UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Name of Registrant; State or Other Jurisdiction of Incorporation; Address of Principal Executive Offices; and Telephone Number
IRS Employer Identification Number
EXELON CORPORATION
(a Pennsylvania corporation)
10 South Dearborn Street
P.O. Box 805379
Chicago, Illinois 60680-5379
(800) 483-3220
COMMONWEALTH EDISON COMPANY
(an Illinois corporation)
10 South Dearborn Street
49 Floor
Chicago, Illinois 60603-2300
(312) 394-4321
th
PECO ENERGY COMPANY
(a Pennsylvania corporation)
P.O. Box 8699
2301 Market Street
Philadelphia, Pennsylvania 19101-8699
(215) 841-4000
BALTIMORE GAS AND ELECTRIC COMPANY
(a Maryland corporation)
2 Center Plaza
110 West Fayette Street
Baltimore, Maryland 21201-3708
(410) 234-5000
PEPCO HOLDINGS LLC
(a Delaware limited liability company)
701 Ninth Street, N.W.
Washington, District of Columbia 20068-0001
(202) 872-2000
POTOMAC ELECTRIC POWER COMPANY
(a District of Columbia and Virginia corporation)
701 Ninth Street, N.W.
Washington, District of Columbia 20068-0001
(202) 872-2000
DELMARVA POWER & LIGHT COMPANY
(a Delaware and Virginia corporation)
500 North Wakefield Drive
Newark, Delaware 19702-5440
(202) 872-2000
ATLANTIC CITY ELECTRIC COMPANY
(a New Jersey corporation)
500 North Wakefield Drive
Newark, Delaware 19702-5440
(202) 872-2000
23-2990190
36-0938600
23-0970240
52-0280210
52-2297449
53-0127880
51-0084283
21-0398280
Commission
File Number
001-16169
001-01839
000-16844
001-01910
001-31403
001-01072
001-01405
001-03559
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
EXELON CORPORATION:
Common Stock, without par value
PECO ENERGY COMPANY:
Trust Receipts of PECO Energy Capital Trust III, each representing a 7.38% Cumulative
Preferred Security, Series D, $25 stated value, issued by PECO Energy Capital, L.P. and
unconditionally guaranteed by PECO Energy Company
EXC
EXC/28
The Nasdaq Stock Market LLC
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
COMMONWEALTH EDISON COMPANY:
Common Stock Purchase Warrants (1971 Warrants and Series B Warrants)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Exelon Corporation
Commonwealth Edison Company
PECO Energy Company
Baltimore Gas and Electric Company
Pepco Holdings LLC
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Exelon Corporation
Commonwealth Edison Company
PECO Energy Company
Baltimore Gas and Electric Company
Pepco Holdings LLC
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
Yes
x
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
Yes ☐
No ☐
x
No
x
No
x
No
x
No
x
No
x
No
x
No
No
No
No
No
No
No
No
No
x
x
x
x
x
x
x
x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Exelon Corporation
Commonwealth Edison
Company
PECO Energy Company
Baltimore Gas and Electric
Company
Pepco Holdings LLC
Potomac Electric Power
Company
Delmarva Power & Light
Company
Atlantic City Electric Company
Large Accelerated Filer x
Accelerated Filer ☐
Non-accelerated Filer ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
Large Accelerated Filer ☐
Large Accelerated Filer ☐
Large Accelerated Filer ☐
Large Accelerated Filer ☐
Accelerated Filer ☐
Accelerated Filer ☐
Accelerated Filer ☐
Accelerated Filer ☐
Non-accelerated Filer x
Non-accelerated Filer x
Smaller Reporting Company ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
Emerging Growth Company ☐
Non-accelerated Filer x
Non-accelerated Filer x
Smaller Reporting Company ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
Emerging Growth Company ☐
Large Accelerated Filer ☐
Accelerated Filer ☐
Non-accelerated Filer x
Smaller Reporting Company ☐
Emerging Growth Company ☐
Large Accelerated Filer ☐
Large Accelerated Filer ☐
Accelerated Filer ☐
Accelerated Filer ☐
Non-accelerated Filer x
Non-accelerated Filer x
Smaller Reporting Company ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section
13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley
Act by the registered public accounting firm that prepared or issued its audit report. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The estimated aggregate market value of the voting and non-voting common equity held by nonaffiliates of each registrant as of June 30, 2021 was as follows:
Exelon Corporation Common Stock, without par value
Commonwealth Edison Company Common Stock, $12.50 par value
PECO Energy Company Common Stock, without par value
Baltimore Gas and Electric Company, without par value
Pepco Holdings LLC
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
The number of shares outstanding of each registrant’s common stock as of January 31, 2022 was as follows:
Exelon Corporation Common Stock, without par value
Commonwealth Edison Company Common Stock, $12.50 par value
PECO Energy Company Common Stock, without par value
Baltimore Gas and Electric Company Common Stock, without par value
Pepco Holdings LLC
Potomac Electric Power Company Common Stock, $0.01 par value
Delmarva Power & Light Company Common Stock, $2.25 par value
Atlantic City Electric Company Common Stock, $3.00 par value
$43,290,833,498
No established market
None
None
Not applicable
None
None
None
980,136,968
127,021,391
170,478,507
1,000
Not applicable
100
1,000
8,546,017
Portions of the Exelon Proxy Statement for the 2021 Annual Meeting of Shareholders and the Commonwealth Edison Company 2021 Information Statement are incorporated by reference in Part III.
PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company meet the conditions set forth in
General Instruction I(1)(a) and (b) of Form 10-K and are therefore filing this Form in the reduced disclosure format.
Documents Incorporated by Reference
GLOSSARY OF TERMS AND ABBREVIATIONS
FILING FORMAT
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
WHERE TO FIND MORE INFORMATION
TABLE OF CONTENTS
Page No.
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
PART II
ITEM 5.
ITEM 6.
ITEM 7.
BUSINESS
General
Constellation Energy Generation, LLC
Utility Operations
Exelon's Strategy and Outlook
Employees
Environmental Matters and Regulation
Executive Officers of the Registrants
RISK FACTORS
UNRESOLVED STAFF COMMENTS
PROPERTIES
Constellation Energy Generation, LLC
The Utility Registrants
LEGAL PROCEEDINGS
MINE SAFETY DISCLOSURES
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
SELECTED FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Exelon Corporation
Executive Overview
Financial Results of Operations
Significant 2021 Transactions and Recent Developments
Other Key Business Drivers and Management Strategies
Critical Accounting Policies and Estimates
Results of Operations
Commonwealth Edison Company
PECO Energy Company
Baltimore Gas and Electric Company
Pepco Holdings LLC
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
Constellation Energy Generation, LLC
Liquidity and Capital Resources
ITEM 7A.
ITEM 8.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Exelon Corporation
1
6
6
6
7
7
8
15
18
19
21
25
29
40
41
41
44
45
46
47
51
52
52
52
53
56
60
61
72
72
75
79
82
83
86
90
93
101
119
126
151
Commonwealth Edison Company
PECO Energy Company
Baltimore Gas and Electric Company
Pepco Holdings LLC
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
Combined Notes to Consolidated Financial Statements
1. Significant Accounting Policies
2. Mergers, Acquisitions, and Dispositions
3. Regulatory Matters
4. Revenue from Contracts with Customers
5. Segment Information
6. Accounts Receivable
7. Early Plant Retirements
8. Property, Plant, and Equipment
9. Jointly Owned Electric Utility Plant
10. Asset Retirement Obligations
11. Leases
12. Asset Impairments
13. Intangible Assets
14. Income Taxes
15. Retirement Benefits
16. Derivative Financial Instruments
17. Debt and Credit Agreements
18. Fair Value of Financial Assets and Liabilities
19. Commitments and Contingencies
20. Shareholders' Equity
21. Stock-Based Compensation Plans
22. Changes in Accumulated Other Comprehensive Income
23. Variable Interest Entities
24. Supplemental Financial Information
25. Related Party Transactions
26. Separation
ITEM 9.
ITEM 9A.
ITEM 9B.
ITEM 9C.
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
CONTROLS AND PROCEDURES
OTHER INFORMATION
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
PRINCIPAL ACCOUNTING FEES AND SERVICES
Page No.
156
161
166
171
176
181
186
191
191
200
202
221
225
236
240
243
245
246
250
255
255
258
264
276
281
291
305
316
317
320
321
326
333
335
336
336
337
337
338
339
340
341
342
PART IV
ITEM 15.
ITEM 16.
SIGNATURES
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
FORM 10-K SUMMARY
Exelon Corporation
Commonwealth Edison Company
PECO Energy Company
Baltimore Gas and Electric Company
Pepco Holdings LLC
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
Page No.
343
383
384
384
385
386
387
388
389
390
391
Table of Contents
Exelon Corporation and Related Entities
Exelon
Generation
ComEd
PECO
BGE
Pepco Holdings or PHI
Pepco
DPL
ACE
Registrants
Utility Registrants
Legacy PHI
ACE Funding or ATF
Antelope Valley
BondCo
BSC
CENG
Constellation
CR
CRP
EEDC
Exelon Corporate
Exelon Transmission Company
FitzPatrick
Ginna
NER
PCI
PEC L.P.
PECO Trust III
PECO Trust IV
Pepco Energy Services or PES
PHI Corporate
PHISCO
RPG
SolGen
TMI
UII
GLOSSARY OF TERMS AND ABBREVIATIONS
Exelon Corporation
Constellation Energy Generation, LLC (formerly Exelon Generation Company, LLC, a subsidiary of Exelon as of December
31, 2021 prior to separation on February 1, 2022)
Commonwealth Edison Company
PECO Energy Company
Baltimore Gas and Electric Company
Pepco Holdings LLC (formerly Pepco Holdings, Inc.)
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
Exelon, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE, collectively
ComEd, PECO, BGE, Pepco, DPL, and ACE, collectively
PHI, Pepco, DPL, ACE, PES, and PCI, collectively
Atlantic City Electric Transition Funding LLC
Antelope Valley Solar Ranch One
RSB BondCo LLC
Exelon Business Services Company, LLC
Constellation Energy Nuclear Group, LLC
Constellation Energy Group, Inc.
Constellation Renewables, LLC (formerly ExGen Renewables IV, LLC)
Constellation Renewables Partners, LLC (formerly ExGen Renewables Partners, LLC)
Exelon Energy Delivery Company, LLC
Exelon in its corporate capacity as a holding company
Exelon Transmission Company, LLC
James A. FitzPatrick nuclear generating station
R. E. Ginna nuclear generating station
NewEnergy Receivables LLC
Potomac Capital Investment Corporation and its subsidiaries
PECO Energy Capital, L.P.
PECO Energy Capital Trust III
PECO Energy Capital Trust IV
Pepco Energy Services, Inc. and its subsidiaries
PHI in its corporate capacity as a holding company
PHI Service Company
Renewable Power Generation, LLC
SolGen, LLC
Three Mile Island nuclear facility
Unicom Investments, Inc.
1
Table of Contents
Other Terms and Abbreviations
ABO
AEC
AESO
AFUDC
AMI
AOCI
ARC
ARO
ARP
ASA
BGS
Brookfield Renewable
BSA
CAISO
CBAs
CERCLA
Clean Air Act
Clean Water Act
CMC
CODM
Conectiv
DC PLUG
DCPSC
DEPSC
DOE
DOEE
DOJ
DPP
DSP
EDF
EIMA
EPA
ERCOT
ERISA
EROA
ERP
FEJA
FERC
FRCC
FRR
GAAP
GCR
GHG
GSA
GLOSSARY OF TERMS AND ABBREVIATIONS
Accumulated Benefit Obligation
Alternative Energy Credit that is issued for each megawatt hour of generation from a qualified alternative energy source
Alberta Electric Systems Operator
Allowance for Funds Used During Construction
Advanced Metering Infrastructure
Accumulated Other Comprehensive Income (Loss)
Asset Retirement Cost
Asset Retirement Obligation
Alternative Revenue Program
Asset Sale Agreement
Basic Generation Service
Brookfield Renewable Partners, L.P.
Bill Stabilization Adjustment
California ISO
Collective Bargaining Agreements
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended
Clean Air Act of 1963, as amended
Federal Water Pollution Control Amendments of 1972, as amended
Carbon Mitigation Credit
Chief Operating Decision Maker
Conectiv, LLC, a wholly owned subsidiary of PHI and the parent of DPL and ACE during the Predecessor periods
District of Columbia Power Line Undergrounding Initiative
District of Columbia Public Service Commission
Delaware Public Service Commission
United States Department of Energy
Department of Energy & Environment
United States Department of Justice
Deferred Purchase Price
Default Service Provider
Electricite de France SA and its subsidiaries
Energy Infrastructure Modernization Act (Illinois Senate Bill 1652 and Illinois House Bill 3036)
United States Environmental Protection Agency
Electric Reliability Council of Texas
Employee Retirement Income Security Act of 1974, as amended
Expected Rate of Return on Assets
Enterprise Resource Program
Illinois Public Act 99-0906 or Future Energy Jobs Act
Federal Energy Regulatory Commission
Florida Reliability Coordinating Council
Fixed Resource Requirement
Generally Accepted Accounting Principles in the United States
Gas Cost Rate
Greenhouse Gas
Generation Supply Adjustment
2
Table of Contents
Other Terms and Abbreviations
GWh
ICC
ICE
IIP
Illinois Settlement Legislation
IPA
IRC
IRS
ISO
ISO-NE
NYISO
kV
kWh
LIBOR
LLRW
LNG
LTIP
LTRRPP
MDE
MDPSC
MGP
MISO
mmcf
MOPR
MPSC
MRV
MW
MWh
N/A
NAV
NDT
NEIL
NERC
NGX
NJBPU
Non-Regulatory Agreement Units
NOSA
NPDES
NPNS
NRC
NWPA
NYMEX
NYPSC
OCEP
OCI
GLOSSARY OF TERMS AND ABBREVIATIONS
Gigawatt hour
Illinois Commerce Commission
Intercontinental Exchange
Infrastructure Investment Program
Legislation enacted in 2007 affecting electric utilities in Illinois
Illinois Power Agency
Internal Revenue Code
Internal Revenue Service
Independent System Operator
ISO New England Inc.
New York ISO
Kilovolt
Kilowatt-hour
London Interbank Offered Rate
Low-Level Radioactive Waste
Liquefied Natural Gas
Long-Term Incentive Plan
Long-Term Renewable Resources Procurement Plan
Maryland Department of the Environment
Maryland Public Service Commission
Manufactured Gas Plant
Midcontinent Independent System Operator, Inc.
Million Cubic Feet
Minimum Offer Price Rule
Missouri Public Service Commission
Market-Related Value
Megawatt
Megawatt hour
Not applicable
Net Asset Value
Nuclear Decommissioning Trust
Nuclear Electric Insurance Limited
North American Electric Reliability Corporation
Natural Gas Exchange
New Jersey Board of Public Utilities
Nuclear generating units or portions thereof whose decommissioning-related activities are not subject to contractual
elimination under regulatory accounting
Nuclear Operating Services Agreement
National Pollutant Discharge Elimination System
Normal Purchase Normal Sale scope exception
Nuclear Regulatory Commission
Nuclear Waste Policy Act of 1982
New York Mercantile Exchange
New York Public Service Commission
Oyster Creek Environmental Protection, LLC
Other Comprehensive Income
3
Table of Contents
Other Terms and Abbreviations
OIESO
OPEB
PA DEP
PAPUC
PCB
PGC
PG&E
PJM
POLR
PPA
PP&E
Price-Anderson Act
PRP
PSEG
PUCT
PV
RCRA
REC
Regulatory Agreement Units
RES
RFP
Rider
RGGI
RMC
RNF
ROE
ROU
RPS
RTEP
RTO
S&P
SEC
SERC
SNF
SOA
SOFR
SOS
SPP
SSA
STRIDE
TCJA
Transition Bond Charge
GLOSSARY OF TERMS AND ABBREVIATIONS
Ontario Independent Electricity System Operator
Other Postretirement Employee Benefits
Pennsylvania Department of Environmental Protection
Pennsylvania Public Utility Commission
Polychlorinated Biphenyl
Purchased Gas Cost Clause
Pacific Gas and Electric Company
PJM Interconnection, LLC
Provider of Last Resort
Power Purchase Agreement
Property, Plant, and Equipment
Price-Anderson Nuclear Industries Indemnity Act of 1957
Potentially Responsible Parties
Public Service Enterprise Group Incorporated
Public Utility Commission of Texas
Photovoltaic
Resource Conservation and Recovery Act of 1976, as amended
Renewable Energy Credit which is issued for each megawatt hour of generation from a qualified renewable energy source
Nuclear generating units or portions thereof whose decommissioning-related activities are subject to contractual elimination
under regulatory accounting
Retail Electric Suppliers
Request for Proposal
Reconcilable Surcharge Recovery Mechanism
Regional Greenhouse Gas Initiative
Risk Management Committee
Revenue Net of Purchased Power and Fuel Expense
Return on equity
Right-of-use
Renewable Energy Portfolio Standards
Regional Transmission Expansion Plan
Regional Transmission Organization
Standard & Poor’s Ratings Services
United States Securities and Exchange Commission
SERC Reliability Corporation (formerly Southeast Electric Reliability Council)
Spent Nuclear Fuel
Society of Actuaries
Secured Overnight Financing Rate
Standard Offer Service
Southwest Power Pool
Social Security Administration
Maryland Strategic Infrastructure Development and Enhancement Program
Tax Cuts and Jobs Act
Revenue ACE receives, and pays to ACE Funding, to fund the principal and interest payments on Transition Bonds and
related taxes, expenses, and fees
4
Table of Contents
Other Terms and Abbreviations
Transition Bonds
U.S. Court of Appeals for the D.C. Circuit
VIE
WECC
ZEC
ZES
GLOSSARY OF TERMS AND ABBREVIATIONS
Transition Bonds issued by ACE Funding
United States Court of Appeals for the District of Columbia Circuit
Variable Interest Entity
Western Electric Coordinating Council
Zero Emission Credit
Zero Emission Standard
5
Table of Contents
FILING FORMAT
This combined Annual Report on Form 10-K is being filed separately by Exelon Corporation, Commonwealth Edison Company, PECO Energy Company, Baltimore Gas and Electric Company, Pepco
Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company (Registrants). Information contained herein relating to any individual Registrant
is filed by such Registrant on its own behalf. No Registrant makes any representation as to information relating to any other Registrant.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Words such as “could,”
“may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” and variations on such words, and similar expressions that reflect our
current views with respect to future events and operational, economic and financial performance, are intended to identify such forward-looking statements.
The factors that could cause actual results to differ materially from the forward-looking statements made by the Registrants include those factors discussed herein, including those factors discussed
with respect to the Registrants discussed in (a) Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, (c) Part II,
ITEM 8. Financial Statements and Supplementary Data: Note 19, Commitments and Contingencies, and (d) other factors discussed in filings with the SEC by the Registrants. Readers are cautioned
not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. None of the Registrants undertakes any obligation to publicly release any revision to its
forward-looking statements to reflect events or circumstances after the date of this Report.
The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that the Registrants file electronically with the SEC. These documents
are also available to the public from commercial document retrieval services and the Registrants’ website at www.exeloncorp.com. Information contained on the Registrants’ website shall not be
deemed incorporated into, or to be a part of, this Report.
WHERE TO FIND MORE INFORMATION
6
Table of Contents
ITEM 1.
General
PART I
Corporate Structure and Business and Other Information
As of December 31, 2021, Exelon was a utility services holding company engaged in the generation, delivery, and marketing of energy through Generation and the energy distribution and transmission
businesses through ComEd, PECO, BGE, Pepco, DPL, and ACE.
On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies with the resources necessary to best
serve customers and sustain long-term investment and operating excellence. The separation was completed on February 1, 2022 and gives each company the financial and strategic independence to
focus on its specific customer needs, while executing its core business strategy. See Note 26 – Separation of the Combined Notes to Consolidated Financial Statements for additional information.
Name of Registrant / Subsidiary
Commonwealth Edison Company (registrant)
PECO Energy Company (registrant)
Baltimore Gas and Electric Company (registrant)
Purchase and regulated retail sale of electricity
Transmission and distribution of electricity to retail customers
Business
Northern Illinois, including the City of Chicago
Service Territories
Purchase and regulated retail sale of electricity and natural gas
Transmission and distribution of electricity and distribution of natural gas to retail customers
Southeastern Pennsylvania, including the City of Philadelphia (electricity)
Pennsylvania counties surrounding the City of Philadelphia (natural gas)
Purchase and regulated retail sale of electricity and natural gas
Transmission and distribution of electricity and distribution of natural gas to retail customers
Central Maryland, including the City of Baltimore (electricity and natural gas)
Pepco Holdings LLC (registrant)
Utility services holding company engaged, through its reportable segments Pepco, DPL, and ACE
Service Territories of Pepco, DPL, and ACE
Potomac Electric Power Company (registrant)
Purchase and regulated retail sale of electricity
District of Columbia and Major portions of Montgomery and Prince George’s
Counties, Maryland
Delmarva Power & Light Company (registrant)
Atlantic City Electric Company (registrant)
Transmission and distribution of electricity to retail customers
Purchase and regulated retail sale of electricity and natural gas
Transmission and distribution of electricity and distribution of natural gas to retail customers
Portions of Delaware and Maryland (electricity)
Portions of New Castle County, Delaware (natural gas)
Purchase and regulated retail sale of electricity
Transmission and distribution of electricity to retail customers
Portions of Southern New Jersey
Constellation Energy Generation, LLC (formerly Exelon Generation
Company, LLC) (subsidiary)
Generation, physical delivery, and marketing of power across multiple geographical regions through its
customer-facing business, Constellation, which sells electricity to both wholesale and retail customers.
Generation also sells natural gas, renewable energy, and other energy-related products and services.
Five reportable segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other
Power Regions
Business Services
Through its business services subsidiary, BSC, Exelon provides its subsidiaries with a variety of support services at cost, including legal, human resources, financial, information technology, and supply
management services. PHI also has a business services subsidiary, PHISCO, which provides a variety of support services at cost, including legal, accounting, engineering, customer operations,
distribution and transmission planning, asset management, system operations, and power procurement, to PHI operating companies. The costs of BSC and PHISCO are directly charged or allocated to
the applicable subsidiaries. The results of Exelon’s corporate
7
Table of Contents
operations are presented as “Other” within the consolidated financial statements and include intercompany eliminations unless otherwise disclosed.
Generation
Generation, one of the largest competitive electric generation companies in the United States as measured by owned and contracted MW, physically delivers and markets power across multiple
geographic regions through its customer-facing business, Constellation. Constellation sells electricity and natural gas, including renewable energy and associated attributes, in competitive domestic
energy markets to both wholesale and retail customers. Generation leverages its generation portfolio to serve customers under both long-term and short-term contracts, as well as spot market sales.
Generation operates in well-developed energy markets and employs integrated and ratable hedging strategies to manage commodity price volatility. Generation's fleet also provides geographic and
supply source diversity. Generation’s customers include distribution utilities, municipalities, cooperatives, and commercial, industrial, governmental, and residential customers in competitive markets.
Generation’s customer-facing activities foster development and delivery of other innovative energy-related products and services for its customers.
Generation is a public utility as defined under the Federal Power Act and is subject to FERC’s exclusive ratemaking jurisdiction over wholesale sales of electricity and the transmission of electricity in
interstate commerce. Under the Federal Power Act, FERC has the authority to grant or deny market-based rates for sales of energy, capacity, and ancillary services to ensure that such sales are just
and reasonable. FERC’s jurisdiction over ratemaking includes the authority to suspend the market-based rates of utilities and set cost-based rates should FERC find that its previous grant of market-
based rates authority is no longer just and reasonable. Other matters subject to FERC jurisdiction include, but are not limited to, third-party financings; review of mergers; dispositions of jurisdictional
facilities and acquisitions of securities of another public utility or an existing operational generating facility; affiliate transactions; intercompany financings and cash management arrangements; certain
internal corporate reorganizations; and certain holding company acquisitions of public utility and holding company securities.
RTOs and ISOs exist in a number of regions to provide transmission service across multiple transmission systems. FERC has approved PJM, MISO, ISO-NE, and SPP as RTOs and CAISO and
NYISO as ISOs. These entities are responsible for regional planning, managing transmission congestion, developing wholesale markets for energy and capacity, maintaining reliability, market
monitoring, the scheduling of physical power sales brokered through ICE and NYMEX, and the elimination or reduction of redundant transmission charges imposed by multiple transmission providers
when wholesale customers take transmission service across several transmission systems. ERCOT is not subject to regulation by FERC but performs a similar function in Texas to that performed by
RTOs in markets regulated by FERC.
Specific operations of Generation are also subject to the jurisdiction of various other Federal, state, regional, and local agencies, including the NRC, and Federal and state environmental protection
agencies. Additionally, Generation is subject to NERC mandatory reliability standards, which protect the nation’s bulk power system against potential disruptions from cyber and physical security
breaches.
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Generating Resources
At December 31, 2021, the generating resources of Generation consisted of the following:
Type of Capacity
Owned generation assets
(a)
Nuclear
Fossil (primarily natural gas and oil)
Renewable
(b)
Owned generation assets
Contracted generation
(c)
Total generating resources
MW
20,899
8,819
2,682
32,400
4,102
36,502
__________
(a) Net generation capacity is stated at proportionate ownership share. See ITEM 2. PROPERTIES—Generation for additional information.
(b)
Includes wind, hydroelectric, and solar generating assets.
(c) Electric supply procured under unit-specific agreements.
Generation has five reportable segments, as described in the table below, representing the different geographical areas in which Generation’s owned generating resources are located and Generation's
customer-facing activities are conducted.
Segment
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Total
Net Generation Capacity (MW)
(a)
% of Net Generation Capacity
Geographical Area
10,508
11,898
3,093
3,610
3,291
32,400
Eastern half of PJM, which includes New Jersey, Maryland, Virginia, West Virginia, Delaware, the
District of Columbia, and parts of Pennsylvania and North Carolina
32 %
37 % Western half of PJM and the United States footprint of MISO, excluding MISO’s Southern Region
10 % NYISO
11 % Electric Reliability Council of Texas
10 % New England, South, West, and Canada
100 %
__________
(a) Net generation capacity is stated at proportionate ownership share. See ITEM 2. PROPERTIES—Generation for additional information.
Nuclear Facilities
Generation has ownership interests in thirteen nuclear generating stations currently in service, consisting of 23 units with an aggregate of 20,899 MW of capacity. These stations exclude TMI located in
Middletown, Pennsylvania, which permanently ceased generation operations on September 20, 2019 and Oyster Creek located in Forked River, New Jersey, which permanently ceased generation
operations on September 17, 2018 and was subsequently sold to Holtec International (Holtec) on July 1, 2019. Generation wholly owns all of its nuclear generating stations, except for undivided
ownership interests in four jointly-owned nuclear stations: Quad Cities (75% ownership), Peach Bottom (50% ownership), Salem (42.59% ownership), and Nine Mile Point Unit 2 (82% ownership),
which are consolidated in Exelon’s financial statements relative to its proportionate ownership interest in each unit.
Generation had a 50.01% membership interest in CENG, a joint venture with EDF, which wholly owns the Calvert Cliffs and Ginna nuclear stations and Nine Mile Point Unit 1, in addition to an 82%
undivided ownership interest in Nine Mile Point Unit 2. EDF had the option to sell its 49.99% equity interest in CENG to Generation exercisable beginning on January 1, 2016 and thereafter until June
30, 2022. On August 6, 2021, Generation and
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EDF entered into a settlement agreement pursuant to which Generation, through a wholly owned subsidiary, purchased EDF’s equity interest in CENG for a net purchase price of $885 million.
See ITEM 2. PROPERTIES for additional information on Generation's nuclear facilities, Note 2 — Mergers, Acquisitions, and Dispositions of the Combined Notes to Consolidated Financial Statements
for additional information on the acquisition of EDF's equity interest in CENG and the disposition of Oyster Creek, and Note 23 — Variable Interest Entities of the Combined Notes to Consolidated
Financial Statements for additional information regarding the CENG consolidation.
Generation’s nuclear generating stations are all operated by Generation, with the exception of the two units at Salem, which are operated by PSEG Nuclear, LLC (PSEG Nuclear), an indirect, wholly
owned subsidiary of PSEG. In 2021, 2020, and 2019 electric supply (in GWh) generated from the nuclear generating facilities was 65%, 62%, and 64%, respectively, of Generation’s total electric
supply, which also includes fossil, hydroelectric, and renewable generation and electric supply purchased for resale. Generation’s wholesale and retail power marketing activities are, in part, supplied
by the output from the nuclear generating stations. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for additional
information of Generation’s electric supply sources.
Nuclear Operations
Capacity factors, which are significantly affected by the number and duration of refueling and non-refueling outages, can have a significant impact on Generation’s results of operations. Generation’s
operations from its nuclear plants have historically had minimal environmental impact and the plants have a safe operating history.
Generation manages its scheduled refueling outages to minimize their duration and to maintain high nuclear generating capacity factors, resulting in a stable generation base for Generation’s
wholesale and retail power marketing activities. During scheduled refueling outages, Generation performs maintenance and equipment upgrades in order to minimize the occurrence of unplanned
outages and to maintain safe, reliable operations. During 2021, 2020, and 2019, the nuclear generating facilities operated by Generation, achieved capacity factors of 94.5%, 95.4%, and 95.7%,
respectively, at ownership percentage.
In addition to the maintenance and equipment upgrades performed by Generation during scheduled refueling outages, Generation has extensive operating and security procedures in place to ensure
the safe operation of the nuclear units. Generation also has extensive safety systems in place to protect the plant, personnel, and surrounding area in the unlikely event of an accident or other incident.
Regulation of Nuclear Power Generation
Generation is subject to the jurisdiction of the NRC with respect to the operation of its nuclear generating stations, including the licensing for operation of each unit. The NRC subjects nuclear
generating stations to continuing review and regulation covering, among other things, operations, maintenance, emergency planning, security, and environmental and radiological aspects of those
stations. As part of its reactor oversight process, the NRC continuously assesses unit performance indicators and inspection results and communicates its assessment on a semi-annual basis. All
nuclear generating stations operated by Generation are categorized by the NRC in the Licensee Response Column, which is the highest of five performance bands. The NRC may modify, suspend, or
revoke operating licenses and impose civil penalties for failure to comply with the Atomic Energy Act or the terms of the operating licenses. Changes in regulations by the NRC may require a
substantial increase in capital expenditures and/or operating costs for nuclear generating facilities.
Licenses
Generation has original 40-year operating licenses from the NRC for each of its nuclear units and has received 20-year operating license renewals from the NRC for all its nuclear units except Clinton.
PSEG has received 20-year operating license renewals for Salem Units 1 and 2. Peach Bottom has received a second 20-year license renewal from the NRC for Units 2 and 3.
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The following table summarizes the current license expiration dates for Generation’s operating nuclear facilities in service:
Station
Braidwood
Byron
Calvert Cliffs
(b)
Clinton
Dresden
FitzPatrick
LaSalle
Limerick
Nine Mile Point
Peach Bottom
Quad Cities
Ginna
Salem
Unit
In-Service
Date
(a)
Current License
Expiration
1
2
1
2
1
2
1
2
3
1
1
2
1
2
1
2
2
3
1
2
1
1
2
1988
1988
1985
1987
1975
1977
1987
1970
1971
1975
1984
1984
1986
1990
1969
1988
1974
1974
1973
1973
1970
1977
1981
2046
2047
2044
2046
2034
2036
2027
2029
2031
2034
2042
2043
2044
2049
2029
2046
2053
2054
2032
2032
2029
2036
2040
__________
(a) Denotes year in which nuclear unit began commercial operations.
(b) Although timing has been delayed, Generation currently plans to seek license renewal for Clinton and has received a Timely Renewal Exemption from the NRC that allows for the license renewal application to be filed in
the first quarter of 2024.
The operating license renewal process takes approximately four to five years from the commencement of the renewal process, which includes approximately two years for Generation to develop the
application and approximately two years for the NRC to review the application. Depreciation provisions are based on the estimated useful lives of the stations, which corresponds with the term of the
NRC operating licenses denoted in the table above as of December 31, 2021. From August 27, 2020 through September 15, 2021, Byron and Dresden depreciation provisions were accelerated to
reflect the previously announced shutdown dates of September 2021 and November 2021, respectively. On September 15, 2021, Generation updated the expected useful lives for both facilities to
reflect the end of the available NRC operating license for each unit consistent with the table above. See Note 7 — Early Plant Retirements of the Combined Notes to Consolidated Financial Statements
for additional information on Byron and Dresden.
Nuclear Waste Storage and Disposal
There are no facilities for the reprocessing or permanent disposal of SNF currently in operation in the United States, nor has the NRC licensed any such facilities. Generation currently stores all SNF
generated by its nuclear generating facilities on-site in storage pools or in dry cask storage facilities. Since Generation’s SNF storage pools generally do not have sufficient storage capacity for the life
of the respective plant, Generation has developed dry cask storage facilities to support operations.
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As of December 31, 2021, Generation had approximately 89,400 SNF assemblies (21,900 tons) stored on site in SNF pools or wet and dry cask storage which includes SNF assemblies at Zion Station,
for which Generation retains ownership and responsibility for the decommissioning of the Zion Independent Spent Fuel Storage Installation. All currently operating Generation-owned nuclear sites have
on-site dry cask storage. TMI's on-site dry cask storage is projected to be in operation in 2022. On-site dry cask storage in concert with on-site storage pools will be capable of meeting all current and
future SNF storage requirements at Generation’s sites through the end of the license renewal periods and through decommissioning.
For a discussion of matters associated with Generation’s contracts with the DOE for the disposal of SNF, see Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated
Financial Statements.
As a by-product of their operations, nuclear generating units produce LLRW. LLRW is accumulated at each generating station and permanently disposed of at licensed disposal facilities. The Federal
Low-Level Radioactive Waste Policy Act of 1980 provides that states may enter into agreements to provide regional disposal facilities for LLRW and restrict use of those facilities to waste generated
within the region. Illinois and Kentucky have entered into such an agreement, although neither state currently has an operational site and none is anticipated to be operational for the next ten years.
Generation ships its Class A LLRW, which represents 93% of LLRW generated at its stations, to disposal facilities in Utah and South Carolina, which have enough storage capacity to store all Class A
LLRW for the life of all stations in Generation's nuclear fleet. The disposal facility in South Carolina at present is only receiving LLRW from LLRW generators in South Carolina, New Jersey (which
includes Salem), and Connecticut.
Generation utilizes on-site storage capacity at all its stations to store and stage for shipping Class B and Class C LLRW. Generation has a contract through 2040 to ship Class B and Class C LLRW to a
disposal facility in Texas. The agreement provides for disposal of all current Class B and Class C LLRW currently stored at each station as well as the Class B and Class C LLRW generated during the
term of the agreement. However, because the production of LLRW from Generation’s nuclear fleet will exceed the capacity at the Texas site (3.9 million curies for 15 years beginning in 2012),
Generation will still be required to utilize on-site storage at its stations for Class B and Class C LLRW. Generation currently has enough storage capacity to store all Class B and Class C LLRW for the
life of all stations in Generation’s nuclear fleet. Generation continues to pursue alternative disposal strategies for LLRW, including an LLRW reduction program to minimize on-site storage and cost
impacts.
Nuclear Insurance
Generation is subject to liability, property damage, and other risks associated with major incidents at all of its nuclear stations. Generation has reduced its financial exposure to these risks through
insurance and other industry risk-sharing provisions. See “Nuclear Insurance” within Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for
additional information.
For information regarding property insurance, see ITEM 2. PROPERTIES — Generation. Generation is self-insured to the extent that any losses may exceed the amount of insurance maintained or are
within the policy deductible for its insured losses.
Fossil and Renewable Facilities (including Hydroelectric)
Generation wholly owns all its fossil and renewable generating stations, except for: (1) Wyman; (2) certain wind project entities; and (3) CRP, which is owned 49% by another owner. See Note 23 —
Variable Interest Entities of the Combined Notes to Consolidated Financial Statements for additional information regarding CRP which is a VIE. Generation’s fossil and renewable generating stations
are all operated by Generation, except for Wyman, which is operated by the principal owner, NextEra Energy Resources LLC, a subsidiary of the FPL Group, Inc. In 2021, 2020, and 2019, electric
supply (in GWh) generated from owned fossil and renewable generating facilities was 10%, 9%, and 11%, respectively, of Generation’s total electric supply. Much of this output was dispatched to
support Generation’s wholesale and retail power marketing activities. On March 31, 2021 and June 30, 2021, Generation completed the sale of a significant portion of its solar business and its interest
in the Albany Green Energy biomass facility, respectively. See ITEM 2. PROPERTIES for additional information regarding Generation's electric generating facilities and Note 2 - Mergers, Acquisitions,
and Dispositions of the Combined Notes to Consolidated Financial Statements for additional information on these dispositions.
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Licenses
Fossil and renewable generation plants are generally not licensed, and, therefore, the decision on when to retire plants is, fundamentally, a commercial one. FERC has the exclusive authority to license
most non-Federal hydropower projects located on navigable waterways or Federal lands, or connected to the interstate electric grid, which include Generation's Conowingo Hydroelectric Project
(Conowingo) and Muddy Run Pumped Storage Facility Project (Muddy Run). Muddy Run's license expires on December 1, 2055 and Conowingo's on February 28, 2071. The stations are currently
being depreciated over their estimated useful lives, which correspond with the license terms. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for
additional information on Conowingo.
Insurance
Generation maintains business interruption insurance for its renewable projects, but not for its fossil and hydroelectric operations unless required by contract or financing agreements. See Note 17 —
Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on financing agreements. Generation maintains both property damage and liability
insurance. For property damage and liability claims for these operations, Generation is self-insured to the extent that losses are within the policy deductible or exceed the amount of insurance
maintained. For information regarding property insurance, see ITEM 2. PROPERTIES — Generation.
Contracted Generation
In addition to energy produced by owned generation assets, Generation sources electricity from plants it does not own under long-term contracts. The following tables summarize Generation’s long-
term contracts to purchase unit-specific physical power with an original term in excess of one year in duration, by region, in effect as of December 31, 2021:
Region
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Total
Capacity Expiring (MW)
Number of
Agreements
Expiration
Dates
2022 - 2032
2026 - 2032
2022
2022 - 2035
2022 - 2033
7
3
4
5
12
31
Capacity (MW)
176
351
26
864
2,685
4,102
2022
2023
2024
2025
2026
Thereafter
Total
1,084
114
101
490
398
1,915
4,102
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Fuel
The following table shows sources of electric supply in GWh for 2021 and 2020:
(a)
Nuclear
Purchases — non-trading portfolio
Fossil (primarily natural gas and oil)
Renewable
Total supply
(b)
Source of Electric Supply
2021
2020
174,987
67,605
19,960
6,577
269,129
175,085
79,972
19,501
7,052
281,610
__________
(a)
(b)
Includes the proportionate share of output where Generation has an undivided ownership interest in jointly-owned generating plants and includes the total output of plants that are fully consolidated.
Includes wind, hydroelectric, solar, and biomass generating assets.
The cycle of production and utilization of nuclear fuel includes the mining and milling of uranium ore into uranium concentrates, the conversion of uranium concentrates to uranium hexafluoride, the
enrichment of the uranium hexafluoride, and the fabrication of fuel assemblies. Generation has inventory in various forms and does not anticipate difficulty in obtaining the necessary uranium
concentrates or conversion, enrichment, or fabrication services to meet the nuclear fuel requirements of its nuclear units.
Natural gas is procured through long-term and short-term contracts, as well as spot-market purchases. Fuel oil inventories are managed so that in the winter months sufficient volumes of fuel are
available in the event of extreme weather conditions and during the remaining months to take advantage of favorable market pricing.
Generation uses financial instruments to mitigate price risk associated with certain commodity price exposures, using both over-the-counter and exchange-traded instruments. See ITEM 1A. RISK
FACTORS, ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Critical Accounting Policies and Estimates and Note 16 —
Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information regarding derivative financial instruments.
Power Marketing
Generation’s integrated business operations include physical delivery and marketing of power and natural gas. Generation largely obtains physical power supply from its owned and contracted
generation in multiple geographic regions. The commodity risks associated with the output from owned and contracted generation is managed using various commodity transactions including sales to
customers and its ratable hedging program. The main objective is to obtain low-cost energy supply to meet physical delivery obligations to both wholesale and retail customers. Generation sells
electricity, natural gas, and other energy related products and solutions to various customers, including distribution utilities, municipalities, cooperatives, and commercial, industrial, governmental, and
residential customers in competitive markets.
Price and Supply Risk Management
Generation uses a combination of wholesale and retail customer load sales, as well as non-derivative and derivative contracts, including financially-settled swaps, futures contracts and swap options,
and physical options and physical forward contracts, all with credit-approved counterparties, to hedge the price risk of the generation portfolio. Generation implements a three-year ratable sales plan to
align its hedging strategy with its financial objectives. Generation may also enter into transactions that are outside of this ratable hedging program.
A portion of Generation’s hedging strategy may be implemented using fuel products based on assumed correlations between power and fuel prices. The risk management group monitors the financial
risks of the wholesale and retail power marketing activities. Generation also uses financial and commodity contracts for proprietary trading purposes, but this activity accounts for only a small portion of
Generation’s efforts. The
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proprietary trading portfolio is subject to a risk management policy that includes stringent risk management limits. See ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK for additional information.
Utility Registrants
Utility Operations
Service Territories and Franchise Agreements
The following table presents the size of service territories, populations of each service territory, and the number of customers within each service territory for the Utility Registrants as of December 31,
2021:
ComEd
PECO
BGE
Pepco
DPL
ACE
Service Territories (in square miles)
Electric
Natural Gas
(a)
Total
Service Territory Population (in millions)
Electric
Natural Gas
(b)
Total
Main City
Main City Population
Number of Customers (in millions)
Electric
Natural Gas
(c)
Total
11,450
N/A
11,450
9.3
N/A
9.3
Chicago
2.7
4.1
N/A
4.1
2,100
1,900
2,100
4.0
2.5
4.0
Philadelphia
1.6
1.7
0.5
1.7
2,300
3,050
3,250
3.0
2.9
3.1
Baltimore
0.6
1.3
0.7
1.3
650
N/A
650
2.4
N/A
2.4
District of Columbia
0.7
0.9
N/A
0.9
5,400
250
5,400
1.5
0.6
1.5
Wilmington
0.1
0.5
0.1
0.5
2,750
N/A
2,750
1.2
N/A
1.2
Atlantic City
0.1
0.6
N/A
0.6
___________
(a) The number of total service territory square miles counts once only a square mile that includes both electric and natural gas services, and thus does not represent the combined total square mileage of electric and natural
gas service territories.
(b) The total service territory population counts once only an individual who lives in a region that includes both electric and natural gas services, and thus does not represent the combined total population of electric and
natural gas service territories.
(c) The number of total customers counts once only a customer who is both an electric and a natural gas customer, and thus does not represent the combined total of electric customers and natural gas customers.
The Utility Registrants have the necessary authorizations to perform their current business of providing regulated electric and natural gas distribution services in the various municipalities and territories
in which they now supply such services. These authorizations include charters, franchises, permits, and certificates of public convenience issued by local and state governments and state utility
commissions. ComEd's, BGE's (gas), Pepco DC's, and ACE's rights are generally non-exclusive while PECO's, BGE's (electric), Pepco MD's, and DPL's rights are generally exclusive. Certain
authorizations are perpetual while others have varying expiration dates. The Utility Registrants anticipate working with the appropriate governmental bodies to extend or replace the authorizations prior
to their expirations.
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Utility Regulations
State utility commissions regulate the Utility Registrants' electric and gas distribution rates and service, issuances of certain securities, and certain other aspects of the business. The following table
outlines the state commissions responsible for utility oversight:
Registrant
ComEd
PECO
BGE
Pepco
DPL
ACE
Commission
ICC
PAPUC
MDPSC
DCPSC/MDPSC
DEPSC/MDPSC
NJBPU
The Utility Registrants are public utilities under the Federal Power Act subject to regulation by FERC related to transmission rates and certain other aspects of the utilities' business. The U.S.
Department of Transportation also regulates pipeline safety and other areas of gas operations for PECO, BGE, and DPL. The U.S. Department of Homeland Security (Transportation Security
Administration) provided new security directives in 2021 that regulate cyber risks for certain gas distribution operators. Additionally, the Utility Registrants are subject to NERC mandatory reliability
standards, which protect the nation's bulk power system against potential disruptions from cyber and physical security breaches.
Seasonality Impacts on Delivery Volumes
The Utility Registrants' electric distribution volumes are generally higher during the summer and winter months when temperature extremes create demand for either summer cooling or winter heating.
For PECO, BGE, and DPL, natural gas distribution volumes are generally higher during the winter months when cold temperatures create demand for winter heating.
ComEd, BGE, Pepco, DPL Maryland, and ACE have electric distribution decoupling mechanisms and BGE has a natural gas decoupling mechanism that eliminate the favorable and unfavorable
impacts of weather and customer usage patterns on electric distribution and natural gas delivery volumes. As a result, ComEd's, BGE's, Pepco's, DPL Maryland's, and ACE's electric distribution
revenues and BGE's natural gas distribution revenues are not materially impacted by delivery volumes. PECO's and DPL Delaware's electric distribution revenues and natural gas distribution revenues
are impacted by delivery volumes.
Electric and Natural Gas Distribution Services
The Utility Registrants are allowed to recover reasonable costs and fair and prudent capital expenditures associated with electric and natural gas distribution services and earn a return on those capital
expenditures, subject to commission approval. ComEd recovers costs through a performance-based rate formula. ComEd is required to file an update to the performance-based rate formula on an
annual basis. On September 15, 2021, Illinois passed the Clean Energy Law, which contains requirements for ComEd to transition away from the performance-based rate formula by the end of 2022
and would allow for the submission of either a general rate or multi-year rate plan. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional
information. PECO's, BGE's, and DPL's electric and gas distribution costs and Pepco's and ACE's electric distribution costs have generally been recovered through traditional rate case proceedings.
However, the MDPSC and the DCPSC allow utilities to file multi-year rate plans. In certain instances, the Utility Registrants use specific recovery mechanisms as approved by their respective
regulatory agencies.
ComEd, Pepco, DPL and ACE customers have the choice to purchase electricity, and PECO and BGE customers have the choice to purchase electricity and natural gas from competitive electric
generation and natural gas suppliers. DPL customers, with the exception of certain commercial and industrial customers, do not have the choice to purchase natural gas from competitive natural gas
suppliers. The Utility Registrants remain the distribution service providers for all customers and are obligated to deliver electricity and natural gas to customers in their respective service territories while
charging a regulated rate for distribution service. In addition, the Utility Registrants also retain significant default service obligations to provide electricity to certain groups of customers in their
respective service areas who do not choose a competitive electric generation supplier. PECO,
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BGE, and DPL also retain significant default service obligations to provide natural gas to certain groups of customers in their respective service areas who do not choose a competitive natural gas
supplier.
For customers that choose to purchase electric generation or natural gas from competitive suppliers, the Utility Registrants act as the billing agent and therefore do not record Operating revenues or
Purchased power and fuel expense related to the electricity and/or natural gas. For customers that choose to purchase electric generation or natural gas from a Utility Registrant, the Utility Registrants
are permitted to recover the electricity and natural gas procurement costs from customers without mark-up or with a slight mark-up and therefore record the amounts in Operating revenues and
Purchased power and fuel expense. As a result, fluctuations in electricity or natural gas sales and procurement costs have no significant impact on the Utility Registrants’ Net income.
See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, Results of Operations and Note 3 — Regulatory Matters of the
Combined Notes to Consolidated Financial Statements for additional information regarding electric and natural gas distribution services.
Procurement of Electricity and Natural Gas
The Utility Registrants' electric supply for its customers is primarily procured through contracts as required by their respective state commissions. The Utility Registrants procure electricity supply from
various approved bidders, including Generation. RTO spot market purchases and sales are utilized to balance the utility electric load and supply as required. Charges incurred for electric supply
procured through contracts with Generation are included in Purchased power from affiliates on the Utility Registrants' Statements of Operations and Comprehensive Income.
PECO's, BGE’s, and DPL's natural gas supplies are purchased from a number of suppliers for terms of up to three years. PECO, BGE, and DPL have annual firm supply and transportation contracts of
137,000 mmcf, 268,000 mmcf and 61,000 mmcf, respectively. In addition, to supplement gas supply at times of heavy winter demands and in the event of temporary emergencies, PECO, BGE, and
DPL have available storage capacity from the following sources:
PECO
BGE
DPL
LNG Facility
Propane-Air Plant
Underground Storage Service Agreements (a)
Peak Natural Gas Sources (in mmcf)
1,200
1,056
250
150
550
N/A
19,400
22,000
3,900
___________
(a) Natural gas from underground storage represents approximately 28%, 20%, and 33% of PECO's, BGE’s, and DPL's 2021-2022 heating season planned supplies, respectively.
PECO, BGE, and DPL have long-term interstate pipeline contracts and also participate in the interstate markets by releasing pipeline capacity or bundling pipeline capacity with gas for off-system
sales. Off-system gas sales are low-margin direct sales of gas to wholesale suppliers of natural gas. Earnings from these activities are shared between the utilities and customers. PECO, BGE, and
DPL make these sales as part of a program to balance its supply and cost of natural gas. The off-system gas sales are not material to PECO, BGE, and DPL.
See ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, Commodity Price Risk (All Registrants), for additional information regarding Utility Registrants' contracts to
procure electric supply and natural gas.
Energy Efficiency Programs
The Utility Registrants are generally allowed to recover costs associated with the energy efficiency and demand response programs they offer. Each commission approved program seeks to meet
mandated electric consumption reduction targets and implement demand response measures to reduce peak demand. The programs are designed to meet standards required by each respective
regulatory agency.
ComEd is allowed to earn a return on its energy efficiency costs. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information.
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Capital Investment
The Utility Registrants' businesses are capital intensive and require significant investments, primarily in electric transmission and distribution and natural gas transportation and distribution facilities, to
ensure the adequate capacity, reliability, and efficiency of their systems. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, Liquidity and Capital Resources, for additional information regarding projected 2022 capital expenditures.
Transmission Services
Under FERC’s open access transmission policy, the Utility Registrants, as owners of transmission facilities, are required to provide open access to their transmission facilities under filed tariffs at cost-
based rates approved by FERC. The Utility Registrants and their affiliates are required to comply with FERC’s Standards of Conduct regulation governing the communication of non-public transmission
information between the transmission owner’s employees and wholesale merchant employees.
PJM is the regional grid operator and operates pursuant to FERC-approved tariffs. PJM is the transmission provider under, and the administrator of, the PJM Open Access Transmission Tariff (PJM
Tariff). PJM operates the PJM energy, capacity, and other markets, and, through central dispatch, controls the day-to-day operations of the bulk power system for the region. The Utility Registrants are
members of PJM and provide regional transmission service pursuant to the PJM Tariff. The Utility Registrants and the other transmission owners in PJM have turned over control of certain of their
transmission facilities to PJM, and their transmission systems are under the dispatch control of PJM. Under the PJM Tariff, transmission service is provided on a region-wide, open-access basis using
the transmission facilities of the PJM transmission owners at rates based on the costs of transmission service.
The Utility Registrants' transmission rates are established based on a FERC approved formula as shown below:
ComEd
PECO
BGE
Pepco
DPL
ACE
Exelon’s Strategy and Outlook
Approval Date
January 2008
December 2019
April 2006
April 2006
April 2006
April 2006
In 2021, the businesses remained focused on maintaining industry leading operational excellence, meeting or exceeding their financial commitments, ensuring timely recovery on investments to enable
customer benefits, supporting enactment of clean energy policies, and continued commitment to corporate responsibility.
Exelon’s strategy is to improve reliability and operations, enhance the customer experience, and advance clean and affordable energy choices, while ensuring ratemaking mechanisms provide the
utilities fair financial returns. The Utility Registrants only invest in rate base where it provides a benefit to customers and the community by improving reliability and the service experience or otherwise
meeting customer needs. The Utility Registrants make these investments at the lowest reasonable cost to customers. Exelon seeks to leverage its scale and expertise across the utilities platform
through enhanced standardization and sharing of resources and best practices to achieve improved operational and financial results. Additionally, the Utility Registrants anticipate making significant
future investments in smart grid technology, transmission projects, gas infrastructure, and electric system improvement projects, providing greater reliability, improved service for our customers,
increased capacity to accommodate new technologies, and a stable return for the company.
Management continually evaluates growth opportunities aligned with Exelon’s businesses, assets and markets leveraging Exelon’s expertise in those areas and offering sustainable returns.
The Utility Registrants anticipate investing approximately $29 billion over the next four years in electric and natural gas infrastructure improvements and modernization projects, including smart grid
technology, storm
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hardening, advanced reliability technologies, and transmission projects, which is projected to result in an increase to current rate base of approximately $17 billion by the end of 2025. The Utility
Registrants invest in rate base where beneficial to customers and the community by increasing reliability and the service experience or otherwise meeting customer needs. These investments are
made at the lowest reasonable cost to customers.
In August 2021, the Utility Registrants announced a “path to clean” goal to collectively reduce their operations-driven emissions 50% by 2030 against a 2015 baseline, and to reach net zero operations-
driven emissions by 2050. This goal builds upon Exelon’s long-standing commitment to reducing our GHG emissions. See ITEM 1. BUSINESS — Environmental Matters and Regulation — Climate
Change for additional information.
Various market, financial, regulatory, legislative and operational factors could affect Exelon's success in pursuing its strategies. Exelon continues to assess infrastructure, operational, policy, and legal
solutions to these issues. See ITEM 1A. RISK FACTORS for additional information.
Employees
The Registrants strive to create a workplace that is diverse, innovative, and safe for their employees. In order to provide the services and products that their customers expect, the Registrants must
create the best teams. These teams must reflect the diversity of the communities that the Registrants serve. Therefore, the Registrants strive to attract highly qualified and diverse talent and routinely
review their hiring and promotion practices to ensure they maintain equitable and bias free processes to neutralize any unconscious bias. The Registrants provide growth opportunities, competitive
compensation and benefits, and a variety of training and development programs. The Registrants are committed to helping employees grow their skills and careers largely through numerous training
opportunities in technical, safety and business acumen areas, mentorship programs, and continuous feedback and development discussions and evaluations. Employees are encouraged to thrive
outside the workplace as well. The Registrants provide a full suite of wellness benefits targeted at supporting work-life balance, physical, mental and financial health, and industry-leading paid leave
policies.
The Registrants generally conduct an employee engagement survey every other year to help identify their successes and areas where they can grow. The survey results are reviewed with senior
management and the Exelon Board of Directors.
Diversity Metrics
The following tables show diversity metrics for all employees and management as of December 31, 2021. The Exelon numbers include all subsidiaries, including Generation.
Employees
Female
(a) (b)
(b)
People of Color
Aged <30
Aged 30-50
Aged >50
Total Employees
(c)
Management
(d)
Female
(a) (b)
(b)
People of Color
Aged <30
Aged 30-50
Aged >50
Within 10 years of retirement eligibility
Total Employees in Management
(c)
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
7,892
9,436
3,236
17,008
11,274
31,518
1,505
2,464
653
3,566
2,037
6,256
752
929
315
1,337
1,157
2,809
753
1,115
280
1,728
1,120
3,128
1,269
1,760
413
2,241
1,532
4,186
339
873
169
748
472
1,389
143
196
87
458
365
910
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
116
146
1
256
161
226
418
179
246
8
356
266
368
630
49
113
3
105
67
92
175
11
27
—
58
59
74
117
1,242
1,233
73
2,857
2,107
2,876
5,037
219
308
6
469
365
497
840
123
117
7
157
194
239
358
19
105
139
58
361
214
633
19
20
2
44
40
53
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__________
(a) The Registrants are devoted to creating an environment that allows women to stay in the workforce, grow with the company, and move up the ranks, all with parity of pay. Exelon employs an independent third-party vendor
to run regression analysis on all management positions each year. The analysis consistently shows that the Registrants have no systemic pay equity issues.
(b) This is based on self-disclosed information.
(c) Total employees represents the sum of the aged categories.
(d) Management is defined as executive/senior level officials and managers as well as all employees who have direct reports and supervisory responsibilities.
Turnover Rates
As turnover is inherent, management succession planning is performed and tracked for all executives and critical key manager positions. Management frequently reviews succession planning to ensure
the Registrants are prepared when positions become available.
The table below shows the average turnover rate for all employees for the last three years of 2019 to 2021. The Exelon numbers include all subsidiaries, including Generation.
Retirement Age
Voluntary
Non-Voluntary
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
4.27 %
2.98 %
0.98 %
3.82 %
1.49 %
0.56 %
3.47 %
1.76 %
1.06 %
3.70 %
1.36 %
0.94 %
4.02 %
2.06 %
0.96 %
4.37 %
2.36 %
1.87 %
4.10 %
1.11 %
0.32 %
3.17 %
1.20 %
0.68 %
Collective Bargaining Agreements
Approximately 37% of Exelon’s employees participate in CBAs. The following table presents employee information, including information about CBAs, as of December 31, 2021. The Exelon numbers
include all subsidiaries, including Generation.
Total Employees Covered by CBAs
Number of CBAs
CBAs New and Renewed in 2021
(a)
Total Employees Under CBAs
New and Renewed
in 2021
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
11,770
3,478
1,351
1,416
2,161
929
631
387
__________
(a) Does not include CBAs that were extended in 2021 while negotiations are ongoing for renewal.
32
2
2
1
5
1
2
2
20
8
2
2
—
—
—
—
—
6,476
3,478
1,351
—
—
—
—
—
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Environmental Matters and Regulation
On February 21, 2021, Exelon's Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies. The separation was completed on
February 1, 2022. See Note 26 — Separation of the Combined Notes to Consolidated Financial Statements for additional information. As such, the disclosures below do not include disclosures
associated with Generation.
The Registrants are subject to comprehensive and complex environmental legislation and regulation at the federal, state, and local levels, including requirements relating to climate change, air and
water quality, solid and hazardous waste, and impacts on species and habitats.
The Exelon Board of Directors is responsible for overseeing the management of environmental matters. Exelon has a management team to address environmental compliance and strategy, including
the CEO; the Senior Vice President and Chief Strategy and Sustainability Officer; as well as senior management of the Utility Registrants. Performance of those individuals directly involved in
environmental compliance and strategy is reviewed and affects compensation as part of the annual individual performance review process. The Exelon Board of Directors has delegated to the
Corporate Governance Committee the authority to oversee Exelon’s compliance with health, environmental, and safety laws and regulations and its strategies and efforts to protect and improve the
quality of the environment, including Exelon’s internal climate change and sustainability policies and programs, as discussed in further detail below. The respective Boards of the Utility Registrants
oversee environmental, health, and safety issues related to these companies.
Climate Change
As detailed below, the Registrants face climate change mitigation and transition risks as well as adaptation risks. Mitigation and transition risks include changes to the energy systems as a result of new
technologies, changing customer expectations and/or voluntary GHG goals, as well as local, state or federal regulatory requirements intended to reduce GHG emissions. Adaptation risk refers to risks
to the Registrants' facilities or operations that may result from changes in the physical climate, such as changes to temperature, weather patterns and sea level.
Climate Change Mitigation and Transition
The Registrants support comprehensive federal climate legislation that addresses the urgent need to substantially reduce national GHG emissions while providing appropriate protections for
consumers, businesses, and the economy. In the absence of comprehensive federal legislation, Exelon supports EPA moving forward with meaningful regulation of GHG emissions under the Clean Air
Act.
The Registrants currently are subject to, and may become subject to additional, federal and/or state legislation and/or regulations addressing GHG emissions. GHG emission sources associated with
the Registrants include natural gas (methane) leakage on the natural gas systems, sulfur hexafluoride (SF6) leakage from electric transmission and distribution operations, refrigerant leakage from
chilling and cooling equipment, and fossil fuel combustion in motor vehicles. In addition, PECO, BGE, and DPL distribute natural gas; and consumers' use of such natural gas produces GHG
emissions.
Since its inception, Exelon has positioned itself as a leader in climate change mitigation. In 2020, Exelon's Scope 1 and 2 GHG emissions, as revised following the separation, were just over 5.6 million
metric tons carbon dioxide equivalent using the World Resources Institute Corporate Standard Market-based accounting. Of these emissions, 551,000 metric tons are considered to be operations-
driven and in more direct control of our employees and processes. The remaining 5 million metric tons, approximately 90%, are the indirect emissions associated with electric distribution and
transmission system uses and losses resulting from the Utility Registrant's delivery of electricity to their customers. These system uses and losses are driven primarily by customer use and generation
assets on the grid that are not under our ownership.
In August 2021, the Utility Registrants announced a "path to clean" goal to collectively reduce their operations-driven emissions 50% by 2030 against a 2015 baseline, and to reach net zero operations-
driven emissions by 2050, while also supporting customers and communities to achieve their clean energy and emissions goals. This goal builds upon Exelon's long-standing commitment to reducing
our GHG emissions. The Utility Registrants "path to clean" will include efficiency and clean electricity for operations, vehicle fleet electrification, equipment
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and processes to reduce sulfur hexafluoride (SF6) leakage, modern natural gas infrastructure to minimize methane leaks and increase safety and reliability, and investment and collaboration to develop
new technologies. Over the next 10 years, Exelon anticipates investing approximately $4.8 billion towards its "path to clean" goal. Exelon believes it has line of sight into solutions available today to
achieve 80% of its "path to clean" goal and that achieving full net-zero operations will require some technology advancement and continued policy support. Exelon is laying the groundwork by
partnering with national labs, universities and research consortia to research, develop and pilot clean technologies. The Utility Registrants are also driving customer-driven emissions reductions in their
communities through some of the nation's largest energy efficiency programs. During 2022 - 2025, estimated energy efficiency investments across the Utility Registrants total $3.4 billion. These
programs enable customer savings through home energy audits, lighting discounts, appliance recycling, home improvement rebates, equipment upgrade incentives and innovative programs like smart
thermostats and combined heat and power programs.
The electric sector plays a key role in lowering GHG emissions across much of the economy. Electrification, where feasible for transportation, buildings, and industry coupled with simultaneous
decarbonization of electric generation can be a key lever for emissions reductions. To support this transition, Exelon is advocating for public policy supportive of vehicle electrification, investing in
enabling infrastructure and technology, and supporting customer education and adoption. In addition, the Utility Registrants will electrify 30% of their own vehicle fleet by 2025, increasing to 50% by
2030. Exelon also continues to explore other decarbonization opportunities, supporting pilots of emerging energy technologies and clean fuels to support both operational and customer-driven
emissions reductions.
International Climate Change Agreements. At the international level, the United States is a party to the United Nations Framework Convention on Climate Change (UNFCCC). The Parties to the
UNFCCC adopted the Paris Agreement at the 21st session of the UNFCCC Conference of the Parties (COP 21) on December 12, 2015. Under the Agreement, which became effective on November 4,
2016, the parties committed to try to limit the global average temperature increase and to develop national GHG reduction commitments. On November 4, 2020, the United States formally withdrew
from the Paris Agreement, retracting its commitment to reduce domestic GHG emissions by 26%-28% by 2025 compared with 2005 levels. However, on January 20, 2021, President Biden accepted
the Paris Agreement, which resulted in the United States’ formal re-entry on February 19, 2021. The Biden administration has announced its intent to pursue ambitious GHG reductions in the United
States and internationally, and the United States has now set an economy-wide target of reducing its net GHG emissions by 50-52% below 2005 levels by 2030. The 2021 UNFCCC Conference of the
Parties (COP26) and resulting Glasgow Climate Pact indicated important global support for the Paris Agreement and continued progress toward decarbonization.
Federal Climate Change Legislation and Regulation. It is uncertain whether federal legislation to significantly reduce GHG emissions will be enacted in the near-term. On November 15, 2021,
President Biden signed the Infrastructure Investment and Jobs Act's (IIJA) into law, which does include provisions intended to address climate change. Exelon anticipates pursuing opportunities under
IIJA.
Regulation of GHGs from Power Plants under the Clean Air Act. The EPA’s 2015 Clean Power Plan (CPP) established regulations addressing carbon dioxide emissions from existing fossil-fired
power plants under Clean Air Act Section 111(d). The CPP’s carbon pollution limits could be met through changes to the electric generation system, including shifting generation from higher-emitting
units to lower- or zero-emitting units, as well as the development of new or expanded zero-emissions generation. In July 2019, the EPA published its final Affordable Clean Energy rule, which repealed
the CPP and replaced it with less stringent emissions guidelines for existing fossil-fired power plants based on heat rate improvement measures that could be achieved within the fence line of individual
plants. Exelon, together with a coalition of other electric utilities, filed a lawsuit in the U.S. Court of Appeals for the D.C. Circuit on September 6, 2019, challenging the Affordable Clean Energy rule as
unlawful. This lawsuit was consolidated with separate challenges to the Affordable Clean Energy rule filed by various states, non-governmental organizations, and business coalitions. On January 19,
2021, the U.S. Court of Appeals for the D.C. Circuit held the Affordable Clean Energy Rule to be unlawful, vacated the rule, and remanded it to the EPA. On October 29, 2021, the Supreme Court
granted certiorari to examine the extent of EPA's authority to regulate GHGs from power plants; a decision is expected in 2022. The EPA has indicated it will promulgate new GHG limits for existing
power plants. Increased regulation of GHG emissions from power plants could increase the cost of electricity delivered or sold by The Registrants. As of February 1, 2022, the Registrants no longer
directly own electric generation plants.
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State Climate Change Legislation and Regulation. A number of states in which the Registrants operate have state and regional programs to reduce GHG emissions and renewable and other
portfolio standards, which impact the power sector. See discussion below for additional information on renewable and other portfolio standards.
Eleven northeast and mid-Atlantic states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia) currently participate
in the RGGI, which is in the process of strengthening its requirements. The program requires most fossil fuel-fired power plants in the region to hold allowances, purchased at auction, for each ton of
CO2 emissions. Non-emitting resources do not have to purchase or hold these allowances. In October 2019, the Governor of Pennsylvania issued an Executive Order directing the PA DEP to begin a
rulemaking process to allow Pennsylvania to join the RGGI, with the goal of reducing carbon emissions from the electricity sector. On November 7, 2020, the PA DEP proposed its rule, which is
anticipated to support Pennsylvania's participation in RGGI beginning sometime in 2022.
Broader state programs impact other sectors as well, such as the District of Columbia's Clean Energy DC Omnibus Act and cross-sector GHG reduction plans, which resulted in recent requirements for
Pepco to develop 5-year and 30-year decarbonization programs and strategies. Maryland has a statewide GHG reduction mandate to reduce GHG emissions by 40% no later than 2030, which it
expects to meet and surpass. New Jersey accelerated its goals through Executive Order 274, which establishes an interim goal of 50% reductions below 2006 levels by 2030 and affirms its goal of
achieving 80% reductions by 2050 and includes programs to drive greater amounts of electrified transportation. Finally, the Clean Energy Law establishes decarbonization requirements for Illinois as
well as programs to support the retention and development of emissions-free sources of electricity. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for
additional information on the Clean Energy Law.
The Registrants cannot predict the nature of future regulations or how such regulations might impact future financial statements.
Renewable and Clean Energy Standards. The states where Exelon operates have adopted some form of renewable or clean energy procurement requirement. These standards impose varying
levels of mandates for procurement of renewable or clean electricity (the definition of which varies by state) and/or energy efficiency. These are generally expressed as a percentage of annual electric
load, often increasing by year. The Utility Registrants comply with these various requirements through purchasing qualifying renewables, implementing efficiency programs, acquiring sufficient credits
(e.g., RECs), paying an alternative compliance payment, and/or a combination of these compliance alternatives. The Utility Registrants are permitted to recover from retail customers the costs of
complying with their state RPS requirements, including the procurement of RECs or other alternative energy resources. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated
Financial Statements for additional information.
Climate Change Adaptation
The Registrants' facilities and operations are subject to the global impacts of climate change. Long-term shifts in climactic patterns, such as sustained higher temperatures and sea level rise, may
present challenges for the Registrants and their service territories. Exelon believes its operations could be significantly affected by the physical risks of climate change. See ITEM 1A. RISK FACTORS,
The Registrants are subject to risks associated with climate change, for additional information.
The Registrants' assets undergo seasonal readiness efforts to ensure they are ready for the weather projections of the summer and winter months. The Registrants consider and review national
climate assessments to inform their planning. Each of the Utility Registrants also has well establish system recovery plans and is investing in its systems to install advanced equipment and reinforce
the local electric system, making it more weather resistant and less vulnerable to anticipated storm damage.
Other Environmental Regulation
Water Quality
Under the federal Clean Water Act, NPDES permits for discharges into waterways are required to be obtained from the EPA or from the state environmental agency to which the permit program has
been delegated, and
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permits must be renewed periodically. Certain of Exelon's facilities discharge water into waterways and are therefore subject to these regulations and operate under NPDES permits.
Under Clean Water Act Section 404 and state laws and regulations, the Registrants may be required to obtain permits for projects involving dredge or fill activities in Waters of the United States.
Where Registrants’ facilities are required to secure a federal license or permit for activities that may result in a discharge to covered waters, they may be required to obtain a state water quality
certification under Clean Water Act section 401.
Solid and Hazardous Waste and Environmental Remediation
CERCLA provides for response and removal actions coordinated by the EPA in the event of threatened releases of hazardous substances and authorizes the EPA either to clean up sites at which
hazardous substances have created actual or potential environmental hazards or to order persons responsible for the situation to do so. Under CERCLA, generators and transporters of hazardous
substances, as well as past and present owners and operators of hazardous waste sites, are strictly, jointly and severally liable for the cleanup costs of hazardous waste at sites, many of which are
listed by the EPA on the National Priorities List (NPL). These PRPs can be ordered to perform a cleanup, can be sued for costs associated with an EPA-directed cleanup, may voluntarily settle with the
EPA concerning their liability for cleanup costs, or may voluntarily begin a site investigation and site remediation under state oversight. Most states have also enacted statutes that contain provisions
substantially similar to CERCLA. Such statutes apply in many states where the Registrants currently own or operate, or previously owned or operated, facilities, including Delaware, Illinois, Maryland,
New Jersey, and Pennsylvania and the District of Columbia. In addition, RCRA governs treatment, storage and disposal of solid and hazardous wastes and cleanup of sites where such activities were
conducted.
The Registrants’ operations have in the past, and may in the future, require substantial expenditures in order to comply with these Federal and state environmental laws. Under these laws, the
Registrants may be liable for the costs of remediating environmental contamination of property now or formerly owned by them and of property contaminated by hazardous substances generated by
them. The Registrants own or lease a number of real estate parcels, including parcels on which their operations or the operations of others may have resulted in contamination by substances that are
considered hazardous under environmental laws. The Registrants and their subsidiaries are, or could become in the future, parties to proceedings initiated by the EPA, state agencies, and/or other
responsible parties under CERCLA and RCRA or similar state laws with respect to a number of sites or may undertake to investigate and remediate sites for which they may be subject to enforcement
actions by an agency or third-party.
ComEd’s and PECO’s environmental liabilities primarily arise from contamination at former MGP sites. ComEd, pursuant to an ICC order, and PECO, pursuant to settlements of natural gas distribution
rate cases with the PAPUC, have an on-going process to recover environmental remediation costs of the MGP sites through a provision within customer rates. BGE, ACE, Pepco, and DPL do not have
material contingent liabilities relating to MGP sites. The amount to be expended in 2022 for compliance with environmental remediation related to contamination at former MGP sites and other gas
purification sites is estimated to be approximately $54 million which consists primarily of $48 million at ComEd.
As of December 31, 2021, the Registrants have established appropriate contingent liabilities for environmental remediation requirements. In addition, the Registrants may be required to make
significant additional expenditures not presently determinable for other environmental remediation costs.
See Note 3 — Regulatory Matters and Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information regarding the Registrants’
environmental matters, remediation efforts, and related impacts to the Registrants’ Consolidated Financial Statements.
24
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Information about our Executive Officers as of February 25, 2022
Exelon
Name
Crane, Christopher M.
Position
Age
63 Chief Executive Officer, Exelon;
President, Exelon
Butler, Calvin G.
52 Senior Executive Vice President, Exelon; Chief Operations Officer, Exelon
Senior Executive Vice President, Exelon; Chief Executive Officer, Exelon Utilities
Chief Executive Officer, BGE
Glockner, David
Littleton, Gayle E.
Quiniones, Gil
61 Executive Vice President, Compliance and Audit, Exelon
Chief Compliance Officer, Citadel LLC
Regional Director, U.S. Securities and Exchange Commission
49 Executive Vice President, General Counsel, Exelon
Partner, Jenner & Block LLP
55 Chief Executive Officer, ComEd
President and Chief Executive Officer, New York Power Authority
Innocenzo, Michael A.
56 President and Chief Executive Officer, PECO
Senior Vice President and Chief Operations Officer, PECO
Khouzami, Carim V.
46 Chief Executive Officer, BGE
Anthony, J. Tyler
Nigro, Joseph
Souza, Fabian E.
Senior Vice President, Chief Operating Officer, Exelon Utilities
Senior Vice President, Chief Financial Officer, Exelon Utilities
57 President and Chief Executive Officer, PHI
Senior Vice President and Chief Operating Officer, PHI, Pepco, DPL, and ACE
57 Senior Executive Vice President and Chief Financial Officer, Exelon
Executive Vice President, Exelon; Chief Executive Officer, Constellation
51 Senior Vice President and Corporate Controller, Exelon
Senior Vice President and Deputy Controller, Exelon
Vice President, Controller and Chief Accounting Officer, The AES Corporation
Period
2012 - Present
2008 - Present
2021 - Present
2019 - 2021
2014 - 2019
2020 - Present
2017 - 2020
2013 - 2017
2020- Present
2015 -2020
2021 - Present
2011 - 2021
2018 - Present
2012 - 2018
2019 - Present
2018 - 2019
2016 - 2018
2021 - Present
2016 - 2021
2018 - Present
2013 - 2018
2018 - Present
2017 - 2018
2015 - 2017
25
Table of Contents
ComEd
Name
Quiniones, Gil
Position
Age
55 Chief Executive Officer, ComEd
President and Chief Executive Officer, New York Power Authority
Donnelly, Terence R.
61 President and Chief Operating Officer, ComEd
Trpik, Joseph
Executive Vice President and Chief Operating Officer, ComEd
52
Interim Senior Vice President, Chief Financial Officer and Treasurer, ComEd
Senior Vice President, Chief Financial Officer, Exelon Utilities
Senior Vice President, Chief Financial Officer and Treasurer, ComEd
Rippie, E. Glenn
61 Senior Vice President and General Counsel, ComEd
Partner, Jenner & Block LLP
Partner and Chief Financial Officer, Rooney, Rippie & Ratnaswamy, LLP
Washington, Melissa
52 Senior Vice President, Customer Operations and Chief Customer Officer, ComEd
Perez, David
Senior Vice President, Governmental and External Affairs, ComEd
Vice President, Governmental and External Affairs, ComEd
Vice President, External Affairs and Large Customer Services, ComEd
52 Senior Vice President, Distribution Operations, ComEd
Vice President, Transmission and Substation, ComEd
Blaise, M. Michelle
60 Senior Vice President, Technical Services, ComEd
26
Period
2021 - Present
2011 - 2021
2018 - Present
2012 - 2018
2021 - Present
2018 - Present
2009 - 2018
2022 - Present
2019 - 2021
2010 - 2019
2021 - Present
2019 - 2021
2019 -2019
2016 - 2019
2019 - Present
2016 - 2019
2014 - Present
Table of Contents
PECO
Name
Innocenzo, Michael A.
McDonald, John
Stefani, Robert J.
Murphy, Elizabeth A.
Webster Jr., Richard G.
Williamson, Olufunmilayo
Gay, Anthony
Position
Age
56 President and Chief Executive Officer, PECO
Senior Vice President and Chief Operations Officer, PECO
64 Senior Vice President and Chief Operations Officer, PECO
Vice President, Integration, PHI
48 Senior Vice President, Chief Financial Officer and Treasurer, PECO
Vice President, Corporate Development, Exelon
62 Senior Vice President, Governmental and External Affairs, PECO
60 Vice President, Regulatory Policy and Strategy, PECO
43 Senior Vice President, Customer Operations, PECO
Senior Vice President, Chief Commercial Risk Officer, Exelon
Vice President, Commercial Risk Management, Exelon
56 Vice President and General Counsel, PECO
Vice President, Governmental and External Affairs, PECO
Period
2018 - Present
2012 - 2018
2018 - Present
2016 - 2018
2018 - Present
2015 - 2018
2016 - Present
2012 - Present
2020 - Present
2017 - 2020
2015 - 2017
2019 - Present
2016 - 2019
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Table of Contents
BGE
Name
Khouzami, Carim V.
Dickens, Derrick
Vahos, David M.
Núñez, Alexander G.
Case, Mark D.
Galambos, Denise
Position
Age
46 Chief Executive Officer, BGE
Senior Vice President, Chief Operating Officer, Exelon Utilities
Senior Vice President, Chief Financial Officer, Exelon Utilities
56 Senior Vice President and Chief Operating Officer, BGE
Senior Vice President, Customer Operations, PHI
Vice President, Technical Services, BGE
49 Senior Vice President, Chief Financial Officer and Treasurer, BGE
50 Senior Vice President, Governmental, External and Regulatory Affairs, BGE
Senior Vice President, Regulatory Affairs and Strategy, BGE
Senior Vice President, Regulatory and External Affairs, BGE
60 Vice President, Strategy and Regulatory Affairs, BGE
59 Senior Vice President, Customer Operations, BGE
Vice President, Utility Oversight, Exelon Utilities
VP, Human Resources, BGE
Associate General Counsel, Exelon
Ralph, David
55 Vice President and General Counsel, BGE
Associate General Counsel, BGE
Assistant General Counsel, Exelon
City Attorney, City of Baltimore
28
Period
2019 - Present
2018 - 2019
2016 - 2018
2021 - Present
2020 - 2021
2016 - 2020
2016 - Present
2021 - Present
2020 - 2021
2016 - 2020
2012 - Present
2021 - Present
2020 - 2021
2018 - 2020
2012 - 2017
2021 - Present
2019 - 2021
2017 - 2019
2016 - 2017
Table of Contents
PHI, Pepco, DPL, and ACE
Name
Anthony, J. Tyler
Olivier, Tamla
Position
Age
57 President and Chief Executive Officer, PHI
Senior Vice President and Chief Operating Officer, PHI, Pepco, DPL, and ACE
49 Senior Vice President and Chief Operating Officer, PHI, Pepco, DPL, and ACE
Senior Vice President, Customer Operations, BGE
Senior Vice President, Constellation NewEnergy, Inc.
Barnett, Phillip S.
58 Senior Vice President, Chief Financial Officer and Treasurer, PHI, Pepco, DPL, and ACE
Senior Vice President and Chief Financial Officer, PECO
Treasurer, PECO
Oddoye, Rodney
45 Senior Vice President, Governmental & External Affairs, PHI, Pepco, DPL, and ACE
Bancroft, Anne
Senior Vice President, Governmental and External Affairs, BGE
Vice President, Customer Operations, BGE
Director, Northeast Regional Electric Operations, BGE
55 Vice President and General Counsel, PHI
Associate General Counsel, Exelon
Assistant General Counsel, Exelon
Bell-Izzard, Morlon
56 Senior Vice President, Customer Operations & Chief Customer Officer, PHI
O'Donnell, Morgan
46 Vice President, Regulatory Policy and Strategy, DC/MD
Vice President, Customer Operations, PHI
Director, Utility Performance Assessment, Exelon
Director, Financial Planning and Analysis, PHI
Director, Regulatory Strategy & Revenue Policy, PHI
Manager, Regulatory Analysis, PHI
Humphrey, Marissa
42 Vice President, Regulatory Policy and Strategy, PHI, DPL, and ACE
Vice President Finance, Exelon Utilities
Vice President, Finance, PHI
ITEM 1A.
RISK FACTORS
Period
2021 - Present
2016 - 2021
2021 - Present
2020 - 2021
2016 - 2020
2018 - Present
2007 - 2018
2012 - 2018
2021 - Present
2020 - 2021
2018 - 2020
2016 - 2018
2021 - Present
2017 - 2021
2010 - 2017
2021 - Present
2019 - 2021
2016 - 2019
2021 - Present
2020 - 2021
2019 - 2020
2016 - 2019
2021 - Present
2019 - 2020
2016 - 2019
On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies. The separation was completed on
February 1, 2022. See Note 26 — Separation of the Combined Notes to Consolidated Financial Statements for additional information. As such, the risk factors discussed below do not include those
associated with Generation.
Each of the Registrants operates in a complex market and regulatory environment that involves significant risks, many of which are beyond that Registrant’s direct control. Such risks, which could
negatively affect one or more of the Registrants’ consolidated financial statements, fall primarily under the categories below:
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Risks related to market and financial factors primarily include:
•
•
•
the demand for electricity, reliability of service, and affordability in the markets where the Utility Registrants conduct their business,
the ability of the Utility Registrants to operate their respective transmission and distribution assets, their ability to access capital markets, and the impacts on their results of operations due to
the global outbreak (pandemic) of the 2019 novel coronavirus (COVID-19), and
emerging technologies and business models, including those related to climate change mitigation and transition to a low carbon economy.
Risks related to legislative, regulatory, and legal factors primarily include changes to, and compliance with, the laws and regulations that govern:
•
•
•
utility regulatory business models,
environmental and climate policy, and
tax policy.
Risks related to operational factors primarily include:
•
•
•
changes in the global climate could produce extreme weather events, which could put the Registrant’s facilities at risk, and such changes could also affect the levels and patterns of demand
for energy and related services,
the ability of the Utility Registrants to maintain the reliability, resiliency, and safety of their energy delivery systems, which could affect their ability to deliver energy to their customers and affect
their operating costs, and
physical and cyber security risks for the Utility Registrants as the owner-operators of transmission and distribution facilities.
Risks related to the separation primarily include:
•
•
challenges to achieving the benefits of separation and
performance by Exelon and Generation under the transaction agreements, including indemnification responsibilities.
There may be further risks and uncertainties that are not presently known or that are not currently believed to be material that could negatively affect the Registrants' consolidated financial statements
in the future.
Risks Related to Market and Financial Factors
The Registrants are potentially affected by emerging technologies that could over time affect or transform the energy industry (All Registrants).
Advancements in power generation technology, including commercial and residential solar generation installations and commercial micro turbine installations, are improving the cost-effectiveness of
customer self-supply of electricity. Improvements in energy storage technology, including batteries and fuel cells, could also better position customers to meet their around-the-clock electricity
requirements. Improvements in energy efficiency of lighting, appliances, equipment and building materials will also affect energy consumption by customers. Changes in power generation, storage, and
use technologies could have significant effects on customer behaviors and their energy consumption.
These developments could affect levels of customer-owned generation, customer expectations, and current business models and make portions of the Utility Registrants' transmission and/or
distribution facilities uneconomic prior to the end of their useful lives. These factors could affect the Registrants’ consolidated financial statements through, among other things, increased operating and
maintenance expenses, increased capital
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expenditures, and potential asset impairment charges or accelerated depreciation over shortened remaining asset useful lives.
Market performance and other factors could decrease the value of employee benefit plan assets and could increase the related employee benefit plan obligations,
which then could require significant additional funding (All Registrants).
Disruptions in the capital markets and their actual or perceived effects on particular businesses and the greater economy could adversely affect the value of the investments held within Exelon’s
employee benefit plan trusts. The asset values are subject to market fluctuations and will yield uncertain returns, which could fall below Exelon's projected return rates. A decline in the market value of
the pension and OPEB plan assets would increase the funding requirements associated with Exelon’s pension and OPEB plan obligations. Additionally, Exelon’s pension and OPEB plan liabilities are
sensitive to changes in interest rates. As interest rates decrease, the liabilities increase, potentially increasing benefit costs and funding requirements. Changes in demographics, including increased
numbers of retirements or changes in life expectancy assumptions or changes to Social Security or Medicare eligibility requirements could also increase the costs and funding requirements of the
obligations related to the pension and OPEB plans. See Note 15 — Retirement Benefits of the Combined Notes to Consolidated Financial Statements for additional information.
The Registrants could be negatively affected by unstable capital and credit markets (All Registrants).
The Registrants rely on the capital markets, particularly for publicly offered debt, as well as the banking and commercial paper markets, to meet their financial commitments and short-term liquidity
needs. Disruptions in the capital and credit markets in the United States or abroad could negatively affect the Registrants’ ability to access the capital markets or draw on their respective bank revolving
credit facilities. The banks may not be able to meet their funding commitments to the Registrants if they experience shortages of capital and liquidity or if they experience excessive volumes of
borrowing requests within a short period of time. The inability to access capital markets or credit facilities, and longer-term disruptions in the capital and credit markets as a result of uncertainty,
changing or increased regulation, reduced alternatives, or failures of significant financial institutions could result in the deferral of discretionary capital expenditures, or require a reduction in dividend
payments or other discretionary uses of cash. In addition, the Registrants have exposure to worldwide financial markets, including Europe, Canada, and Asia. Disruptions in these markets could reduce
or restrict the Registrants’ ability to secure sufficient liquidity or secure liquidity at reasonable terms. As of December 31, 2021, approximately 20%, 17%, and 16% of the Registrants’ available credit
facilities (not including Generation's credit facilities) were with European, Canadian, and Asian banks, respectively. See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated
Financial Statements for additional information on the credit facilities.
If any of the Registrants were to experience a downgrade in its credit ratings to below investment grade or otherwise fail to satisfy the credit standards in its
agreements with its counterparties or regulatory financial requirements, it would be required to provide significant amounts of collateral that could affect its liquidity
and could experience higher borrowing costs (All Registrants).
The Utility Registrants' operating agreements with PJM and PECO's, BGE's, and DPL's natural gas procurement contracts contain collateral provisions that are affected by their credit rating and market
prices. If certain wholesale market conditions were to exist and the Utility Registrants were to lose their investment grade credit ratings (based on their senior unsecured debt ratings), they would be
required to provide collateral in the forms of letters of credit or cash, which could have a material adverse effect upon their remaining sources of liquidity. PJM collateral posting requirements will
generally increase as market prices rise and decrease as market prices fall. Collateral posting requirements for PECO, BGE, and DPL, with respect to their natural gas supply contracts, will generally
increase as forward market prices fall and decrease as forward market prices rise. If the Utility Registrants were downgraded, they could experience higher borrowing costs as a result of the
downgrade. In addition, changes in ratings methodologies by the agencies could also have an adverse negative impact on the ratings of the Utility Registrants.
The Utility Registrants conduct their respective businesses and operate under governance models and other arrangements and procedures intended to assure that the Utility Registrants are treated as
separate,
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independent companies, distinct from Exelon and other Exelon subsidiaries in order to isolate the Utility Registrants from Exelon and other Exelon subsidiaries in the event of financial difficulty at
Exelon or another Exelon subsidiary. These measures (commonly referred to as “ring-fencing”) could help avoid or limit a downgrade in the credit ratings of the Utility Registrants in the event of a
reduction in the credit rating of Exelon. Despite these ring-fencing measures, the credit ratings of the Utility Registrants could remain linked, to some degree, to the credit ratings of Exelon.
Consequently, a reduction in the credit rating of Exelon could result in a reduction of the credit rating of some or all of the Utility Registrants. A reduction in the credit rating of a Utility Registrant could
have a material adverse effect on the Utility Registrant.
See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources — Credit Matters — Market
Conditions and Security Ratings for additional information regarding the potential impacts of credit downgrades on the Registrants’ cash flows.
The impacts of significant economic downturns or increases in customer rates, could lead to decreased volumes delivered and increased expense for uncollectible
customer balances (All Registrants).
The impacts of significant economic downturns on the Utility Registrants' customers and the related regulatory limitations on residential service terminations for the Utility Registrants, could result in an
increase in the number of uncollectible customer balances and related expense. Further, increases in customer rates, including those related to increases in purchased power and natural gas prices,
could result in declines in customer usage and lower revenues for the Utility Registrants that do not have decoupling mechanisms.
See ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK for additional information on the Registrants’ credit risk.
The Registrants' results were negatively affected by the impacts of COVID-19 (All Registrants).
COVID-19 has disrupted economic activity in the Registrants’ respective markets and negatively affected the Registrants’ results of operations. The estimated impact of COVID-19 to the Utility
Registrants’ Net income was approximately $75 million for the year ended December 31, 2020 and was not material for the year ended December 31, 2021. The Registrants cannot predict the full
extent of the impacts of COVID-19, which will depend on, among other things, the rate, and public perceptions of the effectiveness, of vaccinations and rate of resumption of business activity. In
addition, any future widespread pandemic or other local or global health issue could adversely affect customer demand and the Registrants’ ability to operate their transmission and distribution assets.
See Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Executive Overview for additional information.
The Registrants could be negatively affected by the impacts of weather (All Registrants).
Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities. Temperatures above normal levels in the summer tend to increase summer
cooling electricity demand and revenues, and temperatures below normal levels in the winter tend to increase winter heating electricity and gas demand and revenues. Moderate temperatures
adversely affect the usage of energy and resulting operating revenues at PECO and DPL Delaware. Due to revenue decoupling, operating revenues from electric distribution at ComEd, BGE, Pepco,
DPL Maryland, and ACE are not affected by abnormal weather.
Extreme weather conditions or damage resulting from storms could stress the Utility Registrants' transmission and distribution systems, communication systems, and technology, resulting in increased
maintenance and capital costs and limiting each company’s ability to meet peak customer demand. First and third quarter financial results, in particular, are substantially dependent on weather
conditions, and could make period comparisons less relevant.
Climate change projections suggest increases to summer temperature and humidity trends, as well as more erratic precipitation and storm patterns over the long-term in the areas where the Utility
Registrants have transmission and distribution assets. The frequency in which weather conditions emerge outside the current expected climate norms could contribute to weather-related impacts
discussed above.
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Long-lived assets, goodwill, and other assets could become impaired (All Registrants).
Long-lived assets represent the single largest asset class on the Registrants’ statements of financial position. In addition, Exelon, ComEd, and PHI have material goodwill balances.
The Registrants evaluate the recoverability of the carrying value of long-lived assets to be held and used whenever events or circumstances indicating a potential impairment exist. Factors such as, but
not limited to, the business climate, including current and future energy and market conditions, environmental regulation, and the condition of assets are considered.
ComEd and PHI perform an assessment for possible impairment of their goodwill at least annually or more frequently if an event occurs or circumstances change that would more likely than not reduce
the fair value of the reporting units below their carrying amount. Regulatory actions or changes in significant assumptions, including discount and growth rates, utility sector market performance and
transactions, projected operating and capital cash flows for ComEd’s, Pepco’s, DPL’s, and ACE’s business, and the fair value of debt, could potentially result in future impairments of Exelon’s,
ComEd's, and PHI’s goodwill.
An impairment would require the Registrants to reduce the carrying value of the long-lived asset or goodwill to fair value through a non-cash charge to expense by the amount of the impairment. See
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Critical Accounting Policies and Estimates, Note 8 — Property, Plant, and
Equipment, Note 12 — Asset Impairments and Note 13 — Intangible Assets of the Combined Notes to the Consolidated Financial Statements for additional information on long-lived asset impairments
and goodwill impairments.
The Registrants could incur substantial costs in the event of non-performance by third-parties under indemnification agreements, or when the Registrants have
guaranteed their performance (All Registrants).
The Registrants have entered into various agreements with counterparties that require those counterparties to reimburse a Registrant and hold it harmless against specified obligations and claims. To
the extent that any of these counterparties are affected by deterioration in their creditworthiness or the agreements are otherwise determined to be unenforceable, the affected Registrant could be held
responsible for the obligations. Each of the Utility Registrants has transferred its former generation business to a third party and in each case the transferee has agreed to assume certain obligations
and to indemnify the applicable Utility Registrant for such obligations. In connection with the restructurings under which ComEd, PECO, and BGE transferred their generating assets to Generation,
Generation assumed certain of ComEd’s, PECO’s, and BGE's rights and obligations with respect to their former generation businesses. Further, ComEd, PECO, and BGE have entered into
agreements with third parties under which the third-party agreed to indemnify ComEd, PECO, or BGE for certain obligations related to their respective former generation businesses that have been
assumed by Generation as part of the restructuring. If the third-party, Generation, or the transferee of Pepco's, DPL's, or ACE’s generation facilities experienced events that reduced its creditworthiness
or the indemnity arrangement became unenforceable, the applicable Utility Registrant could be liable for any existing or future claims. In addition, the Utility Registrants have residual liability under
certain laws in connection with their former generation facilities.
The Registrants have issued indemnities to third parties regarding environmental or other matters in connection with purchases and sales of assets, including several of the Utility Registrants in
connection with Generation's absorption of their former generating assets. The Registrants could incur substantial costs to fulfill their obligations under these indemnities.
The Registrants have issued guarantees of the performance of third parties, which obligate the Registrants to perform in the event that the third parties do not perform. In the event of non-performance
by those third parties, the Registrants could incur substantial cost to fulfill their obligations under these guarantees.
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Risks Related to Legislative, Regulatory, and Legal Factors
The Registrants' businesses are highly regulated and could be negatively affected by legislative and/or regulatory actions (All Registrants).
Substantial aspects of the Registrants' businesses are subject to comprehensive Federal or state legislation and/or regulation.
The Utility Registrants' consolidated financial statements are heavily dependent on the ability of the Utility Registrants to recover their costs for the retail purchase and distribution of power and natural
gas to their customers.
Fundamental changes in regulations or adverse legislative actions affecting the Registrants’ businesses would require changes in their business planning models and operations. The Registrants
cannot predict when or whether legislative or regulatory proposals could become law or what their effect would be on the Registrants.
Changes in the Utility Registrants' respective terms and conditions of service, including their respective rates, are subject to regulatory approval proceedings and/or
negotiated settlements that are at times contentious, lengthy, and subject to appeal, which lead to uncertainty as to the ultimate result and which could introduce time
delays in effectuating rate changes (All Registrants).
The Utility Registrants are required to engage in regulatory approval proceedings as a part of the process of establishing the terms and rates for their respective services. These proceedings typically
involve multiple parties, including governmental bodies and officials, consumer advocacy groups, and various consumers of energy, who have differing concerns but who have the common objective of
limiting rate increases or even reducing rates. Decisions are subject to appeal, potentially leading to additional uncertainty associated with the approval proceedings. The potential duration of such
proceedings creates a risk that rates ultimately approved by the applicable regulatory body may not be sufficient for a Utility Registrant to recover its costs by the time the rates become effective.
Established rates are also subject to subsequent prudency reviews by state regulators, whereby various portions of rates could be adjusted, subject to refund or disallowed, including recovery
mechanisms for costs associated with the procurement of electricity or gas, credit losses, MGP remediation, smart grid infrastructure, and energy efficiency and demand response programs. In certain
instances, the Utility Registrants could agree to negotiated settlements related to various rate matters, customer initiatives, or franchise agreements. These settlements are subject to regulatory
approval. The ultimate outcome and timing of regulatory rate proceedings have a significant effect on the ability of the Utility Registrants to recover their costs or earn an adequate return. See Note 3 —
Regulatory Matters of the Combined Notes to the Consolidated Financial Statements for additional information.
The Registrants could be subject to higher costs and/or penalties related to mandatory reliability standards, including the likely exposure of the Utility Registrants to
the results of PJM’s RTEP and NERC compliance requirements (All Registrants).
The Utility Registrants as users, owners, and operators of the bulk power transmission system are subject to mandatory reliability standards promulgated by NERC and enforced by FERC. PECO,
BGE, and DPL, as operators of natural gas distribution systems, are also subject to mandatory reliability standards of the U.S. Department of Transportation. The standards are based on the functions
that need to be performed to ensure the bulk power system operates reliably and are guided by reliability and market interface principles. Compliance with or changes in the reliability standards could
subject the Registrants to higher operating costs and/or increased capital expenditures. In addition, the ICC, PAPUC, MDPSC, DCPSC, DEPSC, and NJBPU impose certain distribution reliability
standards on the Utility Registrants. If the Utility Registrants were found in non-compliance with the Federal and state mandatory reliability standards, they could be subject to remediation costs as well
as sanctions, which could include substantial monetary penalties.
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The Registrants could incur substantial costs to fulfill their obligations related to environmental and other matters (All Registrants).
The Registrants are subject to extensive environmental regulation and legislation by local, state, and Federal authorities. These laws and regulations affect the manner in which the Registrants conduct
their operations and make capital expenditures including how they handle air and water emissions, hazardous and solid waste, and activities affecting surface waters, groundwater, and aquatic and
other species. Violations of these requirements could subject the Registrants to enforcement actions, capital expenditures to bring existing facilities into compliance, additional operating costs for
remediation and clean-up costs, civil penalties and exposure to third parties’ claims for alleged health or property damages, or operating restrictions to achieve compliance. In addition, the Registrants
are subject to liability under these laws for the remediation costs for environmental contamination of property now or formerly owned by the Registrants and of property contaminated by hazardous
substances they generated or released. Remediation activities associated with MGP operations conducted by predecessor companies are one component of such costs. Also, the Registrants are
currently involved in a number of proceedings relating to sites where hazardous substances have been deposited and could be subject to additional proceedings in the future. See ITEM 1. BUSINESS
— Environmental Matters and Regulation for additional information.
The Registrants could be negatively affected by federal and state RPS and/or energy conservation legislation, along with energy conservation by customers (All
Registrants).
Changes to current state legislation or the development of Federal legislation that requires the use of clean, renewable, and alternate fuel sources could significantly impact the Utility Registrants,
especially if timely cost recovery is not allowed.
Federal and state legislation mandating the implementation of energy conservation programs that require the implementation of new technologies, such as smart meters and smart grid, could increase
capital expenditures and could significantly impact the Utility Registrants consolidated financial statements if timely cost recovery is not allowed. These energy conservation programs, regulated energy
consumption reduction targets, and new energy consumption technologies could cause declines in customer energy consumption and lead to a decline in the Registrants' revenues. See ITEM 1.
BUSINESS — Environmental Matters and Regulation — Renewable and Clean Energy Standards and "The Registrants are potentially affected by emerging technologies that could over time affect or
transform the energy industry" above for additional information.
The Registrants could be negatively affected by challenges to tax positions taken, tax law changes, and the inherent difficulty in quantifying potential tax effects of
business decisions. (All Registrants).
The Registrants are required to make judgments in order to estimate their obligations to taxing authorities. These tax obligations include income, real estate, sales and use, and employment-related
taxes and ongoing appeal issues related to these tax matters. These judgments include reserves established for potential adverse outcomes regarding tax positions that have been taken that could be
subject to challenge by the tax authorities. See Note 1 — Significant Accounting Policies and Note 14 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional
information.
Legal proceedings could result in a negative outcome, which the Registrants cannot predict (All Registrants).
The Registrants are involved in legal proceedings, claims, and litigation arising out of their business operations. The material ones are summarized in Note 19 — Commitments and Contingencies of
the Combined Notes to Consolidated Financial Statements. Adverse outcomes in these proceedings could require significant expenditures, result in lost revenue, or restrict existing business activities.
The Registrants could be subject to adverse publicity and reputational risks, which make them vulnerable to negative customer perception and could lead to increased
regulatory oversight or other consequences (All Registrants).
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The Registrants could be the subject of public criticism. Adverse publicity of this nature could render public service commissions and other regulatory and legislative authorities less likely to view energy
companies in a favorable light, and could cause those companies, including the Registrants, to be susceptible to less favorable legislative and regulatory outcomes, as well as increased regulatory
oversight and more stringent legislative or regulatory requirements.
Exelon and ComEd have received requests for information related to an SEC investigation into their lobbying activities. The outcome of the investigations could have a
material adverse effect on their reputation and consolidated financial statements (Exelon and ComEd).
On October 22, 2019, the SEC notified Exelon and ComEd that it had opened an investigation into their lobbying activities in the state of Illinois. Exelon and ComEd have cooperated fully, including by
providing all information requested by the SEC, and intend to continue to cooperate fully and expeditiously with the SEC. The outcome of the SEC’s investigation cannot be predicted and could subject
Exelon and ComEd to civil penalties, sanctions, or other remedial measures. Any of the foregoing, as well as the appearance of non-compliance with anti-corruption and anti-bribery laws, could have
an adverse impact on Exelon’s and ComEd’s reputations or relationships with regulatory and legislative authorities, customers, and other stakeholders, as well as their consolidated financial
statements. See Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements.
If ComEd violates its Deferred Prosecution Agreement announced on July 17, 2020, it could have an adverse effect on the reputation and consolidated financial
statements of Exelon and ComEd (Exelon and ComEd).
On July 17, 2020, ComEd entered into a Deferred Prosecution Agreement (DPA) with the U.S. Attorney’s Office for the Northern District of Illinois (USAO) to resolve the USAO’s investigation into
Exelon’s and ComEd’s lobbying activities in the State of Illinois. Exelon was not made a party to the DPA and the investigation by the USAO into Exelon’s activities ended with no charges being brought
against Exelon. Under the DPA, the USAO filed a single charge alleging that ComEd improperly gave and offered to give jobs, vendor subcontracts, and payments associated with those jobs and
subcontracts for the benefit of the Speaker of the Illinois House of Representatives and the Speaker’s associates, with the intent to influence the Speaker’s action regarding legislation affecting
ComEd’s interests. The DPA provides that the USAO will defer any prosecution of such charge and any other criminal or civil case against ComEd in connection with the matters identified therein for a
three-year period subject to certain obligations of ComEd, including, but not limited to, the following: (i) payment to the United States Treasury of $200 million; (ii) continued full cooperation with the
government’s investigation; and (iii) ComEd’s adoption and maintenance of remedial measures involving compliance and reporting undertakings as specified in the DPA. If ComEd is found to have
breached the terms of the DPA, the USAO may elect to prosecute, or bring a civil action against, ComEd for conduct alleged in the DPA or known to the government, which could result in fines or
penalties and could have an adverse impact on Exelon’s and ComEd’s reputation or relationships with regulatory and legislative authorities, customers and other stakeholders, as well as their
consolidated financial statements. See Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements.
Risks Related to Operational Factors
The Registrants are subject to risks associated with climate change (All Registrants).
Climate adaptation risk refers to risks to the Registrants' facilities or operations that may result from changes in the physical climate, such as changes to temperature, weather patterns and sea level.
The Registrants periodically perform analyses to better understand how climate change could affect their facilities and operations. The Registrants primarily operate in the Midwest and East Coast of
the United States, areas that historically have been prone to various types of severe weather events, and as such the Registrants have well-developed response and recovery programs based on these
historical events. However, the Registrants’ physical facilities could be placed at greater risk of damage should changes in the global climate impact temperature and weather patterns, and result in
more intense, frequent and extreme weather events, unprecedented levels of precipitation, sea level rise, increased surface water temperatures, and/or other effects.
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Over time, the Registrants may need to make additional investments to protect their facilities from physical climate-related risks.
In addition, changes to the climate may impact levels and patterns of demand for energy and related services, which could affect Registrants’ operations. Over time, the Registrants may need to make
additional investments to adapt to changes in operational requirements as a result of climate change.
Climate mitigation and transition risks include changes to the energy systems as a result of new technologies, changing customer expectations and/or voluntary GHG goals, as well as local, state or
federal regulatory requirements intended to reduce GHG emissions.
The Registrants also periodically perform analyses of potential pathways to reduce power sector and economy-wide GHG emissions to mitigate climate change. To the extent additional GHG reduction
legislation and/or regulation becomes effective at the Federal and/or state levels, the Registrants could incur costs to further limit the GHG emissions from their operations or otherwise comply with
applicable requirements. See ITEM 1. BUSINESS — Environmental Matters and Regulation — Climate Change and "The Registrants are potentially affected by emerging technologies that could over
time affect or transform the energy industry" above for additional information.
The Utility Registrants' operating costs are affected by their ability to maintain the availability and reliability of their delivery and operational systems (All Registrants).
Failures of the equipment or facilities used in the Utility Registrants' delivery systems could interrupt the electric transmission and electric and natural gas delivery, which could result in a loss of
revenues and an increase in maintenance and capital expenditures. Equipment or facilities failures can be due to a number of factors, including natural causes such as weather or information systems
failure. Specifically, if the implementation of AMI, smart grid, or other technologies in the Utility Registrants' service territory fail to perform as intended or are not successfully integrated with billing and
other information systems, or if any of the financial, accounting, or other data processing systems fail or have other significant shortcomings, the Utility Registrants' financial results could be negatively
impacted. In addition, dependence upon automated systems could further increase the risk that operational system flaws or internal and/or external tampering or manipulation of those systems will
result in losses that are difficult to detect.
Regulated utilities, which are required to provide service to all customers within their service territory, have generally been afforded liability protections against claims by customers relating to failure of
service. Under Illinois law, however, ComEd could be required to pay damages to its customers in some circumstances involving extended outages affecting large numbers of its customers, which
could be material.
The Registrants are subject to physical security and cybersecurity risks (All Registrants).
The Registrants face physical security and cybersecurity risks. Threat sources continue to seek to exploit potential vulnerabilities in the electric and natural gas utility industry, grid infrastructure, and
other energy infrastructures, and these attacks and disruptions, both physical and cyber, are becoming increasingly sophisticated and dynamic. Continued implementation of advanced digital
technologies increases the potentially unfavorable impacts of such attacks.
A security breach of the Registrants' physical assets or information systems or those of the Registrants competitors, vendors, business partners and interconnected entities in RTOs and ISOs, or
regulators could impact the operation of the generation fleet and/or reliability of the transmission and distribution system or result in the theft or inappropriate release of certain types of information,
including critical infrastructure information, sensitive customer, vendor, and employee data, trading or other confidential data. The risk of these system-related events and security breaches occurring
continues to intensify, and while the Registrants have been, and will likely continue to be, subjected to physical and cyber-attacks, to date none have directly experienced a material breach or disruption
to its network or information systems or our operations. However, as such attacks continue to increase in sophistication and frequency, the Registrants may be unable to prevent all such attacks in the
future.
If a significant breach were to occur, the Registrants' reputation could be negatively affected, customer confidence in the Registrants or others in the industry could be diminished, or the Registrants
could be subject to
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legal claims, loss of revenues, increased costs, or operations shutdown. Moreover, the amount and scope of insurance maintained against losses resulting from any such events or security breaches
may not be sufficient to cover losses or otherwise adequately compensate for any disruptions to business that could result.
The Utility Registrants' deployment of smart meters throughout their service territories could increase the risk of damage from an intentional disruption of the system by third parties.
In addition, new or updated security regulations or unforeseen threat sources could require changes in current measures taken by the Registrants or their business operations and could adversely
affect their consolidated financial statements.
The Registrants’ employees, contractors, customers, and the general public could be exposed to a risk of injury due to the nature of the energy industry (All
Registrants).
Employees and contractors throughout the organization work in, and customers and the general public could be exposed to, potentially dangerous environments near the Registrants’ operations. As a
result, employees, contractors, customers, and the general public are at some risk for serious injury, including loss of life. These risks include gas explosions, pole strikes, and electric contact cases.
Natural disasters, war, acts and threats of terrorism, pandemic, and other significant events could negatively impact the Registrants' results of operations, ability to
raise capital and future growth (All Registrants).
The Utility Registrants' distribution and transmission infrastructures could be affected by natural disasters and extreme weather events, which could result in increased costs, including supply chain
costs. An extreme weather event within the Utility Registrants’ service areas can also directly affect their capital assets, causing disruption in service to customers due to downed wires and poles or
damage to other operating equipment.
The impact that potential terrorist attacks could have on the industry and the Registrants is uncertain. The Registrants face a risk that their operations would be direct targets or indirect casualties of an
act of terror. Any retaliatory military strikes or sustained military campaign could affect their operations in unpredictable ways, such as changes in insurance markets and disruptions of fuel supplies and
markets, particularly oil. Furthermore, these catastrophic events could compromise the physical or cybersecurity of the Registrants' facilities, which could adversely affect the Registrants' ability to
manage their businesses effectively. Instability in the financial markets as a result of terrorism, war, natural disasters, pandemic, credit crises, recession, or other factors also could result in a decline in
energy consumption or interruption of fuel or the supply chain. In addition, the implementation of security guidelines and measures has resulted in and is expected to continue to result in increased
costs.
The Registrants could be significantly affected by the outbreak of a pandemic. Exelon has plans in place to respond to a pandemic. However, depending on the severity of a pandemic and the resulting
impacts to workforce and other resource availability, the ability to operate Exelon's transmission and distribution assets could be adversely affected. See "The Registrants' results were negatively
affected by the impacts of COVID-19" above for additional information.
In addition, Exelon maintains a level of insurance coverage consistent with industry practices against property, casualty and cybersecurity losses subject to unforeseen occurrences or catastrophic
events that could damage or destroy assets or interrupt operations. However, there can be no assurance that the amount of insurance will be adequate to address such property and casualty losses.
The Registrants’ businesses are capital intensive, and their assets could require significant expenditures to maintain and are subject to operational failure, which could
result in potential liability (All Registrants).
The Utility Registrants’ businesses are capital intensive and require significant investments in transmission and distribution infrastructure projects. Equipment, even if maintained in accordance with
good utility practices, is subject to operational failure, including events that are beyond the Utility Registrants’ control, and could require significant expenditures to operate efficiently. The Registrants
consolidated financial statements could be negatively affected if they were unable to effectively manage their capital projects or raise the necessary capital.
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See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — Liquidity and Capital Resources for additional information regarding
the Registrants’ potential future capital expenditures.
The Utility Registrants' respective ability to deliver electricity, their operating costs, and their capital expenditures could be negatively impacted by transmission
congestion and failures of neighboring transmission systems (All Registrants).
Demand for electricity within the Utility Registrants' service areas could stress available transmission capacity requiring alternative routing or curtailment of electricity usage. Also, insufficient availability
of electric supply to meet customer demand could jeopardize the Utility Registrants' ability to comply with reliability standards and strain customer and regulatory agency relationships. As with all
utilities, potential concerns over transmission capacity or generation facility retirements could result in PJM or FERC requiring the Utility Registrants to upgrade or expand their respective transmission
systems through additional capital expenditures.
PJM’s systems and operations are designed to ensure the reliable operation of the transmission grid and prevent the operations of one utility from having an adverse impact on the operations of the
other utilities. However, service interruptions at other utilities may cause interruptions in the Utility Registrants’ service areas.
The Registrants' performance could be negatively affected if they fail to attract and retain an appropriately qualified workforce (All Registrants).
Certain events, such as the separation transaction, an employee strike, loss of employees, loss of contract resources due to a major event, and an aging workforce without appropriate replacements,
could lead to operating challenges and increased costs for the Registrants. The challenges include lack of resources, loss of knowledge and a lengthy time period associated with skill development. In
this case, costs, including costs for contractors to replace employees, productivity costs, and safety costs, could arise. The Registrants are particularly affected due to the specialized knowledge
required of the technical and support employees for their transmission and distribution operations.
The Registrants could make acquisitions or investments in new business initiatives and new markets, which may not be successful or achieve the intended financial
results (All Registrants).
The Utility Registrants face risks associated with their regulatory-mandated initiatives, such as smart grids and utility of the future. These risks include, but are not limited to, cost recovery, regulatory
concerns, cybersecurity, and obsolescence of technology. Such initiatives may not be successful.
Risks Related to the Separation (Exelon)
The separation may not achieve some or all of the benefits anticipated by Exelon and, following the separation, Exelon's common stock price may underperform
relative to Exelon's expectations.
By separating the Utility Registrants and Generation, Exelon created two publicly traded companies with the resources necessary to best serve customers and sustain long-term investment and
operating excellence. The separate companies are expected to create value by having the strategic flexibility to focus on their unique customer, market and community priorities. However, the
separation may not provide such results on the scope or scale that Exelon anticipates, and Exelon may not realize the anticipated benefits of the separation. Failure to do so could have a material
adverse effect on Exelon's financial statements and its common stock price.
In connection with the separation into two public companies, Exelon and Generation will indemnify each other for certain liabilities. If Exelon is required to pay under
these indemnities to Generation, Exelon's financial results could be negatively impacted. The Generation indemnities may not be sufficient to hold Exelon harmless
from the full amount of liabilities for which Generation will be allocated responsibility, and Generation may not be able to satisfy its indemnification obligations in the
future.
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Pursuant to the separation agreement and certain other agreements between Exelon and Generation, each party will agree to indemnify the other for certain liabilities, in each case for uncapped
amounts. Indemnities that Exelon may be required to provide Generation are not subject to any cap, may be significant and could negatively impact its business. Third parties could also seek to hold
Exelon responsible for any of the liabilities that Generation has agreed to retain. Any amounts Exelon is required to pay pursuant to these indemnification obligations and other liabilities could require
Exelon to divert cash that would otherwise have been used in furtherance of its operating business. Further, the indemnities from Generation for Exelon's benefit may not be sufficient to protect Exelon
against the full amount of such liabilities, and Generation may not be able to fully satisfy its indemnification obligations.
Moreover, even if Exelon ultimately succeeds in recovering from Generation any amounts for which Exelon is held liable, Exelon may be temporarily required to bear these losses. Each of these risks
could negatively affect Exelon's business, results of operations and financial condition.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
All Registrants
None.
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ITEM 2.
PROPERTIES
Generation
The following table presents Generation’s interests in net electric generating capacity by station at December 31, 2021:
Station
(a)
Location
No. of
Units
Percent
(b)
Owned
Primary
Fuel Type
Primary
Dispatch
Type
(c)
Net Generation
(d)
Capacity (MW)
Midwest
Braidwood
Byron
LaSalle
Dresden
Quad Cities
Clinton
Michigan Wind 2
Beebe
Michigan Wind 1
Harvest 2
Harvest
Beebe 1B
Blue Breezes
CP Windfarm
Southeast Chicago
Clinton Battery Storage
Total Midwest
Mid-Atlantic
Limerick
Calvert Cliffs
Peach Bottom
Salem
Conowingo
Criterion
Fair Wind
Fourmile Ridge
Solar Horizons
Solar New Jersey 3
Muddy Run
Eddystone 3, 4
Perryman
Croydon
Handsome Lake
Braidwood, IL
Byron, IL
Seneca, IL
Morris, IL
Cordova, IL
Clinton, IL
Sanilac Co., MI
Gratiot Co., MI
Huron Co., MI
Huron Co., MI
Huron Co., MI
Gratiot Co., MI
Faribault Co., MN
Faribault Co., MN
Chicago, IL
Blanchester, OH
Sanatoga, PA
Lusby, MD
Delta, PA
Lower Alloways
Creek Township, NJ
Darlington, MD
Oakland, MD
Garrett County, MD
Garrett County, MD
Emmitsburg, MD
Middle Township, NJ
Drumore, PA
Eddystone, PA
Aberdeen, MD
West Bristol, PA
Kennerdell, PA
2
2
2
2
2
1
50
34
46
33
32
21
2
2
8
1
2
2
2
2
11
28
12
16
1
4
8
2
5
8
5
75
51
51
51
51
51
51
(g)
(g)
(g)
(g)
(g)
(g)
51
(g)
50
42.59
51
(g)
51
51
51
(g)
(g)
(g)
41
Uranium
Uranium
Uranium
Uranium
Uranium
Uranium
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Gas
Energy Storage
Uranium
Uranium
Uranium
Uranium
Hydroelectric
Wind
Wind
Wind
Solar
Solar
Hydroelectric
Oil/Gas
Oil/Gas
Oil
Gas
Base-load
Base-load
Base-load
Base-load
Base-load
Base-load
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Peaking
Peaking
Base-load
Base-load
Base-load
Base-load
Base-load
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermediate
Peaking
Peaking
Peaking
Peaking
2,386
2,347
2,320
1,845
1,403
1,080
46
42
35
30
27
26
3
2
296
10
(e)
(e)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(h)
11,898
(f)
(f)
(f)
(f)
(f)
(f)
2,317
1,789
1,324
995
572
36
30
20
16
2
1,070
760
404
391
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Station
(a)
Location
No. of
Units
Percent
(b)
Owned
Primary
Fuel Type
Primary
Dispatch
Type
(c)
Net Generation
(d)
Capacity (MW)
Richmond
Philadelphia Road
Eddystone
Delaware
Southwark
Falls
Moser
Chester
Schuylkill
Salem
Total Mid-Atlantic
ERCOT
Whitetail
Sendero
Colorado Bend II
Wolf Hollow II
Handley 3
Handley 4, 5
Total ERCOT
New York
Nine Mile Point
FitzPatrick
Ginna
Total New York
Other
Antelope Valley
Bluestem
Shooting Star
Sacramento PV Energy
Bluegrass Ridge
Philadelphia, PA
Baltimore, MD
Eddystone, PA
Philadelphia, PA
Philadelphia, PA
Morrisville, PA
Lower Pottsgrove Twp., PA
Chester, PA
Philadelphia, PA
Lower Alloways
Creek Township, NJ
Webb County, TX
Jim Hogg and Zapata County, TX
Wharton, TX
Granbury, TX
Fort Worth, TX
Fort Worth, TX
Scriba, NY
Scriba, NY
Ontario, NY
Lancaster, CA
Beaver County, OK
Kiowa County, KS
Sacramento, CA
King City, MO
2
4
4
4
4
3
3
3
2
1
57
39
3
3
1
2
2
1
1
1
60
65
4
27
42.59
51
51
(g)
(g)
(i)
51
51
51
51
(g)(j)
(g)
(g)
(g)
42
Oil
Oil
Oil
Oil
Oil
Oil
Oil
Oil
Oil
Oil
Wind
Wind
Gas
Gas
Gas
Gas
Uranium
Uranium
Uranium
Solar
Wind
Wind
Solar
Wind
Peaking
Peaking
Peaking
Peaking
Peaking
Peaking
Peaking
Peaking
Peaking
Peaking
Intermittent
Intermittent
Intermediate
Intermediate
Intermediate
Peaking
Base-load
Base-load
Base-load
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
98
61
60
56
52
51
51
39
30
16
(f)
10,508
(f)
(f)
47
40
1,143
1,115
395
870
3,610
(f)
1,675
842
576
3,093
242
101
53
30
29
(f)
(f)
(f)
(f)
Table of Contents
Station
(a)
Location
No. of
Units
Percent
(b)
Owned
Primary
Fuel Type
Primary
Dispatch
Type
(c)
Net Generation
(d)
Capacity (MW)
Conception
Cow Branch
Mountain Home
High Mesa
Echo 1
Cassia
Wildcat
Echo 2
Tuana Springs
Greensburg
Echo 3
Three Mile Canyon
Loess Hills
Denver Airport Solar
Mystic 8, 9
Hillabee
Wyman 4
West Medway II
West Medway
Grand Prairie
Framingham
Total Other
Total
Barnard, MO
Rock Port, MO
Glenns Ferry, ID
Elmore Co., ID
Echo, OR
Buhl, ID
Lovington, NM
Echo, OR
Hagerman, ID
Greensburg, KS
Echo, OR
Boardman, OR
Rock Port, MO
Denver, CO
Charlestown, MA
Alexander City,
AL
Yarmouth, ME
West Medway, MA
West Medway, MA
Alberta, Canada
Framingham, MA
24
24
20
19
21
14
13
10
8
10
6
6
4
1
6
3
1
2
3
1
3
51
51
51
51
50.49
51
51
51
51
51
50.49
51
(g)
(g)
(g)
(g)
(g)
(g)
(g)
(g)
(g)
(g)
(g)
(g)
51
(g)
5.9
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Solar
Gas
Gas
Oil
Oil/Gas
Oil
Gas
Oil
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermittent
Intermediate
Intermediate
Intermediate
Peaking
Peaking
Peaking
Peaking
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(f)
(e)
(f)
26
26
21
20
17
15
14
10
9
6
5
5
5
4
1,417
753
34
189
124
105
31
3,291
32,400
__________
(a) All nuclear stations are boiling water reactors except Braidwood, Byron, Calvert Cliffs, Ginna, and Salem, which are pressurized water reactors.
(b) 100%, unless otherwise indicated.
(c) Base-load units are plants that normally operate to take all or part of the minimum continuous load of a system and, consequently, produce electricity at an essentially constant rate. Intermittent units are plants with output
controlled by the natural variability of the energy resource rather than dispatched based on system requirements. Intermediate units are plants that normally operate to take load of a system during the daytime higher load
hours and, consequently, produce electricity by cycling on and off daily. Peaking units consist of lower-efficiency, quick response steam units, gas turbines and diesels normally used during the maximum load periods.
(d) For nuclear stations, capacity reflects the annual mean rating. Fossil stations and wind and solar facilities reflect a summer rating.
(e) On August 9, 2020, Generation announced it would permanently cease generation operations at Byron and Dresden nuclear facilities in 2021 and Mystic Unit 8 and 9 in 2024. On September 15, 2021, Generation
reversed its previous decision to retire Byron and Dresden. See Note 7 — Early Plant Retirements of the Combined Notes to the Consolidated Financial Statements for additional information.
(f) Net generation capacity is stated at proportionate ownership share.
(g) Reflects the prior sale of 49% of CRP to a third party. See Note 23 — Variable Interest Entities of the Combined Notes to Consolidated Financial Statements for additional information.
(h) Generation has deactivated the site and is evaluating for potential return of service or retirement beyond 2023.
(i) Generation wholly owns Nine Mile Point Unit 1 and has an 82% undivided ownership interest in Nine Mile Point Unit 2.
(j) CRP owns 100% of the Class A membership interests and a tax equity investor owns 100% of the Class B membership interests of the entity that owns the Bluestem generating assets.
The net generation capability available for operation at any time may be less due to regulatory restrictions, transmission congestion, fuel restrictions, efficiency of cooling facilities, level of water
supplies, or generating
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units being temporarily out of service for inspection, maintenance, refueling, repairs, or modifications required by regulatory authorities.
Generation maintains property insurance against loss or damage to its principal plants and properties by fire or other perils, subject to certain exceptions. For additional information regarding nuclear
insurance of generating facilities, see ITEM 1. BUSINESS — Generation. For its insured losses, Generation is self-insured to the extent that any losses are within the policy deductible or exceed the
amount of insurance maintained. Any such losses could have a material adverse effect on Generation’s consolidated financial condition or results of operations.
The Utility Registrants
The Utility Registrants' electric substations and a portion of their transmission rights are located on property that they own. A significant portion of their electric transmission and distribution facilities are
located above or underneath highways, streets, other public places, or property that others own. The Utility Registrants believe that they have satisfactory rights to use those places or property in the
form of permits, grants, easements, licenses, and franchise rights; however, they have not necessarily undertaken to examine the underlying title to the land upon which the rights rest.
Transmission and Distribution
The Utility Registrants’ high voltage electric transmission lines owned and in service at December 31, 2021 were as follows:
Voltage
(Volts)
765,000
(a)
500,000
345,000
230,000
138,000
115,000
69,000
ComEd
90
—
2,676
—
2,246
—
—
PECO
—
188
—
550
135
—
177
Circuit Miles
Pepco
—
109
—
770
61
25
—
BGE
—
216
—
358
55
700
—
DPL
—
16
—
472
586
—
567
ACE
—
—
—
274
214
—
667
___________
(a) In addition, PECO, DPL, and ACE have an ownership interest located in Delaware and New Jersey. See Note 9 - Jointly Owned Electric Utility Plant of the Combined Notes to the Consolidated Financial Statements for
additional information.
The Utility Registrants' electric distribution system includes the following number of circuit miles of overhead and underground lines:
Circuit Miles
Overhead
Underground
ComEd
35,387
32,498
PECO
12,981
9,555
BGE
9,164
17,796
Pepco
4,127
7,162
DPL
6,006
6,427
ACE
7,364
2,951
Gas
The following table presents PECO’s, BGE’s, and DPL’s natural gas pipeline miles at December 31, 2021:
(a)
Transmission
Distribution
Service piping
Total
PECO
9
6,956
6,479
13,444
BGE
152
7,482
6,407
14,041
DPL
8
2,166
1,473
3,647
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___________
(a) DPL has a 10% undivided interest in approximately 8 miles of natural gas transmission mains located in Delaware which are used by DPL for its natural gas operations and by 90% owner for distribution of natural gas to
its electric generating facilities.
The following table presents PECO’s, BGE’s, and DPL’s natural gas facilities:
Registrant
PECO
PECO
BGE
BGE
DPL
Facility
LNG Facility
Propane Air Plant
LNG Facility
Propane Air Plant
LNG Facility
Location
West Conshohocken, PA
Chester, PA
Baltimore, MD
Baltimore, MD
Wilmington, DE
Storage Capacity
(mmcf)
Send-out or Peaking Capacity
(mmcf/day)
1,200
105
1,056
550
250
160
25
332
85
25
PECO, BGE, and DPL also own 30, 30, and 10 natural gas city gate stations and direct pipeline customer delivery points at various locations throughout their gas service territory, respectively.
First Mortgage and Insurance
The principal properties of ComEd, PECO, PEPCO, DPL, and ACE are subject to the lien of their respective Mortgages under which their respective First Mortgage Bonds are issued. See Note 17 —
Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information.
The Utility Registrants maintain property insurance against loss or damage to their properties by fire or other perils, subject to certain exceptions. For their insured losses, the Utility Registrants are self-
insured to the extent that any losses are within the policy deductible or exceed the amount of insurance maintained. Any such losses could have a material adverse effect in the consolidated financial
condition or results of operations of the Utility Registrants.
Exelon
Security Measures
The Registrants have initiated and work to maintain security measures. On a continuing basis, the Registrants evaluate enhanced security measures at certain critical locations, enhanced response
and recovery plans, long-term design changes, and redundancy measures. Additionally, the energy industry has strategic relationships with governmental authorities to ensure that emergency plans
are in place and critical infrastructure vulnerabilities are addressed in order to maintain the reliability of the country’s energy systems.
ITEM 3.
LEGAL PROCEEDINGS
All Registrants
The Registrants are parties to various lawsuits and regulatory proceedings in the ordinary course of their respective businesses. For information regarding material lawsuits and proceedings, see
Note 3 — Regulatory Matters and Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements. Such descriptions are incorporated herein by these
references.
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ITEM 4.
MINE SAFETY DISCLOSURES
Not Applicable
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Table of Contents
PART II
(Dollars in millions except per share data, unless otherwise noted)
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Exelon
Exelon’s common stock is listed on the Nasdaq (trading symbol: EXC). As of January 31, 2022, there were 980,136,968 shares of common stock outstanding and approximately 85,423 record holders
of common stock.
Stock Performance Graph
The performance graph below illustrates a five-year comparison of cumulative total returns based on an initial investment of $100 in Exelon common stock, as compared with the S&P 500 Stock Index
and the S&P Utility Index, for the period 2017 through 2021.
This performance chart assumes:
•
•
$100 invested on December 31, 2016 in Exelon common stock, the S&P 500 Stock Index, and the S&P Utility Index; and
All dividends are reinvested.
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Exelon Corporation
S&P 500
S&P Utilities
ComEd
2016
$100
$100
$100
Value of Investment at December 31,
2017
$115.05
$121.83
$112.11
2018
$136.13
$116.49
$116.71
2019
$141.96
$153.17
$147.46
2020
$136.44
$181.35
$148.18
2021
$192.94
$233.41
$174.36
As of January 31, 2022, there were 127,021,391 outstanding shares of common stock, $12.50 par value, of ComEd, of which 127,002,904 shares were indirectly held by Exelon. At January 31, 2022,
in addition to Exelon, there were 285 record holders of ComEd common stock. There is no established market for shares of the common stock of ComEd.
PECO
As of January 31, 2022, there were 170,478,507 outstanding shares of common stock, without par value, of PECO, all of which were indirectly held by Exelon.
BGE
As of January 31, 2022, there were 1,000 outstanding shares of common stock, without par value, of BGE, all of which were indirectly held by Exelon.
PHI
As of January 31, 2022, Exelon indirectly held the entire membership interest in PHI.
Pepco
As of January 31, 2022, there were 100 outstanding shares of common stock, $0.01 par value, of Pepco, all of which were indirectly held by Exelon.
DPL
As of January 31, 2022, there were 1,000 outstanding shares of common stock, $2.25 par value, of DPL, all of which were indirectly held by Exelon.
ACE
As of January 31, 2022, there were 8,546,017 outstanding shares of common stock, $3.00 par value, of ACE, all of which were indirectly held by Exelon.
All Registrants
Dividends
Under applicable Federal law, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE can pay dividends only from retained, undistributed or current earnings. A significant loss recorded at, ComEd, PECO,
BGE, PHI, Pepco, DPL, or ACE may limit the dividends that these companies can distribute to Exelon.
ComEd has agreed in connection with a financing arranged through ComEd Financing III that ComEd will not declare dividends on any shares of its capital stock in the event that: (1) it exercises its
right to extend the interest payment periods on the subordinated debt securities issued to ComEd Financing III; (2) it defaults on its guarantee of the payment of distributions on the preferred trust
securities of ComEd Financing III; or (3) an event of default occurs under the Indenture under which the subordinated debt securities are issued. No such event has occurred.
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PECO has agreed in connection with financings arranged through PEC L.P. and PECO Trust IV that PECO will not declare dividends on any shares of its capital stock in the event that: (1) it exercises
its right to extend the interest payment periods on the subordinated debentures which were issued to PEC L.P. or PECO Trust IV; (2) it defaults on its guarantee of the payment of distributions on the
Series D Preferred Securities of PEC L.P. or the preferred trust securities of PECO Trust IV; or (3) an event of default occurs under the Indenture under which the subordinated debentures are issued.
No such event has occurred.
BGE is subject to restrictions established by the MDPSC that prohibit BGE from paying a dividend on its common shares if (a) after the dividend payment, BGE’s equity ratio would be below 48% as
calculated pursuant to the MDPSC’s ratemaking precedents or (b) BGE’s senior unsecured credit rating is rated by two of the three major credit rating agencies below investment grade. No such event
has occurred.
Pepco is subject to certain dividend restrictions established by settlements approved in Maryland and the District of Columbia. Pepco is prohibited from paying a dividend on its common shares if (a)
after the dividend payment, Pepco's equity ratio would be below 48% as equity levels are calculated under the ratemaking precedents of the MDPSC and DCPSC or (b) Pepco’s senior unsecured
credit rating is rated by one of the three major credit rating agencies below investment grade. No such event has occurred.
DPL is subject to certain dividend restrictions established by settlements approved in Delaware and Maryland. DPL is prohibited from paying a dividend on its common shares if (a) after the dividend
payment, DPL's equity ratio would be below 48% as equity levels are calculated under the ratemaking precedents of the DEPSC and MDPSC or (b) DPL’s senior unsecured credit rating is rated by one
of the three major credit rating agencies below investment grade. No such event has occurred.
ACE is subject to certain dividend restrictions established by settlements approved in New Jersey. ACE is prohibited from paying a dividend on its common shares if (a) after the dividend payment,
ACE's equity ratio would be below 48% as equity levels are calculated under the ratemaking precedents of the NJBPU or (b) ACE's senior unsecured credit rating is rated by one of the three major
credit rating agencies below investment grade. ACE is also subject to a dividend restriction which requires ACE to obtain the prior approval of the NJBPU before dividends can be paid if its equity as a
percent of its total capitalization, excluding securitization debt, falls below 30%. No such events have occurred.
Exelon’s Board of Directors approved an updated dividend policy for 2022. The 2022 quarterly dividend will be $0.3375 per share.
At December 31, 2021, Exelon had retained earnings of $16,942 million, ComEd’s retained earnings of $1,691 million consisting of retained earnings appropriated for future dividends of $3,330 million,
partially offset by $1,639 million of unappropriated accumulated deficits, PECO’s retained earnings of $1,684 million, BGE’s retained earnings of $1,995 million, and PHI's undistributed losses of $210
million.
The following table sets forth Exelon’s quarterly cash dividends per share paid during 2021 and 2020:
(per share)
Exelon
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
$
0.3825 $
0.3825 $
0.3825 $
0.3825 $
0.3825 $
0.3825 $
0.3825 $
0.3825
2021
2020
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The following table sets forth PHI's quarterly distributions and ComEd’s, PECO’s, BGE's, Pepco's, DPL's, and ACE's quarterly common dividend payments:
(in millions)
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
First Quarter 2022 Dividend
4th
Quarter
3rd
Quarter
2nd
Quarter
1st
Quarter
4th
Quarter
3rd
Quarter
2nd
Quarter
1st
Quarter
2021
2020
127
85
73
98
47
41
8
127
85
73
191
98
43
51
126
84
72
333
95
23
215
127
85
74
81
28
40
14
126
85
60
102
58
42
3
124
85
62
183
73
33
76
124
85
62
134
73
14
12
125
85
62
134
28
52
23
On February 8, 2022, Exelon's Board of Directors declared a regular quarterly dividend of $0.3375 per share on Exelon’s common stock for the first quarter of 2022. The dividend is payable on
Monday, March 10, 2022, to shareholders of record of Exelon as of 5 p.m. Eastern time on Friday, February 25, 2022.
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ITEM 6.
SELECTED FINANCIAL DATA
Not Applicable
51
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Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions except per share data, unless otherwise noted)
Exelon
Executive Overview
As of December 31, 2021, Exelon was a utility services holding company engaged in the generation, delivery, and marketing of energy through Generation and the energy distribution and transmission
businesses through ComEd, PECO, BGE, Pepco, DPL, and ACE.
Exelon has eleven reportable segments consisting of Generation’s five reportable segments (Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions), ComEd, PECO, BGE, Pepco, DPL,
and ACE. See Note 1 — Significant Accounting Policies and Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for additional information regarding Exelon's
principal subsidiaries and reportable segments.
Exelon’s consolidated financial information includes the results of its seven separate operating subsidiary registrants, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE and its subsidiary Generation.
The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations summarizes results for the year ended December 31, 2021 compared to the year
ended December 31, 2020, and is separately filed by Exelon, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE. However, none of the Registrants makes any representation as to information related
solely to any of the other Registrants. For discussion of the year ended December 31, 2020 compared to the year ended December 31, 2019, refer to ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in the 2020 Form 10-K, which was filed with the SEC on February 24, 2021.
COVID-19. The Registrants have taken steps to mitigate the potential risks posed by the global outbreak (pandemic) of COVID-19. The Registrants provide a critical service to our customers which
means that it is paramount that we keep our employees who operate our businesses safe and minimize unnecessary risk of exposure to the virus by taking extra precautions for employees who work in
the field and in our facilities. The Registrants have implemented work from home policies where appropriate, and imposed travel limitations on employees.
The Registrants continue to implement strong physical and cyber-security measures to ensure that our systems remain functional in order to both serve our operational needs with a remote workforce
and keep them running to ensure uninterrupted service to our customers.
There were no changes in internal control over financial reporting as a result of COVID-19 that materially affected, or are reasonably likely to materially affect, any of the Registrants’ internal control
over financial reporting. See ITEM 9A. CONTROLS AND PROCEDURES for additional information.
Unfavorable economic conditions due to COVID-19 resulted in an estimated reduction to Exelon’s Net income of approximately $245 million for the year ended December 31, 2020. The impact was not
material for the year ended December 31, 2021. To offset the unfavorable impacts from COVID-19, Exelon identified approximately $250 million in cost savings in 2020. The cost savings achieved in
2020 were higher than originally anticipated.
The Registrants assessed long-lived assets, goodwill, and investments for recoverability and there were no material impairment charges recorded in 2020 or 2021 as a result of COVID-19. See Note
12 — Asset Impairments of the Combined Notes to Consolidated Financial Statements for additional information related to other impairment assessments.
The Registrants will continue to monitor developments affecting their workforce, customers, and suppliers and will take additional precautions that they determine to be necessary in order to mitigate
the impacts. The Registrants cannot predict the full extent of the impacts of COVID-19, which will depend on, among other things, the rate, and public perceptions of the effectiveness, of vaccinations
and rate of resumption of business activity.
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Financial Results of Operations
GAAP Results of Operations. The following table sets forth Exelon's GAAP consolidated Net Income attributable to common shareholders by Registrant or subsidiary for the year ended
December 31, 2021 compared to the same period in 2020. For additional information regarding the financial results for the years ended December 31, 2021 and 2020 see the discussions of Results of
Operations by Registrant or subsidiary.
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Generation
(a)
Other
$
2021
2020
(Unfavorable) Favorable Variance
1,706 $
742
504
408
561
296
128
146
(205)
(304)
1,963 $
438
447
349
495
266
125
112
589
(355)
(257)
304
57
59
66
30
3
34
(794)
51
__________
(a) Primarily includes eliminating and consolidating adjustments, Exelon’s corporate operations, shared service entities, and other financing and investing activities.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income attributable to common shareholders decreased by $257 million and diluted earnings per average
common share decreased to $1.74 in 2021 from $2.01 in 2020 primarily due to:
•
•
•
•
•
•
Impacts of the February 2021 extreme cold weather event;
Accelerated depreciation and amortization associated with Generation's previous decision in the third quarter of 2020 to early retire Byron and Dresden nuclear facilities in 2021, a
decision which was reversed on September 15, 2021, and Generation's decision in the third quarter of 2020 to early retire Mystic Units 8 and 9 in 2024;
Decommissioning-related activities that were not offset for the Byron units beginning in the second quarter of 2021 through September 15, 2021. With Generation's September 15, 2021
reversal of the previous decision to retire Byron, Generation resumed contractual offset for Byron as of that date;
Impairments at Generation of the New England asset group, the Albany Green Energy biomass facility, and a wind project, partially offset by the absence of an impairment of the New
England asset group in the third quarter of 2020;
Higher net unrealized and realized losses on equity investments; and
The absence of prior year one-time tax settlements.
The decreases were partially offset by;
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•
•
•
•
•
•
•
•
•
•
•
•
•
Higher electric distribution earnings from higher rate base and higher allowed ROE due to an increase in treasury rates at ComEd;
The favorable impacts of the multi-year plan at BGE and Pepco and regulatory rate increases at DPL and ACE;
Favorable weather conditions at PECO and DPL's Delaware service territory;
Favorable volume at PECO and ACE;
Lower storm costs at PECO and DPL due to the absence of the June 2020 and August 2020 storms, respectively;
Lower operating and maintenance expense at ComEd due to the payments that ComEd made in 2020 under the Deferred Prosecution Agreement;
Higher mark-to-market gains;
Higher net unrealized and realized gains on NDT funds;
Absence of one time charges recorded in the third quarter of 2020 associated with Generation's decision to early retire the Byron and Dresden nuclear facilities and Mystic Units 8 and 9,
and the reversal of one-time charges resulting from the reversal of the previous decision to early retire Byron and Dresden on September 15, 2021;
Favorable sales and hedges of excess emission credits;
Favorable commodity prices on fuel hedges;
Lower nuclear fuel costs due to accelerated amortization of nuclear fuel and lower prices; and
Higher New York ZEC revenues due to higher generation and an increase in ZEC prices.
Adjusted (non-GAAP) Operating Earnings. In addition to net income, Exelon evaluates its operating performance using the measure of Adjusted (non-GAAP) operating earnings because
management believes it represents earnings directly related to the ongoing operations of the business. Adjusted (non-GAAP) operating earnings exclude certain costs, expenses, gains and losses, and
other specified items. This information is intended to enhance an investor’s overall understanding of year-to-year operating results and provide an indication of Exelon’s baseline operating performance
excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this information is among the primary indicators management uses
as a basis for evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting of future periods. Adjusted (non-GAAP) operating earnings is not a
presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report.
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The following table provides a reconciliation between Net income attributable to common shareholders as determined in accordance with GAAP and Adjusted (non-GAAP) operating earnings for the
year ended December 31, 2021 as compared to 2020:
(In millions, except per share data)
Net Income Attributable to Common Shareholders
Mark-to-Market Impact of Economic Hedging Activities (net of taxes of $145 and $73, respectively)
$
Unrealized Gains Related to NDT Fund Investments (net of taxes of $141 and $278, respectively)
Asset Impairments (net of taxes of $136 and $135, respectively)
Plant Retirements and Divestitures (net of taxes of $290 and $244, respectively)
Cost Management Program (net of taxes of $2 and $14, respectively)
(b)
(d)
(c)
(a)
Asset Retirement Obligation (net of taxes of $12 and $16, respectively)
Change in Environmental Liabilities (net of taxes of $3 and $6, respectively)
COVID-19 Direct Costs (net of taxes of $13 and $19, respectively)
(g)
Deferred Prosecution Agreement Payments (net of taxes of $0)
(f)
(e)
Acquisition Related Costs (net of taxes of $5 and $1, respectively)
(h)
ERP System Implementation Costs (net of taxes of $4 and $1, respectively)
(j)
Separation Costs (net of taxes of $31)
Costs Related to Suspension of Contractual Offset (net of taxes of $45)
Income Tax-Related Adjustments (entire amount represents tax expense)
Noncontrolling Interests (net of taxes of $2 and $19, respectively)
Adjusted (non-GAAP) Operating Earnings
(m)
(k)
(l)
(i)
For the Years Ended December 31,
2021
2020
Earnings per
Diluted Share
Earnings per
Diluted Share
1,706 $
(421)
(139)
405
865
9
(35)
9
36
—
15
13
90
148
47
16
1.74 $
(0.43)
(0.14)
0.41
0.88
0.01
(0.04)
0.01
0.04
—
0.02
0.01
0.09
0.15
0.05
0.02
1,963 $
(213)
(256)
396
718
45
48
18
50
200
4
3
—
—
71
103
$
2,764 $
2.82 $
3,149 $
2.01
(0.22)
(0.26)
0.41
0.74
0.05
0.05
0.02
0.05
0.20
—
—
—
—
0.07
0.11
3.22
__________
Note:
Amounts may not sum due to rounding.
Unless otherwise noted, the income tax impact of each reconciling item between GAAP Net Income and Adjusted (non-GAAP) Operating Earnings is based on the marginal statutory federal and state income tax rates for each
Registrant, taking into account whether the income or expense item is taxable or deductible, respectively, in whole or in part. For all items except the unrealized gains and losses related to NDT funds, the marginal statutory
income tax rates for 2021 and 2020 ranged from 25.0% to 29.0%. Under IRS regulations, NDT fund investment returns are taxed at different rates for investments if they are in qualified or non-qualified funds. The effective tax
rates for the unrealized gains and losses related to NDT funds were 50.4% and 52.1% for the years ended December 31, 2021 and 2020, respectively.
(a) Reflects the impact of net unrealized gains and losses on Generation’s NDT fund investments for Non-Regulatory Agreement Units.
(b)
In 2021, reflects an impairment of the New England asset group, an impairment recorded as a result of the agreement to sell the Albany Green Energy biomass facility, and an impairment of a wind project at Generation.
In 2020, reflects an impairment at ComEd related to the acquisition of transmission assets and an impairment of the New England asset group in the third quarter of 2020 at Generation.
In 2021, primarily reflects accelerated depreciation and amortization associated with Generation's decisions to early retire Byron, Dresden, and Mystic Units 8 and 9, partially offset by reversal of one-time charges resulting
from the reversal of the previous decision to retire Byron and Dresden on September 15, 2021 and a gain on sale of Generation's solar business. Depreciation for Byron and Dresden was adjusted beginning September
15, 2021 to reflect the extended useful life estimates. In 2020, primarily reflects one-time charges and accelerated depreciation and amortization expenses
(c)
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associated with Generation’s decisions in the third quarter of 2020 to early retire Byron and Dresden nuclear facilities in 2021 and Mystic Units 8 and 9 in 2024.
(d) Primarily represents reorganization and severance costs related to cost management programs.
(e) For Generation, reflects an adjustment to the nuclear asset obligation for the Non-Regulatory Agreement Units resulting from the annual update in the third quarter of 2021 and fourth quarter of 2020, respectively.
(f) Represents direct costs related to COVID-19 consisting primarily of costs to acquire personal protective equipment, costs for cleaning supplies and services, and costs to hire healthcare professionals to monitor the health
of employees.
(g) Reflects the payments made by ComEd under the Deferred Prosecution Agreement, which ComEd entered in July 2020 with the U.S. Attorney’s Office for the Northern District of Illinois.
(h) Reflects costs related to the acquisition of EDF's interest in CENG, which was completed in the third quarter of 2021.
(i) Reflects costs related to a multi-year Enterprise Resource Program (ERP) system implementation.
(j) Represents costs related to the separation primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the planned separation, and employee-related
severance costs.
(k) Decommissioning-related activities for the former ComEd and PECO units (Regulatory Agreement Units), net of applicable taxes, including realized and unrealized gains and losses on the NDT funds, depreciation of the
ARC, and accretion of the decommissioning obligation, are generally offset within Exelon’s consolidated statements of operations. These costs reflect the impact of suspension of contractual offset for the Byron units
beginning in the second quarter of 2021 through September 15, 2021. With Generation's September 15, 2021 reversal of the previous decision to retire Byron, Generation resumed contractual offset for Byron as of that
date.
In 2021, primarily reflects the recognition of a valuation allowance against a deferred tax asset associated with Delaware net operating loss carryforwards due to a change in Delaware tax law. In 2021 and 2020, also
reflects the adjustment to deferred income taxes due to changes in forecasted apportionment.
(l)
(m) Represents elimination from Generation’s results of the noncontrolling interests related to certain exclusion items, primarily related to unrealized gains and losses on NDT fund investments for CENG units prior to
Generation's acquisition of EDF's interest in CENG on August 6, 2021 and the noncontrolling interest portion of a wind project impairment.
Significant 2021 Transactions and Developments
Separation
On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies with the resources necessary to best
serve customers and sustain long-term investment and operating excellence ("the separation"). The separation gives each company the financial and strategic independence to focus on its specific
customer needs, while executing its core business strategy. Exelon completed the separation on February 1, 2022. The new publicly traded company is Constellation Energy Corporation. See Note 26
— Separation of the Combined Notes to Consolidated Financial Statements for additional information.
In connection with the separation, Exelon incurred transaction costs of $122 million on a pre-tax basis for the year ended December 31, 2021, which are recorded in Operating and maintenance
expense. Exelon expects to incur incremental transaction costs of approximately $90 million in 2022. These costs are excluded from Adjusted (non-GAAP) Operating Earnings. The transaction costs
are primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the separation, and employee-related severance costs.
CENG Put Option
EDF had the option to sell its 49.99% equity interest in CENG to Generation exercisable beginning on January 1, 2016 and thereafter until June 30, 2022. On November 20, 2019, Generation received
notice of EDF’s intention to exercise the put option and sell its 49.99% equity interest in CENG to Generation and the put automatically exercised on January 19, 2020 at the end of the sixty-day
advance notice period. On August 6, 2021, Generation and EDF entered into a settlement agreement pursuant to which Generation, through a wholly owned subsidiary, purchased EDF’s equity interest
in CENG for a net purchase price of $885 million, which includes, among other things, an adjustment for EDF’s share of the balance of the preferred distribution payable by CENG to Generation. The
difference between the net purchase price and EDF’s noncontrolling interest as of the closing date was recorded to Common Stock in Exelon’s Consolidated Balance Sheet.
In connection with the settlement agreement, on August 6, 2021, Generation issued approximately $880 million under a term loan credit agreement to fund the transaction, which will expire on August
5, 2022.
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See Note Note 2 — Mergers, Acquisitions, and Dispositions and Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information.
Clean Energy Law
On September 15, 2021, the Illinois Public Act 102-0662 was signed into law by the Governor of Illinois (“Clean Energy Law”). The Clean Energy Law is designed to achieve 100% carbon-free power
by 2045 to enable the state’s transition to a clean energy economy. The Clean Energy Law establishes decarbonization requirements for Illinois as well as programs to support the retention and
development of emissions-free sources of electricity. Among other things, the Clean Energy Law authorized the IPA to procure up to 54.5 million CMCs from qualifying nuclear plants for a five-year
period beginning on June 1, 2022 through May 31, 2027. CMCs are credits for the carbon-free attributes of eligible nuclear power plants in PJM. The Byron, Dresden, and Braidwood nuclear plants
located in Illinois participated in the CMC procurement process and were awarded contracts that commit each plant to operate through May 31, 2027. Pursuant to these contracts, ComEd will procure
CMCs based upon the number of MWhs produced annually by each plant, subject to minimum performance requirements. ComEd is required to purchase CMCs pursuant to these contracts and all its
costs of doing so will be recovered through a new rider.
Following enactment of the Clean Energy Law, Generation announced on September 15, 2021, that it has reversed the previous decision to retire Byron and Dresden given the opportunity for
additional revenue. In addition, Generation no longer considers the Braidwood or LaSalle nuclear plants to be at risk for premature retirement. See Note 7 — Early Plant Retirements of the Combined
Notes to Consolidated Financial Statements for additional information and Early Retirement of Generation Facilities below.
The Clean Energy Law also contains requirements associated with ComEd’s transition away from the performance-based electric distribution formula rate. The law authorizing that rate setting process
sunsets at the end of 2022. The Clean Energy Law, and tariffs adopted under it, governs both the remaining reconciliations of rates set under that process and requires ComEd to file in 2023 its choice
of either a general rate case or a four-year multi-year plan to set rates that take effect in 2024. If ComEd elects to file a multi-year plan, that plan would set rates for 2024 – 2027, based on forecasted
revenue requirements and an ICC determined rate of return on rate base, including the cost of common equity. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial
Statements for additional information and other features of the Clean Energy Law.
Early Retirement of Generation Facilities
In August 2020, Generation announced the intention to retire the Byron Generating Station in September 2021, Dresden Generating Station in November 2021, and Mystic Units 8 and 9 at the
expiration of the cost of service commitment in May 2024. As a result, Exelon recognized a $500 million pre-tax impairment for the New England asset group along with certain one-time charges in the
third and fourth quarters of 2020 in addition to ongoing annual financial impacts stemming from shortening the expected economic useful lives of these facilities, primarily related to accelerated
depreciation of plant assets (including any ARC) and accelerated amortization of nuclear fuel.
In the second quarter of 2021, an incremental decline in value resulted in an additional pre-tax impairment charge of $350 million for the New England asset group.
Exelon recorded pre-tax charges of $53 million and $140 million, in the second and third quarters of 2021, respectively, for decommissioning-related activities that were not offset for the Byron units due
to the inability to recognize a regulatory asset at ComEd.
On September 15, 2021, Generation reversed the previous decision to early retire Byron and Dresden and the expected economic useful life for both facilities was updated to 2044 and 2046 for Byron
Units 1 and 2, respectively, and to 2029 and 2031 for Dresden Units 2 and 3, respectively. Depreciation was therefore adjusted beginning September 15, 2021, to reflect these extended useful life
estimates. In addition, in the third quarter of 2021, Exelon reversed approximately $81 million of severance benefit costs and $13 million of other one-time charges initially recorded in the third and
fourth quarters of 2020 associated with the early retirements.
All of the charges were excluded from Exelon's Adjusted (non-GAAP) Operating Earnings.
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Exelon recognized pre-tax expenses for Byron, Dresden, and Mystic Units 8 and 9 of $1,458 million for the year ended December 31, 2021, primarily due to accelerated depreciation and amortization
of plant assets, partially offset by the reversal of one-time charges for Byron and Dresden.
See Note 7 — Early Plant Retirements, Note 10 — Asset Retirement Obligations, and Note 12 — Asset Impairments of the Combined Notes to Consolidated Financial Statements for additional
information.
Impacts of the February 2021 Extreme Cold Weather Event and Texas-based Generating Assets Outages
Beginning on February 15, 2021, Generation’s Texas-based generating assets within the ERCOT market, specifically Colorado Bend II, Wolf Hollow II, and Handley, experienced outages as a result of
extreme cold weather conditions. In addition, those weather conditions drove increased demand for service, dramatically increased wholesale power prices, and also increased gas prices in certain
regions.
The estimated impact to Exelon’s Net income for the year ended December 31, 2021 arising from these market and weather conditions was a reduction of approximately $800 million. The ultimate
impact to Exelon’s consolidated financial statements may be affected by a number of factors, including the impacts of customer and counterparty defaults and recoveries, any additional solutions to
address the financial challenges caused by the event, and related litigation and contract disputes. See Note 3 — Regulatory Matters and Note 19 — Commitments and Contingencies of the Combined
Notes to Consolidated Financial Statements for additional information.
To offset a portion of the unfavorable impacts, Exelon identified between $410 million and $490 million of enhanced revenue opportunities, deferral of selected non-essential maintenance, and primarily
one-time cost savings, primarily at Generation, which was achieved in 2021.
Agreement for the Sale of a Generation Biomass Facility
On April 28, 2021, Generation and ReGenerate Energy Holdings, LLC ("ReGenerate") entered into a purchase agreement, under which ReGenerate agreed to purchase Generation's interest in the
Albany Green Energy biomass facility. As a result, in the second quarter of 2021, Exelon recorded a pre-tax impairment charge of $140 million which is excluded from Exelon’s Adjusted (non-GAAP)
Operating Earnings. The sale was completed on June 30, 2021 for a net purchase price of $36 million. Note 2 — Mergers, Acquisitions, and Dispositions of the Combined Notes to Consolidated
Financial Statements for additional information.
Utility Distribution Base Rate Case Proceedings
The Utility Registrants file base rate cases with their regulatory commissions seeking increases or decreases to their electric transmission and distribution, and gas distribution rates to recover their
costs and earn a fair return on their investments. The outcomes of these regulatory proceedings impact the Utility Registrants’ current and future financial statements.
The following tables show the Utility Registrants’ completed and pending distribution base rate case proceedings in 2021. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated
Financial Statements for additional information on these and other regulatory proceedings.
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Completed Distribution Base Rate Case Proceedings
Registrant/Jurisdiction
Filing Date
Service
Requested Revenue
Requirement (Decrease)
Increase
Approved Revenue
Requirement (Decrease)
Increase
April 16, 2020
Electric
$
(11) $
ComEd - Illinois
PECO - Pennsylvania
BGE - Maryland
Pepco - District of Columbia
Pepco - Maryland
DPL - Delaware
ACE - New Jersey
April 16, 2021
Electric
September 30, 2020
Natural Gas
March 30, 2021
Electric
May 15, 2020 (amended
September 11, 2020)
Electric
Natural Gas
May 30, 2019 (amended June
1, 2020)
October 26, 2020 (amended
March 31, 2021)
March 6, 2020 (amended
February 2, 2021)
December 9, 2020 (amended
February 26, 2021)
Electric
Electric
Electric
Electric
Pending Distribution Base Rate Case Proceedings
51
69
246
203
108
136
104
23
67
(14)
46
29
132
140
74
109
52
14
41
Approved ROE
Approval Date
Rate Effective Date
8.38 % December 9, 2020
January 1, 2021
7.36 % December 1, 2021
January 1, 2022
10.24 %
June 22, 2021
July 1, 2021
N/A
November 18, 2021
January 1, 2022
9.50 %
9.65 %
December 16, 2020
January 1, 2021
9.275 %
June 8, 2021
July 1, 2021
9.55 %
June 28, 2021
June 28, 2021
9.60 % September 15, 2021
October 6, 2020
9.60 %
July 14, 2021
January 1, 2022
Registrant/Jurisdiction
Filing Date
Service
Requested Revenue Requirement
Increase
Requested ROE
Expected Approval Timing
DPL - Delaware
DPL - Maryland
January 14, 2022
September 1, 2021 (amended
December 23, 2021)
Natural Gas
$
Electric
14
27
10.30 %
10.10 %
First quarter of 2023
First quarter of 2022
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Transmission Formula Rates
The following total increases/(decreases) were included in the Utility Registrants' 2021 annual electric transmission formula rate updates. See Note 3 — Regulatory Matters of the Combined Notes to
Consolidated Financial Statements for additional information.
ComEd
PECO
BGE
Pepco
DPL
ACE
Registrant
$
Initial Revenue
Requirement Increase
(Decrease)
Annual Reconciliation
Increase
Total Revenue
Requirement Increase
Allowed Return on Rate
Base
Allowed ROE
33 $
(2)
38
(9)
19
27
12 $
26
27
21
33
24
45
24
65
12
52
51
8.20 %
7.37 %
7.35 %
7.68 %
7.20 %
7.45 %
11.50 %
10.35 %
10.50 %
10.50 %
10.50 %
10.50 %
Other Key Business Drivers and Management Strategies
Utility Rates and Rate Proceedings
The Utility Registrants file rate cases with their regulatory commissions seeking increases or decreases to their electric transmission and distribution, and gas distribution rates to recover their costs
and earn a fair return on their investments. The outcomes of these regulatory proceedings impact the Utility Registrants’ current and future results of operations, cash flows, and financial positions. See
Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information on these regulatory proceedings.
Legislative and Regulatory Developments
FERC Supplemental Notice of Proposed Rulemaking
On April 15, 2021, FERC issued a Supplemental Notice of Proposed Rulemaking (NOPR) proposing to modify the current regulation permitting a continuous 50-basis-point ROE incentive adder for a
transmission utility that joins and remains a member of a RTO. Under the NOPR, the ROE incentive adder would only be available for a period of up to three years after a transmission utility newly joins
a RTO and all existing ROE incentive adders would end for transmission utilities that have been members for three or more years. The Utility Registrants’ existing transmission rates include the ROE
incentive adder. Exelon submitted comments to FERC on this matter on June 25, 2021. Exelon cannot predict the outcome, but a final rule as proposed could have an adverse impact to the
Registrants’ financial statements. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information regarding the Utility Registrants’
transmission formula rates and regulatory proceedings at FERC.
City of Chicago Franchise Agreement
ComEd has had a Franchise Agreement with the City of Chicago (the City) since 1992. The Franchise Agreement grants rights to use the public right of way to install, maintain, and operate the wires,
poles, and other infrastructure required to deliver electricity to residents and businesses across the City. The Franchise Agreement became terminable on one year notice as of December 31, 2020. It
now continues in effect indefinitely unless and until either party issues a notice of termination, effective one year later, or it is replaced by mutual agreement with a new franchise agreement between
ComEd and the City. If either party terminates and no new agreement is reached between the parties, the parties could continue with ComEd providing electric services within the City with no franchise
agreement in place. The City also has an option to terminate and purchase the ComEd system (“municipalize”), which also requires one year notice. Neither party has issued a
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notice of termination at this time, the City has not exercised its municipalization option, and no new agreement has been reached. Accordingly, the 1992 Franchise Agreement remains in effect at this
time. In April 2021, the City invited interested parties to respond to a Request for Information (RFI) regarding the franchise for electricity delivery. Under this process, the City could choose to terminate
the ComEd Franchise Agreement on one year notice and grant a franchise to another party instead. Final responses to the RFI were due on July 30, 2021, however, on July 29, 2021, the City chose to
extend the final submission deadline to September 30, 2021. ComEd submitted its response to the RFI by the due date and looks forward to continuing engagement with the City about its response.
While Exelon and ComEd cannot predict the ultimate outcome of the RFI and the Franchise Agreement, fundamental changes in the agreement or other adverse actions affecting ComEd’s business in
the City would require changes in their business planning models and operations and could have a material adverse impact on Exelon’s and ComEd’s consolidated financial statements. If the City were
to disconnect from the ComEd system, ComEd would seek full compensation for the business and its associated property taken by the City, as well as for all damages resulting to ComEd and its
system. ComEd would also seek appropriate compensation for stranded costs with FERC.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP requires that management apply accounting policies and make estimates and assumptions that affect results of operations and the
amounts of assets and liabilities reported in the financial statements. Management believes that the accounting policies described below require significant judgment in their application or incorporate
estimates and assumptions that are inherently uncertain and that may change in subsequent periods. Additional information on the application of these accounting policies can be found in the
Combined Notes to Consolidated Financial Statements.
Nuclear Decommissioning Asset Retirement Obligations (Exelon)
Exelon recorded AROs associated with decommissioning Generation's nuclear units of $12.7 billion at December 31, 2021. The authoritative guidance requires that Generation estimate its obligation
for the future decommissioning of its nuclear generating plants. To estimate that liability, Generation uses an internally-developed, probability-weighted, discounted cash flow model which, on a unit-by-
unit basis, considers multiple decommissioning outcome scenarios.
As a result of nuclear plant retirements in the industry, in recent years, nuclear operators and third-party service providers are obtaining more information about costs associated with decommissioning
activities. At the same time, regulators are gaining more information about decommissioning activities which could result in changes to existing decommissioning requirements. In addition, as more
nuclear plants are retired, it is possible that technological advances will be identified that could create efficiencies and lead to a reduction in decommissioning costs. The amount of NDT funds could
also impact the timing of the decommissioning activities. Additionally, certain factors such as changes in regulatory requirements during plant operations or the profitability of a nuclear plant could
impact the timing of plant retirements.
The nuclear decommissioning obligation is adjusted on a regular basis due to the passage of time and revisions to the key assumptions for the expected timing and/or estimated amounts of the future
undiscounted cash flows required to decommission the nuclear plants, based upon the following methodologies and significant estimates and assumptions:
Decommissioning Cost Studies. Generation uses unit-by-unit decommissioning cost studies to provide a marketplace assessment of the expected costs (in current year dollars) and timing of
decommissioning activities, which are validated by comparison to current decommissioning projects within the industry and other estimates. Decommissioning cost studies are updated, on a rotational
basis, for each of Generation’s nuclear units at least every five years, unless circumstances warrant more frequent updates. As part of the annual cost study update process, Generation evaluates
newly assumed costs or substantive changes in previously assumed costs to determine if the cost estimate impacts are sufficiently material to warrant application of the updated estimates to the AROs
across the nuclear fleet outside of the normal five-year rotating cost study update cycle.
Cost Escalation Factors. Generation uses cost escalation factors to escalate the decommissioning costs from the decommissioning cost studies discussed above through the assumed
decommissioning period for each of the units. Cost escalation studies, updated on an annual basis, are used to determine escalation factors, and are
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based on inflation indices for labor, equipment and materials, energy, LLRW disposal, and other costs. All the nuclear AROs are adjusted each year for updated cost escalation factors.
Probabilistic Cash Flow Models. Generation’s probabilistic cash flow models include the assignment of probabilities to various scenarios for decommissioning cost levels, decommissioning
approaches, and timing of plant shutdown on a unit-by-unit basis. Probabilities assigned to cost levels include an assessment of the likelihood of costs 20% higher (high-cost scenario) or 15% lower
(low-cost scenario) than the base cost scenario. The assumed decommissioning scenarios generally include the following three alternatives: (1) DECON, which assumes major decommissioning
activities begin shortly after the cessation of operation, (2) Shortened SAFSTOR, which generally assumes a 30-year delay prior to onset of major decommissioning activities, and (3) SAFSTOR, which
assumes the nuclear facility is placed and maintained in such condition during decommissioning so that the nuclear facility can be safely stored and subsequently decontaminated within 60 years after
cessation of operations. In each decommissioning scenario, spent fuel is transferred to dry cask storage as soon as possible until DOE acceptance for disposal.
The actual decommissioning approach selected once a nuclear facility is shutdown will be determined by Generation at the time of shutdown and may be influenced by multiple factors including the
funding status of the NDT funds at the time of shutdown and regulatory or other commitments.
The assumed plant shutdown timing scenarios include the following four alternatives: (1) the probability of operating through the original 40-year nuclear license term, (2) the probability of operating
through an initial 20-year license renewal term, (3) the probability of a second, 20-year license renewal term, and (4) the probability of early plant retirement for certain sites due to changing market
conditions and regulatory environments. As power market and regulatory environment developments occur, Generation evaluates and incorporates, as necessary, the impacts of such developments
into its nuclear ARO assumptions and estimates.
Generation’s probabilistic cash flow models also include an assessment of the timing of DOE acceptance of SNF for disposal. Generation currently assumes DOE will begin accepting SNF from the
industry in 2035. The SNF acceptance date assumption is based on management’s estimates of the amount of time required for DOE to select a site location and develop the necessary infrastructure
for long-term SNF storage. For additional information regarding SNF, see Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements.
Discount Rates. The probability-weighted estimated future cash flows for the various assumed scenarios are discounted using credit-adjusted, risk-free rates (CARFR). Generation initially recognizes
an ARO at fair value and subsequently adjusts it for changes to estimated costs, timing of future cash flows and modifications to decommissioning assumptions. The ARO is not required or permitted to
be re-measured for changes in the CARFR that occur in isolation. Increases in the ARO due to upward revisions in estimated undiscounted cash flows are considered new obligations and are
measured using a current CARFR as the increase creates a new cost layer within the ARO. Any decrease in the estimated undiscounted future cash flows relating to the ARO are treated as a
modification of an existing ARO cost layer and, therefore, are measured using the average historical CARFR rates used in creating the initial ARO cost layers. If all of Generation's future nominal cash
flows associated with the ARO were to be discounted at the current prevailing CARFR, the obligation would increase from approximately $12.7 billion to approximately $16.0 billion.
The following table illustrates the significant impact that changes in the CARFR, when combined with changes in projected amounts and expected timing of cash flows, can have on the valuation of the
ARO:
Change in the CARFR applied to the annual ARO update
2020 CARFR rather than the 2021 CARFR
2021 CARFR increased by 50 basis points
2021 CARFR decreased by 50 basis points
(Decrease) Increase to ARO as of December 31,
2021
$
(490)
(600)
750
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ARO Sensitivities. Changes in the assumptions underlying the ARO could materially affect the decommissioning obligation. The impact of a change in any one of these assumptions to the ARO is
highly dependent on how the other assumptions may correspondingly change.
The following table illustrates the effects of changing certain ARO assumptions while holding all other assumptions constant:
Change in ARO Assumption
Cost escalation studies
Uniform increase in escalation rates of 50 basis points
Probabilistic cash flow models
Increase the estimated costs to decommission the nuclear plants by 10 percent
Increase the likelihood of the DECON scenario by 10 percent and decrease the likelihood of the SAFSTOR scenario by 10 percent
Shorten each unit's probability weighted operating life assumption by 10 percent
Extend the estimated date for DOE acceptance of SNF to 2040
(b)
(a)
__________
(a) Excludes any sites in which management has committed to a specific decommissioning approach.
(b) Excludes any retired sites.
Increase to ARO as of December 31, 2021
$
2,900
1,110
480
1,570
290
See Note 1 — Significant Accounting Policies and Note 10 — Asset Retirement Obligations of the Combined Notes to Consolidated Financial Statements for additional information regarding accounting
for nuclear AROs.
Goodwill (Exelon, ComEd, and PHI)
As of December 31, 2021, Exelon’s $6.7 billion carrying amount of goodwill consists primarily of $2.6 billion at ComEd and $4 billion at PHI. These entities are required to perform an assessment for
possible impairment of their goodwill at least annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting units below
their carrying amount. A reporting unit is an operating segment or one level below an operating segment (known as a component) and is the level at which goodwill is assessed for impairment. ComEd
has a single operating segment and reporting unit. PHI’s operating segments and reporting units are Pepco, DPL, and ACE. See Note 5 — Segment Information of the Combined Notes to Consolidated
Financial Statements for additional information. Exelon's and ComEd’s goodwill has been assigned entirely to the ComEd reporting unit. Exelon's and PHI’s goodwill has been assigned to the Pepco,
DPL, and ACE reporting units in the amounts of $2.1 billion, $1.4 billion, and $0.5 billion, respectively. See Note 13 — Intangible Assets of the Combined Notes to Consolidated Financial Statements
for additional information.
Entities assessing goodwill for impairment have the option of first performing a qualitative assessment to determine whether a quantitative assessment is necessary. As part of the qualitative
assessments, Exelon, ComEd, and PHI evaluate, among other things, management's best estimate of projected operating and capital cash flows for their businesses, outcomes of recent regulatory
proceedings, changes in certain market conditions, including the discount rate and regulated utility peer EBITDA multiples, and the passing margin from their last quantitative assessments performed.
Application of the goodwill impairment assessment requires management judgment, including the identification of reporting units and determining the fair value of the reporting unit, which management
estimates using a weighted combination of a discounted cash flow analysis and a market multiples analysis. Significant assumptions used in these fair value analyses include discount and growth
rates, utility sector market performance and transactions, and projected operating and capital cash flows for ComEd’s, Pepco's, DPL's, and ACE's businesses and the fair value of debt.
While the 2021 annual assessments indicated no impairments, certain assumptions used in the assessment are highly sensitive to changes. Adverse regulatory actions or changes in significant
assumptions could potentially result in future impairments of Exelon’s, ComEd's, or PHI’s goodwill, which could be material.
See Note 1 — Significant Accounting Policies and Note 13 — Intangible Assets of the Combined Notes to Consolidated Financial Statements for additional information.
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Unamortized Energy Contract Assets and Liabilities (Exelon and PHI)
Unamortized energy contract assets and liabilities represent the remaining unamortized balances of non-derivative energy contracts that Generation has acquired and the electricity contracts Exelon
acquired as part of the PHI merger. The initial amount recorded represents the difference between the fair value of the contracts at the time of acquisition and the contract value based on the terms of
each contract. At Exelon and PHI, offsetting regulatory assets or liabilities were also recorded for those energy contract costs that are probable of recovery or refund through customer rates. The
unamortized energy contract assets and liabilities and any corresponding regulatory assets or liabilities, respectively, are amortized over the life of the contract in relation to the expected realization of
the underlying cash flows. Amortization of the unamortized energy contract assets and liabilities are recorded through purchased power and fuel expense or operating revenues, depending on the
nature of the underlying contract. See Note 3 — Regulatory Matters and Note 13 — Intangible Assets of the Combined Notes to Consolidated Financial Statements for additional information.
Impairment of Long-Lived Assets (Exelon)
Exelon regularly monitors and evaluates the carrying value of long-lived assets or asset groups for recoverability whenever events or changes in circumstances indicate that the carrying value of those
assets may not be recoverable. Indicators of potential impairment may include a deteriorating business climate, including, but not limited to, declines in energy prices, condition of the asset, or plans to
dispose of a long-lived asset significantly before the end of its useful life.
The review of long-lived assets or asset groups for impairment utilizes significant assumptions about operating strategies and estimates of future cash flows, which require assessments of current and
projected market conditions. For Generation, forecasting future cash flows requires assumptions regarding forecasted commodity prices for the sale of power and purchases of fuel and the expected
operations of assets. A variation in the assumptions used could lead to a different conclusion regarding the recoverability of an asset or asset group. An impairment evaluation is based on an
undiscounted cash flow analysis at the lowest level at which cash flows of the long-lived assets or asset groups are largely independent of the cash flows of other assets and liabilities. For Generation,
the lowest level of independent cash flows is determined by the evaluation of several factors, including the geographic dispatch of the generation units and the hedging strategies related to those units.
The cash flows from the generating units are generally evaluated at a regional portfolio level given the interdependency of cash flows generated from the customer supply and risk management
activities within each region. In certain cases, the generating assets may be evaluated on an individual basis where those assets are contracted on a long-term basis with a third party and operations
are independent of other generating assets (typically contracted renewables).
On a quarterly basis, Generation assesses its long-lived assets or asset groups for indicators of potential impairment. If indicators are present for a long-lived asset or asset group, a comparison of the
undiscounted expected future cash flows to the carrying value is performed. When the undiscounted cash flow analysis indicates the carrying value of a long-lived asset or asset group may not be
recoverable, the amount of the impairment loss is determined by measuring the excess of the carrying amount of the long-lived asset or asset group over its fair value. The fair value of the long-lived
asset or asset group is dependent upon a market participant’s view of the exit price of the asset or asset groups. This includes significant assumptions of the estimated future cash flows generated by
the asset or asset groups and market discount rates. Events and circumstances often do not occur as expected, resulting in differences between prospective financial information and actual results,
which may be material. The determination of fair value is driven by both internal assumptions that include significant unobservable inputs (Level 3), such as revenue and generation forecasts, projected
capital, maintenance expenditures, and discount rates, as well as information from various public, financial and industry sources.
See Note 12 — Asset Impairments of the Combined Notes to Consolidated Financial Statements for a discussion of asset impairment assessments.
Depreciable Lives of Property, Plant, and Equipment (All Registrants)
The Registrants have significant investments in electric generation assets and electric and natural gas transmission and distribution assets. These assets are generally depreciated on a straight-line
basis, using the group, composite, or unitary methods of depreciation. The group approach is typically for groups of similar assets
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that have approximately the same useful lives and the composite approach is used for heterogeneous assets that have different lives. Under both methods, a reporting entity depreciates the assets
over the average life of the assets in the group. The estimation of asset useful lives requires management judgment, supported by formal depreciation studies of historical asset retirement experience.
Depreciation studies are conducted periodically and as required by a rate regulator or if an event, regulatory action, or change in retirement patterns indicate an update is necessary.
For the Utility Registrants, depreciation studies generally serve as the basis for amounts allowed in customer rates for recovery of depreciation costs. Generally, the Utility Registrants adjust their
depreciation rates for financial reporting purposes concurrent with adjustments to depreciation rates reflected in customer rates, unless the depreciation rates reflected in customer rates do not align
with management’s judgment as to an appropriate estimated useful life or have not been updated on a timely basis. Depreciation expense and customer rates for ComEd, BGE, Pepco, DPL, and ACE
include an estimate of the future costs of dismantling and removing plant from service upon retirement. See Note 3 — Regulatory Matters of the Combined Notes to the Consolidated Financial
Statements for information regarding regulatory liabilities and assets recorded by ComEd, BGE, Pepco, DPL, and ACE related to removal costs.
PECO’s removal costs are capitalized to accumulated depreciation when incurred, and recorded to depreciation expense over the life of the new asset constructed consistent with PECO’s regulatory
recovery method. Estimates for such removal costs are also evaluated in the periodic depreciation studies.
At Generation, along with depreciation study results, management considers expected future energy market conditions and generation plant operating costs and capital investment requirements in
determining the estimated service lives of its generating facilities and reassesses the reasonableness of estimated useful lives whenever events or changes in circumstances warrant. When a
determination has been made that an asset will be retired before the end of its current estimated useful life, depreciation provisions will be accelerated to reflect the shortened estimated useful life. See
Note 7 — Early Plant Retirements of the Combined Notes to the Consolidated Financial Statements for additional information.
Changes in estimated useful lives of electric generation assets and of electric and natural gas transmission and distribution assets could have a significant impact on the Registrants’ future results of
operations. See Note 1 — Significant Accounting Policies of the Combined Notes to Consolidated Financial Statements for information regarding depreciation and estimated service lives of the
property, plant, and equipment of the Registrants.
Defined Benefit Pension and Other Postretirement Employee Benefits (All Registrants)
Exelon sponsors defined benefit pension plans and OPEB plans for substantially all current employees. The measurement of the plan obligations and costs of providing benefits involves various
factors, including the development of valuation assumptions and inputs and accounting policy elections. When developing the required assumptions, Exelon considers historical information as well as
future expectations. The measurement of benefit obligations and costs is affected by several assumptions including the discount rate, the long-term expected rate of return on plan assets, the
anticipated rate of increase of health care costs, Exelon's contributions, the rate of compensation increases, and the long-term expected investment rate credited to employees of certain plans, among
others. The assumptions are updated annually and upon any interim remeasurement of the plan obligations.
Pension and OPEB plan assets include equity securities, including U.S. and international securities, and fixed income securities, as well as certain alternative investment classes such as real estate,
private equity, and hedge funds.
Expected Rate of Return on Plan Assets. In determining the EROA, Exelon considers historical economic indicators (including inflation and GDP growth) that impact asset returns, as well as
expectation regarding future long-term capital market performance, weighted by Exelon’s target asset class allocations. Exelon calculates the amount of expected return on pension and OPEB plan
assets by multiplying the EROA by the MRV of plan assets at the beginning of the year, taking into consideration anticipated contributions and benefit payments to be made during the year. In
determining MRV, the authoritative guidance for pensions and postretirement benefits allows the use of either fair value or a calculated value that recognizes changes in fair value in a systematic and
rational manner over not more than five years. For the majority of pension plan assets, Exelon uses a calculated value that adjusts for 20% of the difference between fair value and expected MRV of
plan assets. Use of this
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calculated value approach enables less volatile expected asset returns to be recognized as a component of pension cost from year to year. For OPEB plan assets and certain pension plan assets,
Exelon uses fair value to calculate the MRV.
Discount Rate. The discount rates are determined by developing a spot rate curve based on the yield to maturity of a universe of high-quality non-callable (or callable with make whole provisions)
bonds with similar maturities to the related pension and OPEB obligations. The spot rates are used to discount the estimated future benefit distribution amounts under the pension and OPEB plans.
The discount rate is the single level rate that produces the same result as the spot rate curve. Exelon utilizes an analytical tool developed by its actuaries to determine the discount rates.
Mortality. The mortality assumption is composed of a base table that represents the current expectation of life expectancy of the population adjusted by an improvement scale that attempts to
anticipate future improvements in life expectancy. Exelon’s mortality assumption utilizes the SOA 2019 base table (Pri-2012) and MP-2021 improvement scale adjusted to use Proxy SSA ultimate
improvement rates.
Sensitivity to Changes in Key Assumptions. The following tables illustrate the effects of changing certain of the actuarial assumptions discussed above, while holding all other assumptions constant:
Actuarial Assumption
Change in 2021 cost:
Discount rate
(a)
EROA
Change in benefit obligation at December 31, 2021:
Discount rate
(a)
Actual Assumption
Pension
OPEB
2.58%
2.58%
7.00%
7.00%
2.92%
2.92%
2.51%
2.51%
6.46%
6.46%
2.88%
2.88%
$
Change in
Assumption
0.5%
(0.5)%
0.5%
(0.5)%
0.5%
(0.5)%
Pension
OPEB
Total
(57) $
82
(95)
95
(1,393)
1,618
(10) $
11
(12)
12
(242)
279
(67)
93
(107)
107
(1,635)
1,897
__________
(a)
In general, the discount rate will have a larger impact on the pension and OPEB cost and obligation as the rate moves closer to 0%. Therefore, the discount rate sensitivities above cannot necessarily be extrapolated for
larger increases or decreases in the discount rate. Additionally, Exelon utilizes a liability-driven investment strategy for its pension asset portfolio. The sensitivities shown above do not reflect the offsetting impact that
changes in discount rates may have on pension asset returns.
See Note 1 — Significant Accounting Policies and Note 15 — Retirement Benefits of the Combined Notes to Consolidated Financial Statements for additional information regarding the accounting for
the defined benefit pension plans and OPEB plans.
Regulatory Accounting (All Registrants)
For their regulated electric and gas operations, the Registrants reflect the effects of cost-based rate regulation in their financial statements, which is required for entities with regulated operations that
meet the following criteria: (1) rates are established or approved by a third-party regulator; (2) rates are designed to recover the entities’ cost of providing services or products; and (3) a reasonable
expectation that rates designed to recover costs can be charged to and collected from customers. Regulatory assets represent incurred costs that have been deferred because of their probable future
recovery from customers through regulated rates. Regulatory liabilities represent (1) revenue or gains that have been deferred because it is probable such amounts will be returned to customers
through future regulated rates; or (2) billings in advance of expenditures for approved regulatory programs. If it is concluded in a future period that a separable portion of operations no longer meets the
criteria discussed above, the Registrants would be required to eliminate any associated regulatory assets and liabilities and the impact, which could be material, would be recognized in the
Consolidated Statements of Operations and Comprehensive Income.
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The following table illustrates gains (losses) to be included in net income that could result from the elimination of regulatory assets and liabilities and charges against OCI related to deferred costs
associated with Exelon's pension and OPEB plans that are recorded as regulatory assets in Exelon's Consolidated Balance Sheets (before taxes):
December 31, 2021
Gain (loss)
Charge against OCI
(a)
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
$
3,743
(3,259)
$
$
4,739 $
— $
(262) $
— $
268 $
— $
(920) $
— $
(182) $
— $
186 $
— $
(239)
—
___________
(a) Exelon's charge against OCI (before taxes) consists of up to $2.2 billion, $391 million, $703 million, $323 million, $154 million, and $91 million related to ComEd's, BGE's, PHI's, Pepco's, DPL's, and ACE's respective
portions of the deferred costs associated with Exelon's pension and OPEB plans. Exelon also has a net regulatory liability of $66 million (before taxes) related to PECO’s portion of the deferred costs associated with
Exelon’s OPEB plans that would result in an increase in OCI if reversed.
See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information regarding regulatory matters, including the regulatory assets and liabilities of
the Registrants.
For each regulatory jurisdiction in which they conduct business, the Registrants assess whether the regulatory assets and liabilities continue to meet the criteria for probable future recovery or refund at
each balance sheet date and when regulatory events occur. This assessment includes consideration of recent rate orders, historical regulatory treatment for similar costs in each Registrant's
jurisdictions, and factors such as changes in applicable regulatory and political environments. If the assessments and estimates made by the Registrants for regulatory assets and regulatory liabilities
are ultimately different than actual regulatory outcomes, the impact in their consolidated financial statements could be material.
Refer to the revenue recognition discussion below for additional information on the annual revenue reconciliations associated with ICC-approved electric distribution and energy efficiency formula rates
for ComEd, and FERC transmission formula rate tariffs for the Utility Registrants.
Accounting for Derivative Instruments (All Registrants)
The Registrants use derivative instruments to manage commodity price risk, foreign currency exchange risk, and interest rate risk related to ongoing business operations. The Registrants’ derivative
activities are in accordance with Exelon’s Risk Management Policy (RMP). See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional
information.
The Registrants account for derivative financial instruments under the applicable authoritative guidance. Determining whether a contract qualifies as a derivative requires that management exercise
significant judgment, including assessing market liquidity as well as determining whether a contract has one or more underlying and one or more notional quantities. Changes in management’s
assessment of contracts and the liquidity of their markets, and changes in authoritative guidance, could result in previously excluded contracts becoming in scope of new authoritative guidance.
All derivatives are recognized on the balance sheet at their fair value, except for certain derivatives that qualify for, and are elected under, NPNS. Derivatives entered for economic hedging and for
proprietary trading purposes are recorded at fair value through earnings. For economic hedges that are not designated for hedge accounting for the Utility Registrants, changes in the fair value each
period are generally recorded with a corresponding offsetting regulatory asset or liability given the likelihood of recovering the associated costs through customer rates.
NPNS. As part of Generation’s energy marketing business, Generation enters contracts to buy and sell energy to meet the requirements of its customers. These contracts include short-term and long-
term commitments to purchase and sell energy and energy-related products in the retail and wholesale markets with the intent and ability to deliver or take delivery. While some of these contracts are
considered derivative financial instruments under the authoritative guidance, certain of these qualifying transactions have been designated by Generation as NPNS transactions, which are thus not
required to be recorded at fair value, but rather on an accrual basis of accounting. Determining whether a contract qualifies for the NPNS requires judgment on whether the contract will physically
deliver and requires that management ensure compliance with all the associated qualification and
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documentation requirements. Revenues and expenses on contracts that qualify as NPNS are recognized when the underlying physical transaction is completed. Contracts that qualify for the NPNS are
those for which physical delivery is probable, quantities are expected to be used or sold in the normal course of business over a reasonable period, and the contract is not financially settled on a net
basis. The contracts that ComEd has entered into with suppliers as part of ComEd’s energy procurement process, PECO’s full requirement contracts under the PAPUC-approved DSP program, most of
PECO’s natural gas supply agreements, all of BGE’s full requirement contracts and natural gas supply agreements that are derivatives, and certain Pepco, DPL, and ACE full requirement contracts
qualify for and are accounted for under the NPNS.
Commodity Contracts. Identification of a commodity contract as an economic hedge requires Generation to determine that the contract is in accordance with the RMP. Generation reassesses its
economic hedges on a regular basis to determine if they continue to be within the guidelines of the RMP.
As a part of the authoritative guidance, the Registrants make estimates and assumptions concerning future commodity prices, load requirements, interest rates, the timing of future transactions and
their probable cash flows, the fair value of contracts and the expected changes in the fair value in deciding whether to enter derivative transactions, and in determining the initial accounting treatment
for derivative transactions. Under the authoritative guidance for fair value measurements, the Registrants categorize these derivatives under a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value.
Derivative contracts are traded in both exchange-based and non-exchange-based markets. Exchange-based derivatives that are valued using unadjusted quoted prices in active markets are generally
categorized in Level 1 in the fair value hierarchy.
Certain derivative pricing is verified using indicative price quotations available through brokers or over-the-counter, online exchanges. The price quotations reflect the average of the mid-point of the
bid-ask spread from observable markets that the Registrants believe provide the most liquid market for the commodity. The price quotations are reviewed and corroborated to ensure the prices are
observable and representative of an orderly transaction between market participants. The Registrant’s derivatives are traded predominantly at liquid trading points. The remaining derivative contracts
are valued using models that consider inputs such as contract terms, including maturity, and market parameters, and assumptions of the future prices of energy, interest rates, volatility, credit
worthiness, and credit spread. For derivatives that trade in liquid markets, such as generic forwards, swaps, and options, the model inputs are generally observable. Such instruments are categorized
in Level 2.
For derivatives that trade in less liquid markets with limited pricing information, the model inputs generally would include both observable and unobservable inputs and are categorized in Level 3.
The Registrants consider nonperformance risk, including credit risk in the valuation of derivative contracts, and both historical and current market data in its assessment of nonperformance risk. The
impacts of nonperformance and credit risk to date have generally not been material to the financial statements.
See ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK and Note 18 — Fair Value of Financial Assets and Liabilities and Note 16 — Derivative Financial
Instruments of the Combined Notes to Consolidated Financial Statements for additional information regarding the Registrants’ derivative instruments.
Taxation (All Registrants)
Significant management judgment is required in determining the Registrants’ provisions for income taxes, primarily due to the uncertainty related to tax positions taken, as well as deferred tax assets
and liabilities and valuation allowances. The Registrants account for uncertain income tax positions using a benefit recognition model with a two-step approach including a more-likely-than-not
recognition threshold and a measurement approach based on the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. Management evaluates each
position based solely on the technical merits and facts and circumstances of the position, assuming the position will be examined by a taxing authority having full knowledge of all relevant information.
Significant judgment is required to determine whether the recognition threshold has been met and, if so, the appropriate amount of tax benefits to be recorded in the Registrants’ consolidated financial
statements.
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The Registrants evaluate quarterly the probability of realizing deferred tax assets by reviewing a forecast of future taxable income and their intent and ability to implement tax planning strategies, if
necessary, to realize deferred tax assets. The Registrants also assess negative evidence, such as the expiration of historical operating loss or tax credit carryforwards, that could indicate the
Registrant's inability to realize its deferred tax assets. Based on the combined assessment, the Registrants record valuation allowances for deferred tax assets when it is more-likely-than-not such
benefit will not be realized in future periods.
Actual income taxes could vary from estimated amounts due to the future impacts of various items, including future changes in income tax laws, the Registrants’ forecasted financial condition and
results of operations, failure to successfully implement tax planning strategies, as well as results of audits and examinations of filed tax returns by taxing authorities. See Note 14 — Income Taxes of
the Combined Notes to Consolidated Financial Statements for additional information.
Accounting for Loss Contingencies (All Registrants)
In the preparation of their financial statements, the Registrants make judgments regarding the future outcome of contingent events and record liabilities for loss contingencies that are probable and can
be reasonably estimated based upon available information. The amount recorded may differ from the actual expense incurred when the uncertainty is resolved. Such difference could have a significant
impact in the Registrants' consolidated financial statements.
Environmental Costs. Environmental investigation and remediation liabilities are based upon estimates with respect to the number of sites for which the Registrants will be responsible, the scope and
cost of work to be performed at each site, the portion of costs that will be shared with other parties, the timing of the remediation work, regulations, and the requirements of local governmental
authorities. Annual studies and/or reviews are conducted at ComEd, PECO, BGE, and DPL to determine future remediation requirements for MGP sites and estimates are adjusted accordingly. In
addition, periodic reviews are performed at each of the Registrants to assess the adequacy of other environmental reserves. These matters, if resolved in a manner different from the estimate, could
have a significant impact in the Registrants’ consolidated financial statements. See Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for
additional information.
Other, Including Personal Injury Claims. The Registrants are self-insured for general liability, automotive liability, workers’ compensation, and personal injury claims to the extent that losses are
within policy deductibles or exceed the amount of insurance maintained. The Registrants have reserves for both open claims asserted, and an estimate of claims incurred but not reported (IBNR). The
IBNR reserve is estimated based on actuarial assumptions and analysis and is updated annually. Future events, such as the number of new claims to be filed each year, the average cost of disposing
of claims, as well as the numerous uncertainties surrounding litigation and possible state and national legislative measures could cause the actual costs to be higher or lower than estimated.
Accordingly, these claims, if resolved in a manner different from the estimate, could have a material impact to the Registrants’ consolidated financial statements.
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Revenue Recognition (All Registrants)
Sources of Revenue and Determination of Accounting Treatment. The Registrants earn revenues from various business activities including: the sale of power and energy-related products, such as
natural gas, capacity, and other commodities in non-regulated markets (wholesale and retail); the sale and delivery of power and natural gas in regulated markets; and the provision of other energy-
related non-regulated products and services.
The accounting treatment for revenue recognition is based on the nature of the underlying transaction and applicable authoritative guidance. The Registrants primarily apply the Revenue from
Contracts with Customers, Derivative Revenues, and Alternative Revenue Program Accounting guidance to recognize revenue as discussed in more detail below.
Revenue from Contracts with Customers. The Registrants recognize revenues in the period in which the performance obligations within contracts with customers are satisfied, which generally
occurs when power, natural gas, and other energy-related commodities are physically delivered to the customer. Transactions of the Registrants within the scope of Revenue from Contracts with
Customers generally include non-derivative agreements, contracts that are designated as NPNS, sales to utility customers under regulated service tariffs, and spot-market energy commodity sales,
including settlements with ISOs.
The determination of Generation’s and the Utility Registrants' retail power and natural gas sales to individual customers is based on systematic readings of customer meters, generally monthly. At the
end of each month, amounts of energy delivered to customers since the date of the last meter reading are estimated, and corresponding unbilled revenue is recorded. The measurement of unbilled
revenue is affected by the following factors: daily customer usage measured by generation or gas throughput volume, customer usage by class, losses of energy during delivery to customers and
applicable customer rates. Increases or decreases in volumes delivered to the utilities’ customers and favorable or unfavorable rate mix due to changes in usage patterns in customer classes in the
period could be significant to the calculation of unbilled revenue. In addition, revenues may fluctuate monthly as a result of customers electing to use an alternative supplier, since unbilled commodity
revenues are not recorded for these customers. Changes in the timing of meter reading schedules and the number and type of customers scheduled for each meter reading date also impact the
measurement of unbilled revenue; however, total operating revenues would remain materially unchanged. See Note 1 — Significant Accounting Policies of the Combined Notes to Consolidated
Financial Statements for additional information.
Derivative Revenues. The Registrants record revenues and expenses using the mark-to-market method of accounting for transactions that are accounted for as derivatives. These derivative
transactions primarily relate to commodity price risk management activities. Mark-to-market revenues and expenses include: inception gains or losses on new transactions where the fair value is
observable, unrealized gains and losses from changes in the fair value of open contracts, and realized gains and losses.
Alternative Revenue Program Accounting. Certain of the Utility Registrants’ ratemaking mechanisms qualify as ARPs if they (i) are established by a regulatory order and allow for automatic
adjustment to future rates, (ii) provide for additional revenues (above those amounts currently reflected in the price of utility service) that are objectively determinable and probable of recovery, and (iii)
allow for the collection of those additional revenues within 24 months following the end of the period in which they were recognized. For mechanisms that meet these criteria, which include the Utility
Registrants’ formula rate mechanisms and revenue decoupling mechanisms, the Utility Registrants adjust revenue and record an offsetting regulatory asset or liability once the condition or event
allowing additional billing or refund has occurred. The ARP revenues presented in the Utility Registrants’ Consolidated Statements of Operations and Comprehensive Income include both: (i) the
recognition of “originating” ARP revenues (when the regulator-specified condition or event allowing for additional billing or refund has occurred) and (ii) an equal and offsetting reversal of the
“originating” ARP revenues as those amounts are reflected in the price of utility service and recognized as Revenue from Contracts with Customers.
ComEd records ARP revenue for its best estimate of the electric distribution, energy efficiency, distributed generation rebates, and transmission revenue impacts resulting from future changes in rates
that ComEd believes are probable of approval by the ICC and FERC in accordance with its formula rate mechanisms. BGE, Pepco, DPL, and ACE record ARP revenue for their best estimate of the
electric and natural gas distribution revenue impacts resulting from future changes in rates that they believe are probable of approval by the MDPSC, DCPSC, and/or NJBPU in accordance with their
revenue decoupling mechanisms. PECO, BGE, Pepco, DPL,
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and ACE record ARP revenue for their best estimate of the transmission revenue impacts resulting from future changes in rates that they believe are probable of approval by FERC in accordance with
their formula rate mechanisms. Estimates of the current year revenue requirement are based on actual and/or forecasted costs and investments in rate base for the period and the rates of return on
common equity and associated regulatory capital structure allowed under the applicable tariff. The estimated reconciliation can be affected by, among other things, variances in costs incurred,
investments made, allowed ROE, and actions by regulators or courts.
See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information.
Allowance for Credit Losses on Customer Accounts Receivable (All Registrants)
Utility Registrants estimate the allowance for credit losses on customer receivables by applying loss rates developed specifically for each company based on historical loss experience, current
conditions, and forward-looking risk factors to the outstanding receivable balance by customer risk segment. Risk segments represent a group of customers with similar forward-looking credit quality
indicators and risk factors that are comprised based on various attributes, including delinquency of their balances and payment history and represent expected, future customer behavior. Loss rates
applied to the accounts receivable balances are based on a historical average of charge-offs as a percentage of accounts receivable in each risk segment. The Utility Registrants' customer accounts
are generally considered delinquent if the amount billed is not received by the time the next bill is issued, which normally occurs on a monthly basis. Utility Registrants' customer accounts are written off
consistent with approved regulatory requirements. Utility Registrants' allowances for credit losses will continue to be affected by changes in volume, prices, and economic conditions as well as changes
in ICC, PAPUC, MDPSC, DCPSC, DEPSC, and NJBPU regulations.
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Results of Operations by Registrant or Subsidiary
Results of Operations—ComEd
Operating revenues
Operating expenses
Purchased power expense
Operating and maintenance
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
ComEd
Favorable (Unfavorable)
Variance
502
(273)
165
(72)
(21)
(201)
301
(7)
5
(2)
299
5
304
2021
2020
$
6,406 $
5,904 $
2,271
1,355
1,205
320
5,151
1,255
(389)
48
(341)
914
172
1,998
1,520
1,133
299
4,950
954
(382)
43
(339)
615
177
$
742 $
438 $
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income increased by $304 million primarily due to increases in electric distribution formula rate earnings
(reflecting the impacts of higher rate base and higher allowed electric distribution ROE due to an increase in treasury rates) and payments that ComEd made in 2020 under the Deferred Prosecution
Agreement. See Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information related to the Deferred Prosecution Agreement.
The changes in Operating revenues consisted of the following:
Electric Distribution
Energy efficiency
Transmission
Other
Regulatory required programs
Total increase
2021 vs. 2020
Increase
135
42
13
23
213
289
502
$
$
Revenue Decoupling. The demand for electricity is affected by weather and customer usage. Operating revenues are not impacted by abnormal weather, usage per customer, or number of customers
as a result of revenue decoupling mechanisms implemented pursuant to FEJA.
Distribution Revenue. EIMA and FEJA provide for a performance-based formula rate, which requires an annual reconciliation of the revenue requirement in effect to the actual costs that the ICC
determines are prudently and reasonably incurred in a given year. Electric distribution revenue varies from year to year based upon fluctuations in the underlying costs (e.g., severe weather and storm
restoration), investments being recovered, and allowed ROE. Electric distribution revenue increased during the year ended December 31, 2021, as compared to the same period in 2020, due to the
impact of higher rate base and higher allowed ROE due to an increase in treasury rates.
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ComEd
Energy Efficiency Revenue. FEJA provides for a performance-based formula rate, which requires an annual reconciliation of the revenue requirement in effect to the actual costs that the ICC
determines are prudently and reasonably incurred in a given year. Under FEJA, energy efficiency revenue varies from year to year based upon fluctuations in the underlying costs, investments being
recovered, and allowed ROE. Energy efficiency revenue increased during the year ended December 31, 2021, as compared to the same period in 2020, primarily due to increased regulatory asset
amortization, which is fully recoverable.
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs, capital investments being recovered, and the
highest daily peak load, which is updated annually in January based on the prior calendar year. Generally, increases/decreases in the highest daily peak load will result in higher/lower transmission
revenue. During the year ended December 31, 2021, as compared to the same period in 2020, transmission revenues increased primarily due to the impact of a higher rate base.
Other Revenue primarily includes assistance provided to other utilities through mutual assistance programs. Other revenue increased for the year ended December 31, 2021, as compared to the same
period in 2020, which primarily reflects mutual assistance revenues associated with storm restoration efforts.
Regulatory Required Programs represents revenues collected under approved riders to recover costs incurred for regulatory programs such as recoveries under the credit loss expense tariff,
environmental costs associated with MGP sites, and costs related to electricity, ZEC, and REC procurement. The riders are designed to provide full and current cost recovery. The costs of these
programs are included in Purchased power expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income. Customers have the choice to
purchase electricity from competitive electric generation suppliers. Customer choice programs do not impact the volume of deliveries as ComEd remains the distribution service provider for all
customers and charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation from competitive suppliers, ComEd
either acts as the billing agent or the competitive supplier separately bills its own customers, and therefore does not record Operating revenues or Purchased power expense related to the electricity.
For customers that choose to purchase electric generation from ComEd, ComEd is permitted to recover the electricity, ZEC, and REC procurement costs without mark-up and therefore records equal
and offsetting amounts in Operating revenues and Purchased power expense related to the electricity, ZECs, and RECs.
See Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of ComEd's revenue disaggregation.
The increase of $273 million for the year ended December 31, 2021, as compared to the same period in 2020, in Purchased power expense is offset in Operating revenues as part of regulatory
required programs.
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The changes in Operating and maintenance expense consisted of the following:
Deferred Prosecution Agreement payments
(a)
BSC costs
Labor, other benefits, contracting, and materials
Pension and non-pension postretirement benefits expense
Storm-related costs
Other
Regulatory required programs
(b)
Total decrease
__________
(a) See Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information.
(b) ComEd is allowed to recover from or refund to customers the difference between its annual credit loss expense and the amounts collected in rates annually through a rider mechanism.
The changes in Depreciation and amortization expense consisted of the following:
Depreciation and amortization
Regulatory asset amortization
(a)
(b)
Total increase
__________
(a) Reflects ongoing capital expenditures.
(b)
Includes amortization of ComEd's energy efficiency formula rate regulatory asset.
ComEd
(200)
21
(5)
6
(6)
4
(180)
15
(165)
48
24
72
2021 vs. 2020
(Decrease) Increase
2021 vs. 2020
Increase
$
$
$
$
Effective income tax rates for the years ended December 31, 2021 and 2020, were 18.8% and 28.8%, respectively. See Note 14 — Income Taxes of the Combined Notes to Consolidated Financial
Statements for additional information regarding the components of the effective income tax rates.
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Results of Operations—PECO
Operating revenues
Operating expenses
Purchased power and fuel expense
Operating and maintenance
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
PECO
(Unfavorable) Favorable
Variance
140
(63)
41
(1)
(12)
(35)
105
(14)
8
(6)
99
(42)
57
2021
2020
$
3,198 $
3,058 $
1,081
934
348
184
2,547
651
(161)
26
(135)
516
12
1,018
975
347
172
2,512
546
(147)
18
(129)
417
(30)
$
504 $
447 $
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income increased by $57 million primarily due to favorable weather conditions, an increase in volume, and a
decrease in storm cost activity, net of tax repair deductions.
The changes in Operating revenues consisted of the following:
Weather
Volume
Pricing
Transmission
Other
Regulatory required programs
Total increase
2021 vs. 2020
(Decrease) Increase
Electric
Gas
Total
$
$
16 $
15
12
13
1
57
58
115 $
1 $
13
7
—
3
24
1
25 $
17
28
19
13
4
81
59
140
Weather. The demand for electricity and natural gas is affected by weather conditions. With respect to the electric business, very warm weather in summer months and, with respect to the electric and
natural gas businesses, very cold weather in winter months are referred to as “favorable weather conditions” because these weather conditions result in increased deliveries of electricity and natural
gas. Conversely, mild weather reduces demand. For the year ended December 31, 2021 compared to the same period in 2020, Operating revenues related to weather increased due to the impact of
favorable weather conditions in PECO's service territory.
Heating and cooling degree days are quantitative indices that reflect the demand for energy needed to heat or cool a home or business. Normal weather is determined based on historical average
heating and cooling degree days for a 30-year period in PECO’s service territory. The changes in heating and cooling degree days in PECO’s service territory for the years ended December 31, 2021
compared to the same period in 2020 and normal weather consisted of the following:
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PECO
Heating and Cooling Degree-Days
2021
2020
Normal
2021 vs. 2020
2021 vs. Normal
Heating Degree-Days
Cooling Degree-Days
3,946
1,586
3,959
1,521
4,409
1,435
(0.3)%
4.3 %
(10.5)%
10.5 %
For the Years Ended December 31,
% Change
Volume. Electric volume, exclusive of the effects of weather, for the year ended December 31, 2021 compared to the same period in 2020, increased on a net basis due to an increase in overall usage
for customers further increased by customer growth. Natural gas volume for the year ended December 31, 2021 compared to the same period in 2020, increased due to retail load growth.
(a)
Electric Retail Deliveries to Customers (in GWhs)
Retail Deliveries
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Total electric retail deliveries
2021
2020
% Change 2021 vs. 2020
Weather - Normal %
Change
(b)
14,262
7,597
14,003
559
36,421
14,041
7,210
13,669
575
35,495
1.6 %
5.4 %
2.4 %
(2.8)%
2.6 %
0.1 %
4.3 %
2.1 %
(2.8)%
1.7 %
__________
(a) Reflects delivery volumes and revenue from customers purchasing electricity directly from PECO and customers purchasing electricity from a competitive electric generation supplier as all customers are assessed
distribution charges.
(b) Reflects the change in delivery volumes assuming normalized weather based on the historical 30-year average.
Number of Electric Customers
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Total
(a)
Natural Gas Deliveries to customers (in mmcf)
Retail Deliveries
Residential
Small commercial & industrial
Large commercial & industrial
Transportation
Total natural gas deliveries
As of December 31,
2021
2020
1,517,806
155,308
3,107
10,306
1,686,527
1,508,622
154,421
3,101
10,206
1,676,350
2021
2020
% Change 2021 vs. 2020
Weather - Normal %
Change
(b)
39,580
21,361
34
25,081
86,056
38,272
19,341
36
24,533
82,182
3.4 %
10.4 %
(5.6)%
2.2 %
4.7 %
1.4 %
7.0 %
8.3 %
1.4 %
2.8 %
__________
(a) Reflects delivery volumes and revenue from customers purchasing electricity directly from PECO and customers purchasing electricity from a competitive electric generation supplier as all customers are assessed
distribution charges.
(b) Reflects the change in delivery volumes assuming normalized weather based on the historical 30-year average.
Number of Gas Customers
Residential
Small commercial & industrial
Large commercial & industrial
Transportation
Total
As of December 31,
2021
2020
497,873
44,815
6
670
543,364
492,298
44,472
5
713
537,488
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PECO
Pricing for the year ended December 31, 2021 compared to the same period in 2020 increased primarily due to higher overall effective rates due to favorable customer mix. Additionally, the increase
represents revenue from higher natural gas distribution rates.
Transmission Revenue. Under a FERC approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered.
Other Revenue primarily includes revenue related to late payment charges. Other revenues for the year ended December 31, 2021 compared to the same period in 2020, remained relatively
consistent.
Regulatory Required Programs represents revenues collected under approved riders to recover costs incurred for regulatory programs such as energy efficiency, PGC, and the GSA. The riders are
designed to provide full and current cost recovery as well as a return. The costs of these programs are included in Purchased power and fuel expense, Operating and maintenance expense,
Depreciation and amortization expense, and Income taxes. Customers have the choice to purchase electricity and natural gas from competitive electric generation and natural gas suppliers. Customer
choice programs do not impact the volume of deliveries as PECO remains the distribution service provider for all customers and charges a regulated rate for distribution service, which is recorded in
Operating revenues. For customers that choose to purchase electric generation or natural gas from competitive suppliers, PECO either acts as the billing agent or the competitive supplier separately
bills its own customers and therefore PECO does not record Operating revenues or Purchased power and fuel expense related to the electricity and/or natural gas. For customers that choose to
purchase electric generation or natural gas from PECO, PECO is permitted to recover the electricity, natural gas, and REC procurement costs without mark-up and therefore records equal and
offsetting amounts in Operating revenues and Purchased power and fuel expense related to the electricity, natural gas, and RECs.
See Note 5—Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of PECO's revenue disaggregation.
The increase of $63 million for the year ended December 31, 2021 compared to the same period in 2020, respectively, in Purchased power and fuel expense is fully offset in Operating revenues as
part of regulatory required programs.
The changes in Operating and maintenance expense consisted of the following:
Storm-related costs
(a)
Credit loss expense
Labor, other benefits, contracting, and materials
BSC costs
Pension and non-pension postretirement benefits expense
Other
Regulatory Required Programs
Total decrease
__________
(a) Primarily reflects the absence of costs in 2021 due to the June and August 2020 storms.
77
2021 vs. 2020
Increase (Decrease)
(64)
(3)
23
19
2
(8)
(31)
(10)
(41)
$
$
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The changes in Depreciation and amortization expense consisted of the following:
Depreciation and amortization
(a)
Regulatory asset amortization
Total increase
__________
(a) Depreciation and amortization expense increased primarily due to ongoing capital expenditures.
PECO
17
(16)
1
2021 vs. 2020
Increase (Decrease)
$
$
Taxes other than income taxes increased by $12 million for the year ended December 31, 2021 compared to the same period in 2020, primarily due to higher PA gross receipts tax, which is offset in
operating revenues, and PA Use Tax.
Interest expense, net increased $14 million for the year ended December 31, 2021 compared to the same period in 2020, respectively, primarily due to the issuance of debt in 2021.
Effective income tax rates were 2.3% and (7.2)% for the years ended December 31, 2021 and 2020, respectively. See Note 14 — Income Taxes of the Combined Notes to Consolidated Financial
Statements for additional information of the change in effective income tax rates.
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Results of Operations—BGE
Operating revenues
Operating expenses
Purchased power and fuel
Operating and maintenance
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
BGE
Favorable (Unfavorable)
Variance
243
(184)
(22)
(41)
(15)
(262)
(19)
(5)
7
2
(17)
76
59
2021
2020
$
3,341 $
3,098 $
1,175
811
591
283
2,860
481
(138)
30
(108)
373
(35)
991
789
550
268
2,598
500
(133)
23
(110)
390
41
$
408 $
349 $
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income increased by $59 million primarily due to favorable impacts of the multi-year plan, partially offset by an
increase in depreciation and amortization expense. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information on the three-year electric
and natural gas distribution multi-year plans.
The changes in Operating revenues consisted of the following:
Distribution
Transmission
Other
Regulatory required programs
Total increase
Electric
2021 vs. 2020
Increase
Gas
Total
$
$
7 $
35
13
55
116
171 $
2 $
—
3
5
67
72 $
9
35
16
60
183
243
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BGE
Revenue Decoupling. The demand for electricity and natural gas is affected by weather and customer usage. However, Operating revenues are not impacted by abnormal weather or usage per
customer as a result of a monthly rate adjustment that provides for fixed distribution revenue per customer by customer class. While Operating revenues are not impacted by abnormal weather or
usage per customer, they are impacted by changes in the number of customers. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional
information on revenue decoupling for BGE.
Number of Electric Customers
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Total
Number of Gas Customers
Residential
Small commercial & industrial
Large commercial & industrial
Total
As of December 31,
2021
2020
1,195,929
115,049
12,637
268
1,323,883
As of December 31,
2021
2020
651,589
38,300
6,179
696,068
1,190,678
114,173
12,478
267
1,317,596
647,188
38,267
6,101
691,556
Distribution Revenue increased for the year ended December 31, 2021 compared to the same period in 2020, due to customer growth.
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered.
Transmission revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to the reduction in revenue in 2020 due to the settlement agreement of
ongoing transmission-related income tax regulatory liabilities and increases in underlying costs and capital investments.
Other Revenue includes revenue related to late payment charges, mutual assistance, off-system sales, and service application fees. Other revenue increased for the year ended December 31, 2021
compared to the same period in 2020, as BGE had temporarily suspended customer disconnections for non-payment and temporarily ceased new late fees for all customers in 2020 which has
resumed in 2021.
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs such as conservation, demand response, STRIDE, and the
POLR mechanism. The riders are designed to provide full and current cost recovery, as well as a return in certain instances. The costs of these programs are included in Purchased power and fuel
expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. Customers have the choice to purchase electricity and natural gas from
competitive electric generation and natural gas suppliers. Customer choice programs do not impact the volume of deliveries as BGE remains the distribution service provider for all customers and
charges a regulated rate for distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation or natural gas from competitive suppliers, BGE
acts as the billing agent and therefore does not record Operating revenues or Purchased power and fuel expense related to the electricity and/or natural gas. For customers that choose to purchase
electric generation or natural gas from BGE, BGE is permitted to recover the electricity and natural gas procurement costs from customers and therefore records the amounts related to the electricity
and/or natural gas in Operating revenues and Purchased power and fuel expense. BGE recovers electricity and natural gas procurement costs from customers with a slight mark-up.
See Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of BGE's revenue disaggregation.
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BGE
The increase of $184 million for the year ended December 31, 2021 compared to the same period in 2020, respectively, in Purchased power and fuel expense is fully offset in Operating revenues as
part of regulatory required programs.
The changes in Operating and maintenance expense consisted of the following:
BSC costs
Storm-related costs
Credit loss expense
Labor, other benefits, contracting, and materials
Pension and non-pension postretirement benefits expense
Small business grants commitment
Other
(a)
Regulatory required programs
Total increase
__________
(a) Reflects charitable contributions expensed as a result of a commitment in 2020 to a multi-year small business grants program.
The changes in Depreciation and amortization expense consisted of the following:
Depreciation and amortization
Regulatory required programs
Regulatory asset amortization
(a)
Total increase
__________
(a) Depreciation and amortization increased primarily due to ongoing capital expenditures.
2021 vs. 2020
Increase (Decrease)
$
$
$
2021 vs. 2020
Increase (Decrease)
19
7
2
4
1
(15)
(3)
15
7
22
44
(4)
1
41
Taxes other than income taxes increased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to higher property taxes.
Effective income tax rates were (9.4)% and 10.5% for the years ended December 31, 2021 and 2020, respectively. The change is primarily due to the multi-year plan which resulted in the
acceleration of certain income tax benefits and the April 24, 2020 settlement agreement of ongoing transmission related income tax regulatory liabilities. See Note 3 — Regulatory Matters of the
Combined Notes to Consolidated Financial Statements for additional information on both the three-year electric and natural gas distribution multi-year plans and the April 24, 2020 settlement
agreement and Note 14 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the effective income tax rates.
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Results of Operations—PHI
PHI
PHI’s Results of Operations include the results of its three reportable segments, Pepco, DPL, and ACE. PHI also has a business services subsidiary, PHISCO, which provides a variety of support
services and the costs are directly charged or allocated to the applicable subsidiaries. Additionally, the results of PHI's corporate operations include interest costs from various financing activities. All
material intercompany accounts and transactions have been eliminated in consolidation. The following table sets forth PHI's GAAP consolidated Net income by Registrant for the year ended
December 31, 2021 compared to the same period in 2020. See the Results of Operations for Pepco, DPL, and ACE for additional information.
PHI
Pepco
DPL
ACE
Other
(a)
2021
2020
Favorable (Unfavorable)
Variance
$
561 $
296
128
146
(9)
495 $
266
125
112
(8)
66
30
3
34
(1)
__________
(a) Primarily includes eliminating and consolidating adjustments, PHI's corporate operations, shared service entities, and other financing and investing activities.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income increased by $66 million primarily due to favorable impacts as a result of rate case outcomes, higher
transmission revenues due to an increase in capital investments in DPL's and ACE's service territories, higher distribution revenues due to an increase in volume in ACE's service territory, favorable
weather conditions in DPL's Delaware electric service territory, a decrease in storm costs due to the August 2020 storms in Delaware at DPL, a decrease in credit loss expense at Pepco and DPL, and
partially offset by recognition of a valuation allowance against a deferred tax asset at DPL, due to a change in Delaware tax law and an increase in depreciation and amortization expense.
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Results of Operations—Pepco
Operating revenues
Operating expenses
Purchased power
Operating and maintenance
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sales of assets
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
Pepco
Favorable (Unfavorable)
Variance
125
(22)
(18)
(26)
(6)
(72)
(9)
44
(2)
10
8
52
(22)
30
2021
2020
$
2,274 $
2,149 $
624
471
403
373
1,871
—
403
(140)
48
(92)
311
15
602
453
377
367
1,799
9
359
(138)
38
(100)
259
(7)
$
296 $
266 $
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income increased by $30 million primarily due to favorable impacts of the Maryland and District of Columbia
multi-year plans, and a decrease in credit loss expense, partially offset by an increase in depreciation and amortization expense and various operating expenses.
The changes in Operating revenues consisted of the following:
Distribution
Transmission
Other
Regulatory required programs
Total increase
2021 vs. 2020
Increase
31
32
7
70
55
125
$
$
Revenue Decoupling. The demand for electricity is affected by weather and customer usage. However, Operating revenues from electric distribution in both Maryland and the District of Columbia are
not impacted by abnormal weather or usage per customer as a result of a BSA that provides for a fixed distribution charge per customer by customer class. While Operating revenues are not impacted
by abnormal weather or usage per customer, they are impacted by changes in the number of customers. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial
Statements for additional information on revenue decoupling for Pepco Maryland and District of Columbia.
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Number of Electric Customers
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Total
Pepco
832,190
53,800
22,459
168
908,617
As of December 31,
2021
2020
841,831
54,216
22,568
181
918,796
Distribution Revenue increased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to favorable impacts of the Maryland and District of Columbia multi-year
plans in 2021.
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs, capital investments being recovered.
Transmission revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to the reduction in revenue in 2020 due to the settlement agreement of
ongoing transmission related income tax regulatory liabilities and increases in underlying costs.
Other Revenue includes rental revenue, revenue related to late payment charges, mutual assistance revenues, and recoveries of other taxes.
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs such as energy efficiency programs, DC PLUG, and SOS
procurement and administrative costs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs are included in Purchased
power expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. Customers have the choice to purchase electricity from competitive
electric generation suppliers. Customer choice programs do not impact the volume of deliveries, as Pepco remains the distribution service provider for all customers and charges a regulated rate for
distribution service, which is recorded in Operating revenues. For customers that choose to purchase electric generation from competitive suppliers, Pepco acts as the billing agent and therefore does
not record Operating revenues or Purchased power expense related to the electricity. For customers that choose to purchase electric generation from Pepco, Pepco is permitted to recover the
electricity and REC procurement costs from customers and therefore records the amounts related to the electricity and RECs in Operating revenues and Purchased power expense. Pepco recovers
electricity and REC procurement costs from customers with a slight mark-up.
See Note 5 - Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of Pepco's revenue disaggregation.
The increase of $22 million for the year ended December 31, 2021 compared to the same period in 2020, in Purchased power expense is fully offset in Operating revenues as part of regulatory
required programs.
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The changes in Operating and maintenance expense consisted of the following:
Storm related costs
BSC and PHISCO costs
Pension and non-pension postretirement benefits expense
Labor, other benefits, contracting, and materials
Credit loss expense
Other
Regulatory required programs
Total increase
The changes in Depreciation and amortization expense consisted of the following:
Depreciation and amortization
(a)
Regulatory asset amortization
Regulatory required programs
Total increase
__________
(a) Depreciation and amortization increased primarily due to ongoing capital expenditures.
Pepco
5
3
(4)
(5)
(6)
21
14
4
18
17
(13)
22
26
2021 vs. 2020
Increase (Decrease)
2021 vs. 2020
Increase (Decrease)
$
$
$
$
Taxes other than income taxes increased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to an increase in property taxes.
Gain on sales of assets decreased for the year ended December 31, 2021 compared to the year ended December 31, 2020 due to the sale of land in the fourth quarter of 2020.
Other, net increased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to higher AFUDC equity.
Effective income tax rates were 4.8% and (2.7)% for the years ended December 31, 2021 and 2020, respectively. The change is primarily related to the settlement agreement of ongoing
transmission-related income tax regulatory liabilities, partially offset by the multi-year plan which resulted in the acceleration of certain income tax benefits. See Note 3 — Regulatory Matters of the
Combined Notes to Consolidated Financial Statements for additional information on the three-year electric distribution multi-year plan and the April 24, 2020 settlement agreement, and Note 14 —
Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the change in effective income tax rates.
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Results of Operations—DPL
Operating revenues
Operating expenses
Purchased power and fuel
Operating and maintenance
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
DPL
Favorable (Unfavorable)
Variance
109
(36)
16
(19)
(2)
(41)
68
—
2
2
70
(67)
3
2021
2020
$
1,380 $
1,271 $
539
345
210
67
1,161
219
(61)
12
(49)
170
42
503
361
191
65
1,120
151
(61)
10
(51)
100
(25)
$
128 $
125 $
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income increased by $3 million primarily due to higher electric distribution rates, a decrease in storm costs due
to the August 2020 storms in Delaware, a decrease in credit loss expense, higher transmission revenues due to an increase in capital investments, and favorable weather conditions at DPL's Delaware
electric service territories, which was partially offset by the recognition of a valuation allowance against a deferred tax asset due to a change in Delaware tax law and an increase in depreciation and
amortization expense.
The changes in Operating revenues consisted of the following:
Weather
Volume
Distribution
Transmission
Other
Regulatory required programs
Total increase
2021 vs. 2020
Increase (Decrease)
Electric
Gas
Total
$
$
5 $
1
21
33
2
62
41
103 $
1 $
(1)
2
—
—
2
4
6 $
6
—
23
33
2
64
45
109
Revenue Decoupling. The demand for electricity is affected by weather and customer usage. However, Operating revenues from electric distribution in Maryland are not impacted by abnormal
weather or usage per customer as a result of a BSA that provides for a fixed distribution charge per customer by customer class. While Operating revenues from electric distribution in Maryland are not
impacted by abnormal weather or usage per customer, they are impacted by changes in the number of customers. See Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial
Statements for additional information on revenue decoupling for DPL Maryland.
Weather. The demand for electricity and natural gas in Delaware is affected by weather conditions. With respect to the electric business, very warm weather in summer months and, with respect to the
electric and natural gas businesses, very cold weather in winter months are referred to as "favorable weather conditions” because these weather conditions result in increased deliveries of electricity
and natural gas. Conversely, mild weather reduces
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DPL
demand. During the year ended December 31, 2021 compared to the same period in 2020, Operating revenues related to weather increased due to favorable weather conditions in DPL's Delaware
electric service territory.
Heating and cooling degree days are quantitative indices that reflect the demand for energy needed to heat or cool a home or business. Normal weather is determined based on historical average
heating and cooling degree days for a 20-year period in DPL's Delaware electric service territory and a 30-year period in DPL's Delaware natural gas service territory. The changes in heating and
cooling degree days in DPL’s Delaware service territory for the year ended December 31, 2021 compared to same period in 2020 and normal weather consisted of the following:
Delaware Electric Service Territory
Heating Degree-Days
Cooling Degree-Days
Delaware Natural Gas Service Territory
Heating Degree-Days
For the Years Ended December 31,
% Change
2021
2020
Normal
2021 vs. 2020
2021 vs. Normal
4,239
1,380
4,146
1,264
4,608
1,256
For the Years Ended December 31,
2.2 %
9.2 %
% Change
(8.0)%
9.9 %
2021
2020
Normal
2021 vs. 2020
2021 vs. Normal
4,239
4,146
4,679
2.2 %
(9.4)%
Volume, exclusive of the effects of weather, remained relatively consistent for the year ended December 31, 2021 compared to the same period in 2020.
Electric Retail Deliveries to Delaware Customers (in GWhs)
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Total electric retail deliveries
(a)
Number of Total Electric Customers (Maryland and Delaware)
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Total
2021
2020
% Change 2021 vs.
2020
Weather - Normal %
Change
(b)
3,214
1,452
3,149
34
7,849
3,149
1,255
3,225
32
7,661
2.1 %
15.7 %
(2.4)%
6.3 %
2.5 %
As of December 31,
2021
2020
476,260
63,195
1,218
604
541,277
(0.1)%
14.4 %
(2.9)%
9.1 %
1.1 %
472,621
62,461
1,223
609
536,914
__________
(a) Reflects delivery volumes from customers purchasing electricity directly from DPL and customers purchasing electricity from a competitive electric generation supplier as all customers are assessed distribution charges.
(b) Reflects the change in delivery volumes assuming normalized weather based on the historical 20-year average.
Natural Gas Retail Deliveries to Delaware Customers (in mmcf)
Residential
Small commercial & industrial
Large commercial & industrial
Transportation
Total natural gas deliveries
(a)
2021
2020
% Change 2021 vs.
2020
Weather - Normal %
Change
(b)
7,914
3,747
1,679
6,778
20,118
7,832
3,718
1,703
6,631
19,884
1.0 %
0.8 %
(1.4)%
2.2 %
1.2 %
(0.9)%
(1.2)%
(1.5)%
1.7 %
(0.2)%
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Number of Delaware Natural Gas Customers
Residential
Small commercial & industrial
Large commercial & industrial
Transportation
Total
DPL
127,128
10,017
16
161
137,322
As of December 31,
2021
2020
128,121
10,027
20
158
138,326
__________
(a) Reflects delivery volumes from customers purchasing natural gas directly from DPL and customers purchasing natural gas from a competitive natural gas supplier as all customers are assessed distribution charges.
(b) Reflects the change in delivery volumes assuming normalized weather based on the historical 30-year average.
Distribution Revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to higher electric distribution rates in Maryland that became effective in July
2020 and higher electric distribution rates in Delaware that became effective in October 2020.
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs and capital investments being recovered.
Transmission revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to the reduction in revenue in 2020 due to the settlement agreement of
ongoing transmission related income tax regulatory liabilities and increases in underlying costs and capital investments.
Other Revenue includes rental revenue, revenue related to late payment charges, mutual assistance revenues, and recoveries of other taxes.
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs such as energy efficiency programs, DE Renewable Portfolio
Standards, SOS procurement and administrative costs, and GCR costs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these
programs are included in Purchased power and fuel expense, Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. All customers have the
choice to purchase electricity from competitive electric generation suppliers; however, only certain commercial and industrial customers have the choice to purchase natural gas from competitive
natural gas suppliers. Customer choice programs do not impact the volume of deliveries as DPL remains the distribution service provider for all customers and charges a regulated rate for distribution
service, which is recorded in Operating revenues. For customers that choose to purchase electric generation or natural gas from competitive suppliers, DPL either acts as the billing agent or the
competitive supplier separately bills its own customers, and therefore does not record Operating revenues or Purchased power and fuel expense related to the electricity and/or natural gas. For
customers that choose to purchase electric generation or natural gas from DPL, DPL is permitted to recover the electricity, natural gas, and REC procurement costs from customers and therefore
records the amounts related to the electricity, natural gas, and RECs in Operating revenues and Purchased power and fuel expense. DPL recovers electricity and REC procurement costs from
customers with a slight mark-up, and natural gas costs without mark-up.
See Note 5 - Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of DPL's revenue disaggregation.
The increase of $36 million for the year ended December 31, 2021 compared to the same period in 2020, in Purchased power and fuel expense is fully offset in Operating revenues as part of
regulatory required programs.
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The changes in Operating and maintenance expense consisted of the following:
Storm-related costs
Credit loss expense
Pension and non-pension postretirement benefits expense
Labor, other benefits, contracting, and materials
BSC and PHISCO costs
Other
Regulatory required programs
Total decrease
The changes in Depreciation and amortization expense consisted of the following:
Depreciation and amortization
(a)
Regulatory asset amortization
Regulatory required programs
Total increase
__________
(a) Depreciation and amortization increased primarily due to ongoing capital expenditures.
DPL
(20)
(7)
(3)
(2)
10
7
(15)
(1)
(16)
14
(1)
6
19
2021 vs. 2020
(Decrease) Increase
2021 vs. 2020
Increase (Decrease)
$
$
$
$
Effective income tax rates were 24.7% and (25.0)% for the years ended December 31, 2021 and 2020, respectively. The increase for the year ended December 31, 2021 is primarily related to the
recognition of a valuation allowance against a deferred tax asset associated with Delaware net operating loss carryforwards due to a change in Delaware tax law and nonrecurring impact related to the
settlement agreement of transmission-related income tax regulatory liabilities in 2020. See Note 3 — Regulatory Matters for additional information on the April 24, 2020 settlement agreement, and Note
14 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding the components of the change in effective income tax rates.
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Table of Contents
Results of Operations—ACE
Operating revenues
Operating expenses
Purchased power
Operating and maintenance
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sale of assets
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
ACE
Favorable
(Unfavorable) Variance
143
(85)
6
1
—
(78)
(2)
63
1
(2)
(1)
62
(28)
34
2021
2020
$
1,388 $
1,245 $
694
320
179
8
1,201
—
187
(58)
4
(54)
133
(13)
609
326
180
8
1,123
2
124
(59)
6
(53)
71
(41)
$
146 $
112 $
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income increased $34 million primarily due to favorable impacts as a result of outcomes from a distribution base
rate case, higher distribution revenues due to an increase in volume, and higher transmission revenues due to an increase in capital investments which was partially offset by an increase in
depreciation and amortization expense.
The changes in Operating revenues consisted of the following:
Weather
Volume
Distribution
Transmission
Other
Regulatory required programs
Total increase
2021 vs. 2020
Increase (Decrease)
2
17
1
51
(3)
68
75
143
$
$
Revenue Decoupling. The demand for electricity is affected by weather and customer usage. However, Operating revenues from electric distribution in New Jersey are not impacted by abnormal
weather or usage per customer as a result of the Conservation Incentive Program (CIP) which became effective, prospectively, in the third quarter of 2021. The CIP compares current distribution
revenues by customer class to approved target revenues established in ACE’s most recent distribution base rate case. The CIP is calculated annually, and recovery is subject to certain conditions,
including an earnings test and ceilings on customer rate increases. While Operating revenues are not impacted by abnormal weather or usage per customer, they are impacted by changes in the
number of customers. See Note 3 — Regulatory Matters of the Combined Notes to the Consolidated Financial Statements for additional information on the ACE CIP.
Weather. Prior to the third quarter of 2021, the demand for electricity was affected by weather conditions. With respect to the electric business, very warm weather in summer months and very cold
weather in winter months are referred to as “favorable weather conditions” because these weather conditions result in increased deliveries of electricity. Conversely, mild weather reduces demand.
There was an increase related to weather for the year
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ACE
ended December 31, 2021 compared to the same period in 2020 due to the absence of impacts in the second half of 2021 as a result of the CIP.
Heating and cooling degree days are quantitative indices that reflect the demand for energy needed to heat or cool a home or business. Normal weather is determined based on historical average
heating and cooling degree days for a 20-year period in ACE’s service territory. The changes in heating and cooling degree days in ACE’s service territory for the year ended December 31, 2021
compared to same period in 2020, and normal weather consisted of the following:
Heating and Cooling Degree-Days
Heating Degree-Days
Cooling Degree-Days
For the Years Ended December 31,
% Change
2021
2020
Normal
2021 vs. 2020
2021 vs. Normal
4,256
1,284
4,029
1,314
4,609
1,197
5.6 %
(2.3)%
(7.7)%
7.3 %
Volume, exclusive of the effects of weather, increased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to customer growth, usage and absence of impacts in
the second half of 2021 as a result of the CIP.
Electric Retail Deliveries to Customers (in GWhs)
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Total retail deliveries
(a)
Number of Electric Customers
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Total
2021
2020
% Change 2021 vs. 2020
Weather - Normal %
Change
(b)
4,220
1,409
3,146
46
8,821
4,029
1,277
3,067
47
8,420
4.7 %
10.3 %
2.6 %
(2.1)%
4.8 %
As of December 31,
2021
2020
499,628
61,900
3,156
717
565,401
3.8 %
10.0 %
2.8 %
(1.9)%
4.3 %
497,672
61,622
3,282
701
563,277
__________
(a) Reflects delivery volumes from customers purchasing electricity directly from ACE and customers purchasing electricity from a competitive electric generation supplier as all customers are assessed distribution charges.
(b) Reflects the change in delivery volumes assuming normalized weather based on the historical 20-year average.
Distribution Revenue remained relatively consistent for the year ended December 31, 2021 compared to the same period in 2020.
Transmission Revenue. Under a FERC-approved formula, transmission revenue varies from year to year based upon fluctuations in the underlying costs, capital investments being recovered.
Transmission revenue increased for the year ended December 31, 2021 compared to the same period in 2020 primarily due to the reduction in revenue in 2020 due to the settlement agreement of
ongoing transmission-related income tax regulatory liabilities and increases in underlying costs and capital investments.
Other Revenue includes rental revenue, service connection fees, and mutual assistance revenues.
Regulatory Required Programs represent revenues collected under approved riders to recover costs incurred for regulatory programs such as energy efficiency programs, Societal Benefits Charge,
Transition Bonds, and BGS procurement and administrative costs. The riders are designed to provide full and current cost recovery as well as a return in certain instances. The costs of these programs
are included in Purchased power expense,
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ACE
Operating and maintenance expense, Depreciation and amortization expense, and Taxes other than income taxes. Customers have the choice to purchase electricity from competitive electric
generation suppliers. Customer choice programs do not impact the volume of deliveries, as ACE remains the distribution service provider for all customers and charges a regulated rate for distribution
service, which is recorded in Operating revenues. For customers that choose to purchase electric generation from competitive suppliers, ACE acts as the billing agent and therefore does not record
Operating revenues or Purchased power expense related to the electricity. For customers that choose to purchase electric generation from ACE, ACE is permitted to recover the electricity, ZEC, and
REC procurement costs without mark-up and therefore records equal and offsetting amounts in Operating revenues and Purchased power expense related to the electricity, ZECs, and RECs.
See Note 5 - Segment Information of the Combined Notes to Consolidated Financial Statements for the presentation of ACE's revenue disaggregation.
The increase of $85 million for the year ended December 31, 2021 compared to same period in 2020, in Purchased power expense is fully offset in Operating revenues as part of regulatory required
programs.
The changes in Operating and maintenance expense consisted of the following:
Storm-related costs
Pension and non-pension postretirement benefits expense
Labor, other benefits, contracting and materials
BSC and PHISCO costs
Other
Regulatory required programs
Total decrease
(a)
2021 vs. 2020
(Decrease) Increase
$
$
__________
(a) ACE is allowed to recover from or refund to customers the difference between its annual credit loss expense and the amounts collected in rates annually through the Societal Benefits Charge.
The changes in Depreciation and amortization expense consisted of the following:
Depreciation and amortization
(a)
Regulatory asset amortization
Regulatory required programs
Total decrease
__________
(a) Depreciation and amortization increased primarily due to ongoing capital expenditures.
2021 vs. 2020
Increase (Decrease)
$
$
(9)
(1)
1
7
(6)
(8)
2
(6)
15
(1)
(15)
(1)
Effective income tax rates were (9.8)% and (57.7)% for the years ended December 31, 2021 and 2020, respectively. The change is primarily related to the settlement agreement of ongoing
transmission-related income tax regulatory liabilities, partially offset by the July 14, 2021 settlement which allowed ACE to retain certain tax benefits. See Note 3 — Regulatory Matters for additional
information on the April 24, 2020 and July 14, 2021 settlement agreements, and Note 14 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information
regarding the components of the change in effective income tax rates.
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Results of Operations—Generation
Operating revenues
Operating expenses
Purchased power and fuel
Operating and maintenance
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sales of assets and businesses
Operating (loss) income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Equity in losses of unconsolidated affiliates
Net (loss) income
Net income (loss) attributable to noncontrolling interests
Net (loss) income attributable to membership interest
Generation
Favorable
(Unfavorable) Variance
2,046
(2,578)
613
(880)
7
(2,838)
190
(602)
60
(142)
(82)
(684)
24
(2)
(662)
132
(794)
2021
2020
$
19,649 $
17,603 $
12,163
4,555
3,003
475
20,196
201
(346)
(297)
795
498
152
225
(10)
(83)
122
9,585
5,168
2,123
482
17,358
11
256
(357)
937
580
836
249
(8)
579
(10)
$
(205) $
589 $
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020. Net income attributable to membership interest decreased by $794 million primarily due to:
•
•
•
•
•
•
Impacts of the February 2021 extreme cold weather event;
Accelerated depreciation and amortization associated with Generation's previous decision in the third quarter of 2020 to early retire Byron and Dresden nuclear facilities in 2021, a
decision which was reversed on September 15, 2021, and Generation's decision in the third quarter of 2020 to early retire Mystic Units 8 and 9 in 2024;
Decommissioning-related activities that were not offset for the Byron units beginning in the second quarter of 2021 through September 15, 2021. With Generation's September 15, 2021
reversal of the previous decision to retire Byron, Generation resumed contractual offset for Byron as of that date;
Impairments of the New England asset group, the Albany Green Energy biomass facility at Generation, and a wind project at Generation, partially offset by the absence of an impairment
of the New England asset group in the third quarter of 2020;
Higher net unrealized and realized losses on equity investments; and
The absence of prior year one-time tax settlements.
The decreases were partially offset by:
•
•
•
Higher mark-to-market gains;
Higher net unrealized and realized gains on NDT funds;
Absence of one time charges recorded in 2020 associated with Generation's decision to early retire the Byron and Dresden nuclear facilities and Mystic Units 8 and 9, and the reversal of
one-time
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charges resulting from the reversal of the previous decision to early retire Byron and Dresden on September 15, 2021;
•
•
•
•
Favorable sales and hedges of excess emission credits;
Favorable commodity prices on fuel hedges;
Lower nuclear fuel costs due to accelerated amortization of nuclear fuel and lower prices; and
Higher New York ZEC revenues due to higher generation and an increase in ZEC prices.
Operating revenues. The basis for Generation's reportable segments is the integrated management of its electricity business that is located in different geographic regions, and largely representative
of the footprints of ISO/RTO and/or NERC regions, which utilize multiple supply sources to provide electricity through various distribution channels (wholesale and retail). Generation's hedging
strategies and risk metrics are also aligned with these same geographic regions. Generation's five reportable segments are Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions. See
Note 5 — Segment Information of the Combined Notes to Consolidated Financial Statements for additional information on these reportable segments.
The following business activities are not allocated to a region and are reported under Other: natural gas, as well as other miscellaneous business activities that are not significant to overall operating
revenues or results of operations.
For the year ended December 31, 2021 compared to 2020, Operating revenues by region were as follows:
2021
2020
Variance
% Change
(a)
2021 vs. 2020
$
4,584 $
4,060
1,575
1,181
4,890
16,290
3,992
(633)
4,645 $
4,024
1,431
958
4,002
15,060
2,433
110
$
19,649 $
17,603 $
(61)
36
144
223
888
1,230
1,559
(743)
2,046
(1.3)%
0.9 %
10.1 %
23.3 %
22.2 %
8.2 %
64.1 %
11.6 %
(b)
(c)
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Total electric revenues
Other
Mark-to-market (losses) gains
Total Operating revenues
__________
(a) % Change in mark-to-market is not a meaningful measure.
(b)
(c)
Includes results of transactions with PECO, BGE, Pepco, DPL, and ACE.
Includes results of transactions with ComEd.
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Supply Sources. Generation’s supply sources by region are summarized below:
(a)
Supply Source (GWhs)
Nuclear Generation
Mid-Atlantic
Midwest
New York
Total Nuclear Generation
Fossil and Renewables
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Total Fossil and Renewables
Purchased Power
Mid-Atlantic
Midwest
ERCOT
Other Power Regions
Total Purchased Power
Total Supply/Sales by Region
(b)
Mid-Atlantic
Midwest
(b)
New York
ERCOT
Other Power Regions
Total Supply/Sales by Region
2021
2020
Variance
% Change
2021 vs. 2020
53,589
93,107
28,291
174,987
2,271
1,083
1
13,187
9,995
26,537
13,576
561
3,256
50,212
67,605
69,436
94,751
28,292
16,443
60,207
269,129
52,202
96,322
26,561
175,085
2,206
1,240
4
11,982
11,121
26,553
22,487
770
5,636
51,079
79,972
76,895
98,332
26,565
17,618
62,200
281,610
1,387
(3,215)
1,730
(98)
65
(157)
(3)
1,205
(1,126)
(16)
(8,911)
(209)
(2,380)
(867)
(12,367)
(7,459)
(3,581)
1,727
(1,175)
(1,993)
(12,481)
2.7 %
(3.3)%
6.5 %
(0.1)%
2.9 %
(12.7)%
(75.0)%
10.1 %
(10.1)%
(0.1)%
(39.6)%
(27.1)%
(42.2)%
(1.7)%
(15.5)%
(9.7)%
(3.6)%
6.5 %
(6.7)%
(3.2)%
(4.4)%
__________
(a)
Includes the proportionate share of output where Generation has an undivided ownership interest in jointly-owned generating plants. Includes the total output for fully owned plants and the total output for CENG prior to the
acquisition of EDF’s interest on August 6, 2021 as CENG was fully consolidated. See Note 2 — Mergers, Acquisitions, and Dispositions of the Combined Notes to Consolidated Financial Statements for additional
information on Generation’s acquisition of EDF’s interest in CENG.
Includes affiliate sales to PECO, BGE, Pepco, DPL, and ACE in the Mid-Atlantic region and affiliate sales to ComEd in the Midwest region.
(b)
Nuclear Fleet Capacity Factor. The following table presents nuclear fleet operating data for the Generation-operated plants, which reflects ownership percentage of stations operated by Exelon,
excluding Salem, which is operated by PSEG. The nuclear fleet capacity factor presented in the table is defined as the ratio of the actual output of a plant over a period of time to its output if the plant
had operated at full average annual mean capacity for that time period. Generation considers capacity factor to be a useful measure to analyze the nuclear fleet performance between periods.
Generation has included the analysis below as a complement to the financial information provided in accordance with GAAP. However, these measures are not a presentation defined under GAAP and
may not be comparable to other companies’ presentations or be more useful than the GAAP information provided elsewhere in this report.
Nuclear fleet capacity factor
Refueling outage days
Non-refueling outage days
2021
2020
94.5 %
262
34
95.4 %
260
19
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ZEC Prices. Generation is compensated through state programs for the carbon-free attributes of its nuclear generation. ZEC prices have a significant impact on operating revenues. The following table
presents the average ZEC prices ($/MWh) for each of Generation's major regions in which state programs have been enacted. Prices reflect the weighted average price for the various delivery periods
within each calendar year.
State (Region)
New Jersey (Mid-Atlantic)
Illinois (Midwest)
New York (New York)
2021
2020
Variance
% Change
$
10.00 $
16.50
20.93
10.00 $
16.50
19.59
—
—
1.34
— %
— %
6.8 %
2021 vs. 2020
Capacity Prices. Generation participates in capacity auctions in each of its major regions, except ERCOT which does not have a capacity market. Generation also incurs capacity costs associated
with load served, except in ERCOT. Capacity prices have a significant impact on Generation's operating revenues and purchased power and fuel. The following table presents the average capacity
prices ($/MW Day) for each of Generation's major regions. Prices reflect the weighted average price for the various auction periods within each calendar year.
Location (Region)
Eastern Mid-Atlantic Area Council (Mid-Atlantic and Midwest)
ComEd (Midwest)
Rest of State (New York)
Southeast New England (Other)
2021
2020
Variance
% Change
2021 vs. 2020
$
174.96 $
192.45
98.35
163.66
159.50 $
194.22
47.81
200.69
15.46
(1.77)
50.54
(37.03)
9.7 %
(0.9)%
105.7 %
(18.5)%
Electricity Prices. The price of electricity has a significant impact on Generation's operating revenues and purchased power cost. The following table presents the average day-ahead around-the-clock
price ($/MWh) for each of Generation's major regions.
Location (Region)
PJM West (Mid-Atlantic)
ComEd (Midwest)
Central (New York)
North (ERCOT)
Southeast Massachusetts (Other)
(a)
__________
(a) Reflects New England, which comprises the majority of the activity in the Other region.
2021
2020
Variance
% Change
2021 vs. 2020
$
38.91 $
34.76
29.90
146.63
46.38
20.95 $
18.96
16.36
22.03
23.57
17.96
15.80
13.54
124.60
22.81
85.7 %
83.3 %
82.8 %
565.6 %
96.8 %
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For the year ended December 31, 2021 compared to 2020, changes in Operating revenues by region were approximately as follows:
2021 vs. 2020
Variance
% Change
(a)
Description
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Other
Mark-to-market
(b)
Total
$
$
(61)
36
144
223
888
1,559
(743)
2,046
(1.3)% • unfavorable wholesale load revenue of $(520) primarily due to lower volumes; partially offset by
• favorable settled economic hedges of $365 due to settled prices relative to hedged prices
• favorable retail load revenue of $95 primarily due to higher prices
0.9 % • favorable net wholesale load and generation revenue of $540 primarily due to higher prices, partially
offset by decreased generation due to higher nuclear outage days
• unfavorable settled economic hedges of $(525) due to settled prices relative to hedged prices
10.1 % • favorable nuclear generation revenue of $75 primarily due to higher prices and lower nuclear outage
days
• favorable ZEC revenue of $70 due to higher prices and higher nuclear generation
23.3 % • favorable retail load revenue of $140 primarily due to higher prices in part due to the February 2021
extreme cold weather event
• favorable settled economic hedges of $65 due to settled prices relative to hedged prices
22.2 % • favorable settled economic hedges of $655 due to settled prices relative to hedged prices
• favorable retail load revenue of $535 due to higher prices and higher volumes; partially offset by
• unfavorable wholesale load revenue of $(380) primarily due to lower volumes
64.1 % • favorable gas revenue of $1,375 primarily due to higher prices in part due to the February 2021
extreme cold weather event
• losses on economic hedging activities of $(633) in 2021 compared to gains of $110 in 2020
11.6 %
__________
(a) % Change in mark-to-market is not a meaningful measure.
(b) See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information on mark-to-market gains and losses.
Purchased power and fuel. See Operating revenues above for discussion of Generation's reportable segments and hedging strategies and for supplemental statistical data, including supply sources
by region, nuclear fleet capacity factor, capacity prices, and electricity prices.
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The following business activities are not allocated to a region and are reported under Other: natural gas, as well as other miscellaneous business activities that are not significant to overall purchased
power and fuel expense or results of operations, and accelerated nuclear fuel amortization associated with nuclear decommissioning.
For the year ended December 31, 2021 compared to 2020, Purchased power and fuel by region were as follows:
2021
2020
Variance
% Change
(a)
2021 vs. 2020
$
2,320 $
1,343
414
2,006
3,999
10,082
3,279
(1,198)
2,442 $
1,121
434
532
3,336
7,865
1,904
(184)
$
12,163 $
9,585 $
122
(222)
20
(1,474)
(663)
(2,217)
(1,375)
1,014
(2,578)
5.0 %
(19.8)%
4.6 %
(277.1)%
(19.9)%
(28.2)%
(72.2)%
(26.9)%
Mid-Atlantic
(b)
(c)
Midwest
New York
ERCOT
Other Power Regions
Total electric purchased power and fuel
Other
Mark-to-market gains
Total purchased power and fuel
__________
(a) % Change in mark-to-market is not a meaningful measure.
(b)
(c)
Includes results of transactions with PECO, BGE, Pepco, DPL, and ACE.
Includes results of transactions with ComEd.
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For the year ended December 31, 2021 compared to 2020, changes in Purchased power and fuel by region were approximately as follows:
Mid-Atlantic
$
122
5.0 % • favorable purchased power and net capacity impact of $80 primarily due to higher nuclear
2021 vs. 2020
Variance
% Change
(a)
Description
Midwest
New York
ERCOT
Other Power Regions
Other
Mark-to-market
(b)
Total
(222)
generation, lower load and higher capacity prices earned partially offset by lower cleared capacity
volumes
• favorable settlement of economic hedges of $70 due to settled prices relative to hedged prices
(19.8)% • unfavorable purchased power and net capacity impact of $(330) primarily due to higher energy
prices, lower nuclear generation, lower cleared capacity volumes, and lower capacity prices; partially
offset by
• favorable nuclear fuel cost of $75 primarily due to accelerated amortization of nuclear fuel and lower
nuclear fuel prices
20
4.6 % • favorable settlement of economic hedges of $45 due to settled prices relative to hedged prices;
partially offset by
• unfavorable purchased power and net capacity impact of $(40) primarily due to higher energy prices
partially offset by higher nuclear generation and higher capacity prices earned
(1,474)
(277.1)% • unfavorable purchased power of $(755) primarily due to higher energy prices primarily during the
(663)
(1,375)
1,014
(2,578)
$
February 2021 extreme cold weather event
• unfavorable settlement of economic hedges of $(535) due to settled prices relative to hedged prices
• unfavorable fuel cost of $(170) primarily due to higher gas prices
(19.9)% • unfavorable purchased power and net capacity impact of $(855) primarily due to higher energy
prices, lower generation, lower cleared capacity volumes, and lower capacity prices
• unfavorable fuel cost of $(80) primarily due to higher gas prices; partially offset by
• net favorable environmental products activity of $270 primarily driven by favorable emissions activity
partially offset by unfavorable RPS activity
(72.2)% • unfavorable net gas purchase costs and settlement of economic hedges of $(1,150)
• unfavorable accelerated nuclear fuel amortization associated with announced early plant
retirements of $(90)
• gains on economic hedging activities of $1,198 in 2021 compared to gains of $184 in 2020
(26.9)%
__________
(a) % Change in mark-to-market is not a meaningful measure.
(b) See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information on mark-to-market gains and losses.
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The changes in Operating and maintenance expense consisted of the following:
Plant retirements and divestitures
(a)
ARO update
Labor, other benefits, contracting, and materials
Insurance
Cost management program
Nuclear refueling outage costs, including the co-owned Salem plants
Corporate allocations
Acquisition related costs
Credit loss expense
Asset impairments
Separation costs
Other
Total decrease
Generation
2021 vs. 2020
(Decrease) Increase
(484)
(109)
(64)
(45)
(34)
(16)
(14)
15
21
27
49
41
(613)
$
$
__________
(a) Primarily reflects contractual offset of accelerated depreciation and amortization associated with Generation's previous decision to early retire the Byron and Dresden nuclear facilities. See Note 10 — Asset Retirement
Obligations of the Combined Notes to Consolidated Financial Statements for additional information.
Depreciation and amortization expense increased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to the accelerated depreciation and amortization
associated with Generation's previous decision to early retire the Byron and Dresden nuclear facilities. This decision was reversed on September 15, 2021 and depreciation for Byron and Dresden was
adjusted beginning September 15, 2021 to reflect the extended useful life estimates. A portion of this accelerated depreciation and amortization is offset in Operating and maintenance expense.
Gain on sales of assets and businesses increased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to gains on sales of equity investments that became
publicly traded entities in the fourth quarter of 2020 and the first half of 2021 and a gain on sale of Generation's solar business.
Interest expense, net decreased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to decreased expense related to the CR nonrecourse senior secured term
loan credit facility and interest rate swaps, and decreases in interest rates. See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional
information on the CR credit facility and interest rate swaps.
Other, net decreased for the year ended December 31, 2021 compared to the same period in 2020, due to activity described in the table below:
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(a)
Net unrealized gains on NDT funds
Net realized gains on sale of NDT funds
Interest and dividend income on NDT funds
Contractual elimination of income tax expense
Net unrealized (losses) gains from equity investments
Other
(a)
(a)
(b)
(c)
Total other, net
2021
2020
$
$
204 $
381
98
226
(160)
46
795 $
Generation
391
70
90
180
186
20
937
__________
(a) Unrealized gains, realized gains, and interest and dividend income on the NDT funds are associated with the Non-Regulatory Agreement Units. In addition, also includes unrealized gains, realized gains, and interest and
dividend income on the NDT funds associated with the Byron units as decommissioning-related impacts were not offset starting in the second quarter of 2021 due to the inability to recognize a regulatory asset at ComEd.
With the September 15, 2021 reversal of the previous decision to retire Byron, Generation resumed contractual offset for Byron as of that date. See Note 10 — Asset Retirement Obligations of the Combined Notes to
Consolidated Financial Statements for additional information.
(b) Contractual elimination of income tax expense is associated with the income taxes on the NDT funds of the Regulatory Agreement Units.
(c) Net unrealized gains and losses from equity investments that became publicly traded entities in the fourth quarter of 2020 and the first half of 2021.
Effective income tax rates were 148.0% and 29.8% for the years ended December 31, 2021 and 2020, respectively. The higher effective tax rate in 2021 is primarily due to the impacts of the
February 2021 extreme cold weather event on Income before income taxes. See Note 14 — Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information.
Net income attributable to noncontrolling interests increased for the year ended December 31, 2021 compared to the same period in 2020, primarily due to CENG's results of operations prior to
Generation's acquisition of EDF's interest in CENG on August 6, 2021.
Liquidity and Capital Resources
All results included throughout the liquidity and capital resources section are presented on a GAAP basis.
The Registrants’ operating and capital expenditures requirements are provided by internally generated cash flows from operations, the sale of certain receivables, as well as funds from external
sources in the capital markets and through bank borrowings. The Registrants’ businesses are capital intensive and require considerable capital resources. Each of the Registrants annually evaluates
its financing plan, dividend practices, and credit line sizing, focusing on maintaining its investment grade ratings while meeting its cash needs to fund capital requirements, including construction
expenditures, retire debt, pay dividends, fund pension and OPEB obligations, and invest in new and existing ventures. The Registrants spend a significant amount of cash on capital improvements and
construction projects that have a long-term return on investment. Additionally, the Utility Registrants operate in rate-regulated environments in which the amount of new investment recovery may be
delayed or limited and where such recovery takes place over an extended period of time. A broad spectrum of financing alternatives beyond the core financing options can be used to meet its needs
and fund growth including monetizing assets in the portfolio via project financing, asset sales, and the use of other financing structures (e.g., joint ventures, minority partners, etc.). Each Registrant’s
access to external financing on reasonable terms depends on its credit ratings and current overall capital market business conditions, including that of the utility industry in general. If these conditions
deteriorate to the extent that the Registrants no longer have access to the capital markets at reasonable terms, the Registrants have access to credit facilities with aggregate bank commitments of
$10.3 billion, as of December 31, 2021. The Registrants utilize their credit facilities to support their commercial paper programs, provide for other short-term borrowings, and to issue letters of credit.
See the “Credit Matters” section below for additional information. The Registrants expect cash flows to be sufficient to meet operating expenses, financing costs, and capital expenditure requirements.
See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ debt and credit agreements.
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Cash Flows from Operating Activities (All Registrants)
The Utility Registrants' cash flows from operating activities primarily result from the transmission and distribution of electricity and, in the case of PECO, BGE, and DPL, gas distribution services. The
Utility Registrants' distribution services are provided to an established and diverse base of retail customers. The Utility Registrants' future cash flows may be affected by the economy, weather
conditions, future legislative initiatives, future regulatory proceedings with respect to their rates or operations, and their ability to achieve operating cost reductions. Generation's cash flows from
operating activities primarily result from the sale of electric energy and energy-related products and services to customers.
See Note 3 — Regulatory Matters and Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information on regulatory and legal
proceedings and proposed legislation.
The following table provides a summary of the change in cash flows from operating activities for the years ended December 31, 2021 and 2020 by Registrant:
(Decrease) increase in cash flows from operating activities
Net income
Adjustments to reconcile net income to cash:
Non-cash operating activities
Option premiums paid, net
Collateral (posted) received, net
Income taxes
Pension and non-pension postretirement benefit contributions
Changes in working capital and other noncurrent assets and liabilities
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
(125)
$
304
$
57
$
59
$
66
$
30
$
3
$
(332)
(199)
(568)
187
(64)
(122)
12
—
(14)
(8)
(48)
25
11
—
—
(26)
—
(46)
(35)
—
—
(40)
(3)
(136)
(155)
45
—
—
42
(9)
11
35
—
—
12
—
(116)
23
—
—
38
(1)
50
$
155
$
(39)
$
113
$
34
(15)
—
—
1
(1)
77
96
(Decrease) increase in cash flows from operating activities
$
(1,223)
$
271
$
(4)
$
Changes in the Registrants' cash flows from operations were generally consistent with changes in each Registrant’s respective results of operations, as adjusted by changes in working capital in the
normal course of business, except as discussed below. In addition, significant operating cash flow impacts for the Registrants for 2021 and 2020 were as follows:
•
•
•
•
•
See Note 24 —Supplemental Financial Information of the Combined Notes to Consolidated Financial Statements and the Registrants’ Consolidated Statements of Cash Flows for
additional information on non-cash operating activities.
Option premiums paid relate to options contracts that Generation purchases and sells as part of its established policies and procedures to manage risks associated with market
fluctuations in commodity prices. See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information on derivative
contracts.
Depending upon whether Exelon is in a net mark-to-market liability or asset position, collateral may be required to be posted with or collected from its counterparties. In addition, the
collateral posting and collection requirements differ depending on whether the transactions are on an exchange or in the over-the-counter markets. See Note 16 — Derivative Financial
Instruments of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ collateral.
See Note 14 —Income Taxes of the Combined Notes to Consolidated Financial Statements and the Registrants' Consolidated Statements of Cash Flows for additional information on
income taxes.
Changes in working capital and other noncurrent assets and liabilities include a decrease in Accounts receivable at Exelon resulting from the impact of cash received in 2020 related
to the revolving accounts receivable financing arrangement entered into on April 8, 2020, and an increase in Accounts payable and accrued expenses at Exelon resulting from the impact
of certain penalties for natural gas delivery associated with the February 2021 extreme cold weather event at
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Generation and increases in natural gas prices at Generation. See Note 6 — Accounts Receivable and Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial
Statements for additional information on the sales of customer accounts receivable and on the February 2021 extreme cold weather event, respectively.
Cash Flows from Investing Activities (All Registrants)
The following table provides a summary of the change in cash flows from investing activities for the years ended December 31, 2021 and 2020 by Registrant:
Increase (decrease) in cash flows from investing activities
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Capital expenditures
Investment in NDT fund sales, net
Collection of DPP
Proceeds from sales of assets and businesses
Changes in intercompany money pool
Other investing activities
Increase (decrease) in cash flows from investing activities
$
$
$
67
(18)
131
831
—
8
1,019
$
(170)
—
—
—
—
24
(146)
$
$
$
(93)
—
—
—
(68)
2
(159)
$
21
—
—
—
—
16
37
$
$
(116)
—
—
—
—
(5)
(121)
$
$
(70)
—
—
—
—
(1)
(71)
$
$
(5)
—
—
—
—
7
2
$
$
(44)
—
—
—
—
(5)
(49)
Significant investing cash flow impacts for the Registrants for 2021 and 2020 were as follows:
•
•
•
•
Variances in capital expenditures are primarily due to the timing of cash expenditures for capital projects. See the "Credit Matters" section below for additional information on projected
capital expenditure spending.
See Note 6 — Accounts Receivable of the Combined Notes to Consolidated Financial Statements for additional information on the Collection of DPP.
Proceeds from sales of assets and businesses increased primarily due to the sale of a significant portion of Exelon's solar business and a biomass facility and proceeds received on
sales of equity investments. See Note 2 — Mergers, Acquisitions, and Dispositions of the Combined Notes to Consolidated Financial Statements for additional information on the sale of
Exelon's solar business and biomass facility.
Changes in intercompany money pool are driven by short-term borrowing needs. Refer below for more information regarding the intercompany money pool.
Cash Flows from Financing Activities (All Registrants)
The following table provides a summary of the change in cash flows from financing activities for the years ended December 31, 2021 and 2020 by Registrant:
Increase (decrease) in cash flows from financing activities
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Changes in short-term borrowings, net
Long-term debt, net
Changes in intercompany money pool
Dividends paid on common stock
Acquisition of noncontrolling interest
Distributions to member
Contributions from/(to) parent/member
Other financing activities
$
$
638
774
—
(5)
(885)
—
—
91
Increase (decrease) in cash flows from financing activities
$
613
$
(516)
300
—
(8)
—
—
79
(3)
(148)
$
$
—
100
(80)
1
—
—
166
(5)
182
$
$
206
(100)
—
(46)
—
—
(154)
2
$
(60)
91
(23)
—
—
(150)
189
(7)
$
(92)
$
40
$
187
(22)
—
(36)
—
—
(18)
—
111
$
$
(87)
27
—
(6)
—
—
8
(3)
(61)
$
$
(160)
86
—
(174)
—
—
202
(4)
(50)
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Significant financing cash flow impacts for the Registrants for 2021 and 2020 were as follows:
•
•
•
•
•
•
Changes in short-term borrowings, net, is driven by repayments on and issuances of notes due in less than 365 days. Refer to Note 17 - Debt and Credit Agreements of the Combined
Notes to Consolidated Financial Statements for additional information on short-term borrowings.
Long-term debt, net, varies due to debt issuances and redemptions each year. Refer to debt issuances and redemptions tables below for additional information.
Changes in intercompany money pool are driven by short-term borrowing needs. Refer below for more information regarding the intercompany money pool.
Exelon’s ability to pay dividends on its common stock depends on the receipt of dividends paid by its operating subsidiaries. The payments of dividends to Exelon by its subsidiaries in turn
depend on their results of operations and cash flows and other items affecting retained earnings. See Note 19 - Commitments and Contingencies of the Combined Notes to Consolidated
Financial Statements for additional information on dividend restrictions. See below for quarterly dividends declared.
See Note 2 — Mergers, Acquisitions, and Dispositions of the Combined Notes to Consolidated Financial Statements for additional information related to the acquisition of CENG
noncontrolling interest.
Other financing activities primarily consists of debt issuance costs. See debt issuances table below for additional information on the Registrants’ debt issuances.
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Debt Issuances and Redemptions
See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information of the Registrants’ long-term debt. Debt activity for 2021 and 2020
by Registrant was as follows:
During 2021, the following long-term debt was issued:
Company/Subsidiary
Type
Interest Rate
Maturity
Amount
Use of Proceeds
Exelon
(a)
ComEd
Long-Term Software License
Agreements
First Mortgage Bonds, Series 130
ComEd
First Mortgage Bonds, Series 131
PECO
PECO
BGE
Pepco
Pepco
DPL
(b)
ACE
ACE
(c)
First and Refunding Mortgage Bonds
First and Refunding Mortgage Bonds
Senior Notes
First Mortgage Bonds
First Mortgage Bonds
First Mortgage Bonds
First Mortgage Bonds
First Mortgage Bonds
3.62 %
3.13 %
2.75 %
3.05 %
2.85 %
2.25 %
2.32 %
3.29 %
3.24 %
2.30 %
2.27 %
Generation
Generation
West Medway II Nonrecourse Debt
(d)
LIBOR + 3%
(e)
Energy Efficiency Project Financing
(f)
2.53% - 4.24%
December 1, 2025
$
4 Procurement of software licenses.
March 15, 2051
700 Repay a portion of outstanding commercial paper obligations
and two outstanding term loans, and to fund other general
corporate purposes.
September 1, 2051
450 Refinance existing indebtedness and for general corporate
March 15, 2051
September 15, 2051
June 15, 2031
purposes.
375 Funding for general corporate purposes.
375 Refinance existing indebtedness and for general corporate
purposes.
600 Repay a portion of outstanding commercial paper obligations,
repay existing indebtedness, and to fund other general
corporate purposes.
March 30, 2031
150 Repay existing indebtedness and for general corporate
purposes.
September 28, 2051
125 Repay existing indebtedness and for general corporate
purposes.
March 30, 2051
125 Repay existing indebtedness and for general corporate
purposes.
March 15, 2031
350 Refinance existing indebtedness, repay outstanding
commercial paper obligations, and for general corporate
purposes.
February 15, 2032
75 Repay existing indebtedness and for general corporate
purposes.
March 31, 2026
150 Funding for general corporate purposes.
January 31, 2022 - February 28,
2022
2 Funding to install energy conservation measures.
__________
(a)
In connection with the separation, Exelon Corporate entered into three 18-month term loan agreements. On January 21, 2022, two of the loan agreements were issued for $300 million each with an expiration date of July
21, 2023. On January 24, 2022, the third loan agreement was issued for $250 million with an expiration date of July 24, 2023. Pursuant to the loan agreement, loans made thereunder bear interest at a variable rate equal
to SOFR plus 0.65%.
(b) On November 16, 2021, DPL entered into a purchase agreement of First Mortgage Bonds of $125 million at 3.06% due on February 15, 2052. The closing date of the issuance occurred on February 15, 2022.
(c) On November 16, 2021, ACE entered into a purchase agreement of First Mortgage Bonds of $25 million and $150 million at 2.27% and 3.06% due on February 15, 2032 and February 15, 2052, respectively. The closing
date of the issuance occurred on February 15, 2022.
(d) See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on nonrecourse debt.
(e) The nonrecourse debt has an average blended interest rate.
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(f) For Energy Efficiency Project Financing, the maturity dates represent the expected date of project completion, upon which the respective customer assumes the outstanding debt.
During 2020, the following long-term debt was issued:
Company/Subsidiary
Type
Interest Rate
Maturity
Amount
Use of Proceeds
Exelon
Exelon
ComEd
ComEd
PECO
BGE
Pepco
Pepco
DPL
DPL
ACE
ACE
Notes
Notes
First Mortgage Bonds, Series 128
First Mortgage Bonds, Series 129
First and Refunding Mortgage Bonds
Senior Notes
First Mortgage Bonds
First Mortgage Bonds
First Mortgage Bonds
Tax-Exempt Bonds
(a)
Tax-Exempt First Mortgage Bonds
First Mortgage Bonds
Generation
Senior Notes
4.05 %
4.70 %
2.20 %
3.00 %
2.80 %
2.90 %
2.53 %
3.28 %
2.53 %
1.05 %
2.25 %
3.24 %
3.25 %
April 15, 2030
$
1,250 Repay existing indebtedness and for general corporate
purposes.
April 15, 2050
750 Repay existing indebtedness and for general corporate
purposes.
March 1, 2030
350 Repay a portion of outstanding commercial paper obligations
and fund other general corporate purposes.
March 1, 2050
650 Repay a portion of outstanding commercial paper obligations
June 15, 2050
June 15, 2050
and fund other general corporate purposes.
350 Funding for general corporate purposes.
400 Repay commercial paper obligations and for general
corporate purposes.
February 25, 2030
150 Repay existing indebtedness and for general corporate
purposes.
September 23, 2050
150 Repay existing indebtedness and for general corporate
purposes.
June 9, 2030
100 Repay existing indebtedness and for general corporate
January 1, 2031
June 1, 2029
June 9, 2050
purposes.
78 Refinance existing indebtedness.
23 Refinance existing indebtedness.
100 Repay existing indebtedness and for general corporate
purposes.
June 1, 2025
900 Repay existing indebtedness and for general corporate
purposes.
Generation
Generation
Constellation Renewables
Nonrecourse Debt
(b)
LIBOR + 2.75%
December 15, 2027
750 Repay existing indebtedness and for general corporate
purposes.
Energy Efficiency Project Financing
(c)
2.53% - 3.95% February 28, 2021 - March 31, 2021
6 Funding to install energy conservation measures.
__________
(a) The bonds have a 1.05% interest rate through July 2025.
(b) See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on nonrecourse debt.
(c) For Energy Efficiency Project Financing, the maturity dates represent the expected date of project completion, upon which the respective customer assumes the outstanding debt.
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During 2021, the following long-term debt was retired and/or redeemed:
Company/Subsidiary
Type
Interest Rate
Exelon
Exelon
Exelon
ComEd
PECO
BGE
ACE
ACE
ACE
Generation
Generation
Generation
Generation
Generation
Generation
Senior Notes
(a)
Long-Term Software License Agreements
Long-Term Software License Agreements
First Mortgage Bonds
First Mortgage Bonds
Senior Notes
First Mortgage Bonds
Tax-Exempt First Mortgage Bonds
Transition Bonds
Continental Wind Nonrecourse Debt
(b)
CR Nonrecourse Debt
(b)
SolGen Nonrecourse Debt
(b)
Antelope Valley DOE Nonrecourse Debt
(b)
West Medway II Nonrecourse Debt
(b)
RPG Nonrecourse Debt
(b)
2.45%
3.95%
3.62%
3.40%
1.70%
3.50%
4.35%
6.80%
5.55%
6.00%
3-month LIBOR + 2.50%
(c)
3.93%
2.29% - 3.56%
(d)
LIBOR + 3%
4.11%
Maturity
April 15, 2021
May 1, 2024
December 1, 2025
September 1, 2021
September 15, 2021
November 15, 2021
April 1, 2021
March 1, 2021
October 20, 2021
February 28, 2033
December 15, 2027
September 30, 2036
January 5, 2037
March 31, 2026
March 31, 2035
Amount
$
300
24
1
350
300
300
200
39
21
35
17
7
24
13
9
__________
(a) As part of the 2012 Constellation merger, Exelon entered intercompany loan agreements that mirrored the terms and amounts of the third-party debt obligations. In connection with the separation, on January 31, 2022,
Exelon Corporate received cash from Generation of $258 million to settle the intercompany loan. See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional
information on the mirror debt.
(b) See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on nonrecourse debt.
(c) The interest rate was amended to 3-month LIBOR + 2.50% on June 16, 2021.
(d) The nonrecourse debt has an average blended interest rate.
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During 2020, the following long-term debt was retired and/or redeemed:
Company/Subsidiary
Type
Interest Rate
Exelon
Exelon
ComEd
DPL
ACE
ACE
Generation
Generation
Generation
Generation
Generation
Generation
Generation
Generation
Generation
Generation
Generation
Generation
Notes
Long-Term Software License Agreements
First Mortgage Bonds
Tax-Exempt Bonds
Tax-Exempt First Mortgage Bonds
Transition Bonds
Senior Notes
Senior Notes
Senior Notes
(a)
Tax-Exempt Bonds
CR Nonrecourse Debt
(b)
Continental Wind Nonrecourse Debt
(b)
Antelope Valley DOE Nonrecourse Debt
(b)
RPG Nonrecourse Debt
(b)
Energy Efficiency Project Financing
NUKEM
SolGen Nonrecourse Debt
Energy Efficiency Project Financing
2.85%
3.95%
4.00%
5.40%
4.88%
5.55%
2.95%
4.00%
5.15%
Maturity
June 15, 2020
May 1, 2024
August 1, 2020
February 1, 2031
June 1, 2029
October 20, 2023
January 15, 2020
October 1, 2020
December 1, 2020
2.50% - 2.70%
December 1, 2025 - June 1, 2036
3-month LIBOR + 3.00%
6.00%
2.29% - 3.56%
4.11%
3.71%
3.15%
3.93%
4.12%
November 30, 2024
February 28, 2033
January 5, 2037
March 31, 2035
December 31, 2020
September 30, 2020
September 30, 2036
November 30, 2020
Amount
$
900
24
500
78
23
20
1,000
550
550
412
796
33
23
9
4
3
3
1
__________
(a) The senior notes are legacy Constellation mirror debt that were previously held at Exelon. As part of the 2012 Constellation merger, Exelon assumed intercompany loan agreements that mirrored the terms and amounts of
external obligations held by Exelon. See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information.
(b) See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information of nonrecourse debt.
From time to time and as market conditions warrant, the Registrants may engage in long-term debt retirements via tender offers, open market repurchases or other viable options to reduce debt on
their respective balance sheets.
Dividends
Quarterly dividends declared by the Exelon Board of Directors during the year ended December 31, 2021 and for the first quarter of 2022 were as follows:
Period
Declaration Date
Shareholder of Record Date
Dividend Payable Date
Cash per Share
(a)
First Quarter 2021
Second Quarter 2021
Third Quarter 2021
Fourth Quarter 2021
First Quarter 2022
February 21, 2021
April 27, 2021
July 27, 2021
October 29, 2021
February 8, 2022
March 8, 2021
May 14, 2021
August 13, 2021
November 15, 2021
February 25, 2022
March 15, 2021 $
June 10, 2021 $
September 10, 2021 $
December 10, 2021 $
March 10, 2022 $
0.3825
0.3825
0.3825
0.3825
0.3375
___________
(a) Exelon's Board of Directors approved an updated dividend policy for 2022. The 2022 quarterly dividend will be $0.3375 per share.
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Credit Matters and Cash Requirements (All Registrants)
The Registrants fund liquidity needs for capital expenditures, working capital, energy hedging, and other financial commitments through cash flows from continuing operations, public debt offerings,
commercial paper markets, and large, diversified credit facilities. The credit facilities include $10.3 billion in aggregate total commitments of which $6.5 billion was available to support additional
commercial paper as of December 31, 2021, and of which no financial institution has more than 7% of the aggregate commitments for the Registrants. On February 1, 2022, Exelon Corporate and the
Utility Registrants each entered into a new 5-year revolving credit facility that replaced its existing syndicated revolving credit facility. See Note 17 — Debt and Credit Agreements of the Combined
Notes to Consolidated Financial Statements for additional information. The Registrants had access to the commercial paper markets and had availability under their revolving credit facilities during
2021 to fund their short-term liquidity needs, when necessary. Exelon and Generation used their available credit facilities to manage short-term liquidity needs as a result of the impacts of the February
2021 extreme cold weather event. The Registrants routinely review the sufficiency of their liquidity position, including appropriate sizing of credit facility commitments, by performing various stress test
scenarios, such as commodity price movements, increases in margin-related transactions, changes in hedging levels, and the impacts of hypothetical credit downgrades. The Registrants closely
monitor events in the financial markets and the financial institutions associated with the credit facilities, including monitoring credit ratings and outlooks, credit default swap levels, capital raising, and
merger activity. See PART I, ITEM 1A. RISK FACTORS for additional information regarding the effects of uncertainty in the capital and credit markets.
The Registrants believe their cash flow from operating activities, access to credit markets, and their credit facilities provide sufficient liquidity to support the estimated future cash requirements
discussed below.
Pursuant to the Separation Agreement between Exelon and Constellation Energy Corporation, Exelon made a cash payment of $1.75 billion to Generation on January 31, 2022. See Note 26 —
Separation of the Combined Notes to Consolidated Financial Statements for additional information on the separation.
The following table presents the incremental collateral that each Utility Registrant would have been required to provide in the event each Utility Registrant lost its investment grade credit rating at
December 31, 2021 and available credit facility capacity prior to any incremental collateral at December 31, 2021:
ComEd
PECO
BGE
Pepco
DPL
ACE
__________
(a) Represents incremental collateral related to natural gas procurement contracts.
PJM Credit Policy Collateral
Other Incremental Collateral Required
(a)
Available Credit Facility Capacity Prior to Any
Incremental Collateral
$
28 $
1
4
3
4
1
$
—
37
78
—
14
—
998
600
470
125
151
155
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Capital Expenditures
As of December 31, 2021, estimates of capital expenditures for plant additions and improvements are as follows:
(in millions)
(a)
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
2022 Transmission
2022 Distribution
2022 Gas
Total 2022
(b)
Beyond 2022
(b)(c)
N/A
450
175
275
600
275
150
175
N/A
2,025
850
500
1,175
625
250
300
N/A $
N/A
325
475
100
N/A
100
N/A
8,600 $
2,475
1,325
1,225
1,850
900
475
475
24,950
7,775
4,500
4,100
5,650
2,750
1,550
1,375
___________
(a) Exelon's estimated capital expenditures include estimated capital expenditures for Generation.
(b) Numbers rounded to the nearest $25M and may not sum due to rounding.
(c)
Includes estimated capital expenditures for the Utility Registrants from 2023 and 2025 and includes estimated capital expenditures for Generation from 2023 to 2024.
Projected capital expenditures and other investments are subject to periodic review and revision to reflect changes in economic conditions and other factors.
Projected capital expenditures at the Utility Registrants are for continuing projects to maintain and improve operations, including enhancing reliability and adding capacity to the transmission and
distribution systems.
The Utility Registrants anticipate that they will fund their capital expenditures with a combination of internally generated funds and borrowings and additional capital contributions from parent.
Pension and Other Postretirement Benefits
Management considers various factors when making pension funding decisions, including actuarially determined minimum contribution requirements under ERISA, contributions required to avoid
benefit restrictions and at-risk status as defined by the Pension Protection Act of 2006 (the Act), management of the pension obligation, and regulatory implications. The Act requires the attainment of
certain funding levels to avoid benefit restrictions (such as an inability to pay lump sums or to accrue benefits prospectively), and at-risk status (which triggers higher minimum contribution requirements
and participant notification). The projected contributions below reflect a funding strategy to make levelized annual contributions with the objective of achieving 100% funded status on an ABO basis
over time. This level funding strategy helps minimize volatility of future period required pension contributions. Based on this funding strategy and current market conditions, which are subject to change,
Exelon’s estimated annual qualified pension contributions will be approximately $500 million in 2022. Exelon's estimated contributions include contributions related to Generation's qualified pension
plans. In connection with the separation, an additional qualified pension contribution of $207 million was completed on February 1, 2022. Unlike the qualified pension plans, Exelon’s non-qualified
pension plans are not funded, given that they are not subject to statutory minimum contribution requirements.
While OPEB plans are also not subject to statutory minimum contribution requirements, Exelon does fund certain of its plans. For Exelon's funded OPEB plans, contributions generally equal accounting
costs, however, Exelon’s management has historically considered several factors in determining the level of contributions to its OPEB plans, including liabilities management, levels of benefit claims
paid, and regulatory implications (amounts deemed prudent to meet regulatory expectations and best assure continued rate recovery). The amounts below include benefit payments related to unfunded
plans.
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Table of Contents
The following table provides all Registrants' planned contributions to the qualified pension plans, planned benefit payments to non-qualified pension plans, and planned contributions to OPEB plans in
2022:
Exelon
(a)
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Qualified Pension Plans
Non-Qualified Pension Plans
OPEB
$
505 $
173
12
48
60
2
1
7
32 $
2
1
2
10
1
1
—
50
12
2
16
7
6
—
—
_________
(a) Exelon's estimated contributions include contributions related to Generation's qualified pension plans. These payments are based on the combined plans, as of December 31, 2021 and do not reflect the impacts of the
separation.
To the extent interest rates decline significantly or the pension and OPEB plans earn less than the expected asset returns, annual pension contribution requirements in future years could increase.
Conversely, to the extent interest rates increase significantly or the pension and OPEB plans earn greater than the expected asset returns, annual pension and OPEB contribution requirements in
future years could decrease. Additionally, expected contributions could change if Exelon changes its pension or OPEB funding strategy.
See Note 15 — Retirement Benefits of the Combined Notes to Consolidated Financial Statements for additional information on pension and OPEB contributions.
Cash Requirements for Other Financial Commitments
The following tables summarize the Registrants' future estimated cash payments as of December 31, 2021 under existing financial commitments:
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Exelon
(b)
(c)
Long-term debt
Interest payments on long-term debt
(d)
Operating leases
Purchase power obligations
(f)
Fuel purchase agreements
Electric supply procurement
Long-term renewable energy and REC commitments
(e)
Other purchase obligations
DC PLUG obligation
SNF obligation
(g)
Pension contributions
(h)
Total cash requirements
2022
(a)
Beyond 2022
(a)
Total
(a)
Time Period
$
3,357 $
1,509
99
620
1,303
2,122
302
5,247
33
—
505
$
15,097 $
35,300 $
23,670
937
1,109
5,446
1,254
1,691
5,806
37
1,210
190
76,650 $
38,657
25,179
1,036
1,729
6,749
3,376
1,993
11,053
70
1,210
695
91,747
2022 - 2053
2022 - 2051
2022 - 2106
2022 - 2036
2022 - 2054
2022 - 2025
2022 - 2033
2022 - 2046
2022 - 2024
2022 - 2035
2022 - 2027
__________
(a) Exelon's future estimated cash payments include future estimated cash payments for Generation.
(b)
(c)
Includes amounts from ComEd and PECO financing trusts.
Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2021 and do not reflect anticipated future refinancing, early redemptions, or debt issuances. Variable rate
interest obligations are estimated based on rates as of December 31, 2021. Includes estimated interest payments due to ComEd and PECO financing trusts.
(d) Capacity payments associated with contracted generation lease agreements are net of sublease and capacity offsets of $57 million and $315 million for 2022 and beyond 2022, respectively, and $372 million in total.
(e) Purchase power obligations primarily include expected payments for REC purchases and payments associated with contracted generation agreements, which may be reduced based on plant availability. Expected
payments exclude payments on renewable generation contracts that are contingent in nature.
(f) Represents commitments to purchase nuclear fuel, natural gas and related transportation, storage capacity, and services.
(g) Represents the future estimated value at December 31, 2021 of the cash flows associated with all contracts, both cancellable and non-cancellable, entered into between the Registrants or subsidiary and third-parties for
the provision of services and materials, entered into in the normal course of business not specifically reflected elsewhere in this table. These estimates are subject to significant variability from period to period.
(h) These amounts represent Exelon’s expected contributions to its qualified pension plans. Qualified pension contributions for years after 2027 are not included.
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ComEd
(a)
Long-term debt
Interest payments on long-term debt
Operating leases
Electric supply procurement
Long-term renewable energy and REC commitments
(b)
Other purchase obligations
ZEC commitments
Total cash requirements
(c)
2022
Beyond 2022
Total
Time Period
$
— $
10,084 $
394
2
474
271
858
160
7,467
3
260
1,438
764
706
$
2,159 $
20,722 $
10,084
7,861
5
734
1,709
1,622
866
22,881
2022 - 2053
2022 - 2051
2022 - 2025
2022 - 2024
2022 - 2033
2022 - 2031
2022 - 2027
__________
(a)
(b)
Includes amounts from ComEd financing trust.
Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2021 and do not reflect anticipated future refinancing, early redemptions, or debt issuances. Includes
estimated interest payments due to the ComEd financing trust.
(c) Represents the future estimated value at December 31, 2021 of the cash flows associated with all contracts, both cancellable and non-cancellable, entered into between ComEd and third-parties for the provision of
services and materials, entered into in the normal course of business not specifically reflected elsewhere in this table. These estimates are subject to significant variability from period to period.
PECO
(a)
Long-term debt
Interest payments on long-term debt
Operating leases
(b)
(c)
Fuel purchase agreements
Electric supply procurement
(d)
Other purchase obligations
Total cash requirements
2022
Beyond 2022
Total
Time Period
$
$
350 $
166
—
140
490
846
1,992 $
4,084 $
3,213
1
271
2
690
8,261 $
4,434
3,379
1
411
492
1,536
10,253
2022 - 2051
2022 - 2051
2022 - 2034
2022 - 2029
2022 - 2023
2022 - 2030
__________
(a)
(b)
Includes amounts from PECO financing trusts.
Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2021 and do not reflect anticipated future refinancing, early redemptions, or debt issuances. Includes
estimated interest payments due to the PECO financing trusts.
(c) Represents commitments to purchase natural gas and related transportation, storage capacity, and services.
(d) Represents the future estimated value at December 31, 2021 of the cash flows associated with all contracts, both cancellable and non-cancellable, entered into between PECO and third-parties for the provision of services
and materials, entered into in the normal course of business not specifically reflected elsewhere in this table. These estimates are subject to significant variability from period to period.
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BGE
Long-term debt
Interest payments on long-term debt
Operating leases
(a)
Fuel purchase agreements
Electric supply procurement
(b)
Other purchase obligations
Total cash requirements
(c)
2022
Beyond 2022
Total
Time Period
$
$
250 $
138
16
112
764
692
1,972 $
3,750 $
2,312
19
481
498
607
7,667 $
4,000
2,450
35
593
1,262
1,299
9,639
2022 - 2050
2022 - 2050
2022 - 2106
2022 - 2038
2022 - 2024
2022 - 2040
Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2021 and do not reflect anticipated future refinancing, early redemptions, or debt issuances.
__________
(a)
(b) Represents commitments to purchase natural gas and related transportation, storage capacity, and services.
(c) Represents the future estimated value at December 31, 2021 of the cash flows associated with all contracts, both cancellable and non-cancellable, entered into between BGE and third-parties for the provision of services
and materials, entered into in the normal course of business not specifically reflected elsewhere in this table. These estimates are subject to significant variability from period to period.
PHI
Long-term debt
Interest payments on long-term debt
Finance leases
Operating leases
(a)
Fuel purchase agreements
Electric supply procurement
Long-term renewable energy and REC commitments
(b)
Other purchase obligations
DC PLUG obligation
Total cash requirements
(c)
2022
Beyond 2022
Total
Time Period
$
$
387 $
282
12
38
31
1,097
31
1,016
33
2,927 $
6,618 $
3,953
67
230
242
754
253
1,031
37
7,005
4,235
79
268
273
1,851
284
2,047
70
13,185 $
16,112
2022 - 2051
2022 - 2051
2022 - 2029
2022 - 2032
2022 - 2030
2022 - 2025
2022 - 2032
2022 - 2029
2022 - 2024
__________
(a)
Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2021 and do not reflect anticipated future refinancing, early redemptions, or debt issuances. Variable rate
interest obligations are estimated based on rates as of December 31, 2021.
(b) Represents commitments to purchase natural gas and related transportation, storage capacity, and services.
(c) Represents the future estimated value at December 31, 2021 of the cash flows associated with all contracts, both cancellable and non-cancellable, entered into between Pepco, DPL, ACE, and PHISCO and third-parties
for the provision of services and materials, entered into in the normal course of business not specifically reflected elsewhere in this table. These estimates are subject to significant variability from period to period.
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Pepco
Long-term debt
Interest payments on long-term debt
Finance leases
Operating leases
Electric supply procurement
(a)
Other purchase obligations
DC PLUG obligation
Total cash requirements
(b)
2022
Beyond 2022
Total
Time Period
$
309 $
149
4
8
498
603
33
3,150 $
2,287
23
47
384
551
37
$
1,604 $
6,479 $
3,459
2,436
27
55
882
1,154
70
8,083
2022 - 2051
2022 - 2051
2022 - 2029
2022 - 2032
2022 - 2025
2022 - 2026
2022 - 2024
__________
(a)
(b) Represents the future estimated value at December 31, 2021 of the cash flows associated with all contracts, both cancellable and non-cancellable, entered into between Pepco and third-parties for the provision of services
Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2021 and do not reflect anticipated future refinancing, early redemptions, or debt issuances.
and materials, entered into in the normal course of business not specifically reflected elsewhere in this table. These estimates are subject to significant variability from period to period.
DPL
Long-term debt
Interest payments on long-term debt
Finance leases
Operating leases
(a)
Fuel purchase agreements
Electric supply procurement
(b)
Long-term renewable energy and REC commitments
Other purchase obligations
Total cash requirements
(c)
2022
Beyond 2022
Total
Time Period
$
78 $
63
5
10
31
298
31
214
1,711 $
1,013
27
60
242
187
253
192
$
730 $
3,685 $
1,789
1,076
32
70
273
485
284
406
4,415
2022 - 2051
2022 - 2051
2022 - 2029
2022 - 2027
2022 - 2030
2022 - 2024
2022 - 2032
2022 - 2028
__________
(a)
Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2021 and do not reflect anticipated future refinancing, early redemptions, or debt issuances. Variable rate
interest obligations are estimated based on rates as of December 31, 2021.
(b) Represents commitments to purchase natural gas and related transportation, storage capacity, and services.
(c) Represents the future estimated value at December 31, 2021 of the cash flows associated with all contracts, both cancellable and non-cancellable, entered into between DPL and third-parties for the provision of services
and materials, entered into in the normal course of business not specifically reflected elsewhere in this table. These estimates are subject to significant variability from period to period.
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ACE
Long-term debt
Interest payments on long-term debt
Finance leases
Operating leases
Electric supply procurement
(a)
Other purchase obligations
Total cash requirements
(b)
2022
Beyond 2022
Total
Time Period
$
$
— $
56
3
4
301
158
522 $
1,572 $
519
17
9
183
240
2,540 $
1,572
575
20
13
484
398
3,062
2022 - 2050
2022 - 2050
2022 - 2029
2022 - 2027
2022 - 2024
2022 - 2027
__________
(a)
(b) Represents the future estimated value at December 31, 2021 of the cash flows associated with all contracts, both cancellable and non-cancellable, entered into between ACE and third-parties for the provision of services
Interest payments are estimated based on final maturity dates of debt securities outstanding at December 31, 2021 and do not reflect anticipated future refinancing, early redemptions, or debt issuances.
and materials, entered into in the normal course of business not specifically reflected elsewhere in this table. These estimates are subject to significant variability from period to period.
See Note 19 — Commitments and Contingencies and Note 3 — Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional information of the Registrants’ other
commitments potentially triggered by future events. Additionally, see below for where to find additional information regarding the financial commitments in the tables above in the Combined Notes to the
Consolidated Financial Statements:
Item
Long-term debt
Interest payments on long-term debt
Finance leases
Operating leases
SNF obligation
REC commitments
ZEC commitments
DC PLUG obligation
Pension contributions
Credit Facilities (All Registrants)
Location within Notes to the Consolidated Financial Statements
Note 17 — Debt and Credit Agreements
Note 17 — Debt and Credit Agreements
Note 11 — Leases
Note 11 — Leases
Note 19 — Commitments and Contingencies
Note 3 — Regulatory Matters
Note 3 — Regulatory Matters
Note 3 — Regulatory Matters
Note 15 — Retirement Benefits
Exelon Corporate, ComEd, and BGE meet their short-term liquidity requirements primarily through the issuance of commercial paper. PECO meets its short-term liquidity requirements primarily through
the issuance of commercial paper and borrowings from the Exelon intercompany money pool. Pepco, DPL, and ACE meet their short-term liquidity requirements primarily through the issuance of
commercial paper and borrowings from the PHI intercompany money pool. PHI Corporate meets its short-term liquidity requirements primarily through the issuance of short-term notes and the Exelon
intercompany money pool. The Registrants may use their respective credit facilities for general corporate purposes, including meeting short-term funding requirements and the issuance of letters of
credit.
See Note 17 — Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information on the Registrants’ credit facilities and short term borrowing activity.
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Capital Structure
At December 31, 2021, the capital structures of the Registrants consisted of the following:
Long-term debt
(a)
Long-term debt to affiliates
Common equity
Member’s equity
Commercial paper and notes payable
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
50 %
1 %
45 %
— %
4 %
44 %
1 %
55 %
— %
— %
44 %
2 %
54 %
— %
— %
45 %
— %
53 %
— %
2 %
40 %
— %
— %
57 %
3 %
49 %
— %
49 %
— %
2 %
48 %
— %
48 %
— %
4 %
48 %
— %
48 %
— %
4 %
__________
(a)
Includes approximately $390 million, $205 million, and $184 million owed to unconsolidated affiliates of Exelon, ComEd, and PECO respectively. These special purpose entities were created for the sole purposes of
issuing mandatory redeemable trust preferred securities of ComEd and PECO. See Note 23 — Variable Interest Entities of the Combined Notes to Consolidated Financial Statements for additional information regarding
the authoritative guidance for VIEs.
Security Ratings (All Registrants)
The Registrants’ access to the capital markets, including the commercial paper market, and their respective financing costs in those markets, may depend on the securities ratings of the entity that is
accessing the capital markets.
The Registrants’ borrowings are not subject to default or prepayment as a result of a downgrading of securities, although such a downgrading of a Registrant’s securities could increase fees and
interest charges under that Registrant’s credit agreements.
As part of the normal course of business, the Registrants enter into contracts that contain express provisions or otherwise permit the Registrants and their counterparties to demand adequate
assurance of future performance when there are reasonable grounds for doing so. In accordance with the contracts and applicable contracts law, if the Registrants are downgraded by a credit rating
agency, it is possible that a counterparty would attempt to rely on such a downgrade as a basis for making a demand for adequate assurance of future performance, which could include the posting of
additional collateral. See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information on collateral provisions.
The credit ratings for Exelon Corporate and the Utility Registrants did not change for the year ended December 31, 2021. On January 14, 2022, Fitch lowered Exelon Corporate's long-term rating from
BBB+ to BBB and affirmed the short-term rating of F2. In addition, Fitch upgraded Pepco, ACE, and PHI's long-term rating from BBB to BBB+ and upgraded Pepco and ACE's senior secured rating
from A- to A.
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Intercompany Money Pool (All Registrants)
To provide an additional short-term borrowing option that will generally be more favorable to the borrowing participants than the cost of external financing, both Exelon and PHI operate an intercompany
money pool. Maximum amounts contributed to and borrowed from the money pool by participant and the net contribution or borrowing as of December 31, 2021, are presented in the following tables.
ACE did not have any intercompany money pool activity as of December 31, 2021.
Exelon Intercompany Money Pool
Exelon Corporate
Generation
PECO
BSC
PHI Corporate
PCI
PHI Intercompany Money Pool
Pepco
DPL
For the Year Ended December 31, 2021
As of December 31, 2021
Maximum
Contributed
Maximum
Borrowed
Contributed (Borrowed)
735 $
—
303
—
—
60
— $
(426)
(100)
(435)
(40)
—
For the Year Ended December 31, 2021
As of December 31, 2021
Maximum
Contributed
Maximum
Borrowed
Contributed (Borrowed)
— $
30
(30) $
—
217
—
—
(260)
(7)
50
—
—
$
$
Shelf Registration Statements (All Registrants)
Exelon and the Utility Registrants have a currently effective combined shelf registration statement unlimited in amount, filed with the SEC, that will expire in August 2022. The ability of each Registrant
to sell securities off the shelf registration statement or to access the private placement markets will depend on a number of factors at the time of the proposed sale, including other required regulatory
approvals, as applicable, the current financial condition of the Registrant, its securities ratings and market conditions.
Regulatory Authorizations (All Registrants)
The Utility Registrants are required to obtain short-term and long-term financing authority from Federal and State Commissions as follows:
Short-term Financing Authority
(a)
Remaining Long-term Financing Authority
As of December 31, 2021
(b)
ComEd
(c)
PECO
BGE
Pepco
DPL
ACE
(d)
Commission
FERC
FERC
FERC
FERC
FERC
NJBPU
Expiration Date
December 31, 2023
December 31, 2023
December 31, 2023
December 31, 2023
December 31, 2023
December 31, 2023
Amount
Commission
$
2,500
1,500
700
500
500
350
ICC
PAPUC
MDPSC
MDPSC / DCPSC
MDPSC / DEPSC
NJBPU
Expiration Date
January 1, 2025
December 31, 2024
N/A
December 31, 2022
December 31, 2022
December 31, 2022
$
Amount
2,093
1,900
500
625
172
175
__________
(a) On October 15, 2021, ComEd, PECO, BGE, Pepco, and DPL filed applications with FERC and on July 21, 2021, ACE filed an application with NJBPU for renewal of their short-term financing authority through December
31, 2023. ComEd received approval on December 16, 2021, PECO and BGE received approval on December 23, 2021, Pepco and DPL received approval on December 28, 2021, and ACE received approval on
December 1, 2021.
(b) On November 18, 2021, ComEd had an additional $2 billion in new money long-term debt financing authority from the ICC with an effective date of January 1, 2022 and an expiration date of January 1, 2025.
(c) On December 2, 2021, PECO received approval from the PAPUC for $2.5 billion in new long-term debt financing authority with an effective date of January 1, 2022.
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(d) ACE is currently in the process of renewing its long-term financing authority with the NJBPU and expects approval by August 1, 2022.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Registrants are exposed to market risks associated with adverse changes in commodity prices, counterparty credit, interest rates, and equity prices. Exelon manages these risks through risk
management policies and objectives for risk assessment, control and valuation, counterparty credit approval, and the monitoring and reporting of risk exposures. Historically, reporting on risk
management issues has been to Exelon’s Risk Management Committee, the Risk Management Committees of each Utility Registrant, and the Risk Committee of Exelon’s Board of Directors. After
separation, reporting on risk management issues will be to Exelon’s Executive Committee, the Risk Management Committees of each Utility Registrant, and the Audit and Risk Committee of Exelon’s
Board of Directors.
Commodity Price Risk (All Registrants)
Commodity price risk is associated with price movements resulting from changes in supply and demand, fuel costs, market liquidity, weather conditions, governmental regulatory and environmental
policies, and other factors. To the extent the total amount of energy Exelon generates and purchases differs from the amount of energy it has contracted to sell, Exelon is exposed to market fluctuations
in commodity prices. Exelon seeks to mitigate its commodity price risk through the sale and purchase of electricity, fossil fuel, and other commodities.
Generation
Electricity available from Generation’s owned or contracted generation supply in excess of Generation’s obligations to customers, including portions of the Utility Registrants' retail load, is sold into the
wholesale markets. To reduce commodity price risk caused by market fluctuations, Generation enters into non-derivative contracts as well as derivative contracts, including swaps, futures, forwards,
and options, with approved counterparties to hedge anticipated exposures. Generation uses derivative instruments as economic hedges to mitigate exposure to fluctuations in commodity prices. We
expect the settlement of the majority of our economic hedges will occur during 2022 through 2024.
In general, increases and decreases in forward market prices have a positive and negative impact, respectively, on Generation’s owned and contracted generation positions which have not been
hedged. For merchant revenues not already hedged via comprehensive state programs, such as the CMC in Illinois, we utilize a three-year ratable sales plan to align our hedging strategy with our
financial objectives. The prompt three-year merchant revenues are hedged on an approximate rolling 90%/60%/30% basis. We may also enter transactions that are outside of this ratable hedging
program.As of December 31, 2021, the percentage of expected generation hedged for the Mid-Atlantic, Midwest, New York, and ERCOT reportable segments is 92%-95% and 73%-76% for 2022 and
2023, respectively. The percentage of expected generation hedged is the amount of equivalent sales divided by the expected generation. Expected generation is the volume of energy that best
represents our commodity position in energy markets from owned or contracted generation based upon a simulated dispatch model that makes assumptions regarding future market conditions, which
are calibrated to market quotes for power, fuel, load following products and options. Equivalent sales represent all hedging products, which include economic hedges, CMC payments, and certain non-
derivative contracts.
A portion of Generation’s hedging strategy may be accomplished with fuel products based on assumed correlations between power and fuel prices, which routinely change in the market. Market price
risk exposure is the risk of a change in the value of unhedged positions. The forecasted market price risk exposure for Generation’s entire economic hedge portfolio associated with a $5/MWh reduction
in the annual average around-the-clock energy price based on December 31, 2021 market conditions and hedged position would be a decrease in pre-tax net income of approximately $20 million and
$243 million for 2022 and 2023, respectively. Power price sensitivities are derived by adjusting power price assumptions while keeping all other price inputs constant. Generation actively manages its
portfolio to mitigate market price risk exposure for its unhedged position. Actual results could differ depending on the specific timing of, and markets affected by, price changes, as well as future
changes in Generation’s portfolio. See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information.
Fuel Procurement
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Generation procures natural gas through long-term and short-term contracts, and spot-market purchases. Nuclear fuel assemblies are obtained predominantly through long-term uranium concentrate
supply contracts, contracted conversion services, contracted enrichment services, or a combination thereof, and contracted fuel fabrication services. The supply markets for uranium concentrates and
certain nuclear fuel services are subject to price fluctuations and availability restrictions. Supply market conditions may make Generation’s procurement contracts subject to credit risk related to the
potential non-performance of counterparties to deliver the contracted commodity or service at the contracted prices.
Utility Registrants
ComEd entered into 20-year floating-to-fixed renewable energy swap contracts beginning in June 2012, which are considered an economic hedge and have changes in fair value recorded to an
offsetting regulatory asset or liability. ComEd has block energy contracts to procure electric supply that are executed through a competitive procurement process, which are considered derivatives and
qualify for NPNS, and as a result are accounted for on an accrual basis of accounting. PECO, BGE, Pepco, DPL, and ACE have contracts to procure electric supply that are executed through a
competitive procurement process. BGE, Pepco, DPL, and ACE have certain full requirements contracts, which are considered derivatives and qualify for NPNS, and as a result are accounted for on an
accrual basis of accounting. Other full requirements contracts are not derivatives.
PECO, BGE, and DPL also have executed derivative natural gas contracts, which either qualify for NPNS or have no mark-to-market balances because the derivatives are index priced, to hedge their
long-term price risk in the natural gas market. The hedging programs for natural gas procurement have no direct impact on their financial statements. PECO, BGE, Pepco, DPL, and ACE do not
execute derivatives for speculative purposes.
For additional information on these contracts, see Note 3 — Regulatory Matters and Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements.
Trading and Non-Trading Marketing Activities
The following table detailing Exelon’s (including Generation's) and ComEd’s trading and non-trading marketing activities is included to address the recommended disclosures by the energy industry’s
Committee of Chief Risk Officers (CCRO).
The following table provides detail on changes in Exelon’s and ComEd’s commodity mark-to-market net asset or liability balance sheet position from December 31, 2019 to December 31, 2021. It
indicates the drivers behind changes in the balance sheet amounts. This table incorporates the mark-to-market activities that are immediately recorded in earnings. This table excludes all NPNS
contracts and does not segregate proprietary trading activity. See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information on
the balance sheet classification of the mark-to-market energy contract net assets (liabilities) recorded as of December 31, 2021 and 2020.
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Balance as of December 31, 2019
Total change in fair value during 2020 of contracts recorded in result of operations
Reclassification to realized at settlement of contracts recorded in results of operations
Changes in allocated collateral
Net option premium paid
Option premium amortization
Upfront payments and amortizations
Balance as of December 31, 2020
(c)
Total change in fair value during 2021 of contracts recorded in result of operations
Reclassification to realized at settlement of contracts recorded in results of operations
Changes in fair value—recorded through regulatory assets
Changes in allocated collateral
Net option premium paid
Option premium amortization
(b)
Upfront payments and amortizations
(c)
Balance as of December 31, 2021
$
Exelon
ComEd
(a)
$
567
(203)
469
(513)
139
(104)
73
428
(a)
797
(228)
82
96
338
(125)
15
(301)
—
—
—
—
—
—
(301)
—
—
82
—
—
—
—
$
1,403
(a)
$
(219)
__________
(a) Exelon's balance related to Generation is shown net of collateral paid to and received from counterparties.
(b) For ComEd, the changes in fair value are recorded as a change in regulatory assets. As of December 31, 2020 and 2021, ComEd recorded a regulatory asset of $301 million and $219 million, respectively, related to its
mark-to-market derivative liabilities with unaffiliated suppliers. ComEd recorded $33 million of decreases in fair value and an increase for realized losses due to settlements of $33 million in purchased power expense
associated with floating-to-fixed energy swap contracts with unaffiliated suppliers for the year ended December 31, 2020. ComEd recorded $62 million of increases in fair value and an increase for realized losses due to
settlements of $20 million recorded in purchased power expense associated with floating-to-fixed energy swap contracts with unaffiliated suppliers for the year ended December 31, 2021.
Includes derivative contracts acquired or sold by Generation through upfront payments or receipts of cash, excluding option premiums, and the associated amortizations.
(c)
Fair Values
The following tables present maturity and source of fair value for Exelon and ComEd mark-to-market commodity contract net assets (liabilities). The tables provide two fundamental pieces of
information. First, the tables provide the source of fair value used in determining the carrying amount of Exelon's and ComEd's total mark-to-market net assets (liabilities), net of allocated collateral.
Second, the tables show the maturity, by year, of Exelon's and ComEd's commodity contract net assets (liabilities), net of allocated collateral, giving an indication of when these mark-to-market
amounts will settle and either generate or require cash. See Note 18 — Fair Value of Financial Assets and Liabilities of the Combined Notes to Consolidated Financial Statements for additional
information regarding fair value measurements and the fair value hierarchy.
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Exelon
Normal Operations, Commodity derivative contracts
(a)(b)(c)
:
Actively quoted prices (Level 1)
Prices provided by external sources (Level 2)
Prices based on model or other valuation methods (Level 3)
(d)
Total
2022
2023
2024
2025
2026
2027 and Beyond
Total Fair
Value
Maturities Within
$
$
711 $
442
19
66 $
436
(93)
1,172 $
409 $
53 $
(60)
2
(5) $
43 $
1
(15)
29 $
24 $
—
(45)
(21) $
— $
—
(181)
(181) $
897
819
(313)
1,403
__________
(a) Exelon's maturity by year includes maturities related to Generation's mark-to-market contract net assets (liabilities).
(b) Mark-to-market gains and losses on other economic hedge and trading derivative contracts that are recorded in results of operations.
(c) Amounts are shown net of collateral paid/(received) from counterparties (and offset against mark-to-market assets and liabilities) of $512 million at December 31, 2021.
(d)
Includes ComEd’s net assets (liabilities) associated with the floating-to-fixed energy swap contracts with unaffiliated suppliers.
ComEd
(a)
Commodity derivative contracts :
2022
2023
2024
2025
2026
2027 and Beyond
Total Fair
Value
Maturities Within
Prices based on model or other valuation methods (Level 3)
(a)
$
(18) $
(19) $
(21) $
(20) $
(21) $
(120) $
(219)
__________
(a) Represents ComEd’s net liabilities associated with the floating-to-fixed energy swap contracts with unaffiliated suppliers.
Credit Risk (All Registrants)
The Registrants would be exposed to credit-related losses in the event of non-performance by counterparties that execute derivative instruments. The credit exposure of derivative contracts, before
collateral, is represented by the fair value of contracts at the reporting date. See Note 16—Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for a detailed
discussion of credit risk.
Generation
The following tables provide information on Generation’s credit exposure for all derivative instruments, NPNS, and payables and receivables, net of collateral and instruments that are subject to master
netting agreements, as of December 31, 2021. The tables further delineate that exposure by credit rating of the counterparties and provide guidance on the concentration of credit risk to individual
counterparties and an indication of the duration of a company’s credit risk by credit rating of the counterparties. The figures in the table below exclude credit risk exposure from individual retail
customers, uranium procurement contracts, and exposure through RTOs, ISOs, and commodity exchanges, which are discussed below.
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Rating as of December 31, 2021
Investment grade
Non-investment grade
No external ratings
Internally rated—investment grade
Internally rated—non-investment grade
Total
Total
Exposure
Before Credit
Collateral
Credit
Collateral
(a)
Net
Exposure
Number of
Counterparties
Greater than 10%
of Net Exposure
Net Exposure of
Counterparties
Greater than 10%
of Net Exposure
$
$
715 $
13
111
226
176 $
—
—
47
1,065 $
223 $
539
13
111
179
842
1 $
—
—
—
1 $
__________
(a) As of December 31, 2021, credit collateral held from counterparties where Generation had credit exposure included $163 million of cash and $60 million of letters of credit.
Rating as of December 31, 2021
Investment grade
Non-investment grade
No external ratings
Internally rated—investment grade
Internally rated—non-investment grade
Total
Net Credit Exposure by Type of Counterparty
Financial institutions
Investor-owned utilities, marketers, power producers
Energy cooperatives and municipalities
Other
Total
The Utility Registrants
Less than
2 Years
2-5
Years
Exposure
Greater than
5 Years
Total Exposure
Before Credit
Collateral
Maturity of Credit Risk Exposure
$
$
605 $
13
111
181
62 $
—
—
39
910 $
101 $
48 $
—
—
6
54 $
As of December 31, 2021
$
$
106
—
—
—
106
715
13
111
226
1,065
32
711
62
37
842
Credit risk for the Utility Registrants is governed by credit and collection policies, which are aligned with state regulatory requirements. The Utility Registrants are currently obligated to provide service
to all electric customers within their franchised territories. The Utility Registrants record an allowance for credit losses on customer receivables, based upon historical loss experience, current
conditions, and forward-looking risk factors, to provide for the potential loss from nonpayment by these customers. The Utility Registrants will monitor nonpayment from customers and will make any
necessary adjustments to the allowance for credit losses on customer receivables. See Note 1 — Significant Accounting Policies of the Combined Notes to Consolidated Financial Statements for the
allowance for credit losses policy. The Utility Registrants did not have any customers representing over 10% of their revenues as of December 31, 2021. See Note 3 — Regulatory Matters of the
Combined Notes to Consolidated Financial Statements for additional information regarding the regulatory recovery of credit losses on customer accounts receivable.
As of December 31, 2021, the Utility Registrants net credit exposure to suppliers was immaterial. See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial
Statements for additional information.
Credit-Risk-Related Contingent Features (All Registrants)
Generation
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As part of the normal course of business, Generation routinely enters into physical or financial contracts for the sale and purchase of electricity, natural gas, and other commodities. In accordance with
the contracts and applicable law, if Generation is downgraded by a credit rating agency, especially if such downgrade is to a level below investment grade, it is possible that a counterparty would
attempt to rely on such a downgrade as a basis for making a demand for adequate assurance of future performance. Depending on Generation’s net position with a counterparty, the demand could be
for the posting of collateral. In the absence of expressly agreed-to provisions that specify the collateral that must be provided, collateral requested will be a function of the facts and circumstances of the
situation at the time of the demand. See Note 16 — Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information regarding collateral
requirements and Note 19 — Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for additional information regarding the letters of credit supporting the cash
collateral.
Generation transacts output through bilateral contracts. The bilateral contracts are subject to credit risk, which relates to the ability of counterparties to meet their contractual payment obligations. As
market prices rise above or fall below contracted price levels, Generation is required to post collateral with purchasers; as market prices fall below contracted price levels, counterparties are required to
post collateral with Generation. To post collateral, Generation depends on access to bank credit facilities, which serve as liquidity sources to fund collateral requirements. See ITEM 7. Liquidity and
Capital Resources — Credit Matters — Exelon Credit Facilities for additional information.
The Utility Registrants
As of December 31, 2021, the Utility Registrants were not required to post collateral under their energy and/or natural gas procurement contracts. See Note 3 — Regulatory Matters and Note 16 —
Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information.
RTOs and ISOs (All Registrants)
All Registrants participate in all, or some, of the established, wholesale spot energy markets that are administered by PJM, ISO-NE, NYISO, CAISO, MISO, SPP, AESO, OIESO, and ERCOT. ERCOT
is not subject to regulation by FERC but performs a similar function in Texas to that performed by RTOs in markets regulated by FERC. In these areas, power is traded through bilateral agreements
between buyers and sellers and on the spot energy markets that are administered by the RTOs or ISOs, as applicable. In areas where there is no spot energy market, electricity is purchased and sold
solely through bilateral agreements. For sales into the spot markets administered by an RTO or ISO, the RTO or ISO maintains financial assurance policies that are established and enforced by those
administrators. The credit policies of the RTOs and ISOs may, under certain circumstances, require that losses arising from the default of one member on spot energy market transactions be shared by
the remaining participants. Non-performance or non-payment by a major counterparty could result in a material adverse impact on the Registrants’ financial statements. See Note 3 — Regulatory
Matters of the Combined Notes to Consolidated Financial Statements for additional information on the February 2021 extreme cold weather event and Texas-based generating asset outages.
Exchange Traded Transactions (Exelon, PHI, and DPL)
Generation enters into commodity transactions on NYMEX, ICE, NASDAQ, NGX, and the Nodal exchange ("the Exchanges"). DPL enters into commodity transactions on ICE. The Exchange
clearinghouses act as the counterparty to each trade. Transactions on the Exchanges must adhere to comprehensive collateral and margining requirements. As a result, transactions on Exchanges are
significantly collateralized and have limited counterparty credit risk.
Interest Rate and Foreign Exchange Risk (Exelon)
Exelon and Generation use a combination of fixed-rate and variable-rate debt to manage interest rate exposure. Exelon and Generation may also utilize interest rate swaps to manage their interest rate
exposure. A hypothetical 50 basis point increase in the interest rates associated with unhedged variable-rate debt (excluding Commercial Paper) and fixed-to-floating swaps would result in
approximately a $2 million decrease in Exelon pre-tax income for the year ended December 31, 2021. To manage foreign exchange rate exposure associated with international energy purchases in
currencies other than U.S. dollars, Generation utilizes foreign currency derivatives, which
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are typically designated as economic hedges. See Note 16—Derivative Financial Instruments of the Combined Notes to Consolidated Financial Statements for additional information.
Equity Price Risk (Exelon)
Generation maintains trust funds, as required by the NRC, to fund certain costs of decommissioning its nuclear plants. Generation’s NDT funds are reflected at fair value in Exelon's Consolidated
Balance Sheets. The mix of securities in the trust funds is designed to provide returns to be used to fund decommissioning and to compensate Generation for inflationary increases in decommissioning
costs; however, the equity securities in the trust funds are exposed to price fluctuations in equity markets, and the value of fixed-rate, fixed-income securities are exposed to changes in interest rates.
Generation actively monitors the investment performance of the trust funds and periodically reviews asset allocation in accordance with Generation’s NDT fund investment policy. A hypothetical 25
basis points increase in interest rates and 10% decrease in equity prices would result in a $892 million reduction in the fair value of the trust assets as of December 31, 2021. This calculation holds all
other variables constant and assumes only the discussed changes in interest rates and equity prices. See Liquidity and Capital Resources section of ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for additional information.
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management’s Report on Internal Control Over Financial Reporting
The management of Exelon Corporation (Exelon) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-
15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Exelon’s management conducted an assessment of the effectiveness of Exelon’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the
criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, Exelon’s management
concluded that, as of December 31, 2021, Exelon’s internal control over financial reporting was effective.
The effectiveness of Exelon’s internal control over financial reporting as of December 31, 2021, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as
stated in their report which appears herein.
February 25, 2022
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Management’s Report on Internal Control Over Financial Reporting
The management of Commonwealth Edison Company (ComEd) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ComEd’s management conducted an assessment of the effectiveness of ComEd’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the
criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, ComEd’s management
concluded that, as of December 31, 2021, ComEd’s internal control over financial reporting was effective.
February 25, 2022
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Management’s Report on Internal Control Over Financial Reporting
The management of PECO Energy Company (PECO) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
PECO’s management conducted an assessment of the effectiveness of PECO’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the
criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, PECO’s management
concluded that, as of December 31, 2021, PECO’s internal control over financial reporting was effective.
February 25, 2022
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Management’s Report on Internal Control Over Financial Reporting
The management of Baltimore Gas and Electric Company (BGE) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
BGE’s management conducted an assessment of the effectiveness of BGE’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the
criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, BGE’s management
concluded that, as of December 31, 2021, BGE’s internal control over financial reporting was effective.
February 25, 2022
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Management’s Report on Internal Control Over Financial Reporting
The management of Pepco Holdings LLC (PHI) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-
15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
PHI’s management conducted an assessment of the effectiveness of PHI’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria
in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, PHI’s management concluded that,
as of December 31, 2021, PHI’s internal control over financial reporting was effective.
February 25, 2022
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Management’s Report on Internal Control Over Financial Reporting
The management of Potomac Electric Power Company (Pepco) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Pepco’s management conducted an assessment of the effectiveness of Pepco’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the
criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, Pepco’s management
concluded that, as of December 31, 2021, Pepco’s internal control over financial reporting was effective.
February 25, 2022
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Management’s Report on Internal Control Over Financial Reporting
The management of Delmarva Power & Light Company (DPL) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act
Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
DPL’s management conducted an assessment of the effectiveness of DPL’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria
in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, DPL’s management concluded that,
as of December 31, 2021, DPL’s internal control over financial reporting was effective.
February 25, 2022
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Management’s Report on Internal Control Over Financial Reporting
The management of Atlantic City Electric Company (ACE) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act
Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ACE’s management conducted an assessment of the effectiveness of ACE’s internal control over financial reporting as of December 31, 2021. In making this assessment, management used the
criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, ACE’s management
concluded that, as of December 31, 2021, ACE’s internal control over financial reporting was effective.
February 25, 2022
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To the Board of Directors and Shareholders of Exelon Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item 15(a)(1)(i), and the financial statement schedules listed in the index
appearing under Item 15(a)(1)(ii), of Exelon Corporation and its subsidiaries (the “Company”) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's
internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of
its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. Also in
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 8. Our responsibility is to express opinions on the
Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in
the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the
audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters
below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Annual Nuclear Decommissioning Asset Retirement Obligations (ARO) Assessment
As described in Notes 1 and 10 to the consolidated financial statements, the Company has a legal obligation to decommission its nuclear generation stations following permanent cessation of
operations. To estimate its decommissioning obligations related to its nuclear generating stations for financial accounting and reporting purposes, management uses a probability-weighted, discounted
cash flow model which, on a unit-by-unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on decommissioning cost studies, cost
escalation rates, probabilistic cash flow models, and discount rates. Management updates its ARO annually, unless circumstances warrant more frequent updates, based on its review of updated cost
studies and its annual evaluation of cost escalation factors and probabilities assigned to various scenarios. As of December 31, 2021, the nuclear decommissioning ARO was $12.7 billion.
The principal considerations for our determination that performing procedures relating to the Company’s annual nuclear decommissioning ARO assessment is a critical audit matter are the significant
judgment by management when estimating its decommissioning obligations; this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the
reasonableness of management’s discounted cash flow model and significant assumptions related to decommissioning cost studies. In addition, the audit effort involved the use of professionals with
specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included
testing the effectiveness of controls relating to management’s development of the inputs, assumptions, and model used in management’s ARO assessment. These procedures also included, among
others, testing management’s process for estimating the decommissioning obligations by evaluating the appropriateness of the discounted cash flow model, testing the completeness and accuracy of
data used by management, and evaluating the reasonableness of management’s significant assumptions related to decommissioning cost studies. Professionals with specialized skill and knowledge
were used to assist in evaluating the results of decommissioning cost studies.
Impairment Assessment of Long-Lived Generation Assets
As described in Notes 1, 8, and 12 to the consolidated financial statements, the Company evaluates the carrying value of long-lived assets or asset groups for recoverability whenever events or
changes in circumstances indicate that the carrying value of those assets may not be recoverable. Indicators of impairment may include a deteriorating business climate, including, but not limited to,
declines in energy prices, condition of the asset, or plans to dispose of a long-lived asset significantly before the end of its useful life. Management determines if long-lived assets or asset groups are
potentially impaired by comparing the undiscounted expected future cash flows to the carrying value when indicators of impairment exist. When the undiscounted cash flow analysis indicates a long-
lived asset or asset group may not be recoverable, the amount of the impairment loss is determined by measuring the excess of the carrying amount of the long-lived asset or asset group over its fair
value. The fair value analysis is primarily based on the income approach using significant unobservable inputs including revenue and generation forecasts, projected capital and maintenance
expenditures, and discount rates. As of December 31, 2021, the total carrying value of long-lived generation assets subject to this assessment was $19.6 billion.
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The principal considerations for our determination that performing procedures relating to the Company’s impairment assessment of long-lived generation assets is a critical audit matter are the
significant judgment by management in assessing the recoverability and estimating the fair value of these long-lived generation assets or asset groups; this in turn led to a high degree of auditor
judgment, subjectivity and effort in performing procedures and evaluating the reasonableness of management’s significant assumptions related to revenue and generation forecasts. In addition, the
audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included
testing the effectiveness of controls relating to management’s development of the inputs, assumptions, and model used to assess the recoverability and estimate the fair value of the Company’s long-
lived generation assets or asset groups. These procedures also included, among others, testing management’s process for developing the expected future cash flows for the long-lived generation
assets or asset groups by evaluating the appropriateness of the future cash flow model, testing the completeness and accuracy of the data used by management, and evaluating the reasonableness of
management’s significant assumptions related to revenue and generation forecasts. Evaluating the reasonableness of the revenue and generation forecasts involved considering whether the forecasts
were consistent with future commodity prices and external market data. Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the revenue
forecasts.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 3 to the consolidated financial statements, the Company applies the authoritative guidance for accounting for certain types of regulation, which requires management to
record in the consolidated financial statements the effects of cost-based rate regulation for entities with regulated operations that meet the following criteria, (i) rates are established or approved by a
third-party regulator; (ii) rates are designed to recover the entity’s cost of providing services or products; and (iii) there is a reasonable expectation that rates designed to recover costs can be charged
to and collected from customers. The Company accounts for its regulated operations in accordance with regulatory and legislative guidance from the regulatory authorities having jurisdiction under
state public utility laws and the FERC under various Federal laws. Upon updates in material regulatory and legislative proceedings, where applicable, management will record new regulatory assets or
liabilities and will assess whether it is probable that its currently recorded regulatory assets and liabilities will be recovered and settled, respectively, in future rates. As of December 31, 2021, there were
$9.5 billion of regulatory assets and $10.0 billion of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of rate regulation is a critical audit matter are the high degree of audit
effort to assess the impact of regulation on accounting for regulatory assets and liabilities and to evaluate the complex audit evidence related to whether the regulatory assets and liabilities will be
recovered and settled.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included
testing the effectiveness of controls relating to accounting for regulatory matters and evaluation of new and existing regulatory assets and liabilities. These procedures also included, among others,
obtaining the Company’s correspondence with regulators, evaluating the reasonableness of management’s interpretation of regulatory guidance and proceedings and the related accounting
implications, and recalculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
February 25, 2022
We have served as the Company’s auditor since 2000.
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To the Board of Directors and Shareholders of Commonwealth Edison Company
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item 15(a)(2)(i), and the financial statement schedule listed in the index
appearing under Item 15(a)(2)(ii), of Commonwealth Edison Company and its subsidiaries (the “Company”) (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on
our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the
audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 3 to the consolidated financial statements, the Company applies the authoritative guidance for accounting for certain types of regulation, which requires management to
record in the consolidated financial statements the effects of cost-based rate regulation for entities with regulated operations that meet the following criteria, (i) rates are established or approved by a
third-party regulator; (ii) rates are designed to recover the entity’s cost of providing services or products; and (iii) there is a reasonable expectation that rates designed to recover costs can be charged
to and collected from customers. The Company accounts for its regulated operations in accordance with regulatory and legislative guidance from the regulatory authorities having jurisdiction under
state public utility laws and the FERC under various Federal laws. Upon updates in material regulatory and legislative proceedings, where applicable, management will record new regulatory assets or
liabilities and will assess whether it is probable that its currently recorded regulatory assets and liabilities will be
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recovered and settled, respectively, in future rates. As of December 31, 2021, there were $2.2 billion of regulatory assets and $6.9 billion of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of rate regulation is a critical audit matter are the high degree of audit
effort to assess the impact of regulation on accounting for regulatory assets and liabilities and to evaluate the complex audit evidence related to whether the regulatory assets and liabilities will be
recovered and settled.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included
testing the effectiveness of controls relating to accounting for regulatory matters and evaluation of new and existing regulatory assets and liabilities. These procedures also included, among others,
obtaining the Company’s correspondence with regulators, evaluating the reasonableness of management’s interpretation of regulatory guidance and proceedings and the related accounting
implications, and recalculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
February 25, 2022
We have served as the Company's auditor since 2000.
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To the Board of Directors and Shareholder of PECO Energy Company
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item 15(a)(3)(i), and the financial statement schedule listed in the index
appearing under Item 15(a)(3)(ii), of PECO Energy Company and its subsidiaries (the “Company”) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on
our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the
audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 3 to the consolidated financial statements, the Company applies the authoritative guidance for accounting for certain types of regulation, which requires management to
record in the consolidated financial statements the effects of cost-based rate regulation for entities with regulated operations that meet the following criteria, (i) rates are established or approved by a
third-party regulator; (ii) rates are designed to recover the entity’s cost of providing services or products; and (iii) there is a reasonable expectation that rates designed to recover costs can be charged
to and collected from customers. The Company accounts for its regulated operations in accordance with regulatory and legislative guidance from the regulatory authorities having jurisdiction under
state public utility laws and the FERC under various Federal laws. Upon updates in material regulatory and legislative proceedings, where applicable, management will record new regulatory assets or
liabilities and will assess whether it is probable that its currently recorded regulatory assets and liabilities will be
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recovered and settled, respectively, in future rates. As of December 31, 2021, there were $991 million of regulatory assets and $729 million of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of rate regulation is a critical audit matter are the high degree of audit
effort to assess the impact of regulation on accounting for regulatory assets and liabilities and to evaluate the complex audit evidence related to whether the regulatory assets and liabilities will be
recovered and settled.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included
testing the effectiveness of controls relating to accounting for regulatory matters and evaluation of new and existing regulatory assets and liabilities. These procedures also included, among others,
obtaining the Company’s correspondence with regulators, evaluating the reasonableness of management’s interpretation of regulatory guidance and proceedings and the related accounting
implications, and recalculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 25, 2022
We have served as the Company's auditor since 1932.
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To the Board of Directors and Shareholder of Baltimore Gas and Electric Company
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the financial statements, including the related notes, as listed in the index appearing under Item 15(a)(4)(i), and the financial statement schedule listed in the index appearing under
Item 15(a)(4)(ii), of Baltimore Gas and Electric Company (the “Company”) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee
and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 3 to the financial statements, the Company applies the authoritative guidance for accounting for certain types of regulation, which requires management to record in the
financial statements the effects of cost-based rate regulation for entities with regulated operations that meet the following criteria, (i) rates are established or approved by a third-party regulator; (ii) rates
are designed to recover the entity’s cost of providing services or products; and (iii) there is a reasonable expectation that rates designed to recover costs can be charged to and collected from
customers. The Company accounts for its regulated operations in accordance with regulatory and legislative guidance from the regulatory authorities having jurisdiction under state public utility laws
and the FERC under various Federal laws. Upon updates in material regulatory and legislative proceedings, where applicable, management will record new regulatory assets or liabilities and will
assess whether it is probable that its currently recorded regulatory assets and liabilities will be recovered and settled,
141
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respectively, in future rates. As of December 31, 2021, there were $692 million of regulatory assets and $960 million of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of rate regulation is a critical audit matter are the high degree of audit
effort to assess the impact of regulation on accounting for regulatory assets and liabilities and to evaluate the complex audit evidence related to whether the regulatory assets and liabilities will be
recovered and settled.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the
effectiveness of controls relating to accounting for regulatory matters and evaluation of new and existing regulatory assets and liabilities. These procedures also included, among others, obtaining the
Company’s correspondence with regulators, evaluating the reasonableness of management’s interpretation of regulatory guidance and proceedings and the related accounting implications, and
recalculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
February 25, 2022
We have served as the Company’s auditor since at least 1993. We have not been able to determine the specific year we began serving as auditor of the Company.
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To the Board of Directors and Member of Pepco Holdings LLC
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item 15(a)(5)(i), and the financial statement schedule listed in the index
appearing under Item 15(a)(5)(ii), of Pepco Holdings LLC and its subsidiaries (the “Company”) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on
our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the
audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 3 to the consolidated financial statements, the Company applies the authoritative guidance for accounting for certain types of regulation, which requires management to
record in the consolidated financial statements the effects of cost-based rate regulation for entities with regulated operations that meet the following criteria, (i) rates are established or approved by a
third-party regulator; (ii) rates are designed to recover the entity’s cost of providing services or products; and (iii) there is a reasonable expectation that rates designed to recover costs can be charged
to and collected from customers. The Company accounts for its regulated operations in accordance with regulatory and legislative guidance from the regulatory authorities having jurisdiction under
state public utility laws and the FERC under various Federal laws. Upon updates in material regulatory and legislative proceedings, where applicable, management will record new regulatory assets or
liabilities and will assess whether it is probable that its currently recorded regulatory assets and liabilities will be
143
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recovered and settled, respectively, in future rates. As of December 31, 2021, there were $2.2 billion of regulatory assets and $1.3 billion of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of rate regulation is a critical audit matter are the high degree of audit
effort to assess the impact of regulation on accounting for regulatory assets and liabilities and to evaluate the complex audit evidence related to whether the regulatory assets and liabilities will be
recovered and settled.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included
testing the effectiveness of controls relating to accounting for regulatory matters and evaluation of new and existing regulatory assets and liabilities. These procedures also included, among others,
obtaining the Company’s correspondence with regulators, evaluating the reasonableness of management’s interpretation of regulatory guidance and proceedings and the related accounting
implications, and recalculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 25, 2022
We have served as the Company's auditor since 2001.
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To the Board of Directors and Shareholder of Potomac Electric Power Company
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the financial statements, including the related notes, as listed in the index appearing under Item 15(a)(6)(i), and the financial statement schedule listed in the index appearing under
Item 15(a)(6)(ii), of Potomac Electric Power Company (the “Company”) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee
and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 3 to the financial statements, the Company applies the authoritative guidance for accounting for certain types of regulation, which requires management to record in the
financial statements the effects of cost-based rate regulation for entities with regulated operations that meet the following criteria, (i) rates are established or approved by a third-party regulator; (ii) rates
are designed to recover the entity’s cost of providing services or products; and (iii) there is a reasonable expectation that rates designed to recover costs can be charged to and collected from
customers. The Company accounts for its regulated operations in accordance with regulatory and legislative guidance from the regulatory authorities having jurisdiction under state public utility laws
and the FERC under various Federal laws. Upon updates in material regulatory and legislative proceedings, where applicable, management will record new regulatory assets or liabilities and will
assess whether it is probable that its currently recorded regulatory assets and liabilities will be recovered and settled,
145
Table of Contents
respectively, in future rates. As of December 31, 2021, there were $745 million of regulatory assets and $563 million of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of rate regulation is a critical audit matter are the high degree of audit
effort to assess the impact of regulation on accounting for regulatory assets and liabilities and to evaluate the complex audit evidence related to whether the regulatory assets and liabilities will be
recovered and settled.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the
effectiveness of controls relating to accounting for regulatory matters and evaluation of new and existing regulatory assets and liabilities. These procedures also included, among others, obtaining the
Company’s correspondence with regulators, evaluating the reasonableness of management’s interpretation of regulatory guidance and proceedings and the related accounting implications, and
recalculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 25, 2022
We have served as the Company's auditor since at least 1993. We have not been able to determine the specific year we began serving as auditor of the Company.
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To the Board of Directors and Shareholder of Delmarva Power & Light Company
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the financial statements, including the related notes, as listed in the index appearing under Item 15(a)(7)(i), and the financial statement schedule listed in the index appearing under
Item 15(a)(7)(ii), of Delmarva Power & Light Company (the “Company”) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31,
2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee
and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 3 to the financial statements, the Company applies the authoritative guidance for accounting for certain types of regulation, which requires management to record in the
financial statements the effects of cost-based rate regulation for entities with regulated operations that meet the following criteria, (i) rates are established or approved by a third-party regulator; (ii) rates
are designed to recover the entity’s cost of providing services or products; and (iii) there is a reasonable expectation that rates designed to recover costs can be charged to and collected from
customers. The Company accounts for its regulated operations in accordance with regulatory and legislative guidance from the regulatory authorities having jurisdiction under state public utility laws
and the FERC under various Federal laws. Upon updates in material regulatory and legislative proceedings, where applicable, management will record new regulatory assets or liabilities and will
assess whether it is probable that its currently recorded regulatory assets and liabilities will be recovered and settled,
147
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respectively, in future rates. As of December 31, 2021, there were $280 million of regulatory assets and $466 million of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of rate regulation is a critical audit matter are the high degree of audit
effort to assess the impact of regulation on accounting for regulatory assets and liabilities and to evaluate the complex audit evidence related to whether the regulatory assets and liabilities will be
recovered and settled.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the
effectiveness of controls relating to accounting for regulatory matters and evaluation of new and existing regulatory assets and liabilities. These procedures also included, among others, obtaining the
Company’s correspondence with regulators, evaluating the reasonableness of management’s interpretation of regulatory guidance and proceedings and the related accounting implications, and
recalculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 25, 2022
We have served as the Company's auditor since at least 1993. We have not been able to determine the specific year we began serving as auditor of the Company.
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To the Board of Directors and Shareholder of Atlantic City Electric Company
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the consolidated financial statements, including the related notes, as listed in the index appearing under Item 15(a)(8)(i), and the financial statement schedule listed in the index
appearing under Item 15(a)(8)(ii), of Atlantic City Electric Company and its subsidiary (the “Company”) (collectively referred to as the “consolidated financial statements”). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on
our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the
audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for the Effects of Rate Regulation
As described in Notes 1 and 3 to the consolidated financial statements, the Company applies the authoritative guidance for accounting for certain types of regulation, which requires management to
record in the consolidated financial statements the effects of cost-based rate regulation for entities with regulated operations that meet the following criteria, (i) rates are established or approved by a
third-party regulator; (ii) rates are designed to recover the entity’s cost of providing services or products; and (iii) there is a reasonable expectation that rates designed to recover costs can be charged
to and collected from customers. The Company accounts for its regulated operations in accordance with regulatory and legislative guidance from the regulatory authorities having jurisdiction under
state public utility laws and the FERC under various Federal laws. Upon updates in material regulatory and legislative proceedings, where applicable, management will record new regulatory assets or
liabilities and will assess whether it is probable that its currently recorded regulatory assets and liabilities will be
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recovered and settled, respectively, in future rates. As of December 31, 2021, there were $491 million of regulatory assets and $252 million of regulatory liabilities.
The principal considerations for our determination that performing procedures relating to the Company’s accounting for the effects of rate regulation is a critical audit matter are the high degree of audit
effort to assess the impact of regulation on accounting for regulatory assets and liabilities and to evaluate the complex audit evidence related to whether the regulatory assets and liabilities will be
recovered and settled.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included
testing the effectiveness of controls relating to accounting for regulatory matters and evaluation of new and existing regulatory assets and liabilities. These procedures also included, among others,
obtaining the Company’s correspondence with regulators, evaluating the reasonableness of management’s interpretation of regulatory guidance and proceedings and the related accounting
implications, and recalculating regulatory assets and liabilities based on provisions outlined in rate orders and other correspondence with regulators.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 25, 2022
We have served as the Company's auditor since 1998.
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Table of Contents
(In millions, except per share data)
Operating revenues
Competitive businesses revenues
Rate-regulated utility revenues
Revenues from alternative revenue programs
Total operating revenues
Operating expenses
Competitive businesses purchased power and fuel
Rate-regulated utility purchased power and fuel
Operating and maintenance
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sales of assets and businesses
Gain on deconsolidation of business
Operating income
Other income and (deductions)
Interest expense, net
Interest expense to affiliates
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Equity in losses of unconsolidated affiliates
Net income
Net income (loss) attributable to noncontrolling interests
Net income attributable to common shareholders
Comprehensive income, net of income taxes
Net income
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost
Actuarial loss reclassified to periodic benefit cost
Pension and non-pension postretirement benefit plan valuation adjustment
Unrealized loss on cash flow hedges
Unrealized gain on investments in unconsolidated affiliates
Unrealized gain on foreign currency translation
Other comprehensive income (loss)
Comprehensive income
Comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income attributable to common shareholders
Average shares of common stock outstanding:
Basic
Assumed exercise and/or distributions of stock-based awards
Diluted
(a)
Earnings per average common share:
Basic
Diluted
Exelon Corporation and Subsidiary Companies
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31,
2021
2020
2019
$
$
$
$
$
$
$
$
$
18,467
17,709
171
36,347
12,157
5,207
8,659
6,036
1,766
33,825
201
—
2,723
(1,546)
(25)
1,056
(515)
2,208
370
(9)
1,829
123
1,706
1,829
(4)
223
432
(1)
—
—
650
2,479
123
$
$
$
16,400
16,633
6
33,039
9,592
4,512
9,408
5,014
1,714
30,240
24
—
2,823
(1,610)
(25)
1,145
(490)
2,333
373
(6)
1,954
(9)
1,963
1,954
(40)
190
(357)
(3)
—
4
(206)
1,748
(9)
2,356
$
1,757
$
979
1
980
976
1
977
1.74
1.74
$
$
2.01
2.01
$
$
17,754
16,839
(155)
34,438
10,849
4,648
8,615
4,252
1,732
30,096
31
1
4,374
(1,591)
(25)
1,227
(389)
3,985
774
(183)
3,028
92
2,936
3,028
(65)
149
(289)
—
1
6
(198)
2,830
93
2,737
973
1
974
3.02
3.01
__________
(a)
The number of stock options not included in the calculation of diluted common shares outstanding due to their antidilutive effect was zero for the year ended December 31, 2021 and less than 1 million for the years ended December
31, 2020 and 2019.
See the Combined Notes to Consolidated Financial Statements
151
Table of Contents
Exelon Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
(In millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation, amortization, and accretion, including nuclear fuel and energy contract amortization
Asset impairments
Gain on sales of assets and businesses
Deferred income taxes and amortization of investment tax credits
Net fair value changes related to derivatives
Net realized and unrealized gains on NDT funds
Net unrealized losses (gains) on equity investments
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Inventories
Accounts payable and accrued expenses
Option premiums paid, net
Collateral (posted) received, net
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Proceeds from NDT fund sales
Investment in NDT funds
Collection of DPP
Acquisitions of assets and businesses, net
Proceeds from sales of assets and businesses
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Changes in short-term borrowings
Proceeds from short-term borrowings with maturities greater than 90 days
Repayments on short-term borrowings with maturities greater than 90 days
Issuance of long-term debt
Retirement of long-term debt
Dividends paid on common stock
Acquisition of CENG noncontrolling interest
Proceeds from employee stock plans
Other financing activities
Net cash flows provided by (used in) financing activities
Increase (decrease) in cash, restricted cash, and cash equivalents
Cash, restricted cash, and cash equivalents at beginning of period
Cash, restricted cash, and cash equivalents at end of period
Supplemental cash flow information
Increase (decrease) in capital expenditures not paid
Increase in DPP
Increase in PP&E related to ARO update
See the Combined Notes to Consolidated Financial Statements
152
For the Years Ended December 31,
2021
2020
2019
$
1,829
$
1,954
$
7,573
552
(201)
18
(568)
(586)
160
(200)
(703)
(141)
440
(338)
(74)
327
(665)
(4,411)
3,012
(7,981)
6,532
(6,673)
3,902
—
877
26
(3,317)
269
1,380
(350)
3,481
(1,640)
(1,497)
(885)
80
(80)
758
453
1,166
1,619
16
3,652
642
$
$
6,527
591
(24)
309
(268)
(461)
(186)
592
697
(85)
(129)
(139)
494
140
(601)
(5,176)
4,235
(8,048)
3,341
(3,464)
3,771
—
46
18
(4,336)
161
500
—
7,507
(6,440)
(1,492)
—
45
(136)
145
44
1,122
1,166
194
4,441
850
$
$
$
$
3,028
5,780
201
(27)
681
222
(663)
—
613
(243)
(87)
(425)
(29)
(438)
(64)
(408)
(1,482)
6,659
(7,248)
10,051
(10,087)
—
(41)
53
12
(7,260)
781
—
(125)
1,951
(1,287)
(1,408)
—
112
(82)
(58)
(659)
1,781
1,122
(7)
—
968
Table of Contents
(In millions)
Current assets
ASSETS
Exelon Corporation and Subsidiary Companies
Consolidated Balance Sheets
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer accounts receivable
Customer allowance for credit losses
Customer accounts receivable, net
Other accounts receivable
Other allowance for credit losses
Other accounts receivable, net
Mark-to-market derivative assets
Inventories, net
Fossil fuel and emission allowances
Materials and supplies
Regulatory assets
Renewable energy credits
Assets held for sale
Other
Total current assets
Property, plant, and equipment (net of accumulated depreciation and amortization of $30,318 and $26,727 as of December 31, 2021
and 2020, respectively)
Deferred debits and other assets
Regulatory assets
Nuclear decommissioning trust funds
Investments
Goodwill
Mark-to-market derivative assets
Other
Total deferred debits and other assets
Total assets
(a)
See the Combined Notes to Consolidated Financial Statements
153
$
3,913
(375)
1,664
(76)
December 31,
2021
2020
1,182 $
393
3,597
(366)
1,469
(71)
3,538
1,588
2,169
389
1,480
1,296
529
13
1,380
13,957
84,219
8,224
15,938
443
6,677
949
2,606
34,837
$
133,013 $
663
438
3,231
1,398
644
297
1,425
1,228
633
958
1,647
12,562
82,584
8,759
14,464
440
6,677
555
3,276
34,171
129,317
Table of Contents
(In millions)
Current liabilities
Short-term borrowings
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Regulatory liabilities
Mark-to-market derivative liabilities
Unamortized energy contract liabilities
Renewable energy credit obligation
Liabilities held for sale
Other
Total current liabilities
Long-term debt
Long-term debt to financing trusts
Deferred credits and other liabilities
Exelon Corporation and Subsidiary Companies
Consolidated Balance Sheets
December 31,
2021
2020
LIABILITIES AND SHAREHOLDERS’ EQUITY
$
3,330 $
3,373
4,136
1,955
5
376
999
91
779
3
1,064
16,111
35,324
390
14,194
13,090
2,990
1,687
1,210
9,628
714
147
2,733
46,393
98,218
20,324
(123)
16,942
(2,750)
34,393
402
34,795
2,031
1,819
3,562
2,078
5
581
295
100
661
375
1,264
12,771
35,093
390
13,035
12,300
4,503
2,011
1,208
9,485
473
238
2,942
46,195
94,449
19,373
(123)
16,735
(3,400)
32,585
2,283
34,868
129,317
Deferred income taxes and unamortized investment tax credits
Asset retirement obligations
Pension obligations
Non-pension postretirement benefit obligations
Spent nuclear fuel obligation
Regulatory liabilities
Mark-to-market derivative liabilities
Unamortized energy contract liabilities
Other
Total deferred credits and other liabilities
Total liabilities
(a)
Commitments and contingencies
Shareholders’ equity
Common stock (No par value, 2,000 shares authorized, 979 shares and 976 shares outstanding as of December 31, 2021 and 2020,
respectively)
Treasury stock, at cost (2 shares as of December 31, 2021 and 2020)
Retained earnings
Accumulated other comprehensive loss, net
Total shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and shareholders' equity
__________
(a)
Exelon’s consolidated assets include $2,549 million and $10,200 million as of December 31, 2021 and 2020, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Exelon’s consolidated
liabilities include $1,077 million and $3,598 million as of December 31, 2021 and 2020, respectively, of certain VIEs for which the VIE creditors do not have recourse to Exelon. See Note 23–Variable Interest Entities for
additional information.
See the Combined Notes to Consolidated Financial Statements
154
$
133,013 $
Table of Contents
(In millions, shares in thousands)
Balance, December 31, 2018
Net income
Long-term incentive plan activity
Employee stock purchase plan issuances
Sale of noncontrolling interests
Changes in equity of noncontrolling interests
Common stock dividends
($1.45/common share)
Other comprehensive loss, net of income taxes
Balance, December 31, 2019
Net income (loss)
Long-term incentive plan
activity
Employee stock purchase
plan issuances
Sale of noncontrolling interests
Changes in equity of noncontrolling interests
Common stock dividends
($1.53/common share)
Other comprehensive loss, net of income taxes
Balance, December 31, 2020
Net income
Long-term incentive plan activity
Employee stock purchase plan issuances
Changes in equity of noncontrolling interests
Acquisition of CENG noncontrolling interest
Deferred tax adjustment related to acquisition of CENG
noncontrolling interest
Common stock dividends
($1.53/common share)
Acquisition of other noncontrolling interest
Other comprehensive income, net of income taxes
Balance, December 31, 2021
Exelon Corporation and Subsidiary Companies
Consolidated Statements of Changes in Equity
Shareholders' Equity
Issued
Shares
Common
Stock
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Loss, net
Noncontrolling
Interests
Total
Equity
970,020
—
3,111
1,285
—
—
—
—
974,416
—
1,570
1,480
—
—
—
—
977,466
—
1,734
2,091
—
—
—
—
—
—
981,291
$
$
$
$
19,116
—
40
112
6
—
—
—
19,274
—
40
56
3
—
—
—
19,373
—
69
90
—
1,080
(290)
—
2
—
20,324
$
$
$
$
(123)
—
—
—
—
—
—
—
(123)
—
—
—
—
—
—
—
(123)
—
—
—
—
—
—
—
—
—
(123)
$
$
$
$
14,743
2,936
—
—
—
—
(1,412)
—
16,267
1,963
—
—
—
—
(1,495)
—
16,735
1,706
—
—
—
—
—
(1,499)
—
—
16,942
$
$
$
$
(2,995)
—
—
—
—
—
—
(199)
(3,194)
—
—
—
—
—
—
(206)
(3,400)
—
—
—
—
—
—
—
—
650
(2,750)
$
$
$
$
2,306
92
—
—
—
(48)
—
(1)
2,349
(9)
—
—
—
(57)
—
—
2,283
123
—
—
(37)
(1,965)
—
—
(2)
—
402
$
$
$
$
33,047
3,028
40
112
6
(48)
(1,412)
(200)
34,573
1,954
40
56
3
(57)
(1,495)
(206)
34,868
1,829
69
90
(37)
(885)
(290)
(1,499)
—
650
34,795
See the Combined Notes to Consolidated Financial Statements
155
Table of Contents
(In millions)
Operating revenues
Electric operating revenues
Revenues from alternative revenue programs
Operating revenues from affiliates
Total operating revenues
Operating expenses
Purchased power
Purchased power from affiliates
Operating and maintenance
Operating and maintenance from affiliates
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sales of assets
Operating income
Other income and (deductions)
Interest expense, net
Interest expense to affiliates
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
Comprehensive income
Commonwealth Edison Company and Subsidiary Companies
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31,
2021
2020
2019
6,323 $
42
41
6,406
5,914 $
(47)
37
5,904
1,888
383
1,048
307
1,205
320
5,151
—
1,255
(376)
(13)
48
(341)
914
172
742 $
742 $
1,653
345
1,231
289
1,133
299
4,950
—
954
(369)
(13)
43
(339)
615
177
438 $
438 $
5,850
(133)
30
5,747
1,565
376
1,041
264
1,033
301
4,580
4
1,171
(346)
(13)
39
(320)
851
163
688
688
$
$
$
See the Combined Notes to Consolidated Financial Statements
156
Table of Contents
Commonwealth Edison Company and Subsidiary Companies
Consolidated Statements of Cash Flows
(In millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization
Deferred income taxes and amortization of investment tax credits
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Receivables from and payables to affiliates, net
Inventories
Accounts payable and accrued expenses
Collateral received, net
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Changes in short-term borrowings
Issuance of long-term debt
Retirement of long-term debt
Dividends paid on common stock
Contributions from parent
Other financing activities
Net cash flows provided by financing activities
(Decrease) increase in cash, restricted cash, and cash equivalents
Cash, restricted cash, and cash equivalents at beginning of period
Cash, restricted cash, and cash equivalents at end of period
Supplemental cash flow information
(Decrease) increase in capital expenditures not paid
See the Combined Notes to Consolidated Financial Statements
157
For the Years Ended December 31,
2021
2020
2019
$
742 $
438 $
1,205
244
126
(25)
32
(2)
—
—
—
(196)
(531)
1,595
(2,387)
26
(2,361)
(323)
1,150
(350)
(507)
791
(16)
745
(21)
405
384 $
1,133
228
202
(10)
(1)
(13)
63
14
8
(148)
(590)
1,324
(2,217)
2
(2,215)
193
1,000
(500)
(499)
712
(13)
893
2
403
405 $
688
1,033
109
265
(34)
(12)
(16)
(51)
48
95
(77)
(345)
1,703
(1,915)
29
(1,886)
130
700
(300)
(508)
250
(16)
256
73
330
403
$
$
(46) $
109 $
(37)
Table of Contents
Commonwealth Edison Company and Subsidiary Companies
Consolidated Balance Sheets
(In millions)
Current assets
ASSETS
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer accounts receivable
Customer allowance for credit losses
Customer accounts receivable, net
Other accounts receivable
Other allowance for credit losses
Other accounts receivable, net
Receivables from affiliates
Inventories, net
Regulatory assets
Other
Total current assets
Property, plant, and equipment (net of accumulated depreciation and amortization of $6,099 and $5,672 as of December 31, 2021
and 2020, respectively)
Deferred debits and other assets
Regulatory assets
Investments
Goodwill
Receivables from affiliates
Prepaid pension asset
Other
Total deferred debits and other assets
Total assets
See the Combined Notes to Consolidated Financial Statements
158
$
647
(73)
227
(17)
December 31,
2021
2020
131 $
210
656
(97)
239
(21)
574
210
16
170
335
76
1,722
25,995
1,870
6
2,625
2,761
1,086
405
8,753
$
36,470 $
83
279
559
218
22
170
279
49
1,659
24,557
1,749
6
2,625
2,541
1,022
307
8,250
34,466
Commonwealth Edison Company and Subsidiary Companies
Consolidated Balance Sheets
LIABILITIES AND SHAREHOLDERS’ EQUITY
December 31,
2021
2020
Table of Contents
(In millions)
Current liabilities
Short-term borrowings
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Customer deposits
Regulatory liabilities
Mark-to-market derivative liabilities
Other
Total current liabilities
Long-term debt
Long-term debt to financing trusts
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits
Asset retirement obligations
Non-pension postretirement benefits obligations
Regulatory liabilities
Mark-to-market derivative liabilities
Other
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies
Shareholders’ equity
Common stock ($12.50 par value, 250 shares authorized, 127 shares outstanding as of December 31, 2021 and 2020)
Other paid-in capital
Retained deficit unappropriated
Retained earnings appropriated
Total shareholders’ equity
Total liabilities and shareholders’ equity
See the Combined Notes to Consolidated Financial Statements
159
$
$
— $
—
647
384
121
99
185
18
133
1,587
9,773
205
4,685
144
169
6,759
201
592
12,550
24,115
1,588
9,076
(1,639)
3,330
12,355
36,470 $
323
350
683
390
96
86
289
33
143
2,393
8,633
205
4,341
126
173
6,403
268
595
11,906
23,137
1,588
8,285
(1,639)
3,095
11,329
34,466
Table of Contents
(In millions)
Balance, December 31, 2018
Net income
Appropriation of retained earnings for future dividends
Common stock dividends
Contributions from parent
Balance, December 31, 2019
Net income
Appropriation of retained earnings for future dividends
Common stock dividends
Contributions from parent
Balance, December 31, 2020
Net income
Appropriation of retained earnings for future dividends
Common stock dividends
Contributions from parent
Balance, December 31, 2021
Commonwealth Edison Company and Subsidiary Companies
Consolidated Statements of Changes in Shareholders’ Equity
Common
Stock
Other
Paid-In
Capital
Retained Deficit
Unappropriated
Retained
Earnings
Appropriated
Total
Shareholders’
Equity
$
$
$
$
1,588 $
—
—
—
—
1,588 $
—
—
—
—
1,588 $
—
—
—
—
1,588 $
7,322 $
—
—
—
250
7,572 $
—
—
—
713
8,285 $
—
—
—
791
9,076 $
(1,639) $
688
(688)
—
—
(1,639) $
438
(438)
—
—
(1,639) $
742
(742)
—
—
(1,639) $
2,976 $
—
688
(508)
—
3,156 $
—
438
(499)
—
3,095 $
—
742
(507)
—
3,330 $
10,247
688
—
(508)
250
10,677
438
—
(499)
713
11,329
742
—
(507)
791
12,355
See the Combined Notes to Consolidated Financial Statements
160
Table of Contents
(In millions)
Operating revenues
Electric operating revenues
Natural gas operating revenues
Revenues from alternative revenue programs
Operating revenues from affiliates
Total operating revenues
Operating expenses
Purchased power
Purchased fuel
Purchased power from affiliates
Operating and maintenance
Operating and maintenance from affiliates
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sales of assets
Operating income
Other income and (deductions)
Interest expense, net
Interest expense to affiliates, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
Comprehensive income
PECO Energy Company and Subsidiary Companies
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31,
2021
2020
2019
$
2,613 $
538
26
21
3,198
699
188
194
757
177
348
184
2,547
—
651
(149)
(12)
26
(135)
516
12
$
$
504 $
504 $
2,519 $
514
16
9
3,058
645
185
188
816
159
347
172
2,512
—
546
(136)
(11)
18
(129)
417
(30)
447 $
447 $
2,505
610
(21)
6
3,100
610
262
157
707
154
333
165
2,388
1
713
(124)
(12)
16
(120)
593
65
528
528
See the Combined Notes to Consolidated Financial Statements
161
Table of Contents
(In millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows provided by
operating activities:
Depreciation and amortization
Deferred income taxes and amortization of investment tax
credits
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Receivables from and payables to affiliates, net
Inventories
Accounts payable and accrued expenses
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Changes in Exelon intercompany money pool
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Issuance of long-term debt
Retirement of long-term debt
Changes in Exelon intercompany money pool
Dividends paid on common stock
Contributions from parent
Other financing activities
Net cash flows provided by financing activities
Increase (decrease) in cash, restricted cash, and cash equivalents
Cash, restricted cash, and cash equivalents at beginning of period
Cash, restricted cash, and cash equivalents at end of period
Supplemental cash flow information
Increase in capital expenditures not paid
PECO Energy Company and Subsidiary Companies
Consolidated Statements of Cash Flows
For the Years Ended December 31,
2021
2020
2019
$
504 $
447 $
348
11
—
(35)
21
(26)
15
5
(18)
(52)
773
(1,240)
—
9
(1,231)
750
(300)
(40)
(339)
414
(9)
476
18
26
44 $
347
(23)
24
(88)
(6)
(1)
63
31
(18)
1
777
(1,147)
68
7
(1,072)
350
—
40
(340)
248
(4)
294
(1)
27
26 $
528
333
20
38
(29)
(5)
4
(11)
(34)
(28)
(65)
751
(939)
(68)
(1)
(1,008)
325
—
—
(358)
188
(6)
149
(108)
135
27
$
$
26 $
55 $
40
See the Combined Notes to Consolidated Financial Statements
162
Table of Contents
(In millions)
Current assets
ASSETS
PECO Energy Company and Subsidiary Companies
Consolidated Balance Sheets
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer accounts receivable
Customer allowance for credit losses
Customer accounts receivable, net
Other accounts receivable
Other allowance for credit losses
Other accounts receivable, net
Receivables from affiliates
Inventories, net
Fossil fuel
Materials and supplies
Regulatory assets
Other
Total current assets
Property, plant, and equipment (net of accumulated depreciation and amortization of $3,964 and $3,843 as of December 31, 2021
and 2020, respectively)
Deferred debits and other assets
Regulatory assets
Investments
Receivables from affiliates
Prepaid pension asset
Other
Total deferred debits and other assets
Total assets
See the Combined Notes to Consolidated Financial Statements
163
$
489
(105)
116
(7)
December 31,
2021
2020
36 $
8
511
(116)
130
(8)
384
109
1
51
45
48
29
711
11,117
943
34
597
386
36
1,996
$
13,824 $
19
7
395
122
2
33
38
25
21
662
10,181
776
30
475
375
32
1,688
12,531
Table of Contents
(In millions)
Current liabilities
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
2021
2020
PECO Energy Company and Subsidiary Companies
Consolidated Balance Sheets
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Borrowings from Exelon intercompany money pool
Customer deposits
Regulatory liabilities
Other
Total current liabilities
Long-term debt
Long-term debt to financing trusts
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits
Asset retirement obligations
Non-pension postretirement benefits obligations
Regulatory liabilities
Other
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies
Shareholder's equity
Common stock (No par value, 500 shares authorized, 170 shares outstanding as of December 31, 2021 and 2020)
Retained earnings
Total shareholder's equity
Total liabilities and shareholder's equity
See the Combined Notes to Consolidated Financial Statements
164
$
350 $
494
136
70
—
48
94
35
1,227
3,847
184
2,421
29
286
635
83
3,454
8,712
3,428
1,684
5,112
$
13,824 $
300
479
129
50
40
59
121
30
1,208
3,453
184
2,242
29
286
503
93
3,153
7,998
3,014
1,519
4,533
12,531
Table of Contents
(In millions)
Balance, December 31, 2018
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2019
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2020
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2021
PECO Energy Company and Subsidiary Companies
Consolidated Statements of Changes in Shareholder's Equity
Common
Stock
Retained
Earnings
Total
Shareholder's
Equity
$
$
$
$
2,578 $
—
—
188
2,766 $
—
—
248
3,014 $
—
—
414
3,428 $
1,242 $
528
(358)
—
1,412 $
447
(340)
—
1,519 $
504
(339)
—
1,684 $
3,820
528
(358)
188
4,178
447
(340)
248
4,533
504
(339)
414
5,112
See the Combined Notes to Consolidated Financial Statements
165
Table of Contents
(In millions)
Operating revenues
Electric operating revenues
Natural gas operating revenues
Revenues from alternative revenue programs
Operating revenues from affiliates
Total operating revenues
Operating expenses
Purchased power
Purchased fuel
Purchased power and fuel from affiliates
Operating and maintenance
Operating and maintenance from affiliates
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
Comprehensive income
Baltimore Gas and Electric Company
Statements of Operations and Comprehensive Income
For the Years Ended December 31,
2021
2020
2019
$
$
$
2,497 $
801
12
31
3,341
699
243
233
618
193
591
283
2,860
481
(138)
30
(108)
373
(35)
408 $
408 $
2,323 $
739
16
20
3,098
509
171
311
617
172
550
268
2,598
500
(133)
23
(110)
390
41
349 $
349 $
2,368
700
12
26
3,106
585
181
286
600
160
502
260
2,574
532
(121)
28
(93)
439
79
360
360
See the Combined Notes to Consolidated Financial Statements
166
Table of Contents
Baltimore Gas and Electric Company
Statements of Cash Flows
(In millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization
Deferred income taxes and amortization of investment tax credits
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Receivables from and payables to affiliates, net
Inventories
Accounts payable and accrued expenses
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Changes in short-term borrowings
Issuance of long-term debt
Retirement of long-term debt
Dividends paid on common stock
Contributions from parent
Other financing activities
Net cash flows provided by financing activities
(Decrease) increase in cash, restricted cash, and cash equivalents
Cash, restricted cash, and cash equivalents at beginning of period
Cash, restricted cash, and cash equivalents at end of period
Supplemental cash flow information
(Decrease) increase in capital expenditures not paid
See the Combined Notes to Consolidated Financial Statements
167
For the Years Ended December 31,
2021
2020
2019
$
408 $
349 $
591
(17)
75
30
(13)
(29)
14
20
(81)
(269)
729
(1,226)
18
(1,208)
130
600
(300)
(292)
257
(6)
389
(90)
145
550
37
97
(165)
(8)
10
102
60
(78)
(70)
884
(1,247)
2
(1,245)
(76)
400
—
(246)
411
(8)
481
120
25
55 $
145 $
360
502
130
85
25
1
(1)
(43)
(67)
(48)
(196)
748
(1,145)
8
(1,137)
40
400
—
(224)
193
(8)
401
12
13
25
$
$
(59) $
53 $
6
Table of Contents
(In millions)
Current assets
ASSETS
Baltimore Gas and Electric Company
Balance Sheets
December 31,
2021
2020
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer accounts receivable
Customer allowance for credit losses
Customer accounts receivable, net
Other accounts receivable
Other allowance for credit losses
Other accounts receivable, net
Receivables from affiliates
Inventories, net
Fossil fuel
Materials and supplies
Prepaid utility taxes
Regulatory assets
Other
Total current assets
Property, plant, and equipment (net of accumulated depreciation and amortization of $4,299 and $4,034 as of December 31, 2021
and 2020, respectively)
Deferred debits and other assets
Regulatory assets
Investments
Prepaid pension asset
Other
Total deferred debits and other assets
Total assets
See the Combined Notes to Consolidated Financial Statements
168
$
436
(38)
124
(9)
$
51 $
4
487
(35)
117
(9)
398
115
1
42
53
49
215
8
936
10,577
477
14
276
44
811
12,324 $
144
1
452
108
3
25
41
—
168
6
948
9,872
481
10
270
69
830
11,650
Baltimore Gas and Electric Company
Balance Sheets
December 31,
2021
2020
LIABILITIES AND SHAREHOLDER'S EQUITY
$
Table of Contents
(In millions)
Current liabilities
Short-term borrowings
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Customer deposits
Regulatory liabilities
Other
Total current liabilities
Long-term debt
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits
Asset retirement obligations
Non-pension postretirement benefits obligations
Regulatory liabilities
Other
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies
Shareholder's equity
Common stock (No par value, 0 shares authorized, 0 shares outstanding as of December 31, 2021 and 2020)
Retained earnings
(a)
(a)
Total shareholder's equity
Total liabilities and shareholder's equity
_____________
(a)
In millions, shares round to zero. Number of shares is 1,500 authorized and 1,000 outstanding as of December 31, 2021 and 2020.
See the Combined Notes to Consolidated Financial Statements
169
130 $
250
349
176
48
97
26
48
1,124
3,711
1,686
26
175
934
98
2,919
7,754
2,575
1,995
4,570
—
300
346
205
61
110
30
91
1,143
3,364
1,521
23
189
1,109
104
2,946
7,453
2,318
1,879
4,197
11,650
$
12,324 $
Table of Contents
(In millions)
Balance, December 31, 2018
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2019
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2020
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2021
Baltimore Gas and Electric Company
Statements of Changes in Shareholder's Equity
Common
Stock
Retained
Earnings
Total
Shareholder's
Equity
$
$
$
$
1,714 $
—
—
193
1,907 $
—
—
411
2,318 $
—
—
257
2,575 $
1,640 $
360
(224)
—
1,776 $
349
(246)
—
1,879 $
408
(292)
—
1,995 $
3,354
360
(224)
193
3,683
349
(246)
411
4,197
408
(292)
257
4,570
See the Combined Notes to Consolidated Financial Statements
170
Table of Contents
(In millions)
Operating revenues
Electric operating revenues
Natural gas operating revenues
Revenues from alternative revenue programs
Operating revenues from affiliates
Total operating revenues
Operating expenses
Purchased power
Purchased fuel
Purchased power from affiliates
Operating and maintenance
Operating and maintenance from affiliates
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sales of assets
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Equity in earnings of unconsolidated affiliate
Net income
Comprehensive income
Pepco Holdings LLC and Subsidiary Companies
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31,
2021
2020
2019
$
$
$
4,769 $
168
91
13
5,041
1,417
73
367
925
179
821
458
4,240
—
801
(267)
69
(198)
603
42
—
561 $
561 $
4,463 $
162
21
17
4,663
1,279
69
366
940
159
782
450
4,045
11
629
(268)
57
(211)
418
(77)
—
495 $
495 $
4,639
167
(14)
14
4,806
1,371
75
352
939
143
754
450
4,084
—
722
(263)
55
(208)
514
38
1
477
477
See the Combined Notes to Consolidated Financial Statements
171
Table of Contents
Pepco Holdings LLC and Subsidiary Companies
Consolidated Statements of Cash Flows
(In millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization
Deferred income taxes and amortization of investment tax credits
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Receivables from and payables to affiliates, net
Inventories
Accounts payable and accrued expenses
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Changes in short-term borrowings
Repayments of short-term borrowings with maturities greater than 90 days
Issuance of long-term debt
Retirement of long-term debt
Change in Exelon intercompany money pool
Distributions to member
Contributions from member
Other financing activities
Net cash flows provided by financing activities
Increase (decrease) in cash, restricted cash, and cash equivalents
Cash, restricted cash, and cash equivalents at beginning of period
Cash, restricted cash, and cash equivalents at end of period
Supplemental cash flow information
(Decrease) increase in capital expenditures not paid
See the Combined Notes to Consolidated Financial Statements
172
For the Years Ended December 31,
2021
2020
2019
$
561 $
495 $
821
24
(12)
(48)
6
(16)
34
17
(48)
(182)
1,157
(1,720)
2
(1,718)
100
—
825
(260)
(14)
(703)
683
(17)
614
53
160
213 $
782
(97)
103
(159)
3
(6)
49
(25)
(39)
(104)
1,002
(1,604)
7
(1,597)
160
—
602
(128)
9
(553)
494
(10)
574
(21)
181
160 $
477
754
(7)
161
(39)
3
(27)
(17)
16
(25)
(179)
1,117
(1,355)
(3)
(1,358)
154
(125)
485
(157)
12
(526)
398
(5)
236
(5)
186
181
$
$
(6) $
54 $
2
Table of Contents
(In millions)
Current assets
ASSETS
Pepco Holdings LLC and Subsidiary Companies
Consolidated Balance Sheets
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer accounts receivable
Customer allowance for credit losses
Customer accounts receivable, net
Other accounts receivable
Other allowance for credit losses
Other accounts receivable, net
Receivable from affiliates
Inventories, net
Fossil fuel
Materials and supplies
Regulatory assets
Other
Total current assets
Property, plant, and equipment (net of accumulated depreciation and amortization of $2,108 and $1,811 as of December 31, 2021
and 2020, respectively)
Deferred debits and other assets
Regulatory assets
Investments
Goodwill
Prepaid pension asset
Deferred income taxes
Other
Total deferred debits and other assets
Total assets
(a)
See the Combined Notes to Consolidated Financial Statements
173
$
616
(104)
283
(39)
December 31,
2021
2020
136 $
77
611
(86)
260
(33)
512
244
2
11
209
432
69
1,692
16,498
1,794
145
4,005
344
8
258
6,554
$
24,744 $
111
39
525
227
8
6
198
440
45
1,599
15,377
1,933
140
4,005
365
10
307
6,760
23,736
Table of Contents
(In millions)
Current liabilities
Short-term borrowings
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Borrowings from Exelon intercompany money pool
Customer deposits
Regulatory liabilities
Unamortized energy contract liabilities
Other
Total current liabilities
Long-term debt
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits
Asset retirement obligations
Non-pension postretirement benefit obligations
Regulatory liabilities
Unamortized energy contract liabilities
Other
Total deferred credits and other liabilities
Total liabilities
(a)
Commitments and contingencies
Member's equity
Membership interest
Undistributed losses
Total member's equity
Total liabilities and member's equity
Pepco Holdings LLC and Subsidiary Companies
Consolidated Balance Sheets
LIABILITIES AND EQUITY
December 31,
2021
2020
$
$
468 $
399
578
281
104
7
81
68
89
171
2,246
7,148
2,675
70
66
1,238
146
570
4,765
14,159
10,795
(210)
10,585
24,744 $
368
347
539
299
104
21
106
137
92
141
2,154
6,659
2,439
59
86
1,438
235
622
4,879
13,692
10,112
(68)
10,044
23,736
_____________
(a)
PHI’s consolidated total assets include $0 million and $18 million as of December 31, 2021 and 2020, respectively, of PHI's consolidated VIE that can only be used to settle the liabilities of the VIE. PHI’s consolidated
total liabilities include $0 million and $26 million as of December 31, 2021 and 2020, respectively, of PHI's consolidated VIE for which the VIE creditors do not have recourse to PHI. See Note 23 - Variable Interest Entities
for additional information.
See the Combined Notes to Consolidated Financial Statements
174
Table of Contents
(In millions)
Balance, December 31, 2018
Net income
Distribution to member
Contributions from member
Balance, December 31, 2019
Net Income
Distribution to member
Contributions from member
Balance, December 31, 2020
Net income
Distribution to member
Contributions from member
Balance, December 31, 2021
Pepco Holdings LLC and Subsidiary Companies
Consolidated Statements of Changes in Equity
Membership Interest
Undistributed Gains/(Losses)
Total
Member's Equity
$
$
$
$
9,220 $
—
—
398
9,618 $
—
—
494
10,112 $
—
—
683
10,795 $
39 $
477
(526)
—
(10) $
495
(553)
—
(68) $
561
(703)
—
(210) $
9,259
477
(526)
398
9,608
495
(553)
494
10,044
561
(703)
683
10,585
See the Combined Notes to Consolidated Financial Statements
175
Table of Contents
(In millions)
Operating revenues
Electric operating revenues
Revenues from alternative revenue programs
Operating revenues from affiliates
Total operating revenues
Operating expenses
Purchased power
Purchased power from affiliate
Operating and maintenance
Operating and maintenance from affiliates
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sales of assets
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
Comprehensive income
Potomac Electric Power Company
Statements of Operations and Comprehensive Income
For the Years Ended December 31,
2021
2020
2019
2,216 $
53
5
2,274
2,102 $
40
7
2,149
353
271
258
213
403
373
1,871
—
403
(140)
48
(92)
311
15
296 $
296 $
324
278
248
205
377
367
1,799
9
359
(138)
38
(100)
259
(7)
266 $
266 $
2,258
(3)
5
2,260
401
264
273
209
374
378
1,899
—
361
(133)
31
(102)
259
16
243
243
$
$
$
See the Combined Notes to Consolidated Financial Statements
176
Table of Contents
Potomac Electric Power Company
Statements of Cash Flows
(In millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization
Deferred income taxes and amortization of investment tax credits
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Receivables from and payables to affiliates, net
Inventories
Accounts payable and accrued expenses
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Changes in short-term borrowings
Issuance of long-term debt
Retirement of long-term debt
Dividends paid on common stock
Contributions from parent
Other financing activities
Net cash flows provided by financing activities
Increase in cash, restricted cash, and cash equivalents
Cash, restricted cash, and cash equivalents at beginning of period
Cash, restricted cash, and cash equivalents at end of period
Supplemental cash flow information
Increase in capital expenditures not paid
See the Combined Notes to Consolidated Financial Statements
177
For the Years Ended December 31,
2021
2020
2019
$
296 $
266 $
403
(8)
(52)
(28)
6
(8)
16
11
(11)
(163)
462
(843)
(1)
(844)
140
275
—
(268)
244
(6)
385
3
65
68 $
377
(46)
(23)
(67)
(12)
1
41
(1)
(11)
(24)
501
(773)
—
(773)
(47)
300
(3)
(232)
262
(6)
274
2
63
65 $
243
374
1
56
(22)
5
(19)
(39)
9
(14)
(82)
512
(626)
3
(623)
42
260
(125)
(213)
160
(3)
121
10
53
63
$
$
30 $
1 $
39
Table of Contents
(In millions)
Current assets
ASSETS
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer accounts receivable
Customer allowance for credit losses
Customer accounts receivable, net
Other accounts receivable
Other allowance for credit losses
Other accounts receivable, net
Receivables from affiliates
Inventories, net
Regulatory assets
Other
Total current assets
Potomac Electric Power Company
Balance Sheets
December 31,
2021
2020
$
277
(37)
160
(16)
$
34 $
34
279
(32)
131
(13)
240
144
—
119
213
25
809
8,104
532
120
279
59
990
9,903 $
30
35
247
118
2
111
214
13
770
7,456
570
115
284
69
1,038
9,264
Property, plant, and equipment (net of accumulated depreciation and amortization of $3,875 and $3,697 as of December 31, 2021
and 2020, respectively)
Deferred debits and other assets
Regulatory assets
Investments
Prepaid pension asset
Other
Total deferred debits and other assets
Total assets
See the Combined Notes to Consolidated Financial Statements
178
Potomac Electric Power Company
Balance Sheets
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
2021
2020
Table of Contents
(In millions)
Current liabilities
Short-term borrowings
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Customer deposits
Regulatory liabilities
Merger related obligation
Other
Total current liabilities
Long-term debt
Deferred credits and other liabilities
Deferred income taxes and unamortized investment tax credits
Asset retirement obligations
Non-pension postretirement benefit obligations
Regulatory liabilities
Other
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies
Shareholder's equity
Common stock ($0.01 par value, 200 shares authorized, 0 shares outstanding as of December 31, 2021 and 2020)
Retained earnings
(a)
Total shareholder's equity
Total liabilities and shareholder's equity
_____________
(a)
In millions, shares round to zero. Number of shares is 100 outstanding as of December 31, 2021 and 2020.
See the Combined Notes to Consolidated Financial Statements
179
$
$
175 $
313
272
160
59
35
14
27
55
1,110
3,132
1,275
45
3
549
314
2,186
6,428
2,302
1,173
3,475
9,903 $
35
3
226
164
55
51
46
33
61
674
3,162
1,189
39
13
644
340
2,225
6,061
2,058
1,145
3,203
9,264
Table of Contents
(In millions)
Balance, December 31, 2018
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2019
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2020
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2021
Potomac Electric Power Company
Statements of Changes in Shareholder's Equity
Common Stock
Retained Earnings
Total Shareholder's Equity
$
$
$
$
1,636 $
—
—
160
1,796 $
—
—
262
2,058 $
—
—
244
2,302 $
1,081 $
243
(213)
—
1,111 $
266
(232)
—
1,145 $
296
(268)
—
1,173 $
2,717
243
(213)
160
2,907
266
(232)
262
3,203
296
(268)
244
3,475
See the Combined Notes to Consolidated Financial Statements
180
Table of Contents
(In millions)
Operating revenues
Electric operating revenues
Natural gas operating revenues
Revenues from alternative revenue programs
Operating revenues from affiliates
Total operating revenues
Operating expenses
Purchased power
Purchased fuel
Purchased power from affiliates
Operating and maintenance
Operating and maintenance from affiliates
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
Comprehensive income
Delmarva Power & Light Company
Statements of Operations and Comprehensive Income
For the Years Ended December 31,
2021
2020
2019
$
$
$
1,191 $
168
14
7
1,380
387
73
79
183
162
210
67
1,161
219
(61)
12
(49)
170
42
128 $
128 $
1,107 $
162
(7)
9
1,271
359
69
75
208
153
191
65
1,120
151
(61)
10
(51)
100
(25)
125 $
125 $
1,143
167
(11)
7
1,306
381
75
70
171
152
184
56
1,089
217
(61)
13
(48)
169
22
147
147
See the Combined Notes to Consolidated Financial Statements
181
Table of Contents
Delmarva Power & Light Company
Statements of Cash Flows
(In millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization
Deferred income taxes and amortization of investment tax credits
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Receivables from and payables to affiliates, net
Inventories
Accounts payable and accrued expenses
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Changes in short-term borrowings
Issuance of long-term debt
Retirement of long-term debt
Dividends paid on common stock
Contributions from parent
Other financing activities
Net cash flows provided by financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental cash flow information
(Decrease) increase in capital expenditures not paid
$
$
See the Combined Notes to Consolidated Financial Statements
182
For the Years Ended December 31,
2021
2020
2019
$
128 $
125 $
210
39
3
15
(3)
(8)
16
13
(1)
(27)
385
(429)
4
(425)
3
125
—
(147)
120
(5)
96
56
15
71 $
191
(13)
51
(34)
8
(5)
4
(25)
—
(30)
272
(424)
(3)
(427)
90
178
(80)
(141)
112
(2)
157
2
13
15 $
147
184
(7)
27
(5)
(5)
(6)
3
12
(1)
(55)
294
(348)
1
(347)
56
75
(12)
(139)
63
(1)
42
(11)
24
13
(18) $
20 $
(4)
Table of Contents
(In millions)
Current assets
ASSETS
Delmarva Power & Light Company
Balance Sheets
December 31,
2021
2020
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer accounts receivable
Customer allowance for credit losses
Customer accounts receivable, net
Other accounts receivable
Other allowance for credit losses
Other accounts receivable, net
Receivables from affiliates
Inventories, net
Fossil fuel
Materials and supplies
Prepaid utility taxes
Regulatory assets
Other
Total current assets
Property, plant, and equipment, (net of accumulated depreciation and amortization of $1,635 and $1,533 as of December 31, 2021
and 2020, respectively)
Deferred debits and other assets
Regulatory assets
Prepaid pension asset
Other
Total deferred debits and other assets
Total assets
See the Combined Notes to Consolidated Financial Statements
183
$
149
(18)
58
(8)
$
28 $
43
176
(22)
68
(9)
131
50
1
11
54
20
68
16
422
4,560
212
157
61
430
5,412 $
15
—
154
59
1
6
51
11
58
13
368
4,314
222
162
74
458
5,140
Table of Contents
(In millions)
Current liabilities
Short-term borrowings
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Customer deposits
Regulatory liabilities
Other
Total current liabilities
Long-term debt
Deferred credits and other liabilities
Delmarva Power & Light Company
Balance Sheets
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
2021
2020
$
149 $
83
131
40
33
28
25
59
548
1,727
803
16
11
441
89
1,360
3,635
1,209
568
1,777
5,412 $
$
146
82
126
46
36
32
47
20
535
1,595
715
14
15
493
97
1,334
3,464
1,089
587
1,676
5,140
Deferred income taxes and unamortized investment tax credits
Asset retirement obligations
Non-pension postretirement benefit obligations
Regulatory liabilities
Other
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies
Shareholder's equity
Common stock ($2.25 par value, 0 shares authorized, 0 shares outstanding as of December 31, 2021 and 2020, respectively)
Retained earnings
(a)
(a)
Total shareholder's equity
Total liabilities and shareholder's equity
_____________
(a)
In millions, shares round to zero. Number of shares is 1,000 authorized and 1,000 outstanding as of December 31, 2021 and 2020.
See the Combined Notes to Consolidated Financial Statements
184
Table of Contents
(In millions)
Balance, December 31, 2018
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2019
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2020
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2021
Delmarva Power & Light Company
Statements of Changes in Shareholder's Equity
Common Stock
Retained Earnings
Total Shareholder's Equity
$
$
$
$
914 $
—
—
63
977 $
—
—
112
1,089 $
—
—
120
1,209 $
595 $
147
(139)
—
603 $
125
(141)
—
587 $
128
(147)
—
568 $
1,509
147
(139)
63
1,580
125
(141)
112
1,676
128
(147)
120
1,777
See the Combined Notes to Consolidated Financial Statements
185
Table of Contents
(In millions)
Operating revenues
Electric operating revenues
Revenues from alternative revenue programs
Operating revenues from affiliates
Total operating revenues
Operating expenses
Purchased power
Purchased power from affiliate
Operating and maintenance
Operating and maintenance from affiliates
Depreciation and amortization
Taxes other than income taxes
Total operating expenses
Gain on sales of assets
Operating income
Other income and (deductions)
Interest expense, net
Other, net
Total other income and (deductions)
Income before income taxes
Income taxes
Net income
Comprehensive income
Atlantic City Electric Company and Subsidiary Company
Consolidated Statements of Operations and Comprehensive Income
For the Years Ended December 31,
2021
2020
2019
1,362 $
24
2
1,388
1,253 $
(12)
4
1,245
677
17
179
141
179
8
1,201
—
187
(58)
4
(54)
133
(13)
146 $
146 $
596
13
192
134
180
8
1,123
2
124
(59)
6
(53)
71
(41)
112 $
112 $
1,237
—
3
1,240
589
19
187
133
157
4
1,089
—
151
(58)
6
(52)
99
—
99
99
$
$
$
See the Combined Notes to Consolidated Financial Statements
186
Table of Contents
Atlantic City Electric Company and Subsidiary Company
Consolidated Statements of Cash Flows
(In millions)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization
Deferred income taxes and amortization of investment tax credits
Other non-cash operating activities
Changes in assets and liabilities:
Accounts receivable
Receivables from and payables to affiliates, net
Inventories
Accounts payable and accrued expenses
Income taxes
Pension and non-pension postretirement benefit contributions
Other assets and liabilities
Net cash flows provided by operating activities
Cash flows from investing activities
Capital expenditures
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Changes in short-term borrowings
Repayments of short-term borrowings with maturities greater than 90 days
Issuance of long-term debt
Retirement of long-term debt
Dividends paid on common stock
Contributions from parent
Other financing activities
Net cash flows provided by financing activities
(Decrease) increase in cash, restricted cash, and cash equivalents
Cash, restricted cash, and cash equivalents at beginning of period
Cash, restricted cash, and cash equivalents at end of period
Supplemental cash flow information
(Decrease) increase in capital expenditures not paid
See the Combined Notes to Consolidated Financial Statements
187
For the Years Ended December 31,
2021
2020
2019
$
146 $
112 $
179
(15)
—
(37)
4
1
3
—
(3)
17
295
(445)
1
(444)
(43)
—
425
(260)
(288)
319
(5)
148
(1)
30
29 $
180
(37)
36
(55)
6
(3)
5
(1)
(2)
(42)
199
(401)
6
(395)
117
—
123
(44)
(114)
117
(1)
198
2
28
30 $
99
157
3
22
(13)
(6)
(1)
26
2
(1)
(27)
261
(375)
(1)
(376)
56
(125)
150
(18)
(124)
175
(1)
113
(2)
30
28
$
$
(18) $
33 $
(29)
Table of Contents
Atlantic City Electric Company and Subsidiary Company
Consolidated Balance Sheets
(In millions)
Current assets
ASSETS
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer accounts receivable
Customer allowance for credit losses
Customer accounts receivable, net
Other accounts receivable
Other allowance for credit losses
Other accounts receivable, net
Receivables from affiliates
Inventories, net
Regulatory assets
Other
Total current assets
Property, plant, and equipment, (net of accumulated depreciation and amortization of $1,420 and $1,303 as of December 31, 2021
and 2020, respectively)
Deferred debits and other assets
Regulatory assets
Prepaid pension asset
Other
Total deferred debits and other assets
Total assets
(a)
See the Combined Notes to Consolidated Financial Statements
188
December 31,
2021
2020
$
190
(49)
76
(15)
$
29 $
—
156
(32)
72
(11)
141
61
2
36
61
3
333
3,729
430
27
37
494
4,556 $
17
3
124
61
6
37
75
3
326
3,475
395
40
50
485
4,286
Table of Contents
(In millions)
Current liabilities
Short-term borrowings
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Customer deposits
Regulatory liabilities
Other
Total current liabilities
Long-term debt
Deferred credits and other liabilities
Atlantic City Electric Company and Subsidiary Company
Consolidated Balance Sheets
LIABILITIES AND SHAREHOLDER'S EQUITY
December 31,
2021
2020
$
$
144 $
3
165
44
31
18
28
12
445
1,579
679
12
224
49
964
2,988
1,590
(22)
1,568
4,556 $
187
261
177
46
31
23
44
11
780
1,152
624
17
274
48
963
2,895
1,271
120
1,391
4,286
Deferred income taxes and unamortized investment tax credits
Non-pension postretirement benefit obligations
Regulatory liabilities
Other
Total deferred credits and other liabilities
Total liabilities
(a)
Commitments and contingencies
Shareholder's equity
Common stock ($3 par value, 25 shares authorized, 9 shares outstanding as of December 31, 2021 and 2020)
Retained (deficit) earnings
Total shareholder's equity
Total liabilities and shareholder's equity
_____________
(a)
ACE’s consolidated assets include $0 million and $13 million as of December 31, 2021 and 2020, respectively, of ACE’s consolidated VIE that can only be used to settle the liabilities of the VIE. ACE’s consolidated
liabilities include $0 million and $21 million as of December 31, 2021 and 2020, respectively, of ACE’s consolidated VIE for which the VIE creditors do not have recourse to ACE. See Note 23 - Variable Interest Entities
for additional information.
See the Combined Notes to Consolidated Financial Statements
189
Table of Contents
(In millions)
Balance, December 31, 2018
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2019
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2020
Net income
Common stock dividends
Contributions from parent
Balance, December 31, 2021
Atlantic City Electric Company and Subsidiary Company
Consolidated Statements of Changes in Shareholder's Equity
Common Stock
Retained Earnings (Deficit)
Total Shareholder's Equity
$
$
$
$
979 $
—
—
175
1,154 $
—
—
117
1,271 $
—
—
319
1,590 $
147 $
99
(124)
—
122 $
112
(114)
—
120 $
146
(288)
—
(22) $
1,126
99
(124)
175
1,276
112
(114)
117
1,391
146
(288)
319
1,568
See the Combined Notes to Consolidated Financial Statements
190
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1. Significant Accounting Policies (All Registrants)
Description of Business (All Registrants)
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
As of December 31, 2021, Exelon was a utility services holding company engaged in the generation, delivery and marketing of energy through Generation and the energy distribution and transmission
businesses through ComEd, PECO, BGE, Pepco, DPL, and ACE.
On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies. The separation was completed on
February 1, 2022. See Note 26 – Separation of the Combined Notes to Consolidated Financial Statements for additional information.
Name of Registrant / Subsidiary
Business
Commonwealth Edison Company (registrant)
Purchase and regulated retail sale of electricity
Transmission and distribution of electricity to retail customers
PECO Energy Company (registrant)
Baltimore Gas and Electric Company (registrant)
Purchase and regulated retail sale of electricity and natural gas
Transmission and distribution of electricity and distribution of natural gas to retail customers
Purchase and regulated retail sale of electricity and natural gas
Transmission and distribution of electricity and distribution of natural gas to retail customers
Service Territories
Northern Illinois, including the City of Chicago
Southeastern Pennsylvania, including the City of Philadelphia (electricity)
Pennsylvania counties surrounding the City of Philadelphia (natural gas)
Central Maryland, including the City of Baltimore (electricity and natural gas)
Pepco Holdings LLC (registrant)
Utility services holding company engaged, through its reportable segments Pepco, DPL, and ACE
Service Territories of Pepco, DPL, and ACE
Potomac Electric
Power Company (registrant)
Purchase and regulated retail sale of electricity
District of Columbia, and major portions of Montgomery and Prince George’s
Counties, Maryland.
Delmarva Power & Light Company (registrant)
Transmission and distribution of electricity to retail customers
Purchase and regulated retail sale of electricity and natural gas
Transmission and distribution of electricity and distribution of natural gas to retail customers
Atlantic City Electric Company (registrant)
Purchase and regulated retail sale of electricity
Transmission and distribution of electricity to retail customers
Portions of Delaware and Maryland (electricity)
Portions of New Castle County, Delaware (natural gas)
Portions of Southern New Jersey
Constellation Energy Generation, LLC (formerly
Exelon Generation
Company, LLC) (subsidiary)
Generation, physical delivery and marketing of power across multiple geographical regions through its
customer-facing business, Constellation, which sells electricity to both wholesale and retail customers.
Generation also sells natural gas, renewable energy, and other energy-related products and services.
Five reportable segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other
Power Regions
Basis of Presentation (All Registrants)
This is a combined annual report of all Registrants. The Notes to the Consolidated Financial Statements apply to the Registrants as indicated parenthetically next to each corresponding disclosure.
When appropriate, the Registrants are named specifically for their related activities and disclosures. Each of the Registrant’s Consolidated Financial Statements includes the accounts of its
subsidiaries. The accounts of Generation are included within Exelon's Consolidated Financial Statements. For activities and disclosures associated with Generation included in the Notes to the Exelon
Consolidated Financial Statements, Generation is specifically named. All intercompany transactions have been eliminated.
Through its business services subsidiary, BSC, Exelon provides its subsidiaries with a variety of support services at cost, including legal, human resources, financial, information technology, and supply
management services. PHI also has a business services subsidiary, PHISCO, which provides a variety of support services at cost, including legal, accounting, engineering, customer operations,
distribution and transmission planning, asset management, system operations, and power procurement, to PHI operating companies. The costs of BSC and
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
PHISCO are directly charged or allocated to the applicable subsidiaries. The results of Exelon’s corporate operations are presented as “Other” within the consolidated financial statements and include
intercompany eliminations unless otherwise disclosed.
As of December 31, 2021 and 2020, Exelon owned 100% of Generation, PECO, BGE, and PHI and more than 99% of ComEd. PHI owns 100% of Pepco, DPL, and ACE. Generation owns 100% of its
significant consolidated subsidiaries, either directly or indirectly, except for certain consolidated VIEs, including CRP, of which Generation holds a 51% interest. The remaining interests in the
consolidated VIEs are included in noncontrolling interests on Exelon’s Consolidated Balance Sheet. See Note 23 — Variable Interest Entities for additional information on VIEs. As of February 1, 2022,
as a result of the completion of the separation, Exelon no longer owns any interest in Generation. See Note 26 — Separation for additional information.
The Registrants consolidate the accounts of entities in which a Registrant has a controlling financial interest, after the elimination of intercompany transactions. Where the Registrants do not have a
controlling financial interest in an entity, proportionate consolidation, equity method accounting, or accounting for investments in equity securities with or without readily determinable fair value is
applied. The Registrants apply proportionate consolidation when they have an undivided interest in an asset and are proportionately liable for their share of each liability associated with the asset. The
Registrants proportionately consolidate their undivided ownership interests in jointly owned electric plants and transmission facilities. Under proportionate consolidation, the Registrants separately
record their proportionate share of the assets, liabilities, revenues, and expenses related to the undivided interest in the asset. The Registrants apply equity method accounting when they have
significant influence over an investee through an ownership in common stock, which generally approximates a 20% to 50% voting interest. The Registrants apply equity method accounting to certain
investments and joint ventures. Under equity method accounting, the Registrants report their interest in the entity as an investment and the Registrants’ percentage share of the earnings from the entity
as single line items in their financial statements. The Registrants use accounting for investments in equity securities with or without readily determinable fair values if they lack significant influence,
which generally results when they hold less than 20% of the common stock of an entity. Under accounting for investments in equity securities with readily determinable fair values, the Registrants report
their investment values based on quoted prices in active markets and realized and unrealized gains and losses are included in earnings. Under accounting for investments in equity securities without
readily determinable fair values, the Registrants report their investments at cost adjusted for changes from observable transactions for identical or similar investments of the same issuer, less
impairment, and changes in measurement are reported in earnings.
The accompanying consolidated financial statements have been prepared in accordance with GAAP for annual financial statements and in accordance with the instructions to Form 10-K and
Regulation S-X promulgated by the SEC.
COVID-19 (All Registrants)
The Registrants have taken steps to mitigate the potential risks posed by the global outbreak (pandemic) of the 2019 novel coronavirus (COVID-19). The Registrants provide a critical service to their
customers and have taken measures to keep employees who operate the business safe and minimize unnecessary risk of exposure to the virus, including extra precautions for employees who work in
the field. The Registrants have implemented work from home policies where appropriate and imposed travel limitations on employees.
Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and
accompanying notes, and the amounts of revenues and expenses reported during the periods covered by those financial statements and accompanying notes. As of December 31, 2021 and 2020, and
through the date of this report, management assessed certain accounting matters that require consideration of forecasted financial information, including, but not limited to, allowance for credit losses
and the carrying value of goodwill and other long-lived assets, in context with the information reasonably available and the unknown future impacts of COVID-19. The Registrants' future assessment of
the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to their consolidated financial statements in future reporting periods.
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
Use of Estimates (All Registrants)
The preparation of financial statements of each of the Registrants in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Areas in which significant estimates have been made include, but are not limited to, the accounting for nuclear decommissioning costs and other AROs, pension
and OPEB, inventory reserves, allowance for credit losses, goodwill and long-lived asset impairment assessments, derivative instruments, unamortized energy contracts, fixed asset depreciation,
environmental costs and other loss contingencies, taxes, and unbilled energy revenues. Actual results could differ from those estimates.
Accounting for the Effects of Regulation (All Registrants)
For their regulated electric and gas operations, the Registrants reflect the effects of cost-based rate regulation in their financial statements, which is required for entities with regulated operations that
meet the following criteria: 1) rates are established or approved by a third-party regulator; (2) rates are designed to recover the entities’ cost of providing services or products; and (3) there is a
reasonable expectation that rates designed to recover costs can be charged to and collected from customers. The Registrants account for their regulated operations in accordance with regulatory and
legislative guidance from the regulatory authorities having jurisdiction, principally the ICC, PAPUC, MDPSC, DCPSC, DEPSC, and NJBPU, under state public utility laws and the FERC under various
Federal laws. Regulatory assets and liabilities are amortized and the related expense or revenue is recognized in the Consolidated Statements of Operations consistent with the recovery or refund
included in customer rates. The Registrants' regulatory assets and liabilities as of the balance sheet date are probable of being recovered or settled in future rates. If a separable portion of the
Registrants' business was no longer able to meet the criteria discussed above, the affected entities would be required to eliminate from their consolidated financial statements the effects of regulation
for that portion, which could have a material impact on their financial statements. See Note 3 — Regulatory Matters for additional information.
With the exception of income tax-related regulatory assets and liabilities, the Registrants classify regulatory assets and liabilities with a recovery or settlement period greater than one year as both
current and non-current in their Consolidated Balance Sheets, with the current portion representing the amount expected to be recovered from or refunded to customers over the next twelve-month
period as of the balance sheet date. Income tax-related regulatory assets and liabilities are classified entirely as non-current in the Registrants’ Consolidated Balance Sheets to align with the
classification of the related deferred income tax balances.
The Registrants treat the impacts of a final rate order received after the balance sheet date but prior to the issuance of the financial statements as a non-recognized subsequent event, as the receipt of
a final rate order is a separate and distinct event that has future impacts on the parties affected by the order.
Revenues (All Registrants)
Operating Revenues. The Registrants’ operating revenues generally consist of revenues from contracts with customers involving the sale and delivery of energy commodities and related products and
services, utility revenues from ARP, and realized and unrealized revenues recognized under mark-to-market energy commodity derivative contracts. The Registrants recognize revenue from contracts
with customers to depict the transfer of goods or services to customers in an amount that the entities expect to be entitled to in exchange for those goods or services. Generation’s primary sources of
revenue include competitive sales of power, natural gas, and other energy-related products and services. The Utility Registrants’ primary sources of revenue include regulated electric and natural gas
tariff sales, distribution, and transmission services. At the end of each month, the Registrants accrue an estimate for the unbilled amount of energy delivered or services provided to customers.
ComEd records ARP revenue for its best estimate of the electric distribution, energy efficiency, and transmission revenue impacts resulting from future changes in rates that ComEd believes are
probable of approval by the ICC and FERC in accordance with its formula rate mechanisms. BGE, Pepco, DPL, and ACE record ARP revenue for their best estimate of the electric and natural gas
distribution revenue impacts resulting from future changes in rates that they believe are probable of approval by the MDPSC, DCPSC, and/or NJBPU in accordance with their revenue decoupling
mechanisms. PECO, BGE, Pepco, DPL, and ACE record ARP revenue for their best estimate of the transmission revenue impacts resulting from future changes in rates that they believe are probable
of approval by FERC in accordance with their formula rate mechanisms. See Note 3 — Regulatory Matters for additional information.
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
Option Contracts, Swaps, and Commodity Derivatives. Certain option contracts and swap arrangements that meet the definition of derivative instruments are recorded at fair value with subsequent
changes in fair value recognized as revenue or expense. The classification of revenue or expense is based on the intent of the transaction. To the extent a Utility Registrant receives full cost recovery
for energy procurement and related costs from retail customers, it records the fair value of its energy swap contracts with unaffiliated suppliers as well as an offsetting regulatory asset or liability in its
Consolidated Balance Sheets. See Note 3 — Regulatory Matters and Note 16 — Derivative Financial Instruments for additional information.
Taxes Directly Imposed on Revenue-Producing Transactions. The Registrants collect certain taxes from customers such as sales and gross receipts taxes, along with other taxes, surcharges, and
fees, that are levied by state or local governments on the sale or distribution of electricity and gas. Some of these taxes are imposed on the customer, but paid by the Registrants, while others are
imposed on the Registrants. Where these taxes are imposed on the customer, such as sales taxes, they are reported on a net basis with no impact to the Consolidated Statements of Operations and
Comprehensive Income. However, where these taxes are imposed on the Registrants, such as gross receipts taxes or other surcharges or fees, they are reported on a gross basis. Accordingly,
revenues are recognized for the taxes collected from customers along with an offsetting expense. See Note 24 — Supplemental Financial Information for taxes that are presented on a gross basis.
Leases (All Registrants)
The Registrants recognize a ROU asset and lease liability for operating and finance leases with a term of greater than one year. Operating lease ROU assets are included in Other deferred debits and
other assets and operating lease liabilities are included in Other current liabilities and Other deferred credits and other liabilities on the Consolidated Balance Sheets. Finance lease ROU assets are
included in Plant, property, and equipment, net and finance lease liabilities are included in Long-term debt due within one year and Long-term debt on the Consolidated Balance Sheets. The ROU asset
is measured as the sum of (1) the present value of all remaining fixed and in-substance fixed payments using the rate implicit in the lease whenever that is readily determinable or each Registrant’s
incremental borrowing rate, (2) any lease payments made at or before the commencement date (less any lease incentives received), and (3) any initial direct costs incurred. The lease liability is
measured the same as the ROU asset, but excludes any payments made before the commencement date and initial direct costs incurred. Lease terms include options to extend or terminate the lease
if it is reasonably certain they will be exercised. The Registrants include non-lease components for most asset classes, which are service-related costs that are not integral to the use of the asset, in the
measurement of the ROU asset and lease liability.
Expense for operating leases and leases with a term of one year or less is recognized on a straight-line basis over the term of the lease, unless another systematic and rational basis is more
representative of the derivation of benefit from use of the leased property. Variable lease payments are recognized in the period in which the related obligation is incurred and consist primarily of
payments for purchases of electricity under contracted generation that are based on the electricity produced by those generating assets. Operating lease expense and variable lease payments are
recorded to Purchased power and fuel expense for contracted generation or Operating and maintenance expense for all other lease agreements on the Registrants’ Statements of Operations and
Comprehensive Income. Expense for finance leases is primarily recorded to Operating and maintenance on the Registrants’ Statements of Operations and Comprehensive Income.
Income from operating leases, including subleases, is recognized on a straight-line basis over the term of the lease, unless another systematic and rational basis is more representative of the pattern in
which income is earned over the term of the lease. Variable lease payments are recognized in the period in which the related obligation is performed and consist primarily of payments received from
sales of electricity under contracted generation that are based on the electricity produced by those generating assets. Operating lease income and variable lease payments are recorded to Operating
revenues on the Registrants’ Statements of Operations and Comprehensive Income.
The Registrants’ operating and finance leases consist primarily of contracted generation, real estate including office buildings, and vehicles and equipment. The Registrants generally account for
contracted generation in which the generating asset is not renewable as a lease if the customer has dispatch rights and obtains substantially all the economic benefits. The Registrants generally do not
account for contracted generation in which the generating asset is renewable as a lease if the customer does not design the generating asset. The Registrants account for land right arrangements that
provide for exclusive use as leases while shared use land
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
arrangements are generally not leases. The Registrants do not account for secondary use pole attachments as leases.
See Note 11 — Leases for additional information.
Income Taxes (All Registrants)
Deferred federal and state income taxes are recorded on significant temporary differences between the book and tax basis of assets and liabilities and for tax benefits carried forward. Investment tax
credits have been deferred in the Registrants’ Consolidated Balance Sheets and are recognized in book income over the life of the related property. The Registrants account for uncertain income tax
positions using a benefit recognition model with a two-step approach; a more-likely-than-not recognition criterion; and a measurement approach that measures the position as the largest amount of tax
benefit that is greater than 50% likely of being realized upon ultimate settlement. If it is not more-likely-than-not that the benefit of the tax position will be sustained on its technical merits, no benefit is
recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Registrants recognize accrued interest
related to unrecognized tax benefits in Interest expense, net or Other, net (interest income) and recognize penalties related to unrecognized tax benefits in Other, net in their Consolidated Statements
of Operations and Comprehensive Income.
Cash and Cash Equivalents (All Registrants)
The Registrants consider investments purchased with an original maturity of three months or less to be cash equivalents.
Restricted Cash and Cash Equivalents (All Registrants)
Restricted cash and cash equivalents represent funds that are restricted to satisfy designated current liabilities. As of December 31, 2021 and 2020, the Registrants' restricted cash and cash
equivalents primarily represented the following items:
Registrant
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Description
Payment of medical, dental, vision, and long-term disability benefits and Generation project-specific nonrecourse financing structures for debt service and financing of operations of the
underlying entities, in addition to the items listed below for the Utility Registrants.
Collateral held from suppliers associated with energy and REC procurement contracts, any over-recovered RPS costs and alternative compliance payments received from RES pursuant
to FEJA, and costs for the remediation of an MGP site.
Proceeds from the sales of assets that were subject to PECO’s mortgage indenture.
Proceeds from the loan program for the completion of certain energy efficiency measures and collateral held from energy suppliers.
Payment of merger commitments, collateral held from its energy suppliers associated with procurement contracts, and repayment of Transition Bonds.
Payment of merger commitments and collateral held from energy suppliers.
Collateral held from energy suppliers.
Repayment of Transition Bonds and collateral held from energy suppliers.
Restricted cash and cash equivalents not available to satisfy current liabilities are classified as noncurrent assets. As of December 31, 2021 and 2020, the Registrants' noncurrent restricted cash and
cash equivalents primarily represented ComEd’s over-recovered RPS costs and alternative compliance payments received from RES pursuant to FEJA and costs for the remediation of an MGP site,
and ACE’s repayment of Transition Bonds.
See Note 17 — Debt and Credit Agreements and Note 24 — Supplemental Financial Information for additional information.
Allowance for Credit Losses on Accounts Receivables (All Registrants)
The allowance for credit losses reflects the Registrants’ best estimates of losses on the customers' accounts receivable balances based on historical experience, current information, and reasonable
and supportable forecasts.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
The allowance for credit losses for Generation’s retail customers is based on accounts receivable aging historical experience coupled with specific identification through a credit monitoring process,
which considers current conditions and forward-looking information such as industry trends, macroeconomic factors, changes in the regulatory environment, external credit ratings, publicly available
news, payment status, payment history, and the exercise of collateral calls. The allowance for credit losses for Generation wholesale customers is developed using a credit monitoring process, like that
used for retail customers. When a wholesale customer’s risk characteristics are no longer aligned with the pooled population, Generation uses specific identification to develop an allowance for credit
losses. Adjustments to the allowance for credit losses are recorded in Operating and maintenance expense in Exelon’s Consolidated Statements of Operations and Comprehensive Income.
The allowance for credit losses for the Utility Registrants’ customers is developed by applying loss rates for each Utility Registrant, based on historical loss experience, current conditions, and forward-
looking risk factors, to the outstanding receivable balance by customer risk segment. Utility Registrants' customer accounts are written off consistent with approved regulatory requirements.
Adjustments to the allowance for credit losses are primarily recorded to Operating and maintenance expense on the Utility Registrants' Consolidated Statements of Operations and Comprehensive
Income or Regulatory assets and liabilities on the Utility Registrants' Consolidated Balance Sheets. See Note 3 - Regulatory Matters for additional information regarding the regulatory recovery of credit
losses on customer accounts receivable.
The Registrants have certain non-customer receivables in Other deferred debits and other assets which primarily are with governmental agencies and other high-quality counterparties with no history of
default. As such, the allowance for credit losses related to these receivables is not material. The Registrants monitor these balances and will record an allowance if there are indicators of a decline in
credit quality.
Variable Interest Entities (Exelon, PHI, and ACE)
Exelon accounts for its investments in and arrangements with VIEs based on the following specific requirements:
•
•
•
qualitative assessment of factors determinant in whether it has a controlling financial interest,
ongoing reconsideration of this assessment, and
where it consolidates a VIE (as primary beneficiary), disclosure of (1) the assets of the consolidated VIE, if they can be used to only settle specific obligations of the consolidated VIE, and (2)
the liabilities of a consolidated VIE for which creditors do not have recourse to the general credit of the primary beneficiary.
See Note 23 — Variable Interest Entities for additional information.
Inventories (All Registrants)
Inventory is recorded at the lower of weighted average cost or net realizable value. Provisions are recorded for excess and obsolete inventory. Fossil fuel, materials and supplies, and emissions
allowances are generally included in inventory when purchased. Fossil fuel and emissions allowances are expensed to Purchased power and fuel expense when used or sold. Materials and supplies
generally includes transmission, distribution, and generating plant materials and are expensed to Operating and maintenance or capitalized to Property, plant, and equipment, as appropriate, when
installed or used.
Debt and Equity Security Investments (Exelon)
Debt Security Investments. Debt securities are reported at fair value and classified as available-for-sale securities. Unrealized gains and losses, net of tax, are reported in OCI.
Equity Security Investments without Readily Determinable Fair Values. Exelon has certain equity securities without readily determinable fair values. Exelon has elected to use the measurement
alternative to measure these investments, defined as cost adjusted for changes from observable transactions for identical or similar investments of the same issuer, less impairment. Changes in
measurement are reported in earnings.
Equity Security Investments with Readily Determinable Fair Values. Exelon has certain equity securities with readily determinable fair values. For equity securities held in NDT funds, realized and
unrealized gains and losses, net of tax, associated with the Regulatory Agreement Units are included in regulatory liabilities at Exelon,
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
ComEd, and PECO and in Noncurrent receivables from affiliates at ComEd and PECO. Realized and unrealized gains and losses, net of tax, on NDT funds associated with the Non-Regulatory
Agreement Units are included in earnings at Exelon. NDT funds are classified as current or noncurrent assets, depending on the timing of the decommissioning activities and income taxes on trust
earnings. For all other equity securities with readily determinable fair values, realized and unrealized gains and losses are included in earnings at Exelon. See Note 3 — Regulatory Matters for
additional information regarding ComEd’s and PECO’s regulatory assets and liabilities and Note 18 — Fair Value of Financial Assets and Liabilities and Note 10 — Asset Retirement Obligations for
additional information.
Property, Plant, and Equipment (All Registrants)
Property, plant, and equipment is recorded at original cost. Original cost includes construction-related direct labor and material costs. The Utility Registrants also include indirect construction costs
including labor and related costs of departments associated with supporting construction activities. When appropriate, original cost also includes capitalized interest for Generation, Exelon Corporate,
and PHI and AFUDC for regulated property at the Utility Registrants. The cost of repairs and maintenance and minor replacements of property, is charged to Operating and maintenance expense as
incurred.
Third parties reimburse the Utility Registrants for all or a portion of expenditures for certain capital projects. Such contributions in aid of construction costs (CIAC) are recorded as a reduction to
Property, plant, and equipment, net.
For Generation, upon retirement, the cost of property is generally charged to accumulated depreciation in accordance with the composite and group methods of depreciation. Upon replacement of an
asset, the costs to remove the asset, net of salvage, are capitalized to gross plant when incurred as part of the cost of the newly-installed asset and recorded to depreciation expense over the life of the
new asset. Removal costs, net of salvage, incurred for property that will not be replaced is charged to Operating and maintenance expense as incurred.
For the Utility Registrants, upon retirement, the cost of property, net of salvage, is charged to accumulated depreciation consistent with the composite and group methods of depreciation. Depreciation
expense at ComEd, BGE, Pepco, DPL, and ACE includes the estimated cost of dismantling and removing plant from service upon retirement. Actual incurred removal costs are applied against a
related regulatory liability or recorded to a regulatory asset if in excess of previously collected removal costs. PECO’s removal costs are capitalized to accumulated depreciation when incurred and
recorded to depreciation expense over the life of the new asset constructed consistent with PECO’s regulatory recovery method.
Capitalized Software. Certain costs, such as design, coding, and testing incurred during the application development stage of software projects that are internally developed or purchased for
operational use are capitalized within Property, plant, and equipment. Similar costs incurred for cloud-based solutions treated as service arrangements are capitalized within Other Current Assets and
Deferred Debits and Other Assets. Such capitalized amounts are amortized ratably over the expected lives of the projects when they become operational, generally not to exceed five years. Certain
other capitalized software costs are being amortized over longer lives based on the expected life or pursuant to prescribed regulatory requirements.
Capitalized Interest and AFUDC. During construction, Exelon capitalizes the costs of debt funds used to finance non-regulated construction projects. Capitalization of debt funds is recorded as a
charge to construction work in progress and as a non-cash credit to interest expense.
AFUDC is the cost, during the period of construction, of debt and equity funds used to finance construction projects for regulated operations. AFUDC is recorded to construction work in progress and as
a non-cash credit to an allowance that is included in interest expense for debt-related funds and other income and deductions for equity-related funds. The rates used for capitalizing AFUDC are
computed under a method prescribed by regulatory authorities.
See Note 8 — Property, Plant, and Equipment, Note 9 — Jointly Owned Electric Utility Plant and Note 24 — Supplemental Financial Information for additional information.
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Nuclear Fuel (Exelon)
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
The cost of nuclear fuel is capitalized in Property, plant, and equipment and charged to Purchased power and fuel expense using the unit-of-production method. Any potential future SNF disposal fees
will also be expensed through Purchased power and fuel expense. Additionally, certain on-site SNF storage costs are being reimbursed by the DOE since a DOE (or government-owned) long-term
storage facility has not been completed. See Note 19 — Commitments and Contingencies for additional information regarding the cost of SNF storage and disposal.
Nuclear Outage Costs (Exelon)
Costs associated with nuclear outages, including planned major maintenance activities, are expensed to Operating and maintenance expense or capitalized to Property, plant, and equipment (based
on the nature of the activities) in the period incurred.
Depreciation and Amortization (All Registrants)
Except for the amortization of nuclear fuel, depreciation is generally recorded over the estimated service lives of property, plant, and equipment on a straight-line basis using the group, composite or
unitary methods of depreciation. The group approach is typically for groups of similar assets that have approximately the same useful lives and the composite approach is used for dissimilar assets that
have different lives. Under both methods, a reporting entity depreciates the assets over the average life of the assets in the group. ComEd, BGE, Pepco, DPL, and ACE's depreciation expense includes
the estimated cost of dismantling and removing plant from service upon retirement, which is consistent with each utility's regulatory recovery method. PECO's removal costs are capitalized to
accumulated depreciation when incurred and recorded to depreciation expense over the life of the new asset constructed consistent with PECO's regulatory recovery method. The estimated service
lives for the Registrants are based on a combination of depreciation studies, historical retirements, site licenses, and management estimates of operating costs and expected future energy market
conditions. See Note 7 — Early Plant Retirements for additional information on the impacts of early plant retirements.
See Note 8 — Property, Plant, and Equipment for additional information regarding depreciation.
Amortization of regulatory assets and liabilities are recorded over the recovery or refund period specified in the related legislation or regulatory order or agreement. When the recovery or refund period
is less than one year, amortization is recorded to the line item in which the deferred cost or income would have originally been recorded in the Utility Registrants’ Consolidated Statements of Operations
and Comprehensive Income. Amortization of ComEd’s electric distribution and energy efficiency formula rate regulatory assets and the Utility Registrants' transmission formula rate regulatory assets is
recorded to Operating revenues.
Amortization of income tax related regulatory assets and liabilities is generally recorded to Income tax expense. Except for the regulatory assets and liabilities discussed above, amortization is
generally recorded to Depreciation and amortization in the Registrants’ Consolidated Statements of Operations and Comprehensive Income when the recovery period is more than one year.
See Note 3 — Regulatory Matters and Note 24 — Supplemental Financial Information for additional information regarding the amortization of the Utility Registrants' regulatory assets and Generation's
nuclear fuel and ARC, respectively.
Asset Retirement Obligations (All Registrants)
The Registrants estimate and recognize a liability for their legal obligation to perform asset retirement activities even though the timing and/or methods of settlement may be conditional on future
events. Generation generally updates its nuclear decommissioning ARO annually, unless circumstances warrant more frequent updates, based on its annual evaluation of cost escalation factors and
probabilities assigned to the multiple outcome scenarios within its probability-weighted discounted cash flow models. Generation’s multiple outcome scenarios are generally based on decommissioning
cost studies which are updated, on a rotational basis, for each of Generation’s nuclear units at least every five years, unless circumstances warrant more frequent updates. The Utility Registrants
update their AROs either annually or on a rotational basis at least once every three years, based on a risk profile, unless circumstances warrant more frequent updates. The updates factor in new cost
estimates, credit-adjusted, risk-free rates (CARFR) and escalation rates, and the timing of cash flows. AROs are accreted throughout each year to reflect the time value of money for these present
value obligations through a
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
charge to Operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive Income for Non-Regulatory Agreement Units and through a decrease to regulatory
liabilities for Regulatory Agreement Units or, in the case of the Utility Registrants' accretion, through an increase to regulatory assets. See Note 10 — Asset Retirement Obligations for additional
information.
Guarantees (All Registrants)
If necessary, the Registrants recognize a liability at the time of issuance of a guarantee for the fair value of the obligations they have undertaken by issuing the guarantee. The liability is reduced or
eliminated as the Registrants are released from risk under the guarantee. Depending on the nature of the guarantee, the release from risk of the Registrant may be recognized only upon the expiration
or settlement of the guarantee or by a systematic and rational amortization method over the term of the guarantee. See Note 19 — Commitments and Contingencies for additional information.
Asset Impairments
Long-Lived Assets (All Registrants). The Registrants regularly monitor and evaluate the carrying value of long-lived assets or asset groups for recoverability whenever events or changes in
circumstances indicate that the carrying value of those assets may not be recoverable. Indicators of impairment may include a deteriorating business climate, including, but not limited to, declines in
energy prices, condition of the asset, specific regulatory disallowance, or plans to dispose of a long-lived asset significantly before the end of its useful life. The Registrants determine if long-lived
assets or asset groups are potentially impaired by comparing the undiscounted expected future cash flows to the carrying value when indicators of impairment exist. When the undiscounted cash flow
analysis indicates a long-lived asset or asset group may not be recoverable, the amount of the impairment loss is determined by measuring the excess of the carrying amount of the long-lived asset or
asset group over its fair value. See Note 12 — Asset Impairments for additional information.
Goodwill (Exelon, ComEd, and PHI). Goodwill represents the excess of the purchase price paid over the estimated fair value of the net assets acquired and liabilities assumed in the acquisition of a
business. Goodwill is not amortized but is assessed for impairment at least annually or on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair
value of a reporting unit below its carrying value. See Note 13 — Intangible Assets for additional information.
Equity Method Investments (Exelon). Exelon regularly monitors and evaluates equity method investments to determine whether they are impaired. An impairment is recorded when the investment
has experienced a decline in value that is other-than-temporary in nature. Additionally, if the entity in which Exelon holds an investment recognizes an impairment loss, Exelon would record their
proportionate share of that impairment loss and evaluate the investment for an other-than-temporary decline in value.
Debt Security Investments (Exelon). Declines in the fair value of debt security investments below the cost basis are reviewed to determine if such declines are other-than-temporary. If the decline is
determined to be other-than-temporary, the amount of the impairment loss is included in earnings.
Equity Security Investments (Exelon). Equity investments with readily determinable fair values are measured and recorded at fair value with any changes in fair value recorded in earnings.
Investments in equity securities without readily determinable fair values are qualitatively assessed for impairment each reporting period. If it is determined that the equity security is impaired, an
impairment loss will be recognized in earnings to the amount by which the security’s carrying amount exceeds its fair value.
Derivative Financial Instruments (All Registrants)
All derivatives are recognized on the balance sheet at their fair value unless they qualify for certain exceptions, including NPNS. For derivatives intended to serve as economic hedges, changes in fair
value are recognized in earnings each period. Amounts classified in earnings are included in Operating revenue, Purchased power and fuel, Interest expense, or Other, net in the Consolidated
Statements of Operations and Comprehensive Income based on the activity the transaction is economically hedging. While most of the derivatives serve as economic hedges, there are also derivatives
entered into for proprietary trading purposes, subject to Exelon’s RMP, and changes in the fair value of those derivatives are recorded in revenue or expense in the Consolidated Statements of
Operations and Comprehensive Income. At the Utility Registrants, changes in fair value may be recorded as a regulatory asset or liability if there is an ability to recover or return the associated
costs. Cash inflows and
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 1 — Significant Accounting Policies
outflows related to derivative instruments are included as a component of operating, investing, or financing cash flows in the Consolidated Statements of Cash Flows, depending on the nature of each
transaction. See Note 3 — Regulatory Matters and Note 16 — Derivative Financial Instruments for additional information.
As part of Generation’s energy marketing business, Generation enters contracts to buy and sell energy to meet the requirements of its customers. These contracts include short-term and long-term
commitments to purchase and sell energy and energy-related products in the energy markets with the intent and ability to deliver or take delivery of the underlying physical commodity. NPNS are
contracts where physical delivery is probable, quantities are expected to be used or sold in the normal course of business over a reasonable period and will not be financially settled. Revenues and
expenses on derivative contracts that qualify, and are designated, as NPNS are recognized when the underlying physical transaction is completed. While these contracts are considered derivative
financial instruments, they are not required to be recorded at fair value. See Note 16 — Derivative Financial Instruments for additional information.
Retirement Benefits (All Registrants)
Exelon sponsors defined benefit pension plans and OPEB plans for substantially all current employees.
The plan obligations and costs of providing benefits under these plans are measured as of December 31. The measurement involves various factors, assumptions, and accounting elections. The
impact of assumption changes or experience different from that assumed on pension and OPEB obligations is recognized over time rather than immediately recognized in the Consolidated Statements
of Operations and Comprehensive Income. Gains or losses in excess of the greater of ten percent of the projected benefit obligation or the MRV of plan assets are amortized over the expected
average remaining service period of plan participants. See Note 15 — Retirement Benefits for additional information.
2. Mergers, Acquisitions, and Dispositions (Exelon)
CENG Put Option
Prior to August 6, 2021, Generation owned a 50.01% membership interest in CENG, a joint venture with EDF, which wholly owns the Calvert Cliffs and Ginna nuclear stations and Nine Mile Point Unit
1, in addition to an 82% undivided ownership interest in Nine Mile Point Unit 2. CENG is 100% consolidated in Exelon's financial statements. See Note 23 — Variable Interest Entities for additional
information.
On April 1, 2014, Generation and EDF entered into various agreements including a NOSA, an amended LLC Operating Agreement, an Employee Matters Agreement, and a Put Option Agreement,
among others. Under the amended LLC Operating Agreement, CENG made a $400 million special distribution to EDF and committed to make preferred distributions to Generation until Generation has
received aggregate distributions of $400 million plus a return of 8.50% per annum.
Under the terms of the Put Option Agreement, EDF had the option to sell its 49.99% equity interest in CENG to Generation exercisable beginning on January 1, 2016 and thereafter until June 30, 2022.
On November 20, 2019, Generation received notice of EDF’s intention to exercise the put option to sell its interest in CENG to Generation, and the put automatically exercised on January 19, 2020 at
the end of the sixty-day advance notice period. The transaction required approval by FERC and the NYPSC, which approvals were received on July 30, 2020 and April 15, 2021, respectively. On
August 6, 2021, Generation and EDF entered into a settlement agreement pursuant to which Generation purchased EDF’s equity interest in CENG for a net purchase price of $885 million, which
includes, among other things, an adjustment for EDF’s share of the balance of the preferred distribution payable by CENG to Generation. The difference between the net purchase price and EDF’s
noncontrolling interest as of August 6, 2021 was recorded in Common stock in Exelon’s Consolidated Balance Sheet. As a result of the transaction, Exelon recorded deferred tax liabilities of $290
million in Common stock in the Consolidated Balance Sheet. See Note 14 — Income Taxes for additional information.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
The following table summarizes the effects of the changes in Generation's ownership interest in CENG in Exelon's Shareholders' Equity:
Net income attributable to Exelon's common shareholders
Pre-tax increase in Exelon's common stock for purchase of EDF's 49.99% equity interest
Decrease in Exelon's common stock due to deferred tax liabilities resulting from purchase of EDF's 49.99% equity interest
(a)
(a)
Change from net income attributable to common stock and transfers from noncontrolling interest
_________
(a) Represents non-cash activity in Exelon’s consolidated financial statements.
Agreement for Sale of Generation’s Solar Business
Note 2 — Mergers, Acquisitions, and Dispositions
For the Year Ended December 31, 2021
$
$
1,706
1,080
(290)
2,496
On December 8, 2020, Generation entered into an agreement with an affiliate of Brookfield Renewable, for the sale of a significant portion of Generation’s solar business, including 360 MW of
generation in operation or under construction across more than 600 sites across the United States. Generation will retain certain solar assets not included in this agreement, primarily Antelope Valley.
Completion of the transaction contemplated by the sale agreement was subject to the satisfaction of several closing conditions which were satisfied in the first quarter of 2021. The sale was completed
on March 31, 2021 for a purchase price of $810 million. Exelon received cash proceeds of $675 million, net of $125 million long-term debt assumed by the buyer and certain working capital and other
post-closing adjustments. Exelon recognized a pre-tax gain of $68 million which is included in Gain on sales of assets and businesses in the Consolidated Statements of Operations and
Comprehensive Income.
See Note 17 — Debt and Credit Agreements for additional information on the SolGen nonrecourse debt included as part of the transaction.
Agreement for the Sale of a Generation Biomass Facility
On April 28, 2021, Generation and ReGenerate entered into a purchase agreement, under which ReGenerate agreed to purchase Generation’s interest in the Albany Green Energy biomass facility. As
a result, in the second quarter of 2021, Exelon recorded a pre-tax impairment charge of $140 million in Operating and maintenance expense in the Consolidated Statement of Operations and
Comprehensive Income. Completion of the transaction was subject to the satisfaction of various customary closing conditions which were satisfied in the second quarter of 2021. The sale was
completed on June 30, 2021 for a net purchase price of $36 million.
Disposition of Oyster Creek
On July 31, 2018, Generation entered into an agreement with Holtec and its indirect wholly owned subsidiary, OCEP, for the sale and decommissioning of Oyster Creek located in Forked River, New
Jersey, which permanently ceased generation operations on September 17, 2018. Completion of the transaction contemplated by the sale agreement was subject to the satisfaction of several closing
conditions, including approval of the license transfer from the NRC and other regulatory approvals, and a private letter ruling from the IRS, which were satisfied in the second quarter of 2019. The sale
was completed on July 1, 2019. Exelon recognized a loss on the sale in the third quarter of 2019, which was immaterial.
Under the terms of the transaction, Generation transferred to OCEP substantially all the assets associated with Oyster Creek, including assets held in NDT funds, along with the assumption of liability
for all responsibility for the site, including full decommissioning and ongoing management of the SNF until it is moved offsite. The terms of the transaction also include various forms of performance
assurance for the obligations of OCEP to timely complete the required decommissioning, including a parental guaranty from Holtec for all performance and payment obligations of OCEP, and a
requirement for Holtec to deliver a letter of credit to Generation upon the occurrence of specified events.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 2 — Mergers, Acquisitions, and Dispositions
3. Regulatory Matters (All Registrants)
The following matters below discuss the status of material regulatory and legislative proceedings of the Registrants.
Utility Regulatory Matters (All Registrants)
Distribution Base Rate Case Proceedings
The following tables show the completed and pending distribution base rate case proceedings in 2021.
Completed Distribution Base Rate Case Proceedings
Registrant/Jurisdiction
Filing Date
Service
Requested Revenue
Requirement (Decrease)
Increase
Approved Revenue
Requirement (Decrease)
Increase
April 16, 2020
Electric
$
(11) $
ComEd - Illinois
(a)
PECO - Pennsylvania
BGE - Maryland
(c)
April 16, 2021
Electric
September 30, 2020
Natural Gas
March 30, 2021
Electric
May 15, 2020 (amended
September 11, 2020)
Electric
Natural Gas
Pepco - District of Columbia
(d)
Pepco - Maryland
(e)
DPL - Delaware
ACE - New Jersey
(f)
May 30, 2019 (amended June
1, 2020)
October 26, 2020 (amended
March 31, 2021)
March 6, 2020 (amended
February 2, 2021)
December 9, 2020 (amended
February 26, 2021)
Electric
Electric
Electric
Electric
51
69
246
203
108
136
104
23
67
(14)
46
29
132
140
74
109
52
14
41
Approved ROE
Approval Date
Rate Effective Date
8.38 %
December 9, 2020
January 1, 2021
7.36 %
December 1, 2021
January 1, 2022
10.24 %
June 22, 2021
July 1, 2021
N/A
(b)
November 18, 2021
January 1, 2022
9.50 %
9.65 %
December 16, 2020
January 1, 2021
9.275 %
June 8, 2021
July 1, 2021
9.55 %
June 28, 2021
June 28, 2021
9.60 %
September 15, 2021
October 6, 2020
9.60 %
July 14, 2021
January 1, 2022
__________
(a) Pursuant to EIMA and FEJA, ComEd’s electric distribution rates are established through a performance-based formula, which sunsets at the end of 2022. See discussion of the Clean Energy Law below for details on the
transition away from the electric distribution formula rate. The electric distribution formula rate includes decoupling provisions and, as a result, ComEd's electric distribution formula rate revenues are not impacted by
abnormal weather, usage per customer, or number of customers. ComEd is required to file an annual update to its electric distribution formula rate on or before May 1 , with resulting rates effective in January of the
following year. ComEd’s annual electric distribution formula rate update is based on prior year actual costs and current year projected capital additions (initial year revenue requirement). The update also reconciles any
differences between the revenue requirement in effect for the prior year and actual costs incurred from the year (annual reconciliation).
st
ComEd’s 2021 approved revenue requirement reflects an increase of $50 million for the initial year revenue requirement for 2021 and a decrease of $64 million related to the annual reconciliation for 2019. The revenue
requirement for 2021
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
and the revenue requirement for 2019 provide for a weighted average debt and equity return on distribution rate base of 6.28% inclusive of an allowed ROE of 8.38%, reflecting the monthly average yields for 30-year
treasury bonds plus 580 basis points.
ComEd’s 2022 approved revenue requirement above reflects an increase of $37 million for the initial year revenue requirement for 2022 and an increase of $9 million related to the annual reconciliation for 2020. The
revenue requirement for 2022 provides for a weighted average debt and equity return on distribution rate base of 5.72% inclusive of an allowed ROE of 7.36%, reflecting the monthly average yields for 30-year treasury
bonds plus 580 basis points. The reconciliation revenue requirement for 2020 provides for a weighted average debt and equity return on distribution rate base of 5.69%, inclusive of an allowed ROE of 7.29%, reflecting the
monthly yields on 30-year treasury bonds plus 580 basis points less a performance metrics penalty of 7 basis points.
(b) The PECO electric base rate case proceeding was resolved through a settlement agreement, which did not specify an approved ROE.
(c) Reflects a three-year cumulative multi-year plan for 2021 through 2023. The MDPSC awarded BGE electric revenue requirement increases of $59 million, $39 million, and $42 million, before offsets, in 2021, 2022, and
2023, respectively, and natural gas revenue requirement increases of $53 million, $11 million, and $10 million, before offsets, in 2021, 2022, and 2023, respectively. BGE proposed to use certain tax benefits to fully offset
the increases in 2021 and 2022 and partially offset the increase in 2023. However, the MDPSC utilized the tax benefits to fully offset the increases in 2021 and January 2022 such that customer rates remained unchanged.
For the remainder of 2022, the MDPSC chose to offset only 25% of the cumulative 2021 and 2022 electric revenue requirement increases and 50% of the cumulative gas revenue requirement increases. Whether certain
tax benefits will be used to offset the customer rate increases in 2023 has not been decided, and BGE cannot predict the outcome.
(d) Reflects a cumulative multi-year plan with 18-months remaining in 2021 through 2022. The DCPSC awarded Pepco electric incremental revenue requirement increases of $42 million and $67 million, before offsets, for the
remainder of 2021 and 2022, respectively. However, the DCPSC utilized the acceleration of refunds for certain tax benefits along with other rate relief to partially offset the customer rate increases by $22 million and
$40 million for the remainder of 2021 and 2022, respectively.
(e) Reflects a three-year cumulative multi-year plan for April 1, 2021 through March 31, 2024. The MDPSC awarded Pepco electric incremental revenue requirement increases of $21 million, $16 million, and $15 million,
before offsets, for the 12-month periods ending March 31, 2022, 2023, and 2024, respectively. Pepco proposed to utilize certain tax benefits to fully offset the increase through 2023 and partially offset customer rate
increases in 2024. However, the MDPSC only utilized the acceleration of refunds for certain tax benefits to fully offset the increases such that customer rates remain unchanged through March 31, 2022. On February 23,
2022, the MDPSC chose to offset 25% of the cumulative revenue requirement increase through March 31, 2023. Whether certain tax benefits will be used to offset the customer rate increases for the twelve months ended
March 31, 2024 has not been decided, and Pepco cannot predict the outcome.
(f) Requested and approved increases are before New Jersey sales and use tax. The order allows ACE to retain approximately $11 million of certain tax benefits which resulted in a decrease to income tax expense in
Exelon's, PHI's, and ACE's Consolidated Statements of Operations and Comprehensive Income in the third quarter of 2021.
Pending Distribution Base Rate Case Proceedings
Registrant/Jurisdiction
Filing Date
Service
Requested Revenue Requirement Increase
Requested ROE
Expected Approval Timing
DPL - Delaware
DPL - Maryland
(a)
January 14, 2022
September 1, 2021 (amended
December 23, 2021)
Natural Gas
$
Electric
14
27
10.30 %
10.10 %
First quarter of 2023
First quarter of 2022
__________
(a) On January 24, 2022, DPL filed a settlement agreement with the MDPSC. The settlement provides for a revenue requirement increase of $13 million. The 9.60% ROE in the agreement is solely for the purposes of
calculating AFUDC and regulatory asset carrying costs. On February 15, 2021, the Chief Public Utility Law Judge issued a proposed order approving the settlement agreement without modification. The proposed order will
become a final order of the MDPSC on March 2, 2022, subject to modification or reversal by the MDPSC.
Transmission Formula Rates
The Utility Registrants' transmission rates are each established based on a FERC-approved formula. ComEd, BGE, Pepco, DPL, and ACE are required to file an annual update to the FERC-approved
formula on or before May 15, and PECO is required to file on or before May 31, with the resulting rates effective on June 1 of the same year. The annual update for ComEd is based on prior year actual
costs and current year projected capital
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Note 3 — Regulatory Matters
additions (initial year revenue requirement). The annual update for PECO is based on prior year actual costs and current year projected capital additions, accumulated depreciation, and accumulated
deferred income taxes. The annual update for BGE, Pepco, DPL, and ACE is based on prior year actual costs and current year projected capital additions, accumulated depreciation, depreciation and
amortization expense, and accumulated deferred income taxes. The update for ComEd also reconciles any differences between the revenue requirement in effect beginning June 1 of the prior year and
actual costs incurred for that year (annual reconciliation). The update for PECO, BGE, Pepco, DPL, and ACE also reconciles any differences between the actual costs and actual revenues for the
calendar year (annual reconciliation).
For 2021, the following total increases/(decreases) were included in the Utility Registrants' electric transmission formula rate updates:
Registrant
(a)
Initial Revenue Requirement
Increase (Decrease)
Annual Reconciliation Increase
Total Revenue Requirement
Increase
(b)
Allowed Return on Rate Base
(c)
Allowed ROE
(d)
ComEd
PECO
BGE
Pepco
DPL
ACE
$
33 $
(2)
38
(9)
19
27
12 $
26
27
21
33
24
45
24
65
12
52
51
8.20 %
7.37 %
7.35 %
7.68 %
7.20 %
7.45 %
11.50 %
10.35 %
10.50 %
10.50 %
10.50 %
10.50 %
__________
(a) All rates are effective June 1, 2021 - May 31, 2022, subject to review by interested parties pursuant to review protocols of each Utility Registrant's tariff.
(b)
In 2020, ComEd, BGE, Pepco, DPL, and ACE's transmission revenue requirement included a one-time decrease in accordance with the April 24, 2020 settlement agreement related to excess deferred income taxes which
now completed has resulted in an increase to the 2021 transmission revenue requirement. In 2020, PECO's transmission revenue requirement included a one-time decrease in accordance with the December 5, 2019
settlement agreement related to refunds which now completed has resulted in an increase to the 2021 transmission revenue requirement.
(c) Represents the weighted average debt and equity return on transmission rate bases.
(d) As part of the FERC-approved settlements of ComEd’s 2007 and PECO's 2017 transmission rate cases, the rate of return on common equity is 11.50% and 10.35%, respectively, inclusive of a 50-basis-point incentive
adder for being a member of a RTO, and the common equity component of the ratio used to calculate the weighted average debt and equity return for the transmission formula rate is currently capped at 55% and 55.75%,
respectively. As part of the FERC-approved settlement of the ROE complaint against BGE, Pepco, DPL, and ACE, the rate of return on common equity is 10.50%, inclusive of a 50-basis-point incentive adder for being a
member of a RTO.
Other State Regulatory Matters
Illinois Regulatory Matters
Clean Energy Law (Exelon and ComEd). On September 15, 2021, the Illinois Public Act 102-0662 was signed into law by the Governor of Illinois (“Clean Energy Law”). The Clean Energy Law
includes, among other features, (1) procurement of CMCs from qualifying nuclear-powered generating facilities, (2) a requirement to file a general rate case or a new four-year multi-year plan no later
than January 20, 2023 to establish rates effective after ComEd’s existing performance-based distribution formula rate sunsets, (3) an extension of and certain adjustments to ComEd’s energy efficiency
MWh savings goals, (4) revisions to the Illinois RPS requirements, including expanded charges for the procurement of RECs from wind and solar generation, (5) a requirement to accelerate
amortization of ComEd’s unprotected excess deferred income taxes that ComEd was previously directed by the ICC to amortize using the average rate assumption method which equates to
approximately 39.5 years, and (6) requirements that the ICC initiate and conduct various regulatory proceedings on subjects including ethics, spending, grid investments, and performance metrics.
Regulatory or legal challenges regarding the validity or implementation of the Clean Energy Law are possible and Exelon and ComEd cannot reasonably predict the outcome of any such challenges.
Carbon Mitigation Credit
The Clean Energy Law establishes decarbonization requirements for Illinois as well as programs to support the retention and development of emissions-free sources of electricity. Among other things,
the Clean Energy Law
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
authorized the IPA to procure up to 54.5 million CMCs from qualifying nuclear plants for a five-year period beginning on June 1, 2022 through May 31, 2027. CMCs are credits for the carbon-free
attributes of eligible nuclear power plants in PJM. The Byron, Dresden, and Braidwood nuclear plants located in Illinois participated in the CMC procurement process and were awarded contracts that
commit each plant to operate through May 31, 2027. Pursuant to these contracts, ComEd will procure CMCs based upon the number of MWhs produced annually by each plant, subject to minimum
performance requirements. The price to be paid for each CMC was established through a competitive bidding process that included consumer-protection measures that capped the maximum
acceptable bid amount and a formula that reduces CMC prices by an energy price index, the base residual auction capacity price in the ComEd zone of PJM, and the monetized value of any federal tax
credit or other subsidy if applicable. The consumer protection measures contained in the new law will result in net payments to ComEd ratepayers if the energy index, the capacity price and applicable
federal tax credits or subsidy exceed the CMC contract price.
ComEd is required to purchase CMCs pursuant to these contracts and all its costs of doing so will be recovered through a new rider. That rider will provide for an annual reconciliation and true-up to
actual costs incurred by ComEd to purchase CMCs, with any difference to be credited to or collected from ComEd’s retail customers in subsequent periods.
See Note 7 — Early Plant Retirements for the impacts of the provisions above on the Illinois nuclear plants and Exelon’s consolidated financial statements. The provisions do not impact ComEd’s
consolidated financial statements until 2022.
ComEd Electric Distribution Rates
The Clean Energy Law contains requirements associated with ComEd’s transition away from the performance-based electric distribution formula rate. The law authorizing that rate setting process
sunsets at the end of 2022. The Clean Energy Law, and tariffs adopted under it, governs both the remaining reconciliations of rates set under that formula process and requires ComEd to file in 2023 its
choice of either a general rate case or a four-year multi-year plan to set rates that take effect in 2024.
On February 3, 2022, the ICC approved a tariff that establishes the process under which ComEd will reconcile its 2022 and 2023 rate year revenue requirements with actual costs. Those reconciliation
amounts will be determined using the same process as were used for prior reconciliations under the performance-based electric distribution formula rate. Using that process, for the years 2022 and
2023 ComEd will ultimately collect revenues from customers reflecting each year’s actual recoverable costs, year-end rate base, and a weighted average debt and equity return on distribution rate
base, with the ROE component based on the annual average of the monthly yields of the 30-year United States Treasury bonds plus 580 basis points.
If ComEd elects to file a multi-year plan, that plan would set rates for 2024 – 2027, based on forecasted revenue requirements and an ICC determined rate of return on rate base, including the cost of
common equity. Each year of the multi-year plan is subject to after the fact ICC review and reconciliation of the plan’s revenue requirement for that year with the actual costs that the ICC determines
are prudently and reasonably incurred for that year. That reconciliation is subject to adjustment for certain expenses and, unless the plan is modified, to a 5% cap on increases in certain costs over the
costs in the previously approved multi-year rate plan revenue requirement. ComEd would make its initial reconciliation filing in 2025, and the rate adjustments necessary to reconcile 2024 revenues to
ComEd’s actual 2024 costs incurred would take effect in January 2026 after the ICC’s review. The ICC must also approve certain annual performance metrics, which can impose symmetrical
performance adjustments in the total range of 20 to 60 basis points to ComEd’s rate of return on common equity based on the extent to which ComEd achieved the annual performance goals. ComEd
will recover from retail customers, subject to certain exceptions, the costs it incurs pursuant to the Clean Energy Law either through its electric distribution rate or other recovery mechanisms.
The Clean Energy Law, among other things, also requires ComEd’s rates to include a decoupling mechanism to eliminate any impacts of weather or load from ComEd’s electric distribution rate
revenues. The Clean Energy Law also requires the ICC to initiate a docket to accelerate and fully credit to customers unprotected property related TCJA excess deferred income taxes no later than
December 31, 2025.
Energy Efficiency
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
The Clean Energy Law extends ComEd’s current cumulative annual energy efficiency MWh savings goals through 2040, adds expanded electrification measures to those goals, increases low-income
commitments and adds a new performance adjustment to the energy efficiency formula rate. ComEd expects its annual spend to increase in 2022 through 2040 to achieve these energy efficiency MWh
savings goals, which will be deferred as a separate regulatory asset that will be recovered through the energy efficiency formula rate over the weighted average useful life, as approved by the ICC, of
the related energy efficiency measures.
Energy Efficiency Formula Rate (Exelon and ComEd). FEJA allows ComEd to defer energy efficiency costs (except for any voltage optimization costs which are recovered through the electric
distribution formula rate) as a separate regulatory asset that is recovered through the energy efficiency formula rate over the weighted average useful life, as approved by the ICC, of the related energy
efficiency measures. ComEd earns a return on the energy efficiency regulatory asset at a rate equal to its weighted average cost of capital, which is based on a year-end capital structure and
calculated using the same methodology applicable to ComEd’s electric distribution formula rate. Beginning January 1, 2018 through December 31, 2030, the ROE that ComEd earns on its energy
efficiency regulatory asset is subject to a maximum downward or upward adjustment of 200 basis points if ComEd’s cumulative persisting annual MWh savings falls short of or exceeds specified
percentage benchmarks of its annual incremental savings goal. ComEd is required to file an update to its energy efficiency formula rate on or before June 1 each year, with resulting rates effective in
January of the following year. The annual update is based on projected current year energy efficiency costs, PJM capacity revenues, and the projected year-end regulatory asset balance less any
related deferred income taxes (initial year revenue requirement). The update also reconciles any differences between the revenue requirement in effect for the prior year and actual costs incurred from
the year (annual reconciliation). The approved energy efficiency formula rate also provides for revenue decoupling provisions similar to those in ComEd’s electric distribution formula rate.
st
During 2021, the ICC approved the following total increases in ComEd's requested energy efficiency revenue requirement:
Filing Date
Requested Revenue Requirement
Increase
Approved Revenue Requirement
Increase
(a)
Approved ROE
Approval Date
June 1, 2021
$
54 $
54
7.36 %
November 18, 2021
Rate Effective Date
January 1, 2022
_________
(a) ComEd’s 2022 approved revenue requirement above reflects an increase of $55 million for the initial year revenue requirement for 2022 and a decrease of $1 million related to the annual reconciliation for 2020. The
revenue requirement for 2022 provides for a weighted average debt and equity return on the energy efficiency regulatory asset and rate base of 5.72% inclusive of an allowed ROE of 7.36%, reflecting the monthly average
yields for 30-year treasury bonds plus 580 basis points. The revenue requirement for the 2020 reconciliation year provides for a weighted average debt and equity return on the energy efficiency asset and rate base of
6.26% inclusive of an allowed ROE of 8.46%, which includes an upward performance adjustment that increased the ROE. The performance adjustment can either increase or decrease the ROE based upon the
achievement of energy efficiency savings goals. See table below for ComEd's regulatory assets associated with its energy efficiency formula rate.
Maryland Regulatory Matters
Maryland Revenue Decoupling (Exelon, BGE, PHI, Pepco, and DPL). In 1998, the MDPSC approved natural gas monthly rate adjustments for BGE and in 2007, the MDPSC approved electric
monthly rate adjustments for BGE and BSAs for Pepco and DPL, all of which are decoupling mechanisms. As a result of the decoupling mechanisms, certain Operating revenues from electric and
natural gas distribution at BGE and Operating revenues from electric distribution at Pepco Maryland (see also District of Columbia Revenue Decoupling below for Pepco District of Columbia) and DPL
are not impacted by abnormal weather or usage per customer. For BGE, Pepco, and DPL, the decoupling mechanism eliminates the impacts of abnormal weather or customer usage by recognizing
revenues based on an authorized distribution amount per customer by customer class. Operating revenues from electric and natural gas distribution at BGE and Operating revenues from electric
distribution at Pepco Maryland and DPL are, however, impacted by changes in the number of customers.
Maryland Order Directing the Distribution of Energy Assistance Funds (Exelon, BGE, PHI, Pepco, and DPL). On June 15, 2021, the MDPSC issued an order authorizing the disbursal of funds to
utilities in accordance with Maryland COVID-19 relief legislation. Under this order, BGE, Pepco, and DPL received funds of $50 million, $12 million, and $8 million, respectively, in July 2021. The funds
have been used to reduce or eliminate certain qualifying past-due residential customer receivables.
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
District of Columbia Regulatory Matters
District of Columbia Revenue Decoupling (Exelon, PHI, and Pepco). In 2009, the DCPSC approved a BSA, which is a decoupling mechanism. As a result of the decoupling mechanism, Operating
revenues from electric distribution at Pepco District of Columbia (see also Maryland Revenue Decoupling above for Pepco Maryland) are not impacted by abnormal weather or usage per customer. The
decoupling mechanism eliminates the impacts of abnormal weather or customer usage by recognizing revenues based on an authorized distribution amount per customer by customer class. Operating
revenues from electric distribution at Pepco District of Columbia are, however, impacted by changes in the number of customers.
New Jersey Regulatory Matters
Conservation Incentive Program (CIP) (Exelon, PHI, and ACE). On September 25, 2020, ACE filed an application with the NJBPU as was required seeking approval to implement a portfolio of
energy efficiency programs pursuant to New Jersey’s clean energy legislation. The filing included a request to implement a CIP that would eliminate the favorable and unfavorable impacts of weather
and customer usage patterns on distribution revenues for most customers. The CIP compares current distribution revenues by customer class to approved target revenues established in ACE’s most
recent distribution base rate case. The CIP is calculated annually and recovery is subject to certain conditions, including an earnings test and ceilings on customer rate increases.
On April 27, 2021, the NJBPU approved the settlement filed by ACE and the third parties to the proceeding. The approved settlement addresses all material aspects of ACE’s filing, including ACE’s
ability to implement the CIP prospectively effective July 1, 2021. As a result of this decoupling mechanism, operating revenues will no longer be impacted by abnormal weather or usage for most
customers. Starting in third quarter of 2021, ACE will record alternative revenue program revenues for its best estimate of the distribution revenue impacts resulting from future changes in CIP rates
that it believes are probable of approval by the NJBPU in accordance with this mechanism.
ACE Infrastructure Investment Program Filing (Exelon, PHI, and ACE). On February 28, 2018, ACE filed with the NJBPU the company’s IIP proposing to seek recovery of a series of investments
through a new rider mechanism, totaling $338 million, between 2019-2022 to provide safe and reliable service for its customers. The IIP will allow for more timely recovery of investments made to
modernize and enhance ACE’s electric system. On April 15, 2019, ACE entered into a settlement agreement with other parties, which allows for a recovery totaling $96 million of reliability related
capital investments from July 1, 2019 through June 30, 2023. On April 18, 2019, the NJBPU approved the settlement agreement.
Advanced Metering Infrastructure Filing (Exelon, PHI, and ACE). On August 26, 2020, ACE filed an application with the NJBPU as was required seeking approval to deploy a smart energy network
in alignment with New Jersey’s Energy Master Plan and Clean Energy Act. The proposal consisted of estimated costs totaling $220 million with deployment taking place over a 3-year implementation
period from approximately 2021 to 2024 that involves the installation of an integrated system of smart meters for all customers accompanied by the requisite communications facilities and data
management systems.
On July 14, 2021, the NJBPU approved the settlement filed by ACE and the third parties to the proceeding. The approved settlement addresses all material aspects of ACE's smart energy network
deployment plan, including cost recovery of the investment costs, incremental O&M expenses, and the unrecovered balance of existing infrastructure through future distribution rates.
New Jersey Clean Energy Legislation (Exelon, PHI, and ACE). On May 23, 2018, New Jersey enacted legislation that established and modified New Jersey’s clean energy and energy efficiency
programs and solar and RPS. On the same day, New Jersey enacted legislation that established a ZEC program that provides compensation for nuclear plants that demonstrate to the NJBPU that they
meet certain requirements, including that they make a significant contribution to air quality in the state and that their revenues are insufficient to cover their costs and risks. Electric distribution utilities in
New Jersey, including ACE, began collecting from retail distribution customers, through a non-bypassable charge, all costs associated with the utility’s procurement of the ZECs effective April 18, 2019.
See Generation Regulatory Matters below for additional information.
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
Other Federal Regulatory Matters
Transmission-Related Income Tax Regulatory Assets (Exelon, ComEd, BGE, PHI, Pepco, DPL, and ACE). On December 13, 2016 (and as amended on March 13, 2017), BGE filed with FERC to
begin recovering certain existing and future transmission-related income tax regulatory assets through its transmission formula rate. BGE’s existing regulatory assets included (1) amounts that, if BGE’s
transmission formula rate provided for recovery, would have been previously amortized and (2) amounts that would be amortized and recovered prospectively. On November 16, 2017, FERC issued an
order rejecting BGE’s proposed revisions to its transmission formula rate to recover these transmission-related income tax regulatory assets. In the fourth quarter of 2017, ComEd, BGE, Pepco, DPL,
and ACE fully impaired their associated transmission-related income tax regulatory assets for the portion of the income tax regulatory assets that would have been previously amortized.
On February 23, 2018 (as amended on July 9, 2018), ComEd, Pepco, DPL, and ACE each filed with FERC to revise their transmission formula rate mechanisms to permit recovery of transmission-
related income tax regulatory assets, including those amounts that would have been previously amortized and recovered through rates had the transmission formula rate provided for such recovery.
On September 7, 2018, FERC issued orders rejecting 1) BGE’s rehearing request of FERC's November 16, 2017 order and 2) the February 23, 2018 (as amended on July 9, 2018) filing by ComEd,
Pepco, DPL, and ACE for similar recovery.
On November 2, 2018, BGE filed an appeal of FERC's September 7, 2018 order to the U.S. Court of Appeals for the D.C. Circuit. On March 27, 2020, the U.S. Court of Appeals for the D.C. Circuit
Court denied BGE’s November 2, 2018 appeal.
On October 1, 2018, ComEd, BGE, Pepco, DPL, and ACE submitted filings to recover ongoing non-TCJA amortization amounts and credit TCJA transmission-related income tax regulatory liabilities to
customers for the prospective period starting on October 1, 2018. On April 26, 2019, FERC issued an order accepting ComEd's, BGE's, Pepco's, DPL's, and ACE's October 1, 2018 filings, effective
October 1, 2018, subject to refund and established hearing and settlement judge procedures. On April 24, 2020, ComEd, BGE, Pepco, DPL, ACE, and other parties filed a settlement agreement with
FERC, which FERC approved on September 24, 2020. The settlement agreement provides for the recovery of ongoing transmission-related income tax regulatory assets and establishes the amount
and amortization period for excess deferred income taxes resulting from TCJA. The settlement resulted in a reduction to Operating revenues and an offsetting reduction to Income tax expense in the
second quarter of 2020.
Regulatory Assets and Liabilities
Regulatory assets represent incurred costs that have been deferred because of their probable future recovery from customers through regulated rates. Regulatory liabilities represent the excess
recovery of costs or accrued credits that have been deferred because it is probable such amounts will be returned to customers through future regulated rates or represent billings in advance of
expenditures for approved regulatory programs.
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
The following tables provide information about the regulatory assets and liabilities of the Registrants as of December 31, 2021 and 2020:
December 31, 2021
Regulatory assets
Pension and OPEB
Pension and OPEB - merger related
Deferred income taxes
AMI programs - deployment costs
AMI programs - legacy meters
Electric distribution formula rate annual reconciliations
Electric distribution formula rate significant one-time events
Energy efficiency costs
Fair value of long-term debt
Fair value of PHI's unamortized energy contracts
Asset retirement obligations
MGP remediation costs
Renewable energy
Electric energy and natural gas costs
Transmission formula rate annual reconciliations
Energy efficiency and demand response programs
Under-recovered revenue decoupling
Removal costs
DC PLUG charge
Deferred storm costs
COVID-19
Under-recovered credit loss expense
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
2,409 $
893
883
145
186
44
104
1,181
557
236
145
283
219
96
43
564
157
758
70
49
82
89
327
9,520
1,296
— $
—
—
—
69
44
104
1,181
—
—
99
266
219
—
—
—
—
—
—
—
28
60
135
2,205
335
— $
—
873
—
—
—
—
—
—
—
21
8
—
—
14
—
—
—
—
—
33
—
42
991
48
— $
—
—
89
29
—
—
—
—
—
19
9
—
49
1
283
32
143
—
—
8
—
30
692
215
— $
—
10
56
88
—
—
—
443
236
6
—
—
47
28
281
125
615
70
49
13
29
130
2,226
432
— $
—
10
30
60
—
—
—
—
—
5
—
—
29
—
199
125
147
70
3
10
—
57
745
213
— $
—
—
26
21
—
—
—
—
—
—
—
—
13
8
79
—
109
—
3
3
—
18
280
68
$
8,224 $
1,870 $
943 $
477 $
1,794 $
532 $
212 $
—
—
—
—
7
—
—
—
—
—
1
—
—
5
20
3
—
360
—
43
—
29
23
491
61
430
209
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
December 31, 2021
Regulatory liabilities
Deferred income taxes
Nuclear decommissioning
Removal costs
Electric energy and natural gas costs
Transmission formula rate annual reconciliations
Renewable portfolio standards costs
Stranded costs
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
4,005 $
3,357
1,694
113
8
500
35
292
10,004
376
2,105 $
2,760
1,541
25
7
500
—
6
6,944
185
— $
597
—
71
—
—
—
61
729
94
819 $
—
39
—
—
—
—
102
960
26
1,081 $
—
114
17
1
—
35
58
1,306
68
525 $
—
20
9
1
—
—
8
563
14
354 $
—
94
3
—
—
—
15
466
25
$
9,628 $
6,759 $
635 $
934 $
1,238 $
549 $
441 $
202
—
—
5
—
—
35
10
252
28
224
210
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
December 31, 2020
Regulatory assets
Pension and OPEB
Pension and OPEB - merger related
Deferred income taxes
AMI programs - deployment costs
AMI programs - legacy meters
Electric distribution formula rate annual reconciliations
Electric distribution formula rate significant one-time events
Energy efficiency costs
Fair value of long-term debt
Fair value of PHI's unamortized energy contracts
Asset retirement obligations
MGP remediation costs
Renewable energy
Electric energy and natural gas costs
Transmission formula rate annual reconciliations
Energy efficiency and demand response programs
Under-recovered revenue decoupling
Stranded costs
Removal costs
DC PLUG charge
Deferred storm costs
COVID-19
Under-recovered credit loss expense
Other
Total regulatory assets
Less: current portion
Total noncurrent regulatory assets
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
3,010 $
1,014
715
174
219
(14)
117
982
598
328
135
285
301
95
5
572
113
25
701
100
50
81
107
274
9,987
1,228
— $
—
—
—
90
(14)
117
982
—
—
92
271
301
—
—
—
—
—
—
—
—
22
89
78
2,028
279
— $
—
705
—
—
—
—
—
—
—
21
10
—
—
—
—
—
—
—
—
—
38
—
27
801
25
— $
—
—
109
37
—
—
—
—
—
18
4
—
23
2
289
20
—
107
—
—
10
—
30
649
168
— $
—
10
65
92
—
—
—
478
328
4
—
—
72
3
283
93
25
594
100
50
11
18
147
2,373
440
— $
—
10
35
68
—
—
—
—
—
3
—
—
37
—
203
93
—
151
100
5
7
—
72
784
214
— $
—
—
30
24
—
—
—
—
—
—
—
—
5
2
80
—
—
105
—
4
4
—
26
280
58
$
8,759 $
1,749 $
776 $
481 $
1,933 $
570 $
222 $
—
—
—
—
—
—
—
—
—
—
1
—
—
30
1
—
—
25
339
—
41
—
18
15
470
75
395
211
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
December 31, 2020
Regulatory liabilities
Deferred income taxes
Nuclear decommissioning
Removal costs
Electric energy and natural gas costs
Transmission formula rate annual reconciliations
Renewable portfolio standards costs
Stranded costs
Other
Total regulatory liabilities
Less: current portion
Total noncurrent regulatory liabilities
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
4,502 $
3,016
1,649
175
52
427
24
221
10,066
581
2,205 $
2,541
1,482
34
2
427
—
1
6,692
289
— $
475
—
97
12
—
—
40
624
121
1,001 $
—
47
6
—
—
—
85
1,139
30
1,296 $
—
120
38
38
—
24
59
1,575
137
621 $
—
20
24
23
—
—
2
690
46
404 $
—
100
10
9
—
—
17
540
47
$
9,485 $
6,403 $
503 $
1,109 $
1,438 $
644 $
493 $
271
—
—
4
6
—
24
13
318
44
274
Descriptions of the regulatory assets and liabilities included in the tables above are summarized below, including their recovery and amortization periods.
Line Item
Description
Pension and OPEB
Primarily reflects the Utility Registrants' and PHI's portion of deferred costs,
including unamortized actuarial losses (gains) and prior service costs (credits),
associated with Exelon's pension and OPEB plans, which are recovered
through customer rates once amortized through net periodic benefit cost. Also,
includes the Utility Registrants' and PHI's non–service cost components
capitalized in Property, plant and equipment, net on their Consolidated Balance
Sheets.
End Date of Remaining Recovery/Refund
Period
The deferred costs are amortized over
the plan participants' average
remaining service periods subject to
applicable pension and OPEB cost
recognition policies. See Note 15 —
Retirement Benefits for additional
information. The capitalized non–
service cost components are amortized
over the lives of the underlying assets.
Pension and OPEB - merger related
The deferred costs are amortized over the plan participants' average remaining
service periods subject to applicable pension and OPEB cost recognition
policies. See Note 15 — Retirement Benefits for additional information. The
capitalized non–service cost components are amortized over the lives of the
underlying assets.
Legacy Constellation - 2038
Legacy PHI - 2032
No
No
Return
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Line Item
Description
Deferred income taxes
Deferred income taxes that are recoverable or refundable through customer
rates, primarily associated with accelerated depreciation, the equity component
of AFUDC, and the effects of income tax rate changes, including those
resulting from the TCJA. These amounts include transmission-related
regulatory liabilities that require FERC approval separate from the transmission
formula rate. See Transmission-Related Income Tax Regulatory Assets section
above for additional information.
End Date of Remaining Recovery/Refund
Period
Over the period in which the related
deferred income taxes reverse, which
is generally based on the expected life
of the underlying assets. For TCJA,
generally refunded over the remaining
depreciable life of the underlying
assets, except in certain jurisdictions
where the commissions have approved
a shorter refund period for certain
assets not subject to IRS normalization
rules.
No
Note 3 — Regulatory Matters
Return
AMI programs - deployment costs
Installation and ongoing incremental costs of new smart meters, including
implementation costs at Pepco and DPL of dynamic pricing for energy usage
resulting from smart meters.
AMI programs - legacy meters
Early retirement costs of legacy meters.
BGE - 2026
Pepco - 2027
DPL - 2030
ACE - To be determined in next
distribution rate case filed with NJBPU
BGE, Pepco, DPL - Yes
ACE - Yes, on incremental costs of
new smart meters
ComEd - 2028
BGE - 2026
Pepco - 2027
DPL - 2030
ACE - To be determined in next
distribution rate case filed with NJBPU
ComEd, Pepco (District of Columbia),
DPL (Delaware), ACE - Yes
BGE, Pepco (Maryland), DPL
(Maryland) - No
Electric distribution formula rate annual
reconciliations
Electric distribution formula rate
significant one-time events
Under/(Over)-recoveries related to electric distribution service costs
recoverable through ComEd's performance-based formula rate, which is
st
updated annually with rates effective on January 1 .
Deferred distribution service costs related to ComEd's significant one-time
events (e.g., storm costs), which are recovered over 5 years from date of the
event.
2023
2025
Yes
Yes
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
Line Item
Description
End Date of Remaining Recovery/Refund
Period
Return
Energy efficiency costs
Fair value of long-term debt
Fair value of PHI’s unamortized energy
contracts
ComEd's costs recovered through the energy efficiency formula rate tariff and
the reconciliation of the difference of the revenue requirement in effect for the
prior year and the revenue requirement based on actual prior year costs.
Deferred energy efficiency costs are recovered over the weighted average
useful life of the related energy measure.
Represents the difference between the carrying value and fair value of long-
term debt of BGE and PHI of $114 million and $443 million, respectively, as of
December 31, 2021, and $120 million and $478 million, respectively, as of
December 31, 2020, as of the PHI and Constellation merger dates.
Represents the regulatory assets recorded at Exelon and PHI offsetting the fair
value adjustment related to Pepco's, DPL's, and ACE's electricity and natural
gas energy supply contracts recorded at PHI as of the PHI merger date.
2032
BGE - 2036
PHI - 2045
2036
Yes
No
No
Asset retirement obligations
Future legally required removal costs associated with existing AROs.
Over the life of the related assets.
Yes, once the removal activities have
been performed.
MGP remediation costs
Environmental remediation costs for MGP sites recorded at ComEd, PECO,
and BGE.
Over the expected remediation period.
See Note 19 — Commitments and
Contingencies for additional
information.
Renewable energy
Represents the change in fair value of ComEd‘s 20-year floating-to-fixed long-
term renewable energy swap contracts.
2032
Electric energy and natural gas costs
Under (over)-recoveries related to energy and gas supply related costs
recoverable (refundable) under approved rate riders.
2025
Transmission formula rate annual
reconciliations
Under (over)-recoveries related to transmission service costs recoverable
through the Utility Registrants’ FERC formula rates, which are updated annually
st
with rates effective each June 1 .
2023
Energy efficiency and demand
response programs
Includes under (over)-recoveries of costs incurred related to energy efficiency
programs and demand response programs and recoverable costs associated
with customer direct load control and energy efficiency and conservation
programs that are being recovered from customers.
PECO - 2025
BGE - 2026
Pepco, DPL - 2036
ACE - 2031
No
No
DPL (Delaware), ACE - Yes
ComEd, PECO, BGE, Pepco, DPL
(Maryland) - No
Yes
BGE, Pepco, DPL, ACE - Yes
PECO - Yes on capital investment
recovered through this mechanism
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
Line Item
Description
End Date of Remaining Recovery/Refund
Period
Return
Under-recovered revenue decoupling
Electric and / or gas distribution costs recoverable from customers under
decoupling mechanisms.
Stranded costs
Removal costs
DC PLUG charge
The regulatory asset represents certain stranded costs associated with ACE's
former electricity generation business. The regulatory liability represents
overcollection of a customer surcharge collected by ACE to fund principal and
interest payments on Transition Bonds of ACE Transition Funding that
securitized such costs.
For BGE, Pepco, DPL, and ACE, the regulatory asset represents costs incurred
to remove property, plant and equipment in excess of amounts received from
customers through depreciation rates. For ComEd, BGE, Pepco, and DPL, the
regulatory liability represents amounts received from customers through
depreciation rates to cover the future non–legally required cost to remove
property, plant and equipment, which reduces rate base for ratemaking
purposes.
Costs associated with DC PLUG, which is a projected six-year, $500 million
project to place underground some of the District of Columbia’s most outage-
prone power lines with $250 million of the project costs funded by Pepco and
$250 million funded by the District of Columbia. Rates for the DC PLUG
initiative went into effect on February 7, 2018.
BGE - 2022
Pepco (Maryland) - $22 million - 2022
Pepco (District of Columbia) -
$103 million: $66 million to be
recovered via monthly surcharge by
2024; $37 million to be recovered via
monthly surcharge, estimated to be
fully recovered by 2028
BGE and Pepco - No
Stranded costs - 2022
Stranded costs - Yes
Overcollection - To be determined by
refund mechanism filing with NJBPU
Overcollection - No
BGE, Pepco, DPL, and ACE - Asset is
generally recovered over the life of the
underlying assets.
Yes
ComEd, BGE, Pepco, and DPL -
Liability is reduced as costs are
incurred.
2024
Portion of asset funded by Pepco-Yes
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
Line Item
Description
End Date of Remaining Recovery/Refund
Period
Return
Deferred storm costs
For Pepco, DPL, and ACE amounts represent total incremental storm
restoration costs incurred due to major storm events recoverable from
customers in the Maryland and New Jersey jurisdictions.
Pepco - 2024
DPL - $1 million - 2025; $2 million to
be determined in pending distribution
rate case filed with MDPSC
ACE - $36 million - 2024; $7 million to
be determined in next distribution rate
case filed with NJBPU
Pepco, DPL - Yes
ACE - No
Nuclear decommissioning
Estimated future decommissioning costs for the Regulatory Agreement Units
that are less than the associated NDT fund assets. See Note 10 — Asset
Retirement Obligations for additional information.
Not currently being refunded.
No
ComEd - 2025
BGE - 2025
PECO - 2024
Pepco (District of Columbia) -
$8 million to be determined in next
distribution rate case filed with DCPSC
Pepco (Maryland) - $1 million - 2026;
$1 million to be determined in next
distribution rate case filed with MDPSC
DPL (Maryland) - $1 million to be
determined in pending distribution rate
case filed with MDPSC
DPL (Delaware) - $2 million to be
determined in next distribution rate
case filed with DEPSC
ComEd and BGE - Yes
PECO, Pepco, and DPL - No
COVID-19
Incremental credit losses and direct costs related to COVID-19 incurred
primarily in 2020 at the Utility Registrants, partially offset by a decrease in
travel costs at BGE, Pepco and DPL. Direct costs consisted primarily of costs
to acquire personal protective equipment, costs for cleaning supplies and
services, and costs to hire healthcare professionals to monitor the health of
employees.
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
Line Item
Description
End Date of Remaining Recovery/Refund
Period
Return
Under-recovered credit loss expense
For ComEd and ACE, amounts represent the difference between annual credit
loss expense and revenues collected in rates through ICC and NJBPU-
approved riders. The difference between net credit loss expense and revenues
collected through the rider each calendar year for ComEd is recovered over a
twelve-month period beginning in June of the following calendar year. ACE
intends to recover from June through May of each respective year, subject to
approval of the NJBPU.
ComEd - 2024
ACE - To be determined in next
Societal Benefits Rider filing with
NJBPU
Renewable portfolio standards costs
Represents an overcollection of funds from both ComEd customers and
alternative retail electricity suppliers to be spent on future renewable energy
procurements.
$432 million to be determined in the
ICC annual reconciliation for 2023
$68 million to be determined based on
the LTRRPP developed by the IPA
No
No
Capitalized Ratemaking Amounts Not Recognized
The following table presents authorized amounts capitalized for ratemaking purposes related to earnings on shareholders’ investment that are not recognized for financial reporting purposes in the
Registrants' Consolidated Balance Sheets. These amounts will be recognized as revenues in the related Consolidated Statements of Operations and Comprehensive Income in the periods they are
billable to the Utility Registrants' customers.
December 31, 2021
December 31, 2020
$
43 $
51
1 $
(1)
— $
—
37 $
45
5 $
7
3 $
4
2 $
3
—
—
Exelon
ComEd
(a)
PECO
BGE
(b)
PHI
Pepco
(c)
DPL
(c)
ACE
__________
(a) Reflects ComEd's unrecognized equity returns/(losses) earned/(incurred) for ratemaking purposes on its electric distribution formula rate regulatory assets.
(b) BGE's authorized amounts capitalized for ratemaking purposes primarily relate to earnings on shareholders' investment on its AMI programs.
(c) Pepco's and DPL's authorized amounts capitalized for ratemaking purposes relate to earnings on shareholders' investment on their respective AMI Programs and Energy Efficiency and Demand Response Programs. The
earnings on energy efficiency are on Pepco DC and DPL DE programs only.
Generation Regulatory Matters (Exelon)
Impacts of the February 2021 Extreme Cold Weather Event and Texas-based Generating Assets Outages
Beginning on February 15, 2021, Generation’s Texas-based generating assets within the ERCOT market, specifically Colorado Bend II, Wolf Hollow II, and Handley, experienced outages as a result of
extreme cold weather conditions. In addition, those weather conditions drove increased demand for service, dramatically increased wholesale power prices, and also increased gas prices in certain
regions. In response to the high demand and significantly reduced total generation on the system, the PUCT directed ERCOT to use an administrative price cap of $9,000 per MWh during firm load
shedding events.
The estimated impact to Exelon's Net Income for the year ended December 31, 2021 arising from these market and weather conditions was a reduction of approximately $800 million. The ultimate
impact to Exelon's
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
consolidated financial statements may be affected by a number of factors, including the impacts of customer and counterparty defaults and recoveries, any additional solutions to address the financial
challenges caused by the event, and related litigation and contract disputes.
During February and March 2021, various parties with differing interests, including generators and retail providers, filed requests with the PUCT to void the PUCT’s orders setting prices at $9,000 per
MWh during firm load shedding events. Other requests were made for the PUCT to enforce its order and reduce prices for 33 hours between February 18 and February 19 after firm load shedding
ceased, and to cap ancillary services at $9,000 per MWh. On March 2, 2021, a third party filed a notice of appeal in the Court of Appeals for the Third District of Texas challenging the validity of the
PUCT’s actions. Generation intervened in that appeal and filed its initial brief on June 2, 2021 and reply brief on November 5, 2021. On April 19, 2021, Generation filed a declaratory action and request
for judicial review of the PUCT’s orders setting prices at $9,000 per MWh in District Court of Travis County, Texas. Generation subsequently requested that the District Court of Travis County, Texas
stay its proceeding pending action by the Court of Appeals in the third party proceeding. On May 17, 2021, Generation amended its petition for declaratory action and request for judicial review pending
in the District Court of Travis County, Texas. Exelon cannot reasonably predict the outcome of these proceedings or the potential financial statement impact.
Due to the event, a number of ERCOT market participants experienced bankruptcies or defaulted on payments to ERCOT, resulting in approximately a $3.0 billion payment shortfall in collections, which
is allocated to the remaining ERCOT market participants. As of December 31, 2021, Exelon has recorded Generation's estimated portion of this obligation, net of legislative solutions, of approximately
$17 million on a discounted basis, which is to be paid over a term of 83 years. ERCOT rules historically have limited recovery of default from market participants to $2.5 million per month market-wide.
In February 2021, the PUCT gave ERCOT discretion to disregard those rules, but ERCOT has declined to exercise that discretion as to the imposition of uplift charges. On March 8, 2021, a third party
filed a notice of appeal in the Court of Appeals for the Third District of Texas challenging the validity of the PUCT's order to ERCOT in February 2021. Generation intervened in that appeal and filed its
initial brief on July 7, 2021. The case has been stayed until March 3, 2022 to afford time for the PUCT to respond to ERCOT's November 18, 2021 request that the PUCT withdraw its February 2021
order. On May 7, 2021, Generation filed a declaratory action and request for judicial review of the PUCT's order in the District Court of Travis County, Texas. Generation subsequently requested that the
District Court of Travis County, Texas stay its proceeding pending action by the Court of Appeals in the third party proceeding. Exelon cannot reasonably predict the outcome of these proceedings or
the potential financial statement impact.
Additionally, several legislative proposals were introduced in the Texas legislature during February and March 2021 concerning the amount, timing and allocation of recovery of the $3.0 billion shortfall,
as well as recovery of other costs associated with the PUCT's directive to set prices at $9,000 per MWh. Two of these proposals were enacted into law in June 2021 and establish financing
mechanisms that ERCOT and certain market participants can utilize to fund amounts owed to ERCOT. Generation participated in proceedings before the PUCT addressing the proposed allocation of
the $2.1 billion in securitized funds for reliability and ancillary service charges over $9,000 per MWh. In September 2021, Generation entered into a settlement agreement and stipulation to resolve the
allocation issues. The PUCT approved the settlement agreement and stipulation on October 13, 2021.
In addition, other legislative proposals were introduced in the Texas legislature during February and March 2021 addressing cold-weather preparation for power plants and natural gas production and
transportation infrastructure and the market structure for reliability services. The Texas legislature addressed these proposals by enacting a bill with a broad set of market reforms that, among other
things, directed the PUCT to establish weatherization standards for electric generators within six months of enactment and gave the PUCT authority to impose administrative penalties if the new
proposed standards, once adopted, are not met. On October 21, 2021, the PUCT adopted a rule change requiring generators by December 1, 2021 to complete a number of specified winter readiness
preparations and to submit to ERCOT a report describing and certifying the completion of those preparations. The PUCT described these requirements as the first phase of its actions with respect to
winter preparedness, which Generation completed timely, and will be followed by a second phase consisting of a year-round set of weather preparedness standards to be informed by a weather study
conducted by ERCOT and submitted to the PUCT on December 15, 2021.
The legislation also directs the PUCT to evaluate whether additional ancillary services are needed for reliability in the ERCOT power region to provide adequate incentives for dispatchable generation.
Throughout 2021, Exelon and others submitted various proposals to the PUCT with respect to a range of potential market reforms,
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
including the implementation of additional ancillary service products as well as changes to the high system-wide offer cap and operating reserve demand curve, which remain pending. On December 2,
2021, the PUCT reduced ERCOT’s high system-wide offer cap to $5,000 per MWh.
In February 2021, more than 70 local distribution companies (LDCs) and natural gas pipelines in multiple states throughout the mid-continent region, where Generation serves natural gas customers,
issued operational flow orders (OFOs), curtailments or other limitations on natural gas transportation or use to manage the operational integrity of the applicable LDC or pipeline system. When in effect,
gas transportation or use above these limitations is subject to significant penalties according to the applicable LDCs’ and natural gas pipelines’ tariffs. Gas transportation and supply in many states
became restricted due to wells freezing and pipeline compression disruption, while demand was increasing due to the extreme cold temperatures, resulting in extremely high natural gas prices. Due to
the extraordinary circumstances, many LDCs and natural gas pipelines have either voluntarily waived or have sought applicable regulatory approvals to waive the tariff penalties associated with the
extreme weather event. During March 2021, three natural gas pipelines filed individual petitions with FERC requesting approval to waive OFO penalties. Generation also filed motions in March 2021 to
intervene and filed comments in support of these FERC waiver requests. On March 25, 2021, FERC issued an order on one of the petitions approving a pipeline’s request for a limited waiver of
penalties for February 15, 2021. On April 23, 2021, Generation and several other entities filed a request at FERC for rehearing of this order which was denied on May 24, 2021. Generation and the
other entities filed an appeal of the rehearing of the order with the U.S. Court of Appeals for the D.C. Circuit on July 21, 2021. Additionally, Generation and the other entities filed a complaint requesting
that FERC expand the order to include additional days of the weather event in February, from February 16 through February 19, 2021. On October 21, 2021, FERC denied the complaint finding that a
pipeline has the discretion whether to waive penalties under its tariff, and on December 6, 2021 the related D.C. Circuit petition for review was withdrawn. During April 2021, FERC issued orders on the
remaining petitions approving the requests to waive the penalties. During May 2021, an LDC filed a motion with the Kansas Corporation Commission (KCC) requesting the KCC to grant a waiver from
the tariff and allow the LDC to reduce the amounts assessed by permitting the removal of a multiplier from the penalty calculation. On January 20, 2022, a unanimous settlement that was filed with the
KCC that amended previously filed October 8, 2021 and November 30, 2021 nonunanimous settlements that, if approved, would resolve this matter. Exelon cannot predict the outcome of the KCC
proceeding.
Illinois Regulatory Matters
Clean Energy Law. See Clean Energy Law above for additional information related to Generation. See Note 7 – Early Plant Retirements for additional information on Generation’s Illinois nuclear
plants.
New Jersey Regulatory Matters
New Jersey Clean Energy Legislation. On May 23, 2018, New Jersey enacted legislation that established a ZEC program that provides compensation for nuclear plants that demonstrate to the
NJBPU that they meet certain requirements, including that they make a significant contribution to air quality in the state and that their revenues are insufficient to cover their costs and risks. Under the
legislation, the NJBPU will issue ZECs to qualifying nuclear power plants and the electric distribution utilities in New Jersey, including ACE, will be required to purchase those ZECs. On April 18, 2019,
the NJBPU approved the award of ZECs to Salem 1 and Salem 2. Upon approval, Generation began recognizing revenue for the sale of New Jersey ZECs in the month they are generated. On March
19, 2021, a three-judge panel of the Superior Court of New Jersey Appellate Division unanimously affirmed the NJBPU’s April 2019 order awarding ZECs for the first eligibility period. On April 8, 2021,
New Jersey Rate Counsel filed a notice asking the New Jersey Supreme Court to hear the appeal of the Superior Court’s order. On July 9, 2021, the New Jersey Supreme Court declined to hear the
appeal. On October 1, 2020, PSEG and Generation filed applications seeking ZECs for the second eligibility period (June 2022 through May 2025). On April 27, 2021, the NJBPU approved the award
of ZECs to Salem 1 and Salem 2 for the second eligibility period. On May 11, 2021, the New Jersey Rate Counsel appealed the April 27, 2021 decision to the Superior Court of New Jersey Appellate
Division. Briefing on the appeal is expected to conclude in the first half of 2022. Exelon cannot reasonably predict the outcome of this proceeding.
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Federal Regulatory Matters
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
PJM and NYISO MOPR Proceedings. PJM and NYISO capacity markets include a MOPR. If a resource is subjected to a MOPR, its offer is adjusted to effectively remove the revenues it receives
through a state government-provided financial support program - resulting in a higher offer that may not clear the capacity market. Prior to December 19, 2019, the MOPR in PJM applied only to certain
new gas-fired resources. Currently, the MOPR in NYISO applies only to certain resources in downstate New York.
For Generation’s nuclear facilities in PJM and NYISO that are currently receiving state-supported compensation, for carbon-free attributes, an expanded MOPR would require exclusion of such
compensation when bidding into future capacity auctions, resulting in an increased risk of these facilities not receiving capacity revenues in future auctions.
On December 19, 2019, FERC required PJM to broadly apply the MOPR to all new and existing resources including nuclear, renewables, demand response, energy efficiency, storage, and all
resources owned by vertically-integrated utilities. This greatly expanded the breadth and scope of PJM’s MOPR, which became effective as of PJM’s capacity auction for the 2022-2023 planning year.
While FERC included some limited exemptions, no exemptions were available to state-supported nuclear resources.
FERC provided no new mechanism for accommodating state-supported resources other than the existing FRR mechanism (under which an entire utility zone would be removed from PJM’s capacity
auction along with sufficient resources to support the load in such zone). In response to FERC’s order, PJM submitted a compliance filing on March 18, 2020 wherein PJM proposed tariff language
interpreting and implementing FERC's directives, and proposed a schedule for resuming capacity auctions that is contingent on the timing of FERC's action on the compliance filing.
On April 16, 2020, FERC issued an order largely denying most requests for rehearing of FERC's December 2019 order but granting a few clarifications that required an additional PJM compliance filing
which PJM submitted on June 1, 2020.
A number of parties, including Exelon, have filed petitions for review of FERC's orders in this proceeding, which remain pending before the Court of Appeals for the Seventh Circuit.
As a result, the MOPR applied in the capacity auction for the 2022-23 planning year to Generation's owned or jointly owned nuclear plants in those states receiving a benefit under the Illinois ZES, and
the New Jersey ZEC program. The MOPR prevented Quad Cities from clearing in that capacity auction.
At the direction of the PJM Board of Managers, PJM and its stakeholders developed further MOPR reforms to ensure that the capacity market rules respect and accommodate state resource
preferences such as the ZEC programs. PJM filed related tariff revisions at FERC on July 30, 2021 and, on September 29, 2021, PJM's proposed MOPR reforms became effective by operation of law.
Under the new tariff provisions, the MOPR will no longer apply to any of Generation’s owned or jointly owned nuclear plants. Requests for rehearing of FERC’s notice establishing the effective date for
PJM’s proposed market reforms were filed in October 2021 and denied by operation of law on November 4, 2021. Several parties have filed petitions for review of FERC's orders in this proceeding,
which remain pending before the Court of Appeals for the Third Circuit. Exelon is strenuously opposing these appeals. Exelon cannot predict the outcome of this proceeding.
On February 20, 2020, FERC issued an order rejecting requests to expand NYISO’s version of the MOPR (referred to as buyer-side mitigation rules) beyond its current limited applicability to certain
resources in downstate. However, on October 14, 2020, two natural gas-fired generators in New York filed a complaint at FERC seeking to expand the MOPR in NYISO to apply to all resources, new
and existing, across the entire NYISO market. Exelon is strenuously opposing expansion of FERC’s MOPR policies in the NYISO market. While it is too early in the proceeding to predict its outcome
and there are significant differences between the NYISO and PJM markets that would justify a different result, if FERC applies the MOPR in NYISO broadly as requested in the complaint, Generation’s
facilities in NYISO that are receiving ZEC compensation may be at increased risk of not clearing the capacity auction.
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(Dollars in millions, except per share data unless otherwise noted)
Note 3 — Regulatory Matters
Operating License Renewals
Conowingo Hydroelectric Project. On August 29, 2012, Generation submitted an application to FERC for a new license for the Conowingo Hydroelectric Project (Conowingo). In connection with
Generation’s efforts to obtain a water quality certification pursuant to Section 401 of the Clean Water Act (401 Certification) from MDE for Conowingo, Generation had been working with MDE and other
stakeholders to resolve water quality licensing issues, including: (1) water quality, (2) fish habitat, and (3) sediment.
On April 21, 2016, Generation and the U.S. Fish and Wildlife Service of the U.S. Department of the Interior executed a settlement agreement (DOI Settlement) resolving all fish passage issues between
the parties.
On April 27, 2018, MDE issued its 401 Certification for Conowingo. As issued, the 401 Certification contained numerous conditions, including those relating to reduction of nutrients from upstream
sources, removal of all visible trash and debris from upstream sources, and implementation of measures relating to fish passage.
On October 29, 2019, Generation and MDE filed with FERC a Joint Offer of Settlement (Offer of Settlement) that would resolve all outstanding issues relating to the 401 Certification. Pursuant to the
Offer of Settlement, the parties submitted Proposed License Articles to FERC to be incorporated by FERC into the new license in accordance with FERC’s discretionary authority under the Federal
Power Act. Among the Proposed License Articles were modifications to river flows to improve aquatic habitat, eel passage improvements, and initiatives to support rare, threatened and endangered
wildlife.
On March 19, 2021, FERC issued a new 50-year license for Conowingo, effective March 1, 2021. FERC adopted the Proposed License Articles into the new license only making modifications it
deemed necessary to allow FERC to enforce the Proposed License Articles. Consistent with the Offer of Settlement, FERC found that MDE waived its 401 Certification and pursuant to a separate
agreement with MDE (MDE Settlement), Generation agreed to implement additional environmental protection, mitigation, and enhancement measures over the 50-year term of the new license. These
measures address mussel restoration and other ecological and water quality matters, among other commitments. On April 19, 2021, a few environmental groups filed with FERC a petition for rehearing
requesting that FERC reconsider the issuance of the new Conowingo license, which was denied by operation of law on May 20, 2021. On June 17, 2021, the petitioners appealed FERC’s ruling to the
U.S. Court of Appeals for the D.C. Circuit. On July 15, 2021, FERC issued an order addressing the arguments raised on rehearing, affirming the determinations of its March 19, 2021 order.
The financial impact of the DOI and MDE Settlements and other anticipated license commitments are recognized over the new license term, including capital and operating costs. The actual timing and
amount of the majority of these costs are not currently fixed and will vary from year to year throughout the life of the new license.
Peach Bottom Units 2 and 3. On March 6, 2020, the NRC approved a second 20-year license renewal for Peach Bottom Units 2 and 3. Peach Bottom Units 2 and 3 are now licensed to operate
through 2053 and 2054, respectively. See Note 8 – Property, Plant, and Equipment for additional information regarding the estimated useful life and depreciation provisions for Peach Bottom.
4. Revenue from Contracts with Customers (All Registrants)
The Registrants recognize revenue from contracts with customers to depict the transfer of goods or services to customers at an amount that the entities expect to be entitled to in exchange for those
goods or services. Generation’s primary sources of revenue include competitive sales of power, natural gas, and other energy-related products and services. The Utility Registrants’ primary sources of
revenue include regulated electric and gas tariff sales, distribution, and transmission services. The performance obligations, revenue recognition, and payment terms associated with these sources of
revenue are further discussed in the table below. There are no significant financing components for these sources of revenue and no variable consideration for regulated electric and gas tariff sales and
regulated transmission services unless noted below.
Unless otherwise noted, for each of the significant revenue categories and related performance obligations described below, the Registrants have the right to consideration from the customer in an
amount that corresponds directly with the value transferred to the customer for the performance completed to date. Therefore, the Registrants generally recognize revenue in the amount for which they
have the right to invoice the customer. As a result, there are generally no significant judgments used in determining or allocating the transaction price.
221
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 4 — Revenue from Contracts with Customers
Revenue Source
Description
Performance Obligation
Timing of Revenue Recognition
Payment Terms
Competitive Power Sales (Exelon)
Competitive Natural Gas Sales
(Exelon)
Other Competitive Products and
Services (Exelon)
Regulated Electric and Gas Tariff
Sales (The Registrants)
Regulated Transmission Services
(The Registrants)
Sales of power and other energy-related
commodities to wholesale and retail customers
across multiple geographic regions through
Generation's customer-facing business.
Sales of natural gas on a full requirement basis
or for an agreed upon volume to commercial
and residential customers.
Sales of other energy-related products and
services such as long-term construction and
installation of energy efficiency assets and new
power generating facilities, primarily to
commercial and industrial customers.
Sales of electricity and electricity distribution
services (the Utility Registrants) and natural gas
and gas distribution services (PECO, BGE, and
DPL) to residential, commercial, industrial, and
governmental customers through regulated tariff
rates approved by state regulatory commissions.
The Utility Registrants provide open access to
their transmission facilities to PJM, which directs
and controls the operation of these transmission
facilities and accordingly compensates the Utility
Registrants pursuant to filed tariffs at cost-based
rates approved by FERC.
Various including the delivery of power
(generally delivered over time) and other
energy-related commodities such as
capacity (generally delivered over time),
ZECs, RECs or other ancillary services
(generally delivered at a point in time).
Delivery of natural gas to the customer.
Construction and/or installation of the asset
for the customer.
Delivery of electricity and/or natural gas.
Various including (i) Network Integration
Transmission Services (NITS), (ii)
scheduling, system control and dispatch
services, and (iii) access to the wholesale
grid.
Concurrently as power is generated
(a)
for bundled power sale contracts.
Within the month following
delivery to the customer.
Over time as the natural gas is
delivered and consumed by the
customer.
Revenues and associated costs are
recognized throughout the contract
term using an input method to
measure progress towards
completion.
(b)
Over time (each day) as the
electricity and/or natural gas is
delivered to customers. Tariff sales
are generally considered daily
contracts as customers can
discontinue service at any time.
(c)
Within the month following
delivery to the customer.
Within 30 or 45 days from the
invoice date.
Within the month following
delivery of the electricity or
natural gas to the customer.
Over time utilizing output methods to
measure progress towards
completion.
(d)
Paid weekly by PJM.
__________
(a) Certain contracts may contain limits on the total amount of revenue Exelon is able to collect over the entire term of the contract. In such cases, Exelon estimates the total consideration expected to be received over the
term of the contract net
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 4 — Revenue from Contracts with Customers
of the constraint and allocate the expected consideration to the performance obligations in the contract such that revenue is recognized ratably over the term of the entire contract as the performance obligations are
satisfied.
(b) The method recognizes revenue based on the various inputs used to satisfy the performance obligation, such as costs incurred and total labor hours expended. The total amount of revenue that will be recognized is based
on the agreed upon contractually-stated amount. The average contract term for these projects is approximately 18 months.
(c) Electric and natural gas utility customers have the choice to purchase electricity or natural gas from competitive electric generation and natural gas suppliers. While the Utility Registrants are required under state legislation
to bill their customers for the supply and distribution of electricity and/or natural gas, they recognize revenue related only to the distribution services when customers purchase their electricity or natural gas from
competitive suppliers.
(d) Passage of time is used for NITS and access to the wholesale grid and MWHs of energy transported over the wholesale grid is used for scheduling, system control and dispatch services.
Generation incurs incremental costs in order to execute certain retail power and gas sales contracts. These costs, which primarily relate to retail broker fees and sales commissions, are capitalized
when incurred as contract acquisition costs and were not material as of December 31, 2021 and 2020. The Utility Registrants do not incur any material costs to obtain or fulfill contracts with customers.
Contract Balances (All Registrants)
Contract Assets
Exelon records contract assets for the revenue recognized on the construction and installation of energy efficiency assets and new power generating facilities before Generation has an unconditional
right to bill for and receive the consideration from the customer. These contract assets are subsequently reclassified to receivables when the right to payment becomes unconditional. Exelon records
contract assets and contract receivables in Other current assets and Customer accounts receivable, net, respectively, in the Consolidated Balance Sheets.
The following table provides a rollforward of the contract assets reflected in Exelon's Consolidated Balance Sheets. The Utility Registrants do not have any contract assets.
Balance as of December 31, 2019
Amounts reclassified to receivables
Revenues recognized
Contract assets reclassified as held-for-sale
Balance as of December 31, 2020
Amounts reclassified to receivables
Revenues recognized
Amounts previously held-for-sale
Balance as of December 31, 2021
Contract Liabilities
Exelon
174
(86)
68
(12)
144
(59)
52
12
149
$
$
The Registrants record contract liabilities when consideration is received or due prior to the satisfaction of the performance obligations. The Registrants record contract liabilities in Other current
liabilities and Other noncurrent liabilities in the Registrants' Consolidated Balance Sheets.
For Generation, these contract liabilities primarily relate to upfront consideration received or due for equipment service plans and the Illinois ZEC program that introduces a cap on the total
consideration to be received by Generation. The Generation contract liability related to the Illinois ZEC program includes certain amounts with ComEd that are eliminated in consolidation in Exelon’s
Consolidated Statements of Operations and Consolidated Balance Sheets.
On July 1, 2020, Pepco, DPL, and ACE each entered into a collaborative arrangement with an unrelated owner and manager of communication infrastructure (the Buyer). Under this arrangement,
Pepco, DPL, and ACE sold a 60% undivided interest in their respective portfolios of transmission tower attachment agreements with telecommunications companies to the Buyer, in addition to
transitioning management of the day-to-day operations of the jointly-owned agreements to the Buyer for 35 years, while retaining the safe and reliable
223
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 4 — Revenue from Contracts with Customers
operation of its utility assets. In return, Pepco, DPL, and ACE will provide the Buyer limited access on the portion of the towers where the equipment resides for the purposes of managing the
agreements for the benefit of Pepco, DPL, ACE, and the Buyer. In addition, for an initial period of three years and two, two-year extensions that are subject to certain conditions, the Buyer has the
exclusive right to enter into new agreements with telecommunications companies and to receive a 30% undivided interest in those new agreements. PHI, Pepco, DPL, and ACE received cash and
recorded contract liabilities as of July 1, 2020 as shown in the table below. The revenue attributable to this arrangement will be recognized as operating revenue over the 35 years under the
collaborative arrangement.
The following table provides a rollforward of the contract liabilities reflected in Exelon's, PHI's, Pepco's, DPL's, and ACE'S Consolidated Balance Sheets. As of December 31, 2021, 2020, and 2019,
ComEd's, PECO's, and BGE's contract liabilities were not material.
Balance as of December 31, 2018
Consideration received or due
Revenues recognized
Balance as of December 31, 2019
Consideration received or due
Revenues recognized
Contract liabilities reclassified as held-for-sale
Balance as of December 31, 2020
Consideration received or due
Revenues recognized
Amounts previously held-for-sale
Balance as of December 31, 2021
Exelon
PHI
Pepco
DPL
ACE
$
$
27
94
(88)
33
219
(98)
(3)
151
97
(110)
3
$
141
$
—
—
—
—
122
(4)
—
118
—
(9)
—
109
$
$
—
—
—
—
98
(4)
—
94
—
(7)
—
87
$
$
—
—
—
—
12
—
—
12
—
(1)
—
11
$
$
—
—
—
—
12
—
—
12
—
(1)
—
11
The following table reflects revenues recognized in the years ended December 31, 2021, 2020 and 2019, which were included in contract liabilities at December 31, 2020, 2019, and 2018, respectively:
Exelon
PHI
Pepco
DPL
ACE
2021
2020
2019
$
40 $
9
7
1
1
27 $
—
—
—
—
18
—
—
—
—
Transaction Price Allocated to Remaining Performance Obligations (All Registrants)
The following table shows the amounts of future revenues expected to be recorded in each year for performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2021. This
disclosure only includes contracts for which the total consideration is fixed and determinable at contract inception. The average contract term varies by customer type and commodity but ranges from
one month to several years.
This disclosure excludes Generation's power and gas sales contracts as they contain variable volumes and/or variable pricing. This disclosure excludes the Utility Registrants' gas and electric tariff
sales contracts and transmission revenue contracts as they generally have an original expected duration of one year or less and, therefore, do not contain any future, unsatisfied performance
obligations to be included in this disclosure.
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Table of Contents
Exelon
PHI
Pepco
DPL
ACE
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 4 — Revenue from Contracts with Customers
2022
2023
2024
2025
2026 and thereafter
Total
$
194 $
8
6
1
1
70 $
38 $
31 $
155 $
8
6
1
1
6
5
—
1
5
5
—
—
82
65
9
8
488
109
87
11
11
Revenue Disaggregation (All Registrants)
The Registrants disaggregate revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by
economic factors. See Note 5 — Segment Information for the presentation of the Registrant's revenue disaggregation.
5. Segment Information (All Registrants)
Operating segments for each of the Registrants are determined based on information used by the CODM in deciding how to evaluate performance and allocate resources at each of the Registrants.
Exelon has eleven reportable segments, which includes five reportable segments for Generation consisting of the Mid-Atlantic, Midwest, New York, ERCOT, and all other power regions referred to
collectively as “Other Power Regions” and ComEd, PECO, BGE, and PHI's three reportable segments consisting of Pepco, DPL, and ACE. ComEd, PECO, BGE, Pepco, DPL, and ACE each
represent a single reportable segment, and as such, no separate segment information is provided for these Registrants. Exelon, ComEd, PECO, BGE, Pepco, DPL, and ACE's CODMs evaluate the
performance of and allocate resources to ComEd, PECO, BGE, Pepco, DPL, and ACE based on net income.
The basis for the reportable segments of Generation is the integrated management of Generation's electricity business that is located in different geographic regions, and largely representative of the
footprints of ISO/RTO and/or NERC regions, which utilize multiple supply sources to provide electricity through various distribution channels (wholesale and retail). Generation's hedging strategies and
risk metrics are also aligned to these same geographic regions. Descriptions of each of the five reportable segments of Generation are as follows:
• Mid-Atlantic represents operations in the eastern half of PJM, which includes New Jersey, Maryland, Virginia, West Virginia, Delaware, the District of Columbia, and parts of Pennsylvania
and North Carolina.
• Midwest represents operations in the western half of PJM and the United States footprint of MISO, excluding MISO’s Southern Region.
•
•
•
•
•
New York represents operations within NYISO.
ERCOT represents operations within Electric Reliability Council of Texas that covers a majority of the state of Texas.
Other Power Regions:
New England represents operations within ISO-NE.
South represents operations in the FRCC, MISO’s Southern Region, and the remaining portions of the SERC not included within MISO or PJM.
• West represents operations in the WECC, which includes CAISO.
•
Canada represents operations across the entire country of Canada and includes AESO, OIESO, and the Canadian portion of MISO.
The CODM evaluates the performance of Generation’s electric business activities and allocates resources based on Revenues Net of Purchased Power and Fuel Expense (RNF). Management
believes that RNF is a useful
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 5 — Segment Information
measurement of operational performance. RNF is not a presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more useful than the GAAP
information provided elsewhere in this report. Generation’s operating revenues include all sales to third parties and affiliated sales to the Utility Registrants. Purchased power costs include all costs
associated with the procurement and supply of electricity including capacity, energy, and ancillary services. Fuel expense includes the fuel costs for Generation’s owned generation and fuel costs
associated with tolling agreements. The results of Generation's other business activities are not regularly reviewed by the CODM and are therefore not classified as operating segments or included in
the regional reportable segment amounts. These activities include natural gas, as well as other miscellaneous business activities that are not significant to Generation's overall operating revenues or
results of operations. Further, Generation’s unrealized mark-to-market gains and losses on economic hedging activities and its amortization of certain intangible assets and liabilities relating to
commodity contracts recorded at fair value from mergers and acquisitions are also excluded from the regional reportable segment amounts. The CODM does not use a measure of total assets in
making decisions regarding allocating resources to or assessing the performance of these reportable segments.
An analysis and reconciliation of the reportable segment information to the respective information in the Exelon consolidated financial statements for the years ended December 31, 2021, 2020, and
2019 is as follows:
ComEd
PECO
BGE
PHI
Generation
Other
(a)
Intersegment
Eliminations
Exelon
—
$
—
$
—
$
—
$
16,290
$
—
$
(1,171)
$
(b)
Operating revenues :
2021
Competitive businesses electric revenues $
Competitive businesses natural gas
revenues
Competitive businesses other revenues
Rate-regulated electric revenues
Rate-regulated natural gas revenues
Shared service and other revenues
Competitive businesses electric revenues $
Competitive businesses natural gas
revenues
Competitive businesses other revenues
Rate-regulated electric revenues
Rate-regulated natural gas revenues
Shared service and other revenues
Total operating revenues
Total operating revenues
2020
$
6,406
—
—
6,406
—
—
—
—
—
5,904
—
—
$
$
—
—
2,659
539
—
3,198
—
—
—
2,543
515
—
$
$
—
—
2,505
836
—
3,341
—
—
—
2,336
762
—
$
$
—
—
4,860
168
13
5,041
—
—
—
4,485
162
16
$
$
3,379
(20)
—
—
—
19,649
15,060
2,003
540
—
—
—
$
$
—
—
—
—
2,213
2,213
—
—
—
—
—
2,035
$
$
$
5,904
$
3,058
$
3,098
$
4,663
$
17,603
$
2,035
$
226
15,119
3,379
(31)
16,352
1,528
—
36,347
13,864
2,000
536
15,207
1,432
—
33,039
(11)
(78)
(15)
(2,226)
(3,501)
(1,196)
(3)
(4)
(61)
(7)
$
$
(2,051)
(3,322)
$
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 5 — Segment Information
ComEd
PECO
BGE
PHI
Generation
Other
(a)
Intersegment
Eliminations
Exelon
2019
Competitive businesses electric revenues $
Competitive businesses natural gas
revenues
Competitive businesses other revenues
Rate-regulated electric revenues
Rate-regulated natural gas revenues
Shared service and other revenues
Total operating revenues
(c)
Intersegment revenues :
2021
2020
2019
Depreciation and amortization:
2021
2020
2019
Operating expenses:
2021
2020
2019
Interest expense, net:
2021
2020
2019
Income (loss) before income taxes:
2021
2020
2019
Income taxes:
2021
2020
2019
Net income (loss):
2021
2020
$
$
$
$
$
$
$
$
—
$
—
$
—
$
—
$
16,285
$
—
$
(1,165)
$
—
—
5,747
—
—
—
—
2,490
610
—
—
—
2,379
727
—
—
—
4,626
167
13
2,148
491
—
—
—
—
—
—
—
1,921
5,747
$
3,100
$
3,106
$
4,806
$
18,924
$
1,921
$
41
37
30
1,205
$
1,133
1,033
$
21
$
9
6
348
347
333
$
$
$
31
20
26
591
550
502
$
$
13
17
14
821
782
754
1,188
$
2,203
$
1,211
1,172
3,003
$
2,123
1,535
2,024
1,913
$
67
79
95
5,151
$
2,547
$
2,860
$
4,240
$
20,196
$
2,242
$
4,950
4,580
389
382
359
914
615
851
172
177
163
742
438
$
$
$
$
2,512
2,388
161
147
136
516
417
593
$
$
2,598
2,574
138
133
121
373
390
439
$
$
4,045
4,084
267
268
263
603
418
514
$
$
12
$
(35)
$
42
$
(30)
65
504
447
$
41
79
$
408
349
(77)
38
561
495
$
17,358
17,628
297
357
429
152
836
1,917
225
249
516
(83)
579
$
$
$
$
2,047
1,996
320
351
308
(351)
(343)
(327)
$
$
(46)
$
13
(87)
$
(304)
(354)
227
(1)
(4)
(47)
(15)
(1,934)
(3,166)
$
(3,497)
$
(3,314)
(3,159)
$
1
—
—
(3,411)
$
(3,270)
(3,154)
$
$
$
$
(1)
(3)
—
1
—
(2)
—
—
—
1
—
15,120
2,147
487
15,195
1,489
—
34,438
—
4
2
6,036
5,014
4,252
33,825
30,240
30,096
1,571
1,635
1,616
2,208
2,333
3,985
370
373
774
1,829
1,954
Table of Contents
2019
Capital expenditures:
2021
2020
2019
Total assets:
2021
2020
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
ComEd
PECO
BGE
PHI
Generation
Other
(a)
688
528
360
477
1,217
(240)
$
$
2,387
$
1,240
$
1,226
$
1,720
$
1,329
$
2,217
1,915
1,147
939
1,247
1,145
1,604
1,355
1,747
1,845
79
86
49
36,470
34,466
$
13,824
12,531
$
12,324
11,650
$
24,744
23,736
$
48,086
48,094
$
7,727
9,005
Note 5 — Segment Information
Intersegment
Eliminations
Exelon
(2)
—
—
—
(10,162)
(10,165)
$
$
3,028
7,981
8,048
7,248
133,013
129,317
$
$
__________
(a) Other primarily includes Exelon’s corporate operations, shared service entities, and other financing and investment activities.
(b)
(c)
Includes gross utility tax receipts from customers. The offsetting remittance of utility taxes to the governing bodies is recorded in expenses in the Registrants’ Consolidated Statements of Operations and Comprehensive
Income. See Note 24 — Supplemental Financial Information for additional information on total utility taxes.
Intersegment revenues exclude sales to unconsolidated affiliates. The intersegment profit associated with Generation’s sale of certain products and services by and between Exelon’s segments is not eliminated in
consolidation due to the recognition of intersegment profit in accordance with regulatory accounting guidance. For Exelon, these amounts are included in Operating revenues in the Consolidated Statements of Operations
and Comprehensive Income. See Note 25 - Related Party Transactions for additional information on intersegment revenues.
228
Table of Contents
PHI:
(b)
Operating revenues :
2021
Rate-regulated electric revenues
Rate-regulated natural gas revenues
Shared service and other revenues
Total operating revenues
2020
Rate-regulated electric revenues
Rate-regulated natural gas revenues
Shared service and other revenues
Total operating revenues
2019
Rate-regulated electric revenues
Rate-regulated natural gas revenues
Shared service and other revenues
Total operating revenues
(c)
Intersegment revenues :
2021
2020
2019
Depreciation and amortization:
2021
2020
2019
Operating expenses:
2021
2020
2019
Interest expense, net:
2021
2020
2019
Income (loss) before income taxes:
2021
2020
2019
Income taxes:
2021
2020
2019
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 5 — Segment Information
Pepco
DPL
ACE
Other
(a)
Intersegment
Eliminations
PHI
$
$
$
$
$
$
$
$
$
$
$
$
1,388
—
—
1,388
1,245
—
—
1,245
1,240
—
—
1,240
2
4
3
179
180
157
1,201
1,123
1,089
58
59
58
133
71
99
(13)
(41)
—
$
$
$
$
$
$
$
$
$
$
$
$
—
—
379
379
—
—
372
372
—
—
396
396
380
372
396
29
34
39
388
378
403
8
10
10
(11)
(12)
(13)
(2)
(4)
—
$
$
$
$
$
$
$
$
$
$
$
$
(14)
—
(366)
(380)
(18)
—
(356)
(374)
(13)
—
(383)
(396)
(381)
(375)
(397)
—
—
—
(381)
(375)
(396)
—
—
1
—
—
—
—
—
—
4,860
168
13
5,041
4,485
162
16
4,663
4,626
167
13
4,806
13
17
14
821
782
754
4,240
4,045
4,084
267
268
263
603
418
514
42
(77)
38
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,212
168
—
1,380
1,109
162
—
1,271
1,139
167
—
1,306
7
9
7
210
191
184
1,161
1,120
1,089
61
61
61
170
100
169
42
(25)
22
$
$
$
$
$
$
$
$
$
$
$
$
2,274
—
—
2,274
2,149
—
—
2,149
2,260
—
—
2,260
5
7
5
403
377
374
1,871
1,799
1,899
140
138
133
311
259
259
15
(7)
16
229
Table of Contents
Net income (loss):
2021
2020
2019
Capital expenditures:
2021
2020
2019
Total assets:
2021
2020
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 5 — Segment Information
Pepco
DPL
ACE
Other
(a)
Intersegment
Eliminations
PHI
$
$
$
296
266
243
843
773
626
9,903
9,264
$
$
$
128
125
147
429
424
348
5,412
5,140
$
$
$
146
112
99
445
401
375
4,556
4,286
$
$
$
(9)
(8)
(12)
3
6
6
4,933
5,079
$
$
$
$
$
$
—
—
—
—
—
—
(60)
(33)
561
495
477
1,720
1,604
1,355
24,744
23,736
__________
(a) Other primarily includes PHI’s corporate operations, shared service entities, and other financing and investment activities.
(b)
Includes gross utility tax receipts from customers. The offsetting remittance of utility taxes to the governing bodies is recorded in expenses in the Registrants’ Consolidated Statements of Operations and Comprehensive
Income. See Note 24 — Supplemental Financial Information for additional information on total utility taxes.
Includes intersegment revenues with ComEd, BGE, and PECO, which are eliminated at Exelon.
(c)
The following tables disaggregate the revenue recognized from contracts with customers into categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are
affected by economic factors. For Generation, the disaggregation of revenues reflects Generation's two primary products of power sales and natural gas sales, with further disaggregation of power
sales provided by geographic region. For the Utility Registrants, the disaggregation of revenues reflects the two primary utility services of rate-regulated electric sales and rate-regulated natural gas
sales (where applicable), with further disaggregation of these tariff sales provided by major customer groups. Exelon's disaggregated revenues are consistent with Generation and the Utility
Registrants, but exclude any intercompany revenues.
Competitive Business Revenues (Generation):
Revenues from external customers
(a)
Contracts with customers
Other
(b)
2021
Total
Intersegment Revenues
Total Revenues
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Total Competitive Businesses Electric Revenues
Competitive Businesses Natural Gas Revenues
Competitive Businesses Other Revenues
(c)
Total Generation Consolidated Operating Revenues
$
$
$
183 $
(205)
(57)
276
981
1,178 $
1,602
(385)
2,395 $
4,564 $
4,060
1,576
1,172
4,918
16,290 $
3,379
(20)
19,649 $
20 $
—
(1)
9
(28)
— $
—
—
— $
4,584
4,060
1,575
1,181
4,890
16,290
3,379
(20)
19,649
4,381 $
4,265
1,633
896
3,937
15,112 $
1,777
365
17,254 $
230
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Total Competitive Businesses Electric Revenues
Competitive Businesses Natural Gas Revenues
Competitive Businesses Other Revenues
(c)
Total Generation Consolidated Operating Revenues
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Total Competitive Businesses Electric Revenues
Competitive Businesses Natural Gas Revenues
Competitive Businesses Other Revenues
(c)
Total Generation Consolidated Operating Revenues
Note 5 — Segment Information
Revenues from external customers
(a)
Contracts with customers
Other
(b)
2020
Total
Intersegment Revenues
Total Revenues
4,785 $
3,717
1,444
735
3,586
14,267 $
1,283
355
(168) $
312
(12)
198
463
793 $
720
185
4,617 $
4,029
1,432
933
4,049
15,060 $
2,003
540
15,905 $
1,698 $
17,603 $
28 $
(5)
(1)
25
(47)
— $
—
—
— $
4,645
4,024
1,431
958
4,002
15,060
2,003
540
17,603
Revenues from external customers
(a)
Contracts with customers
Other
(b)
2019
Total
Intersegment Revenues
Total Revenues
5,053 $
4,095
1,571
768
3,687
15,174 $
1,446
440
17,060 $
17 $
232
25
229
608
1,111 $
702
51
1,864 $
5,070 $
4,327
1,596
997
4,295
16,285 $
2,148
491
18,924 $
4 $
(34)
—
16
(49)
(63) $
62
1
— $
5,074
4,293
1,596
1,013
4,246
16,222
2,210
492
18,924
$
$
$
$
$
$
__________
(a)
(b)
(c) Represents activities not allocated to a region. See text above for a description of included activities. Includes unrealized mark-to-market losses of $633 million, gains of $110 million and losses of $4 million for the years
Includes all wholesale and retail electric sales to third parties and affiliated sales to the Utility Registrants.
Includes revenues from derivatives and leases.
ended December 31, 2021, 2020, and 2019, respectively, and the elimination of intersegment revenues.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 5 — Segment Information
Revenues net of purchased power and fuel expense (Generation):
RNF from
external
customers
(a)
2021
Intersegment
RNF
Total
RNF
RNF from
external
customers
(a)
2020
Intersegment
RNF
Total
RNF
RNF from
external
customers
(a)
2019
Intersegment
RNF
Mid-Atlantic
Midwest
New York
ERCOT
Other Power Regions
Total RNF for Reportable
Segments
Other
(b)
Total Generation RNF
$
$
$
2,247
2,717
1,151
(668)
984
6,431
1,055
7,486
$
$
$
17
—
10
(157)
(93)
(223)
223
—
$
$
$
2,264
2,717
1,161
(825)
891
6,208
1,278
7,486
$
$
$
2,174
2,902
983
407
759
7,225
793
8,018
$
$
$
30
—
14
19
(94)
(31)
31
—
$
$
$
2,204
2,902
997
426
665
7,194
824
8,018
$
$
$
2,637
2,994
1,081
338
694
7,744
324
8,068
$
$
$
__________
(a)
(b) Other represents activities not allocated to a region. See text above for a description of included activities. Primarily includes:
Includes purchases and sales from/to third parties and affiliated sales to the Utility Registrants.
Total
RNF
2,655
2,962
1,094
308
620
7,639
429
8,068
18
(32)
13
(30)
(74)
(105)
105
—
$
$
$
•
•
•
unrealized mark-to-market gains of $565 million and $295 million and losses of $215 million for the years ended December 31, 2021, 2020, and 2019, respectively;
accelerated nuclear fuel amortization associated with the announced early plant retirements as discussed in Note 7 - Early Plant Retirements of $148 million, $60 million, and $13 million in for the years ended
December 31, 2021, 2020, and 2019, respectively; and
the elimination of intersegment RNF.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 5 — Segment Information
Electric and Gas Revenue by Customer Class (Utility Registrants):
Revenues from contracts with customers
Rate-regulated electric revenues
ComEd
PECO
BGE
2021
PHI
Pepco
DPL
ACE
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Other
Total rate-regulated electric revenues
(a)
(b)
Rate-regulated natural gas revenues
Residential
Small commercial & industrial
Large commercial & industrial
Transportation
(c)
Other
Total rate-regulated natural gas revenues
(d)
Total rate-regulated revenues from contracts with customers
Other revenues
Revenues from alternative revenue programs
Other rate-regulated electric revenues
Other rate-regulated natural gas revenues
(e)
(e)
Total other revenues
Total rate-regulated revenues for reportable segments
1,375
267
459
27
371
2,499
518
83
147
—
68
816
3,315
12
11
3
26
3,341
$
$
$
$
$
$
$
$
2,441
521
1,123
58
634
4,777
97
42
7
14
8
168
4,945
91
5
—
96
5,041
$
$
$
$
$
$
$
$
1,003
135
844
31
205
2,218
—
—
—
—
—
—
2,218
53
3
—
56
2,274
$
$
$
$
$
$
$
$
694
193
94
14
201
1,196
97
42
7
14
8
168
1,364
14
2
—
16
1,380
$
$
$
$
$
$
$
$
744
193
185
13
229
1,364
—
—
—
—
—
—
1,364
24
—
—
24
1,388
$
$
$
$
$
$
$
$
3,233
1,571
559
45
926
6,334
—
—
—
—
—
—
6,334
42
30
—
72
6,406
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,704
422
243
31
229
2,629
372
136
—
24
7
539
3,168
26
4
—
30
3,198
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 5 — Segment Information
Revenues from contracts with customers
Rate-regulated electric revenues
ComEd
PECO
BGE
2020
PHI
Pepco
DPL
ACE
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Other
Total rate-regulated electric revenues
(a)
(b)
Rate-regulated natural gas revenues
Residential
Small commercial & industrial
Large commercial & industrial
Transportation
(c)
Other
Total rate-regulated natural gas revenues
(d)
Total rate-regulated revenues from contracts with customers
Other revenues
Revenues from alternative revenue programs
Other rate-regulated electric revenues
Other rate-regulated natural gas revenues
(e)
(e)
Total other revenues
Total rate-regulated revenues for reportable segments
1,345
241
406
27
309
2,328
504
79
135
—
29
747
3,075
16
5
2
23
3,098
$
$
$
$
$
$
$
$
2,332
472
1,001
60
613
4,478
96
42
4
14
6
162
4,640
21
2
—
23
4,663
$
$
$
$
$
$
$
$
988
132
736
34
218
2,108
—
—
—
—
—
—
2,108
40
1
—
41
2,149
$
$
$
$
$
$
$
$
652
171
89
13
190
1,115
96
42
4
14
6
162
1,277
(7)
1
—
(6)
1,271
$
$
$
$
$
$
$
$
692
169
176
13
207
1,257
—
—
—
—
—
—
1,257
(12)
—
—
(12)
1,245
$
$
$
$
$
$
$
$
3,090
1,399
515
45
884
5,933
—
—
—
—
—
—
5,933
(47)
18
—
(29)
5,904
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1,656
386
228
29
225
2,524
361
126
—
24
4
515
3,039
16
3
—
19
3,058
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Revenues from contracts with customers
Rate-regulated electric revenues
Residential
Small commercial & industrial
Large commercial & industrial
Public authorities & electric railroads
Other
Total rate-regulated electric revenues
(a)
(b)
Rate-regulated natural gas revenues
Residential
Small commercial & industrial
Large commercial & industrial
Transportation
(c)
Other
Total rate-regulated natural gas revenues
(d)
Total rate-regulated revenues from contracts with customers
Other revenues
Revenues from alternative revenue programs
Other rate-regulated electric revenues
Other rate-regulated natural gas revenues
(e)
(e)
Total other revenues
Total rate-regulated revenues for reportable segments
Note 5 — Segment Information
ComEd
PECO
BGE
2019
PHI
Pepco
DPL
ACE
$
$
$
$
$
$
$
$
2,916
1,463
540
47
888
5,854
—
—
—
—
—
—
5,854
(133)
26
—
(107)
5,747
$
$
$
$
$
$
$
$
1,596
404
219
29
249
2,497
409
169
1
25
6
610
3,107
(21)
13
1
(7)
3,100
$
$
$
$
$
$
$
$
1,326
254
436
27
321
2,364
474
77
132
—
31
714
3,078
12
12
4
28
3,106
$
$
$
$
$
$
$
$
2,316
505
1,112
61
650
4,644
96
44
5
14
7
166
4,810
(14)
10
—
(4)
4,806
$
$
$
$
$
$
$
$
1,012
149
833
34
227
2,255
—
—
—
—
—
—
2,255
(3)
8
—
5
2,260
$
$
$
$
$
$
$
$
645
186
99
14
204
1,148
96
45
5
14
7
167
1,315
(11)
2
—
(9)
1,306
$
$
$
$
$
$
$
$
659
170
180
13
218
1,240
—
—
—
—
—
—
1,240
—
—
—
—
1,240
__________
(a)
(b)
Includes revenues from transmission revenue from PJM, wholesale electric revenue and mutual assistance revenue.
Includes operating revenues from affiliates in 2021, 2020, and 2019 respectively of:
•
•
•
•
•
•
•
$41 million, $37 million, and $30 million at ComEd
$20 million, $8 million, and $5 million at PECO
$13 million, $10 million, and $8 million at BGE
$13 million, $17 million, and $14 million at PHI
$5 million, $7 million, and $5 million at Pepco
$7 million, $9 million, and $7 million at DPL
$2 million, $4 million, and $3 million at ACE
Includes revenues from off-system natural gas sales.
Includes operating revenues from affiliates in 2021, 2020, and 2019 respectively of:
(c)
(d)
•
•
$1 million, $1 million, and $1 million at PECO
$18 million, $10 million, and $18 million at BGE
(e)
Includes late payment charge revenues.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 6 — Accounts Receivable
6. Accounts Receivable (All Registrants)
Allowance for Credit Losses on Accounts Receivable (All Registrants)
The following tables present the rollforward of Allowance for Credit Losses on Customer Accounts Receivable.
Balance as of December 31, 2020
Plus: Current period provision for expected credit losses
Less: Write-offs, net of recoveries
(b)(c)
(a)
Balance as of December 31, 2021
Balance as of December 31, 2019
Plus: Current period provision for expected credit losses
Less: Write-offs, net of recoveries
Less: Sale of customer accounts receivable
(e)
(c)
(d)
Balance as of December 31, 2020
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Year Ended December 31, 2021
366 $
126
117
375 $
97 $
21
45
73 $
116 $
23
34
105 $
35 $
15
12
38 $
86 $
37
19
104 $
32 $
13
8
37 $
22 $
6
10
18 $
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Year Ended December 31, 2020
243 $
248
69
56
366 $
59 $
62
24
—
97 $
55 $
79
18
—
116 $
12 $
30
7
—
35 $
37 $
64
15
—
86 $
13 $
24
5
—
32 $
11 $
15
4
—
22 $
32
18
1
49
13
25
6
—
32
$
$
$
$
_________
(a) For Exelon, the increase primarily relates to the impacts of the February 2021 extreme cold weather event. See Note 3 — Regulatory Matters for additional information. For the Utility Registrants, the increase is primarily a
result of increased aging of receivables.
(b) For ComEd, PECO and DPL, the increase in 2021 is primarily related to the termination of the moratorium which, beginning in March 2020, prevented customer disconnections for non-payment. With disconnection
activities restarting in 2021, write-offs of aging accounts receivable increased throughout the year.
(c) Recoveries were not material to the Registrants.
(d) The increase is primarily as a result of increased aging of receivables, the temporary suspension of customer disconnections for non-payment, temporary cessation of new late payment fees, and reconnection of service to
customers previously disconnected due to COVID-19.
(e) See below for additional information on the sale of customer accounts receivable in the second quarter of 2020.
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 6 — Accounts Receivable
The following tables present the rollforward of Allowance for Credit Losses on Other Accounts Receivable.
Balance as of December 31, 2020
Plus: Current period provision for expected credit losses
Less: Write-offs, net of recoveries
(a)
Balance as of December 31, 2021
Balance as of December 31, 2019
Plus: Current period provision for expected credit losses
Less: Write-offs, net of recoveries
(a)
Balance as of December 31, 2020
_________
(a) Recoveries were not material to the Registrants.
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Year Ended December 31, 2021
71 $
15
10
76 $
21 $
(2)
2
17 $
8 $
3
4
7 $
9 $
4
4
9 $
33 $
6
—
39 $
13 $
3
—
16 $
9 $
(1)
—
8 $
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Year Ended December 31, 2020
48 $
33
10
71 $
20 $
5
4
21 $
7 $
3
2
8 $
5 $
7
3
9 $
16 $
18
1
33 $
7 $
6
—
13 $
4 $
5
—
9 $
11
4
—
15
5
7
1
11
$
$
$
$
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 6 — Accounts Receivable
Unbilled Customer Revenue (All Registrants)
The following table provides additional information about unbilled customer revenues recorded in the Registrants' Consolidated Balance Sheets as of December 31, 2021 and 2020.
December 31, 2021
December 31, 2020
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
1,120 $
998
240 $
218
161 $
147
171 $
197
175 $
178
82 $
87
53 $
62
40
29
Unbilled customer revenues
(a)
_________
(a) Unbilled customer revenues are classified in Customer accounts receivables, net in the Registrants' Consolidated Balance Sheets.
Sales of Customer Accounts Receivable (Exelon)
On April 8, 2020, NER, a bankruptcy remote, special purpose entity, which is wholly-owned by Generation, entered into a revolving accounts receivable financing arrangement with a number of
financial institutions and a commercial paper conduit (the Purchasers) to sell certain customer accounts receivable (the Facility). The Facility had a maximum funding limit of $750 million and was
scheduled to expire on April 7, 2021, unless renewed by the mutual consent of the parties in accordance with its terms. The Facility was renewed on March 29, 2021. The Facility term was extended
through March 29, 2024, unless further renewed by the mutual consent of the parties, and the maximum funding limit was increased to $900 million. Under the Facility, NER may sell eligible short-term
customer accounts receivable to the Purchasers in exchange for cash and subordinated interest. The transfers are reported as sales of receivables in Exelon’s consolidated financial statements. The
subordinated interest in collections upon the receivables sold to the Purchasers is referred to as the DPP, which is reflected in Other current assets in Exelon’s Consolidated Balance Sheets.
The Facility requires the balance of eligible receivables to be maintained at or above the balance of cash proceeds received from the Purchasers. To the extent the eligible receivables decrease below
such balance, Generation is required to repay cash to the Purchasers. When eligible receivables exceed cash proceeds, Generation has the ability to increase the cash received up to the maximum
funding limit. These cash inflows and outflows impact the DPP.
On April 8, 2020, Exelon derecognized and transferred approximately $1.2 billion of receivables at fair value to the Purchasers in exchange for approximately $500 million in cash purchase price and
$650 million of DPP.
During the first quarter of 2021, Exelon received additional cash of $250 million from the Purchasers for the remaining available funding in the Facility.
Additionally, during the first quarter of 2021, Exelon received cash of approximately $150 million from the Purchasers in connection with the increased funding limit at the time of the Facility renewal.
During the second quarter of 2021, Exelon returned cash of $50 million to the Purchasers due to the eligible receivables decreasing temporarily. Subsequently, in the second quarter, Exelon received
cash of $50 million from the Purchasers as a result of an increase in the eligible receivable balance. The $50 million cash outflow and inflow is included in the Collection of DPP line in Cash flows from
investing activities in Exelon’s Consolidated Statement of Cash Flows.
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
The following table summarizes the impact of the sale of certain receivables:
Derecognized receivables transferred at fair value
Cash proceeds received
DPP
Loss on sale of receivables
(a)
$
$
2021
2021
_________
(a) Reflected in Operating and maintenance expense in Exelon's Consolidated Statements of Operations and Comprehensive Income.
Proceeds from new transfers
Cash collections received on DPP and reinvested in the Facility
Cash collections reinvested in the Facility
(a)
(b)
$
2021
Note 6 — Accounts Receivable
As of December 31,
1,265 $
900
365
For the Year Ended December 31,
36 $
For the Year Ended December 31,
6,095 $
3,502
9,597
2020
2020
2020
1,139
500
639
30
2,816
3,771
6,587
_________
(a) Customer accounts receivable sold into the Facility were $9,747 million and $6,608 million for the years ended December 31, 2021 and December 31, 2020, respectively.
(b) Does not include the $400 million in cash proceeds received from the Purchasers in the first quarter of 2021.
The risk of loss following the transfer of accounts receivable is limited to the DPP outstanding. Payment of DPP is not subject to significant risks other than delinquencies and credit losses on accounts
receivable transferred, which have historically been and are expected to be immaterial. Generation continues to service the receivables sold in exchange for a servicing fee. Exelon did not record a
servicing asset or liability as the servicing fees were immaterial.
Exelon recognizes the cash proceeds received upon sale in Net cash provided by operating activities in the Consolidated Statements of Cash Flows. The collection and reinvestment of DPP is
recognized in Net cash provided by investing activities in the Consolidated Statements of Cash Flows.
See Note 18 — Fair Value of Financial Assets and Liabilities and Note 23 — Variable Interest Entities for additional information.
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 6 — Accounts Receivable
Other Purchases and Sales of Customer and Other Accounts Receivables (All Registrants)
The Utility Registrants are required, under separate legislation and regulations in Illinois, Pennsylvania, Maryland, District of Columbia, and New Jersey, to purchase certain receivables from alternative
retail electric and, as applicable, natural gas suppliers that participate in the utilities' consolidated billing. Generation is required, under supplier tariffs in ISO-NE, MISO, NYISO, and PJM, to sell
customer and other receivables to utility companies, which include the Utility Registrants. The other purchases and sales of customer and other accounts receivable activity related to Generation is
eliminated upon consolidation in Exelon's Consolidated Financial Statements. The following tables present the total receivables purchased and sold.
Total receivables purchased
Total receivables sold
Related party transactions:
Receivables purchased from Generation
Total receivables purchased
Total receivables sold
Related party transactions:
$
$
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
3,817 $
124
1,031 $
—
1,041 $
—
687 $
—
1,081 $
—
660 $
—
217 $
—
204
—
Year Ended December 31, 2021
—
1
1
21
—
—
—
—
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
3,529 $
572
1,094 $
—
1,020 $
—
652 $
—
1,015 $
—
622 $
—
207 $
—
186
—
Year Ended December 31, 2020
Receivables purchased from Generation
—
34
67
79
72
51
13
8
7. Early Plant Retirements (Exelon)
Nuclear Generation
On August 27, 2020, Generation announced that it intended to permanently cease generation operations at Byron in September 2021 and at Dresden in November 2021. Neither of these nuclear
plants cleared in PJM’s capacity auction for the 2022-2023 planning year held in May 2021. Generation’s Braidwood and LaSalle nuclear plants in Illinois did clear in the capacity auction, but were also
showing increased signs of economic distress.
On September 15, 2021, the Illinois Public Act 102-0662 was signed into law by the Governor of Illinois (“Clean Energy Law”). The Clean Energy Law is designed to achieve 100% carbon-free power
by 2045 to enable the state’s transition to a clean energy economy. Among other things, the Clean Energy Law authorized the IPA to procure up to 54.5 million CMCs from qualifying nuclear plants for
a five-year period beginning on June 1, 2022 through May 31, 2027. CMCs are credits for the carbon-free attributes of eligible nuclear power plants in PJM. The Byron, Dresden, and Braidwood
nuclear plants located in Illinois participated in the CMC procurement process and were awarded contracts that commit each plant to operate through May 31, 2027. See Note 3 — Regulatory Matters
for additional information. Following enactment of the legislation, Generation announced on September 15, 2021, that it has reversed the previous decision to retire Byron and Dresden given the
opportunity for additional revenue under the Clean Energy Law. In addition, Generation no longer considers the Braidwood or LaSalle nuclear plants to be at risk for premature retirement.
As a result of the decision to early retire Byron and Dresden, Exelon recognized certain one-time charges in the third and fourth quarters of 2020 related to materials and supplies inventory reserve
adjustments, employee-related costs including severance benefit costs, and construction work-in-progress impairments, among other items. In addition, there were ongoing annual financial impacts
stemming from shortening the expected economic useful lives of these nuclear plants primarily related to accelerated depreciation of plant assets (including any
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(Dollars in millions, except per share data unless otherwise noted)
Note 7 — Early Plant Retirements
ARC), accelerated amortization of nuclear fuel, and changes in ARO accretion expense associated with the changes in decommissioning timing and cost assumptions to reflect an earlier retirement
date.
In the third quarter of 2021, Exelon reversed $81 million of severance benefit costs and $13 million of other one-time charges initially recorded in Operating and maintenance expense in the third and
fourth quarters of 2020 associated with the early retirements. In addition, the expected economic useful life for both facilities was updated to 2044 and 2046 for Byron Units 1 and 2, respectively, and to
2029 and 2031 for Dresden Units 2 and 3, respectively, the end of the respective NRC operating license for each unit. Depreciation was therefore adjusted beginning September 15, 2021, to reflect
these extended useful life estimates. See Note 10 — Asset Retirement Obligations for additional detail on changes to the nuclear decommissioning ARO balances resulting from the initial decision and
subsequent reversal of the decision to early retire Byron and Dresden.
In Pennsylvania, the TMI nuclear plant did not clear in the May 2017 PJM capacity auction for the 2020-2021 planning year, the third consecutive year that TMI failed to clear the PJM base residual
capacity auction and on May 30, 2017, based on these capacity auction results, prolonged periods of low wholesale power prices, and the absence of federal or state policies, Generation announced
that it would permanently cease generation operations at TMI. On September 20, 2019, TMI permanently ceased generation operations.
The total impact for the years ended December 31, 2021, 2020, and 2019 in Exelon's Consolidated Statements of Operations and Comprehensive Income resulting from the initial decision and
subsequent reversal of the decision to early retire Byron and Dresden, and decision to early retire TMI is summarized in the table below.
Income statement expense (pre-tax)
2021
(a)
2020
(a)
2019
(b)
Depreciation and amortization
(c)
Accelerated depreciation
Accelerated nuclear fuel amortization
Operating and maintenance
One-time charges
Other charges
Contractual offset
(d)
(e)
Total
$
$
1,805 $
148
(94)
9
(451)
1,417 $
895 $
60
255
34
(364)
880 $
216
13
—
(53)
—
176
Includes the accelerated depreciation of plant assets including any ARC.
_________
(a) Reflects expense for Byron and Dresden.
(b) Reflects expense for TMI.
(c)
(d) For 2020 and 2019, reflects the net impacts associated with the remeasurement of the ARO. See Note 10 – Asset Retirement Obligations for additional information.
(e) Reflects contractual offset for ARO accretion, ARC depreciation, ARO remeasurement, and excludes any changes in earnings in the NDT funds. Decommissioning-related impacts were not offset for the Byron units
starting in the second quarter of 2021 due to the inability to recognize a regulatory asset at ComEd. With the September 15, 2021 reversal of the previous decision to retire Byron, Generation resumed contractual offset for
Byron as of that date. Based on the regulatory agreement with the ICC, decommissioning-related activities are offset in Exelon's Consolidated Statements of Operations and Comprehensive Income as long as the net
cumulative decommissioning-related activities result in a regulatory liability at ComEd. The offset resulted in an equal adjustment to the regulatory liabilities at ComEd. See Note 10 — Asset Retirement Obligations for
additional information.
Other Generation
In March 2018, Generation notified ISO-NE of its plans to early retire, among other assets, the Mystic Generating Station's units 8 and 9 (Mystic 8 and 9) absent regulatory reforms to properly value
reliability and regional fuel security. Thereafter, ISO-NE identified Mystic 8 and 9 as being needed to ensure fuel security for the region and entered into a cost of service agreement with these two units
for the period between June 1, 2022 - May 31, 2024. The agreement was approved by the FERC in December 2018.
On June 10, 2020, Generation filed a complaint with FERC against ISO-NE stating that ISO-NE failed to follow its tariff with respect to its evaluation of Mystic 8 and 9 for transmission security for the
2024 to 2025 Capacity Commitment Period and that the modifications that ISO-NE made to its unfiled planning procedures to avoid
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(Dollars in millions, except per share data unless otherwise noted)
Note 7 — Early Plant Retirements
retaining Mystic 8 and 9 should have been filed with FERC for approval. On August 17, 2020, FERC issued an order denying the complaint. As a result, on August 20, 2020, Generation announced it
will permanently cease generation operations at Mystic 8 and 9 at the expiration of the cost of service commitment in May 2024.
As a result of the decision to early retire Mystic 8 and 9, Exelon recognized $22 million of one-time charges for the year ended December 31, 2020, related to materials and supplies inventory reserve
adjustments, among other items. In addition, there are annual financial impacts stemming from shortening the expected economic useful life of Mystic 8 and 9 primarily related to accelerated
depreciation of plant assets. Exelon recorded incremental Depreciation and amortization expense of $41 million and $26 million for the years ended December 31, 2021 and 2020, respectively. See
Note 12 — Asset Impairments for impairment assessment considerations of the New England Asset Group.
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(Dollars in millions, except per share data unless otherwise noted)
Note 8 — Property, Plant, and Equipment
8. Property, Plant, and Equipment (All Registrants)
The following tables present a summary of property, plant, and equipment by asset category as of December 31, 2021 and 2020:
Asset Category
December 31, 2021
Exelon
(a)
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Electric—transmission and distribution
$
64,771
$
31,077
$
10,076
$
9,352
$
16,062
$
10,798
$
4,957
$
4,882
Electric—generation
Gas—transportation and distribution
Common—electric and gas
(b)
Nuclear fuel
Construction work in progress
Other property, plant, and equipment
(c)
Total property, plant, and equipment
Less: accumulated depreciation
(d)
Property, plant, and equipment, net
December 31, 2020
Electric—transmission and distribution
Electric—generation
Gas—transportation and distribution
Common—electric and gas
(b)
Nuclear fuel
Construction work in progress
Other property, plant and equipment
(c)
Total property, plant and equipment
Less: accumulated depreciation
(d)
Property, plant, and equipment, net
29,912
7,429
2,335
5,166
4,097
827
114,537
30,318
—
—
—
—
918
99
32,094
6,099
—
3,339
1,005
—
620
41
15,081
3,964
—
3,712
1,224
—
554
34
14,876
4,299
—
646
201
—
1,590
107
18,606
2,108
—
—
—
—
1,118
63
11,979
3,875
—
806
180
—
229
23
6,195
1,635
84,219
$
25,995
$
11,117
$
10,577
$
16,498
$
8,104
$
4,560
$
—
—
—
—
242
25
5,149
1,420
3,729
60,946
$
29,371
$
9,462
$
8,797
$
15,137
$
10,264
$
4,730
$
4,568
$
$
29,725
6,733
2,170
5,399
3,576
762
109,311
26,727
—
—
—
—
799
59
30,229
5,672
—
3,098
956
—
474
34
14,024
3,843
—
3,315
1,138
—
627
29
13,906
4,034
—
591
178
—
1,174
108
17,188
1,811
—
—
—
—
824
65
11,153
3,697
—
751
180
—
163
23
5,847
1,533
$
82,584
$
24,557
$
10,181
$
9,872
$
15,377
$
7,456
$
4,314
$
—
—
—
—
182
28
4,778
1,303
3,475
__________
(a) As of December 31, 2021, includes $19,612 million of Property, plant, and equipment, net related to Generation.
(b)
(c) Primarily composed of land and non-utility property.
(d) At Exelon, includes accumulated amortization of nuclear fuel in the reactor core of $2,765 million and $2,774 million as of December 31, 2021 and 2020, respectively.
Includes nuclear fuel that is in the fabrication and installation phase of $859 million and $939 million as of December 31, 2021 and 2020, respectively.
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(Dollars in millions, except per share data unless otherwise noted)
Note 8 — Property, Plant, and Equipment
The following table presents the average service life for each asset category in number of years:
Asset Category
Electric - transmission and distribution
Electric - generation
Gas - transportation and distribution
Common - electric and gas
Nuclear fuel
Other property, plant, and equipment
Average Service Life (years)
Exelon
ComEd
PECO
5-80
1-52
5-80
4-75
1-8
1-61
5-80
N/A
N/A
N/A
N/A
32-50
5-70
N/A
5-70
5-55
N/A
50
BGE
5-80
N/A
5-80
4-50
N/A
20-50
PHI
5-75
N/A
5-75
5-75
N/A
3-50
Pepco
5-75
N/A
N/A
N/A
N/A
33-50
DPL
5-70
N/A
5-75
5-75
N/A
8-50
ACE
5-65
N/A
N/A
N/A
N/A
13-15
Depreciation provisions are based on the estimated useful lives of the stations, which corresponds with the term of the NRC operating licenses for the nuclear units. Beginning August 2020, Byron,
Dresden, and Mystic depreciation provisions were based on their announced shutdown dates of September 2021, November 2021, and May 2024, respectively. On September 15, 2021, Generation
updated the expected useful lives for Byron and Dresden to reflect the end of the available NRC operating license for each unit. See Note 3 — Regulatory Matters for additional information regarding
license renewal and Note 7 — Early Plant Retirements for additional information on the impacts related to Byron, Dresden, and Mystic.
The following table presents the annual depreciation rates for each asset category. Nuclear fuel amortization is charged to fuel expense using the unit-of-production method and not included in the
below table.
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Annual Depreciation Rates
December 31, 2021
Electric—transmission and distribution
Electric—generation
Gas—transportation and distribution
Common—electric and gas
December 31, 2020
Electric—transmission and distribution
Electric—generation
Gas—transportation and distribution
Common—electric and gas
December 31, 2019
Electric—transmission and distribution
Electric—generation
Gas—transportation and distribution
Common—electric and gas
2.28 %
N/A
1.84 %
6.34 %
2.31 %
N/A
1.85 %
6.39 %
2.36 %
N/A
1.89 %
6.06 %
2.80 %
N/A
2.54 %
7.88 %
2.69 %
N/A
2.56 %
7.45 %
2.60 %
N/A
2.30 %
8.30 %
2.87 %
N/A
1.47 %
8.33 %
2.81 %
N/A
1.50 %
7.36 %
2.77 %
N/A
1.55 %
8.25 %
2.56 %
N/A
N/A
N/A
2.53 %
N/A
N/A
N/A
2.47 %
N/A
N/A
N/A
2.86 %
N/A
1.47 %
8.69 %
2.85 %
N/A
1.50 %
6.72 %
2.86 %
N/A
1.55 %
6.24 %
3.21 %
N/A
N/A
N/A
3.08 %
N/A
N/A
N/A
2.94 %
N/A
N/A
N/A
2.81 %
8.67 %
2.13 %
7.31 %
2.79 %
6.11 %
2.14 %
7.01 %
2.80 %
4.35 %
2.04 %
7.37 %
2.94 %
N/A
N/A
N/A
2.95 %
N/A
N/A
N/A
2.99 %
N/A
N/A
N/A
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 8 — Property, Plant, and Equipment
Capitalized Interest and AFUDC
The following table summarizes capitalized interest and credits to AFUDC by year:
December 31, 2021
Capitalized interest
AFUDC debt and equity
December 31, 2020
Capitalized interest
AFUDC debt and equity
December 31, 2019
Capitalized interest
AFUDC debt and equity
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
$
$
16
$
189
22
$
150
24
$
132
$
$
$
—
47
—
42
—
32
$
$
$
—
34
—
23
—
17
$
$
$
—
36
—
30
—
29
$
$
$
—
72
—
55
—
54
$
$
$
—
59
—
42
—
39
$
$
$
—
8
—
6
—
6
—
5
—
7
—
9
See Note 1 — Significant Accounting Policies for additional information regarding property, plant and equipment policies. See Note 17 — Debt and Credit Agreements for additional information
regarding Exelon’s, ComEd’s, PECO's, Pepco's, DPL's, and ACE’s property, plant and equipment subject to mortgage liens.
9. Jointly Owned Electric Utility Plant (Exelon, PECO, DPL, and ACE)
Exelon's, PECO's, DPL's, and ACE's material undivided ownership interests in jointly owned electric plants and transmission facilities as of December 31, 2021 and 2020 were as follows:
Operator
Ownership interest
Exelon’s share as of December 31, 2021:
Plant in service
Accumulated depreciation
Construction work in progress
Exelon’s share as of December 31, 2020:
Plant in service
Accumulated depreciation
Construction work in progress
Nuclear Generation
Transmission
Quad Cities
Peach
Bottom
Generation
Generation
Salem
PSEG
Nuclear
Nine Mile Point Unit 2
NJ/DE
(a)
Generation
PSEG/DPL
75.00 %
50.00 %
42.59 %
82.00 %
various
$
$
$
$
1,211
715
11
1,188
670
13
$
$
1,515
628
12
1,506
601
13
$
$
756
299
20
717
265
39
$
$
1,002
222
41
990
187
25
103
55
—
103
54
—
__________
(a) PECO, DPL, and ACE own a 42.55%, 1%, and 13.9% share, respectively in 151.3 miles of 500kV lines located in New Jersey and of the Salem generating plant substation. PECO, DPL, and ACE also own a 42.55%,
7.45%, and 7.45% share, respectively, in 2.5 miles of 500kV line located over the Delaware River. ACE also has a 21.78% share in a 500kV New Freedom Switching substation.
Exelon’s, PECO's, DPL's, and ACE's undivided ownership interests are financed with their funds and all operations are accounted for as if such participating interests were wholly owned facilities.
Exelon’s, PECO's, DPL's, and ACE's share of direct expenses of the jointly owned plants are included in Purchased power and fuel and Operating and maintenance expenses in Exelon’s Consolidated
Statements of Operations and Comprehensive Income and in Operating and maintenance expenses in PECO's, PHI's, DPL's, and ACE's Consolidated Statements of Operations and Comprehensive
Income.
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(Dollars in millions, except per share data unless otherwise noted)
Note 10 — Asset Retirement Obligations
10. Asset Retirement Obligations (All Registrants)
Nuclear Decommissioning Asset Retirement Obligations (Exelon)
Generation has a legal obligation to decommission its nuclear power plants following permanent cessation of operations. To estimate its decommissioning obligations related to its nuclear generating
stations for financial accounting and reporting purposes, Generation uses a probability-weighted, discounted cash flow model which, on a unit-by-unit basis, considers multiple outcome scenarios that
include significant estimates and assumptions, and are based on decommissioning cost studies, cost escalation rates, probabilistic cash flow models, and discount rates. Generation updates its AROs
annually, unless circumstances warrant more frequent updates, based on its review of updated cost studies and its annual evaluation of cost escalation factors and probabilities assigned to various
scenarios. Generation began decommissioning the TMI nuclear plant upon permanently ceasing operations in 2019. See below section for decommissioning of Zion Station.
The financial statement impact for changes in the ARO, on an individual unit basis, due to the changes in and timing of estimated cash flows generally result in a corresponding change in the unit’s
ARC in Property, plant, and equipment in Exelon’s Consolidated Balance Sheets. If the ARO decreases for a Non-Regulatory Agreement unit without any remaining ARC, the corresponding change is
recorded as a decrease in Operating and maintenance expense in Exelon’s Consolidated Statements of Operations and Comprehensive Income.
The following table provides a rollforward of the nuclear decommissioning AROs reflected in Exelon’s Consolidated Balance Sheets from December 31, 2019 to December 31, 2021:
Nuclear decommissioning AROs as of December 31, 2019
Net increase due to changes in, and timing of, estimated future cash flows
Accretion expense
Costs incurred related to decommissioning plants
Nuclear decommissioning AROs as of December 31, 2020
(a)
Net increase due to changes in, and timing of, estimated future cash flows
Accretion expense
Costs incurred related to decommissioning plants
Nuclear decommissioning AROs as of December 31, 2021
(a)
$
$
10,504
1,022
489
(93)
11,922
324
503
(73)
12,676
__________
(a)
Includes $72 million and $80 million as the current portion of the ARO as of December 31, 2021 and 2020, respectively, which is included in Other current liabilities in Exelon’s Consolidated Balance Sheets.
The net $324 million increase in the ARO during 2021 for changes in the amounts and timing of estimated decommissioning cash flows was driven by multiple adjustments throughout the year. These
adjustments primarily include:
•
•
•
•
An increase of approximately $550 million for updated cost escalation rates, primarily for labor and energy, and a decrease in discount rates.
An increase of approximately $90 million due to revisions to assumed retirement dates for several nuclear plants.
A net decrease of approximately $170 million was driven by updates to Byron and Dresden reflecting changes in assumed retirement dates and assumed methods of decommissioning as a
result of the reversal of the decision to early retire the plants. See Note 7 — Early Plant Retirements for additional information.
A net decrease of approximately $150 million due to lower estimated decommissioning costs resulting from the completion of updated cost studies for seven nuclear plants.
The 2021 ARO updates resulted in a decrease of $51 million in Operating and maintenance expense for the year ended December 31, 2021 in Exelon's Consolidated Statement of Operations and
Comprehensive Income.
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(Dollars in millions, except per share data unless otherwise noted)
Note 10 — Asset Retirement Obligations
The net $1,022 million increase in the ARO during 2020 for changes in the amounts and timing of estimated decommissioning cash flows was driven by multiple adjustments throughout the year. These
adjustments primarily include:
•
•
•
A net increase of approximately $800 million was driven by updates to Byron and Dresden reflecting changes in assumed retirement dates and assumed methods of decommissioning as a
result of the announcement to early retire these plants in 2021. Refer to Note 7 — Early Plant Retirements for additional information.
An increase of approximately $360 million resulting from the change in the assumed DOE spent fuel acceptance date for disposal from 2030 to 2035.
A decrease of approximately $220 million due to lower estimated decommissioning costs resulting from the completion of updated cost studies primarily for two nuclear plants.
The 2020 ARO updates resulted in an increase of $60 million in Operating and maintenance expense for the year ended December 31, 2020 in Exelon's Consolidated Statement of Operations and
Comprehensive Income.
NDT Funds
NDT funds have been established for each generation station nuclear unit to satisfy Generation’s nuclear decommissioning obligations, as required by the NRC, and withdrawals from these funds for
reasons other than to pay for decommissioning are restricted pursuant to NRC requirements until all decommissioning activities have been completed. Generally, NDT funds established for a particular
unit may not be used to fund the decommissioning obligations of any other unit.
The NDT funds associated with Generation's nuclear units have been funded with amounts collected from the previous owners and their respective utility customers. PECO is authorized to collect
funds, in revenues, through regulated rates for decommissioning the former PECO nuclear plants, and these collections are scheduled through the operating lives of these former PECO plants. The
amounts collected from PECO customers are remitted to Generation and deposited into the NDT funds for the unit for which funds are collected. Every five years, PECO files a rate adjustment with the
PAPUC that reflects PECO’s calculations of the estimated amount needed to decommission each of the former PECO units based on updated fund balances and estimated decommissioning costs.
The rate adjustment is used to determine the amount collectible from PECO customers. On March 31, 2017, PECO filed its Nuclear Decommissioning Cost Adjustment with the PAPUC proposing an
annual recovery from customers of approximately $4 million. On August 8, 2017, the PAPUC approved the filing and the new rates became effective January 1, 2018.
Any shortfall of funds necessary for decommissioning, determined for each generating station unit, are generally required to be funded by Generation, with the exception of a shortfall for the current
decommissioning activities at Zion Station, where certain decommissioning activities have been transferred to a third-party (see Zion Station Decommissioning below) and the former PECO nuclear
plants where, through PECO, Generation has recourse to collect additional amounts from PECO customers related to a shortfall of NDT funds for those units, subject to certain limitations and
thresholds, as prescribed by an order from the PAPUC that limits collection of amounts associated with the first $50 million of any shortfall of trust funds compared to decommissioning costs, as well as
5% of any additional shortfalls, on an aggregate basis for all former PECO units. The initial $50 million and up to 5% of any additional shortfalls would be borne by Generation. No recourse exists to
collect additional amounts from utility customers for any of Generation's other nuclear units.
With respect to the former ComEd and former PECO units, any funds remaining in the NDTs after all decommissioning has been completed are required to be refunded to ComEd’s or PECO’s
customers, subject to certain limitations that allow sharing of excess funds with Generation related to the former PECO units. With respect to Generation's other nuclear units, Generation retains any
funds remaining after decommissioning. However, in connection with CENG's acquisition of the Nine Mile Point and Ginna plants and settlements with certain regulatory agencies, certain conditions
pertaining to NDT funds apply that, if met, could possibly result in obligations to make payments to certain third parties (clawbacks). For Nine Mile Point and Ginna, the clawback provisions are
triggered only in the event that the required decommissioning activities are discontinued or not started or completed in a timely manner. In the event that the clawback provisions are triggered for Nine
Mile Point, then, depending upon the triggering event, an amount equal to 50% of the total amount withdrawn from the funds for non-decommissioning activities as defined in the agreement or 50% of
any excess funds in the trust
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(Dollars in millions, except per share data unless otherwise noted)
Note 10 — Asset Retirement Obligations
funds above the amounts required for decommissioning (including SNF management and site restoration) is to be paid to the Nine Mile Point sellers. In the event that the clawback provisions are
triggered for Ginna, then an amount equal to any estimated cost savings realized by not completing any of the required decommissioning activities is to be paid to the Ginna sellers.
The key criteria and assumptions used by Generation to determine the ARO and to forecast the target growth in the NDT funds as of December 31, 2021 include: (1) the use of site specific cost
estimates that are updated at least once every five years; (2) the inclusion in the ARO estimate of all legally unavoidable costs required to decommission the unit (e.g., radiological decommissioning
and full site restoration for certain units, on-site SNF maintenance and storage subsequent to ceasing operations and until DOE acceptance, and disposal of certain LLRW); (3) as applicable, the
consideration of multiple scenarios where decommissioning and site restoration activities are completed under possible scenarios ranging from 10 to 70 years after the cessation of plant operations or
the end of the current licensed operating life; (4) the consideration of multiple end of life scenarios; (5) the measurement of the obligation at the present value of the future estimated costs and an
annual average accretion of the ARO of approximately 4% through a period of approximately 30 years after the end of the extended lives of the units; and (6) an estimated targeted annual pre-tax
return on the NDT funds of 5.5% to 6.3% (as compared to a historical 5-year annual average pre-tax return of approximately 10.2%).
As of December 31, 2021 and 2020, Exelon had NDT funds totaling $16,064 million and $14,599 million, respectively. The NDT funds also include $126 million and $134 million for the current portion
of the NDT funds as of December 31, 2021 and 2020, respectively, which are included in Other current assets in Exelon's Consolidated Balance Sheets. See Note 24 — Supplemental Financial
Information for additional information on activities of the NDT funds.
Accounting Implications of the Regulatory Agreements with ComEd and PECO
Based on the regulatory agreements with the ICC and PAPUC that dictate Generation’s obligations related to the shortfall or excess of NDT funds necessary for decommissioning the former ComEd
units on a unit-by-unit basis and the former PECO units in total, decommissioning-related activities net of applicable taxes, including realized and unrealized gains and losses on the NDT funds,
depreciation of the ARC, and accretion of the decommissioning obligation, are generally offset in Exelon’s Consolidated Statements of Operations and Comprehensive Income and are recorded by the
corresponding regulated utility as a component of the intercompany and regulatory balances in the balance sheet.
For the former PECO units, given the symmetric settlement provisions that allow for continued recovery of decommissioning costs from PECO customers in the event of a shortfall and the obligation for
Generation to ultimately return excess funds to PECO customers (on an aggregate basis for all seven units), decommissioning-related activities are generally offset in Exelon’s Consolidated
Statements of Operations and Comprehensive Income regardless of whether the NDT funds are expected to exceed or fall short of the total estimated decommissioning obligation. The offset of
decommissioning-related activities in the Consolidated Statement of Operations and Comprehensive Income results in an adjustment to the regulatory liabilities or regulatory assets and an equal
noncurrent affiliate receivable from or payable to Generation at PECO.
For the former ComEd units, given no further recovery from ComEd customers is permitted and Generation retains an obligation to ultimately return any unused NDTs to ComEd customers (on a unit-
by-unit basis), to the extent the related NDT investment balances are expected to exceed the total estimated decommissioning obligation for each unit, decommissioning-related activities are offset in
the Consolidated Statements of Operations and Comprehensive Income which results in an adjustment to the regulatory liabilities and noncurrent receivables from Generation at ComEd. However,
given the asymmetric settlement provision that does not allow for continued recovery from ComEd customers in the event of a shortfall, recognition of a regulatory asset at ComEd is not permissible
and accounting for decommissioning-related activities for that unit would not be offset. During the second and third quarter of 2021, a pre-tax charge of $53 million and $140 million, respectively, was
recorded in Exelon’s Consolidated Statement of Operations and Comprehensive Income for decommissioning-related activities that were not offset for the Byron units due to contractual offset being
temporarily suspended. With Generation’s September 15, 2021 reversal of the previous decision to retire Byron and the corresponding adjustment to the ARO for Byron discussed previously,
Generation resumed contractual offset for Byron as of that date.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 10 — Asset Retirement Obligations
As of December 31, 2021, decommissioning-related activities for all of the former ComEd units, except for Zion (see Zion Station Decommissioning below), are currently offset in Exelon’s Consolidated
Statements of Operations and Comprehensive Income.
The decommissioning-related activities related to the Non-Regulatory Agreement Units are reflected in Exelon’s Consolidated Statements of Operations and Comprehensive Income.
See Note 3 — Regulatory Matters for additional information regarding regulatory liabilities at ComEd and PECO.
Zion Station Decommissioning
In 2010, Generation completed an ASA under which ZionSolutions assumed responsibility for decommissioning Zion Station and Generation transferred to ZionSolutions substantially all the Zion
Station’s assets, including the related NDT funds. Following ZionSolutions' completion of its contractual obligations and transfer of the NRC license back to Generation, Generation will store the SNF at
Zion Station until it is transferred to the DOE for ultimate disposal, and complete all remaining decommissioning activities associated with the SNF dry storage facility.
Generation had retained its obligation for the SNF upon transfer of the NRC license to Generation as well as certain NDT assets to fund its obligation to maintain the SNF at Zion Station until transfer to
the DOE and to complete all remaining decommissioning activities for the SNF storage facility. Any shortage of funds necessary to maintain the SNF and decommission the SNF storage facility is
ultimately required to be funded by Generation. As of December 31, 2021, the ARO associated with Zion's SNF storage facility is $140 million and the NDT funds available to fund this obligation are
$65 million.
Non-Nuclear Asset Retirement Obligations (All Registrants)
The Utility Registrants have AROs primarily associated with the abatement and disposal of equipment and buildings contaminated with asbestos and PCBs. In addition, Exelon has AROs for
Generation's plant closure costs associated with its fossil and renewable generating facilities, including asbestos abatement, removal of certain storage tanks, restoring leased land to the condition it
was in prior to construction of renewable generating stations, and other decommissioning-related activities. See Note 1 — Significant Accounting Policies for additional information on the Registrants’
accounting policy for AROs.
The following table provides a rollforward of the non-nuclear AROs reflected in the Registrants’ Consolidated Balance Sheets from December 31, 2019 to December 31, 2021:
Non-nuclear AROs as of December 31, 2019
$
460 $
129 $
28 $
23 $
57 $
41 $
12 $
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Net increase (decrease) due to changes in, and timing of, estimated future cash
flows
Development projects
Accretion expense
Asset divestitures
Payments
AROs reclassified to liabilities held for sale
Non-nuclear AROs as of December 31, 2020
(a)
(a)
Net increase due to changes in, and timing of, estimated future cash flows
Accretion expense
Asset divestitures
Payments
AROs previously held for sale
7
1
16
(4)
(9)
(10)
461
31
18
(19)
(11)
10
—
—
1
—
(1)
—
129
15
4
—
(2)
—
2
—
1
—
(2)
—
29
—
1
—
(1)
—
1
—
1
—
(2)
—
23
2
1
—
—
—
1
—
1
—
—
—
59
10
1
—
—
—
(3)
—
1
—
—
—
39
5
1
—
—
—
2
—
—
—
—
—
14
2
—
—
—
—
Non-nuclear AROs as of December 31, 2021
$
490 $
146 $
29 $
26 $
70 $
45 $
16 $
4
2
—
—
—
—
—
6
3
—
—
—
—
9
249
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 10 — Asset Retirement Obligations
__________
(a) For ComEd, PECO, BGE, PHI, and Pepco, the majority of the accretion is recorded as an increase to a regulatory asset due to the associated regulatory treatment.
11. Leases (All Registrants)
Lessee
The Registrants have operating and finance leases for which they are the lessees. The following tables outline the significant types of leases at each registrant and other terms and conditions of the
lease agreements as of December 31, 2021. Exelon, ComEd, PECO, and BGE did not have material finance leases in 2021, 2020, or in 2019. PHI, Pepco, DPL, and ACE also did not have material
finance leases in 2019.
Contracted generation
Real estate
Vehicles and equipment
(in years)
Remaining lease terms
Options to extend the term
Options to terminate within
The components of operating lease costs were as follows:
Exelon
ComEd
PECO
●
●
●
●
●
●
●
Exelon
ComEd
PECO
BGE
●
●
BGE
PHI
●
●
PHI
Pepco
●
●
Pepco
DPL
●
●
DPL
ACE
●
●
ACE
1-84
1-30
1-11
1-3
5
1
1-12
N/A
N/A
1-84
N/A
1
1-10
3-30
N/A
1-10
5
N/A
1-10
3-30
N/A
For the year ended December 31, 2021
Operating lease costs
Variable lease costs
Short-term lease costs
Total lease costs
(a)
For the year ended December 31, 2020
Operating lease costs
Variable lease costs
Short-term lease costs
Total lease costs
(a)
For the year ended December 31, 2019
Operating lease costs
Variable lease costs
Short-term lease costs
Total lease costs
(a)
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
$
$
$
$
$
245
175
—
420
292
241
2
535
320
300
19
639
$
$
$
$
$
$
3
1
—
4
3
1
—
4
3
2
—
5
$
$
$
$
$
$
—
—
—
—
1
—
—
1
1
—
—
1
$
$
$
$
$
$
30
1
—
31
33
1
—
34
33
2
—
35
$
$
$
$
$
$
43
1
—
44
46
2
—
48
48
6
—
54
$
$
$
$
$
$
10
—
—
10
11
1
—
12
12
2
—
14
$
$
$
$
$
$
12
—
—
12
13
1
—
14
14
2
—
16
$
$
$
$
$
$
1-7
5
N/A
6
—
—
6
6
—
—
6
7
1
—
8
__________
(a) Excludes sublease income recorded at Exelon, PHI, and DPL of $48 million, $4 million, and $4 million, respectively, for the year ended December 31, 2021, $48 million, $4 million, and $4 million, respectively, for the year
ended December 31, 2020, and $51 million, $7 million, and $7 million, respectively, for the year ended December 31, 2019.
PHI, Pepco, DPL, and ACE recorded finance lease costs of $13 million, $5 million, $5 million, and $3 million, respectively, for the year ended December 31, 2021 and $9 million, $3 million, $4 million,
and $2 million, respectively, for the year ended December 31, 2020.
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 11 — Leases
The following tables provide additional information regarding the presentation of operating and finance lease ROU assets and lease liabilities within the Registrants’ Consolidated Balance Sheets:
As of December 31, 2021
Operating lease ROU assets
Other deferred debits and other assets
Operating lease liabilities
Other current liabilities
Other deferred credits and other liabilities
Total operating lease liabilities
As of December 31, 2020
Operating lease ROU assets
Other deferred debits and other assets
Operating lease liabilities
Other current liabilities
Other deferred credits and other liabilities
Total operating lease liabilities
$
$
$
$
Exelon
(a)
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Operating Leases
875
$
5
$
1
$
16
$
209
$
43
$
46
$
124
968
1,092
$
2
3
5
$
—
1
1
$
15
4
19
$
31
195
226
$
6
40
46
$
8
49
57
$
1,064
$
7
$
1
$
46
$
241
$
49
$
54
$
213
1,089
1,302
$
3
5
8
$
—
1
1
$
45
19
64
$
31
224
255
$
6
46
52
$
9
56
65
$
11
3
9
12
15
4
11
15
__________
(a) Exelon's operating ROU assets and lease liabilities include $293 million and $429 million, respectively, related to contracted generation as of December 31, 2021, and $387 million and $528 million, respectively, as of
December 31, 2020.
As of December 31, 2021
Finance lease ROU assets
Plant, property and equipment, net
Finance lease liabilities
Long-term debt due within one year
Long-term debt
Total finance lease liabilities
As of December 31, 2020
Finance lease ROU assets
Plant, property and equipment, net
Finance lease liabilities
Long-term debt due within one year
Long-term debt
Total finance lease liabilities
PHI
Pepco
DPL
ACE
Finance Leases
73
$
10
64
74
$
50
$
7
43
50
$
$
$
$
$
251
25
$
3
23
26
$
17
$
2
15
17
$
29
$
4
25
29
$
20
$
3
17
20
$
19
3
16
19
13
2
11
13
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 11 — Leases
The weighted average remaining lease terms, in years, for operating and finance leases were as follows:
As of December 31, 2021
As of December 31, 2020
As of December 31, 2019
As of December 31, 2021
As of December 31, 2020
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Operating Leases
9.8
10.1
10.1
3.3
3.8
4.6
6.1
4.2
4.4
PHI
13.7
8.3
5.4
7.5
8.2
9.0
8.6
9.1
9.8
8.5
9.1
9.7
Finance Leases
Pepco
DPL
ACE
6.1
6.5
5.9
6.3
6.1
6.5
The weighted average discount rates for operating and finance leases were as follows:
As of December 31, 2021
As of December 31, 2020
As of December 31, 2019
4.7 %
4.7 %
4.6 %
2.8 %
3.0 %
3.0 %
2.2 %
2.9 %
3.2 %
4.0 %
3.8 %
3.6 %
4.2 %
4.2 %
4.2 %
4.0 %
4.0 %
4.0 %
4.0 %
4.0 %
4.0 %
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Operating Leases
As of December 31, 2021
As of December 31, 2020
PHI
Pepco
DPL
ACE
Finance Leases
2.2 %
2.5 %
2.3 %
2.6 %
2.1 %
2.4 %
Future minimum lease payments for operating and finance leases as of December 31, 2021 were as follows:
Year
2022
2023
2024
2025
2026
Remaining years
Total
Interest
Total operating lease liabilities
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Operating Leases
$
$
156
144
140
140
135
693
1,408
316
1,092
$
$
2
1
1
1
—
—
5
—
5
$
$
—
—
—
—
—
1
1
—
1
$
$
252
16
1
—
—
—
18
35
16
19
$
$
38
37
36
34
29
94
268
42
226
$
$
8
7
7
6
5
22
55
9
46
$
$
10
10
8
7
5
30
70
13
57
$
$
3.5
4.0
4.7
6.3
6.5
3.4 %
3.5 %
3.6 %
2.1 %
2.4 %
4
3
3
2
1
—
13
1
12
Table of Contents
Year
2022
2023
2024
2025
2026
Remaining years
Total
Interest
Total finance lease liabilities
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 11 — Leases
PHI
Pepco
DPL
ACE
Finance Leases
$
$
12
12
13
12
12
18
79
5
74
$
$
4
4
5
4
4
6
27
1
26
$
$
5
5
5
5
5
7
32
3
29
$
$
Cash paid for amounts included in the measurement of operating and finance lease liabilities were as follows:
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Operating cash flows from operating leases
For the year ended December 31, 2021
For the year ended December 31, 2020
For the year ended December 31, 2019
$
$
255
271
287
$
3
3
3
$
—
1
—
PHI
$
46
20
33
$
39
39
37
$
8
8
9
$
9
9
6
Financing cash flows from finance leases
Pepco
DPL
ACE
For the year ended December 31, 2021
For the year ended December 31, 2020
$
$
10
6
$
3
2
$
4
3
ROU assets obtained in exchange for operating and finance lease obligations were as follows:
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Operating Leases
For the year ended December 31, 2021
For the year ended December 31, 2020
For the year ended December 31, 2019
$
$
(1)
1
52
$
—
—
6
For the year ended December 31, 2021
For the year ended December 31, 2020
Lessor
$
—
1
—
PHI
$
(1)
—
2
$
1
(1)
(3)
Finance Leases
$
—
—
(1)
$
1
(1)
(2)
Pepco
DPL
ACE
$
$
32
29
$
12
8
$
12
14
The Registrants have operating leases for which they are the lessors. The following tables outline the significant types of leases at each registrant and other terms and conditions of their lease
agreements as of December 31, 2021.
Contracted generation
Real estate
●
●
●
●
Exelon
ComEd
PECO
BGE
●
PHI
●
Pepco
●
DPL
●
ACE
253
3
3
3
3
3
5
20
1
19
4
4
5
3
1
—
—
(1)
8
7
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 11 — Leases
(in years)
Remaining lease terms
Options to extend the term
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
1-81
1-79
1-15
5-79
1-81
5-50
21
N/A
1-11
5
1-4
N/A
10-11
N/A
N/A
N/A
The components of lease income were as follows:
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
For the year ended December 31, 2021
Operating lease income
Variable lease income
For the year ended December 31, 2020
Operating lease income
Variable lease income
For the year ended December 31, 2019
Operating lease income
Variable lease income
$
$
$
$
$
$
52
262
52
283
54
261
$
$
$
—
—
—
—
—
—
$
$
$
—
—
—
—
—
—
$
$
$
—
—
—
—
—
—
$
$
$
4
1
3
1
5
3
$
$
$
—
—
—
—
—
—
Future minimum lease payments to be recovered under operating leases as of December 31, 2021 were as follows:
Year
2022
2023
2024
2025
2026
Remaining years
Total
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
$
$
50
49
49
49
49
169
415
$
$
—
—
—
—
—
1
1
$
$
—
—
—
—
—
4
4
$
$
254
—
—
—
—
—
1
1
$
$
4
3
4
4
4
26
45
$
$
—
—
—
—
—
—
—
$
$
3
1
3
1
4
3
3
3
4
4
4
26
44
$
$
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
ACE
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 12 — Asset Impairments
12. Asset Impairments (Exelon)
Exelon evaluates the carrying value of long-lived assets or asset groups for recoverability whenever events or changes in circumstances indicate that the carrying value of those assets may not be
recoverable. Indicators of impairment may include a deteriorating business climate, including, but not limited to, declines in energy prices, condition of the asset, or plans to dispose of a long-lived asset
significantly before the end of its useful life. Exelon determines if long-lived assets or asset groups are potentially impaired by comparing the undiscounted expected future cash flows to the carrying
value when indicators of impairment exist. When the undiscounted cash flow analysis indicates a long-lived asset or asset group may not be recoverable, the amount of the impairment loss is
determined by measuring the excess of the carrying amount of the long-lived asset or asset group over its fair value. The fair value analysis is primarily based on the income approach using significant
unobservable inputs (Level 3) including revenue and generation forecasts, projected capital and maintenance expenditures, and discount rates. A variation in the assumptions used could lead to a
different conclusion regarding the recoverability of an asset or asset group and, thus, could potentially result in material future impairments of Exelon's long-lived assets.
New England Asset Group
In the third quarter of 2020, in conjunction with the retirement announcement of Mystic Units 8 and 9, Generation completed a comprehensive review of the estimated undiscounted future cash flows of
the New England asset group and concluded that the estimated undiscounted future cash flows and fair value of the New England asset group were less than their carrying values. As a result, a pre-
tax impairment charge of $500 million was recorded in the third quarter of 2020 in Operating and maintenance expense in Exelon’s Consolidated Statement of Operations and Comprehensive Income.
See Note 7 - Early Plant Retirements for additional information.
In the second quarter of 2021, an overall decline in the asset group's portfolio value suggested that the carrying value of the New England asset group may be impaired. Generation completed a
comprehensive review of the estimated undiscounted future cash flows of the New England asset group and concluded that the carrying value was not recoverable and that its fair value was less than
its carrying value. As a result, a pre-tax impairment charge of $350 million was recorded in the second quarter of 2021 in Operating and maintenance expense in Exelon’s Consolidated Statement of
Operations and Comprehensive Income.
Contracted Wind Project
In the third quarter of 2021, significant long-term operational issues anticipated for a specific wind turbine technology suggested that the carrying value of a contracted wind asset, located in Maryland
and part of the CRP joint venture, may be impaired. Generation completed a comprehensive review of the estimated undiscounted future cash flows and concluded that the carrying value of this
contracted wind project was not recoverable and that its fair value was less than its carrying value. As a result, in the third quarter of 2021, a pre-tax impairment charge of $45 million was recorded in
Operating and maintenance expense, $21 million of which was offset in Net income attributable to noncontrolling interests in Exelon’s Consolidated Statement of Operations and Comprehensive
Income.
Equity Method Investments in Certain Distributed Energy Companies
In the third quarter of 2019, Generation’s equity method investments in certain distributed energy companies were fully impaired due to an other-than-temporary decline in market conditions and
underperforming projects. Exelon recorded a pre-tax impairment charge of $164 million in Equity in losses of unconsolidated affiliates and an offsetting pre-tax $96 million in Net income attributable to
noncontrolling interests in the Consolidated Statement of Operations and Comprehensive Income. As a result, Generation accelerated the amortization of investment tax credits associated with these
companies and Exelon recorded a benefit of $46 million in Income taxes. The impairment charge and the accelerated amortization of investment tax credits resulted in a net $15 million decrease to
Exelon’s earnings. See Note 23 — Variable Interest Entities for additional information.
13. Intangible Assets
Goodwill (Exelon, ComEd, PHI, Pepco, DPL, and ACE)
255
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 13 — Intangible Assets
The following table presents the gross amount, accumulated impairment loss, and carrying amount of goodwill at Exelon, ComEd, and PHI as of December 31, 2021 and 2020. There were no additions
or impairments during the years ended December 31, 2021 and 2020.
Exelon
(a)
ComEd
(b)
PHI
__________
(a) Reflects goodwill recorded in 2000 from the PECO/Unicom merger (predecessor parent company of ComEd).
(b) Reflects goodwill recorded in 2016 from the PHI merger.
Gross Amount
Accumulated Impairment Loss
Carrying Amount
$
8,660 $
4,608
4,005
1,983 $
1,983
—
6,677
2,625
4,005
Goodwill is not amortized, but is subject to an assessment for impairment at least annually, or more frequently if events occur or circumstances change that would more likely than not reduce the fair
value of ComEd's and PHI's reporting units below their carrying amounts. A reporting unit is an operating segment or one level below an operating segment (known as a component) and is the level at
which goodwill is assessed for impairment. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and its
operating results are regularly reviewed by segment management. ComEd has a single operating segment. PHI's operating segments are Pepco, DPL, and ACE. See Note 5 — Segment Information
for additional information. There is no level below these operating segments for which operating results are regularly reviewed by segment management. Therefore, the ComEd, Pepco, DPL, and ACE
operating segments are also considered reporting units for goodwill impairment assessment purposes. Exelon's and ComEd's $2.6 billion of goodwill has been assigned entirely to the ComEd reporting
unit, while Exelon's and PHI's $4.0 billion of goodwill has been assigned to the Pepco, DPL, and ACE reporting units in the amounts of $2.1 billion, $1.4 billion, and $0.5 billion, respectively.
Entities assessing goodwill for impairment have the option of first performing a qualitative assessment to determine whether a quantitative assessment is necessary. As part of the qualitative
assessments, Exelon, ComEd, and PHI evaluate, among other things, management's best estimate of projected operating and capital cash flows for their businesses, outcomes of recent regulatory
proceedings, changes in certain market conditions, including the discount rate and regulated utility peer EBITDA multiples, and the passing margin from their last quantitative assessments performed. If
an entity bypasses the qualitative assessment, a quantitative, fair value-based assessment is performed, which compares the fair value of the reporting unit to its carrying amount, including goodwill. If
the carrying amount of the reporting unit exceeds its fair value, the entity recognizes an impairment charge, which is limited to the amount of goodwill allocated to the reporting unit.
Application of the goodwill impairment assessment requires management judgment, including the identification of reporting units and determining the fair value of the reporting unit, which management
estimates using a weighted combination of a discounted cash flow analysis and a market multiples analysis. Significant assumptions used in these fair value analyses include discount and growth
rates, utility sector market performance and transactions, projected operating and capital cash flows for ComEd's, Pepco's, DPL's, and ACE's businesses, and the fair value of debt.
2021 and 2020 Goodwill Impairment Assessment. ComEd and PHI qualitatively determined that it was more likely than not that the fair values of their reporting units exceeded their carrying values
and, therefore, did not perform quantitative assessments as of November 1, 2021 and 2020. The last quantitative assessments performed were as of November 1, 2016 for ComEd and November 1,
2018 for PHI.
While the annual assessments indicated no impairments, certain assumptions used to estimate reporting unit fair values are highly sensitive to changes. Adverse regulatory actions or changes in
significant assumptions could potentially result in future impairments of Exelon's, ComEd's, and PHI’s goodwill, which could be material.
Other Intangible Assets and Liabilities (Exelon and PHI)
Exelon’s other intangible assets, included in Other current assets and Other deferred debits and other assets in the Consolidated Balance Sheets, consisted of the following as of December 31, 2021
and 2020. Exelon's and PHI's other intangible liabilities, included in current and noncurrent Unamortized energy contract liabilities in their Consolidated Balance Sheets, consisted of the following as of
December 31, 2021 and 2020. The intangible
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 13 — Intangible Assets
assets and liabilities shown below are amortized on a straight-line basis, except for unamortized energy contracts which are amortized in relation to the expected realization of the underlying cash
flows:
Exelon
Unamortized Energy Contracts
Customer Relationships
Trade Name
Software License
Exelon Total
PHI
Unamortized Energy Contracts
Gross
Accumulated Amortization
Net
Gross
Accumulated Amortization
Net
December 31, 2021
December 31, 2020
$
$
$
448 $
330
222
95
1,095 $
(393) $
(243)
(218)
(62)
(916) $
55 $
87
4
33
448 $
326
222
95
179 $
1,091 $
(454) $
(215)
(197)
(53)
(919) $
(6)
111
25
42
172
(1,515) $
1,280 $
(235) $
(1,515) $
1,188 $
(327)
The following table summarizes the amortization expense related to intangible assets and liabilities for each of the years ended December 31, 2021, 2020, and 2019:
For the Years Ended December 31,
2021
2020
2019
Exelon
(a)(b)
(b)
PHI
$
(3) $
(17)
(28)
(92)
(115)
(119)
__________
(a) See Note 24 - Supplemental Financial Information for additional information related to the amortization of unamortized energy contracts.
(b) For PHI unamortized energy contracts, the amortization of the fair value adjustment amounts and the corresponding offsetting regulatory asset amounts are amortized through Purchased power and fuel expense in their
Consolidated Statements of Operations and Comprehensive Income resulting in no effect to net income.
The following table summarizes the estimated future amortization expense related to intangible assets and liabilities as of December 31, 2021:
For the Years Ending December 31,
Exelon
PHI
2022
2023
2024
2025
2026
Renewable Energy Credits (Exelon)
$
(19) $
(18)
22
43
32
(89)
(81)
(38)
(5)
(5)
RECs are included in Renewable energy credits in Exelon's Consolidated Balance Sheets. Purchased RECs are recorded at cost on the date they are purchased. The cost of RECs purchased on a
stand-alone basis is based on the transaction price, while the cost of RECs acquired through PPAs represents the difference between the total contract price and the market price of energy at contract
inception. Generally, revenue for RECs that are sold to a counterparty under a contract that specifically identifies a power plant is recognized at a point in time when the power is produced. This
includes both bundled and unbundled REC sales. Otherwise, the revenue is recognized upon physical transfer of the REC to the customer.
The following table presents current RECs as of December 31, 2021 and 2020:
Current REC's
As of December 31, 2021
As of December 31, 2020
$
529 $
632
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 14 — Income Taxes
14. Income Taxes (All Registrants)
Components of Income Tax Expense or Benefit
Income tax expense (benefit) from continuing operations is comprised of the following components:
Included in operations:
Federal
Current
Deferred
Investment tax credit amortization
State
Current
Deferred
Total
Included in operations:
Federal
Current
Deferred
Investment tax credit amortization
State
Current
Deferred
Total
Included in operations:
Federal
Current
Deferred
Investment tax credit amortization
State
Current
Deferred
Total
Rate Reconciliation
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
For the Year Ended December 31, 2021
$
322 $
(66)
(18)
32
100
(30) $
113
(1)
(41)
131
1 $
20
—
—
(9)
(18) $
34
—
—
(51)
18 $
(52)
(1)
—
77
22 $
(17)
—
1
9
2 $
(14)
—
1
53
$
370 $
172 $
12 $
(35) $
42 $
15 $
42 $
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
For the Year Ended December 31, 2020
$
26 $
156
(28)
42
177
(24) $
112
(2)
(27)
118
(7) $
1
—
—
(24)
4 $
25 $
10
—
—
27
(129)
(1)
(5)
33
40 $
(62)
—
—
15
(13) $
(20)
—
—
8
$
373 $
177 $
(30) $
41 $
(77) $
(7) $
(25) $
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
For the Year Ended December 31, 2019
$
85 $
489
(72)
5
267
59 $
15
(2)
(5)
96
45 $
20
—
—
—
(51) $
95
—
—
35
43 $
(34)
(1)
3
27
16 $
(6)
—
—
6
29 $
(21)
—
—
14
$
774 $
163 $
65 $
79 $
38 $
16 $
22 $
1
(26)
—
—
12
(13)
(4)
(43)
—
—
6
(41)
(3)
(6)
—
—
9
—
The effective income tax rate from continuing operations varies from the U.S. federal statutory rate principally due to the following:
258
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 14 — Income Taxes
U.S. federal statutory rate
Increase (decrease) due to:
State income taxes, net of federal income tax benefit
Qualified NDT fund income
Amortization of investment tax credit, including deferred taxes on basis
differences
Plant basis differences
Production tax credits and other credits
Excess deferred tax amortization
Other
Exelon
ComEd
PECO
(b)
BGE
(b)
PHI
Pepco
DPL
(b)
ACE
(b)
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
For the Year Ended December 31, 2021
(a)
4.8
11.3
(0.7)
(4.1)
(2.5)
(12.9)
(0.1)
7.8
—
(0.1)
(0.8)
(0.5)
(7.6)
(1.0)
(1.4)
—
—
(13.6)
—
(3.8)
0.1
(10.8)
—
(0.1)
(1.7)
(0.9)
(16.3)
(0.6)
10.1
—
(0.1)
(1.1)
(0.5)
(22.4)
—
2.7
—
—
(1.6)
(0.5)
(16.4)
(0.4)
25.0
—
(0.2)
(0.8)
(0.4)
(20.0)
0.1
7.4
—
(0.2)
(0.2)
(0.5)
(37.1)
(0.2)
Effective income tax rate
16.8 %
18.8 %
2.3 %
(9.4)%
7.0 %
4.8 %
24.7 %
(9.8)%
U.S. federal statutory rate
Increase (decrease) due to:
State income taxes, net of federal income tax benefit
Qualified NDT fund income
Deferred Prosecution Agreement payments
Amortization of investment tax credit, including deferred taxes on basis
differences
Plant basis differences
Production tax credits and other credits
Noncontrolling interests
Excess deferred tax amortization
(e)
Tax Settlements
Other
Effective income tax rate
U.S. federal statutory rate
Increase (decrease) due to:
Exelon
ComEd
(c)
PECO
(c)
BGE
(d)
(d)
PHI
Pepco
(d)
DPL
(d)
ACE
(d)
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
For the Year Ended December 31, 2020
(a)
7.8
8.4
1.8
(1.1)
(4.0)
(2.2)
1.1
(13.6)
(3.7)
0.5
16.0 %
11.6
—
6.8
(0.3)
(0.6)
(0.3)
—
(11.2)
—
1.8
28.8 %
(4.5)
—
—
—
(18.7)
—
—
(4.6)
—
(0.4)
(7.2)%
5.5
—
—
(0.1)
(1.5)
(0.4)
—
(13.9)
—
(0.1)
10.5 %
5.1
—
—
(0.2)
(1.6)
(0.3)
—
(42.0)
—
(0.4)
(18.4)%
For the Year Ended December 31, 2019
(a)
4.5
—
—
(0.1)
(1.7)
(0.3)
—
(25.4)
—
(0.7)
(2.7)%
6.6
—
—
(0.3)
(0.4)
(0.3)
—
(51.7)
—
0.1
(25.0)%
7.0
—
—
(0.5)
(3.0)
(0.5)
—
(82.1)
—
0.4
(57.7)%
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
21.0 %
State income taxes, net of federal income tax benefit
Qualified NDT fund income
Amortization of investment tax credit, including deferred taxes on basis
differences
Plant basis differences
Production tax credits and other credits
Noncontrolling interests
Excess deferred tax amortization
Other
Effective income tax rate
5.4
5.9
(1.5)
(1.4)
(3.1)
(0.6)
(5.5)
(0.8)
19.4 %
8.5
—
(0.2)
—
(1.2)
—
(9.7)
0.8
19.2 %
—
—
—
(7.2)
—
—
(2.8)
—
11.0 %
6.4
—
(0.1)
(1.2)
(1.3)
—
(6.8)
—
18.0 %
4.7
—
(0.2)
(1.2)
(0.2)
—
(17.5)
0.8
7.4 %
2.0
—
(0.1)
(1.8)
(0.1)
—
(15.1)
0.3
6.2 %
6.8
—
(0.2)
(0.4)
—
—
(14.2)
—
13.0 %
7.0
—
(0.3)
(0.7)
(0.1)
—
(27.0)
0.1
— %
__________
(a) Positive percentages represent income tax expense. Negative percentages represent income tax benefit.
(b) For PECO, the lower effective tax rate is primarily related to plant basis differences attributable to tax repair deductions. For BGE, the income tax benefit is primarily due to the Maryland multi-year plan which resulted in
the acceleration of certain income tax benefits. For DPL, the higher effective tax rate is primarily related to a state income tax expense, net of federal income tax benefit, due to the recognition of a valuation allowance of
approximately $31 million against a deferred tax asset associated with Delaware net operating loss carryforwards as a result of a change in Delaware tax law. For ACE, the income tax benefit is primarily due to a
distribution rate case settlement which allows ACE to retain certain tax benefits.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 14 — Income Taxes
(c) At ComEd, the higher effective tax rate is primarily related to the nondeductible Deferred Prosecution Agreement payments. At PECO, the negative effective tax rate is primarily related to an increase in plant basis
differences attributable to tax repair deductions related to an increase in storms and qualifying projects in 2021.
(d) For BGE, PHI, Pepco, DPL, and ACE, the income tax benefit is primarily attributable to accelerated amortization of transmission related deferred income tax regulatory liabilities as a result of regulatory settlements. See
Note 3 — Regulatory Matters for additional information.
(e) Exelon's unrecognized federal and state tax benefits decreased in the first quarter of 2020 by approximately $411 million due to the settlement of a federal refund claim with IRS Appeals. The recognition of these benefits
resulted in an increase to Exelon’s net income of $76 million for the first quarter of 2020, reflecting a decrease to Exelon’s income tax expense of $67 million.
Tax Differences and Carryforwards
The tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred tax assets (liabilities), as of December 31, 2021 and 2020 are presented below:
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
As of December 31, 2021
Plant basis differences
Accrual based contracts
Derivatives and other financial instruments
Deferred pension and postretirement obligation
Nuclear decommissioning activities
Deferred debt refinancing costs
Regulatory assets and liabilities
Tax loss carryforward, net of valuation allowances
Tax credit carryforward
Investment in partnerships
Other, net
Deferred income tax liabilities (net)
Unamortized investment tax credits
Total deferred income tax liabilities (net) and unamortized investment
tax credits
$
$
$
(14,429)
18
(109)
1,054
(912)
161
(1,130)
295
778
(273)
789
(13,758)
(384)
$
$
(4,648)
—
61
(308)
—
(6)
8
—
—
—
216
(4,677)
(8)
$
$
(2,271)
—
—
(32)
—
—
(280)
65
—
—
97
(2,421)
—
$
$
(1,826)
—
—
(37)
—
(2)
92
68
—
—
21
(1,684)
(2)
$
$
(2,976)
56
2
(90)
—
123
(53)
64
—
—
212
(2,662)
(5)
$
$
(1,321)
—
—
(76)
—
(2)
24
2
—
—
99
(1,274)
(1)
$
$
$
$
(853)
—
—
(40)
—
(1)
55
18
—
—
19
(802)
(1)
(14,142)
$
(4,685)
$
(2,421)
$
(1,686)
$
(2,667)
$
(1,275)
$
(803)
$
(777)
—
—
(6)
—
(1)
31
42
—
—
34
(677)
(2)
(679)
260
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 14 — Income Taxes
Plant basis differences
Accrual based contracts
Derivatives and other financial instruments
Deferred pension and postretirement obligation
Nuclear decommissioning activities
Deferred debt refinancing costs
Regulatory assets and liabilities
Tax loss carryforward, net of valuation allowances
Tax credit carryforward
Investment in partnerships
Other, net
Deferred income tax liabilities (net)
Unamortized investment tax credits
Total deferred income tax liabilities (net) and
unamortized investment tax credits
(a)
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
As of December 31, 2020
(13,868)
40
41
1,559
(742)
169
(1,107)
286
841
(835)
1,070
(12,546)
(464)
$
$
(4,432)
—
84
(288)
—
(6)
87
—
—
—
223
(4,332)
(9)
$
$
(2,131)
—
—
(30)
—
—
(231)
47
—
—
104
(2,241)
(1)
$
$
(1,711)
—
—
(33)
—
(2)
142
57
—
—
29
(1,518)
(3)
$
$
(2,822)
77
2
(80)
—
131
(41)
90
—
—
220
(2,423)
(6)
$
$
(1,259)
—
—
(74)
—
(3)
38
4
—
—
107
(1,187)
(2)
$
$
$
$
(806)
—
—
(40)
—
(1)
67
49
—
—
18
(713)
(2)
(13,010)
$
(4,341)
$
(2,242)
$
(1,521)
$
(2,429)
$
(1,189)
$
(715)
$
(725)
—
—
(7)
—
(1)
46
38
—
—
27
(622)
(3)
(625)
$
$
$
_________
(a) Does not include unamortized investment tax credits reclassified to liabilities held for sale.
The following table provides Exelon’s, PECO’s, BGE’s, PHI’s, Pepco’s, DPL’s, and ACE’s carryforwards, of which the state related items are presented on a post-apportioned basis, and any
corresponding valuation allowances as of December 31, 2021. ComEd does not have net operating losses or credit carryforwards for the year ended December 31, 2021.
Federal
Federal general business credits carryforwards and other carryforwards
State
State net operating losses and other carryforwards
Deferred taxes on state tax attributes (net of federal taxes)
Valuation allowance on state tax attributes (net of federal taxes)
Year in which net operating loss or credit carryforwards will begin to expire
(b)
(a)
(c)
Exelon
PECO
BGE
PHI
Pepco
DPL
ACE
$
806 $
— $
— $
— $
— $
— $
5,485
365
59
2035
890
70
3
2032
1,098
72
—
2033
1,512
104
31
2029
42
3
—
N/A
736
50
31
2032
—
605
43
—
2031
__________
(a) For Exelon, the federal general business credit carryforward will begin expiring in 2035.
(b) At Exelon, a full valuation allowance has been recorded against certain separate company state net operating loss carryforwards that are expected to expire before realization. At PECO, a full valuation allowance has
been recorded against Pennsylvania charitable contributions carryforwards that are expected to expire before realization. At DPL, a full valuation allowance has been recorded against Delaware net operating losses
carryforwards due to a change in Delaware tax law.
(c) A portion of Exelon's, BGE's, Pepco's, and DPL's Maryland state net operating loss carryforward have an indefinite carryforward period.
Tabular Reconciliation of Unrecognized Tax Benefits
The following table presents changes in unrecognized tax benefits, for Exelon, PHI, and ACE. ComEd's, PECO's, BGE's, Pepco's, and DPL's amounts are not material.
261
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Balance at January 1, 2019
Change to positions that only affect timing
Increases based on tax positions related to 2019
Increases based on tax positions prior to 2019
Decreases based on tax positions prior to 2019
Decrease from settlements with taxing authorities
Balance at December 31, 2019
Change to positions that only affect timing
Increases based on tax positions related to 2020
Increases based on tax positions prior to 2020
Decreases based on tax positions prior to 2020
Decrease from settlements with taxing authorities
(a)
(a)
Balance at December 31, 2020
Change to positions that only affect timing
Increases based on tax positions related to 2021
Increases based on tax positions prior to 2021
Decreases based on tax positions prior to 2021
Decrease from settlements with taxing authorities
Balance at December 31, 2021
Note 14 — Income Taxes
Exelon
PHI
ACE
$
477 $
45 $
26
2
34
(3)
(29)
507
6
3
26
(348)
(69)
125
13
4
4
(3)
—
3
—
—
—
—
48
3
—
1
—
—
52
3
1
—
—
—
$
143 $
56 $
14
—
—
—
—
—
14
1
—
—
—
—
15
1
—
—
—
—
16
__________
(a) Exelon's unrecognized federal and state tax benefits decreased in the first quarter of 2020 by approximately $411 million due to the settlement of a federal refund claim with IRS Appeals. The recognition of these tax
benefits resulted in an increase to Exelon's net income of $76 million in the first quarter of 2020, reflecting a decrease to Exelon's income tax expense of $67 million.
Recognition of unrecognized tax benefits
The following table presents Exelon's unrecognized tax benefits that, if recognized, would decrease the effective tax rate. The Utility Registrants' amounts are not material.
December 31, 2021
December 31, 2020
December 31, 2019
$
Exelon
77
73
462
Reasonably possible the total amount of unrecognized tax benefits could significantly increase or decrease within 12 months after the reporting date
As of December 31, 2021, ACE has approximately $14 million of unrecognized state tax benefits that could significantly decrease within the 12 months after the reporting date based on the outcome of
pending court cases involving other taxpayers. The unrecognized tax benefit, if recognized, may be included in future base rates and that portion would have no impact to the effective tax rate.
Total amounts of interest and penalties recognized
The following table represents the net interest and penalties receivable (payable) related to tax positions reflected in Exelon's Consolidated Balance Sheets. The Utility Registrants' amounts are not
material.
Net interest and penalties receivable as of
December 31, 2021
December 31, 2020
(a)
$
Exelon
43
314
262
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 14 — Income Taxes
__________
(a) As of December 31, 2021, the interest receivable balance is not expected to be settled in cash within the next twelve months and therefore classified as non-current receivable. In December of 2021, Exelon received a
refund of approximately $272 million related to an interest netting refund claim.
The Registrants did not record material interest and penalty expense related to tax positions reflected in their Consolidated Balance Sheets. Interest expense and penalty expense are recorded in
Interest expense, net and Other, net, respectively, in Other income and deductions in the Registrants' Consolidated Statements of Operations and Comprehensive Income.
Description of tax years open to assessment by major jurisdiction
Major Jurisdiction
(a)
Federal consolidated income tax returns
Delaware separate corporate income tax returns
District of Columbia combined corporate income tax returns
Illinois unitary corporate income tax returns
Maryland separate company corporate net income tax returns
New Jersey separate corporate income tax returns
New Jersey combined corporate income tax returns
New Jersey separate corporate income tax returns
New York combined corporate income tax returns
Pennsylvania separate corporate income tax returns
Pennsylvania separate corporate income tax returns
Pennsylvania separate corporate income tax returns
Open Years
2010-2020
Same as federal
2018-2020
2012-2020
Same as federal
2017-2018
2019-2020
2017-2020
2011-2020
2011-2016
2018-2020
2018-2020
Registrants Impacted
All Registrants
DPL
Exelon, PHI, Pepco
Exelon, ComEd
BGE, Pepco, DPL
Exelon
Exelon
ACE
Exelon
Exelon
Exelon
PECO
__________
(a) Certain registrants are only open to assessment for tax years since joining the Exelon federal consolidated group; BGE beginning in 2012 and PHI, Pepco, DPL, and ACE beginning in 2016.
Other Tax Matters
CENG Put Option (Exelon)
On August 6, 2021, Generation entered into a settlement agreement pursuant to which Generation purchased EDF’s equity interest in CENG. Exelon recorded deferred tax liabilities of $290 million
against Common Stock in Exelon’s Consolidated Balance Sheet. The deferred tax liabilities represent the tax effect on the difference between the net purchase price and EDF’s noncontrolling interest
as of August 6, 2021. The deferred tax liabilities will reverse during the remaining operating lives and during decommissioning of the CENG nuclear plants. See Note 2 — Mergers, Acquisitions, and
Dispositions for additional information.
Long-Term Marginal State Income Tax Rate (All Registrants)
Quarterly, Exelon reviews and updates its marginal state income tax rates and updates for material changes in state tax laws and state apportionment. The Registrants remeasure their existing
deferred income tax balances to reflect the changes in marginal rates, which results in either an increase or a decrease to their net deferred income tax liability balances. Utility Registrants record
corresponding regulatory liabilities or assets to the extent such amounts are probable of settlement or recovery through customer rates and an adjustment to income tax expense for all other amounts.
The impacts to the Utility Registrants for the years ended December 31, 2021, 2020, and 2019 were not material.
December 31, 2021
Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes
December 31, 2020
Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes
December 31, 2019
Increase to Deferred Income Tax Liability and Income Tax Expense, Net of Federal Taxes
263
$
$
$
Exelon
27
66
20
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 14 — Income Taxes
Allocation of Tax Benefits (All Registrants)
The Utility Registrants are party to an agreement with Exelon and other subsidiaries of Exelon that provides for the allocation of consolidated tax liabilities and benefits (Tax Sharing Agreement). The
Tax Sharing Agreement provides that each party is allocated an amount of tax similar to that which would be owed had the party been separately subject to tax. In addition, any net federal and state
benefits attributable to Exelon are reallocated to the other Registrants. That allocation is treated as a contribution from Exelon to the party receiving the benefit.
The following table presents the allocation of tax benefits from Exelon under the Tax Sharing Agreement.
December 31, 2021
December 31, 2020
December 31, 2019
(a)
(b)
(c)
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
1 $
14
—
19 $
17
14
$
—
—
3
17 $
17
7
16 $
8
6
— $
6
1
—
1
—
__________
(a) BGE, DPL, and ACE did not record an allocation of federal tax benefits from Exelon under the Tax Sharing Agreement as a result of a tax net operating loss.
(b) BGE did not record an allocation of federal tax benefits from Exelon under the Tax Sharing Agreement as a result of a tax net operating loss.
(c) ComEd and ACE did not record an allocation of federal tax benefits from Exelon under the Tax Sharing Agreement as a result of a tax net operating loss.
Research and Development Activities
In the fourth quarter of 2019, Exelon recognized additional tax benefits related to certain research and development activities that qualify for federal and state tax incentives for the 2010 through 2018
tax years, which resulted in an increase to Exelon’s net income of $108 million for the year ended December 31, 2019, reflecting a decrease to Exelon’s Income tax expense of $97 million.
15. Retirement Benefits (All Registrants)
Exelon sponsors defined benefit pension plans and OPEB plans for essentially all current employees. Substantially all non-union employees and electing union employees hired on or after January 1,
2001 participate in cash balance pension plans. Effective January 1, 2009, substantially all newly-hired union-represented employees participate in cash balance pension plans. Effective February 1,
2018 for most newly-hired Generation and BSC non-represented, non-craft, employees, January 1, 2021 for most newly-hired utility management employees, and for certain newly-hired union
employees pursuant to their collective bargaining agreements, these newly-hired employees are not eligible for pension benefits, and will instead be eligible to receive an enhanced non-discretionary
employer contribution in an Exelon defined contribution savings plan. Effective January 1, 2018, most newly-hired non-represented, non-craft, employees are not eligible for OPEB benefits and
employees represented by Local 614 are not eligible for retiree health care benefits. Effective January 1, 2021, most non-represented, non-craft, employees who are under the age of 40 are not eligible
for retiree health care benefits. Effective January 1, 2022, management employees retiring on or after that date are no longer eligible for retiree life insurance benefits.
Effective January 1, 2019, Exelon merged the Exelon Corporation Cash Balance Pension Plan (CBPP) into the Exelon Corporation Retirement Program (ECRP). The merging of the plans did not
change the benefits offered to the plan participants and, thus, had no impact on Exelon's pension obligation. However, beginning in 2019, actuarial losses and gains related to the CBPP and ECRP are
amortized over participants’ average remaining service period of the merged ECRP rather than each individual plan.
Effective February 1, 2022, in connection with the separation, pension and OPEB obligations and assets for current and former Generation employees and shared service employees supporting
Generation, were transferred to pension and OPEB plans and trusts established by Generation.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
The tables below show the pension and OPEB plans in which employees of each operating company participated as of December 31, 2021:
Name of Plan:
Qualified Pension Plans:
Exelon Corporation Retirement Program
(a)
Exelon Corporation Pension Plan for Bargaining Unit Employees
(a)
Exelon New England Union Employees Pension Plan
(a)
Exelon Employee Pension Plan for Clinton, TMI, and Oyster Creek
(a)
Pension Plan of Constellation Energy Group, Inc.
(b)
Pension Plan of Constellation Energy Nuclear Group, LLC
(c)
Nine Mile Point Pension Plan
Constellation Mystic Power, LLC Union Employees Pension Plan Including
Plan A and Plan B
(b)
(c)
Pepco Holdings LLC Retirement Plan
Non-Qualified Pension Plans:
Exelon Corporation Supplemental Pension Benefit Plan and 2000 Excess
Benefit Plan
(a)
(d)
Exelon Corporation Supplemental Management Retirement Plan
(a)
Constellation Energy Group, Inc. Senior Executive Supplemental Plan
(b)
Constellation Energy Group, Inc. Supplemental Pension Plan
(b)
Constellation Energy Group, Inc. Benefits Restoration Plan
(b)
Constellation Energy Nuclear Plan, LLC Executive Retirement Plan
(c)
Constellation Energy Nuclear Plan, LLC Benefits Restoration Plan
(c)
Baltimore Gas & Electric Company Executive Benefit Plan
(b)
Baltimore Gas & Electric Company Manager Benefit Plan
(b)
Pepco Holdings LLC 2011 Supplemental Executive Retirement Plan
Conectiv Supplemental Executive Retirement Plan
(d)
(d)
Pepco Holdings LLC Combined Executive Retirement Plan
(d)
Atlantic City Electric Director Retirement Plan
(d)
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Generation
Operating Company
(e)
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Name of Plan:
OPEB Plans:
PECO Energy Company Retiree Medical Plan
(a)
Exelon Corporation Health Care Program
(a)
Exelon Corporation Employees’ Life Insurance Plan
(a)
Exelon Corporation Health Reimbursement Arrangement Plan
(a)
(b)
Constellation Energy Group, Inc. Retiree Medical Plan
(b)
Constellation Energy Group, Inc. Retiree Dental Plan
Constellation Energy Group, Inc. Employee Life Insurance Plan and
Family Life Insurance Plan
Constellation Mystic Power, LLC
Post-Employment Medical Account Savings Plan
Exelon New England Union Post-Employment Medical Savings Account
Plan
(b)
(a)
(b)
Retiree Medical Plan of Constellation Energy Nuclear Group, LLC
(c)
Retiree Dental Plan of Constellation Energy Nuclear Group, LLC
Nine Mile Point Nuclear Station, LLC Medical Care and Prescription Drug
Plan for Retired Employees
(c)
(c)
Pepco Holdings LLC Welfare Plan for Retirees
(d)
Note 15 — Retirement Benefits
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Generation
Operating Company
(e)
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
__________
(a) These plans are collectively referred to as the legacy Exelon plans.
(b) These plans are collectively referred to as the legacy Constellation Energy Group (CEG) Plans.
(c) These plans are collectively referred to as the legacy CENG plans.
(d) These plans are collectively referred to as the legacy PHI plans.
(e) Employees generally remain in their legacy benefit plans when transferring between operating companies.
Exelon’s traditional and cash balance pension plans are intended to be tax-qualified defined benefit plans. Exelon has elected that the trusts underlying these plans be treated as qualified trusts under
the IRC. If certain conditions are met, Exelon can deduct payments made to the qualified trusts, subject to certain IRC limitations.
Benefit Obligations, Plan Assets, and Funded Status
During the first quarter of 2021, Exelon received an updated valuation of its pension and OPEB to reflect actual census data as of January 1, 2021. This valuation resulted in an increase to the pension
obligations of $33 million and a decrease to the OPEB obligations of $9 million. Additionally, accumulated other comprehensive loss increased by $1 million (after-tax) and regulatory assets and
liabilities increased by $21 million and $1 million, respectively.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
The following tables provide a rollforward of the changes in the benefit obligations and plan assets of Exelon for the most recent two years for all plans combined:
Change in benefit obligation:
Net benefit obligation as of the beginning of year
Service cost
Interest cost
Plan participants’ contributions
(a)
Actuarial (gain) loss
Plan amendments
Settlements
Gross benefits paid
Net benefit obligation as of the end of year
Change in plan assets:
Fair value of net plan assets as of the beginning of year
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Gross benefits paid
Settlements
Fair value of net plan assets as of the end of year
Pension Benefits
OPEB
2021
2020
2021
2020
24,894 $
439
641
—
(630)
—
(88)
(1,410)
23,846 $
Pension Benefits
22,868 $
387
757
—
2,217
—
(45)
(1,290)
24,894 $
4,604 $
80
114
50
(223)
—
(5)
(292)
4,328 $
OPEB
2021
2020
2021
2020
20,344 $
18,590 $
1,407
574
—
(1,410)
(88)
2,547
542
—
(1,290)
(45)
20,827 $
20,344 $
2,554 $
203
91
50
(292)
(5)
2,601 $
4,658
90
154
49
49
(111)
(5)
(280)
4,604
2,541
190
59
49
(280)
(5)
2,554
$
$
$
$
__________
(a) The pension and OPEB gains in 2021 primarily reflect an increase in the discount rate. In 2020, the actuarial losses primarily reflect a decrease in the discount rate. OPEB losses in 2020 were offset by gains related to
plan changes.
Exelon presents its benefit obligations and plan assets net on its balance sheet within the following line items:
Other current liabilities
Pension obligations
Non-pension postretirement benefit obligations
Unfunded status (net benefit obligation less plan assets)
Pension Benefits
OPEB
2021
2020
2021
2020
$
$
29 $
2,990
—
3,019 $
47 $
4,503
—
4,550 $
42 $
—
1,685
1,727 $
42
—
2,008
2,050
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
The following table provides the ABO and fair value of plan assets for all pension plans with an ABO in excess of plan assets. Information for pension and OPEB plans with projected benefit obligations
(PBO) and accumulated postretirement benefit obligation (APBO), respectively, in excess of plan assets has been disclosed in the Obligations and Plan Assets table above as all pension and OPEB
plans are underfunded.
ABO in Excess of Plan Assets
ABO
Fair value of net plan assets
Components of Net Periodic Benefit Costs
Exelon
2021
2020
$
22,609 $
20,827
23,514
20,344
The majority of the 2021 pension benefit cost for the Exelon-sponsored plans is calculated using an expected long-term rate of return on plan assets of 7.00% and a discount rate of 2.58%. The
majority of the 2021 OPEB cost is calculated using an expected long-term rate of return on plan assets of 6.46% for funded plans and a discount rate of 2.51%.
A portion of the net periodic benefit cost for all plans is capitalized in the Consolidated Balance Sheets. The following table presents the components of Exelon’s net periodic benefit costs, prior to
capitalization, for the years ended December 31, 2021, 2020, and 2019.
Components of net periodic benefit cost:
Service cost
Interest cost
Expected return on assets
Amortization of:
Prior service cost (credit)
Actuarial loss
Curtailment benefits
Settlement and other charges
Contractual termination benefits
Net periodic benefit cost
$
$
Cost Allocation to Exelon Subsidiaries
2021
Pension Benefits
2020
2019
2021
OPEB
2020
2019
439 $
641
(1,336)
387 $
757
(1,270)
357 $
883
(1,225)
3
598
—
27
—
4
512
—
14
—
—
414
—
17
1
80 $
114
(158)
(34)
37
—
1
—
90 $
154
(163)
(124)
49
(1)
1
—
372 $
404 $
447 $
40 $
6 $
93
188
(153)
(179)
45
—
1
—
(5)
All Registrants account for their participation in Exelon’s pension and OPEB plans by applying multi-employer accounting. Exelon allocates costs related to its pension and OPEB plans to its
subsidiaries based on both active and retired employee participation in each plan.
The amounts below represent the Registrants' allocated pension and OPEB costs. For Exelon, the service cost component is included in Operating and maintenance expense and Property, plant, and
equipment, net while the non-service cost components are included in Other, net and Regulatory assets. For the Utility Registrants, the service cost and non-service cost components are included in
Operating and maintenance expense and Property, plant, and equipment, net in their consolidated financial statements.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
For the Years Ended December 31,
2021
2020
2019
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
411 $
411
442
129 $
114
96
8 $
5
12
64 $
64
61
49 $
70
95
6 $
15
25
2 $
7
15
11
14
16
Components of AOCI and Regulatory Assets
Exelon recognizes the overfunded or underfunded status of defined benefit pension and OPEB plans as an asset or liability on its balance sheet, with offsetting entries to AOCI and regulatory assets
(liabilities). A portion of current year actuarial (gains) losses and prior service costs (credits) is capitalized in Exelon’s Consolidated Balance Sheets to reflect the expected regulatory recovery of these
amounts, which would otherwise be recorded to AOCI. The following tables provide the components of AOCI and regulatory assets (liabilities) for Exelon for the years ended December 31, 2021, 2020,
and 2019 for all plans combined.
2021
Pension Benefits
2020
2019
2021
OPEB
2020
2019
Changes in plan assets and benefit
obligations recognized in AOCI and
regulatory assets (liabilities):
Current year actuarial (gain) loss
Amortization of actuarial loss
Current year prior service cost (credit)
Amortization of prior service (cost) credit
Curtailments
Settlements
Total recognized in AOCI and regulatory
assets (liabilities)
$
$
Total recognized in AOCI
$
Total recognized in regulatory assets (liabilities) $
(700) $
(598)
—
(3)
—
(27)
(1,328) $
(747) $
(581) $
941 $
(512)
—
(4)
—
(14)
411 $
271 $
140 $
538 $
(414)
68
—
(3)
(17)
172 $
169 $
3 $
(270) $
(37)
—
34
—
(1)
(274) $
(130) $
(144) $
22 $
(49)
(111)
124
1
(1)
(14) $
6 $
(20) $
80
(45)
—
179
—
(1)
213
107
106
The following table provides the components of gross accumulated other comprehensive loss and regulatory assets (liabilities) for Exelon that have not been recognized as components of periodic
benefit cost as of December 31, 2021 and 2020, respectively, for all plans combined:
Pension Benefits
OPEB
2021
2020
2021
2020
Prior service cost (credit)
Actuarial loss
Total
Total included in AOCI
Total included in regulatory assets (liabilities)
$
$
$
$
32 $
6,752
6,784 $
3,592 $
3,192 $
269
35 $
8,077
8,112 $
4,339 $
3,773 $
(111) $
230
119 $
53 $
66 $
(145)
538
393
183
210
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
Average Remaining Service Period
For pension benefits, Exelon amortizes its unrecognized prior service costs (credits) and certain actuarial (gains) losses, as applicable, based on participants’ average remaining service periods.
For OPEB, Exelon amortizes its unrecognized prior service costs (credits) over participants’ average remaining service period to benefit eligibility age and amortizes certain actuarial (gains) losses over
participants’ average remaining service period to expected retirement. The resulting average remaining service periods for pension and OPEB were as follows:
Pension plans
OPEB plans:
Benefit Eligibility Age
Expected Retirement
Assumptions
2021
2020
2019
12.4
7.6
8.8
12.3
9.0
10.2
11.7
8.7
9.3
The measurement of the plan obligations and costs of providing benefits under Exelon’s defined benefit and OPEB plans involves various factors, including the development of valuation assumptions
and inputs and accounting policy elections. The measurement of benefit obligations and costs is impacted by several assumptions and inputs, as shown below, among other factors. When developing
the required assumptions, Exelon considers historical information as well as future expectations.
Expected Rate of Return. In determining the EROA, Exelon considers historical economic indicators (including inflation and GDP growth) that impact asset returns, as well as expectations regarding
future long-term capital market performance, weighted by Exelon’s target asset class allocations.
Mortality. The mortality assumption is composed of a base table that represents the current expectation of life expectancy of the population adjusted by an improvement scale that attempts to anticipate
future improvements in life expectancy. For the year ended December 31, 2021, Exelon’s mortality assumption utilizes the SOA 2019 base table (Pri-2012) and MP-2021 improvement scale adjusted to
use Proxy SSA ultimate improvement rates. For the year ended December 31, 2020, Exelon's mortality assumption utilizes the SOA 2019 base table (Pri-2012) and MP-2020 improvement scale
adjusted to use Proxy SSA ultimate improvement rates.
For Exelon, the following assumptions were used to determine the benefit obligations for the plans as of December 31, 2021 and 2020. Assumptions used to determine year-end benefit obligations are
the assumptions used to estimate the subsequent year’s net periodic benefit costs.
Discount rate
Investment crediting rate
Rate of compensation increase
Mortality table
Pension Benefits
OPEB
2021
2020
2021
2020
(a)
(b)
2.92 %
3.75 %
3.75 %
(a)
(b)
2.58 %
3.72 %
3.75 %
(a)
2.88 %
N/A
3.75 %
(a)
2.51 %
N/A
3.75 %
Pri-2012 table with MP- 2021
improvement scale (adjusted)
Pri-2012 table with MP- 2020
improvement scale (adjusted)
Pri-2012 table with MP- 2021
improvement scale (adjusted)
Pri-2012 table with MP- 2020
improvement scale (adjusted)
Health care cost trend on covered charges
N/A
N/A
Initial and ultimate rate of 5.00%
Initial and ultimate trend of 5.00%
__________
(a) The discount rates above represent the blended rates used to determine the majority of Exelon’s pension and OPEB obligations. Certain benefit plans used individual rates, which range from 2.55% - 3.02% and 2.84% -
2.92% for pension and OPEB plans, respectively, as of December 31, 2021 and 2.11% - 2.73% and 2.45% - 2.63% for pension and OPEB plans, respectively, as of December 31, 2020.
(b) The investment crediting rate above represents a weighted average rate.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
The following assumptions were used to determine the net periodic benefit cost for Exelon for the years ended December 31, 2021, 2020 and 2019:
Discount rate
Investment crediting rate
Expected return on plan
assets
Rate of compensation
increase
Mortality table
Health care cost trend on
covered charges
2021
Pension Benefits
2020
2019
2021
OPEB
2020
2019
(a)
2.58 %
(b)
3.72 %
(c)
7.00 %
3.75 %
(d)
(a)
3.34 %
(b)
3.82 %
(c)
7.00 %
3.75 %
(d)
(a)
4.31 %
(b)
4.46 %
(c)
7.00 %
3.25 %
(d)
(a)
2.51 %
N/A
(c)
6.46 %
3.75 %
(d)
(a)
3.31 %
N/A
(c)
6.69 %
3.75 %
(d)
(a)
4.30 %
N/A
(c)
6.67 %
3.25 %
(d)
Pri-2012 table with MP- 2020
improvement scale (adjusted)
Pri-2012 table with MP - 2019
improvement scale (adjusted)
RP-2000 table projected to
2012 with improvement scale
AA, with Scale BB-2D
improvements (adjusted)
N/A
N/A
N/A
Pri-2012 table with MP- 2020
improvement scale (adjusted)
Initial and ultimate rate of
5.00%
Pri-2012 table with MP - 2019
improvement scale (adjusted)
Initial and ultimate rate of
5.00%
RP-2000 table projected to
2012 with improvement scale
AA, with Scale BB-2D
improvements (adjusted)
5.00% with ultimate trend of
5.00% in 2017
__________
(a) The discount rates above represent the blended rates used to establish the majority of Exelon’s pension and OPEB costs. Certain benefit plans used individual rates, which range from 2.11%-2.73% and 2.45%-2.63% for
pension and OPEB plans, respectively, for the year ended December 31, 2021; 3.02%-3.44% and 3.27%-3.40% for pension and OPEB plans; respectively, for the year ended December 31, 2020; and 4.13%-4.36% and
4.27%-4.38% for pension and OPEB plans, respectively, for the year ended December 31, 2019.
(b) The investment crediting rate above represents a weighted average rate.
(c) Not applicable to pension and OPEB plans that do not have plan assets.
(d) 3.25% through 2019 and 3.75% thereafter.
Contributions
Exelon allocates contributions related to its legacy Exelon pension and OPEB plans to its subsidiaries based on accounting cost. For legacy CEG, CENG, FitzPatrick, and PHI plans, pension and
OPEB contributions are allocated to the subsidiaries based on employee participation (both active and retired). The following tables provide contributions to the pension and OPEB plans:
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
2021
$
Pension Benefits
2020
542 $
143
18
56
30
2
—
2
574 $
174
17
57
39
2
1
3
2019
2021
356 $
72
27
34
10
2
1
—
91 $
22
1
24
9
9
—
—
OPEB
2020
2019
59 $
5
—
22
9
9
—
—
51
5
1
14
15
12
—
1
Management considers various factors when making pension funding decisions, including actuarially determined minimum contribution requirements under ERISA, contributions required to avoid
benefit restrictions and at-risk status as defined by the Pension Protection Act of 2006 (the Act), management of the pension obligation, and regulatory implications. The Act requires the attainment of
certain funding levels to avoid benefit restrictions (such as an inability to pay lump sums or to accrue benefits prospectively), and at-risk status (which triggers higher minimum contribution requirements
and participant notification). The projected contributions below reflect a funding strategy to make levelized annual contributions with the objective of achieving 100% funded status on
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(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
an ABO basis over time. This level funding strategy helps minimize volatility of future period required pension contributions. Based on this funding strategy and current market conditions, which are
subject to change, Exelon’s estimated annual qualified pension contributions will be approximately $500 million in 2022. Exelon's estimated contributions include contributions related to Generation's
qualified pension plans. In connection with the separation, an additional qualified pension contribution of $207 million was completed on February 1, 2022. Unlike the qualified pension plans, Exelon’s
non-qualified pension plans are not funded, given that they are not subject to statutory minimum contribution requirements.
While OPEB plans are also not subject to statutory minimum contribution requirements, Exelon does fund certain of its plans. For Exelon's funded OPEB plans, contributions generally equal accounting
costs, however, Exelon’s management has historically considered several factors in determining the level of contributions to its OPEB plans, including liabilities management, levels of benefit claims
paid, and regulatory implications (amounts deemed prudent to meet regulatory expectations and best assure continued rate recovery). The amounts below include benefit payments related to unfunded
plans.
The following table provides all Registrants' planned contributions to the qualified pension plans, planned benefit payments to non-qualified pension plans, and planned contributions to OPEB plans in
2022:
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Qualified Pension Plans
Non-Qualified Pension Plans
OPEB
$
505 $
173
12
48
60
2
1
7
32 $
2
1
2
10
1
1
—
Estimated Future Benefit Payments
Estimated future benefit payments to participants in all of the pension plans and postretirement benefit plans as of December 31, 2021 were:
2022
2023
2024
2025
2026
2027 through 2031
Total estimated future benefits payments through 2031
Plan Assets
Pension Benefits
OPEB
$
$
1,288 $
1,298
1,326
1,330
1,326
6,736
13,304 $
50
12
2
16
7
6
—
—
253
254
255
255
258
1,284
2,559
Investment Strategy. On a regular basis, Exelon evaluates its investment strategy to ensure that plan assets will be sufficient to pay plan benefits when due. As part of this ongoing evaluation, Exelon
may make changes to its targeted asset allocation and investment strategy.
Exelon has developed and implemented a liability hedging investment strategy for its qualified pension plans that has reduced the volatility of its pension assets relative to its pension liabilities. Exelon
is likely to continue to gradually increase the liability hedging portfolio as the funded status of its plans improves. The overall objective is to achieve attractive risk-adjusted returns that will balance the
liquidity requirements of the plans’ liabilities while striving to minimize the risk of significant losses. Trust assets for Exelon’s OPEB plans are managed in a diversified investment strategy that prioritizes
maximizing liquidity and returns while minimizing asset volatility.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
Actual asset returns have an impact on the costs reported for the Exelon-sponsored pension and OPEB plans. The actual asset returns across Exelon’s pension and OPEB plans for the year ended
December 31, 2021 were 7.21% and 9.54%, respectively, compared to an expected long-term return assumption of 7.00% and 6.46%, respectively. Exelon used an EROA of 7.00% and 6.44% to
estimate its 2022 pension and OPEB costs, respectively.
Exelon’s pension and OPEB plan target asset allocations as of December 31, 2021 and 2020 were as follows:
Asset Category
Equity securities
Fixed income securities
Alternative investments
Total
(a)
December 31, 2021
December 31, 2020
Pension Benefits
OPEB
Pension Benefits
OPEB
35 %
41 %
24 %
100 %
44 %
41 %
15 %
100 %
34 %
43 %
23 %
100 %
45 %
39 %
16 %
100 %
__________
(a) Alternative investments include private equity, hedge funds, real estate, and private credit.
Concentrations of Credit Risk. Exelon evaluated its pension and OPEB plans’ asset portfolios for the existence of significant concentrations of credit risk as of December 31, 2021. Types of
concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, type of industry, foreign country, and individual fund. As of December 31, 2021, there were
no significant concentrations (defined as greater than 10% of plan assets) of risk in Exelon’s pension and OPEB plan assets.
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Fair Value Measurements
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
The following tables present pension and OPEB plan assets measured and recorded at fair value in Exelon's Consolidated Balance Sheets on a recurring basis and their level within the fair value
hierarchy as of December 31, 2021 and 2020:
Level 1
Level 2
Level 3
Not subject to
leveling
Total
Level 1
Level 2
Level 3
Not subject to
leveling
Total
December 31, 2021
December 31, 2020
Pension plan assets
(a)
Cash equivalents
Equities
(b)
Fixed income:
U.S. Treasury and agencies
State and municipal debt
Corporate debt
(c)
Other
(b)
Fixed income subtotal
Private equity
Hedge funds
Real estate
Private credit
$
445
$
4,621
1,716
—
—
74
1,790
—
—
—
—
156
$
—
302
80
4,319
276
4,977
—
—
—
—
Pension plan assets subtotal
6,856
5,133
OPEB plan assets
(a)
Cash equivalents
Equities
Fixed income:
U.S. Treasury and agencies
State and municipal debt
Corporate debt
(c)
Other
Fixed income subtotal
Hedge funds
Real estate
Private credit
84
605
22
—
—
348
370
—
—
—
OPEB plan assets subtotal
1,059
64
3
68
11
116
7
202
—
—
—
269
—
3
—
—
557
20
577
—
—
—
223
803
—
—
—
—
—
—
—
—
—
—
—
$
—
$
601
$
408
$
2,180
—
—
—
515
515
1,924
1,325
1,301
1,033
8,278
—
506
—
—
—
212
212
273
134
131
6,804
2,018
80
4,876
885
7,859
1,924
1,325
1,301
1,256
4,255
1,137
—
—
—
1,137
—
—
—
—
121
$
—
367
85
4,873
239
5,564
—
—
—
—
21,070
5,800
5,685
148
1,114
90
11
116
567
784
273
134
131
50
618
16
—
—
285
301
—
—
—
969
52
2
66
89
89
3
247
—
—
—
301
—
2
—
—
573
21
594
—
—
—
234
830
—
—
—
—
—
—
—
—
—
—
—
$
—
$
2,552
—
—
—
537
537
1,632
1,314
1,080
1,046
8,161
—
569
—
—
—
179
179
308
111
117
529
6,809
1,504
85
5,446
797
7,832
1,632
1,314
1,080
1,280
20,476
102
1,189
82
89
89
467
727
308
111
117
1,284
9,445
$
2,554
23,030
Total pension and OPEB plan assets
(d)
$
7,915
$
5,402
$
803
$
9,534
$
23,654
$
6,769
$
5,986
$
830
$
1,256
2,584
__________
(a) See Note 18—Fair Value of Financial Assets and Liabilities for a description of levels within the fair value hierarchy.
(b)
Includes derivative instruments of $(3) million and $2 million for the years ended December 31, 2021 and 2020, respectively, which have total notional amounts of $5,959 million and $6,879 million as of December 31,
2021 and 2020, respectively. The notional principal amounts for these instruments provide one measure of the transaction volume
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
(c)
outstanding as of the fiscal years ended and do not represent the amount of the company’s exposure to credit or market loss.
Includes investments in equities sold short held in investment vehicles primarily to hedge the equity option component of its convertible debt. Pension equities sold short totaled $(75) million and $(96) million as of
December 31, 2021 and 2020, respectively. OPEB equities sold short totaled $(28) million and $(42) million as of December 31, 2021 and 2020, respectively.
(d) Excludes net liabilities of $226 million and $132 million as of December 31, 2021 and 2020, respectively, which include certain derivative assets that have notional amounts of $214 million and $239 million as of
December 31, 2021 and 2020, respectively. These items are required to reconcile to the fair value of net plan assets and consist primarily of receivables or payables related to pending securities sales and purchases,
interest and dividends receivable, and repurchase agreement obligations. The repurchase agreements generally have maturities ranging from 3-6 months.
The following table presents the reconciliation of Level 3 assets and liabilities for Exelon measured at fair value for pension and OPEB plans for the years ended December 31, 2021 and 2020:
Pension Assets
Balance as of January 1, 2021
Actual return on plan assets:
Relating to assets still held as of the
reporting date
Purchases, sales and settlements:
Purchases
Settlements
Transfers into Level 3
(a)
Balance as of December 31, 2021
Pension Assets
Balance as of January 1, 2020
Actual return on plan assets:
Relating to assets still held as of the
reporting date
Purchases, sales and settlements:
Purchases
Settlements
Transfers into Level 3
(a)
(b)
Balance as of December 31, 2020
Fixed Income
Equities
Private
Credit
Total
594 $
2 $
234 $
(21)
17
(20)
7
—
—
—
1
31
9
(51)
—
577 $
3 $
223 $
Fixed Income
Equities
Private
Credit
Total
245 $
5 $
237 $
19
34
(3)
299
(3)
—
—
—
15
24
(42)
—
594 $
2 $
234 $
$
$
$
$
830
10
26
(71)
8
803
487
31
58
(45)
299
830
__________
(a) Represents cash settlements only.
(b)
In 2020, a contract was terminated for a certain fixed income commingled fund resulting in the ownership of certain fixed income securities which led to a transfer into Level 3 from not subject to leveling of $299 million.
Valuation Techniques Used to Determine Fair Value
The techniques used to fair value the pension and OPEB assets invested in cash equivalents, equities, fixed income, derivatives, private equity, real estate, and private credit investments are the same
as the valuation techniques for these types of investments in NDT funds. See Cash Equivalents and NDT Fund Investments in Note 18 - Fair Value of Financial Assets and Liabilities for further
information.
Pension and OPEB assets also include investments in hedge funds. Hedge fund investments include those that employ a broad range of strategies to enhance returns and provide additional
diversification. The fair value of hedge funds is determined using NAV or its equivalent as a practical expedient, and therefore, hedge funds are not classified within the fair value hierarchy. Exelon has
the ability to redeem these investments at NAV or its equivalent subject to certain restrictions which may include a lock-up period or a gate.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 15 — Retirement Benefits
Defined Contribution Savings Plan (All Registrants)
The Registrants participate in various 401(k) defined contribution savings plans that are sponsored by Exelon. The plans are qualified under applicable sections of the IRC and allow employees to
contribute a portion of their pre-tax and/or after-tax income in accordance with specified guidelines. All Registrants match a percentage of the employee contributions up to certain limits. The following
table presents matching contributions to the savings plan for the years ended December 31, 2021, 2020, and 2019:
For the Years Ended December 31,
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
2021
2020
2019
$
143 $
158
161
35 $
36
35
12 $
12
11
12
13
12
14 $
14
13
4 $
4
3
3 $
3
3
2
3
2
16. Derivative Financial Instruments (All Registrants)
The Registrants use derivative instruments to manage commodity price risk, interest rate risk, and foreign exchange risk related to ongoing business operations.
Authoritative guidance requires that derivative instruments be recognized as either assets or liabilities at fair value, with changes in fair value of the derivative recognized in earnings immediately. Other
accounting treatments are available through special election and designation, provided they meet specific, restrictive criteria both at the time of designation and on an ongoing basis. These alternative
permissible accounting treatments include NPNS, cash flow hedges, and fair value hedges. Generation's and ComEd's derivative economic hedges related to commodities, referred to as economic
hedges, are recorded at fair value through earnings at Exelon for Generation's economic hedges and for ComEd's economic hedges are offset by a corresponding regulatory asset or liability. For all
NPNS derivative instruments, accounts receivable or accounts payable are recorded when derivatives settle and revenue or expense is recognized in earnings as the underlying physical commodity is
sold or consumed.
Authoritative guidance about offsetting assets and liabilities requires the fair value of derivative instruments to be shown in the Combined Notes to Consolidated Financial Statements on a gross basis,
even when the derivative instruments are subject to legally enforceable master netting agreements and qualify for net presentation in the Consolidated Balance Sheets. A master netting agreement is
an agreement between two counterparties that may have derivative and non-derivative contracts with each other providing for the net settlement of all referenced contracts via one payment stream,
which takes place as the contracts deliver, when collateral is requested or in the event of default. In the tables below, which present fair value balances, Generation’s energy-related economic hedges
and proprietary trading derivatives are shown gross. The impact of the netting of fair value balances with the same counterparty that are subject to legally enforceable master netting agreements, as
well as netting of cash collateral, including margin on exchange positions, is aggregated in the collateral and netting columns.
Generation’s and ComEd’s use of cash collateral is generally unrestricted unless Generation or ComEd are downgraded below investment grade. Cash collateral held by PECO, BGE, Pepco, DPL, and
ACE must be deposited in an unaffiliated major U.S. commercial bank or foreign bank with a U.S. branch office that meet certain qualifications.
Commodity Price Risk (All Registrants)
Each of the Registrants employ established policies and procedures to manage their risks associated with market fluctuations in commodity prices by entering into physical and financial derivative
contracts, including swaps, futures, forwards, options, and short-term and long-term commitments to purchase and sell energy and commodity products. The Registrants believe these instruments,
which are either determined to be non-derivative or classified as economic hedges, mitigate exposure to fluctuations in commodity prices.
Generation. To the extent the amount of energy Generation produces differs from the amount of energy it has contracted to sell, Exelon is exposed to market fluctuations in the prices of electricity,
fossil fuels, and other commodities. Within Exelon, Generation has the most exposure to commodity price risk. As such, Generation
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 16 — Derivative Financial Instruments
uses a variety of derivative and non-derivative instruments to manage the commodity price risk of its electric generation facilities, including power and gas sales, fuel and power purchases, natural gas
transportation and pipeline capacity agreements, and other energy-related products marketed and purchased. To manage these risks, Generation may enter into fixed-price derivative or non-derivative
contracts to hedge the variability in future cash flows from expected sales of power and gas and purchases of power and fuel. The objectives for executing such hedges include fixing the price for a
portion of anticipated future electricity sales at a level that provides an acceptable return. Generation is also exposed to differences between the locational settlement prices of certain economic hedges
and the hedged generating units. This price difference is actively managed through other instruments which include derivative congestion products, whose changes in fair value are recognized in
earnings each period, and auction revenue rights, which are accounted for on an accrual basis.
Additionally, Generation is exposed to certain market risks through its proprietary trading activities. The proprietary trading activities are a complement to Generation’s energy marketing portfolio but
represent a small portion of Generation’s overall energy marketing activities and are subject to limits established by Exelon’s RMC.
Utility Registrants. The Utility Registrants procure electric and natural gas supply through a competitive procurement process approved by each of the respective state utility commissions. The Utility
Registrants’ hedging programs are intended to reduce exposure to energy and natural gas price volatility and have no direct earnings impact as the costs are fully recovered from customers through
regulatory-approved recovery mechanisms. The following table provides a summary of the Utility Registrants’ primary derivative hedging instruments, listed by commodity and accounting treatment.
Registrant
ComEd
PECO
BGE
Pepco
DPL
Commodity
Electricity
Electricity
Electricity
Gas
Electricity
Gas
Electricity
Electricity
Gas
Accounting Treatment
NPNS
Hedging Instrument
Fixed price contracts based on all requirements in the IPA procurement plans.
Changes in fair value of economic hedge recorded to an
offsetting regulatory asset or liability
(a)
20-year floating-to-fixed energy swap contracts beginning June 2012 based on the renewable energy
resource procurement requirements in the Illinois Settlement Legislation of approximately 1.3 million
MWhs per year.
NPNS
NPNS
NPNS
NPNS
NPNS
NPNS
NPNS
Fixed price contracts for default supply requirements through full requirements contracts.
Fixed price contracts to cover about 10% of planned natural gas purchases in support of projected firm
sales.
Fixed price contracts for all SOS requirements through full requirements contracts.
Fixed price contracts for between 10-20% of forecasted system supply requirements for flowing (i.e.,
non-storage) gas for the November through March period.
Fixed price contracts for all SOS requirements through full requirements contracts.
Fixed price contracts for all SOS requirements through full requirements contracts.
Fixed and index priced contracts through full requirements contracts.
Changes in fair value of economic hedge recorded to an
offsetting regulatory asset or liability
(b)
Exchange traded future contracts for up to 50% of estimated monthly purchase requirements each
month, including purchases for storage injections.
ACE
Electricity
NPNS
Fixed price contracts for all BGS requirements through full requirements contracts.
_________
(a) See Note 3—Regulatory Matters for additional information.
(b) The fair value of the DPL economic hedge is not material as of December 31, 2021 and 2020 and is not presented in the fair value tables below.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 16 — Derivative Financial Instruments
The following tables provide a summary of the derivative fair value balances recorded by Exelon and ComEd as of December 31, 2021 and 2020:
December 31, 2021
Mark-to-market derivative assets (current assets)
Mark-to-market derivative assets (noncurrent assets)
Total mark-to-market derivative assets
Mark-to-market derivative liabilities (current liabilities)
Mark-to-market derivative liabilities (noncurrent liabilities)
Total mark-to-market derivative liabilities
Total mark-to-market derivative net assets (liabilities)
December 31, 2020
Mark-to-market derivative assets (current assets)
Mark-to-market derivative assets (noncurrent assets)
Total mark-to-market derivative assets
Mark-to-market derivative liabilities (current liabilities)
Mark-to-market derivative liabilities (noncurrent liabilities)
Total mark-to-market derivative liabilities
Total mark-to-market derivative net assets (liabilities)
Economic
Hedges
Proprietary
Trading
Exelon
Collateral
(a)(b)
$
10,915 $
25 $
152 $
3,224
14,139
(10,161)
(3,094)
(13,255)
2
27
(19)
(1)
(20)
15
167
262
83
345
Netting
(a)
Total
(8,923) $
(2,298)
2,169 $
943
(11,221)
8,923
2,298
11,221
3,112
(995)
(714)
(1,709)
$
$
$
884 $
7 $
512 $
— $
1,403 $
2,757 $
1,501
4,258
(2,662)
(1,603)
(4,265)
40 $
103 $
4
44
(23)
(2)
(25)
64
167
131
118
249
(2,261) $
(1,015)
(3,276)
2,261
1,015
3,276
639 $
554
1,193
(293)
(472)
(765)
(7) $
19 $
416 $
— $
428 $
ComEd
Economic
Hedges
—
—
—
(18)
(201)
(219)
(219)
—
—
—
(33)
(268)
(301)
(301)
_________
(a) Exelon nets all available amounts allowed under the derivative authoritative guidance in the balance sheet. These amounts include unrealized derivative transactions with the same counterparty under legally enforceable
master netting agreements and cash collateral. In some cases, Exelon may have other offsetting exposures, subject to a master netting or similar agreement, such as trade receivables and payables, transactions that do
not qualify as derivatives, letters of credit, and other forms of non-cash collateral. These amounts are not material as of December 31, 2021 and 2020 and not reflected in the table above.
Includes $897 million held and $209 million posted of variation margin with the exchanges as of December 31, 2021 and 2020, respectively.
(b)
Economic Hedges (Commodity Price Risk)
Generation. For the years ended December 31, 2021, 2020, and 2019, Exelon recognized the following net pre-tax commodity mark-to-market gains (losses) which are also located in the Net fair
value changes related to derivatives line in the Consolidated Statements of Cash Flows.
Income Statement Location
Operating revenues
Purchased power and fuel
Total
2021
Gain (Loss)
2020
2019
$
$
(635) $
1,206
571 $
112 $
168
280 $
—
(204)
(204)
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 16 — Derivative Financial Instruments
In general, increases and decreases in forward market prices have a positive and negative impact, respectively, on Generation’s owned and contracted generation positions that have not been hedged.
For merchant revenues not already hedged via comprehensive state programs, such as the CMC in Illinois, we utilize a three-year ratable sales plan to align our hedging strategy with our financial
objectives. The prompt three-year merchant revenues are hedged on an approximate rolling 90%/60%/30% basis. We may also enter into transactions that are outside of this ratable hedging program.
Proprietary Trading (Commodity Price Risk)
Generation also executes commodity derivatives for proprietary trading purposes. Proprietary trading includes all contracts executed with the intent of benefiting from shifts or changes in market prices
as opposed to those executed with the intent of hedging or managing risk. Gains and losses associated with proprietary trading are reported as Operating revenues in Exelon’s Consolidated
Statements of Operations and Comprehensive Income and are included in the Net fair value changes related to derivatives line in the Consolidated Statements of Cash Flows. For the years ended
December 31, 2021, 2020, and 2019, net pre-tax commodity mark-to-market gains and losses for Exelon were not material. The Utility Registrants do not execute derivatives for proprietary trading
purposes.
Interest Rate and Foreign Exchange Risk (Exelon)
Generation utilizes interest rate swaps to manage its interest rate exposure and foreign currency derivatives to manage foreign exchange rate exposure associated with international commodity
purchases in currencies other than U.S. dollars, both of which are treated as economic hedges. The notional amounts were $486 million and $665 million for Exelon as of December 31, 2021 and
2020, respectively.
The mark-to-market derivative assets and liabilities as of December 31, 2021 and 2020 and the mark-to-market gains and losses for the years ended December 31, 2021, 2020, and 2019 were not
material for Exelon.
Credit Risk (All Registrants)
The Registrants would be exposed to credit-related losses in the event of non-performance by counterparties on executed derivative instruments. The credit exposure of derivative contracts, before
collateral, is represented by the fair value of contracts at the reporting date.
Generation. For commodity derivatives, Generation enters into enabling agreements that allow for payment netting with its counterparties, which reduces Generation’s exposure to counterparty risk by
providing for the offset of amounts payable to the counterparty against amounts receivable from the counterparty. Typically, each enabling agreement is for a specific commodity and so, with respect to
each individual counterparty, netting is limited to transactions involving that specific commodity product, except where master netting agreements exist with a counterparty that allow for cross product
netting. In addition to payment netting language in the enabling agreement, Generation’s credit department establishes credit limits, margining thresholds and collateral requirements for each
counterparty, which are defined in the derivative contracts. Counterparty credit limits are based on an internal credit review process that considers a variety of factors, including the results of a scoring
model, leverage, liquidity, profitability, credit ratings by credit rating agencies, and risk management capabilities. To the extent that a counterparty’s margining thresholds are exceeded, the counterparty
is required to post collateral with Generation as specified in each enabling agreement. Generation’s credit department monitors current and forward credit exposure to counterparties and their affiliates,
both on an individual and an aggregate basis.
The following tables provide information on Generation’s credit exposure for all derivative instruments, NPNS, and payables and receivables, net of collateral and instruments that are subject to master
netting agreements, as of December 31, 2021. The tables further delineate that exposure by credit rating of the counterparties and provide guidance on the concentration of credit risk to individual
counterparties. The amounts in the tables below exclude credit risk exposure from individual retail counterparties, nuclear fuel procurement contracts, and exposure through RTOs, ISOs, NYMEX, ICE,
NASDAQ, NGX, and Nodal commodity exchanges.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Rating as of December 31, 2021
Investment grade
Non-investment grade
No external ratings
Internally rated — investment grade
Internally rated — non-investment grade
Total
Net Credit Exposure by Type of Counterparty
Financial institutions
Investor-owned utilities, marketers, power producers
Energy cooperatives and municipalities
Other
Total
Total
Exposure
Before Credit
Collateral
Credit
Collateral
(a)
Net
Exposure
Number of
Counterparties
Greater than 10%
of Net Exposure
Net Exposure of
Counterparties
Greater than 10%
of Net Exposure
Note 16 — Derivative Financial Instruments
$
$
715 $
13
111
226
176 $
—
—
47
1,065 $
223 $
539
13
111
179
842
1 $
—
—
—
1 $
$
$
As of December 31, 2021
106
—
—
—
106
32
711
62
37
842
__________
(a) As of December 31, 2021, credit collateral held from counterparties where Generation had credit exposure included $163 million of cash and $60 million of letters of credit. The credit collateral does not include non-liquid
collateral.
Utility Registrants. The Utility Registrants have contracts to procure electric and natural gas supply that provide suppliers with a certain amount of unsecured credit. If the exposure on the supply
contract exceeds the amount of unsecured credit, the suppliers may be required to post collateral. The net credit exposure is mitigated primarily by the ability to recover procurement costs through
customer rates. As of December 31, 2021, the amount of cash collateral held with external counterparties by ComEd and DPL was $41 million and $43 million, respectively, which is recorded in Other
current liabilities in ComEd’s and DPL’s Consolidated Balance Sheets. The amounts for PECO, BGE, Pepco, and ACE as of December 31, 2021 and for the Utility Registrants as of December 31, 2020
are not material.
Credit-Risk-Related Contingent Features (All Registrants)
Generation. As part of the normal course of business, Generation routinely enters into physically or financially settled contracts for the purchase and sale of electric capacity, electricity, fuels, emissions
allowances, and other energy-related products. Certain of Generation’s derivative instruments contain provisions that require Generation to post collateral. Generation also enters into commodity
transactions on exchanges where the exchanges act as the counterparty to each trade. Transactions on the exchanges must adhere to comprehensive collateral and margining requirements. This
collateral may be posted in the form of cash or credit support with thresholds contingent upon Generation’s credit rating from each of the major credit rating agencies. The collateral and credit support
requirements vary by contract and by counterparty. These credit-risk related contingent features stipulate that if Generation were to be downgraded or lose its investment grade credit rating (based on
its senior unsecured debt rating), it would be required to provide additional collateral. This incremental collateral requirement allows for the offsetting of derivative instruments that are assets with the
same counterparty, where the contractual right of offset exists under applicable master netting agreements. In the absence of expressly agreed-to provisions that specify the collateral that must be
provided, collateral requested will be a function of the facts and circumstances of the situation at the time of the demand. In this case, Generation believes an amount of several months of future
payments (i.e., capacity payments) rather than a calculation of fair value is the best estimate for the contingent collateral obligation, which has been factored into the disclosure below.
The aggregate fair value of all derivative instruments with credit-risk related contingent features in a liability position that are not fully collateralized (excluding transactions on the exchanges that are
fully collateralized) is detailed in the table below:
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Credit-Risk Related Contingent Features
Gross fair value of derivative contracts containing this feature
Offsetting fair value of in-the-money contracts under master netting arrangements
(b)
(a)
Net fair value of derivative contracts containing this feature
(c)
Note 16 — Derivative Financial Instruments
As of December 31,
2021
2020
$
$
(3,872) $
2,424
(1,448) $
(834)
537
(297)
__________
(a) Amount represents the gross fair value of out-of-the-money derivative contracts containing credit-risk-related contingent features ignoring the effects of master netting agreements.
(b) Amount represents the offsetting fair value of in-the-money derivative contracts under legally enforceable master netting agreements with the same counterparty, which reduces the amount of any liability for which
Generation could potentially be required to post collateral.
(c) Amount represents the net fair value of out-of-the-money derivative contracts containing credit-risk related contingent features after considering the mitigating effects of offsetting positions under master netting
arrangements and reflects the actual net liability upon which any potential contingent collateral obligations would be based.
As of December 31, 2021 and 2020, Generation posted or held the following amounts of cash collateral and letters of credit on derivative contracts with external counterparties, after giving
consideration to offsetting derivative and non-derivative positions under master netting agreements.
Cash collateral posted
Letters of credit posted
Cash collateral held
Letters of credit held
Additional collateral required in the event of a credit downgrade below investment grade
$
As of December 31,
2021
2020
713 $
755
182
124
2,113
511
226
110
40
1,432
Generation entered into supply forward contracts with certain utilities, including the Utility Registrants, with one-sided collateral postings only from Generation. If market prices fall below the benchmark
price levels in these contracts, the utilities are not required to post collateral. However, when market prices rise above the benchmark price levels, counterparty suppliers, including Generation, are
required to post collateral once certain unsecured credit limits are exceeded.
Utility Registrants
The Utility Registrants’ electric supply procurement contracts do not contain provisions that would require them to post collateral.
PECO’s, BGE’s, and DPL’s natural gas procurement contracts contain provisions that could require PECO, BGE, and DPL to post collateral in the form of cash or credit support, which vary by contract
and counterparty, with thresholds contingent upon PECO’s, BGE's, and DPL’s credit rating. As of December 31, 2021, PECO, BGE, and DPL were not required to post collateral for any of these
agreements. If PECO, BGE, or DPL lost their investment grade credit rating as of December 31, 2021, they could have been required to post incremental collateral to their counterparties of $37 million,
$78 million, and $14 million, respectively.
17. Debt and Credit Agreements (All Registrants)
Short-Term Borrowings
Exelon Corporate, ComEd, and BGE meet their short-term liquidity requirements primarily through the issuance of commercial paper. PECO meets its short-term liquidity requirements primarily through
the issuance of commercial paper and borrowings from the Exelon intercompany money pool. Pepco, DPL, and ACE meet their short-term liquidity requirements primarily through the issuance of
commercial paper and borrowings from the PHI intercompany money pool. PHI Corporate meets its short-term liquidity requirements primarily through the issuance of short-term notes and borrowings
from the Exelon intercompany money pool. The Registrants may
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
use their respective credit facilities for general corporate purposes, including meeting short-term funding requirements and the issuance of letters of credit.
Commercial Paper
The following table reflects the Registrants' commercial paper programs supported by the revolving credit agreements and bilateral credit agreements as of December 31, 2021 and 2020:
Commercial Paper Issuer
Exelon
(d)
$
ComEd
PECO
BGE
(e)
PHI
Pepco
DPL
ACE
Maximum
Program Size at
December 31,
Outstanding
Commercial
Paper at
December 31,
Average Interest Rate on
Commercial Paper Borrowings at December 31,
2021
(a)(b)(c)
2020
(a)(b)(c)
2021
2020
2021
2020
9,000 $
1,000
600
600
900
300
300
300
9,000 $
1,000
600
600
900
300
300
300
1,301 $
—
—
130
469
175
149
145
1,031
323
—
—
368
35
146
187
0.52 %
— %
— %
0.37 %
0.35 %
0.33 %
0.36 %
0.35 %
0.25 %
0.23 %
— %
— %
0.24 %
0.22 %
0.24 %
0.25 %
__________
(a) Excludes $1,200 million and $1,500 million in bilateral credit facilities as of December 31, 2021 and 2020, respectively, and $131 million and $144 million in credit facilities for project finance as of December 31, 2021 and
2020, respectively. These credit facilities do not back the commercial paper program relating to Generation.
(b) As of December 31, 2021, excludes $142 million of credit facility agreements arranged at minority and community banks, including $33 million, $33 million, $8 million, $8 million, $8 million, and $8 million, at ComEd,
PECO, BGE, Pepco, DPL, and ACE, respectively. These facilities expire on October 7, 2022. These facilities are solely utilized to issue letters of credit. As of December 31, 2020, excludes $135 million of credit facility
agreements arranged primarily at minority and community banks, including $32 million, $33 million, $8 million, $8 million, $8 million, and $8 million, at ComEd, PECO, BGE, Pepco, DPL, and ACE, respectively.
(c) Pepco, DPL, and ACE's revolving credit facility has the ability to flex to $500 million, $500 million, and $350 million, respectively. The borrowing capacity may be increased or decreased during the term of the facility,
except that (i) the sum of the borrowing capacity must equal the total amount of the facility, and (ii) the aggregate amount of credit used at any given time by each of Pepco, DPL, or ACE may not exceed $900 million or
the maximum amount of short-term debt the company is permitted to have outstanding by its regulatory authorities. The total number of the borrowing reallocations may not exceed eight per year during the term of the
facility.
Includes revolving credit agreement at Exelon Corporate with a maximum program size of $600 million as of December 31, 2021 and 2020. Exelon Corporate had no outstanding commercial paper as of December 31,
2021 and 2020.
(d)
(e) Represents the consolidated amounts of Pepco, DPL, and ACE.
In order to maintain their respective commercial paper programs in the amounts indicated above, each Registrant must have credit facilities in place, at least equal to the amount of its commercial
paper program. A registrant does not issue commercial paper in an aggregate amount exceeding the then available capacity under its credit facility.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
As of December 31, 2021, the Registrants had the following aggregate bank commitments, credit facility borrowings, and available capacity under their respective credit facilities:
Borrower
(a)
(c)
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Facility Type
Syndicated Revolver / Bilaterals /
Project Finance
Syndicated Revolver
Syndicated Revolver
Syndicated Revolver
Syndicated Revolver
Syndicated Revolver
Syndicated Revolver
Syndicated Revolver
Aggregate Bank
(b)
Commitment
Facility Draws
Outstanding
Letters of Credit
Actual
To Support
Additional
Commercial
Paper
(c)
Available Capacity as of December 31, 2021
$
10,331 $
1,000
600
600
900
300
300
300
— $
—
—
—
—
—
—
—
2,383 $
2
—
—
—
—
—
—
7,948 $
998
600
600
900
300
300
300
6,461
998
600
470
431
125
151
155
__________
(a) On February 1, 2022, Exelon Corporate and the Utility Registrants' respective syndicated revolving credit facilities were replaced with a new 5-year revolving credit facility.
(b) As of December 31, 2021, excludes $142 million of credit facility agreements arranged at minority and community banks, including $33 million, $33 million, $8 million, $8 million, $8 million, and $8 million, at ComEd,
PECO, BGE, Pepco, DPL, and ACE, respectively. These facilities expire on October 7, 2022. These facilities are solely utilized to issue letters of credit. As of December 31, 2021, letters of credit issued under these
facilities totaled $5 million, $1 million, and $2 million for ComEd, PECO, and BGE, respectively.
Includes $600 million aggregate bank commitment related to Exelon Corporate. Exelon Corporate had $6 million outstanding letters of credit as of December 31, 2021. Exelon Corporate had $594 million in available
capacity to support additional commercial paper as of December 31, 2021.
(c)
Revolving Credit Agreements
On February 1, 2022, Exelon Corporate and the Utility Registrants each entered into a new 5-year revolving credit facility that replaced its existing syndicated revolving credit facility. The following table
reflects the credit agreements:
Borrower
Aggregate Bank Commitment
Interest Rate
Exelon Corporate
ComEd
PECO
BGE
Pepco
DPL
ACE
$
900
1,000
600
600
300
300
300
SOFR plus 1.275 %
SOFR plus 1.000 %
SOFR plus 0.900 %
SOFR plus 0.900 %
SOFR plus 1.075 %
SOFR plus 1.000 %
SOFR plus 1.075 %
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
Bilateral Credit Agreements
The following table reflects the bilateral credit agreements as of December 31, 2021:
Subsidiary
(b)(c)
(b)
(b)(c)
Generation
Generation
Generation
Generation
Generation
Generation
Generation
Generation
(b)
(b)
(b)
(b)
(b)(d)
Date Initiated
January 11, 2013
January 5, 2016
February 21, 2019
October 25, 2019
November 20, 2019
November 21, 2019
November 21, 2019
May 15, 2020
Latest Amendment Date
March 1, 2021
April 2, 2021
March 31, 2021
N/A
N/A
N/A
November 21, 2021
N/A
Maturity Date
(a)
March 1, 2023
April 5, 2023
March 31, 2022
N/A
N/A
N/A
November 21, 2022
N/A
Amount
$
100
150
100
200
300
150
100
100
__________
(a) Credit facilities that do not contain a maturity date are specific to the agreements set within each contract. In some instances, credit facilities are automatically renewed based on the contingency standards set within the
specific agreement.
(b) Bilateral credit agreements solely support the issuance of letters of credit and do not back the commercial paper program relating to Generation.
(c) The bilateral credit agreement was terminated on January 31, 2022.
(d) On February 9, 2022, the bilateral credit agreement increased to $200 million.
Borrowings under Exelon’s, ComEd’s, PECO’s, BGE's, Pepco's, DPL's, and ACE's revolving credit agreements bear interest at a rate based upon either the prime rate or a LIBOR-based rate, plus an
adder based upon the particular Registrant’s credit rating. The adders for the prime based borrowings and LIBOR-based borrowings are presented in the following table:
Prime based borrowings
LIBOR-based borrowings
Exelon
(a)
ComEd
PECO
BGE
Pepco
DPL
ACE
0 - 27.5
90.0 - 127.5
—
100.0
—
90.0
—
90.0
7.5
107.5
—
100.0
7.5
107.5
__________
(a)
Includes interest rate adders at Exelon Corporate of 27.5 basis points and 127.5 basis points for prime and LIBOR-based borrowings, respectively.
If any registrant loses its investment grade rating, the maximum adders for prime rate borrowings and LIBOR-based rate borrowings would be 65 basis points and 165 basis points, respectively. The
credit agreements also require the borrower to pay a facility fee based upon the aggregate commitments. The fee varies depending upon the respective credit ratings of the borrower.
Short-Term Loan Agreements
On March 23, 2017, Exelon Corporate entered into a term loan agreement for $500 million. The loan agreement was renewed on March 17, 2021 and will expire on March 16, 2022. Pursuant to the
loan agreement, loans made thereunder bear interest at a variable rate equal to LIBOR plus 0.65% and all indebtedness thereunder is unsecured. The loan agreement is reflected in Short-term
borrowings in Exelon's Consolidated Balance Sheet.
On March 24, 2021, Exelon Corporate entered into a 9-month term loan agreement for $200 million. Pursuant to the loan agreement, loans made thereunder bear interest at a variable rate equal to
LIBOR plus 0.65% and all indebtedness thereunder is unsecured. Exelon Corporate repaid the term loan on December 22, 2021.
On March 31, 2021, Exelon Corporate entered into a 9-month and 364-day term loan agreement for $150 million each with variable interest rates of LIBOR plus 0.65% and expiration dates of
December 31, 2021 and March 30, 2022, respectively. The 364-day loan agreement is reflected in Short-term borrowings in Exelon's Consolidated Balance Sheet. Exelon Corporate repaid the 9-month
term loan on December 29, 2021.
In connection with the separation, on January 24, 2022, Exelon Corporate entered into a 364-day term loan agreement for $1.15 billion. The loan agreement will expire on January 23, 2023. Pursuant
to the loan
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(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
agreement, loans made thereunder bear interest at a variable rate equal to SOFR plus 0.75% and all indebtedness thereunder is unsecured.
On March 19, 2020, Generation entered into a term loan agreement for $200 million. The loan agreement was renewed on March 17, 2021 and will expire on March 16, 2022. Pursuant to the loan
agreement, loans made thereunder bear interest at a variable rate equal to LIBOR plus 0.875% and all indebtedness thereunder is unsecured. The loan agreement is reflected in Short-term borrowings
in Exelon's Consolidated Balance Sheet. In connection with the separation, Generation repaid the term loan on January 26, 2022.
On March 31, 2020, Generation entered into a term loan agreement for $300 million. The loan agreement was renewed on March 30, 2021 and will expire on March 29, 2022. Pursuant to the loan
agreement, loans made thereunder bear interest at a variable rate equal to LIBOR plus 0.70% and all indebtedness thereunder is unsecured. The loan agreement is reflected in Short-term borrowings
in Exelon's Consolidated Balance Sheet.
On August 6, 2021, Generation entered into a 364-day term loan agreement for $880 million to fund the purchase of EDF's equity interest in CENG. Pursuant to the loan agreement, loans made
thereunder bear interest at a variable rate of LIBOR plus 0.875% until March 31, 2022 and a rate of LIBOR plus 1% thereafter and all indebtedness thereunder is unsecured. The loan agreement is
reflected in Short-term borrowings in Exelon's Consolidated Balance Sheet. The loan agreement was amended on January 24, 2022 to change the maturity date to June 30, 2022 from August 5, 2022.
See Note 2 — Mergers, Acquisitions, and Dispositions for additional information.
On January 25, 2021, ComEd entered into two 90-day term loan agreements of $125 million each with variable interest rates of LIBOR plus 0.50% and LIBOR plus 0.75%, respectively. ComEd repaid
the term loans on March 9, 2021.
Variable Rate Demand Bonds
DPL has outstanding obligations in respect of Variable Rate Demand Bonds (VRDB). VRDBs are subject to repayment on the demand of the holders and, for this reason, are accounted for as short-
term debt in accordance with GAAP. However, these bonds may be converted to a fixed-rate, fixed-term option to establish a maturity which corresponds to the date of final maturity of the bonds. On
this basis, PHI views VRDBs as a source of long-term financing. As of both December 31, 2021 and December 31, 2020, $79 million in variable rate demand bonds issued by DPL were outstanding
and are included in the Long-term debt due within one year in Exelon's, PHI's, and DPL's Consolidated Balance Sheet.
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Long-Term Debt
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
The following tables present the outstanding long-term debt at the Registrants as of December 31, 2021 and 2020:
Exelon
Long-term debt
(a)(b)(c)
First mortgage bonds
Senior unsecured notes
Unsecured notes
Notes payable and other
Junior subordinated notes
Long-term software licensing agreement
Unsecured tax-exempt bonds
Medium-terms notes (unsecured)
Transition bonds
Loan agreement
Nonrecourse debt:
Fixed rates
Variable rates
(d)
Total long-term debt
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Fair value adjustment
Long-term debt due within one year
Long-term debt
Long-term debt to financing trusts
(e)
Subordinated debentures to ComEd Financing III
Subordinated debentures to PECO Trust III
Subordinated debentures to PECO Trust IV
Total long-term debt to financing trusts
Rates
0.14 % -
3.25 % -
2.25 % -
1.64 % -
3.62 % -
0.12 % -
2.29 % -
2.98 % -
5.25 % -
7.90 %
7.60 %
6.35 %
7.49 %
3.50 %
3.95 %
1.70 %
7.72 %
5.55 %
2.00 %
6.00 %
3.50 %
6.35 %
7.38 %
5.75 %
Maturity
Date
December 31,
2021
2020
2022 - 2051 $
2022 - 2050
2022 - 2050
2022 - 2053
2022
2024 - 2025
2022 - 2024
2027
2021
2023
2031 - 2037
2026 - 2027
20,751 $
10,285
4,000
189
1,150
9
143
10
—
50
909
870
38,366
(77)
(262)
670
(3,373)
$
35,324 $
2033 $
2028
2033
$
206 $
81
103
390 $
18,915
10,585
3,700
170
1,150
30
143
10
21
50
977
765
36,516
(77)
(248)
721
(1,819)
35,093
206
81
103
390
__________
(a) Substantially all of ComEd’s assets other than expressly excepted property and substantially all of PECO’s, Pepco's, DPL's, and ACE's assets are subject to the liens of their respective mortgage indentures.
(b) On November 16, 2021, DPL entered into a purchase agreement of First Mortgage Bonds of $125 million at 3.06% due on February 15, 2052. The closing date of the issuance occurred on February 15, 2022.
(c) On November 16, 2021, ACE entered into a purchase agreement of First Mortgage Bonds of $25 million and $150 million at 2.27% and 3.06% due on February 15, 2032 and February 15, 2052, respectively. The closing
(d)
date of the issuance occurred on February 15, 2022.
In connection with the separation, Exelon Corporate entered into three 18-month term loan agreements. On January 21, 2022, two of the loan agreements were issued for $300 million each with an expiration date of July
21, 2023. On January 24, 2022, the third loan agreement was issued for $250 million with an expiration date of July 24, 2023. Pursuant to the loan agreement, loans made thereunder bear interest at a variable rate equal
to SOFR plus 0.65%.
(e) Amounts owed to these financing trusts are recorded as Long-term debt to financing trusts within Exelon’s Consolidated Balance Sheet.
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ComEd
Long-term debt
First mortgage bonds
Other
(a)
Total long-term debt
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Long-term debt due within one year
Long-term debt
Long-term debt to financing trust
(b)
Subordinated debentures to ComEd Financing III
Total long-term debt to financing trusts
Unamortized debt issuance costs
Long-term debt to financing trusts
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
Rates
2.20 % -
Maturity
Date
December 31,
2021
2020
6.45 %
7.49 %
2024 - 2051 $
2053
9,879 $
8
9,887
(27)
(87)
—
$
9,773 $
6.35 %
2033 $
206 $
206
(1)
$
205 $
__________
(a) Substantially all of ComEd’s assets, other than expressly excepted property, are subject to the lien of its mortgage indenture.
(b) Amount owed to this financing trust is recorded as Long-term debt to financing trust within ComEd’s Consolidated Balance Sheet.
PECO
Long-term debt
First mortgage bonds
Loan agreement
Total long-term debt
(a)
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Long-term debt due within one year
Long-term debt
Long-term debt to financing trusts
(b)
Subordinated debentures to PECO Trust III
Subordinated debentures to PECO Trust IV
Long-term debt to financing trusts
Rates
2.38 % -
Maturity
Date
December 31,
2021
2020
5.95 %
2.00 %
2022 - 2051 $
2023
4,200 $
50
4,250
(20)
(33)
(350)
$
3,847 $
2028 $
2033
$
81 $
103
184 $
5.25 % -
7.38 %
5.75 %
__________
(a) Substantially all of PECO’s assets are subject to the lien of its mortgage indenture.
(b) Amounts owed to this financing trust are recorded as Long-term debt to financing trusts within PECO’s Consolidated Balance Sheet.
287
9,079
8
9,087
(28)
(76)
(350)
8,633
206
206
(1)
205
3,750
50
3,800
(20)
(27)
(300)
3,453
81
103
184
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BGE
Long-term debt
Unsecured notes
Total long-term debt
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Long-term debt due within one year
Long-term debt
PHI
Long-term debt
First mortgage bonds
Senior unsecured notes
(a)
Unsecured tax-exempt bonds
Medium-terms notes (unsecured)
Transition bonds
Finance leases
(b)
Other
Total long-term debt
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Fair value adjustment
Long-term debt due within one year
Long-term debt
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
Rates
Maturity
Date
December 31,
2021
2020
2.25 % -
6.35 %
2022 - 2050 $
4,000 $
Rates
0.14 % -
0.12 % -
7.28 % -
7.90 %
7.45 %
1.70 %
7.72 %
5.55 %
3.54 %
7.49 %
4,000
(12)
(27)
(250)
$
3,711 $
Maturity
Date
December 31,
2021
2020
2022 - 2051 $
2032
2022 - 2024
2027
2021
2022 - 2029
2022
6,672 $
185
143
10
—
74
—
7,084
4
(36)
495
(399)
$
7,148 $
3,700
3,700
(12)
(24)
(300)
3,364
6,086
185
143
10
21
50
1
6,496
4
(28)
534
(347)
6,659
_________
(a) Substantially all of Pepco's, DPL's, and ACE's assets are subject to the liens of their respective mortgage indentures.
(b) The amount in the Other category was less than 1 million as of December 31, 2021.
Pepco
Long-term debt
(a)
First mortgage bonds
Unsecured tax-exempt bonds
Finance leases
(b)
Other
Total long-term debt
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Long-term debt due within one year
Long-term debt
________
(a) Substantially all of Pepco's assets are subject to the lien of its mortgage indenture.
(b) The amount in the Other category was less than 1 million as of December 31, 2021.
Maturity
Date
December 31,
2021
2020
7.90 %
1.70 %
3.54 %
7.49 %
$
2022 - 2051
2022
2025 - 2029
2022
$
3,350
110
26
—
3,486
2
(43)
(313)
$
3,132
$
3,075
110
17
1
3,203
2
(40)
(3)
3,162
Rates
2.32 % -
7.28 % -
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DPL
Long-term debt
(a)(b)
First mortgage bonds
Unsecured tax-exempt bonds
Medium-terms notes (unsecured)
Finance leases
Total long-term debt
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Long-term debt due within one year
Long-term debt
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
Rates
0.14 % -
0.12 % -
Maturity
Date
December 31,
2021
2020
4.27 %
0.13 %
7.72 %
3.54 %
2023 - 2051 $
2024
2027
2025 - 2029
1,749 $
33
10
29
1,821
—
(11)
(83)
$
1,727 $
__________
(a) Substantially all of DPL's assets are subject to the lien of its mortgage indenture.
(b) On November 16, 2021, DPL entered into a purchase agreement of First Mortgage Bonds of $125 million at 3.06% due on February 15, 2052. The closing date of the issuance occurred on February 15, 2022.
ACE
Long-term debt
First mortgage bonds
Transition bonds
(a)(b)
Finance leases
Total long-term debt
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Long-term debt due within one year
Long-term debt
Rates
2.25 % -
Maturity
Date
December 31,
2021
2020
5.80 %
5.55 %
3.54 %
2024 - 2050 $
2021
2022 - 2029
1,573 $
—
19
1,592
(1)
(9)
(3)
$
1,579 $
__________
(a) Substantially all of ACE's assets are subject to the lien of its mortgage indenture.
(b) On November 16, 2021, ACE entered into a purchase agreement of First Mortgage Bonds of $25 million and $150 million at 2.27% and 3.06% due on February 15, 2032 and February 15, 2052, respectively. The closing
date of the issuance occurred on February 15, 2022.
Long-term debt maturities at the Registrants in the periods 2022 through 2026 and thereafter are as follows:
Year
2022
2023
2024
2025
2026
Thereafter
Total
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
$
$
$
3,373
865
818
2,223
1,725
29,752
(a)
$
—
—
250
—
500
9,342
(b)
38,756
$
10,092
$
350
50
—
350
—
3,684
4,434
(c)
$
$
250 $
300
—
—
350
3,100
4,000 $
399 $
512
562
162
11
5,438
7,084 $
313 $
4
404
4
4
2,757
3,486 $
83 $
505
5
5
4
1,219
1,821 $
3
3
153
153
3
1,277
1,592
__________
(a)
(b)
(c)
Includes $390 million due to ComEd and PECO financing trusts.
Includes $206 million due to ComEd financing trust.
Includes $184 million due to PECO financing trusts.
289
1,624
33
10
20
1,687
1
(11)
(82)
1,595
1,387
21
13
1,421
(1)
(7)
(261)
1,152
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
Long-Term Debt to Affiliates
In connection with the debt obligations assumed by Exelon as part of the Constellation merger, Exelon and subsidiaries of Generation (former Constellation subsidiaries) entered into intercompany loan
agreements that mirror the terms and amounts of the third-party debt obligations of Exelon, resulting in intercompany notes receivable at Exelon Corporate from Generation. As of December 31, 2021
and 2020, Exelon Corporate had $319 million and $324 million, respectively, recorded to intercompany notes receivable from Generation. In connection with the separation, on January 31, 2022,
Exelon Corporate received cash from Generation of $258 million to settle the intercompany loan.
Debt Covenants
As of December 31, 2021, the Registrants are in compliance with debt covenants.
Nonrecourse Debt
Exelon, through Generation, has issued nonrecourse debt financing, in which approximately $2 billion of generating assets have been pledged as collateral as of December 31, 2021. Borrowings under
these agreements are secured by the assets and equity of each respective project. The lenders do not have recourse against Exelon in the event of a default. If a specific project financing entity does
not maintain compliance with its specific nonrecourse debt financing covenants, there could be a requirement to accelerate repayment of the associated debt or other borrowings earlier than the stated
maturity dates. In these instances, if such repayment was not satisfied, the lenders or security holders would generally have rights to foreclose against the project-specific assets and related collateral.
The potential requirement to satisfy its associated debt or other borrowings earlier than otherwise anticipated could lead to impairments due to a higher likelihood of disposing of the respective project-
specific assets significantly before the end of their useful lives.
Antelope Valley Solar Ranch One. In December 2011, the DOE Loan Programs Office issued a guarantee for up to $646 million for a nonrecourse loan from the Federal Financing Bank to support
the financing of the construction of the Antelope Valley facility. The project became fully operational in 2014. The loan will mature on January 5, 2037. Interest rates on the loan were fixed upon each
advance at a spread of 37.5 basis points above U.S. Treasuries of comparable maturity. The advances were completed as of December 31, 2015 and the outstanding loan balance will bear interest at
an average blended interest rate of 2.82%. As of December 31, 2021 and December 31, 2020, approximately $435 million and $460 million were outstanding, respectively. In addition, letters of credit
were issued to support Generation's equity investment in the project with $37 million outstanding as of December 31, 2021. In December 2017, Exelon’s interests in Antelope Valley were contributed to
and are pledged as collateral for the CR financing structures referenced below.
Continental Wind, LLC. In September 2013, Continental Wind, an indirect subsidiary of Exelon, completed the issuance and sale of $613 million senior secured notes. Continental Wind owns and
operates a portfolio of wind farms in Idaho, Kansas, Michigan, Oregon, New Mexico, and Texas with a total net capacity of 667 MW. The net proceeds were distributed to Generation for its general
business purposes. The notes are scheduled to mature on February 28, 2033. The notes bear interest at a fixed rate of 6.00% with interest payable semi-annually. As of December 31, 2021 and
December 31, 2020, approximately $380 million and $415 million were outstanding, respectively.
In addition, Continental Wind has a $122 million letter of credit facility and $4 million working capital revolver facility. Continental Wind has issued letters of credit to satisfy certain of its credit support
and security obligations. As of December 31, 2021, the Continental Wind letter of credit facility had $115 million in letters of credit outstanding related to the project.
In 2017, Exelon’s interests in Continental Wind were contributed to CRP. Refer to Note 23 - Variable Interest Entities for additional information on CRP.
Renewable Power Generation. In March 2016, RPG, an indirect subsidiary of Exelon, issued $150 million aggregate principal amount of a nonrecourse senior secured notes. The net proceeds were
distributed to Generation for paydown of long term debt obligations at Sacramento PV Energy and Constellation Solar Horizons and for general business purposes. The loan is scheduled to mature on
March 31, 2035. The term loan
290
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 17 — Debt and Credit Agreements
bears interest at a fixed rate of 4.11% payable semi-annually. As of December 31, 2021 and December 31, 2020, approximately $90 million and $95 million were outstanding, respectively.
In 2017, Exelon’s interests in RPG were contributed to CRP. Refer to Note 23 - Variable Interest Entities for additional information on CRP.
SolGen, LLC. In September 2016, SolGen, an indirect subsidiary of Exelon, issued $150 million aggregate principal amount of a nonrecourse senior secured notes. The net proceeds were distributed
to Generation for general business purposes. On December 8, 2020, Generation entered into an agreement with an affiliate of Brookfield Renewable, for the sale of a significant portion of Generation's
solar business. The sale was completed on March 31, 2021 in which the buyer assumed the $125 million outstanding debt. See Note 2 — Mergers, Acquisitions, and Dispositions for additional
information on the sale agreement.
Constellation Renewables. In November 2017, CR, an indirect subsidiary of Exelon, entered into an $850 million nonrecourse senior secured term loan credit facility agreement with a maturity date
of November 28, 2024. In addition to the financing, CR entered into interest rate swaps with an initial notional amount of $636 million at an interest rate of 2.32% to manage a portion of the interest rate
exposure in connection with the financing.
In December 2020, CR entered into a financing agreement for a $750 million nonrecourse senior secured term loan credit facility, scheduled to mature on December 15, 2027. The term loan bears
interest at a variable rate equal to LIBOR plus 2.50%, subject to a 1% LIBOR floor with interest payable quarterly. In addition to the financing, CR entered into interest rate swaps with an initial notional
amount of $516 million at an interest rate of 1.05% to manage a portion of the interest rate exposure in connection with the financing.
The proceeds were used to repay the November 2017 nonrecourse senior secured term loan credit facility of $850 million, of which $709 million was outstanding as of the retirement date in December
of 2020, and to settle the November 2017 interest rate swap. Exelon’s interests in CRP and Antelope Valley remained contributed to and are pledged as collateral for this financing. As of December 31,
2021 and December 31, 2020, $735 million and $750 million was outstanding, respectively. See Note 23 — Variable Interest Entities for additional information on CRP and Note 16 — Derivative
Financial Instruments for additional information on interest rate swaps.
West Medway II, LLC. On May 13, 2021, West Medway II, LLC (West Medway II), an indirect subsidiary of Exelon, entered into a financing agreement for a $150 million nonrecourse senior secured
term loan credit facility with a maturity date of March 31, 2026. The term loan bears interest at an average blended interest rate of LIBOR plus 3%, paid quarterly. In addition to the financing, West
Medway II, entered into interest rate swaps with an initial notional amount of $113 million at an interest rate of 0.61%, paid quarterly, to manage a portion of the interest rate exposure in connection with
the financing. The net proceeds were distributed to Generation for general corporate purposes. Exelon’s interests in West Medway II, were pledged as collateral for this financing. As of December 31,
2021, approximately $135 million was outstanding. See Note 16 — Derivative Financial Instruments for additional information on interest rate swaps.
18. Fair Value of Financial Assets and Liabilities (All Registrants)
Exelon measures and classifies fair value measurements in accordance with the hierarchy as defined by GAAP. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value
into three levels as follows:
•
•
•
Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities that the Registrants have the ability to liquidate as of the reporting date.
Level 2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market
data.
Level 3 — unobservable inputs, such as internally developed pricing models or third-party valuations for the asset or liability due to little or no market activity for the asset or liability.
291
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
Fair Value of Financial Liabilities Recorded at Amortized Cost
The following tables present the carrying amounts and fair values of the Registrants’ short-term liabilities, long-term debt, SNF obligation, and trust preferred securities (long-term debt to financing
trusts or junior subordinated debentures) as of December 31, 2021 and 2020. The Registrants have no financial liabilities classified as Level 1.
The carrying amounts of the Registrants’ short-term liabilities as presented in their Consolidated Balance Sheets are representative of their fair value (Level 2) because of the short-term nature of these
instruments.
Carrying Amount
Level 2
Fair Value
Level 3
Total
Carrying Amount
Level 2
Fair Value
Level 3
Total
December 31, 2021
December 31, 2020
Long-Term Debt, including amounts due within one year
Exelon
38,697
$
$
(a)
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Long-Term Debt to Financing Trusts
Exelon
$
ComEd
PECO
SNF Obligation
Exelon
9,773
4,197
3,961
7,547
3,445
1,810
1,582
$
390
205
184
40,282
$
11,305
4,740
4,406
5,970
3,201
1,426
1,091
$
—
—
—
3,310
$
—
50
—
2,167
975
552
641
470
248
222
$
43,592
$
11,305
4,790
4,406
8,137
4,176
1,978
1,732
$
470
248
222
36,912
$
8,983
3,753
3,664
7,006
3,165
1,677
1,413
$
390
205
184
40,688
$
11,117
4,553
4,366
6,099
3,336
1,484
1,018
$
—
—
—
3,064
$
—
50
—
1,806
748
455
602
467
246
221
$
43,752
11,117
4,603
4,366
7,905
4,084
1,939
1,620
467
246
221
909
$
1,210
$
1,060
$
—
$
1,060
$
1,208
$
909
$
—
$
__________
(a) Includes unamortized debt issuance costs, unamortized debt discount and premium, net, purchase accounting fair value adjustments, and finance lease liabilities which are not fair valued. Refer to Note 17 — Debt and
Credit Agreements for unamortized debt issuance costs, unamortized debt discount and premium, net, and purchase accounting fair value adjustments and Note 11 — Leases for finance lease liabilities.
292
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
Exelon uses the following methods and assumptions to estimate fair value of financial liabilities recorded at carrying cost:
Type
Registrants
Valuation
Level
Long-Term Debt, including amounts due within one year
Taxable Debt Securities
Variable Rate Financing Debt
Taxable Private Placement Debt Securities
Government Backed Fixed Rate Project
Financing Debt
Non-Government Backed Fixed Rate
Nonrecourse Debt
Long-Term Debt to Financing Trusts
Long Term Debt to Financing Trusts
SNF Obligation
SNF Obligation
Recurring Fair Value Measurements
2
2
3
3
3
3
2
All
The fair value is determined by a valuation model that is based on a conventional discounted cash flow methodology and
utilizes assumptions of current market pricing curves. Exelon obtains credit spreads based on trades of existing Exelon debt
securities as well as other issuers in the utility sector with similar credit ratings. The yields are then converted into discount
rates of various tenors that are used for discounting the respective cash flows of the same tenor for each bond or note.
Exelon, DPL
Debt rates are reset on a regular basis and the carrying value approximates fair value.
Exelon, Pepco, DPL, ACE
Rates are obtained similar to the process for taxable debt securities. Due to low trading volume and qualitative factors such
as market conditions, low volume of investors, and investor demand, these debt securities are Level 3.
Exelon
Exelon, Pepco
The fair value is similar to the process for taxable debt securities. Due to the lack of market trading data on similar debt, the
discount rates are derived based on the original loan interest rate spread to the applicable U.S. Treasury rate as well as a
current market curve derived from government-backed securities.
Fair value is based on market and quoted prices for its own and other nonrecourse debt with similar risk profiles. Given the
low trading volume in the nonrecourse debt market, the price quotes used to determine fair value will reflect certain
qualitative factors, such as market conditions, investor demand, new developments that might significantly impact the project
cash flows or off-taker credit, and other circumstances related to the project.
Exelon, ComEd, PECO
Fair value is based on publicly traded securities issued by the financing trusts. Due to low trading volume of these securities
and qualitative factors, such as market conditions, investor demand, and circumstances related to each issue, this debt is
classified as Level 3.
Exelon
The carrying amount is derived from a contract with the DOE to provide for disposal of SNF from certain of Exelon’s nuclear
generating stations. See Note 19 — Commitments and Contingencies for further details. When determining the fair value of
the obligation, the future carrying amount of the SNF obligation is calculated by compounding the current book value of the
SNF obligation at the 13-week U.S. Treasury rate. The compounded obligation amount is discounted back to present value
using Exelon’s discount rate, which is calculated using the same methodology as described above for the taxable debt
securities, and an estimated maturity date of 2035.
The following tables present assets and liabilities measured and recorded at fair value in the Registrants' Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy
as of December 31, 2021 and 2020:
293
NDT fund investments subtotal
(d)(e)
7,251
3,205
Table of Contents
Exelon
(a)
Assets
Cash equivalents
NDT fund investments
Cash equivalents
Equities
Fixed income
(b)
(c)
Corporate debt
U.S. Treasury and agencies
Foreign governments
State and municipal debt
Other
Fixed income subtotal
Private credit
Private equity
Real estate
Rabbi trust investments
Cash equivalents
Mutual funds
Fixed income
Life insurance contracts
Rabbi trust investments subtotal
(f)
Investments in equities
Commodity derivative assets
Economic hedges
Proprietary trading
Effect of netting and allocation of
collateral
(g)(h)
Commodity derivative assets subtotal
DPP consideration
Total assets
Liabilities
Commodity derivative liabilities
Economic hedges
Proprietary trading
Effect of netting and allocation of
collateral
(g)(h)
Commodity derivative liabilities
subtotal
Deferred compensation obligation
Total liabilities
Total net assets
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
Level 1
Level 2
Level 3
Not subject to
leveling
Total
Level 1
Level 2
Level 3
Not subject to
leveling
Total
As of December 31, 2021
As of December 31, 2020
$
643
$
—
$
—
$
—
$
643
$
686
$
—
$
—
$
—
$
686
465
4,564
—
2,193
—
—
29
2,222
—
—
—
116
1,805
1,145
30
60
26
23
1,284
—
—
—
63
105
—
—
168
43
3,017
—
(2,108)
909
—
9,014
(2,201)
—
2,189
(12)
—
(12)
—
—
10
99
109
—
7,223
19
(6,177)
1,065
365
4,744
(6,870)
(18)
6,642
(246)
(154)
(400)
—
—
286
—
—
—
—
286
178
—
—
464
—
—
—
38
38
—
3,899
8
(2,769)
1,138
—
1,640
(4,184)
(2)
2,735
(1,451)
—
(1,451)
—
1,645
—
—
—
—
1,449
1,449
624
673
864
5,255
—
—
—
—
—
—
—
—
—
—
—
5,255
—
—
—
—
—
—
581
8,014
1,431
2,223
60
26
1,501
5,241
802
673
864
210
3,886
—
1,871
—
—
—
1,871
—
—
—
95
2,077
1,485
126
56
101
41
1,809
—
—
—
16,175
5,967
3,981
63
105
10
137
315
43
14,139
27
(11,054)
3,112
365
20,653
(13,255)
(20)
11,566
(1,709)
(154)
(1,863)
60
91
—
—
151
195
745
—
(607)
138
—
7,137
(682)
—
540
(142)
—
(142)
—
—
11
87
98
—
1,914
17
(1,597)
334
639
5,052
(1,928)
(21)
1,918
(31)
(145)
(176)
—
—
285
—
—
—
—
285
212
—
—
497
—
—
—
34
34
—
1,599
27
(905)
721
—
1,252
(1,655)
(4)
1,067
(592)
—
(592)
—
1,562
—
—
—
—
961
961
629
504
679
305
7,525
1,770
1,997
56
101
1,002
4,926
841
504
679
4,335
14,780
—
—
—
—
—
—
—
—
—
—
—
4,335
—
—
—
—
—
—
60
91
11
121
283
195
4,258
44
(3,109)
1,193
639
17,776
(4,265)
(25)
3,525
(765)
(145)
(910)
$
9,002
$
4,344
$
189
$
5,255
$
18,790
$
6,995
$
4,876
$
660
$
4,335
$
16,866
294
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
__________
(a) Excludes cash of $881 million and $409 million as of December 31, 2021 and 2020, respectively, and restricted cash of $95 million and $59 million as of December 31, 2021 and 2020, respectively, and includes long-term
(b)
(c)
(d)
restricted cash of $44 million and $53 million as of December 31, 2021 and 2020, respectively, which is reported in Other deferred debits in the Consolidated Balance Sheets.
Includes $116 million of cash received from outstanding repurchase agreements as of both December 31, 2021 and 2020, and is offset by an obligation to repay upon settlement of the agreement as discussed in (e)
below.
Includes investments in equities sold short of $(55) million and $(62) million as of December 31, 2021 and 2020, respectively, held in an investment vehicle primarily to hedge the equity option component of its convertible
debt.
Includes net derivative liabilities of $1 million and net derivative assets of $2 million, which have total notional amounts of $687 million and $1,043 million as of December 31, 2021 and 2020, respectively. The notional
principal amounts for these instruments provide one measure of the transaction volume outstanding as of the periods ended and do not represent the amount of Exelon's exposure to credit or market loss.
(e) Excludes net liabilities of $111 million and $181 million as of December 31, 2021 and 2020, respectively, which include certain derivative assets that have notional amounts of $182 million and $104 million as of
December 31, 2021 and 2020, respectively. These items consist of receivables related to pending securities sales, interest and dividend receivables, repurchase agreement obligations, and payables related to pending
securities purchases. The repurchase agreements are generally short-term in nature with durations generally of 30 days or less.
Includes equity investments which were previously designated as equity investments without readily determinable fair values but are now publicly traded and therefore have readily determinable fair values. The first
investment became publicly traded in the fourth quarter of 2020. The fair value of these investments is recorded in Other current assets in Exelon's Consolidated Balance Sheets based on the quoted market prices of the
stocks as of the respective balance sheet date. Unrealized (losses)/gains of $(160) million and $186 million were recorded in Other, net in Exelon's Consolidated Statement of Operations and Comprehensive Income for
the years ended December 31, 2021 and 2020, respectively.
(f)
(g) Collateral posted/(received) from counterparties, net of collateral paid to counterparties, totaled $81 million, $465 million, and $(34) million allocated to Level 1, Level 2, and Level 3 mark-to-market derivatives, respectively,
as of December 31, 2021. Collateral posted/(received) from counterparties, net of collateral paid to counterparties, totaled $(67) million, $321 million, and $162 million allocated to Level 1, Level 2, and Level 3 mark-to-
market derivatives, respectively, as of December 31, 2020.
Includes $897 million held and $209 million posted of variation margin with the exchanges as of December 31, 2021 and 2020, respectively.
(h)
As of December 31, 2021, Exelon has outstanding commitments to invest in private credit, private equity, and real estate investments of approximately $306 million, $171 million, and $459 million,
respectively. These commitments will be funded by the existing NDT funds.
Exelon held investments without readily determinable fair values with carrying amounts of $44 million and $73 million as of December 31, 2021 and 2020, respectively. Changes in fair value, cumulative
adjustments, and impairments were not material for the years ended December 31, 2021 and 2020.
ComEd, PECO, and BGE
295
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
Total net assets (liabilities)
$
237
$
As of December 31, 2021
Assets
Cash equivalents
Rabbi trust investments
Mutual funds
Life insurance contracts
(a)
Rabbi trust investments subtotal
Total assets
Liabilities
Mark-to-market derivative liabilities
Deferred compensation obligation
(b)
Total liabilities
As of December 31, 2020
Assets
Cash equivalents
Rabbi trust investments
Mutual funds
Life insurance contracts
(a)
Rabbi trust investments subtotal
Total assets
Liabilities
Mark-to-market derivative liabilities
Deferred compensation obligation
(b)
Total liabilities
—
—
—
237
—
—
—
—
—
—
285
—
—
—
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
ComEd
PECO
BGE
$
237
$
—
$
—
$
237
$
9
$
—
$
—
$
9
$
—
$
—
$
—
$
—
—
—
237
(219)
(10)
(229)
$
8
$
11
—
11
20
—
—
—
20
$
—
—
—
—
(219)
—
(219)
(219)
—
—
—
—
—
(10)
(10)
(10)
$
ComEd
—
16
16
16
—
(9)
(9)
7
$
PECO
—
—
—
—
—
—
—
—
$
11
16
27
36
—
(9)
(9)
27
$
14
—
14
14
—
—
—
14
$
—
—
—
—
—
—
—
—
$
—
—
—
—
—
(7)
(7)
(7)
$
BGE
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
$
285
$
—
$
—
$
285
$
8
$
—
$
—
$
8
$
120
$
—
$
—
$
—
—
—
—
—
(8)
(8)
(8)
$
—
—
—
—
(301)
—
(301)
(301)
—
—
—
285
(301)
(8)
(309)
$
(24)
$
9
—
9
17
—
—
—
17
$
—
13
13
13
—
(9)
(9)
4
$
—
—
—
—
—
—
—
—
$
9
13
22
30
—
(9)
(9)
21
10
—
10
130
—
—
—
$
130
$
—
—
—
—
—
(5)
(5)
(5)
$
—
—
—
—
—
—
—
—
$
Total net assets (liabilities)
$
285
$
__________
(a) ComEd excludes cash of $105 million and $83 million as of December 31, 2021 and 2020, respectively, and restricted cash of $42 million and $37 million as of December 31, 2021 and 2020, respectively, and includes
long-term restricted cash of $43 million as of both December 31, 2021 and 2020, which is reported in Other deferred debits in the Consolidated Balance Sheets. PECO excludes cash of $35 million and $18 million as of
December 31, 2021 and 2020, respectively. BGE excludes cash of $51 million and $24 million as of December 31, 2021 and 2020, respectively, and restricted cash of $4 million and $1 million as of December 31, 2021
and 2020, respectively.
(b) The Level 3 balance consists of the current and noncurrent liability of $18 million and $201 million, respectively, as of December 31, 2021 and $33 million and $268 million, respectively, as of December 31, 2020 related to
floating-to-fixed energy swap contracts with unaffiliated suppliers.
PHI, Pepco, DPL, and ACE
296
—
14
—
14
14
—
(7)
(7)
7
120
10
—
10
130
—
(5)
(5)
125
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
PHI
(a)
Assets
Cash equivalents
Rabbi trust investments
Cash equivalents
Mutual funds
Fixed income
Life insurance contracts
Rabbi trust investments subtotal
Total assets
Liabilities
Deferred compensation obligation
Total liabilities
Total net assets
As of December 31, 2021
Assets
Cash equivalents
Rabbi trust investments
Cash equivalents
Life insurance contracts
(a)
Rabbi trust investments subtotal
Total assets
Liabilities
Deferred compensation obligation
Total liabilities
Total net assets
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
As of December 31, 2021
As of December 31, 2020
$
110
$
—
$
—
$
110
$
86
$
—
$
—
$
59
14
—
—
73
183
—
—
$
183
$
Pepco
—
—
10
27
37
37
(18)
(18)
19
$
59
14
10
62
145
255
(18)
(18)
237
—
—
—
35
35
35
—
—
35
$
DPL
55
14
—
—
69
155
—
—
$
155
$
—
—
—
34
34
34
—
—
34
$
—
—
11
26
37
37
(17)
(17)
20
$
ACE
86
55
14
11
60
140
226
(17)
(17)
209
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
$
31
$
—
$
—
$
31
$
43
$
—
$
—
$
43
$
—
$
—
$
—
$
58
—
58
89
—
—
89
$
—
27
27
27
(2)
(2)
25
$
—
35
35
35
—
—
35
$
58
62
120
151
(2)
(2)
$
149
$
—
—
—
43
—
—
43
$
297
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
$
—
—
—
43
—
—
43
$
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
As of December 31, 2020
(a)
Assets
Cash equivalents
Rabbi trust investments
Cash equivalents
Fixed income
Life insurance contracts
Rabbi trust investments subtotal
Total assets
Liabilities
Deferred compensation obligation
Total liabilities
Total net assets
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Pepco
DPL
ACE
$
35
$
—
$
—
$
35
$
—
$
—
$
—
$
—
$
13
$
—
$
—
$
53
—
—
53
88
—
—
88
$
—
2
26
28
28
(2)
(2)
26
$
—
—
34
34
34
—
—
34
$
53
2
60
115
150
(2)
(2)
$
148
$
—
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
$
—
—
—
—
13
—
—
13
$
—
—
—
—
—
—
—
—
$
—
—
—
—
—
—
—
—
$
13
—
—
—
—
13
—
—
13
__________
(a) PHI excludes cash of $100 million and $74 million as of December 31, 2021 and 2020, respectively, and restricted cash of $3 million and none as of December 31, 2021 and 2020, respectively, and includes long-term
restricted cash of none and $10 million as of December 31, 2021 and 2020, respectively, which is reported in Other deferred debits in the Consolidated Balance Sheets. Pepco excludes cash of $34 million and $30 million
as of December 31, 2021 and 2020, respectively, and restricted cash of $3 million and none as of December 31, 2021 and 2020, respectively. DPL excludes cash of $28 million and $15 million as of December 31, 2021
and 2020, respectively. ACE excludes cash of $29 million and $17 million as of December 31, 2021 and 2020, respectively, and includes long-term restricted cash of none and $10 million as of December 31, 2021 and
2020, respectively, which is reported in Other deferred debits in the Consolidated Balance Sheets.
Reconciliation of Level 3 Assets and Liabilities
The following tables present the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis during the years ended December 31, 2021 and 2020:
For the year ended December 31, 2021
NDT Fund Investments
Mark-to-Market Derivatives
Life Insurance Contracts
Total
Exelon
ComEd
Mark-to-Market
Derivatives
PHI and Pepco
Life Insurance Contracts
$
497
$
129
$
34
$
660
$
(301)
$
Balance as of January 1, 2021
Total realized / unrealized gains (losses)
Included in net income
Included in regulatory assets/liabilities
Change in collateral
Purchases, sales, and settlements
Purchases
Sales
Settlements
Transfers into Level 3
Transfers out of Level 3
Balance as of December 31, 2021
The amount of total gains (losses) included in income
attributed to the change in unrealized gains (losses) related to
assets and liabilities as of December 31, 2021
$
$
5
19
—
4
—
(61)
—
—
464
5
$
$
(a)
(812)
82
(196)
162
(10)
—
19
313
(313)
(c)
(c)
(1,222)
$
$
298
3
—
—
—
—
(2)
3
—
38
3
$
(804)
101
(196)
166
(10)
(63)
22
313
189
(1,214)
$
$
(b)
—
82
—
—
—
—
—
—
(219)
—
$
$
34
3
—
—
—
—
(2)
—
—
35
3
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
For the year ended December 31, 2020
Balance as of January 1, 2020
Total realized / unrealized gains (losses)
Included in net income
Included in regulatory assets/liabilities
Change in collateral
Purchases, sales, and settlements
Purchases
Sales
Settlements
Transfers into Level 3
Transfers out of Level 3
Balance as of December 31, 2020
The amount of total gains included in income attributed to the
change in unrealized gains (losses) related to assets and
liabilities as of December 31, 2020
$
$
NDT Fund Investments
$
511
Mark-to-Market Derivatives
516
$
$
Exelon
2
21
—
8
—
(45)
—
—
497
2
$
$
(a)
(414)
—
(53)
143
(27)
—
(12)
(24)
129
(c)
(c)
6
$
$
Note 18 — Fair Value of Financial Assets and Liabilities
Life Insurance Contracts
Total
ComEd
Mark-to-Market
Derivatives
PHI and Pepco
Life Insurance Contracts
41
$
1,068
$
(301)
$
3
—
—
—
—
(10)
—
—
34
3
$
$
(409)
21
(53)
151
(27)
(55)
(12)
(24)
660
$
11
$
(b)
—
—
—
—
—
—
—
—
(301)
—
$
$
41
3
—
—
—
—
(10)
—
—
34
3
__________
(a)
(b)
Includes an addition of $410 million for realized losses and a reduction of $420 million for realized gains due to the settlement of derivative contracts for the years ended December 31, 2021 and 2020, respectively.
Includes $62 million of increases in fair value and an increase for realized losses due to settlements of $20 million recorded in purchased power expense associated with floating-to-fixed energy swap contracts with
unaffiliated suppliers for the year ended December 31, 2021. Includes $33 million of decreases in fair value and an increase for realized losses due to settlements of $33 million recorded in purchased power expense
associated with floating-to-fixed energy swap contracts with unaffiliated suppliers for the year ended December 31, 2020.
(c) Transfers into and out of Level 3 generally occur when the contract tenor becomes less and more observable, respectively, primarily due to changes in market liquidity or assumptions for certain commodity contracts.
The following tables present the income statement classification of the total realized and unrealized gains (losses) included in income for Level 3 assets and liabilities measured at fair value on a
recurring basis during the years ended December 31, 2021 and 2020:
Total (losses) gains included in net income for the year
ended December 31, 2021
Total unrealized (losses) gains for the year ended
December 31, 2021
Total (losses) gains included in net income for the year
ended December 31, 2020
Total unrealized (losses) gains for the year ended
December 31, 2020
Operating
Revenues
Purchased
Power and
Fuel
(1,343)
$
(1,577)
Operating
Revenues
Purchased
Power and
Fuel
(404)
$
(31)
Exelon
531
$
355
Exelon
(10)
$
37
$
$
Operating and Maintenance
Other, net
3
$
3
Operating and Maintenance
Other, net
3
$
3
PHI and Pepco
Operating and
Maintenance
PHI and Pepco
Operating and
Maintenance
3
3
3
3
5
$
5
2
$
2
299
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
Valuation Techniques Used to Determine Fair Value
Cash Equivalents (All Registrants). Investments with original maturities of three months or less when purchased, including mutual and money market funds, are considered cash equivalents. The fair
values are based on observable market prices and, therefore, are included in the recurring fair value measurements hierarchy as Level 1.
NDT Fund Investments (Exelon). The trust fund investments have been established to satisfy Generation's nuclear decommissioning obligations as required by the NRC. The NDT funds hold debt
and equity securities directly and indirectly through commingled funds and mutual funds, which are included in equities and fixed income. Generation’s NDT fund investments policies outline investment
guidelines for the trusts and limit the trust funds’ exposures to investments in highly illiquid markets and other alternative investments, including private credit, private equity, and real estate.
Investments with maturities of three months or less when purchased, including certain short-term fixed income securities are considered cash equivalents and included in the recurring fair value
measurements hierarchy as Level 1 or Level 2.
Equities. These investments consist of individually held equity securities, equity mutual funds, and equity commingled funds in domestic and foreign markets. With respect to individually held equity
securities, the trustees obtain prices from pricing services, whose prices are generally obtained from direct feeds from market exchanges, which Exelon is able to independently corroborate. Equity
securities held individually, including real estate investment trusts, rights, and warrants, are primarily traded on exchanges that contain only actively traded securities due to the volume trading
requirements imposed by these exchanges. The equity securities that are held directly by the trust funds are valued based on quoted prices in active markets and categorized as Level 1. Certain equity
securities have been categorized as Level 2 because they are based on evaluated prices that reflect observable market information, such as actual trade information or similar securities. Certain
private placement equity securities are categorized as Level 3 because they are not publicly traded and are priced using significant unobservable inputs.
Equity commingled funds and mutual funds are maintained by investment companies, and fund investments are held in accordance with a stated set of fund objectives. The values of some of these
funds are publicly quoted. For mutual funds which are publicly quoted, the funds are valued based on quoted prices in active markets and have been categorized as Level 1. For equity commingled
funds and mutual funds which are not publicly quoted, the fund administrators value the funds using the NAV per fund share, derived from the quoted prices in active markets on the underlying
securities and are not classified within the fair value hierarchy. These investments can typically be redeemed monthly or more frequently, with 30 or less days of notice and without further restrictions.
Fixed income. For fixed income securities, which consist primarily of corporate debt securities, U.S. government securities, foreign government securities, municipal bonds, asset and mortgage-backed
securities, commingled funds, mutual funds, and derivative instruments, the trustees obtain multiple prices from pricing vendors whenever possible, which enables cross-provider validations in addition
to checks for unusual daily movements. A primary price source is identified based on asset type, class, or issue for each security. With respect to individually held fixed income securities, the trustees
monitor prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the portfolio managers challenge an assigned price and
the trustees determine that another price source is considered to be preferable. Exelon has obtained an understanding of how these prices are derived, including the nature and observability of the
inputs used in deriving such prices. Additionally, Exelon selectively corroborates the fair values of securities by comparison to other market-based price sources. Investments in U.S. Treasury securities
have been categorized as Level 1 because they trade in highly-liquid and transparent markets. Certain private placement fixed income securities have been categorized as Level 3 because they are
priced using certain significant unobservable inputs and are typically illiquid. The remaining fixed income securities, including certain other fixed income investments, are based on evaluated prices that
reflect observable market information, such as actual trade information of similar securities, adjusted for observable differences and are categorized as Level 2.
Other fixed income investments primarily consist of fixed income commingled funds and mutual funds, which are maintained by investment companies and hold fund investments in accordance with a
stated set of fund objectives. The values of some of these funds are publicly quoted. For mutual funds which are publicly quoted, the funds are valued based on quoted prices in active markets and
have been categorized as Level 1. For fixed income commingled funds and mutual funds which are not publicly quoted, the fund administrators value the funds using the NAV per fund share, derived
from the quoted prices in active markets of the underlying securities
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
and are not classified within the fair value hierarchy. These investments typically can be redeemed monthly or more frequently, with 30 or less days of notice and without further restrictions.
Derivative instruments. These instruments, consisting primarily of futures and swaps to manage risk, are recorded at fair value. Over-the-counter derivatives are valued daily, based on quoted prices in
active markets and trade in open markets, and have been categorized as Level 1. Derivative instruments other than over-the-counter derivatives are valued based on external price data of comparable
securities and have been categorized as Level 2.
Private credit. Private credit investments primarily consist of investments in private debt strategies. These investments are generally less liquid assets with an underlying term of 3 to 5 years and are
intended to be held to maturity. The fair value of these investments is determined by the fund manager or administrator using a combination of valuation models including cost models, market models,
and income models and typically cannot be redeemed until maturity of the term loan. Private credit investments held directly by Exelon are categorized as Level 3 because they are based largely on
inputs that are unobservable and utilize complex valuation models. For managed private credit funds, the fair value is determined using a combination of valuation models including cost models, market
models, and income models and typically cannot be redeemed until maturity of the term loan. Managed private credit fund investments are not classified within the fair value hierarchy because their fair
value is determined using NAV or its equivalent as a practical expedient.
Private equity. These investments include those in limited partnerships that invest in operating companies that are not publicly traded on a stock exchange such as leveraged buyouts, growth capital,
venture capital, distressed investments, and investments in natural resources. These investments typically cannot be redeemed and are generally liquidated over a period of 8 to 10 years from the
initial investment date, which is based on Exelon's understanding of the investment funds. Private equity valuations are reported by the fund manager and are based on the valuation of the underlying
investments, which include unobservable inputs such as cost, operating results, discounted future cash flows, and market based comparable data. These valuation inputs are unobservable. The fair
value of private equity investments is determined using NAV or its equivalent as a practical expedient, and therefore, these investments are not classified within the fair value hierarchy.
Real estate. These investments are funds with a direct investment in pools of real estate properties. These funds are reported by the fund manager and are generally based on independent appraisals
of the underlying investments from sources with professional qualifications, typically using a combination of market based comparable data and discounted cash flows. These valuation inputs are
unobservable. Certain real estate investments cannot be redeemed and are generally liquidated over a period of 8 to 10 years from the initial investment date, which is based on Exelon's
understanding of the investment funds. The remaining liquid real estate investments are generally redeemable from the investment vehicle quarterly, with 30 to 90 days of notice. The fair value of real
estate investments is determined using NAV or its equivalent as a practical expedient, and therefore, these investments are not classified within the fair value hierarchy.
Exelon evaluated its NDT portfolios for the existence of significant concentrations of credit risk as of December 31, 2021. Types of concentrations that were evaluated include, but are not limited to,
investment concentrations in a single entity, type of industry, foreign country, and individual fund. As of December 31, 2021, there were no significant concentrations (generally defined as greater than
10 percent) of risk in the NDT assets.
See Note 10 — Asset Retirement Obligations for additional information on the NDT fund investments. See Note 15 — Retirement Benefits for the valuation techniques used for hedge fund investments.
Rabbi Trust Investments (Exelon, PECO, BGE, PHI, Pepco, DPL, and ACE). The Rabbi trusts were established to hold assets related to deferred compensation plans existing for certain active and
retired members of Exelon’s executive management and directors. The Rabbi trusts' assets are included in investments in the Registrants’ Consolidated Balance Sheets and consist primarily of money
market funds, mutual funds, fixed income securities, and life insurance policies. Money market funds and mutual funds are publicly quoted and have been categorized as Level 1 given the clear
observability of the prices. The fair values of fixed income securities are based on evaluated prices that reflect observable market information, such as actual trade information or similar securities,
adjusted for observable differences and are categorized in Level 2. The life insurance policies are valued using the cash surrender value of the policies, net of loans against those policies, which is
provided by a third-party. Certain life insurance policies, which consist primarily of mutual funds that are priced based on observable market data, have been categorized as Level 2 because the life
insurance policies
301
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
can be liquidated at the reporting date for the value of the underlying assets. Life insurance policies that are valued using unobservable inputs have been categorized as Level 3, where the fair value is
determined based on the cash surrender value of the policy, which contains unobservable inputs and assumptions. Because Exelon relies on its third-party insurance provider to develop the inputs
without adjustment for the valuations of its Level 3 investments, quantitative information about significant unobservable inputs used in valuing these investments is not reasonably available to Exelon.
Therefore, Exelon has not disclosed such inputs.
Deferred Compensation Obligations (All Registrants). The Registrants’ deferred compensation plans allow participants to defer certain cash compensation into a notional investment account. The
Registrants include such plans in other current and noncurrent liabilities in their Consolidated Balance Sheets. The value of the Registrants’ deferred compensation obligations is based on the market
value of the participants’ notional investment accounts. The underlying notional investments are comprised primarily of equities, mutual funds, commingled funds, and fixed income securities which are
based on directly and indirectly observable market prices. Since the deferred compensation obligations themselves are not exchanged in an active market, they are categorized as Level 2 in the fair
value hierarchy.
The value of certain employment agreement obligations (which are included with the Deferred Compensation Obligation in the tables above) are based on a known and certain stream of payments to
be made over time and are categorized as Level 2 within the fair value hierarchy.
Investments in Equities (Exelon). Exelon holds certain investments in equity securities with readily determinable fair values in addition to those held within the NDT funds. These equity securities are
valued based on quoted prices in active markets and are categorized as Level 1.
Deferred Purchase Price Consideration (Exelon). Exelon has DPP consideration for the sale of certain receivables of retail electricity. This amount is valued based on the sales price of the
receivables net of allowance for credit losses based on accounts receivable aging historical experience coupled with specific identification through a credit monitoring process, which considers current
conditions and forward-looking information such as industry trends, macroeconomic factors, changes in the regulatory environment, external credit ratings, publicly available news, payment status,
payment history, and the exercise of collateral calls. Since the DPP consideration is based on the sales price of the receivables, it is categorized as Level 2 in the fair value hierarchy. See Note 6 —
Accounts Receivable for additional information on the sale of certain receivables.
Mark-to-Market Derivatives (Exelon and ComEd). Derivative contracts are traded in both exchange-based and non-exchange-based markets. Exchange-based derivatives that are valued using
unadjusted quoted prices in active markets are categorized in Level 1 in the fair value hierarchy. Certain derivatives’ pricing is verified using indicative price quotations available through brokers or over-
the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask, mid-point prices and are obtained from sources that the Registrants believe
provide the most liquid market for the commodity. The price quotations are reviewed and corroborated to ensure the prices are observable and representative of an orderly transaction between market
participants. This includes consideration of actual transaction volumes, market delivery points, bid-ask spreads, and contract duration. The remainder of derivative contracts are valued using the Black
model, an industry standard option valuation model. The Black model takes into account inputs such as contract terms, including maturity, and market parameters, including assumptions of the future
prices of energy, interest rates, volatility, credit worthiness, and credit spread. For derivatives that trade in liquid markets, such as generic forwards, swaps, and options, model inputs are generally
observable. Such instruments are categorized in Level 2. The Registrants’ derivatives are predominantly at liquid trading points. For derivatives that trade in less liquid markets with limited pricing
information, model inputs generally would include both observable and unobservable inputs. These valuations may include an estimated basis adjustment from an illiquid trading point to a liquid trading
point for which active price quotations are available. Such instruments are categorized in Level 3.
For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This
includes derivatives valued using indicative price quotations whose contract tenure extends into unobservable periods. In instances where observable data is unavailable, consideration is given to the
assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility, and contract duration. Such instruments are
categorized in Level 3 as the model inputs generally are not observable. Forward price curves for the power market utilized by the front office to manage the portfolio, are reviewed and verified by the
middle office, and used for financial reporting by the back office. The Registrants consider credit and
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
nonperformance risk in the valuation of derivative contracts categorized in Level 2 and 3, including both historical and current market data, in their assessment of credit and nonperformance risk by
counterparty. Due to master netting agreements and collateral posting requirements, the impacts of credit and nonperformance risk were not material to the financial statements.
Disclosed below is detail surrounding the Registrants’ significant Level 3 valuations. The calculated fair value includes marketability discounts for margining provisions and other attributes. The Level 3
balance related to Generation generally consists of forward sales and purchases of power and natural gas and certain transmission congestion contracts. Exelon utilizes various inputs and factors
including market data and assumptions that market participants would use in pricing assets or liabilities as well as assumptions about the risks inherent in the inputs to the valuation technique. The
inputs and factors include forward commodity prices, commodity price volatility, contractual volumes, delivery location, interest rates, credit quality of counterparties, and credit enhancements.
For commodity derivatives, the primary input to the valuation models is the forward commodity price curve for each instrument. Forward commodity price curves are derived by risk management for
liquid locations and by the traders and portfolio managers for illiquid locations. All locations are reviewed and verified by risk management considering published exchange transaction prices, executed
bilateral transactions, broker quotes, and other observable or public data sources. The relevant forward commodity curve used to value each of the derivatives depends on a number of factors,
including commodity type, delivery location, and delivery period. Price volatility varies by commodity and location. When appropriate, Exelon discounts future cash flows using risk free interest rates
with adjustments to reflect the credit quality of each counterparty for assets and Generation’s own credit quality for liabilities. The level of observability of a forward commodity price varies generally due
to the delivery location and delivery period. Certain delivery locations including PJM West Hub (for power) and Henry Hub (for natural gas) are more liquid and prices are observable for up to three
years in the future. The observability period of volatility is generally shorter than the underlying power curve used in option valuations. The forward curve for a less liquid location is estimated by using
the forward curve from the liquid location and applying a spread to represent the cost to transport the commodity to the delivery location. This spread does not typically represent a majority of the
instrument’s market price. As a result, the change in fair value is closely tied to liquid market movements and not a change in the applied spread. The change in fair value associated with a change in
the spread is generally immaterial. An average spread calculated across all Level 3 power and gas delivery locations is approximately $3.33 and $0.53 for power and natural gas, respectively. Many of
the commodity derivatives are short term in nature and thus a majority of the fair value may be based on observable inputs even though the contract as a whole must be classified as Level 3.
On December 17, 2010, ComEd entered into several 20-year floating to fixed energy swap contracts with unaffiliated suppliers for the procurement of long-term renewable energy and associated
RECs. See Note 16 — Derivative Financial Instruments for additional information. The fair value of these swaps has been designated as a Level 3 valuation due to the long tenure of the positions and
internal modeling assumptions. The modeling assumptions include using natural gas heat rates to project long term forward power curves adjusted by a renewable factor that incorporates time of day
and seasonality factors to reflect accurate renewable energy pricing. In addition, marketability reserves are applied to the positions based on the tenor and supplier risk.
See Note 16 — Derivative Financial Instruments for additional information on mark-to-market derivatives.
303
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 18 — Fair Value of Financial Assets and Liabilities
The following table presents the significant inputs to the forward curve used to value these positions:
Fair Value as of
December 31, 2021
Fair Value as of
December 31, 2020
Valuation
Technique
Unobservable
Input
2021 Range & Arithmetic Average
2020 Range & Arithmetic Average
Type of trade
Mark-to-market derivatives—Economic
hedges (Exelon)
(a)(b)
$
(66)
$
245 Discounted Cash Flow
Option
Model
Forward power
price
Forward gas
price
Volatility
percentage
Mark-to-market derivatives (Exelon
and ComEd)
$
(219)
$
(301) Discounted Cash Flow
Forward heat rate
(c)
Marketability
reserve
Renewable
factor
$8.86
$1.69
24%
9x
3%
92%
-
-
-
-
-
-
$481
$17
$55
$3.50
284%
56%
10x
7%
9.13x
4.77%
120%
97%
$2.25
$1.57
11%
8x
3%
91%
-
-
-
-
-
-
$163
$30
$7.88
$2.59
237%
32%
9x
8%
8.85x
4.93%
123%
99%
__________
(a) These positions relate to Generation and the valuation techniques, unobservable inputs, ranges, and arithmetic averages are the same for the asset and liability positions.
(b) The fair values do not include cash collateral (received)/posted on level three positions of $(34) million and $162 million as of December 31, 2021 and December 31, 2020, respectively.
(c) Quoted forward natural gas rates are utilized to project the forward power curve for the delivery of energy at specified future dates. The natural gas curve is extrapolated beyond its observable period to the end of the
contract’s delivery.
The inputs listed above, which are as of the balance sheet date, would have a direct impact on the fair values of the above instruments if they were adjusted. The significant unobservable inputs used
in the fair value measurement of Exelon’s commodity derivatives are forward commodity prices and for options is price volatility. Increases (decreases) in the forward commodity price in isolation would
result in significantly higher (lower) fair values for long positions (contracts that give Exelon the obligation or option to purchase a commodity), with offsetting impacts to short positions (contracts that
give Exelon the obligation or right to sell a commodity). Increases (decreases) in volatility would increase (decrease) the value for the holder of the option (writer of the option). Generally, a change in
the estimate of forward commodity prices is unrelated to a change in the estimate of volatility of prices. An increase to the reserves listed above would decrease the fair value of the positions. An
increase to the heat rate or renewable factors would increase the fair value accordingly. Generally, interrelationships exist between market prices of natural gas and power. As such, an increase in
natural gas pricing would potentially have a similar impact on forward power markets.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
19. Commitments and Contingencies (All Registrants)
Commitments
PHI Merger Commitments (Exelon, PHI, Pepco, DPL, and ACE). Approval of the PHI Merger in Delaware, New Jersey, Maryland, and the District of Columbia was conditioned upon Exelon and PHI
agreeing to certain commitments. The following amounts represent total commitment costs that have been recorded since the acquisition date and the total remaining obligations for Exelon, PHI,
Pepco, DPL, and ACE as of December 31, 2021:
Description
Total commitments
Remaining commitments
(a)
Exelon
PHI
Pepco
DPL
ACE
$
513 $
68
320 $
58
120 $
48
89 $
6
111
4
__________
(a) Remaining commitments extend through 2026 and include rate credits, energy efficiency programs, and delivery system modernization.
In addition, Exelon is committed to develop or to assist in the commercial development of approximately 37 MWs of new solar generation in Maryland, District of Columbia, and Delaware at an
estimated cost of approximately $135 million. Investment costs, which are expected to be primarily capital in nature, are recognized as incurred and recorded in Exelon's financial statements. As of
December 31, 2021, approximately 33 MWs of new generation were developed and Exelon incurred costs of $121 million. Development of the remaining 4 MWs of new generation will be completed by
Generation in 2022. Approximately 30 MWs of the new generation developed was part of Generation's first quarter 2021 sale of a significant portion of its solar business. Refer to Note 2 - Mergers,
Acquisitions and Dispositions for additional information on the solar business. Exelon has also committed to purchase 100 MWs of wind energy in PJM. DPL has committed to conducting three RFPs to
procure up to a total of 120 MWs of wind RECs for the purpose of meeting Delaware's renewable portfolio standards. DPL has conducted two of the three wind REC RFPs. The first 40 MW wind REC
tranche was conducted in 2017 and did not result in a purchase agreement. The second 40 MW wind REC tranche was conducted in 2018 and resulted in a proposed REC purchase agreement that
was approved by the DEPSC in 2019. The third and final 40 MW wind REC tranche will be conducted in 2022.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
Commercial Commitments (All Registrants). The Registrants' commercial commitments as of December 31, 2021, representing commitments potentially triggered by future events were as follows:
Exelon
Letters of credit
(a)
Surety bonds
Financing trust guarantees
Guaranteed lease residual values
(b)
Total commercial commitments
ComEd
Letters of credit
(a)
Surety bonds
Financing trust guarantees
Total commercial commitments
PECO
Letters of credit
(a)
Surety bonds
Financing trust guarantees
Total commercial commitments
BGE
Letters of credit
(a)
Surety bonds
Total commercial commitments
PHI
Surety bonds
Guaranteed lease residual values
(a)
(b)
Total commercial commitments
Pepco
Surety bonds
Guaranteed lease residual values
(a)
(c)
Total commercial commitments
DPL
Surety bonds
(a)
Guaranteed lease residual values
(b)
Total commercial commitments
ACE
Surety bonds
(a)
Guaranteed lease residual values
(b)
Total commercial commitments
Total
2022
2023
2024
2025
2026
2027 and beyond
Expiration within
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2,397 $
1,008
378
31
3,814 $
$
7
17
200
224 $
1
$
2
178
181 $
$
2
3
5 $
$
23
31
54 $
$
14
10
24 $
$
5
13
18 $
$
4
8
12 $
2,296 $
989
—
—
3,285 $
101 $
17
—
5
123 $
$
7
15
—
22 $
1
$
2
—
3 $
$
2
3
5 $
$
23
—
23 $
$
14
—
14 $
$
5
—
5 $
$
4
—
4 $
$
—
—
—
— $
—
$
—
—
— $
$
—
—
— $
$
—
5
5 $
$
—
1
1 $
$
—
2
2 $
$
—
2
2 $
— $
2
—
6
8 $
$
—
2
—
2 $
—
$
—
—
— $
$
—
—
— $
$
—
6
6 $
$
—
2
2 $
$
—
3
3 $
$
—
1
1 $
— $
—
—
6
6
—
—
—
—
—
—
—
—
—
—
—
—
6
6
—
2
2
—
2
2
—
2
2
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
—
—
—
5
5
—
—
—
—
—
—
—
—
—
—
—
—
5
5
—
2
2
—
2
2
—
1
1
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
—
—
378
9
387
—
—
200
200
—
—
178
178
—
—
—
—
9
9
—
3
3
—
4
4
—
2
2
__________
(a) Surety bonds—Guarantees issued related to contract and commercial agreements, excluding bid bonds.
(b) Represents the maximum potential obligation in the event that the fair value of certain leased equipment and fleet vehicles is zero at the end of the maximum lease term. The lease term associated with these assets
ranges from 1 to 8 years. The maximum potential obligation at the end of the minimum lease term would be $75 million guaranteed by Exelon and PHI, of which $25 million, $31 million, and $19 million is guaranteed by
Pepco, DPL, and ACE, respectively. Historically, payments under the guarantees have not been made and PHI believes the likelihood of payments being required under the guarantees is remote.
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Nuclear Insurance (Exelon)
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
Generation is subject to liability, property damage, and other risks associated with major incidents at any of its nuclear stations. Generation has mitigated its financial exposure to these risks through
insurance and other industry risk-sharing provisions.
The Price-Anderson Act was enacted to ensure the availability of funds for public liability claims arising from an incident at any of the U.S. licensed nuclear facilities and to limit the liability of nuclear
reactor owners for such claims from any single incident. As of December 31, 2021, the current liability limit per incident is $13.5 billion and is subject to change to account for the effects of inflation and
changes in the number of licensed reactors at least once every five years with the last adjustment effective November 1, 2018. In accordance with the Price-Anderson Act, Generation maintains
financial protection at levels equal to the amount of liability insurance available from private sources through the purchase of private nuclear energy liability insurance for public liability claims that could
arise in the event of an incident. Effective January 1, 2017, the required amount of nuclear energy liability insurance purchased is $450 million for each operating site. Claims exceeding that amount are
covered through mandatory participation in a financial protection pool, as required by the Price Anderson-Act, which provides the additional $13.1 billion per incident in funds available for public liability
claims. Participation in this secondary financial protection pool requires the operator of each reactor to fund its proportionate share of costs for any single incident that exceeds the primary layer of
financial protection. Generation’s share of this secondary layer would be approximately $2.8 billion, however any amounts payable under this secondary layer would be capped at $413 million per year.
In addition, the U.S. Congress could impose revenue-raising measures on the nuclear industry to pay public liability claims exceeding the $13.5 billion limit for a single incident.
Generation is required each year to report to the NRC the current levels and sources of property insurance that demonstrates Generation possesses sufficient financial resources to stabilize and
decontaminate a reactor and reactor station site in the event of an accident. The property insurance maintained for each facility is currently provided through insurance policies purchased from NEIL,
an industry mutual insurance company of which Generation is a member.
NEIL may declare distributions to its members as a result of favorable operating experience. In recent years, NEIL has made distributions to its members. Generation's portion of the annual distribution
declared by NEIL is estimated to be $113 million for 2021, and was $75 million and $136 million for 2020 and 2019, respectively. The distributions were recorded as a reduction to Operating and
maintenance expense within Exelon’s Consolidated Statements of Operations and Comprehensive Income.
Spent Nuclear Fuel Obligation (Exelon)
Under the NWPA, the DOE is responsible for the development of a geologic repository for and the disposal of SNF and high-level radioactive waste. As required by the NWPA, Generation is a party to
contracts with the DOE (Standard Contracts) to provide for disposal of SNF from Generation’s nuclear generating stations. In accordance with the NWPA and the Standard Contracts, Generation
historically had paid the DOE one mill ($0.001) per kWh of net nuclear generation for the cost of SNF disposal. Due to the lack of a viable disposal program, the DOE reduced the SNF disposal fee to
zero in May 2014. Until a new fee structure is in effect, Exelon and Generation will not accrue any further costs related to SNF disposal fees. This fee may be adjusted prospectively to ensure full cost
recovery.
Generation currently assumes the DOE will begin accepting SNF in 2035 and uses that date for purposes of estimating the nuclear decommissioning asset retirement obligations. The SNF acceptance
date assumption is based on management’s estimates of the amount of time required for DOE to select a site location and develop the necessary infrastructure for long-term SNF storage.
The NWPA and the Standard Contracts required the DOE to begin taking possession of SNF generated by nuclear generating units by no later than January 31, 1998. The DOE, however, failed to
meet that deadline and its performance is expected to be delayed significantly. In August 2004, Generation and the DOJ, in close consultation with the DOE, reached a settlement under which the
government agreed to reimburse Generation, subject to certain damage limitations based on the extent of the government’s breach, for costs associated with storage of SNF at Generation’s nuclear
stations pending the DOE’s fulfillment of its obligations. Calvert Cliffs, Ginna, and Nine Mile Point each have separate settlement agreements in place with the DOE which were
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
extended during 2020 to provide for the reimbursement of SNF storage costs through December 31, 2022. FitzPatrick also has a separate settlement agreement in place with the DOE which was
established in 2021 to provide for reimbursement of SNF storage costs through December 31, 2022. Generation submits annual reimbursement requests to the DOE for costs associated with the
storage of SNF. In all cases, reimbursement requests are made only after costs are incurred and only for costs resulting from DOE delays in accepting the SNF.
Under the settlement agreements, Generation received total cumulative cash reimbursements of $1,492 million through December 31, 2021 for costs incurred. After considering the amounts due to co-
owners of certain nuclear stations and to the former owner of Oyster Creek, Generation received net cumulative cash reimbursements of $1,294 million. As of December 31, 2021 and 2020, the
amount of SNF storage costs for which reimbursement has been or will be requested from the DOE under the DOE settlement agreements is as follows:
DOE receivable - current
DOE receivable - noncurrent
Amounts owed to co-owners
(a)
(b)
(c)
December 31, 2021
December 31, 2020
$
241 $
85
(35)
129
70
(23)
__________
(a) Recorded in Other accounts receivable.
(b) Recorded in Deferred debits and other assets, other.
(c) Recorded in Other accounts receivable. Represents amounts owed to the co-owners of Peach Bottom, Quad Cities, and Nine Mile Point Unit 2 generating facilities.
The Standard Contracts with the DOE also required the payment to the DOE of a one-time fee applicable to nuclear generation through April 6, 1983. The below table outlines the SNF liability recorded
at Exelon as of December 31, 2021 and 2020:
Former ComEd units
(b)
Fitzpatrick
(a)
Total SNF Obligation
December 31, 2021
December 31, 2020
$
$
1,083 $
127
1,210 $
1,082
126
1,208
__________
(a) ComEd previously elected to defer payment of the one-time fee of $277 million for its units (which are now part of Generation), with interest to the date of payment, until just prior to the first delivery of SNF to the DOE. The
unfunded liabilities for SNF disposal costs, including the one-time fee, were transferred to Generation as part of Exelon’s 2001 corporate restructuring.
(b) A prior owner of FitzPatrick elected to defer payment of the one-time fee of $34 million, with interest to the date of payment, for the FitzPatrick unit. As part of the FitzPatrick acquisition on March 31, 2017, Generation
assumed a SNF liability for the DOE one-time fee obligation with interest related to FitzPatrick along with an offsetting asset, included in Other deferred debits and other assets, for the contractual right to reimbursement
from NYPA, a prior owner of FitzPatrick, for amounts paid for the FitzPatrick DOE one-time fee obligation.
Interest for SNF liabilities accrues at the 13-week Treasury Rate. The 13-week Treasury Rate in effect for calculation of the interest accrual at December 31, 2021 was 0.051% for the deferred amount
transferred from ComEd and 0.041% for the deferred FitzPatrick amount.
The following table summarizes sites for which Exelon does not have an outstanding SNF Obligation:
Description
Fees have been paid
Outstanding SNF Obligation remains with former owners
Environmental Remediation Matters
Sites
Former PECO units, Clinton and Calvert Cliffs
Nine Mile Point, Ginna and TMI
General (All Registrants). The Registrants’ operations have in the past, and may in the future, require substantial expenditures to comply with environmental laws. Additionally, under Federal and
state environmental laws, the Registrants are generally liable for the costs of remediating environmental contamination of property
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
now or formerly owned by them and of property contaminated by hazardous substances generated by them. The Registrants own or lease a number of real estate parcels, including parcels on which
their operations or the operations of others may have resulted in contamination by substances that are considered hazardous under environmental laws. In addition, the Registrants are currently
involved in a number of proceedings relating to sites where hazardous substances have been deposited and may be subject to additional proceedings in the future. Unless otherwise disclosed, the
Registrants cannot reasonably estimate whether they will incur significant liabilities for additional investigation and remediation costs at these or additional sites identified by the Registrants,
environmental agencies or others, or whether such costs will be recoverable from third parties, including customers. Additional costs could have a material, unfavorable impact on the Registrants'
financial statements.
MGP Sites (All Registrants). ComEd, PECO, BGE, and DPL have identified sites where former MGP or gas purification activities have or may have resulted in actual site contamination. For almost all
of these sites, there are additional PRPs that may share responsibility for the ultimate remediation of each location.
•
•
•
•
ComEd has 21 sites that are currently under some degree of active study and/or remediation. ComEd expects the majority of the remediation at these sites to continue through at least 2027.
PECO has 6 sites that are currently under some degree of active study and/or remediation. PECO expects the majority of the remediation at these sites to continue through at least 2023.
BGE has 4 sites that currently require some level of remediation and/or ongoing activity. BGE expects the majority of the remediation at these sites to continue through at least 2023.
DPL has 1 site that is currently under study and the required cost at the site is not expected to be material.
The historical nature of the MGP and gas purification sites and the fact that many of the sites have been buried and built over, impacts the ability to determine a precise estimate of the ultimate costs
prior to initial sampling and determination of the exact scope and method of remedial activity. Management determines its best estimate of remediation costs using all available information at the time of
each study, including probabilistic and deterministic modeling for ComEd and PECO, and the remediation standards currently required by the applicable state environmental agency. Prior to completion
of any significant clean up, each site remediation plan is approved by the appropriate state environmental agency.
ComEd, pursuant to an ICC order, and PECO, pursuant to settlements of natural gas distribution rate cases with the PAPUC, are currently recovering environmental remediation costs of former MGP
facility sites through customer rates. While BGE and DPL do not have riders for MGP clean-up costs, they have historically received recovery of actual clean-up costs in distribution rates.
As of December 31, 2021 and 2020, the Registrants had accrued the following undiscounted amounts for environmental liabilities in Other current liabilities and Other deferred credits and other
liabilities in their respective Consolidated Balance Sheets:
December 31, 2021
December 31, 2020
Total environmental
investigation and
remediation liabilities
Portion of total related to
MGP investigation and
remediation
Total environmental
investigation and
remediation liabilities
Portion of total related to
MGP investigation and
remediation
$
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
469 $
279
22
6
42
40
1
1
303 $
279
20
4
—
—
—
—
309
483 $
293
23
2
44
42
1
1
314
293
21
—
—
—
—
—
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
Cotter Corporation (Exelon). The EPA has advised Cotter Corporation (Cotter), a former ComEd subsidiary, that it is potentially liable in connection with radiological contamination at a site known as
the West Lake Landfill in Missouri. In 2000, ComEd sold Cotter to an unaffiliated third-party. As part of the sale, ComEd agreed to indemnify Cotter for any liability arising in connection with the West
Lake Landfill. In connection with Exelon’s 2001 corporate restructuring, this responsibility to indemnify Cotter was transferred to Generation. Including Cotter, there are three PRPs participating in the
West Lake Landfill remediation proceeding. Investigation by Generation has identified a number of other parties who also may be PRPs and could be liable to contribute to the final remedy. Further
investigation is ongoing.
In September 2018, the EPA issued its Record of Decision Amendment (RODA) for the selection of a final remedy. The RODA modified the remedy previously selected by EPA in its 2008 Record of
Decision (ROD). While the ROD required only that the radiological materials and other wastes at the site be capped, the 2018 RODA requires partial excavation of the radiological materials in addition
to the previously selected capping remedy. The RODA also allows for variation in depths of excavation depending on radiological concentrations. The EPA and the PRPs have entered into a Consent
Agreement to perform the Remedial Design, which is expected to be completed in late 2024. In March 2019 the PRPs received Special Notice Letters from the EPA to perform the Remedial Action
work. On October 8, 2019, Cotter (Generation’s indemnitee) provided a non-binding good faith offer to conduct, or finance, a portion of the remedy, subject to certain conditions. The total estimated cost
of the remedy, taking into account the current EPA technical requirements and the total costs expected to be incurred collectively by the PRPs in fully executing the remedy, is approximately $290
million, including cost escalation on an undiscounted basis, which would be allocated among the final group of PRPs. Exelon has determined that a loss associated with the EPA’s partial excavation
and enhanced landfill cover remedy is probable and has recorded a liability included in the table above, that reflects management’s best estimate of Cotter’s allocable share of the ultimate cost. Given
the joint and several nature of this liability, the magnitude of Exelon’s ultimate liability will depend on the actual costs incurred to implement the required remedy as well as on the nature and terms of
any cost-sharing arrangements with the final group of PRPs. Therefore, it is reasonably possible that the ultimate cost and Cotter's associated allocable share could differ significantly once these
uncertainties are resolved.
One of the other PRPs has indicated it will be making a contribution claim against Cotter for costs that it has incurred to prevent a subsurface fire from spreading to those areas of the West Lake
Landfill where radiological materials are believed to have been disposed. At this time, Exelon does not possess sufficient information to assess this claim and therefore are unable to estimate a range
of loss, if any. As such, no liability has been recorded for the potential contribution claim.
In January 2018, the PRPs were advised by the EPA that it will begin an additional investigation and evaluation of groundwater conditions at the West Lake Landfill. In September 2018, the PRPs
agreed to an Administrative Settlement Agreement and Order on Consent for the performance by the PRPs of the groundwater Remedial Investigation and Feasibility Study (RI/FS). The purpose of this
RI/FS is to define the nature and extent of any groundwater contamination from the West Lake Landfill site and evaluate remedial alternatives. Exelon estimates the undiscounted cost for the
groundwater RI/FS to be approximately $40 million. Exelon determined a loss associated with the RI/FS is probable and has recorded a liability included in the table above, that reflects management’s
best estimate of Cotter’s allocable share of the cost among the PRPs. At this time Exelon cannot predict the likelihood or the extent to which, if any, remediation activities may be required and therefore
cannot estimate a reasonably possible range of loss for response costs beyond those associated with the RI/FS component.
In August 2011, Cotter was notified by the DOJ that Cotter is considered a PRP with respect to the government’s clean-up costs for contamination attributable to low level radioactive residues at a
former storage and reprocessing facility named Latty Avenue near St. Louis, Missouri. The Latty Avenue site is included in ComEd’s (now Generation's) indemnification responsibilities discussed above
as part of the sale of Cotter. The radioactive residues had been generated initially in connection with the processing of uranium ores as part of the U.S. Government’s Manhattan Project. Cotter
purchased the residues in 1969 for initial processing at the Latty Avenue facility for the subsequent extraction of uranium and metals. In 1976, the NRC found that the Latty Avenue site had radiation
levels exceeding NRC criteria for decontamination of land areas. Latty Avenue was investigated and remediated by the United States Army Corps of Engineers pursuant to funding under FUSRAP
(Formerly Utilized Sites Remedial Action Program). Pursuant to a series of annual agreements since 2011, the DOJ and the PRPs have tolled the statute of limitations until February 28, 2022 so that
settlement discussions can proceed. On August 3, 2020, the DOJ advised Cotter and the other PRPs that it is seeking approximately
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
$90 million from all the PRPs and has directed that the PRPs must submit a good faith joint proposed settlement offer. In December 2021, a good faith offer was submitted to the government and
negotiations are expected to commence in the first quarter of 2022. Exelon has determined that a loss associated with this matter is probable under its indemnification agreement with Cotter and has
recorded an estimated liability, which is included in the table above.
Benning Road Site (Exelon, PHI, and Pepco). In September 2010, PHI received a letter from EPA identifying the Benning Road site as one of six land-based sites potentially contributing to
contamination of the lower Anacostia River. A portion of the site was formerly the location of a Pepco Energy Services electric generating facility, which was deactivated in June 2012. The remaining
portion of the site consists of a Pepco transmission and distribution service center that remains in operation. In December 2011, the U.S. District Court for the District of Columbia approved a Consent
Decree entered into by Pepco and Pepco Energy Services with the DOEE, which requires Pepco and Pepco Energy Services to conduct a RI/FS for the Benning Road site and an approximately 10 to
15-acre portion of the adjacent Anacostia River.
Since 2013, Pepco and Pepco Energy Services (now Generation, pursuant to Exelon's 2016 acquisition of PHI) have been performing RI work and have submitted multiple draft RI reports to the
DOEE. In September 2019, Pepco and Generation issued a draft “final” RI report which DOEE approved on February 3, 2020. Pepco and Generation are developing a FS to evaluate possible remedial
alternatives for submission to DOEE. The Court has established a schedule for completion of the FS, and approval by the DOEE, by September 16, 2022. After completion and approval of the FS,
DOEE will prepare a Proposed Plan for public comment and then issue a ROD identifying any further response actions determined to be necessary. Exelon, PHI, and Pepco, have determined that a
loss associated with this matter is probable and have accrued an estimated liability, which is included in the table above.
Anacostia River Tidal Reach (Exelon, PHI, and Pepco). Contemporaneous with the Benning Road site RI/FS being performed by Pepco and Generation, DOEE and National Park Service ("NPS")
have been conducting a separate RI/FS focused on the entire tidal reach of the Anacostia River extending from just north of the Maryland-District of Columbia boundary line to the confluence of the
Anacostia and Potomac Rivers. The river-wide RI incorporated the results of the river sampling performed by Pepco and Pepco Energy Services as part of the Benning RI/FS, as well as similar
sampling efforts conducted by owners of other sites adjacent to this segment of the river and supplemental river sampling conducted by DOEE’s contractor. In April 2018, DOEE released a draft RI
report for public review and comment. Pepco submitted written comments to the draft RI and participated in a public hearing.
Pepco has determined that it is probable that costs for remediation will be incurred and recorded a liability in the third quarter 2019 for management’s best estimate of its share of those costs. On
September 30, 2020, DOEE released its Interim ROD. The Interim ROD reflects an adaptive management approach which will require several identified “hot spots” in the river to be addressed first
while continuing to conduct studies and to monitor the river to evaluate improvements and determine potential future remediation plans. The adaptive management process chosen by DOEE is less
intrusive, provides more long-term environmental certainty, is less costly, and allows for site specific remediation plans already underway, including the plan for the Benning Road site to proceed to
conclusion. Pepco concluded that incremental exposure remains reasonably possible, but management cannot reasonably estimate a range of loss beyond the amounts recorded, which are included in
the table above.
On July 12, 2021, DOEE and NPS held a virtual meeting with the PRP's in response to a General Notice Letter sent by each agency inviting the PRP's to participate in discussions, which PEPCO
attended.
In addition to the activities associated with the remedial process outlined above, CERCLA separately requires federal and state (here including Washington, D.C.) Natural Resource Trustees (federal or
state agencies designated by the President or the relevant state, respectively, or Indian tribes) to conduct an assessment of any damages to natural resources within their jurisdiction as a result of the
contamination that is being remediated. The Trustees can seek compensation from responsible parties for such damages, including restoration costs. During the second quarter of 2018, Pepco
became aware that the Trustees are in the beginning stages of a Natural Resources Damages (NRD) assessment, a process that often takes many years beyond the remedial decision to complete.
Pepco has concluded that a loss associated with the eventual NRD assessment is reasonably possible. Due to the very early stage of the assessment process, Pepco cannot reasonably estimate the
range of loss.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
Litigation and Regulatory Matters
Asbestos Personal Injury Claims (Exelon). Exelon maintains a reserve for claims associated with asbestos-related personal injury actions in certain facilities that are currently owned by Generation
or were previously owned by ComEd and PECO. The estimated liabilities are recorded on an undiscounted basis and exclude the estimated legal costs associated with handling these matters, which
could be material.
At December 31, 2021 and December 31, 2020, Exelon had recorded estimated liabilities of approximately $81 million and $89 million, respectively, in total for asbestos-related bodily injury claims. As
of December 31, 2021, approximately $17 million of this amount related to 211 open claims presented to Generation, while the remaining $64 million is for estimated future asbestos-related bodily
injury claims anticipated to arise through 2055, based on actuarial assumptions and analyses, which are updated on an annual basis. On a quarterly basis, Generation monitors actual experience
against the number of forecasted claims to be received and expected claim payments and evaluates whether adjustments to the estimated liabilities are necessary.
Fund Transfer Restrictions (All Registrants). Under applicable law, Exelon may borrow or receive an extension of credit from its subsidiaries. Under the terms of Exelon’s intercompany money pool
agreement, Exelon can lend to, but not borrow from the money pool.
Under applicable law, ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE can pay dividends only from retained, undistributed or current earnings. A significant loss recorded at ComEd, PECO, BGE,
PHI, Pepco, DPL, or ACE may limit the dividends that these companies can distribute to Exelon.
ComEd has agreed in connection with financings arranged through ComEd Financing III that it will not declare dividends on any shares of its capital stock in the event that: (1) it exercises its right to
extend the interest payment periods on the subordinated debt securities issued to ComEd Financing III; (2) it defaults on its guarantee of the payment of distributions on the preferred trust securities of
ComEd Financing III; or (3) an event of default occurs under the Indenture under which the subordinated debt securities are issued. No such event has occurred.
PECO has agreed in connection with financings arranged through PEC L.P. and PECO Trust IV that PECO will not declare dividends on any shares of its capital stock in the event that: (1) it exercises
its right to extend the interest payment periods on the subordinated debentures, which were issued to PEC L.P. or PECO Trust IV; (2) it defaults on its guarantee of the payment of distributions on the
Series D Preferred Securities of PEC L.P. or the preferred trust securities of PECO Trust IV; or (3) an event of default occurs under the Indenture under which the subordinated debentures are issued.
No such event has occurred.
BGE is subject to restrictions established by the MDPSC that prohibit BGE from paying a dividend on its common shares if (a) after the dividend payment, BGE’s equity ratio would be below 48% as
calculated pursuant to the MDPSC’s ratemaking precedents or (b) BGE’s senior unsecured credit rating is rated by two of the three major credit rating agencies below investment grade. No such event
has occurred.
Pepco is subject to certain dividend restrictions established by settlements approved in Maryland and the District of Columbia. Pepco is prohibited from paying a dividend on its common shares if (a)
after the dividend payment, Pepco's equity ratio would be 48% as equity levels are calculated under the ratemaking precedents of the MDPSC and DCPSC or (b) Pepco’s senior unsecured credit rating
is rated by one of the three major credit rating agencies below investment grade. No such event has occurred.
DPL is subject to certain dividend restrictions established by settlements approved in Delaware and Maryland. DPL is prohibited from paying a dividend on its common shares if (a) after the dividend
payment, DPL's equity ratio would be 48% as equity levels are calculated under the ratemaking precedents of the DEPSC and MDPSC or (b) DPL’s senior unsecured credit rating is rated by one of the
three major credit rating agencies below investment grade. No such event has occurred.
ACE is subject to certain dividend restrictions established by settlements approved in New Jersey. ACE is prohibited from paying a dividend on its common shares if (a) after the dividend payment,
ACE's equity ratio would be 48% as equity levels are calculated under the ratemaking precedents of the NJBPU or (b) ACE's senior unsecured credit rating is rated by one of the three major credit
rating agencies below investment grade. ACE is also subject to a dividend restriction which requires ACE to obtain the prior approval of the NJBPU before
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
dividends can be paid if its equity as a percent of its total capitalization, excluding securitization debt, falls below 30%. No such events have occurred.
Deferred Prosecution Agreement (DPA) and Related Matters (Exelon and ComEd). Exelon and ComEd received a grand jury subpoena in the second quarter of 2019 from the U.S. Attorney’s
Office for the Northern District of Illinois (USAO) requiring production of information concerning their lobbying activities in the State of Illinois. On October 4, 2019, Exelon and ComEd received a second
grand jury subpoena from the USAO requiring production of records of any communications with certain individuals and entities. On October 22, 2019, the SEC notified Exelon and ComEd that it had
also opened an investigation into their lobbying activities. On July 17, 2020, ComEd entered into a DPA with the USAO to resolve the USAO investigation. Under the DPA, the USAO filed a single
charge alleging that ComEd improperly gave and offered to give jobs, vendor subcontracts, and payments associated with those jobs and subcontracts for the benefit of the Speaker of the Illinois
House of Representatives and the Speaker’s associates, with the intent to influence the Speaker’s action regarding legislation affecting ComEd’s interests. The DPA provides that the USAO will defer
any prosecution of such charge and any other criminal or civil case against ComEd in connection with the matters identified therein for a three-year period subject to certain obligations of ComEd,
including payment to the U.S. Treasury of $200 million, which was paid in November 2020. Exelon was not made a party to the DPA, and therefore the investigation by the USAO into Exelon’s activities
ended with no charges being brought against Exelon. The SEC’s investigation remains ongoing and Exelon and ComEd have cooperated fully and intend to continue to cooperate fully with the SEC.
Exelon and ComEd cannot predict the outcome of the SEC investigation. No loss contingency has been reflected in Exelon's and ComEd's consolidated financial statements with respect to the SEC
investigation, as this contingency is neither probable nor reasonably estimable at this time.
Subsequent to Exelon announcing the receipt of the subpoenas, various lawsuits were filed, and various demand letters were received related to the subject of the subpoenas, the conduct described in
the DPA and the SEC's investigation, including:
•
•
Four putative class action lawsuits against ComEd and Exelon were filed in federal court on behalf of ComEd customers in the third quarter of 2020 alleging, among other things, civil violations
of federal racketeering laws. In addition, the Citizens Utility Board (CUB) filed a motion to intervene in these cases on October 22, 2020 which was granted on December 23, 2020. On
December 2, 2020, the court appointed interim lead plaintiffs in the federal cases which consisted of counsel for three of the four federal cases. These plaintiffs filed a consolidated complaint
on January 5, 2021. CUB also filed its own complaint against ComEd only on the same day. The remaining federal case, Potter, et al. v. Exelon et al, differed from the other lawsuits as it
named additional individual defendants not named in the consolidated complaint. However, the Potter plaintiffs voluntarily dismissed their complaint without prejudice on April 5, 2021. ComEd
and Exelon moved to dismiss the consolidated class action complaint and CUB’s complaint on February 4, 2021 and briefing was completed on March 22, 2021. On March 25, 2021, the
parties agreed, along with state court plaintiffs, discussed below, to jointly engage in mediation. The parties participated in a one-day mediation on June 7, 2021 but no settlement was
reached. On September 9, 2021, the federal court granted Exelon’s and ComEd’s motion to dismiss and dismissed the plaintiffs’ and CUB’s federal law claim with prejudice. The federal court
also dismissed the related state law claims made by the federal plaintiffs and CUB on jurisdictional grounds. Plaintiffs have appealed the ruling to the Seventh Circuit Court of Appeals.
Plaintiffs' opening appeal brief was filed on January 14, 2022. Exelon and ComEd have requested an extension until March 7, 2022 to file their response brief. Plaintiff's reply brief will be due
approximately 21 days thereafter. Plaintiffs also refiled their state law claims in state court and have moved to consolidate that action with the already pending consumer state court class
action, discussed below. CUB also refiled its state law claims in state court.
Three putative class action lawsuits against ComEd and Exelon were filed in Illinois state court in the third quarter of 2020 seeking restitution and compensatory damages on behalf of ComEd
customers. The cases were consolidated into a single action in October of 2020. In November 2020, CUB filed a motion to intervene in the cases pursuant to an Illinois statute allowing CUB to
intervene as a party or otherwise participate on behalf of utility consumers in any proceeding which affects the interest of utility consumers. On November 23, 2020, the court allowed CUB’s
intervention, but denied its request to stay these cases. Plaintiffs subsequently filed a consolidated complaint, and ComEd and Exelon filed a motion to dismiss on jurisdictional and substantive
grounds on January 11, 2021. Briefing on that motion was completed on March 2, 2021. The parties agreed, on March 25, 2021, along with the federal court
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
plaintiffs discussed above, to jointly engage in mediation. The parties participated in a one-day mediation on June 7, 2021 but no settlement was reached. On December 23, 2021, the state
court granted ComEd and Exelon’s motion to dismiss with prejudice. On December 30, 2021, plaintiffs filed a motion to reconsider that dismissal and for permission to amend their complaint.
The court denied the plaintiffs' motion on January 21, 2022. Plaintiffs have appealed the court's ruling dismissing their complaint to the First District Court of Appeals. On February 15, 2022,
Exelon and ComEd moved to dismiss the federal plaintiffs' refiled state law claims, seeking dismissal on the same legal grounds as those asserted in their motion to dismiss the original state
court plaintiffs' complaint. The parties agreed to submit their motion to dismiss briefing as a package, which included Exelon' and ComEd's motion, plaintiffs' response, and Exelon's and
ComEd's reply, in order to facilitate a speedy resolution by the court. The court granted dismissal of the refiled state claims on February 16, 2022. The original federal plaintiffs filed their notice
of appeal of that dismissal on February 18, 2022.
•
•
•
A putative class action lawsuit against Exelon and certain officers of Exelon and ComEd was filed in federal court in December 2019 alleging misrepresentations and omissions in Exelon’s
SEC filings related to ComEd’s lobbying activities and the related investigations. The complaint was amended on September 16, 2020, to dismiss two of the original defendants and add other
defendants, including ComEd. Defendants filed a motion to dismiss in November 2020. The court denied the motion in April 2021. On May 26, 2021, defendants moved the court to certify its
order denying the motion to dismiss for interlocutory appeal. Briefing on the motion was completed in June 2021. That motion was denied on January 28, 2022. In May 2021, the parties each
filed respective initial discovery disclosures. On June 9, 2021, defendants filed their answer and affirmative defenses to the complaint and the parties engaged thereafter in discovery. On
September 9, 2021, the U.S. government moved to intervene in the lawsuit and stay discovery until the parties entered into an amendment to their protective order that would prohibit the
parties from requesting discovery into certain matters, including communications with the U.S. government. The court ordered said amendment to the protective order on November 15, 2021
and discovery resumed. The parties are required to substantially complete discovery by February 15, 2022. On February 10, 2022, the court granted an extension of the amendment to the
protective order, at the U.S. government's request, to May 15, 2022, and directed the parties to submit a proposed joint schedule for the additional case proceedings by May 13, 2022.
Six shareholders have sent letters to the Exelon Board of Directors from 2020 through January 2022 demanding, among other things, that the Exelon Board of Directors investigate and
address alleged breaches of fiduciary duties and other alleged violations by Exelon and ComEd officers and directors related to the conduct described in the DPA. In the first quarter of 2021,
the Exelon Board of Directors appointed a Special Litigation Committee ("SLC") consisting of disinterested and independent parties to investigate and address these shareholders' allegations
and make recommendations to the Exelon Board of Directors based on the outcome of the SLC's investigation. In July 2021, one of the demand letter shareholders filed a derivative action
against current and former Exelon and ComEd officers and directors, and against Exelon, as nominal defendant, asserting the same claims made in its demand letter. On October 12, 2021,
the parties to the derivative action filed an agreed motion to stay that litigation for 120 days in order to allow the SLC to continue its investigation, which the court granted. On January 31,
2022, the parties jointly moved the court to extend the stay an additional 120 days.
Two separate shareholder requests seeking review of certain Exelon books and records were received in August 2021 and January 2022. Exelon has responded to the first request and the
shareholder thereafter sent a formal shareholder demand to the Exelon Board as discussed above. Exelon is in the process of responding to the second request.
No loss contingencies have been reflected in Exelon’s and ComEd’s consolidated financial statements with respect to these matters, as such contingencies are neither probable nor reasonably
estimable at this time.
The ICC continues to conduct an investigation into rate impacts of conduct admitted in the DPA initiated on August 12, 2021. On December 16, 2021 ComEd filed direct testimony addressing the costs
recovered from customers related to the DPA and Exelon’s funding of the fine paid by ComEd. In that testimony, ComEd proposed to voluntarily refund to customers compensation costs of the former
officers charged with wrongdoing in connection with events described in the DPA for the period during which those events occurred as well as costs, previously proposed to be returned, of individuals
and entities specifically identified in the DPA, as well as individuals and entities who were referred to ComEd as part of the conduct described in the DPA and who failed,
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
during their tenure at ComEd, to perform work to management expectations. Exelon and ComEd recorded a loss contingency for these compensation costs as of December 31, 2021, which for
financial statement disclosure purposes is not material. The testimony supports the calculation of the refund amount and proposes a refund mechanism (one time bill credit in February 2023) and also
addresses other topics outlined by statute and the ICC orders initiating the investigation. ComEd also presented evidence concerning the lawfulness of ComEd’s past rates more generally. However, in
response to pre-hearing motions concerning the scope of the hearing and permissible discovery and testimony, the ICC Administrate Law Judge ("ALJ") assigned ruled that scope of this proceeding
was limited to whether ComEd used ratepayer funds to pay the “effectuation costs” for the conduct described in the DPA and to pay the criminal fine. Consistent with that scope, the ALJ limited the
testimony to those subjects. Consistent with that ruling and a failure to exhaust other discovery, on January 18, 2022 the ALJ denied plaintiffs’ counsel’s request to depose witnesses including several
current and former ComEd and Exelon executives.
Impacts of the February 2021 Extreme Cold Weather Event and Texas-based Generating Assets Outages (Exelon). Beginning on February 15, 2021, Exelon’s Texas-based generating assets
within the ERCOT market, specifically Colorado Bend II, Wolf Hollow II, and Handley, experienced outages as a result of extreme cold weather conditions. In addition, those weather conditions drove
increased demand for service, dramatically increased wholesale power prices, and also increased gas prices in certain regions. See Note 3 — Regulatory Matters for additional information.
Various lawsuits have been filed against Exelon since March 2021 related to these events, including:
•
•
On March 5, 2021, Exelon, along with more than 160 power generators and transmission and distribution companies, was sued by approximately 160 individually named plaintiffs, purportedly
on behalf of all Texans who allegedly suffered loss of life or sustained personal injury, property damage or other losses as a result of the weather events. The plaintiffs allege that the
defendants failed to properly prepare for the cold weather and failed to properly conduct their operations, seeking compensatory as well as punitive damages. On April 26, 2021, another multi-
plaintiff lawsuit was filed on behalf of approximately 90 plaintiffs against more than 300 defendants, including Exelon, involving similar allegations of liability and claims of personal injury and
property damage. Since March 2021, approximately 60 additional lawsuits, naming multiple defendants including Exelon, were filed by individual or multiple plaintiffs in different Texas
counties, all arising out of the February weather events. These additional lawsuits allege wrongful death, property damage, or other losses. Co-defendants in these lawsuits include ERCOT,
transmission and distribution utilities and other generators. On December 28, 2021, approximately 130 insurance companies which insured Texas homeowners and businesses filed a
subrogation lawsuit against multiple defendants, including Exelon, alleging that defendants were at fault for the energy failure that resulted from the winter storm, causing significant property
damage to the insureds. Additionally, as of January 28, 2022, Exelon has been added to approximately 80 additional wrongful death, personal injury and property damage lawsuits through the
Multi-District-Litigation (MDL) pending in Texas state court. The MDL now includes all of the above-described Texas state court matters. Exelon disputes liability and denies that it is
responsible for any of plaintiffs’ alleged claims and is vigorously contesting them. No loss contingencies have been reflected in Exelon’s consolidated financial statements with respect to these
matters, as such contingencies are neither probable nor reasonably estimable at this time.
On March 22, 2021, an LDC filed a lawsuit in Missouri federal court against Generation for breach of contract and unjust enrichment, seeking damages of approximately $40 million. The
plaintiff claims that Generation failed to deliver gas to its customers in February of 2021, causing the plaintiff to incur damages by forcing it to purchase gas for Exelon’s customers and by
Exelon’s refusal to pay the resulting penalties. On March 26, 2021, Exelon filed a complaint with the MPSC against the LDC to void the OFO penalties, or alternatively to grant a waiver or
variance from the tariff requirements, to prohibit the LDC from billing or otherwise attempting to collect from Exelon or any Missouri customer any portion of the penalties claimed by the LDC
until the resolution of the complaint, and to prohibit the LDC from taking any retaliatory measure, including termination of service. On September 1, 2021, the MPSC consolidated Exelon’s
complaint with two other similar complaints from other companies. On January 4, 2022, the court denied Exelon's motion to dismiss, but in the alternative granted its motion to stay pending
MPSC resolution of Exelon's complaint. The MPSC has scheduled an evidentiary hearing for the three consolidated complaint cases in April 2022. Based on the penalty provisions within the
tariff
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(Dollars in millions, except per share data unless otherwise noted)
Note 19 — Commitments and Contingencies
that was in effect at the relevant time, Exelon recorded a liability of approximately $40 million as of December 31, 2021.
Savings Plan Claim (Exelon). On December 6, 2021, seven current and former employees filed a putative ERISA class action suit in U.S. District Court for the Northern District of Illinois against
Exelon, its Board of Directors, the former Board Investment Oversight Committee, the Corporate Investment Committee, individual defendants, and other unnamed fiduciaries of the Exelon Corporation
Employee Savings Plan (“Plan”). The complaint alleges that the defendants violated their fiduciary duties under the Plan by including certain investment options that allegedly were more expensive
than and underperformed similar passively-managed or other funds available in the marketplace and permitting a third-party administrative service provider/recordkeeper and an investment adviser to
charge excessive fees for the services provided. The plaintiffs seek declaratory, equitable and monetary relief on behalf of the Plan and participants. On February 16, 2022, the court granted the
parties' stipulated dismissal of the individual named defendants without prejudice. The remaining defendants' responsive pleading is due February 25, 2022. No loss contingencies have been reflected
in Exelon’s consolidated financial statements with respect to this matter, as such contingencies are neither probable nor reasonably estimable at this time.
General (All Registrants). The Registrants are involved in various other litigation matters that are being defended and handled in the ordinary course of business. The assessment of whether a loss is
probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. The Registrants maintain accruals for such
losses that are probable of being incurred and subject to reasonable estimation. Management is sometimes unable to estimate an amount or range of reasonably possible loss, particularly where (1)
the damages sought are indeterminate, (2) the proceedings are in the early stages, or (3) the matters involve novel or unsettled legal theories. In such cases, there is considerable uncertainty regarding
the timing or ultimate resolution of such matters, including a possible eventual loss.
20. Shareholders' Equity (All Registrants)
ComEd Common Stock Warrants
The following table presents warrants outstanding to purchase ComEd common stock and shares of common stock reserved for the conversion of warrants. The warrants entitle the holders to convert
such warrants into common stock of ComEd at a conversion rate of one share of common stock for three warrants.
Warrants outstanding
Common Stock reserved for conversion
Share Repurchases
December 31,
2021
2020
60,061
20,020
60,143
20,048
There currently is no Exelon Board of Director authority to repurchase shares. Any previous shares repurchased are held as treasury shares, at cost, unless cancelled or reissued at the discretion of
Exelon’s management.
Preferred and Preference Securities
The following table presents Exelon, ComEd, PECO, BGE, Pepco, and ACE's shares of preferred securities authorized, none of which were outstanding, as of December 31, 2021 and 2020. There are
no shares of preferred securities authorized for DPL.
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Exelon
ComEd
PECO
BGE
Pepco
(a)
ACE
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 20 — Shareholders' Equity
Preferred Securities Authorized
100,000,000
850,000
15,000,000
1,000,000
6,000,000
2,799,979
__________
(a)
Includes 799,979 shares of cumulative preferred stock and 2,000,000 of no-par preferred stock as of December 31, 2021 and 2020.
The following table presents ComEd's, BGE's, and ACE's preference securities authorized, none of which were outstanding as of December 31, 2021 and 2020. There are no shares of preference
securities authorized for Exelon, PECO, Pepco, and DPL.
ComEd
(a)
BGE
ACE
__________
(a)
Includes 4,600,000 shares of unclassified preference securities and 1,900,000 shares of previously redeemed preference securities as of December 31, 2021 and 2020.
Preference Securities Authorized
6,810,451
6,500,000
3,000,000
21. Stock-Based Compensation Plans (All Registrants)
Stock-Based Compensation Plans
Exelon grants stock-based awards through its LTIP, which primarily includes performance share awards, restricted stock units, and stock options. At December 31, 2021, there were approximately 33
million shares authorized for issuance under the LTIP. For the years ended December 31, 2021, 2020, and 2019, exercised and distributed stock-based awards were primarily issued from authorized
but unissued common stock shares.
The Registrants grant cash awards. The following table does not include expense related to these plans as they are not considered stock-based compensation plans under the applicable authoritative
guidance.
The following table presents the stock-based compensation expense included in Exelon's Consolidated Statements of Operations and Comprehensive Income. The Utility Registrants' stock-based
compensation expense for the years ended December 31, 2021, 2020, and 2019 was not material.
Exelon
Total stock-based compensation expense included in operating and maintenance expense
Income tax benefit
Total after-tax stock-based compensation expense
$
$
2021
Year Ended December 31,
2020
2019
142 $
(37)
105 $
64 $
(16)
48 $
77
(20)
57
Exelon receives a tax deduction based on the intrinsic value of the award on the exercise date for stock options and the distribution date for performance share awards and restricted stock units. For
each award, throughout the requisite service period, Exelon recognizes the tax benefit related to compensation costs. The following table presents information regarding Exelon’s realized tax benefit
when distributed:
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Performance share awards
Restricted stock units
Performance Share Awards
Note 21 — Stock-Based Compensation Plans
2021
2020
2019
Year Ended December 31,
$
9 $
11
21 $
15
41
24
Performance share awards are granted under the LTIP. The performance share awards are settled 50% in common stock and 50% in cash at the end of the three-year performance period, except for
awards granted to vice presidents and higher officers that are settled 100% in cash if certain ownership requirements are satisfied.
The common stock portion of the performance share awards is considered an equity award and is valued based on Exelon's stock price on the grant date. The cash portion of the performance share
awards is considered a liability award which is remeasured each reporting period based on Exelon’s current stock price. As the value of the common stock and cash portions of the awards are based
on Exelon’s stock price during the performance period, coupled with changes in the total shareholder return modifier and expected payout of the award, the compensation costs are subject to volatility
until payout is established.
For nonretirement-eligible employees, stock-based compensation costs are recognized over the vesting period of three years using the straight-line method. For performance share awards granted to
retirement-eligible employees, the value of the performance shares is recognized ratably over the vesting period, which is the year of grant.
Exelon processes forfeitures as they occur for employees who do not complete the requisite service period.
The following table summarizes Exelon’s nonvested performance share awards activity:
Nonvested at December 31, 2020
(a)
Granted
Change in performance
Vested
Forfeited
Undistributed vested awards
Nonvested at December 31, 2021
(b)
(a)
Shares
Weighted Average
Grant Date Fair
Value (per share)
930,392 $
1,131,788
713,202
(327,551)
(157,552)
(1,067,763)
1,222,516 $
__________
(a) Excludes 1,934,238 and 1,414,661 of performance share awards issued to retirement-eligible employees as of December 31, 2021 and 2020, respectively, as they are fully vested.
(b) Represents performance share awards that vested but were not distributed to retirement-eligible employees during 2021.
The following table summarizes the weighted average grant date fair value and the total fair value of performance share awards vested.
Weighted average grant date fair value (per share)
Total fair value of performance shares vested
Total fair value of performance shares settled in cash
2021
(a)
2020
2019
Year Ended December 31,
$
43.37 $
44
28
46.61 $
39
63
__________
(a) As of December 31, 2021, $26 million of total unrecognized compensation costs related to nonvested performance shares are expected to be recognized over the remaining weighted-average period of 1.8 years.
Restricted Stock Units
318
43.67
43.37
45.59
38.66
44.45
44.58
44.96
47.37
158
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 21 — Stock-Based Compensation Plans
Restricted stock units are granted under the LTIP with the majority being settled in a specific number of shares of common stock after the service condition has been met. The corresponding cost of
services is measured based on the grant date fair value of the restricted stock unit issued.
The value of the restricted stock units is expensed over the requisite service period using the straight-line method. The requisite service period for restricted stock units is generally three to five years.
However, certain restricted stock unit awards become fully vested upon the employee reaching retirement-eligibility. The value of the restricted stock units granted to retirement-eligible employees is
either recognized ratably over the first six months in the year of grant if the employee reaches retirement eligibility prior to July 1st of the grant year or through the date of which the employee reaches
retirement eligibility. Exelon processes forfeitures as they occur for employees who do not complete the requisite service period.
The following table summarizes Exelon’s nonvested restricted stock unit activity:
Nonvested at December 31, 2020
(a)
Granted
Vested
Forfeited
Undistributed vested awards
Nonvested at December 31, 2021
(b)
(a)
Shares
Weighted Average
Grant Date Fair
Value (per share)
1,114,130 $
879,606
(397,526)
(57,646)
(396,515)
1,142,049 $
43.67
44.21
44.39
44.98
43.66
43.52
__________
(a) Excludes 609,934 and 748,165 of restricted stock units issued to retirement-eligible employees as of December 31, 2021 and 2020, respectively, as they are fully vested.
(b) Represents restricted stock units that vested but were not distributed to retirement-eligible employees during 2021.
The following table summarizes the weighted average grant date fair value and the total fair value of restricted stock units vested.
Weighted average grant date fair value (per share)
Total fair value of restricted stock units vested
2021
(a)
2020
2019
Year Ended December 31,
$
44.21 $
34
46.33 $
54
45.65
92
__________
(a) As of December 31, 2021, $22 million of total unrecognized compensation costs related to nonvested restricted stock units are expected to be recognized over the remaining weighted-average period of 2.3 years.
Stock Options
Non-qualified stock options to purchase shares of Exelon’s common stock were granted through 2012 under the LTIP. The exercise price of the stock options is equal to the fair market value of the
underlying stock on the date of option grant. Stock options will expire no later than ten years from the date of grant.
At December 31, 2021 all stock options were vested and there were no unrecognized compensation costs.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 21 — Stock-Based Compensation Plans
The following table presents information with respect to stock option activity:
Balance of shares outstanding at December 31, 2020
Options exercised
Options expired
Balance of shares outstanding at December 31, 2021
Exercisable at December 31, 2021
(a)
__________
(a)
Includes stock options issued to retirement eligible employees.
The following table summarizes additional information regarding stock options exercised:
(a)
Intrinsic value
Cash received for exercise price
__________
(a) The difference between the market value on the date of exercise and the option exercise price.
22. Changes in Accumulated Other Comprehensive Income (Exelon)
The following tables present changes in Exelon's AOCI, net of tax, by component:
Weighted
Average
Exercise
Price
(per share)
Weighted
Average
Remaining
Contractual
Life
(years)
Aggregate
Intrinsic
Value
40.57
39.45
43.40
46.47
46.47
0.91 $
0.15 $
0.15 $
Shares
1,265,410 $
(928,003)
(310,400)
27,007 $
27,007 $
2021
2020
2019
Year Ended December 31,
$
11 $
37
5 $
18
Balance at December 31, 2018
OCI before reclassifications
Amounts reclassified from AOCI
Net current-period OCI
Balance at December 31, 2019
OCI before reclassifications
Amounts reclassified from AOCI
Net current-period OCI
Balance at December 31, 2020
OCI before reclassifications
Amounts reclassified from AOCI
Net current-period OCI
Balance at December 31, 2021
Losses on
Cash Flow
Hedges
Pension and
Non-Pension
Postretirement
Benefit Plan
Items
(a)
Foreign
Currency
Items
AOCI of Investments
Unconsolidated
Affiliates
(b)
Total
$
$
$
$
(2) $
(2,960) $
(33) $
—
—
—
(289)
84
(205)
6
—
6
(2) $
(3,165) $
(27) $
(3)
—
(3)
(357)
150
(207)
4
—
4
(5) $
(3,372) $
(23) $
(1)
—
(1)
432
219
651
—
—
—
(6) $
(2,721) $
(23) $
— $
(2)
2
—
— $
—
—
—
— $
—
—
—
— $
3
11
—
—
9
59
(2,995)
(285)
86
(199)
(3,194)
(356)
150
(206)
(3,400)
431
219
650
(2,750)
__________
(a) This AOCI component is included in the computation of net periodic pension and OPEB cost. See Note 15 — Retirement Benefits for additional information. See Exelon's Statements of Operations and Comprehensive
Income for individual components of AOCI.
320
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 22 — Changes in Accumulated Other Comprehensive Income
(b) All amounts are net of noncontrolling interests.
The following table presents income tax benefit (expense) allocated to each component of Exelon's other comprehensive income (loss):
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost
Actuarial loss reclassified to periodic benefit cost
Pension and non-pension postretirement benefit plans valuation adjustment
23. Variable Interest Entities (Exelon, PHI, and ACE)
For the Year Ended December 31,
2021
2020
2019
$
4 $
(76)
(153)
16 $
(66)
122
23
(52)
100
At December 31, 2021 and 2020, Exelon, PHI, and ACE collectively consolidated several VIEs or VIE groups for which the applicable Registrant was the primary beneficiary (see Consolidated VIEs
below) and had significant interests in several other VIEs for which the applicable Registrant does not have the power to direct the entities’ activities and, accordingly, was not the primary beneficiary
(see Unconsolidated VIEs below). Consolidated and unconsolidated VIEs are aggregated to the extent that the entities have similar risk profiles.
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Consolidated VIEs
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 23 — Variable Interest Entities
The table below shows the carrying amounts and classification of the consolidated VIEs’ assets and liabilities included in the consolidated financial statements of Exelon, PHI, and ACE as of
December 31, 2021 and 2020. The assets, except as noted in the footnotes to the table below, can only be used to settle obligations of the VIEs. The liabilities, except as noted in the footnotes to the
table below, are such that creditors, or beneficiaries, do not have recourse to the general credit of Exelon, PHI, and ACE.
Cash and cash equivalents
Restricted cash and cash equivalents
Accounts receivable
Customer
Other
Inventories, net
Materials and supplies
Assets held for sale
Other current assets
(b)
Total current assets
Property, plant and equipment, net
Nuclear decommissioning trust funds
Other noncurrent assets
Total noncurrent assets
Total assets
(c)
Long-term debt due within one year
Accounts payable
Accrued expenses
Unamortized energy contract liabilities
Liabilities held for sale
Other current liabilities
(b)
Total current liabilities
Long-term debt
Asset retirement obligations
Other noncurrent liabilities
Total noncurrent liabilities
Total liabilities
(d)
$
$
$
December 31, 2021
December 31, 2020
Exelon
PHI
ACE
Exelon
PHI
(a)
ACE
35 $
48
— $
—
— $
—
98 $
47
— $
3
24
6
14
—
405
532
2,027
—
215
2,242
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
148
36
244
101
696
1,370
5,803
3,007
301
9,111
—
—
—
—
5
8
—
—
10
10
2,774 $
— $
— $
10,481 $
18 $
70 $
10
21
—
—
1
102
822
151
3
976
— $
—
—
—
—
—
—
—
—
—
—
— $
—
—
—
—
—
—
—
—
—
—
94 $
81
70
4
16
5
270
889
2,318
129
3,336
26 $
—
—
—
—
—
26
—
—
—
—
$
1,078 $
— $
— $
3,606 $
26 $
—
3
—
—
—
—
—
3
—
—
10
10
13
21
—
—
—
—
—
21
—
—
—
—
21
__________
(a)
(b) Generation entered into an agreement for the sale of a significant portion of Generation's solar business. As a result of this transaction, in the fourth quarter of 2020, Exelon reclassified the consolidated VIEs' solar assets
Includes certain purchase accounting adjustments from the PHI merger not pushed down to ACE.
and liabilities as held for sale. Refer to Note 2 — Mergers, Acquisitions, and Dispositions for additional information on the sale of the solar business.
(c) Exelon's balances include unrestricted assets for current unamortized energy contract assets of $23 million and $22 million, disclosed within other current assets in the table above, non-current unamortized energy
contract assets of $202 million and $249 million, disclosed within other noncurrent assets in the table above, Assets held for sale of $0 million and $9 million, and other unrestricted assets of $0 million and $1 million as of
December 31, 2021 and 2020, respectively.
(d) Exelon's balances include liabilities with recourse of $1 million and $8 million as of December 31, 2021 and 2020, respectively.
322
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 23 — Variable Interest Entities
As of December 31, 2021 and 2020, Exelon's consolidated VIEs associated with Generation included the following:
Consolidated VIE or VIE groups:
Reason entity is a VIE:
CENG - A joint venture between Generation and EDF. Generation had a
50.01% equity ownership in CENG as of December 31, 2020 and acquired
EDF's 49.99% equity interest on August 6, 2021 resulting in CENG no longer
being classified as a consolidated VIE beginning in the third quarter of 2021.
See additional discussion below.
Disproportionate relationship between equity interest and operational control as
a result of the NOSA described further below.
Reason Exelon is primary beneficiary:
Generation conducts the operational activities.
CRP - A collection of wind and solar project entities. Generation has a 51%
equity ownership in CRP. See additional discussion below.
Similar structure to a limited partnership and the limited partners do not have
kick out rights with respect to the general partner.
Generation conducts the operational activities.
Bluestem Wind Energy Holdings, LLC - A Tax Equity structure which is
consolidated by CRP. Generation has a noncontrolling interest.
Similar structure to a limited partnership and the limited partners do not have
kick out rights with respect to the general partner.
Generation conducts the operational activities.
Antelope Valley - A solar generating facility, which is 100% owned by
Generation. Antelope Valley sells all of its output to PG&E through a PPA.
Equity investment in distributed energy company - Generation has a 31% equity
ownership. This distributed energy company has an interest in an
unconsolidated VIE. (See Unconsolidated VIEs disclosure below).
Exelon fully impaired this investment in the third quarter of 2019. Refer to Note
12 — Asset Impairments for additional information.
NER - A bankruptcy remote, special purpose entity which is 100% owned by
Generation, which purchases certain of Generation’s customer accounts
receivable arising from the sale of retail electricity.
NER’s assets will be available first and foremost to satisfy the claims of the
creditors of NER. Refer to Note 6 —Accounts Receivable for additional
information on the sale of receivables.
The PPA contract absorbs variability through a performance guarantee.
Generation conducts all activities.
Similar structure to a limited partnership and the limited partners do not have
kick out rights with respect to the general partner.
Generation conducts the operational activities.
Equity capitalization is insufficient to support its operations.
Generation conducts all activities.
CENG - On April 1, 2014, Generation, CENG, and subsidiaries of CENG executed the NOSA pursuant to which Generation conducts all activities associated with the operations of the CENG fleet and
provides corporate and administrative services to CENG and the CENG fleet for the remaining life of the CENG nuclear plants as if they were a part of the Generation nuclear fleet, subject to the
CENG member rights of EDF.
On November 20, 2019, Generation received notice of EDF's intention to exercise the put option to sell its interest in CENG to Generation and the put automatically exercised on January 19, 2020. On
August 6, 2021, Generation and EDF entered into a settlement agreement pursuant to which Generation purchased EDF's equity interest in CENG and resulted in CENG no longer being classified as a
consolidated VIE beginning in the third quarter of 2021. Refer to Note 2 — Mergers, Acquisitions, and Dispositions for additional information.
Exelon and Generation, where indicated, provide the following support to CENG:
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 23 — Variable Interest Entities
•
•
Generation executed an Indemnity Agreement pursuant to which Generation agreed to indemnify EDF against third-party claims that may arise from any future nuclear incident (as defined
in the Price-Anderson Act) in connection with the CENG nuclear plants or their operations. Exelon guarantees Generation’s obligations under this Indemnity Agreement and will continue to
do so post-separation, however, any calls on this guarantee would require Generation to reimburse Exelon under the terms of the Separation Agreement. See Note 19 — Commitments and
Contingencies and Note 26 - Separation for more details.
Exelon has executed an agreement to provide up to $245 million to support the operations of CENG as well as a $165 million guarantee of CENG’s cash pooling agreement with its
subsidiaries. Both the support agreement and guarantee terminated upon separation.
Prior to August 6, 2021, Generation and EDF shared in the $688 million of the contingent payment obligations for the payment of contingent retrospective premium adjustments for the nuclear liability
insurance. Following the execution of the settlement agreement, EDF no longer shares in the obligation.
CRP - CRP is a collection of wind and solar project entities and some of these project entities are VIEs that are consolidated by CRP. While Generation or CRP owns 100% of the solar entities and
100% of the majority of the wind entities, it has been determined that the wholly owned solar and wind entities are VIEs because the entities' customers absorb price variability from the entities through
fixed price power and/or REC purchase agreements. Additionally, for the wind entities that have minority interests, it has been determined that these entities are VIEs because the governance rights of
some investors are not proportional to their financial rights. Generation is the primary beneficiary of these solar and wind entities that qualify as VIEs because Generation controls operations and direct
all activities of the facilities. There is limited recourse to Generation related to certain solar and wind entities.
In 2017, Exelon's interests in CRP were contributed to and are pledged for the CR non-recourse debt project financing structure. Refer to Note 17 — Debt and Credit Agreements for additional
information.
As of December 31, 2021 and 2020, Exelon's, PHI's and ACE's consolidated VIE consists of:
Consolidated VIEs:
ACE Funding - A special purpose entity formed by ACE for the purpose of securitizing authorized portions of
ACE’s recoverable stranded costs through the issuance and sale of Transition Bonds. Proceeds from the sale
of each series of Transition Bonds by ATF were transferred to ACE in exchange for the transfer by ACE to
ATF of the right to collect a non-bypassable Transition Bond Charge from ACE customers pursuant to
bondable stranded costs rate orders issued by the NJBPU in an amount sufficient to fund the principal and
interest payments on Transition Bonds and related taxes, expenses, and fees. In the fourth quarter of 2021,
the Transition bonds were fully redeemed and ACE remitted its final payment to ATF. Upon redemption of the
bonds, ATF no longer meets the definition of a variable interest entity.
Unconsolidated VIEs
Reason entity is a VIE:
ACE’s equity investment is a variable interest as, by design,
it absorbs any initial variability of ATF. The bondholders also
have a variable interest for the investment made to
purchase the Transition Bonds.
Reason ACE is the primary beneficiary:
ACE controls the servicing activities.
Exelon’s variable interests in unconsolidated VIEs generally include equity investments and energy purchase and sale contracts. For the equity investments, the carrying amount of the investments is
reflected in Exelon’s Consolidated Balance Sheets in Investments. For the energy purchase and sale contracts (commercial agreements), the carrying amount of assets and liabilities in Exelon’s
Consolidated Balance Sheets that relate to their involvement with the VIEs are predominantly related to working capital accounts and generally represent the amounts owed by, or owed to, Exelon for
the deliveries associated with the current billing cycles under the commercial agreements.
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 23 — Variable Interest Entities
As of December 31, 2021 and 2020, Exelon had significant unconsolidated variable interests in several VIEs for which Exelon was not the primary beneficiary. These interests include certain equity
method investments and certain commercial agreements.
The following table presents summary information about Exelon's significant unconsolidated VIE entities:
Total assets
(a)
(a)
Total liabilities
Exelon's ownership interest in VIE
(a)
Other ownership interests in VIE
(a)
Commercial
Agreement
VIEs
$
772 $
80
—
692
December 31, 2021
Equity
Investment
VIEs
372 $
216
139
17
Commercial
Agreement
VIEs
December 31, 2020
Equity
Investment
VIEs
777 $
61
—
716
401 $
223
157
21
Total
1,144 $
296
139
709
Total
1,178
284
157
737
__________
(a) These items represent amounts in the unconsolidated VIE balance sheets, not in Exelon’s Consolidated Balance Sheets. These items are included to provide information regarding the relative size of the unconsolidated
VIEs. Exelon does not have any exposure to loss as they do not have a carrying amount in the equity investment VIEs as of December 31, 2021 and 2020.
As of December 31, 2021 and 2020, Exelon's unconsolidated VIEs consist of:
Unconsolidated VIE groups:
Equity investments in distributed energy companies -
1) Generation has a 90% equity ownership in a distributed energy company.
2) Generation, via a consolidated VIE, has a 90% equity ownership in another distributed energy
company (See Consolidated VIEs disclosure above).
Exelon fully impaired this investment in the third quarter of 2019. Refer to Note 12 — Asset
Impairments for additional information.
Energy Purchase and Sale agreements - Generation has several energy purchase and sale
agreements with generating facilities.
Reason entity is a VIE:
Reason Exelon is not the primary beneficiary:
Similar structures to a limited partnership and the limited
partners do not have kick out rights with respect to the
general partner.
Generation does not conduct the operational activities.
PPA contracts that absorb variability through fixed pricing. Generation does not conduct the operational activities.
325
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 24 — Supplemental Financial Information
24. Supplemental Financial Information (All Registrants)
Supplemental Statement of Operations Information
The following tables provide additional information about material items recorded in the Registrants' Consolidated Statements of Operations and Comprehensive Income.
For the year ended December 31, 2021
Utility
(a)
Property
Payroll
For the year ended December 31, 2020
(a)
Utility
Property
Payroll
For the year ended December 31, 2019
(a)
Utility
Property
Payroll
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Taxes other than income taxes
$
$
$
$
$
$
873
633
233
859
602
235
881
595
232
246
$
139
$
88
$
39
27
18
16
176
18
238
$
135
$
87
$
30
27
16
16
164
17
242
$
132
$
90
$
29
27
17
15
153
17
$
$
$
301
131
27
299
126
25
304
122
24
278
$
88
7
275
$
84
7
286
$
85
7
$
$
$
22
40
5
21
39
5
18
34
4
3
3
3
3
3
3
—
2
2
__________
(a) Exelon’s utility tax represents gross receipts tax related to Generation's retail operations, and the Utility Registrants’ utility taxes represents municipal and state utility taxes and gross receipts taxes related to their
operating revenues. The offsetting collection of utility taxes from customers is recorded in revenues in the Registrants’ Consolidated Statements of Operations and Comprehensive Income.
326
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
For the year ended December 31, 2021
Decommissioning-related activities:
Net realized income on NDT funds
Regulatory Agreement Units
(a)
Non-Regulatory Agreement Units
Net unrealized gains on NDT funds
Regulatory Agreement Units
Non-Regulatory Agreement Units
Regulatory offset to NDT fund-related activities
(b)
Decommissioning-related activities
AFUDC—Equity
Non-service net periodic benefit cost
Net unrealized losses from equity investments
(c)
For the year ended December 31, 2020
Decommissioning-related activities:
Net realized income on NDT funds
Regulatory Agreement Units
(a)
Non-Regulatory Agreement Units
Net unrealized gains on NDT funds
Regulatory Agreement Units
Non-Regulatory Agreement Units
Regulatory offset to NDT fund-related activities
(b)
Decommissioning-related activities
AFUDC—Equity
Non-service net periodic benefit cost
Net unrealized gains from equity investments
(c)
For the year ended December 31, 2019
Decommissioning-related activities:
Net realized income on NDT funds
Regulatory Agreement Units
(a)
Non-Regulatory Agreement Units
Net unrealized gains on NDT funds
Regulatory Agreement Units
Non-Regulatory Agreement Units
Regulatory offset to NDT fund-related activities
(b)
Decommissioning-related activities
AFUDC—Equity
Non-service net periodic benefit cost
Note 24 — Supplemental Financial Information
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Other, net
$
$
817
449
351
209
(917)
909
136
91
(160)
$
$
185
160
724
391
(729)
731
104
53
186
$
$
297
363
795
411
(876)
990
85
13
$
$
$
—
—
—
—
—
—
34
—
—
—
—
—
—
—
—
29
—
—
—
—
—
—
—
—
17
—
$
$
$
—
—
—
—
—
—
26
—
—
—
—
—
—
—
—
17
—
—
—
—
—
—
—
—
13
—
$
$
$
—
—
—
—
—
—
27
—
—
—
—
—
—
—
—
22
—
—
—
—
—
—
—
—
21
—
$
$
$
—
—
—
—
—
—
49
—
—
—
—
—
—
—
—
36
—
—
—
—
—
—
—
—
34
—
$
$
$
—
—
—
—
—
—
40
—
—
—
—
—
—
—
—
28
—
—
—
—
—
—
—
—
25
—
$
$
$
—
—
—
—
—
—
6
—
—
—
—
—
—
—
—
4
—
—
—
—
—
—
—
—
4
—
—
—
—
—
—
—
3
—
—
—
—
—
—
—
—
4
—
—
—
—
—
—
—
—
5
—
__________
(a) Realized income includes interest, dividends, and realized gains and losses on sales of NDT fund investments.
(b)
Includes the elimination of decommissioning-related activities for the Regulatory Agreement Units except for decommissioning-related impacts that were not offset for the Byron units starting in the second quarter of 2021,
including the elimination of income taxes related to all NDT fund activity for those units. With the September 15, 2021 reversal of the previous decision to retire Byron, Generation resumed contractual offset for Byron as of
that date. See Note 10 — Asset Retirement Obligations for additional information regarding the accounting for nuclear decommissioning and the contractual offset suspension for the Byron units.
(c) Net unrealized (losses) gains from equity investments that became publicly traded entities in the fourth quarter of 2020 and the first half of 2021.
327
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 24 — Supplemental Financial Information
Supplemental Cash Flow Information
The following tables provide additional information about material items recorded in the Registrants' Consolidated Statements of Cash Flows.
For the year ended December 31, 2021
Property, plant, and equipment
(a)
Amortization of regulatory assets
(a)
Amortization of intangible assets, net
(a)
Amortization of energy contract assets and liabilities
(b)
Nuclear fuel
(c)
ARO accretion
(d)
Total depreciation, amortization, and accretion
For the year ended December 31, 2020
Property, plant, and equipment
(a)
Amortization of regulatory assets
(a)
Amortization of intangible assets, net
(a)
Amortization of energy contract assets and liabilities
(b)
Nuclear fuel
(c)
ARO accretion
(d)
Total depreciation, amortization, and accretion
For the year ended December 31, 2019
Property, plant, and equipment
(a)
Amortization of regulatory assets
(a)
Amortization of intangible assets, net
(a)
Amortization of energy contract assets and liabilities
(b)
Nuclear fuel
(c)
ARO accretion
(d)
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Depreciation, amortization, and accretion
$
5,384
$
594
58
31
992
514
$
970
235
—
—
—
—
336
$
12
—
—
—
—
$
439
152
$
627
194
—
—
—
—
—
—
—
—
274
129
—
—
—
—
$
169
$
155
41
—
—
—
—
24
—
—
—
—
$
$
$
$
7,573
$
1,205
$
348
$
591
$
821
$
403
$
210
$
179
4,364
$
588
62
30
983
500
$
922
211
—
—
—
—
319
$
28
—
—
—
—
$
397
153
$
586
196
—
—
—
—
—
—
—
—
257
120
—
—
—
—
$
155
$
140
36
—
—
—
—
40
—
—
—
—
6,527
$
1,133
$
347
$
550
$
782
$
377
$
191
$
180
3,665
$
528
59
21
1,016
491
$
886
147
—
—
—
—
303
$
30
—
—
—
—
$
359
143
$
547
207
—
—
—
—
—
—
—
—
239
135
—
—
—
—
$
146
$
123
38
—
—
—
—
34
—
—
—
—
Total depreciation, amortization, and accretion
$
5,780
$
1,033
$
333
$
502
$
754
$
374
$
184
$
157
__________
(a)
(b)
(c)
(d)
Included in Depreciation and amortization in the Registrants' Consolidated Statements of Operations and Comprehensive Income.
Included in Operating revenues or Purchased power and fuel expense in Exelon’s Consolidated Statements of Operations and Comprehensive Income.
Included in Purchased power and fuel expense in Exelon’s Consolidated Statements of Operations and Comprehensive Income.
Included in Operating and maintenance expense in Exelon's Consolidated Statements of Operations and Comprehensive Income.
328
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
For the year ended December 31, 2021
Interest (net of amount capitalized)
Income taxes (net of refunds)
For the year ended December 31, 2020
Interest (net of amount capitalized)
Income taxes (net of refunds)
For the year ended December 31, 2019
Interest (net of amount capitalized)
Income taxes (net of refunds)
Note 24 — Supplemental Financial Information
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Cash paid (refunded) during the year:
$
$
$
372
(72)
371
(61)
343
(42)
152
$
(4)
$
$
144
(37)
129
82
$
$
$
134
(38)
125
(57)
106
17
255
$
132
$
—
12
257
$
129
$
46
40
$
255
29
$
130
7
$
$
$
59
(9)
61
12
59
19
56
2
57
(3)
55
(5)
$
$
$
1,505
$
281
1,521
$
10
1,470
265
$
329
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
For the year ended December 31, 2021
Pension and non-pension postretirement benefit costs
Allowance for credit losses
Other decommissioning-related activity
(a)
Energy-related options
True-up adjustments to decoupling mechanisms and formula rates
(b)
(c)
Severance costs
Long-term incentive plan
Amortization of operating ROU asset
AFUDC - Equity
For the year ended December 31, 2020
Pension and non-pension postretirement benefit costs
Allowance for credit losses
Other decommissioning-related activity
(a)
Energy-related options
True-up adjustments to decoupling mechanisms and formula rates
(b)
(c)
Severance costs
Provision for excess and obsolete inventory
Long-term incentive plan
Amortization of operating ROU asset
Asset impairments
AFUDC - Equity
For the year ended December 31, 2019
Pension and non-pension postretirement benefit costs
(a)
(b)
Allowance for credit losses
Other decommissioning-related activity
Energy-related options
True-up adjustments to decoupling mechanisms and formula rates
Long-term incentive plan
Amortization of operating ROU Asset
Change in environmental liabilities
AFUDC - Equity
(d)
Note 24 — Supplemental Financial Information
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Other non-cash operating activities:
$
$
$
411
160
(946)
125
(171)
(57)
137
183
(136)
411
150
(659)
104
(6)
105
131
56
222
—
(104)
438
120
(506)
22
124
10
244
23
(85)
$
129
$
8
$
47
—
—
(42)
2
—
1
(34)
39
—
—
(26)
—
—
—
(26)
$
114
$
5
$
32
—
—
47
1
2
—
2
15
(29)
96
33
—
—
128
—
3
—
(17)
$
42
—
—
(16)
1
1
—
1
—
(17)
12
31
—
—
—
—
—
—
(13)
$
$
$
$
$
61
17
—
—
(12)
—
—
29
(27)
62
15
—
—
(16)
—
—
—
31
—
(22)
61
8
—
—
—
—
30
—
(21)
$
$
$
49
24
—
—
(91)
1
—
28
(49)
70
43
—
—
(21)
—
—
—
28
13
(36)
95
17
—
—
(4)
—
33
23
(34)
6
9
—
—
(53)
—
—
6
(40)
15
24
—
—
(40)
—
—
—
7
—
(28)
25
7
—
—
(4)
—
8
23
(25)
$
$
2
5
—
—
(14)
—
—
8
(6)
$
7
$
16
—
—
7
—
—
—
8
7
(4)
15
4
—
—
—
—
8
—
(4)
$
$
11
10
—
—
(24)
—
—
4
(3)
14
2
—
—
12
—
—
—
3
6
(4)
16
5
—
—
—
—
4
—
(5)
__________
(a)
Includes the elimination of decommissioning-related activities for the Regulatory Agreement Units except for decommissioning-related impacts that were not offset for the Byron units starting in the second quarter of 2021,
including the elimination of operating revenues, ARO accretion, ARC amortization, investment income, and income taxes related to all NDT fund activity for these units. With the September 15, 2021 reversal of the
previous decision to retire Byron, Generation resumed contractual offset for Byron as of that date. See Note 10 — Asset Retirement Obligations for additional information regarding the accounting for nuclear
decommissioning and for additional information on the contractual offset suspension for the Byron units.
Includes option premiums reclassified to realized at the settlement of the underlying contracts and recorded to results of operations.
(b)
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Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 24 — Supplemental Financial Information
(c) For ComEd, reflects the true-up adjustments in regulatory assets and liabilities associated with its distribution, energy efficiency, distributed generation, and transmission formula rates. For BGE, Pepco, DPL, and ACE,
reflects the change in regulatory assets and liabilities associated with their decoupling mechanisms and transmission formula rates. For PECO, reflects the change in regulatory assets and liabilities associated with its
transmission formula rate. See Note 3 — Regulatory Matters for additional information.
(d) For ComEd, reflects the true-up adjustments in regulatory assets and liabilities associated with its distribution and energy efficiency formula rates. For Pepco and DPL, reflects the change in regulatory assets and liabilities
associated with their decoupling mechanisms. See Note 3 — Regulatory Matters for additional information.
The following tables provide a reconciliation of cash, restricted cash, and cash equivalents reported within the Registrants' Consolidated Balance Sheets that sum to the total of the same amounts in
their Consolidated Statements of Cash Flows.
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
December 31, 2021
Cash and cash equivalents
Restricted cash and cash equivalents
Restricted cash included in other long-term assets
Total cash, restricted cash, and cash equivalents
December 31, 2020
Cash and cash equivalents
Restricted cash and cash equivalents
Restricted cash included in other long-term assets
Cash, restricted cash, and cash equivalents - Held for Sale
Total cash, restricted cash, and cash equivalents
December 31, 2019
Cash and cash equivalents
Restricted cash and cash equivalents
Restricted cash included in other long-term assets
Total cash, restricted cash, and cash equivalents
December 31, 2018
Cash and cash equivalents
Restricted cash and cash equivalents
Restricted cash included in other long-term assets
Total cash, restricted cash, and cash equivalents
$
$
$
$
$
$
$
$
1,182
$
393
44
131
210
43
1,619
$
384
$
663
438
53
12
$
83
$
279
43
—
1,166
$
405
$
$
36
$
51
$
136
$
8
—
44
19
7
—
—
26
$
$
$
4
—
55
77
—
$
213
$
144
$
111
$
1
—
—
39
10
—
145
$
160
$
$
90
$
21
$
24
$
131
$
587
358
177
1,122
$
150
163
403
$
6
—
27
$
1
—
25
7
6
—
13
$
$
$
36
14
181
$
124
$
43
19
186
$
1,349
$
135
$
130
$
5
—
$
135
$
247
185
1,781
$
29
166
330
331
34
34
—
68
30
35
—
—
65
30
33
—
63
16
37
—
53
$
$
$
$
$
$
$
$
28
43
—
71
15
—
—
—
15
13
—
—
13
$
$
$
$
$
$
23
$
1
—
24
$
29
—
—
29
17
3
10
—
30
12
2
14
28
7
4
19
30
Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 24 — Supplemental Financial Information
Supplemental Balance Sheet Information
The following tables provide additional information about material items recorded in the Registrants' Consolidated Balance Sheets.
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Investments
December 31, 2021
Equity method investments:
Other equity method investments
Other investments:
Employee benefit trusts and investments
Equity investments without readily determinable fair values
(a)
Other available for sale debt security investments
Total investments
December 31, 2020
Equity method investments:
Other equity method investments
Other investments:
Employee benefit trusts and investments
Equity investments without readily determinable fair values
(a)
Other available for sale debt security investments
Total investments
$
$
$
$
__________
(a) The Registrants’ debt and equity security investments are recorded at fair market value.
77
$
6
$
7
$
—
$
—
$
—
$
—
$
315
44
7
443
$
—
—
—
6
$
27
—
—
34
$
14
—
—
14
145
—
—
120
—
—
$
145
$
120
$
—
—
—
—
$
81
$
6
$
8
$
—
$
—
$
—
$
—
$
283
73
3
440
$
—
—
—
6
$
22
—
—
30
$
10
—
—
10
140
—
—
115
—
—
$
140
$
115
$
—
—
—
—
$
December 31, 2021
Compensation-related accruals
Taxes accrued
(a)
Interest accrued
December 31, 2020
Compensation-related accruals
Taxes accrued
(a)
Interest accrued
Exelon
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Accrued expenses
$
$
991
495
341
$
155
$
94
116
1,069
$
170
$
527
331
94
109
$
$
77
14
41
73
16
37
$
$
78
53
44
84
73
46
113
$
96
52
$
109
117
51
$
$
35
88
28
36
90
26
20
$
9
8
18
18
7
$
—
—
—
—
—
—
—
—
—
—
17
11
11
17
12
12
__________
(a) Primarily includes accrued payroll, bonuses and other incentives, vacation, and benefits.
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 25 — Related Party Transactions
25. Related Party Transactions (All Registrants)
Utility Registrants' expense with Generation
The Utility Registrants incur expenses from transactions with the Generation affiliate as described in the footnotes to the table below. Such expenses are primarily recorded as Purchased power from
affiliates and an immaterial amount recorded as Operating and maintenance expense from affiliates at the Utility Registrants:
ComEd
(a)
(b)
PECO
(c)
BGE
PHI
(d)
Pepco
(e)
DPL
ACE
(f)
2021
$
For the Years Ended
December 31,
2020
2019
376 $
196
236
366
270
79
17
330 $
190
315
367
279
75
13
369
158
289
353
264
70
19
__________
(a) ComEd has an ICC-approved RFP contract with Generation to provide a portion of ComEd’s electric supply requirements. ComEd also purchases RECs and ZECs from Generation.
(b) PECO receives electric supply from Generation under contracts executed through PECO’s competitive procurement process. In addition, PECO has a ten-year agreement with Generation to sell solar AECs.
(c) BGE receives a portion of its energy requirements from Generation under its MDPSC-approved market-based SOS and gas commodity programs.
(d) Pepco receives electric supply from Generation under contracts executed through Pepco's competitive procurement process approved by the MDPSC and DCPSC.
(e) DPL receives a portion of its energy requirements from Generation under its MDPSC and DEPSC approved market-based SOS commodity programs.
(f) ACE receives electric supply from Generation under contracts executed through ACE's competitive procurement process.
Service Company Costs for Corporate Support
The Registrants receive a variety of corporate support services from BSC. Pepco, DPL, and ACE also receive corporate support services from PHISCO. See Note 1 - Significant Accounting Policies for
additional information regarding BSC and PHISCO.
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Table of Contents
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 25 — Related Party Transactions
The following table presents the service company costs allocated to the Registrants:
Exelon
BSC
PHISCO
ComEd
BSC
PECO
BSC
BGE
BSC
PHI
BSC
PHISCO
Pepco
BSC
PHISCO
DPL
BSC
PHISCO
ACE
BSC
PHISCO
Operating and maintenance from affiliates
Capitalized costs
For the years ended December 31,
For the years ended December 31,
2021
2020
2019
2021
2020
2019
$
637 $
72
585 $
61
304
169
189
168
—
96
114
61
99
53
86
283
150
170
152
—
85
120
54
97
45
87
263
149
157
139
—
85
124
52
100
42
90
207
81
92
128
72
50
31
43
22
33
19
186
76
132
149
61
55
27
51
18
40
16
Current Receivables from/Payables to affiliates
The following tables present Current receivables from affiliates and Current payables to affiliates:
December 31, 2021
Payables to affiliates:
ComEd
PECO
BGE
Pepco
DPL
ACE
Generation
BSC
PHISCO
Other
Total
Receivables from affiliates:
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Generation
Other
Total
$
— $
—
—
—
—
—
—
13
3
—
1
—
—
—
—
—
— $
—
—
1
—
—
—
—
— $
—
—
—
—
—
—
—
— $
—
—
—
1
—
—
—
— $
—
—
1
1
—
—
—
41 $
30
4
—
20
4
7
11
$
16 $
1 $
1 $
— $
1 $
2 $
117 $
71 $
36
41
5
21
17
13
102
—
306 $
— $
—
—
—
12
11
9
—
—
32 $
9 $
4
3
9
3
1
2
16
47 $
334
516
72
148
88
126
88
72
38
33
25
20
19
19
121
70
48
16
59
33
31
131
14
523
Table of Contents
December 31, 2020
Combined Notes to Consolidated Financial Statements
(Dollars in millions, except per share data unless otherwise noted)
Note 25 — Related Party Transactions
Payables to affiliates:
ComEd
PECO
BGE
Pepco
DPL
ACE
Generation
BSC
PHISCO
Other
Total
Receivables from affiliates:
ComEd
PECO
BGE
PHI
Pepco
DPL
ACE
Generation
Other
Total
$
— $
1
—
—
2
1
—
13
5
—
—
—
—
—
—
2
— $
—
—
1
—
—
—
2
— $
—
—
—
—
—
—
2
— $
—
—
—
—
—
—
1
— $
—
—
—
—
—
—
6
28 $
17
11
—
13
3
6
25
59 $
28
47
4
25
21
15
72
—
— $
—
—
—
14
10
9
—
—
9 $
4
3
11
—
1
1
22
$
22 $
2 $
3 $
2 $
1 $
6 $
103 $
271 $
33 $
51 $
96
50
61
15
55
36
31
107
43
494
Borrowings from Exelon/PHI intercompany money pool
To provide an additional short-term borrowing option that will generally be more favorable to the borrowing participants than the cost of external financing both Exelon and PHI operate an intercompany
money pool. ComEd, PECO, and PHI Corporate participate in the Exelon money pool. Pepco, DPL, and ACE participate in the PHI intercompany money pool.
Noncurrent Receivables from affiliates
ComEd and PECO have Noncurrent receivables with Generation as a result of the nuclear decommissioning contractual construct whereby, to the extent NDT funds are greater than the underlying
ARO at the end of decommissioning, such amounts are due back to ComEd and PECO, as applicable, for payment to their respective customers. See Note 10 — Asset Retirement Obligations for
additional information.
Long-term debt to financing trusts
The following table presents Long-term debt to financing trusts:
ComEd Financing III
PECO Trust III
PECO Trust IV
Total
26. Separation (Exelon)
Exelon
2021
ComEd
As of December 31,
PECO
Exelon
2020
ComEd
PECO
$
$
206 $
81
103
390 $
205 $
—
—
205 $
— $
81
103
184 $
206 $
81
103
390 $
205 $
—
—
205 $
—
81
103
184
On February 21, 2021, Exelon’s Board of Directors approved a plan to separate the Utility Registrants and Generation, creating two publicly traded companies ("the separation").
On February 25, 2021, Exelon filed applications with FERC, NYPSC, and NRC seeking approvals for the separation of Generation. On March 25, 2021, Exelon filed a request for a private letter ruling
with the IRS to confirm the tax-free treatment of the separation, which was received on September 23, 2021. Exelon received approval from FERC on August 24, 2021, NRC on November 16, 2021,
and NYPSC on December 16, 2021 for the separation.
The Form 10 registration statement was declared effective by the SEC on December 29, 2021.
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Table of Contents
Note 26 — Separation
Exelon completed the separation on February 1, 2022, through the distribution of 326,663,937 common stock shares of Constellation Energy Corporation, the new publicly traded company, to Exelon
shareholders. Under the separation plan, Exelon shareholders retained their current shares of Exelon stock and received one share of Constellation Energy Corporation common stock for every three
shares of Exelon common stock held on January 20, 2022, the record date for the distribution, in a transaction that is tax-free to Exelon and its shareholders for U.S. federal income tax purposes.
In order to govern the ongoing relationships between Exelon and Constellation Energy Corporation after the separation, and to facilitate an orderly transition, Exelon and Constellation Energy
Corporation have entered into several agreements, including a Separation Agreement, Tax Matters Agreement, a Transition Services Agreement, and an Employee Matters Agreement, and other
ancillary agreements.
Pursuant to the Separation Agreement, Exelon made a cash payment of $1.75 billion to Generation on January 31, 2022. Exelon issued term loans of $2.0 billion on January 21, 2022 and January 24,
2022 primarily to fund the cash payment to Constellation Energy Corporation and for general corporate purposes. See Note 17 — Debt and Credit Agreements for additional information.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
All Registrants
None.
ITEM 9A.
CONTROLS AND PROCEDURES
All Registrants—Disclosure Controls and Procedures
During the fourth quarter of 2021, each of the Registrant’s management, including its principal executive officer and principal financial officer, evaluated disclosure controls and procedures related to the
recording, processing, summarizing, and reporting of information in that registrant’s periodic reports that it files with the SEC. These disclosure controls and procedures have been designed by each
registrant to ensure that (a) information relating to that Registrant, including its consolidated subsidiaries, is accumulated and made known to that registrant’s management, including its principal
executive officer and principal financial officer, by other employees of that registrant and its subsidiaries as appropriate to allow timely decisions regarding required disclosure, and (b) this information is
recorded, processed, summarized, evaluated, and reported, as applicable, within the time periods specified in the SEC’s rules and forms. Due to the inherent limitations of control systems, not all
misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Additionally, controls could be circumvented by the individual acts of some persons or by collusion of two or more people.
Accordingly, as of December 31, 2021, the principal executive officer and principal financial officer of each of the Registrants concluded that such Registrant’s disclosure controls and procedures were
effective to accomplish their objectives.
All Registrants—Changes in Internal Control Over Financial Reporting
Each registrant continually strives to improve its disclosure controls and procedures to enhance the quality of its financial reporting and to maintain dynamic systems that change as conditions warrant.
However, there have been no changes in internal control over financial reporting that occurred during the fourth quarter of 2021 that have materially affected, or are reasonably likely to materially affect,
any of the Registrant's internal control over financial reporting. See ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Executive Overview for additional information on COVID-19.
All Registrants—Internal Control Over Financial Reporting
Management is required to assess and report on the effectiveness of its internal control over financial reporting as of December 31, 2021. As a result of that assessment, management determined that
there were no material weaknesses as of December 31, 2021 and, therefore, concluded that each registrant’s internal control over
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Table of Contents
financial reporting was effective. Management’s Report on Internal Control Over Financial Reporting is included in ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
ITEM 9B.
OTHER INFORMATION
All Registrants
None.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable
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Table of Contents
PECO Energy Company, Baltimore Gas and Electric Company, Pepco Holdings LLC, Potomac Electric Power Company, Delmarva Power & Light Company, and Atlantic City Electric Company meet
the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K for a reduced disclosure format. Accordingly, all items in this section relating to PECO, BGE, PHI, Pepco, DPL, and ACE are
not presented.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Executive Officers
The information required by ITEM 10 relating to executive officers is set forth above in ITEM 1. BUSINESS—Executive officers of the Registrants at February 25, 2022.
Directors, Director Nomination Process and Audit Committee
The information required under ITEM 10 concerning directors and nominees for election as directors at the annual meeting of shareholders (Item 401 of Regulation S-K), the director nomination
process (Item 407(c)(3)), the audit committee (Item 407(d)(4) and (d)(5)), and the beneficial reporting compliance (Sec. 16(a)) is incorporated herein by reference to information to be contained in
Exelon’s definitive 2022 proxy statement (2022 Exelon Proxy Statement) and the ComEd information statement (2022 ComEd Information Statement) to be filed with the SEC on or before April 30,
2022 pursuant to Regulation 14A or 14C, as applicable, under the Securities Exchange Act of 1934.
Code of Ethics
Exelon’s Code of Business Conduct is the code of ethics that applies to Exelon’s and ComEd’s Chief Executive Officer, Chief Financial Officer, Corporate Controller, and other finance organization
employees. The Code of Business Conduct is filed as Exhibit 14 to this report and is available on Exelon’s website at www.exeloncorp.com. The Code of Business Conduct will be made available,
without charge, in print to any shareholder who requests such document from Carter C. Culver, Senior Vice President and Deputy General Counsel, Exelon Corporation, P.O. Box 805398, Chicago,
Illinois 60680-5398.
If any substantive amendments to the Code of Business Conduct are made or any waivers are granted, including any implicit waiver, from a provision of the Code of Business Conduct, to its Chief
Executive Officer, Chief Financial Officer or Corporate Controller, Exelon will disclose the nature of such amendment or waiver on Exelon’s website, www.exeloncorp.com, or in a report on Form 8-K.
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Table of Contents
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this item will be set forth under Executive Compensation Data and Report of the Compensation Committee in the Exelon Proxy Statement for the 2022 Annual Meeting of
Shareholders or the ComEd 2022 Information Statement, which are incorporated herein by reference.
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Table of Contents
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The additional information required by this item will be set forth under Ownership of Exelon Stock in the 2022 Exelon Proxy Statement or the ComEd 2022 Information Statement and incorporated
herein by reference.
Securities Authorized for Issuance under Exelon Equity Compensation Plans
Plan Category
[A]
[B]
Number of securities to
be issued upon
exercise of outstanding
Options, warrants and
rights (Note 1)
Weighted-average
price of outstanding
Options, warrants
and rights (Note 2)
[C]
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in
column [A]) (Note 3)
Equity compensation plans approved by security holders
5,343,357 $
0.22
48,184,437
__________
(1) Balance includes stock options, unvested performance shares, and unvested restricted stock units that were granted under the Exelon LTIP or predecessor company plans (including shares awarded under those plans
and deferred into the stock deferral plan) and deferred stock units granted to directors as part of their compensation. Unvested performance shares are subject to performance metrics and to a total shareholder return
modifier. Additionally, pursuant to the terms of the Exelon LTIP plan, 50% of final payouts are made in the form of shares of common stock and 50% is made in form of in cash, or if the participant has exceeded 200% of
their stock ownership requirement, 100% of the final payout is made in cash. For performance shares granted in 2019, 2020, and 2021, the total includes the maximum number of shares that could be issued assuming all
participants receive 50% of payouts in shares and assuming the performance and total shareholder return modifier metrics were both at maximum, representing best case performance, for a total of 3,110,870 shares. If
the performance and total shareholder return modifier metrics were at "target", the number of securities to be issued for such awards would be 1,555,435. The balance also includes 431,918 shares to be issued upon the
conversion of deferred stock units awarded to members of the Exelon board of directors. Conversion of the deferred stock units to shares of common stock occurs after a director terminates service to the Exelon board or
the board of any of its subsidiary companies. See Note 21 — Stock-Based Compensation Plans of the Combined Notes to Consolidated Financial Statements for additional information about the material features of the
plans.
(2) The weighted-average price reported in column B does not take the performance shares and shares credited to deferred compensation plans into account.
(3)
Includes 13,633,243 shares remaining available for issuance from the employee stock purchase plan and 4,556,610 shares remaining available for issuance to former Constellation employees with outstanding awards
made under the prior Constellation LTIP.
No ComEd securities are authorized for issuance under equity compensation plans.
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Table of Contents
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The additional information required by this item will be set forth under Related Persons Transactions and Director Independence in the Exelon Proxy Statement for the 2022 Annual Meeting of
Shareholders or the ComEd 2022 Information Statement, which are incorporated herein by reference.
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Table of Contents
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item will be set forth under The Ratification of PricewaterhouseCoopers LLP as Exelon’s Independent Accountant for 2022 in the Exelon Proxy Statement for the 2022
Annual Meeting of Shareholders and the ComEd 2022 Information Statement, which are incorporated herein by reference.
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Table of Contents
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as a part of this report:
(1) Exelon
(i)
Financial Statements (Item 8):
PART IV
Report of Independent Registered Public Accounting Firm dated February 25, 2022 of PricewaterhouseCoopers LLP (PCAOB ID 238)
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements
(ii)
Financial Statement Schedules:
Schedule I—Condensed Financial Information of Parent (Exelon Corporate) at December 31, 2021 and 2020 and for the Years Ended December 31, 2021, 2020, and 2019
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019
Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial
statements, including the notes thereto.
343
Table of Contents
(In millions)
Operating expenses
Operating and maintenance
Operating and maintenance from affiliates
Other
Total operating expenses
Operating loss
Other income and (deductions)
Interest expense, net
Equity in earnings of investments
Interest income from affiliates, net
Other, net
Total other income
Income before income taxes
Income taxes
Net income
Other comprehensive income (loss), net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic costs
Actuarial loss reclassified to periodic cost
Pension and non-pension postretirement benefit plan valuation adjustment
Unrealized (loss) gain on cash flow hedges
Other comprehensive income (loss)
Comprehensive income
Exelon Corporation and Subsidiary Companies
Schedule I – Condensed Financial Information of Parent (Exelon Corporate)
Condensed Statements of Operations and Other Comprehensive Income
2021
For the Years Ended
December 31,
2020
2019
$
$
$
$
(9) $
38
2
31
(31)
(333)
1,996
16
—
1,679
1,648
(58)
1,706 $
(4) $
223
431
—
650
2,356 $
(2) $
10
2
10
(10)
(378)
2,313
30
15
1,980
1,970
7
1,963 $
(40) $
190
(357)
(1)
(208)
1,755 $
33
9
1
43
(43)
(321)
3,254
39
14
2,986
2,943
7
2,936
(64)
148
(289)
1
(204)
2,732
See the Notes to Financial Statements
344
Table of Contents
Exelon Corporation and Subsidiary Companies
Schedule I – Condensed Financial Information of Parent (Exelon Corporate)
Condensed Statements of Cash Flows
(In millions)
Net cash flows provided by operating activities
Cash flows from investing activities
Changes in Exelon intercompany money pool
Notes receivable from affiliates
Investment in affiliates
Other investing activities
Net cash flows used in investing activities
Cash flows from financing activities
Changes in short-term borrowings
Proceeds from short-term borrowings with maturities greater than 90 days
Repayments on short-term borrowings with maturities greater than 90 days
Issuance of long-term debt
Retirement of long-term debt
Dividends paid on common stock
Proceeds from employee stock plans
Other financing activities
Net cash flows used in financing activities
Increase (Decrease) in cash, restricted cash, and cash equivalents
Cash, restricted cash, and cash equivalents at beginning of period
Cash, restricted cash, and cash equivalents at end of period
2021
For the Years Ended
December 31,
2020
2019
$
3,629 $
3,018 $
381
—
(2,231)
1
(1,849)
—
500
(350)
—
(300)
(1,497)
80
19
(1,548)
232
63
(477)
550
(1,969)
—
(1,896)
(136)
—
—
2,000
(1,450)
(1,492)
45
(27)
(1,060)
62
1
$
295 $
63 $
1,948
95
—
(1,071)
—
(976)
136
—
—
—
—
(1,408)
112
—
(1,160)
(188)
189
1
See the Notes to Financial Statements
345
Table of Contents
(In millions)
Current assets
Cash and cash equivalents
Accounts receivable, net
Other accounts receivable
Accounts receivable from affiliates
Notes receivable from affiliates
Regulatory assets
Other
Total current assets
Property, plant, and equipment, net
Deferred debits and other assets
Regulatory assets
Investments in affiliates
Deferred income taxes
Notes receivable from affiliates
Other
Total deferred debits and other assets
Total assets
Exelon Corporation and Subsidiary Companies
Schedule I – Condensed Financial Information of Parent (Exelon Corporate)
Condensed Balance Sheets
ASSETS
December 31,
2021
2020
$
295 $
318
35
217
266
6
1,137
45
3,164
44,495
1,513
319
42
49,533
50,715 $
$
63
354
11
598
315
4
1,345
46
3,816
43,149
1,625
324
312
49,226
50,617
See the Notes to Financial Statements
346
Table of Contents
(In millions)
Current liabilities
Short-term borrowings
Long-term debt due within one year
Accounts payable
Accrued expenses
Payables to affiliates
Regulatory liabilities
Pension obligations
Other
Total current liabilities
Long-term debt
Deferred credits and other liabilities
Exelon Corporation and Subsidiary Companies
Schedule I – Condensed Financial Information of Parent (Exelon Corporate)
Condensed Balance Sheets
LIABILITIES AND SHAREHOLDERS’ EQUITY
December 31,
2021
2020
$
650 $
Regulatory liabilities
Pension obligations
Non-pension postretirement benefit obligations
Deferred income taxes
Other
Total deferred credits and other liabilities
Total liabilities
Commitments and contingencies
Shareholders’ equity
Common stock (No par value, 2,000 shares authorized, 979 shares and 976 shares outstanding as of December 31, 2021 and 2020,
respectively)
Treasury stock, at cost (2 shares as of December 31, 2021 and 2020)
Retained earnings
Accumulated other comprehensive loss, net
Total shareholders’ equity
Total liabilities and shareholders’ equity
$
See the Notes to Financial Statements
347
1,150
—
79
360
3
75
7
2,324
6,265
63
7,038
116
404
112
7,733
16,322
20,324
(123)
16,942
(2,750)
34,393
50,715 $
500
300
1
76
457
4
92
4
1,434
7,418
32
8,351
387
348
62
9,180
18,032
19,373
(123)
16,735
(3,400)
32,585
50,617
Table of Contents
1. Basis of Presentation
Exelon Corporation and Subsidiary Companies
Schedule I – Condensed Financial Information of Parent (Exelon Corporate)
Notes to Financial Statements
Exelon Corporate is a holding company that conducts substantially all of its business operations through its subsidiaries. These condensed financial statements and related footnotes have been
prepared in accordance with Rule 12-04, Schedule I of Regulation S-X. These statements should be read in conjunction with the consolidated financial statements and notes thereto of Exelon
Corporation.
As of December 31, 2021 and 2020, Exelon Corporate owned 100% of all of its significant subsidiaries, either directly or indirectly, except for Commonwealth Edison Company (ComEd), of which
Exelon Corporate owns more than 99%. As a February 1, 2022, as a result of the completion of the separation, Exelon Corporate no longer owns any interest in Exelon Generation Company, LLC. See
Note 26 — Separation of the Combined Notes to Consolidated Financial Statements for additional information.
2. Debt and Credit Agreements
Short-Term Borrowings
Exelon Corporate meets its short-term liquidity requirements primarily through the issuance of commercial paper. Exelon Corporate had no outstanding commercial paper borrowings as of
December 31, 2021 and 2020.
Short-Term Loan Agreements
On March 23, 2017, Exelon Corporate entered into a term loan agreement for $500 million. The loan agreement was renewed on March 17, 2021 and will expire on March 16, 2022. Pursuant to the
loan agreement, loans made thereunder bear interest at a variable rate equal to LIBOR plus 0.65% and all indebtedness thereunder is unsecured. The loan agreement is reflected in Short-term
borrowings in Exelon's Consolidated Balance Sheet.
On March 24, 2021, Exelon Corporate entered into a 9-month term loan agreement for $200 million. Pursuant to the loan agreement, loans made thereunder bear interest at a variable rate equal to
LIBOR plus 0.65% and all indebtedness thereunder is unsecured. Exelon Corporate repaid the term loan on December 22, 2021.
On March 31, 2021, Exelon Corporate entered into a 9-month and 364-day term loan agreement for $150 million each with variable interest rates of LIBOR plus 0.65% and expiration dates of
December 31, 2021 and March 30, 2022, respectively. The 364-day loan agreement is reflected in Short-term borrowings in Exelon's Consolidated Balance Sheet. Exelon Corporate repaid the 9-month
term loan on December 29, 2021.
In connection with the separation, on January 24, 2022, Exelon Corporate entered into a 364-day term loan agreement for $1.15 billion. The loan agreement will expire on January 23, 2023. Pursuant
to the loan agreement, loans made thereunder bear interest at a variable rate equal to SOFR plus 0.75% and all indebtedness thereunder is unsecured.
Revolving Credit Agreements
As of December 31, 2021, Exelon Corporation had a $600 million aggregate bank commitment under its existing syndicated revolving facility in which $594 million was available to support additional
commercial paper as of December 31, 2021. See Note 17—Debt and Credit Agreements of the Combined Notes to Consolidated Financial Statements for additional information regarding Exelon
Corporation’s credit agreement.
On February 1, 2022, Exelon Corporate entered into a new 5-year revolving credit facility with an aggregate bank commitment of $900 million at a variable interest rate of SOFR plus 1.275% which
replaced its existing $600 million syndicated revolving credit facility.
348
Table of Contents
Long-Term Debt
Exelon Corporation and Subsidiary Companies
Schedule I – Condensed Financial Information of Parent (Exelon Corporate)
Notes to Financial Statements
The following tables present the outstanding long-term debt for Exelon Corporate as of December 31, 2021 and December 31, 2020:
Rates
Maturity
Date
December 31,
2021
2020
Long-term debt
(a)
Junior subordinated notes
Senior unsecured notes
(b)
Total long-term debt
Unamortized debt discount and premium, net
Unamortized debt issuance costs
Fair value adjustment
Long-term debt due within one year
Long-term debt
3.40 % -
3.50 %
7.60 %
2022 $
2025 - 2050
1,150 $
6,139
7,289
(10)
(39)
175
(1,150)
$
6,265 $
1,150
6,439
7,589
(10)
(47)
186
(300)
7,418
__________
(a)
In connection with the separation, Exelon Corporate entered into three 18-month term loan agreements. On January 21, 2022, two of the loan agreements were issued for $300 million each with an expiration date of July
21, 2023. On January 24, 2022, the third loan agreement was issued for $250 million with an expiration date of July 24, 2023. Pursuant to the loan agreement, loans made thereunder bear interest at a variable rate equal
to SOFR plus 0.65%.
(b) Senior unsecured notes include mirror debt that is held on Exelon Corporation's balance sheet. In connection with the separation, on January 31, 2022, Exelon Corporate received cash from Generation of $258 million to
settle the intercompany loan. See Note 17 — Debt and Credit Agreements for additional information on the merger debt.
The debt maturities for Exelon Corporate for the periods 2022, 2023, 2024, 2025, 2026, and thereafter are as follows:
2022
2023
2024
2025
2026
Thereafter
Total long-term debt
3. Commitments and Contingencies
$
$
1,150
—
—
807
750
4,582
7,289
See Note 19—Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for Exelon Corporate’s commitments and contingencies related to environmental matters
and fund transfer restrictions.
349
Table of Contents
Exelon Corporation and Subsidiary Companies
Schedule I – Condensed Financial Information of Parent (Exelon Corporate)
Notes to Financial Statements
4. Related Party Transactions
The financial statements of Exelon Corporate include related party transactions as presented in the tables below:
(In millions)
Operating and maintenance from affiliates:
BSC
(a)
Total operating and maintenance from affiliates:
Interest income from affiliates, net:
Generation
BSC
Total interest income from affiliates, net:
Equity in earnings (losses) of investments:
(b)
EEDC
Generation
UII
PCI
Exelon Enterprises
Exelon INQB8R
Exelon Transmission Company
Other
Total equity in earnings of investments:
Cash contributions received from affiliates
2021
2020
2019
For the Years Ended December 31,
38 $
38 $
16 $
—
16 $
2,215 $
(206)
—
(1)
—
(13)
—
1
1,996 $
10 $
10 $
29 $
1
30 $
1,729 $
589
—
—
—
(6)
—
1
2,313 $
3,674 $
3,372 $
9
9
36
3
39
2,054
1,125
97
1
(16)
(8)
(2)
3
3,254
2,514
$
$
$
$
$
$
$
350
Table of Contents
(in millions)
Accounts receivable from affiliates (current):
(a)
BSC
Generation
ComEd
PECO
BGE
PHISCO
Exelon Enterprises
Total accounts receivable from affiliates (current):
Notes receivable from affiliates (current):
(c)
(a)
BSC
Generation
PECO
PHI
Total notes receivable from affiliates (current):
Investments in affiliates:
(a)
BSC
EEDC
(b)
Generation
PCI
UII
Voluntary Employee Beneficiary Association trust
Exelon Enterprises
Exelon INQB8R, LLC
Other
Total investments in affiliates:
Notes receivable from affiliates (non-current):
Generation
(c)
Accounts payable to affiliates (current):
UII
BSC
EEDC
Generation
(b)
(c)
Total accounts payable to affiliates (current):
Exelon Corporation and Subsidiary Companies
Schedule I – Condensed Financial Information of Parent (Exelon Corporate)
Notes to Financial Statements
As of December 31,
2021
2020
$
$
$
$
$
$
$
$
$
4 $
13
5
4
2
6
1
35 $
210 $
—
—
7
217 $
195 $
32,621
11,219
62
365
3
3
29
(2)
44,495 $
319 $
360 $
—
—
—
360 $
—
3
—
1
—
6
1
11
252
285
40
21
598
196
30,103
12,400
62
365
—
3
23
(3)
43,149
324
360
91
4
2
457
__________
(a) Exelon Corporate receives a variety of corporate support services from BSC, including legal, human resources, financial, information technology, and supply management services. All services are provided at cost,
including applicable overhead.
(b) EEDC consists of ComEd, PECO, BGE, PHI, Pepco, DPL, and ACE.
(c)
In connection with the debt obligations assumed by Exelon as part of the Constellation merger, Exelon and subsidiaries of Generation (former Constellation subsidiaries) entered into intercompany loan agreements that
mirror the terms and amounts of the third-party debt obligations of Exelon, resulting in intercompany notes receivable at Exelon Corporate from Generation. In connection with the separation, on January 31, 2022, Exelon
Corporate received cash from Generation of $258 million to settle the intercompany loan. See Schedule 1 - 2. Debit and Credit agreements for additional information on the merger debt.
351
Table of Contents
(In millions)
Exelon Corporation and Subsidiary Companies
Schedule II – Valuation and Qualifying Accounts
Column A
Description
Column B
Balance at
Beginning
of Period
Column C
Additions and adjustments
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Column D
Column E
Deductions
Balance at
End
of Period
(a)
For the year ended December 31, 2021
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
For the year ended December 31, 2020
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
For the year ended December 31, 2019
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
(a)
(a)
$
$
$
437 $
27
276
294 $
26
155
319 $
35
156
(b)
$
(b)
(f)
(b)
$
$
141
—
(1)
240
—
128
119
—
6
$
—
32
(2)
(d)
(e)
$
$
(18)
1
(1)
26
(9)
—
(c)
$
(c)
$
(c)
$
127
—
10
79
—
6
170
—
7
451
59
263
437
27
276
294
26
155
__________
(a) Excludes the non-current allowance for credit losses related to PECO’s installment plan receivables of $14 million, $5 million, and $9 million for the years ended December 31, 2021, 2020, and 2019, respectively.
(b) The amount charged to costs and expenses includes the amount that was reclassified to regulatory assets/liabilities under different mechanisms applicable to the different jurisdictions the Utility Registrants operate in.
(c) Primarily reflects write-offs, net of recoveries of individual accounts receivable.
(d) DPL recorded a full valuation allowance against Delaware net operating losses carryforwards due to a change in Delaware tax law. See Note 14 — Income Taxes of the Combined Notes to Consolidated Financial
(e)
Statements for additional information on the valuation allowance.
Includes a decrease related to the sale of customer accounts receivable at Generation in the second quarter of 2020. See Note 6—Accounts Receivable of the Combined Notes to Consolidated Financial Statements for
additional information.
(f) Primarily reflects expense resulting from materials and supplies inventory reserve adjustments as a result of the decision to early retire Byron, Dresden, and Mystic 8 and 9. See Note 7—Early Plant Retirements of the
Combined Notes to Consolidated Financial Statements for additional information.
352
Table of Contents
(2) ComEd
(i)
Financial Statements (Item 8):
Commonwealth Edison Company and Subsidiary Companies
Report of Independent Registered Public Accounting Firm dated February 25, 2022 of PricewaterhouseCoopers LLP (PCAOB ID 238)
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements
(ii)
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019
Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial
statements, including the notes thereto
353
Table of Contents
Commonwealth Edison Company and Subsidiary Companies
Schedule II – Valuation and Qualifying Accounts
Column A
Description
Column B
Balance at
Beginning
of Period
Column C
Additions and adjustments
Column D
Column E
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Deductions
Balance at
End
of Period
(In millions)
For the year ended December 31, 2021
Allowance for credit losses
Reserve for obsolete materials
For the year ended December 31, 2020
Allowance for credit losses
Reserve for obsolete materials
For the year ended December 31, 2019
Allowance for credit losses
Reserve for obsolete materials
$
$
$
118 $
6
79 $
7
81 $
6
$
$
$
(a)
18
3
(a)
54
3
(a)
35
6
1 $
—
13 $
—
20 $
—
$
$
$
(b)
47
2
(b)
28
4
(b)
57
5
90
7
118
6
79
7
__________
(a) ComEd is allowed to recover from or refund to customers the difference between its annual credit loss expense and the amounts collected in rates annually through a rider mechanism. The amount charged to costs and
expenses includes the amount that was reclassified to regulatory assets/liabilities under such mechanism. See Note 3 – Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional
information.
(b) Write-offs, net of recoveries of individual accounts receivable.
354
Table of Contents
(3) PECO
(i)
Financial Statements (Item 8):
PECO Energy Company and Subsidiary Companies
Report of Independent Registered Public Accounting Firm dated February 25, 2022 of PricewaterhouseCoopers LLP (PCAOB ID 238)
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Changes in Shareholder's Equity for the Years Ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements
(ii)
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019
Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial
statements, including the notes thereto
355
Table of Contents
Column A
Description
(In millions)
For the year ended December 31, 2021
(a)
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
For the year ended December 31, 2020
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
For the year ended December 31, 2019
Allowance for credit losses
Reserve for obsolete materials
(a)
(a)
PECO Energy Company and Subsidiary Companies
Schedule II – Valuation and Qualifying Accounts
Column B
Balance at
Beginning
of Period
Column C
Column D
Column E
Additions and adjustments
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Deductions
Balance at
End
of Period
$
$
$
124 $
1
2
62 $
—
2
61 $
2
(b)
$
(b)
$
$
32
—
1
76
—
1
31
—
(6) $
2
—
6 $
1
—
3 $
—
$
$
$
$
(c)
(c)
38
—
1
20
—
1
(c)
33
—
112
3
2
124
1
2
62
2
__________
(a) Excludes the non-current allowance for credit losses related to PECO’s installment plan receivables of $14 million, $5 million, and $9 million for the years ended December 31, 2021, 2020, and 2019, respectively.
(b) The amount charged to costs and expenses includes the amount that was reclassified to the COVID-19 regulatory asset. See Note 3 – Regulatory Matters of the Combined Notes to Consolidated Financial Statements for
additional information.
(c) Write-offs, net of recoveries of individual accounts receivable.
356
Table of Contents
(4) BGE
(i)
Financial Statements (Item 8):
Baltimore Gas and Electric Company
Report of Independent Registered Public Accounting Firm dated February 25, 2022 of PricewaterhouseCoopers LLP (PCAOB ID 238)
Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019
Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Balance Sheets at December 31, 2021 and 2020
Statements of Changes in Shareholder's Equity for the Years Ended December 31, 2021, 2020 and 2019
Notes to Financial Statements
(ii)
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019
Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial
statements, including the notes thereto
357
Table of Contents
Baltimore Gas and Electric Company
Schedule II – Valuation and Qualifying Accounts
Column A
Description
Column B
Balance at
Beginning
of Period
Column C
Column D
Column E
Additions and adjustments
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Deductions
Balance at
End
of Period
(In millions)
For the year ended December 31, 2021
Allowance for credit losses
Reserve for obsolete materials
For the year ended December 31, 2020
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
For the year ended December 31, 2019
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
$
$
$
44 $
1
17 $
1
1
20 $
1
1
$
$
(a)
16
—
(a)
31
—
—
8
—
—
3 $
—
6 $
(1)
—
7 $
—
—
$
$
(b)
16
—
(b)
10
—
—
18
—
—
47
1
44
—
1
17
1
1
(a)
$
(b)
$
__________
(a) The amount charged to costs and expenses includes the amount that was reclassified to regulatory assets/liabilities under different mechanisms as approved by the MDPSC.
(b) Write-offs, net of recoveries of individual accounts receivable.
358
Table of Contents
(5) PHI
(i)
Financial Statements (Item 8):
Pepco Holdings LLC and Subsidiary Companies
Report of Independent Registered Public Accounting Firm dated February 25, 2022 of PricewaterhouseCoopers LLP (PCAOB ID 238)
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements
(ii)
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019
Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial
statements, including the notes thereto
359
Table of Contents
Pepco Holdings LLC and Subsidiary Companies
Schedule II – Valuation and Qualifying Accounts
Column A
Description
Column B
Balance at
Beginning
of Period
Column C
Column D
Column E
Additions and adjustments
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Deductions
Balance at
End
of Period
(In millions)
For the year ended December 31, 2021
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
For the year ended December 31, 2020
Allowance for credit losses
Reserve for obsolete materials
For the year ended December 31, 2019
Allowance for credit losses
Deferred tax valuation allowance
Reserve for obsolete materials
$
$
$
119 $
—
2
53 $
3
53 $
8
2
(a)
$
41
—
1
$
$
(a)
69
—
(a)
17
—
1
$
$
$
(c)
2
31
—
13
—
7
(8)
—
(b)
$
19
—
—
$
$
(b)
16
1
(d)
24
—
—
143
31
3
119
2
53
—
3
__________
(a) The amount charged to costs and expenses includes the amount that was reclassified to regulatory assets/liabilities under different mechanisms applicable to the different jurisdictions Pepco, DPL, and ACE operate in.
(b) Write-offs, net of recoveries of individual accounts receivable.
(c) DPL recorded a full valuation allowance against Delaware net operating losses carryforwards due to a change in Delaware tax law. See Note 14 — Income Taxes of the Combined Notes to Consolidated Financial
Statements for additional information on the valuation allowance.
(d) Write-offs of individual accounts receivable.
360
Table of Contents
(6) Pepco
(i)
Financial Statements (Item 8):
Potomac Electric Power Company
Report of Independent Registered Public Accounting Firm dated February 25, 2022 of PricewaterhouseCoopers LLP (PCAOB ID 238)
Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019
Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Balance Sheets at December 31, 2021 and 2020
Statements of Changes in Shareholder's Equity for the Years Ended December 31, 2021, 2020 and 2019
Notes to Financial Statements
(ii)
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019
Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial
statements, including the notes thereto
361
Table of Contents
Potomac Electric Power Company
Schedule II – Valuation and Qualifying Accounts
Column A
Description
Column B
Balance at
Beginning
of Period
Column C
Column D
Column E
Additions and adjustments
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Deductions
Balance at
End
of Period
(In millions)
For the year ended December 31, 2021
Allowance for credit losses
Reserve for obsolete materials
For the year ended December 31, 2020
Allowance for credit losses
Reserve for obsolete materials
For the year ended December 31, 2019
Allowance for credit losses
Reserve for obsolete materials
$
$
$
45 $
1
20 $
1
21 $
1
$
$
$
(a)
14
—
(a)
25
—
(a)
7
—
2 $
—
5 $
—
2 $
—
$
$
$
(b)
8
—
(b)
5
—
(c)
10
—
53
1
45
1
20
1
__________
(a) The amount charged to costs and expenses includes the amount that was reclassified to regulatory assets/liabilities under different mechanisms as approved by the DCPSC and MDPSC.
(b) Write-offs, net of recoveries of individual accounts receivable.
(c) Write-off of individual accounts receivable.
362
Table of Contents
(7) DPL
(i)
Financial Statements (Item 8):
Delmarva Power & Light Company
Report of Independent Registered Public Accounting Firm dated February 25, 2022 of PricewaterhouseCoopers LLP (PCAOB ID 238)
Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020 and 2019
Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019
Balance Sheets at December 31, 2021 and 2020
Statements of Changes in Shareholder's Equity for the Years Ended December 31, 2021, 2020 and 2019
Notes to Financial Statements
(ii)
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019
Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial
statements, including the notes thereto
363
Table of Contents
Column A
Description
(In millions)
For the year ended December 31, 2021
Allowance for credit losses
Deferred tax valuation allowance
For the year ended December 31, 2020
Allowance for credit losses
For the year ended December 31, 2019
Allowance for credit losses
Delmarva Power & Light Company
Schedule II – Valuation and Qualifying Accounts
Column B
Balance at
Beginning
of Period
Column C
Additions and adjustments
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Column D
Column E
Deductions
Balance at
End
of Period
$
$
$
31 $
—
15 $
13 $
(a)
6
—
16
(a)
4
(a)
$
$
$
(1)
31
(c)
4
3
$
$
$
(b)
10
—
4
(b)
5
(d)
$
$
$
26
31
31
15
__________
(a) The amount charged to costs and expenses includes the amount that was reclassified to regulatory assets/liabilities under different mechanisms as approved by the DEPSC and MDPSC.
(b) Write-offs, net of recoveries of individual accounts receivable.
(c) DPL recorded a full valuation allowance against Delaware net operating losses carryforwards due to a change in Delaware tax law. See Note 14 — Income Taxes of the Combined Notes to Consolidated Financial
Statements for additional information on the valuation allowance.
(d) Write-off of individual accounts receivable.
364
Table of Contents
(8) ACE
(i)
Financial Statements (Item 8):
Atlantic City Electric Company and Subsidiary Company
Report of Independent Registered Public Accounting Firm dated February 25, 2022 of PricewaterhouseCoopers LLP (PCAOB ID 238)
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Changes in Shareholder's Equity for the Years Ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements
(ii)
Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2021, 2020, and 2019
Schedules not included are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial
statements, including the notes thereto
365
Table of Contents
Atlantic City Electric Company and Subsidiary Company
Schedule II – Valuation and Qualifying Accounts
Column A
Description
Column B
Balance at
Beginning
of Period
Column C
Column D
Column E
Additions and adjustments
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Deductions
Balance at
End
of Period
(In millions)
For the year ended December 31, 2021
Allowance for credit losses
Reserve for obsolete materials
For the year ended December 31, 2020
Allowance for credit losses
Reserve for obsolete materials
For the year ended December 31, 2019
Allowance for credit losses
Reserve for obsolete materials
$
$
$
43 $
—
18 $
1
19 $
1
$
$
$
(a)
21
1
(a)
28
—
(a)
5
—
1 $
—
4 $
—
2 $
—
$
$
$
(b)
1
—
(b)
7
1
(c)
8
—
64
1
43
—
18
1
__________
(a) ACE is allowed to recover from or refund to customers the difference between its annual credit loss expense and the amounts collected in rates annually through the Societal Benefits Charge. The amount charged to costs
and expenses includes the amount that was reclassified to regulatory assets/liabilities under such mechanism. See Note 3 – Regulatory Matters of the Combined Notes to Consolidated Financial Statements for additional
information.
(b) Write-offs, net of recoveries of individual accounts receivable.
(c) Write-off of individual accounts receivable.
366
Table of Contents
Exhibits required by Item 601 of Regulation S-K:
Certain of the following exhibits are incorporated herein by reference under Rule 12b-32 of the Securities and Exchange Act of 1934, as amended. Certain other instruments which would otherwise be
required to be listed below have not been so listed because such instruments do not authorize securities in an amount which exceeds 10% of the total assets of the applicable registrant and its
subsidiaries on a consolidated basis and the relevant registrant agrees to furnish a copy of any such instrument to the Commission upon request.
Exhibit No.
Description
2-1
3-1
3-2
3-3
3-4
3-5
3-6
3-7
3-8
3-9
3-10
3-11
3-12
3-13
3-14
3-15
Separation Agreement, dated January 31, 2022, between Exelon Corporation and Constellation Energy Corporation (File No. 001-16169, Form 8K dated February 2, 2022,
Exhibit 2.1)
Amended and Restated Articles of Incorporation of Exelon Corporation, as amended July 24, 2018 (File No. 001-16169, Form 8-K dated July 27, 2018, Exhibit 3.1).
Exelon Corporation Amended and Restated Bylaws, as amended on August 3, 2020 (File No. 001-16169, Form 10-Q dated August 4, 2020, Exhibit 3.1).
Restated Articles of Incorporation of Commonwealth Edison Company Effective February 20, 1985, including Statements of Resolution Establishing Series, relating to the
establishment of three new series of Commonwealth Edison Company preference stock known as the “$9.00 Cumulative Preference Stock,” the “$6.875 Cumulative Preference
Stock” and the “$2.425 Cumulative Preference Stock” (File No. 001-01839, Form 10-K dated March 30, 1995, Exhibit 3.2).
Commonwealth Edison Company Amended and Restated By-Laws, Effective February 22, 2021 (File 001-01839, Form 10-K dated February 24, 2021, Exhibit 3.6).
Amended and Restated Articles of Incorporation of PECO Energy Company (File No. 001-01401, Form 10-K dated April 2, 2001, Exhibit 3.3).
PECO Energy Company Amended and Restated Bylaws dated August 3, 2020 (File 000-16844, Form 10-Q dated August 4, 2020, Exhibit 3.3).
Articles of Restatement to the Charter of Baltimore Gas and Electric Company, restated as of August 16, 1996. (File No. 001-01910, Form 10-Q dated November 14, 1996,
Exhibit 3).
Articles of Amendment to the Charter of Baltimore Gas and Electric Company as of February 2, 2010. (File No. 001-01910, Form 8-K dated February 4, 2010, Exhibit 3.1).
Amended and Restated Bylaws of Baltimore Gas and Electric Company dated August 3, 2020 (File No. 001-01910, Form 10-Q dated August 4, 2020, Exhibit 3.4).
Certificate of Formation of Pepco Holdings LLC, dated March 23, 2016 (File No. 001-31403, Form 8-K dated March 24, 2016, Exhibit 3.2).
Amended and Restated Limited Liability Company Agreement of Pepco Holdings LLC, dated August 3, 2020 (File No. 001-31403, Form 10-Q dated August 4, 2020, Exhibit
3.5).
Potomac Electric Power Company Restated Articles of Incorporation and Articles of Restatement of (as filed in the District of Columbia) (File No. 001-31403, Form 10-Q dated
May 5, 2006, Exhibit 3.1).
Potomac Electric Power Company Restated Articles of Incorporation and Articles of Restatement of (as filed in Virginia) (File No. 001-01072, Form 10-Q dated November 4,
2011, Exhibit 3.3).
Delmarva Power & Light Company Articles of Restatement of Certificate and Articles of Incorporation (filed in Delaware and Virginia 02/22/07) (File No. 001-01405, Form 10-K
dated March 1, 2007, Exhibit 3.3).
Atlantic City Electric Company Restated Certificate of Incorporation (filed in New Jersey on August 9, 2002) (File No. 001-03559, Amendment No. 1 to Form U5B dated
February 13, 2003, Exhibit B.8.1).
367
Table of Contents
Exhibit No.
Description
3-16
3-17
3-18
Bylaws of Potomac Electric Power Company (File No. 001-01072, Form 10-Q dated May 5, 2006, Exhibit 3.2).
Bylaws of Delmarva Power & Light Company (File No. 001-01405, Form 10-Q dated May 9, 2005, Exhibit 3.2.1).
Bylaws of Atlantic City Electric Company (File No. 001-03559, Form 10-Q dated May 9, 2005, Exhibit 3.2.2).
368
Table of Contents
Exhibit No.
Description
4-1
4-1-1
First and Refunding Mortgage dated May 1, 1923 between The Counties Gas and Electric Company (predecessor to PECO Energy Company) and Fidelity Trust Company,
Trustee (U.S. Bank National Association, as current successor trustee), (Registration No. 2-2281, Exhibit B-1).
(a)
Supplemental Indentures to PECO Energy Company’s First and Refunding Mortgage:
Dated as of
December 1, 1941
April 15, 2004
September 15, 2006
March 1, 2007
September 1, 2012
September 1, 2014
September 15, 2015
September 1, 2017
February 1, 2018
September 1, 2018
August 15, 2019
June 1, 2020
February 15, 2021
September 1, 2021
File Reference
2-4863
(a)
Exhibit No.
B-1(h)
000-16844, Form 10-Q dated September 30, 2004
4-1-1
000-16844, Form 8-K dated September 25, 2006
000-16844, Form 8-K dated March 19, 2007
000-16844, Form 8-K dated September 17, 2012
000-16844, Form 8-K dated September 15, 2014
000-16844, Form 8-K dated October 5, 2015
000-16844, Form 8-K dated September 18, 2017
000-16844, Form 8-K dated February 23, 2018
000-16844, Form 8-K dated September 11, 2018
000-16844, Form 8-K dated September 10, 2019
000-16844, Form 8-K dated June 8, 2020
000-16844, Form 8-K dated March 8, 2021
000-16844, Form 8-K, dated September 14, 2021
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
Exhibit No.
Description
4-2
4-3
Exelon Corporation Direct Stock Purchase Plan (Registration Statement No. 333-206474, Form S-3, Prospectus).
Mortgage of Commonwealth Edison Company to Illinois Merchants Trust Company, Trustee (BNY Mellon Trust Company of Illinois, as current successor Trustee), dated July 1,
1923, as supplemented and amended by Supplemental Indenture thereto dated August 1, 1944. (Registration No. 2-60201, Form S-7, Exhibit 2-1).
(a)
369
Table of Contents
Exhibit No.
4-3-1
Description
Supplemental Indentures to Commonwealth Edison Company Mortgage.
Dated as of
January 13, 2003
February 22, 2006
March 1, 2007
December 20, 2007
September 17, 2012
August 1, 2013
January 2, 2014
October 28, 2014
February 18, 2015
November 4, 2015
June 15, 2016
August 9, 2017
February 6, 2018
July 26, 2018
February 7, 2019
October 29, 2019
February 10, 2020
February 16, 2021
August 2, 2021
File Reference
Exhibit No.
001-01839, Form 8-K dated February 13, 2003
001-01839, Form 8-K dated March 6, 2006
001-01839, Form 8-K dated March 23, 2007
001-01839, Form 8-K dated January 16, 2008
001-01839, Form 8-K dated October 1, 2012
001-01839, Form 8-K dated August 19, 2013
001-01839, Form 8-K dated January 10, 2014
001-01839, Form 8-K dated November 10, 2014
001-01839, Form 8-K dated March 2, 2015
001-01839, Form 8-K dated November 19, 2015
001-01839, Form 8-K dated June 27, 2016
001-01839, Form 8-K dated August 23, 2017
001-01839, Form 8-K dated February 20, 2018
001-01839, Form 8-K dated August 14, 2018
001-01839, Form 8-K dated February 19, 2019
001-01839, Form 8-K dated November 12, 2019
001-01839, Form 8-K dated February 25, 2020
001-01839, Form 8-K dated March 9, 2021
001-01839, Form 8-K dated August 12, 2021
4-4
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
4.1
370
Table of Contents
Exhibit No.
Description
4-4
4-5
4-6
4-7
4-8
4-9
4-10
4-11
4-12
4-13
4-14
4-14-1
4-14-2
4-15
4-15-1
Instrument of Resignation, Appointment and Acceptance dated as of February 20, 2002, under the provisions of the Mortgage of Commonwealth Edison Company dated July 1,
1923, and Indentures Supplemental thereto, regarding corporate trustee (File No. 001-01839, Form 10-K dated April 1, 2002, Exhibit 4.4.2).
Instrument dated as of January 31, 1996, under the provisions of the Mortgage of Commonwealth Edison Company dated July 1, 1923 and Indentures Supplemental thereto,
regarding individual trustee (File No. 001-01839, Form 10-K dated March 29, 1996, Exhibit 4.29).
Indenture to Subordinated Debt Securities dated as of June 24, 2003 between PECO Energy Company, as Issuer, and U.S. Bank National Association, as Trustee (File
No. 000-16844, Form 10-Q dated July 30, 2003, Exhibit 4.1).
Form of 2.80% Senior Note due 2022 issued by Baltimore Gas and Electric Company. (File No. 001-01910, Form 8-K dated August 17, 2012, Exhibit 4.1).
Form of 3.35% Senior Note due 2023 Baltimore Gas and Electric Company. (File No. 001-01910, Form 8-K dated June 17, 2013, Exhibit 4.1).
Preferred Securities Guarantee Agreement between PECO Energy Company, as Guarantor, and U.S. Bank National Association, as Trustee, dated as of June 24, 2003 (File
No. 000-16844, Form 10-Q dated July 30, 2003, Exhibit 4.2).
PECO Energy Capital Trust IV Amended and Restated Declaration of Trust among PECO Energy Company, as Sponsor, U.S. Bank Trust National Association, as Delaware
Trustee and Property Trustee, and J. Barry Mitchell, George R. Shicora and Charles S. Walls as Administrative Trustees dated as of June 24, 2003 (File No. 000-16844, Form
10-Q dated July 30, 2003, Exhibit 4.3).
Indenture dated May 1, 2001 between Exelon Corporation and The Bank of New York Mellon Trust Company, National Association, as trustee (File No. 001-16169, Form 10-Q
dated July 26, 2005, Exhibit 4.10).
Form of $500,000,000 5.625% senior notes due 2035 dated June 9, 2005 issued by Exelon Corporation (File No. 001-16169, Form 8-K dated June 9, 2005, Exhibit 99.3).
Indenture dated as of July 24, 2006 between Baltimore Gas and Electric Company and Deutsche Bank Trust Company Americas, as trustee. (File No. 333-135991, Registration
Statement on Form S-3 dated July 24, 2006, Exhibit 4(b)).
Indenture, dated as of June 17, 2014, between Exelon Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee. (File No. 001-16169, Form 8-K dated
June 23, 2014, Exhibit 4.1).
First Supplemental Indenture, dated as of June 17, 2014, between Exelon Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee. (File No. 001-
16169, Form 8-K dated June 23, 2014, Exhibit 4.2).
Second Supplemental Indenture, dated April 3, 2017, between Exelon and The Bank of New York Mellon Trust Company, N.A., as trustee, to that certain Indenture (For
Unsecured Subordinated Debt Securities), dated June 17, 2014 (File No. 001-16169, Form 8-K dated April 4, 2017, Exhibit 4.3).
Indenture, dated as of June 11, 2015, among Exelon Corporation and The Bank of New York Mellon Trust Company, National Association, as trustee (File No. 001-16169, Form
8-K dated June 11, 2015, Exhibit 4.1).
First Supplemental Indenture, dated as of June 11, 2015, among Exelon Corporation and The Bank of New York Mellon Trust Company, National Association, as trustee (File
No. 001-16169, Form 8-K dated June 11, 2015, Exhibit 4.2).
371
Table of Contents
Exhibit No.
Description
4-15-2
4-15-3
4-15-4
4-16
4-17
Second Supplemental Indenture, dated as of December 2, 2015, among Exelon Corporation and The Bank of New York Mellon Trust Company, National Association, as trustee
(File No. 001-16169, Form 8-K dated December 2, 2015, Exhibit 4.1).
Third Supplemental Indenture, dated as of April 7, 2016, among Exelon Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee (File No. 001-16169,
Form 8-K dated April 7, 2016, Exhibit 4.2).
Fourth Supplemental Indenture, dated as of April 1, 2020, among Exelon Corporation and The Bank of New York Mellon Trust Company, N.A., as trustee (File No. 001-16169,
Form 8-K dated April 1, 2020, Exhibit 4.2).
Form of Conversion Supplemental Indenture, dated March 23, 2016 (File No. 001-31403, Form 8-K dated March 24, 2016, Exhibit 4.1).
Mortgage and Deed of Trust, dated July 1, 1936, of Potomac Electric Power Company to The Bank of New York Mellon as successor trustee, securing First Mortgage Bonds of
Potomac Electric Power Company, and Supplemental Indenture dated July 1, 1936 (File No. 2-2232, Registration Statement dated June 19, 1936, Exhibit B-4).
(a)
4-17-1
Supplemental Indentures to Potomac Electric Power Company Mortgage.
372
Table of Contents
Dated as of
December 10, 1939
March 16, 2004
May 24, 2005
November 13, 2007
March 24, 2008
December 3, 2008
March 28, 2012
March 11, 2013
November 14, 2013
March 11, 2014
March 9, 2015
May 15, 2017
June 1, 2018
May 2, 2019
February 12, 2020
February 15, 2021
File Reference
Form 8-K dated January 3, 1940
(a)
001-01072, Form 8-K dated March 23, 2004
001-01072, Form 8-K dated May 26, 2005
001-01072, Form 8-K dated November 15, 2007
001-01072, Form 8-K dated March 28, 2008
001-01072, Form 8-K dated December 8, 2008
001-01072, Form 8-K dated March 29, 2012
001-01072, Form 8-K dated March 12, 2013
001-01072, Form 8-K dated November 15, 2013
001-01072, Form 8-K dated March 12, 2014
001-01072, Form 8-K dated March 10, 2015
001-01072, Form 8-K dated May 22, 2017
001-01072, Form 8-K dated June 21, 2018
001-01072, Form 8-K dated June 13, 2019
001-01072, Form 8-K dated February 25, 2020
001-01072, Form 8-K dated March 30, 2021
Exhibit No.
B
4.3
4.2
4.2
4.1
4.2
4.2
4.2
4.2
4.2
4.3
4.2
4.2
4.2
4.2
4.2
373
Table of Contents
Exhibit No.
Description
4-18
4-18-1
Mortgage and Deed of Trust of Delaware Power & Light Company to The Bank of New York Mellon (ultimate successor to the New York Trust Company), as trustee, dated as of
October 1, 1943, and copies of the First through Sixty-Eighth Supplemental Indentures thereto (File No. 33-1763, Registration Statement dated November 27, 1985, Exhibit 4-A)
(a)
Supplemental Indentures to Delmarva Power & Light Company Mortgage.
Dated as of
October 1, 1993
October 1, 1994
November 7, 2013
June 2, 2014
May 4, 2015
December 5, 2016
June 1, 2018
May 2, 2019
March 18, 2020
June 1, 2020
February 15, 2021
February 15, 2022
File Reference
Exhibit No.
33-53855, Registration Statement dated January 30,
1995
(a)
33-53855, Registration Statement dated January 30,
1995
(a)
001-01405, Form 8-K dated November 8, 2013
001-01405, Form 8-K dated June 3, 2014
001-01405, Form 8-K dated May 5, 2015
001-01405, Form 8-K dated December 12, 2016
000-01405, Form 8-K dated June 21, 2018
001-01405, Form 8-K dated December 12, 2019
001-01405, Form 10-Q dated May 8, 2020
001-01405, Form 8-K dated June 9, 2020
001-01405, Form 8-K dated March 30, 2021
001-01405, Form 8-K dated February 15, 2022
4-L
4-N
4.2
4.3
4.2
4.2
4.2
4.2
4.4
4.4
4.4
4.4
374
Table of Contents
Exhibit No.
Description
4-19
4-19-1
Mortgage and Deed of Trust, dated January 15, 1937, between Atlantic City Electric Company and The Bank of New York Mellon (formerly Irving Trust Company), as trustee
(File No. 2-66280, Registration Statement dated December 21, 1979, Exhibit 2(a)).
(a)
Supplemental Indentures to Atlantic City Electric Company Mortgage.
Dated as of
June 1, 1949
March 1, 1991
April 1, 2004
March 8, 2006
March 29, 2011
August 18, 2014
December 1, 2015
October 9, 2018
May 2, 2019
June 1, 2020
February 15, 2021
November 1, 2021
February 15, 2022
File Reference
2-66280, Registration Statement dated December 21,
1979
(a)
Form 10-K dated March 28, 1991
(a)
001-03559, Form 8-K dated April 6, 2004
001-03559, Form 8-K dated March 17, 2006
001-03559, Form 8-K dated April 1, 2011
001-03559, Form 8-K dated August 19, 2014
001-03559, Form 8-K dated December 2, 2015
001-03559, Form 8-K dated October 16, 2018
001-03559, Form 8-K dated May 21, 2019
001-03559, Form 8-K dated June 9, 2020
001-03559, Form 8-K dated March 10, 2021
001-03559, Form 8-K dated November 16, 2021
001-03559, Form 8-K dated February 15, 2022
Exhibit No.
2(b)
4(d)(1)
4.3
4
4.2
4.2
4.2
4.1
4.3
4.2
4.1
4.2
4.2
Exhibit No.
Description
4-20
4-21
4-22
4-23
Form of 2.400% notes due 2026 (File No. 001-01910, Form 8-K dated August 18, 2016, Exhibit 4.1).
Form of 3.500% notes due 2046 (File No. 001-01910, Form 8-K dated August 18, 2016, Exhibit 4.2).
Form of Exelon Corporation 3.497% junior subordinated notes due 2022 (File No. 001-16169, Form 8-K dated April 4, 2017, Exhibit 4.4).
Form of Pepco First Mortgage Bond, 4.15% Series due March 15, 2043 (File No. 001-01072, Form 8-K dated May 22, 2017, Exhibit 4.2).
375
Table of Contents
Exhibit No.
Description
4-24
4-25
4-26
4-27
4-28
4-29
4-30
4-31
10-1
10-2
10-3
10-4
10-5
10-6
10-7
10-8
10-9
Form of 3.750% BGE notes due 2047 (File No. 001-01910, Form 8-K dated August 24, 2017, Exhibit 4.1).
Exempt Facilities Loan Agreement dated as of June 1, 2019 between the Maryland Economic Development Corporation and Potomac Electric Power Company (File No. 001-
01072, Form 8-K dated June 27, 2019, Exhibit 4.1).
Indenture, dated as of September 1, 2019, between Baltimore Gas and Electric Company and U.S. Bank National Association, as trustee (File No. 001-01910, Form 8-K dated
September 12, 2019, Exhibit 4.1).
Description of Exelon Securities (File No. 001-16169, Form 10-K dated February 11, 2020, Exhibit 4.63).
Description of PECO Securities (File No. 001-16169, Form 10-K dated February 11, 2020, Exhibit 4.64).
Description of ComEd Securities (File No. 001-16169, Form 10-K dated February 11, 2020, Exhibit 4.65).
Pollution Control Facilities Loan Agreement, dated as of June 1, 2020, between The Pollution Control Financing Authority of Salem County and Atlantic City Electric (File No.
001-03559, Form 8-K dated June 2, 2020, Exhibit 4.1).
Gas Facilities Loan Agreement, dated as of July 1, 2020, between The Delaware Economic Development Authority and Delmarva Power & Light Company (File No. 001-01405,
Form 8-K dated July 1, 2020, Exhibit 4.1).
Exelon Corporation Non-Employee Directors’ Deferred Stock Unit Plan (As Amended and Restated Effective April 28, 2020). (File No. 001-16169, Form 10-Q dated August 4,
2020, Exhibit 10.1).
Form of Exelon Corporation Unfunded Deferred Compensation Plan for Directors (as amended and restated Effective March 12, 2012) * (File No. 001-16169, Form 10-K dated
February 10, 2016, Exhibit 10.3).
Form of Restricted Stock Award Agreement under the Exelon Corporation Long-Term Incentive Plan* (File No. 1-16169, Form 10-Q dated October 31, 2019, Exhibit 10.2).
Unicom Corporation Deferred Compensation Unit Plan, as amended (File No. 001-11375, Form 10-K dated March 29, 1996, Exhibit 10.12).
Amendment Number One to the Unicom Corporation Deferred Compensation Unit Plan, as amended January 1, 2008 * (File No. 001-16169, Form 10-K dated February 6,
2009, Exhibit 10.16).
Exelon Corporation Supplemental Management Retirement Plan (As Amended and Restated Effective January 1, 2009) * (File No. 001-16169, Form 10-K dated February 6,
2009, Exhibit 10.19).
PECO Energy Company Supplemental Pension Benefit Plan (As Amended and Restated Effective January 1, 2009) (File No. 000-16844, Form 10-K dated February 6, 2009,
Exhibit 10.20).
Exelon Corporation Annual Incentive Plan for Senior Executives (As Amended Effective January 1, 2014 * (File No. 001-16169, Proxy Statement dated April 1, 2014, Appendix
A).
Exelon Corporation Employee Stock Purchase Plan, as amended and restated effective September 25, 2019 (File No. 001-16169, Form 10-Q dated October 31, 2019, Exhibit
10.3).
376
Table of Contents
Exhibit No.
Description
10-10
10-11
10-12
10-13
10-14
10-15
10-16
10-17
10-18
10-19
10-20
10-20-1
10-20-2
10-21
10-22
10-23
Exelon Corporation 2006 Long-Term Incentive Plan (Registration Statement No. 333-122704, Form S-4, Joint Proxy Statement-Prospectus pursuant to Rule 424(b)(3) filed
June 3, 2005, Annex H).
Form of Stock Option Grant Instrument under the Exelon Corporation 2006 Long-Term Incentive Plan (File No. 001-16169, Form 8-K dated January 27, 2006, Exhibit 99.2).
Exelon Corporation Employee Stock Purchase Plan for Unincorporated Subsidiaries, as amended and restated effective September 25, 2019 (File No. 001-16169, Form 10-Q
dated October 31, 2019, Exhibit 10.4).
Exelon Corporation Senior Management Severance Plan (As Amended and Restated Effective January 1, 2020) * (File No. 001-16169, Form 10-K dated February 11, 2020,
Exhibit 10.13).
Exelon Corporation Executive Death Benefits Plan dated as of January 1, 2003 * (File No. 001-16169, Form 10-K dated February 13, 2007, Exhibit 10.52).
First Amendment to Exelon Corporation Executive Death Benefits Plan, Effective January 1, 2006 * (File No. 001-16169, Form 10-K dated February 13, 2007, Exhibit 10.53).
Amendment Number One to the Exelon Corporation 2006 Long-Term Incentive Plan, Effective December 4, 2006 (File No. 001-16169, Form 10-K dated February 13, 2007,
Exhibit 10.54).
Exelon Corporation Deferred Compensation Plan (As Amended and Restated Effective January 1, 2005) (File No. 001-16169, Form 10-K dated February 13, 2007, Exhibit
10.56).
Exelon Corporation Stock Deferral Plan (As Amended and Restated Effective September 25, 2019) (File No. 001-16169, Form 10-Q dated October 31, 2019, Exhibit 10.5).
Restricted stock unit award agreement (File 001-16169, Form 8-K dated August 31, 2007, Exhibit 99.1).
Form of Exelon Corporation 2011 Long-Term Incentive Plan, as amended effective December 18, 2014. * (File No. 001-16169, Form 10-K dated February 10, 2016, Exhibit
10.34).
Form of Exelon Corporation Long-Term Incentive Program, as amended and restated as of January 1, 2020. * (File No. 001-16169, Form 10-K dated February 11, 2020, Exhibit
10.21).
Amendment Number Two to the Exelon Corporation 2011 Long-Term Incentive Plan (As Amended and Restated Effective January 21, 2014), Effective October 26, 2015. * (File
No. 001-16169, Form 10-K dated February 10, 2016, Exhibit 10.34.3).
Form of Separation Agreement under Exelon Corporation Senior Management Severance Plan (As Amended and Restated Effective January 1, 2020) (File No. 001-16169,
Form 10-K dated February 11, 2020, Exhibit 10.21).
Credit Agreement for $500,000,000 dated as of March 23, 2011 between Exelon Corporation and Various Financial Institutions (File No. 001-16169, Form 8-K dated March 23,
2011, Exhibit 99.1).
Bond Purchase Agreement, dated December 1, 2015, among Atlantic City Electric Company and the purchasers signatory thereto (File No. 001-03559, Form 8-K dated
December 2, 2015, Exhibit 1.1).
Exhibit No.
Description
10-24
10-25
2016 Form of Exelon Corporation Change in Control Agreement (File No. 001-16169, Form 10-Q dated October 26, 2016, Exhibit 10.1).
Letter Agreement, dated May 7, 2018, between Exelon Corporation and Denis P. O’Brien (File No. 001-16169, Form 10-Q dated August 2, 2018, Exhibit 10.3).
377
Table of Contents
Exhibit No.
Description
10-26
10-27
10-28
10-29
10-30
10-31
10-32
10-33
10-34
10-35
10-36
10-37
10-38
10-39
10-40
10-41
10-42
10-43
10-44
Letter Agreement, dated May 7, 2018, between Exelon Corporation and Jonathan W. Thayer (File No. 001-16169, Form 10-Q dated August 2, 2018, Exhibit 10.4).
Exelon Corporation 2020 Long-Term Incentive Plan (Effective April 28, 2020) (File No. 001-16169, Proxy Statement dated March 18, 2020, Appendix A).
Exelon Corporation 2020 Long-Term Incentive Plan Prospectus, dated May 27, 2020 (File No. 001-16169, Form 10-Q dated August 4, 2020, Exhibit 10.3).
Form of Restricted Stock Unit Award Notice and Agreement under the Exelon Corporation 2020 Long-Term Incentive Plan (File No. 001-16169, Form 10-Q dated August 4,
2020, Exhibit 10.4).
Form of Performance Share Award Notice and Agreement under the Exelon Corporation 2020 Long-Term Incentive Plan (File No. 001-16169, Form 10-Q dated August 4, 2020,
Exhibit 10.5).
Letter Agreement, dated June 4, 2020, between Exelon Corporation and William A. Von Hoene, Jr. (File 001-16169, Form 10-K dated February 24, 2021, Exhibit 10.74)
Deferred Prosecution Agreement, dated July 17, 2020, between Commonwealth Edison Company and the U.S. Department of Justice and the U.S. Attorney for the Northern
District of Illinois (File No. 001-16169, Form 8-K dated July 17, 2020, Exhibit 10.1).
Transition Services Agreement, dated January 31, 2022, between Exelon Corporation and Constellation Energy Corporation (File No. 001-16169, Form 8K dated February 2,
2022, Exhibit 10.1)
Tax Matters Agreement, dated January 31, 2022, between Exelon Corporation and Constellation Energy Corporation (File No. 001-16169, Form 8K dated February 2, 2022,
Exhibit 10.2)
Employee Matters Agreement, dated January 31, 2022, between Exelon Corporation and Constellation Energy Corporation (File No. 001-16169, Form 8K dated February 2,
2022, Exhibit 10.3)
Credit Agreement for $300,000,000 dated January 21, 2022, between Exelon Corporation, various financial institutions, and Sumitomo Mitsui Banking Corp**
Credit Agreement for $300,000,000 dated January 21, 2022, between Exelon Corporation, various financial institutions, and U.S. Bank**
Credit Agreement for $1,150,000,000 dated January 24, 2022, between Exelon Corporation and Barclays Bank PLC**
Credit Agreement for $250,000,000 dated January 24, 2022, between Exelon Corporation, various financial institutions and PNC Bank**
Credit Agreement for $900,000,000 dated February 1, 2022, between Exelon Corporation and various financial institutions**
Credit Agreement for $600,000,000 dated February 1, 2022, between Baltimore Gas and Electric Company and various financial institutions**
Credit Agreement for $1,000,000,000 dated February 1, 2022, between Commonwealth Edison Company and various financial institutions**
Credit Agreement for $600,000,000 dated February 1, 2022, between PECO Energy Company and various financial institutions**
Credit Agreement for $900,000,000 dated February 1, 2022, between Potomac Electric Power Company, Delmarva Power & Light Company, Atlantic City Electric Company and
various financial institutions**
378
Table of Contents
Exhibit No.
Description
14
21-1
21-2
21-3
21-4
21-5
21-6
21-7
21-8
23-1
23-2
23-3
23-4
23-5
23-6
23-7
24-1
24-2
24-3
24-4
24-5
24-6
24-7
24-8
24-9
Exelon Code of Conduct, as amended March 12, 2012 (File No. 1-16169, Form 8-K dated March 14, 2012, Exhibit No. 14-1).
Subsidiaries
Exelon Corporation
Commonwealth Edison Company
PECO Energy Company
Baltimore Gas and Electric Company
Pepco Holdings LLC
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
Consent of Independent Registered Public Accountants
Exelon Corporation
Commonwealth Edison Company
PECO Energy Company
Baltimore Gas and Electric Company
Potomac Electric Power Company
Delmarva Power & Light Company
Atlantic City Electric Company
Power of Attorney (Exelon Corporation)
Anthony K. Anderson
Ann C. Berzin
W. Paul Bowers
Marjorie Rodgers Cheshire
Christopher M. Crane
Carlos Gutierrez
Linda P. Jojo
Paul Joskow
Mayo A. Shattuck III
24-10
John F. Young
Power of Attorney (Commonwealth Edison Company)
24-11
24-12
24-13
24-14
Calvin G. Butler, Jr.
Christopher M. Crane
Nicholas DeBenedictis
Ricardo Estrada
379
Table of Contents
Exhibit No.
Description
24-15
24-16
24-17
24-18
24-19
24-20
24-21
24-22
24-23
24-24
24-25
24-26
24-27
24-28
24-29
24-30
24-31
24-32
24-33
24-34
24-35
24-36
24-37
24-38
24-39
24-40
24-41
24-42
24-43
24-44
Zaldwaynaka Scott
Smita Shah
Gil C. Quiniones
Power of Attorney (PECO Energy Company)
Calvin G. Butler, Jr.
Christopher M. Crane
Nicholas DeBenedictis
Nelson A. Diaz
John S. Grady
Rosemarie B. Greco
Michael A. Innocenzo
Charisse R. Lillie
Power of Attorney (Baltimore Gas and Electric Company)
Ann C. Berzin
Calvin G. Butler, Jr.
Christopher M. Crane
Michael E. Cryor
James R. Curtiss
Joseph Haskins, Jr.
Carim V. Khouzami
Amy Seto
Maria Harris Tildon
Power of Attorney (Pepco Holdings LLC)
Antoine Allen
J. Tyler Anthony
Calvin G. Butler, Jr.
Christopher M. Crane
Linda W. Cropp
Michael E. Cryor
Debra P. DiLorenzo
Power of Attorney (Potomac Electric Power Company)
J. Tyler Anthony
Phillip S. Barnett
Calvin G. Butler, Jr.
380
Table of Contents
Exhibit No.
Description
24-45
24-46
24-47
24-48
24-49
24-50
Christopher M. Crane
Rodney Oddoye
Elizabeth O'Donnell
Tamla Olivier
Power of Attorney (Delmarva Power & Light Company)
J. Tyler Anthony
Calvin G. Butler, Jr.
Power of Attorney (Atlantic City Electric Company)
24-51
J. Tyler Anthony
Certifications Pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as to the Annual Report on Form 10-K for the year ended December 31, 2021 filed by the following
officers for the following registrants:
Exhibit No.
Description
31-1
31-2
31-3
31-4
31-5
31-6
31-7
31-8
31-9
31-10
31-11
31-12
31-13
31-14
31-15
31-16
Filed by Christopher M. Crane for Exelon Corporation
Filed by Joseph Nigro for Exelon Corporation
Filed by Gil C. Quiniones for Commonwealth Edison Company
Filed by Joseph R. Trpik for Commonwealth Edison Company
Filed by Michael A. Innocenzo for PECO Energy Company
Filed by Robert J. Stefani for PECO Energy Company
Filed by Carim V. Khouzami for Baltimore Gas and Electric Company
Filed by David M. Vahos for Baltimore Gas and Electric Company
Filed by J. Tyler Anthony for Pepco Holdings LLC
Filed by Phillip S. Barnett for Pepco Holdings LLC
Filed by J. Tyler Anthony for Potomac Electric Power Company
Filed by Phillip S. Barnett for Potomac Electric Power Company
Filed by J. Tyler Anthony for Delmarva Power & Light Company
Filed by Phillip S. Barnett for Delmarva Power & Light Company
Filed by J. Tyler Anthony for Atlantic City Electric Company
Filed by Phillip S. Barnett for Atlantic City Electric Company
Certifications Pursuant to Section 1350 of Chapter 63 of Title 18 United States Code as to the Annual Report on Form 10-K for the year ended December 31, 2021 filed by the following officers for the
following registrants:
Exhibit No.
Description
32-1
32-2
32-3
32-4
Filed by Christopher M. Crane for Exelon Corporation
Filed by Joseph Nigro for Exelon Corporation
Filed by Gil C. Quiniones for Commonwealth Edison Company
Filed by Joseph R. Trpik for Commonwealth Edison Company
381
Table of Contents
Exhibit No.
Description
32-5
32-6
32-7
32-8
32-9
32-10
32-11
32-12
32-13
32-14
32-15
32-16
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Filed by Michael A. Innocenzo for PECO Energy Company
Filed by Robert J. Stefani for PECO Energy Company
Filed by Carim V. Khouzami for Baltimore Gas and Electric Company
Filed by David M. Vahos for Baltimore Gas and Electric Company
Filed by J. Tyler Anthony for Pepco Holdings LLC
Filed by Phillip S. Barnett for Pepco Holdings LLC
Filed by J. Tyler Anthony for Potomac Electric Power Company
Filed by Phillip S. Barnett for Potomac Electric Power Company
Filed by J.Tyler Anthony for Delmarva Power & Light Company
Filed by Phillip S. Barnett for Delmarva Power & Light Company
Filed by J. Tyler Anthony for Atlantic City Electric Company
Filed by Phillip S. Barnett for Atlantic City Electric Company
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Labels Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
__________
* Compensatory plan or arrangements in which directors or officers of the applicable registrant participate and which are not available to all employees.
** Filed herewith.
(a) These filings are not available electronically on the SEC website as they were filed in paper previous to the electronic system that is currently in place.
382
Table of Contents
ITEM 16.
FORM 10-K SUMMARY
All Registrants
Registrants may voluntarily include a summary of information required by Form 10-K under this Item 16. The Registrants have elected not to include such summary information.
383
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 25th day of February, 2022.
SIGNATURES
EXELON CORPORATION
By:
Name:
Title:
/s/ CHRISTOPHER M. CRANE
Christopher M. Crane
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 25th day of
February, 2022.
Signature
Title
/s/ CHRISTOPHER M. CRANE
Christopher M. Crane
/s/ JOSEPH NIGRO
Joseph Nigro
/s/ FABIAN E. SOUZA
Fabian E. Souza
President, Chief Executive Officer (Principal Executive Officer) and Director
Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Senior Vice President and Corporate Controller (Principal Accounting Officer)
This annual report has also been signed below by Gayle E. Littleton, Attorney-in-Fact, on behalf of the following Directors on the date indicated:
Anthony K. Anderson
Ann C. Berzin
W. Paul Bowers
Marjorie Rodgers Cheshire
Carlos Gutierrez
By:
Name:
/s/ GAYLE E. LITTLETON
Gayle E. Littleton
Linda P. Jojo
Paul Joskow
Mayo A. Shattuck III
John F. Young
384
February 25, 2022
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 25th day of February, 2022.
SIGNATURES
COMMONWEALTH EDISON COMPANY
By:
Name:
Title:
/s/ GIL C. QUINIONES
Gil C. Quiniones
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 25th day of
February, 2022.
/s/ GIL C. QUINIONES
Gil C. Quiniones
/s/ JOSEPH R. TRPIK
Joseph R. Trpik
/s/ STEVEN J. CICHOCKI
Steven J. Cichocki
Signature
Title
Chief Executive Officer (Principal Executive Officer) and Director
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Director, Accounting (Principal Accounting Officer)
This annual report has also been signed below by Gil C. Quiniones, Attorney-in-Fact, on behalf of the following Directors on the date indicated:
Calvin G. Butler, Jr.
Christopher M. Crane
Nicholas DeBenedictis
By:
Name:
/s/ GIL C. QUINIONES
Gil C. Quiniones
Ricardo Estrada
Zaldwaynaka Scott
Smita Shah
385
February 25, 2022
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 25th day of February, 2022.
SIGNATURES
PECO ENERGY COMPANY
By:
Name:
Title:
/s/ MICHAEL A. INNOCENZO
Michael A. Innocenzo
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 25th day of
February, 2022.
Signature
Title
/s/ MICHAEL A. INNOCENZO
Michael A. Innocenzo
/s/ ROBERT J. STEFANI
Robert J. Stefani
/s/ CAROLINE FULGINITI
Caroline Fulginiti
President, Chief Executive Officer (Principal Executive Officer) and Director
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Director, Accounting (Principal Accounting Officer)
This annual report has also been signed below by Michael A. Innocenzo, Attorney-in-Fact, on behalf of the following Directors on the date indicated:
Calvin G. Butler, Jr.
Christopher M. Crane
Nicholas DeBenedictis
Nelson A. Diaz
By:
Name:
/s/ MICHAEL A. INNOCENZO
Michael A. Innocenzo
John S. Grady
Rosemarie B. Greco
Charisse R. Lillie
386
February 25, 2022
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 25th day of February, 2022.
SIGNATURES
BALTIMORE GAS AND ELECTRIC COMPANY
By:
Name:
Title:
/s/ CARIM V. KHOUZAMI
Carim V. Khouzami
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 25th day of
February, 2022.
/s/ CARIM V. KHOUZAMI
Carim V. Khouzami
/s/ DAVID M. VAHOS
David M. Vahos
/s/ JASON T. JONES
Jason T. Jones
Signature
Title
Chief Executive Officer (Principal Executive Officer) and Director
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Director, Accounting (Principal Accounting Officer)
This annual report has also been signed below by Carim V. Khouzami, Attorney-in-Fact, on behalf of the following Directors on the date indicated:
Ann C. Berzin
Calvin G. Butler, Jr.
Christopher M. Crane
Michael E. Cryor
By:
Name:
/s/ CARIM V. KHOUZAMI
Carim V. Khouzami
James R. Curtiss
Joseph Haskins, Jr.
Amy Seto
Maria Harris Tildon
387
February 25, 2022
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 25th day of February, 2022.
SIGNATURES
PEPCO HOLDINGS LLC
By:
Name:
Title:
/s/ J. TYLER ANTHONY
J. Tyler Anthony
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 25th day of
February, 2022.
Signature
Title
/s/ J. TYLER ANTHONY
J. Tyler Anthony
/s/ PHILLIP S. BARNETT
Phillip S. Barnett
/s/ JULIE E. GIESE
Julie E. Giese
President, Chief Executive Officer (Principal Executive Officer) and Director
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Director, Accounting (Principal Accounting Officer)
This annual report has also been signed below by J. Tyler Anthony, Attorney-in-Fact, on behalf of the following Directors on the date indicated:
Antoine Allen
Calvin G. Butler, Jr.
Christopher M. Crane
By:
Name:
/s/ J. TYLER ANTHONY
J. Tyler Anthony
Linda W. Cropp
Michael E. Cryor
Debra P. DiLorenzo
388
February 25, 2022
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 25th day of February, 2022.
SIGNATURES
POTOMAC ELECTRIC POWER COMPANY
By:
Name:
Title:
/s/ J. TYLER ANTHONY
J. Tyler Anthony
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 25th day of
February, 2022.
Signature
Title
/s/ J. TYLER ANTHONY
J. Tyler Anthony
/s/ PHILLIP S. BARNETT
Phillip S. Barnett
/s/ JULIE E. GIESE
Julie E. Giese
President, Chief Executive Officer (Principal Executive Officer) and Director
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Director, Accounting (Principal Accounting Officer)
This annual report has also been signed below by J. Tyler Anthony, Attorney-in-Fact, on behalf of the following Directors on the date indicated:
Phillip S. Barnett
Calvin G. Butler, Jr.
Christopher M. Crane
By:
Name:
/s/ J. TYLER ANTHONY
J. Tyler Anthony
Rodney Oddoye
Elizabeth O'Donnell
Tamla Olivier
389
February 25, 2022
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 25th day of February, 2022.
SIGNATURES
DELMARVA POWER & LIGHT COMPANY
By:
Name:
Title:
/s/ J. TYLER ANTHONY
J. Tyler Anthony
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 25th day of
February, 2022.
Signature
Title
/s/ J. TYLER ANTHONY
J. Tyler Anthony
/s/ PHILLIP S. BARNETT
Phillip S. Barnett
/s/ JULIE E. GIESE
Julie E. Giese
President, Chief Executive Officer (Principal Executive Officer) and Director
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Director, Accounting (Principal Accounting Officer)
This annual report has also been signed below by J. Tyler Anthony, Attorney-in-Fact, on behalf of the following Directors on the date indicated:
Calvin G. Butler, Jr.
By:
Name:
/s/ J. TYLER ANTHONY
J. Tyler Anthony
February 25, 2022
390
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago and State of Illinois on the 25th day of February, 2022.
SIGNATURES
ATLANTIC CITY ELECTRIC COMPANY
By:
Name:
Title:
/s/ J. TYLER ANTHONY
J. Tyler Anthony
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 25th day of
February, 2022.
Signature
Title
/s/ J. TYLER ANTHONY
J. Tyler Anthony
/s/ PHILLIP S. BARNETT
Phillip S. Barnett
/s/ JULIE E. GIESE
Julie E. Giese
President, Chief Executive Officer (Principal Executive Officer) and Director
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Director, Accounting (Principal Accounting Officer)
391
Execution Version $300,000,000 CREDIT AGREEMENT dated as of January 21, 2022 among EXELON CORPORATION, as Borrower, VARIOUS FINANCIAL INSTITUTIONS, as Lenders, and SUMITOMO MITSUI BANKING CORPORATION, as Administrative Agent
-i- TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND INTERPRETATION Certain Defined Terms ...................................................................................... 1 SECTION 1.02 Other Interpretive Provisions .............................................................................. 23 SECTION 1.03 Accounting Principles ......................................................................................... 23 SECTION 1.05 Divisions ............................................................................................................. 24 ARTICLE II AMOUNTS AND TERMS OF THE COMMITMENTS SECTION 2.01 Commitments ...................................................................................................... 24 SECTION 2.02 Procedures for Advances; Limitations on Borrowings ....................................... 25 SECTION 2.03 Fees ..................................................................................................................... 25 SECTION 2.04 Termination of Commitments ............................................................................. 25 SECTION 2.05 Repayment of Advances ..................................................................................... 25 SECTION 2.06 Interest on Advances ........................................................................................... 25 SECTION 2.07 [Reserved] ........................................................................................................... 25 SECTION 2.08 Interest Rate Determination ................................................................................ 26 SECTION 2.09 Continuation and Conversion of Advances ........................................................ 26 SECTION 2.10 Prepayments ........................................................................................................ 26 SECTION 2.11 Increased Costs. .................................................................................................. 26 SECTION 2.12 Illegality .............................................................................................................. 28 SECTION 2.13 Payments and Computations ............................................................................... 28 SECTION 2.14 Taxes ................................................................................................................... 29 SECTION 2.15 Sharing of Payments, Etc
.................................................................................... 33 SECTION 2.16 Availability of Types of Borrowings; Adequacy of Interest Rate; Benchmark Replacement .................................................................................................... 34 SECTION 2.17 Funding Indemnification…………………………………………………………………36 SECTION 2.18 Investment Payment Dates……………………………………………………………….37 ARTICLE III CONDITIONS PRECEDENT SECTION 3.01 Conditions Precedent to Effectiveness ................................................................ 37
TABLE OF CONTENTS (continued) Page -ii- ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01 Representations and Warranties of the Borrower ............................................... 38 ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01 Affirmative Covenants ........................................................................................ 41 SECTION 5.02 Negative Covenants ............................................................................................ 45 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01 Events of Default ................................................................................................ 49 ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01 Authorization and Action .................................................................................... 51 SECTION 7.02 Administrative Agent’s Reliance, Etc ................................................................. 52 SECTION 7.03 Administrative Agent and Affiliates ................................................................... 52 SECTION 7.04 Lender Credit Decision ....................................................................................... 52 SECTION 7.05 Indemnification ................................................................................................... 53 SECTION 7.06 Successor Administrative Agent ......................................................................... 53 ARTICLE VIII MISCELLANEOUS SECTION 8.01 Amendments, Etc ................................................................................................ 54 SECTION 8.02 Notices, Etc ......................................................................................................... 54 SECTION 8.03 No Waiver; Remedies ......................................................................................... 55 SECTION 8.04 Costs and Expenses; Indemnification ................................................................. 55 SECTION 8.05 Right of Set-off ................................................................................................... 56 SECTION 8.06 Binding Effect ..................................................................................................... 56 SECTION 8.07 Assignments and Participations .......................................................................... 56 SECTION 8.08
Governing Law ................................................................................................... 61 SECTION 8.09 Consent to Jurisdiction; Certain Waivers............................................................ 61 SECTION 8.10 Waiver of Jury Trial ............................................................................................ 61
TABLE OF CONTENTS (continued) Page -iii- SECTION 8.11 Execution in Counterparts; Integration ............................................................... 62 SECTION 8.12 USA PATRIOT ACT NOTIFICATION............................................................. 62 SECTION 8.13 No Advisory or Fiduciary Responsibility ........................................................... 62 SECTION 8.14 [Reserved] ........................................................................................................... 63 SECTION 8.15 Acknowledgement and Consent to Bail-In of Affected Financial Institutions ... 63 SECTION 8.16 Confidentiality .................................................................................................... 63 SECTION 8.17 Material Non-Public Information........................................................................ 64 SECTION 8.18 Interest Rate Limitation ...................................................................................... 64 SECTION 8.19 Severability ......................................................................................................... 65 SECTION 8.20 Headings.............................................................................................................. 65 SECTION 8.21 Survival ............................................................................................................... 65 SCHEDULE I COMMITMENTS SCHEDULE 3.06 DISCLOSED MATTERS SCHEDULE 5.02 EXISTING RESTRICTIONS EXHIBIT A FORM OF ASSIGNMENT AND ASSUMPTION EXHIBIT B FORM OF NOTICE OF BORROWING EXHIBIT C FORM OF NOTE EXHIBIT D FORM OF ANNUAL AND QUARTERLY COMPLIANCE CERTIFICATE EXHIBIT E FORMS OF U.S. TAX COMPLIANCE CERTIFICATE EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION EXHIBIT G FORM OF NOTICE OF PREPAYMENT
CREDIT AGREEMENT THIS CREDIT AGREEMENT dated as of January 21, 2022 is among EXELON CORPORATION, a Pennsylvania corporation, the banks and other financial institutions or entities listed on the signature pages hereof, and SUMITOMO MITSUI BANKING CORPORATION, as Administrative Agent. The parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION Certain Defined Terms. As used in this Agreement, each of the following terms shall have the meaning set forth below (each such meaning to be equally applicable to both the singular and plural forms of the term defined): “Administrative Agent” means Sumitomo Mitsui Banking Corporation in its capacity as administrative agent for the Lenders pursuant to Article VII, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Section 7.06. “Administrative Questionnaire” means an administrative questionnaire, substantially in the form supplied by the Administrative Agent, completed by a Lender and furnished to the Administrative Agent in connection with this Agreement. “Advance” means an advance by a Lender to the Borrower hereunder. An Advance may be a Base Rate Advance or a SOFR Advance, each of which shall be a “Type” of Advance. “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. “Aggregate Commitment Amount” means the aggregate of the Commitments of all the Lenders, as reduced or increased from time to time pursuant to the terms hereof. As of the Effective Date, the Aggregate Commitment Amount is $300,000,000. “Alternate Base Rate” means, for any day, a rate of interest
per annum equal to the highest of (a) zero, (b) the Prime Rate for such day, (c) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (d) the Term SOFR Rate (without giving effect to the Applicable Margin) for a one-month Interest Period on such day (or if such day is not a Business Day or if the Term SOFR Rate for such Business Day is not published due to a holiday or other circumstance that the Administrative Agent deems in its sole discretion to be temporary, the immediately preceding Business Day) for Dollars plus 1.00%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate, or the Term SOFR Rate shall be effective from the effective date of such change. If the Alternate Base Rate is being used when Term SOFR Advances are unavailable pursuant to Section 2.16, then the Alternate Base Rate shall be the highest of clauses (a), (b) and (c) above, without reference to clause (d) above.
-2- “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Affiliates from time to time concerning or relating to money-laundering, bribery or corruption. “Applicable Margin” means, 0.65% with respect to SOFR Advances, Term SOFR Borrowings and Term SOFR Loans and (y) 0.00% with respect to Base Rate Advances, Base Rate Borrowings and Base Rate Loans to Borrower. “Approved Fund” has the meaning set forth in Section 8.07(a). “Available Tenor” means, as of any date of determination and with respect to the then- current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date. “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit A. “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or
their affiliates (other than through liquidation, administration or other insolvency proceedings). “Base Rate” means, for any day, a rate per annum equal to (a) the Alternate Base Rate for such day plus (b) the Applicable Margin for such day, in each case changing when and as the Alternate Base Rate or the Applicable Margin changes. “Base Rate Advance” means an Advance that bears interest as provided in Section 2.06. “Base Rate Borrowing” means a Borrowing that, except as otherwise provided in Section 2.13(f), bears interest at the Base Rate. “Base Rate Loan” means a Loan that, except as otherwise provided in Section 2.13(f), bears interest at the Base Rate. “Benchmark” means, initially, Term SOFR; provided that if a replacement of the Benchmark has occurred pursuant to Section 2.16(b), then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has become effective pursuant to Section 2.16(b).
-3- “Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date: (1) Daily Simple SOFR; or (2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment. If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement pursuant to clause (2) thereof for any applicable Interest Period and Available Tenor for any setting of such Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the
applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities. “Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Borrowing” and “Term SOFR Borrowing,” the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
-4- “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date; and (3) in the case of an Early Opt-in Election, the Business Day specified by the Administrative Agent in the notice of the Early Opt-in Election provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (Central time) on the fifth Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Majority Lenders. For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date”
will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark: (1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); (2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or
-5- resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or (3) a public statement or publication of information by any of the entities referenced in clause (2) above announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark in accordance with Section 2.16(b), and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark in accordance with Section 2.16(b). “Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. “BGE” shall mean Baltimore Gas and Electric Company. “BGE Entity” shall mean RF Holdco, BGE and any of their Subsidiaries. “Borrower” means Exelon Corporation or any Eligible Successor thereof. “Borrowing” means a
group of Advances of the same Type made, continued or converted on the same day by the Lenders ratably according to their Pro Rata Shares and, in the case of a Borrowing of Term SOFR Loans, having the same Interest Period. “Business Day” means a day (other than a Saturday or Sunday) on which banks generally are open in New York City, New York for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system; provided that, when used in connection with SOFR, Term SOFR, Term SOFR Base Rate or Term SOFR Rate, the term “Business Day” excludes any day on which the Securities Industry and Financial Markets Association (SIFMA) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP,
-6- and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. “Change in Control” means the acquisition of ownership, directly or indirectly beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of Equity Interests representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower. “Change in Law” means (a) the adoption of any law, rule, regulation or treaty after the date of this Agreement, (b) any change in any law, rule, regulation or treaty or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.11(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, rule, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued. “Code” means the Internal Revenue Code of 1986, as amended. “ComEd” means Commonwealth Edison Company, an Illinois corporation, or any successor thereof. “ComEd Entity” means ComEd and each of its Subsidiaries. “Commitment”
means, with respect to each Lender, the commitment of such Lender to make an Advance, expressed as an amount representing the maximum principal amount of the Advance to be made by such Lender. The initial amount of each Lender’s Commitment is set forth on Schedule I attached hereto. “Commitment Amount” means, for any Lender at any time, the amount set forth opposite such Lender’s name on Schedule I attached hereto or, if such Lender has entered into any Assignment and Assumption, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c). “Commodity Trading Obligations” shall mean the obligations of the Borrower (or, prior to consummation of the Spin Transaction, Genco) under (i) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement, arrangement or transaction, including natural gas, power, electric energy, emissions forward contracts, renewable energy credits, or any combination of any such arrangements, agreements and/or transactions, employed in the ordinary course of the Borrower or Genco’s business,
-7- including the Borrower or Genco’s energy marketing, trading and asset optimization business, or (ii) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement or arrangement, or combination thereof (including an agreement or arrangement to hedge foreign exchange risks) in respect of commodities entered into by the Borrower or Genco pursuant to asset optimization and risk management policies and procedures adopted pursuant to authority delegated by the Board of Directors of the Borrower or Genco. The term “commodities” shall include electric energy and/or capacity, transmission rights, coal, petroleum, natural gas liquids, natural gas, fuel transportation rights, emissions allowances, weather derivatives and related products and by-products and ancillary services. “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes. “Consolidated Capitalization Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of the last day of the applicable Test Period to (b) the sum of Consolidated Total Indebtedness plus Consolidated Stockholders’ Equity as of the last day for such Test Period. “Consolidated Stockholders’ Equity” means, as of any date of determination, the total stockholders’ equity of the Borrower on a consolidated basis, determined in accordance with GAAP. “Consolidated Total Indebtedness” means, as of any date of determination, the total amount of all Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP. For the avoidance of doubt, Consolidated Total Indebtedness shall not
include Nonrecourse Indebtedness. “Controlled Group” means each person (as defined in Section 3(9) of ERISA) that, together with the Borrower, would be deemed to be a “single employer” within the meaning of Section 414(b) or 414(c) of the Code. “Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor. “Credit Extension” means the making of an Advance hereunder. “Daily Simple SOFR” means for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion.
-8- “Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. “Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06. “Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” in its Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. “Early Opt-in Election” means, if the then-current Benchmark is the Term SOFR Base Rate, the joint election by the Administrative Agent and the Borrower to trigger a fallback from the Term SOFR Base Rate to the Benchmark Replacement, and a notification by the Administrative Agent to each of the other parties hereto of such election and the proposed Benchmark Replacement. “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means the date on which all conditions precedent set forth in Section 3.01 have been satisfied. “Electronic System” means any electronic system, including e-mail, e-fax, Intralinks®, ClearPar®, Debt Domain, Syndtrak and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent or any Lender and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system. “Eligible Assignee” means (i) a commercial bank organized under the laws of the United States, or any State thereof; (ii) a commercial bank organized under the laws of any other country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund associated with its “General Arrangements to Borrow”, or a political subdivision of any such country, provided that such bank is acting through a branch or agency located in the United States; (iii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership or other entity) engaged generally in
-9- making, purchasing or otherwise investing in commercial loans in the ordinary course of its business; (iv) the central bank of any country that is a member of the OECD; (v) any Lender; or (vi) any Affiliate (excluding any individual) of a Lender; provided that, unless otherwise agreed by the Borrower and the Administrative Agent in their sole discretion, (A) any Person described in clause (i), (ii) or (iii) above shall also (x) have outstanding unsecured long-term debt that is rated BBB- or better by S&P and Baa3 or better by Moody’s (or an equivalent rating by another nationally recognized credit rating agency of similar standing if either such corporation is no longer in the business of rating unsecured indebtedness of entities engaged in such businesses) and (y) have combined capital and surplus (as established in its most recent report of condition to its primary regulator) of not less than $100,000,000 (or its equivalent in foreign currency), and (B) any Person described in clause (ii), (iii), (iv), (v) or (vi) above shall, on the date on which it is to become a Lender hereunder, be entitled to receive payments hereunder without deduction or withholding of any United States Federal income taxes (as contemplated by Section 2.14(e)). In no event shall an Eligible Assignee include an Ineligible Institution. “Eligible Successor” means a Person that (i) is a corporation, limited liability company or business trust duly incorporated or organized, validly existing and in good standing under the laws of one of the states of the United States or the District of Columbia, (ii) as a result of a contemplated acquisition, consolidation or merger, will succeed to all or substantially all of the consolidated business and assets of the Borrower, (iii) upon giving effect to such contemplated acquisition, consolidation or merger, will have all or substantially all of its consolidated business and assets conducted and located in the United States and (iv) is acceptable to the Majority Lenders as a
credit matter. “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to (i) the environment, (ii) preservation or reclamation of natural resources, (iii) the management, release or threatened release of any Hazardous Material or (iv) health and safety matters. “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest, but excluding any debt securities convertible into any of the foregoing. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
-10- “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. “ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the failure with respect to any Plan to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition upon the Borrower or any of its ERISA Affiliates of Withdrawal Liability under Section 4201 of ERISA or a determination that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Title IV of ERISA. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan
Market Association (or any successor Person), as in effect from time to time. “Event of Default” shall have the meaning specified in Section 6.01. “Exchange Act” means the Securities Exchange Act of 1934. “Excluded Project Subsidiary” shall mean, at any time, any Subsidiary that is an obligor (or, in the case of a Subsidiary of an Excluded Project Subsidiary that is such an obligor and is in a business that is related to the business of such Excluded Project Subsidiary that is such an obligor, is otherwise bound, or its property is subject to one or more covenants and other terms of any Nonrecourse Indebtedness outstanding at such time, regardless of whether such Subsidiary is a party to the agreement evidencing the Nonrecourse Indebtedness) with respect to any Nonrecourse Indebtedness outstanding at such time. “Excluded Subsidiary” shall mean (a) an Excluded Project Subsidiary, (b) any captive insurance Subsidiary, (c) any not-for-profit Subsidiary or (d) any special purpose vehicle, including any Securitization Vehicle. “Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other
-11- Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 8.07(g)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.14, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in an Advance or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.14(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA. “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement, and any current or future regulations or official interpretations thereof; provided that “FATCA” shall also include any amendments to Sections 1471 through 1474 of the Code that are substantively comparable, but only if the requirements in such amended version for avoiding the withholding are not materially more onerous than the requirements in the current version. “Federal Funds Effective Rate” means, for any day, the greater of (a) zero and (b) the rate per annum calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate or, if such rate is not so published for any day which is a Business Day, the average of the quotations at
approximately 10:00 a.m. (Central time) on such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion. “Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source. “Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower. “Fitch” means Fitch Ratings, Inc. or any successor. “Fitch Rating” means, at any time, the rating issued by Fitch and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from Fitch for debt securities of such type, then such indicative rating shall be used for determining the “Fitch Rating” and if the Borrower does not have such an indicative rating, but has an issuer rating from Fitch, then such issuer rating shall be used for determining the “Fitch Rating”). “Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate.
-12- “Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. “GAAP” shall have meaning specified in Section 1.03(a). “Genco” means Exelon Generation Company, LLC, a Pennsylvania limited liability company. “Governmental Authority” means the government of the United States of America or any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing). “Granting Bank” shall have the meaning specified in Section 8.07(i). “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. “Hedging Obligations” mean, with respect to any Person, the obligations of such Person under any interest rate or currency swap agreement, interest rate or currency future agreement, interest rate collar agreement, interest rate or currency hedge agreement, and any put, call or other agreement or arrangement designed to protect such Person against fluctuations in interest rates or currency exchange rates.
-13- “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed and (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. “Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by the Borrower under this Agreement, and (b) Other Taxes. “Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to any other credit enhancement, provided, that if the Borrower does not have any
outstanding debt securities of the type described, an appropriate fallback will be determined by Administrative Agent in consultation with Borrower. “Ineligible Institution” has the meaning assigned to it in Section 8.07(a). “Interest Period” means, with respect to a Term SOFR Borrowing, a period of one, three or six months (in each case, subject to the availability thereof) commencing on a Business Day selected by the Borrower pursuant to this Agreement and ending on the day that corresponds numerically to such date one, three or six months thereafter; provided that (a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such succeeding Business Day falls in a new calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; (c) no Interest Period shall extend beyond the Termination Date; and (d) no tenor that has been removed from this definition pursuant to Section 2.16(b)(iv) may be available for selection by the Borrower.
-14- “IRS” means the United States Internal Revenue Service. “Lenders” means each of the financial institutions listed on the signature pages hereof and each Eligible Assignee that shall become a party hereto pursuant to Section 8.07. “Lien” means any lien (statutory or other), mortgage, pledge, security interest or other charge or encumbrance, or any other type of preferential arrangement in the nature of a security interest (including the interest of a vendor or lessor under any conditional sale, capitalized lease or other title retention agreement). “Loan Documents” means this Agreement, including schedules and exhibits hereto, and any agreements entered into in connection herewith by the Borrower with or in favor of the Administrative Agent and/or the Lenders, including any amendments, modifications or supplements thereto or waivers thereof, legal opinions issued in connection with the other Loan Documents, flood determinations, letter of credit applications and any other documents prepared in connection with the other Loan Documents, if any. “Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement. “Majority Lenders” means Lenders having Pro Rata Shares of more than 50%; provided that, for purposes of this definition, neither the Borrower nor any of its Affiliates, if a Lender, shall be included in calculating the amount of any Lender’s Pro Rata Share or the amount of the Commitment Amounts or Outstanding Credit Extensions, as applicable, required to constitute more than 50% of the Pro Rata Shares. “Material Adverse Change” and “Material Adverse Effect” each means, relative to any occurrence, fact or circumstances of whatsoever nature (including any determination in any litigation, arbitration or governmental investigation or proceeding), (i) any materially adverse change in, or materially adverse effect on, the financial condition, operations, assets or business of the Borrower and its consolidated
Subsidiaries, taken as a whole, provided that, except as otherwise expressly provided herein, the assertion against the Borrower or any Subsidiary of liability for any obligation arising under ERISA for which the Borrower or such Subsidiary bore joint and several liability with any ComEd Entity, or the payment by the Borrower or any Subsidiary of any such obligation, shall not be considered in determining whether a Material Adverse Change or Material Adverse Effect has occurred); or (ii) any materially adverse effect on the validity or enforceability against the Borrower of this Agreement. “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto. “Moody’s Rating” means, at any time, the rating issued by Moody’s and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from Moody’s for debt securities of such type, then such indicative rating shall be used for determining the “Moody’s Rating” and if the Borrower does not have such an indicative rating, but has an issuer rating from Moody’s, then such issuer rating shall be used for determining the “Moody’s Rating”).
-15- “Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which Exelon or any other member of the Controlled Group is a party to which more than one employer is obligated to make contributions. “Nonrecourse Indebtedness” means any Indebtedness that finances the acquisition, development, ownership or operation of an asset or pool of assets in respect of which the Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates other than: (i) recourse to the named obligor with respect to such Indebtedness (the “Debtor”) for amounts limited to the cash flow or net cash flow (other than historic cash flow) from the asset; (ii) recourse to the Debtor for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any security interest or lien given by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor over its shares or like interest in the capital of the Debtor) to secure the Indebtedness, but only if the extent of the recourse to the Debtor is limited solely to the amount of any recoveries made on any such enforcement; and (iii) recourse to the Debtor generally or indirectly to any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a payment obligation or an obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person against which such recourse is available. “Notice of Borrowing” has the meaning set forth in Section 2.02(a). “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower
arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower or any Affiliate thereof of any proceeding under any debtor relief laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed or allowable claims in such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest commissions, charges, expenses, fees, indemnities and other amounts payable by the Borrower under any Loan Document and (b) the obligation of the Borrower to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Borrower. “OECD” means the Organization for Economic Cooperation and Development.
-16- “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any loan document, or sold or assigned an interest in any Advance or document related thereto. “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment under Section 8.07(g)). “Outstanding Credit Extensions” means the sum of the aggregate principal amount of all outstanding Advances. “Participant” has the meaning assigned to such term in Section 8.07(e). “Participant Register” has the meaning assigned to such term in Section 8.07(e). “Payment Date” means (i) for Base Rate Loans, the last day of each calendar quarter and (ii) for Term SOFR Loans the last day of each Interest Period. “PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. “PECO” means PECO Energy Company, a Pennsylvania corporation, or any successor thereof. “Pepco” means Pepco Holdings LLC, a Delaware limited liability company, or any successor thereof. “Pepco Entity” shall mean Pepco, PH Holdco and any of their Subsidiaries. “Permitted Encumbrance” means (a) any right reserved to or vested in any municipality or other governmental or public authority
(i) by the terms of any right, power, franchise, grant (including, without limitation, any financial assistance grant), license or permit granted or issued to the Borrower (or prior to consummation of the Spin Transaction, Genco) or (ii) to purchase or recapture or to designate a purchaser of any property of the Borrower (or prior to consummation of the Spin Transaction, Genco) ; (b) any easement, restriction, exception or reservation in any property and/or right of way of the Borrower (or prior to consummation of the Spin Transaction, Genco) for the purposes of roads, pipelines, transmission lines, distribution lines, transportation lines or removal of minerals or timber or for other like purposes or for the joint or common use of real property, rights of way, facilities and/or equipment, and defects, irregularities and deficiencies in title of any property and/or rights of way, which, in each case described in this clause (b), whether considered individually or collectively with all other items described in this clause (b), do not materially impair the use of the relevant property and/or rights of way for the purposes for
-17- which such property and/or rights of way are held by the Borrower (or prior to consummation of the Spin Transaction, Genco); (c) rights reserved to or vested in any municipality or other Governmental Authority to control or regulate any property of the Borrower (or prior to consummation of the Spin Transaction, Genco) or to use such property in a manner that does not materially impair the use of such property for the purposes for which it is held by the Borrower (or prior to consummation of the Spin Transaction, Genco) ; and (d) obligations or duties of the Borrower (or prior to consummation of the Spin Transaction, Genco) to any municipality or other Governmental Authority that arise out of any franchise, grant, license or permit and that affect any property of the Borrower (or prior to consummation of the Spin Transaction, Genco) (including, without limitation, obligations with respect to nuclear waste disposal and related arrangements). “Permitted Obligations” mean (1) Hedging Obligations of the Borrower (or prior to consummation of the Spin Transaction, Genco) arising in the ordinary course of business and in accordance with the Borrower’s (or prior to consummation of the Spin Transaction, Genco’s) established risk management policies that are designed to protect the Borrower (or prior to consummation of the Spin Transaction, Genco) against, among other things, fluctuations in interest rates or currency exchange rates and which in the case of agreements relating to interest rates shall have a notional amount no greater than the payments due with respect to the applicable obligations being hedged and (2) Commodity Trading Obligations of the Borrower (or prior to consummation of the Spin Transaction, Genco). “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. “PH Holdco” shall mean PH HoldCo LLC, a Delaware limited liability company. “Plan” means an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any other member of the Controlled Group has or may have any liability (including contingent liability). “Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system. “Prime Rate” means a rate per annum equal to the prime rate of interest announced by Sumitomo Mitsui Banking Corporation as its prime rate for U.S. credit (which is not necessarily the lowest rate charged to any customer) in effect at its office located in New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. “Principal Subsidiary” means each Subsidiary other than PECO and its Subsidiaries, any BGE Entity, any ComEd Entity and any Pepco Entity, (i) the consolidated assets of which, as of the date of any determination thereof, are at least equal to 10% of the consolidated assets of the Borrower or (ii) the consolidated earnings before taxes of which are at least equal to 10% of the consolidated earnings before taxes of the Borrower for the most recently completed fiscal year
-18- “Pro Rata Share” means, with respect to a Lender, the percentage that such Lender’s Commitment Amount is of the Aggregate Commitment Amount. If the Commitments have terminated or expired, the Pro Rata Shares shall be determined based upon the Commitment Amounts most recently in effect, giving effect to any assignments. “Public-Sider” means a Lender whose representatives may trade in securities of the Borrower or its controlling person or any of its Subsidiaries while in possession of the financial statements provided by the Borrower under the terms of this Agreement. “Rating Agency” means each of S&P, Moody’s and Fitch. “Recipient” means, as applicable, (a) the Administrative Agent and (b) any Lender. “Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, 10:00 a.m. (Central time) on the day that is two Business Days before the date of such setting, and (2) if such Benchmark is not Term SOFR, the time determined by the Administrative Agent in its reasonable discretion. “Register” has the meaning set forth in Section 8.07(c). “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective trustees, administrators, managers, representatives, directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates. “Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto. “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and regulations issued under such Section with respect to a Single Employer Plan, excluding such events as to which the requirement of Section 4043(a) of ERISA that the PBGC be notified within 30
days after the occurrence of such event is waived under PBGC Regulation Section 4043, provided that a failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waivers in accordance with either Section 4043(a) of ERISA or Section 412(c) of the Code. “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority. “RF Holdco” shall mean RF HoldCo LLC, a Delaware limited liability company. “S&P” means Standard and Poor’s Financial Services, LLC, or any successor. “S&P Rating” means, at any time, the rating issued by S&P and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third-party credit
-19- enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from S&P for debt securities of such type, then such indicative rating shall be used for determining the “S&P Rating”). “Sanctioned Country” means, at any time, a country, region or territory which is itself, or whose government is, the subject or target of any Sanctions (as of the Effective Date, Cuba, Iran, North Korea, Sudan, Syria and Crimea). “Sanctioned Person” means, at any time, any Person that is the target of Sanctions, including, without limitation, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state or Her Majesty's Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clause (a) or (b). “Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom. “Screen” has the meaning provided in the definition of Term SOFR Base Rate. “Securitization” shall mean any transaction or series of transactions entered into by the Borrower or any Subsidiary pursuant to which the Borrower or such Subsidiary, as the case may be, sells, conveys, assigns, grants an interest in or otherwise transfers, from time to time, to one or more
Securitization Vehicles the Securitization Assets (and/or grants a security interest in such Securitization Assets transferred or purported to be transferred to such Securitization Vehicle), and which Securitization Vehicle finances the acquisition of such Securitization Assets (i) with proceeds from the issuance of Third Party Securities, (ii) with the issuance to the Borrower or such Subsidiary of Sellers’ Retained Interests or an increase in such Sellers’ Retained Interests, or (iii) with proceeds from the sale or collection of Securitization Assets. “Securitization Assets” shall mean any accounts receivable originated or expected to be originated by (and owed to) the Borrower or any Subsidiary (in each case whether now existing or arising or acquired in the future) and any ancillary assets (including contract rights) which are of the type customarily conveyed with, or in respect of which security interests are customarily granted in connection with, such accounts receivable in a securitization transaction and which are sold, transferred or otherwise conveyed by the Borrower or a Subsidiary to a Securitization Vehicle. “Securitization Vehicle” shall mean a Person that is a direct wholly owned Subsidiary of the Borrower or of any Subsidiary (a) formed for the purpose of effecting a Securitization, (b) to which the Borrower and/or any Subsidiary transfers Securitization Assets and (c) which, in connection therewith, issues Third Party Securities; provided that (i) such Securitization Vehicle shall engage in no business other than the purchase of Securitization Assets pursuant to the
-20- Securitization, the issuance of Third Party Securities or other funding of such Securitization and any activities reasonably related thereto. “Sellers’ Retained Interests” means the debt and/or Equity Interests (including any intercompany notes) held by the Borrower or any Subsidiary in a Securitization Vehicle to which Securitization Assets have been transferred in a Securitization, including any such debt or equity received as consideration for, or as a portion of, the purchase price for the Securitization Assets transferred, and any other instrument through which the Borrower or any Subsidiary has rights to or receives distributions in respect of any residual or excess interest in the Securitization Assets. “Single Employer Plan” means a Plan other than a Multiemployer Plan, maintained by the Borrower or any other member of the Controlled Group for employees of the Borrower or any other member of the Controlled Group. “SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website. “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time. “SOFR Advance” means any Advance that bears interest as provided in Section 2.06. “SPC” has the meaning set forth in Section 8.07(i). “Spin Transaction” means (i) the transfer of the membership interests of Genco by Exelon to SpinCo and (ii) the pro rata distribution of the capital stock of SpinCo to the holders of Exelon’s common stock, at which point SpinCo will become a separate, independent publicly traded
company. “SpinCo” means the new company established by Exelon in connection with the Spin Transaction and that as of the effective date of the Spin Transaction, will own, directly, 100% of the issued and outstanding membership interests of Genco (or its successor in interest, as applicable). “Subsidiary” means, with respect to any Person, any corporation or unincorporated entity of which more than 50% of the outstanding capital stock (or comparable interest) having ordinary voting power (irrespective of whether or not at the time capital stock, or comparable interests, of any other class or classes of such corporation or entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person (whether directly or through one or more other Subsidiaries). Unless otherwise indicated, each reference to a “Subsidiary” means a Subsidiary of the Borrower.
-21- “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes, or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto. “Termination Date” means July 21, 2023. “Term SOFR” means the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. “Term SOFR Administrator” means CME Group Benchmark Administration Ltd. (or a successor administrator of Term SOFR). “Term SOFR Administrator’s Website” means https://www.cmegroup.com/market- data/cme-group-benchmark-administration/term-sofr, or any successor source for Term SOFR identified as such by the Term SOFR Administrator from time to time. “Term SOFR Base Rate” means, for the relevant Interest Period, the greater of (a) zero and (b) the Term SOFR rate quoted by the Administrative Agent from the Term SOFR Administrator’s Website or the applicable Bloomberg screen (or other commercially available source providing such quotations as may be selected by the Administrative Agent from time to time) (the “Screen”) for such Interest Period, which shall be the Term SOFR rate published two Business Days before the first day of such Interest Period (such Business Day, the “Determination Date”). If as of 5:00 p.m. (New York time) on any Determination Date, the Term SOFR rate has not been published by the Term SOFR Administrator or on the Screen, then the rate used will be that as published by the Term SOFR Administrator or on the Screen for the first preceding Business Day for which such rate was published on such Screen so long as such first preceding Business Day is not more than three (3) Business Days prior to such Determination Date. “Term SOFR Borrowing” means a Borrowing that,
except as otherwise provided in Section 2.13(f), bears interest at the applicable Term SOFR Rate. “Term SOFR Loan” means a Loan that, except as otherwise provided in Section 2.13(f), bears interest at the applicable Term SOFR Rate other than pursuant to clause (d) of the definition of Alternate Base Rate. “Term SOFR Rate” means, for the relevant Interest Period, the sum of (a) the Term SOFR Base Rate applicable to such Interest Period, plus (b) the Applicable Margin; provided that the Term SOFR Rate before an Event of Default or the Termination Date expressed as an annual rate shall not be less than 0%. “Test Period” means, for any date of determination under this Agreement, the four (4) consecutive fiscal quarters of the Borrower most recently ended as of such date of determination for which financial statements have been delivered pursuant to Section 5.01(a). “Third Party Securities” shall mean, with respect to any Securitization, notes, bonds or other debt instruments, beneficial interests in a trust, undivided ownership interests in receivables or other securities issued for cash consideration by the relevant Securitization Vehicle to banks,
-22- financing conduits, investors or other financing sources (other than the Borrower or any Subsidiary, except in respect of the Sellers’ Retained Interest) the proceeds of which are used to finance, in whole or in part, the purchase by such Securitization Vehicle of Securitization Assets in a Securitization. The amount of any Third Party Securities shall be deemed to equal the aggregate principal, stated, or invested amount of such Third Party Securities which are outstanding at such time. “Type” means, with respect to any Borrowing, its nature as a Base Rate Borrowing or a Term SOFR Borrowing and with respect to a Loan, its nature as a Base Rate Loan or a Term SOFR Loan. “UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. “UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution. “Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “Unfunded Liabilities” means, (i) in the case of any Single Employer Plan, the amount (if any) by which the present value of all vested nonforfeitable benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent actuarial valuation date for such Plan using the actuarial assumptions set forth in the most recent actuarial valuation report for such Single Employer Plan, and (ii) in the case of any
Multiemployer Plan, the Withdrawal Liability that would be incurred by the Controlled Group if all members of the Controlled Group completely withdrew from such Multiemployer Plan. “U.S. Person” means a “United States” person within the meaning of Section 7701(a)(30) of the Code. “U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.14(f)(ii)(B)(3). “Withdrawal Liability” shall have the meaning specified in Part 1 of Subtitle E of Title IV of ERISA. “Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of
-23- that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers. SECTION 1.02 Other Interpretive Provisions. In this Agreement, (a) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; (b) the term “including” means “including without limitation”; and (c) unless otherwise indicated, (i) any reference to an Article, Section, Exhibit or Schedule means an Article or Section hereof or an Exhibit or Schedule hereto; (ii) any reference to a time of day means such time in Chicago, Illinois; (iii) any reference to a law or regulation means such law or regulation as amended, modified or supplemented from time to time and includes all statutory and regulatory provisions consolidating, replacing or interpreting such law or regulation; and (d) any reference to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented or otherwise modified from time to time. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Term SOFR Loan”) or by Class and Type (e.g., a “Term SOFR Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Term SOFR Borrowing”) or by Class and Type (e.g., a “Term SOFR Revolving Borrowing”). SECTION 1.03 Accounting Principles. (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time;
provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Majority Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to (i) any election under Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) any treatment of Indebtedness under Accounting Standards Codification 470-20 or 2015-03 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. (b) Notwithstanding anything to the contrary contained in Error! Reference source not found. or in the definition of “Capital Lease Obligations,” any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board
-24- Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith. SECTION 1.04 Term SOFR Notification. The interest rate on Term SOFR Borrowings is determined by reference to the Term SOFR Base Rate, which is derived from Term SOFR. Section 2.16(b) provides a mechanism for (a) determining an alternative rate of interest if Term SOFR is no longer available or in the other circumstances set forth in Section 2.16(b), and (b) modifying this Agreement to give effect to such alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to Term SOFR or other rates in the definition of Term SOFR Base Rate or with respect to any alternative or successor rate thereto, or replacement rate thereof (including any Benchmark Replacement), including without limitation, whether any such alternative, successor or replacement reference rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 2.16(b), will have the same value as, or be economically equivalent to, the Term SOFR Base Rate. The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of Alternate Base Rate, Term SOFR, the Term SOFR Base Rate, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments
thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain the Alternate Base Rate, the Term SOFR Base Rate, Term SOFR or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. SECTION 1.05 Divisions. For all purposes hereunder or under any other loan documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its equity interests at such time. ARTICLE II AMOUNTS AND TERMS OF THE COMMITMENTS SECTION 2.01 Commitments. Subject to the terms and conditions set forth herein, each Lender severally (and not jointly) agrees to make an Advance in dollars to the Borrower, on the Effective Date, in a principal amount not to exceed such Lender’s Commitment. Amounts prepaid or repaid in respect of such Advances may not be reborrowed.
-25- SECTION 2.02 Procedures for Advances; Limitations on Borrowings. (a) The Borrower shall request the Advance to be made on the Effective Date by giving notice (a “Notice of Borrowing”) to the Administrative Agent (which shall promptly advise each Lender of its receipt thereof) not later than 10:00 A.M. on the third Business Day prior to the Effective Date of any proposed borrowing of SOFR Advances and on the Effective Date of any proposed borrowing of Base Rate Advances. Each Notice of Borrowing shall be in substantially the form of Exhibit B, specifying therein (i) the Type of Advances requested, (ii) the aggregate principal amount of the requested Advances and (iii) in the case of a borrowing of SOFR Advances, the initial Interest Period therefor. Each Lender shall, before 12:00 noon on the date of such borrowing, make available for the account of its applicable lending office to the Administrative Agent at its address referred to in Section 8.02, in same day funds, such Lender’s ratable portion of the requested borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s aforesaid address. (b) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. If a Notice of Borrowing requests SOFR Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure of the Borrower to fulfill on or before the requested borrowing date the applicable conditions set forth in Article III, including any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the requested Advance to be made by such Lender. SECTION 2.03 Fees. The Borrower agrees to pay to the Administrative Agent, for its own account,
fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent. SECTION 2.04 Termination of Commitments. The Commitments shall terminate at 5:00 p.m. on the Effective Date. SECTION 2.05 Repayment of Advances. The Borrower shall repay all outstanding Advances made by each Lender, and all other obligations of the Borrower hereunder on the Termination Date. SECTION 2.06 Interest on Advances. Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made or is automatically converted into a Base Rate Loan pursuant to Section 2.09, to the date it is paid or is converted into a Term SOFR Loan pursuant to Section 2.09, at a rate per annum equal to the Base Rate for such day. Changes in the rate of interest on each Base Rate Borrowing will take effect simultaneously with each change in the Alternate Base Rate. Each Term SOFR Loan shall bear interest on the outstanding principal amount thereof from the first day of the Interest Period applicable thereto to the last day of such Interest Period at the interest rate determined by the Administrative Agent as applicable to such Term SOFR Loan based upon the Borrower’s selections under Sections 2.02 and 2.09 and the Applicable Margin. SECTION 2.07[Reserved].
-26- SECTION 2.08 Interest Rate Determination. The Administrative Agent shall give prompt notice to the Borrower and the Lenders of each applicable interest rate determined by the Administrative Agent for purposes of Section 2.06. SECTION 2.09 Continuation and Conversion of Advances. (a) The Borrower may on any Business Day, upon notice given to the Administrative Agent, substantially in the form of Exhibit F to this Agreement, not later than 10:00 A.M. on the third Business Day prior to the date of any proposed continuation of or conversion into SOFR Advances, and on the date of any proposed conversion into Base Rate Advances, and subject to the provisions of Sections 2.08 and 2.12, continue SOFR Advances for a new Interest Period or convert a Borrowing of Advances of one Type into Advances of the other Type; provided that any continuation of SOFR Advances or conversion of SOFR Advances into Base Rate Advances shall be made on, and only on, the last day of an Interest Period for such SOFR Advances, unless, in the case of such a conversion, the Borrower shall also reimburse the Lenders pursuant to Section 8.04(b) on the date of such conversion. Each such notice of a continuation or conversion shall, within the restrictions specified above, specify (i) the date of such continuation or conversion, (ii) the Advances to be continued or converted, and (iii) in the case of continuation of or conversion into SOFR Advances, the duration of the Interest Period for such Advances. (b) If the Borrower fails to select the Type of any Advance or the duration of any Interest Period for any Borrowing of SOFR Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and Section 2.09(a), the Administrative Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, convert into Base Rate
Advances. SECTION 2.10 Prepayments. The Borrower may, upon notice to the Administrative Agent, substantially in the form of Exhibit G to this Agreement. not later than 10:00 A.M. at least three Business Days prior to any prepayment of SOFR Advances or on the date of any prepayment of Base Rate Advances, in each case stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given, the Borrower shall, prepay the outstanding principal amounts of the Advances made as part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided that (i) each partial prepayment shall be in an aggregate principal amount not less than $10,000,000 or a higher integral multiple of $1,000,000 in the case of any prepayment of SOFR Advances and $5,000,000 or a higher integral multiple of $1,000,000 in the case of any prepayment of Base Rate Advances and (ii) in the case of any such prepayment of a SOFR Advance, the Borrower shall be obligated to reimburse the Lenders pursuant to Section 8.04(b) on the date of such prepayment. SECTION 2.11 Increased Costs. (a) If any Change In Law shall: (i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the
-27- account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Term SOFR Rate); (ii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or SOFR Advances made by such Lender; or (iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto); and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any SOFR Advance (or of maintaining its obligation to make any such Advance) or to reduce the amount of any sum received or receivable by such Lender or such other Recipient hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender determines that any Change in Law, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Advances made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender such additional amount or amounts as
will compensate such Lender or such Lender’s holding company for any such reduction suffered. (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 90 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 90-day period referred to above shall be extended to include the period of retroactive effect thereof, provided that such demand is made within 90 days after the implementation of such retroactive Change in Law.
-28- SECTION 2.12 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make, maintain, or fund Loans whose interest is determined by reference to the Term SOFR Rate, or to determine or charge interest rates based upon the Term SOFR Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, upon notice thereof by such Lender to the Borrower (through the Administrative Agent), (a) any obligation of such Lender to make or continue Term SOFR Borrowings or to convert Base Rate Borrowings to Term SOFR Borrowings shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Borrowings the interest rate on which is determined by reference to the Term SOFR Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert each Term SOFR Loan of such Lender to a Base Rate Loan (the interest rate on which Base Rate Loan shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender can lawfully continue to maintain such Term SOFR Loan to such day, or immediately, if
such Lender cannot lawfully continue to maintain such Term SOFR Loan, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Term SOFR Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Term SOFR Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Term SOFR Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted, together with any additional amounts required pursuant to Section 2.17. SECTION 2.13 Payments and Computations. (a) The Borrower shall make each payment hereunder not later than 10:00 A.M. on the day when due in U.S. dollars to the Administrative Agent at its address referred to in Section 8.02 in same day funds without setoff, counterclaim or other deduction. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest and upfront fees ratably (other than amounts payable pursuant to Section 2.02(b), 2.11, 2.14 or 8.04(b)) to the Lenders for the account of their respective applicable lending offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its applicable lending office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(d), from the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such
Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.
-29- (b) The Borrower hereby authorizes each Lender, if and to the extent any payment owed to such Lender by the Borrower is not made when due hereunder, to charge from time to time against any of the Borrower’s accounts with such Lender any amount so due. Each Lender agrees to notify the Borrower promptly after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. (c) All computations of interest based on the Alternate Base Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all other computations of interest and of fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of any interest or fees, as the case may be; provided that if such extension would cause payment of interest on or principal of a SOFR Advance to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due by the Borrower to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Effective Rate. (f) Notwithstanding anything to the contrary contained herein, any amount payable by the Borrower hereunder that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid in full at a rate per annum equal at all times to the Alternate Base Rate plus the Applicable Margin in effect from time to time plus 2%, payable upon demand. SECTION 2.14 Taxes. (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under this Agreement shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent
-30- shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.14) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. (b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes. (c) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.14, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy
to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. (e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.07(e) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with this Agreement, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e). (f) Status of Lenders.
-31- (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under this Agreement shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.14(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. (ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person, (A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an executed IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax; (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver
to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable: (1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any loan document, an executed IRS Form W- 8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under this Agreement, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
-32- (2) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed IRS Form W-8ECI; (3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) an executed IRS Form W-8BEN-E or IRS Form W- 8BEN; or (4) to the extent a Foreign Lender is not the beneficial owner, an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner; (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by
applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and (D) if a payment made to a Lender under this Agreement would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent
-33- to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so. (g) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.14 (including by the payment of additional amounts pursuant to this Section 2.14), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.14 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified
party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. (h) Survival. Each party’s obligations under this Section 2.14 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under this Agreement. (i) Defined Terms. For purposes of this Section 2.14, the term “applicable law” includes FATCA. (j) Status. For purposes of determining withholding Taxes imposed under FATCA, from and after the Effective Date, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i). SECTION 2.15 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on
-34- account of the Advances made by it to the Borrower (other than pursuant to Section 2.02(b), 2.11, 2.14, or 8.04(b)) in excess of its ratable share of payments on account of the Advances to the Borrower, such Lender shall forthwith purchase from the other Lenders such participations in the Advances as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. SECTION 2.16 Availability of Types of Borrowings; Adequacy of Interest Rate; Benchmark Replacement. (a) Availability of Term SOFR Borrowings. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, but subject to Section 2.16(b), if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Majority Lenders notify the Administrative Agent that the Majority Lenders have determined, that: (i) for any reason in connection with any request for a Term SOFR Borrowing or a conversion or continuation thereof that the
Term SOFR Base Rate for any requested Interest Period with respect to a proposed Term SOFR Borrowing does not adequately and fairly reflect the cost to such Lenders of the funding such Loans, or (ii) the interest rate applicable to Term SOFR Borrowings for any requested Interest Period is not ascertainable or available (including, without limitation, because the applicable Screen (or on any successor or substitute page on such screen) is unavailable) and such inability to ascertain or unavailability is not expected to be permanent, or does not adequately and fairly reflect the cost of making or maintaining Term SOFR Borrowings, then the Administrative Agent shall suspend the availability of Term SOFR Borrowings and require any affected Term SOFR Borrowings to be repaid or converted to Base Rate Borrowings, subject to the payment of any funding indemnification amounts required by Section 2.17. (b) Benchmark Replacement. (i) Benchmark Transition Event; Early Opt-in Election. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then
-35- (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth Business Day after the date notice of such Benchmark Replacement is provided by the Administrative Agent to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders. (ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. (iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the
implementation of any Benchmark Replacement, and (B) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.16(b), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.16(b). (iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR Base Rate and Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove any tenor of such Benchmark that is unavailable or non-representative for any Benchmark settings and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a
Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for
-36- a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor. (v) Benchmark Unavailability Period. Upon notice to the Borrower by the Administrative Agent in accordance with this Section 2.16(b) of the commencement of a Benchmark Unavailability Period and until a Benchmark Replacement is determined in accordance with this Section 2.16(b), the Borrower may revoke any request for a Term SOFR Borrowing, or any request for the conversion or continuation of a Term SOFR Borrowing to be made, converted or continued during any Benchmark Unavailability Period at the end of the applicable Interest Period, and, failing that, the Borrower will be deemed to have converted any such request at the end of the applicable Interest Period into a request for a Base Rate Borrowing or conversion to a Base Rate Borrowing. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate. SECTION 2.17 Funding Indemnification. If (i) any payment of a Term SOFR Borrowing occurs on a date that is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise; (ii) a Term SOFR Borrowing is not made on the date specified by the Borrower for any reason other than default by the Lenders; (iii) a Term SOFR Borrowing is converted other than on the last day of the Interest Period applicable thereto; or (iv) the Borrower fails to borrow, convert, continue or prepay a Term SOFR Borrowing on the date specified in any notice delivered pursuant hereto. then
the Borrower shall indemnify each Lender for such Lender’s costs, expenses and Interest Differential (as determined by such Lender) incurred as a result of such prepayment. The term “Interest Differential” means the greater of zero and the financial loss incurred by the Lender resulting from prepayment, calculated as the difference between the amount of interest such Lender would have earned (from like investments as of the first day of the Interest Period) had prepayment not occurred and the interest such Lender will actually earn (from like investments as of the date of prepayment) as a result of the redeployment of funds from the prepayment. Because of the short-term duration of any Interest Period, the Borrower agrees that the Interest Differential shall not be discounted to its present value. The Borrower hereby acknowledges that the Borrower shall be required to pay Interest Differential with respect to any portion of the principal balance accelerated or paid before the end of the Interest Period for such Term SOFR Borrowing, whether voluntarily, involuntarily, or otherwise, including without limitation any principal payment required upon maturity when the Borrower has elected an Interest Period that extends beyond the scheduled maturity date of such Loan and any principal payment required following default, demand for payment, acceleration,
-37- collection proceedings, foreclosure, sale or other disposition of collateral, bankruptcy or other insolvency proceedings, eminent domain, condemnation, application of insurance proceeds, or otherwise. Such Interest Differential shall at all times be an Obligation as well as an undertaking by the Borrower to the Lenders whether arising out of a voluntary or mandatory prepayment. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.17 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (e) SECTION 2.18 Interest Payment Dates. Interest accrued on each Base Rate Loan or Term SOFR Loan shall be payable on each Payment Date, commencing with the first Payment Date to occur after the Closing Date, on the date of any prepayment of such Loan (whether or not as a result of acceleration) on the amount prepaid, and on the Termination Date. Interest accrued on each Term SOFR Loan having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest accrued pursuant to Section 2.13(f) is payable on demand. If any payment of principal of or interest on a Loan becomes due on a day that is not a Business Day, such payment shall be made on the immediately succeeding Business Day unless such succeeding Business Day falls in a new calendar month, in which case such interest or principal shall be payable on the immediately preceding Business Day. ARTICLE III CONDITIONS PRECEDENT SECTION 3.01 Conditions Precedent to Effectiveness. This Agreement (including the Commitments of the Lenders and the obligations of the Borrower hereunder) shall become effective if all of the following conditions precedent have been satisfied: (a)
the Administrative Agent shall have received (i) a counterpart of this Agreement signed on behalf of each party hereto or (ii) written evidence (which may include electronic transmission of a signed signature page of this Agreement) that each party hereto has signed a counterpart of this Agreement and each of the following documents, each dated a date reasonably satisfactory to the Administrative Agent and otherwise in form and substance satisfactory to the Administrative Agent: (i) Certified copies of resolutions of the Board of Directors or equivalent managing body of the Borrower approving the transactions contemplated by this Agreement and of all documents evidencing other necessary organizational action of the Borrower with respect to this Agreement and the documents contemplated hereby; (ii) A certificate of the Secretary or an Assistant Secretary of Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the other documents to be delivered hereunder; (B) that attached thereto are true and correct copies of the organizational
-38- documents of the Borrower, in each case in effect on such date; and (C) that attached thereto are true and correct copies of all governmental and regulatory authorizations and approvals required for the due execution, delivery and performance by the Borrower of this Agreement and the documents contemplated hereby; (iii) A certificate signed by either the chief financial officer, principal accounting officer or treasurer of the Borrower stating that (A) the representations and warranties contained in Section 4.01 are correct on and as of the date of such certificate as though made on and as of such date and (B) no Default or Event of Default has occurred and is continuing on the date of such certificate; (iv) Any notes requested by a Lender, substantially in the form of Exhibit C; and (v) A favorable opinion of Ballard Spahr LLP, counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent. (b) The Borrower shall have paid to the Administrative Agent an upfront fee equal to $120,000; (c) The Administrative Agent shall have received evidence, satisfactory to the Administrative Agent, that the Borrower has paid (or will pay with the proceeds of the initial Credit Extensions) all fees and, to the extent billed, expenses payable by the Borrower hereunder on the Effective Date; (d) Upon the reasonable request of any Lender, the Borrower shall have provided to such Lender the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including the PATRIOT Act, in each case at least five days prior to the Effective Date; and (e) Receipt by the Administrative Agent of the Beneficial Ownership Certification in relation to the Borrower. Promptly upon the occurrence thereof, the Administrative Agent shall notify the Borrower and the Lenders as to the Effective Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The Borrower is a corporation, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania.
-39- (b) The execution, delivery and performance by the Borrower of this Agreement are within the Borrower’s organizational powers, have been duly authorized by all necessary organizational action on the part of the Borrower, and do not and will not contravene (i) the organizational documents of the Borrower, (ii) applicable law or (iii) any contractual or legal restriction binding on or affecting the properties of the Borrower or any Subsidiary. (c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution, delivery and performance by the Borrower of this Agreement, except any order that has been duly obtained and is (i) in full force and effect and (ii) sufficient for the purposes hereof. (d) This Agreement is a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as the enforceability thereof may be limited by equitable principles or bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally. (e) The consolidated balance sheet of the Borrower and its Subsidiaries as of December 31, 2020 and the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, certified by PricewaterhouseCoopers LLP, copies of which have been furnished to each Lender, fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as of such dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates in accordance with GAAP; and (ii) since December 31, 2020, there has been no Material Adverse Change. (f) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in
connection with Section 5.01 and/or filed with the Securities and Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or threatened action, investigation or proceeding affecting the Borrower or any Subsidiary before any court, governmental agency or arbitrator that may reasonably be anticipated to have a Material Adverse Effect. There is no pending or threatened action or proceeding against the Borrower or any Subsidiary that purports to affect the legality, validity, binding effect or enforceability against the Borrower of this Agreement. Since December 31, 2021, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole. (g) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, the Borrower (i) has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has not become subject to any Environmental Liability, (iii) has not received notice of any claim with respect to any Environmental Liability or (iv) has no knowledge of any basis for any Environmental Liability. (h) No proceeds of any Advance have been or will be used directly or indirectly in connection with the acquisition of in excess of 5% of any class of equity securities that is
-40- registered pursuant to Section 12 of the Exchange Act or any transaction subject to the requirements of Section 13 or 14 of the Exchange Act. (i) The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance 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. Not more than 25% of the value of the assets of the Borrower and its Subsidiaries is represented by margin stock. (j) The Borrower is not required to register as an “investment company” under the Investment Company Act of 1940. (k) During the twelve consecutive month period prior to the date of the execution and delivery of this Agreement and prior to the date of any Credit Extension, no steps have been taken by the Borrower or any member of the Controlled Group or, to the knowledge of the Borrower, by any other Person to terminate any Plan (excluding any termination arising out of the institution by or against any ComEd Entity of any bankruptcy, insolvency or similar proceeding so long as such termination would not constitute an Default or Event of Default under Section 6.01(g)), and there has been no failure to satisfy the minimum funding standard described in Section 412(a)(2) of the Code with respect to any Single Employer Plan that would reasonably be expected to result in a lien pursuant to Section 430(k) of the Code. To the knowledge of the Borrower, no condition exists or event or transaction has occurred with respect to any Plan, which would reasonably be expected to result in the incurrence by the Borrower or any other member of the Controlled Group of any material liability (other than to make contributions, pay annual PBGC premiums or pay
out benefits in the ordinary course of business), fine or penalty (excluding any condition, event or transaction arising out of the institution by or against any ComEd Entity of any bankruptcy, insolvency or similar proceeding so long as such condition, event or transaction does not constitute an Default or Event of Default under Section 6.01(g)). (l) The Borrower has implemented, and maintains in effect, policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with all Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of the Borrower, its directors and agents, are in compliance with all Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby or the transactions contemplated hereby, is a Sanctioned Person. No Advance, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions. (m) The Borrower is not an Affected Financial Institution. (n) The Borrower is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other
-41- instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing. (o) As of the Effective Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects. (p) The Borrower has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (i) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower has set aside on its books adequate reserves or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. (q) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01 Affirmative Covenants. The Borrower agrees that so long as any amount payable by the Borrower hereunder remains unpaid, the Borrower will, and, in the case of Section 5.01(a), will cause its Principal Subsidiaries to, unless the Majority Lenders shall otherwise consent in writing: (a) Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the Administrative Agent and each Lender, including their Public-Siders. (i) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the Borrower’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission with respect to such quarter (or, if the Borrower is not required to file a Quarterly Report on Form 10-Q, copies of an unaudited
consolidated balance sheet of the Borrower as of the end of such quarter and the related consolidated statement of operations of the Borrower for the portion of the Borrower’s fiscal year ending on the last day of such quarter, in each case prepared in accordance with GAAP, subject to the absence of footnotes and to year-end adjustments), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto; (ii) as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the Borrower’s Annual Report on Form 10-K filed with the Securities and Exchange Commission with respect to such fiscal year (or, if the Borrower is not required to file an Annual Report on Form 10- K, the consolidated balance sheet of the Borrower and its Subsidiaries as of the last
-42- day of such fiscal year and the related consolidated statements of operations, changes in shareholders’ equity (if applicable) and cash flows of the Borrower for such fiscal year, certified by PricewaterhouseCoopers LLP or other certified public accountants of recognized national standing), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto; (iii) concurrently with the delivery of the quarterly and annual reports referred to in subsections (i) and (ii) above, a compliance certificate in substantially the form set forth in Exhibit D, duly completed and signed by the Chief Financial Officer, Treasurer or an Assistant Treasurer of the Borrower; (iv) except as otherwise provided in clause (i) or (ii) above, promptly after the sending or filing thereof, copies of all reports that the Borrower sends to its security holders generally, and copies of all Reports on Form 10-K, 10-Q or 8- K, and registration statements and prospectuses that the Borrower or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange (except to the extent that any such registration statement or prospectus relates solely to the issuance of securities pursuant to employee purchase, benefit or dividend reinvestment plans of the Borrower or a Subsidiary); (v) promptly upon becoming aware of the institution of any steps by the Borrower or any other Person to terminate any Plan, or the failure to make a required contribution to any Plan if such failure is sufficient to give rise to a lien under section 430(k) of the Code, or the taking of any action with respect to a Plan which could result in the requirement that the Borrower furnish a bond or other security to the PBGC or such Plan, or the
occurrence of any event with respect to any Plan which could result in the incurrence by the Borrower or any other member of the Controlled Group of any material liability, fine or penalty, notice thereof and a statement as to the action the Borrower or such member of the Controlled Group proposes to take with respect thereto; (vi) promptly after any Rating Agency shall have announced a change in the rating established or deemed to have been established for the Index Debt, written notice of such rating change; (vii) promptly following any request therefor, (x) such other information regarding the operations, business affairs and financial condition of the Borrower or any Principal Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request and (y) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation; and
-43- (viii) such other information respecting the condition, operations or business, financial or otherwise, of the Borrower or any Subsidiary as any Lender, through the Administrative Agent, may from time to time reasonably request (including any information that any Lender reasonably requests in order to comply with its obligations under any “know your customer” or anti-money laundering laws or regulations, including the Patriot Act and the Beneficial Ownership Regulation). Documents required to be delivered pursuant to Section 5.01(a)(i), (ii) or (v) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on which such materials are publicly available as posted on the Electronic Data Gathering, Analysis and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether made available by the Administrative Agent); provided that: (A) upon written request by the Administrative Agent (or any Lender through the Administrative Agent) to the Borrower, the Borrower shall deliver paper copies of such documents to the Administrative Agent or such Lender until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such document to it and maintaining its copies of such documents. (b) Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following: (i) as soon as possible, and in any event within five Business Days after the occurrence of any Default or Event of Default with respect to the Borrower continuing on the date of such statement, a statement of an authorized officer of the Borrower setting forth details of such Default or Event of Default and the action which the Borrower proposes to take with respect thereto; (ii) any change in the credit ratings from a credit rating agency, or the placement by a credit rating agency of the Borrower or its parent on a “CreditWatch” or “WatchList” or any similar list, in each case with negative implications, or the cessation by a credit rating agency of, or its intent to cease, rating the Borrower’s debt; and
-44- (iii) any change in the information provided in the Beneficial Ownership Certification delivered to such Lender that would result in a change to the list of beneficial owners identified in such certification. Each notice delivered under this Section (i) shall be in writing, (ii) shall contain a heading or a reference line that reads “Notice under Section 5.01 of Exelon Corporation Credit Agreement dated January 21, 2022” and (iii) shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. (c) Existence; Conduct of Business. The Borrower will do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 5.02(b). (d) Payment of Obligations. The Borrower will pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) the Borrower has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (iii) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. (e) Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Principal Subsidiaries to, (i) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (ii) maintain, with financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. (f) Books and Records; Inspection Rights. The Borrower will, at any reasonable time and from time to time, pursuant to prior notice delivered to the Borrower, permit any Lender, or any agent or representative of any thereof, to examine and, at such Lender’s expense, make copies of, and abstracts from the records and books of account of, and visit the properties of, the Borrower and any Principal Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Principal Subsidiary with any of their respective officers; provided that any non-public information (which has been identified as such by the Borrower or the applicable Principal Subsidiary) obtained by any Lender or any of its agents or representatives pursuant to this Section 5.01(f) shall be treated confidentially by such Person; provided, further, that such Person may disclose such information to (a) any other party to this Agreement, its examiners, Affiliates, outside auditors, counsel or other professional advisors in connection with this Agreement, (b) to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement, (c) to any credit insurance provider or (d) if otherwise required to do so by law or regulatory process (it being understood that, unless prevented from doing so by any applicable law or Governmental Authority, such Person shall use reasonable efforts to notify the Borrower of any
-45- demand or request for any such information promptly upon receipt thereof so that the Borrower may seek a protective order or take other appropriate action). (g) Compliance with Laws. The Borrower will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. (h) Use of Proceeds. The proceeds of the Loans will be used only for general limited liability company or corporate purposes (including the making of acquisitions), but in no event for any purpose that would be contrary to Section 4.01(h) or 4.01(i). No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulations T, U and X. The Borrower will not request any Borrowing, and the Borrower shall not use, and shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, directly or indirectly, the proceeds of any Borrowing (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto (including any Person participating in the Loans hereunder, whether as underwriter, advisor, investor,
lender, hedge provider, facility or security agent or otherwise). (i) Accuracy of Information. The Borrower will ensure that any information, including financial statements or other documents, furnished to the Administrative Agent or the Lenders in connection with this Agreement or any amendment or modification hereof or waiver hereunder contains no material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the furnishing of such information shall be deemed to be a representation and warranty by the Borrower on the date thereof as to the matters specified in this Section. SECTION 5.02 Negative Covenants. The Borrower agrees that so long as any amount payable by the Borrower hereunder remains unpaid, the Borrower will not, without the written consent of the Majority Lenders: (a) Limitation on Liens. Create, incur, allow to assume or suffer to exist or permit (and prior to consummation of the Spin Transaction allow Genco to create, incur, allow to assume or suffer to exist) any Lien on its property, revenues or assets, whether now owned or hereafter acquired, except as follows: (i) Liens imposed by law, such as carriers’, warehousemen’s, landlords’ repairmen’s, materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business;
-46- (ii) Liens for taxes, assessments or governmental charges, levies, or fines (including such amounts arising under environmental law) on property of the Borrower (or prior to consummation of the Spin Transaction, Genco) if the same shall not at the time be delinquent or thereafter can be paid without a material penalty, or are being contested in good faith and by appropriate proceedings; (iii) Liens on the capital stock of or any other equity interest in any Subsidiary (other than, prior to the Spin Transaction, Genco and any holding company for Genco) to secure Nonrecourse Indebtedness; (iv) Liens upon or in any property acquired in the ordinary course of business to secure the purchase price of such property or to secure any obligation incurred solely for the purpose of financing the acquisition of such property; (v) Liens existing on property at the time of the acquisition thereof (other than any such Lien created in contemplation of such acquisition unless permitted by the preceding clause (iv)); (vi) Liens granted in connection with any financing arrangement for the purchase of nuclear fuel or the financing of pollution control facilities, limited to the fuel or facilities so purchased or acquired; (vii) Liens arising in connection with sales or transfers of, or financing secured by, accounts receivable or related contracts, provided that any such sale, transfer or financing shall be on arms’ length terms; (viii) Liens securing Permitted Obligations and reimbursement obligations in respect of letters of credit issued to support Permitted Obligations (for the avoidance of doubt, the Electric Reliability Council of Texas (ERCOT) program and any other similar agreement or arrangement, including with any Independent System Operator or Regional Transmission Organization, are permitted under this clause (viii)); (ix) Permitted Encumbrances; (x) Liens arising in connection with sale and leaseback transactions entered into by the Borrower (or prior to consummation of
the Spin Transaction, Genco), but only to the extent that the aggregate purchase price of all assets sold by the Borrower (or prior to consummation of the Spin Transaction, Genco) during the term of this Agreement pursuant to such sale and leaseback transactions does not exceed $1,000,000,000; (xi) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans or other social security or similar legislation;
-47- (xii) Liens constituting attachment, judgment and other similar Liens arising in connection with court proceedings to the extent not constituting an Event of Default under Section 6.01(f); (xiii) Liens created in the ordinary course of business to secure liability to insurance carriers and Liens on insurance policies and the proceeds thereof (whether accrued or not), rights or claims against an insurer or other similar asset securing insurance premium financings; (xiv) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business; (xv) Liens in the nature of rights of setoff, bankers’ liens, revocation, refund, chargeback, counterclaim, netting of cash amounts or similar rights as to deposit accounts, commodity accounts or securities accounts or other funds maintained with a credit or depository institution; (xvi) Liens consisting of pledges of industrial development, pollution control or similar revenue bonds in connection with the remarketing of such bonds; (xvii) Liens and similar customary cash collateralization obligations in respect of letter of credit exposure or swingline loan exposure relating to defaulting lenders in the Borrower’s senior unsecured credit facilities; (xviii) Liens arising under leases or subleases, licenses or sublicenses granted to others that do not materially interfere with the ordinary course of business of the Borrower (or prior to the consummation of the Spin Transaction, Genco); (xix) Liens resulting from any restriction on any equity interest (or project interest, interests in any energy facility (including undivided interests)) of a Person providing for a breach, termination or default under any owners, participation, shared facility, joint venture, stockholder, membership, limited liability company or partnership agreement between such Person and one or more other holders of equity interest (or project interest,
interests in any energy facility (including undivided interests)) of such Person, to the extent a security interest or other Lien is created on any such interest as a result thereof; (xx) Liens granted on cash or cash equivalents to defease or repay Indebtedness of the Borrower (or, prior to consummation of the Spin Transaction, Genco) no later than 60 days after the creation of such Lien; (xxi) Liens created in connection with sales, transfers, leases, assignment or other conveyances or dispositions of assets, including (A) Liens on assets or securities granted or deemed to arise in connection with and as a result of the execution, delivery or performance of contracts to purchase or sell such assets or
-48- securities, and (B) rights of first refusal, options or other contractual rights or obligations to sell, assign or otherwise dispose of any interest therein; and (xxii) Liens, other than those described above in this Section 5.02(a), provided that the aggregate amount of all Indebtedness secured by Liens permitted by this clause (xxii) shall (i) prior to consummation of the Spin Transaction, (A) in the case of Genco, not exceed $100,000,000, and (B) in the case of the Borrower and Genco, collectively, not exceed $200,000,000 and (ii) on and after the consummation of the Spin Transaction, not exceed in the aggregate at any one time outstanding $200,000,000. (b) Mergers and Consolidations; Disposition of Assets. Merge with or into or consolidate with or into, or sell, assign, 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 permit any Principal Subsidiary to do so, except that (i) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary, (ii) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to the Borrower (and the Borrower may transfer any assets acquired by the Borrower through any such merger, consolidation or transfer to any Principal Subsidiary), (iii) [Reserved] and (iv) the Borrower or any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Person, provided that, in each case, (A) immediately before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing (except in the case where any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary), (B) in the case of any such merger, consolidation or transfer of assets to which the Borrower is a party, either (x) the Borrower shall be the
surviving entity or transferee (as applicable), or (y) the surviving entity or transferee (as applicable), shall be an Eligible Successor and shall have assumed all of the Obligations of the Borrower under this Agreement pursuant to a written instrument in form and substance satisfactory to the Administrative Agent, and the Administrative Agent shall have received an opinion of counsel in form and substance satisfactory to it as to the enforceability of such obligations assumed and (C) subject to clause (B) above, in the case of any such merger, consolidation or transfer of assets to which any Principal Subsidiary is a party, a Principal Subsidiary shall be the surviving entity or transferee (as applicable). (c) Consolidated Capitalized Ratio. the Consolidated Capitalization Ratio as of the last day of any Test Period to exceed 0.65:1.00. (d) Continuation of Businesses. Engage, or permit any Subsidiary to engage, in any line of business which is material to the Borrower and its Subsidiaries, taken as a whole, other than businesses engaged in by the Borrower and its Subsidiaries as of the date hereof and reasonable extensions thereof. (e) Capital Structure. Prior to consummation of the Spin Transaction, fail at any time to own, free and clear of all Liens, 100% of the issued and outstanding equity interests of Genco (or of a holding company which owns, free and clear of all Liens, 100% of the issued and outstanding equity interests of Genco).
-49- (f) Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries (other than any Excluded Subsidiary) to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (c) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, (d) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 5.02 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition),(e) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale; provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (f) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (g) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof. (g) Anti-Corruption Laws and Sanctions. Request any Borrowing or Advance and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any
Borrowing or Advance (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, business or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01 Events of Default. If any of the following events shall occur and be continuing (any such event an “Event of Default”): (a) The Borrower shall fail to pay (i) any principal of any Advance when the same becomes due and payable or (ii) any interest on any Advance or any other amount payable by the Borrower hereunder within three Business Days after the same becomes due and payable; or (b) Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) pursuant to the terms of this Agreement shall prove to have been incorrect or misleading in any material respect when made; or
-50- (c) The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(c) (with respect to Borrower’s existence), Section 5.01(h) or Section 5.02, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent (which notice shall be given by the Administrative Agent at the written request of any Lender); or (d) The Borrower or any Principal Subsidiary shall fail to pay any principal of or premium or interest on any Indebtedness that is outstanding in a principal amount in excess of $100,000,000 in the aggregate (but excluding Indebtedness hereunder and Nonrecourse Indebtedness) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof, other than any acceleration of any Indebtedness secured by equipment leases or fuel leases of the Borrower or a Principal Subsidiary as a result of the occurrence of any event requiring a prepayment (whether or not characterized as such) thereunder, which prepayment will not result
in a Material Adverse Change; or (e) The Borrower or any Principal Subsidiary 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 Borrower or any Principal Subsidiary 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 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 Borrower or any Principal Subsidiary shall take any corporate or limited liability company action to authorize or to consent to any of the actions set forth above in this Section 6.01(e); or (f) One or more judgments or orders for the payment of money in an aggregate amount exceeding $100,000,000 (excluding any such judgments or orders to the extent covered by insurance, subject to any customary deductible, and under which the applicable insurance carrier has not denied coverage) shall be rendered against the Borrower or any Principal Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of
-51- enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (g) (i) Any Reportable Event that the Majority Lenders determine in good faith is reasonably likely to result in the termination of any Single Employer Plan or in the appointment by the appropriate United States District Court of a trustee to administer a Single Employer Plan shall have occurred and be continuing 60 days after written notice to such effect shall have been given to the Borrower by the Administrative Agent; (ii) any Single Employer Plan shall be terminated; (iii) a Trustee shall be appointed by an appropriate United States District Court to administer any Single Employer Plan; (iv) the PBGC shall institute proceedings to terminate any Single Employer Plan or to appoint a trustee to administer any Single Employer Plan; or (v) the Borrower or any other member of the Controlled Group withdraws from any Multiemployer Plan; provided that on the date of any event described in clauses (i) through (v) above, the Unfunded Liabilities of the applicable Plan exceed $100,000,000; (h) any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all Obligations, ceases to be in full force and effect; or the Borrower or any other Person contests in writing the validity or enforceability of any provision of any Loan Document; or the Borrower denies in writing that it has any or further liability or obligation under any Loan Document, or purports in writing to revoke, terminate or rescind any Loan Document; or (i) a Change in Control shall have occurred; then, and in any such event, the Administrative Agent shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, declare the outstanding principal amount of the Advances, all interest thereon and all other amounts payable
under this Agreement by the Borrower to be forthwith due and payable, whereupon the outstanding principal amount of the Advances, all such interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided that in the event of an Event of Default under Section 6.01(e), (A) the obligation of each Lender to make any Advance to the Borrower shall automatically be terminated and (B) the outstanding principal amount of all Advances, all interest thereon and all other amounts payable by the Borrower hereunder shall automatically and immediately become due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01 Authorization and Action. Each Lender hereby appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including enforcement or collection of the obligations of the
-52- Borrower hereunder), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. SECTION 7.02 Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their respective own gross negligence or willful misconduct. Without limiting the generality of the foregoing: (i) the Administrative Agent may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) the Administrative Agent makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iii) the Administrative Agent shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (iv) the Administrative Agent shall not be responsible to
any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (v) the Administrative Agent shall not incur any liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by facsimile) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03 Administrative Agent and Affiliates. With respect to its Commitment, Advances and other rights and obligations hereunder in its capacity as a Lender, Sumitomo Mitsui Banking Corporation shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall include Sumitomo Mitsui Banking Corporation in its individual capacity. Sumitomo Mitsui Banking Corporation and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any Affiliate thereof and any Person who may do business with or own securities of the Borrower or any such Affiliate, all as if it were not Administrative Agent and without any duty to account therefor to the Lenders. SECTION 7.04 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it
-53- shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05 Indemnification. The Lenders severally agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its Pro Rata Share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that such expenses are reimbursable by the Borrower but for which the Administrative Agent is not reimbursed by the Borrower. SECTION 7.06 Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation or the Majority Lenders’ removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank described in clause (i) or (ii) of the definition of “Eligible Assignee” having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. Notwithstanding the foregoing, if no Default or Event of Default shall have occurred and be continuing, then no successor Administrative Agent shall be appointed under this Section 7.06 without the prior written consent of the Borrower, which consent shall not be unreasonably withheld or delayed.
-54- ARTICLE VIII MISCELLANEOUS SECTION 8.01 Amendments, Etc. No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders and, in the case of an amendment, the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall: (a) increase or extend the Commitment of any Lender, without the written consent of such Lender, (b) reduce the principal of, or rate of interest on, any Advance or any fees payable hereunder, without the written consent of each Lender directly affected thereby, (c) postpone any date fixed for any payment of principal of, or interest on, any Advance or any fees payable hereunder, without the written consent of each Lender directly affected thereby, (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder or the definition of “Majority Lenders”, without the written consent of each Lender, (e) amend this Section 8.01, without the written consent of each Lender or (f) waive or amend any provision regarding pro rata sharing or otherwise
relates to the distribution of payments among Lenders, without the written consent of each Lender; provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement. Without limiting the generality of the foregoing, the making of an Advance shall not be construed as a waiver of any Event of Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Event of Default at the time. If the Administrative Agent and the Borrower acting together identify any ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement or any other document executed in connection herewith, then the Administrative Agent and the Borrower shall be permitted to amend, modify or supplement such provision to cure such ambiguity, omission, mistake, typographical error or other defect, and such amendment shall become effective without any further action or consent of any other party to this Agreement. SECTION 8.02 Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including facsimile transmission) and mailed, sent by facsimile or delivered, if to the Borrower, at 10 S. Dearborn, 48th Floor, Chicago, IL 60603, Attention: Chief Financial Officer, facsimile: 312-394-5443; if to any Lender, at its Domestic Lending Office specified in its Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender; and if to the Administrative Agent, (a) for payments and notices pursuant to Section 2.09 or 2.10, at its address at Sumitomo Mitsui Banking Corporation, 277 Park Avenue, New York, New York 10172, Attention: Agency Loan Services Department, telephone: 212-256-7317, facsimile: 212-224-4501 and email:
AgencyServices@smbcgroup.com and
-55- eestevez@smnbclf.com; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall be effective (a) if mailed, three Business Days after being deposited in the U.S. mail, postage prepaid, (b) if sent by facsimile, when such facsimile is sent (except that if not sent during normal business hours for the recipient, such facsimile shall be deemed to have been sent at the opening of business on the next Business Day for the recipient), and (c) otherwise, when delivered, except that notices and communications to the Administrative Agent pursuant to Article II or VII shall not be effective until received by the Administrative Agent. SECTION 8.03 No Waiver; Remedies. No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 8.04 Costs and Expenses; Indemnification. (a) The Borrower agrees to pay on demand all costs and expenses incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including the reasonable fees, internal charges and out-of-pocket expenses of counsel (including in-house counsel) for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay on demand all costs and expenses, if any (including counsel fees and expenses of outside counsel and of internal counsel), incurred by the Administrative Agent or any Lender
in connection with the collection and enforcement (whether through negotiations, legal proceedings or otherwise) of the Borrower’s obligations under this Agreement and the other documents to be delivered by the Borrower hereunder, including reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 8.04(a). (b) In the event of any payment of principal of, or any conversion of, any SOFR Advance is made other than on the last day of the Interest Period for such Advance, as a result of a payment or conversion pursuant to Section 2.09 or 2.12 or acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other reason, or the assignment of a SOFR Advance other than on the last day of the Interest Period for such Advance as a result of a request by the Borrower pursuant to Section 8.07(g) or the failure to borrow any SOFR Advance on the date specified in any notice delivered pursuant hereto, the Borrower shall, upon demand by any Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amount required to compensate such Lender for any additional loss, cost or expense which it may reasonably incur as a result of such event, including any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (c) The Borrower agrees to indemnify and hold each Lender and the Administrative Agent and each of their respective Related Parties (each, an “Indemnified Person”) harmless from and against any claim, damage, loss, liability, cost or expense (including reasonable attorney’s fees and expenses, whether or not such Indemnified Person is named as a party to any
-56- proceeding or is otherwise subjected to judicial or legal process arising from any such proceeding) that any of them may pay or incur arising out of or relating to this Agreement or the transactions contemplated hereby, or the use by the Borrower or any Subsidiary of the proceeds of any Advance; provided that the Borrower shall not be liable for any portion of any such claim, damage, loss, liability, cost or expense resulting from such Indemnified Person’s gross negligence or willful misconduct as determined in a final non-appealable order of a court of competent jurisdiction. The Borrower’s obligations under this Section 8.04(c) shall survive the repayment of all amounts owing by the Borrower to the Lenders and the Administrative Agent under this Agreement and the termination of Commitments hereunder. If and to the extent that the obligations of the Borrower under this Section 8.04(c) are unenforceable for any reason, the Borrower agrees to make the maximum contribution to the payment and satisfaction thereof which is permissible under applicable law. This Section 8.04(c) shall not apply with respect to Taxes other than any Taxes that represent losses or damages arising from any non-Tax claim. In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, any of the Borrower’s equityholders or creditors, an Indemnified Person or any other person or entity, whether or not an Indemnified Person is otherwise a party thereto. SECTION 8.05 Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement, whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. Each Lender agrees to notify the Borrower promptly after any such set-off and application made by such Lender or Affiliate thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section 8.05 are in addition to other rights and remedies (including other rights of set-off) that such Lender may have. SECTION 8.06 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns, provided that (except as permitted by Section 5.02(b)(iii)) the Borrower shall not have the right to assign rights hereunder or any interest herein without the prior written consent of all Lenders. SECTION 8.07 Assignments and Participations. (a) Each Lender may, with the prior written consent of the Borrower and the Administrative Agent (which consents shall not be unreasonably withheld or delayed), and if demanded by the Borrower pursuant to Section 8.07(g) shall to the extent required by such Section, assign to one or more banks or other entities (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances owing to it); provided that (i) each such assignment shall be of a constant, and
-57- not a varying, percentage of all of the assigning Lender’s rights and obligations under this Agreement, (ii) the Commitment Amount of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Assumption with respect to such assignment) shall in no event be less than $5,000,000 or, if less, the entire amount of such Lender’s Commitment Amount, and shall be an integral multiple of $1,000,000 or such Lender’s entire Commitment Amount, (iii) each such assignment shall be to an Eligible Assignee, (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Assumption, together with a processing and recordation fee of $3,500 (which shall be payable by one or more of the parties to the Assignment and Assumption, and not by the Borrower (except in the case of a demand under Section 8.07(g)), and shall not be payable if the assignee is a Federal Reserve Bank), (v) the consent of the Borrower shall not be required after the occurrence and during the continuance of any Event of Default, and (vi) the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Assumption, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Assumption, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Assumption, relinquish its rights and be released from its
obligations under this Agreement and, in the case of an Assignment and Assumption covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto (although an assigning Lender shall continue to be entitled to indemnification pursuant to Section 8.04(c)). Notwithstanding anything contained in this Section 8.07(a) to the contrary, (A) the consent of the Borrower and the Administrative Agent shall not be required with respect to any assignment by any Lender to an Affiliate of such Lender or to another Lender or to an Approved Fund, and (B) any Lender may at any time, without the consent of the Borrower or the Administrative Agent, and without any requirement to have an Assignment and Assumption executed, assign all or any part of its rights under this Agreement to a Federal Reserve Bank or other central banking authority, provided that no such assignment shall release the transferor Lender from any of its obligations hereunder. For the purposes of this Section 8.07(a), the terms “Approved Fund” and “Ineligible Institution” have the following meanings: “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. “Ineligible Institution” means (a) a natural person, (b) a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof, (c) the Borrower or any of its Affiliates or (d) Lender, an Affiliate of a Lender or an Approved Fund that, in each case at the time of such assignment, is a Sanctioned Person; provided that, such holding company, investment vehicle or trust shall not
constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Borrowings or
-58- Commitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its business. (b) By executing and delivering an Assignment and Assumption, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Assumption, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v)
such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (c) The Administrative Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment Amount of, and principal amount of the Advances owing to, each Lender from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Assumption executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, the Administrative Agent shall, if such Assignment and Assumption has been completed and is in substantially the form of Exhibit A (including any necessary consents of the Administrative Agent and the Borrower), (i) accept such Assignment and Assumption, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower.
-59- (e) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities other than an Ineligible Institution (a “Participant”) in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances owing to it); provided that (A) such Lender's obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 8.01 that affects such Participant. Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.11, 2.14 and 8.04(b) (subject to the requirements and limitations therein, including the requirements under Section 2.14(f) (it being understood that the documentation required under Section 2.14(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.15 and 8.07(g) as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.11 or 2.14, with
respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender, provided such Participant agrees to be subject to Section 2.15 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non- fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant's interest in the Advances or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant's interest in any Commitments, Advances or its other obligations hereunder) except to the extent that such disclosure is necessary to establish that such Commitment, Advance, or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. (f) [Reserved]. (g) If any Lender (i) shall make demand for payment under Section 2.11(a), 2.11(b) or 2.14, (ii) shall deliver any notice to the Administrative Agent pursuant to Section 2.12 resulting in the suspension of certain obligations of the Lenders with respect to SOFR Advances, or (iii) does not consent to an amendment or waiver that requires the consent of all
Lenders and has been approved by the Majority Lenders, then (A) in the case of clause (i), within 60 days after such demand (if, but only if, the payment demanded under Section 2.11(a), 2.11(b) or 2.14 has
-60- been made by the Borrower), (B) in the case of clause (ii), within 60 days after such notice (if such suspension is still in effect), or (C) in the case of clause (iii), within 60 days after the date the Majority Lenders approve the applicable amendment or waiver, as the case may be, the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, demand that such Lender assign in accordance with this Section 8.07 to one or more Eligible Assignees designated by the Borrower and reasonably acceptable to the Administrative Agent all (but not less than all) of such Lender’s rights and obligations hereunder within the next succeeding 30 days; provided that such Lender shall have received payment of an amount equal to the outstanding principal of its Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts). If any such Eligible Assignee designated by the Borrower shall fail to consummate such assignment on terms acceptable to such Lender, or if the Borrower shall fail to designate any such Eligible Assignee for all of such Lender’s Commitment and Advances, then such Lender may (but shall not be required to) assign such Commitment and Advances to any other Eligible Assignee in accordance with this Section 8.07 during such period. In the event that a Lender assigns any SOFR Advances pursuant to this Section 8.07(g), such assignment shall be deemed to be a prepayment by the Borrower of such SOFR Advances for purposes of Section 8.04(b). (h) [Reserved]. (i) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Bank”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Borrower, the
option to provide to the Borrower all or any part of any Advance that such Granting Bank would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Bank shall be obligated to make such Advance pursuant to the terms hereof. The making of an Advance by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Advance were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 8.07, any SPC may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Advance to the Granting Bank or to any financial institution (consented to by the Borrower and Administrative Agent, which consents shall be unreasonably withheld or delayed) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Advances and (ii) disclose on a confidential basis any non-
public information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section 8.07(i) may not be
-61- amended in any manner which adversely affects a Granting Bank or an SPC without the written consent of such Granting Bank or SPC. (j) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 8.08 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 8.09 Consent to Jurisdiction; Certain Waivers. (a) THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND ANY UNITED STATES DISTRICT COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.. (b) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; PROVIDED THAT NOTHING CONTAINED IN THIS SENTENCE SHALL LIMIT ANY OF THE BORROWER’S INDEMNITY AND REIMBURSEMENT OBLIGATIONS TO ANY INDEMNITEE TO THE EXTENT SUCH INDEMNITEE IS ENTITLED TO INDEMNIFICATION WITH RESPECT TO THIRD PARTY CLAIMS. SECTION 8.10 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
-62- REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 8.11 Execution in Counterparts; Integration. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes all prior and contemporaneous agreements and understandings, oral or written, relating to the subject matter hereof. SECTION 8.12 USA PATRIOT ACT NOTIFICATION. The following notification is provided to the Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318: IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product. What this means for the Borrower: When the Borrower opens an account, the Administrative Agent and the Lenders will ask for the Borrower’s name, tax identification number and business address and other information that will allow the Administrative Agent and the Lenders to identify the Borrower. The Administrative Agent
and the Lenders may also ask to see the Borrower’s legal organizational documents or other identifying documents. SECTION 8.13 No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated hereby (including in connection with any amendment, waiver or other modification hereof), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the services regarding this Agreement provided by the Administrative Agent and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Lenders on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby; (ii) (A) the Administrative Agent and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither the Administrative Agent nor any Lender has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein; and (iii) the Administrative Agent and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any Lender has
-63- any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby. SECTION 8.14 [Reserved]. SECTION 8.15 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. SECTION 8.16 Confidentiality. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or
-64- (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a non- confidential basis prior to disclosure by the Borrower and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 8.17 Material Non-Public Information. (a) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 8.16 FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL
HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS. (b) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR ITS SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW. SECTION 8.18 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Advance or Borrowing, together with all fees, charges and other amounts which are treated as interest on such Advance or Borrowing under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by a Lender holding such Advance or Borrowing in accordance with applicable law, the rate of interest payable in respect of such Advance or Borrowing hereunder, together with all Charges payable in respect thereof, shall
-65- be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Advance or Borrowing but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Advances or Borrowings or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. SECTION 8.19 Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 8.20 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 8.21 Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Advance, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any accrued interest on any Advance or any fee or any other amount payable under this Agreement is outstanding and unpaid. [Signature Pages Follow]
[Signature Page to Credit Agreement] IN WITNESS WHEREOF, Borrower, the Lenders and the Administrative Agent have executed this Agreement as of the date first above written. EXELON CORPORATION, as Borrower By: Name: Title:
[Signature Page to Credit Agreement] SUMITOMO MITSUI BANKING CORPORATION, as Administrative Agent and Lender By: Name: Title:
I-1 SCHEDULE I COMMITMENTS Lender Commitment Sumitomo Mitsui Banking Corporation $300,000,000.00 TOTAL $300,000,000.00
SCHEDULE 3.06 Disclosed Matters Nothing other than what has been previously disclosed in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2020, Quarterly Reports on Form 10-Q for the periods ending March 31, 2021, June 30, 2021, and September 30, 2021, and Periodic Reports on Form 8-K filed by the Borrower with the United States Securities and Exchange Commission during the period between January 1, 2021, and the date hereof.
SCHEDULE 5.02 Existing Restrictions None.
A-1 EXHIBIT A FORM OF ASSIGNMENT AND ASSUMPTION This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, the interest in and to all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the Assignor’s outstanding rights and obligations under the respective facilities identified below (including without limitation any guaranties included in such facilities and, to the extent permitted to be assigned under applicable law, all claims (including without limitation contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity), suits, causes of action and any other right of the Assignor against any Person whether known or unknown arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or
the loan transactions governed thereby) other than claims for indemnification or reimbursement with respect to any period prior to Effective Date (the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor. 1. Assignor: 2. Assignee: [and is an Affiliate of Assignor] 3. Borrower: Exelon Corporation 4. Administrative Agent: Sumitomo Mitsui Banking Corporation 5. Credit Agreement: Credit Agreement, dated as of January 21, 2022, as amended, among the Borrower, the Lenders party thereto, and the Administrative Agent. 6. Assigned Interest: Facility Assigned Aggregate Amount of Commitment/ Outstanding Credit Amount of Commitment/ Outstanding Credit Exposure Assigned(cid:0) Percentage Assigned of Commitment/
A-2 Exposure for all Lenders(cid:0) Outstanding Credit Exposure1 ____________ $ $ _______% ____________ $ $ _______% ____________ $ $ _______% 7. Trade Date:2 Effective Date: ____________________, 20__ [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE ADMINISTRATIVE AGENT.] The terms set forth in this Assignment and Assumption are hereby agreed to: ASSIGNOR [NAME OF ASSIGNOR] By: Title: ASSIGNEE [NAME OF ASSIGNEE] By: Title: [Consented to and]3Accepted: SUMITOMO MITSUI BANKING CORPORATION, as Administrative Agent By: Title: [Consented to:]4 [NAME OF RELEVANT PARTY] By: Title: (cid:0) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. 1 Set forth, to at least 9 decimals, as a percentage of the Commitment/loans of all Lenders thereunder. 2 Insert if satisfaction of minimum amounts is to be determined as of the Trade Date. 3 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. 4 To be added only if the consent of the Borrower and/or other parties is required by the terms of the Credit Agreement.
A-3 ANNEX 1 TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION 1. Representations and Warranties. 1.1 Assignor. The Assignor represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency, perfection, priority, collectability, or value of the Credit Agreement or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement, (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement, (v) inspecting any of the property, books or records of the Borrower, or any guarantor, or (vi) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Credit Extensions or the Credit Agreement. 1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iii)
agrees that its payment instructions and notice instructions are as set forth in Schedule 1 to this Assignment and Assumption, (iv) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are “plan assets” as defined under ERISA and that its rights, benefits and interests in and under the Credit Agreement will not be “plan assets” under ERISA, (v) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys’ fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee’s non-performance of the obligations assumed under this Assignment and Assumption, (vi) it has received a copy of the Credit Agreement, together with copies of financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (vii) attached as Schedule 1 to this Assignment and Assumption is any documentation required to be delivered by the Assignee with respect to its tax status pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit
A-4 Agreement, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. 2. Payments. The Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee. 3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
A-5 ADMINISTRATIVE QUESTIONNAIRE (Schedule to be supplied by Closing Unit or Trading Documentation Unit)
A-6 US AND NON-US TAX INFORMATION REPORTING REQUIREMENTS (Schedule to be supplied by Closing Unit or Trading Documentation Unit)
B-1 EXHIBIT B FORM OF NOTICE OF BORROWING January [ ], 2022 Sumitomo Mitsui Banking Corporation as Administrative Agent 277 Park Avenue, New York, NY, 10172 Attention: Agency Loan Services Department Phone: 212-256-7317 Fax : 212-224-4501 Email: AgencyServices@smbcgroup.com and eestevez@smbclf.com, and the Lenders that are parties to the Credit Agreement referred to below Ladies and Gentlemen: The undersigned, Exelon Corporation, a Pennsylvania corporation (the “Borrower”), refers to the Credit Agreement, dated as of January 21, 2022, as amended, among the Borrower, various financial institutions and Sumitomo Mitsui Banking Corporation, as Administrative Agent (as amended, modified or supplemented from time to time, the “Credit Agreement”), and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the undersigned requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 2.02(a) of the Credit Agreement: (i) The Type of Advances to be made in connection with the Proposed Borrowing is [Base Rate Advances] [SOFR Advances]. (ii) The aggregate amount of the Proposed Borrowing is $[___]. (iii) The Interest Period for each SOFR Advance made as part of the Proposed Borrowing is [ month[s]]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing: (A) the representations and warranties of the undersigned contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date;
B-2 (B) no event has occurred and is continuing, or would result from the Proposed Borrowing or from the application of the proceeds therefrom, that constitutes an Default or Event of Default; and (C) after giving effect to the Proposed Borrowing, the undersigned will not have exceeded any limitation on its ability to incur indebtedness (including any limitation imposed by any governmental or regulatory authority). Very truly yours, EXELON CORPORATION By: Name: Title:
C-1 EXHIBIT C FORM OF NOTE __________, 20__ Exelon Corporation, a Pennsylvania corporation (“Borrower”) promises to pay to _____________ (“Lender”) the aggregate unpaid principal amount of all Advances made by Lender to Borrower pursuant to the Credit Agreement (as defined below), at the main office of Sumitomo Mitsui Banking Corporation, in New York, New York as Administrative Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Credit Agreement. Borrower shall pay the principal of and accrued and unpaid interest on the Advances in full on the Termination Date. Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of the Advances and the date and amount of each principal payment hereunder. This note (this “Note”) is one of the notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of January 21, 2022 (as further amended or otherwise modified from time to time, the “Credit Agreement”), among Borrower, the various financial institutions from time to time made party as Lenders thereto, and Sumitomo Mitsui Banking Corporation, as Administrative Agent and a Lender. The Credit Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Credit Agreement. All payments hereunder shall be made in lawful money of the United States of America and in immediately available funds. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS. EXELON CORPORATION By____________________________________ Name: Title:
D-1 EXHIBIT D FORM OF ANNUAL AND QUARTERLY COMPLIANCE CERTIFICATE ______________________, 20____ Pursuant to the Credit Agreement, dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and Sumitomo Mitsui Banking Corporation, as Administrative Agent (as amended, modified or supplemented from time to time, the “Credit Agreement”), the undersigned, being ______________________ of the Borrower, hereby certifies on behalf of the Borrower as follows: 1. [Delivered] [Posted concurrently]* herewith are the financial statements prepared pursuant to Section 5.01(b)[(ii)/(iii)] of the Credit Agreement for the fiscal ________ ended ___________, 20__. All such financial statements comply with the applicable requirements of the Credit Agreement. *Applicable language to be used based on method of delivery. 2. Schedule I hereto sets forth in reasonable detail the information and calculations necessary to establish the Borrower’s compliance with the provisions of Section 5.02(c) of the Credit Agreement as of the end of the fiscal period referred to in paragraph 1 above. 3. (Check one and only one:) __ No Default or Event of Default has occurred and is continuing. __ An Default or Event of Default has occurred and is continuing, and the document(s) attached hereto as Schedule II specify in detail the nature and period of existence of such Default or Event of Default as well as any and all actions with respect thereto taken or contemplated to be taken by the Borrower. 4. The undersigned has personally reviewed the Credit Agreement, and this certificate was based on an examination made by or under the supervision of the undersigned sufficient to assure that this certificate is accurate. 5. Capitalized terms used in this certificate and not otherwise defined shall have the meanings given in the Credit Agreement. EXELON
CORPORATION By____________________________________ Name: Title: Date:
E-1 EXHIBIT E FORMS OF U.S. TAX COMPLIANCE CERTIFICATE [See Attached Forms]
EXHIBIT E-1 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (FOR FOREIGN LENDERS THAT ARE NOT PARTNERSHIPS FOR U.S. FEDERAL INCOME TAX PURPOSES) Reference is hereby made to the Credit Agreement dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and Sumitomo Mitsui Banking Corporation, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Advances in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade or business. The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. person status on United States Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF LENDER ] By:______________________________________ Name: Title: Date: ________ __
20[ ]
EXHIBIT E-2 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and Sumitomo Mitsui Banking Corporation, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Advances and interests in respect of which it is providing this certificate, (ii) with respect to the extension of credit pursuant to the Agreement, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iii) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business. The undersigned has furnished the Administrative Agent and the Borrower with United States Internal Revenue Service Form W-8IMY accompanied by a United States Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times
furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF LENDER ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT E-3 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and Sumitomo Mitsui Banking Corporation, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade or business. The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on United States Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF PARTICIPANT ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT E-4 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and Sumitomo Mitsui Banking Corporation, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business. The undersigned has furnished its participating Lender with United States Internal Revenue Service Form W-8IMY accompanied by a United States Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such
Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF PARTICIPANT ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION Sumitomo Mitsui Banking Corporation, as Administrative Agent 277 Park Avenue New York, New York 10172 Attention of: Agency Loan Services Department Ladies and Gentlemen: This Notice of Conversion/Continuation (this “Notice”) is delivered to you pursuant to Section 2.09 of the Credit Agreement dated as of January 21, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and between Exelon Corporation, a Pennsylvania corporation (the “Borrower”) and Sumitomo Mitsui Banking Corporation, as Administrative Agent. 1. This Notice is submitted for the purpose of:5 (cid:0) Converting a Base Rate Advance into a SOFR Advance. (a) The principal amount of such Advance to be converted is $_______________. (b) The requested effective date of the conversion of such Advance is _______________.6 (c) The requested Interest Period applicable to the converted Advance is _______________. (cid:0) Converting a SOFR Advance into a Base Rate Advance. (a) The principal amount of such Advance to be converted is $_______________. (b) The last day of the current Interest Period is _______________. (c) The requested effective date of the conversion of such Effective is _______________.7 (cid:0) Continuing all or a portion of a SOFR Advance as a Base Rate Advance (a) The principal balance of such Advance is _______________. 5 Check one and complete applicable information in accordance with the Credit Agreement. 6 Complete with a Business Day. 7 Complete with a Business Day.
(b) The last day of the current Interest Period for such Advance is _______________. (c) The principal amount of such Advance to be continued is _______________.8 (d) The requested effective date of the continuation of such Advance is _______________.9 (e) The requested Interest Period applicable to the continued Advance is _______________. 3. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. [Signature Page Follows] 8 Insert amount in U.S. Dollars. 9 Complete with a Business Day.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Conversion/Continuation as of the day and year first written above. EXELON CORPORATION By: Name: Title: _____________________________________
EXHIBIT G FORM OF NOTICE OF PREPAYMENT [____], 20[__] Sumitomo Mitsui Banking Corporation, as Administrative Agent 277 Park Avenue New York, New York 10172 Attention of: Agency Loan Services Department Ladies and Gentlemen: The undersigned, Exelon Corporation, a Pennsylvania corporation (the “Borrower”), provides a Notice of Prepayment delivered to you pursuant to Section 2.10 of the Credit Agreement dated as of January 21, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and between the Borrower and Sumitomo Mitsui Banking Corporation, as Administrative Agent. 1. The Borrower hereby provides notice to the Administrative Agent that it shall repay the following [Base Rate Advances] and/or [SOFR Advances]: 2. The Advance to be prepaid is a [check each applicable box] (cid:0) Base Rate Advance (amount to be prepaid _______________) (cid:0) SOFR Advance (amount to be prepaid ____________) 3. The Borrower shall repay the above-referenced Advances on the following Business Day: _______________.1 4. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. [Signature Page Follows] 1 Complete with a date no earlier than (i) the same Business Day as of the date of this Notice of Prepayment with respect to any Base Rate Advance and (ii) three (3) Business Days subsequent to date of this Notice of Prepayment with respect to any SOFR Advance.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as of the day and year first written above. EXELON CORPORATION By: Name: Title:
Execution Version $300,000,000 CREDIT AGREEMENT dated as of January 21, 2022 among EXELON CORPORATION as Borrower, VARIOUS FINANCIAL INSTITUTIONS, as Lenders, and U.S. BANK NATIONAL ASSOCIATION as Administrative Agent
-i- TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.01 Certain Defined Terms ...................................................................................... 1 SECTION 1.02 Other Interpretive Provisions .......................................................................... 23 SECTION 1.03 Accounting Principles ..................................................................................... 23 SECTION 1.05 Divisions ......................................................................................................... 24 ARTICLE II AMOUNTS AND TERMS OF THE COMMITMENTS SECTION 2.01 Commitments .................................................................................................. 25 SECTION 2.02 Procedures for Advances; Limitations on Borrowings ................................... 25 SECTION 2.03 Fees ................................................................................................................. 25 SECTION 2.04 Termination of Commitments ......................................................................... 25 SECTION 2.05 Repayment of Advances ................................................................................. 25 SECTION 2.06 Interest on Advances ....................................................................................... 26 SECTION 2.07 [Reserved] ....................................................................................................... 26 SECTION 2.08 Interest Rate Determination ............................................................................ 26 SECTION 2.09 Continuation and Conversion of Advances .................................................... 26 SECTION 2.10 Prepayments .................................................................................................... 26 SECTION 2.11 Increased Costs ............................................................................................... 27 SECTION 2.12 Illegality .......................................................................................................... 28 SECTION 2.13 Payments and Computations ........................................................................... 29 SECTION 2.14 Taxes ............................................................................................................... 30 SECTION 2.15 Sharing of Payments, Etc ................................................................................ 34
SECTION 2.16 Availability of Types of Borrowings; Adequacy of Interest Rate; Benchmark Replacement ................................................................................ 34 SECTION 2.17 Funding Indemnification…………………………………………………………….37 SECTION 2.18 Investment Payment Dates…………………………………………………………..37 ARTICLE III CONDITIONS PRECEDENT SECTION 3.01 Conditions Precedent to Effectiveness............................................................ 38 ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01 Representations and Warranties of the Borrower ........................................... 39
TABLE OF CONTENTS (continued) Page -ii- ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01 Affirmative Covenants .................................................................................... 42 SECTION 5.02 Negative Covenants ........................................................................................ 46 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01 Events of Default ............................................................................................ 50 ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01 Authorization and Action ................................................................................ 52 SECTION 7.02 Administrative Agent’s Reliance, Etc............................................................. 52 SECTION 7.03 Administrative Agent and Affiliates ............................................................... 53 SECTION 7.04 Lender Credit Decision ................................................................................... 53 SECTION 7.05 Indemnification ............................................................................................... 53 SECTION 7.06 Successor Administrative Agent ..................................................................... 54 ARTICLE VIII MISCELLANEOUS SECTION 8.01 Amendments, Etc ............................................................................................ 54 SECTION 8.02 Notices, Etc ..................................................................................................... 55 SECTION 8.03 No Waiver; Remedies ..................................................................................... 55 SECTION 8.04 Costs and Expenses; Indemnification ............................................................. 55 SECTION 8.05 Right of Set-off ............................................................................................... 57 SECTION 8.06 Binding Effect ................................................................................................. 57 SECTION 8.07 Assignments and Participations ...................................................................... 57 SECTION 8.08 Governing Law ............................................................................................... 61 SECTION 8.09 Consent to Jurisdiction; Certain Waivers ....................................................... 61 SECTION 8.10 Waiver of Jury
Trial ........................................................................................ 62 SECTION 8.11 Execution in Counterparts; Integration ........................................................... 62 SECTION 8.12 USA PATRIOT ACT NOTIFICATION ........................................................ 62 SECTION 8.13 No Advisory or Fiduciary Responsibility ....................................................... 63 SECTION 8.14 [Reserved] ....................................................................................................... 63 SECTION 8.15 Acknowledgement and Consent to Bail-In of Affected Financial Institutions....................................................................................................... 63
TABLE OF CONTENTS (continued) Page -iii- SECTION 8.16 Confidentiality ................................................................................................ 64 SECTION 8.17 Material Non-Public Information ................................................................... 64 SECTION 8.18 Interest Rate Limitation .................................................................................. 65 SECTION 8.19 Severability ..................................................................................................... 65 SECTION 8.20 Headings ......................................................................................................... 65 SECTION 8.21 Survival ........................................................................................................... 65 SCHEDULE I COMMITMENTS SCHEDULE 3.06 DISCLOSED MATTERS SCHEDULE 5.02 EXISTING RESTRICTIONS EXHIBIT A FORM OF ASSIGNMENT AND ASSUMPTION EXHIBIT B FORM OF NOTICE OF BORROWING EXHIBIT C FORM OF NOTE EXHIBIT D FORM OF ANNUAL AND QUARTERLY COMPLIANCE CERTIFICATE EXHIBIT E FORMS OF U.S. TAX COMPLIANCE CERTIFICATE EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION EXHIBIT G FORM OF NOTICE OF PREPAYMENT
CREDIT AGREEMENT THIS CREDIT AGREEMENT dated as of January 21, 2022 is among EXELON CORPORATION, a Pennsylvania, corporation the banks and other financial institutions or entities listed on the signature pages hereof, and U.S. BANK NATIONAL ASSOCIATION, as Administrative Agent. The parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.01 Certain Defined Terms. As used in this Agreement, each of the following terms shall have the meaning set forth below (each such meaning to be equally applicable to both the singular and plural forms of the term defined): “Administrative Agent” means U.S. Bank National Association in its capacity as administrative agent for the Lenders pursuant to Article VII, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Section 7.06. “Administrative Questionnaire” means an administrative questionnaire, substantially in the form supplied by the Administrative Agent, completed by a Lender and furnished to the Administrative Agent in connection with this Agreement. “Advance” means an advance by a Lender to the Borrower hereunder. An Advance may be a Base Rate Advance or a SOFR Advance, each of which shall be a “Type” of Advance. “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. “Aggregate Commitment Amount” means the aggregate of the Commitments of all the Lenders, as reduced or increased from time to time pursuant to the terms hereof. As of the Effective Date, the Aggregate Commitment Amount is $300,000,000. “Alternate Base Rate” means, for any day, a rate of interest per
annum equal to the highest of (a) zero, (b) the Prime Rate for such day, (c) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (d) the Term SOFR Rate (without giving effect to the Applicable Margin) for a one-month Interest Period on such day (or if such day is not a Business Day or if the Term SOFR Rate for such Business Day is not published due to a holiday or other circumstance that the Administrative Agent deems in its sole discretion to be temporary, the immediately preceding Business Day) for Dollars plus 1.00%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate, or the Term SOFR Rate shall be effective from the effective date of such change. If the Alternate Base Rate is being used when Term SOFR Advances are unavailable pursuant to Section 2.16, then the Alternate Base Rate shall be the highest of clauses (a), (b) and (c) above, without reference to clause (d) above.
-2- “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Affiliates from time to time concerning or relating to money-laundering, bribery or corruption. “Applicable Margin” means, 0.65% with respect to SOFR Advances, Term SOFR Borrowings and Term SOFR Loans and (y) 0.00% with respect to Base Rate Advances, Base Rate Borrowings and Base Rate Loans to Borrower. “Approved Fund” has the meaning set forth in Section 8.07(a). “Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date. “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit A. “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or
their affiliates (other than through liquidation, administration or other insolvency proceedings). “Base Rate” means, for any day, a rate per annum equal to (a) the Alternate Base Rate for such day plus (b) the Applicable Margin for such day, in each case changing when and as the Alternate Base Rate or the Applicable Margin changes. “Base Rate Advance” means an Advance that bears interest as provided in Section 2.06. “Base Rate Borrowing” means a Borrowing that, except as otherwise provided in Section 2.13(f), bears interest at the Base Rate. “Base Rate Loan” means a Loan that, except as otherwise provided in Section 2.13(f), bears interest at the Base Rate.
-3- “Benchmark” means, initially, Term SOFR; provided that if a replacement of the Benchmark has occurred pursuant to Section 2.16(b), then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has become effective pursuant to Section 2.16(b). “Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date: (1) Daily Simple SOFR; or (2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment. If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement pursuant to clause (2) thereof for any applicable Interest Period and Available Tenor for any setting of such Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor
giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities. “Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Borrowing” and “Term SOFR Borrowing,” the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption
-4- of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents). “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date; and (3) in the case of an Early Opt-in Election, the Business Day specified by the Administrative Agent in the notice of the Early Opt-in Election provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (Central time) on the fifth Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from
Lenders comprising the Majority Lenders. For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark: (1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); (2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the
-5- calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or (3) a public statement or publication of information by any of the entities referenced in clause (2) above announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark in accordance with Section 2.16(b), and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark in accordance with Section 2.16(b). “Beneficial Ownership Certification” means a certification
regarding beneficial ownership as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. “BGE” shall mean Baltimore Gas and Electric Company. “BGE Entity” shall mean RF Holdco, BGE and any of their Subsidiaries. “Borrower” means Exelon Corporation or any Eligible Successor thereof. “Borrowing” means a group of Advances of the same Type made, continued or converted on the same day by the Lenders ratably according to their Pro Rata Shares and, in the case of a Borrowing of Term SOFR Loans, having the same Interest Period. “Business Day” means a day (other than a Saturday or Sunday) on which banks generally are open in New York City, New York for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system; provided that, when used in connection with SOFR, Term SOFR, Term SOFR Base Rate or Term SOFR Rate, the term “Business Day” excludes any day on which the Securities Industry and Financial Markets Association (SIFMA) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
-6- “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. “Change in Control” means the acquisition of ownership, directly or indirectly beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of Equity Interests representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower. “Change in Law” means (a) the adoption of any law, rule, regulation or treaty after the date of this Agreement, (b) any change in any law, rule, regulation or treaty or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.11(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, rule, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued. “Code” means the Internal Revenue Code of 1986, as amended. “ComEd” means Commonwealth Edison Company, an Illinois corporation, or any successor thereof. “ComEd Entity” means ComEd and each of its Subsidiaries. “Commitment” means, with respect to each Lender, the commitment of such Lender to make an Advance, expressed as an amount representing the maximum principal amount of the Advance to be made by such Lender. The initial amount of each Lender’s Commitment is set forth on Schedule I attached hereto. “Commitment Amount” means, for any Lender at any time, the amount set forth opposite such Lender’s name on Schedule I attached hereto or, if such Lender has entered into any Assignment and Assumption, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c). “Commodity Trading Obligations” shall mean the obligations of the Borrower (or, prior to consummation of the Spin Transaction, Genco) under (i) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement,
-7- commodity forward contract or derivative transaction and any put, call or other agreement, arrangement or transaction, including natural gas, power, electric energy, emissions forward contracts, renewable energy credits, or any combination of any such arrangements, agreements and/or transactions, employed in the ordinary course of the Borrower or Genco’s business, including the Borrower or Genco’s energy marketing, trading and asset optimization business, or (ii) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement or arrangement, or combination thereof (including an agreement or arrangement to hedge foreign exchange risks) in respect of commodities entered into by the Borrower or Genco pursuant to asset optimization and risk management policies and procedures adopted pursuant to authority delegated by the Board of Directors of the Borrower or Genco. The term “commodities” shall include electric energy and/or capacity, transmission rights, coal, petroleum, natural gas liquids, natural gas, fuel transportation rights, emissions allowances, weather derivatives and related products and by-products and ancillary services. “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes. “Consolidated Capitalization Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of the last day of the applicable Test Period to (b) the sum of Consolidated Total Indebtedness plus Consolidated Stockholders’ Equity as of the last day for such Test Period. “Consolidated Stockholders’ Equity” means, as of any date of determination, the total stockholders’
equity of the Borrower on a consolidated basis, determined in accordance with GAAP. “Consolidated Total Indebtedness” means, as of any date of determination, the total amount of all Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP. For the avoidance of doubt, Consolidated Total Indebtedness shall not include Nonrecourse Indebtedness. “Controlled Group” means each person (as defined in Section 3(9) of ERISA) that, together with the Borrower, would be deemed to be a “single employer” within the meaning of Section 414(b) or 414(c) of the Code. “Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor. “Credit Extension” means the making of an Advance hereunder. “Daily Simple SOFR” means for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Administrative Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the
-8- Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may establish another convention in its reasonable discretion. “Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. “Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06. “Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” in its Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. “Early Opt-in Election” means, if the then-current Benchmark is the Term SOFR Base Rate, the joint election by the Administrative Agent and the Borrower to trigger a fallback from the Term SOFR Base Rate to the Benchmark Replacement, and a notification by the Administrative Agent to each of the other parties hereto of such election and the proposed Benchmark Replacement. “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public
administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. “Effective Date” means the date on which all conditions precedent set forth in Section 3.01 have been satisfied. “Electronic System” means any electronic system, including e-mail, e-fax, Intralinks®, ClearPar®, Debt Domain, Syndtrak and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent or any Lender and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system. “Eligible Assignee” means (i) a commercial bank organized under the laws of the United States, or any State thereof; (ii) a commercial bank organized under the laws of any other
-9- country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund associated with its “General Arrangements to Borrow”, or a political subdivision of any such country, provided that such bank is acting through a branch or agency located in the United States; (iii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership or other entity) engaged generally in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business; (iv) the central bank of any country that is a member of the OECD; (v) any Lender; or (vi) any Affiliate (excluding any individual) of a Lender; provided that, unless otherwise agreed by the Borrower and the Administrative Agent in their sole discretion, (A) any Person described in clause (i), (ii) or (iii) above shall also (x) have outstanding unsecured long-term debt that is rated BBB- or better by S&P and Baa3 or better by Moody’s (or an equivalent rating by another nationally recognized credit rating agency of similar standing if either such corporation is no longer in the business of rating unsecured indebtedness of entities engaged in such businesses) and (y) have combined capital and surplus (as established in its most recent report of condition to its primary regulator) of not less than $100,000,000 (or its equivalent in foreign currency), and (B) any Person described in clause (ii), (iii), (iv), (v) or (vi) above shall, on the date on which it is to become a Lender hereunder, be entitled to receive payments hereunder without deduction or withholding of any United States Federal income taxes (as contemplated by Section 2.14(e)). In no event shall an Eligible Assignee include an Ineligible Institution. “Eligible Successor” means a Person that (i) is a corporation, limited liability company or business trust duly incorporated or organized, validly existing and in good standing under the laws of one
of the states of the United States or the District of Columbia, (ii) as a result of a contemplated acquisition, consolidation or merger, will succeed to all or substantially all of the consolidated business and assets of the Borrower, (iii) upon giving effect to such contemplated acquisition, consolidation or merger, will have all or substantially all of its consolidated business and assets conducted and located in the United States and (iv) is acceptable to the Majority Lenders as a credit matter. “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to (i) the environment, (ii) preservation or reclamation of natural resources, (iii) the management, release or threatened release of any Hazardous Material or (iv) health and safety matters. “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to
-10- purchase or acquire any such equity interest, but excluding any debt securities convertible into any of the foregoing. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. “ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the failure with respect to any Plan to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition upon the Borrower or any of its ERISA Affiliates of Withdrawal Liability under Section 4201 of ERISA or a determination that
a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Title IV of ERISA. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time. “Event of Default” shall have the meaning specified in Section 6.01. “Exchange Act” means the Securities Exchange Act of 1934. “Excluded Project Subsidiary” shall mean, at any time, any Subsidiary that is an obligor (or, in the case of a Subsidiary of an Excluded Project Subsidiary that is such an obligor and is in a business that is related to the business of such Excluded Project Subsidiary that is such an obligor, is otherwise bound, or its property is subject to one or more covenants and other terms of any Nonrecourse Indebtedness outstanding at such time, regardless of whether such Subsidiary is a party to the agreement evidencing the Nonrecourse Indebtedness) with respect to any Nonrecourse Indebtedness outstanding at such time. “Excluded Subsidiary” shall mean (a) an Excluded Project Subsidiary, (b) any captive insurance Subsidiary, (c) any not-for-profit Subsidiary or (d) any special purpose vehicle, including any Securitization Vehicle.
-11- “Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 8.07(g)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.14, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in an Advance or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.14(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA. “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement, and any current or future regulations or official interpretations thereof; provided that “FATCA” shall also include any amendments to Sections 1471 through 1474 of the Code that are substantively comparable, but only if the requirements in such amended version for avoiding the withholding are not materially more onerous than the requirements in the current version. “Federal Funds Effective Rate
means, for any day, the greater of (a) zero and (b) the rate per annum calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Central time) on such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion. “Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source. “Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower. “Fitch” means Fitch Ratings, Inc. or any successor. “Fitch Rating” means, at any time, the rating issued by Fitch and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from Fitch for debt securities of such type, then such indicative rating shall be used for determining the “Fitch Rating” and if the
-12- Borrower does not have such an indicative rating, but has an issuer rating from Fitch, then such issuer rating shall be used for determining the “Fitch Rating”). “Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate. “Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. “GAAP” shall have meaning specified in Section 1.03(a). “Genco” means Exelon Generation Company, LLC a Pennsylvania limited liability company. “Governmental Authority” means the government of the United States of America or any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing). “Granting Bank” shall have the meaning specified in Section 8.07(i). “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
-13- “Hedging Obligations” mean, with respect to any Person, the obligations of such Person under any interest rate or currency swap agreement, interest rate or currency future agreement, interest rate collar agreement, interest rate or currency hedge agreement, and any put, call or other agreement or arrangement designed to protect such Person against fluctuations in interest rates or currency exchange rates. “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed and (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. “Indemnified
Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by the Borrower under this Agreement, and (b) Other Taxes. “Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to any other credit enhancement, provided, that if the Borrower does not have any outstanding debt securities of the type described, an appropriate fallback will be determined by Administrative Agent in consultation with Borrower. “Ineligible Institution” has the meaning assigned to it in Section 8.07(a). “Interest Period” means, with respect to a Term SOFR Borrowing, a period of one, three or six months (in each case, subject to the availability thereof) commencing on a Business Day selected by the Borrower pursuant to this Agreement and ending on the day that corresponds numerically to such date one, three or six months thereafter; provided that (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such succeeding Business Day falls in a new calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day
-14- in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; (iii) no Interest Period shall extend beyond the Termination Date; and (iv) no tenor that has been removed from this definition pursuant to Section 2.16(b)(iv) may be available for selection by the Borrower. “IRS” means the United States Internal Revenue Service. “Lenders” means each of the financial institutions listed on the signature pages hereof and each Eligible Assignee that shall become a party hereto pursuant to Section 8.07. “Lien” means any lien (statutory or other), mortgage, pledge, security interest or other charge or encumbrance, or any other type of preferential arrangement in the nature of a security interest (including the interest of a vendor or lessor under any conditional sale, capitalized lease or other title retention agreement). “Loan Documents” means this Agreement, including schedules and exhibits hereto, and any agreements entered into in connection herewith by the Borrower with or in favor of the Administrative Agent and/or the Lenders, including any amendments, modifications or supplements thereto or waivers thereof, legal opinions issued in connection with the other Loan Documents, flood determinations, letter of credit applications and any other documents prepared in connection with the other Loan Documents, if any. “Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement. “Majority Lenders” means Lenders having Pro Rata Shares of more than 50%; provided that, for purposes of this definition, neither the Borrower nor any of its Affiliates, if a Lender, shall be included in calculating the amount of any Lender’s Pro Rata Share or the amount of the Commitment Amounts or Outstanding Credit Extensions, as applicable, required to constitute more than 50% of the Pro Rata Shares. “Material Adverse Change” and “Material Adverse Effect”
each means, relative to any occurrence, fact or circumstances of whatsoever nature (including any determination in any litigation, arbitration or governmental investigation or proceeding), (i) any materially adverse change in, or materially adverse effect on, the financial condition, operations, assets or business of the Borrower and its consolidated Subsidiaries, taken as a whole, provided that, except as otherwise expressly provided herein, the assertion against the Borrower or any Subsidiary of liability for any obligation arising under ERISA for which the Borrower or such Subsidiary bore joint and several liability with any ComEd Entity, or the payment by the Borrower or any Subsidiary of any such obligation, shall not be considered in determining whether a Material Adverse Change or Material Adverse Effect has occurred; or (ii) any materially adverse effect on the validity or enforceability against the Borrower of this Agreement. “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
-15- “Moody’s Rating” means, at any time, the rating issued by Moody’s and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from Moody’s for debt securities of such type, then such indicative rating shall be used for determining the “Moody’s Rating” and if the Borrower does not have such an indicative rating, but has an issuer rating from Moody’s, then such issuer rating shall be used for determining the “Moody’s Rating”). “Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which Exelon or any other member of the Controlled Group is a party to which more than one employer is obligated to make contributions. “Nonrecourse Indebtedness” means any Indebtedness that finances the acquisition, development, ownership or operation of an asset or pool of assets in respect of which the Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates other than: (i) recourse to the named obligor with respect to such Indebtedness (the “Debtor”) for amounts limited to the cash flow or net cash flow (other than historic cash flow) from the asset; (ii) recourse to the Debtor for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any security interest or lien given by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor over its shares or like interest in the capital of the Debtor) to secure the Indebtedness, but only if the extent of the recourse to the Debtor is limited solely to the amount of any recoveries made on any such enforcement; and (iii) recourse to the Debtor generally or
indirectly to any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a payment obligation or an obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person against which such recourse is available. “Notice of Borrowing” has the meaning set forth in Section 2.02(a). “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower or any Affiliate thereof of any proceeding under any debtor relief laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed or allowable claims in such proceeding. Without
-16- limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest commissions, charges, expenses, fees, indemnities and other amounts payable by the Borrower under any Loan Document and (b) the obligation of the Borrower to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Borrower. “OECD” means the Organization for Economic Cooperation and Development. “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any loan document, or sold or assigned an interest in any Advance or document related thereto). “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment under Section 8.07(g)). “Outstanding Credit Extensions” means the sum of the aggregate principal amount of all outstanding Advances. “Participant” has the meaning assigned to such term in Section 8.07(e). “Participant Register” has the meaning assigned to such term in Section 8.07(e). “Payment Date” means (i) for Base Rate Loans, the last day of each calendar quarter and (ii) for Term SOFR Loans the last day of each Interest Period.
“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. “PECO” means PECO Energy Company, a Pennsylvania corporation, or any successor thereof. “Pepco” means Pepco Holdings LLC, a Delaware limited liability company, or any successor thereof. “Pepco Entity” shall mean Pepco, PH Holdco and any of their Subsidiaries. “Permitted Encumbrance” means (a) any right reserved to or vested in any municipality or other governmental or public authority (i) by the terms of any right, power, franchise, grant (including, without limitation, any financial assistance grant), license or permit granted or issued to the Borrower (or prior to consummation of the Spin Transaction, Genco) or (ii) to purchase or recapture or to designate a purchaser of any property of the Borrower (or prior
-17- to consummation of the Spin Transaction, Genco) ; (b) any easement, restriction, exception or reservation in any property and/or right of way of the Borrower (or prior to consummation of the Spin Transaction, Genco) for the purposes of roads, pipelines, transmission lines, distribution lines, transportation lines or removal of minerals or timber or for other like purposes or for the joint or common use of real property, rights of way, facilities and/or equipment, and defects, irregularities and deficiencies in title of any property and/or rights of way, which, in each case described in this clause (b), whether considered individually or collectively with all other items described in this clause (b), do not materially impair the use of the relevant property and/or rights of way for the purposes for which such property and/or rights of way are held by the Borrower (or prior to consummation of the Spin Transaction, Genco); (c) rights reserved to or vested in any municipality or other Governmental Authority to control or regulate any property of the Borrower (or prior to consummation of the Spin Transaction, Genco) or to use such property in a manner that does not materially impair the use of such property for the purposes for which it is held by the Borrower (or prior to consummation of the Spin Transaction, Genco) ; and (d) obligations or duties of the Borrower (or prior to consummation of the Spin Transaction, Genco) to any municipality or other Governmental Authority that arise out of any franchise, grant, license or permit and that affect any property of the Borrower (or prior to consummation of the Spin Transaction, Genco) (including, without limitation, obligations with respect to nuclear waste disposal and related arrangements). “Permitted Obligations” mean (1) Hedging Obligations of the Borrower (or prior to consummation of the Spin Transaction, Genco) arising in the ordinary course of business and in accordance with the Borrower’s (or prior to
consummation of the Spin Transaction, Genco’s) established risk management policies that are designed to protect the Borrower (or prior to consummation of the Spin Transaction, Genco) against, among other things, fluctuations in interest rates or currency exchange rates and which in the case of agreements relating to interest rates shall have a notional amount no greater than the payments due with respect to the applicable obligations being hedged and (2) Commodity Trading Obligations of the Borrower (or prior to consummation of the Spin Transaction, Genco). “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. “PH Holdco” shall mean PH HoldCo LLC, a Delaware limited liability company. “Plan” means an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any other member of the Controlled Group has or may have any liability (including contingent liability). “Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system. “Prime Rate” means a rate per annum equal to the prime rate of interest announced by U.S. Bank National Association as its prime rate (which is not necessarily the lowest rate charged to any customer) in effect at its office located in Minneapolis, Minnesota; each change in
-18- the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. “Principal Subsidiary” means each Subsidiary, other than PECO and its Subsidiaries, any BGE Entity, any ComEd Entity and any Pepco Entity, (i) the consolidated assets of which, as of the date of any determination thereof, are at least equal to 10% of the consolidated assets of the Borrower or (ii) the consolidated earnings before taxes of which are at least equal to 10% of the consolidated earnings before taxes of the Borrower for the most recently completed fiscal year. “Pro Rata Share” means, with respect to a Lender, the percentage that such Lender’s Commitment Amount is of the Aggregate Commitment Amount. If the Commitments have terminated or expired, the Pro Rata Shares shall be determined based upon the Commitment Amounts most recently in effect, giving effect to any assignments. “Public-Sider” means a Lender whose representatives may trade in securities of the Borrower or its controlling person or any of its Subsidiaries while in possession of the financial statements provided by the Borrower under the terms of this Agreement. “Rating Agency” means each of S&P, Moody’s and Fitch. “Recipient” means, as applicable, (a) the Administrative Agent and (b) any Lender. “Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, 10:00 a.m. (Central time) on the day that is two Business Days before the date of such setting, and (2) if such Benchmark is not Term SOFR, the time determined by the Administrative Agent in its reasonable discretion. “Register” has the meaning set forth in Section 8.07(c). “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective trustees, administrators, managers, representatives, directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto. “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and regulations issued under such Section with respect to a Single Employer Plan, excluding such events as to which the requirement of Section 4043(a) of ERISA that the PBGC be notified within 30 days after the occurrence of such event is waived under PBGC Regulation Section 4043, provided that a failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waivers in accordance with either Section 4043(a) of ERISA or Section 412(c) of the Code.
-19- “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority. “RF Holdco” shall mean RF HoldCo LLC, a Delaware limited liability company. “S&P” means Standard and Poor’s Financial Services, LLC, or any successor. “S&P Rating” means, at any time, the rating issued by S&P and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from S&P for debt securities of such type, then such indicative rating shall be used for determining the “S&P Rating”). “Sanctioned Country” means, at any time, a country, region or territory which is itself, or whose government is, the subject or target of any Sanctions (as of the Effective Date, Cuba, Iran, North Korea, Sudan, Syria and Crimea). “Sanctioned Person” means, at any time, any Person that is the target of Sanctions, including, without limitation, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state or Her Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clause (a) or (b). “Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the
European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom. “Screen” has the meaning provided in the definition of Term SOFR Base Rate. “Securitization” shall mean any transaction or series of transactions entered into by the Borrower or any Subsidiary pursuant to which the Borrower or such Subsidiary, as the case may be, sells, conveys, assigns, grants an interest in or otherwise transfers, from time to time, to one or more Securitization Vehicles the Securitization Assets (and/or grants a security interest in such Securitization Assets transferred or purported to be transferred to such Securitization Vehicle), and which Securitization Vehicle finances the acquisition of such Securitization Assets (i) with proceeds from the issuance of Third Party Securities, (ii) with the issuance to the Borrower or such Subsidiary of Sellers’ Retained Interests or an increase in such Sellers’ Retained Interests, or (iii) with proceeds from the sale or collection of Securitization Assets. “Securitization Assets” shall mean any accounts receivable originated or expected to be originated by (and owed to) the Borrower or any Subsidiary (in each case whether now existing or arising or acquired in the future) and any ancillary assets (including contract rights) which are of the type customarily conveyed with, or in respect of which security interests are customarily granted in connection with, such accounts receivable in a securitization transaction
-20- and which are sold, transferred or otherwise conveyed by the Borrower or a Subsidiary to a Securitization Vehicle. “Securitization Vehicle” shall mean a Person that is a direct wholly owned Subsidiary of the Borrower or of any Subsidiary (a) formed for the purpose of effecting a Securitization, (b) to which the Borrower and/or any Subsidiary transfers Securitization Assets and (c) which, in connection therewith, issues Third Party Securities; provided that (i) such Securitization Vehicle shall engage in no business other than the purchase of Securitization Assets pursuant to the Securitization, the issuance of Third Party Securities or other funding of such Securitization and any activities reasonably related thereto. “Sellers’ Retained Interests” means the debt and/or Equity Interests (including any intercompany notes) held by the Borrower or any Subsidiary in a Securitization Vehicle to which Securitization Assets have been transferred in a Securitization, including any such debt or equity received as consideration for, or as a portion of, the purchase price for the Securitization Assets transferred, and any other instrument through which the Borrower or any Subsidiary has rights to or receives distributions in respect of any residual or excess interest in the Securitization Assets. “Single Employer Plan” means a Plan other than a Multiemployer Plan, maintained by the Borrower or any other member of the Controlled Group for employees of the Borrower or any other member of the Controlled Group. “SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website. “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at
http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time. “SOFR Advance” means any Advance that bears interest as provided in Section 2.06. “SPC” has the meaning set forth in Section 8.07(i). “Spin Transaction” means (i) the transfer of the membership interests of Genco by Exelon to SpinCo and (ii) the pro rata distribution of the capital stock of SpinCo to the holders of Exelon’s common stock, at which point SpinCo will become a separate, independent publicly traded company. “SpinCo” means the new company established by Exelon in connection with the Spin Transaction and that as of the effective date of the Spin Transaction, will own, directly, 100% of the issued and outstanding membership interests of Genco (or its successor in interest, as applicable).
-21- “Subsidiary” means, with respect to any Person, any corporation or unincorporated entity of which more than 50% of the outstanding capital stock (or comparable interest) having ordinary voting power (irrespective of whether or not at the time capital stock, or comparable interests, of any other class or classes of such corporation or entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person (whether directly or through one or more other Subsidiaries). Unless otherwise indicated, each reference to a “Subsidiary” means a Subsidiary of the Borrower. “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes, or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto. “Termination Date” means July 21, 2023. “Term SOFR” means the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. “Term SOFR Administrator” means CME Group Benchmark Administration Ltd. (or a successor administrator of Term SOFR). “Term SOFR Administrator’s Website” means https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr, or any successor source for Term SOFR identified as such by the Term SOFR Administrator from time to time. “Term SOFR Base Rate” means, for the relevant Interest Period, the greater of (a) zero and (b) the Term SOFR rate quoted by the Administrative Agent from the Term SOFR Administrator’s Website or the applicable Bloomberg screen (or other commercially available source providing such quotations as may be selected by the Administrative Agent from time to time) (the “Screen”) for such Interest Period, which shall be the Term SOFR rate
published two Business Days before the first day of such Interest Period (such Business Day, the “Determination Date”). If as of 5:00 p.m. (New York time) on any Determination Date, the Term SOFR rate has not been published by the Term SOFR Administrator or on the Screen, then the rate used will be that as published by the Term SOFR Administrator or on the Screen for the first preceding Business Day for which such rate was published on such Screen so long as such first preceding Business Day is not more than three (3) Business Days prior to such Determination Date. “Term SOFR Borrowing” means a Borrowing that, except as otherwise provided in Section 2.13(f), bears interest at the applicable Term SOFR Rate. “Term SOFR Loan” means a Loan that, except as otherwise provided in Section 2.13(f), bears interest at the applicable Term SOFR Rate other than pursuant to clause (d) of the definition of Alternate Base Rate. “Term SOFR Rate” means, for the relevant Interest Period, the sum of (a) the Term SOFR Base Rate applicable to such Interest Period, plus (b) the Applicable Margin; provided that
-22- the Term SOFR Rate before an Event of Default or the Termination Date expressed as an annual rate shall not be less than 0%. “Test Period” means, for any date of determination under this Agreement, the four (4) consecutive fiscal quarters of the Borrower most recently ended as of such date of determination for which financial statements have been delivered pursuant to Section 5.01(a). “Third Party Securities” shall mean, with respect to any Securitization, notes, bonds or other debt instruments, beneficial interests in a trust, undivided ownership interests in receivables or other securities issued for cash consideration by the relevant Securitization Vehicle to banks, financing conduits, investors or other financing sources (other than the Borrower or any Subsidiary, except in respect of the Sellers’ Retained Interest) the proceeds of which are used to finance, in whole or in part, the purchase by such Securitization Vehicle of Securitization Assets in a Securitization. The amount of any Third Party Securities shall be deemed to equal the aggregate principal, stated, or invested amount of such Third Party Securities which are outstanding at such time. “Type” means, with respect to any Borrowing, its nature as a Base Rate Borrowing or a Term SOFR Borrowing and with respect to a Loan, its nature as a Base Rate Loan or a Term SOFR Loan. “UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. “UK Resolution Authority” means the Bank of England or any other public administrative authority having
responsibility for the resolution of any UK Financial Institution. “Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “Unfunded Liabilities” means, (i) in the case of any Single Employer Plan, the amount (if any) by which the present value of all vested nonforfeitable benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent actuarial valuation date for such Plan using the actuarial assumptions set forth in the most recent actuarial valuation report for such Single Employer Plan, and (ii) in the case of any Multiemployer Plan, the Withdrawal Liability that would be incurred by the Controlled Group if all members of the Controlled Group completely withdrew from such Multiemployer Plan. “U.S. Person” means a “United States” person within the meaning of Section 7701(a)(30) of the Code. “U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.14(f)(ii)(B)(3).
-23- “Withdrawal Liability” shall have the meaning specified in Part 1 of Subtitle E of Title IV of ERISA. “Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers. SECTION 1.02 Other Interpretive Provisions. In this Agreement, (a) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; (b) the term “including” means “including without limitation”; and (c) unless otherwise indicated, (i) any reference to an Article, Section, Exhibit or Schedule means an Article or Section hereof or an Exhibit or Schedule hereto; (ii) any reference to a time of day means such time in Minneapolis, Minnesota; (iii) any reference to a law or regulation means such law or regulation as amended, modified or supplemented from time to time and includes all statutory and regulatory provisions consolidating, replacing or interpreting such law or regulation; and (d) any reference to an agreement, instrument or
other document means such agreement, instrument or other document as amended, supplemented or otherwise modified from time to time. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Term SOFR Loan”) or by Class and Type (e.g., a “Term SOFR Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Term SOFR Borrowing”) or by Class and Type (e.g., a “Term SOFR Revolving Borrowing”). SECTION 1.03 Accounting Principles. (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Majority Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to (i) any election under Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting
-24- Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) any treatment of Indebtedness under Accounting Standards Codification 470-20 or 2015-03 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. (b) Notwithstanding anything to the contrary contained in Error! Reference source not found. or in the definition of “Capital Lease Obligations,” any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith. SECTION 1.04 Term SOFR Notification. The interest rate on Term SOFR Borrowings is determined by reference to the Term SOFR Base Rate, which is derived from Term SOFR. Section 2.16(b) provides a mechanism for (a) determining an alternative rate of interest if Term SOFR is no longer available or in the other circumstances set forth in Section 2.16(b), and (b) modifying this Agreement to give effect to such alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or
any other matter related to Term SOFR or other rates in the definition of Term SOFR Base Rate or with respect to any alternative or successor rate thereto, or replacement rate thereof (including any Benchmark Replacement), including without limitation, whether any such alternative, successor or replacement reference rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 2.16(b), will have the same value as, or be economically equivalent to, the Term SOFR Base Rate. The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of Alternate Base Rate, Term SOFR, the Term SOFR Base Rate, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain the Alternate Base Rate, the Term SOFR Base Rate, Term SOFR or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. SECTION 1.05 Divisions. For all purposes hereunder or under any other loan documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the
subsequent Person, and (b) if any
-25- new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its equity interests at such time. ARTICLE II AMOUNTS AND TERMS OF THE COMMITMENTS SECTION 2.01 Commitments. Subject to the terms and conditions set forth herein, each Lender severally (and not jointly) agrees to make an Advance in dollars to the Borrower, on the Effective Date, in a principal amount not to exceed such Lender’s Commitment. Amounts prepaid or repaid in respect of such Advances may not be reborrowed. SECTION 2.02 Procedures for Advances; Limitations on Borrowings. (a) The Borrower shall request the Advance to be made on the Effective Date by giving notice (a “Notice of Borrowing”) to the Administrative Agent (which shall promptly advise each Lender of its receipt thereof) not later than 10:00 A.M. on the third Business Day prior to the Effective Date of any proposed borrowing of SOFR Advances and on the Effective Date of any proposed borrowing of Base Rate Advances. Each Notice of Borrowing shall be in substantially the form of Exhibit B, specifying therein (i) the Type of Advances requested, (ii) the aggregate principal amount of the requested Advances and (iii) in the case of a borrowing of SOFR Advances, the initial Interest Period therefor. Each Lender shall, before 12:00 noon on the date of such borrowing, make available for the account of its applicable lending office to the Administrative Agent at its address referred to in Section 8.02, in same day funds, such Lender’s ratable portion of the requested borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s aforesaid address. (b) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. If a Notice of Borrowing requests SOFR Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure of the Borrower to fulfill on or before the requested borrowing date the applicable conditions set forth in Article III, including any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the requested Advance to be made by such Lender. SECTION 2.03 Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent. SECTION 2.04 Termination of Commitments. The Commitments shall terminate at 5:00 pm on the Effective Date. SECTION 2.05 Repayment of Advances. The Borrower shall repay all outstanding Advances made by each Lender, and all other obligations of the Borrower hereunder on the Termination Date.
-26- SECTION 2.06 Interest on Advances. Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made or is automatically converted into a Base Rate Loan pursuant to Section 2.09, to the date it is paid or is converted into a Term SOFR Loan pursuant to Section 2.09, at a rate per annum equal to the Base Rate for such day. Changes in the rate of interest on each Base Rate Borrowing will take effect simultaneously with each change in the Alternate Base Rate. Each Term SOFR Loan shall bear interest on the outstanding principal amount thereof from the first day of the Interest Period applicable thereto to the last day of such Interest Period at the interest rate determined by the Administrative Agent as applicable to such Term SOFR Loan based upon the Borrower’s selections under Sections 2.02 and 2.09 and the Applicable Margin. SECTION 2.07 [Reserved]. SECTION 2.08 Interest Rate Determination. The Administrative Agent shall give prompt notice to the Borrower and the Lenders of each applicable interest rate determined by the Administrative Agent for purposes of Section 2.06. SECTION 2.09 Continuation and Conversion of Advances. (a) The Borrower may on any Business Day, upon notice given to the Administrative Agent, substantially in the form of Exhibit F to this Agreement, not later than 10:00 A.M. on the third Business Day prior to the date of any proposed continuation of or conversion into SOFR Advances, and on the date of any proposed conversion into Base Rate Advances, and subject to the provisions of Sections 2.08 and 2.12, continue SOFR Advances for a new Interest Period or convert a Borrowing of Advances of one Type into Advances of the other Type; provided that any continuation of SOFR Advances or conversion of SOFR Advances into Base Rate Advances shall be made on, and only on, the last day of an Interest Period for such SOFR Advances,
unless, in the case of such a conversion, the Borrower shall also reimburse the Lenders pursuant to Section 8.04(b) on the date of such conversion. Each such notice of a continuation or conversion shall, within the restrictions specified above, specify (i) the date of such continuation or conversion, (ii) the Advances to be continued or converted, and (iii) in the case of continuation of or conversion into SOFR Advances, the duration of the Interest Period for such Advances. (b) If the Borrower fails to select the Type of any Advance or the duration of any Interest Period for any Borrowing of SOFR Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and Section 2.09(a), the Administrative Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, convert into Base Rate Advances. SECTION 2.10 Prepayments. (a) Optional Prepayments. The Borrower may, upon notice to the Administrative Agent, substantially in the form of Exhibit G to this Agreement. not later than 10:00 A.M. at least three Business Days prior to any prepayment of SOFR Advances or on the date of any prepayment of Base Rate Advances, in each case stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given, the Borrower shall,
-27- prepay the outstanding principal amounts of the Advances made as part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided that (i) each partial prepayment shall be in an aggregate principal amount not less than $10,000,000 or a higher integral multiple of $1,000,000 in the case of any prepayment of SOFR Advances and $5,000,000 or a higher integral multiple of $1,000,000 in the case of any prepayment of Base Rate Advances and (ii) in the case of any such prepayment of a SOFR Advance, the Borrower shall be obligated to reimburse the Lenders pursuant to Section 8.04(b) on the date of such prepayment. (b) Mandatory Prepayment. In the event that the Spin Transaction is not consummated on or before March 15, 2022 (or such later date approved by Administrative Agent in its sole discretion), Borrower shall, within one (1) Business Day, (i) prepay all of the Loans and (ii) pay all accrued but unpaid interest thereon. SECTION 2.11 Increased Costs. (a) If any Change In Law shall: (i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Term SOFR Rate); (ii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or SOFR Advances made by such Lender; or (iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto). and the
result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any SOFR Advance (or of maintaining its obligation to make any such Advance) or to reduce the amount of any sum received or receivable by such Lender or such other Recipient hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender determines that any Change in Law, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Advances made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with
-28- respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered. (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 90 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 90-day period referred to above shall be extended to include the period of retroactive effect thereof, provided that such demand is made within 90 days after the implementation of such retroactive Change in Law. SECTION 2.12 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make, maintain, or fund Loans whose interest is determined by reference to the Term SOFR Rate, or to determine or charge interest rates based upon the Term SOFR Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank market, then, upon notice thereof by such Lender to the Borrower (through the Administrative Agent), (a) any obligation of such Lender to make or continue Term SOFR Borrowings or to convert Base Rate Borrowings to Term SOFR Borrowings shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Borrowings the interest rate on which is determined by reference to the Term SOFR Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert each Term SOFR Loan of such Lender to a Base Rate Loan (the interest rate on which Base Rate Loan shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender can lawfully continue to maintain such Term SOFR Loan to such day, or immediately, if such Lender cannot lawfully continue to maintain such Term SOFR Loan, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Term SOFR Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Term SOFR Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for
such Lender to determine or charge interest rates based upon the Term SOFR Rate. Upon any such prepayment or conversion, the
-29- Borrower shall also pay accrued interest on the amount so prepaid or converted, together with any additional amounts required pursuant to Section 2.17. SECTION 2.13 Payments and Computations. (a) The Borrower shall make each payment hereunder not later than 10:00 A.M. on the day when due in U.S. dollars to the Administrative Agent at its address referred to in Section 8.02 in same day funds without setoff, counterclaim or other deduction. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest and upfront fees ratably (other than amounts payable pursuant to Section 2.02(b), 2.11, 2.14 or 8.04(b)) to the Lenders for the account of their respective applicable lending offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its applicable lending office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(d), from the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) The Borrower hereby authorizes each Lender, if and to the extent any payment owed to such Lender by the Borrower is not made when due hereunder, to charge from time to time against any of the Borrower’s accounts with such Lender any amount so due. Each Lender agrees to notify the Borrower promptly after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off
and application. (c) All computations of interest based on the Alternate Base Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all other computations of interest and of fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (d) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of any interest or fees, as the case may be; provided that if such extension would cause payment of interest on or principal of a SOFR Advance to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due by the Borrower to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each
-30- Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Effective Rate. (f) Notwithstanding anything to the contrary contained herein, any amount payable by the Borrower hereunder that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid in full at a rate per annum equal at all times to the Alternate Base Rate plus the Applicable Margin in effect from time to time plus 2%, payable upon demand. SECTION 2.14 Taxes. (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under this Agreement shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.14) the applicable Recipient receives an amount equal to the sum it
would have received had no such deduction or withholding been made. (b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes. (c) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.14, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
-31- (e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.07(e) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with this Agreement, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e). (f) Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under this Agreement shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.14(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. (ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person, (A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an executed IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax;
-32- (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable: (1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any loan document, an executed IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under this Agreement, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (2) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed IRS Form W-8ECI; (3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) an executed IRS Form W-8BEN-E or IRS Form W-8BEN; or (4) to the extent a Foreign Lender is not the beneficial owner, an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-
8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner; (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the
-33- date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and (D) if a payment made to a Lender under this Agreement would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do
so. (g) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.14 (including by the payment of additional amounts pursuant to this Section 2.14), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.14 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had
-34- never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. (h) Survival. Each party’s obligations under this Section 2.14 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under this Agreement. (i) Defined Terms. For purposes of this Section 2.14, the term “applicable law” includes FATCA. (j) Status. For purposes of determining withholding Taxes imposed under FATCA, from and after the Effective Date, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i). SECTION 2.15 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances made by it to the Borrower (other than pursuant to Section 2.02(b), 2.11, 2.14, or 8.04(b)) in excess of its ratable share of payments on account of the Advances to the Borrower, such Lender shall forthwith purchase from the other Lenders such participations in the Advances as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion
of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. SECTION 2.16 Availability of Types of Borrowings; Adequacy of Interest Rate; Benchmark Replacement. (a) Availability of Term SOFR Borrowings. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, but subject to Section 2.16(b), if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Majority Lenders notify the Administrative Agent that the Majority Lenders have determined, that: (i) for any reason in connection with any request for a Term SOFR Borrowing or a conversion or continuation thereof that the Term SOFR Base Rate
-35- for any requested Interest Period with respect to a proposed Term SOFR Borrowing does not adequately and fairly reflect the cost to such Lenders of the funding such Loans, or (ii) the interest rate applicable to Term SOFR Borrowings for any requested Interest Period is not ascertainable or available (including, without limitation, because the applicable Screen (or on any successor or substitute page on such screen) is unavailable) and such inability to ascertain or unavailability is not expected to be permanent, or does not adequately and fairly reflect the cost of making or maintaining Term SOFR Borrowings, then the Administrative Agent shall suspend the availability of Term SOFR Borrowings and require any affected Term SOFR Borrowings to be repaid or converted to Base Rate Borrowings, subject to the payment of any funding indemnification amounts required by Section 2.17. (b) Benchmark Replacement. (i) Benchmark Transition Event; Early Opt-in Election. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will
replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth Business Day after the date notice of such Benchmark Replacement is provided by the Administrative Agent to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders. (ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
-36- (iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement, and (B) the effectiveness of any Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.16(b), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.16(b). (iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then- current Benchmark is a term rate (including the Term SOFR Base Rate and Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove any tenor of such Benchmark that is unavailable or non-representative for any Benchmark settings and (ii) if a
tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor. (v) Benchmark Unavailability Period. Upon notice to the Borrower by the Administrative Agent in accordance with this Section 2.16(b) of the commencement of a Benchmark Unavailability Period and until a Benchmark Replacement is determined in accordance with this Section 2.16(b), the Borrower may revoke any request for a Term SOFR Borrowing, or any request for the conversion or continuation of a Term SOFR Borrowing to be made, converted or continued during any Benchmark Unavailability Period at the end of the applicable Interest Period, and, failing that, the Borrower will be deemed to have converted any such request at the end of the applicable Interest Period into a request for a Base Rate Borrowing or conversion to a Base Rate Borrowing. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Alternate Base Rate
-37- based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate. SECTION 2.17 Funding Indemnification. If (i) any payment of a Term SOFR Borrowing occurs on a date that is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise; (ii) a Term SOFR Borrowing is not made on the date specified by the Borrower for any reason other than default by the Lenders; (iii) a Term SOFR Borrowing is converted other than on the last day of the Interest Period applicable thereto; or (iv) the Borrower fails to borrow, convert, continue or prepay a Term SOFR Borrowing on the date specified in any notice delivered pursuant hereto. then the Borrower shall indemnify each Lender for such Lender’s costs, expenses and Interest Differential (as determined by such Lender) incurred as a result of such prepayment. The term “Interest Differential” means the greater of zero and the financial loss incurred by the Lender resulting from prepayment, calculated as the difference between the amount of interest such Lender would have earned (from like investments as of the first day of the Interest Period) had prepayment not occurred and the interest such Lender will actually earn (from like investments as of the date of prepayment) as a result of the redeployment of funds from the prepayment. Because of the short-term duration of any Interest Period, the Borrower agrees that the Interest Differential shall not be discounted to its present value. The Borrower hereby acknowledges that the Borrower shall be required to pay Interest Differential with respect to any portion of the principal balance accelerated or paid before the end of the Interest Period for such Term SOFR Borrowing, whether voluntarily, involuntarily, or otherwise, including without limitation any principal payment required upon maturity when the Borrower has elected an
Interest Period that extends beyond the scheduled maturity date of such Loan and any principal payment required following default, demand for payment, acceleration, collection proceedings, foreclosure, sale or other disposition of collateral, bankruptcy or other insolvency proceedings, eminent domain, condemnation, application of insurance proceeds, or otherwise. Such Interest Differential shall at all times be an Obligation as well as an undertaking by the Borrower to the Lenders whether arising out of a voluntary or mandatory prepayment. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.17 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. SECTION 2.18 Interest Payment Dates. Interest accrued on each Base Rate Loan or Term SOFR Loan shall be payable on each Payment Date, commencing with the first Payment Date to occur after the Closing Date, on the date of any prepayment of such Loan (whether or not as a result of acceleration) on the amount prepaid, and on the Termination Date. Interest accrued
-38- on each Term SOFR Loan having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest accrued pursuant to Section 2.13(f) is payable on demand. If any payment of principal of or interest on a Loan becomes due on a day that is not a Business Day, such payment shall be made on the immediately succeeding Business Day unless such succeeding Business Day falls in a new calendar month, in which case such interest or principal shall be payable on the immediately preceding Business Day. ARTICLE III CONDITIONS PRECEDENT SECTION 3.01 Conditions Precedent to Effectiveness. This Agreement (including the Commitments of the Lenders and the obligations of the Borrower hereunder) shall become effective if all of the following conditions precedent have been satisfied: (a) the Administrative Agent shall have received (i) a counterpart of this Agreement signed on behalf of each party hereto or (ii) written evidence (which may include electronic transmission of a signed signature page of this Agreement) that each party hereto has signed a counterpart of this Agreement and each of the following documents, each dated a date reasonably satisfactory to the Administrative Agent and otherwise in form and substance satisfactory to the Administrative Agent: (i) Certified copies of resolutions of the Board of Directors or equivalent managing body of the Borrower approving the transactions contemplated by this Agreement and of all documents evidencing other necessary organizational action of the Borrower with respect to this Agreement and the documents contemplated hereby; (ii) A certificate of the Secretary or an Assistant Secretary of Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the other documents to be delivered hereunder; (B) that attached thereto are true and correct
copies of the organizational documents of the Borrower, in each case in effect on such date; and (C) that attached thereto are true and correct copies of all governmental and regulatory authorizations and approvals required for the due execution, delivery and performance by the Borrower of this Agreement and the documents contemplated hereby; (iii) A certificate signed by either the chief financial officer, principal accounting officer or treasurer of the Borrower stating that (A) the representations and warranties contained in Section 4.01 are correct on and as of the date of such certificate as though made on and as of such date and (B) no Default or Event of Default has occurred and is continuing on the date of such certificate; (iv) Any notes requested by a Lender, substantially in the form of Exhibit C; and
-39- (v) A favorable opinion of Ballard Spahr LLP, counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent. (b) [Reserved]; (c) The Administrative Agent shall have received evidence, satisfactory to the Administrative Agent, that the Borrower has paid (or will pay with the proceeds of the initial Credit Extensions) all fees and, to the extent billed, expenses payable by the Borrower hereunder on the Effective Date; (d) Upon the reasonable request of any Lender, the Borrower shall have provided to such Lender the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including the PATRIOT Act, in each case at least five days prior to the Effective Date; and (e) Receipt by the Administrative Agent of the Beneficial Ownership Certification in relation to the Borrower. Promptly upon the occurrence thereof, the Administrative Agent shall notify the Borrower and the Lenders as to the Effective Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01 Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The Borrower is a corporation, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. (b) The execution, delivery and performance by the Borrower of this Agreement are within the Borrower’s organizational powers, have been duly authorized by all necessary organizational action on the part of the Borrower, and do not and will not contravene (i) the organizational documents of the Borrower, (ii) applicable law or (iii) any contractual or legal restriction binding on or affecting the properties of the Borrower or any Subsidiary. (c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution, delivery and
performance by the Borrower of this Agreement, except any order that has been duly obtained and is (x) in full force and effect and (y) sufficient for the purposes hereof. (d) This Agreement is a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as the enforceability thereof
-40- may be limited by equitable principles or bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally. (e) The consolidated balance sheet of the Borrower and its Subsidiaries as of December 31, 2020 and the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, certified by PricewaterhouseCoopers LLP, copies of which have been furnished to each Lender, fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as of such dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates in accordance with GAAP; and (ii) since December 31, 2020, there has been no Material Adverse Change. (f) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in connection with Section 5.01 and/or filed with the Securities and Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or threatened action, investigation or proceeding affecting the Borrower or any Subsidiary before any court, governmental agency or arbitrator that may reasonably be anticipated to have a Material Adverse Effect. There is no pending or threatened action or proceeding against the Borrower or any Subsidiary that purports to affect the legality, validity, binding effect or enforceability against the Borrower of this Agreement. Since December 31, 2021, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole. (g) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, the Borrower (i) has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has not become subject to any Environmental Liability, (iii) has not received notice of any claim with respect to any Environmental Liability or (iv) has no knowledge of any basis for any Environmental Liability. (h) No proceeds of any Advance have been or will be used directly or indirectly in connection with the acquisition of in excess of 5% of any class of equity securities that is registered pursuant to Section 12 of the Exchange Act or any transaction subject to the requirements of Section 13 or 14 of the Exchange Act. (i) The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance 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. Not more than 25% of the value of the assets of the Borrower and its Subsidiaries is represented by margin stock. (j) The Borrower is not required to register as an “investment company” under the Investment Company Act of 1940.
-41- (k) During the twelve consecutive month period prior to the date of the execution and delivery of this Agreement and prior to the date of any Credit Extension, no steps have been taken by the Borrower or any member of the Controlled Group or, to the knowledge of the Borrower, by any other Person to terminate any Plan (excluding any termination arising out of the institution by or against any ComEd Entity of any bankruptcy, insolvency or similar proceeding so long as such termination would not constitute an Default or Event of Default under Section 6.01(g)), and there has been no failure to satisfy the minimum funding standard described in Section 412(a)(2) of the Code with respect to any Single Employer Plan that would reasonably be expected to result in a lien pursuant to Section 430(k) of the Code. To the knowledge of the Borrower, no condition exists or event or transaction has occurred with respect to any Plan, which would reasonably be expected to result in the incurrence by the Borrower or any other member of the Controlled Group of any material liability (other than to make contributions, pay annual PBGC premiums or pay out benefits in the ordinary course of business), fine or penalty (excluding any condition, event or transaction arising out of the institution by or against any ComEd Entity of any bankruptcy, insolvency or similar proceeding so long as such condition, event or transaction does not constitute an Default or Event of Default under Section 6.01(g)). (l) The Borrower has implemented, and maintains in effect, policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with all Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of the Borrower, its directors and agents, are in compliance with all Anti-Corruption Laws and applicable
Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby or the transactions contemplated hereby, is a Sanctioned Person. No Advance, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions. (m) The Borrower is not an Affected Financial Institution. (n) The Borrower is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing. (o) As of the Effective Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects. (p) The Borrower has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (q) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower has set aside on its books adequate reserves or (r) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
-42- (s) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01 Affirmative Covenants. The Borrower agrees that so long as any amount payable by the Borrower hereunder remains unpaid, the Borrower will, and, in the case of Section 5.01(a), will cause its Principal Subsidiaries to, unless the Majority Lenders shall otherwise consent in writing: (a) Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the Administrative Agent and each Lender, including their Public-Siders: (i) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the Borrower’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission with respect to such quarter (or, if the Borrower is not required to file a Quarterly Report on Form 10-Q, copies of an unaudited consolidated balance sheet of the Borrower as of the end of such quarter and the related consolidated statement of operations of the Borrower for the portion of the Borrower’s fiscal year ending on the last day of such quarter, in each case prepared in accordance with GAAP, subject to the absence of footnotes and to year-end adjustments), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto; (ii) as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the Borrower’s Annual Report on Form 10-K filed
with the Securities and Exchange Commission with respect to such fiscal year (or, if the Borrower is not required to file an Annual Report on Form 10- K, the consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of such fiscal year and the related consolidated statements of operations, changes in shareholders’ equity (if applicable) and cash flows of the Borrower for such fiscal year, certified by PricewaterhouseCoopers LLP or other certified public accountants of recognized national standing), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto; (iii) concurrently with the delivery of the quarterly and annual reports referred to in subsections (i) and (ii) above, a compliance certificate in substantially
-43- the form set forth in Exhibit D, duly completed and signed by the Chief Financial Officer, Treasurer or an Assistant Treasurer of the Borrower; (iv) except as otherwise provided in clause (i) or (ii) above, promptly after the sending or filing thereof, copies of all reports that the Borrower sends to its security holders generally, and copies of all Reports on Form 10-K, 10-Q or 8- K, and registration statements and prospectuses that the Borrower or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange (except to the extent that any such registration statement or prospectus relates solely to the issuance of securities pursuant to employee purchase, benefit or dividend reinvestment plans of the Borrower or a Subsidiary); (v) promptly upon becoming aware of the institution of any steps by the Borrower or any other Person to terminate any Plan, or the failure to make a required contribution to any Plan if such failure is sufficient to give rise to a lien under section 430(k) of the Code, or the taking of any action with respect to a Plan which could result in the requirement that the Borrower furnish a bond or other security to the PBGC or such Plan, or the occurrence of any event with respect to any Plan which could result in the incurrence by the Borrower or any other member of the Controlled Group of any material liability, fine or penalty, notice thereof and a statement as to the action the Borrower or such member of the Controlled Group proposes to take with respect thereto; (vi) promptly after any Rating Agency shall have announced a change in the rating established or deemed to have been established for the Index Debt, written notice of such rating change; (vii) promptly following any request therefor, (x) such other information regarding the operations, business affairs and financial condition of the Borrower or any Principal Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agen
or any Lender (through the Administrative Agent) may reasonably request and (y) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation; and (viii) such other information respecting the condition, operations or business, financial or otherwise, of the Borrower or any Subsidiary as any Lender, through the Administrative Agent, may from time to time reasonably request (including any information that any Lender reasonably requests in order to comply with its obligations under any “know your customer” or anti-money laundering laws or regulations, including the Patriot Act and the Beneficial Ownership Regulation). Documents required to be delivered pursuant to Section 5.01(a)(i), (ii) or (v) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the
-44- date (i) on which such materials are publicly available as posted on the Electronic Data Gathering, Analysis and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether made available by the Administrative Agent); provided that: (A) upon written request by the Administrative Agent (or any Lender through the Administrative Agent) to the Borrower, the Borrower shall deliver paper copies of such documents to the Administrative Agent or such Lender until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such document to it and maintaining its copies of such documents. (b) Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following: (i) as soon as possible, and in any event within five Business Days after the occurrence of any Default or Event of Default with respect to the Borrower continuing on the date of such statement, a statement of an authorized officer of the Borrower setting forth details of such Default or Event of Default and the action which the Borrower
proposes to take with respect thereto; (ii) any change in the credit ratings from a credit rating agency, or the placement by a credit rating agency of the Borrower or its parent on a “CreditWatch” or “WatchList” or any similar list, in each case with negative implications, or the cessation by a credit rating agency of, or its intent to cease, rating the Borrower’s debt; and (iii) any change in the information provided in the Beneficial Ownership Certification delivered to such Lender that would result in a change to the list of beneficial owners identified in such certification. Each notice delivered under this Section (i) shall be in writing, (ii) shall contain a heading or a reference line that reads “Notice under Section 5.01 of Exelon Corporation Credit Agreement dated January 21, 2022” and (iii) shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. (c) Existence; Conduct of Business. The Borrower will do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided
-45- that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 5.02(b). (d) Payment of Obligations. The Borrower will pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) the Borrower has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (iii) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. (e) Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Principal Subsidiaries to, (i) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (ii) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. (f) Books and Records; Inspection Rights. The Borrower will, at any reasonable time and from time to time, pursuant to prior notice delivered to the Borrower, permit any Lender, or any agent or representative of any thereof, to examine and, at such Lender’s expense, make copies of, and abstracts from the records and books of account of, and visit the properties of, the Borrower and any Principal Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Principal Subsidiary with any of their respective officers; provided that any non-public information (which has been identified as such by the Borrower or the applicable Principal Subsidiary) obtained by any Lender or any of its agents or representatives pursuant to this Section 5.01(f) shall be treated
confidentially by such Person; provided, further, that such Person may disclose such information to (a) any other party to this Agreement, its examiners, Affiliates, outside auditors, counsel or other professional advisors in connection with this Agreement, (b) to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement, (c) to any credit insurance provider or (d) if otherwise required to do so by law or regulatory process (it being understood that, unless prevented from doing so by any applicable law or Governmental Authority, such Person shall use reasonable efforts to notify the Borrower of any demand or request for any such information promptly upon receipt thereof so that the Borrower may seek a protective order or take other appropriate action). (g) Compliance with Laws. The Borrower will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. (h) Use of Proceeds. The proceeds of the Loans will be used only to make a capital contribution to Genco in connection with Spin Transaction and to pay certain fees and expenses in connection therewith, but in no event for any purpose that would be contrary to Section 4.01(h) or 4.01(i). No part of the proceeds of any Loan will be used, whether directly or indirectly,
-46- for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulations T, U and X. The Borrower will not request any Borrowing, and the Borrower shall not use, and shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, directly or indirectly, the proceeds of any Borrowing (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto (including any Person participating in the Loans hereunder, whether as underwriter, advisor, investor, lender, hedge provider, facility or security agent or otherwise). (i) Accuracy of Information. The Borrower will ensure that any information, including financial statements or other documents, furnished to the Administrative Agent or the Lenders in connection with this Agreement or any amendment or modification hereof or waiver hereunder contains no material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the furnishing of such information shall be deemed to be a representation and warranty by the Borrower on the date thereof as to the matters specified in this Section. SECTION 5.02 Negative Covenants. The Borrower agrees that so long as any amount payable by the Borrower hereunder remains unpaid, the Borrower will not, without the written consent of the Majority Lenders: (a) Limitation on Liens. Create, incur, allow to assume or suffer to exist or permit (and prior to consummation of the Spin
Transaction allow Genco to create, incur, allow to assume or suffer to exist) any Lien on its property, revenues or assets, whether now owned or hereafter acquired, except as follows: (i) Liens imposed by law, such as carriers’, warehousemen’s, landlords’ repairmen’s, materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business; (ii) Liens for taxes, assessments or governmental charges, levies, or fines (including such amounts arising under environmental law) on property of the Borrower (or prior to consummation of the Spin Transaction, Genco) if the same shall not at the time be delinquent or thereafter can be paid without a material penalty, or are being contested in good faith and by appropriate proceedings; (iii) Liens on the capital stock of or any other equity interest in any Subsidiary (other than, prior to the Spin Transaction, Genco and any holding company for Genco) to secure Nonrecourse Indebtedness; (iv) Liens upon or in any property acquired in the ordinary course of business to secure the purchase price of such property or to secure any obligation incurred solely for the purpose of financing the acquisition of such property;
-47- (v) Liens existing on property at the time of the acquisition thereof (other than any such Lien created in contemplation of such acquisition unless permitted by the preceding clause (iv)); (vi) Liens granted in connection with any financing arrangement for the purchase of nuclear fuel or the financing of pollution control facilities, limited to the fuel or facilities so purchased or acquired; (vii) Liens arising in connection with sales or transfers of, or financing secured by, accounts receivable or related contracts, provided that any such sale, transfer or financing shall be on arms’ length terms; (viii) Liens securing Permitted Obligations and reimbursement obligations in respect of letters of credit issued to support Permitted Obligations (for the avoidance of doubt, the Electric Reliability Council of Texas (ERCOT) program and any other similar agreement or arrangement, including with any Independent System Operator or Regional Transmission Organization, are permitted under this clause (viii)); (ix) Permitted Encumbrances; (x) Liens arising in connection with sale and leaseback transactions entered into by the Borrower (or prior to consummation of the Spin Transaction, Genco), but only to the extent that the aggregate purchase price of all assets sold by the Borrower (or prior to consummation of the Spin Transaction, Genco) during the term of this Agreement pursuant to such sale and leaseback transactions does not exceed $1,000,000,000; (xi) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans or other social security or similar legislation; (xii) Liens constituting attachment, judgment and other similar Liens arising in connection with court proceedings to the extent not constituting an Event of
Default under Section 6.01(f); (xiii) Liens created in the ordinary course of business to secure liability to insurance carriers and Liens on insurance policies and the proceeds thereof (whether accrued or not), rights or claims against an insurer or other similar asset securing insurance premium financings; (xiv) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business;
-48- (xv) Liens in the nature of rights of setoff, bankers’ liens, revocation, refund, chargeback, counterclaim, netting of cash amounts or similar rights as to deposit accounts, commodity accounts or securities accounts or other funds maintained with a credit or depository institution; (xvi) Liens consisting of pledges of industrial development, pollution control or similar revenue bonds in connection with the remarketing of such bonds; (xvii) Liens and similar customary cash collateralization obligations in respect of letter of credit exposure or swingline loan exposure relating to defaulting lenders in the Borrower’s senior unsecured credit facilities; (xviii) Liens arising under leases or subleases, licenses or sublicenses granted to others that do not materially interfere with the ordinary course of business of the Borrower (or prior to the consummation of the Spin Transaction, Genco); (xix) Liens resulting from any restriction on any equity interest (or project interest, interests in any energy facility (including undivided interests)) of a Person providing for a breach, termination or default under any owners, participation, shared facility, joint venture, stockholder, membership, limited liability company or partnership agreement between such Person and one or more other holders of equity interest (or project interest, interests in any energy facility (including undivided interests)) of such Person, to the extent a security interest or other Lien is created on any such interest as a result thereof; (xx) Liens granted on cash or cash equivalents to defease or repay Indebtedness of the Borrower (or, prior to consummation of the Spin Transaction, Genco) no later than 60 days after the creation of such Lien; (xxi) Liens created in connection with sales, transfers, leases, assignment or other conveyances or dispositions of assets, including (A) Liens on assets or securities granted or deemed to arise in connection with and as a result of the execution, delivery or performance of contracts to
purchase or sell such assets or securities, and (B) rights of first refusal, options or other contractual rights or obligations to sell, assign or otherwise dispose of any interest therein; and (xxii) Liens, other than those described above in this Section 5.02(a), provided that the aggregate amount of all Indebtedness secured by Liens permitted by this clause (xxii) shall (i) prior to consummation of the Spin Transaction, (A) in the case of Genco, not exceed $100,000,000, and (B) in the case of the Borrower and Genco, collectively, not exceed $200,000,000 and (ii) on and after the consummation of the Spin Transaction, not exceed in the aggregate at any one time outstanding $200,000,000. (b) Mergers and Consolidations; Disposition of Assets. Merge with or into or consolidate with or into, or sell, assign, 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
-49- acquired) to any Person or permit any Principal Subsidiary to do so, except that (i) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary, (ii) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to the Borrower (and the Borrower may transfer any assets acquired by the Borrower through any such merger, consolidation or transfer to any Principal Subsidiary), (iii) [Reserved] and (iv) the Borrower or any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Person, provided that, in each case, (A) immediately before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing (except in the case where any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary), (B) in the case of any such merger, consolidation or transfer of assets to which the Borrower is a party, either (x) the Borrower shall be the surviving entity or transferee (as applicable), or (y) the surviving entity or transferee (as applicable), shall be an Eligible Successor and shall have assumed all of the Obligations of the Borrower under this Agreement pursuant to a written instrument in form and substance satisfactory to the Administrative Agent, and the Administrative Agent shall have received an opinion of counsel in form and substance satisfactory to it as to the enforceability of such obligations assumed and (C) subject to clause (B) above, in the case of any such merger, consolidation or transfer of assets to which any Principal Subsidiary is a party, a Principal Subsidiary shall be the surviving entity or transferee (as applicable). (c) Consolidated Capitalized Ratio. the Consolidated Capitalization Ratio as of the last day of any Test Period to exceed 0.65:1.00. (d) Continuation of Businesses. Engage, or permit any Subsidiary to engage, in any line of
business which is material to the Borrower and its Subsidiaries, taken as a whole, other than businesses engaged in by the Borrower and its Subsidiaries as of the date hereof and reasonable extensions thereof. (e) Capital Structure. Prior to consummation of the Spin Transaction, fail at any time to own, free and clear of all Liens, 100% of the issued and outstanding equity interests of Genco (or of a holding company which owns, free and clear of all Liens, 100% of the issued and outstanding equity interests of Genco). (f) Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries (other than any Excluded Subsidiary) to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (c) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, (d) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 5.02 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition),(e) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale; provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted
-50- hereunder, (f) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (g) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof. (g) Anti-Corruption Laws and Sanctions. Request any Borrowing or Advance and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Advance (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, business or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto. ARTICLE VI EVENTS OF DEFAULT SECTION 6.01 Events of Default. If any of the following events shall occur and be continuing (any such event an “Event of Default”): (a) The Borrower shall fail to pay (i) any principal of any Advance when the same becomes due and payable or (ii) any interest on any Advance or any other amount payable by the Borrower hereunder within three Business Days after the same becomes due and payable; or (b) Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) pursuant to the terms of this Agreement shall prove to have been incorrect or misleading in any
material respect when made; or (c) The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(c) (with respect to Borrower’s existence), Section 5.01(h) or Section 5.02, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent (which notice shall be given by the Administrative Agent at the written request of any Lender); or (d) The Borrower or any Principal Subsidiary shall fail to pay any principal of or premium or interest on any Indebtedness that is outstanding in a principal amount in excess of $100,000,000 in the aggregate (but excluding Indebtedness hereunder and Nonrecourse Indebtedness) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such
-51- Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof, other than any acceleration of any Indebtedness secured by equipment leases or fuel leases of the Borrower or a Principal Subsidiary as a result of the occurrence of any event requiring a prepayment (whether or not characterized as such) thereunder, which prepayment will not result in a Material Adverse Change; or (e) The Borrower or any Principal Subsidiary 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 Borrower or any Principal Subsidiary 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 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 Borrower or any Principal Subsidiary shall take any corporate or limited liability company action to authorize or to consent to any of the actions set forth above in this Section 6.01(e); or (f) One or more judgments or orders for the payment of money in an aggregate amount exceeding $100,000,000 (excluding any such judgments or orders to the extent covered by insurance, subject to any customary deductible, and under which the applicable insurance carrier has not denied coverage) shall be rendered against the Borrower or any Principal Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (g) (i) Any Reportable Event that the Majority Lenders determine in good faith is reasonably likely to result in the termination of any Single Employer Plan or in the appointment by the appropriate United States District Court of a trustee to administer a Single Employer Plan shall have occurred and be continuing 60 days after written notice to such effect shall have been given to the Borrower by the Administrative Agent; (ii) any Single Employer Plan shall be terminated; (iii) a Trustee shall be appointed by an appropriate United States District Court to administer any Single Employer Plan; (iv) the PBGC shall institute proceedings to terminate any Single Employer Plan or to appoint a trustee to administer any Single Employer Plan; or (v) the Borrower or any other member of the Controlled Group withdraws from any Multiemployer Plan; provided that on the date of any event described in clauses (i) through (v) above, the Unfunded Liabilities of the applicable Plan exceed $100,000,000;
-52- (h) any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all Obligations, ceases to be in full force and effect; or the Borrower or any other Person contests in writing the validity or enforceability of any provision of any Loan Document; or the Borrower denies in writing that it has any or further liability or obligation under any Loan Document, or purports in writing to revoke, terminate or rescind any Loan Document; or (i) a Change in Control shall have occurred; then, and in any such event, the Administrative Agent shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, declare the outstanding principal amount of the Advances, all interest thereon and all other amounts payable under this Agreement by the Borrower to be forthwith due and payable, whereupon the outstanding principal amount of the Advances, all such interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided that in the event of an Event of Default under Section 6.01(e), (A) the obligation of each Lender to make any Advance to the Borrower shall automatically be terminated and (B) the outstanding principal amount of all Advances, all interest thereon and all other amounts payable by the Borrower hereunder shall automatically and immediately become due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01 Authorization and Action. Each Lender hereby appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including enforcement or collection of the obligations of the Borrower hereunder), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. SECTION 7.02 Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their respective own gross negligence or willful misconduct. Without limiting the generality of the foregoing: (i) the Administrative Agent may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable
-53- for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) the Administrative Agent makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iii) the Administrative Agent shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (iv) the Administrative Agent shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (v) the Administrative Agent shall not incur any liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by facsimile) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03 Administrative Agent and Affiliates. With respect to its Commitment, Advances and other rights and obligations hereunder in its capacity as a Lender, U.S. Bank National Association shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall include U.S. Bank National Association in its individual capacity. U.S. Bank National Association and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any Affiliate thereof and any Person who may do business with or own securities of the Borrower or any such Affiliate, all as if it were
not Administrative Agent and without any duty to account therefor to the Lenders. SECTION 7.04 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05 Indemnification. The Lenders severally agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its Pro Rata Share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcemen
(whether through
-54- negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that such expenses are reimbursable by the Borrower but for which the Administrative Agent is not reimbursed by the Borrower. SECTION 7.06 Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation or the Majority Lenders’ removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank described in clause (i) or (ii) of the definition of “Eligible Assignee” having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. Notwithstanding the foregoing, if no Default or Event of Default shall have occurred and be
continuing, then no successor Administrative Agent shall be appointed under this Section 7.06 without the prior written consent of the Borrower, which consent shall not be unreasonably withheld or delayed. ARTICLE VIII MISCELLANEOUS SECTION 8.01 Amendments, Etc. No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders and, in the case of an amendment, the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall: (a) increase or extend the Commitment of any Lender, without the written consent of such Lender, (b) reduce the principal of, or rate of interest on, any Advance or any fees payable hereunder, without the written consent of each Lender directly affected thereby, (c) postpone any date fixed for any payment of principal of, or interest on, any Advance or any fees payable hereunder, without the written consent of each Lender directly affected thereby, (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or the number of
-55- Lenders, that shall be required for the Lenders or any of them to take any action hereunder or the definition of “Majority Lenders”, without the written consent of each Lender, (e) amend this Section 8.01, without the written consent of each Lender or (f) waive or amend any provision regarding pro rata sharing or otherwise relates to the distribution of payments among Lenders, without the written consent of each Lender; provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement. Without limiting the generality of the foregoing, the making of an Advance shall not be construed as a waiver of any Event of Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Event of Default at the time. If the Administrative Agent and the Borrower acting together identify any ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement or any other document executed in connection herewith, then the Administrative Agent and the Borrower shall be permitted to amend, modify or supplement such provision to cure such ambiguity, omission, mistake, typographical error or other defect, and such amendment shall become effective without any further action or consent of any other party to this Agreement. SECTION 8.02 Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including facsimile transmission) and mailed, sent by facsimile or delivered, if to the Borrower, at 10 S. Dearborn, 48th Floor, Chicago, IL 60603, Attention: Chief Financial Officer, facsimile: 312-394-5443; if to any Lender, at its Domestic Lending Office specified in its Administrative Questionnaire or in the Assignment and Assumption pursuant to which it
became a Lender; and if to the Administrative Agent, (a) for payments and notices pursuant to Section 2.09 or 2.10, at its address at U.S. Bank National Association, 1095 Avenue of the Americas, 15th Floor, New York, New York 10036, Attention: Johnny Hon, telephone: 917- 326-3944, facsimile: 917-256-2890 and email: johnny.hon@usbank.com, ncb.utilities.oilgas@usbank.com and CCSLIBOR@usbank.com and at U.S. Bank National Association, 1095 Avenue of the Americas, 15th Floor, New York, New York 10036, Attention: Kevin Murphy, telephone: 917-326-3912, facsimile: 917-256-2890 and email: kevin.murphy4@usbank.com, ncb.utilities.oilgas@usbank.com and CCSLIBOR@usbank.com; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall be effective (a) if mailed, three Business Days after being deposited in the U.S. mail, postage prepaid, (b) if sent by facsimile, when such facsimile is sent (except that if not sent during normal business hours for the recipient, such facsimile shall be deemed to have been sent at the opening of business on the next Business Day for the recipient), and (c) otherwise, when delivered, except that notices and communications to the Administrative Agent pursuant to Article II or VII shall not be effective until received by the Administrative Agent. SECTION 8.03 No Waiver; Remedies. No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 8.04 Costs and Expenses; Indemnification.
-56- (a) The Borrower agrees to pay on demand all costs and expenses incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including the reasonable fees, internal charges and out-of-pocket expenses of counsel (including in-house counsel) for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay on demand all costs and expenses, if any (including counsel fees and expenses of outside counsel and of internal counsel), incurred by the Administrative Agent or any Lender in connection with the collection and enforcement (whether through negotiations, legal proceedings or otherwise) of the Borrower’s obligations under this Agreement and the other documents to be delivered by the Borrower hereunder, including reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 8.04(a). (b) In the event of any payment of principal of, or any conversion of, any SOFR Advance is made other than on the last day of the Interest Period for such Advance, as a result of a payment or conversion pursuant to Section 2.09 or 2.12 or acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other reason, or the assignment of a SOFR Advance other than on the last day of the Interest Period for such Advance as a result of a request by the Borrower pursuant to Section 8.07(g) or the failure to borrow any SOFR Advance on the date specified in any notice delivered pursuant hereto, the Borrower shall, upon demand by any Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amount required to compensate such Lender for any additional loss,
cost or expense which it may reasonably incur as a result of such event, including any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (c) The Borrower agrees to indemnify and hold each Lender and the Administrative Agent and each of their respective Related Parties (each, an “Indemnified Person”) harmless from and against any claim, damage, loss, liability, cost or expense (including reasonable attorney’s fees and expenses, whether or not such Indemnified Person is named as a party to any proceeding or is otherwise subjected to judicial or legal process arising from any such proceeding) that any of them may pay or incur arising out of or relating to this Agreement or the transactions contemplated hereby, or the use by the Borrower or any Subsidiary of the proceeds of any Advance; provided that the Borrower shall not be liable for any portion of any such claim, damage, loss, liability, cost or expense resulting from such Indemnified Person’s gross negligence or willful misconduct as determined in a final non-appealable order of a court of competent jurisdiction. The Borrower’s obligations under this Section 8.04(c) shall survive the repayment of all amounts owing by the Borrower to the Lenders and the Administrative Agent under this Agreement and the termination of Commitments hereunder. If and to the extent that the obligations of the Borrower under this Section 8.04(c) are unenforceable for any reason, the Borrower agrees to make the maximum contribution to the payment and satisfaction thereof which is permissible under applicable law. This Section 8.04(c) shall not apply with respect to Taxes other than any Taxes that represent losses or damages arising from any non-Tax claim. In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by the Borrower, any of the Borrower’s equityholders or creditors, an Indemnified Person or any other person or entity, whether or not an Indemnified Person is otherwise a party thereto.
-57- SECTION 8.05 Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement, whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. Each Lender agrees to notify the Borrower promptly after any such set-off and application made by such Lender or Affiliate thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section 8.05 are in addition to other rights and remedies (including other rights of set-off) that such Lender may have. SECTION 8.06 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns, provided that (except as permitted by Section 5.02(b)(iii)) the Borrower shall not have the right to assign rights hereunder or any interest herein without the prior written consent of all Lenders. SECTION 8.07 Assignments and Participations. (a) Each Lender may, with the prior written consent of the Borrower and the Administrative Agent (which consents shall not be unreasonably withheld or delayed), and if demanded by the Borrower pursuant to Section 8.07(g)
shall to the extent required by such Section, assign to one or more banks or other entities (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances owing to it); provided that (i) each such assignment shall be of a constant, and not a varying, percentage of all of the assigning Lender’s rights and obligations under this Agreement, (ii) the Commitment Amount of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Assumption with respect to such assignment) shall in no event be less than $5,000,000 or, if less, the entire amount of such Lender’s Commitment Amount, and shall be an integral multiple of $1,000,000 or such Lender’s entire Commitment Amount, (iii) each such assignment shall be to an Eligible Assignee, (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Assumption, together with a processing and recordation fee of $3,500 (which shall be payable by one or more of the parties to the Assignment and Assumption, and not by the Borrower (except in the case of a demand under Section 8.07(g)), and shall not be payable if the assignee is a Federal Reserve Bank), (v) the consent of the Borrower shall not be required after the occurrence and during the continuance of any Event of Default, and (vi) the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Assumption, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Assumption, have the rights
-58- and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Assumption, relinquish its rights and be released from its obligations under this Agreement and, in the case of an Assignment and Assumption covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto (although an assigning Lender shall continue to be entitled to indemnification pursuant to Section 8.04(c)). Notwithstanding anything contained in this Section 8.07(a) to the contrary, (A) the consent of the Borrower and the Administrative Agent shall not be required with respect to any assignment by any Lender to an Affiliate of such Lender or to another Lender or to an Approved Fund, and (B) any Lender may at any time, without the consent of the Borrower or the Administrative Agent, and without any requirement to have an Assignment and Assumption executed, assign all or any part of its rights under this Agreement to a Federal Reserve Bank or other central banking authority, provided that no such assignment shall release the transferor Lender from any of its obligations hereunder. For the purposes of this Section 8.07(a), the terms “Approved Fund” and “Ineligible Institution” have the following meanings: “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. “Ineligible Institution” means (a) a natural person, (b) a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof,
(c) the Borrower or any of its Affiliates or (d) Lender, an Affiliate of a Lender or an Approved Fund that, in each case at the time of such assignment, is a Sanctioned Person; provided that, such holding company, investment vehicle or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Borrowings or Commitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its business. (b) By executing and delivering an Assignment and Assumption, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Assumption, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01(e) and such other documents and
-59- information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (c) The Administrative Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment Amount of, and principal amount of the Advances owing to, each Lender from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Assumption executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, the Administrative Agent shall, if such
Assignment and Assumption has been completed and is in substantially the form of Exhibit A (including any necessary consents of the Administrative Agent and the Borrower), (i) accept such Assignment and Assumption, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. (e) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities other than an Ineligible Institution (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 8.01 that affects such Participant. Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.11, 2.14 and 8.04(b) (subject to the requirements and limitations therein, including the requirements under Section 2.14(f) (it being understood that the documentation required under Section 2.14(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to
-60- paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.15 and 8.07(g) as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.11 or 2.14, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender, provided such Participant agrees to be subject to Section 2.15 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non- fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Advances or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Advances or its other obligations hereunder) except to the extent that such disclosure is necessary to establish that such Commitment, Advance, or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. (f) [Reserved]. (g) If any Lender (i) shall make demand for payment under Section
2.11(a), 2.11(b) or 2.14, (ii) shall deliver any notice to the Administrative Agent pursuant to Section 2.12 resulting in the suspension of certain obligations of the Lenders with respect to SOFR Advances, or (iii) does not consent to an amendment or waiver that requires the consent of all Lenders and has been approved by the Majority Lenders, then (A) in the case of clause (i), within 60 days after such demand (if, but only if, the payment demanded under Section 2.11(a), 2.11(b) or 2.14 has been made by the Borrower), (B) in the case of clause (ii), within 60 days after such notice (if such suspension is still in effect), or (C) in the case of clause (iii), within 60 days after the date the Majority Lenders approve the applicable amendment or waiver, as the case may be, the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, demand that such Lender assign in accordance with this Section 8.07 to one or more Eligible Assignees designated by the Borrower and reasonably acceptable to the Administrative Agent all (but not less than all) of such Lender’s rights and obligations hereunder within the next succeeding 30 days; provided that such Lender shall have received payment of an amount equal to the outstanding principal of its Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts). If any such Eligible Assignee designated by the Borrower shall fail to consummate such assignment on terms acceptable to such Lender, or if the Borrower shall fail to designate any such Eligible Assignee for all of such Lender’s Commitment and Advances, then such Lender may (but shall not be required to) assign such Commitment and Advances to any other Eligible Assignee in accordance with this Section 8.07 during such period. In the event that a
Lender assigns any SOFR Advances pursuant to this Section 8.07(g), such assignment shall be deemed to be a prepayment by the Borrower of such SOFR Advances for purposes of Section 8.04(b).
-61- (h) [Reserved]. (i) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Bank”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Advance that such Granting Bank would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Bank shall be obligated to make such Advance pursuant to the terms hereof. The making of an Advance by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Advance were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 8.07, any SPC may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Advance to the Granting Bank or to any financial
institution (consented to by the Borrower and Administrative Agent, which consents shall be unreasonably withheld or delayed) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Advances and (ii) disclose on a confidential basis any non-public information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section 8.07(i) may not be amended in any manner which adversely affects a Granting Bank or an SPC without the written consent of such Granting Bank or SPC. (j) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 8.08 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 8.09 Consent to Jurisdiction; Certain Waivers. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND ANY UNITED STATES DISTRICT COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
-62- RELATING TO THIS AGREEMENT AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; PROVIDED THAT NOTHING CONTAINED IN THIS SENTENCE SHALL LIMIT ANY OF THE BORROWER’S INDEMNITY AND REIMBURSEMENT OBLIGATIONS TO ANY INDEMNITEE TO THE EXTENT SUCH INDEMNITEE IS ENTITLED TO INDEMNIFICATION WITH RESPECT TO THIRD PARTY CLAIMS. SECTION 8.10 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 8.11 Execution in Counterparts; Integration. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes all prior and contemporaneous agreements and understandings, oral or written, relating to the subject matter hereof. SECTION 8.12 USA PATRIOT ACT NOTIFICATION. The following notification is provided to the Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318: IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any
-63- deposit account, treasury management account, loan, other extension of credit, or other financial services product. What this means for the Borrower: When the Borrower opens an account, the Administrative Agent and the Lenders will ask for the Borrower’s name, tax identification number and business address and other information that will allow the Administrative Agent and the Lenders to identify the Borrower. The Administrative Agent and the Lenders may also ask to see the Borrower’s legal organizational documents or other identifying documents. SECTION 8.13 No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated hereby (including in connection with any amendment, waiver or other modification hereof), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the services regarding this Agreement provided by the Administrative Agent and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Lenders on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby; (ii) (A) the Administrative Agent and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither the Administrative Agent nor any Lender has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein; and (iii) the Administrative Agent and the Lenders
and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any Lender has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby. SECTION 8.14 [Reserved]. SECTION 8.15 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability;
-64- (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. SECTION 8.16 Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a non- confidential basis prior to disclosure by the Borrower and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 8.17 Material Non-Public Information. EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 8.16 FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES
-65- REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS. ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR ITS SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW. SECTION 8.18 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Advance or Borrowing, together with all fees, charges and other amounts which are treated as interest on such Advance or Borrowing under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by a Lender holding such Advance or Borrowing in accordance with applicable law, the rate of interest payable in respect of such Advance or Borrowing hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that
would have been payable in respect of such Advance or Borrowing but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Advances or Borrowings or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. SECTION 8.19 Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 8.20 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 8.21 Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Advance, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge
-66- of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Advance or any fee or any other amount payable under this Agreement is outstanding and unpaid. [Signature Pages Follow]
[Signature Page to Credit Agreement] IN WITNESS WHEREOF, Borrower, the Lenders and the Administrative Agent have executed this Agreement as of the date first above written. EXELON CORPORATION, as Borrower By: Name: Title:
[Signature Page to Credit Agreement] U.S. BANK NATIONAL ASSOCIATION, as Administrative Agent and Lender By: Name: Title:
I-1 SCHEDULE I COMMITMENTS Lender Commitment U.S. Bank National Association $300,000,000.00 TOTAL $300,000,000.00
I-1 SCHEDULE 3.06 Disclosed Matters Nothing other than what has been previously disclosed in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2020, Quarterly Reports on Form 10-Q for the periods ending March 31, 2021, June 30, 2021, and September 30, 2021, and Periodic Reports on Form 8-K filed by the Borrower with the United States Securities and Exchange Commission during the period between January 1, 2021, and the date hereof.
I-1 SCHEDULE 5.02 Existing Restrictions None.
A-1 EXHIBIT A FORM OF ASSIGNMENT AND ASSUMPTION This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, the interest in and to all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the Assignor’s outstanding rights and obligations under the respective facilities identified below (including without limitation any guaranties included in such facilities and, to the extent permitted to be assigned under applicable law, all claims (including without limitation contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity), suits, causes of action and any other right of the Assignor against any Person whether known or unknown arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or
the loan transactions governed thereby) other than claims for indemnification or reimbursement with respect to any period prior to Effective Date (the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor. 1. Assignor: 2. Assignee: [and is an Affiliate of Assignor] 3. Borrower: Exelon Corporation 4. Administrative Agent: U.S. Bank National Association 5. Credit Agreement: Credit Agreement, dated as of January 21, 2022, as amended, among the Borrower, the Lenders party thereto, and the Administrative Agent. 6. Assigned Interest: Facility Assigned Aggregate Amount of Commitment/ Outstanding Credit Amount of Commitment/ Outstanding Credit Exposure Assigned(cid:0) Percentage Assigned of Commitment/
A-2 Exposure for all Lenders(cid:0) Outstanding Credit Exposure1 ____________ $ $ _______% ____________ $ $ _______% ____________ $ $ _______% 7. Trade Date:2 Effective Date: ____________________, 20__ [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE ADMINISTRATIVE AGENT.] The terms set forth in this Assignment and Assumption are hereby agreed to: ASSIGNOR [NAME OF ASSIGNOR] By: Title: ASSIGNEE [NAME OF ASSIGNEE] By: Title: [Consented to and]3Accepted: U.S. BANK NATIONAL ASSOCIATION, as Administrative Agent By: Title: [Consented to:]4 [NAME OF RELEVANT PARTY] By: Title: (cid:0) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. 1 Set forth, to at least 9 decimals, as a percentage of the Commitment/loans of all Lenders thereunder. 2 Insert if satisfaction of minimum amounts is to be determined as of the Trade Date. 3 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. 4 To be added only if the consent of the Borrower and/or other parties is required by the terms of the Credit Agreement.
A-3 ANNEX 1 TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION 1. Representations and Warranties. 1.1 Assignor. The Assignor represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency, perfection, priority, collectability, or value of the Credit Agreement or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement, (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement, (v) inspecting any of the property, books or records of the Borrower, or any guarantor, or (vi) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Credit Extensions or the Credit Agreement. 1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iii)
agrees that its payment instructions and notice instructions are as set forth in Schedule 1 to this Assignment and Assumption, (iv) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are “plan assets” as defined under ERISA and that its rights, benefits and interests in and under the Credit Agreement will not be “plan assets” under ERISA, (v) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys’ fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee’s non-performance of the obligations assumed under this Assignment and Assumption, (vi) it has received a copy of the Credit Agreement, together with copies of financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (vii) attached as Schedule 1 to this Assignment and Assumption is any documentation required to be delivered by the Assignee with respect to its tax status pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit
A-4 Agreement, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. 2. Payments. The Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee. 3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
B-1 EXHIBIT B FORM OF NOTICE OF BORROWING [____], 20[__] U.S. Bank National Association 1095 Avenue of the Americas, 15th Floor New York, New York, 10036 Attn: Conchita Vergara and Kevin Murphy and the Lenders that are parties to the Credit Agreement referred to below Ladies and Gentlemen: The undersigned, Exelon Corporation, a Pennsylvania corporation (the “Borrower”), refers to the Credit Agreement, dated as of January 21, 2022, as amended, among the Borrower, various financial institutions and U.S. Bank National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Credit Agreement”), and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the undersigned requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 2.02(a) of the Credit Agreement: (i) The Type of Advances to be made in connection with the Proposed Borrowing is [Base Rate Advances] [SOFR Advances]. (ii) The aggregate amount of the Proposed Borrowing is $[___]. (iii) The Interest Period for each SOFR Advance made as part of the Proposed Borrowing is [ month[s]]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing: (A) the representations and warranties of the undersigned contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (B) no event has occurred and is continuing, or would result from the Proposed Borrowing or from the application of the proceeds therefrom, that constitutes an Default or Event of Default; and
B-2 (C) after giving effect to the Proposed Borrowing, the undersigned will not have exceeded any limitation on its ability to incur indebtedness (including any limitation imposed by any governmental or regulatory authority). Very truly yours, EXELON CORPORATION By: Name: Title:
C-1 EXHIBIT C FORM OF NOTE __________, 20__ Exelon Corporation, a Pennsylvania corporation (“Borrower”) promises to pay to _____________ (“Lender”) the aggregate unpaid principal amount of all Advances made by Lender to Borrower pursuant to the Credit Agreement (as defined below), at the main office of U.S. Bank National Association, in Minneapolis, Minnesota as Administrative Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Credit Agreement. Borrower shall pay the principal of and accrued and unpaid interest on the Advances in full on the Termination Date. Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of the Advances and the date and amount of each principal payment hereunder. This note (this “Note”) is one of the notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of January 21, 2022 (as further amended or otherwise modified from time to time, the “Credit Agreement”), among Borrower, the various financial institutions from time to time made party as Lenders thereto, and U.S Bank National Association, as Administrative Agent and a Lender. The Credit Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Credit Agreement. All payments hereunder shall be made in lawful money of the United States of America and in immediately available funds. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS. EXELON CORPORATION By____________________________________ Name: Title:
D-1 EXHIBIT D FORM OF ANNUAL AND QUARTERLY COMPLIANCE CERTIFICATE ______________________, 20____ Pursuant to the Credit Agreement, dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and U.S. Bank National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Credit Agreement”), the undersigned, being ______________________ of the Borrower, hereby certifies on behalf of the Borrower as follows: 1. [Delivered] [Posted concurrently]* herewith are the financial statements prepared pursuant to Section 5.01(a)[(ii)/(iii)] of the Credit Agreement for the fiscal ________ ended ___________, 20__. All such financial statements comply with the applicable requirements of the Credit Agreement. *Applicable language to be used based on method of delivery. 2. Schedule I hereto sets forth in reasonable detail the information and calculations necessary to establish the Borrower’s compliance with the provisions of Section 5.02(c) of the Credit Agreement as of the end of the fiscal period referred to in paragraph 1 above. 3. (Check one and only one:) __ No Default or Event of Default has occurred and is continuing. __ An Default or Event of Default has occurred and is continuing, and the document(s) attached hereto as Schedule II specify in detail the nature and period of existence of such Default or Event of Default as well as any and all actions with respect thereto taken or contemplated to be taken by the Borrower. 4. The undersigned has personally reviewed the Credit Agreement, and this certificate was based on an examination made by or under the supervision of the undersigned sufficient to assure that this certificate is accurate. 5. Capitalized terms used in this certificate and not otherwise defined shall have the meanings given in the Credit Agreement. EXELON CORPORATION
By____________________________________ Name: Title: Date:
E-1 EXHIBIT E FORMS OF U.S. TAX COMPLIANCE CERTIFICATE [See Attached Forms]
EXHIBIT E-1 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (FOR FOREIGN LENDERS THAT ARE NOT PARTNERSHIPS FOR U.S. FEDERAL INCOME TAX PURPOSES) Reference is hereby made to the Credit Agreement dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and U.S Bank National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Advances in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade or business. The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. person status on United States Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF LENDER] By: ______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT E-2 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and U.S. Bank National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Advances and interests in respect of which it is providing this certificate, (ii) with respect to the extension of credit pursuant to the Agreement, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iii) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business. The undersigned has furnished the Administrative Agent and the Borrower with United States Internal Revenue Service Form W-8IMY accompanied by a United States Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the
Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF LENDER ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT E-3 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and U.S. Bank National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade or business. The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on United States Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF PARTICIPANT ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT E-4 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 21, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and U.S. Bank National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business. The undersigned has furnished its participating Lender with United States Internal Revenue Service Form W-8IMY accompanied by a United States Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with
a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF PARTICIPANT ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION U.S. Bank National Association 1095 Avenue of the Americas, 15th Floor New York, New York, 10036 Attn: Conchita Vergara and Kevin Murphy Ladies and Gentlemen: This Notice of Conversion/Continuation (this “Notice”) is delivered to you pursuant to Section 2.09 of the Credit Agreement dated as of January 21, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and between Exelon Corporation, a Pennsylvania corporation (the “Borrower”) and U.S Bank National Association, as Administrative Agent. 1. This Notice is submitted for the purpose of:5 (cid:0) Converting a Base Rate Advance into a SOFR Advance. (a) The principal amount of such Advance to be converted is $_______________. (b) The requested effective date of the conversion of such Advance is _______________.6 (c) The requested Interest Period applicable to the converted Advance is _______________. (cid:0) Converting a SOFR Advance into a Base Rate Advance. (d) The principal amount of such Advance to be converted is $_______________. (e) The last day of the current Interest Period is _______________. 5 Check one and complete applicable information in accordance with the Credit Agreement. 6 Complete with a Business Day.
(f) The requested effective date of the conversion of such Advance is _______________.7 (cid:0) Continuing all or a portion of a SOFR Advance as a Base Rate Advance (g) The principal balance of such Advance is _______________. (h) The last day of the current Interest Period for such Advance is _______________. (i) The principal amount of such Advance to be continued is _______________.8 (j) The requested effective date of the continuation of such Advance is _______________.9 (k) The requested Interest Period applicable to the continued Advance is _______________. 3. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. [Signature Page Follows] 7 Complete with a Business Day. 8 Insert amount in U.S. Dollars. 9 Complete with a Business Day.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Conversion/Continuation as of the day and year first written above. EXELON CORPORATION By: Name: Title: _____________________________________
EXHIBIT G FORM OF NOTICE OF PREPAYMENT [____], 20[__] U.S. Bank National Association 1095 Avenue of the Americas, 15th Floor New York, New York, 10036 Attn: Conchita Vergara and Kevin Murphy Ladies and Gentlemen: The undersigned, Exelon Corporation, a Pennsylvania corporation (the “Borrower”), provides a Notice of Prepayment delivered to you pursuant to Section 2.10 of the Credit Agreement dated as of January 21, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and between the Borrower and U.S Bank National Association, as Administrative Agent. 1. The Borrower hereby provides notice to the Administrative Agent that it shall repay the following [Base Rate Advances] and/or [SOFR Advances]: 2. The Advance to be prepaid is a [check each applicable box] (cid:0) Base Rate Advance (amount to be prepaid _______________) (cid:0) SOFR Advance (amount to be prepaid ____________) 3. The Borrower shall repay the above-referenced Advances on the following Business Day: _______________.1 4. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. [Signature Page Follows] 1 Complete with a date no earlier than (i) the same Business Day as of the date of this Notice of Prepayment with respect to any Base Rate Advance and (ii) three (3) Business Days subsequent to date of this Notice of Prepayment with respect to any SOFR Advance.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as of the day and year first written above. EXELON CORPORATION By: Name: Title:
Execution Version $1,150,000,000 364-DAY TERM LOAN CREDIT AGREEMENT dated as of January 24, 2022 among EXELON CORPORATION the Lenders Party Hereto and BARCLAYS BANK PLC, as Administrative Agent and Sole Lead Arranger and Bookrunner
TABLE OF CONTENTS Page ARTICLE 1 DEFINITIONS _______________________________________________________ 1 Section 1.01. Defined Terms ........................................................................................................ 1 Section 1.02. Classification of Loans and Borrowings .............................................................. 25 Section 1.03. Terms Generally ................................................................................................... 25 Section 1.04. Accounting Terms; GAAP ................................................................................... 26 Section 1.05. Interest Rates; Benchmark Notification ............................................................... 26 Section 1.06. [Reserved] ............................................................................................................ 27 Section 1.07. Divisions ............................................................................................................... 27 ARTICLE 2 THE CREDITS ______________________________________________________ 27 Section 2.01. Commitments ....................................................................................................... 27 Section 2.02. Loans and Borrowings.......................................................................................... 27 Section 2.03. Requests for Borrowings ...................................................................................... 27 Section 2.04. [Reserved] ............................................................................................................ 28 Section 2.05. [Reserved] ............................................................................................................ 28 Section 2.06. [Reserved] ............................................................................................................ 28 Section 2.07. Funding of Borrowings ........................................................................................ 28 Section 2.08. Interest Elections .................................................................................................. 29 Section 2.09. Termination of Commitments .............................................................................. 30 Section 2.10. Repayment of Loans; Evidence of Indebtedness .................................................. 30 Section 2.11. Prepayment of Loans ............................................................................................ 30 Section
2.12. Fees....................................................................................................................... 31 Section 2.13. Interest .................................................................................................................. 31 Section 2.14. Alternate Rate of Interest ..................................................................................... 32 Section 2.15. Increased Costs ..................................................................................................... 34 Section 2.16. Break Funding Payments...................................................................................... 35 Section 2.17. Withholding of Taxes; Gross-Up ......................................................................... 36 Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs ............................. 39 Section 2.19. Mitigation Obligations; Replacement of Lenders ................................................ 40 Section 2.20. Defaulting Lenders ............................................................................................... 41 ARTICLE 3 REPRESENTATIONS AND WARRANTIES __________________________________ 42 Section 3.01. Organization; Powers ........................................................................................... 42 Section 3.02. Authorization; Enforceability ............................................................................... 42 Section 3.03. Governmental Approvals; No Conflicts ............................................................... 42 Section 3.04. Financial Condition; No Material Adverse Effect ................................................ 42 Section 3.05. Reserved ............................................................................................................... 43 Section 3.06. Litigation and Environmental Matters.................................................................. 43 Section 3.07. Compliance with Laws and Agreements .............................................................. 43 Section 3.08. Investment Company Status ................................................................................. 44 Section 3.09. Taxes .................................................................................................................... 44 Section 3.10. ERISA .................................................................................................................. 44 Section 3.11. Beneficial Ownership
........................................................................................... 44 Section 3.12. Reserved ............................................................................................................... 44
ii #95368685v14 Section 3.13. Anti-Corruption Laws and Sanctions ................................................................... 44 Section 3.14. Affected Financial Institutions ............................................................................. 44 Section 3.15. Reserved ............................................................................................................... 44 Section 3.16. Margin Regulations .............................................................................................. 44 Section 3.17. Reserved ............................................................................................................... 44 Section 3.18. Exchange Act ....................................................................................................... 44 ARTICLE 4 CONDITIONS _______________________________________________________ 45 Section 4.01. Effective Date ....................................................................................................... 45 ARTICLE 5 AFFIRMATIVE COVENANTS ___________________________________________ 46 Section 5.01. Financial Statements; Ratings Change and Other Information ............................ 46 Section 5.02. Notices of Material Events ................................................................................... 48 Section 5.03. Existence; Conduct of Business ........................................................................... 48 Section 5.04. Payment of Obligations ........................................................................................ 48 Section 5.05. Maintenance of Properties; Insurance .................................................................. 48 Section 5.06. Books and Records; Inspection Rights ................................................................. 48 Section 5.07. Compliance with Laws ......................................................................................... 49 Section 5.08. Use of Proceeds .................................................................................................... 49 Section 5.09. Accuracy of Information ...................................................................................... 49 ARTICLE 6 NEGATIVE COVENANTS ______________________________________________ 50 Section 6.01. Liens ..................................................................................................................... 50 Section 6.02
Fundamental Changes; Mergers and Consolidations; Disposition of Assets ....... 51 Section 6.03. Continuation of Businesses .................................................................................. 52 Section 6.04. Restrictive Agreements ........................................................................................ 52 Section 6.05. Consolidated Capitalization Ratio ........................................................................ 52 ARTICLE 7 EVENTS OF DEFAULT ________________________________________________ 53 Section 7.01. Events of Default .................................................................................................. 53 Section 7.02. Remedies Upon an Event of Default .................................................................... 54 Section 7.03. Application of Payments ...................................................................................... 55 ARTICLE 8 THE ADMINISTRATIVE AGENT _________________________________________ 56 Section 8.01. Authorization and Action ..................................................................................... 56 Section 8.02. Administrative Agent’s Reliance, Limitation of Liability, Etc ............................ 58 Section 8.03. Posting of Communications ................................................................................. 59 Section 8.04. The Administrative Agent Individually ............................................................... 60 Section 8.05. Successor Administrative Agent .......................................................................... 60 Section 8.06. Acknowledgements of Lenders ............................................................................ 61 Section 8.07. [Reserved] ............................................................................................................ 63 Section 8.08. [Reserved] ............................................................................................................ 63 Section 8.09. Certain ERISA Matters ........................................................................................ 63
iii #95368685v14 ARTICLE 9 MISCELLANEOUS ___________________________________________________ 64 Section 9.01. Notices .................................................................................................................. 64 Section 9.02. Waivers; Amendments ......................................................................................... 65 Section 9.03. Expenses; Limitation of Liability; Indemnity, Etc ............................................... 66 Section 9.04. Successors and Assigns ........................................................................................ 67 Section 9.05. Survival ................................................................................................................ 71 Section 9.06. Counterparts; Integration; Effectiveness; Electronic Execution .......................... 71 Section 9.07. Severability ........................................................................................................... 72 Section 9.08. Right of Setoff ...................................................................................................... 72 Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process .............................. 73 Section 9.10. WAIVER OF JURY TRIAL ................................................................................ 73 Section 9.11. Headings ............................................................................................................... 74 Section 9.12. Confidentiality ...................................................................................................... 74 Section 9.13. Material Non-Public Information ......................................................................... 74 Section 9.14. Interest Rate Limitation ........................................................................................ 75 Section 9.15. No Fiduciary Duty, etc ......................................................................................... 75 Section 9.16. USA PATRIOT Act ............................................................................................. 76 Section 9.17. Acknowledgement and Consent to Bail-In of Affected Financial Institutions ............................................................................................................ 76 Section 9.18. Acknowledgement Regarding Any Supported QFCs ........................................... 76 Section 9.19. Judgment
Currency............................................................................................... 77 Section 9.20. Payments Set Aside .............................................................................................. 77 SCHEDULES: Schedule 2.01 – Commitments Schedule 3.06 – Disclosed Matters Schedule 6.04 – Existing Restrictions EXHIBITS: Exhibit A – Form of Assignment and Assumption Exhibit B – Form of Borrowing Request Exhibit C – Form of Interest Election Request Exhibit D – Form of Opinion of Borrower’s Counsel Exhibit E – Form of Compliance Certificate Exhibit F-1 – U.S. Tax Certificate (For Non-U.S. Lenders that are not Partnerships for U.S. Federal Income Tax Purposes) Exhibit F-2 – U.S. Tax Certificate (For Non-U.S. Lenders that are Partnerships for U.S. Federal Income Tax Purposes) Exhibit F-3 – U.S. Tax Certificate (For Non-U.S. Participants that are not Partnerships for U.S. Federal Income Tax Purposes) Exhibit F-4 – U.S. Tax Certificate (For Non-U.S. Participants that are Partnerships for U.S. Federal Income Tax Purposes) Exhibit G – Form of Prepayment Notice
364-DAY TERM LOAN CREDIT AGREEMENT dated as of January 24, 2022 (this “Agreement”), among Borrower (as defined herein), the Lenders party hereto, and BARCLAYS BANK PLC, as Administrative Agent. The parties hereto agree as follows: ARTICLE 1 DEFINITIONS Section 1.01. Defined Terms. As used in this Agreement, the following terms have the meanings specified below: “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Alternate Base Rate. “Adjusted Daily Simple SOFR Rate” means an interest rate per annum equal to (a) the Daily Simple SOFR Rate, plus (b) 0.10%; provided that if the Adjusted Daily Simple SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement. “Adjusted Term SOFR Rate” means, for any Interest Period, an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period, plus (b) 0.10%; provided that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement. “Administrative Agent” means Barclays Bank PLC (or any of its designated branch offices or affiliates), in its capacity as administrative agent for the Lenders hereunder. “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent. “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Agent-Related Person” has the meaning assigned to it in Section 9.03(d). “Agreement” has the
meaning specified in introductory paragraph hereof. “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% and (c) the sum of 1.0% plus the Adjusted Term SOFR Rate for an Interest Period of one month on such day (or if such day is not a Business Day, on the immediately preceding Business Day). Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted Term SOFR Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14(b), then the Alternate Base Rate shall be the greater of clauses (a) and (b)
2 #95368685v14 above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement. “Ancillary Document” has the meaning assigned to it in Section 9.06(b). “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption. “Applicable Party” has the meaning assigned to it in Section 8.03(c). “Applicable Percentage” means, with respect to any Lender, the percentage of the total Loans represented by such Lender’s Loans; provided that, in the case of Section 2.20 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the total Loans (disregarding any Defaulting Lender’s Loans) represented by such Lender’s Loans. “Applicable Rate” means, for any day, (i) prior to July 24, 2022, (x) 0.65% with respect to Term Benchmark Loans or RFR Loans and (y) 0.00% with respect to ABR Loans and (ii) on or after July 24, 2022, (x) 0.875% with respect to Term Benchmark Loans or RFR Loans and (y) 0.00% with respect to ABR Loans. “Approved Electronic Platform” has the meaning assigned to it in Section 8.03(a). “Approved Fund” has the meaning assigned to it in Section 9.04(b). “Arranger” means Barclays Bank PLC, in its capacity as sole lead arranger and bookrunner. “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form (including electronic records generated by the use of an electronic platform) approved by the Administrative Agent. “Available Tenor” means, as of any date of
determination and with respect to the then- current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 2.14. “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the
3 #95368685v14 United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings). “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute. “Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person. “Benchmark” means, initially, with respect to any (i) RFR Loan, the Daily Simple SOFR Rate or (ii) Term Benchmark Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event, and the related Benchmark
Replacement Date have occurred with respect to the Daily Simple SOFR Rate or Term SOFR Rate, as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) of Section 2.14. “Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date: (1) the Adjusted Daily Simple SOFR Rate; (2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and (b) the related Benchmark Replacement Adjustment; If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread
4 #95368685v14 adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time. “Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement and/or any Term Benchmark Loan, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the
Administrative Agent determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents). “Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current Benchmark: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date. For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the
applicable
5 #95368685v14 event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark: (1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); (2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, the Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or (3) a public statement or publication of information by the regulatory superviso
for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then- current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced such then- current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14. “Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
6 #95368685v14 “Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code to which Section 4975 of the Code applies, and (c) any Person whose assets include (for purposes of the Plan Asset Regulations or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”. “BGE” shall mean Baltimore Gas and Electric Company. “BGE Entity” shall mean RF Holdco, BGE and any of their Subsidiaries. “BHC Act Affiliate” of a party means an ‘affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party. “Borrower” means Exelon. “Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of Term Benchmark Loans, as to which a single Interest Period is in effect. “Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03, which shall be substantially in the form of Exhibit B or any other form approved by the Administrative Agent. “Business Day” means, any day (other than a Saturday or a Sunday) on which banks are open for business in New York City or Chicago, Illinois; provided that, in relation to RFR Loans and any interest rate settings, fundings, disbursements, settlements or payments of any such RFR Loan, or any other dealings of such RFR Loan, any such day that is only an U.S. Government Securities Business Day. “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance with GAAP. “Change in Control” means the acquisition of ownership, directly or indirectly beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of Equity Interests representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower. “Change in Law” means the occurrence after the date of this Agreement of (a) the adoption of or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) compliance by any Lender (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for
7 #95368685v14 International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted, adopted, issued or implemented. “Charges” has the meaning assigned to it in Section 9.14. “Code” means the Internal Revenue Code of 1986, as amended. “ComEd” means Commonwealth Edison Company, an Illinois corporation, or any successor thereof. “ComEd Entity” means ComEd and each of its Subsidiaries. “Commitment” means, with respect to each Lender, the amount set forth on Schedule 2.01 opposite such Lender’s name. The initial aggregate amount of the Lenders’ Commitments is $1,150,000,000. “Commodity Trading Obligations” means the obligations of the Borrower under (i) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement, arrangement or transaction, including natural gas, power, electric energy, emissions forward contracts, renewable energy credits, or any combination of any such arrangements, agreements and/or transactions, employed in the ordinary course of the Borrower’s business, or (ii) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement or arrangement, or combination thereof (including an agreement or arrangement to hedge foreign exchange risks) in respect of commodities entered into by the Borrower pursuant to asset
optimization and risk management policies and procedures adopted pursuant to authority delegated by the Board of Directors of the Borrower. The term “commodities” shall include electric energy and/or capacity, transmission rights, coal, petroleum, natural gas liquids, natural gas, fuel transportation rights, emissions allowances, weather derivatives and related products and by- products and ancillary services. “Communications” has the meaning assigned to it in Section 8.03(c). “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes. “Consolidated Capitalization Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of the last day of the applicable Test Period to (b) the sum of Consolidated Total Indebtedness plus Consolidated Stockholders’ Equity as of the last day for such Test Period. “Consolidated Stockholders’ Equity” means, as of any date of determination, the total stockholders’ equity of the Borrower on a consolidated basis, determined in accordance with GAAP.
8 #95368685v14 “Consolidated Total Indebtedness” means, as of any date of determination, the total amount of all Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP. For the avoidance of doubt, Consolidated Total Indebtedness shall not include Nonrecourse Indebtedness. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. “Controlled Group” means each person (as defined in Section 3(9) of ERISA) that, together with the Borrower, would be deemed to be a “single employer” within the meaning of Section 414(b) or 414(c) of the Code. “Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor. “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). “Covered Party” has the meaning assigned to it in Section 9.18. “Credit Party” means the Administrative Agent or any other Lender. “Daily Simple SOFR Rate” means, for any day (a “SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day “i”) that is five U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government
Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. If by 5:00 pm (New York City time) on the second (2nd) U.S. Government Securities Business Day immediately following any day “i”, the SOFR in respect of such day “i” has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to the Daily Simple SOFR Rate has not occurred, then the SOFR for such day “i” will be the SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided that any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation of the Daily Simple SOFR Rate for no more than three (3) consecutive SOFR Rate Days. Any change in the Daily Simple SOFR Rate due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
9 #95368685v14 “Debt Issuance” means the incurrence of Indebtedness by the Borrower or any of its Subsidiaries (other than any Regulated Subsidiary) (excluding (i) intercompany debt among the Borrower and any Affiliate, (ii) credit extensions under the Existing Credit Agreement as in effect as of the date hereof (including the renewal, replacement or refinancing thereof; provided that the aggregate commitments thereunder do not exceed $900,000,000), (iii) up to $1,150,000,000 to refinance or replace the Borrower’s 3.497% Junior Subordinated Notes due June 1, 2022 and up to $1,350,000,000 for any other purpose, (iv) any additional term loan facilities entered into by the Borrower on or about the date hereof to fund a portion of the $1,750,000,000 cash capital contribution to Constellation Energy Corporation in connection with the Spin Transaction, (v) commercial paper issuances, (vi) ordinary course letter of credit facilities, overdraft protection and short term working capital facilities, ordinary course foreign credit facilities (including the renewal, replacement or refinancing thereof), capital leases, hedging and cash management, and (vii) purchase money and equipment financings and similar obligations). “Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. “Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, or (ii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith
determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date of certification) to fund prospective Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of (A) a Bankruptcy Event or (B) a Bail-In Action. “Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06. “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. “Dollars”, “dollars” or “$”
refers to lawful money of the United States of America.
10 #95368685v14 “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. “Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02). “Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record. “Eligible Successor” means a Person that (i) is a corporation, limited liability company or business trust duly incorporated or organized, validly existing and in good standing under the laws of one of the states of the United States or the District of Columbia, (ii) as a result of a contemplated acquisition, consolidation or merger, will succeed to all or substantially all of the consolidated business and assets of the Borrower, as applicable, (iii) upon giving effect to such contemplated acquisition, consolidation or merger, will have all or substantially all of its consolidated business and assets conducted and located in the United States and (iv) in the case of the Borrower, is acceptable to the
Required Lenders as a credit matter. “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to (i) the environment, (ii) preservation or reclamation of natural resources, (iii) the management, release or threatened release of any Hazardous Material or (iv) health and safety matters. “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest, but excluding any debt securities convertible into any of the foregoing.
11 #95368685v14 “Equity Issuance” means the issuance of any Equity Interests by the Borrower or any of its Subsidiaries (other than any Regulated Subsidiary) (excluding (i) issuances pursuant to employee stock plans and retirement plans or issued as compensation to officers and/or non- employee directors or other benefit or employee incentive arrangements and (ii) issuances of directors’ qualifying shares and/or other nominal amounts required to be held by persons other than the Borrower or its Subsidiaries under applicable law); provided that, for purposes of this definition, the Spin Transaction shall not constitute an Equity Issuance. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder. “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or Section 4001(14) of ERISA or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the failure to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition upon the Borrower or any of its ERISA Affiliates of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time. “Event of Default” has the meaning assigned to such term in Section 7.01. “Excluded Project Subsidiary” shall mean, at any time, any Subsidiary that is an obligor (or, in the case of a Subsidiary of an Excluded Project Subsidiary that is such an obligor and is in a business that is related to the business of such Excluded Project Subsidiary that is such an obligor, is otherwise bound, or its property is subject to one or more covenants and other terms of any Nonrecourse Indebtedness outstanding at such time, regardless of whether such Subsidiary is a party to the agreement evidencing the Non-Recourse Indebtedness) with respect to any Non- Recourse Indebtedness outstanding at such time. “Excluded Subsidiary” shall mean (a) an Excluded Project Subsidiary, (b) any captive insurance Subsidiary, (c) any not-for-profit Subsidiary or (d) any special purpose vehicle, including any Securitization Vehicle.
12 #95368685v14 “Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.17(f) and (d) any withholding Taxes imposed under FATCA. “Exelon” means Exelon Corporation, a Pennsylvania corporation, or any Eligible Successor thereof. “Existing Credit Agreement” means that certain Credit Agreement, dated as of March 23, 2011, as amended, restated or otherwise modified from time to time prior to the date hereof, by and among the Borrower, the lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent. “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended o
successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code. “Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than 0%, such rate shall be deemed to be 0% for the purposes of this Agreement. “Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America. “Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower. “Fitch” means Fitch Ratings Inc. “Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR Rate,
13 #95368685v14 as applicable. For the avoidance of doubt the initial Floor for each of Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR Rate shall be 0%. “Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. “GAAP” means generally accepted accounting principles in the United States of America. “Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. “Hedging Obligations” mean, with respect to any Person, the obligations of such Person under any interest rate or currency swap agreement, interest rate or currency future agreement, interest rate collar agreement, interest rate or currency hedge agreement, and any put, call or other agreement or arrangement designed to protect such Person against fluctuations in interest rates or currency exchange rates. “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed and (g) all Guarantees
14 #95368685v14 by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. “Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (b) to the extent not otherwise described in (a) hereof, Other Taxes. “Indemnitee” has the meaning assigned to it in Section 9.03(c). “Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to any other credit enhancement, provided, that if the Borrower does not have any outstanding debt securities of the type described, an appropriate fallback will be determined by Administrative Agent in consultation with Borrower “Ineligible Institution” has the meaning assigned to it in Section 9.04(b). “Information” has the meaning assigned to it in Section 9.12. “Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.08, which shall be substantially in the form of Exhibit C or any other form approved by the Administrative Agent. “Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and the Maturity Date, (b) with respect to any RFR Loan, (1) each date that is on the numerically corresponding day in each calendar month
that is one month after the Borrowing of such Loan (or, if there is no such numerically corresponding day in such month, then the last day of such month) and (2) the Maturity Date and (c) with respect to any Term Benchmark Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Term Benchmark Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and the Maturity Date. “Interest Period” means with respect to any Term Benchmark Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, three or six months thereafter (in each case, subject to the availability for the Benchmark applicable to the relevant Loan or Commitment), as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (iii) no tenor that has been removed from this definition pursuant to Section 2.14(e) shall be available for specification in such Borrowing Request or Interest Election Request. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing
15 #95368685v14 is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. “IRS” means the United States Internal Revenue Service. “ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto. “Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary. “Lender-Related Person” has the meaning assigned to it in Section 9.03(b). “Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption or otherwise, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption or otherwise. “Liabilities” means any losses, claims (including intraparty claims), demands, damages or liabilities of any kind. “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. “LLC” means any Person that is a limited liability company under the laws of its jurisdiction of formation. “Loan Documents” means this Agreement, including schedules and exhibits hereto, and any agreements entered into in connection herewith by the Borrower or any Loan Party with
or in favor of the Administrative Agent and/or the Lenders, including any amendments, modifications or supplements thereto or waivers thereof, legal opinions issued in connection with the other Loan Documents, and any other documents prepared in connection with the other Loan Documents, if any. “Loan Parties” means the Borrower. “Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement. “Margin Stock” means margin stock within the meaning of Regulations T, U and X, as applicable. “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of its Obligations or (c) the rights of or benefits available to the Lenders under this Agreement or any other Loan Document.
16 #95368685v14 “Maturity Date” means, with respect to any Lender, January 23, 2023; provided, however, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day. “Maximum Rate” has the meaning assigned to it in Section 9.14. “Moody’s” means Moody’s Investors Service, Inc. “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. “Net Cash Proceeds” means: (i) with respect to any Debt Issuance, the excess, if any, of (A) cash received by the Borrower and its Subsidiaries (other than Regulated Subsidiaries) in connection with such incurrence, issuance, offering or placement over (B) the sum of (I) payments made to retire any Indebtedness that is required to be repaid in connection with such issuance, offering or placement (other than the Loans) and (II) the underwriting discounts and commissions and other fees and expenses incurred by the Borrower and its Subsidiaries (other than Regulated Subsidiaries) in connection with such incurrence, issuance, offering or placement; and (ii) with respect to any Equity Issuance, the excess of (A) the cash received by the Borrower and its Subsidiaries (other than Regulated Subsidiaries) in connection with such issuance over (B) the underwriting discounts and commissions and other fees and expenses incurred by the Borrower and its Subsidiaries (other than Regulated Subsidiaries) in connection with such issuance. “Nonrecourse Indebtedness” means any Indebtedness that finances the acquisition, development, ownership or operation of an asset in respect of which the Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates other than: (i) recourse to the named obligor with respect to such Indebtedness (the “Debtor”) for amounts limited to the cash flow or net cash flow (other than historic cash flow) from the asset; (ii) recourse to the Debtor for the purpose only of enabling amount
to be claimed in respect of such Indebtedness in an enforcement of any security interest or lien given by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor over its shares or like interest in the capital of the Debtor) to secure the Indebtedness, but only if the extent of the recourse to the Debtor is limited solely to the amount of any recoveries made on any such enforcement; and (iii) recourse to the Debtor generally or indirectly to any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a payment obligation or an obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person against which such recourse is available. “NYFRB” means the Federal Reserve Bank of New York. “NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
17 #95368685v14 “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower or any Affiliate thereof of any proceeding under any debtor relief laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed or allowable claims in such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest, charges, expenses, fees, indemnities and other amounts payable by the Borrower under any Loan Document and (b) the obligation of the Borrower to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Borrower. “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document). “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan
Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19). “Participant” has the meaning assigned to such term in Section 9.04(c). “Participant Register” has the meaning assigned to such term in Section 9.04(c). “Patriot Act” has the meaning assigned to it in Section 9.16. “Payment” has the meaning assigned to it in Section 8.06(c). “Payment Notice” has the meaning assigned to it in Section 8.06(c). “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. “PECO” means PECO Energy Company, a Pennsylvania corporation, or any successor thereof. “Pepco” means Pepco Holdings LLC, a Delaware limited liability company, or any successor thereof. “Pepco Entity” shall mean Pepco, PH Holdco and any of their Subsidiaries. “Permitted Encumbrances” means: (a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 5.04;
18 #95368685v14 (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.04; (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations; (d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business; (e) judgment liens in respect of judgments that do not constitute an Event of Default under Section 7.01(f); (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary; (g) leases, licenses, subleases or sublicenses granted to third parties in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Borrower or any Subsidiary; (h) Liens in favor of a banking or other financial institution arising as a matter of law or in the ordinary course of business under customary general terms and conditions encumbering deposits or other funds maintained with a financial institution (including the right of set-off) and that are within the general parameters customary in the banking industry or arising pursuant to such banking institution’s general terms and conditions; (i) Liens on specific items of inventory or other goods (other than fixed or capital assets) and proceeds thereof of any Person securing such Person’s obligations in respect of
bankers’ acceptances or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods in the ordinary course of business; (j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business so long as such Liens only cover the related goods; and (k) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes; provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness. “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
19 #95368685v14 “Permitted Obligations” mean (1) Hedging Obligations of the Borrower or any Subsidiary arising in the ordinary course of business and in accordance with the applicable Person’s established risk management policies that are designed to protect such Person against, among other things, fluctuations in interest rates or currency exchange rates and which in the case of agreements relating to interest rates shall have a notional amount no greater than the payments due with respect to the applicable obligations being hedged and (2) Commodity Trading Obligations. “PH Holdco” shall mean PH HoldCo LLC, a Delaware limited liability company. “Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA. “Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time. “Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent). “Principal Subsidiary” means each Subsidiary, other than PECO and its Subsidiaries, any BGE Entity, any ComEd Entity and any Pepco Entity, (i) the consolidated assets of which, as of the date of any determination thereof, are a
least equal to 10% of the consolidated assets of the Borrower or (ii) the consolidated earnings before taxes of which are at least equal to 10% of the consolidated earnings before taxes of the Borrower for the most recently completed fiscal year. “Proceeding” means any claim, litigation, investigation, action, suit, arbitration or administrative, judicial or regulatory action or proceeding in any jurisdiction. “PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time. “Public-Sider” means a Lender whose representatives may trade in securities of the Borrower or its Controlling person or any of its Subsidiaries while in possession of the financial statements provided by the Borrower under the terms of this Agreement. “QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D). “QFC Credit Support” has the meaning assigned to it in Section 9.18. “Rating Agency” means each of S&P, Moody’s and Fitch. “Recipient” means (a) the Administrative Agent and (b) any Lender, as applicable.
20 #95368685v14 “Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that is two Business Days preceding the date of such setting, (2) if the RFR for such Benchmark is Daily Simple SOFR Rate, then four Business Days prior to such setting or (3) if such Benchmark is none of the Term SOFR Rate or Daily Simple SOFR Rate, the time determined by the Administrative Agent in its reasonable discretion. “Register” has the meaning assigned to such term in Section 9.04(b). “Regulated Subsidiary” means the following subsidiaries of the Company: BGE, ComEd, PECO and the Pepco Entities. “Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof. “Regulation T” means Regulation T of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof. “Regulation U” means Regulation U of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof. “Regulation X” means Regulation X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof. “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates. “Relevant Governmental Body” means, the Federal Reserve Board and/or the NYFRB, the Term SOFR Administrator, as applicable, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto. “Relevant Rate” means (i) with respect to any Term Benchmark Borrowing, the Adjusted Term SOFR Rate or (ii) with respect to any RFR Borrowing,
the Adjusted Daily Simple SOFR Rate, as applicable. “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and regulations issued under such Section with respect to a Single Employer Plan, excluding such events as to which the requirement of Section 4043(a) of ERISA that the PBGC be notified within 30 days after the occurrence of such event is waived under PBGC Regulation Section 4043, provided that a failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waivers in accordance with either Section 4043(a) of ERISA or Section 412(c) of the Code. “Required Lenders” means, subject to Section 2.20, Lenders having Loans representing greater than 50% of the aggregate amount of the Loans at such time. “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
21 #95368685v14 “Responsible Officer” means the president, Financial Officer or other executive officer of the Borrower. “RF Holdco” shall mean RF HoldCo LLC, a Delaware limited liability company. “RFR Borrowing” means, as to any Borrowing, the RFR Loans comprising such Borrowing. “RFR Loan” means a Loan that bears interest at a rate based on the Adjusted Daily Simple SOFR Rate. “S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business. “Sanctioned Country” means, at any time, a country, region or territory which is itself, or whose government is, the subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea and Syria). “Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of any Sanctions. “Sanctions” means all economic or financial sanctions or trade embargoes or restrictive measures imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or (b) the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority. “SEC” means the Securities and Exchange Commission of the United State of
America. “Securitization” shall mean any transaction or series of transactions entered into by the Borrower or any Subsidiary pursuant to which the Borrower or such Subsidiary, as the case may be, sells, conveys, assigns, grants an interest in or otherwise transfers, from time to time, to one or more Securitization Vehicles the Securitization Assets (and/or grants a security interest in such Securitization Assets transferred or purported to be transferred to such Securitization Vehicle), and which Securitization Vehicle finances the acquisition of such Securitization Assets (i) with proceeds from the issuance of Third Party Securities, (ii) with the issuance to the Borrower or such Subsidiary of Sellers’ Retained Interests or an increase in such Sellers’ Retained Interests, or (iii) with proceeds from the sale or collection of Securitization Assets. “Securitization Assets” shall mean any accounts receivable originated or expected to be originated by (and owed to) the Borrower or any Subsidiary (in each case whether now existing or arising or acquired in the future) and any ancillary assets (including contract rights) which are of the type customarily conveyed with, or in respect of which security interests are customarily granted in connection with, such accounts receivable in a securitization transaction and which are sold, transferred or otherwise conveyed by the Borrower or a Subsidiary to a Securitization Vehicle.
22 #95368685v14 “Securitization Vehicle” shall mean a Person that is a direct wholly owned Subsidiary of the Borrower or of any Subsidiary (a) formed for the purpose of effecting a Securitization, (b) to which the Borrower and/or any Subsidiary transfers Securitization Assets and (c) which, in connection therewith, issues Third Party Securities; provided that (i) such Securitization Vehicle shall engage in no business other than the purchase of Securitization Assets pursuant to the Securitization, the issuance of Third Party Securities or other funding of such Securitization and any activities reasonably related thereto. “Sellers’ Retained Interests” means the debt and/or Equity Interests (including any intercompany notes) held by the Borrower or any Subsidiary in a Securitization Vehicle to which Securitization Assets have been transferred in a Securitization, including any such debt or equity received as consideration for, or as a portion of, the purchase price for the Securitization Assets transferred, and any other instrument through which the Borrower or any Subsidiary has rights to or receives distributions in respect of any residual or excess interest in the Securitization Assets. “Single Employer Plan” means a Plan other than a Multiemployer Plan maintained by the Borrower or any other member of the Controlled Group for employees of the Borrower or any other member of the Controlled Group. “SOFR” means, with respect to any U.S. Government Securities Business Day, a rate per annum equal to the secured overnight financing rate for such U.S. Government Securities Business Day published by the SOFR Administrator on the website of the SOFR Administrator, currently at http://www.newyorkfed.org (or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time) on the immediately succeeding U.S. Government Securities Business Day. “SOFR Administrator” means the NYFRB (or
a successor administrator of the secured overnight financing rate). “SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR Rate”. “Spin Transaction” means (i) the transfer of the membership interests of the Exelon Generation Company by Exelon to SpinCo and (ii) the pro rata distribution of the capital stock of SpinCo to the holders of Exelon’s common stock, at which point SpinCo will become a separate, independent publicly traded company. “SpinCo” means the new company established by Exelon in connection with the Spin Transaction and that as of the effective date of the Spin Transaction, will own, directly, 100% of the issued and outstanding membership interests of Exelon Generation Company (or its successor in interest, as applicable). “subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled by the parent and/or one or more subsidiaries of the parent.
23 #95368685v14 “Subsidiary” means any subsidiary of the Borrower. “Supported QFC” has the meaning assigned to it in Section 9.18. “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement. “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes, or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto. “Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted Term SOFR Rate. “Term SOFR Administrator” means the CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion). “Term SOFR Rate” means, (a) for any calculation with respect to a Term Benchmark Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published
by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and (b) for any calculation with respect to an ABR Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “ABR Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any ABR Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR
24 #95368685v14 Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such ABR SOFR Determination Day. “Term SOFR Reference Rate” means the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. “Test Period” means, for any date of determination under this Agreement, the four (4) consecutive fiscal quarters of the Borrower most recently ended as of such date of determination for which financial statements have been delivered pursuant to Section 5.01(b). “Third Party Securities” shall mean, with respect to any Securitization, notes, bonds or other debt instruments, beneficial interests in a trust, undivided ownership interests in receivables or other securities issued for cash consideration by the relevant Securitization Vehicle to banks, financing conduits, investors or other financing sources (other than the Borrower or any Subsidiary, except in respect of the Sellers’ Retained Interest) the proceeds of which are used to finance, in whole or in part, the purchase by such Securitization Vehicle of Securitization Assets in a Securitization. The amount of any Third Party Securities shall be deemed to equal the aggregate principal, stated or invested amount of such Third Party Securities which are outstanding at such time. “Transactions” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans hereunder and the use of the proceeds thereof. “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted Term SOFR Rate, the Alternate Base Rate or the Adjusted Daily Simple SOFR Rate. “UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from
time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. “UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution. “Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “Unfunded Liabilities” means, (i) in the case of any Single Employer Plan, the amount (if any) by which the present value of all vested nonforfeitable benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent evaluation date for such Plan, and (ii) in the case of any Multiemployer Plan, the withdrawal liability that would be incurred by the Controlled Group if all members of the Controlled Group completely withdrew from such Multiemployer Plan. “U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association
25 #95368685v14 recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code. “U.S. Special Resolution Regime” has the meaning assigned to it in Section 9.18. “U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(f)(ii)(B)(3). “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. “Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers. Section 1.02. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “Term Benchmark Loan” or an “RFR Loan”). Borrowings also may be classified and referred to by Type (e.g., a “Term Benchmark Borrowing” or an “RFR
Borrowing”). Section 1.03. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law, rule or regulation herein shall, unless otherwise specified, refer to such law, rule or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
26 #95368685v14 Section 1.04. Accounting Terms; GAAP. (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to (i) any election under Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) any treatment of Indebtedness under Accounting Standards Codification 470-20 or 2015-03 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. (b) Notwithstanding anything to the contrary
contained in Section 1.04(a) or in the definition of “Capital Lease Obligations,” any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith. Section 1.05. Interest Rates; Benchmark Notification. The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 2.14(b) provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used
in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether
27 #95368685v14 in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. Section 1.06. [Reserved]. Section 1.07. Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time. ARTICLE 2 THE CREDITS Section 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Loans in Dollars to the Borrower on the Effective Date, in a principal amount not to exceed such Lender’s Commitment. Amounts prepaid or repaid in respect of such Loans may not be reborrowed. Section 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required. (b) Subject to Section 2.14, each Borrowing shall be comprised entirely of ABR Loans or Term Benchmark Loans, as the Borrower may request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. (c) At the commencement of each Interest Period for any Term Benchmark Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR Borrowing and/or RFR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of five Term Benchmark Borrowings or RFR Borrowings outstanding. (d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. Section 2.03. Requests for Borrowings. To request the Borrowing on the Effective Date, the Borrower shall notify the Administrative Agent of such request by submitting a Borrowing Request (a) in the case of a Term Benchmark Borrowing, not later than 12:00 noon, New York City time, two Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, on the date of the proposed
28 #95368685v14 Borrowing. Each such Borrowing Request shall be irrevocable and shall be signed by a Responsible Officer of the Borrower. Each such Borrowing Request shall specify the following information in compliance with Section 2.02: (i) the aggregate amount of the requested Borrowing; (ii) the date of such Borrowing, which shall be a Business Day; (iii) whether such Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing; (iv) in the case of a Term Benchmark Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and (v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Term Benchmark Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing. Section 2.04. [Reserved]. Section 2.05. [Reserved]. Section 2.06. [Reserved]. Section 2.07. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof solely by wire transfer of immediately available funds, by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the funds so received in the aforesaid account of the Administrative Agent to an account of the Borrower maintained
with the Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing Request. (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with
29 #95368685v14 banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing. Section 2.08. Interest Elections. (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Term Benchmark Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Term Benchmark Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. (b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such Interest Election Request shall be irrevocable and shall be signed by a Responsible Officer of the Borrower. (c) Each Interest Election Request shall specify the following information in compliance with Section 2.02: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resultin
Borrowing); (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing or an RFR Borrowing; and (iv) if the resulting Borrowing is a Term Benchmark Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”. If any such Interest Election Request requests a Term Benchmark Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing. (e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Term Benchmark Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be deemed to have an Interest Period that is one month. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the
30 #95368685v14 request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Term Benchmark Borrowing and (ii) unless repaid, (A) each Term Benchmark Borrowing and (B) each RFR Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. Section 2.09. Termination of Commitments. The Commitments shall terminate in full on the Effective Date after the proceeds of the Loans have been made available to the Borrower. Section 2.10. Repayment of Loans; Evidence of Indebtedness. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan on the Maturity Date. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof. (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower t
repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form. Section 2.11. Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section. (b) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy or electronic mail) of any prepayment hereunder (i) in the case of prepayment of (1) a Term Benchmark Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of prepayment or (2) an RFR Borrowing, not later than 12:00 noon, New York City time, five Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of prepayment. Each such notice shall be in the form of Exhibit G and be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that a notice of prepayment delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if
31 #95368685v14 such condition is not satisfied. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13 and any break funding payments required by Section 2.16. (c) In the event that the Borrower or any of its Subsidiaries (other than any Regulated Subsidiary) actually receives any Net Cash Proceeds arising from any Equity Issuance or Debt Issuance, then the Borrower or such Subsidiary shall prepay the Advances in an amount equal to 100% of such Net Cash Proceeds not later than five Business Days following the receipt by the Borrower or such Subsidiary of such Net Cash Proceeds. The Borrower shall promptly (and not later than the date of receipt thereof) notify the Administrative Agent of the receipt by the Borrower or such Subsidiary of such Net Cash Proceeds from any Equity Issuance or Debt Issuance, and such notice shall be accompanied by a reasonably detailed calculation of the Net Cash Proceeds. Each prepayment of Loans shall be applied ratably and shall be accompanied by accrued interest and fees on the amount prepaid to the date fixed for prepayment, plus, in the case of any Term Benchmark Loan, any amounts due to the Lenders under Section 2.16. Section 2.12. Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent. All fees payable hereunder shall be paid on the dates due, in dollars in immediately available funds, to the
Administrative Agent. Fees paid shall not be refundable under any circumstances. Section 2.13. Interest. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate. (b) The Loans comprising each Term Benchmark Borrowing shall bear interest in at the Adjusted Term SOFR Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate. (c) Each RFR Loan shall bear interest at a rate per annum equal to the Adjusted Daily Simple SOFR Rate plus the Applicable Rate. (d) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section. (e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Term Benchmark Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
32 #95368685v14 (f) Interest computed by reference to the Term SOFR Rate or Daily Simple SOFR Rate hereunder shall be computed on the basis of a year of 360 days. Interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year). In each case interest shall be payable for the actual number of days elapsed (including the first day but excluding the last day). All interest hereunder on any Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of determination. The applicable Alternate Base Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Adjusted Daily Simple SOFR Rate or Daily Simple SOFR Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. Section 2.14. Alternate Rate of Interest. (a) Subject to clauses (b), (c), (d), (e) and (f) of this Section 2.14, if: (i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate or the Term SOFR Rate (including because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period or (B) at any time, that adequate and reasonable means do not exist for ascertaining the applicable Adjusted Daily Simple SOFR Rate, Daily Simple SOFR Rate; or (ii) the Administrative Agent is advised by the Required Lenders that (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, the Adjusted Term SOFR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its
Loan) included in such Borrowing for such Interest Period or (B) at any time, Adjusted Daily Simple SOFR Rate will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing; then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.08 or a new Borrowing Request in accordance with the terms of Section 2.03, (1) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Term Benchmark Borrowing and any Borrowing Request that requests a Term Benchmark Borrowing shall instead be deemed to be an Interest Election Request or a Borrowing Request, as applicable, for (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not also the subject of Section 2.14(a)(i) or (ii) above or (y) an ABR Borrowing if the Adjusted Daily Simple SOFR Rate also is the subject of Section 2.14(a)(i) or (ii) above and (2) any Borrowing Request that requests an RFR Borrowing shall instead be deemed to be a Borrowing Request, as applicable, for an ABR Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted. Furthermore, if any Term Benchmark Loan or RFR Loan is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent referred to in this Section 2.14(a) with respect to a Relevant Rate applicable to such Term Benchmark Loan or RFR Loan, then until (x) the
Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest
33 #95368685v14 Election Request in accordance with the terms of Section 2.08 or a new Borrowing Request in accordance with the terms of Section 2.03, (1) any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not also the subject of Section 2.14(a)(i) or (ii) above or (y) an ABR Loan if the Adjusted Daily Simple SOFR Rate also is the subject of Section 2.14(a)(i) or (ii) above, on such day, and (2) any RFR Loan shall on and from such day be converted by the Administrative Agent to, and shall constitute an ABR Loan. (b) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark
Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders. (c) Notwithstanding anything to the contrary herein or in any other Loan Document, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. (d) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (e) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14. (e) Notwithstanding anything to the
contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including the Term SOFR Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the
34 #95368685v14 regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor. (f) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Term Benchmark Borrowing or RFR Borrowing of, conversion to or continuation of Term Benchmark Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any request for a Term Benchmark Borrowing into a request for a Borrowing of or conversion to (A) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not the subject of a Benchmark Transition Event or (B) an ABR Borrowing if the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR. Furthermore, if
any Term Benchmark Loan or RFR Loan is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a Relevant Rate applicable to such Term Benchmark Loan or RFR Loan, then until such time as a Benchmark Replacement is implemented pursuant to this Section 2.14, (1) any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not the subject of a Benchmark Transition Event or (y) an ABR Loan if the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event, on such day and (2) any RFR Loan shall on and from such day be converted by the Administrative Agent to, and shall constitute an ABR Loan. Section 2.15. Increased Costs. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted Term SOFR Rate); (ii) impose on any Lender or the applicable offshore interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender; or (iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;
35 #95368685v14 and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender or such other Recipient hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered. (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to
demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof. Section 2.16. Break Funding Payments. (a) With respect to Loans that are not RFR Loans, in the event of (i) the payment of any principal of any Term Benchmark Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or an optional or mandatory prepayment of Loans), (ii) the conversion of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto, (iii) the failure to borrow, convert, continue or prepay any Term Benchmark Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is revoked in accordance therewith) or (iv) the assignment of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (b) With respect to RFR Loans, in the
event of (i) the payment of any principal of any RFR Loan other than on the Interest Payment Date applicable thereto (including as a result of an Event of Default or an optional or mandatory prepayment of Loans), (ii) the failure to borrow or
36 #95368685v14 prepay any RFR Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is revoked in accordance therewith) or (iii) the assignment of any RFR Loan other than on the Interest Payment Date applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. Section 2.17. Withholding of Taxes; Gross-Up. (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. (b) Payment of Other Taxes by the
Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes. (c) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. (e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the
maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with
37 #95368685v14 any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to setoff and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e). (f) Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. (ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person, (A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an executed copy of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax; (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable: (1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, an executed copy of IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
38 #95368685v14 (2) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed copy of IRS Form W-8ECI; (3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) an executed copy of IRS Form W- 8BEN-E or IRS Form W-8BEN; or (4) to the extent a Foreign Lender is not the beneficial owner, an executed copy of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner; (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and (D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and
39 #95368685v14 withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so. (g) [Reserved]. (h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out- of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification
payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. (i) Survival. Each party’s obligations under this Section shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document. (j) Defined Terms. For purposes of this Section, the term “applicable law” includes FATCA. Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs. (a) The Borrower shall make each payment or prepayment required to be made by it hereunder (whether of principal, interest or fees or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) in Dollars prior to 12:00 noon, New York City time, on the date when due or the date fixed for any prepayment hereunder, in immediately available funds, without setoff, recoupment or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 383 Madison Avenue, New York, New York, except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day,
40 #95368685v14 and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars. (b) At any time that payments are not required to be applied in the manner required by Section 7.03, if at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties. (c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. (d) Unless the Administrative Agent shall have received, prior to any date on which any payment is due to the Administrative Agent for the account of the Lenders pursuant to the terms hereof or any other Loan Document (including any date that is fixed for prepayment by notice from the Borrower to the Administrative Agent pursuant to Section 2.11(b)), notice from the Borrower that the Borrower will not make such payment or prepayment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Federal Funds Effective Rate. Section 2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Sections 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any
41 #95368685v14 unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender becomes Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Sections 2.15 or 2.17) and obligations under this Agreement and the other Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that (A) an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants), and (B) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to an be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; provided that any such documents shall be without recourse to or warranty by the parties thereto. Section 2.20. Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender: (a) any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 7.03 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such
Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations (if applicable) with respect to Loans under this Agreement, in
42 #95368685v14 accordance with this Section; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 4.01 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto; and (b) the Commitment and Loans of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9.02); provided that this clause (b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such
Lender or each Lender affected thereby. ARTICLE 3 REPRESENTATIONS AND WARRANTIES The Borrower represents and warrants to the Lenders that: Section 3.01. Organization; Powers. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. Section 3.02. Authorization; Enforceability. The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. Section 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower, and (d) will not result in the creation or imposition of, or the requirement to create, any Lien on any asset of the Borrower. Section 3.04. Financial Condition; No Material Adverse Effect.
43 #95368685v14 (a) (i) The consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2020 and the related consolidated statements of operations, changes in shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, certified by Pricewaterhouse Coopers LLP, and the consolidated balance sheet of the Borrower and its Subsidiaries as at March 31, 2021, June 30, 2021 and September 30, 2021 and the related consolidated statements of operations, changes in shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal quarters then ended, in each case, copies of which have been furnished to each Lender, fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as at such dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates in accordance with GAAP; and (ii) since December 31, 2020, there has been no Material Adverse Effect. (b) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in connection with Section 5.01 and/or filed with the Securities and Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or threatened action, investigation or proceeding affecting the Borrower or any Subsidiary before any court, governmental agency or arbitrator that may reasonably be anticipated to have a Material Adverse Effect. There is no pending or threatened action or proceeding against the Borrower or any Subsidiary that purports to affect the legality, validity, binding effect or enforceability against the Borrower of this Agreement. Since December 31, 2020, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole. Section 3.05. Reserved. Section
3.06. Litigation and Environmental Matters. (a) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in connection with Section 5.01 and/or filed with the Securities and Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or threatened action, investigation or proceeding affecting the Borrower or any Subsidiary before any court, governmental agency or arbitrator that may reasonably be anticipated to have a Material Adverse Effect. There is no pending or threatened action or proceeding against the Borrower or any Subsidiary that purports to affect the legality, validity, binding effect or enforceability against the Borrower of this Agreement. (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, the Borrower (i) has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has not become subject to any Environmental Liability, (iii) has not received notice of any claim with respect to any Environmental Liability or (iv) has no knowledge of any basis for any Environmental Liability. (c) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect. Section 3.07. Compliance with Laws and Agreements. The Borrower is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred
and is continuing.
44 #95368685v14 Section 3.08. Investment Company Status. The Borrower is not required to register as an “investment company” as defined in the Investment Company Act of 1940. Section 3.09. Taxes. The Borrower has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. Section 3.10. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. Section 3.11. Beneficial Ownership. As of the Effective Date, to the best knowledge of the Borrower, the information included in the Beneficial Ownership Certification provided on or prior to the Effective Date to any Lender in connection with this Agreement is true and correct in all respects. Section 3.12. Reserved. Section 3.13. Anti-Corruption Laws and Sanctions. None of (a) the Borrower, any Subsidiary, any of their respective directors or officers, or (b) to the knowledge of the Borrower, any affiliate, agent or employee of the Borrower or any Subsidiary have engaged in any activity or conduct which would violate any applicable Anti-Corruption Laws or any applicable Sanctions and the Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. None of (a) the Borrower, any Subsidiary, any of their respective directors or officers or employees, o
(b) to the knowledge of the Borrower, any affiliate or agent of the Borrower or any Subsidiary is a Sanctioned Person. No Borrowing, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions. Section 3.14. Affected Financial Institutions. The Borrower is not an Affected Financial Institution. Section 3.15. Reserved. Section 3.16. Margin Regulations. The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of any Borrowing hereunder will be used to buy or carry any Margin Stock. Following the application of the proceeds of each Borrowing, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) will be Margin Stock. Section 3.17. Reserved. Section 3.18. Exchange Act. No proceeds of any Loan have been or will be used directly or indirectly in connection with the acquisition of in excess of 5% of any class of equity securities that is registered pursuant to Section 12 of the Exchange Act or any transaction subject to the requirements of Section 13 or 14 of the Exchange Act.
45 #95368685v14 ARTICLE 4 CONDITIONS Section 4.01. Effective Date. The obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02): (a) The Administrative Agent (or its counsel) shall have received from each party hereto a counterpart of this Agreement signed on behalf of such party (which, subject to Section 9.06(b), may include any Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page). (b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Ballard Spahr LLP, counsel for the Borrower, substantially in the form of Exhibit D, and covering such other matters relating to the Borrower, this Agreement or the Transactions as the Required Lenders shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion. (c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel. (d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (j) and (k) below. (e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out
of pocket expenses required to be reimbursed or paid by the Borrower hereunder. (f) The Administrative Agent shall have received the audited financial statements and the unaudited quarterly financial statements of the Borrower referred to in Section 3.04. (g) (i) The Administrative Agent shall have received, at least five days prior to the Effective Date, all documentation and other information regarding the Borrower requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, to the extent requested in writing of the Borrower at least 10 days prior to the Effective Date and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five days prior to the Effective Date, any Lender that has requested, in a written notice to the Borrower at least 10 days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Borrower shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied). (h) The Administrative Agent shall have received such other documents as the Administrative Agent or the Required Lenders (through the Administrative Agent) may reasonably request.
46 #95368685v14 (i) The Administrative Agent shall have received a Borrowing Request in accordance with the requirements hereof. (j) The representations and warranties of the Borrower set forth in this Agreement are true and correct on and as of the Effective Date before and after giving effect to the Borrowing on such date. (k) At the time of and immediately after giving effect to the Borrowing on the Effective Date, no Default shall have occurred and be continuing. ARTICLE 5 AFFIRMATIVE COVENANTS Until the principal of and interest on each Loan and all fees payable hereunder shall have been irrevocably paid in full, the Borrower and, in the case of Sections 5.03, 5.04, 5.05, 5.06, 5.07 and 5.08 the Principal Subsidiaries, covenant(s) and agree(s) with the Lenders that: Section 5.01. Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the Administrative Agent and each Lender, including their Public-Siders: (a) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the Borrower’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission with respect to such quarter (or, if the Borrower is not required to file a Quarterly Report on Form 10-Q, copies of an unaudited consolidated balance sheet of the Borrower as of the end of such quarter and the related consolidated statement of operations of the Borrower for the portion of the Borrower’s fiscal year ending on the last day of such quarter, in each case prepared in accordance with GAAP, subject to the absence of footnotes and to year-end adjustments), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes
to take with respect thereto; (b) as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the Borrower’s Annual Report on Form 10-K filed with the Securities and Exchange Commission with respect to such fiscal year (or, if the Borrower is not required to file an Annual Report on Form 10-K, the consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of such fiscal year and the related consolidated statements of operations, changes in shareholders’ equity (if applicable) and cash flows of the Borrower for such fiscal year, certified by PricewaterhouseCoopers LLP or other certified public accountants of recognized national standing), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto; (c) concurrently with the delivery of the quarterly and annual reports referred to in subsections (a) and (b) above, a compliance certificate in substantially the form set forth in Exhibit E, duly completed and signed by the Chief Financial Officer, Treasurer or an Assistant Treasurer of the Borrower; (d) except as otherwise provided in clause (a) or (b) above, promptly after the sending or filing thereof, copies of all reports that the Borrower sends to its security holders generally, and
47 #95368685v14 copies of all Reports on Form 10-K, 10-Q or 8-K, and registration statements and prospectuses that the Borrower or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange (except to the extent that any such registration statement or prospectus relates solely to the issuance of securities pursuant to employee purchase, benefit or dividend reinvestment plans of the Borrower or a Subsidiary); (e) promptly upon becoming aware of the institution of any steps by the Borrower or any other Person to terminate any Plan, or the failure to make a required contribution to any Plan if such failure is sufficient to give rise to a lien under section 430(k) of the Code, or the taking of any action with respect to a Plan which could result in the requirement that the Borrower furnish a bond or other security to the PBGC or such Plan, or the occurrence of any event with respect to any Plan which could result in the incurrence by the Borrower or any other member of the Controlled Group of any material liability, fine or penalty, notice thereof and a statement as to the action the Borrower or such member of the Controlled Group proposes to take with respect thereto; (f) promptly after any Rating Agency shall have announced a change in the rating established or deemed to have been established for the Index Debt, written notice of such rating change; (g) promptly following any request therefor, (x) such other information regarding the operations, business affairs and financial condition of the Borrower or any Principal Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request and (y) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the Patrio
Act and the Beneficial Ownership Regulation; and (h) such other information respecting the condition, operations or business, financial or otherwise, of the Borrower or any Subsidiary as any Lender, through the Administrative Agent, may from time to time reasonably request (including any information that any Lender reasonably requests in order to comply with its obligations under any “know your customer” or anti-money laundering laws or regulations, including the Patriot Act and the Beneficial Ownership Regulation). Documents required to be delivered pursuant to Section 5.01(a), (b) or (e) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on which such materials are publicly available as posted on the Electronic Data Gathering, Analysis and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether made available by the Administrative Agent); provided that: (A) upon written request by the Administrative Agent (or any Lender through the Administrative Agent) to the Borrower, the Borrower shall deliver paper copies of such documents to the Administrative Agent or such Lender until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event
shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for timely accessing posted
48 #95368685v14 documents or requesting delivery of paper copies of such document to it and maintaining its copies of such documents. Section 5.02. Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following: (a) as soon as possible, and in any event within five Business Days after the occurrence of any Default or Event of Default with respect to the Borrower continuing on the date of such statement, a statement of an authorized officer of the Borrower setting forth details of such Default or Event of Default and the action which the Borrower proposes to take with respect thereto; (b) any change in the credit ratings from a credit rating agency, or the placement by a credit rating agency of the Borrower or its parent on a “CreditWatch” or “WatchList” or any similar list, in each case with negative implications, or the cessation by a credit rating agency of, or its intent to cease, rating the Borrower’s debt; and (c) any change in the information provided in the Beneficial Ownership Certification delivered to such Lender that would result in a change to the list of beneficial owners identified in such certification. Each notice delivered under this Section (i) shall be in writing, (ii) shall contain a heading or a reference line that reads “Notice under Section 5.02 of Exelon Corporation 364-Day Term Loan Credit Agreement dated January 24, 2022” and (iii) shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. Section 5.03. Existence; Conduct of Business. The Borrower will do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.02. Section 5.04. Payment of Obligations. The Borrower will pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. Section 5.05. Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Principal Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. Section 5.06. Books and Records; Inspection Rights. The Borrower will, at any reasonable time and from time to time, pursuant to prior notice delivered to the Borrower, permit any Lender, or any agent or representative of any thereof, to examine and, at such Lender’s expense, make copies of, and abstracts from the records and books of account of, and visit the properties of,
49 #95368685v14 the Borrower and any Principal Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Principal Subsidiary with any of their respective officers; provided that any non- public information (which has been identified as such by the Borrower or the applicable Principal Subsidiary) obtained by any Lender or any of its agents or representatives pursuant to this Section 5.06 shall be treated confidentially by such Person; provided, further, that such Person may disclose such information to (a) any other party to this Agreement, its examiners, Affiliates, outside auditors, counsel or other professional advisors in connection with this Agreement, (b) to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement, (c) to any credit insurance provider or (d) if otherwise required to do so by law or regulatory process (it being understood that, unless prevented from doing so by any applicable law or governmental authority, such Person shall use reasonable efforts to notify the Borrower of any demand or request for any such information promptly upon receipt thereof so that the Borrower may seek a protective order or take other appropriate action). Section 5.07. Compliance with Laws. The Borrower will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. Section 5.08. Use of Proceeds. The proceeds of the Loans will be used only for general limited liability company or
corporate purposes (including the making of acquisitions and funding a portion of the $1,750,000,000 cash capital contribution to Constellation Energy Corporation in connection with the Spin Transaction), but in no event for any purpose that would be contrary to Section 3.13, 3.16 or 3.18. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulations T, U and X. The Borrower will not request any Borrowing, and the Borrower shall not use, and shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, directly or indirectly, the proceeds of any Borrowing (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto (including any Person participating in the Loans hereunder, whether as underwriter, advisor, investor, lender, hedge provider, facility or security agent or otherwise). Section 5.09. Accuracy of Information. The Borrower will ensure that any information, including financial statements or other documents, furnished to the Administrative Agent or the Lenders in connection with this Agreement or any amendment or modification hereof or waiver hereunder contains no material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the furnishing of such information shall be deemed to be a representation and warranty by the Borrower on the date thereof a
to the matters specified in this Section.
50 #95368685v14 ARTICLE 6 NEGATIVE COVENANTS Until the principal of and interest on each Loan and all fees payable hereunder have been paid in full the Borrower covenants and agrees with the Lenders that: Section 6.01. Liens. The Borrower will not create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except: (a) Liens imposed by law, such as carriers’, warehousemen’s, landlords’ repairmen’s, materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business; (b) Liens on the capital stock of or any other Equity Interest in any Subsidiary to secure Nonrecourse Indebtedness; (c) Liens for taxes, assessments or governmental charges, levies, or fines (including such amounts arising under environmental law) on property of the Borrower if the same shall not at the time be delinquent or thereafter can be paid without a material penalty, or are being contested in good faith and by appropriate proceedings; (d) Liens upon or in any property acquired in the ordinary course of business to secure the purchase price of such property or to secure any obligation incurred solely for the purpose of financing the acquisition of such property; (e) Liens existing on property at the time of the acquisition thereof (other than any such Lien created in contemplation of such acquisition unless permitted by the preceding clause (d)); (f) Liens granted in connection with any financing arrangement for the purchase of nuclear fuel or the financing of pollution control facilities, limited to the fuel or facilities so purchased or acquired; (g) Liens arising in connection with sales or transfers of, or financing secured by, accounts receivable or related contracts, provided that any such sale, transfer or financing shall be on arms’ length terms; (h) Liens securing Permitted Obligations; (i)
Permitted Encumbrances; (j) Liens arising in connection with sale and leaseback transactions entered into by the Borrower, but only to the extent that the aggregate purchase price of all assets sold by the Borrower during the term of this Agreement pursuant to such sale and leaseback transactions does not exceed $1,000,000,000; (k) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans or other social security or similar legislation;
51 #95368685v14 (l) Liens constituting attachment, judgment and other similar Liens arising in connection with court proceedings to the extent not constituting an Event of Default under Section 7.01(f); (m) Liens created in the ordinary course of business to secure liability to insurance carriers and Liens on insurance policies and the proceeds thereof (whether accrued or not), rights or claims against an insurer or other similar asset securing insurance premium financings; (n) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business; (o) Liens in the nature of rights of setoff, bankers’ liens, revocation, refund, chargeback, counterclaim, netting of cash amounts or similar rights as to deposit accounts, commodity accounts or securities accounts or other funds maintained with a credit or depository institution; (p) Liens consisting of pledges of industrial development, pollution control or similar revenue bonds in connection with the remarketing of such bonds; (q) Liens and similar customary cash collateralization obligations in respect of letter of credit exposure or swingline exposure relating to defaulting lenders in the Borrower’s senior unsecured credit facilities; (r) Liens resulting from any restriction on any Equity Interest (or project interest, interests in any energy facility (including undivided interests)) of a Person providing for a breach, termination or default under any owners, participation, shared facility, joint venture, stockholder, membership, limited liability company or partnership agreement between such Person and one or more other holders of Equity Interests (or project interest, interests in any energy facility (including undivided interests)) of such Person, to the extent a security interest or other Lien is created on any such interest as a result thereof; (s) Liens granted on cash or cash equivalents to defease or repay
Indebtedness of the Borrower no later than 60 days after the creation of such Lien; (t) Liens created in connection with sales, transfers, leases, assignment or other conveyances or Dispositions of assets, including (A) Liens on assets or securities granted or deemed to arise in connection with and as a result of the execution, delivery or performance of contracts to purchase or sell such assets or securities, and (B) rights of first refusal, options or other contractual rights or obligations to sell, assign or otherwise dispose of any interest therein; (u) Liens securing Permitted Obligations and reimbursement obligations in respect of letters of credit issued to support Permitted Obligations; and (v) Liens, other than those described above in this Section 6.01, provided that the aggregate amount of all Indebtedness secured by Liens permitted by this clause (v) shall not exceed in the aggregate at any one time outstanding $200,000,000. Section 6.02. Fundamental Changes; Mergers and Consolidations; Disposition of Assets. Merge with or into or consolidate with or into, or sell, assign, 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 permit any Principal Subsidiary to do so, except
52 #95368685v14 that (i) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary, (ii) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to the Borrower, (iii) the Borrower may merge or consolidate with or into a Subsidiary thereof formed for the purpose of converting the Borrower into a corporation and (iv) the Borrower or any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Person; provided that, in each case, (A) immediately before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing (except in the case where any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary), (B) in the case of any such merger, consolidation or transfer of assets to which the Borrower is a party, either (x) the Borrower shall be the surviving entity or (y) the surviving entity shall be an Eligible Successor and shall have assumed all of the obligations of the Borrower under this Agreement pursuant to a written instrument in form and substance satisfactory to the Administrative Agent and the Administrative Agent shall have received an opinion of counsel in form and substance satisfactory to it as to the enforceability of such obligations assumed, and (C) subject to clause (B) above, in the case of any such merger, consolidation or transfer of assets to which any Principal Subsidiary is a party, a Principal Subsidiary shall be the surviving entity or transferee (as applicable); provided, further, that the consummation of the Spin Transaction shall be permitted. Section 6.03. Continuation of Businesses. Engage, or permit any Subsidiary to engage, in any line of business which is material to the Borrower and its Subsidiaries, taken as a whole, other than businesses engaged in by the Borrower and its Subsidiaries as of the date hereof and
reasonable extensions thereof. Section 6.04. Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries (other than any Excluded Subsidiary) to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law by this Agreement, (ii) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.04 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale; provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (v) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof. Section 6.05. Consolidated Capitalization Ratio. The Borrower will not permit the Consolidated Capitalization Ratio as of the last day of any Test Period to exceed 0.65:1.00. Section 6.06. Most Favored Lender.
The Borrower will not, and will not permit any of its Subsidiaries to, enter into any amendment, waiver, consent, modification, refunding, refinancing or replacement of the Existing Credit Agreement with terms the effect of which is to (i) include a term, covenant and/or event of default which imposes a restriction, limitation or obligation in favor of another lender not imposed in favor of the Lenders by this Agreement, or (ii) revise or alter any
53 #95368685v14 term, covenant and/or event of default contained therein the effect of which is to impose a restriction, limitation or obligation in favor of another lender not imposed in favor of the Lenders by this Agreement, unless the Borrower or such Subsidiary, as the case may be, incorporates herein such additional term, covenant and/or event of default. Within ten Business Days, the Borrower shall deliver to the Administrative Agent an amendment to this Agreement incorporating such additional term, covenant and/or event of default. Prior to the execution and delivery of such amendment by the Borrower, this Agreement shall be deemed to contain each such additional term, covenant and/or event of default for the purposes of determining the rights and obligations hereunder. ARTICLE 7 EVENTS OF DEFAULT Section 7.01. Events of Default. If any of the following events (“Events of Default”) shall occur: (a) The Borrower shall fail to pay (i) any principal of any Loan when the same becomes due and payable or (ii) any interest on any Loan or any other amount payable by the Borrower hereunder within three Business Days after the same becomes due and payable; (b) Any representation or warranty made or deemed made by or on behalf of the Borrower herein or by the Borrower (or any of its officers) pursuant to the terms of this Agreement shall prove to have been incorrect or misleading in any material respect when made; (c) The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.02, 5.03 (with respect to Borrower’s existence), 5.08 or Article 6 or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent (which notice shall be given by
the Administrative Agent at the written request of any Lender); (d) The Borrower or any Principal Subsidiary shall fail to pay any principal of or premium or interest on any Indebtedness that is outstanding in a principal amount in excess of $100,000,000 in the aggregate (but excluding Indebtedness hereunder and Nonrecourse Indebtedness) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof, other than any acceleration of any Indebtedness secured by equipment leases or fuel leases of the Borrower or a Principal Subsidiary as a result of the occurrence of any event requiring a prepayment (whether or not characterized as such) thereunder, which prepayment will not result in a Material Adverse Effect; (e) The Borrower or any Principal Subsidiary 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 Borrower or any Principal Subsidiary seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition
54 #95368685v14 of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 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 Borrower or any Principal Subsidiary shall take any corporate or limited liability company action to authorize or to consent to any of the actions set forth above in this Section 7.01(e); (f) One or more judgments or orders for the payment of money in an aggregate amount exceeding $100,000,000 (excluding any such judgments or orders to the extent covered by insurance, subject to any customary deductible, and under which the applicable insurance carrier has not denied coverage) shall be rendered against the Borrower or any Principal Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (g) (i) Any Reportable Event that the Required Lenders determine in good faith is reasonably likely to result in the termination of any Single Employer Plan or in the appointment by the appropriate United States District Court of a trustee to administer a Single Employer Plan shall have occurred and be continuing 60 days after written notice to such effect shall have been given to the Borrower by the Administrative Agent; (ii) any Single
Employer Plan shall be terminated; (iii) a Trustee shall be appointed by an appropriate United States District Court to administer any Single Employer Plan; (iv) the PBGC shall institute proceedings to terminate any Single Employer Plan or to appoint a trustee to administer any Single Employer Plan; or (v) the Borrower or any other member of the Controlled Group withdraws from any Multiemployer Plan; provided that on the date of any event described in clauses (i) through (v) above, the Unfunded Liabilities of the applicable Plan exceed $100,000,000; (h) [Reserved]; (i) any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all Obligations, ceases to be in full force and effect; or the Borrower or any other Person contests in writing the validity or enforceability of any provision of any Loan Document; or the Borrower denies in writing that it has any or further liability or obligation under any Loan Document, or purports in writing to revoke, terminate or rescind any Loan Document; or (j) a Change in Control shall have occurred. Section 7.02. Remedies Upon an Event of Default. If an Event of Default occurs (other than an event with respect to the Borrower described in Section 7.01(e), and at any time thereafter during the continuance of such Event of Default, the Administrative Agent may with the consent of the Required Lenders, and shall at the request of the Required Lenders, by notice to the Borrower, take any or all of the following actions, at the same or different times: (a) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations
of the Borrower accrued hereunder
55 #95368685v14 and under any other Loan Document, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and (b) exercise on behalf of itself and the Lenders all rights and remedies available to it andthe Lenders under the Loan Documents and Applicable Law. If an Event of Default described in Section 7.01(e) occurs with respect to the Borrower, the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder and under any other Loan Document including any break funding payment or prepayment premium, shall automatically become due and payable, in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. Section 7.03. Application of Payments. Notwithstanding anything herein to the contrary, following the occurrence and during the continuance of an Event of Default, and notice thereof to the Administrative Agent by the Borrower or the Required Lenders, all payments received on account of the Obligations shall, subject to Section 2.20, be applied by the Administrative Agent as follows: (a) first, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts payable to the Administrative Agent (including fees and disbursements and other charges of counsel to the Administrative Agent payable under Section 9.03 and amounts pursuant to Section 2.12 payable to the Administrative Agent in its capacity as such); (b) second, to payment of that portion of the Obligations constituting fees, expenses, indemnities and other amounts (other than principal and interest) payable to the Lenders (including fees and disbursements and other charges of counsel to the Lenders payable under Section 9.03) arising under the Loan Documents, ratably among them in
proportion to the respective amounts described in this clause (b) payable to them; (c) third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause (c) payable to them; (d) fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause (d) payable to them; (e) fifth, to the payment in full of all other Obligations, in each case ratably among the Administrative Agent and the Lenders based upon the respective aggregate amounts of all such Obligations owing to them in accordance with the respective amounts thereof then due and payable; and (f) finally, the balance, if any, after all Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by law.
56 #95368685v14 ARTICLE 8 THE ADMINISTRATIVE AGENT Section 8.01. Authorization and Action. (a) Each Lender hereby irrevocably appoints the entity named as Administrative Agent in the heading of this Agreement and its successors and assigns to serve as the administrative agent under the Loan Documents and each Lender authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent under such agreements and to exercise such powers as are reasonably incidental thereto. Without limiting the foregoing, each Lender hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan Documents. (b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender; provided, however, that the Administrative Agent shall not be required to take any action that (i) the Administrative Agent in good faith believes exposes it to liability unless the Administrative Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Lenders with respect to such action or (ii) is contrary to this Agreement or any other Loan Document or
applicable law, including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that the Administrative Agent may seek clarification or direction from the Required Lenders prior to the exercise of any such instructed action and may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (c) In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the Lenders (except in limited circumstances expressly provided for herein relating to the maintenance of the Register), and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the foregoing: (i) the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent, fiduciary or trustee of or for any Lender
or holder of any other obligation other than as expressly set forth herein and in the other Loan Documents, regardless of whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in any other Loan Document with reference to
57 #95368685v14 the Administrative Agent is not intended to connote any fiduciary duty or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it will not assert any claim against the Administrative Agent based on an alleged breach of fiduciary duty by the Administrative Agent in connection with this Agreement and/or the transactions contemplated hereby; (ii) [Reserved]; (iii) [Reserved]; and (iv) nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any Lender for any sum or the profit element of any sum received by the Administrative Agent for its own account; (d) The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any of their respective duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub- agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agent. (e) The Arranger shall not have obligations or duties whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no liability hereunder
or thereunder in such capacity, but all such persons shall have the benefit of the indemnities provided for hereunder. (f) In case of the pendency of any proceeding with respect to any Loan Party under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan or any reimbursement obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise: (i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim under Sections 2.12, 2.13, 2.15, 2.17 and 9.03) allowed in such judicial proceeding; and (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due to it,
58 #95368685v14 in its capacity as the Administrative Agent, under the Loan Documents (including under Section 9.03). Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding. (g) The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and, except solely to the extent of the Borrower’s rights to consent pursuant to and subject to the conditions set forth in this Article, none of the Borrower or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party beneficiary under any such provisions. Section 8.02. Administrative Agent’s Reliance, Limitation of Liability, Etc. (a) Neither the Administrative Agent nor any of its Related Parties shall be (i) liable for any action taken or omitted to be taken by such party, the Administrative Agent or any of its Related Parties under or in connection with this Agreement or the other Loan Documents (x) with the consent of or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (including, for the avoidance of doubt, in connection with the Administrative Agent’s reliance on any Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page) or for any failure of to perform its obligations hereunder or thereunder. (b) The Administrative Agent shall be deemed not to have knowledge of any (i) notice of any of the events or circumstances set forth or described in Section 5.02 unless and until written notice thereof stating that it is a “notice under Section 5.02” in respect of this Agreement and identifying the specific clause under said Section is given to the Administrative Agent by the Borrower, or (ii) notice of any Default or Event of Default unless and until written notice thereof (stating that it is a “notice of Default” or a “notice of an Event of Default”) is given to the Administrative Agent by the Borrower or a Lender. Further, the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (A) any statement, warranty or representation made in or in connection with any Loan Document, (B) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (C) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default or Event of Default, (D) the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (E) the satisfaction of any condition set forth in Article 4 or elsewhere in any Loan Document, other than to confirm
receipt of items (which on their face purport to be such items) expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the Administrative Agent. (c) Without limiting the foregoing, the Administrative Agent (i) may treat the payee of any promissory note as its holder until such promissory note has been assigned in accordance with
59 #95368685v14 Section 9.04, (ii) may rely on the Register to the extent set forth in Section 9.04(b), (iii) may consult with legal counsel (including counsel to the Borrower), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (iv) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made by or on behalf of any Loan Party in connection with this Agreement or any other Loan Document, (v) in determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender sufficiently in advance of the making of such Loan and (vi) shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the maker thereof). Section 8.03. Posting of Communications. (a) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communications available to the Lenders by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative Agent to be its electronic transmission system
(the “Approved Electronic Platform”). (b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Effective Date, a user ID/password authorization system) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal- by-deal basis, each of the Lenders and the Borrower acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders and the Borrower hereby approves distribution of the Communications through the Approved Electronic Platform and understands and assumes the risks of such distribution. (c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS
IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, THE ARRANGER OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR
60 #95368685v14 CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED ELECTRONIC PLATFORM. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent or any Lender by means of electronic communications pursuant to this Section, including through an Approved Electronic Platform. (d) Each Lender agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees (i) to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address. (e) Each of the Lenders and the Borrower agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally applicable document retention procedures and policies. (f) Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document. Section 8.04. The Administrative Agent Individually. With
respect to its Commitment and Loans, the Person serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender. The terms “Lenders”, “Required Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its individual capacity as a Lender or as one of the Required Lenders, as applicable. The Person serving as the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust or other business with, the Borrower, any Subsidiary or any Affiliate of any of the foregoing as if such Person was not acting as the Administrative Agent and without any duty to account therefor to the Lenders. Section 8.05. Successor Administrative Agent. (a) The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders and the Borrower, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank. Such appointment shall be subject to the prior written approval of the Borrower (which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing). Upon the
acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent
61 #95368685v14 shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent. Upon the acceptance of appointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents. (b) Notwithstanding paragraph (a) of this Section, in the event no successor Administrative Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the effectiveness of its resignation to the Lenders and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (ii) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be given or made to each Lender. Following the effectiveness of the Administrative Agent’s resignation from its capacity as such, the provisions of this Article and Section 9.03, as well as any
exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent. Section 8.06. Acknowledgements of Lenders. (a) Each Lender acknowledges that (i) the Loan Documents set forth the terms of a commercial lending facility, (ii) it is engaged in making, acquiring or holding commercial loans and in providing other facilities set forth herein as may be applicable to such Lender in the ordinary course of business and is making the Loans hereunder as commercial loans in the ordinary course of business, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument (and each Lender agrees not to assert a claim in contravention of the foregoing), (iii) it has, independently and without reliance upon the Administrative Agent, the Arranger or any other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder and (iv) it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Arranger or any other Lender, or any of the Related Parties
of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
62 #95368685v14 (b) Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective Date. (c) (i) Each Lender hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such Lender), and demands the return of such Payment (or a portion thereof), such Lender shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of
any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this Section 8.06(c) shall be conclusive, absent manifest error. (ii) Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment. Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Lender shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. (iii) The Borrower and each other Loan Party hereby agrees that (x) in the event an erroneous Payment (or portion thereof) are not recovered from any Lender that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an
erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party.
63 #95368685v14 (iv) Each party’s obligations under this Section 8.06(c) shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations under any Loan Document. Section 8.07. [Reserved]. Section 8.08. [Reserved]. Section 8.09. Certain ERISA Matters. (a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true: (i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Benefit Plans in connection with the Loans or the Commitments, (ii) the transaction exemption set forth in one or more PTEs, such as PTE 84- 14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96- 23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement, (iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of
Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement, or (iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender. (b) In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan
64 #95368685v14 Party, that none of the Administrative Agent or the Arranger or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto). (c) The Administrative Agent and the Arranger hereby informs the Lenders that each such Person is not undertaking to provide investment advice or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Commitments, this Agreement and any other Loan Documents (ii) may recognize a gain if it extended the Loans, or the Commitments for an amount less than the amount being paid for an interest in the Loans or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal- away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing. ARTICLE 9 MISCELLANEOUS Section 9.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows: (i) if to the Borrower, to it at 10 S. Dearborn, 54th Floor, Chicago, IL 60603, Attention: Chief Financial Officer, facsimile: 312-394-5443; (ii) if to the Administrative Agent, at its address at 400 Jefferson Park, Whippany, NY 07981, Attention: Michael Xu, email: michael.xu@barclays.com; (iii) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through Approved Electronic Platforms, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b). (b) Notices and other communications to the Borrower and the Lenders hereunder may be delivered or furnished by using Approved Electronic Platforms pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
65 #95368685v14 (c) Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient. (d) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. Section 9.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. (b) Subject to Section 2.14(b) and (c) and Section 9.02(c) below, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change 2.18(b) or (c) in a manner that would alter the ratable reduction of Commitments or the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change the payment waterfall provisions of Section 2.20(a) or 7.03 without the written consent of each Lender, or (vi) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify
or otherwise affect the rights or duties of the Administrative Agent without the prior written consent of the Administrative Agent. (c) If the Administrative Agent and the Borrower acting together identify any ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement or any other Loan Document, then the Administrative Agent and the Borrower shall be permitted to amend, modify
66 #95368685v14 or supplement such provision to cure such ambiguity, omission, mistake, typographical error or other defect, and such amendment shall become effective without any further action or consent of any other party to this Agreement. Section 9.03. Expenses; Limitation of Liability; Indemnity, Etc. (a) Expenses. The Borrower shall pay (i) all reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans. (b) Limitation of Liability. To the extent permitted by applicable law (i) the Borrower shall not assert, and the Borrower hereby waives, any claim against the Administrative Agent, the Arranger and any Lender, and any Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related Person”) for any Liabilities arising from the use by others of information or other materials (including, without limitation, any personal data) obtained through telecommunications, electronic or other information transmission systems (including the
Internet), and (ii) no party hereto shall assert, and each such party hereby waives, any Liabilities against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or the use of the proceeds thereof; provided that, nothing in this Section 9.03(b) shall relieve the Borrower of any obligation it may have to indemnify an Indemnitee, as provided in Section 9.03(c), against any special, indirect, consequential or punitive damages asserted against such Indemnitee by a third party. (c) Indemnity. The Borrower shall indemnify the Administrative Agent, the Arranger and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all Liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, (ii) the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective Proceeding relating to any of the foregoing, whether or not such Proceeding is brought by the Borrower or its equity holders, Affiliates, creditors
or any other third Person and whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such Liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted primarily from the gross negligence or willful
67 #95368685v14 misconduct of such Indemnitee. This Section 9.03(c) shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim. (d) Lender Reimbursement. Each Lender severally agrees to pay any amount required to be paid by the Borrower under paragraphs (a), (b) or (c) of this Section 9.03 to the Administrative Agent and each Related Party of any of the foregoing Persons (each, an “Agent-Related Person”) (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Applicable Percentage in effect on the date on which such payment is sought under this Section (or, if such payment is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Applicable Percentage immediately prior to such date), and agrees to indemnify and hold each Agent-Related Person harmless from and against any and all Liabilities and related expenses, including the fees, charges and disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent- Related Person in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent-Related Person under or in connection with any of the foregoing; provided that the unreimbursed expense or Liability or related expense, as the case may be, was incurred by or asserted against such Agent- Related Person in its capacity as such; provided further that no Lender shall be liable for the payment of any portion of such Liabilities, costs, expenses or disbursements that are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted primarily from such Agent-Related Person’s gross negligence or willful misconduct. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. (e) Payments. All amounts due under this Section 9.03 shall be payable promptly after written demand therefor. Section 9.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) of: (A) the Borrower; provided that, the Borrower shall be deemed to have consented to an assignment
of all or a portion of the Loans and Commitments unless it shall have objected thereto by written notice to the Administrative Agent within ten (10) Business Days after having received
68 #95368685v14 notice thereof provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee; and (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of any Commitment to an assignee that is a Lender (other than a Defaulting Lender) with a Commitment immediately prior to giving effect to such assignment. (ii) Assignments shall be subject to the following additional conditions: (A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent; provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing; (B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement; (C) the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignment and Assumption or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, together with a processing and recordation fee of $3,500; and (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more Credit Contacts to whom all syndicate- level information (which may contain material non-public information about the Borrower and its Related Parties or its securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws. For the purposes of this Section 9.04(b), the term “Approved Fund” and “Ineligible Institution” have the following meanings: “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
69 #95368685v14 “Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) a company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof or (d) the Borrower or any of its Affiliates; provided that, with respect to clause (c), such company, investment vehicle or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Loans or Commitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its business. (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph
(c) of this Section. (iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and an assignee or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.07(b), 2.18(d) or 9.03(d), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No
70 #95368685v14 assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (c) Any Lender may, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged; (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Section 2.15, 2.16 and 2.17 (subject to the requirements and limitations therein, including the requirements under Sections 2.17(f) (it being understood that the documentation required under Section 2.17(f) shall be delivered to the participating Lender and the information)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the
provisions of Section 2.19 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 2.15 or 2.17, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.19(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.18(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreemen
notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. (d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
71 #95368685v14 Section 9.05. Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the other Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Documents shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article 8 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and the Commitments or the termination of this Agreement or any provision hereof. Section 9.06. Counterparts; Integration; Effectiveness; Electronic Execution. (a) This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. (b) Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 9.01), certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it;
provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature and (ii) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower hereby (A) agrees that, for all purposes, including without limitation, in connection with
72 #95368685v14 any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders, the Borrower, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (B) the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (C) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (D) waives any claim against any Lender-Related Person for any Liabilities arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any Liabilities arising as a result of the failure of the Borrower to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature. Section 9.07. Severability. Any provision of this
Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. Section 9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits (general or special, time or demand, provisional or final) at any time held, and other obligations at any time owing, by such Lender or any such Affiliate, to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender or its Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch office or Affiliate of such Lender different from the branch office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so setoff shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.20 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing
to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or its Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
73 #95368685v14 Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement and the other Loan Documents shall be construed in accordance with and governed by the law of the State of New York. (b) Each of the Lenders and the Administrative Agent hereby irrevocably and unconditionally agrees that, notwithstanding the governing law provisions of any applicable Loan Document, any claims brought against the Administrative Agent by any Lender relating to this Agreement, any other Loan Document or the consummation or administration of the transactions contemplated hereby or thereby shall be construed in accordance with and governed by the law of the State of New York. (c) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the United States District Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough of Manhattan), and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may (and any such claims, cross-claims or third party claims brought against the Administrative Agent or any of its Related Parties may only) be heard and determined in such Federal (to the extent permitted by law) or New York State court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan
Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction. (d) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (c) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (e) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
74 #95368685v14 Section 9.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. Section 9.12. Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder or under any other Loan Document, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided for herein, (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of
identification numbers with respect to the credit facilities provided for herein or (iii) insurers, reinsurers and brokers to the Administrative Agent or any Lender, (h) with the consent of the Borrower or (i) to the extent such Information (ii) becomes publicly available other than as a result of a breach of this Section or (iii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a non-confidential basis prior to disclosure by the Borrower and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Section 9.13. Material Non-Public Information. (a) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN Section 9.12 FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT
WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS. (b) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC
75 #95368685v14 INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR ITS SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW. Section 9.14. Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. Section 9.15. No Fiduciary Duty, etc. (a) The Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that no Credit Party will have any obligations except those obligations expressly set forth herein and in the other Loan Documents and each Credit Party is
acting solely in the capacity of an arm’s length contractual counterparty to the Borrower with respect to the Loan Documents and the transactions contemplated herein and therein and not as a financial advisor or a fiduciary to, or an agent of, the Borrower or any other person. The Borrower agrees that it will not assert any claim against any Credit Party based on an alleged breach of fiduciary duty by such Credit Party in connection with this Agreement and the transactions contemplated hereby. Additionally, the Borrower acknowledges and agrees that no Credit Party is advising the Borrower as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction. The Borrower shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated herein or in the other Loan Documents, and the Credit Parties shall have no responsibility or liability to the Borrower with respect thereto. (b) The Borrower further acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party, together with its Affiliates, is a full service securities or banking firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, any Credit Party may provide investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of, the Borrower and other companies with which the Borrower may have commercial or other relationships. With respect to any securities and/or financial instruments so held by any Credit Party or any of its customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holde
of the rights, in its sole discretion. (c) In addition, the Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party and its affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which the Borrower may have conflicting interests regarding the transactions described herein and
76 #95368685v14 otherwise. No Credit Party will use confidential information obtained from the Borrower by virtue of the transactions contemplated by the Loan Documents or its other relationships with the Borrower in connection with the performance by such Credit Party of services for other companies, and no Credit Party will furnish any such information to other companies. The Borrower also acknowledges that no Credit Party has any obligation to use in connection with the transactions contemplated by the Loan Documents, or to furnish to the Borrower, confidential information obtained from other companies. Section 9.16. USA PATRIOT Act. Each Lender that is subject to the requirements of the USA PATRIOT Act of 2001 (the “Patriot Act”) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act. Section 9.17. Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in par
or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. Section 9.18. Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States): In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such
77 #95368685v14 Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support. Section 9.19. Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrower in respect of any such sum due from it to the Administrative Agent or
any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from the Borrower in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law). Section 9.20. Payments Set Aside. To the extent that the Borrower makes a payment or payments to the Administrative Agent or any Lender, or Administrative Agent or any Lender exercises its rights of set-off, and such payment or payments or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or any Lender in its discretion) to be repaid to a trustee, receiver or any other party in connection with any bankruptcy, insolvency or similar
proceeding, or otherwise, then (a) to the extent of such recovery, the obligation hereunder or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its ratable share of the total amount so recovered from or repaid by the Administrative Agent to the extent paid to such Lender.
[Signature Page to Exelon 364-Day Term Loan Agreement] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective authorized officers as of the day and year first above written. EXELON CORPORATION, By: Name: Title: BARCLAYS BANK PLC, individually and as Administrative Agent, By: Name: Title: BARCLAYS BANK PLC, as Lender By: Name: Title:
Execution Version $250,000,000 CREDIT AGREEMENT dated as of January 24, 2022 among EXELON CORPORATION as Borrower, VARIOUS FINANCIAL INSTITUTIONS, as Lenders, and PNC BANK, NATIONAL ASSOCIATION as Administrative Agent
-i- TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.01 Certain Defined Terms ...................................................................................... 1 SECTION 1.02 Other Interpretive Provisions .......................................................................... 24 SECTION 1.03 Accounting Principles ..................................................................................... 25 SECTION 1.04 Term SOFR Notification................................................................................. 25 SECTION 1.05 Divisions ......................................................................................................... 26 ARTICLE II AMOUNTS AND TERMS OF THE COMMITMENTS SECTION 2.01 Commitments .................................................................................................. 26 SECTION 2.02 Procedures for Advances; Limitations on Borrowings ................................... 26 SECTION 2.03 Fees ................................................................................................................. 27 SECTION 2.04 Termination of Commitments ......................................................................... 27 SECTION 2.05 Repayment of Advances ................................................................................. 27 SECTION 2.06 Interest on Advances ....................................................................................... 27 SECTION 2.07 [Reserved] ....................................................................................................... 28 SECTION 2.08 Interest Rate Determination ............................................................................ 28 SECTION 2.09 Continuation and Conversion of Advances .................................................... 28 SECTION 2.10 Prepayments .................................................................................................... 28 SECTION 2.11 Increased Costs ............................................................................................... 29 SECTION 2.12 Illegality .......................................................................................................... 30 SECTION 2.13 Payments and Computations ........................................................................... 30 SECTION 2.14 Taxes ............................................................................................................... 32
SECTION 2.15 Sharing of Payments, Etc ................................................................................ 36 SECTION 2.16 Availability of Types of Borrowings; Adequacy of Interest Rate; Benchmark Replacement ................................................................................ 36 SECTION 2.17 Funding Indemnification ................................................................................. 38 SECTION 2.18 Interest Payment Dates ................................................................................... 39 ARTICLE III CONDITIONS PRECEDENT SECTION 3.01 Conditions Precedent to Effectiveness............................................................ 40
TABLE OF CONTENTS (continued) Page -ii- ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01 Representations and Warranties of the Borrower ........................................... 41 ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01 Affirmative Covenants .................................................................................... 43 SECTION 5.02 Negative Covenants ........................................................................................ 48 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01 Events of Default ............................................................................................ 52 ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01 Authorization and Action ................................................................................ 54 SECTION 7.02 Administrative Agent’s Reliance, Etc............................................................. 54 SECTION 7.03 Administrative Agent and Affiliates ............................................................... 54 SECTION 7.04 Lender Credit Decision ................................................................................... 55 SECTION 7.05 Indemnification ............................................................................................... 55 SECTION 7.06 Successor Administrative Agent ..................................................................... 55 ARTICLE VIII MISCELLANEOUS SECTION 8.01 Amendments, Etc ............................................................................................ 56 SECTION 8.02 Notices, Etc ..................................................................................................... 57 SECTION 8.03 No Waiver; Remedies ..................................................................................... 57 SECTION 8.04 Costs and Expenses; Indemnification ............................................................. 57 SECTION 8.05 Right of Set-off ............................................................................................... 58 SECTION 8.06 Binding Effect ................................................................................................. 58 SECTION 8.07 Assignments and Participations ...................................................................... 58 SECTION 8.08 Governing Law
............................................................................................... 63 SECTION 8.09 Consent to Jurisdiction; Certain Waivers ....................................................... 63 SECTION 8.10 Waiver of Jury Trial ........................................................................................ 63
TABLE OF CONTENTS (continued) Page -iii- SECTION 8.11 Execution in Counterparts; Integration ........................................................... 64 SECTION 8.12 USA PATRIOT ACT NOTIFICATION ........................................................ 64 SECTION 8.13 No Advisory or Fiduciary Responsibility ....................................................... 64 SECTION 8.14 [Reserved] ....................................................................................................... 65 SECTION 8.15 Acknowledgement and Consent to Bail-In of Affected Financial Institutions....................................................................................................... 65 SECTION 8.16 Confidentiality ................................................................................................ 65 SECTION 8.17 Material Non-Public Information ................................................................... 66 SECTION 8.18 Interest Rate Limitation .................................................................................. 66 SECTION 8.19 Severability ..................................................................................................... 67 SECTION 8.20 Headings ......................................................................................................... 67 SECTION 8.21 Survival ........................................................................................................... 67 SCHEDULE I COMMITMENTS SCHEDULE 3.06 DISCLOSED MATTERS SCHEDULE 5.02 EXISTING RESTRICTIONS EXHIBIT A FORM OF ASSIGNMENT AND ASSUMPTION EXHIBIT B FORM OF NOTICE OF BORROWING EXHIBIT C FORM OF NOTE EXHIBIT D FORM OF ANNUAL AND QUARTERLY COMPLIANCE CERTIFICATE EXHIBIT E FORMS OF U.S. TAX COMPLIANCE CERTIFICATE EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION EXHIBIT G FORM OF NOTICE OF PREPAYMENT
CREDIT AGREEMENT THIS CREDIT AGREEMENT dated as of January 24, 2022 is among EXELON CORPORATION, a Pennsylvania, corporation the banks and other financial institutions or entities listed on the signature pages hereof, and PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent. The parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION SECTION 1.01 Certain Defined Terms. As used in this Agreement, each of the following terms shall have the meaning set forth below (each such meaning to be equally applicable to both the singular and plural forms of the term defined): “Administrative Agent” means PNC Bank, National Association in its capacity as administrative agent for the Lenders pursuant to Article VII, and not in its individual capacity as a Lender, and any successor Administrative Agent appointed pursuant to Section 7.06. “Administrative Questionnaire” means an administrative questionnaire, substantially in the form supplied by the Administrative Agent, completed by a Lender and furnished to the Administrative Agent in connection with this Agreement. “Advance” means an advance by a Lender to the Borrower hereunder. An Advance may be a Base Rate Advance, a Daily Simple SOFR Advance or a SOFR Advance, each of which shall be a “Type” of Advance. “Adjusted Daily Simple SOFR Rate” means an interest rate per annum equal to (a) the Daily Simple SOFR Rate, plus (b) 0.10%; provided that if the Adjusted Daily Simple SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement. “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person
or is a director or officer of such Person. “Aggregate Commitment Amount” means the aggregate of the Commitments of all the Lenders, as reduced or increased from time to time pursuant to the terms hereof. As of the Effective Date, the Aggregate Commitment Amount is $250,000,000. “Alternate Base Rate” means, for any day, a rate of interest per annum equal to the highest of (a) zero, (b) the Prime Rate for such day, (c) the sum of the Federal Funds Effective Rate for such day plus 0.50% per annum and (d) the Term SOFR Rate or Daily Simple SOFR Rate (without giving effect to the Applicable Margin) for a one-month Interest Period on such day (or if such day is not a Business Day or if the Term SOFR Rate or Daily Simple SOFR Rate, as
-2- applicable for such Business Day is not published due to a holiday or other circumstance that the Administrative Agent deems in its sole discretion to be temporary, the immediately preceding Business Day) for Dollars plus 1.00%. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate, or the Term SOFR Rate shall be effective from the effective date of such change. If the Alternate Base Rate is being used when Term SOFR Advances are unavailable pursuant to Section 2.16, then the Alternate Base Rate shall be the highest of clauses (a), (b) and (c) above, without reference to clause (d) above. “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Affiliates from time to time concerning or relating to money-laundering, bribery or corruption. “Applicable Margin” means, 0.55% with respect to Term SOFR Advances, Daily Simple SOFR Advances, Term SOFR Borrowings, Daily Simple SOFR Borrowings, Daily Simple SOFR Loans and Term SOFR Loans and (y) 0.00% with respect to Base Rate Advances, Base Rate Borrowings and Base Rate Loans to Borrower. “Approved Fund” has the meaning set forth in Section 8.07(a). “Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if the then-current Benchmark is a term rate, any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date. “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit A. “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the
applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings). “Base Rate” means, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Overnight Bank Funding Rate, plus 0.5%, (ii) the Prime Rate, and (iii) Daily Simple SOFR Rate, plus 1.00%, so long as the Daily Simple SOFR Rate is offered, ascertainable and not unlawful; provided, however, if the Base Rate as determined above would be less than
-3- zero, then such rate shall be deemed to be zero. Any change in the Base Rate (or any component thereof) shall take effect at the opening of business on the day such change occurs. “Base Rate Advance” means an Advance that bears interest as provided in Section 2.06. “Base Rate Borrowing” means a Borrowing that, except as otherwise provided in Section 2.13(f), bears interest at the Base Rate. “Base Rate Loan” means a Loan that, except as otherwise provided in Section 2.13(f), bears interest at the Base Rate. “Benchmark” means, initially, with respect to any (i) Daily Simple SOFR Loan, the Daily Simple SOFR Rate or (ii) Term SOFR Loan, the Term SOFR Rate; provided that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to the Daily Simple SOFR Rate or Term SOFR Rate, as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.16(b). “Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date: (1) Daily Simple SOFR; or (2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment. If the
Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement pursuant to clause (2) thereof for any applicable Interest Period and Available Tenor for any setting of such Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such
-4- spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities. “Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Borrowing” and “Term SOFR Borrowing,” the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents). “Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely
ceases to provide all Available Tenors of such Benchmark (or such component thereof); (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date; and (3) in the case of an Early Opt-in Election, the Business Day specified by the Administrative Agent in the notice of the Early Opt-in Election provided to the Lenders, so long as the Administrative Agent has not received, by 5:00 p.m. (Central time) on the fifth Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, written notice of objection to such Early Opt-in Election from Lenders comprising the Majority Lenders. For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the
-5- occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark: (1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); (2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or (3) a public statement or publication of information by any of the entities referenced in
clause (2) above announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark in accordance with Section 2.16(b), and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark in accordance with Section 2.16(b). “Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. “BGE” shall mean Baltimore Gas and Electric Company. “BGE Entity” shall mean RF Holdco, BGE and any of their Subsidiaries.
-6- “Borrower” means Exelon Corporation or any Eligible Successor thereof. “Borrowing” means a group of Advances of the same Type made, continued or converted on the same day by the Lenders ratably according to their Pro Rata Shares and, in the case of a Borrowing of Term SOFR Loans, having the same Interest Period. “Business Day” means a day (other than a Saturday or Sunday) on which banks generally are open in New York City, New York for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system; provided that, when used in connection with SOFR, Term SOFR, Term SOFR Base Rate or Term SOFR Rate, the term “Business Day” excludes any day on which the Securities Industry and Financial Markets Association (SIFMA) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. “Change in Control” means the acquisition of ownership, directly or indirectly beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of Equity Interests representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower. “Change in Law” means (a) the adoption of any law, rule, regulation or treaty after the
date of this Agreement, (b) any change in any law, rule, regulation or treaty or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.11(b), by any lending office of such Lender or by such Lender’s holding company, if any) with any request, rule, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued. “Code” means the Internal Revenue Code of 1986, as amended. “ComEd” means Commonwealth Edison Company, an Illinois corporation, or any successor thereof. “ComEd Entity” means ComEd and each of its Subsidiaries.
-7- “Commitment” means, with respect to each Lender, the commitment of such Lender to make an Advance, expressed as an amount representing the maximum principal amount of the Advance to be made by such Lender. The initial amount of each Lender’s Commitment is set forth on Schedule I attached hereto. “Commitment Amount” means, for any Lender at any time, the amount set forth opposite such Lender’s name on Schedule I attached hereto or, if such Lender has entered into any Assignment and Assumption, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c). “Commodity Trading Obligations” shall mean the obligations of the Borrower (or, prior to consummation of the Spin Transaction, Genco) under (i) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement, arrangement or transaction, including natural gas, power, electric energy, emissions forward contracts, renewable energy credits, or any combination of any such arrangements, agreements and/or transactions, employed in the ordinary course of the Borrower or Genco’s business, including the Borrower or Genco’s energy marketing, trading and asset optimization business, or (ii) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other agreement or arrangement, or combination thereof (including an agreement or arrangement to hedge foreign exchange risks) in respect of commodities entered into by the Borrower or Genco pursuant to asset optimization and
risk management policies and procedures adopted pursuant to authority delegated by the Board of Directors of the Borrower or Genco. The term “commodities” shall include electric energy and/or capacity, transmission rights, coal, petroleum, natural gas liquids, natural gas, fuel transportation rights, emissions allowances, weather derivatives and related products and by-products and ancillary services. “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes. “Consolidated Capitalization Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of the last day of the applicable Test Period to (b) the sum of Consolidated Total Indebtedness plus Consolidated Stockholders’ Equity as of the last day for such Test Period. “Consolidated Stockholders’ Equity” means, as of any date of determination, the total stockholders’ equity of the Borrower on a consolidated basis, determined in accordance with GAAP. “Consolidated Total Indebtedness” means, as of any date of determination, the total amount of all Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP. For the avoidance of doubt, Consolidated Total Indebtedness shall not include Nonrecourse Indebtedness.
-8- “Controlled Group” means each person (as defined in Section 3(9) of ERISA) that, together with the Borrower, would be deemed to be a “single employer” within the meaning of Section 414(b) or 414(c) of the Code. “Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor. “Credit Extension” means the making of an Advance hereunder. Advance” means any Advance that bears interest as provided in Section 2.06. “Daily Simple SOFR Borrowing” means a Borrowing that, except as otherwise provided in Section 2.13(f), bears interest at the applicable Daily Simple SOFR Rate “Daily Simple SOFR Loan” means a Loan that, except as otherwise provided in Section 2.13(f), bears interest at the applicable Adjusted Daily Simple SOFR Rate other than pursuant to clause (d) of the definition of Alternate Base Rate. “Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) SOFR for the day (the “SOFR Determination Date”) that is 2 Business Days prior to (i) such SOFR Rate Day if such SOFR Rate Day is a Business Day or (ii) the Business Day immediately preceding such SOFR Rate Day if such SOFR Rate Day is not a Business Day, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. If Daily Simple SOFR as determined above would be less than the SOFR Floor, then Daily Simple SOFR shall be deemed to be the SOFR Floor. If SOFR for any SOFR Determination Date has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the second Business Day immediately following such SOFR
Determination Date, then SOFR for such SOFR Determination Date will be SOFR for the first Business Day preceding such SOFR Determination Date for which SOFR was published in accordance with the definition of “SOFR”; provided that SOFR determined pursuant to this sentence shall be used for purposes of calculating Daily Simple SOFR for no more than 3 consecutive SOFR Rate Days. If and when Daily Simple SOFR as determined above changes, any applicable rate of interest based on Daily Simple SOFR will change automatically without notice to the Borrower, effective on the date of any such change. “Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. “Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06. “Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” in its Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender, or such other office of such
-9- Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent. “Early Opt-in Election” means, if the then-current Benchmark is the Term SOFR Base Rate, the joint election by the Administrative Agent and the Borrower to trigger a fallback from the Term SOFR Base Rate to the Benchmark Replacement, and a notification by the Administrative Agent to each of the other parties hereto of such election and the proposed Benchmark Replacement. “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. “Effective Date” means the date on which all conditions precedent set forth in Section 3.01 have been satisfied. “Electronic System” means any electronic system, including e-mail, e-fax, Intralinks®, ClearPar®, Debt Domain, Syndtrak and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent or any Lender and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system. “Eligible Assignee” means (i) a commercial bank
organized under the laws of the United States, or any State thereof; (ii) a commercial bank organized under the laws of any other country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund associated with its “General Arrangements to Borrow”, or a political subdivision of any such country, provided that such bank is acting through a branch or agency located in the United States; (iii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership or other entity) engaged generally in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business; (iv) the central bank of any country that is a member of the OECD; (v) any Lender; or (vi) any Affiliate (excluding any individual) of a Lender; provided that, unless otherwise agreed by the Borrower and the Administrative Agent in their sole discretion, (A) any Person described in clause (i), (ii) or (iii) above shall also (x) have outstanding unsecured long-term debt that is rated BBB- or better by S&P and Baa3 or better by Moody’s (or an equivalent rating by another nationally recognized credit rating agency of similar standing if either such corporation is no longer in the business of rating unsecured indebtedness of entities engaged in such businesses) and
-10- (y) have combined capital and surplus (as established in its most recent report of condition to its primary regulator) of not less than $100,000,000 (or its equivalent in foreign currency), and (B) any Person described in clause (ii), (iii), (iv), (v) or (vi) above shall, on the date on which it is to become a Lender hereunder, be entitled to receive payments hereunder without deduction or withholding of any United States Federal income taxes (as contemplated by Section 2.14(e)). In no event shall an Eligible Assignee include an Ineligible Institution. “Eligible Successor” means a Person that (i) is a corporation, limited liability company or business trust duly incorporated or organized, validly existing and in good standing under the laws of one of the states of the United States or the District of Columbia, (ii) as a result of a contemplated acquisition, consolidation or merger, will succeed to all or substantially all of the consolidated business and assets of the Borrower, (iii) upon giving effect to such contemplated acquisition, consolidation or merger, will have all or substantially all of its consolidated business and assets conducted and located in the United States and (iv) is acceptable to the Majority Lenders as a credit matter. “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to (i) the environment, (ii) preservation or reclamation of natural resources, (iii) the management, release or threatened release of any Hazardous Material or (iv) health and safety matters. “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. “Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest, but excluding any debt securities convertible into any of the foregoing. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. “ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which
-11- the 30-day notice period is waived); (b) the failure with respect to any Plan to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition upon the Borrower or any of its ERISA Affiliates of Withdrawal Liability under Section 4201 of ERISA or a determination that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Title IV of ERISA. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time. “Event of Default” shall have the meaning specified in Section 6.01. “Exchange Act” means the Securities Exchange Act of 1934. “Excluded Project Subsidiary” shall mean, at any time, any Subsidiary that is an obligor (or, in the case of a Subsidiary of an Excluded Project Subsidiary that is such an obligor and is in a business that is related to the business of such Excluded Project Subsidiary that is such an obligor, is
otherwise bound, or its property is subject to one or more covenants and other terms of any Nonrecourse Indebtedness outstanding at such time, regardless of whether such Subsidiary is a party to the agreement evidencing the Nonrecourse Indebtedness) with respect to any Nonrecourse Indebtedness outstanding at such time. “Excluded Subsidiary” shall mean (a) an Excluded Project Subsidiary, (b) any captive insurance Subsidiary, (c) any not-for-profit Subsidiary or (d) any special purpose vehicle, including any Securitization Vehicle. “Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Advance or Commitment (other than pursuant to an assignment request by the Borrower under Section 8.07(g)) or (ii) such Lender changes its lending office, except in each case
-12- to the extent that, pursuant to Section 2.14, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in an Advance or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.14(f) and (d) any U.S. Federal withholding Taxes imposed under FATCA. “FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement, and any current or future regulations or official interpretations thereof; provided that “FATCA” shall also include any amendments to Sections 1471 through 1474 of the Code that are substantively comparable, but only if the requirements in such amended version for avoiding the withholding are not materially more onerous than the requirements in the current version. “Federal Funds Effective Rate” means, for any day, the greater of (a) zero and (b) the rate per annum calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Central time) on such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent in its sole discretion. “Federal Reserve Bank of New York’s Website” means the website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source. “Financial Officer” means the chief financial officer, principal accounting officer, treasurer or
controller of the Borrower. “Fitch” means Fitch Ratings, Inc. or any successor. “Fitch Rating” means, at any time, the rating issued by Fitch and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from Fitch for debt securities of such type, then such indicative rating shall be used for determining the “Fitch Rating” and if the Borrower does not have such an indicative rating, but has an issuer rating from Fitch, then such issuer rating shall be used for determining the “Fitch Rating”). “Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate or the Adjusted Daily Simple SOFR, as applicable. For the avoidance of doubt the initial Floor for each of the Term SOFR Rate or the Adjusted Daily Simple SOFR Rate shall be 0%. “Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.
-13- “GAAP” shall have meaning specified in Section 1.03(a). “Genco” means Exelon Generation Company, LLC a Pennsylvania limited liability company. “Governmental Authority” means the government of the United States of America or any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing). “Granting Bank” shall have the meaning specified in Section 8.07(i). “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. “Hedging Obligations” mean, with respect to any Person, the obligations of such Person under any interest rate or currency swap agreement, interest rate or currency future agreement, interest rate collar agreement, interest rate or currency hedge agreement, and any put, call or other agreement or arrangement designed to protect such Person against fluctuations in interest rates or currency exchange rates. “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of
-14- such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed and (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. “Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by the Borrower under this Agreement, and (b) Other Taxes. “Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to any other credit enhancement, provided, that if the Borrower does not have any outstanding debt securities of the type described, an appropriate fallback will be determined by Administrative Agent in consultation with Borrower. “Ineligible Institution” has the meaning assigned to it in Section 8.07(a). “Interest Period” means, with respect to a Term SOFR Borrowing, a period of one month (in each case, subject to the availability thereof)
commencing on a Business Day selected by the Borrower pursuant to this Agreement and ending on the day that corresponds numerically to such date one month thereafter; provided that (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such succeeding Business Day falls in a new calendar month, in which case such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; (iii) no Interest Period shall extend beyond the Termination Date; and (iv) no tenor that has been removed from this definition pursuant to Section 2.16(b)(iv) may be available for selection by the Borrower. “IRS” means the United States Internal Revenue Service.
-15- “Lenders” means each of the financial institutions listed on the signature pages hereof and each Eligible Assignee that shall become a party hereto pursuant to Section 8.07. “Lien” means any lien (statutory or other), mortgage, pledge, security interest or other charge or encumbrance, or any other type of preferential arrangement in the nature of a security interest (including the interest of a vendor or lessor under any conditional sale, capitalized lease or other title retention agreement). “Loan Documents” means this Agreement, including schedules and exhibits hereto, and any agreements entered into in connection herewith by the Borrower with or in favor of the Administrative Agent and/or the Lenders, including any amendments, modifications or supplements thereto or waivers thereof, legal opinions issued in connection with the other Loan Documents, flood determinations, letter of credit applications and any other documents prepared in connection with the other Loan Documents, if any. “Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement. “Majority Lenders” means Lenders having Pro Rata Shares of more than 50%; provided that, for purposes of this definition, neither the Borrower nor any of its Affiliates, if a Lender, shall be included in calculating the amount of any Lender’s Pro Rata Share or the amount of the Commitment Amounts or Outstanding Credit Extensions, as applicable, required to constitute more than 50% of the Pro Rata Shares. “Material Adverse Change” and “Material Adverse Effect” each means, relative to any occurrence, fact or circumstances of whatsoever nature (including any determination in any litigation, arbitration or governmental investigation or proceeding), (i) any materially adverse change in, or materially adverse effect on, the financial condition, operations, assets or business of the Borrower and its consolidated Subsidiaries, taken as a whole, provided that, except as otherwise
expressly provided herein, the assertion against the Borrower or any Subsidiary of liability for any obligation arising under ERISA for which the Borrower or such Subsidiary bore joint and several liability with any ComEd Entity, or the payment by the Borrower or any Subsidiary of any such obligation, shall not be considered in determining whether a Material Adverse Change or Material Adverse Effect has occurred; or (ii) any materially adverse effect on the validity or enforceability against the Borrower of this Agreement. “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto. “Moody’s Rating” means, at any time, the rating issued by Moody’s and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from Moody’s for debt securities of such type, then such indicative rating shall be used for determining the “Moody’s Rating” and if the Borrower does not have such an indicative rating, but has an issuer rating from Moody’s, then such issuer rating shall be used for determining the “Moody’s Rating”).
-16- “Multiemployer Plan” means a Plan maintained pursuant to a collective bargaining agreement or any other arrangement to which Exelon or any other member of the Controlled Group is a party to which more than one employer is obligated to make contributions. “Nonrecourse Indebtedness” means any Indebtedness that finances the acquisition, development, ownership or operation of an asset or pool of assets in respect of which the Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates other than: (i) recourse to the named obligor with respect to such Indebtedness (the “Debtor”) for amounts limited to the cash flow or net cash flow (other than historic cash flow) from the asset; (ii) recourse to the Debtor for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any security interest or lien given by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor over its shares or like interest in the capital of the Debtor) to secure the Indebtedness, but only if the extent of the recourse to the Debtor is limited solely to the amount of any recoveries made on any such enforcement; and (iii) recourse to the Debtor generally or indirectly to any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a payment obligation or an obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person against which such recourse is available. “Notice of Borrowing” has the meaning set forth in Section 2.02(a). “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower
arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower or any Affiliate thereof of any proceeding under any debtor relief laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed or allowable claims in such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest commissions, charges, expenses, fees, indemnities and other amounts payable by the Borrower under any Loan Document and (b) the obligation of the Borrower to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Borrower. “OECD” means the Organization for Economic Cooperation and Development.
-17- “Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any loan document, or sold or assigned an interest in any Advance or document related thereto). “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, this Agreement, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment under Section 8.07(g)). “Outstanding Credit Extensions” means the sum of the aggregate principal amount of all outstanding Advances. “Overnight Bank Funding Rate” means for any day, the rate comprised of both overnight federal funds and overnight eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York, as set forth on its public website from time to time, and as published on the next succeeding Business Day as the overnight bank funding rate by the Federal Reserve Bank of New York (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate shall at any time, for
any reason, no longer exist, a comparable replacement rate determined by Administrative Agent at such time (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Borrower. “Participant” has the meaning assigned to such term in Section 8.07(e). “Participant Register” has the meaning assigned to such term in Section 8.07(e). “Payment Date” means (a) with respect to Base Rate Loans, the last day of each calendar quarter and the Termination Date, (b) with respect to Daily Simple SOFR Loans, each date that is on the numerically corresponding day in each calendar month that is one month after the borrowing of such Loan (or, if there is no such numerically corresponding day in such month, then the last day of such month) and the Termination Date and (c) with respect to Term SOFR Loans, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part. “PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA.
-18- “PECO” means PECO Energy Company, a Pennsylvania corporation, or any successor thereof. “Pepco” means Pepco Holdings LLC, a Delaware limited liability company, or any successor thereof. “Pepco Entity” shall mean Pepco, PH Holdco and any of their Subsidiaries. “Permitted Encumbrance” means (a) any right reserved to or vested in any municipality or other governmental or public authority (i) by the terms of any right, power, franchise, grant (including, without limitation, any financial assistance grant), license or permit granted or issued to the Borrower (or prior to consummation of the Spin Transaction, Genco) or (ii) to purchase or recapture or to designate a purchaser of any property of the Borrower (or prior to consummation of the Spin Transaction, Genco) ; (b) any easement, restriction, exception or reservation in any property and/or right of way of the Borrower (or prior to consummation of the Spin Transaction, Genco) for the purposes of roads, pipelines, transmission lines, distribution lines, transportation lines or removal of minerals or timber or for other like purposes or for the joint or common use of real property, rights of way, facilities and/or equipment, and defects, irregularities and deficiencies in title of any property and/or rights of way, which, in each case described in this clause (b), whether considered individually or collectively with all other items described in this clause (b), do not materially impair the use of the relevant property and/or rights of way for the purposes for which such property and/or rights of way are held by the Borrower (or prior to consummation of the Spin Transaction, Genco); (c) rights reserved to or vested in any municipality or other Governmental Authority to control or regulate any property of the Borrower (or prior to consummation of the Spin Transaction, Genco) or to use such property in a manner that does not materially impair the use of such property for the purposes for which it is held by the
Borrower (or prior to consummation of the Spin Transaction, Genco) ; and (d) obligations or duties of the Borrower (or prior to consummation of the Spin Transaction, Genco) to any municipality or other Governmental Authority that arise out of any franchise, grant, license or permit and that affect any property of the Borrower (or prior to consummation of the Spin Transaction, Genco) (including, without limitation, obligations with respect to nuclear waste disposal and related arrangements). “Permitted Obligations” mean (1) Hedging Obligations of the Borrower (or prior to consummation of the Spin Transaction, Genco) arising in the ordinary course of business and in accordance with the Borrower’s (or prior to consummation of the Spin Transaction, Genco’s) established risk management policies that are designed to protect the Borrower (or prior to consummation of the Spin Transaction, Genco) against, among other things, fluctuations in interest rates or currency exchange rates and which in the case of agreements relating to interest rates shall have a notional amount no greater than the payments due with respect to the applicable obligations being hedged and (2) Commodity Trading Obligations of the Borrower (or prior to consummation of the Spin Transaction, Genco). “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.
-19- “PH Holdco” shall mean PH HoldCo LLC, a Delaware limited liability company. “Plan” means an employee pension benefit plan that is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Borrower or any other member of the Controlled Group has or may have any liability (including contingent liability). “Platform” means Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system. “Prime Rate” means a rate per annum equal to the prime rate of interest announced by PNC Bank, National Association as its prime rate (which is not necessarily the lowest rate charged to any customer) in effect at its office located in Minneapolis, Minnesota; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. “Principal Subsidiary” means each Subsidiary other than PECO and its Subsidiaries, any BGE Entity, any ComEd Entity, and any Pepco Entity, (i) the consolidated assets of which, as of the date of any determination thereof, are at least equal to 10% of the consolidated assets of the Borrower or (ii) the consolidated earnings before taxes of which are at least equal to 10% of the consolidated earnings before taxes of the Borrower for the most recently completed fiscal year. “Pro Rata Share” means, with respect to a Lender, the percentage that such Lender’s Commitment Amount is of the Aggregate Commitment Amount. If the Commitments have terminated or expired, the Pro Rata Shares shall be determined based upon the Commitment Amounts most recently in effect, giving effect to any assignments. “Public-Sider” means a Lender whose representatives may trade in securities of the Borrower or its controlling person or any of its Subsidiaries while in possession of the financial statements provided by the Borrower under the terms of this Agreement. “Rating Agency” means each of
S&P, Moody’s and Fitch. “Recipient” means, as applicable, (a) the Administrative Agent and (b) any Lender. “Reference Time” means, with respect to any setting of the then-current Benchmark, the time determined by the Administrative Agent in its reasonable discretion. “Register” has the meaning set forth in Section 8.07(c). “Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective trustees, administrators, managers, representatives, directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates. “Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or
-20- convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto. “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and regulations issued under such Section with respect to a Single Employer Plan, excluding such events as to which the requirement of Section 4043(a) of ERISA that the PBGC be notified within 30 days after the occurrence of such event is waived under PBGC Regulation Section 4043, provided that a failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waivers in accordance with either Section 4043(a) of ERISA or Section 412(c) of the Code. “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority. “RF Holdco” shall mean RF HoldCo LLC, a Delaware limited liability company. “S&P” means Standard and Poor’s Financial Services, LLC, or any successor. “S&P Rating” means, at any time, the rating issued by S&P and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from S&P for debt securities of such type, then such indicative rating shall be used for determining the “S&P Rating”). “Sanctioned Country” means, at any time, a country, region or territory which is itself, or whose government is, the subject or target of any Sanctions (as of the Effective Date, Cuba, Iran, North Korea, Sudan, Syria and Crimea). “Sanctioned Person” means, at any time, any Person that is the target of Sanctions, including, without limitation, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the
Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state or Her Majesty’s Treasury of the United Kingdom, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clause (a) or (b). “Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom. “Screen” has the meaning provided in the definition of Term SOFR Base Rate. “Securitization” shall mean any transaction or series of transactions entered into by the Borrower or any Subsidiary pursuant to which the Borrower or such Subsidiary, as the case may be, sells, conveys, assigns, grants an interest in or otherwise transfers, from time to time, to one or more Securitization Vehicles the Securitization Assets (and/or grants a security interest in
-21- such Securitization Assets transferred or purported to be transferred to such Securitization Vehicle), and which Securitization Vehicle finances the acquisition of such Securitization Assets (i) with proceeds from the issuance of Third Party Securities, (ii) with the issuance to the Borrower or such Subsidiary of Sellers’ Retained Interests or an increase in such Sellers’ Retained Interests, or (iii) with proceeds from the sale or collection of Securitization Assets. “Securitization Assets” shall mean any accounts receivable originated or expected to be originated by (and owed to) the Borrower or any Subsidiary (in each case whether now existing or arising or acquired in the future) and any ancillary assets (including contract rights) which are of the type customarily conveyed with, or in respect of which security interests are customarily granted in connection with, such accounts receivable in a securitization transaction and which are sold, transferred or otherwise conveyed by the Borrower or a Subsidiary to a Securitization Vehicle. “Securitization Vehicle” shall mean a Person that is a direct wholly owned Subsidiary of the Borrower or of any Subsidiary (a) formed for the purpose of effecting a Securitization, (b) to which the Borrower and/or any Subsidiary transfers Securitization Assets and (c) which, in connection therewith, issues Third Party Securities; provided that (i) such Securitization Vehicle shall engage in no business other than the purchase of Securitization Assets pursuant to the Securitization, the issuance of Third Party Securities or other funding of such Securitization and any activities reasonably related thereto. “Sellers’ Retained Interests” means the debt and/or Equity Interests (including any intercompany notes) held by the Borrower or any Subsidiary in a Securitization Vehicle to which Securitization Assets have been transferred in a Securitization, including any such debt or equity received as consideration for, or as a portion of, the purchase
price for the Securitization Assets transferred, and any other instrument through which the Borrower or any Subsidiary has rights to or receives distributions in respect of any residual or excess interest in the Securitization Assets. “Single Employer Plan” means a Plan other than a Multiemployer Plan, maintained by the Borrower or any other member of the Controlled Group for employees of the Borrower or any other member of the Controlled Group. “SOFR” means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR Administrator’s Website. “SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time. “SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR Rate”.
-22- “SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR Rate”. “SOFR Reserve Percentage” shall mean, for any day, the maximum effective percentage in effect on such day, if any, 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 SOFR funding. “SPC” has the meaning set forth in Section 8.07(i). “Spin Transaction” means (i) the transfer of the membership interests of Genco by Exelon to SpinCo and (ii) the pro rata distribution of the capital stock of SpinCo to the holders of Exelon’s common stock, at which point SpinCo will become a separate, independent publicly traded company. “SpinCo” means the new company established by Exelon in connection with the Spin Transaction and that as of the effective date of the Spin Transaction, will own, directly, 100% of the issued and outstanding membership interests of Genco (or its successor in interest, as applicable). “Subsidiary” means, with respect to any Person, any corporation or unincorporated entity of which more than 50% of the outstanding capital stock (or comparable interest) having ordinary voting power (irrespective of whether or not at the time capital stock, or comparable interests, of any other class or classes of such corporation or entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person (whether directly or through one or more other Subsidiaries). Unless otherwise indicated, each reference to a “Subsidiary” means a Subsidiary of the Borrower. “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes, or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties applicable thereto. “Termination Date” means July 24, 2023. “Term SOFR” means the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. “Term SOFR Administrator” means CME Group Benchmark Administration Ltd.(or a successor administrator of Term SOFR). “Term SOFR Administrator’s Website” means https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr, or any successor source for Term SOFR identified as such by the Term SOFR Administrator from time to time.
-23- “Term SOFR Advance” means any Advance that bears interest as provided in Section 2.06. “Term SOFR Base Rate” means, for the relevant Interest Period, the greater of (a) zero and (b) the Term SOFR rate quoted by the Administrative Agent from the Term SOFR Administrator’s Website or the applicable Bloomberg screen (or other commercially available source providing such quotations as may be selected by the Administrative Agent from time to time) (the “Screen”) for such Interest Period, which shall be the Term SOFR rate published two Business Days before the first day of such Interest Period (such Business Day, the “Determination Date”). If as of 5:00 p.m. (New York time) on any Determination Date, the Term SOFR rate has not been published by the Term SOFR Administrator or on the Screen, then the rate used will be that as published by the Term SOFR Administrator or on the Screen for the first preceding Business Day for which such rate was published on such Screen so long as such first preceding Business Day is not more than three (3) Business Days prior to such Determination Date. “Term SOFR Borrowing” means a Borrowing that, except as otherwise provided in Section 2.13(f), bears interest at the applicable Term SOFR Rate. “Term SOFR Loan” means a Loan that, except as otherwise provided in Section 2.13(f), bears interest at the applicable Term SOFR Rate other than pursuant to clause (d) of the definition of Alternate Base Rate. “Term SOFR Rate” means, for the relevant Interest Period, the sum of (a) the Term SOFR Base Rate applicable to such Interest Period, plus (b) the Applicable Margin, plus (c) 0.10%; provided that the Term SOFR Rate before an Event of Default or the Termination Date expressed as an annual rate shall not be less than 0%. “Test Period” means, for any date of determination under this Agreement, the four (4) consecutive fiscal quarters of the Borrower most recently ended as of such date of
determination for which financial statements have been delivered pursuant to Section 5.01(a). “Third Party Securities” shall mean, with respect to any Securitization, notes, bonds or other debt instruments, beneficial interests in a trust, undivided ownership interests in receivables or other securities issued for cash consideration by the relevant Securitization Vehicle to banks, financing conduits, investors or other financing sources (other than the Borrower or any Subsidiary, except in respect of the Sellers’ Retained Interest) the proceeds of which are used to finance, in whole or in part, the purchase by such Securitization Vehicle of Securitization Assets in a Securitization. The amount of any Third Party Securities shall be deemed to equal the aggregate principal, stated, or invested amount of such Third Party Securities which are outstanding at such time. “Type” means, with respect to any Borrowing, its nature as a Base Rate Borrowing, a Term SOFR Borrowing or a Daily Simple SOFR Borrowing and with respect to a Loan, its nature as a Base Rate Loan, Term SOFR Loan or Daily Simple SOFR Loan. “UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook
-24- (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. “UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution. “Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “Unfunded Liabilities” means, (i) in the case of any Single Employer Plan, the amount (if any) by which the present value of all vested nonforfeitable benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent actuarial valuation date for such Plan using the actuarial assumptions set forth in the most recent actuarial valuation report for such Single Employer Plan, and (ii) in the case of any Multiemployer Plan, the Withdrawal Liability that would be incurred by the Controlled Group if all members of the Controlled Group completely withdrew from such Multiemployer Plan. “U.S. Government Securities Business Day” means any day except for (a) a Saturday or Sunday or (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “U.S. Person” means a “United States” person within the meaning of Section 7701(a)(30) of the Code. “U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.14(f)(ii)(B)(3). “Withdrawal Liability” shall have the meaning specified in Part 1 of Subtitle E of Title IV of ERISA. “Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion
powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers. SECTION 1.02 Other Interpretive Provisions. In this Agreement, (a) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; (b) the term “including” means “including without limitation”; and (c) unless otherwise indicated, (i) any
-25- reference to an Article, Section, Exhibit or Schedule means an Article or Section hereof or an Exhibit or Schedule hereto; (ii) any reference to a time of day means such time in Pittsburgh, Pennsylvania; (iii) any reference to a law or regulation means such law or regulation as amended, modified or supplemented from time to time and includes all statutory and regulatory provisions consolidating, replacing or interpreting such law or regulation; and (d) any reference to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented or otherwise modified from time to time. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Term SOFR Loan”) or by Class and Type (e.g., a “Term SOFR Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Term SOFR Borrowing”) or by Class and Type (e.g., a “Term SOFR Revolving Borrowing”). SECTION 1.03 Accounting Principles. (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Majority Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to (i) any election under Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) any treatment of Indebtedness under Accounting Standards Codification 470-20 or 2015-03 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. (b) Notwithstanding anything to the contrary contained in Error! Reference source not found. or in the definition of “Capital Lease Obligations,” any change in accounting for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith. SECTION 1.04 Term SOFR Notification. The interest rate on Term SOFR Borrowings is determined by reference to the Term SOFR Base Rate, which is derived from
Term
-26- SOFR. Section 2.16(b) provides a mechanism for (a) determining an alternative rate of interest if Term SOFR is no longer available or in the other circumstances set forth in Section 2.16(b), and (b) modifying this Agreement to give effect to such alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to Term SOFR or other rates in the definition of Term SOFR Base Rate or with respect to any alternative or successor rate thereto, or replacement rate thereof (including any Benchmark Replacement), including without limitation, whether any such alternative, successor or replacement reference rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 2.16(b), will have the same value as, or be economically equivalent to, the Term SOFR Base Rate. The Administrative Agent and its affiliates or other related entities may engage in transactions that affect the calculation of Alternate Base Rate, Term SOFR, the Term SOFR Base Rate, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain the Alternate Base Rate, the Term SOFR Base Rate, Term SOFR or any other Benchmark, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
SECTION 1.05 Divisions. For all purposes hereunder or under any other loan documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its equity interests at such time. ARTICLE II AMOUNTS AND TERMS OF THE COMMITMENTS SECTION 2.01 Commitments. Subject to the terms and conditions set forth herein, each Lender severally (and not jointly) agrees to make an Advance in dollars to the Borrower, on the Effective Date, in a principal amount not to exceed such Lender’s Commitment. Amounts prepaid or repaid in respect of such Advances may not be reborrowed. SECTION 2.02 Procedures for Advances; Limitations on Borrowings. (a) The Borrower shall request the Advance to be made on the Effective Date by giving notice (a “Notice of Borrowing”) to the Administrative Agent (which shall promptly advise each Lender of its receipt thereof) not later than 10:00 A.M. on the third Business Day prior to the Effective Date of any proposed borrowing of Term SOFR Advances or Daily Simple SOFR Advances and on the Effective Date of any proposed borrowing of Base Rate Advances. Each Notice of Borrowing shall be in substantially the form of Exhibit B, specifying therein (i) the Type
-27- of Advances requested, (ii) the aggregate principal amount of the requested Advances and (iii) in the case of a borrowing of Term SOFR Advances, the initial Interest Period therefor. Each Lender shall, before 12:00 noon on the date of such borrowing, make available for the account of its applicable lending office to the Administrative Agent at its address referred to in Section 8.02, in same day funds, such Lender’s ratable portion of the requested borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Administrative Agent’s aforesaid address. (b) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. If a Notice of Borrowing requests Term SOFR Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure of the Borrower to fulfill on or before the requested borrowing date the applicable conditions set forth in Article III, including any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the requested Advance to be made by such Lender. (c) If the Notice of Borrowing requests Daily Simple SOFR Advances , Borrower shall indemnify each Lender against any loss cost or expense incurred by such Lender as a result of (i) the payment of principal of any Daily Simple SOFR Loan other than on the Payment Date applicable thereto, (ii) the failure to borrow or prepay any Daily Simple SOFR Loan on the date specified in any notice delivered pursuant hereto or (iii) the assignment of any Daily Simple SOFR Loan or Term SOFR Advances other than on the Payment Date applicable thereto as a result of a request by the Borrower. SECTION 2.03 Fees. The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent. SECTION 2.04 Termination of Commitments. The Commitments shall terminate at 5:00 pm on the Effective Date. SECTION 2.05 Repayment of Advances. The Borrower shall repay all outstanding Advances made by each Lender, and all other obligations of the Borrower hereunder on the Termination Date. SECTION 2.06 Interest on Advances. (a) Each Base Rate Loan shall bear interest on the outstanding principal amount thereof, for each day from the date such Loan is made or is automatically converted into a Base Rate Loan pursuant to Section 2.09, to the date it is paid or is converted into a Term SOFR Loan pursuant to Section 2.09, at a rate per annum equal to the Base Rate for such day. Changes in the rate of interest on each Base Rate Borrowing will take effect simultaneously with each change in the Alternate Base Rate. (b) Each Term SOFR Loan shall bear interest on the outstanding principal amount thereof from the first day of the Interest Period applicable thereto to the last day of such Interest Period at the interest rate determined by the Administrative Agent as applicable to such
-28- Term SOFR Loan based upon the Borrower’s selections under Sections 2.02 and 2.09 and the Applicable Margin. (c) Each Daily Simple SOFR Loan shall bear interest on the outstanding principal amount thereof from the date such Loan is made at a rate per annum equal to the Adjusted Daily Simple SOFR Rate for such day. SECTION 2.07 [Reserved]. SECTION 2.08 Interest Rate Determination. The Administrative Agent shall give prompt notice to the Borrower and the Lenders of each applicable interest rate determined by the Administrative Agent for purposes of Section 2.06. SECTION 2.09 Continuation and Conversion of Advances. (a) The Borrower may on any Business Day, upon notice given to the Administrative Agent, substantially in the form of Exhibit F to this Agreement, not later than 10:00 A.M. on the third Business Day prior to the date of any proposed continuation of or conversion into Term SOFR Advances or Daily Simple SOFR Advances, and on the date of any proposed conversion into Base Rate Advances, and subject to the provisions of Sections 2.08 and 2.12, continue Term SOFR Advances for a new Interest Period or convert a Borrowing of Advances of one Type into Advances of the other Type; provided that any continuation of Term SOFR Advances or conversion of Term SOFR Advances into Base Rate Advances shall be made on, and only on, the last day of an Interest Period for such Term SOFR Advances, unless, in the case of such a conversion, the Borrower shall also reimburse the Lenders pursuant to Section 8.04(b) on the date of such conversion. Each such notice of a continuation or conversion shall, within the restrictions specified above, specify (i) the date of such continuation or conversion, (ii) the Advances to be continued or converted, and (iii) in the case of continuation of or conversion into Term SOFR Advances, the duration of the Interest Period for such Advances. (b) If the Borrower fails to select the
Type of any Advance or the duration of any Interest Period for any Borrowing of Term SOFR Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01 and Section 2.09(a), the Administrative Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, convert into Base Rate Advances. SECTION 2.10 Prepayments. The Borrower may, upon notice to the Administrative Agent, substantially in the form of Exhibit G to this Agreement. not later than 10:00 A.M. at least three Business Days prior to any prepayment of Term SOFR Advances or Daily Simple SOFR Advances or on the date of any prepayment of Base Rate Advances, in each case stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given, the Borrower shall, prepay the outstanding principal amounts of the Advances made as part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided that (i) each partial prepayment shall be in an aggregate principal amount not less than $10,000,000 or a higher integral multiple of $1,000,000 in the case of any prepayment of Term SOFR Advances or Daily Simple SOFR
-29- Advances and $5,000,000 or a higher integral multiple of $1,000,000 in the case of any prepayment of Base Rate Advances and (ii) in the case of any such prepayment of a Term SOFR Advance or Daily Simple SOFR Advance, the Borrower shall be obligated to reimburse the Lenders pursuant to Section 8.04(b) on the date of such prepayment. SECTION 2.11 Increased Costs. (a) If any Change In Law shall: (i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Term SOFR Rate); (ii) impose on any Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement, Term SOFR Advances or Daily Simple SOFR Advances made by such Lender; or (iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto). and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any Term SOFR Advance or Daily Simple SOFR Advance (or of maintaining its obligation to make any such Advance) or to reduce the amount of any sum received or receivable by such Lender or such other Recipient hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, for such additional costs incurred
or reduction suffered. (b) If any Lender determines that any Change in Law, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Advances made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered. (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest
-30- error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 90 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 90-day period referred to above shall be extended to include the period of retroactive effect thereof, provided that such demand is made within 90 days after the implementation of such retroactive Change in Law. SECTION 2.12 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending office to make, maintain, or fund Loans whose interest is determined by reference to the Term SOFR Rate, or to determine or charge interest rates based upon the Term SOFR Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, upon notice thereof by such Lender to the Borrower (through the Administrative Agent), (a) any obligation of such Lender to make or continue Term SOFR Borrowings or to convert Base Rate Borrowings to Term SOFR Borrowings shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Borrowings the interest rate on which is determined by reference to the Term SOFR
Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert each Term SOFR Loan of such Lender to a Base Rate Loan (the interest rate on which Base Rate Loan shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender can lawfully continue to maintain such Term SOFR Loan to such day, or immediately, if such Lender cannot lawfully continue to maintain such Term SOFR Loan, and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Term SOFR Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Term SOFR Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Term SOFR Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted, together with any additional amounts required pursuant to Section 2.17. SECTION 2.13 Payments and Computations. (a) The Borrower shall make each payment hereunder not later than 10:00 A.M. on the day when due in U.S. dollars to the Administrative Agent at its address referred to in Section
-31- 8.02 in same day funds without setoff, counterclaim or other deduction. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal, interest and upfront fees ratably (other than amounts payable pursuant to Section 2.02(b), 2.11, 2.14 or 8.04(b)) to the Lenders for the account of their respective applicable lending offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its applicable lending office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(d), from the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) The Borrower hereby authorizes each Lender, if and to the extent any payment owed to such Lender by the Borrower is not made when due hereunder, to charge from time to time against any of the Borrower’s accounts with such Lender any amount so due. Each Lender agrees to notify the Borrower promptly after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. (c) Interest computed by reference to the Term SOFR Rate or Daily Simple SOFR Rate hereunder shall be computed on the basis of a year of 360 days. Interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year). In
each case interest shall be payable for the actual number of days elapsed (including the first day but excluding the last day). All interest hereunder on any Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of determination. The applicable Alternate Base Rate, Term SOFR Rate, or Daily Simple SOFR Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. (d) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of any interest or fees, as the case may be; provided that if such extension would cause payment of interest on or principal of a Term SOFR Advance or Daily Simple SOFR Advance to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due by the Borrower to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent that the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed
-32- to such Lender until the date such Lender repays such amount to the Administrative Agent, at the Federal Funds Effective Rate. (f) Notwithstanding anything to the contrary contained herein, any amount payable by the Borrower hereunder that is not paid when due (whether at stated maturity, by acceleration or otherwise) shall (to the fullest extent permitted by law) bear interest from the date when due until paid in full at a rate per annum equal at all times to the Alternate Base Rate plus the Applicable Margin in effect from time to time plus 2%, payable upon demand. SECTION 2.14 Taxes. (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under this Agreement shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.14) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. (b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes. (c) Evidence of Payments. As soon as practicable after any payment of Taxes by the
Borrower to a Governmental Authority pursuant to this Section 2.14, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (d) Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. (e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified
-33- the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 8.07(e) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with this Agreement, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e). (f) Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under this Agreement shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding
or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.14(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. (ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person, (A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an executed IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax; (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the
-34- date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable: (1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any loan document, an executed IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under this Agreement, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (2) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed IRS Form W-8ECI; (3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) an executed IRS Form W-8BEN-E or IRS Form W-8BEN; or (4) to the extent a Foreign Lender is not the beneficial owner, an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership
and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of each such direct and indirect partner; (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other
-35- form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and (D) if a payment made to a Lender under this Agreement would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so. (g) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.14
(including by the payment of additional amounts pursuant to this Section 2.14), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.14 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
-36- (h) Survival. Each party’s obligations under this Section 2.14 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under this Agreement. (i) Defined Terms. For purposes of this Section 2.14, the term “applicable law” includes FATCA. (j) Status. For purposes of determining withholding Taxes imposed under FATCA, from and after the Effective Date, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i). SECTION 2.15 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances made by it to the Borrower (other than pursuant to Section 2.02(b), 2.11, 2.14, or 8.04(b)) in excess of its ratable share of payments on account of the Advances to the Borrower, such Lender shall forthwith purchase from the other Lenders such participations in the Advances as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them, provided that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The
Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. SECTION 2.16 Availability of Types of Borrowings; Adequacy of Interest Rate; Benchmark Replacement. (a) Availability of Term SOFR Borrowings. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, but subject to Section 2.16(b), if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Majority Lenders notify the Administrative Agent that the Majority Lenders have determined, that: (i) for any reason in connection with any request for a Term SOFR Borrowing or a conversion or continuation thereof that the Term SOFR Base Rate for any requested Interest Period with respect to a proposed Term SOFR Borrowing does not adequately and fairly reflect the cost to such Lenders of the funding such Loans, or
-37- (ii) the interest rate applicable to Term SOFR Borrowings for any requested Interest Period is not ascertainable or available (including, without limitation, because the applicable Screen (or on any successor or substitute page on such screen) is unavailable) and such inability to ascertain or unavailability is not expected to be permanent, or does not adequately and fairly reflect the cost of making or maintaining Term SOFR Borrowings, then the Administrative Agent shall suspend the availability of Term SOFR Borrowings and require any affected Term SOFR Borrowings to be repaid or converted to Base Rate Borrowings, subject to the payment of any funding indemnification amounts required by Section 2.17. (b) Benchmark Replacement. (i) Benchmark Transition Event; Early Opt-in Election. Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth
Business Day after the date notice of such Benchmark Replacement is provided by the Administrative Agent to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders. (ii) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. (iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement, and (B) the effectiveness of any
-38- Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.16(b), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.16(b). (iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then- current Benchmark is a term rate (including the Term SOFR Base Rate and Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove any tenor of such Benchmark that is unavailable or non-representative for any Benchmark settings and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an
announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor. (v) Benchmark Unavailability Period. Upon notice to the Borrower by the Administrative Agent in accordance with this Section 2.16(b) of the commencement of a Benchmark Unavailability Period and until a Benchmark Replacement is determined in accordance with this Section 2.16(b), the Borrower may revoke any request for a Term SOFR Borrowing, or any request for the conversion or continuation of a Term SOFR Borrowing to be made, converted or continued during any Benchmark Unavailability Period at the end of the applicable Interest Period, and, failing that, the Borrower will be deemed to have converted any such request at the end of the applicable Interest Period into a request for a Base Rate Borrowing or conversion to a Base Rate Borrowing. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate. SECTION 2.17 Funding Indemnification. If
-39- (i) any payment of a Term SOFR Borrowing occurs on a date that is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise; (ii) a Term SOFR Borrowing is not made on the date specified by the Borrower for any reason other than default by the Lenders; (iii) a Term SOFR Borrowing is converted other than on the last day of the Interest Period applicable thereto; or (iv) the Borrower fails to borrow, convert, continue or prepay a Term SOFR Borrowing on the date specified in any notice delivered pursuant hereto. then the Borrower shall indemnify each Lender for such Lender’s costs, expenses and Interest Differential (as determined by such Lender) incurred as a result of such prepayment. The term “Interest Differential” means the greater of zero and the financial loss incurred by the Lender resulting from prepayment, calculated as the difference between the amount of interest such Lender would have earned (from like investments as of the first day of the Interest Period) had prepayment not occurred and the interest such Lender will actually earn (from like investments as of the date of prepayment) as a result of the redeployment of funds from the prepayment. Because of the short-term duration of any Interest Period, the Borrower agrees that the Interest Differential shall not be discounted to its present value. The Borrower hereby acknowledges that the Borrower shall be required to pay Interest Differential with respect to any portion of the principal balance accelerated or paid before the end of the Interest Period for such Term SOFR Borrowing, whether voluntarily, involuntarily, or otherwise, including without limitation any principal payment required upon maturity when the Borrower has elected an Interest Period that extends beyond the scheduled maturity date of such Loan and any principal payment required following default, demand for payment, acceleration, collection proceedings, foreclosure
sale or other disposition of collateral, bankruptcy or other insolvency proceedings, eminent domain, condemnation, application of insurance proceeds, or otherwise. Such Interest Differential shall at all times be an Obligation as well as an undertaking by the Borrower to the Lenders whether arising out of a voluntary or mandatory prepayment. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.17 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. SECTION 2.18 Interest Payment Dates. Interest on each Loan shall be due on the Interest Payment Date for the corresponding Type of Loan. Interest on mandatory prepayments shall be due on the date such mandatory prepayment is due. Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Expiration Date, upon acceleration or otherwise). Interest shall be computed to, but excluding, the date payment is due.
-40- ARTICLE III CONDITIONS PRECEDENT SECTION 3.01 Conditions Precedent to Effectiveness. This Agreement (including the Commitments of the Lenders and the obligations of the Borrower hereunder) shall become effective if all of the following conditions precedent have been satisfied: (a) the Administrative Agent shall have received (i) a counterpart of this Agreement signed on behalf of each party hereto or (ii) written evidence (which may include electronic transmission of a signed signature page of this Agreement) that each party hereto has signed a counterpart of this Agreement and each of the following documents, each dated a date reasonably satisfactory to the Administrative Agent and otherwise in form and substance satisfactory to the Administrative Agent: (i) Certified copies of resolutions of the Board of Directors or equivalent managing body of the Borrower approving the transactions contemplated by this Agreement and of all documents evidencing other necessary organizational action of the Borrower with respect to this Agreement and the documents contemplated hereby; (ii) A certificate of the Secretary or an Assistant Secretary of Borrower certifying (A) the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the other documents to be delivered hereunder; (B) that attached thereto are true and correct copies of the organizational documents of the Borrower, in each case in effect on such date; and (C) that attached thereto are true and correct copies of all governmental and regulatory authorizations and approvals required for the due execution, delivery and performance by the Borrower of this Agreement and the documents contemplated hereby; (iii) A certificate signed by either the chief financial officer, principal accounting officer or treasurer of the Borrower stating that (A) the representations and warranties contained in Section 4.01 are correct on and as of the date of such
certificate as though made on and as of such date and (B) no Default or Event of Default has occurred and is continuing on the date of such certificate; (iv) Any notes requested by a Lender, substantially in the form of Exhibit C; and (v) A favorable opinion of Ballard Spahr LLP, counsel for the Borrower, in form and substance reasonably acceptable to the Administrative Agent. (b) [Reserved]; (c) The Administrative Agent shall have received evidence, satisfactory to the Administrative Agent, that the Borrower has paid (or will pay with the proceeds of the initial Credit
-41- Extensions) all fees and, to the extent billed, expenses payable by the Borrower hereunder on the Effective Date; (d) Upon the reasonable request of any Lender, the Borrower shall have provided to such Lender the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including the PATRIOT Act, in each case at least five days prior to the Effective Date; and (e) Receipt by the Administrative Agent of the Beneficial Ownership Certification in relation to the Borrower. Promptly upon the occurrence thereof, the Administrative Agent shall notify the Borrower and the Lenders as to the Effective Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01 Representations and Warranties of the Borrower. The Borrower represents and warrants as follows: (a) The Borrower is a corporation, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. (b) The execution, delivery and performance by the Borrower of this Agreement are within the Borrower’s organizational powers, have been duly authorized by all necessary organizational action on the part of the Borrower, and do not and will not contravene (i) the organizational documents of the Borrower, (ii) applicable law or (iii) any contractual or legal restriction binding on or affecting the properties of the Borrower or any Subsidiary. (c) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution, delivery and performance by the Borrower of this Agreement, except any order that has been duly obtained and is (x) in full force and effect and (y) sufficient for the purposes hereof. (d) This Agreement is a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as the enforceability thereof may
be limited by equitable principles or bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally. (e) The consolidated balance sheet of the Borrower and its Subsidiaries as of December 31, 2020 and the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, certified by PricewaterhouseCoopers LLP, copies of which have been furnished to each Lender, fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as of such dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates in accordance with GAAP; and (ii) since December 31, 2020, there has been no Material Adverse Change.
-42- (f) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in connection with Section 5.01 and/or filed with the Securities and Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or threatened action, investigation or proceeding affecting the Borrower or any Subsidiary before any court, governmental agency or arbitrator that may reasonably be anticipated to have a Material Adverse Effect. There is no pending or threatened action or proceeding against the Borrower or any Subsidiary that purports to affect the legality, validity, binding effect or enforceability against the Borrower of this Agreement. Since December 31, 2021, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole. (g) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, the Borrower (i) has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has not become subject to any Environmental Liability, (iii) has not received notice of any claim with respect to any Environmental Liability or (iv) has no knowledge of any basis for any Environmental Liability. (h) No proceeds of any Advance have been or will be used directly or indirectly in connection with the acquisition of in excess of 5% of any class of equity securities that is registered pursuant to Section 12 of the Exchange Act or any transaction subject to the requirements of Section 13 or 14 of the Exchange Act. (i) The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance 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. Not more than 25% of the value of the assets of the Borrower and its Subsidiaries is represented by margin stock. (j) The Borrower is not required to register as an “investment company” under the Investment Company Act of 1940. (k) During the twelve consecutive month period prior to the date of the execution and delivery of this Agreement and prior to the date of any Credit Extension, no steps have been taken by the Borrower or any member of the Controlled Group or, to the knowledge of the Borrower, by any other Person to terminate any Plan (excluding any termination arising out of the institution by or against any ComEd Entity of any bankruptcy, insolvency or similar proceeding so long as such termination would not constitute an Default or Event of Default under Section 6.01(g)), and there has been no failure to satisfy the minimum funding standard described in Section 412(a)(2) of the Code with respect to any Single Employer Plan that would reasonably be expected to result in a lien pursuant to Section 430(k) of the Code. To the knowledge of the Borrower, no condition exists or event or transaction has occurred with respect to any Plan, which would reasonably be expected to result in the incurrence by the Borrower or any other member of the Controlled Group of any material liability (other than to make contributions, pay annual PBGC
-43- premiums or pay out benefits in the ordinary course of business), fine or penalty (excluding any condition, event or transaction arising out of the institution by or against any ComEd Entity of any bankruptcy, insolvency or similar proceeding so long as such condition, event or transaction does not constitute an Default or Event of Default under Section 6.01(g)). (l) The Borrower has implemented, and maintains in effect, policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with all Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of the Borrower, its directors and agents, are in compliance with all Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby or the transactions contemplated hereby, is a Sanctioned Person. No Advance, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions. (m) The Borrower is not an Affected Financial Institution. (n) The Borrower is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing. (o) As of the Effective Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects. (p) The
Borrower has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (q) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower has set aside on its books adequate reserves or (r) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. (s) No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. ARTICLE V COVENANTS OF THE BORROWER SECTION 5.01 Affirmative Covenants. The Borrower agrees that so long as any amount payable by the Borrower hereunder remains unpaid, the Borrower will, and, in the case of Section 5.01(a), will cause its Principal Subsidiaries to, unless the Majority Lenders shall otherwise consent in writing:
-44- (a) Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the Administrative Agent and each Lender, including their Public-Siders: (i) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the Borrower’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission with respect to such quarter (or, if the Borrower is not required to file a Quarterly Report on Form 10-Q, copies of an unaudited consolidated balance sheet of the Borrower as of the end of such quarter and the related consolidated statement of operations of the Borrower for the portion of the Borrower’s fiscal year ending on the last day of such quarter, in each case prepared in accordance with GAAP, subject to the absence of footnotes and to year-end adjustments), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto; (ii) as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the Borrower’s Annual Report on Form 10-K filed with the Securities and Exchange Commission with respect to such fiscal year (or, if the Borrower is not required to file an Annual Report on Form 10- K, the consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of such fiscal year and the related consolidated statements of operations, changes in shareholders’ equity (if applicable) and cash flows of the Borrower for such fiscal year, certified by PricewaterhouseCoopers LLP or other certified public accountants of recognized national standing), together with a certificate of an authorized officer of the Borrower stating
that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto; (iii) concurrently with the delivery of the quarterly and annual reports referred to in subsections (i) and (ii) above, a compliance certificate in substantially the form set forth in Exhibit D, duly completed and signed by the Chief Financial Officer, Treasurer or an Assistant Treasurer of the Borrower; (iv) except as otherwise provided in clause (i) or (ii) above, promptly after the sending or filing thereof, copies of all reports that the Borrower sends to its security holders generally, and copies of all Reports on Form 10-K, 10-Q or 8- K, and registration statements and prospectuses that the Borrower or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange (except to the extent that any such registration statement or prospectus relates solely to the issuance of securities pursuant to employee purchase, benefit or dividend reinvestment plans of the Borrower or a Subsidiary); (v) promptly upon becoming aware of the institution of any steps by the Borrower or any other Person to terminate any Plan, or the failure to make a
-45- required contribution to any Plan if such failure is sufficient to give rise to a lien under section 430(k) of the Code, or the taking of any action with respect to a Plan which could result in the requirement that the Borrower furnish a bond or other security to the PBGC or such Plan, or the occurrence of any event with respect to any Plan which could result in the incurrence by the Borrower or any other member of the Controlled Group of any material liability, fine or penalty, notice thereof and a statement as to the action the Borrower or such member of the Controlled Group proposes to take with respect thereto; (vi) promptly after any Rating Agency shall have announced a change in the rating established or deemed to have been established for the Index Debt, written notice of such rating change; (vii) promptly following any request therefor, (x) such other information regarding the operations, business affairs and financial condition of the Borrower or any Principal Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request and (y) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation; and (viii) such other information respecting the condition, operations or business, financial or otherwise, of the Borrower or any Subsidiary as any Lender, through the Administrative Agent, may from time to time reasonably request (including any information that any Lender reasonably requests in order to comply with its obligations under any “know your customer” or anti-money laundering laws or regulations, including the Patriot Act and the Beneficial Ownership Regulation). Documents required to be delivered pursuant to Section 5.01(a)(i)
(ii) or (v) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on which such materials are publicly available as posted on the Electronic Data Gathering, Analysis and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether made available by the Administrative Agent); provided that: (A) upon written request by the Administrative Agent (or any Lender through the Administrative Agent) to the Borrower, the Borrower shall deliver paper copies of such documents to the Administrative Agent or such Lender until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by
-46- the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of paper copies of such document to it and maintaining its copies of such documents. (b) Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following: (i) as soon as possible, and in any event within five Business Days after the occurrence of any Default or Event of Default with respect to the Borrower continuing on the date of such statement, a statement of an authorized officer of the Borrower setting forth details of such Default or Event of Default and the action which the Borrower proposes to take with respect thereto; (ii) any change in the credit ratings from a credit rating agency, or the placement by a credit rating agency of the Borrower or its parent on a “CreditWatch” or “WatchList” or any similar list, in each case with negative implications, or the cessation by a credit rating agency of, or its intent to cease, rating the Borrower’s debt; and (iii) any change in the information provided in the Beneficial Ownership Certification delivered to such Lender that would result in a change to the list of beneficial owners identified in such certification. Each notice delivered under this Section (i) shall be in writing, (ii) shall contain a heading or a reference line that reads “Notice under Section 5.01 of Exelon Corporation Credit Agreement dated January 24, 2022” and (iii) shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. (c) Existence; Conduct of Business. The Borrower will do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 5.02(b). (d) Payment of Obligations. The Borrower will pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) the Borrower has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (iii) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect. (e) Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Principal Subsidiaries to, (i) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (ii) maintain, with financially sound and reputable insurance companies, insurance in such
-47- amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. (f) Books and Records; Inspection Rights. The Borrower will, at any reasonable time and from time to time, pursuant to prior notice delivered to the Borrower, permit any Lender, or any agent or representative of any thereof, to examine and, at such Lender’s expense, make copies of, and abstracts from the records and books of account of, and visit the properties of, the Borrower and any Principal Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Principal Subsidiary with any of their respective officers; provided that any non-public information (which has been identified as such by the Borrower or the applicable Principal Subsidiary) obtained by any Lender or any of its agents or representatives pursuant to this Section 5.01(f) shall be treated confidentially by such Person; provided, further, that such Person may disclose such information to (a) any other party to this Agreement, its examiners, Affiliates, outside auditors, counsel or other professional advisors in connection with this Agreement, (b) to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement, (c) to any credit insurance provider or (d) if otherwise required to do so by law or regulatory process (it being understood that, unless prevented from doing so by any applicable law or Governmental Authority, such Person shall use reasonable efforts to notify the Borrower of any demand or request for any such information promptly upon receipt thereof so that the Borrower may seek a protective order or take other appropriate action). (g) Compliance with Laws. The Borrower will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. (h) Use of Proceeds. The proceeds of the Loans will be used only to make a capital contribution to Genco in connection with Spin Transaction and to pay certain fees and expenses in connection therewith, but in no event for any purpose that would be contrary to Section 4.01(h) or 4.01(i). No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulations T, U and X. The Borrower will not request any Borrowing, and the Borrower shall not use, and shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, directly or indirectly, the proceeds of any Borrowing (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto (including any Person participating in the Loans hereunder, whether as underwriter, advisor, investor, lender, hedge provider, facility or security agent or otherwise). (i) Accuracy of Information. The Borrower will ensure that any information, including financial statements or other documents, furnished to the Administrative Agent or the
-48- Lenders in connection with this Agreement or any amendment or modification hereof or waiver hereunder contains no material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the furnishing of such information shall be deemed to be a representation and warranty by the Borrower on the date thereof as to the matters specified in this Section. SECTION 5.02 Negative Covenants. The Borrower agrees that so long as any amount payable by the Borrower hereunder remains unpaid, the Borrower will not, without the written consent of the Majority Lenders: (a) Limitation on Liens. Create, incur, allow to assume or suffer to exist or permit (and prior to consummation of the Spin Transaction allow Genco to create, incur, allow to assume or suffer to exist) any Lien on its property, revenues or assets, whether now owned or hereafter acquired, except as follows: (i) Liens imposed by law, such as carriers’, warehousemen’s, landlords’ repairmen’s, materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business; (ii) Liens for taxes, assessments or governmental charges, levies, or fines (including such amounts arising under environmental law) on property of the Borrower (or prior to consummation of the Spin Transaction, Genco) if the same shall not at the time be delinquent or thereafter can be paid without a material penalty, or are being contested in good faith and by appropriate proceedings; (iii) Liens on the capital stock of or any other equity interest in any Subsidiary (other than, prior to the Spin Transaction, Genco and any holding company for Genco) to secure Nonrecourse Indebtedness; (iv) Liens upon or in any property acquired in the ordinary course of business to secure the purchase price of such property or to secure any obligation incurred solely for the purpose of financing the
acquisition of such property; (v) Liens existing on property at the time of the acquisition thereof (other than any such Lien created in contemplation of such acquisition unless permitted by the preceding clause (iv)); (vi) Liens granted in connection with any financing arrangement for the purchase of nuclear fuel or the financing of pollution control facilities, limited to the fuel or facilities so purchased or acquired; (vii) Liens arising in connection with sales or transfers of, or financing secured by, accounts receivable or related contracts, provided that any such sale, transfer or financing shall be on arms’ length terms; (viii) Liens securing Permitted Obligations and reimbursement obligations in respect of letters of credit issued to support Permitted Obligations (for the avoidance of doubt, the Electric Reliability Council of Texas (ERCOT)
-49- program and any other similar agreement or arrangement, including with any Independent System Operator or Regional Transmission Organization, are permitted under this clause (viii)); (ix) Permitted Encumbrances; (x) Liens arising in connection with sale and leaseback transactions entered into by the Borrower (or prior to consummation of the Spin Transaction, Genco), but only to the extent that the aggregate purchase price of all assets sold by the Borrower (or prior to consummation of the Spin Transaction, Genco) during the term of this Agreement pursuant to such sale and leaseback transactions does not exceed $1,000,000,000; (xi) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans or other social security or similar legislation; (xii) Liens constituting attachment, judgment and other similar Liens arising in connection with court proceedings to the extent not constituting an Event of Default under Section 6.01(f); (xiii) Liens created in the ordinary course of business to secure liability to insurance carriers and Liens on insurance policies and the proceeds thereof (whether accrued or not), rights or claims against an insurer or other similar asset securing insurance premium financings; (xiv) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business; (xv) Liens in the nature of rights of setoff, bankers’ liens, revocation, refund, chargeback, counterclaim, netting of cash amounts or similar rights as to deposit accounts, commodity accounts or securities accounts or other funds maintained with a credit or depository institution; (xvi) Liens consisting of pledges of
industrial development, pollution control or similar revenue bonds in connection with the remarketing of such bonds; (xvii) Liens and similar customary cash collateralization obligations in respect of letter of credit exposure or swingline loan exposure relating to defaulting lenders in the Borrower’s senior unsecured credit facilities; (xviii) Liens arising under leases or subleases, licenses or sublicenses granted to others that do not materially interfere with the ordinary course of business of the Borrower (or prior to the consummation of the Spin Transaction, Genco);
-50- (xix) Liens resulting from any restriction on any equity interest (or project interest, interests in any energy facility (including undivided interests)) of a Person providing for a breach, termination or default under any owners, participation, shared facility, joint venture, stockholder, membership, limited liability company or partnership agreement between such Person and one or more other holders of equity interest (or project interest, interests in any energy facility (including undivided interests)) of such Person, to the extent a security interest or other Lien is created on any such interest as a result thereof; (xx) Liens granted on cash or cash equivalents to defease or repay Indebtedness of the Borrower (or, prior to consummation of the Spin Transaction, Genco) no later than 60 days after the creation of such Lien; (xxi) Liens created in connection with sales, transfers, leases, assignment or other conveyances or dispositions of assets, including (A) Liens on assets or securities granted or deemed to arise in connection with and as a result of the execution, delivery or performance of contracts to purchase or sell such assets or securities, and (B) rights of first refusal, options or other contractual rights or obligations to sell, assign or otherwise dispose of any interest therein; and (xxii) Liens, other than those described above in this Section 5.02(a), provided that the aggregate amount of all Indebtedness secured by Liens permitted by this clause (xxii) shall (i) prior to consummation of the Spin Transaction, (A) in the case of Genco, not exceed $100,000,000, and (B) in the case of the Borrower and Genco, collectively, not exceed $200,000,000 and (ii) on and after the consummation of the Spin Transaction, not exceed in the aggregate at any one time outstanding $200,000,000. (b) Mergers and Consolidations; Disposition of Assets. Merge with or into or consolidate with or into, or sell, assign, 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 permit any Principal Subsidiary to do so, except that (i) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary, (ii) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to the Borrower (and the Borrower may transfer any assets acquired by the Borrower through any such merger, consolidation or transfer to any Principal Subsidiary), (iii) [Reserved] and (iv) the Borrower or any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Person, provided that, in each case, (A) immediately before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing (except in the case where any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary), (B) in the case of any such merger, consolidation or transfer of assets to which the Borrower is a party, either (x) the Borrower shall be the surviving entity or transferee (as applicable), or (y) the surviving entity or transferee (as applicable), shall be an Eligible Successor and shall have assumed all of the Obligations of the Borrower under this Agreement pursuant to a written instrument in form and substance satisfactory to the Administrative Agent, and the Administrative Agent shall have received an opinion of counsel in form and substance satisfactory to it as to the enforceability of such obligations assumed and (C)
-51- subject to clause (B) above, in the case of any such merger, consolidation or transfer of assets to which any Principal Subsidiary is a party, a Principal Subsidiary shall be the surviving entity or transferee (as applicable). (c) Consolidated Capitalized Ratio. the Consolidated Capitalization Ratio as of the last day of any Test Period to exceed 0.65:1.00. (d) Continuation of Businesses. Engage, or permit any Subsidiary to engage, in any line of business which is material to the Borrower and its Subsidiaries, taken as a whole, other than businesses engaged in by the Borrower and its Subsidiaries as of the date hereof and reasonable extensions thereof. (e) Capital Structure. Prior to consummation of the Spin Transaction, fail at any time to own, free and clear of all Liens, 100% of the issued and outstanding equity interests of Genco (or of a holding company which owns, free and clear of all Liens, 100% of the issued and outstanding equity interests of Genco). (f) Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries (other than any Excluded Subsidiary) to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (c) the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, (d) the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 5.02 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of,
any such restriction or condition),(e) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale; provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (f) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and (g) clause (a) of the foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof. (g) Anti-Corruption Laws and Sanctions. Request any Borrowing or Advance and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Advance (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, business or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
-52- ARTICLE VI EVENTS OF DEFAULT SECTION 6.01 Events of Default. If any of the following events shall occur and be continuing (any such event an “Event of Default”): (a) The Borrower shall fail to pay (i) any principal of any Advance when the same becomes due and payable or (ii) any interest on any Advance or any other amount payable by the Borrower hereunder within three Business Days after the same becomes due and payable; or (b) Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) pursuant to the terms of this Agreement shall prove to have been incorrect or misleading in any material respect when made; or (c) The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.01(c) (with respect to Borrower’s existence), Section 5.01(h) or Section 5.02, or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent (which notice shall be given by the Administrative Agent at the written request of any Lender); or (d) The Borrower or any Principal Subsidiary shall fail to pay any principal of or premium or interest on any Indebtedness that is outstanding in a principal amount in excess of $100,000,000 in the aggregate (but excluding Indebtedness hereunder and Nonrecourse Indebtedness) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness and shall
continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof, other than any acceleration of any Indebtedness secured by equipment leases or fuel leases of the Borrower or a Principal Subsidiary as a result of the occurrence of any event requiring a prepayment (whether or not characterized as such) thereunder, which prepayment will not result in a Material Adverse Change; or (e) The Borrower or any Principal Subsidiary 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 Borrower or any Principal Subsidiary 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
-53- or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 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 Borrower or any Principal Subsidiary shall take any corporate or limited liability company action to authorize or to consent to any of the actions set forth above in this Section 6.01(e); or (f) One or more judgments or orders for the payment of money in an aggregate amount exceeding $100,000,000 (excluding any such judgments or orders to the extent covered by insurance, subject to any customary deductible, and under which the applicable insurance carrier has not denied coverage) shall be rendered against the Borrower or any Principal Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (g) (i) Any Reportable Event that the Majority Lenders determine in good faith is reasonably likely to result in the termination of any Single Employer Plan or in the appointment by the appropriate United States District Court of a trustee to administer a Single Employer Plan shall have occurred and be continuing 60 days after written notice to such effect shall have been given to the Borrower by the Administrative Agent; (ii) any Single Employer Plan shall be terminated; (iii) a Trustee shall be appointed by an appropriate Unite
States District Court to administer any Single Employer Plan; (iv) the PBGC shall institute proceedings to terminate any Single Employer Plan or to appoint a trustee to administer any Single Employer Plan; or (v) the Borrower or any other member of the Controlled Group withdraws from any Multiemployer Plan; provided that on the date of any event described in clauses (i) through (v) above, the Unfunded Liabilities of the applicable Plan exceed $100,000,000; (h) any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all Obligations, ceases to be in full force and effect; or the Borrower or any other Person contests in writing the validity or enforceability of any provision of any Loan Document; or the Borrower denies in writing that it has any or further liability or obligation under any Loan Document, or purports in writing to revoke, terminate or rescind any Loan Document; or (i) a Change in Control shall have occurred; then, and in any such event, the Administrative Agent shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, declare the outstanding principal amount of the Advances, all interest thereon and all other amounts payable under this Agreement by the Borrower to be forthwith due and payable, whereupon the outstanding principal amount of the Advances, all such interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are
-54- hereby expressly waived by the Borrower; provided that in the event of an Event of Default under Section 6.01(e), (A) the obligation of each Lender to make any Advance to the Borrower shall automatically be terminated and (B) the outstanding principal amount of all Advances, all interest thereon and all other amounts payable by the Borrower hereunder shall automatically and immediately become due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE VII THE ADMINISTRATIVE AGENT SECTION 7.01 Authorization and Action. Each Lender hereby appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including enforcement or collection of the obligations of the Borrower hereunder), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders; provided that the Administrative Agent shall not be required to take any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement or applicable law. The Administrative Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. SECTION 7.02 Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them
under or in connection with this Agreement, except for its or their respective own gross negligence or willful misconduct. Without limiting the generality of the foregoing: (i) the Administrative Agent may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) the Administrative Agent makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iii) the Administrative Agent shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (iv) the Administrative Agent shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (v) the Administrative Agent shall not incur any liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by facsimile) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 7.03 Administrative Agent and Affiliates. With respect to its Commitment, Advances and other rights and obligations hereunder in its capacity as a Lender,
-55- PNC Bank, National Association shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Administrative Agent; and the term “Lender” or “Lenders” shall include PNC Bank, National Association in its individual capacity. PNC Bank, National Association and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any Affiliate thereof and any Person who may do business with or own securities of the Borrower or any such Affiliate, all as if it were not Administrative Agent and without any duty to account therefor to the Lenders. SECTION 7.04 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 7.05 Indemnification. The Lenders severally agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Administrative Agent
under this Agreement, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for its Pro Rata Share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that such expenses are reimbursable by the Borrower but for which the Administrative Agent is not reimbursed by the Borrower. SECTION 7.06 Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation or the Majority Lenders’ removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank described in clause (i) or (ii) of the definition of “Eligible Assignee” having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent,
such successor Administrative Agent shall thereupon succeed to and
-56- become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. Notwithstanding the foregoing, if no Default or Event of Default shall have occurred and be continuing, then no successor Administrative Agent shall be appointed under this Section 7.06 without the prior written consent of the Borrower, which consent shall not be unreasonably withheld or delayed. ARTICLE VIII MISCELLANEOUS SECTION 8.01 Amendments, Etc. No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No amendment or waiver of any provision of this Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Lenders and, in the case of an amendment, the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no amendment, waiver or consent shall: (a) increase or extend the Commitment of any Lender, without the written consent of such Lender, (b) reduce the principal
of, or rate of interest on, any Advance or any fees payable hereunder, without the written consent of each Lender directly affected thereby, (c) postpone any date fixed for any payment of principal of, or interest on, any Advance or any fees payable hereunder, without the written consent of each Lender directly affected thereby, (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder or the definition of “Majority Lenders”, without the written consent of each Lender, (e) amend this Section 8.01, without the written consent of each Lender or (f) waive or amend any provision regarding pro rata sharing or otherwise relates to the distribution of payments among Lenders, without the written consent of each Lender; provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement. Without limiting the generality of the foregoing, the making of an Advance shall not be construed as a waiver of any Event of Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Event of Default at the time. If the Administrative Agent and the Borrower acting together identify any ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement or any other document executed in connection herewith, then the Administrative Agent and the Borrower shall be permitted to amend, modify or supplement such provision to cure such ambiguity, omission, mistake, typographical error or other defect, and such amendment shall become effective without any further action or consent of any other party to this Agreement.
-57- SECTION 8.02 Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including facsimile transmission) and mailed, sent by facsimile or delivered, if to the Borrower, at 10 S. Dearborn, 48th Floor, Chicago, IL 60603, Attention: Chief Financial Officer, facsimile: 312-394-5443; if to any Lender, at its Domestic Lending Office specified in its Administrative Questionnaire or in the Assignment and Assumption pursuant to which it became a Lender; and if to the Administrative Agent, (a) for payments and notices pursuant to Section 2.09 or 2.10, at its address at The Tower at PNC Plaza, 10th Floor, 300 Fifth Avenue, Pittsburgh, PA 15222; or, as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications shall be effective (a) if mailed, three Business Days after being deposited in the U.S. mail, postage prepaid, (b) if sent by facsimile, when such facsimile is sent (except that if not sent during normal business hours for the recipient, such facsimile shall be deemed to have been sent at the opening of business on the next Business Day for the recipient), and (c) otherwise, when delivered, except that notices and communications to the Administrative Agent pursuant to Article II or VII shall not be effective until received by the Administrative Agent. SECTION 8.03 No Waiver; Remedies. No failure on the part of any Lender or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 8.04 Costs and Expenses; Indemnification. (a) The Borrower agrees to pay on demand all costs and expenses incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement and the other documents to be delivered hereunder, including the reasonable fees, internal charges and out-of-pocket expenses of counsel (including in-house counsel) for the Administrative Agent with respect thereto and with respect to advising the Administrative Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay on demand all costs and expenses, if any (including counsel fees and expenses of outside counsel and of internal counsel), incurred by the Administrative Agent or any Lender in connection with the collection and enforcement (whether through negotiations, legal proceedings or otherwise) of the Borrower’s obligations under this Agreement and the other documents to be delivered by the Borrower hereunder, including reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 8.04(a). (b) In the event of any payment of principal of, or any conversion of, any Term SOFR Advance is made other than on the last day of the Interest Period for such Advance, as a result of a payment or conversion pursuant to Section 2.09 or 2.12 or acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other reason, or the assignment of a Term SOFR Advance other than on the last day of the Interest Period for such Advance as a result of a request by the Borrower pursuant to Section 8.07(g) or the failure to borrow any Term SOFR Advance on the date specified in any notice delivered pursuant hereto, the Borrower shall, upon demand by any Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amount required to compensate such Lender for any additional loss, cost or expense which it may reasonably incur as a result of such
-58- event, including any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (c) The Borrower agrees to indemnify and hold each Lender and the Administrative Agent and each of their respective Related Parties (each, an “Indemnified Person”) harmless from and against any claim, damage, loss, liability, cost or expense (including reasonable attorney’s fees and expenses, whether or not such Indemnified Person is named as a party to any proceeding or is otherwise subjected to judicial or legal process arising from any such proceeding) that any of them may pay or incur arising out of or relating to this Agreement or the transactions contemplated hereby, or the use by the Borrower or any Subsidiary of the proceeds of any Advance; provided that the Borrower shall not be liable for any portion of any such claim, damage, loss, liability, cost or expense resulting from such Indemnified Person’s gross negligence or willful misconduct as determined in a final non-appealable order of a court of competent jurisdiction. The Borrower’s obligations under this Section 8.04(c) shall survive the repayment of all amounts owing by the Borrower to the Lenders and the Administrative Agent under this Agreement and the termination of Commitments hereunder. If and to the extent that the obligations of the Borrower under this Section 8.04(c) are unenforceable for any reason, the Borrower agrees to make the maximum contribution to the payment and satisfaction thereof which is permissible under applicable law. This Section 8.04(c) shall not apply with respect to Taxes other than any Taxes that represent losses or damages arising from any non-Tax claim. In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the
Borrower, any of the Borrower’s equityholders or creditors, an Indemnified Person or any other person or entity, whether or not an Indemnified Person is otherwise a party thereto. SECTION 8.05 Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement, whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. Each Lender agrees to notify the Borrower promptly after any such set-off and application made by such Lender or Affiliate thereof, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender under this Section 8.05 are in addition to other rights and remedies (including other rights of set-off) that such Lender may have. SECTION 8.06 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns, provided that (except as permitted by Section 5.02(b)(iii)) the Borrower shall not have the right to assign rights hereunder or any interest herein without the prior written consent of all Lenders. SECTION 8.07 Assignments and Participations.
-59- (a) Each Lender may, with the prior written consent of the Borrower and the Administrative Agent (which consents shall not be unreasonably withheld or delayed), and if demanded by the Borrower pursuant to Section 8.07(g) shall to the extent required by such Section, assign to one or more banks or other entities (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances owing to it); provided that (i) each such assignment shall be of a constant, and not a varying, percentage of all of the assigning Lender’s rights and obligations under this Agreement, (ii) the Commitment Amount of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Assumption with respect to such assignment) shall in no event be less than $5,000,000 or, if less, the entire amount of such Lender’s Commitment Amount, and shall be an integral multiple of $1,000,000 or such Lender’s entire Commitment Amount, (iii) each such assignment shall be to an Eligible Assignee, (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Assumption, together with a processing and recordation fee of $3,500 (which shall be payable by one or more of the parties to the Assignment and Assumption, and not by the Borrower (except in the case of a demand under Section 8.07(g)), and shall not be payable if the assignee is a Federal Reserve Bank), (v) the consent of the Borrower shall not be required after the occurrence and during the continuance of any Event of Default, and (vi) the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof. Upon such execution, delivery
acceptance and recording, from and after the effective date specified in each Assignment and Assumption, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Assumption, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Assumption, relinquish its rights and be released from its obligations under this Agreement and, in the case of an Assignment and Assumption covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto (although an assigning Lender shall continue to be entitled to indemnification pursuant to Section 8.04(c)). Notwithstanding anything contained in this Section 8.07(a) to the contrary, (A) the consent of the Borrower and the Administrative Agent shall not be required with respect to any assignment by any Lender to an Affiliate of such Lender or to another Lender or to an Approved Fund, and (B) any Lender may at any time, without the consent of the Borrower or the Administrative Agent, and without any requirement to have an Assignment and Assumption executed, assign all or any part of its rights under this Agreement to a Federal Reserve Bank or other central banking authority, provided that no such assignment shall release the transferor Lender from any of its obligations hereunder. For the purposes of this Section 8.07(a), the terms “Approved Fund” and “Ineligible Institution” have the following meanings: “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
-60- “Ineligible Institution” means (a) a natural person, (b) a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof, (c) the Borrower or any of its Affiliates or (d) Lender, an Affiliate of a Lender or an Approved Fund that, in each case at the time of such assignment, is a Sanctioned Person; provided that, such holding company, investment vehicle or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Borrowings or Commitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its business. (b) By executing and delivering an Assignment and Assumption, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Assumption, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in Section 4.01(e) and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (c) The Administrative Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Assumption delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment Amount of, and principal amount of the Advances owing to, each Lender from time to time (the “Register”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.
-61- (d) Upon its receipt of an Assignment and Assumption executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, the Administrative Agent shall, if such Assignment and Assumption has been completed and is in substantially the form of Exhibit A (including any necessary consents of the Administrative Agent and the Borrower), (i) accept such Assignment and Assumption, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. (e) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities other than an Ineligible Institution (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 8.01 that affects such Participant. Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.11, 2.14 and 8.04(b) (subject to the requirements and limitations therein, including the requirements
under Section 2.14(f) (it being understood that the documentation required under Section 2.14(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.15 and 8.07(g) as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.11 or 2.14, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.05 as though it were a Lender, provided such Participant agrees to be subject to Section 2.15 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non- fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Advances or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Advances or its other obligations hereunder) except to the extent that such disclosure is necessary to establish that such Commitment, Advance, or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose nam
is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. (f) [Reserved].
-62- (g) If any Lender (i) shall make demand for payment under Section 2.11(a), 2.11(b) or 2.14, (ii) shall deliver any notice to the Administrative Agent pursuant to Section 2.12 resulting in the suspension of certain obligations of the Lenders with respect to Term SOFR Advances, or (iii) does not consent to an amendment or waiver that requires the consent of all Lenders and has been approved by the Majority Lenders, then (A) in the case of clause (i), within 60 days after such demand (if, but only if, the payment demanded under Section 2.11(a), 2.11(b) or 2.14 has been made by the Borrower), (B) in the case of clause (ii), within 60 days after such notice (if such suspension is still in effect), or (C) in the case of clause (iii), within 60 days after the date the Majority Lenders approve the applicable amendment or waiver, as the case may be, the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, demand that such Lender assign in accordance with this Section 8.07 to one or more Eligible Assignees designated by the Borrower and reasonably acceptable to the Administrative Agent all (but not less than all) of such Lender’s rights and obligations hereunder within the next succeeding 30 days; provided that such Lender shall have received payment of an amount equal to the outstanding principal of its Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts). If any such Eligible Assignee designated by the Borrower shall fail to consummate such assignment on terms acceptable to such Lender, or if the Borrower shall fail to designate any such Eligible Assignee for all of such Lender’s Commitment and Advances, then such Lender may (but shall not be required to) assign such Commitment and Advances to any other Eligible Assignee
in accordance with this Section 8.07 during such period. In the event that a Lender assigns any Term SOFR Advances or Daily Simple SOFR Advances pursuant to this Section 8.07(g), such assignment shall be deemed to be a prepayment by the Borrower of such Daily Simple SOFR Advances for purposes of Section 8.04(b). (h) [Reserved]. (i) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Bank”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Advance that such Granting Bank would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Advance, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Advance, the Granting Bank shall be obligated to make such Advance pursuant to the terms hereof. The making of an Advance by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Advance were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in this Section 8.07, any SPC may (i) with notice to, but without the prior written consent of, the Borrower and the
-63- Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Advance to the Granting Bank or to any financial institution (consented to by the Borrower and Administrative Agent, which consents shall be unreasonably withheld or delayed) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Advances and (ii) disclose on a confidential basis any non-public information relating to its Advances to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This Section 8.07(i) may not be amended in any manner which adversely affects a Granting Bank or an SPC without the written consent of such Granting Bank or SPC. (j) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 8.08 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 8.09 Consent to Jurisdiction; Certain Waivers. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND ANY UNITED STATES DISTRICT COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; PROVIDED THAT NOTHING CONTAINED IN THIS SENTENCE SHALL LIMIT ANY OF THE BORROWER’S INDEMNITY AND REIMBURSEMENT OBLIGATIONS TO ANY INDEMNITEE TO THE EXTENT SUCH INDEMNITEE IS ENTITLED TO INDEMNIFICATION WITH RESPECT TO THIRD PARTY CLAIMS. SECTION 8.10 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
-64- IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 8.11 Execution in Counterparts; Integration. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. This Agreement constitutes the entire agreement and understanding among the parties hereto and supersedes all prior and contemporaneous agreements and understandings, oral or written, relating to the subject matter hereof. SECTION 8.12 USA PATRIOT ACT NOTIFICATION. The following notification is provided to the Borrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318: IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including
any deposit account, treasury management account, loan, other extension of credit, or other financial services product. What this means for the Borrower: When the Borrower opens an account, the Administrative Agent and the Lenders will ask for the Borrower’s name, tax identification number and business address and other information that will allow the Administrative Agent and the Lenders to identify the Borrower. The Administrative Agent and the Lenders may also ask to see the Borrower’s legal organizational documents or other identifying documents. SECTION 8.13 No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated hereby (including in connection with any amendment, waiver or other modification hereof), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the services regarding this Agreement provided by the Administrative Agent and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Lenders on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby; (ii) (A) the Administrative Agent and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) neither the Administrative Agent nor any Lender has any obligation to the Borrower or
-65- any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein; and (iii) the Administrative Agent and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor any Lender has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent and the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby. SECTION 8.14 [Reserved]. SECTION 8.15 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other
instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. SECTION 8.16 Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or
-66- the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a non- confidential basis prior to disclosure by the Borrower and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 8.17 Material Non-Public Information. EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN SECTION 8.16 FURNISHED TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE
BORROWER AND ITS RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS. ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR ITS SECURITIES. ACCORDINGLY, EACH LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW. SECTION 8.18 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Advance or Borrowing, together with all fees, charges and other amounts which are treated as interest on such Advance or Borrowing under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum
-67- Rate”) which may be contracted for, charged, taken, received or reserved by a Lender holding such Advance or Borrowing in accordance with applicable law, the rate of interest payable in respect of such Advance or Borrowing hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Advance or Borrowing but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Advances or Borrowings or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. SECTION 8.19 Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 8.20 Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 8.21 Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Advance,
regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Advance or any fee or any other amount payable under this Agreement is outstanding and unpaid. [Signature Pages Follow]
[Signature Page to Credit Agreement] IN WITNESS WHEREOF, Borrower, the Lenders and the Administrative Agent have executed this Agreement as of the date first above written. EXELON CORPORATION, as Borrower By: Name: Title:
[Signature Page to Credit Agreement] PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent and Lender By: Name: Title:
I-1 SCHEDULE I COMMITMENTS Lender Commitment PNC Bank, National Association $250,000,000.00 TOTAL $250,000,000.00
I-1 SCHEDULE 3.06 Disclosed Matters Nothing other than what has been previously disclosed in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2020, Quarterly Reports on Form 10-Q for the periods ending March 31, 2021, June 30, 2021, and September 30, 2021, and Periodic Reports on Form 8-K filed by the Borrower with the United States Securities and Exchange Commission during the period between January 1, 2021, and the date hereof.
I-1 SCHEDULE 5.02 Existing Restrictions None.
A-1 EXHIBIT A FORM OF ASSIGNMENT AND ASSUMPTION This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, the interest in and to all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the Assignor’s outstanding rights and obligations under the respective facilities identified below (including without limitation any guaranties included in such facilities and, to the extent permitted to be assigned under applicable law, all claims (including without limitation contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity), suits, causes of action and any other right of the Assignor against any Person whether known or unknown arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or
the loan transactions governed thereby) other than claims for indemnification or reimbursement with respect to any period prior to Effective Date (the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor. 1. Assignor: 2. Assignee: [and is an Affiliate of Assignor] 3. Borrower: Exelon Corporation 4. Administrative Agent: PNC Bank, National Association 5. Credit Agreement: Credit Agreement, dated as of January 24, 2022, as amended, among the Borrower, the Lenders party thereto, and the Administrative Agent. 6. Assigned Interest: Facility Assigned Aggregate Amount of Commitment/ Outstanding Credit Amount of Commitment/ Outstanding Credit Exposure Assigned(cid:0) Percentage Assigned of Commitment/
A-2 Exposure for all Lenders(cid:0) Outstanding Credit Exposure1 ____________ $ $ _______% ____________ $ $ _______% ____________ $ $ _______% 7. Trade Date:2 Effective Date: ____________________, 20__ [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE ADMINISTRATIVE AGENT.] The terms set forth in this Assignment and Assumption are hereby agreed to: ASSIGNOR [NAME OF ASSIGNOR] By: Title: ASSIGNEE [NAME OF ASSIGNEE] By: Title: [Consented to and]3Accepted: PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent By: Title: [Consented to:]4 [NAME OF RELEVANT PARTY] By: Title: (cid:0) Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. 1 Set forth, to at least 9 decimals, as a percentage of the Commitment/loans of all Lenders thereunder. 2 Insert if satisfaction of minimum amounts is to be determined as of the Trade Date. 3 To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. 4 To be added only if the consent of the Borrower and/or other parties is required by the terms of the Credit Agreement.
A-3 ANNEX 1 TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION 1. Representations and Warranties. 1.1 Assignor. The Assignor represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency, perfection, priority, collectability, or value of the Credit Agreement or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement, (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement, (v) inspecting any of the property, books or records of the Borrower, or any guarantor, or (vi) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Credit Extensions or the Credit Agreement. 1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iii)
agrees that its payment instructions and notice instructions are as set forth in Schedule 1 to this Assignment and Assumption, (iv) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are “plan assets” as defined under ERISA and that its rights, benefits and interests in and under the Credit Agreement will not be “plan assets” under ERISA, (v) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys’ fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee’s non-performance of the obligations assumed under this Assignment and Assumption, (vi) it has received a copy of the Credit Agreement, together with copies of financial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (vii) attached as Schedule 1 to this Assignment and Assumption is any documentation required to be delivered by the Assignee with respect to its tax status pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit
A-4 Agreement, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. 2. Payments. The Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee. 3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
B-1 EXHIBIT B FORM OF NOTICE OF BORROWING [____], 20[__] PNC Bank, National Association Firstside Center 500 First Avenue, 4th Floor Pittsburgh, PA 15219 (Mailstop: P7-PFSC-04-L) and the Lenders that are parties to the Credit Agreement referred to below Ladies and Gentlemen: The undersigned, Exelon Corporation, a Pennsylvania corporation (the “Borrower”), refers to the Credit Agreement, dated as of January 24, 2022, as amended, among the Borrower, various financial institutions and PNC Bank, National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Credit Agreement”), and hereby gives you notice, irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the undersigned requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 2.02(a) of the Credit Agreement: (i) The Type of Advances to be made in connection with the Proposed Borrowing is [Base Rate Advances] [Term SOFR Advances][Daily Simple SOFR Advances]. (ii) The aggregate amount of the Proposed Borrowing is $[___]. (iii) The Interest Period for each Term SOFR Advance made as part of the Proposed Borrowing is [ month[s]]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing: (A) the representations and warranties of the undersigned contained in Section 4.01 of the Credit Agreement are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (B) no event has occurred and is continuing, or would result from the Proposed Borrowing or from the application of the proceeds therefrom, that constitutes an Default or Event of Default; and
B-2 (C) after giving effect to the Proposed Borrowing, the undersigned will not have exceeded any limitation on its ability to incur indebtedness (including any limitation imposed by any governmental or regulatory authority). Very truly yours, EXELON CORPORATION By: Name: Title:
C-1 EXHIBIT C FORM OF NOTE __________, 20__ Exelon Corporation, a Pennsylvania corporation (“Borrower”) promises to pay to _____________ (“Lender”) the aggregate unpaid principal amount of all Advances made by Lender to Borrower pursuant to the Credit Agreement (as defined below), at the main office of PNC Bank, National Association, in Pittsburgh, Pennsylvania as Administrative Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Credit Agreement. Borrower shall pay the principal of and accrued and unpaid interest on the Advances in full on the Termination Date. Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of the Advances and the date and amount of each principal payment hereunder. This note (this “Note”) is one of the notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of January 24, 2022 (as further amended or otherwise modified from time to time, the “Credit Agreement”), among Borrower, the various financial institutions from time to time made party as Lenders thereto, and U.S Bank National Association, as Administrative Agent and a Lender. The Credit Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Credit Agreement. All payments hereunder shall be made in lawful money of the United States of America and in immediately available funds. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS. EXELON CORPORATION By____________________________________ Name: Title:
D-1 EXHIBIT D FORM OF ANNUAL AND QUARTERLY COMPLIANCE CERTIFICATE ______________________, 20____ Pursuant to the Credit Agreement, dated as of January 24, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and PNC Bank, National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Credit Agreement”), the undersigned, being ______________________ of the Borrower, hereby certifies on behalf of the Borrower as follows: 1. [Delivered] [Posted concurrently]* herewith are the financial statements prepared pursuant to Section 5.01(a)[(ii)/(iii)] of the Credit Agreement for the fiscal ________ ended ___________, 20__. All such financial statements comply with the applicable requirements of the Credit Agreement. *Applicable language to be used based on method of delivery. 2. Schedule I hereto sets forth in reasonable detail the information and calculations necessary to establish the Borrower’s compliance with the provisions of Section 5.02(c) of the Credit Agreement as of the end of the fiscal period referred to in paragraph 1 above. 3. (Check one and only one:) __ No Default or Event of Default has occurred and is continuing. __ An Default or Event of Default has occurred and is continuing, and the document(s) attached hereto as Schedule II specify in detail the nature and period of existence of such Default or Event of Default as well as any and all actions with respect thereto taken or contemplated to be taken by the Borrower. 4. The undersigned has personally reviewed the Credit Agreement, and this certificate was based on an examination made by or under the supervision of the undersigned sufficient to assure that this certificate is accurate. 5. Capitalized terms used in this certificate and not otherwise defined shall have the meanings given in the Credit Agreement. EXELON CORPORATION
By____________________________________ Name: Title: Date:
E-1 EXHIBIT E FORMS OF U.S. TAX COMPLIANCE CERTIFICATE [See Attached Forms]
EXHIBIT E-1 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (FOR FOREIGN LENDERS THAT ARE NOT PARTNERSHIPS FOR U.S. FEDERAL INCOME TAX PURPOSES) Reference is hereby made to the Credit Agreement dated as of January 24, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and U.S Bank National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Advances in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade or business. The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. person status on United States Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF LENDER] By: ______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT E-2 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 24, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and PNC Bank, National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Advances and interests in respect of which it is providing this certificate, (ii) with respect to the extension of credit pursuant to the Agreement, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iii) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business. The undersigned has furnished the Administrative Agent and the Borrower with United States Internal Revenue Service Form W-8IMY accompanied by a United States Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at all times furnished th
Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF LENDER ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT E-3 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Non-U.S. Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 24, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and PNC Bank, National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) the interest payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade or business. The undersigned has furnished its participating Lender with a certificate of its non-U.S. person status on United States Internal Revenue Service Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF PARTICIPANT ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT E-4 [FORM OF U.S. TAX COMPLIANCE CERTIFICATE] (For Non-U.S. Participants That Are Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of January 24, 2022, as amended, among Exelon Corporation, a Pennsylvania corporation (the “Borrower”), various financial institutions and PNC Bank, National Association, as Administrative Agent (as amended, modified or supplemented from time to time, the “Agreement”). Pursuant to the provisions of Section 2.14 of the Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its partners/members are the sole beneficial owners of such participation, (iii) with respect such participation, neither the undersigned nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the interest payments in question are not effectively connected with the undersigned’s or its partners/members’ conduct of a U.S. trade or business. The undersigned has furnished its participating Lender with United States Internal Revenue Service Form W-8IMY accompanied by a United States Internal Revenue Service Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender
with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. [NAME OF PARTICIPANT ] By:______________________________________ Name: Title: Date: ________ __, 20[ ]
EXHIBIT F FORM OF NOTICE OF CONTINUATION OR CONVERSION PNC Bank, National Association Firstside Center 500 First Avenue, 4th Floor Pittsburgh, PA 15219 (Mailstop: P7-PFSC-04-L) Ladies and Gentlemen: This Notice of Conversion/Continuation (this “Notice”) is delivered to you pursuant to Section 2.09 of the Credit Agreement dated as of January 24, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and between Exelon Corporation, a Pennsylvania corporation (the “Borrower”) and U.S Bank National Association, as Administrative Agent. 1. This Notice is submitted for the purpose of:5 (cid:0) Converting a Base Rate Advance into a [Term SOFR Advance][Daily Simple SOFR Advance]. (a) The principal amount of such Advance to be converted is $_______________. (b) The requested effective date of the conversion of such Advance is _______________.6 (c) [The requested Interest Period applicable to the converted Advance is _______________.]7 (cid:0) Converting a [Term SOFR Advance]/[Daily Simple SOFR Advance] into a Base Rate Advance. (d) The principal amount of such Advance to be converted is $_______________. 5 Check one and complete applicable information in accordance with the Credit Agreement. 6 Complete with a Business Day. 7 Will only apply to Term SOFR Advances.
(e) The last day of the current Interest Period is _______________. (f) The requested effective date of the conversion of such Advance is _______________.8 (cid:0) Continuing all or a portion of a [Daily Simple SOFR Advance] [Term SOFR Advance] as a Base Rate Advance (g) The principal balance of such Advance is _______________. (h) [The last day of the current Interest Period for such Advance is _______________.]9 (i) The principal amount of such Advance to be continued is _______________.10 (j) The requested effective date of the continuation of such Advance is _______________.11 (k) [The requested Interest Period applicable to the continued Advance is _______________.] 12 3. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. [Signature Page Follows] 8 Complete with a Business Day. 9 Will only apply to Term SOFR Advances. 10 Insert amount in U.S. Dollars. 11 Complete with a Business Day. 12 Will only apply to Term SOFR Advances.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Conversion/Continuation as of the day and year first written above. EXELON CORPORATION By: Name: Title: _____________________________________
EXHIBIT G FORM OF NOTICE OF PREPAYMENT [____], 20[__] PNC Bank, National Association Firstside Center 500 First Avenue, 4th Floor Pittsburgh, PA 15219 (Mailstop: P7-PFSC-04-L) Ladies and Gentlemen: The undersigned, Exelon Corporation, a Pennsylvania corporation (the “Borrower”), provides a Notice of Prepayment delivered to you pursuant to Section 2.10 of the Credit Agreement dated as of January 24, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and between the Borrower and U.S Bank National Association, as Administrative Agent. 1. The Borrower hereby provides notice to the Administrative Agent that it shall repay the following [Base Rate Advances] and/or [Term SOFR Advances]/[Daily Simple SOFR Advances]: 2. The Advance to be prepaid is a [check each applicable box] (cid:0) Base Rate Advance (amount to be prepaid _______________) (cid:0) [Daily Simple]/[Term SOFR] Advance (amount to be prepaid ____________) 3. The Borrower shall repay the above-referenced Advances on the following Business Day: _______________.1 4. Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. [Signature Page Follows] 1 Complete with a date no earlier than (i) the same Business Day as of the date of this Notice of Prepayment with respect to any Base Rate Advance and (ii) three (3) Business Days subsequent to date of this Notice of Prepayment with respect to any Term SOFR Advance or Daily Simple SOFR Advance.
IN WITNESS WHEREOF, the undersigned has executed this Notice of Prepayment as of the day and year first written above. EXELON CORPORATION By: Name: Title:
Execution Version
$900,000,000
CREDIT AGREEMENT
dated as of
February 1, 2022
among
EXELON CORPORATION
the Lenders Party Hereto
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
___________________________
BANK OF AMERICA, N.A., BARCLAYS BANK PLC, BNP PARIBAS SECURITIES CORP., CITIBANK, N.A., GOLDMAN SACHS BANK USA,
MORGAN STANLEY SENIOR FUNDING, INC., and THE BANK OF NOVA SCOTIA,
as Co-Documentation Agents
___________________________
JPMORGAN CHASE BANK, N.A., BOFA SECURITIES, INC., BARCLAYS BANK PLC, BNP PARIBAS SECURITIES CORP., CITIBANK, N.A., GOLDMAN
SACHS BANK USA,
MORGAN STANLEY SENIOR FUNDING, INC., and THE BANK OF NOVA SCOTIA,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions
Section 1.01. Defined Terms
Section 1.02. Classification of Loans and Borrowings
Section 1.03. Terms Generally
Section 1.04. Accounting Terms; GAAP
Section 1.05. Interest Rates; Benchmark Notification
Section 1.06. Letter of Credit Amounts
Section 1.07. Divisions
ARTICLE 2 The Credits
Section 2.01. Commitments
Section 2.02. Loans and Borrowings
Section 2.03. Requests for Revolving Borrowings
Section 2.04. Optional Increases in Commitments
Section 2.05. [Reserved]
Section 2.06. Letters of Credit
Section 2.07. Funding of Borrowings
Section 2.08. Interest Elections
Section 2.09. Termination and Reduction of Commitments
Section 2.10. Repayment of Loans; Evidence of Indebtedness
Section 2.11. Prepayment of Loans
Section 2.12. Fees
Section 2.13. Interest
Section 2.14. Alternate Rate of Interest
Section 2.15. Increased Costs
Section 2.16. Break Funding Payments
Section 2.17. Withholding of Taxes; Gross-Up
Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs
Section 2.19. Mitigation Obligations; Replacement of Lenders
Section 2.20. Defaulting Lenders
Section 2.21. Extension of Maturity Date
ARTICLE 3 Representations and Warranties
Section 3.01. Organization; Powers
Section 3.02. Authorization; Enforceability
Section 3.03. Governmental Approvals; No Conflicts
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Section 3.04. Financial Condition; No Material Adverse Effect
Section 3.05. Reserved
Section 3.06. Litigation and Environmental Matters
Section 3.07. Compliance with Laws and Agreements
Section 3.08. Investment Company Status
Section 3.09. Taxes
Section 3.10. ERISA
Section 3.11. Beneficial Ownership
Section 3.12. Reserved
Section 3.13. Anti-Corruption Laws and Sanctions
Section 3.14. Affected Financial Institutions
Section 3.15. Reserved
Section 3.16. Margin Regulations
Section 3.17. Reserved
Section 3.18. Exchange Act
ARTICLE 4 Conditions
Section 4.01. Effective Date
Section 4.02. Each Credit Event
ARTICLE 5 Affirmative Covenants
Section 5.01. Financial Statements; Ratings Change and Other Information
Section 5.02. Notices of Material Events
Section 5.03. Existence; Conduct of Business
Section 5.04. Payment of Obligations
Section 5.05. Maintenance of Properties; Insurance
Section 5.06. Books and Records; Inspection Rights
Section 5.07. Compliance with Laws
Section 5.08. Use of Proceeds and Letters of Credit
Section 5.09. Accuracy of Information
ARTICLE 6 Negative Covenants
Section 6.01. Liens
Section 6.02. Fundamental Changes; Mergers and Consolidations; Disposition of Assets
Section 6.03. Continuation of Businesses
Section 6.04. Restrictive Agreements
Section 6.05. Consolidated Capitalization Ratio
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ARTICLE 7 Events of Default
Section 7.01. Events of Default
Section 7.02. Remedies Upon an Event of Default
Section 7.03. Application of Payments
ARTICLE 8 The Administrative Agent
Section 8.01. Authorization and Action
Section 8.02. Administrative Agent’s Reliance, Limitation of Liability, Etc
Section 8.03. Posting of Communications
Section 8.04. The Administrative Agent Individually
Section 8.05. Successor Administrative Agent
Section 8.06. Acknowledgements of Lenders and Issuing Banks
Section 8.07. [Reserved]
Section 8.08. [Reserved]
Section 8.09. Certain ERISA Matters
ARTICLE 9 Miscellaneous
Section 9.01. Notices
Section 9.02. Waivers; Amendments
Section 9.03. Expenses; Limitation of Liability; Indemnity, Etc
Section 9.04. Successors and Assigns
Section 9.05. Survival
Section 9.06. Counterparts; Integration; Effectiveness; Electronic Execution
Section 9.07. Severability
Section 9.08. Right of Setoff
Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process
Section 9.10. WAIVER OF JURY TRIAL
Section 9.11. Headings
Section 9.12. Confidentiality
Section 9.13. Material Non-Public Information
Section 9.14. Interest Rate Limitation
Section 9.15. No Fiduciary Duty, etc
Section 9.16. USA PATRIOT Act
Section 9.17. Acknowledgement and Consent to Bail-In of Affected Financial Institutions
Section 9.18. Acknowledgement Regarding Any Supported QFCs
Section 9.19. Judgment Currency
Section 9.20. Payments Set Aside
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SCHEDULES:
Schedule 2.01A – Commitments
Schedule 2.01C – Letter of Credit Commitments
Schedule 3.06 – Disclosed Matters
Schedule 6.04 – Existing Restrictions
EXHIBITS:
Exhibit A – Form of Assignment and Assumption
Exhibit B – Form of Borrowing Request
Exhibit C – Form of Interest Election Request
Exhibit D – Form of Opinion of Borrower’s Counsel
Exhibit E – Form of Compliance Certificate
Exhibit F-1 – U.S. Tax Certificate (For Non-U.S. Lenders that are not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-2 – U.S. Tax Certificate (For Non-U.S. Lenders that are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-3 – U.S. Tax Certificate (For Non-U.S. Participants that are not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-4 – U.S. Tax Certificate (For Non-U.S. Participants that are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit G – Incremental Request
iv
CREDIT AGREEMENT dated as of February 1, 2022 (this “Agreement”), among Borrower (as defined herein), the Lenders party hereto, and JPMORGAN
CHASE BANK, N.A., as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.01.
Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate
determined by reference to the Alternate Base Rate.
“Additional Lender” has the meaning given to such term in Section 2.04.
“Adjusted Daily Simple SOFR Rate” means an interest rate per annum equal to (a) the Daily Simple SOFR Rate, plus (b) 0.10%; provided that if the
Adjusted Daily Simple SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this
Agreement.
“Adjusted Term SOFR Rate” means, for any Interest Period, an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period, plus
(b) 0.10%; provided that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the
purposes of this Agreement.
“Administrative Agent” means JPMorgan Chase Bank, N.A. (or any of its designated branch offices or affiliates), in its capacity as administrative agent for
the Lenders hereunder.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled
by or is under common Control with the Person specified.
“Agent-Related Person” has the meaning assigned to it in Section 9.03(d).
“Agreement” has the meaning specified in introductory paragraph hereof.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on
such day plus ½ of 1% and (c) the Adjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to
such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided that for the purpose of this definition, the Adjusted Term
SOFR Rate for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for
the Term SOFR Reference Rate, as
1
specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Alternate Base Rate due to a change in the
Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB
Rate or the Adjusted Term SOFR Rate, respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 (for the
avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.14(b)), then the Alternate Base Rate shall be the greater of
clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined
pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.
“Ancillary Document” has the meaning assigned to it in Section 9.06(b).
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time
concerning or relating to bribery or corruption.
“Applicable Party” has the meaning assigned to it in Section 8.03(c).
“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment; provided
that, in the case of Section 2.20 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the total Commitments (disregarding any
Defaulting Lender’s Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of
determination.
“Applicable Rate” means, for any day, with respect to any ABR Loan or Term Benchmark Revolving Loan, RFR Revolving Loan or with respect to the
facility fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Applicable Rate for Term Benchmark Revolving
Loans and LC Fee Rate”, “Applicable Rate for ABR Loans” or “Facility Fee Rate”, as the case may be, based upon the ratings by Moody’s, S&P and Fitch,
respectively, applicable on such date to the Pricing Level:
2
Pricing Level
I
II
III
IV
V
VI
Index Debt Rating
S&P/Moody’s/Fitch
> A2/A/A
A3/A-/A-
Baa1/BBB+/BBB+
Baa2/BBB/BBB
Baa3/BBB-/BBB-
< Baa3/BBB-/BBB-
Applicable
Rate for Term
Benchmark Revolving
Loans, RFR Revolving
Loans and LC
Fee Rate
0.900%
Applicable
Rate for ABR Loans
0.000%
Facility Fee
Rate
0.100%
1.000%
1.075%
1.275%
1.475%
1.650%
0.000%
0.075%
0.275%
0.475%
0.650%
0.125%
0.175%
0.225%
0.275%
0.350%
“Debt Rating” means, as of any date of determination, the Fitch Rating, the Moody’s Rating or the S&P Rating, it being understood that if the Borrower does
not have such an indicative rating, an appropriate fallback will be determined by Administrative Agent in consultation with Borrower.
1
For purposes of the foregoing, (x) at any time that Debt Ratings are available from each of S&P, Moody’s and Fitch and there is a split among such Debt
Ratings, then (i) if any two of such Debt Ratings are in the same level, such level shall apply or (ii) if each of such Debt Ratings is in a different level, the level that is
the middle level shall apply and (y) at any time that Debt Ratings are available only from any two of S&P, Moody’s and Fitch and there is a split in such Debt
Ratings, then the higher of such Debt Ratings shall apply, unless there is a split in Debt Ratings of more than one level, in which case the level that is one level lower
than the higher Debt Rating shall apply. The Debt Ratings shall be determined from the most recent public announcement of any changes in the Debt Ratings. If the
rating system of S&P, Moody’s or Fitch shall change, the Borrower and the Administrative Agent shall negotiate in good faith to amend the definition of “Debt
Rating” to reflect such changed rating system and, pending the effectiveness of such amendment (which shall require the approval of the Required Lenders), the Debt
Rating shall be determined by reference to the rating most recently in effect prior to such change. If the Borrower has no Fitch Rating, no Moody’s Rating and no
S&P Rating, Pricing Level VI shall apply it being understood that if the Borrower does not have such an indicative ratings, appropriate fallbacks will be determined
by Administrative Agent in consultation with Borrower.
“Approved Electronic Platform” has the meaning assigned to it in Section 8.03(a).
*
It being understood and agreed, by way of example, that a Debt Rating of A- is one level higher than a Debt Rating of BBB+.
3
“Approved Fund” has the meaning assigned to it in Section 9.04(b).
“Arrangers” means each of JPMorgan Chase Bank, N.A., BofA Securities, Inc., Barclays Bank PLC, BNP Paribas Securities Corp., Citibank, N.A., Goldman
Sachs Bank USA,
Morgan Stanley Senior Funding, Inc., and The Bank of Nova Scotia, in its capacity as a joint lead arranger and joint bookrunner.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent
is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form (including electronic records generated by the use
of an electronic platform) approved by the Administrative Agent.
“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of
the Commitments.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or
component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for
determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this
Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period”
pursuant to clause (e) of Section 2.14.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an
Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and
of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in
the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time)
and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial
institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding,
or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or
liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof;
provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a
Governmental Authority or instrumentality thereof, unless
4
such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of
judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm
any contracts or agreements made by such Person.
“Benchmark” means, initially, with respect to any (i) RFR Loan, the Daily Simple SOFR Rate or (ii) Term Benchmark Loan, the Term SOFR Rate; provided
that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to the Daily Simple SOFR Rate or Term SOFR Rate,
as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has
replaced such prior benchmark rate pursuant to clause (b) of Section 2.14.
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative
Agent for the applicable Benchmark Replacement Date:
(1) the Adjusted Daily Simple SOFR Rate;
(2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-
current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate
or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a
benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and
(b) the related Benchmark Replacement Adjustment;
If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to
be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement
for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating
or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for
the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining
such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the
applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for
calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-
denominated syndicated credit facilities at such time.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement and/or any Term Benchmark Revolving Loan, any
technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of
“U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of
5
determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the
applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect
the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with
market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative
Agent determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent
decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current
Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication
of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof)
permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component
used in the calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component
thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication
referenced in such clause (3) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in
respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the
“Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the
applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation
thereof).
“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-
current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the
calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component
thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to
provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component
6
used in the calculation thereof), the Federal Reserve Board, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the
administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such
component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each
case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark
(or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that
will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component
used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future
date will no longer be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or
publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the
calculation thereof).
“Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date
pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes
hereunder and under any Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced such then-current
Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 2.14.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined
in Section 4975 of the Code to which Section 4975 of the Code applies, and (c) any Person whose assets include (for purposes of the Plan Asset Regulations or
otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“BGE” shall mean Baltimore Gas and Electric Company.
“BGE Entity” shall mean RF Holdco, BGE and any of their Subsidiaries.
“BHC Act Affiliate” of a party means an ‘affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Borrower” means Exelon.
“Borrowing” means Revolving Borrowing.
7
“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03, which shall be substantially in the form
of Exhibit B or any other form approved by the Administrative Agent.
“Business Day” means, any day (other than a Saturday or a Sunday) on which banks are open for business in New York City or Chicago, Illinois; provided
that, in relation to RFR Loans and any interest rate settings, fundings, disbursements, settlements or payments of any such RFR Loan, or any other dealings of such
RFR Loan, any such day that is only an U.S. Government Securities Business Day.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or
financing leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
“Change in Control” means the acquisition of ownership, directly or indirectly beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of Equity Interests representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower.
“Change in Law” means the occurrence after the date of this Agreement of (a) the adoption of or taking effect of any law, rule, regulation or treaty, (b) any
change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or
(c) compliance by any Lender or Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender’s or Issuing Bank’s
holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the
date of this Agreement; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all
requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or
directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United
States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted,
adopted, issued or implemented.
“Charges” has the meaning assigned to it in Section 9.14.
“Class” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans.
“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight
Financing Rate (SOFR) (or a successor administrator).
“Code” means the Internal Revenue Code of 1986, as amended.
“ComEd” means Commonwealth Edison Company, an Illinois corporation, or any successor thereof.
8
“ComEd Entity” means ComEd and each of its Subsidiaries.
“Commitment” means, with respect to each Lender, the amount set forth on Schedule 2.01 opposite such Lender’s name, or in the Assignment and
Assumption or other documentation or record (as such term is defined in Section 9-102(a)(70) of the New York Uniform Commercial Code) as provided in Section
9.04(b)(ii)(C), pursuant to which such Lender shall have assumed its Commitment, as applicable, and giving effect to (a) any reduction in such amount from time to
time pursuant to Section 2.09 and (b) any reduction or increase in such amount from time to time pursuant to assignments by or to such Lender pursuant to Section
9.04; provided, that at no time shall the Revolving Credit Exposure of any Lender exceed its Commitment. The initial aggregate amount of the Lenders’
Commitments is $900,000,000.
“Commodity Trading Obligations” means the obligations of the Borrower under (i) any commodity swap agreement, commodity future agreement,
commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity
forward contract or derivative transaction and any put, call or other agreement, arrangement or transaction, including natural gas, power, electric energy, emissions
forward contracts, renewable energy credits, or any combination of any such arrangements, agreements and/or transactions, employed in the ordinary course of the
Borrower’s business, or (ii) any commodity swap agreement, commodity future agreement, commodity option agreement, commodity cap agreement, commodity
floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative transaction and any put, call or other
agreement or arrangement, or combination thereof (including an agreement or arrangement to hedge foreign exchange risks) in respect of commodities entered into
by the Borrower pursuant to asset optimization and risk management policies and procedures adopted pursuant to authority delegated by the Board of Directors of the
Borrower. The term “commodities” shall include electric energy and/or capacity, transmission rights, coal, petroleum, natural gas liquids, natural gas, fuel
transportation rights, emissions allowances, weather derivatives and related products and by-products and ancillary services.
“Communications” has the meaning assigned to it in Section 8.03(c).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise
Taxes or branch profits Taxes.
“Consolidated Capitalization Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of the last day of the
applicable Test Period to (b) the sum of Consolidated Total Indebtedness plus Consolidated Stockholders’ Equity as of the last day for such Test Period.
“Consolidated Stockholders’ Equity” means, as of any date of determination, the total stockholders’ equity of the Borrower on a consolidated basis,
determined in accordance with GAAP.
“Consolidated Total Indebtedness” means, as of any date of determination, the total amount of all Indebtedness of the Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP. For the avoidance of doubt, Consolidated Total Indebtedness shall not include Nonrecourse
Indebtedness.
9
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Controlled Group” means each person (as defined in Section 3(9) of ERISA) that, together with the Borrower, would be deemed to be a “single employer”
within the meaning of Section 414(b) or 414(c) of the Code.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having
approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of the following:
(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” has the meaning assigned to it in Section 9.18.
“Credit Party” means the Administrative Agent, each Issuing Bank or any other Lender.
“Daily Simple SOFR Rate” means, for any day (a “SOFR Rate Day”), a rate per annum equal SOFR for the day (such day “SOFR Determination Date”)
that is five (5) U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or
(ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR
Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR Rate due
to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived,
become an Event of Default.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its
Loans, (ii) fund any portion of its participations in Letters of Credit or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless,
in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a
condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied,
10
(b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its
funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination
that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally
under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide
a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the
date of certification) to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease
to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the
Administrative Agent, or (d) has become the subject of (A) a Bankruptcy Event or (B) a Bail-In Action.
“Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected
pursuant to a division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary
of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.
“Dollars”, “dollars” or “$” refers to lawful money of the United States of America.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or
(c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is
subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member
Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with
the intent to sign, authenticate or accept such contract or record.
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“Eligible Successor” means a Person that (i) is a corporation, limited liability company or business trust duly incorporated or organized, validly existing and
in good standing under the laws of one of the states of the United States or the District of Columbia, (ii) as a result of a contemplated acquisition, consolidation or
merger, will succeed to all or substantially all of the consolidated business and assets of the Borrower, as applicable, (iii) upon giving effect to such contemplated
acquisition, consolidation or merger, will have all or substantially all of its consolidated business and assets conducted and located in the United States and (iv) in the
case of the Borrower, is acceptable to the Required Lenders as a credit matter.
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way to (i) the environment, (ii) preservation or reclamation of natural resources, (iii) the
management, release or threatened release of any Hazardous Material or (iv) health and safety matters.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is
assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or
other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest, but
excluding any debt securities convertible into any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated
thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under
Section 414(b) or (c) of the Code or Section 4001(14) of ERISA or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30 day notice period is waived); (b) the failure to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with
respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan; or
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(g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any
notice, concerning the imposition upon the Borrower or any of its ERISA Affiliates of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in
effect from time to time.
“Event of Default” has the meaning assigned to such term in Section 7.01.
“Excluded Project Subsidiary” shall mean, at any time, any Subsidiary that is an obligor (or, in the case of a Subsidiary of an Excluded Project Subsidiary
that is such an obligor and is in a business that is related to the business of such Excluded Project Subsidiary that is such an obligor, is otherwise bound, or its
property is subject to one or more covenants and other terms of any Nonrecourse Indebtedness outstanding at such time, regardless of whether such Subsidiary is a
party to the agreement evidencing the Nonrecourse Indebtedness) with respect to any Nonrecourse Indebtedness outstanding at such time.
“Excluded Subsidiary” shall mean (a) an Excluded Project Subsidiary, (b) any captive insurance Subsidiary, (c) any not-for-profit Subsidiary or (d) any
special purpose vehicle, including any Securitization Vehicle.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the
jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding
Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan, Letter of Credit or Commitment pursuant to
a law in effect on the date on which (i) such Lender acquires such interest in the Loan, Letter of Credit or Commitment (other than pursuant to an assignment request
by the Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17, amounts with
respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan, Letter of Credit or
Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.17(f) and
(d) any withholding Taxes imposed under FATCA.
“Exelon” means Exelon Corporation, a Pennsylvania corporation, or any Eligible Successor thereof.
“Existing Letter of Credit” means each letter of credit issued by an Issuing Bank and specified by the Borrower to the Administrative Agent on the Effective
Date.
“Existing Maturity Date” has the meaning assigned to such term in Section 2.21(a).
“Extending Lender” has the meaning assigned to such term in Section 2.21(b)(ii).
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“Extension Request” means a written request from the Borrower to the Administrative Agent requesting an extension of the Maturity Date pursuant to
Section 2.21.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively
comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant
to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or
convention among Governmental Authorities and implementing such Sections of the Code.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary
institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by
the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than 0%, such rate shall be deemed to
be 0% for the purposes of this Agreement.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.
“Fitch” means Fitch Ratings Inc.
“Fitch Rating” means, at any time, the rating issued by Fitch and then in effect with respect to the Borrower’s senior unsecured long-term public debt
securities without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above
but has an indicative rating from Fitch for debt securities of such type, then such indicative rating shall be used for determining the “Fitch Rating” and if the
Borrower does not have such an indicative rating, but has an issuer rating from Fitch, then such issuer rating shall be used for determining the “Fitch Rating”).
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or
renewal of this Agreement or otherwise) with respect to the Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR Rate, as applicable. For the avoidance of
doubt the initial Floor for each of Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR Rate shall be 0%.
“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is
resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.
“GAAP” means generally accepted accounting principles in the United States of America.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or
local, and
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any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other
obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an
account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of business.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.
“Hedging Obligations” mean, with respect to any Person, the obligations of such Person under any interest rate or currency swap agreement, interest rate or
currency future agreement, interest rate collar agreement, interest rate or currency hedge agreement, and any put, call or other agreement or arrangement designed to
protect such Person against fluctuations in interest rates or currency exchange rates.
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of
any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course
of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed and (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the
Borrower
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under any Loan Document and (b) to the extent not otherwise described in (a) hereof, Other Taxes.
“Indemnitee” has the meaning assigned to it in Section 9.03(c).
“Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to
any other credit enhancement, provided, that if the Borrower does not have any outstanding debt securities of the type described, an appropriate fallback will be
determined by Administrative Agent in consultation with Borrower
“Ineligible Institution” has the meaning assigned to it in Section 9.04(b).
“Information” has the meaning assigned to it in Section 9.12.
“Information Memorandum” means the Confidential Information Memorandum dated November 12, 2021 relating to the Borrower and the Transactions.
“Interest Election Request” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.08, which shall be
substantially in the form of Exhibit C or any other form approved by the Administrative Agent.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and the Maturity Date,
(b) with respect to any RFR Loan, (1) each date that is on the numerically corresponding day in each calendar month that is one month after the Borrowing of such
Loan (or, if there is no such numerically corresponding day in such month, then the last day of such month) and (2) the Maturity Date and (c) with respect to any
Term Benchmark Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Term Benchmark
Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’
duration after the first day of such Interest Period, and the Maturity Date.
“Interest Period” means with respect to any Term Benchmark Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, three or six months thereafter (in each case, subject to the availability for the Benchmark applicable
to the relevant Loan or Commitment), as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of
such Interest Period and (iii) no tenor that has been removed from this definition pursuant to Section 2.14(e) shall be available for specification in such Borrowing
Request or Interest Election Request. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a
Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“IRS” means the United States Internal Revenue Service.
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“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as
amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps
and Derivatives Association, Inc. or such successor thereto.
“Issuing Bank” means each of JPMorgan Chase Bank, N.A., Bank of America, N.A., Barclays Bank PLC, BNP Paribas Securities Corp., Citibank, N.A.,
Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., and The Bank of Nova Scotia and any other Lender that, with the consent of the Borrower and the
Administrative Agent, agrees to issue Letters of Credit hereunder, in each case in its capacity as the issuer of the applicable Letters of Credit. Each Issuing Bank may,
in its discretion, arrange for one or more Letters of Credit to be issued by any Affiliate of such Issuing Bank (provided that (i) the identity and creditworthiness of
such Affiliate is reasonably acceptable to the Borrower and (ii) no such Affiliate shall be entitled to any greater indemnification under Section 2.15 or 2.17 than that
to which the applicable Issuing Bank was entitled on the date on which such Letter of Credit was issued except in connection with any indemnification entitlement
arising as a result of any Change in Law after the date on which such Letter of Credit was issued), in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate (it being agreed that such Issuing Bank shall, or shall cause such branch or Affiliate to, comply with
the requirements of Sections 2.06 and 2.17(f) with respect to such Letters of Credit). Notwithstanding anything in this Agreement to the contrary, in no event shall
Morgan Stanley Bank, N.A., Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Goldman Sachs Bank USA, Credit Suisse AG, or any of their respective
Affiliates be an “Issuing Bank” with respect to any Letter of Credit that is not a standby letter of credit.
“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of Credit.
“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time, plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the LC Exposure at such time. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its
terms but any amount may still be drawn thereunder by reason of the operation of applicable law or Article 29(a) of the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce Publication No. 600 (or such later version thereof as may be in effect at the applicable time) or Rule 3.13
or Rule 3.14 of the International Standby Practices, International Chamber of Commerce Publication No. 590 (or such later version thereof as may be in effect at the
applicable time) or similar terms of the Letter of Credit itself, or if compliant documents have been presented but not yet honored, such Letter of Credit shall be
deemed to be “outstanding” and “undrawn” in the amount so remaining available to be paid, and the obligations of the Borrower and each Lender shall remain in full
force and effect until the Issuing Bank and the Lenders shall have no further obligations to make any payments or disbursements under any circumstances with
respect to any Letter of Credit.
“Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.
“Lender-Related Person” has the meaning assigned to it in Section 9.03(b).
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“Lenders” means the Persons listed on Schedule 2.01A and any other Person that shall have become a party hereto pursuant to an Assignment and
Assumption or otherwise, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption or otherwise. Unless the context
otherwise requires, the term “Lenders” includes the Issuing Banks.
“Letter of Credit” means any letter of credit issued pursuant to this Agreement and shall include each Existing Letter of Credit.
“Letter of Credit Agreement” has the meaning assigned to it in Section 2.06(b).
“Letter of Credit Commitment” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credit hereunder. The
initial amount of each Issuing Bank’s Letter of Credit Commitment is set forth on Schedule 2.01C, or if an Issuing Bank has entered into an Assignment and
Assumption or has otherwise assumed a Letter of Credit Commitment after the Effective Date, the amount set forth for such Issuing Bank as its Letter of Credit
Commitment in the Register maintained by the Administrative Agent. The Letter of Credit Commitment of an Issuing Bank may be modified from time to time by
agreement between such Issuing Bank and the Borrower, and notified to the Administrative Agent.
“Liabilities” means any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
“LLC” means any Person that is a limited liability company under the laws of its jurisdiction of formation.
“Loan Documents” means this Agreement, including schedules and exhibits hereto, and any agreements entered into in connection herewith by the Borrower
or any Loan Party with or in favor of the Administrative Agent and/or the Lenders, including any amendments, modifications or supplements thereto or waivers
thereof, legal opinions issued in connection with the other Loan Documents, flood determinations, letter of credit applications and any agreements between the
Borrower and an Issuing Bank regarding the issuance by such Issuing Bank of Letters of Credit hereunder and/or the respective rights and obligations between the
Borrower and such Issuing Bank in connection thereunder and any other documents prepared in connection with the other Loan Documents, if any.
“Loan Parties” means the Borrower.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“Margin Stock” means margin stock within the meaning of Regulations T, U and X, as applicable.
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“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the
Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of its Obligations or (c) the rights of or benefits available to the
Lenders under this Agreement or any other Loan Document.
“Maturity Date” means, with respect to any Lender, the later of (a) February 1, 2027 and (b) if the maturity date is extended for such Lender pursuant to
Section 2.21, such extended maturity date as determined pursuant to such Section; provided, however, in each case, if such date is not a Business Day, the Maturity
Date shall be the next preceding Business Day.
“Maximum Rate” has the meaning assigned to it in Section 9.14.
“Moody’s” means Moody’s Investors Service, Inc.
“Moody’s Rating” means, at any time, the rating issued by Moody’s and then in effect with respect to the Borrower’s senior unsecured long-term public debt
securities without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above
but has an indicative rating from Moody’s for debt securities of such type, then such indicative rating shall be used for determining the “Moody’s Rating” and if the
Borrower does not have such an indicative rating, but has an issuer rating from Moody’s, then such issuer rating shall be used for determining the “Moody’s Rating”).
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Nonrecourse Indebtedness” means any Indebtedness that finances the acquisition, development, ownership or operation of an asset in respect of which the
Person to which such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates other than:
(i) recourse to the named obligor with respect to such Indebtedness (the “Debtor”) for amounts limited to the cash flow or net cash flow (other than historic
cash flow) from the asset;
(ii) recourse to the Debtor for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any security interest
or lien given by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor
over its shares or like interest in the capital of the Debtor) to secure the Indebtedness, but only if the extent of the recourse to the Debtor is limited solely to the
amount of any recoveries made on any such enforcement; and
(iii) recourse to the Debtor generally or indirectly to any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is
limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a
payment obligation or an obligation to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person
against which such recourse is available.
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“Non-extending Lender” has the meaning assigned to such term in Section 2.21(a).
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in
effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any
day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative
Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than 0%, such
rate shall be deemed to be 0% for purposes of this Agreement.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Loan Document or otherwise
with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower or any Affiliate thereof of any proceeding
under any debtor relief laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed or allowable claims in
such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses,
fees, indemnities and other amounts payable by the Borrower under any Loan Document and (b) the obligation of the Borrower to reimburse any amount in respect
of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Borrower.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or
assigned an interest in any Loan, Letter of Credit or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under,
from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any
Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section
2.19).
“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated
in Dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s
Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
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“Participant” has the meaning assigned to such term in Section 9.04(c).
“Participant Register” has the meaning assigned to such term in Section 9.04(c).
“Patriot Act” has the meaning assigned to it in Section 9.16.
“Payment” has the meaning assigned to it in Section 8.06(c).
“Payment Notice” has the meaning assigned to it in Section 8.06(c).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“PECO” means PECO Energy Company, a Pennsylvania corporation, or any successor thereof.
“Pepco” means Pepco Holdings LLC, a Delaware limited liability company, or any successor thereof.
“Pepco Entity” shall mean Pepco, PH Holdco and any of their Subsidiaries.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 5.04;
(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other
social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an Event of Default under Section 7.01(f);
(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of
business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary
conduct of business of the Borrower or any Subsidiary;
(g) leases, licenses, subleases or sublicenses granted to third parties in the ordinary course of business and not interfering in any material respect
with the ordinary conduct of business of the Borrower or any Subsidiary;
(h) Liens in favor of a banking or other financial institution arising as a matter of law or in the ordinary course of business under customary general
terms and conditions encumbering deposits or other funds maintained with a
21
financial institution (including the right of set-off) and that are within the general parameters customary in the banking industry or arising pursuant to such
banking institution’s general terms and conditions;
(i) Liens on specific items of inventory or other goods (other than fixed or capital assets) and proceeds thereof of any Person securing such Person’s
obligations in respect of bankers’ acceptances or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods in the ordinary course of business;
(j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the
importation of goods in the ordinary course of business so long as such Liens only cover the related goods; and
(k) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other
brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or
other entity.
“Permitted Obligations” mean (1) Hedging Obligations of the Borrower or any Subsidiary arising in the ordinary course of business and in accordance with
the applicable Person’s established risk management policies that are designed to protect such Person against, among other things, fluctuations in interest rates or
currency exchange rates and which in the case of agreements relating to interest rates shall have a notional amount no greater than the payments due with respect to
the applicable obligations being hedged and (2) Commodity Trading Obligations.
“PH Holdco” shall mean PH HoldCo LLC, a Delaware limited liability company.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the
Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.
“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote
such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as
the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar
release by the Federal Reserve Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such
change is publicly announced or quoted as being effective.
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“Principal Subsidiary” means each Subsidiary, other than PECO and its Subsidiaries, any BGE Entity, any ComEd Entity and any Pepco Entity, (i) the
consolidated assets of which, as of the date of any determination thereof, are at least equal to 10% of the consolidated assets of the Borrower or (ii) the consolidated
earnings before taxes of which are at least equal to 10% of the consolidated earnings before taxes of the Borrower for the most recently completed fiscal year.
“Proceeding” means any claim, litigation, investigation, action, suit, arbitration or administrative, judicial or regulatory action or proceeding in any
jurisdiction.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public-Sider” means a Lender whose representatives may trade in securities of the Borrower or its Controlling person or any of its Subsidiaries while in
possession of the financial statements provided by the Borrower under the terms of this Agreement.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” has the meaning assigned to it in Section 9.18.
“Rating Agency” means each of S&P, Moody’s and Fitch.
“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, as applicable.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time)
on the day that is two Business Days preceding the date of such setting, (2) if the RFR for such Benchmark is Daily Simple SOFR Rate, then four Business Days
prior to such setting or (3) if such Benchmark is none of the Term SOFR Rate or Daily Simple SOFR Rate, the time determined by the Administrative Agent in its
reasonable discretion.
“Register” has the meaning assigned to such term in Section 9.04(b).
“Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or
thereof.
“Regulation T” means Regulation T of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or
thereof.
“Regulation U” means Regulation U of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or
thereof.
“Regulation X” means Regulation X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or
thereof.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors
of such Person and such Person’s Affiliates.
“Relevant Governmental Body” means, the Federal Reserve Board and/or the NYFRB, the CME Term SOFR Administrator, as applicable, or a committee
officially
23
endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.
“Relevant Rate” means (i) with respect to any Term Benchmark Borrowing, the Adjusted Term SOFR Rate or (ii) with respect to any RFR Borrowing, the
Adjusted Daily Simple SOFR Rate, as applicable.
“Replacement Lender” has the meaning assigned to such term in Section 2.21(c).
“Reportable Event” means a reportable event as defined in Section 4043 of ERISA and regulations issued under such Section with respect to a Single
Employer Plan, excluding such events as to which the requirement of Section 4043(a) of ERISA that the PBGC be notified within 30 days after the occurrence of
such event is waived under PBGC Regulation Section 4043, provided that a failure to meet the minimum funding standard of Section 412 of the Code and Section
302 of ERISA shall be a Reportable Event regardless of the issuance of any such waivers in accordance with either Section 4043(a) of ERISA or Section 412(c) of
the Code.
“Required Lenders” means, subject to Section 2.20, (a) at any time prior to the earlier of the Loans becoming due and payable pursuant to Section 7.01 or the
Commitments terminating or expiring, Lenders having Revolving Credit Exposures and Unfunded Commitments representing at least 50% of the sum of the Total
Revolving Credit Exposure and Unfunded Commitments at such time, provided that, solely for purposes of declaring the Loans to be due and payable pursuant to
Section 7.01, the Unfunded Commitment of each Lender shall be deemed to be zero; and (b) for all purposes after the Loans become due and payable pursuant to
Section 7.01 or the Commitments expire or terminate, Lenders having Revolving Credit Exposures representing at least 50% of the Total Revolving Credit Exposure
at such time; provided that, for the purpose of determining the Required Lenders needed for any waiver, amendment, modification or consent of or under this
Agreement or any other Loan Document, any Lender that is the Borrower or an Affiliate of the Borrower shall be disregarded
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Response Date” has the meaning assigned to such term in Section 2.21(a).
“Responsible Officer” means the president, Financial Officer or other executive officer of the Borrower.
“Reuters” means, as applicable, Thomson Reuters Corp., Refinitiv, or any successor thereto.
“Revolving Borrowing” means Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Term Benchmark
Loans, as to which a single Interest Period is in effect.
“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans
and its LC Exposure at such time.
“Revolving Loan” means a Loan made pursuant to Section 2.03.
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“RF Holdco” shall mean RF HoldCo LLC, a Delaware limited liability company.
“RFR Borrowing” means, as to any Borrowing, the RFR Loans comprising such Borrowing.
“RFR Loan” means a Loan that bears interest at a rate based on the Adjusted Daily Simple SOFR Rate.
“S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business.
“S&P Rating” means, at any time, the rating issued by S&P and then in effect with respect to the Borrower’s senior unsecured long-term public debt
securities without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above
but has an indicative rating from S&P for debt securities of such type, then such indicative rating shall be used for determining the “S&P Rating” and if the Borrower
does not have such an indicative rating, but has an issuer rating from S&P, then such issuer rating shall be used for determining the “S&P Rating”).
“Sanctioned Country” means, at any time, a country, region or territory which is itself, or whose government is, the subject or target of any Sanctions (at the
time of this Agreement, Crimea, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets
Control of the U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union, any European Union
member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned
Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of
any Sanctions.
“Sanctions” means all economic or financial sanctions or trade embargoes or restrictive measures imposed, administered or enforced from time to time by (a)
the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or
(b) the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant
sanctions authority.
“SEC” means the Securities and Exchange Commission of the United State of America.
“Securitization” shall mean any transaction or series of transactions entered into by the Borrower or any Subsidiary pursuant to which the Borrower or such
Subsidiary, as the case may be, sells, conveys, assigns, grants an interest in or otherwise transfers, from time to time, to one or more Securitization Vehicles the
Securitization Assets (and/or grants a security interest in such Securitization Assets transferred or purported to be transferred to such Securitization Vehicle), and
which Securitization Vehicle finances the acquisition of such Securitization Assets (i) with proceeds from the issuance of Third Party Securities, (ii) with the issuance
to the Borrower or such Subsidiary of Sellers’ Retained Interests or an increase in such Sellers’ Retained Interests, or (iii) with proceeds from the sale or collection of
Securitization Assets.
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“Securitization Assets” shall mean any accounts receivable originated or expected to be originated by (and owed to) the Borrower or any Subsidiary (in each
case whether now existing or arising or acquired in the future) and any ancillary assets (including contract rights) which are of the type customarily conveyed with, or
in respect of which security interests are customarily granted in connection with, such accounts receivable in a securitization transaction and which are sold,
transferred or otherwise conveyed by the Borrower or a Subsidiary to a Securitization Vehicle.
“Securitization Vehicle” shall mean a Person that is a direct wholly owned Subsidiary of the Borrower or of any Subsidiary (a) formed for the purpose of
effecting a Securitization, (b) to which the Borrower and/or any Subsidiary transfers Securitization Assets and (c) which, in connection therewith, issues Third Party
Securities; provided that (i) such Securitization Vehicle shall engage in no business other than the purchase of Securitization Assets pursuant to the Securitization, the
issuance of Third Party Securities or other funding of such Securitization and any activities reasonably related thereto.
“Sellers’ Retained Interests” means the debt and/or Equity Interests (including any intercompany notes) held by the Borrower or any Subsidiary in a
Securitization Vehicle to which Securitization Assets have been transferred in a Securitization, including any such debt or equity received as consideration for, or as a
portion of, the purchase price for the Securitization Assets transferred, and any other instrument through which the Borrower or any Subsidiary has rights to or
receives distributions in respect of any residual or excess interest in the Securitization Assets.
“Single Employer Plan” means a Plan other than a Multiemployer Plan maintained by the Borrower or any other member of the Controlled Group for
employees of the Borrower or any other member of the Controlled Group.
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight
financing rate identified as such by the SOFR Administrator from time to time.
“SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR Rate”.
“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR Rate”.
“Spin Transaction” means (i) the transfer of the membership interests of the Exelon Generation Company by Exelon to SpinCo and (ii) the pro rata
distribution of the capital stock of SpinCo to the holders of Exelon’s common stock, at which point SpinCo will become a separate, independent publicly traded
company.
“SpinCo” means the new company established by Exelon in connection with the Spin Transaction and that as of the effective date of the Spin Transaction,
will own, directly, 100% of the issued and outstanding membership interests of Exelon Generation Company (or its successor in interest, as applicable).
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“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or
other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of
the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled by the parent and/or one or more
subsidiaries of the parent.
“Subsidiary” means any subsidiary of the Borrower.
“Supported QFC” has the meaning assigned to it in Section 9.18.
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of
economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan
providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries
shall be a Swap Agreement.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes, or any other
goods and services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted Term SOFR Rate.
“Term SOFR Determination Day” has the meaning assigned to it under the definition of Term SOFR Reference Rate.
“Term SOFR Rate” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR
Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to
the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator.
“Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark
Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Administrative Agent as the
forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the
applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not
occurred, then the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first
preceding U.S. Government Securities
27
Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding Business Day is not
more than five (5) Business Days prior to such Term SOFR Determination Day.
“Test Period” means, for any date of determination under this Agreement, the four (4) consecutive fiscal quarters of the Borrower most recently ended as of
such date of determination for which financial statements have been delivered pursuant to Section 5.01(b).
“Third Party Securities” shall mean, with respect to any Securitization, notes, bonds or other debt instruments, beneficial interests in a trust, undivided
ownership interests in receivables or other securities issued for cash consideration by the relevant Securitization Vehicle to banks, financing conduits, investors or
other financing sources (other than the Borrower or any Subsidiary, except in respect of the Sellers’ Retained Interest) the proceeds of which are used to finance, in
whole or in part, the purchase by such Securitization Vehicle of Securitization Assets in a Securitization. The amount of any Third Party Securities shall be deemed to
equal the aggregate principal, stated or invested amount of such Third Party Securities which are outstanding at such time.
“Total Revolving Credit Exposure” means, at any time, the sum of (a) the outstanding principal amount of the Revolving Loans at such time and (b) the total
LC Exposure at such time.
“Transactions” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans, the use of the proceeds thereof
and the issuance of Letters of Credit hereunder.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted Term SOFR Rate, the Alternate Base Rate or the Adjusted Daily Simple SOFR Rate.
“UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated
by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time)
promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit
institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK
Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unfunded Commitment” means, with respect to each Lender, the Commitment of such Lender less its Revolving Credit Exposure.
“Unfunded Liabilities” means, (i) in the case of any Single Employer Plan, the amount (if any) by which the present value of all vested nonforfeitable
benefits under such Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent evaluation date for such
Plan, and (ii) in the case of any Multiemployer Plan, the withdrawal liability that would be incurred by the
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Controlled Group if all members of the Controlled Group completely withdrew from such Multiemployer Plan.
“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and
Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States
government securities.
“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.
“U.S. Special Resolution Regime” has the meaning assigned to it in Section 9.18.
“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(f)(ii)(B)(3).
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are
described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In
Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises,
to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have
effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are
related to or ancillary to any of those powers.
1.02.
Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”)
or by Type (e.g., a “Term Benchmark Loan” or an “RFR Loan”) or by Class and Type (e.g., a “Term Benchmark Revolving Loan” or an “RFR Revolving Loan”).
Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Term Benchmark Borrowing” or an “RFR
Borrowing”) or by Class and Type (e.g., a “Term Benchmark Revolving Borrowing” or an “RFR Revolving Borrowing”).
1.03.
Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be
followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires
otherwise any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set
forth herein), any reference herein to any Person shall be construed to include such Person’s successors and assigns, the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, all references herein
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to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, any reference to
any law, rule or regulation herein shall, unless otherwise specified, refer to such law, rule or regulation as amended, modified or supplemented from time to time and
the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
1.04.
Accounting Terms; GAAP. (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to
any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or
if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether
any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance
herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of
amounts and ratios referred to herein shall be made, without giving effect to any election under Financial Accounting Standards Board Accounting Standards
Codification 825 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any
Subsidiary at “fair value”, as defined therein and any treatment of Indebtedness under Accounting Standards Codification 470-20 or 2015-03 (or any other
Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated
manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.
(b) Notwithstanding anything to the contrary contained in Section 1.04(a) or in the definition of “Capital Lease Obligations,” any change in accounting
for leases pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842)
(“FAS 842”), to the extent such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or
similar arrangement) would not have been required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease,
and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith.
Section 1.05.
Interest Rates; Benchmark Notification. The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark
that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 2.14(b)
provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have
any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any
alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative,
successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the
same volume or liquidity as did any existing interest rate prior
30
to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of
any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments
thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to
ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this
Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special,
punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or
calculation of any such rate (or component thereof) provided by any such information source or service.
Section 1.06.
Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the amount of
such Letter of Credit available to be drawn during the remaining life thereof; provided that with respect to any Letter of Credit that, by its terms or the terms of any
Letter of Credit Agreement related thereto, provides for one or more automatic increases in the available amount thereof, the amount of such Letter of Credit shall be
deemed to be the maximum amount available to be drawn under such Letter of Credit after giving effect to all such increases, whether or not such maximum amount
is available to be drawn at such time.
Section 1.07.
Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any
comparable event under a different jurisdiction’s laws): if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a
different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and if any new Person comes into existence,
such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its Equity Interests at such time.
ARTICLE 2
THE CREDITS
2.01.
Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans in Dollars to the Borrower from
time to time during the Availability Period in an aggregate principal amount that will not result in such Lender’s Revolving Credit Exposure exceeding such Lender’s
Commitment. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
2.02.
Loans and Borrowings. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as
required.
(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR Loans or Term Benchmark Loans, as the Borrower may
request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that
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any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Term Benchmark Revolving Borrowing, such Borrowing shall be in an aggregate amount that is
an integral multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR Revolving Borrowing and/or RFR Borrowing is made, such Borrowing
shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000; provided that an ABR Revolving Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.06(e). Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more
than a total of ten Term Benchmark Revolving Borrowings or RFR Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing
if the Interest Period requested with respect thereto would end after the Maturity Date.
2.03.
Requests for Revolving Borrowings. To request a Revolving Borrowing, the Borrower shall notify the Administrative Agent of such request by
submitting a Borrowing Request (a)(i) in the case of a Term Benchmark Borrowing, not later than 12:00 noon, New York City time, three Business Days before the
date of the proposed Borrowing or (ii) in the case of an RFR Borrowing, not later than 12:00 noon, New York City time, five Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, on the date of the proposed Borrowing; provided that
any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e) may be given not later
than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Each such Borrowing Request shall be irrevocable and shall be signed by a Responsible
Officer of the Borrower. Each such Borrowing Request shall specify the following information in compliance with Section 2.02:
(i)
the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing, a Term Benchmark Borrowing or an RFR Borrowing;
(iv) in the case of a Term Benchmark Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the
definition of the term “Interest Period”; and
(v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section
2.07.
If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Term Benchmark Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s
duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
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2.04.
Optional Increases in Commitments. The Borrower may, from time to time, by means of a letter delivered to the Administrative Agent substantially
in the form of Exhibit G, request that the Commitments be increased by an aggregate amount (for all such increases) not exceeding $375,000,000.00 by (a) increasing
the Commitments of one or more Lenders that have agreed to such increase (in their sole discretion) and/or (b) adding one or more commercial banks or other
Persons as a party hereto (each an “Additional Lender”) with a Commitments in an amount agreed to by any such Additional Lender; provided that (i) any increase in
the Commitments shall be in an aggregate amount of $25,000,000 or a higher integral multiple of $1,000,000; (ii) no Additional Lender shall be added as a party
hereto without the written consent of the Administrative Agent and the Issuing Banks (which consents shall not be unreasonably withheld) or if a Default or Event of
Default exists; (iii) subject to Section 9.04(b), no such increase shall be effective without the written consent of the Issuing Banks (which consent shall not be
unreasonably withheld or delayed); and (iv) the Borrower may not request an increase in the Commitments unless the Borrower has delivered to the Administrative
Agent (with a copy for each Lender) a certificate (A) stating that any applicable governmental authority has approved such increase, (B) attaching evidence,
reasonably satisfactory to the Administrative Agent, of each such approval and (C) stating that the representations and warranties contained in Article III are correct
on and as of the date of such certificate as though made on and as of such date and that no Default or Event of Default exists on such date. Any increase in the
Commitments pursuant to this Section 2.04 shall be effective three Business Days after the date on which the Administrative Agent has received and accepted the
applicable increase letter in the form of Annex 1 to Exhibit G (in the case of an increase in the Commitments of an existing Lender) or assumption letter in the form
of Annex 2 to Exhibit G (in the case of the addition of a commercial bank or other Person as a new Lender). The Administrative Agent shall promptly notify the
Borrower and the Lenders of any increase in the Commitments pursuant to this Section 2.04 and of the Commitments and Pro rata Commitment of each Lender after
giving effect thereto. The Borrower shall prepay any Loans outstanding on the effective date of such increase (and pay any additional amounts required pursuant to
Section 9.03) to the extent necessary to keep the outstanding Loans ratable among the Lenders in accordance with any revised Pro rata Commitments arising from
any non-ratable increase in the Commitments under this Section 2.04; provided that, notwithstanding any other provision of this Agreement, the Administrative
Agent, the Borrower and each increasing Lender and Additional Lender, as applicable, may make arrangements satisfactory to such parties to cause an increasing
Lender or an Additional Lender to temporarily hold risk participations in the outstanding Loans of the other Lenders (rather than fund its Pro rata Commitment of all
outstanding Loans concurrently with the applicable increase) with a view toward minimizing breakage costs and transfers of funds in connection with any increase in
the Commitments To the extent that any increase pursuant to this Section 2.04 is not expressly authorized pursuant to resolutions or consents delivered pursuant to
Section 4.01(c), the Borrower shall, prior to the effectiveness of such increase, deliver to the Administrative Agent a certificate signed by an authorized officer of the
Borrower certifying and attaching the resolutions or consents that have been adopted to approve or consent to such increase.
2.05.
[Reserved].
2.06.
Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, the Borrower may request any Issuing Bank to issue Letters of Credit as the applicant
thereof for the support of its or its Subsidiaries’ obligations, in a form reasonably acceptable to such Issuing Bank, at any time and from time to time during the
Availability Period.
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(b) Notice of Issuance, Amendment, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment or extension of an
outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved
by the respective Issuing Bank) to an Issuing Bank selected by it and to the Administrative Agent (reasonably in advance of the requested date of issuance,
amendment or extension, but in any event no less than three Business Days) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit
to be amended or extended, and specifying the date of issuance, amendment or extension (which shall be a Business Day), the date on which such Letter of Credit is
to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend or extend such Letter of Credit. In addition, as a condition to any such Letter of Credit issuance, the Borrower
shall have entered into a continuing agreement (or other letter of credit agreement) for the issuance of letters of credit and/or shall submit a letter of credit application,
in each case, as required by the respective Issuing Bank and using such Issuing Bank’s standard form (each, a “Letter of Credit Agreement”). In the event of any
inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Agreement, the terms and conditions of this
Agreement shall control. A Letter of Credit shall be issued, amended or extended only if (and upon issuance, amendment or extension of each Letter of Credit the
Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment or extension (x) the aggregate undrawn amount of all
outstanding Letters of Credit issued by any Issuing Bank at such time plus (y) the aggregate amount of all LC Disbursements made by such Issuing Bank that have
not yet been reimbursed by or on behalf of the Borrower at such time shall not exceed its Letter of Credit Commitment, the LC Exposure shall not exceed the total
Letter of Credit Commitments and no Lender’s Revolving Credit Exposure shall exceed its Commitment. The Borrower may, at any time and from time to time,
reduce the Letter of Credit Commitment of any Issuing Bank with the consent of such Issuing Bank; provided that the Borrower shall not reduce the Letter of Credit
Commitment of any Issuing Bank if, after giving effect of such reduction, the conditions set forth in clauses (i) through (iii) above shall not be satisfied.
An Issuing Bank shall not be under any obligation to issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank
from issuing such Letter of Credit, or any law applicable to such Issuing Bank shall prohibit, or require that such Issuing Bank refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon
such Issuing Bank any unreimbursed loss, cost or expense that was not applicable on the Effective Date and that such Issuing Bank in good faith deems
material to it; or
(ii) the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank applicable to letters of credit generally.
(c) Expiration Date. Each Letter of Credit shall expire (or be subject to termination by notice from the applicable Issuing Bank to the beneficiary thereof)
at or prior to the close of business on the earlier of the date one year after the date of the issuance of such Letter of Credit (or, in the case of any extension of the
expiration date
34
thereof, one year after such extension) and the date that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from such Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of
Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the
account of the respective Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the
Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason,
including after the Maturity Date. Each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender acknowledges
and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected
by any circumstance whatsoever, including any amendment or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments.
(e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such
LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on the Business Day immediately
following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, the Borrower may,
subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with an ABR Revolving Borrowing,
the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing, as applicable. If the Borrower fails to
make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in
respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its
Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and
Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the respective Issuing
Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the respective Issuing Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this
paragraph to reimburse an Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans as contemplated above) shall not constitute a
Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.
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(f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, any
draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, payment by the respective Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit or any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the
Administrative Agent, the Lenders nor any Issuing Bank, nor any of their respective Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under
or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms, any error in
translation or any consequence arising from causes beyond the control of the respective Issuing Bank; provided that the foregoing shall not be construed to excuse an
Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect
of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s failure to
exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly
agree that, in the absence of gross negligence or willful misconduct on the part of an Issuing Bank (as finally determined by a court of competent jurisdiction), such
Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, an Issuing
Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter
of Credit.
(g) Disbursement Procedures. The Issuing Bank for any Letter of Credit shall, within the time allowed by applicable law or the specific terms of the
Letter of Credit following its receipt thereof, examine all documents purporting to represent a demand for payment under such Letter of Credit. Such Issuing Bank
shall promptly after such examination notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy or electronic mail) of such demand for
payment if such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve
the Borrower of its obligation to reimburse such Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h)
Interim Interest. If the Issuing Bank for any Letter of Credit shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the reimbursement is due and payable at the rate per annum then
36
applicable to ABR Revolving Loans and such interest shall be due and payable on the date when such reimbursement is payable; provided that, if the Borrower fails
to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(d) shall apply. Interest accrued pursuant to this
paragraph shall be for the account of such Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this
Section to reimburse such Issuing Bank for such LC Disbursement shall be for the account of such Lender to the extent of such payment.
(i) Replacement and Resignation of an Issuing Bank. An Issuing Bank may be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of an
Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.12(b). From and after the effective date of any such replacement, (x) the successor Issuing Bank shall have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit to be issued by it thereafter and (y) references herein to the term “Issuing Bank” shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of
an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under
this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit or extend or
otherwise amend any existing Letter of Credit.
(ii) Any Issuing Bank may resign as an Issuing Bank at any time upon thirty days’ prior written notice to the Administrative Agent, the Borrower
and the Lenders, in which case, such resigning Issuing Bank shall be replaced in accordance with Section 2.06(i)(i) above.
(j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account or
accounts with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders (the “Collateral Account”), an amount in cash
equal to 105% of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall
become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in Section 7.01(e). Such deposit shall be held by the Administrative Agent as collateral for the payment and
performance of the obligations of the Borrower under this Agreement. In addition, and without limiting the foregoing or paragraph (c) of this Section, if any LC
Exposure remain outstanding after the expiration date specified in said paragraph (c), the Borrower shall immediately deposit into the Collateral Account an amount
in cash equal to 105% of such LC Exposure as of such date plus any accrued and unpaid interest thereon.
The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest
earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk
and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall
37
accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse each Issuing Bank for LC Disbursements for which it
has not been reimbursed, together with related fees, costs and customary processing charges, and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other
Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the
extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.
(k) Letters of Credit Issued for Account of Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder supports any obligations
of, or is for the account of, a Subsidiary, or states that a Subsidiary is the “account party,” “applicant,” “customer,” “instructing party,” or the like of or for such Letter
of Credit, and without derogating from any rights of the applicable Issuing Bank (whether arising by contract, at law, in equity or otherwise) against such Subsidiary
in respect of such Letter of Credit, the Borrower (i) shall reimburse, indemnify and compensate the applicable Issuing Bank hereunder for such Letter of Credit
(including to reimburse any and all drawings thereunder) as if such Letter of Credit had been issued solely for the account of the Borrower and (ii) irrevocably waives
any and all defenses that might otherwise be available to it as a guarantor or surety of any or all of the obligations of such Subsidiary in respect of such Letter of
Credit. The Borrower hereby acknowledges that the issuance of such Letters of Credit for its Subsidiaries inures to the benefit of the Borrower, and that the
Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.
2.07.
Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof solely by wire transfer of
immediately available funds, by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. Except in respect of the provisions of this Agreement covering the reimbursement of Letters of Credit, the Administrative Agent will make
such Loans available to the Borrower by promptly crediting the funds so received in the aforesaid account of the Administrative Agent to an account of the Borrower
maintained with the Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving
Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available
on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In
such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date
such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at in the case of such Lender, the greater of the
NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or in the case of the
Borrower, the interest rate applicable to ABR Loans.
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If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
2.08.
Interest Elections. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a
Term Benchmark Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert
such Borrowing to a different Type or to continue such Borrowing and, in the case of a Term Benchmark Revolving Borrowing, may elect Interest Periods therefor,
all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the
effective date of such election. Each such Interest Election Request shall be irrevocable and shall be signed by a Responsible Officer of the Borrower.
(c) Each Interest Election Request shall specify the following information in compliance with Section 2.02:
(i)
the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below
shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing or an RFR Borrowing; and
(iv) if the resulting Borrowing is a Term Benchmark Borrowing, the Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Term Benchmark Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such
Lender’s portion of each resulting Borrowing.
(e)
If the Borrower fails to deliver a timely Interest Election Request with respect to a Term Benchmark Revolving Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be deemed to
have an Interest Period that is one month. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing no
39
outstanding Revolving Borrowing may be converted to or continued as a Term Benchmark Borrowing and unless repaid, (A) each Term Benchmark Borrowing and
(B) each RFR Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
2.09.
Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that each reduction of the Commitments shall be
in an amount that is an integral multiple of $10,000,000 and not less than $50,000,000 and the Borrower shall not terminate or reduce the Commitments if, after
giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, any Lender’s Revolving Credit Exposure would exceed its Commitment.
(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at
least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall
be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness
of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
2.10.
Repayment of Loans; Evidence of Indebtedness. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record the amount of each Loan made hereunder, the Class and Type thereof and
the Interest Period applicable thereto, the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender
hereunder and the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to
such
40
Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the
Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section
9.04) be represented by one or more promissory notes in such form.
2.11.
Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to
prior notice in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy or electronic mail) of any prepayment hereunder in the case
of prepayment of (1) a Term Benchmark Revolving Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of prepayment or
(2) an RFR Revolving Borrowing, not later than 12:00 noon, New York City time, five Business Days before the date of prepayment, or in the case of prepayment of
an ABR Revolving Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.09, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a Revolving
Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount
that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving
Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by
Section 2.13 and any break funding payments required by Section 2.16.
2.12.
Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at the Applicable
Rate on the daily amount of the Commitment of such Lender (whether used or unused) during the period from and including the Effective Date to but excluding the
date on which such Commitment terminates; provided that, if such Lender continues to have any Revolving Credit Exposure after its Commitment terminates, then
such facility fee shall continue to accrue on the daily amount of such Lender’s Revolving Credit Exposure from and including the date on which its Commitment
terminates to but excluding the date on which such Lender ceases to have any Revolving Credit Exposure. Facility fees accrued through and including the last day of
March, June, September and December of each year shall be payable in arrears on the fifteenth day following such last day and on the date on which the
Commitments terminate, commencing on the first such date to occur after the date hereof; provided that any facility fees accruing after the date on which the
Commitments terminate shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number
of days elapsed (including the first day and the last day of each period but excluding the date on which the Commitments terminate).
(b) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in each
outstanding Letter of Credit, which shall accrue on the daily maximum amount then available to be drawn under such Letter of Credit at the same Applicable Rate
used to determine the interest rate applicable to Term Benchmark Revolving Loans, during the period from and
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including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and to each Issuing Bank for its own account a fronting fee with respect to each Letter of Credit issued by such Issuing Bank, which shall accrue
at the rate or rates per annum separately agreed upon between the Borrower and such Issuing Bank on the daily maximum amount then available to be drawn under
such Letter of Credit, during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure with respect to Letters of Credit issued by such Issuing Bank, as well as such Issuing Bank’s standard fees with respect
to the issuance, amendment or extension of any Letter of Credit and other processing fees, and other standard costs and charges, of such Issuing bank relating the
Letters of Credit as from time to time in effect. Participation fees and fronting fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the fifteenth day following such last day, commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate
shall be payable on demand. Any other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation
fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but
excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in dollars in immediately available funds, to the Administrative Agent (or to an Issuing
Bank, in the case of fees payable to it) for distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall not be refundable under any
circumstances.
2.13.
Interest. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Term Benchmark Borrowing shall bear interest in the case of a Term Benchmark Revolving Loan, at the Adjusted Term
SOFR Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Each RFR Loan shall bear interest at a rate per annum equal to the Adjusted Daily Simple SOFR Rate plus the Applicable Rate.
(d) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum
equal to in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or
in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Commitments; provided that interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, in the event of any repayment
or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the
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Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and in the event of any
conversion of any Term Benchmark Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
(f)
Interest computed by reference to the Term SOFR Rate or Daily Simple SOFR Rate hereunder shall be computed on the basis of a year of 360 days.
Interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year
of 365 days (or 366 days in a leap year). In each case interest shall be payable for the actual number of days elapsed (including the first day but excluding the last
day). All interest hereunder on any Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of
determination. The applicable Alternate Base Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Adjusted Daily Simple SOFR Rate or Daily Simple SOFR Rate
shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
2.14.
Alternate Rate of Interest. (a) Subject to clauses (b), (c), (d), (e) and (f) of this Section 2.14, if:
(i)
the Administrative Agent determines (which determination shall be conclusive absent manifest error) (A) prior to the commencement of any
Interest Period for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate or the Term
SOFR Rate (including because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period or (B) at any time,
that adequate and reasonable means do not exist for ascertaining the applicable Adjusted Daily Simple SOFR Rate, Daily Simple SOFR Rate; or
(ii) the Administrative Agent is advised by the Required Lenders that (A) prior to the commencement of any Interest Period for a Term Benchmark
Borrowing, the Adjusted Term SOFR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period or (B) at any time, Adjusted Daily Simple SOFR Rate will not
adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable
thereafter and, until (x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect
to the relevant Benchmark and (y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.08 or a new Borrowing Request in
accordance with the terms of Section 2.03, (1) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any
Revolving Borrowing as, a Term Benchmark Borrowing and any Borrowing Request that requests a Term Benchmark Revolving Borrowing shall instead be deemed
to be an Interest Election Request or a Borrowing Request, as applicable, for (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not also the
subject of Section 2.14(a)(i) or (ii) above or (y) an ABR Borrowing if the Adjusted Daily Simple SOFR Rate also is the subject of Section 2.14(a)(i) or (ii) above and
(2) any Borrowing Request that requests an RFR Borrowing shall instead be deemed to be a Borrowing Request, as applicable, for an ABR
43
Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted.
Furthermore, if any Term Benchmark Loan or RFR Loan is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent referred to
in this Section 2.14(a) with respect to a Relevant Rate applicable to such Term Benchmark Loan or RFR Loan, then until (x) the Administrative Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a
new Interest Election Request in accordance with the terms of Section 2.08 or a new Borrowing Request in accordance with the terms of Section 2.03, (1) any Term
Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be
converted by the Administrative Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not also the subject of
Section 2.14(a)(i) or (ii) above or (y) an ABR Loan if the Adjusted Daily Simple SOFR Rate also is the subject of Section 2.14(a)(i) or (ii) above, on such day, and
(2) any RFR Loan shall on and from such day be converted by the Administrative Agent to, and shall constitute an ABR Loan.
(b) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark
Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is
determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will
replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without
any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined
in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such
Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth
(5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any
other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such
Benchmark Replacement from Lenders comprising the Required Lenders of each affected Class.
(c) Notwithstanding anything to the contrary herein or in any other Loan Document, the Administrative Agent will have the right to make Benchmark
Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments
implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement
or any other Loan Document.
(d) The Administrative Agent will promptly notify the Borrower and the Lenders of any occurrence of a Benchmark Transition Event, the implementation
of any Benchmark Replacement, the effectiveness of any Benchmark Replacement Conforming Changes, the removal or reinstatement of any tenor of a Benchmark
pursuant to clause (e) below and the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be
made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.14, including any determination with respect to a
tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take
44
or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without
consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 2.14.
(e) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a
Benchmark Replacement), if the then-current Benchmark is a term rate (including the Term SOFR Rate) and either any tenor for such Benchmark is not displayed
on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or the
regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such
Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after
such time to remove such unavailable or non-representative tenor and if a tenor that was removed pursuant to clause (i) above either is subsequently displayed on a
screen or information service for a Benchmark (including a Benchmark Replacement) or is not, or is no longer, subject to an announcement that it is or will no
longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all
Benchmark settings at or after such time to reinstate such previously removed tenor.
(f) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Term
Benchmark Borrowing or RFR Borrowing of, conversion to or continuation of Term Benchmark Loans to be made, converted or continued during any Benchmark
Unavailability Period and, failing that, the Borrower will be deemed to have converted any request for a Term Benchmark Borrowing into a request for a Borrowing
of or conversion to (A) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not the subject of a Benchmark Transition Event or (B) an ABR
Borrowing if the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that
a tenor for the then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-current Benchmark or such tenor for such Benchmark,
as applicable, will not be used in any determination of ABR. Furthermore, if any Term Benchmark Loan or RFR Loan is outstanding on the date of the Borrower’s
receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a Relevant Rate applicable to such Term Benchmark Loan or RFR
Loan, then until such time as a Benchmark Replacement is implemented pursuant to this Section 2.14, (1) any Term Benchmark Loan shall on the last day of the
Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and
shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not the subject of a Benchmark Transition Event or (y) an ABR Loan if
the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event, on such day and (2) any RFR Loan shall on and from such day be converted
by the Administrative Agent to, and shall constitute an ABR Loan.
2.15.
Increased Costs. (a) If any Change in Law shall:
(i)
impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement,
insurance charge or other assessment) against assets of, deposits with or for the
45
account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted Term SOFR Rate) or Issuing Bank;
(ii) impose on any Lender or Issuing Bank or the applicable offshore interbank market any other condition, cost or expense (other than Taxes)
affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or
(iii) subject any Recipient to any Taxes (other than Indemnified Taxes, Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes and Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities
or capital attributable thereto;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any Loan
(or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, such Issuing Bank or such other Recipient of participating in, issuing
or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, such Issuing Bank or such other Recipient hereunder
(whether of principal, interest or otherwise), then the Borrower will pay to such Lender, such Issuing Bank or such other Recipient, as the case may be, such
additional amount or amounts as will compensate such Lender, such Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or
reduction suffered.
(b)
If any Lender or Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing
the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this
Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below
that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s holding company with respect to capital adequacy and
liquidity), then from time to time the Borrower will pay to such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction suffered.
(c) A certificate of a Lender or Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender or Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such
Lender’s or Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to
this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor;
provided further that, if the Change in Law
46
giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect
thereof.
2.16.
Break Funding Payments. (a) With respect to Loans that are not RFR Loans, in the event of (i) the payment of any principal of any Term Benchmark
Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or an optional or mandatory prepayment of
Loans), (ii) the conversion of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto, (iii) the failure to borrow, convert,
continue or prepay any Term Benchmark Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under
Section 2.11(b) and is revoked in accordance therewith) or (iv) the assignment of any Term Benchmark Loan other than on the last day of the Interest Period
applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each Lender for the loss,
cost and expense attributable to such event. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
(b) With respect to RFR Loans, in the event of (i) the payment of any principal of any RFR Loan other than on the Interest Payment Date applicable
thereto (including as a result of an Event of Default or an optional or mandatory prepayment of Loans), (ii) the failure to borrow or prepay any RFR Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is revoked in accordance therewith) or
(iii) the assignment of any RFR Loan other than on the Interest Payment Date applicable thereto as a result of a request by the Borrower pursuant to Section 2.19,
then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. A certificate of any Lender setting forth
any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
2.17. Withholding of Taxes; Gross-Up.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable
withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be
entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with
applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or
withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives
an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or
at the option of the Administrative Agent timely reimburse it for, Other Taxes.
47
(c) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section, the
Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(d)
Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or
required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(e)
Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for any
Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified
Taxes and without limiting the obligation of the Borrower to do so), any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c)
relating to the maintenance of a Participant Register and any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative
Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the
Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to setoff and apply any and all amounts at
any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount
due to the Administrative Agent under this paragraph (e).
(f)
Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan
Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such
properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such
other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to
the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section
2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such
Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
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(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,
(A)
any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which
such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the
Administrative Agent), an executed copy of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in
such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under
this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the
following is applicable:
(1)
in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x)
with respect to payments of interest under any Loan Document, an executed copy of IRS Form W-8BEN-E or IRS Form W-8BEN establishing
an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any
other applicable payments under any Loan Document, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
executed copy of IRS Form W-8ECI;
(2)
in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an
(3)
in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the
Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) an executed
copy of IRS Form W-8BEN-E or IRS Form W-8BEN; or
(4)
to the extent a Foreign Lender is not the beneficial owner, an executed copy of IRS Form W-8IMY, accompanied by IRS
Form W-8ECI, IRS Form W-8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or
Exhibit F-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign
Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are
49
claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of
Exhibit F-4 on behalf of each such direct and indirect partner;
(C)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in
such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under
this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of
any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly
completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the
Administrative Agent to determine the withholding or deduction required to be made; and
(D)
if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA
if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or
1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by
law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable
law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the
Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations
under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to
deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after
the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form
or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(g)
[Reserved].
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to
which it has been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying
party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net
of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such
50
indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority)
in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph
(h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which would place
the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to
such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been
paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it
deems confidential) to the indemnifying party or any other Person.
(i)
Survival. Each party’s obligations under this Section shall survive the resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan
Document.
(j) Defined Terms. For purposes of this Section, the term “Lender” includes any Issuing Bank and the term “applicable law” includes FATCA.
2.18.
Payments Generally; Pro Rata Treatment; Sharing of Setoffs. (a) The Borrower shall make each payment or prepayment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) in
Dollars prior to 12:00 noon, New York City time, on the date when due or the date fixed for any prepayment hereunder, in immediately available funds, without
setoff, recoupment or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices
at 383 Madison Avenue, New York, New York, except payments to be made directly to Issuing Banks as expressly provided herein and except that payments
pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that
is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon
shall be payable for the period of such extension. All payments hereunder shall be made in Dollars.
(b) At any time that payments are not required to be applied in the manner required by Section 7.03, if at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be
applied first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.
(c)
If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of
its Revolving Loans or participations in LC Disbursements resulting in such Lender
51
receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and accrued interest thereon than
the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving
Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements; provided
that if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and the provisions of this paragraph shall not be construed to apply to any payment made by
the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received, prior to any date on which any payment is due to the Administrative Agent for the account of the
Lenders or the Issuing Banks pursuant to the terms hereof or any other Loan Document (including any date that is fixed for prepayment by notice from the Borrower
to the Administrative Agent pursuant to Section 2.11(b)), notice from the Borrower that the Borrower will not make such payment or prepayment, the Administrative
Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Banks, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the
Issuing Banks, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing
Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative
Agent, at the NYFRB Rate.
2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay
any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender
shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment would eliminate or reduce amounts payable pursuant
to Sections 2.15 or 2.17, as the case may be, in the future and would not subject such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b)
If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any
Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender becomes Defaulting Lender, then the Borrower may,
at its sole expense
52
and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to
the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Sections 2.15 or 2.17) and obligations under
this Agreement and the other Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that the Borrower shall have received the prior written consent of the Administrative Agent (and if a Commitment is being assigned, the
Issuing Banks), which consent shall not unreasonably be withheld, such Lender shall have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent
of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and in the case of any such assignment resulting from
a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment required
pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee (or, to
the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the
Administrative Agent and such parties are participants), and the Lender required to make such assignment need not be a party thereto in order for such assignment to
be effective and shall be deemed to have consented to an be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other
parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender;
provided that any such documents shall be without recourse to or warranty by the parties thereto.
2.20.
Defaulting Lenders.
Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so
long as such Lender is a Defaulting Lender:
(a)
fees shall cease to accrue on the Commitment of such Defaulting Lender pursuant to Section 2.12;
(b)
any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether
voluntary or mandatory, at maturity, pursuant to Section 7.03 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section
9.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such
Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing
Bank hereunder; third, to cash collateralize LC Exposure with respect to such Defaulting Lender in accordance with this Section; fourth, as the Borrower may request
(so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as
required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a deposit
account and released pro rata in order to (x) satisfy such Defaulting Lender’s
53
potential future funding obligations with respect to Loans under this Agreement and (y) cash collateralize future LC Exposure with respect to such Defaulting Lender
with respect to future Letters of Credit issued under this Agreement, in accordance with this Section; sixth, to the payment of any amounts owing to the Lenders, the
Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the Issuing Banks against such Defaulting Lender as a result
of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; seventh, so long as no Default or Event of Default
exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such
Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; and eighth, to such
Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans
or LC Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of
Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC
Disbursements owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Disbursements owed to, such
Defaulting Lender until such time as all Loans and funded and unfunded participations in the Borrower’s obligations corresponding to such Defaulting Lender’s LC
Exposure are held by the Lenders pro rata in accordance with the Commitments without giving effect to clause (d) below. Any payments, prepayments or other
amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this
Section shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(c)
the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have
taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9.02); provided that this clause
(c) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender
affected thereby;
(d)
if any LC Exposure exists at the time such Lender becomes a Defaulting Lender then:
(i) all or any part of the LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their
respective Applicable Percentages but only to the extent that such reallocation does not, as to any non-Defaulting Lender, cause such non-Defaulting Lender’s
Revolving Credit Exposure to exceed its Commitment;
(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following
notice by the Administrative Agent prepay, cash collateralize for the benefit of the Issuing Banks only the Borrower’s obligations corresponding to such
Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in
Section 7.02(c) for so long as such LC Exposure is outstanding;
(iii) if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not
be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b)
54
with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;
(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to
Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and
(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above,
then, without prejudice to any rights or remedies of any Issuing Bank or any other Lender hereunder, all facility fees that otherwise would have been payable
to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s Commitment that was utilized by such LC Exposure) and letter of
credit fees payable under Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Banks until and to the extent
that such LC Exposure is reallocated and/or cash collateralized; and
(e)
so long as such Lender is a Defaulting Lender, no Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied
that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders
and/or cash collateral will be provided by the Borrower in accordance with Section 2.20(d), and LC Exposure related to any newly issued or increased Letter of
Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.20(d)(i) (and such Defaulting Lender shall not participate therein).
If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent shall occur following the date hereof and for so long as such event shall continue
or (ii) any Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender
commits to extend credit, no Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless the Issuing Banks, as the case may be, shall have
entered into arrangements with the Borrower or such Lender, satisfactory to Issuing Bank, as the case may be, to defease any risk to it in respect of such Lender
hereunder.
In the event that each of the Administrative Agent, the Borrower, and each Issuing Bank agrees that a Defaulting Lender has adequately remedied all matters
that caused such Lender to be a Defaulting Lender, then the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment
and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for
such Lender to hold such Loans in accordance with its Applicable Percentage.
2.21.
Extension of Maturity Date. (a) The Borrower may, by delivering an Extension Request to the Administrative Agent (who shall promptly deliver a
copy to each of the Lenders), not less than 60 days in advance of the Maturity Date in effect at such time (the “Existing Maturity Date”), request that the Lenders
extend the Existing Maturity Date to the first anniversary of such Existing Maturity Date. Each Lender, acting in its sole discretion, shall, by written notice to the
Administrative Agent given not later than the date that is the 20th day after the date of the Extension Request, or if such date is not a Business Day, the immediately
following Business Day (the “Response Date”), advise the Administrative Agent in writing whether or not such Lender agrees to the requested extension. Each
Lender that advises the Administrative Agent that it will not extend the
55
Existing Maturity Date is referred to herein as a “Non-extending Lender”; provided, that any Lender that does not advise the Administrative Agent of its consent to
such requested extension by the Response Date and any Lender that is a Defaulting Lender on the Response Date shall be deemed to be a Non-extending Lender. The
Administrative Agent shall notify the Borrower, in writing, of the Lenders’ elections promptly following the Response Date. The election of any Lender to agree to
such an extension shall not obligate any other Lender to so agree. The Maturity Date may be extended no more than two times pursuant to this Section 2.21.
(b)
(i) If, by the Response Date, Lenders holding Commitments that aggregate 50% or more of the total Commitments shall constitute Non-extending
Lenders, then the Existing Maturity Date shall not be extended and the outstanding principal balance of all Loans and other amounts payable hereunder shall be
payable, and the Commitments shall terminate, on the Existing Maturity Date in effect prior to such extension.
(ii) If (and only if), by the Response Date, Lenders holding Commitments that aggregate more than 50% of the total Commitments shall have
agreed to extend the Existing Maturity Date (each such consenting Lender, an “Extending Lender”), then effective as of the Existing Maturity Date, the
Maturity Date for such Extending Lenders shall be extended to the first anniversary of the Existing Maturity Date (subject to satisfaction of the conditions set
forth in Section 2.21(d)). In the event of such extension, the Commitment of each Non-extending Lender shall terminate on the Existing Maturity Date in
effect for such Non-extending Lender prior to such extension and the outstanding principal balance of all Loans and other amounts payable hereunder to such
Non-extending Lender shall become due and payable on such Existing Maturity Date and, subject to Section 2.21(c) below, the total Commitments hereunder
shall be reduced by the Commitments of the Non-extending Lenders so terminated on such Existing Maturity Date.
(c)
In the event of any extension of the Existing Maturity Date pursuant to Section 2.21(b)(ii), the Borrower shall have the right on or before the Existing
Maturity Date, at its own expense, to require any Non-extending Lender to transfer and assign without recourse (in accordance with and subject to the restrictions
contained in Section 9.04) all its interests, rights (other than its rights to payments pursuant to Section 2.15, Section 2.16, Section 2.17 or Section 9.03 arising prior to
the effectiveness of such assignment) and obligations under this Agreement to one or more banks or other financial institutions identified to the Non-extending
Lender by the Borrower, which may include any existing Lender (each a “Replacement Lender”); provided that such Replacement Lender, if not already a Lender
hereunder, shall be subject to the approval of the Administrative Agent and each Issuing Bank (such approvals to not be unreasonably withheld) to the extent the
consent of the Administrative Agent or the Issuing Banks would be required to effect an assignment under Section 9.04(b), such assignment shall become effective as
of a date specified by the Borrower (which shall not be later than the Existing Maturity Date in effect for such Non-extending Lender prior to the effective date of the
requested extension) and the Replacement Lender shall pay to such Non-extending Lender in immediately available funds on the effective date of such assignment
the principal of and interest accrued to the date of payment on the outstanding principal amount Loans made by it hereunder and all other amounts accrued and
unpaid for its account or otherwise owed to it hereunder on such date.
(d) As a condition precedent to each such extension of the Existing Maturity Date pursuant to Section 2.21(b)(ii), the Borrower shall deliver to the
Administrative Agent a certificate of the Borrower dated as of the Existing Maturity Date signed by a
56
Responsible Officer of the Borrower certifying that, as of such date, both before and immediately after giving effect to such extension, the representations and
warranties of the Borrower set forth in this Agreement shall be true and correct and no Default shall have occurred and be continuing and first make such
prepayments of the outstanding Loans and second provide such cash collateral (or make such other arrangements satisfactory to the applicable Issuing Bank) with
respect to the outstanding Letters of Credit as shall be required such that, after giving effect to the termination of the Commitments of the Non-extending Lenders
pursuant to Section 2.21(b) and any assignment pursuant to Section 2.21(c), the aggregate Revolving Credit Exposure less the face amount of any Letter of Credit
supported by any such cash collateral (or other satisfactory arrangements) so provided does not exceed the aggregate amount of Commitments being extended.
(e) For the avoidance of doubt, no consent of any Lender (other than the existing Lenders participating in the extension of the Existing Maturity Date)
shall be required for any extension of the Maturity Date pursuant to this Section 2.21 and the operation of this Section 2.21 in accordance with its terms is not an
amendment subject to Section 9.02.
The Borrower represents and warrants to the Lenders that:
REPRESENTATIONS WAND WARRANTIES
ARTICLE 3
3.01.
Pennsylvania.
Organization; Powers. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of
3.02.
Authorization; Enforceability. The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding in equity or at law.
3.03.
Governmental Approvals; No Conflicts. The Transactions do not require any consent or approval of, registration or filing with, or any other action
by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, will not violate any applicable law or regulation or the
charter, by-laws or other organizational documents of the Borrower or any order of any Governmental Authority, will not violate or result in a default under any
indenture, agreement or other instrument binding upon the Borrower or its assets, or give rise to a right thereunder to require any payment to be made by the
Borrower, and will not result in the creation or imposition of, or the requirement to create, any Lien on any asset of the Borrower.
3.04.
Financial Condition; No Material Adverse Effect.
(a)
(i) The consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2020 and the related consolidated statements of operations,
changes in shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, certified by Pricewaterhouse Coopers LLP, copies
of which have been furnished to each Lender, fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as at such
dates and the consolidated
57
results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates in accordance with GAAP; and (ii) since December 31, 2020, there
has been no Material Adverse Effect.
(b) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in connection with Section 5.01 and/or filed with the
Securities and Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or threatened action, investigation or proceeding
affecting the Borrower or any Subsidiary before any court, governmental agency or arbitrator that may reasonably be anticipated to have a Material Adverse Effect.
There is no pending or threatened action or proceeding against the Borrower or any Subsidiary that purports to affect the legality, validity, binding effect or
enforceability against the Borrower of this Agreement. Since December 31, 2020, there has been no material adverse change in the business, assets, operations,
prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.
3.05.
Reserved.
3.06.
Litigation and Environmental Matters. (a) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in connection
with Section 5.01 and/or filed with the Securities and Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or
threatened action, investigation or proceeding affecting the Borrower or any Subsidiary before any court, governmental agency or arbitrator that may reasonably be
anticipated to have a Material Adverse Effect. There is no pending or threatened action or proceeding against the Borrower or any Subsidiary that purports to affect
the legality, validity, binding effect or enforceability against the Borrower of this Agreement.
(b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, the Borrower has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license
or other approval required under any Environmental Law, has not become subject to any Environmental Liability, has not received notice of any claim with respect
to any Environmental Liability or has no knowledge of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in,
or materially increased the likelihood of, a Material Adverse Effect.
3.07.
Compliance with Laws and Agreements. The Borrower is in compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.
3.08.
Investment Company Status. The Borrower is not required to register as an “investment company” as defined in the Investment Company Act of
1940.
3.09.
Taxes required to have been paid by it, except Taxes that are being contested in good faith by
Taxes. The Borrower has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all
58
appropriate proceedings and for which the Borrower has set aside on its books adequate reserves or to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
3.10.
ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.
3.11.
Beneficial Ownership. As of the Effective Date, to the best knowledge of the Borrower, the information included in the Beneficial Ownership
Certification provided on or prior to the Effective Date to any Lender in connection with this Agreement is true and correct in all respects.
3.12.
Reserved.
3.13.
Anti-Corruption Laws and Sanctions. None of (a) the Borrower, any Subsidiary, any of their respective directors or officers, or (b) to the knowledge
of the Borrower, any affiliate, agent or employee of the Borrower or any Subsidiary have engaged in any activity or conduct which would violate any applicable
Anti-Corruption Laws or any applicable Sanctions and the Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance
by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. None of (a) the
Borrower, any Subsidiary, any of their respective directors or officers or employees, or (b) to the knowledge of the Borrower, any affiliate or agent of the Borrower or
any Subsidiary is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-
Corruption Law or applicable Sanctions.
3.14.
Affected Financial Institutions. The Borrower is not an Affected Financial Institution.
3.15.
Reserved.
3.16. Margin Regulations. The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing
or carrying Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of any Borrowing and no Letter of
Credit issued hereunder will be used to buy or carry any Margin Stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of
Credit, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) will be Margin
Stock.
3.17.
Reserved.
3.18.
Exchange Act. No proceeds of any Loan have been or will be used directly or indirectly in connection with the acquisition of in excess of 5% of any
class of equity securities that is registered pursuant to Section 12 of the Exchange Act or any transaction subject to the requirements of Section 13 or 14 of the
Exchange Act.
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ARTICLE 4
CONDITIONS
4.01.
Effective Date. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from each party hereto a counterpart of this Agreement signed on behalf of such party
(which, subject to Section 9.06(b), may include any Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an
image of an actual executed signature page).
(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of Ballard Spahr LLP, counsel for the Borrower, substantially in the form of Exhibit D, and covering such other matters relating to the Borrower, this
Agreement or the Transactions as the Required Lenders shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower,
this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrower hereunder.
(f) The Administrative Agent shall have received the audited financial statements and the unaudited quarterly financial statements of the Borrower
referred to in Section 5.01.
(g)
The Administrative Agent shall have received, at least five days prior to the Effective Date, all documentation and other information regarding the
Borrower requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, to the extent
requested in writing of the Borrower at least 10 days prior to the Effective Date and to the extent the Borrower qualifies as a “legal entity customer” under the
Beneficial Ownership Regulation, at least five days prior to the Effective Date, any Lender that has requested, in a written notice to the Borrower at least 10 days
prior to the Effective Date, a Beneficial Ownership Certification in relation to the Borrower shall have received such Beneficial Ownership Certification (provided
that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).
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(h) The Administrative Agent shall have received such other documents as the Administrative Agent or the Required Lenders (through the Administrative
Agent) may reasonably request.
(i) The Administrative Agent shall have received evidence of consummation of the Spin Transaction in form and substance satisfactory to Administrative
Agent.
(j) Administrative Agent shall have received evidence, that outstanding indebtedness under the (x) Credit Agreements among Administrative Agent,
certain other parties thereto and (i) Baltimore Gas & Electric Company, (ii) Commonwealth Edison Company, (iii) Exelon, (iv) Exelon Generation Company and (v)
PECO Energy Company, in each case dated as of March 23, 2011 and (y) Second Amended and Restated Credit Agreement, dated as of August 1, 2011, among
Potomac Electric Power Company, Delmarva Power & Light Company, Atlantic City Electric Company and Wells Fargo Bank, National Association shall be paid in
full and the credit facilities extended in connection therewith shall be terminated.
4.02.
Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend or
extend any Letter of Credit, is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set forth in this Agreement (excluding the representations and warranties set forth in Section
3.04(a)(ii) and the first sentence of Section 3.06(a)) shall be true and correct on and as of the date of such Borrowing or the date of issuance, amendment or extension
of such Letter of Credit, as applicable.
(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment or extension of such Letter of Credit, as applicable,
no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower
on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been
irrevocably paid in full and all Letters of Credit shall have expired or terminated, in each case, without any pending draw, and all LC Disbursements shall have been
reimbursed, the Borrower and, in the case of Sections 5.03, 5.04, 5.05, 5.06, 5.07 and 5.08 the Principal Subsidiaries, covenant(s) and agree(s) with the Lenders that:
5.01.
their Public-Siders:
Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the Administrative Agent and each Lender, including
(a)
as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the
Borrower’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission with respect to such quarter (or, if the Borrower is not required to
file a Quarterly Report on Form 10-Q, copies of an unaudited consolidated balance sheet of the Borrower as of the
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end of such quarter and the related consolidated statement of operations of the Borrower for the portion of the Borrower’s fiscal year ending on the last day of such
quarter, in each case prepared in accordance with GAAP, subject to the absence of footnotes and to year-end adjustments), together with a certificate of an authorized
officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto;
(b)
as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the Borrower’s Annual Report on
Form 10-K filed with the Securities and Exchange Commission with respect to such fiscal year (or, if the Borrower is not required to file an Annual Report on Form
10-K, the consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of such fiscal year and the related consolidated statements of operations,
changes in shareholders’ equity (if applicable) and cash flows of the Borrower for such fiscal year, certified by PricewaterhouseCoopers LLP or other certified public
accountants of recognized national standing), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has
occurred and is continuing or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the
Borrower proposes to take with respect thereto;
(c)
concurrently with the delivery of the quarterly and annual reports referred to in subsections (a) and (b) above, a compliance certificate in substantially
the form set forth in Exhibit E, duly completed and signed by the Chief Financial Officer, Treasurer or an Assistant Treasurer of the Borrower;
(d)
except as otherwise provided in clause (a) or (b) above, promptly after the sending or filing thereof, copies of all reports that the Borrower sends to its
security holders generally, and copies of all Reports on Form 10-K, 10-Q or 8-K, and registration statements and prospectuses that the Borrower or any Subsidiary
files with the Securities and Exchange Commission or any national securities exchange (except to the extent that any such registration statement or prospectus relates
solely to the issuance of securities pursuant to employee purchase, benefit or dividend reinvestment plans of the Borrower or a Subsidiary);
(e)
promptly upon becoming aware of the institution of any steps by the Borrower or any other Person to terminate any Plan, or the failure to make a
required contribution to any Plan if such failure is sufficient to give rise to a lien under section 430(k) of the Code, or the taking of any action with respect to a Plan
which could result in the requirement that the Borrower furnish a bond or other security to the PBGC or such Plan, or the occurrence of any event with respect to any
Plan which could result in the incurrence by the Borrower or any other member of the Controlled Group of any material liability, fine or penalty, notice thereof and a
statement as to the action the Borrower or such member of the Controlled Group proposes to take with respect thereto;
(f)
promptly after any Rating Agency shall have announced a change in the rating established or deemed to have been established for the Index Debt,
written notice of such rating change;
(g) promptly following any request therefor, (x) such other information regarding the operations, business affairs and financial condition of the Borrower
or any Principal Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender (through the Administrative Agent) may
reasonably request and (y) information and documentation reasonably requested by the
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Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including
the Patriot Act and the Beneficial Ownership Regulation; and
(h)
such other information respecting the condition, operations or business, financial or otherwise, of the Borrower or any Subsidiary as any Lender,
through the Administrative Agent, may from time to time reasonably request (including any information that any Lender reasonably requests in order to comply with
its obligations under any “know your customer” or anti-money laundering laws or regulations, including the Patriot Act and the Beneficial Ownership Regulation).
Documents required to be delivered pursuant to Section 5.01(a), (b) or (e) (to the extent any such documents are included in materials otherwise filed with the
SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on which such materials are publicly available as
posted on the Electronic Data Gathering, Analysis and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Borrower’s behalf on an
Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether made
available by the Administrative Agent); provided that: (A) upon written request by the Administrative Agent (or any Lender through the Administrative Agent) to the
Borrower, the Borrower shall deliver paper copies of such documents to the Administrative Agent or such Lender until a written request to cease delivering paper
copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic
mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The
Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for timely
accessing posted documents or requesting delivery of paper copies of such document to it and maintaining its copies of such documents.
5.02.
Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:
(a)
as soon as possible, and in any event within five Business Days after the occurrence of any Default or Event of Default with respect to the Borrower
continuing on the date of such statement, a statement of an authorized officer of the Borrower setting forth details of such Default or Event of Default and the action
which the Borrower proposes to take with respect thereto;
(b)
any change in the credit ratings from a credit rating agency, or the placement by a credit rating agency of the Borrower or its parent on a
“CreditWatch” or “WatchList” or any similar list, in each case with negative implications, or the cessation by a credit rating agency of, or its intent to cease, rating the
Borrower’s debt; and
(c)
any change in the information provided in the Beneficial Ownership Certification delivered to such Lender that would result in a change to the list of
beneficial owners identified in such certification.
Each notice delivered under this Section (i) shall be in writing, (ii) shall contain a heading or a reference line that reads “Notice under Section 5.02 of Exelon
Corporation Credit Agreement dated February 1, 2022” and (iii) shall be accompanied by a statement
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of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or
proposed to be taken with respect thereto.
5.03.
Existence; Conduct of Business. The Borrower will do or cause to be done all things necessary to preserve, renew and keep in full force and effect its
legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under Section 6.02.
5.04.
Payment of Obligations. The Borrower will pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect
before the same shall become delinquent or in default, except where the validity or amount thereof is being contested in good faith by appropriate proceedings, the
Borrower has set aside on its books adequate reserves with respect thereto in accordance with GAAP and the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.
5.05. Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Principal Subsidiaries to, keep and maintain all property
material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and maintain, with financially sound and reputable
insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.
5.06.
Books and Records; Inspection Rights. The Borrower will, at any reasonable time and from time to time, pursuant to prior notice delivered to the
Borrower, permit any Lender, or any agent or representative of any thereof, to examine and, at such Lender’s expense, make copies of, and abstracts from the records
and books of account of, and visit the properties of, the Borrower and any Principal Subsidiary and to discuss the affairs, finances and accounts of the Borrower and
any Principal Subsidiary with any of their respective officers; provided that any non-public information (which has been identified as such by the Borrower or the
applicable Principal Subsidiary) obtained by any Lender or any of its agents or representatives pursuant to this Section 5.06 shall be treated confidentially by such
Person; provided, further, that such Person may disclose such information to (a) any other party to this Agreement, its examiners, Affiliates, outside auditors, counsel
or other professional advisors in connection with this Agreement, (b) to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap,
derivative or securitization transaction related to the obligations under this Agreement, (c) to any credit insurance provider or (d) if otherwise required to do so by
law or regulatory process (it being understood that, unless prevented from doing so by any applicable law or governmental authority, such Person shall use reasonable
efforts to notify the Borrower of any demand or request for any such information promptly upon receipt thereof so that the Borrower may seek a protective order or
take other appropriate action).
5.07.
Compliance with Laws. The Borrower will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower
will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws and applicable Sanctions.
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5.08.
Use of Proceeds and Letters of Credit. The proceeds of the Loans will be used only for general limited liability company or corporate purposes
(including the making of acquisitions), but in no event for any purpose that would be contrary to Section 3.13, 3.16 or 3.18. No part of the proceeds of any Loan will
be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulations T, U and
X. The Borrower will not request any Borrowing or use any Letter of Credit, and the Borrower shall not use, and shall ensure that its Subsidiaries and its or their
respective directors, officers, employees and agents shall not use, directly or indirectly, the proceeds of any Borrowing or Letter of Credit (a) in furtherance of an
offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption
Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country,
or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto (including any Person participating in the Loans hereunder,
whether as underwriter, advisor, investor, lender, hedge provider, facility or security agent or otherwise).
5.09.
Accuracy of Information. The Borrower will ensure that any information, including financial statements or other documents, furnished to the
Administrative Agent or the Lenders in connection with this Agreement or any amendment or modification hereof or waiver hereunder contains no material
misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not
misleading, and the furnishing of such information shall be deemed to be a representation and warranty by the Borrower on the date thereof as to the matters
specified in this Section.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters
of Credit have expired or terminated, in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lenders that:
6.01.
Liens. The Borrower will not create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or
assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:
(a) Liens imposed by law, such as carriers’, warehousemen’s, landlords’ repairmen’s, materialmen’s and mechanics’ Liens and other similar Liens arising
in the ordinary course of business;
(b) Liens on the capital stock of or any other Equity Interest in any Subsidiary to secure Nonrecourse Indebtedness;
(c) Liens for taxes, assessments or governmental charges, levies, or fines (including such amounts arising under environmental law) on property of the
Borrower if the same shall not at the time be delinquent or thereafter can be paid without a material penalty, or are being contested in good faith and by appropriate
proceedings;
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(d) Liens upon or in any property acquired in the ordinary course of business to secure the purchase price of such property or to secure any obligation
incurred solely for the purpose of financing the acquisition of such property;
(e) Liens existing on property at the time of the acquisition thereof (other than any such Lien created in contemplation of such acquisition unless
permitted by the preceding clause (d));
(f) Liens granted in connection with any financing arrangement for the purchase of nuclear fuel or the financing of pollution control facilities, limited to
the fuel or facilities so purchased or acquired;
(g) Liens arising in connection with sales or transfers of, or financing secured by, accounts receivable or related contracts, provided that any such sale,
transfer or financing shall be on arms’ length terms;
(h) Liens securing Permitted Obligations;
(i)
Permitted Encumbrances;
(j) Liens arising in connection with sale and leaseback transactions entered into by the Borrower, but only to the extent that the aggregate purchase price
of all assets sold by the Borrower during the term of this Agreement pursuant to such sale and leaseback transactions does not exceed $1,000,000,000;
(k) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental
retirement plans arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental
retirement plans or other social security or similar legislation;
(l) Liens constituting attachment, judgment and other similar Liens arising in connection with court proceedings to the extent not constituting an Event of
Default under Section 7.01(f);
(m) Liens created in the ordinary course of business to secure liability to insurance carriers and Liens on insurance policies and the proceeds thereof
(whether accrued or not), rights or claims against an insurer or other similar asset securing insurance premium financings;
(n) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of
goods in the ordinary course of business;
(o) Liens in the nature of rights of setoff, bankers’ liens, revocation, refund, chargeback, counterclaim, netting of cash amounts or similar rights as to
deposit accounts, commodity accounts or securities accounts or other funds maintained with a credit or depository institution;
(p) Liens consisting of pledges of industrial development, pollution control or similar revenue bonds in connection with the remarketing of such bonds;
(q) Liens created under Section 2.20 and similar cash collateralization obligations relating to defaulting lenders and remedies upon default;
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(r) Liens resulting from any restriction on any Equity Interest (or project interest, interests in any energy facility (including undivided interests)) of a
Person providing for a breach, termination or default under any owners, participation, shared facility, joint venture, stockholder, membership, limited liability
company or partnership agreement between such Person and one or more other holders of Equity Interests (or project interest, interests in any energy facility
(including undivided interests)) of such Person, to the extent a security interest or other Lien is created on any such interest as a result thereof;;
(s) Liens granted on cash or cash equivalents to defease or repay Indebtedness of the Borrower no later than 60 days after the creation of such Lien;
(t) Liens created in connection with sales, transfers, leases, assignment or other conveyances or Dispositions of assets, including (A) Liens on assets or
securities granted or deemed to arise in connection with and as a result of the execution, delivery or performance of contracts to purchase or sell such assets or
securities, and (B) rights of first refusal, options or other contractual rights or obligations to sell, assign or otherwise dispose of any interest therein;
(u) Liens securing Permitted Obligations and reimbursement obligations in respect of letters of credit issued to support Permitted Obligations ; and
(v) Liens, other than those described above in this Section 6.01, provided that the aggregate amount of all Indebtedness secured by Liens permitted by this
clause (v) shall not exceed in the aggregate at any one time outstanding $200,000,000.
6.02.
Fundamental Changes; Mergers and Consolidations; Disposition of Assets. Merge with or into or consolidate with or into, or sell, assign, 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 permit any Principal Subsidiary to do so, except that (i) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other
Principal Subsidiary, (ii) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to the Borrower, (iii) the Borrower may merge or
consolidate with or into a Subsidiary thereof formed for the purpose of converting the Borrower into a corporation and (iv) the Borrower or any Principal Subsidiary
may merge with or into or consolidate with or transfer assets to any other Person; provided that, in each case, (A) immediately before and after giving effect thereto,
no Default or Event of Default shall have occurred and be continuing (except in the case where any Principal Subsidiary may merge with or into or consolidate with
or transfer assets to any other Principal Subsidiary), (B) in the case of any such merger, consolidation or transfer of assets to which the Borrower is a party, either (x)
the Borrower shall be the surviving entity or (y) the surviving entity shall be an Eligible Successor and shall have assumed all of the obligations of the Borrower
under this Agreement and the Letters of Credit pursuant to a written instrument in form and substance satisfactory to the Administrative Agent and the
Administrative Agent shall have received an opinion of counsel in form and substance satisfactory to it as to the enforceability of such obligations assumed, and (C)
subject to clause (B) above, in the case of any such merger, consolidation or transfer of assets to which any Principal Subsidiary is a party, a Principal Subsidiary
shall be the surviving entity or transferee (as applicable).
6.03.
Continuation of Businesses. Engage, or permit any Subsidiary to engage, in any line of business which is material to the Borrower and its
Subsidiaries, taken as a
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whole, other than businesses engaged in by the Borrower and its Subsidiaries as of the date hereof and reasonable extensions thereof.
6.04.
Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries (other than any Excluded Subsidiary) to, directly or
indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon the ability of the Borrower
or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or the ability of any Subsidiary to pay dividends or other distributions
with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the
Borrower or any other Subsidiary; provided that the foregoing shall not apply to restrictions and conditions imposed by law or by this Agreement, the foregoing
shall not apply to restrictions and conditions existing on the date hereof identified on Schedule 6.04 (but shall apply to any extension or renewal of, or any
amendment or modification expanding the scope of, any such restriction or condition), the foregoing shall not apply to customary restrictions and conditions
contained in agreements relating to the sale of a Subsidiary pending such sale; provided that such restrictions and conditions apply only to the Subsidiary that is to be
sold and such sale is permitted hereunder, clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and clause (a) of the
foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof.
6.05.
0.65:1.00.
Consolidated Capitalization Ratio. The Borrower will not permit the Consolidated Capitalization Ratio as of the last day of any Test Period to exceed
7.01.
Events of Default. If any of the following events (“Events of Default”) shall occur:
ARTICLE 7
EVENTS OF DEFAULT
(a) The Borrower shall fail to pay (i) any principal of any Loan when the same becomes due and payable, (ii) any reimbursement obligation in respect of
any LC Disbursement within one Business Day after the same becomes due and payable or (iii) any interest on any Loan or any other amount payable by the
Borrower hereunder within three Business Days after the same becomes due and payable;
(b) Any representation or warranty made or deemed made by or on behalf of the Borrower herein or by the Borrower (or any of its officers) pursuant to
the terms of this Agreement shall prove to have been incorrect or misleading in any material respect when made;
(c) The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.02, 5.03 (with respect to Borrower’s
existence), 5.08 or Article 6 or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to
perform or observe such other term, covenant or agreement shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by
the Administrative Agent (which notice shall be given by the Administrative Agent at the written request of any Lender);
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(d) The Borrower or any Principal Subsidiary shall fail to pay any principal of or premium or interest on any Indebtedness that is outstanding in a
principal amount in excess of $100,000,000 in the aggregate (but excluding Indebtedness hereunder and Nonrecourse Indebtedness) when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument
relating to any such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof, other than any acceleration of any Indebtedness
secured by equipment leases or fuel leases of the Borrower or a Principal Subsidiary as a result of the occurrence of any event requiring a prepayment (whether or not
characterized as such) thereunder, which prepayment will not result in a Material Adverse Effect;
(e) The Borrower or any Principal Subsidiary 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 Borrower or any Principal
Subsidiary 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 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 Borrower or any Principal Subsidiary shall take any corporate or limited liability company action to authorize or to consent to
any of the actions set forth above in this Section 7.01(e);
(f) One or more judgments or orders for the payment of money in an aggregate amount exceeding $100,000,000 (excluding any such judgments or orders
to the extent covered by insurance, subject to any customary deductible, and under which the applicable insurance carrier has not denied coverage) shall be rendered
against the Borrower or any Principal Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or
(ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect;
(g)
(i) Any Reportable Event that the Required Lenders determine in good faith is reasonably likely to result in the termination of any Single Employer
Plan or in the appointment by the appropriate United States District Court of a trustee to administer a Single Employer Plan shall have occurred and be continuing 60
days after written notice to such effect shall have been given to the Borrower by the Administrative Agent; (ii) any Single Employer Plan shall be terminated; (iii) a
Trustee shall be appointed by an appropriate United States District Court to administer any Single Employer Plan; (iv) the PBGC shall institute proceedings to
terminate any Single Employer Plan or to appoint a trustee to administer any Single Employer Plan; or (v) the Borrower or any other member of the Controlled
Group withdraws from any Multiemployer Plan; provided that on the
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date of any event described in clauses (i) through (v) above, the Unfunded Liabilities of the applicable Plan exceed $100,000,000;
(h)
[Reserved];
(i)
any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all Obligations, ceases to be in full force and effect; or the Borrower or any other Person contests in writing the
validity or enforceability of any provision of any Loan Document; or the Borrower denies in writing that it has any or further liability or obligation under any Loan
Document, or purports in writing to revoke, terminate or rescind any Loan Document; or
(j)
a Change in Control shall have occurred.
7.02.
Remedies Upon an Event of Default. If an Event of Default occurs (other than an event with respect to the Borrower described in Section 7.01(e), and
at any time thereafter during the continuance of such Event of Default, the Administrative Agent may with the consent of the Required Lenders, and shall at the
request of the Required Lenders, by notice to the Borrower, take any or all of the following actions, at the same or different times:
(a)
terminate the Commitments, and thereupon the Commitments shall terminate immediately;
(b) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and
all fees and other obligations of the Borrower accrued hereunder and under any other Loan Document, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower;
(c)
require that the Borrower provide cash collateral as required in Section 2.06(j); and
(d)
exercise on behalf of itself, the Lenders and the Issuing Banks all rights and remedies available to it, the Lenders and the Issuing Banks under the Loan
Documents and Applicable Law.
If an Event of Default described in Section 7.01(e) occurs with respect to the Borrower, the Commitments shall automatically terminate and the principal of
the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder and under any other Loan
Document including any break funding payment or prepayment premium, shall automatically become due and payable, and the obligation of the Borrower to cash
collateralize the LC Exposure as provided in clause (c) above shall automatically become effective, in each case, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
7.03.
Application of Payments. Notwithstanding anything herein to the contrary, following the occurrence and during the continuance of an Event of
Default, and notice thereof to the Administrative Agent by the Borrower or the Required Lenders:
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(a)
all payments received on account of the Obligations shall, subject to Section 2.20, be applied by the Administrative Agent as follows:
(i)
first, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts payable to the Administrative
Agent (including fees and disbursements and other charges of counsel to the Administrative Agent payable under Section 9.03 and amounts pursuant to
Section 2.12(c) payable to the Administrative Agent in its capacity as such);
(ii) second, to payment of that portion of the Obligations constituting fees, expenses, indemnities and other amounts (other than principal,
reimbursement obligations in respect of LC Disbursements, interest and Letter of Credit fees) payable to the Lenders and the Issuing Banks (including fees
and disbursements and other charges of counsel to the Lenders and the Issuing Banks payable under Section 9.03) arising under the Loan Documents, ratably
among them in proportion to the respective amounts described in this clause (ii) payable to them;
(iii) third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit fees and charges and interest on the Loans
and unreimbursed LC Disbursements, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause (iii)
payable to them;
(iv) fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and unreimbursed LC Disbursements and to
cash collateralize that portion of LC Exposure comprising the undrawn amount of Letters of Credit to the extent not otherwise cash collateralized by the
Borrower pursuant to Section 2.06 or 2.20, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this
clause (iv) payable to them; provided that (x) any such amounts applied pursuant to subclause (B) above shall be paid to the Administrative Agent for the
ratable account of the applicable Issuing Banks to cash collateralize Obligations in respect of Letters of Credit, (y) subject to Section 2.06 or 2.20, amounts
used to cash collateralize the aggregate amount of Letters of Credit pursuant to this clause (iv) shall be used to satisfy drawings under such Letters of Credit
as they occur and (z) upon the expiration of any Letter of Credit (without any pending drawings), the pro rata Commitment of cash collateral shall be
distributed to the other Obligations, if any, in the order set forth in this Section 7.03;
(v) fifth, to the payment in full of all other Obligations, in each case ratably among the Administrative Agent, the Lenders and the Issuing Banks
based upon the respective aggregate amounts of all such Obligations owing to them in accordance with the respective amounts thereof then due and payable;
and
(vi) finally, the balance, if any, after all Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by law; and
(b)
if any amount remains on deposit as cash collateral after all Letters of Credit have either been fully drawn or expired (without any pending drawings),
such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
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ARTICLE 8
THE ADMINISTRATIVE AGENT
8.01.
Authorization and Action. (a) Each Lender and each Issuing Bank hereby irrevocably appoints the entity named as Administrative Agent in the
heading of this Agreement and its successors and assigns to serve as the administrative agent under the Loan Documents and each Lender and each Issuing Bank
authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as
are delegated to the Administrative Agent under such agreements and to exercise such powers as are reasonably incidental thereto. Without limiting the foregoing,
each Lender and each Issuing Bank hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan
Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan
Documents.
(b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), the Administrative Agent
shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to
the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender and each Issuing Bank; provided,
however, that the Administrative Agent shall not be required to take any action that the Administrative Agent in good faith believes exposes it to liability unless the
Administrative Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Lenders and the Issuing Banks with respect to such action
or is contrary to this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any
requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a
Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that the
Administrative Agent may seek clarification or direction from the Required Lenders prior to the exercise of any such instructed action and may refrain from acting
until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower, any Subsidiary or any Affiliate of any of the foregoing that is
communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the
Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of
any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(c)
In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the
Lenders and the Issuing Banks (except in limited circumstances expressly provided for herein relating to the maintenance of the Register), and its duties are entirely
mechanical and administrative in nature. Without limiting the generality of the foregoing:
(i)
the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the
agent,
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fiduciary or trustee of or for any Lender, Issuing Bank or holder of any other obligation other than as expressly set forth herein and in the other Loan
Documents, regardless of whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term
“agent” (or any similar term) herein or in any other Loan Document with reference to the Administrative Agent is not intended to connote any fiduciary duty
or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is
intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it will not assert any claim
against the Administrative Agent based on an alleged breach of fiduciary duty by the Administrative Agent in connection with this Agreement and/or the
transactions contemplated hereby;
(ii) [Reserved];
(iii) [Reserved]; and
(iv) nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any Lender for any sum or the profit
element of any sum received by the Administrative Agent for its own account;
(d) The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any of their respective
duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-
agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The
Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines
in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.
(e) No Arranger shall have obligations or duties whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no
liability hereunder or thereunder in such capacity, but all such persons shall have the benefit of the indemnities provided for hereunder.
(f)
In case of the pendency of any proceeding with respect to any Loan Party under any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan or any reimbursement obligation shall then be due
and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(i)
to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Disbursements and
all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders,
the Issuing Banks and the Administrative Agent (including any claim under Sections 2.12, 2.13, 2.15, 2.17 and 9.03) allowed in such judicial proceeding; and
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(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender, each
Issuing Bank to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, the Issuing Banks, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan
Documents (including under Section 9.03). Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or
adopt on behalf of any Lender or Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any
Lender or Issuing Bank or to authorize the Administrative Agent to vote in respect of the claim of any Lender or Issuing Bank in any such proceeding.
(g) The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks, and, except solely to the extent
of the Borrower’s rights to consent pursuant to and subject to the conditions set forth in this Article, none of the Borrower or any Subsidiary, or any of their
respective Affiliates, shall have any rights as a third party beneficiary under any such provisions.
8.02.
Administrative Agent’s Reliance, Limitation of Liability, Etc. (a) Neither the Administrative Agent nor any of its Related Parties shall be liable for any
action taken or omitted to be taken by such party, the Administrative Agent or any of its Related Parties under or in connection with this Agreement or the other Loan
Documents (x) with the consent of or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross
negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable
judgment) or responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by or any officer thereof contained in
this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document (including, for the avoidance of doubt, in connection with the Administrative Agent’s reliance on any
Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page) or for any
failure of to perform its obligations hereunder or thereunder.
(b) The Administrative Agent shall be deemed not to have knowledge of any notice of any of the events or circumstances set forth or described in Section
5.02 unless and until written notice thereof stating that it is a “notice under Section 5.02” in respect of this Agreement and identifying the specific clause under said
Section is given to the Administrative Agent by the Borrower, or notice of any Default or Event of Default unless and until written notice thereof (stating that it is a
“notice of Default” or a “notice of an Event of Default”) is given to the Administrative Agent by the Borrower, a Lender or an Issuing Bank. Further, the
Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into any statement, warranty or representation made in or in connection
with any Loan Document, the contents of any certificate, report or other document delivered thereunder or in connection therewith, the performance or
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observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default or Event of Default, the
sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or the satisfaction of any
condition set forth in Article 4 or elsewhere in any Loan Document, other than to confirm receipt of items (which on their face purport to be such items) expressly
required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or
satisfactory to the Administrative Agent. Notwithstanding anything herein to the contrary, the Administrative Agent shall not be liable for, or be responsible for any
Liabilities, costs or expenses suffered by the Borrower, any Subsidiary, any Lender or any Issuing Bank as a result of, any determination of the Revolving Credit
Exposure, any of the component amounts thereof or any portion thereof attributable to each Lender or Issuing Bank.
(c) Without limiting the foregoing, the Administrative Agent may treat the payee of any promissory note as its holder until such promissory note has been
assigned in accordance with Section 9.04, may rely on the Register to the extent set forth in Section 9.04(b), may consult with legal counsel (including counsel to the
Borrower), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts, makes no warranty or representation to any Lender or Issuing Bank and shall not be responsible
to any Lender or Issuing Bank for any statements, warranties or representations made by or on behalf of any Loan Party in connection with this Agreement or any
other Loan Document, in determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must
be fulfilled to the satisfaction of a Lender or an Issuing Bank, may presume that such condition is satisfactory to such Lender or Issuing Bank unless the
Administrative Agent shall have received notice to the contrary from such Lender or Issuing Bank sufficiently in advance of the making of such Loan or the issuance
of such Letter of Credit and shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Loan Document by acting upon,
any notice, consent, certificate or other instrument or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other
distribution) or any statement made to it orally or by telephone and believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or
parties (whether or not such Person in fact meets the requirements set forth in the Loan Documents for being the maker thereof).
8.03.
Posting of Communications. (a) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communications
available to the Lenders and the Issuing Banks by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform
chosen by the Administrative Agent to be its electronic transmission system (the “Approved Electronic Platform”).
(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies
implemented or modified by the Administrative Agent from time to time (including, as of the Effective Date, a user ID/password authorization system) and the
Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-
by-deal basis, each of the Lenders, each of the Issuing Banks and the Borrower acknowledges and agrees that the distribution of material through an electronic
medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any
75
Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the
Lenders, each of the Issuing Banks and the Borrower hereby approves distribution of the Communications through the Approved Electronic Platform and
understands and assumes the risks of such distribution.
(c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE
APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE
ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE
APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS
OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE
COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, ANY ARRANGER OR
ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY
LENDER, ANY ISSUING BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY
LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED
ELECTRONIC PLATFORM.
“Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan
Party pursuant to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or any Issuing Bank by
means of electronic communications pursuant to this Section, including through an Approved Electronic Platform.
(d) Each Lender and each Issuing Bank agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the
Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender and
Issuing Bank agrees to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s or
Issuing Bank’s (as applicable) email address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such
email address.
(e) Each of the Lenders, each of the Issuing Banks and the Borrower agrees that the Administrative Agent may, but (except as may be required by
applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally
applicable document retention procedures and policies.
(f) Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Issuing Bank to give any notice or other communication
pursuant to any Loan Document in any other manner specified in such Loan Document.
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8.04.
The Administrative Agent Individually. With respect to its Commitment, Loans, Letter of Credit Commitments and Letters of Credit, the Person
serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to
the extent set forth herein for any other Lender or Issuing Bank, as the case may be. The terms “Issuing Banks”, “Lenders”, “Required Lenders” and any similar
terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its individual capacity as a Lender, Issuing Bank or as one of the
Required Lenders, as applicable. The Person serving as the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as
the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust or other business with, the Borrower, any Subsidiary or
any Affiliate of any of the foregoing as if such Person was not acting as the Administrative Agent and without any duty to account therefor to the Lenders or the
Issuing Banks.
8.05.
Successor Administrative Agent. (a) The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders,
the Issuing Banks and the Borrower, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may,
on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an
Affiliate of any such bank. Such appointment shall be subject to the prior written approval of the Borrower (which approval may not be unreasonably withheld and
shall not be required while an Event of Default has occurred and is continuing). Upon the acceptance of any appointment as Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring
Administrative Agent. Upon the acceptance of appointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its
rights as Administrative Agent under the Loan Documents.
(b) Notwithstanding paragraph (a) of this Section, in the event no successor Administrative Agent shall have been so appointed and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the
effectiveness of its resignation to the Lenders, the Issuing Banks and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice,
the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and the Required Lenders shall
succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that all payments required to be made
hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly
to such Person and all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be given or made to
each Lender and each Issuing Bank. Following the effectiveness of the Administrative Agent’s resignation from its capacity as such, the provisions of this Article and
Section 9.03, as well as any exculpatory, reimbursement and indemnification
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provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
8.06.
Acknowledgements of Lenders and Issuing Banks. (a) Each Lender and each Issuing Bank acknowledges that the Loan Documents set forth the terms
of a commercial lending facility, it is engaged in making, acquiring or holding commercial loans and in providing other facilities set forth herein as may be applicable
to such Lender or Issuing Bank, in each case in the ordinary course of business and is making the Loans hereunder as commercial loans in the ordinary course of
business, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument (and each Lender and each Issuing Bank agrees not to
assert a claim in contravention of the foregoing), it has, independently and without reliance upon the Administrative Agent, any Arranger or any other Lender or
Issuing Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder and it is sophisticated with respect to decisions to make,
acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender or such Issuing Bank, and either it, or the
Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making,
acquiring or holding such commercial loans or providing such other facilities. Each Lender and each Issuing Bank also acknowledges that it will, independently and
without reliance upon the Administrative Agent, any Arranger or any other Lender or Issuing Bank, or any of the Related Parties of any of the foregoing, and based
on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the
Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
(b) Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment and
Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to
and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the
Lenders on the Effective Date.
(c)
(i) Each Lender hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole
discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of
principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such
Lender), and demands the return of such Payment (or a portion thereof), such Lender shall promptly, but in no event later than one Business Day thereafter, return to
the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon
in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the
Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and hereby waives, as to the Administrative
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Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the
return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative
Agent to any Lender under this Section 8.06(c) shall be conclusive, absent manifest error.
(ii) Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different
amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such
Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has
been made with respect to such Payment. Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may
have been sent in error, such Lender shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it
shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof)
as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or
portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.
(iii) The Borrower and each other Loan Party hereby agrees that (x) in the event an erroneous Payment (or portion thereof) are not recovered from
any Lender that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender
with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower
or any other Loan Party.
(iv) Each party’s obligations under this Section 8.06(c) shall survive the resignation or replacement of the Administrative Agent or any transfer of
rights or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations
under any Loan Document.
8.07.
[Reserved].
8.08.
[Reserved].
8.09.
Certain ERISA Matters. (a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants,
from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and
each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the
following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Benefit Plans in connection with the
Loans, the Letters of Credit or the Commitments,
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(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by
independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts),
PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain
transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is
applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14),
(B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform
the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans,
the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the
best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into,
participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and
such Lender.
(b)
In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has provided another
representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of
the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases
being a Lender party hereto, for the benefit of, the Administrative Agent, and each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or
for the benefit of the Borrower or any other Loan Party, that none of the Administrative Agent, or any Arranger or any of their respective Affiliates is a fiduciary with
respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any
Loan Document or any documents related to hereto or thereto).
(c) The Administrative Agent and each Arranger hereby informs the Lenders that each such Person is not undertaking to provide investment advice or to
give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions
contemplated hereby in that such Person or an Affiliate thereof may receive interest or other payments with respect to the Loans, the Letters of Credit, the
Commitments, this Agreement and any other Loan Documents may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an
amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or may receive fees or other payments
in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility
fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees,
fronting
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fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees
or fees similar to the foregoing.
ARTICLE 9
MISCELLANEOUS
9.01.
Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b)
below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by telecopy, as follows:
(i)
if to the Borrower, to it at 10 S. Dearborn, 54th Floor, Chicago, IL 60603, Attention: Chief Financial Officer, facsimile: 312-394-5443;
(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., JPMorgan Loan Services, 500 Stanton Christiana Road, NCC5, Floor 1,
Newark, DE 19713, Attention of Suzanna Gallagher, Wholesale Lending Services, Investment Bank (Fax No. (302) 634-3301);
(iii) if to JPMorgan Chase Bank, 1-800-634-1969 and gts.client.services@jpmchase.com; and
(iv) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by
facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given
at the opening of business on the next business day for the recipient). Notices delivered through Approved Electronic Platforms, to the extent provided in
paragraph (b) below, shall be effective as provided in said paragraph (b).
(b) Notices and other communications to the Borrower, the Lenders and the Issuing Banks hereunder may be delivered or furnished by using Approved
Electronic Platforms pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article 2 unless
otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices
and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
(c) Unless the Administrative Agent otherwise prescribes, notices and other communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written
acknowledgement), and notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended
recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website
address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal
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business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(d) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.
9.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative
Agent, the Issuing Banks and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any
provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b)
of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the time.
(b) Subject to Section 2.14(b) and (c) and Section 9.02(c) below, neither this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent
with the consent of the Required Lenders; provided that no such agreement shall increase the Commitment of any Lender without the written consent of such Lender,
reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby, postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon,
or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, change Section 2.09(c) or 2.18(b) or (c) in a manner that would alter the ratable reduction of
Commitments or the pro rata sharing of payments required thereby, without the written consent of each Lender, change the payment waterfall provisions of Section
2.20(b) or 7.03 without the written consent of each Lender, or change any of the provisions of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any
consent hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent, the Issuing Banks without the prior written consent of the Administrative Agent or the Issuing Banks, as the case may be; and provided
further that no such agreement shall amend or modify the provisions of Section 2.06 without the prior written consent of the Administrative Agent and the Issuing
Banks.
(c)
If the Administrative Agent and the Borrower acting together identify any ambiguity, omission, mistake, typographical error or other defect in any
provision of this Agreement or any other Loan Document, then the Administrative Agent and the Borrower shall be permitted to amend, modify or supplement such
provision to cure such ambiguity, omission, mistake, typographical error or other defect, and such amendment
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shall become effective without any further action or consent of any other party to this Agreement.
9.03.
Expenses; Limitation of Liability; Indemnity, Etc.
(a) Expenses. The Borrower shall pay all reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be consummated), all reasonable out-of-pocket expenses incurred by any Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and all out-of-pocket expenses
incurred by the Administrative Agent, any Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent,
any Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) Limitation of Liability. To the extent permitted by applicable law the Borrower shall not assert, and the Borrower hereby waives, any claim against the
Administrative Agent, any Arranger, any Issuing Bank and any Lender, and any Related Party of any of the foregoing Persons (each such Person being called a
“Lender-Related Person”) for any Liabilities arising from the use by others of information or other materials (including, without limitation, any personal data)
obtained through telecommunications, electronic or other information transmission systems (including the Internet), and no party hereto shall assert, and each such
party hereby waives, any Liabilities against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to
direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document, or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof; provided that, nothing in this Section 9.03(b) shall
relieve the Borrower of any obligation it may have to indemnify an Indemnitee, as provided in Section 9.03(c), against any special, indirect, consequential or punitive
damages asserted against such Indemnitee by a third party.
(c)
Indemnity. The Borrower shall indemnify the Administrative Agent, each Arranger, each Issuing Bank and each Lender, and each Related Party of any
of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all Liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of the execution or delivery of this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by an Issuing Bank to honor a demand for
payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), any
actual or alleged presence or release of Hazardous Materials on or from any property
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owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or any
actual or prospective Proceeding relating to any of the foregoing, whether or not such Proceeding is brought by the Borrower or its equity holders, Affiliates,
creditors or any other third Person and whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that such Liabilities or related expenses are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted primarily from the gross negligence or willful misconduct of such Indemnitee. This Section 9.03(c) shall not
apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.
(d) Lender Reimbursement. Each Lender severally agrees to pay any amount required to be paid by the Borrower under paragraphs (a), (b) or (c) of this
Section 9.03 to the Administrative Agent, each Issuing Bank, and each Related Party of any of the foregoing Persons (each, an “Agent-Related Person”) (to the
extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Applicable Percentage in
effect on the date on which such payment is sought under this Section (or, if such payment is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance with such Applicable Percentage immediately prior to such date), and agrees to
indemnify and hold each Agent-Related Person harmless from and against any and all Liabilities and related expenses, including the fees, charges and disbursements
of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent-Related
Person in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent-Related Person under or in connection with any of
the foregoing; provided that the unreimbursed expense or Liability or related expense, as the case may be, was incurred by or asserted against such Agent-Related
Person in its capacity as such; provided further that no Lender shall be liable for the payment of any portion of such Liabilities, costs, expenses or disbursements that
are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from such Agent-Related Person’s gross negligence or
willful misconduct. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(e) Payments. All amounts due under this Section 9.03 shall be payable promptly after written demand therefor.
9.04.
Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), except that the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void) and no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors
and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this
Section) and, to the extent expressly contemplated hereby, the Related Parties of each of
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the Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)
(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all
or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, participations in Letters of Credit and the Loans at the
time owing to it) with the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) of:
(A)
the Borrower; provided that, the Borrower shall be deemed to have consented to an assignment of all or a portion of the
Revolving Loans and Commitments unless it shall have objected thereto by written notice to the Administrative Agent within ten (10) Business
Days after having received notice thereof provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate
of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee;
(B)
the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of any
Commitment to an assignee that is a Lender (other than a Defaulting Lender) with a Commitment immediately prior to giving effect to such
assignment; and
(C)
each Issuing Bank.
(ii) Assignments shall be subject to the following additional conditions:
(A)
except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of
the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent; provided that no such
consent of the Borrower shall be required if an Event of Default has occurred and is continuing;
(B)
each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement; provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the
assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;
(C)
the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignment and Assumption or (y)
to the extent applicable, an agreement incorporating an Assignment and Assumption by reference
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pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are
participants, together with a processing and recordation fee of $3,500; and
(D)
the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the
assignee designates one or more Credit Contacts to whom all syndicate-level information (which may contain material non-public information
about the Borrower and its related parties or its securities) will be made available and who may receive such information in accordance with
the assignee’s compliance procedures and applicable laws, including Federal and state securities laws.
For the purposes of this Section 9.04(b), the term “Approved Fund” and “Ineligible Institution” have the following meanings:
“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) a company, investment vehicle or trust for, or owned and
operated for the primary benefit of, a natural person or relative(s) thereof or (d) the Borrower or any of its Affiliates; provided that, with respect to clause (c), such
company, investment vehicle or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Loans or
Commitments, (y) is managed by a professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making
or purchasing commercial loans, and (z) has assets greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loans
and similar extensions of credit in the ordinary course of its business; provided, further, that upon the occurrence and during the continuance of an Event of Default,
any Person (other than a Lender) shall be an Ineligible Institution if after giving effect to any proposed assignment to such Person, such Person would hold more than
25% of the then outstanding Total Revolving Credit Exposure or Commitments, as the case may be.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption,
have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this
Section shall be treated for purposes of this Agreement as a sale by such Lender
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of a participation in such rights and obligations in accordance with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and
principal amount (and stated interest) of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Banks and the Lenders shall treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower, any Issuing Bank and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.
(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and an assignee or (y) to the extent
applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the
Administrative Agent and the parties to the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the
assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information
contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it
pursuant to 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(d), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and
record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon. No
assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(c) Any Lender may, without the consent of, or notice to, the Borrower, the Administrative Agent, the Issuing Banks, sell participations to one or more
banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it); provided that such Lender’s obligations under this Agreement shall remain unchanged;
such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and the Borrower, the Administrative Agent, the
Issuing Banks and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce
this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Section 2.15, 2.16 and 2.17 (subject to the requirements and
limitations therein, including the requirements under Sections 2.17(f) (it being understood that the
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documentation required under Section 2.17(f) shall be delivered to the participating Lender and the information)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant agrees to be subject to the provisions of Section 2.19 as if
it were an assignee under paragraph (b) of this Section; and shall not be entitled to receive any greater payment under Section 2.15 or 2.17, with respect to any
participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a
Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and
expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.19(b) with respect to any Participant. To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such Participant agrees to be subject
to Section 2.18(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower,
maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the
Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of
the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit
or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan,
Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register
shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as
Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central bank, and this Section shall not apply to any such pledge
or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
9.05.
Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the other Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Documents shall be considered to have been relied
upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may
have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article 8
shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration
or
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termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.
9.06.
Counterparts; Integration; Effectiveness; Electronic Execution. (a) This Agreement may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative Agent and the reductions of the Letter of Credit Commitment of any Issuing Bank
constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
(b) Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment,
approval, consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 9.01), certificate, request, statement, disclosure
or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”)
that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall
be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words
“execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document
shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any
other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a
manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall
require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it;
provided, further, without limiting the foregoing, to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and
each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower without further verification thereof and
without any obligation to review the appearance or form of any such Electronic signature and upon the request of the Administrative Agent or any Lender, any
Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower hereby agrees
that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation
among the Administrative Agent, the Lenders, the Borrower, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that
reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document
shall have the same legal effect, validity and enforceability as any paper original, the Administrative Agent and each of the Lenders may, at its option, create one or
more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be
deemed created in the ordinary course of such Person’s
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business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect,
validity and enforceability as a paper record), waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other
Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such
Ancillary Document, respectively, including with respect to any signature pages thereto and waives any claim against any Lender-Related Person for any Liabilities
arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any
other electronic means that reproduces an image of an actual executed signature page, including any Liabilities arising as a result of the failure of the Borrower to use
any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.
9.07.
Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof;
and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
9.08.
Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, each Issuing Bank, and each of their respective Affiliates is
hereby authorized at any time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held, and other obligations at any time owing, by such Lender, such Issuing Bank or any such Affiliate, to or for the credit
or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to
such Lender or such Issuing Bank or their respective Affiliates, irrespective of whether or not such Lender, Issuing Bank or Affiliate shall have made any demand
under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch office or
Affiliate of such Lender or such Issuing Bank different from the branch office or Affiliate holding such deposit or obligated on such indebtedness; provided that in
the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so setoff shall be paid over immediately to the Administrative Agent for
further application in accordance with the provisions of Section 2.20 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds
and deemed held in trust for the benefit of the Administrative Agent, the Issuing Banks, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the
Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The
rights of each Lender, each Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff)
that such Lender, such Issuing Bank or their respective Affiliates may have. Each Lender and Issuing Bank agrees to notify the Borrower and the Administrative
Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
9.09.
Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement and the other Loan Documents shall be construed in accordance
with and governed by the law of the State of New York.
(b) Each of the Lenders and the Administrative Agent hereby irrevocably and unconditionally agrees that, notwithstanding the governing law provisions
of any
90
applicable Loan Document, any claims brought against the Administrative Agent by any Lender relating to this Agreement, any other Loan Document or the
consummation or administration of the transactions contemplated hereby or thereby shall be construed in accordance with and governed by the law of the State of
New York.
(c) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the United States
District Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the
State of New York sitting in the Borough of Manhattan), and any appellate court from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any other Loan Document or the transactions relating hereto or thereto, or for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may (and any such claims, cross-claims or third party
claims brought against the Administrative Agent or any of its Related Parties may only) be heard and determined in such Federal (to the extent permitted by law) or
New York State court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the
Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its
properties in the courts of any jurisdiction.
(d) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (c) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.
(e) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any other manner permitted by law.
9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
9.11.
Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement
and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
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9.12.
Confidentiality. Each of the Administrative Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to
keep such Information confidential), to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), to the extent required by applicable laws or regulations or by any subpoena or similar legal process, to any other party to
this Agreement, in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder or under any other Loan Document, subject to an agreement containing provisions substantially the same as those
of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any
actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, on a confidential basis to any
rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided for herein, the CUSIP Service Bureau or any similar agency
in connection with the issuance and monitoring of identification numbers with respect to the credit facilities provided for herein or (iii) insurers, reinsurers and
brokers to the Administrative Agent, the Issuing Banks or any Lender, with the consent of the Borrower or to the extent such Information becomes publicly
available other than as a result of a breach of this Section or becomes available to the Administrative Agent, any Issuing Bank or any Lender on a non-confidential
basis from a source other than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to the Administrative Agent, any Issuing Bank or any Lender on a non-confidential basis
prior to disclosure by the Borrower and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including
league table providers, that serve the lending industry; provided that, in the case of information received from the Borrower after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as
such Person would accord to its own confidential information.
9.13. Material Non-Public Information. (a) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN Section 9.12 FURNISHED
TO IT PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS
RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING
THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
(b) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE
ADMINISTRATIVE AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL
INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR ITS
SECURITIES. ACCORDINGLY, EACH
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LENDER REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE
QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN
ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
9.14.
Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees,
charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the
“Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of
interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor)
until such cumulated amount, together with interest thereon at the NYFRB Rate to the date of repayment, shall have been received by such Lender.
9.15.
No Fiduciary Duty, etc. (a) The Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that no Credit Party will have
any obligations except those obligations expressly set forth herein and in the other Loan Documents and each Credit Party is acting solely in the capacity of an arm’s
length contractual counterparty to the Borrower with respect to the Loan Documents and the transactions contemplated herein and therein and not as a financial
advisor or a fiduciary to, or an agent of, the Borrower or any other person. The Borrower agrees that it will not assert any claim against any Credit Party based on an
alleged breach of fiduciary duty by such Credit Party in connection with this Agreement and the transactions contemplated hereby. Additionally, the Borrower
acknowledges and agrees that no Credit Party is advising the Borrower as to any legal, tax, investment, accounting, regulatory or any other matters in any
jurisdiction. The Borrower shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and
appraisal of the transactions contemplated herein or in the other Loan Documents, and the Credit Parties shall have no responsibility or liability to the Borrower with
respect thereto.
(b) The Borrower further acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party, together with its Affiliates,
is a full service securities or banking firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services.
In the ordinary course of business, any Credit Party may provide investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts
and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of, the Borrower and other
companies with which the Borrower may have commercial or other relationships. With respect to any securities and/or financial instruments so held by any Credit
Party or any of its customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holder of the
rights, in its sole discretion.
(c)
In addition, the Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party and its affiliates may be
providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which the Borrower may have
conflicting interests regarding the transactions described herein and otherwise. No Credit Party will use
93
confidential information obtained from the Borrower by virtue of the transactions contemplated by the Loan Documents or its other relationships with the Borrower
in connection with the performance by such Credit Party of services for other companies, and no Credit Party will furnish any such information to other companies.
The Borrower also acknowledges that no Credit Party has any obligation to use in connection with the transactions contemplated by the Loan Documents, or to
furnish to the Borrower, confidential information obtained from other companies.
9.16.
USA PATRIOT Act. Each Lender that is subject to the requirements of the USA PATRIOT Act of 2001 (the “Patriot Act”) hereby notifies the
Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.
9.17.
Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in
any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution
arising under any Loan Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and
acknowledges and agrees to be bound by:
(a)
the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may
be payable to it by any party hereto that is an Affected Financial Institution; and
(b)
the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent
entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it
in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable
Resolution Authority.
9.18.
Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for
Swap Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties
acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and
Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution
Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any
Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
94
In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution
Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such
QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same
extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest,
obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate
of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply
to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such
Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United
States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a
Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
9.19.
Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan
Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative
Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the
Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement
(the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case
may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal
banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum
originally due to the Administrative Agent or any Lender from the Borrower in the Agreement Currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender,
as the case may be, agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).
9.20.
Payments Set Aside. To the extent that the Borrower makes a payment or payments to the Administrative Agent or any Lender, or Administrative
Agent or any Lender exercises its rights of set-off, and such payment or payments or the proceeds of such set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or any Lender in its
discretion) to be repaid to a trustee, receiver or any other party in connection with any bankruptcy, insolvency or similar proceeding, or otherwise, then (a) to the
extent of such recovery, the obligation hereunder or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its
95
ratable share of the total amount so recovered from or repaid by the Administrative Agent to the extent paid to such Lender.
96
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective authorized officers as of the
day and year first above written.
EXELON CORPORATION,
By:
Name:
Title:
JPMORGAN CHASE BANK, N.A., as Administrative Agent,
and a Lender,,
By:
Name:
Title:
[LENDERS],
By:
Name:
Title:
J.P. Morgan Chase Bank, N.A.
Bank of America, N.A.
Barclays Bank PLC
BNP Paribas
Citibank, N.A.
Goldman Sachs Bank USA
Morgan Stanley Bank, N.A.
The Bank of Nova Scotia
Credit Agricole Corporate & Investment Bank
Credit Suisse AG, New York Branch
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
PNC Bank, National Association
Royal Bank of Canada
Sumitomo Mitsui Banking Corporation
U.S. Bank National Association
Wells Fargo Bank, National Association
Banco Santander, S.A., New York Branch
Bank of China, Chicago Branch
M&T Bank
The Bank of New York Mellon
The Huntington National Bank
The Northern Trust Company
TOTAL
SCHEDULE 2.01A
Commitments
Lender
98
Commitment
$51,750,000.00
$51,750,000.00
$51,750,000.00
$51,750,000.00
$51,750,000.00
$51,750,000.00
$51,750,000.00
$51,750,000.00
$39,825,000.00
$39,825,000.00
$39,825,000.00
$39,825,000.00
$39,825,000.00
$39,825,000.00
$39,825,000.00
$39,825,000.00
$39,825,000.00
$21,262,500.00
$21,262,500.00
$21,262,500.00
$21,262,500.00
$21,262,500.00
$21,262,500.00
$900,000,000.00
SCHEDULE 2.01C
Letter of Credit Commitments
Lender
J.P. Morgan Chase Bank, N.A.
Bank of America, N.A.
Barclays Bank PLC
BNP Paribas Securities Corp.
Citibank, N.A.
Goldman Sachs Bank USA
The Bank of Nova Scotia
Morgan Stanley Bank, N.A.
TOTAL
Commitment
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$110,000,000.00
Nothing other than what has been previously disclosed in the Borrower’s Annual
Report on Form 10-K for the year ended December 31, 2020, Quarterly Reports on Form
10-Q for the periods ending March 31, 2021, June 30, 2021 and September 30, 2021, and
Periodic Reports on Form 8-K filed by the Borrower with the United States Securities and
Exchange Commission during the period between January 1, 2021 and the date hereof.
SCHEDULE 3.06
Disclosed Matters
None.
SCHEDULE 6.04
Existing Restrictions
Execution Version
$600,000,000
CREDIT AGREEMENT
dated as of
February 1, 2022
among
BALTIMORE GAS & ELECTRIC COMPANY
the Lenders Party Hereto
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
___________________________
BANK OF AMERICA, N.A., BARCLAYS BANK PLC, BNP PARIBAS SECURITIES CORP., CITIBANK, N.A., GOLDMAN SACHS BANK USA,
MORGAN STANLEY SENIOR FUNDING, INC., and THE BANK OF NOVA SCOTIA,
as Co-Documentation Agents
___________________________
JPMORGAN CHASE BANK, N.A., BOFA SECURITIES, INC., BARCLAYS BANK PLC, BNP PARIBAS SECURITIES CORP., CITIBANK, N.A., GOLDMAN SACHS BANK
USA,
MORGAN STANLEY SENIOR FUNDING, INC., and THE BANK OF NOVA SCOTIA,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions
Section 1.01. Defined Terms
Section 1.02. Classification of Loans and Borrowings
Section 1.03. Terms Generally
Section 1.04. Accounting Terms; GAAP
Section 1.05. Interest Rates; Benchmark Notification
Section 1.06. Letter of Credit Amounts
Section 1.07. Divisions
ARTICLE 2 The Credits
Section 2.01. Commitments
Section 2.02. Loans and Borrowings
Section 2.03. Requests for Revolving Borrowings
Section 2.04. Optional Increases in Commitments
Section 2.05. [Reserved]
Section 2.06. Letters of Credit
Section 2.07. Funding of Borrowings
Section 2.08. Interest Elections
Section 2.09. Termination and Reduction of Commitments
Section 2.10. Repayment of Loans; Evidence of Indebtedness
Section 2.11. Prepayment of Loans
Section 2.12. Fees
Section 2.13. Interest
Section 2.14. Alternate Rate of Interest
Section 2.15. Increased Costs
Section 2.16. Break Funding Payments
Section 2.17. Withholding of Taxes; Gross-Up
Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs
Section 2.19. Mitigation Obligations; Replacement of Lenders
Section 2.20. Defaulting Lenders
Section 2.21. Extension of Maturity Date
ARTICLE 3 Representations and Warranties
Section 3.01. Organization; Powers
Section 3.02. Authorization; Enforceability
Section 3.03. Governmental Approvals; No Conflicts
1
1
1
29
29
29
30
30
30
31
31
31
31
32
33
33
37
38
39
39
40
40
41
42
45
46
46
50
51
52
55
56
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Section 3.04. Financial Condition; No Material Adverse Effect
Section 3.05. Reserved
Section 3.06. Litigation and Environmental Matters
Section 3.07. Compliance with Laws and Agreements
Section 3.08. Investment Company Status
Section 3.09. Taxes
Section 3.10. ERISA
Section 3.11. Beneficial Ownership
Section 3.12. Reserved
Section 3.13. Anti-Corruption Laws and Sanctions
Section 3.14. Affected Financial Institutions
Section 3.15. Reserved
Section 3.16. Margin Regulations
Section 3.17. Reserved
Section 3.18. Exchange Act
ARTICLE 4 Conditions
Section 4.01. Effective Date
Section 4.02. Each Credit Event
ARTICLE 5 Affirmative Covenants
Section 5.01. Financial Statements; Ratings Change and Other Information
Section 5.02. Notices of Material Events
Section 5.03. Existence; Conduct of Business
Section 5.04. Payment of Obligations
Section 5.05. Maintenance of Properties; Insurance
Section 5.06. Books and Records; Inspection Rights
Section 5.07. Compliance with Laws
Section 5.08. Use of Proceeds and Letters of Credit
Section 5.09. Accuracy of Information
ARTICLE 6 Negative Covenants
Section 6.01. Liens
Section 6.02. Fundamental Changes; Mergers and Consolidations; Disposition of Assets
Section 6.03. Continuation of Businesses
Section 6.04. Restrictive Agreements
Section 6.05. Consolidated Capitalization Ratio
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ARTICLE 7 Events of Default
Section 7.01. Events of Default
Section 7.02. Remedies Upon an Event of Default
Section 7.03. Application of Payments
ARTICLE 8 The Administrative Agent
Section 8.01. Authorization and Action
Section 8.02. Administrative Agent’s Reliance, Limitation of Liability, Etc
Section 8.03. Posting of Communications
Section 8.04. The Administrative Agent Individually
Section 8.05. Successor Administrative Agent
Section 8.06. Acknowledgements of Lenders and Issuing Banks
Section 8.07. [Reserved]
Section 8.08. [Reserved]
Section 8.09. Certain ERISA Matters
ARTICLE 9 Miscellaneous
Section 9.01. Notices
Section 9.02. Waivers; Amendments
Section 9.03. Expenses; Limitation of Liability; Indemnity, Etc
Section 9.04. Successors and Assigns
Section 9.05. Survival
Section 9.06. Counterparts; Integration; Effectiveness; Electronic Execution
Section 9.07. Severability
Section 9.08. Right of Setoff
Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process
Section 9.10. WAIVER OF JURY TRIAL
Section 9.11. Headings
Section 9.12. Confidentiality
Section 9.13. Material Non-Public Information
Section 9.14. Interest Rate Limitation
Section 9.15. No Fiduciary Duty, etc
Section 9.16. USA PATRIOT Act
Section 9.17. Acknowledgement and Consent to Bail-In of Affected Financial Institutions
Section 9.18. Acknowledgement Regarding Any Supported QFCs
Section 9.19. Judgment Currency
Section 9.20. Payments Set Aside
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SCHEDULES:
Schedule 2.01A – Commitments
Schedule 2.01C – Letter of Credit Commitments
Schedule 3.06 – Disclosed Matters
Schedule 6.04 – Existing Restrictions
EXHIBITS:
Exhibit A – Form of Assignment and Assumption
Exhibit B – Form of Borrowing Request
Exhibit C – Form of Interest Election Request
Exhibit D – Form of Opinion of Borrower’s Counsel
Exhibit E – Form of Compliance Certificate
Exhibit F-1 – U.S. Tax Certificate (For Non-U.S. Lenders that are not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-2 – U.S. Tax Certificate (For Non-U.S. Lenders that are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-3 – U.S. Tax Certificate (For Non-U.S. Participants that are not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-4 – U.S. Tax Certificate (For Non-U.S. Participants that are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit G – Incremental Request
4
CREDIT AGREEMENT dated as of February 1, 2022 (this “Agreement”), among Borrower (as defined herein), the Lenders party hereto, and JPMORGAN CHASE
BANK, N.A., as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.01.
Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by
reference to the Alternate Base Rate.
“Additional Lender” has the meaning given to such term in Section 2.04.
“Adjusted Daily Simple SOFR Rate” means an interest rate per annum equal to (a) the Daily Simple SOFR Rate, plus (b) 0.10%; provided that if the Adjusted Daily Simple
SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Adjusted Term SOFR Rate” means, for any Interest Period, an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period, plus (b) 0.10%; provided
that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Administrative Agent” means JPMorgan Chase Bank, N.A. (or any of its designated branch offices or affiliates), in its capacity as administrative agent for the Lenders
hereunder.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.
“Agent-Related Person” has the meaning assigned to it in Section 9.03(d).
“Agreement” has the meaning specified in introductory paragraph hereof.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus
½ of 1% and (c) the Adjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a
Business Day, the immediately preceding Business Day) plus 1%; provided that for the purpose of this definition, the Adjusted Term SOFR Rate for any day shall be based on the
Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME
Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the
Adjusted Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate,
respectively. If the Alternate Base Rate is being used as an alternate rate of
5
interest pursuant to Section 2.14 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.14(b)), then the Alternate Base Rate
shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined
pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.
“Ancillary Document” has the meaning assigned to it in Section 9.06(b).
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or
relating to bribery or corruption.
“Applicable Party” has the meaning assigned to it in Section 8.03(c).
“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment; provided that, in the case
of Section 2.20 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the total Commitments (disregarding any Defaulting Lender’s
Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the
Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.
“Applicable Rate” means, for any day, with respect to any ABR Loan or Term Benchmark Revolving Loan, RFR Revolving Loan or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Applicable Rate for Term Benchmark Revolving Loans and LC Fee Rate”,
“Applicable Rate for ABR Loans” or “Facility Fee Rate”, as the case may be, based upon the ratings by Moody’s, S&P and Fitch, respectively, applicable on such date to the Pricing
Level:
Pricing Level
I
II
III
IV
V
VI
Index Debt Rating
S&P/Moody’s/Fitch
>Aa3/AA-/AA-
A1/A+/A+
A2/A/A
A3/A-/A-
Baa1/BBB+/BBB+
≤Baa2/BBB/BBB
Applicable
Rate for Term Benchmark
Revolving Loans, RFR
Revolving Loans and LC
Fee Rate
0.690%
0.800%
0.900%
1.000%
1.075%
1.275%
Applicable
Rate for ABR Loans
0.000%
Facility Fee
Rate
0.060%
0.000%
0.000%
0.000%
0.075%
0.275%
0.075%
0.100%
0.125%
0.175%
0.225%
“Debt Rating” means, as of any date of determination, the Fitch Rating, the Moody’s Rating or the S&P Rating, it being understood that if the Borrower does not have such
an
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indicative rating, an appropriate fallback will be determined by Administrative Agent in consultation with Borrower.
For purposes of the foregoing, (x) at any time that Debt Ratings are available from each of S&P, Moody’s and Fitch and there is a split among such Debt Ratings, then (i) if
any two of such Debt Ratings are in the same level, such level shall apply or (ii) if each of such Debt Ratings is in a different level, the level that is the middle level shall apply and
(y) at any time that Debt Ratings are available only from any two of S&P, Moody’s and Fitch and there is a split in such Debt Ratings, then the higher of such Debt Ratings shall
apply, unless there is a split in Debt Ratings of more than one level, in which case the level that is one level lower than the higher Debt Rating shall apply. The Debt Ratings shall be
determined from the most recent public announcement of any changes in the Debt Ratings. If the rating system of S&P, Moody’s or Fitch shall change, the Borrower and the
Administrative Agent shall negotiate in good faith to amend the definition of “Debt Rating” to reflect such changed rating system and, pending the effectiveness of such amendment
(which shall require the approval of the Required Lenders), the Debt Rating shall be determined by reference to the rating most recently in effect prior to such change. If the
Borrower has no Fitch Rating, no Moody’s Rating and no S&P Rating, Pricing Level VI shall apply it being understood that if the Borrower does not have such an indicative ratings,
appropriate fallbacks will be determined by Administrative Agent in consultation with Borrower.
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“Approved Electronic Platform” has the meaning assigned to it in Section 8.03(a).
“Approved Fund” has the meaning assigned to it in Section 9.04(b).
“Arrangers” means each of JPMorgan Chase Bank, N.A., BofA Securities, Inc., Barclays Bank PLC, BNP Paribas Securities Corp., Citibank, N.A., Goldman Sachs Bank
USA,
Morgan Stanley Senior Funding, Inc., and The Bank of Nova Scotia, in its capacity as a joint lead arranger and joint bookrunner.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by
Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form (including electronic records generated by the use of an electronic platform)
approved by the Administrative Agent.
“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the
Commitments.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component
thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an
Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including,
for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 2.14.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial
Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the
Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In
Legislation Schedule and (b) with
*
It being understood and agreed, by way of example, that a Debt Rating of A- is one level higher than a Debt Rating of BBB+.
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respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United
Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or
other insolvency proceedings).
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now and hereafter in effect, or any successor statute.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed
for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such
proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any
ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or
provides such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits
such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Benchmark” means, initially, with respect to any (i) RFR Loan, the Daily Simple SOFR Rate or (ii) Term Benchmark Loan, the Term SOFR Rate; provided that if a
Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to the Daily Simple SOFR Rate or Term SOFR Rate, as applicable, or the
then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate
pursuant to clause (b) of Section 2.14.
“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the
applicable Benchmark Replacement Date:
(1) the Adjusted Daily Simple SOFR Rate;
(2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current
Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for
determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement
for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and (b) the related Benchmark Replacement Adjustment;
If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor
for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any
applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such
spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor
giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of
such Benchmark with the applicable Unadjusted Benchmark
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Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a
spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement for dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement and/or any Term Benchmark Revolving Loan, any technical,
administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities
Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment,
conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the
Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative
Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively
feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the
Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means, with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information
referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely
ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the
calculation thereof) has been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer
representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even
if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any
determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date”
will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to
all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation
thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or
indefinitely, provided that, at the time of such statement or publication, there is no
9
successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the
calculation thereof), the Federal Reserve Board, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such
Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar
insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or
such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the
time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the
calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be,
representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of
information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to
clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any
Loan Document in accordance with Section 2.14 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder
and under any Loan Document in accordance with Section 2.14.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section
4975 of the Code to which Section 4975 of the Code applies, and (c) any Person whose assets include (for purposes of the Plan Asset Regulations or otherwise for purposes of Title
I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“BHC Act Affiliate” of a party means an ‘affiliate’ (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Borrower” means Baltimore Gas and Electric Company, a Maryland corporation
“Borrowing” means Revolving Borrowing.
“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03, which shall be substantially in the form of Exhibit B or
any other form approved by the Administrative Agent.
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“Business Day” means, any day (other than a Saturday or a Sunday) on which banks are open for business in New York City or Chicago, Illinois; provided that, in relation
to RFR Loans and any interest rate settings, fundings, disbursements, settlements or payments of any such RFR Loan, or any other dealings of such RFR Loan, any such day that is
only an U.S. Government Securities Business Day.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of
such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
Change in Control” means the occurrence of one of the following: (a) that any person, entity or group (within the meaning of Rule 13d-5 under the Exchange Act),
excluding Exelon, shall beneficially own, directly or indirectly, 50% or more of the Equity Interests of the Borrower having ordinary voting power; or (b) at any time after the
Borrower has a Board of Directors or similar governing body (a “Board”), Continuing Directors shall fail to constitute a majority of the Board of such Borrower; provided that, for
purposes of this definition, the Spin Transaction shall not constitute a Change in Control. For purposes of the foregoing, “Continuing Director” means an individual who (x) is
elected or appointed to be a member of the Board of the Borrower by Exelon or an affiliate of Exelon at a time when Exelon owns (directly or indirectly) a majority of the Equity
Interests of the Borrower or (y) is nominated to be a member of such Board by a majority of the Continuing Directors then in office.
“Change in Law” means the occurrence after the date of this Agreement of (a) the adoption of or taking effect of any law, rule, regulation or treaty, (b) any change in any
law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) compliance by any Lender or
Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any request, guideline
or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that, notwithstanding anything herein
to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or
in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall, in each case, be deemed to be a
“Change in Law,” regardless of the date enacted, adopted, issued or implemented.
“Charges” has the meaning assigned to it in Section 9.14.
“Class” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans.
“CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate
(SOFR) (or a successor administrator).
“Code” means the Internal Revenue Code of 1986, as amended.
“Commitment” means, with respect to each Lender, the amount set forth on Schedule 2.01 opposite such Lender’s name, or in the Assignment and Assumption or other
documentation or record (as such term is defined in Section 9-102(a)(70) of the New York Uniform Commercial Code) as provided in Section 9.04(b)(ii)(C), pursuant to which such
Lender shall have assumed its Commitment, as applicable, and giving effect to (a) any reduction in such amount from time to time pursuant to Section 2.09 and (b) any reduction or
increase in such amount from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04; provided, that at no time
11
shall the Revolving Credit Exposure of any Lender exceed its Commitment. The initial aggregate amount of the Lenders’ Commitments is $600,000,000.
“Commodity Trading Obligations” means the obligations of the Borrower under (i) any commodity swap agreement, commodity future agreement, commodity option
agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement, commodity forward contract or derivative
transaction and any put, call or other agreement, arrangement or transaction, including natural gas, power, electric energy, emissions forward contracts, renewable energy credits, or
any combination of any such arrangements, agreements and/or transactions, employed in the ordinary course of the Borrower’s business, or (ii) any commodity swap agreement,
commodity future agreement, commodity option agreement, commodity cap agreement, commodity floor agreement, commodity collar agreement, commodity hedge agreement,
commodity forward contract or derivative transaction and any put, call or other agreement or arrangement, or combination thereof (including an agreement or arrangement to hedge
foreign exchange risks) in respect of commodities entered into by the Borrower pursuant to asset optimization and risk management policies and procedures adopted pursuant to
authority delegated by the Board of Directors of the Borrower. The term “commodities” shall include electric energy and/or capacity, transmission rights, coal, petroleum, natural
gas liquids, natural gas, fuel transportation rights, emissions allowances, weather derivatives and related products and by-products and ancillary services.
“Communications” has the meaning assigned to it in Section 8.03(c).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch
profits Taxes.
“Consolidated Capitalization Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness as of the last day of the applicable Test Period
to (b) the sum of Consolidated Total Indebtedness plus Consolidated Stockholders’ Equity as of the last day for such Test Period.
“Consolidated Stockholders’ Equity” means, as of any date of determination, the total stockholders’ equity of the Borrower on a consolidated basis, determined in
accordance with GAAP.
“Consolidated Total Indebtedness” means, as of any date of determination, the total amount of all Indebtedness of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP. For the avoidance of doubt, Consolidated Total Indebtedness shall not include Nonrecourse Indebtedness.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Controlled Group” means each person (as defined in Section 3(9) of ERISA) that, together with the Borrower, would be deemed to be a “single employer” within the
meaning of Section 414(b) or 414(c) of the Code.
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately
the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” means any of the following:
(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
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(ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” has the meaning assigned to it in Section 9.18.
“Credit Party” means the Administrative Agent, each Issuing Bank or any other Lender.
“Daily Simple SOFR Rate” means, for any day (a “SOFR Rate Day”), a rate per annum equal SOFR for the day (such day “SOFR Determination Date”) that is five (5)
U.S. Government Securities Business Day prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is
not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is
published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR Rate due to a change in SOFR shall be effective from and
including the effective date of such change in SOFR without notice to the Borrower.
“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event
of Default.
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund
any portion of its participations in Letters of Credit or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above,
such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically
identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect,
that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on
such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot
be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith,
to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations as of the date
of certification) to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting
Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the
subject of (A) a Bankruptcy Event or (B) a Bail-In Action.
“Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a
division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including
any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“Dollars”, “dollars” or “$” refers to lawful money of the United States of America.
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“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA
Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial
institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision
with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to
sign, authenticate or accept such contract or record.
“Eligible Successor” means a Person that (i) is a corporation, limited liability company or business trust duly incorporated or organized, validly existing and in good
standing under the laws of one of the states of the United States or the District of Columbia, (ii) as a result of a contemplated acquisition, consolidation or merger, will succeed to all
or substantially all of the consolidated business and assets of the Borrower or Exelon, as applicable, (iii) upon giving effect to such contemplated acquisition, consolidation or
merger, will have all or substantially all of its consolidated business and assets conducted and located in the United States and (iv) in the case of the Borrower, is acceptable to the
Required Lenders as a credit matter.
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to (i) the environment, (ii) preservation or reclamation of natural resources, (iii) the management, release or
threatened release of any Hazardous Material or (iv) health and safety matters.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials
into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest, but excluding any debt
securities convertible into any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of
the Code or Section 4001(14) of ERISA or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
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“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for
which the 30 day notice period is waived); (b) the failure to satisfy the “minimum funding standard” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or
not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any
Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal of the Borrower or any of its ERISA
Affiliates from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any ERISA Affiliate of any notice, concerning the imposition upon the Borrower or any of its ERISA Affiliates of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time
to time.
“Event of Default” has the meaning assigned to such term in Section 7.01.
“Excluded Project Subsidiary” shall mean, at any time, any Subsidiary that is an obligor (or, in the case of a Subsidiary of an Excluded Project Subsidiary that is such an
obligor and is in a business that is related to the business of such Excluded Project Subsidiary that is such an obligor, is otherwise bound, or its property is subject to one or more
covenants and other terms of any Nonrecourse Indebtedness outstanding at such time, regardless of whether such Subsidiary is a party to the agreement evidencing the Nonrecourse
Indebtedness) with respect to any Nonrecourse Indebtedness outstanding at such time.
“Excluded Subsidiary” shall mean (a) an Excluded Project Subsidiary, (b) any captive insurance Subsidiary, (c) any not-for-profit Subsidiary or (d) any special purpose
vehicle, including any Securitization Vehicle.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient,
(a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being
organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan, Letter of Credit or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the
Loan, Letter of Credit or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in
each case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired
the applicable interest in a Loan, Letter of Credit or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s
failure to comply with Section 2.17(f) and (d) any withholding Taxes imposed under FATCA.
“Exelon” means Exelon Corporation, a Pennsylvania corporation, or any Eligible Successor thereof.
“Existing Letter of Credit” means each letter of credit issued by an Issuing Bank and specified by the Borrower to the Administrative Agent on the Effective Date.
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“Existing Maturity Date” has the meaning assigned to such term in Section 2.21(a).
“Extending Lender” has the meaning assigned to such term in Section 2.21(b)(ii).
“Extension Request” means a written request from the Borrower to the Administrative Agent requesting an extension of the Maturity Date pursuant to Section 2.21.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not
materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code
and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and
implementing such Sections of the Code.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as
determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective
federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than 0%, such rate shall be deemed to be 0% for the purposes of this Agreement.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of the United States of America.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.
“Fitch” means Fitch Ratings Inc.
“Fitch Rating” means, at any time, the rating issued by Fitch and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without
third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from
Fitch for debt securities of such type, then such indicative rating shall be used for determining the “Fitch Rating” and if the Borrower does not have such an indicative rating, but has
an issuer rating from Fitch, then such issuer rating shall be used for determining the “Fitch Rating”).
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this
Agreement or otherwise) with respect to the Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR Rate, as applicable. For the avoidance of doubt the initial Floor for each
of Adjusted Term SOFR Rate or the Adjusted Daily Simple SOFR Rate shall be 0%.
“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or
organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.
“GAAP” means generally accepted accounting principles in the United States of America.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.
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“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or
petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature
regulated pursuant to any Environmental Law.
“Hedging Obligations” mean, with respect to any Person, the obligations of such Person under any interest rate or currency swap agreement, interest rate or currency future
agreement, interest rate collar agreement, interest rate or currency hedge agreement, and any put, call or other agreement or arrangement designed to protect such Person against
fluctuations in interest rates or currency exchange rates.
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all
obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed and (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower
under any Loan Document and (b) to the extent not otherwise described in (a) hereof, Other Taxes.
“Indemnitee” has the meaning assigned to it in Section 9.03(c).
“Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other Person or subject to any other credit
enhancement, provided, that if the Borrower does not have any outstanding debt securities of the type described, an appropriate fallback will be determined by Administrative Agent
in consultation with Borrower
“Ineligible Institution” has the meaning assigned to it in Section 9.04(b).
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“Information” has the meaning assigned to it in Section 9.12.
“Information Memorandum” means the Confidential Information Memorandum dated November 12, 2021 relating to the Borrower and the Transactions.
“Interest Election Request” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.08, which shall be substantially in
the form of Exhibit C or any other form approved by the Administrative Agent.
“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and the Maturity Date, (b) with respect to
any RFR Loan, (1) each date that is on the numerically corresponding day in each calendar month that is one month after the Borrowing of such Loan (or, if there is no such
numerically corresponding day in such month, then the last day of such month) and (2) the Maturity Date and (c) with respect to any Term Benchmark Loan, the last day of each
Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Term Benchmark Borrowing with an Interest Period of more than three months’
duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, and the Maturity Date.
“Interest Period” means with respect to any Term Benchmark Borrowing, the period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, three or six months thereafter (in each case, subject to the availability for the Benchmark applicable to the relevant Loan or
Commitment), as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding
Business Day, (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period and (iii) no tenor that has been removed from this
definition pursuant to Section 2.14(e) shall be available for specification in such Borrowing Request or Interest Election Request. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
“IRS” means the United States Internal Revenue Service.
“ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or
supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives
Association, Inc. or such successor thereto.
“Issuing Bank” means each of JPMorgan Chase Bank, N.A., Bank of America, N.A., Barclays Bank PLC, BNP Paribas Securities Corp., Citibank, N.A., Goldman Sachs
Bank USA,
Morgan Stanley Bank, N.A., and The Bank of Nova Scotia and any other Lender that, with the consent of the Borrower and the Administrative Agent, agrees to issue Letters of
Credit hereunder, in each case in its capacity as the issuer of the applicable Letters of Credit. Each Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by any Affiliate of such Issuing Bank (provided that (i) the identity and creditworthiness of such Affiliate is reasonably acceptable to the Borrower and (ii) no such Affiliate
shall be entitled to any greater indemnification under Section 2.15 or 2.17 than that to which the applicable Issuing Bank was entitled on the date on which such Letter of Credit was
issued except in connection with any indemnification entitlement arising as a result of any Change in Law after the date on which such Letter of Credit was issued), in which case
the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate (it being agreed that such
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Issuing Bank shall, or shall cause such branch or Affiliate to, comply with the requirements of Sections 2.06 and 2.17(f) with respect to such Letters of Credit). Notwithstanding
anything in this Agreement to the contrary, in no event shall Morgan Stanley Bank, N.A., Morgan Stanley Senior Funding, Inc., Barclays Bank PLC, Goldman Sachs Bank USA,
Credit Suisse AG, or any of their respective Affiliates be an “Issuing Bank” with respect to any Letter of Credit that is not a standby letter of credit.
“LC Disbursement” means a payment made by an Issuing Bank pursuant to a Letter of Credit.
“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time, plus (b) the aggregate amount of all LC
Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the
LC Exposure at such time. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn
thereunder by reason of the operation of applicable law or Article 29(a) of the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce
Publication No. 600 (or such later version thereof as may be in effect at the applicable time) or Rule 3.13 or Rule 3.14 of the International Standby Practices, International Chamber
of Commerce Publication No. 590 (or such later version thereof as may be in effect at the applicable time) or similar terms of the Letter of Credit itself, or if compliant documents
have been presented but not yet honored, such Letter of Credit shall be deemed to be “outstanding” and “undrawn” in the amount so remaining available to be paid, and the
obligations of the Borrower and each Lender shall remain in full force and effect until the Issuing Bank and the Lenders shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit.
“Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.
“Lender-Related Person” has the meaning assigned to it in Section 9.03(b).
“Lenders” means the Persons listed on Schedule 2.01A and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption or otherwise,
other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption or otherwise. Unless the context otherwise requires, the term “Lenders”
includes the Issuing Banks.
“Letter of Credit” means any letter of credit issued pursuant to this Agreement and shall include each Existing Letter of Credit.
“Letter of Credit Agreement” has the meaning assigned to it in Section 2.06(b).
“Letter of Credit Commitment” means, with respect to each Issuing Bank, the commitment of such Issuing Bank to issue Letters of Credit hereunder. The initial amount of
each Issuing Bank’s Letter of Credit Commitment is set forth on Schedule 2.01C, or if an Issuing Bank has entered into an Assignment and Assumption or has otherwise assumed a
Letter of Credit Commitment after the Effective Date, the amount set forth for such Issuing Bank as its Letter of Credit Commitment in the Register maintained by the
Administrative Agent. The Letter of Credit Commitment of an Issuing Bank may be modified from time to time by agreement between such Issuing Bank and the Borrower, and
notified to the Administrative Agent.
“Liabilities” means any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect
as any of the
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foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
“LLC” means any Person that is a limited liability company under the laws of its jurisdiction of formation.
“Loan Documents” means this Agreement, including schedules and exhibits hereto, and any agreements entered into in connection herewith by the Borrower or any Loan
Party with or in favor of the Administrative Agent and/or the Lenders, including any amendments, modifications or supplements thereto or waivers thereof, legal opinions issued in
connection with the other Loan Documents, flood determinations, letter of credit applications and any agreements between the Borrower and an Issuing Bank regarding the issuance
by such Issuing Bank of Letters of Credit hereunder and/or the respective rights and obligations between the Borrower and such Issuing Bank in connection thereunder and any
other documents prepared in connection with the other Loan Documents, if any.
“Loan Parties” means the Borrower.
“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
“Margin Stock” means margin stock within the meaning of Regulations T, U and X, as applicable.
“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and the
Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of its Obligations or (c) the rights of or benefits available to the Lenders under this Agreement or any
other Loan Document.
“Maturity Date” means, with respect to any Lender, the later of (a) February 1, 2027 and (b) if the maturity date is extended for such Lender pursuant to Section 2.21, such
extended maturity date as determined pursuant to such Section; provided, however, in each case, if such date is not a Business Day, the Maturity Date shall be the next preceding
Business Day.
“Maximum Rate” has the meaning assigned to it in Section 9.14.
“Moody’s” means Moody’s Investors Service, Inc.
“Moody’s Rating” means, at any time, the rating issued by Moody’s and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities
without third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative
rating from Moody’s for debt securities of such type, then such indicative rating shall be used for determining the “Moody’s Rating” and if the Borrower does not have such an
indicative rating, but has an issuer rating from Moody’s, then such issuer rating shall be used for determining the “Moody’s Rating”).
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Nonrecourse Indebtedness” means any Indebtedness that finances the acquisition, development, ownership or operation of an asset in respect of which the Person to which
such Indebtedness is owed has no recourse whatsoever to the Borrower or any of its Affiliates other than:
(i) recourse to the named obligor with respect to such Indebtedness (the “Debtor”) for amounts limited to the cash flow or net cash flow (other than historic cash flow)
from the asset;
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(ii) recourse to the Debtor for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any security interest or lien given
by the Debtor over the asset or the income, cash flow or other proceeds deriving from the asset (or given by any shareholder or the like in the Debtor over its shares or like interest
in the capital of the Debtor) to secure the Indebtedness, but only if the extent of the recourse to the Debtor is limited solely to the amount of any recoveries made on any such
enforcement; and
(iii) recourse to the Debtor generally or indirectly to any Affiliate of the Debtor, under any form of assurance, undertaking or support, which recourse is limited to a claim
for damages (other than liquidated damages and damages required to be calculated in a specified way) for a breach of an obligation (other than a payment obligation or an obligation
to comply or to procure compliance by another with any financial ratios or other tests of financial condition) by the Person against which such recourse is available.
“Non-extending Lender” has the meaning assigned to such term in Section 2.21(a).
“NYFRB” means the Federal Reserve Bank of New York.
“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day
(or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the
term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized
standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than 0%, such rate shall be deemed to be 0% for purposes of this Agreement.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Loan Document or otherwise with respect to
any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against the Borrower or any Affiliate thereof of any proceeding under any debtor relief laws naming such
Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed or allowable claims in such proceeding. Without limiting the foregoing, the
Obligations include (a) the obligation to pay principal, interest, Letter of Credit commissions, charges, expenses, fees, indemnities and other amounts payable by the Borrower under
any Loan Document and (b) the obligation of the Borrower to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in
its sole discretion, may elect to pay or advance on behalf of the Borrower.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction
imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under,
received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan, Letter of
Credit or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the
execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except
any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19).
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“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars by
U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time, and
published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.
“Participant” has the meaning assigned to such term in Section 9.04(c).
“Participant Register” has the meaning assigned to such term in Section 9.04(c).
“Patriot Act” has the meaning assigned to it in Section 9.16.
“Payment” has the meaning assigned to it in Section 8.06(c).
“Payment Notice” has the meaning assigned to it in Section 8.06(c).
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 5.04;
(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security
laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a
like nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an Event of Default under Section 7.01(f);
(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do
not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower
or any Subsidiary;
(g) leases, licenses, subleases or sublicenses granted to third parties in the ordinary course of business and not interfering in any material respect with the ordinary
conduct of business of the Borrower or any Subsidiary;
(h) Liens in favor of a banking or other financial institution arising as a matter of law or in the ordinary course of business under customary general terms and
conditions encumbering deposits or other funds maintained with a financial institution (including the right of set-off) and that are within the general parameters customary in
the banking industry or arising pursuant to such banking institution’s general terms and conditions;
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(i) Liens on specific items of inventory or other goods (other than fixed or capital assets) and proceeds thereof of any Person securing such Person’s obligations in
respect of bankers’ acceptances or letters of credit issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other
goods in the ordinary course of business;
(j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in
the ordinary course of business so long as such Liens only cover the related goods; and
(k) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative purposes;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Permitted Obligations” mean (1) Hedging Obligations of the Borrower or any Subsidiary arising in the ordinary course of business and in accordance with the applicable
Person’s established risk management policies that are designed to protect such Person against, among other things, fluctuations in interest rates or currency exchange rates and
which in the case of agreements relating to interest rates shall have a notional amount no greater than the payments due with respect to the applicable obligations being hedged and
(2) Commodity Trading Obligations.
“Permitted Securitization” shall mean (i) the transfer of the Company’s rights under a qualified rate order to an Affiliate, (ii) the issuance of rate stabilization bonds by an
Affiliate of the Company, (iii) the creation of Liens on rate stabilization property to secure the payment of the rate stabilization bonds by an Affiliate of the Company, (as
contemplated by Sections 7-520 et. seq. of the Public Utility Companies Article of the Annotated Code of Maryland) or any successor provision of Maryland law and (iv) any other
Securitization by the Company.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA.
“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.
“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the
highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or,
if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as
determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being
effective.
“Principal Subsidiary” shall mean, at any time, (i) any Subsidiary of the Borrower the assets of which are equal to or greater than 10% of the consolidated assets (valued at
book value) of the Borrower and its Subsidiaries, taken as a whole.
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“Proceeding” means any claim, litigation, investigation, action, suit, arbitration or administrative, judicial or regulatory action or proceeding in any jurisdiction.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public-Sider” means a Lender whose representatives may trade in securities of the Borrower or its Controlling person or any of its Subsidiaries while in possession of the
financial statements provided by the Borrower under the terms of this Agreement.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” has the meaning assigned to it in Section 9.18.
“Rating Agency” means each of S&P, Moody’s and Fitch.
“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, as applicable.
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that
is two Business Days preceding the date of such setting, (2) if the RFR for such Benchmark is Daily Simple SOFR Rate, then four Business Days prior to such setting or (3) if such
Benchmark is none of the Term SOFR Rate or Daily Simple SOFR Rate, the time determined by the Administrative Agent in its reasonable discretion.
“Register” has the meaning assigned to such term in Section 9.04(b).
“Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Regulation T” means Regulation T of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Regulation U” means Regulation U of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Regulation X” means Regulation X of the Federal Reserve Board, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.
“Relevant Governmental Body” means, the Federal Reserve Board and/or the NYFRB, the CME Term SOFR Administrator, as applicable, or a committee officially
endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.
“Relevant Rate” means (i) with respect to any Term Benchmark Borrowing, the Adjusted Term SOFR Rate or (ii) with respect to any RFR Borrowing, the Adjusted Daily
Simple SOFR Rate, as applicable.
“Replacement Lender” has the meaning assigned to such term in Section 2.21(c).
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“Reportable Event” means a reportable event as defined in Section 4043 of ERISA and regulations issued under such Section with respect to a Single Employer Plan,
excluding such events as to which the requirement of Section 4043(a) of ERISA that the PBGC be notified within 30 days after the occurrence of such event is waived under PBGC
Regulation Section 4043, provided that a failure to meet the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any such waivers in accordance with either Section 4043(a) of ERISA or Section 412(c) of the Code.
“Required Lenders” means, subject to Section 2.20, (a) at any time prior to the earlier of the Loans becoming due and payable pursuant to Section 7.01 or the Commitments
terminating or expiring, Lenders having Revolving Credit Exposures and Unfunded Commitments representing at least 50% of the sum of the Total Revolving Credit Exposure and
Unfunded Commitments at such time, provided that, solely for purposes of declaring the Loans to be due and payable pursuant to Section 7.01, the Unfunded Commitment of each
Lender shall be deemed to be zero; and (b) for all purposes after the Loans become due and payable pursuant to Section 7.01 or the Commitments expire or terminate, Lenders
having Revolving Credit Exposures representing at least 50% of the Total Revolving Credit Exposure at such time; provided that, for the purpose of determining the Required
Lenders needed for any waiver, amendment, modification or consent of or under this Agreement or any other Loan Document, any Lender that is the Borrower or an Affiliate of the
Borrower shall be disregarded
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Response Date” has the meaning assigned to such term in Section 2.21(a).
“Responsible Officer” means the president, Financial Officer or other executive officer of the Borrower.
“Reuters” means, as applicable, Thomson Reuters Corp., Refinitiv, or any successor thereto.
“Revolving Borrowing” means Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Term Benchmark Loans, as to which a
single Interest Period is in effect.
“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC
Exposure at such time.
“Revolving Loan” means a Loan made pursuant to Section 2.03.
“RFR Borrowing” means, as to any Borrowing, the RFR Loans comprising such Borrowing.
“RFR Loan” means a Loan that bears interest at a rate based on the Adjusted Daily Simple SOFR Rate.
“S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business.
“S&P Rating” means, at any time, the rating issued by S&P and then in effect with respect to the Borrower’s senior unsecured long-term public debt securities without
third-party credit enhancement (it being understood that if the Borrower does not have any outstanding debt securities of the type described above but has an indicative rating from
S&P for debt securities of such type, then such indicative rating shall be used for determining the “S&P Rating” and if the
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Borrower does not have such an indicative rating, but has an issuer rating from S&P, then such issuer rating shall be used for determining the “S&P Rating”).
“Sanctioned Country” means, at any time, a country, region or territory which is itself, or whose government is, the subject or target of any Sanctions (at the time of this
Agreement, Crimea, Cuba, Iran, North Korea and Syria).
“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the
U.S. Department of the Treasury, the U.S. Department of State, the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s
Treasury of the United Kingdom or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country, (c) any Person owned or controlled
by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of any Sanctions.
“Sanctions” means all economic or financial sanctions or trade embargoes or restrictive measures imposed, administered or enforced from time to time by (a) the U.S.
government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State or (b) the United Nations
Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.
“SEC” means the Securities and Exchange Commission of the United State of America.
“Securitization” shall mean any transaction or series of transactions entered into by the Borrower or any Subsidiary pursuant to which the Borrower or such Subsidiary, as
the case may be, sells, conveys, assigns, grants an interest in or otherwise transfers, from time to time, to one or more Securitization Vehicles the Securitization Assets (and/or grants
a security interest in such Securitization Assets transferred or purported to be transferred to such Securitization Vehicle), and which Securitization Vehicle finances the acquisition of
such Securitization Assets (i) with proceeds from the issuance of Third Party Securities, (ii) with the issuance to the Borrower or such Subsidiary of Sellers’ Retained Interests or an
increase in such Sellers’ Retained Interests, or (iii) with proceeds from the sale or collection of Securitization Assets.
“Securitization Assets” shall mean any accounts receivable originated or expected to be originated by (and owed to) the Borrower or any Subsidiary (in each case whether
now existing or arising or acquired in the future) and any ancillary assets (including contract rights) which are of the type customarily conveyed with, or in respect of which security
interests are customarily granted in connection with, such accounts receivable in a securitization transaction and which are sold, transferred or otherwise conveyed by the Borrower
or a Subsidiary to a Securitization Vehicle.
“Securitization Vehicle” shall mean a Person that is a direct wholly owned Subsidiary of the Borrower or of any Subsidiary (a) formed for the purpose of effecting a
Securitization, (b) to which the Borrower and/or any Subsidiary transfers Securitization Assets and (c) which, in connection therewith, issues Third Party Securities; provided that (i)
such Securitization Vehicle shall engage in no business other than the purchase of Securitization Assets pursuant to the Securitization, the issuance of Third Party Securities or other
funding of such Securitization and any activities reasonably related thereto.
“Sellers’ Retained Interests” means the debt and/or Equity Interests (including any intercompany notes) held by the Borrower or any Subsidiary in a Securitization Vehicle
to which Securitization Assets have been transferred in a Securitization, including any such debt or equity received as consideration for, or as a portion of, the purchase price for the
Securitization Assets transferred, and any other instrument through which the Borrower or any Subsidiary has rights to or receives distributions in respect of any residual or excess
interest in the Securitization Assets.
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“Single Employer Plan” means a Plan other than a Multiemployer Plan maintained by the Borrower or any other member of the Controlled Group for employees of the
Borrower or any other member of the Controlled Group.
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate).
“SOFR Administrator’s Website” means the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate
identified as such by the SOFR Administrator from time to time.
“SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR Rate”.
“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR Rate”.
“Spin Transaction” means (i) the transfer of the membership interests of the Exelon Generation Company by Exelon to SpinCo and (ii) the pro rata distribution of the
capital stock of SpinCo to the holders of Exelon’s common stock, at which point SpinCo will become a separate, independent publicly traded company.
“SpinCo” means the new company established by Exelon in connection with the Spin Transaction and that as of the effective date of the Spin Transaction, will own,
directly, 100% of the issued and outstanding membership interests of Exelon Generation Company (or its successor in interest, as applicable).
“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of
such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date,
owned, controlled or held, or (b) that is, as of such date, otherwise Controlled by the parent and/or one or more subsidiaries of the parent.
“Subsidiary” means any subsidiary of the Borrower.
“Supported QFC” has the meaning assigned to it in Section 9.18.
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes, or any other goods and
services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
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“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Adjusted Term SOFR Rate.
“Term SOFR Determination Day” has the meaning assigned to it under the definition of Term SOFR Reference Rate.
“Term SOFR Rate” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate
at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as
such rate is published by the CME Term SOFR Administrator.
“Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing
denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Administrative Agent as the forward-looking term rate
based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by
the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then the Term SOFR Reference Rate for such Term
SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term
SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding Business Day is not more than five (5) Business Days prior to such
Term SOFR Determination Day.
“Test Period” means, for any date of determination under this Agreement, the four (4) consecutive fiscal quarters of the Borrower most recently ended as of such date of
determination for which financial statements have been delivered pursuant to Section 5.01(b).
“Third Party Securities” shall mean, with respect to any Securitization, notes, bonds or other debt instruments, beneficial interests in a trust, undivided ownership interests
in receivables or other securities issued for cash consideration by the relevant Securitization Vehicle to banks, financing conduits, investors or other financing sources (other than the
Borrower or any Subsidiary, except in respect of the Sellers’ Retained Interest) the proceeds of which are used to finance, in whole or in part, the purchase by such Securitization
Vehicle of Securitization Assets in a Securitization. The amount of any Third Party Securities shall be deemed to equal the aggregate principal, stated or invested amount of such
Third Party Securities which are outstanding at such time.
“Total Revolving Credit Exposure” means, at any time, the sum of (a) the outstanding principal amount of the Revolving Loans at such time and (b) the total LC Exposure
at such time.
“Transactions” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans, the use of the proceeds thereof and the issuance
of Letters of Credit hereunder.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted Term SOFR Rate, the Alternate Base Rate or the Adjusted Daily Simple SOFR Rate.
“UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United
Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom
Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
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“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unfunded Commitment” means, with respect to each Lender, the Commitment of such Lender less its Revolving Credit Exposure.
“Unfunded Liabilities” means, (i) in the case of any Single Employer Plan, the amount (if any) by which the present value of all vested nonforfeitable benefits under such
Plan exceeds the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent evaluation date for such Plan, and (ii) in the case of any
Multiemployer Plan, the withdrawal liability that would be incurred by the Controlled Group if all members of the Controlled Group completely withdrew from such Multiemployer
Plan.
“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets
Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.
“U.S. Special Resolution Regime” has the meaning assigned to it in Section 9.18.
“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(f)(ii)(B)(3).
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority
from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation
Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form
of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations
of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of
that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
1.02.
Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type
(e.g., a “Term Benchmark Loan” or an “RFR Loan”) or by Class and Type (e.g., a “Term Benchmark Revolving Loan” or an “RFR Revolving Loan”). Borrowings also may be
classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Term Benchmark Borrowing” or an “RFR Borrowing”) or by Class and Type (e.g., a “Term
Benchmark Revolving Borrowing” or an “RFR Revolving Borrowing”).
1.03.
Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase
“without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”.
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Unless the context requires otherwise any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set
forth herein), any reference herein to any Person shall be construed to include such Person’s successors and assigns, the words “herein”, “hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, any reference to any law, rule or regulation herein shall, unless
otherwise specified, refer to such law, rule or regulation as amended, modified or supplemented from time to time and the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
1.04.
Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate
the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an
accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under
Financial Accounting Standards Board Accounting Standards Codification 825 (or any other Financial Accounting Standard having a similar result or effect) to value any
Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and any treatment of Indebtedness under Accounting Standards Codification
470-20 or 2015-03 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced
or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.
(b) Notwithstanding anything to the contrary contained in Section 1.04(a) or in the definition of “Capital Lease Obligations,” any change in accounting for leases
pursuant to GAAP resulting from the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-02, Leases (Topic 842) (“FAS 842”), to the extent
such adoption would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement) would not have been
required to be so treated under GAAP as in effect on December 31, 2015, such lease shall not be considered a capital lease, and all calculations and deliverables under this
Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith.
1.05.
Interest Rates; Benchmark Notification. The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that may be
discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 2.14(b) provides a mechanism for
determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the
administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or
replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to,
or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its
discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate
used in this Agreement or any
30
alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The
Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates
referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for
damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether
at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
1.06.
Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the amount of such Letter of Credit
available to be drawn during the remaining life thereof; provided that with respect to any Letter of Credit that, by its terms or the terms of any Letter of Credit Agreement related
thereto, provides for one or more automatic increases in the available amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum amount available to
be drawn under such Letter of Credit after giving effect to all such increases, whether or not such maximum amount is available to be drawn at such time.
1.07.
Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a
different jurisdiction’s laws): if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to
have been transferred from the original Person to the subsequent Person, and if any new Person comes into existence, such new Person shall be deemed to have been organized and
acquired on the first date of its existence by the holders of its Equity Interests at such time.
ARTICLE 2
THE CREDITS
2.01.
Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans in Dollars to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not result in such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment. Within the
foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
2.02.
Loans and Borrowings. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance
with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR Loans or Term Benchmark Loans, as the Borrower may request in
accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Term Benchmark Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR Revolving Borrowing and/or RFR Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $1,000,000 and not less than $5,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire
unused
31
balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Borrowings of more than one Type
and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of ten Term Benchmark Revolving Borrowings or RFR Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.
2.03.
Requests for Revolving Borrowings. To request a Revolving Borrowing, the Borrower shall notify the Administrative Agent of such request by submitting a
Borrowing Request (a)(i) in the case of a Term Benchmark Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of the proposed
Borrowing or (ii) in the case of an RFR Borrowing, not later than 12:00 noon, New York City time, five Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 12:00 noon, New York City time, on the date of the proposed Borrowing; provided that any such notice of an ABR Revolving Borrowing to
finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e) may be given not later than 10:00 a.m., New York City time, on the date of the proposed
Borrowing. Each such Borrowing Request shall be irrevocable and shall be signed by a Responsible Officer of the Borrower. Each such Borrowing Request shall specify the
following information in compliance with Section 2.02:
(i)
the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing, a Term Benchmark Borrowing or an RFR Borrowing;
(iv) in the case of a Term Benchmark Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the
term “Interest Period”; and
(v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07.
If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Term Benchmark Revolving Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to
be made as part of the requested Borrowing.
2.04.
Optional Increases in Commitments. The Borrower may, from time to time, by means of a letter delivered to the Administrative Agent substantially in the form of
Exhibit G, request that the Commitments be increased by an aggregate amount (for all such increases) not exceeding $700,000,000 by (a) increasing the Commitments of one or
more Lenders that have agreed to such increase (in their sole discretion) and/or (b) adding one or more commercial banks or other Persons as a party hereto (each an “Additional
Lender”) with a Commitments in an amount agreed to by any such Additional Lender; provided that (i) any increase in the Commitments shall be in an aggregate amount of
$25,000,000 or a higher integral multiple of $1,000,000; (ii) no Additional Lender shall be added as a party hereto without the written consent of the Administrative Agent and the
Issuing Banks (which consents shall not be unreasonably withheld) or if a Default or Event of Default exists; (iii) subject to Section 9.04(b), no such increase shall be effective
without the written consent of the Issuing Banks (which consent shall not be unreasonably withheld or delayed); and (iv) the Borrower may not request an increase in the
Commitments unless the Borrower has delivered to the Administrative Agent (with a copy for
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each Lender) a certificate (A) stating that any applicable governmental authority has approved such increase, (B) attaching evidence, reasonably satisfactory to the Administrative
Agent, of each such approval and (C) stating that the representations and warranties contained in Article III are correct on and as of the date of such certificate as though made on
and as of such date and that no Default or Event of Default exists on such date. Any increase in the Commitments pursuant to this Section 2.04 shall be effective three Business
Days after the date on which the Administrative Agent has received and accepted the applicable increase letter in the form of Annex 1 to Exhibit G (in the case of an increase in the
Commitments of an existing Lender) or assumption letter in the form of Annex 2 to Exhibit G (in the case of the addition of a commercial bank or other Person as a new Lender).
The Administrative Agent shall promptly notify the Borrower and the Lenders of any increase in the Commitments pursuant to this Section 2.04 and of the Commitments and Pro
rata Commitment of each Lender after giving effect thereto. The Borrower shall prepay any Loans outstanding on the effective date of such increase (and pay any additional
amounts required pursuant to Section 9.03) to the extent necessary to keep the outstanding Loans ratable among the Lenders in accordance with any revised Pro rata Commitments
arising from any non-ratable increase in the Commitments under this Section 2.04; provided that, notwithstanding any other provision of this Agreement, the Administrative Agent,
the Borrower and each increasing Lender and Additional Lender, as applicable, may make arrangements satisfactory to such parties to cause an increasing Lender or an Additional
Lender to temporarily hold risk participations in the outstanding Loans of the other Lenders (rather than fund its Pro rata Commitment of all outstanding Loans concurrently with the
applicable increase) with a view toward minimizing breakage costs and transfers of funds in connection with any increase in the Commitments To the extent that any increase
pursuant to this Section 2.04 is not expressly authorized pursuant to resolutions or consents delivered pursuant to Section 4.01(c), the Borrower shall, prior to the effectiveness of
such increase, deliver to the Administrative Agent a certificate signed by an authorized officer of the Borrower certifying and attaching the resolutions or consents that have been
adopted to approve or consent to such increase.
2.05.
[Reserved].
2.06.
Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, the Borrower may request any Issuing Bank to issue Letters of Credit as the applicant thereof for the
support of its or its Subsidiaries’ obligations, in a form reasonably acceptable to such Issuing Bank, at any time and from time to time during the Availability Period.
(b) Notice of Issuance, Amendment, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment or extension of an outstanding
Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the respective Issuing
Bank) to an Issuing Bank selected by it and to the Administrative Agent (reasonably in advance of the requested date of issuance, amendment or extension, but in any event no less
than three Business Days) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended or extended, and specifying the date of issuance,
amendment or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of
such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend or extend such Letter of Credit. In addition,
as a condition to any such Letter of Credit issuance, the Borrower shall have entered into a continuing agreement (or other letter of credit agreement) for the issuance of letters of
credit and/or shall submit a letter of credit application, in each case, as required by the respective Issuing Bank and using such Issuing Bank’s standard form (each, a “Letter of
Credit Agreement”). In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Agreement, the
terms and conditions of this Agreement shall control. A Letter of Credit shall be issued, amended or extended only if (and upon issuance, amendment or extension of each Letter of
Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment or extension (x) the aggregate undrawn amount of all
outstanding Letters of Credit
33
issued by any Issuing Bank at such time plus (y) the aggregate amount of all LC Disbursements made by such Issuing Bank that have not yet been reimbursed by or on behalf of the
Borrower at such time shall not exceed its Letter of Credit Commitment, the LC Exposure shall not exceed the total Letter of Credit Commitments and no Lender’s Revolving
Credit Exposure shall exceed its Commitment. The Borrower may, at any time and from time to time, reduce the Letter of Credit Commitment of any Issuing Bank with the consent
of such Issuing Bank; provided that the Borrower shall not reduce the Letter of Credit Commitment of any Issuing Bank if, after giving effect of such reduction, the conditions set
forth in clauses (i) through (iii) above shall not be satisfied.
An Issuing Bank shall not be under any obligation to issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing
such Letter of Credit, or any law applicable to such Issuing Bank shall prohibit, or require that such Issuing Bank refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which
such Issuing Bank is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or
expense that was not applicable on the Effective Date and that such Issuing Bank in good faith deems material to it; or
(ii) the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank applicable to letters of credit generally.
(c) Expiration Date. Each Letter of Credit shall expire (or be subject to termination by notice from the applicable Issuing Bank to the beneficiary thereof) at or prior to
the close of business on the earlier of the date one year after the date of the issuance of such Letter of Credit (or, in the case of any extension of the expiration date thereof, one year
after such extension) and the date that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part
of the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such
Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the respective Issuing Bank, such Lender’s Applicable
Percentage of each LC Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any
reimbursement payment required to be refunded to the Borrower for any reason, including after the Maturity Date. Each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments.
(e) Reimbursement. If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying
to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the
Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior
to such time on such date, then not later than 12:00 noon, New York City time, on the Business Day immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that, the Borrower may, subject to the conditions to borrowing set forth
34
herein, request in accordance with Section 2.03 that such payment be financed with an ABR Revolving Borrowing, the Borrower’s obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing, as applicable. If the Borrower fails to make such payment when due, the Administrative Agent shall notify
each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following
receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in
Section 2.07 with respect to Loans made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent
shall promptly pay to the respective Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the
Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the respective Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to
this paragraph to reimburse an Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans as contemplated above) shall not constitute a Loan and shall
not relieve the Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of any lack of validity or
enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, payment by the respective Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the
Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor any Issuing Bank, nor any of their respective Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under
or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms, any error in translation or any
consequence arising from causes beyond the control of the respective Issuing Bank; provided that the foregoing shall not be construed to excuse an Issuing Bank from liability to the
Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to
the extent permitted by applicable law) suffered by the Borrower that are caused by such Issuing Bank’s failure to exercise care when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the
part of an Issuing Bank (as finally determined by a court of competent jurisdiction), such Issuing Bank shall be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, an Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with
the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank for any Letter of Credit shall, within the time allowed by applicable law or the specific terms of the Letter of Credit
following its receipt thereof, examine all documents purporting to represent a demand for payment under
35
such Letter of Credit. Such Issuing Bank shall promptly after such examination notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy or electronic
mail) of such demand for payment if such Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall
not relieve the Borrower of its obligation to reimburse such Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h)
Interim Interest. If the Issuing Bank for any Letter of Credit shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but
excluding the date that the reimbursement is due and payable at the rate per annum then applicable to ABR Revolving Loans and such interest shall be due and payable on the date
when such reimbursement is payable; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section
2.13(d) shall apply. Interest accrued pursuant to this paragraph shall be for the account of such Issuing Bank, except that interest accrued on and after the date of payment by any
Lender pursuant to paragraph (e) of this Section to reimburse such Issuing Bank for such LC Disbursement shall be for the account of such Lender to the extent of such payment.
(i)
Replacement and Resignation of an Issuing Bank. An Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank. At the time any
such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the
effective date of any such replacement, (x) the successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of
Credit to be issued by it thereafter and (y) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and
shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit or extend or otherwise amend any existing Letter of Credit.
(ii) Any Issuing Bank may resign as an Issuing Bank at any time upon thirty days’ prior written notice to the Administrative Agent, the Borrower and the
Lenders, in which case, such resigning Issuing Bank shall be replaced in accordance with Section 2.06(i)(i) above.
(j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent
or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account or accounts with the Administrative Agent, in
the name of the Administrative Agent and for the benefit of the Lenders (the “Collateral Account”), an amount in cash equal to 105% of the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due
and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in Section 7.01(e). Such deposit shall
be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. In addition, and without limiting the
foregoing or paragraph (c) of this Section, if any LC Exposure remain outstanding after the expiration date specified in said paragraph (c), the Borrower shall immediately deposit
into the Collateral Account an amount in cash equal to 105% of such LC Exposure as of such date plus any accrued and unpaid interest thereon.
36
The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits
shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to
reimburse each Issuing Bank for LC Disbursements for which it has not been reimbursed, together with related fees, costs and customary processing charges, and, to the extent not
so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated,
be applied to satisfy other Obligations. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.
(k) Letters of Credit Issued for Account of Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder supports any obligations of, or is for the
account of, a Subsidiary, or states that a Subsidiary is the “account party,” “applicant,” “customer,” “instructing party,” or the like of or for such Letter of Credit, and without
derogating from any rights of the applicable Issuing Bank (whether arising by contract, at law, in equity or otherwise) against such Subsidiary in respect of such Letter of Credit, the
Borrower (i) shall reimburse, indemnify and compensate the applicable Issuing Bank hereunder for such Letter of Credit (including to reimburse any and all drawings thereunder) as
if such Letter of Credit had been issued solely for the account of the Borrower and (ii) irrevocably waives any and all defenses that might otherwise be available to it as a guarantor
or surety of any or all of the obligations of such Subsidiary in respect of such Letter of Credit. The Borrower hereby acknowledges that the issuance of such Letters of Credit for its
Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.
2.07.
Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof solely by wire transfer of immediately
available funds, by 12:00 noon, New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. Except in
respect of the provisions of this Agreement covering the reimbursement of Letters of Credit, the Administrative Agent will make such Loans available to the Borrower by promptly
crediting the funds so received in the aforesaid account of the Administrative Agent to an account of the Borrower maintained with the Administrative Agent in New York City and
designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in
Section 2.06(e) shall be remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to
the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance
with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the
date of payment to the Administrative Agent, at in the case of such Lender, the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation or in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
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2.08.
Interest Elections. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Term Benchmark
Revolving Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type
or to continue such Borrowing and, in the case of a Term Benchmark Revolving Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by the time that a Borrowing Request would be
required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each
such Interest Election Request shall be irrevocable and shall be signed by a Responsible Officer of the Borrower.
(c) Each Interest Election Request shall specify the following information in compliance with Section 2.02:
(i)
the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Term Benchmark Borrowing or an RFR Borrowing; and
(iv) if the resulting Borrowing is a Term Benchmark Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.
If any such Interest Election Request requests a Term Benchmark Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest
Period of one month’s duration.
(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of
each resulting Borrowing.
(e)
If the Borrower fails to deliver a timely Interest Election Request with respect to a Term Benchmark Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be deemed to have an Interest Period that is one
month. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders,
so notifies the Borrower, then, so long as an Event of Default is continuing no outstanding Revolving Borrowing may be converted to or continued as a Term Benchmark
Borrowing and unless repaid, (A) each Term Benchmark Borrowing and (B) each RFR Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto.
2.09.
Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that each reduction of the Commitments shall be in an amount
that is an
38
integral multiple of $10,000,000 and not less than $50,000,000 and the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment
of the Loans in accordance with Section 2.11, any Lender’s Revolving Credit Exposure would exceed its Commitment.
(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may
be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the
Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.
2.10.
Repayment of Loans; Evidence of Indebtedness. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each
Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from
each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record the amount of each Loan made hereunder, the Class and Type thereof and the Interest
Period applicable thereto, the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and the amount of
any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter,
the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form.
2.11.
Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice
in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy or electronic mail) of any prepayment hereunder in the case of
prepayment of (1) a Term Benchmark Revolving Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of prepayment or (2) an RFR
Revolving Borrowing, not later than 12:00 noon, New York City time, five Business Days before the date of prepayment, or in the case of prepayment of an ABR Revolving
Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment
date and the principal amount of each Borrowing or portion thereof
39
to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.09, then
such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a
Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that
would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13 and any break funding
payments required by Section 2.16.
2.12.
Fees. (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at the Applicable Rate on the
daily amount of the Commitment of such Lender (whether used or unused) during the period from and including the Effective Date to but excluding the date on which such
Commitment terminates; provided that, if such Lender continues to have any Revolving Credit Exposure after its Commitment terminates, then such facility fee shall continue to
accrue on the daily amount of such Lender’s Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such
Lender ceases to have any Revolving Credit Exposure. Facility fees accrued through and including the last day of March, June, September and December of each year shall be
payable in arrears on the fifteenth day following such last day and on the date on which the Commitments terminate, commencing on the first such date to occur after the date
hereof; provided that any facility fees accruing after the date on which the Commitments terminate shall be payable on demand. All facility fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed (including the first day and the last day of each period but excluding the date on which the
Commitments terminate).
(b) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in each outstanding
Letter of Credit, which shall accrue on the daily maximum amount then available to be drawn under such Letter of Credit at the same Applicable Rate used to determine the interest
rate applicable to Term Benchmark Revolving Loans, during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and to each Issuing Bank for its own account a fronting fee with respect to each Letter
of Credit issued by such Issuing Bank, which shall accrue at the rate or rates per annum separately agreed upon between the Borrower and such Issuing Bank on the daily maximum
amount then available to be drawn under such Letter of Credit, during the period from and including the Effective Date to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC Exposure with respect to Letters of Credit issued by such Issuing Bank, as well as such Issuing Bank’s standard fees
with respect to the issuance, amendment or extension of any Letter of Credit and other processing fees, and other standard costs and charges, of such Issuing bank relating the
Letters of Credit as from time to time in effect. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year
shall be payable on the fifteenth day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the
date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to an
Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in dollars in immediately available funds, to the Administrative Agent (or to an Issuing Bank, in the case
of
40
fees payable to it) for distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances.
2.13.
Interest. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Term Benchmark Borrowing shall bear interest in the case of a Term Benchmark Revolving Loan, at the Adjusted Term SOFR Rate for
the Interest Period in effect for such Borrowing plus the Applicable Rate.
(c) Each RFR Loan shall bear interest at a rate per annum equal to the Adjusted Daily Simple SOFR Rate plus the Applicable Rate.
(d) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due,
whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to in the case of
overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or in the case of any other amount, 2%
plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.
(e) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the
Commitments; provided that interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, in the event of any repayment or prepayment of any Loan (other
than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of
such repayment or prepayment and in the event of any conversion of any Term Benchmark Revolving Loan prior to the end of the current Interest Period therefor, accrued interest
on such Loan shall be payable on the effective date of such conversion.
(f)
Interest computed by reference to the Term SOFR Rate or Daily Simple SOFR Rate hereunder shall be computed on the basis of a year of 360 days. Interest
computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366
days in a leap year). In each case interest shall be payable for the actual number of days elapsed (including the first day but excluding the last day). All interest hereunder on any
Loan shall be computed on a daily basis based upon the outstanding principal amount of such Loan as of the applicable date of determination. The applicable Alternate Base Rate,
Adjusted Term SOFR Rate, Term SOFR Rate, Adjusted Daily Simple SOFR Rate or Daily Simple SOFR Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
2.14.
Alternate Rate of Interest. (a) Subject to clauses (b), (c), (d), (e) and (f) of this Section 2.14, if:
(i)
the Administrative Agent determines (which determination shall be conclusive absent manifest error) (A) prior to the commencement of any Interest Period
for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining the Adjusted Term SOFR Rate or the Term SOFR Rate (including
because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period or (B) at any time, that adequate and reasonable means do
not exist for ascertaining the applicable Adjusted Daily Simple SOFR Rate, Daily Simple SOFR Rate; or
(ii) the Administrative Agent is advised by the Required Lenders that (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing,
the Adjusted Term SOFR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or
its
41
Loan) included in such Borrowing for such Interest Period or (B) at any time, Adjusted Daily Simple SOFR Rate will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until
(x) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and
(y) the Borrower delivers a new Interest Election Request in accordance with the terms of Section 2.08 or a new Borrowing Request in accordance with the terms of Section 2.03,
(1) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Term Benchmark Borrowing and
any Borrowing Request that requests a Term Benchmark Revolving Borrowing shall instead be deemed to be an Interest Election Request or a Borrowing Request, as applicable, for
(x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not also the subject of Section 2.14(a)(i) or (ii) above or (y) an ABR Borrowing if the Adjusted Daily
Simple SOFR Rate also is the subject of Section 2.14(a)(i) or (ii) above and (2) any Borrowing Request that requests an RFR Borrowing shall instead be deemed to be a Borrowing
Request, as applicable, for an ABR Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings
shall be permitted. Furthermore, if any Term Benchmark Loan or RFR Loan is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent
referred to in this Section 2.14(a) with respect to a Relevant Rate applicable to such Term Benchmark Loan or RFR Loan, then until (x) the Administrative Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Borrower delivers a new Interest
Election Request in accordance with the terms of Section 2.08 or a new Borrowing Request in accordance with the terms of Section 2.03, (1) any Term Benchmark Loan shall on the
last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and
shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not also the subject of Section 2.14(a)(i) or (ii) above or (y) an ABR Loan if the Adjusted
Daily Simple SOFR Rate also is the subject of Section 2.14(a)(i) or (ii) above, on such day, and (2) any RFR Loan shall on and from such day be converted by the Administrative
Agent to, and shall constitute an ABR Loan.
(b) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date
have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause
(1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder
and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party
to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for
such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any
Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders
without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by
such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders of each affected Class.
(c) Notwithstanding anything to the contrary herein or in any other Loan Document, the Administrative Agent will have the right to make Benchmark Replacement
Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark
Replacement Conforming
42
Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(d) The Administrative Agent will promptly notify the Borrower and the Lenders of any occurrence of a Benchmark Transition Event, the implementation of any
Benchmark Replacement, the effectiveness of any Benchmark Replacement Conforming Changes, the removal or reinstatement of any tenor of a Benchmark pursuant to clause (e)
below and the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if
applicable, any Lender (or group of Lenders) pursuant to this Section 2.14, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-
occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and
may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required
pursuant to this Section 2.14.
(e) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark
Replacement), if the then-current Benchmark is a term rate (including the Term SOFR Rate) and either any tenor for such Benchmark is not displayed on a screen or other
information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or the regulatory supervisor for the administrator
of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the
Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and if
a tenor that was removed pursuant to clause (i) above either is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or
is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative
Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(f) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Term Benchmark
Borrowing or RFR Borrowing of, conversion to or continuation of Term Benchmark Loans to be made, converted or continued during any Benchmark Unavailability Period and,
failing that, the Borrower will be deemed to have converted any request for a Term Benchmark Borrowing into a request for a Borrowing of or conversion to (A) an RFR Borrowing
so long as the Adjusted Daily Simple SOFR Rate is not the subject of a Benchmark Transition Event or (B) an ABR Borrowing if the Adjusted Daily Simple SOFR Rate is the
subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the
component of ABR based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR. Furthermore, if any
Term Benchmark Loan or RFR Loan is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a
Relevant Rate applicable to such Term Benchmark Loan or RFR Loan, then until such time as a Benchmark Replacement is implemented pursuant to this Section 2.14, (1) any Term
Benchmark Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the
Administrative Agent to, and shall constitute, (x) an RFR Borrowing so long as the Adjusted Daily Simple SOFR Rate is not the subject of a Benchmark Transition Event or (y) an
ABR Loan if the Adjusted Daily Simple SOFR Rate is the subject of a Benchmark Transition Event, on such day and (2) any RFR Loan shall on and from such day be converted by
the Administrative Agent to, and shall constitute an ABR Loan.
2.15.
Increased Costs. (a) If any Change in Law shall:
43
(i)
impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance
charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the
Adjusted Term SOFR Rate) or Issuing Bank;
(ii) impose on any Lender or Issuing Bank or the applicable offshore interbank market any other condition, cost or expense (other than Taxes) affecting this
Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or
(iii) subject any Recipient to any Taxes (other than Indemnified Taxes, Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and
Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable
thereto;
and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost to such Lender, such Issuing Bank or such other Recipient of participating in, issuing or maintaining any
Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, such Issuing Bank or such other Recipient hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender, such Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such
Lender, such Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
(b)
If any Lender or Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of
return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below that which such Lender or Issuing Bank or
such Lender’s or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or Issuing Bank’s policies and the
policies of such Lender’s or Issuing Bank’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or Issuing
Bank, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such
reduction suffered.
(c) A certificate of a Lender or Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as the
case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender
or Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or Issuing
Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to this Section for any increased costs
or reductions incurred more than 270 days prior to the date that such Lender or Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.
44
2.16.
Break Funding Payments. (a) With respect to Loans that are not RFR Loans, in the event of (i) the payment of any principal of any Term Benchmark Loan other
than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or an optional or mandatory prepayment of Loans), (ii) the conversion of any
Term Benchmark Loan other than on the last day of the Interest Period applicable thereto, (iii) the failure to borrow, convert, continue or prepay any Term Benchmark Loan on the
date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is revoked in accordance therewith) or (iv) the
assignment of any Term Benchmark Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
(b) With respect to RFR Loans, in the event of (i) the payment of any principal of any RFR Loan other than on the Interest Payment Date applicable thereto (including
as a result of an Event of Default or an optional or mandatory prepayment of Loans), (ii) the failure to borrow or prepay any RFR Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is revoked in accordance therewith) or (iii) the assignment of any RFR Loan other than
on the Interest Payment Date applicable thereto as a result of a request by the Borrower pursuant to Section 2.19, then, in any such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to
this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
2.17. Withholding of Taxes; Gross-Up.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or
withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the
deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding
and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the
sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to
additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option
of the Administrative Agent timely reimburse it for, Other Taxes.
(c) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such
payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(d)
Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes
(including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted
from a payment to such
45
Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by
the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(e)
Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for any Indemnified Taxes
attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the
obligation of the Borrower to do so), any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant
Register and any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any
reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby
authorizes the Administrative Agent to setoff and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the
Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).
(f)
Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document
shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and
executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of
such documentation (other than such documentation set forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such
completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of
such Lender.
(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,
(A)
any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender
becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), an
executed copy of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number
of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
46
(1)
in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to
payments of interest under any Loan Document, an executed copy of IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under
any Loan Document, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant
to the “business profits” or “other income” article of such tax treaty;
copy of IRS Form W-8ECI;
(2)
in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed
(3)
in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a
certificate substantially in the form of Exhibit F-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the
Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described
in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) an executed copy of IRS Form W-8BEN-E or IRS Form W-8BEN; or
(4)
to the extent a Foreign Lender is not the beneficial owner, an executed copy of IRS Form W-8IMY, accompanied by IRS Form W-
8ECI, IRS Form W-8BEN-E, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, IRS Form W-
9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct
or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance
Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner;
(C)
any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number
of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by
applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction
required to be made; and
(D)
if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such
Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code,
as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times
reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by
47
applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower
or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to
determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such
payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification
or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(g)
[Reserved].
(h) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been
indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund
(but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of
such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the
request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the
contrary in this paragraph (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which
would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to
such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This
paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.
(i)
Survival. Each party’s obligations under this Section shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the
replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
(j) Defined Terms. For purposes of this Section, the term “Lender” includes any Issuing Bank and the term “applicable law” includes FATCA.
2.18.
Payments Generally; Pro Rata Treatment; Sharing of Setoffs. (a) The Borrower shall make each payment or prepayment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) in Dollars prior to 12:00 noon,
New York City time, on the date when due or the date fixed for any prepayment hereunder, in immediately available funds, without setoff, recoupment or counterclaim. Any
amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 383 Madison Avenue, New York, New York, except payments to be
made directly to Issuing Banks as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled
thereto. The Administrative Agent shall distribute any such payments received by it for
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the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such
extension. All payments hereunder shall be made in Dollars.
(b) At any time that payments are not required to be applied in the manner required by Section 7.03, if at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied first, towards
payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and second,
towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
(c)
If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving
Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations
in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be
shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC
Disbursements; provided that if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded
and the purchase price restored to the extent of such recovery, without interest, and the provisions of this paragraph shall not be construed to apply to any payment made by the
Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if
such Lender were a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received, prior to any date on which any payment is due to the Administrative Agent for the account of the Lenders or
the Issuing Banks pursuant to the terms hereof or any other Loan Document (including any date that is fixed for prepayment by notice from the Borrower to the Administrative
Agent pursuant to Section 2.11(b)), notice from the Borrower that the Borrower will not make such payment or prepayment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Banks, as the case may
be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Banks, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount
is distributed to it to but excluding the date of payment to the Administrative Agent, at the NYFRB Rate.
2.19. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any
Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use
reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations
49
hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to
Sections 2.15 or 2.17, as the case may be, in the future and would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b)
If any Lender requests compensation under Section 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender becomes Defaulting Lender, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Sections 2.15 or 2.17) and obligations under this Agreement and the other Loan
Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that the Borrower shall have
received the prior written consent of the Administrative Agent (and if a Commitment is being assigned, the Issuing Banks), which consent shall not unreasonably be withheld, such
Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other
amounts) and in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment
required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee (or, to the
extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and
such parties are participants), and the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have
consented to an be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver
such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; provided that any such documents shall be without recourse to or warranty
by the parties thereto.
2.20.
Defaulting Lenders.
Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such
Lender is a Defaulting Lender:
(a)
fees shall cease to accrue on the Commitment of such Defaulting Lender pursuant to Section 2.12;
(b)
any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or
mandatory, at maturity, pursuant to Section 7.03 or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 9.08 shall be applied at such
time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent
hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing Bank hereunder; third, to cash collateralize LC Exposure with
respect to such Defaulting Lender in accordance with this Section; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan
in respect of which such Defaulting Lender has
50
failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to
be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement
and (y) cash collateralize future LC Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with this
Section; sixth, to the payment of any amounts owing to the Lenders, the Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the
Issuing Banks against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; seventh, so
long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the
Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement or under any other Loan Document; and eighth, to
such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or LC
Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a
time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Disbursements owed to, all non-
Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender until such time as all Loans and
funded and unfunded participations in the Borrower’s obligations corresponding to such Defaulting Lender’s LC Exposure are held by the Lenders pro rata in accordance with the
Commitments without giving effect to clause (d) below. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay
amounts owed by a Defaulting Lender or to post cash collateral pursuant to this Section shall be deemed paid to and redirected by such Defaulting Lender, and each Lender
irrevocably consents hereto.
(c)
the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may
take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9.02); provided that this clause (c) shall not apply to the vote
of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender affected thereby;
(d)
if any LC Exposure exists at the time such Lender becomes a Defaulting Lender then:
(i) all or any part of the LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective
Applicable Percentages but only to the extent that such reallocation does not, as to any non-Defaulting Lender, cause such non-Defaulting Lender’s Revolving Credit
Exposure to exceed its Commitment;
(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by
the Administrative Agent prepay, cash collateralize for the benefit of the Issuing Banks only the Borrower’s obligations corresponding to such Defaulting Lender’s LC
Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 7.02(c) for so long as such LC
Exposure is outstanding;
(iii) if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC Exposure pursuant to clause (ii) above, the Borrower shall not be required to
pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC
Exposure is cash collateralized;
51
(iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section
2.12(a) and Section 2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and
(v) if all or any portion of such Defaulting Lender’s LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without
prejudice to any rights or remedies of any Issuing Bank or any other Lender hereunder, all facility fees that otherwise would have been payable to such Defaulting Lender
(solely with respect to the portion of such Defaulting Lender’s Commitment that was utilized by such LC Exposure) and letter of credit fees payable under Section 2.12(b)
with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Banks until and to the extent that such LC Exposure is reallocated and/or cash
collateralized; and
(e)
so long as such Lender is a Defaulting Lender, no Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related
exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be
provided by the Borrower in accordance with Section 2.20(d), and LC Exposure related to any newly issued or increased Letter of Credit shall be allocated among non-Defaulting
Lenders in a manner consistent with Section 2.20(d)(i) (and such Defaulting Lender shall not participate therein).
If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent shall occur following the date hereof and for so long as such event shall continue or (ii) any
Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, no
Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless the Issuing Banks, as the case may be, shall have entered into arrangements with the Borrower
or such Lender, satisfactory to Issuing Bank, as the case may be, to defease any risk to it in respect of such Lender hereunder.
In the event that each of the Administrative Agent, the Borrower, and each Issuing Bank agrees that a Defaulting Lender has adequately remedied all matters that caused
such Lender to be a Defaulting Lender, then the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment and on such date such Lender
shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in
accordance with its Applicable Percentage.
2.21.
Extension of Maturity Date. (a) The Borrower may, by delivering an Extension Request to the Administrative Agent (who shall promptly deliver a copy to each of
the Lenders), not less than 60 days in advance of the Maturity Date in effect at such time (the “Existing Maturity Date”), request that the Lenders extend the Existing Maturity Date
to the first anniversary of such Existing Maturity Date. Each Lender, acting in its sole discretion, shall, by written notice to the Administrative Agent given not later than the date
that is the 20th day after the date of the Extension Request, or if such date is not a Business Day, the immediately following Business Day (the “Response Date”), advise the
Administrative Agent in writing whether or not such Lender agrees to the requested extension. Each Lender that advises the Administrative Agent that it will not extend the Existing
Maturity Date is referred to herein as a “Non-extending Lender”; provided, that any Lender that does not advise the Administrative Agent of its consent to such requested extension
by the Response Date and any Lender that is a Defaulting Lender on the Response Date shall be deemed to be a Non-extending Lender. The Administrative Agent shall notify the
Borrower, in writing, of the Lenders’ elections promptly following the Response Date. The election of any Lender to agree to such an extension shall not obligate any other Lender
to so agree. The Maturity Date may be extended no more than two times pursuant to this Section 2.21.
(b)
(i) If, by the Response Date, Lenders holding Commitments that aggregate 50% or more of the total Commitments shall constitute Non-extending Lenders, then the
Existing Maturity Date shall not be extended and the outstanding principal balance of all Loans and other
52
amounts payable hereunder shall be payable, and the Commitments shall terminate, on the Existing Maturity Date in effect prior to such extension.
(ii) If (and only if), by the Response Date, Lenders holding Commitments that aggregate more than 50% of the total Commitments shall have agreed to extend
the Existing Maturity Date (each such consenting Lender, an “Extending Lender”), then effective as of the Existing Maturity Date, the Maturity Date for such Extending
Lenders shall be extended to the first anniversary of the Existing Maturity Date (subject to satisfaction of the conditions set forth in Section 2.21(d)). In the event of such
extension, the Commitment of each Non-extending Lender shall terminate on the Existing Maturity Date in effect for such Non-extending Lender prior to such extension
and the outstanding principal balance of all Loans and other amounts payable hereunder to such Non-extending Lender shall become due and payable on such Existing
Maturity Date and, subject to Section 2.21(c) below, the total Commitments hereunder shall be reduced by the Commitments of the Non-extending Lenders so terminated on
such Existing Maturity Date.
(c)
In the event of any extension of the Existing Maturity Date pursuant to Section 2.21(b)(ii), the Borrower shall have the right on or before the Existing Maturity
Date, at its own expense, to require any Non-extending Lender to transfer and assign without recourse (in accordance with and subject to the restrictions contained in Section 9.04)
all its interests, rights (other than its rights to payments pursuant to Section 2.15, Section 2.16, Section 2.17 or Section 9.03 arising prior to the effectiveness of such assignment) and
obligations under this Agreement to one or more banks or other financial institutions identified to the Non-extending Lender by the Borrower, which may include any existing
Lender (each a “Replacement Lender”); provided that such Replacement Lender, if not already a Lender hereunder, shall be subject to the approval of the Administrative Agent and
each Issuing Bank (such approvals to not be unreasonably withheld) to the extent the consent of the Administrative Agent or the Issuing Banks would be required to effect an
assignment under Section 9.04(b), such assignment shall become effective as of a date specified by the Borrower (which shall not be later than the Existing Maturity Date in effect
for such Non-extending Lender prior to the effective date of the requested extension) and the Replacement Lender shall pay to such Non-extending Lender in immediately available
funds on the effective date of such assignment the principal of and interest accrued to the date of payment on the outstanding principal amount Loans made by it hereunder and all
other amounts accrued and unpaid for its account or otherwise owed to it hereunder on such date.
(d) As a condition precedent to each such extension of the Existing Maturity Date pursuant to Section 2.21(b)(ii), the Borrower shall deliver to the Administrative
Agent a certificate of the Borrower dated as of the Existing Maturity Date signed by a Responsible Officer of the Borrower certifying that, as of such date, both before and
immediately after giving effect to such extension, the representations and warranties of the Borrower set forth in this Agreement shall be true and correct and no Default shall have
occurred and be continuing and first make such prepayments of the outstanding Loans and second provide such cash collateral (or make such other arrangements satisfactory to the
applicable Issuing Bank) with respect to the outstanding Letters of Credit as shall be required such that, after giving effect to the termination of the Commitments of the Non-
extending Lenders pursuant to Section 2.21(b) and any assignment pursuant to Section 2.21(c), the aggregate Revolving Credit Exposure less the face amount of any Letter of Credit
supported by any such cash collateral (or other satisfactory arrangements) so provided does not exceed the aggregate amount of Commitments being extended.
(e)
For the avoidance of doubt, no consent of any Lender (other than the existing Lenders participating in the extension of the Existing Maturity Date) shall be required
for any extension of the Maturity Date pursuant to this Section 2.21 and the operation of this Section 2.21 in accordance with its terms is not an amendment subject to Section 9.02.
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The Borrower represents and warrants to the Lenders that:
REPRESENTATIONS AND WARRANTIES
ARTICLE 3
3.01.
Organization; Powers. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland.
3.02.
Authorization; Enforceability. The Transactions are within the Borrower’s corporate powers and have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
3.03.
Governmental Approvals; No Conflicts. The Transactions do not require any consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in full force and effect, will not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any order of any Governmental Authority, will not violate or result in a default under any indenture, agreement or other instrument
binding upon the Borrower or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower, and will not result in the creation or imposition of, or
the requirement to create, any Lien on any asset of the Borrower.
3.04.
Financial Condition; No Material Adverse Effect.
(a)
(i) The consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2020 and the related consolidated statements of operations, changes in
shareholders’ equity and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, certified by Pricewaterhouse Coopers LLP, copies of which have been
furnished to each Lender, fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as at such dates and the consolidated results
of the operations of the Borrower and its Subsidiaries for the periods ended on such dates in accordance with GAAP; and (ii) since December 31, 2020, there has been no Material
Adverse Effect.
(b) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in connection with Section 5.01 and/or filed with the Securities and
Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or threatened action, investigation or proceeding affecting the Borrower or any
Subsidiary before any court, governmental agency or arbitrator that may reasonably be anticipated to have a Material Adverse Effect. There is no pending or threatened action or
proceeding against the Borrower or any Subsidiary that purports to affect the legality, validity, binding effect or enforceability against the Borrower of this Agreement. Since
December 31, 2020, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole.
3.05.
Reserved.
3.06.
Litigation and Environmental Matters. (a) Except as disclosed in the Borrower’s annual, quarterly or current Reports, each as delivered in connection with Section
5.01 and/or filed with the Securities and Exchange Commission and delivered to the Lenders prior to the Effective Date, there is no pending or threatened action, investigation or
proceeding affecting the Borrower or any Subsidiary before any court, governmental agency or arbitrator that may reasonably be anticipated to have a Material Adverse Effect.
There is no pending or threatened action or proceeding against the Borrower or any Subsidiary that purports to affect the legality, validity, binding effect or enforceability against the
Borrower of this Agreement.
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(b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect, the Borrower has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, has not become subject to any Environmental Liability, has not received notice of any claim with respect to any Environmental Liability or has no
knowledge of any basis for any Environmental Liability.
(c)
Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
3.07.
Compliance with Laws and Agreements. The Borrower is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.
3.08.
Investment Company Status. The Borrower is not required to register as an “investment company” as defined in the Investment Company Act of 1940.
3.09.
Taxes. The Borrower has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower has set aside on its books adequate
reserves or to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
3.10.
ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.
3.11.
Beneficial Ownership. As of the Effective Date, to the best knowledge of the Borrower, the information included in the Beneficial Ownership Certification
provided on or prior to the Effective Date to any Lender in connection with this Agreement is true and correct in all respects.
3.12.
Reserved.
3.13.
Anti-Corruption Laws and Sanctions. None of (a) the Borrower, any Subsidiary, any of their respective directors or officers, or (b) to the knowledge of the
Borrower, any affiliate, agent or employee of the Borrower or any Subsidiary have engaged in any activity or conduct which would violate any applicable Anti-Corruption Laws or
any applicable Sanctions and the Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and
their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. None of (a) the Borrower, any Subsidiary, any of their respective
directors or officers or employees, or (b) to the knowledge of the Borrower, any affiliate or agent of the Borrower or any Subsidiary is a Sanctioned Person. No Borrowing or Letter
of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.
3.14.
Affected Financial Institutions. The Borrower is not an Affected Financial Institution.
3.15.
Reserved.
3.16. Margin Regulations. The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying
Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock, and no part of
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the proceeds of any Borrowing and no Letter of Credit issued hereunder will be used to buy or carry any Margin Stock. Following the application of the proceeds of each Borrowing
or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis)
will be Margin Stock.
3.17.
Reserved.
3.18.
Exchange Act. No proceeds of any Loan have been or will be used directly or indirectly in connection with the acquisition of in excess of 5% of any class of equity
securities that is registered pursuant to Section 12 of the Exchange Act or any transaction subject to the requirements of Section 13 or 14 of the Exchange Act.
ARTICLE 4
CONDITIONS
4.01.
Effective Date. The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit hereunder shall not become effective until the date
on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received from each party hereto a counterpart of this Agreement signed on behalf of such party (which, subject
to Section 9.06(b), may include any Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed
signature page).
(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of
Ballard Spahr LLP, counsel for the Borrower, substantially in the form of Exhibit D, and covering such other matters relating to the Borrower, this Agreement or the Transactions as
the Required Lenders shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion.
(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the
Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the
Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrower hereunder.
(f)
Section 5.01.
The Administrative Agent shall have received the audited financial statements and the unaudited quarterly financial statements of the Borrower referred to in
(g)
The Administrative Agent shall have received, at least five days prior to the Effective Date, all documentation and other information regarding the Borrower
requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, to the extent requested in writing of the
Borrower at least 10 days prior to the Effective Date and to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five
days prior to the Effective Date, any Lender that has requested, in a written notice to the Borrower at least 10 days prior to the Effective Date, a Beneficial Ownership Certification
in relation to the Borrower shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery
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by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).
(h) The Administrative Agent shall have received such other documents as the Administrative Agent or the Required Lenders (through the Administrative Agent) may
reasonably request.
(i)
The Administrative Agent shall have received evidence of consummation of the Spin Transaction in form and substance satisfactory to Administrative Agent.
(j) Administrative Agent shall have received evidence, that outstanding indebtedness under the (x) Credit Agreements among Administrative Agent, certain other
parties thereto and (i) Borrower, (ii) Commonwealth Edison Company, (iii) Exelon Corporation, (iv) Exelon Generation Company and (v) PECO Energy Company, in each case
dated as of March 23, 2011 and (y) Second Amended and Restated Credit Agreement, dated as of August 1, 2011, among Potomac Electric Power Company, Delmarva Power &
Light Company, Atlantic City Electric Company and Wells Fargo Bank, National Association shall be paid in full and the credit facilities extended in connection therewith shall be
terminated.
4.02.
Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend or extend any
Letter of Credit, is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set forth in this Agreement (excluding the representations and warranties set forth in Section 3.04(a)(ii) and the
first sentence of Section 3.06(a)) shall be true and correct on and as of the date of such Borrowing or the date of issuance, amendment or extension of such Letter of Credit, as
applicable.
(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment or extension of such Letter of Credit, as applicable, no Default
shall have occurred and be continuing.
Each Borrowing and each issuance, amendment or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date
thereof as to the matters specified in paragraphs (a) and (b) of this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been irrevocably paid in
full and all Letters of Credit shall have expired or terminated, in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower and, in
the case of Sections 5.03, 5.04, 5.05, 5.06, 5.07 and 5.08 the Principal Subsidiaries, covenant(s) and agree(s) with the Lenders that:
5.01.
Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the Administrative Agent and each Lender, including their Public-
Siders:
(a)
as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, a copy of the Borrower’s
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission with respect to such quarter (or, if the Borrower is not required to file a Quarterly Report on
Form 10-Q, copies of an unaudited consolidated balance sheet of the Borrower as of the end of such quarter and the related consolidated statement of operations of the Borrower for
the portion of the Borrower’s fiscal year ending on the last day of such quarter, in each case prepared in accordance with GAAP, subject to the absence of footnotes and to year-end
adjustments), together with a certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing
57
or, if any such Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect
thereto;
(b)
as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the Borrower’s Annual Report on Form 10-K filed
with the Securities and Exchange Commission with respect to such fiscal year (or, if the Borrower is not required to file an Annual Report on Form 10-K, the consolidated balance
sheet of the Borrower and its Subsidiaries as of the last day of such fiscal year and the related consolidated statements of operations, changes in shareholders’ equity (if applicable)
and cash flows of the Borrower for such fiscal year, certified by PricewaterhouseCoopers LLP or other certified public accountants of recognized national standing), together with a
certificate of an authorized officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if any such Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action which the Borrower proposes to take with respect thereto;
(c)
concurrently with the delivery of the quarterly and annual reports referred to in subsections (a) and (b) above, a compliance certificate in substantially the form set
forth in Exhibit E, duly completed and signed by the Chief Financial Officer, Treasurer or an Assistant Treasurer of the Borrower;
(d)
except as otherwise provided in clause (a) or (b) above, promptly after the sending or filing thereof, copies of all reports that the Borrower sends to its security
holders generally, and copies of all Reports on Form 10-K, 10-Q or 8-K, and registration statements and prospectuses that the Borrower or any Subsidiary files with the Securities
and Exchange Commission or any national securities exchange (except to the extent that any such registration statement or prospectus relates solely to the issuance of securities
pursuant to employee purchase, benefit or dividend reinvestment plans of the Borrower or a Subsidiary);
(e)
promptly upon becoming aware of the institution of any steps by the Borrower or any other Person to terminate any Plan, or the failure to make a required
contribution to any Plan if such failure is sufficient to give rise to a lien under section 430(k) of the Code, or the taking of any action with respect to a Plan which could result in the
requirement that the Borrower furnish a bond or other security to the PBGC or such Plan, or the occurrence of any event with respect to any Plan which could result in the
incurrence by the Borrower or any other member of the Controlled Group of any material liability, fine or penalty, notice thereof and a statement as to the action the Borrower or
such member of the Controlled Group proposes to take with respect thereto;
(f)
promptly after any Rating Agency shall have announced a change in the rating established or deemed to have been established for the Index Debt, written notice of
such rating change;
(g)
promptly following any request therefor, (x) such other information regarding the operations, business affairs and financial condition of the Borrower or any
Principal Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request and
(y) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-
money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation; and
(h)
such other information respecting the condition, operations or business, financial or otherwise, of the Borrower or any Subsidiary as any Lender, through the
Administrative Agent, may from time to time reasonably request (including any information that any Lender reasonably requests in order to comply with its obligations under any
“know your customer” or anti-money laundering laws or regulations, including the Patriot Act and the Beneficial Ownership Regulation).
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Documents required to be delivered pursuant to Section 5.01(a), (b) or (e) (to the extent any such documents are included in materials otherwise filed with the SEC) may be
delivered electronically and, if so delivered, shall be deemed to have been delivered on the date (i) on which such materials are publicly available as posted on the Electronic Data
Gathering, Analysis and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial, third-party website or whether made available by the Administrative Agent); provided that: (A) upon
written request by the Administrative Agent (or any Lender through the Administrative Agent) to the Borrower, the Borrower shall deliver paper copies of such documents to the
Administrative Agent or such Lender until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (B) the Borrower shall notify
the Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents
referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be
solely responsible for timely accessing posted documents or requesting delivery of paper copies of such document to it and maintaining its copies of such documents.
5.02.
Notices of Material Events. The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:
(a)
as soon as possible, and in any event within five Business Days after the occurrence of any Default or Event of Default with respect to the Borrower continuing on
the date of such statement, a statement of an authorized officer of the Borrower setting forth details of such Default or Event of Default and the action which the Borrower proposes
to take with respect thereto;
(b)
any change in the credit ratings from a credit rating agency, or the placement by a credit rating agency of the Borrower or its parent on a “CreditWatch” or
“WatchList” or any similar list, in each case with negative implications, or the cessation by a credit rating agency of, or its intent to cease, rating the Borrower’s debt; and
(c)
any change in the information provided in the Beneficial Ownership Certification delivered to such Lender that would result in a change to the list of beneficial
owners identified in such certification.
Each notice delivered under this Section (i) shall be in writing, (ii) shall contain a heading or a reference line that reads “Notice under Section 5.02 of Baltimore Gas and
Electric Company Credit Agreement dated February 1, 2022” and (iii) shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting
forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
5.03.
Existence; Conduct of Business. The Borrower will do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.02.
5.04.
Payment of Obligations. The Borrower will pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same
shall become delinquent or in default, except where the validity or amount thereof is being contested in good faith by appropriate proceedings, the Borrower has set aside on its
books adequate reserves with respect thereto in accordance with GAAP and the failure to make payment pending such contest could not reasonably be expected to result in a
Material Adverse Effect.
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5.05. Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Principal Subsidiaries to, keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and tear excepted, and maintain, with financially sound and reputable insurance companies, insurance in
such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.
5.06.
Books and Records; Inspection Rights. The Borrower will, at any reasonable time and from time to time, pursuant to prior notice delivered to the Borrower, permit
any Lender, or any agent or representative of any thereof, to examine and, at such Lender’s expense, make copies of, and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any Principal Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Principal Subsidiary with any of their
respective officers; provided that any non-public information (which has been identified as such by the Borrower or the applicable Principal Subsidiary) obtained by any Lender or
any of its agents or representatives pursuant to this Section 5.06 shall be treated confidentially by such Person; provided, further, that such Person may disclose such information to
(a) any other party to this Agreement, its examiners, Affiliates, outside auditors, counsel or other professional advisors in connection with this Agreement, (b) to any direct, indirect,
actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement, (c) to any credit insurance
provider or (d) if otherwise required to do so by law or regulatory process (it being understood that, unless prevented from doing so by any applicable law or governmental authority,
such Person shall use reasonable efforts to notify the Borrower of any demand or request for any such information promptly upon receipt thereof so that the Borrower may seek a
protective order or take other appropriate action).
5.07.
Compliance with Laws. The Borrower will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower will maintain in effect and
enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption
Laws and applicable Sanctions.
5.08.
Use of Proceeds and Letters of Credit. The proceeds of the Loans will be used only for general limited liability company or corporate purposes (including the
making of acquisitions), but in no event for any purpose that would be contrary to Section 3.13, 3.16 or 3.18. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the regulations of the Federal Reserve Board, including Regulations T, U and X. The Borrower will not request any
Borrowing or use any Letter of Credit, and the Borrower shall not use, and shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall
not use, directly or indirectly, the proceeds of any Borrowing or Letter of Credit (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of
money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or
transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto
(including any Person participating in the Loans hereunder, whether as underwriter, advisor, investor, lender, hedge provider, facility or security agent or otherwise).
5.09.
Accuracy of Information. The Borrower will ensure that any information, including financial statements or other documents, furnished to the Administrative Agent
or the Lenders in connection with this Agreement or any amendment or modification hereof or waiver hereunder contains no material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the furnishing of such information shall be
deemed to be a representation and warranty by the Borrower on the date thereof as to the matters specified in this Section.
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Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have
expired or terminated, in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:
ARTICLE 6
NEGATIVE COVENANTS
6.01.
Liens. The Borrower will not; nor will it permit any Principal Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned
or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:
(a) Liens imposed by law, such as carriers’, warehousemen’s, landlords’ repairmen’s, materialmen’s and mechanics’ Liens and other similar Liens arising in the
ordinary course of business;
(b) Liens on the capital stock of or any other Equity Interest in any Subsidiary to secure Nonrecourse Indebtedness;
(c) Liens for taxes, assessments or governmental charges, levies, or fines (including such amounts arising under environmental law) on property of the Borrower if the
same shall not at the time be delinquent or thereafter can be paid without a material penalty, or are being contested in good faith and by appropriate proceedings;
(d) Liens upon or in any property acquired in the ordinary course of business to secure the purchase price of such property or to secure any obligation incurred solely
for the purpose of financing the acquisition of such property;
(e) Liens existing on property at the time of the acquisition thereof (other than any such Lien created in contemplation of such acquisition unless permitted by the
preceding clause (d));
(f)
Liens granted in connection with any financing arrangement for the purchase of nuclear fuel or the financing of pollution control facilities, limited to the fuel or
facilities so purchased or acquired;
(g) Liens arising in connection with sales or transfers of, or financing secured by, accounts receivable or related contracts, provided that any such sale, transfer or
financing shall be on arms’ length terms;
(h) Liens securing Permitted Obligations;
(i)
Permitted Encumbrances;
(j)
Liens arising in connection with sale and leaseback transactions entered into by the Borrower, but only to the extent that the aggregate purchase price of all assets
sold by the Borrower during the term of this Agreement pursuant to such sale and leaseback transactions does not exceed $1,000,000,000;
(k) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans
arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, compensation arrangements, supplemental retirement plans or other social security
or similar legislation;
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(l)
under Section 7.01(f);
Liens constituting attachment, judgment and other similar Liens arising in connection with court proceedings to the extent not constituting an Event of Default
(m) Liens created in the ordinary course of business to secure liability to insurance carriers and Liens on insurance policies and the proceeds thereof (whether accrued or
not), rights or claims against an insurer or other similar asset securing insurance premium financings;
(n) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the
ordinary course of business;
(o) Liens in the nature of rights of setoff, bankers’ liens, revocation, refund, chargeback, counterclaim, netting of cash amounts or similar rights as to deposit accounts,
commodity accounts or securities accounts or other funds maintained with a credit or depository institution;
(p) Liens consisting of pledges of industrial development, pollution control or similar revenue bonds in connection with the remarketing of such bonds;
(q) Liens created under Section 2.20 and similar cash collateralization obligations relating to defaulting lenders and remedies upon default;
(r)
Liens resulting from any restriction on any Equity Interest (or project interest, interests in any energy facility (including undivided interests)) of a Person providing
for a breach, termination or default under any owners, participation, shared facility, joint venture, stockholder, membership, limited liability company or partnership agreement
between such Person and one or more other holders of Equity Interests (or project interest, interests in any energy facility (including undivided interests)) of such Person, to the
extent a security interest or other Lien is created on any such interest as a result thereof;;
(s)
Liens granted on cash or cash equivalents to defease or repay Indebtedness of the Borrower no later than 60 days after the creation of such Lien;
(t)
Liens created in connection with sales, transfers, leases, assignment or other conveyances or Dispositions of assets, including (A) Liens on assets or securities
granted or deemed to arise in connection with and as a result of the execution, delivery or performance of contracts to purchase or sell such assets or securities, and (B) rights of first
refusal, options or other contractual rights or obligations to sell, assign or otherwise dispose of any interest therein;
(u) Liens on the property of the Borrower, securing the obligations of the Borrower under that certain Indenture and Security Agreement, dated as of July 9, 2009, by
and between the Borrower, as issuer, and Deutsche Bank Trust Company Americas, as trustee; provided that such obligations do not exceed $1,400,000,000 in aggregate principal
amount;
(v) Liens created in connection with a Permitted Securitization; and
(w) Liens, other than those described above in this Section 6.01, provided that the aggregate amount of all Indebtedness secured by Liens permitted by this clause (v)
shall not exceed in the aggregate at any one time outstanding $100,000,000.
6.02.
Fundamental Changes; Mergers and Consolidations; Disposition of Assets. Merge with or into or consolidate with or into, or sell, assign, 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 permit any
Principal Subsidiary to do so, except that (i) any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Principal Subsidiary, (ii) any
Principal Subsidiary may merge with or into or
62
consolidate with or transfer assets to the Borrower, (iii) the Borrower may merge or consolidate with or into a Subsidiary thereof formed for the purpose of converting the Borrower
into a corporation and (iv) the Borrower or any Principal Subsidiary may merge with or into or consolidate with or transfer assets to any other Person; provided that, in each case,
(A) immediately before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing (except in the case where any Principal Subsidiary may
merge with or into or consolidate with or transfer assets to any other Principal Subsidiary), (B) in the case of any such merger, consolidation or transfer of assets to which the
Borrower is a party, either (x) the Borrower shall be the surviving entity or (y) the surviving entity shall be an Eligible Successor and shall have assumed all of the obligations of the
Borrower under this Agreement and the Letters of Credit pursuant to a written instrument in form and substance satisfactory to the Administrative Agent and the Administrative
Agent shall have received an opinion of counsel in form and substance satisfactory to it as to the enforceability of such obligations assumed, and (C) subject to clause (B) above, in
the case of any such merger, consolidation or transfer of assets to which any Principal Subsidiary is a party, a Principal Subsidiary shall be the surviving entity or transferee (as
applicable).
6.03.
Continuation of Businesses. Engage, or permit any Subsidiary to engage, in any line of business which is material to the Borrower and its Subsidiaries, taken as a
whole, other than businesses engaged in by the Borrower and its Subsidiaries as of the date hereof and reasonable extensions thereof.
6.04.
Restrictive Agreements. The Borrower will not, and will not permit any of its Subsidiaries (other than any Excluded Subsidiary) to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon the ability of the Borrower or any Subsidiary to create, incur or
permit to exist any Lien upon any of its property or assets, or the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that the foregoing shall
not apply to restrictions and conditions imposed by law or by this Agreement, the foregoing shall not apply to restrictions and conditions existing on the date hereof identified on
Schedule 6.04 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), the foregoing shall not
apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale; provided that such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder, clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and clause (a) of the
foregoing shall not apply to customary provisions in leases and other contracts restricting the assignment thereof.
6.05.
Consolidated Capitalization Ratio. The Borrower will not permit the Consolidated Capitalization Ratio as of the last day of any Test Period to exceed 0.65:1.00.
7.01.
Events of Default. If any of the following events (“Events of Default”) shall occur:
ARTICLE 7
EVENTS OF DEFAULT
(a) The Borrower shall fail to pay (i) any principal of any Loan when the same becomes due and payable, (ii) any reimbursement obligation in respect of any LC
Disbursement within one Business Day after the same becomes due and payable or (iii) any interest on any Loan or any other amount payable by the Borrower hereunder within
three Business Days after the same becomes due and payable;
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(b) Any representation or warranty made or deemed made by or on behalf of the Borrower herein or by the Borrower (or any of its officers) pursuant to the terms of this
Agreement shall prove to have been incorrect or misleading in any material respect when made;
(c) The Borrower shall fail to perform or observe (i) any term, covenant or agreement contained in Section 5.02, 5.03 (with respect to Borrower’s existence), 5.08 or
Article 6 or (ii) any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if the failure to perform or observe such other term,
covenant or agreement shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent (which notice shall be
given by the Administrative Agent at the written request of any Lender);
(d) The Borrower or any Principal Subsidiary shall fail to pay any principal of or premium or interest on any Indebtedness that is outstanding in a principal amount in
excess of $75,000,000 in the aggregate (but excluding Indebtedness hereunder and Nonrecourse Indebtedness) when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof, other than any acceleration of any Indebtedness secured by equipment leases or fuel leases of the Borrower or a Principal Subsidiary as a result of the
occurrence of any event requiring a prepayment (whether or not characterized as such) thereunder, which prepayment will not result in a Material Adverse Effect;
(e) The Borrower or any Principal Subsidiary 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 Borrower or any Principal Subsidiary 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 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 Borrower or any Principal Subsidiary shall take any corporate or limited
liability company action to authorize or to consent to any of the actions set forth above in this Section 7.01(e);
(f) One or more judgments or orders for the payment of money in an aggregate amount exceeding $75,000,000 (excluding any such judgments or orders to the extent
covered by insurance, subject to any customary deductible, and under which the applicable insurance carrier has not denied coverage) shall be rendered against the Borrower or any
Principal Subsidiary and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;
(g)
(i) Any Reportable Event that the Required Lenders determine in good faith is reasonably likely to result in the termination of any Single Employer Plan or in the
appointment by the appropriate United States District Court of a trustee to administer a Single Employer Plan shall have occurred and be continuing 60 days after written notice to
such effect shall have been
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given to the Borrower by the Administrative Agent; (ii) any Single Employer Plan shall be terminated; (iii) a Trustee shall be appointed by an appropriate United States District
Court to administer any Single Employer Plan; (iv) the PBGC shall institute proceedings to terminate any Single Employer Plan or to appoint a trustee to administer any Single
Employer Plan; or (v) the Borrower or any other member of the Controlled Group withdraws from any Multiemployer Plan; provided that on the date of any event described in
clauses (i) through (v) above, the Unfunded Liabilities of the applicable Plan exceed $75,000,000;
(h)
the Borrower shall fail to be a wholly-owned direct or indirect subsidiary of Exelon (other than as a result of Exelon distributing the capital stock of the Borrower to
Exelon’s shareholders generally); or
(i)
any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of all Obligations, ceases to be in full force and effect; or the Borrower or any other Person contests in writing the validity or enforceability of any
provision of any Loan Document; or the Borrower denies in writing that it has any or further liability or obligation under any Loan Document, or purports in writing to revoke,
terminate or rescind any Loan Document; or
(j)
a Change in Control shall have occurred.
7.02.
Remedies Upon an Event of Default. If an Event of Default occurs (other than an event with respect to the Borrower described in Section 7.01(e), and at any time
thereafter during the continuance of such Event of Default, the Administrative Agent may with the consent of the Required Lenders, and shall at the request of the Required
Lenders, by notice to the Borrower, take any or all of the following actions, at the same or different times:
(a)
terminate the Commitments, and thereupon the Commitments shall terminate immediately;
(b)
declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations
of the Borrower accrued hereunder and under any other Loan Document, shall become due and payable immediately, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower;
(c)
require that the Borrower provide cash collateral as required in Section 2.06(j); and
(d)
exercise on behalf of itself, the Lenders and the Issuing Banks all rights and remedies available to it, the Lenders and the Issuing Banks under the Loan Documents
and Applicable Law.
If an Event of Default described in Section 7.01(e) occurs with respect to the Borrower, the Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder and under any other Loan Document including any break
funding payment or prepayment premium, shall automatically become due and payable, and the obligation of the Borrower to cash collateralize the LC Exposure as provided in
clause (c) above shall automatically become effective, in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the
Borrower.
7.03.
Application of Payments. Notwithstanding anything herein to the contrary, following the occurrence and during the continuance of an Event of Default, and notice
thereof to the Administrative Agent by the Borrower or the Required Lenders:
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(a)
all payments received on account of the Obligations shall, subject to Section 2.20, be applied by the Administrative Agent as follows:
(i)
first, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts payable to the Administrative Agent
(including fees and disbursements and other charges of counsel to the Administrative Agent payable under Section 9.03 and amounts pursuant to Section 2.12(c) payable to
the Administrative Agent in its capacity as such);
(ii) second, to payment of that portion of the Obligations constituting fees, expenses, indemnities and other amounts (other than principal, reimbursement
obligations in respect of LC Disbursements, interest and Letter of Credit fees) payable to the Lenders and the Issuing Banks (including fees and disbursements and other
charges of counsel to the Lenders and the Issuing Banks payable under Section 9.03) arising under the Loan Documents, ratably among them in proportion to the respective
amounts described in this clause (ii) payable to them;
(iii) third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit fees and charges and interest on the Loans and
unreimbursed LC Disbursements, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause (iii) payable to them;
(iv) fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and unreimbursed LC Disbursements and to cash
collateralize that portion of LC Exposure comprising the undrawn amount of Letters of Credit to the extent not otherwise cash collateralized by the Borrower pursuant to
Section 2.06 or 2.20, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause (iv) payable to them; provided that
(x) any such amounts applied pursuant to subclause (B) above shall be paid to the Administrative Agent for the ratable account of the applicable Issuing Banks to cash
collateralize Obligations in respect of Letters of Credit, (y) subject to Section 2.06 or 2.20, amounts used to cash collateralize the aggregate amount of Letters of Credit
pursuant to this clause (iv) shall be used to satisfy drawings under such Letters of Credit as they occur and (z) upon the expiration of any Letter of Credit (without any
pending drawings), the pro rata Commitment of cash collateral shall be distributed to the other Obligations, if any, in the order set forth in this Section 7.03;
(v) fifth, to the payment in full of all other Obligations, in each case ratably among the Administrative Agent, the Lenders and the Issuing Banks based upon the
respective aggregate amounts of all such Obligations owing to them in accordance with the respective amounts thereof then due and payable; and
(vi) finally, the balance, if any, after all Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by law; and
(b)
if any amount remains on deposit as cash collateral after all Letters of Credit have either been fully drawn or expired (without any pending drawings), such
remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
8.01.
Authorization and Action. (a) Each Lender and each Issuing Bank hereby irrevocably appoints the entity named as Administrative Agent in the heading of this
Agreement and its successors and assigns to serve as the administrative agent under the Loan Documents and each Lender and each Issuing Bank authorizes the Administrative
Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent
under such agreements and to exercise
ARTICLE 8
THE ADMINISTRATIVE AGENT
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such powers as are reasonably incidental thereto. Without limiting the foregoing, each Lender and each Issuing Bank hereby authorizes the Administrative Agent to execute and
deliver, and to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the
Administrative Agent may have under such Loan Documents.
(b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon
the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless
and until revoked in writing, such instructions shall be binding upon each Lender and each Issuing Bank; provided, however, that the Administrative Agent shall not be required to
take any action that the Administrative Agent in good faith believes exposes it to liability unless the Administrative Agent receives an indemnification and is exculpated in a manner
satisfactory to it from the Lenders and the Issuing Banks with respect to such action or is contrary to this Agreement or any other Loan Document or applicable law, including any
action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a
forfeiture, modification or termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of
debtors; provided, further, that the Administrative Agent may seek clarification or direction from the Required Lenders prior to the exercise of any such instructed action and may
refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower, any Subsidiary or any Affiliate of any of the foregoing that is communicated to
or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Administrative Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
(c)
In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the Lenders and the
Issuing Banks (except in limited circumstances expressly provided for herein relating to the maintenance of the Register), and its duties are entirely mechanical and administrative in
nature. Without limiting the generality of the foregoing:
(i)
the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent, fiduciary
or trustee of or for any Lender, Issuing Bank or holder of any other obligation other than as expressly set forth herein and in the other Loan Documents, regardless of
whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in
any other Loan Document with reference to the Administrative Agent is not intended to connote any fiduciary duty or other implied (or express) obligations arising under
agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship
between contracting parties); additionally, each Lender agrees that it will not assert any claim against the Administrative Agent based on an alleged breach of fiduciary duty
by the Administrative Agent in connection with this Agreement and/or the transactions contemplated hereby;
(ii) [Reserved];
(iii) [Reserved]; and
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(iv) nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any Lender for any sum or the profit element of any
sum received by the Administrative Agent for its own account;
(d) The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or
more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any of their respective duties and exercise their respective
rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The Administrative Agent shall not be responsible for the
negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative
Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.
(e) No Arranger shall have obligations or duties whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no liability hereunder
or thereunder in such capacity, but all such persons shall have the benefit of the indemnities provided for hereunder.
(f)
In case of the pendency of any proceeding with respect to any Loan Party under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan or any reimbursement obligation shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but
not obligated) by intervention in such proceeding or otherwise:
(i)
to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Disbursements and all other
Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Issuing Banks and
the Administrative Agent (including any claim under Sections 2.12, 2.13, 2.15, 2.17 and 9.03) allowed in such judicial proceeding; and
(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender, each Issuing Bank to
make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, the Issuing
Banks, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under Section 9.03). Nothing
contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or Issuing Bank any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or Issuing Bank or to authorize the Administrative Agent to vote in
respect of the claim of any Lender or Issuing Bank in any such proceeding.
(g) The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Banks, and, except solely to the extent of the
Borrower’s rights to consent pursuant to and subject to the conditions set forth in this Article, none of the Borrower or any Subsidiary, or any of their respective Affiliates, shall have
any rights as a third party beneficiary under any such provisions.
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8.02.
Administrative Agent’s Reliance, Limitation of Liability, Etc. (a) Neither the Administrative Agent nor any of its Related Parties shall be liable for any action taken
or omitted to be taken by such party, the Administrative Agent or any of its Related Parties under or in connection with this Agreement or the other Loan Documents (x) with the
consent of or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good
faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be
presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or
other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document (including, for the avoidance of doubt, in connection with the
Administrative Agent’s reliance on any Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed
signature page) or for any failure of to perform its obligations hereunder or thereunder.
(b) The Administrative Agent shall be deemed not to have knowledge of any notice of any of the events or circumstances set forth or described in Section 5.02 unless
and until written notice thereof stating that it is a “notice under Section 5.02” in respect of this Agreement and identifying the specific clause under said Section is given to the
Administrative Agent by the Borrower, or notice of any Default or Event of Default unless and until written notice thereof (stating that it is a “notice of Default” or a “notice of an
Event of Default”) is given to the Administrative Agent by the Borrower, a Lender or an Issuing Bank. Further, the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into any statement, warranty or representation made in or in connection with any Loan Document, the contents of any certificate, report or other
document delivered thereunder or in connection therewith, the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan
Document or the occurrence of any Default or Event of Default, the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or the satisfaction of any condition set forth in Article 4 or elsewhere in any Loan Document, other than to confirm receipt of items (which on their face
purport to be such items) expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being
acceptable or satisfactory to the Administrative Agent. Notwithstanding anything herein to the contrary, the Administrative Agent shall not be liable for, or be responsible for any
Liabilities, costs or expenses suffered by the Borrower, any Subsidiary, any Lender or any Issuing Bank as a result of, any determination of the Revolving Credit Exposure, any of
the component amounts thereof or any portion thereof attributable to each Lender or Issuing Bank.
(c) Without limiting the foregoing, the Administrative Agent may treat the payee of any promissory note as its holder until such promissory note has been assigned in
accordance with Section 9.04, may rely on the Register to the extent set forth in Section 9.04(b), may consult with legal counsel (including counsel to the Borrower), independent
public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts, makes no warranty or representation to any Lender or Issuing Bank and shall not be responsible to any Lender or Issuing Bank for any statements,
warranties or representations made by or on behalf of any Loan Party in connection with this Agreement or any other Loan Document, in determining compliance with any
condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Bank, may presume
that such condition is satisfactory to such Lender or Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or Issuing Bank
sufficiently in advance of the making of such Loan or the issuance of such Letter of Credit and shall be entitled to rely on, and shall incur no liability under or in respect of this
Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument
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or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and
believed by it to be genuine and signed or sent or otherwise authenticated by the proper party or parties (whether or not such Person in fact meets the requirements set forth in the
Loan Documents for being the maker thereof).
8.03.
Posting of Communications. (a) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communications available to the
Lenders and the Issuing Banks by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative
Agent to be its electronic transmission system (the “Approved Electronic Platform”).
(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or
modified by the Administrative Agent from time to time (including, as of the Effective Date, a user ID/password authorization system) and the Approved Electronic Platform is
secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders, each of the
Issuing Banks and the Borrower acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is
not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and
other risks associated with such distribution. Each of the Lenders, each of the Issuing Banks and the Borrower hereby approves distribution of the Communications through the
Approved Electronic Platform and understands and assumes the risks of such distribution.
(c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE
APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM
AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE
BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT, ANY ARRANGER OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY
LIABILITY TO ANY LOAN PARTY, ANY LENDER, ANY ISSUING BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING
DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE)
ARISING OUT OF ANY LOAN PARTY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET OR THE
APPROVED ELECTRONIC PLATFORM.
“Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant
to any Loan Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or any Issuing Bank by means of electronic
communications pursuant to this Section, including through an Approved Electronic Platform.
(d) Each Lender and each Issuing Bank agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Approved
Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender and Issuing Bank agrees to notify
the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such
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Lender’s or Issuing Bank’s (as applicable) email address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such
email address.
(e) Each of the Lenders, each of the Issuing Banks and the Borrower agrees that the Administrative Agent may, but (except as may be required by applicable law) shall
not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally applicable document retention
procedures and policies.
(f) Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any Issuing Bank to give any notice or other communication pursuant to any
Loan Document in any other manner specified in such Loan Document.
8.04.
The Administrative Agent Individually. With respect to its Commitment, Loans, Letter of Credit Commitments and Letters of Credit, the Person serving as the
Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for
any other Lender or Issuing Bank, as the case may be. The terms “Issuing Banks”, “Lenders”, “Required Lenders” and any similar terms shall, unless the context clearly otherwise
indicates, include the Administrative Agent in its individual capacity as a Lender, Issuing Bank or as one of the Required Lenders, as applicable. The Person serving as the
Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally
engage in any kind of banking, trust or other business with, the Borrower, any Subsidiary or any Affiliate of any of the foregoing as if such Person was not acting as the
Administrative Agent and without any duty to account therefor to the Lenders or the Issuing Banks.
8.05.
(a) Successor Administrative Agent. The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the Issuing
Banks and the Borrower, whether or not a successor Administrative Agent has been appointed. Upon any such resignation, the Required Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30
days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Banks, appoint a
successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank. Such appointment shall be subject to the prior
written approval of the Borrower (which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing). Upon the
acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall succeed to, and become vested with, all the
rights, powers, privileges and duties of the retiring Administrative Agent. Upon the acceptance of appointment as Administrative Agent by a successor Administrative Agent, the
retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative
Agent its rights as Administrative Agent under the Loan Documents.
(b) Notwithstanding paragraph (a) of this Section, in the event no successor Administrative Agent shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the effectiveness of its
resignation to the Lenders, the Issuing Banks and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder and under the other Loan Documents and the Required Lenders shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent; provided that all payments required to be made hereunder or under any other Loan Document to the
Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and all notices and other
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communications required or contemplated to be given or made to the Administrative Agent shall directly be given or made to each Lender and each Issuing Bank. Following the
effectiveness of the Administrative Agent’s resignation from its capacity as such, the provisions of this Article and Section 9.03, as well as any exculpatory, reimbursement and
indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.
8.06.
Acknowledgements of Lenders and Issuing Banks. (a) Each Lender and each Issuing Bank acknowledges that the Loan Documents set forth the terms of a
commercial lending facility, it is engaged in making, acquiring or holding commercial loans and in providing other facilities set forth herein as may be applicable to such Lender or
Issuing Bank, in each case in the ordinary course of business and is making the Loans hereunder as commercial loans in the ordinary course of business, and not for the purpose of
purchasing, acquiring or holding any other type of financial instrument (and each Lender and each Issuing Bank agrees not to assert a claim in contravention of the foregoing), it
has, independently and without reliance upon the Administrative Agent, any Arranger or any other Lender or Issuing Bank, or any of the Related Parties of any of the foregoing, and
based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or
hold Loans hereunder and it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be
applicable to such Lender or such Issuing Bank, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to
provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities. Each Lender and each Issuing Bank also
acknowledges that it will, independently and without reliance upon the Administrative Agent, any Arranger or any other Lender or Issuing Bank, or any of the Related Parties of any
of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws
concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
(b) Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment and Assumption or any
other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan
Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective Date.
(c)
(i) Each Lender hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any
funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise;
individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such Lender), and demands the return of such Payment (or a
portion thereof), such Lender shall promptly, but in no event later than one Business Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion
thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof)
was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and
hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the
Administrative Agent for the return of any Payments received, including without limitation any
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defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this Section 8.06(c) shall be conclusive, absent manifest
error.
(ii) Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than,
or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment
Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such
Payment. Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Lender shall
promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one Business
Day thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together
with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to
the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation from time to time in effect.
(iii) The Borrower and each other Loan Party hereby agrees that (x) in the event an erroneous Payment (or portion thereof) are not recovered from any Lender
that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount
and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party.
(iv) Each party’s obligations under this Section 8.06(c) shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or
obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations under any Loan
Document.
8.07.
[Reserved].
8.08.
[Reserved].
8.09.
Certain ERISA Matters. (a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date
such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and each Arranger and their
respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Benefit Plans in connection with the Loans, the
Letters of Credit or the Commitments,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified
professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain
transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or
PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in,
administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
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(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such
Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of
Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the
Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the
requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the
Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b)
In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has provided another representation,
warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a
Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the
Administrative Agent, and each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that none
of the Administrative Agent, or any Arranger or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation
or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related to hereto or thereto).
(c) The Administrative Agent and each Arranger hereby informs the Lenders that each such Person is not undertaking to provide investment advice or to give advice in
a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such
Person or an Affiliate thereof may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments, this Agreement and any other Loan
Documents may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the
Letters of Credit or the Commitments by such Lender or may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or
otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral
agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums,
banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.
ARTICLE 9
MISCELLANEOUS
9.01.
Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices
and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:
(i)
if to the Borrower, to it at Baltimore Gas and Electric Company, 2 Center Plaza, 110 W. Fayette Street, 14th Floor, Baltimore, Maryland 21201, Attention:
David Vahos, SVP, CFO & Treasurer, email: HYPERLINK "mailto:david.vahos@bge.com" david.vahos@bge.com with a copy to Exelon Corporation, at 10 S. Dearborn,
54th Floor, Chicago, IL 60603, Attention: Chief Financial Officer, facsimile: 312-394-5443;
(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., JPMorgan Loan Services, 500 Stanton Christiana Road, NCC5, Floor 1, Newark, DE
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19713, Attention of Suzanna Gallagher, Wholesale Lending Services, Investment Bank (Fax No. (302) 634-3301);
(iii) if to JPMorgan Chase Bank, 1-800-634-1969 and gts.client.services@jpmchase.com, and
(iv) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile
shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of
business on the next business day for the recipient). Notices delivered through Approved Electronic Platforms, to the extent provided in paragraph (b) below, shall be effective as
provided in said paragraph (b).
(b) Notices and other communications to the Borrower, the Lenders and the Issuing Banks hereunder may be delivered or furnished by using Approved Electronic
Platforms pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article 2 unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder
by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
(c) Unless the Administrative Agent otherwise prescribes, notices and other communications sent to an e-mail address shall be deemed received upon the sender’s
receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and
notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in
the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above,
if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next business day for the recipient.
(d) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.
9.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Issuing Banks and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure
by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default at the
time.
(b) Subject to Section 2.14(b) and (c) and Section 9.02(c) below, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required
Lenders; provided
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that no such agreement shall increase the Commitment of any Lender without the written consent of such Lender, reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, postpone the scheduled date of payment of the
principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone
the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, change Section 2.09(c) or 2.18(b) or (c) in a manner that would
alter the ratable reduction of Commitments or the pro rata sharing of payments required thereby, without the written consent of each Lender, change the payment waterfall
provisions of Section 2.20(b) or 7.03 without the written consent of each Lender, or change any of the provisions of this Section or the definition of “Required Lenders” or any
other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Issuing Banks without the prior written consent of the Administrative Agent or the Issuing Banks, as the case may be; and provided further that no such agreement shall
amend or modify the provisions of Section 2.06 without the prior written consent of the Administrative Agent and the Issuing Banks.
(c)
If the Administrative Agent and the Borrower acting together identify any ambiguity, omission, mistake, typographical error or other defect in any provision of this
Agreement or any other Loan Document, then the Administrative Agent and the Borrower shall be permitted to amend, modify or supplement such provision to cure such ambiguity,
omission, mistake, typographical error or other defect, and such amendment shall become effective without any further action or consent of any other party to this Agreement.
9.03.
Expenses; Limitation of Liability; Indemnity, Etc.
(a) Expenses. The Borrower shall pay all reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration
of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), all reasonable out-of-pocket expenses incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder and all out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or any Lender, including the
fees, charges and disbursements of any counsel for the Administrative Agent, any Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) Limitation of Liability. To the extent permitted by applicable law the Borrower shall not assert, and the Borrower hereby waives, any claim against the
Administrative Agent, any Arranger, any Issuing Bank and any Lender, and any Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related
Person”) for any Liabilities arising from the use by others of information or other materials (including, without limitation, any personal data) obtained through telecommunications,
electronic or other information transmission systems (including the Internet), and no party hereto shall assert, and each such party hereby waives, any Liabilities against any other
party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof; provided that, nothing in this Section 9.03(b) shall relieve the Borrower of any obligation it may have to indemnify an Indemnitee, as provided in
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Section 9.03(c), against any special, indirect, consequential or punitive damages asserted against such Indemnitee by a third party.
(c)
Indemnity. The Borrower shall indemnify the Administrative Agent, each Arranger, each Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all Liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of the execution
or delivery of this Agreement, any other Loan Document, or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the Transactions or any other transactions contemplated hereby, any Loan or Letter of Credit or the use of the proceeds
therefrom (including any refusal by an Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the
Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or any actual or prospective Proceeding relating to
any of the foregoing, whether or not such Proceeding is brought by the Borrower or its equity holders, Affiliates, creditors or any other third Person and whether based on contract,
tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such
Liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted primarily from the gross negligence or
willful misconduct of such Indemnitee. This Section 9.03(c) shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any
non-Tax claim.
(d) Lender Reimbursement. Each Lender severally agrees to pay any amount required to be paid by the Borrower under paragraphs (a), (b) or (c) of this Section 9.03 to
the Administrative Agent, each Issuing Bank, and each Related Party of any of the foregoing Persons (each, an “Agent-Related Person”) (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Applicable Percentage in effect on the date on which such payment is
sought under this Section (or, if such payment is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in
accordance with such Applicable Percentage immediately prior to such date), and agrees to indemnify and hold each Agent-Related Person harmless from and against any and all
Liabilities and related expenses, including the fees, charges and disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be
imposed on, incurred by or asserted against such Agent-Related Person in any way relating to or arising out of the Commitments, this Agreement, any of the other Loan Documents
or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent-Related Person
under or in connection with any of the foregoing; provided that the unreimbursed expense or Liability or related expense, as the case may be, was incurred by or asserted against
such Agent-Related Person in its capacity as such; provided further that no Lender shall be liable for the payment of any portion of such Liabilities, costs, expenses or disbursements
that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from such Agent-Related Person’s gross negligence or willful
misconduct. The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
(e) Payments. All amounts due under this Section 9.03 shall be payable promptly after written demand therefor.
9.04.
Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of Credit), except that the Borrower may not assign or otherwise transfer any of its
rights or obligations
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hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and no Lender
may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of an Issuing Bank that issues any Letter of
Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative
Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)
(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion
of its rights and obligations under this Agreement (including all or a portion of its Commitment, participations in Letters of Credit and the Loans at the time owing to it) with the
prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) of:
(A)
the Borrower; provided that, the Borrower shall be deemed to have consented to an assignment of all or a portion of the Revolving Loans
and Commitments unless it shall have objected thereto by written notice to the Administrative Agent within ten (10) Business Days after having received
notice thereof provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an
Event of Default has occurred and is continuing, any other assignee;
(B)
the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment of any Commitment to
an assignee that is a Lender (other than a Defaulting Lender) with a Commitment immediately prior to giving effect to such assignment; and
(C)
each Issuing Bank.
(ii) Assignments shall be subject to the following additional conditions:
(A)
except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning
Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined
as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000
unless each of the Borrower and the Administrative Agent otherwise consent; provided that no such consent of the Borrower shall be required if an Event of
Default has occurred and is continuing;
(B)
each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this
Agreement; provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and
obligations in respect of one Class of Commitments or Loans;
(C)
the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignment and Assumption or (y) to the extent
applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the
Administrative Agent and the parties to the Assignment and
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Assumption are participants, together with a processing and recordation fee of $3,500; and
(D)
the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee
designates one or more Credit Contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower
and its related parties or its securities) will be made available and who may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.
For the purposes of this Section 9.04(b), the term “Approved Fund” and “Ineligible Institution” have the following meanings:
“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit
in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or
manages a Lender.
“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) a company, investment vehicle or trust for, or owned and operated for
the primary benefit of, a natural person or relative(s) thereof or (d) the Borrower or any of its Affiliates; provided that, with respect to clause (c), such company, investment vehicle
or trust shall not constitute an Ineligible Institution if it (x) has not been established for the primary purpose of acquiring any Loans or Commitments, (y) is managed by a
professional advisor, who is not such natural person or a relative thereof, having significant experience in the business of making or purchasing commercial loans, and (z) has assets
greater than $25,000,000 and a significant part of its activities consist of making or purchasing commercial loans and similar extensions of credit in the ordinary course of its
business; provided, further, that upon the occurrence and during the continuance of an Event of Default, any Person (other than a Lender) shall be an Ineligible Institution if after
giving effect to any proposed assignment to such Person, such Person would hold more than 25% of the then outstanding Total Revolving Credit Exposure or Commitments, as the
case may be.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement,
such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation
in such rights and obligations in accordance with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated
interest) of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Banks and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender
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hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, any Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and an assignee or (y) to the extent applicable, an
agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to
the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the
Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning
Lender or the assignee shall have failed to make any payment required to be made by it pursuant to 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(d), the Administrative Agent shall
have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in
full, together with all accrued interest thereon. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this
paragraph.
(c) Any Lender may, without the consent of, or notice to, the Borrower, the Administrative Agent, the Issuing Banks, sell participations to one or more banks or other
entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its
Commitment and/or the Loans owing to it); provided that such Lender’s obligations under this Agreement shall remain unchanged; such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations; and the Borrower, the Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 9.02(b) that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Section 2.15, 2.16
and 2.17 (subject to the requirements and limitations therein, including the requirements under Sections 2.17(f) (it being understood that the documentation required under Section
2.17(f) shall be delivered to the participating Lender and the information)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section; provided that such Participant agrees to be subject to the provisions of Section 2.19 as if it were an assignee under paragraph (b) of this Section; and
shall not be entitled to receive any greater payment under Section 2.15 or 2.17, with respect to any participation, than its participating Lender would have been entitled to receive,
except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender
that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.19(b) with
respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender; provided that such
Participant agrees to be subject to Section 2.18(c) as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of
the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the
Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant
Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under
any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment,
80
Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of
this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no
responsibility for maintaining a Participant Register.
(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
9.05.
Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the other Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any other Loan Documents shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such
other party or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or
terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article 8 shall survive and remain in full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision
hereof.
9.06.
Counterparts; Integration; Effectiveness; Electronic Execution. (a) This Agreement may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and any separate letter agreements
with respect to fees payable to the Administrative Agent and the reductions of the Letter of Credit Commitment of any Issuing Bank constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
(b) Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval,
consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 9.01), certificate, request, statement, disclosure or authorization related
to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature
transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually
executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and
words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the
keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an
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actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a
paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format
without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, to the extent the Administrative Agent has agreed to
accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the
Borrower without further verification thereof and without any obligation to review the appearance or form of any such Electronic signature and upon the request of the
Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the
Borrower hereby agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or
litigation among the Administrative Agent, the Lenders, the Borrower, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an
image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal
effect, validity and enforceability as any paper original, the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Agreement, any other
Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s
business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and
enforceability as a paper record), waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any
Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with
respect to any signature pages thereto and waives any claim against any Lender-Related Person for any Liabilities arising solely from the Administrative Agent’s and/or any
Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed
signature page, including any Liabilities arising as a result of the failure of the Borrower to use any available security measures in connection with the execution, delivery or
transmission of any Electronic Signature.
9.07.
Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
9.08.
Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, each Issuing Bank, and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits (general or special, time or demand, provisional or final)
at any time held, and other obligations at any time owing, by such Lender, such Issuing Bank or any such Affiliate, to or for the credit or the account of the Borrower against any
and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender or such Issuing Bank or their respective
Affiliates, irrespective of whether or not such Lender, Issuing Bank or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such
obligations of the Borrower may be contingent or unmatured or are owed to a branch office or Affiliate of such Lender or such Issuing Bank different from the branch office or
Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so
setoff shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.20 and, pending such payment, shall be
segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the Issuing Banks, and the Lenders, and (y) the
Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the
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Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, each Issuing Bank and their respective Affiliates under this
Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such Issuing Bank or their respective Affiliates may have. Each Lender and
Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect
the validity of such setoff and application.
9.09.
Governing Law; Jurisdiction; Consent to Service of Process. (a) This Agreement and the other Loan Documents shall be construed in accordance with and
governed by the law of the State of New York.
(b) Each of the Lenders and the Administrative Agent hereby irrevocably and unconditionally agrees that, notwithstanding the governing law provisions of any
applicable Loan Document, any claims brought against the Administrative Agent by any Lender relating to this Agreement, any other Loan Document or the consummation or
administration of the transactions contemplated hereby or thereby shall be construed in accordance with and governed by the law of the State of New York.
(c) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the United States District Court
for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in
the Borough of Manhattan), and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document or the
transactions relating hereto or thereto, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may (and any such claims, cross-claims or third party claims brought against the Administrative Agent or any of its Related Parties may
only) be heard and determined in such Federal (to the extent permitted by law) or New York State court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other
Loan Document shall affect any right that the Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this
Agreement against the Borrower or its properties in the courts of any jurisdiction.
(d) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now
or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in
paragraph (c) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(e) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner permitted by law.
9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN
83
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
9.11.
Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this Agreement.
9.12.
Confidentiality. Each of the Administrative Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality of the Information (as defined below),
except that Information may be disclosed to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential),
to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), to the extent
required by applicable laws or regulations or by any subpoena or similar legal process, to any other party to this Agreement, in connection with the exercise of any remedies
hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder or under any other Loan Document,
subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement or any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its
obligations, on a confidential basis to any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided for herein, the CUSIP Service
Bureau or any similar agency in connection with the issuance and monitoring of identification numbers with respect to the credit facilities provided for herein or (iii) insurers,
reinsurers and brokers to the Administrative Agent, the Issuing Banks or any Lender, with the consent of the Borrower or to the extent such Information becomes publicly available
other than as a result of a breach of this Section or becomes available to the Administrative Agent, any Issuing Bank or any Lender on a non-confidential basis from a source other
than the Borrower. For the purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such
information that is available to the Administrative Agent, any Issuing Bank or any Lender on a non-confidential basis prior to disclosure by the Borrower and other than information
pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of
information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to its own confidential information.
9.13. Material Non-Public Information. (a) EACH LENDER ACKNOWLEDGES THAT INFORMATION AS DEFINED IN Section 9.12 FURNISHED TO IT
PURSUANT TO THIS AGREEMENT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING THE BORROWER AND ITS RELATED PARTIES OR
THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-
PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND
APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
(b) ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE BORROWER OR THE ADMINISTRATIVE
AGENT PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN
MATERIAL NON-PUBLIC INFORMATION ABOUT THE BORROWER AND ITS RELATED PARTIES OR ITS SECURITIES. ACCORDINGLY, EACH LENDER
REPRESENTS TO THE BORROWER AND THE ADMINISTRATIVE AGENT THAT IT HAS IDENTIFIED IN ITS
84
ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION
IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW.
9.14.
Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and
other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which
may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan
hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been
payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of
other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the NYFRB Rate to the date of
repayment, shall have been received by such Lender.
9.15.
No Fiduciary Duty, etc. (a) The Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that no Credit Party will have any
obligations except those obligations expressly set forth herein and in the other Loan Documents and each Credit Party is acting solely in the capacity of an arm’s length contractual
counterparty to the Borrower with respect to the Loan Documents and the transactions contemplated herein and therein and not as a financial advisor or a fiduciary to, or an agent of,
the Borrower or any other person. The Borrower agrees that it will not assert any claim against any Credit Party based on an alleged breach of fiduciary duty by such Credit Party in
connection with this Agreement and the transactions contemplated hereby. Additionally, the Borrower acknowledges and agrees that no Credit Party is advising the Borrower as to
any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction. The Borrower shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the transactions contemplated herein or in the other Loan Documents, and the Credit Parties shall have no
responsibility or liability to the Borrower with respect thereto.
(b) The Borrower further acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party, together with its Affiliates, is a full
service securities or banking firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course
of business, any Credit Party may provide investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity,
debt and other securities and financial instruments (including bank loans and other obligations) of, the Borrower and other companies with which the Borrower may have
commercial or other relationships. With respect to any securities and/or financial instruments so held by any Credit Party or any of its customers, all rights in respect of such
securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.
(c)
In addition, the Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party and its affiliates may be providing
debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which the Borrower may have conflicting interests regarding
the transactions described herein and otherwise. No Credit Party will use confidential information obtained from the Borrower by virtue of the transactions contemplated by the
Loan Documents or its other relationships with the Borrower in connection with the performance by such Credit Party of services for other companies, and no Credit Party will
furnish any such information to other companies. The Borrower also acknowledges that no Credit Party has any obligation to use in connection with the transactions contemplated
by the Loan Documents, or to furnish to the Borrower, confidential information obtained from other companies.
9.16.
pursuant to the
USA PATRIOT Act. Each Lender that is subject to the requirements of the USA PATRIOT Act of 2001 (the “Patriot Act”) hereby notifies the Borrower that
85
requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower
and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.
9.17.
Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other
agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan
Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound
by:
(a)
the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to
it by any party hereto that is an Affected Financial Institution; and
(b)
the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a
bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with
respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
9.18.
Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Swap
Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree
as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC
Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State
of New York and/or of the United States or any other state of the United States):
In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the
transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any
rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under
the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the
United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special
Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such
Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and
the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and
remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
86
9.19.
Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one
currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first
currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrower in respect of any such sum due from it to
the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than
that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the
Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative
Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the
Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from the Borrower in the Agreement Currency, the Borrower
agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount
of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such
Lender, as the case may be, agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).
9.20.
Payments Set Aside. To the extent that the Borrower makes a payment or payments to the Administrative Agent or any Lender, or Administrative Agent or any
Lender exercises its rights of set-off, and such payment or payments or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or any Lender in its discretion) to be repaid to a trustee, receiver or
any other party in connection with any bankruptcy, insolvency or similar proceeding, or otherwise, then (a) to the extent of such recovery, the obligation hereunder or part thereof
originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred and
(b) each Lender severally agrees to pay to the Administrative Agent upon demand its ratable share of the total amount so recovered from or repaid by the Administrative Agent to
the extent paid to such Lender.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective authorized officers as of the day and year
first above written.
BALTIMORE GAS AND ELECTRIC COMPANY,
By:
Name:
Title:
JPMORGAN CHASE BANK, N.A., as Administrative Agent, and a
Lender,
By:
Name:
Title:
[LENDERS],
By:
Name:
Title:
J.P. Morgan Chase Bank, N.A.
Bank of America, N.A.
Barclays Bank PLC
BNP Paribas
Citibank, N.A.
Goldman Sachs Bank USA
Morgan Stanley Bank, N.A.
The Bank of Nova Scotia
Credit Agricole Corporate & Investment Bank
Credit Suisse AG, New York Branch
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
PNC Bank, National Association
Royal Bank of Canada
Sumitomo Mitsui Banking Corporation
U.S. Bank National Association
Wells Fargo Bank, National Association
Banco Santander, S.A., New York Branch
Bank of China, Chicago Branch
M&T Bank
The Bank of New York Mellon
The Huntington National Bank
The Northern Trust Company
TOTAL
SCHEDULE 2.01A
Commitments
Lender
89
Commitment
$34,500,000.00
$34,500,000.00
$34,500,000.00
$34,500,000.00
$34,500,000.00
$34,500,000.00
$34,500,000.00
$34,500,000.00
$26,550,000.00
$26,550,000.00
$26,550,000.00
$26,550,000.00
$26,550,000.00
$26,550,000.00
$26,550,000.00
$26,550,000.00
$26,550,000.00
$14,175,000.00
$14,175,000.00
$14,175,000.00
$14,175,000.00
$14,175,000.00
$14,175,000.00
$600,000,00.00
SCHEDULE 2.01C
Letter of Credit Commitments
Lender
J.P. Morgan Chase Bank, N.A.
Bank of America, N.A.
Barclays Bank PLC
BNP Paribas Securities Corp.
Citibank, N.A.
Goldman Sachs Bank USA
The Bank of Nova Scotia
Morgan Stanley Bank, N.A.
TOTAL
Commitment
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$13,750,000.00
$110,000,000.00
Nothing other than what has been previously disclosed in the Borrower’s Annual Report
on Form 10-K for the year ended December 31, 2020, Quarterly Reports on Form 10-Q for the
periods ending March 31, 2021, June 30, 2021 and September 30, 2021, and Periodic Reports on
Form 8-K filed by the Borrower with the United States Securities and Exchange Commission
during the period between January 1, 2021 and the date hereof.
SCHEDULE 3.06
Disclosed Matters
None.
SCHEDULE 6.04
Existing Restrictions
Execution Version
$1,000,000,000
CREDIT AGREEMENT
dated as of
February 1, 2022
among
COMMONWEALTH EDISON COMPANY
the Lenders Party Hereto
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
___________________________
BANK OF AMERICA, N.A., BARCLAYS BANK PLC, BNP PARIBAS SECURITIES CORP., CITIBANK, N.A., GOLDMAN SACHS BANK USA,
MORGAN STANLEY SENIOR FUNDING, INC., and THE BANK OF NOVA SCOTIA,
as Co-Documentation Agents
___________________________
JPMORGAN CHASE BANK, N.A., BOFA SECURITIES, INC., BARCLAYS BANK PLC, BNP PARIBAS SECURITIES CORP., CITIBANK, N.A., GOLDMAN SACHS BANK
USA,
MORGAN STANLEY SENIOR FUNDING, INC., and THE BANK OF NOVA SCOTIA,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions
Section 1.01. Defined Terms
Section 1.02. Classification of Loans and Borrowings
Section 1.03. Terms Generally
Section 1.04. Accounting Terms; GAAP
Section 1.05. Interest Rates; Benchmark Notification
Section 1.06. Letter of Credit Amounts
Section 1.07. Divisions
ARTICLE 2 The Credits
Section 2.01. Commitments
Section 2.02. Loans and Borrowings
Section 2.03. Requests for Revolving Borrowings
Section 2.04. Optional Increases in Commitments
Section 2.05. [Reserved]
Section 2.06. Letters of Credit
Section 2.07. Funding of Borrowings
Section 2.08. Interest Elections
Section 2.09. Termination and Reduction of Commitments
Section 2.10. Repayment of Loans; Evidence of Indebtedness
Section 2.11. Prepayment of Loans
Section 2.12. Fees
Section 2.13. Interest
Section 2.14. Alternate Rate of Interest
Section 2.15. Increased Costs
Section 2.16. Break Funding Payments
Section 2.17. Withholding of Taxes; Gross-Up
Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs
Section 2.19. Mitigation Obligations; Replacement of Lenders
Section 2.20. Defaulting Lenders
Section 2.21. Extension of Maturity Date
ARTICLE 3 Representations and Warranties
Section 3.01. Organization; Powers
Section 3.02. Authorization; Enforceability
Section 3.03. Governmental Approvals; No Conflicts
i
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1
29
30
30
31
31
31
31
31
32
32
33
34
34
38
39
40
40
41
41
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46
47
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52
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Section 3.04. Financial Condition; No Material Adverse Effect
Section 3.05. Reserved
Section 3.06. Litigation and Environmental Matters
Section 3.07. Compliance with Laws and Agreements
Section 3.08. Investment Company Status
Section 3.09. Taxes
Section 3.10. ERISA
Section 3.11. Beneficial Ownership
Section 3.12. Reserved
Section 3.13. Anti-Corruption Laws and Sanctions
Section 3.14. Affected Financial Institutions
Section 3.15. Reserved
Section 3.16. Margin Regulations
Section 3.17. Reserved
Section 3.18. Exchange Act
ARTICLE 4 Conditions
Section 4.01. Effective Date
Section 4.02. Each Credit Event
ARTICLE 5 Affirmative Covenants
Section 5.01. Financial Statements; Ratings Change and Other Information
Section 5.02. Notices of Material Events
Section 5.03. Existence; Conduct of Business
Section 5.04. Payment of Obligations
Section 5.05. Maintenance of Properties; Insurance
Section 5.06. Books and Records; Inspection Rights
Section 5.07. Compliance with Laws
Section 5.08. Use of Proceeds and Letters of Credit
Section 5.09. Accuracy of Information
ARTICLE 6 Negative Covenants
Section 6.01. Liens
Section 6.02. Fundamental Changes; Mergers and Consolidations; Disposition of Assets
Section 6.03. Continuation of Businesses
Section 6.04. Restrictive Agreements
Section 6.05. Consolidated Capitalization Ratio
ii
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58
59
59
59
59
59
59
59
59
59
60
60
61
61
61
63
64
64
64
64
64
65
65
65
65
67
68
68
68
ARTICLE 7 Events of Default
Section 7.01. Events of Default
Section 7.02. Remedies Upon an Event of Default
Section 7.03. Application of Payments
ARTICLE 8 The Administrative Agent
Section 8.01. Authorization and Action
Section 8.02. Administrative Agent’s Reliance, Limitation of Liability, Etc
Section 8.03. Posting of Communications
Section 8.04. The Administrative Agent Individually
Section 8.05. Successor Administrative Agent
Section 8.06. Acknowledgements of Lenders and Issuing Banks
Section 8.07. [Reserved]
Section 8.08. [Reserved]
Section 8.09. Certain ERISA Matters
ARTICLE 9 Miscellaneous
Section 9.01. Notices
Section 9.02. Waivers; Amendments
Section 9.03. Expenses; Limitation of Liability; Indemnity, Etc
Section 9.04. Successors and Assigns
Section 9.05. Survival
Section 9.06. Counterparts; Integration; Effectiveness; Electronic Execution
Section 9.07. Severability
Section 9.08. Right of Setoff
Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process
Section 9.10. WAIVER OF JURY TRIAL
Section 9.11. Headings
Section 9.12. Confidentiality
Section 9.13. Material Non-Public Information
Section 9.14. Interest Rate Limitation
Section 9.15. No Fiduciary Duty, etc
Section 9.16. USA PATRIOT Act
Section 9.17. Acknowledgement and Consent to Bail-In of Affected Financial Institutions
Section 9.18. Acknowledgement Regarding Any Supported QFCs
Section 9.19. Judgment Currency
Section 9.20. Payments Set Aside
iii
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95
SCHEDULES:
Schedule 2.01A – Commitments
Schedule 2.01C – Letter of Credit Commitments
Schedule 3.06 – Disclosed Matters
Schedule 6.04 – Existing Restrictions
EXHIBITS:
Exhibit A – Form of Assignment and Assumption
Exhibit B – Form of Borrowing Request
Exhibit C – Form of Interest Election Request
Exhibit D – Form of Opinion of Borrower’s Counsel
Exhibit E – Form of Compliance Certificate
Exhibit F-1 – U.S. Tax Certificate (For Non-U.S. Lenders that are not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-2 – U.S. Tax Certificate (For Non-U.S. Lenders that are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-3 – U.S. Tax Certificate (For Non-U.S. Participants that are not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit F-4 – U.S. Tax Certificate (For Non-U.S. Participants that are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit G – Incremental Request
iv
CREDIT AGREEMENT dated as of February 1, 2022 (this “Agreement”), among Borrower (as defined herein), the Lenders party hereto, and JPMORGAN CHASE
BANK, N.A., as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.01.
Defined Terms. As used in this Agreement, the following terms have the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by
reference to the Alternate Base Rate.
“Additional Lender” has the meaning given to such term in Section 2.04.
“Adjusted Daily Simple SOFR Rate” means an interest rate per annum equal to (a) the Daily Simple SOFR Rate, plus (b) 0.10%; provided that if the Adjusted Daily Simple
SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Adjusted Term SOFR Rate” means, for any Interest Period, an interest rate per annum equal to (a) the Term SOFR Rate for such Interest Period, plus (b) 0.10%; provided
that if the Adjusted Term SOFR Rate as so determined would be less than the Floor, such rate shall be deemed to be equal to the Floor for the purposes of this Agreement.
“Administrative Agent” means JPMorgan Chase Bank, N.A. (or any of its designated branch offices or affiliates), in its capacity as administrative agent for the Lenders
hereunder.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.
“Agent-Related Person” has the meaning assigned to it in Section 9.03(d).
“Agreement” has the meaning specified in introductory paragraph hereof.
“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus
½ of 1% and (c) the Adjusted Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a
Business Day, the immediately preceding Business Day) plus 1%; provided that for the purpose of this definition, the Adjusted Term SOFR Rate for any day shall be based on the
Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME
Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the
Adjusted Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted Term SOFR Rate,
respectively. If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 (for the avoidance of doubt, only until the Benchmark
1
Replacement has been determined pursuant to Section 2.14(b)), then the Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without
reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to
be 1.00% for purposes of this Agreement.
“Ancillary Document” has the meaning assigned to it in Section 9.06(b).
“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or
relating to bribery or corruption.
“Applicable Party” has the meaning assigned to it in Section 8.03(c).
“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender’s Commitment; provided that, in the case
of Section 2.20 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the total Commitments (disregarding any Defaulting Lender’s
Commitment) represented by such Lender’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the
Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.
“Applicable Rate” means, for any day, with respect to any ABR Loan or Term Benchmark Revolving Loan, RFR Revolving Loan or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Applicable Rate for Term Benchmark Revolving Loans and LC Fee Rate”,
“Applicable Rate for ABR Loans” or “Facility Fee Rate”, as the case may be, based upon the ratings by Moody’s, S&P and Fitch, respectively, applicable on such date to the Pricing
Level:
Pricing Level
I
II
III
IV
V
VI
Index Debt Rating
S&P/Moody’s/Fitch
>A1/A+/A+
A2/A/A
A3/A-/A-
Baa1/BBB+/BBB+
Baa2/BBB/BBB