RECEIVABLES PURCHASE AGREEMENT
dated as of September 28, 1999
Among
KN RECEIVABLES CORPORATION ,
as Seller,
FALCON ASSET SECURITIZATION CORPORATION,
INTERNATIONAL SECURITIZATION CORPORATION
and
THE FINANCIAL INSTITUTIONS PARTY HERETO,
as Investors
BANK ONE, NA,
as Agent
TABLE OF CONTENTS
ARTICLE I
PURCHASE ARRANGEMENTS 1
Section 1.1 Purchase Facility 1
Section 1.2 Increases 2
Section 1.3 Decreases 2
Section 1.4 Payment Requirements 2
ARTICLE II
PAYMENTS AND COLLECTIONS 3
Section 2.1 Payments 3
Section 2.2 Collections Prior to Amortization 3
Section 2.3 Collections Following Amortization 4
Section 2.4 Application of Collections 4
Section 2.5 Seller's Interest 5
Section 2.6 Payment Rescission 6
Section 2.7 Purchaser Interests 6
ARTICLE III
CONDUIT FUNDING 6
Section 3.1 CP Costs 6
Section 3.2 CP Costs Payments 6
Section 3.3 Calculation of CP Costs 7
ARTICLE IV
FINANCIAL INSTITUTION FUNDING 7
Section 4.1 Financial Institution Funding 7
Section 4.2 Financial Institution Discount Payments
7
Section 4.3 Selection and Continuation of Tranche
Periods 7
Section 4.4 Financial Institution Discount Rates
8
Section 4.5 Suspension of the LIBO Rate 8
ARTICLE V
REPRESENTATIONS AND WARRANTIES 8
Section 5.1 Representations and Warranties of Seller
Parties 8
Section 5.2 Financial Institution Representations
and Warranties 12
ARTICLE VI
CONDITIONS OF PURCHASES 13
Section 6.1 Conditions Precedent to Initial
Incremental Purchase 13
Section 6.2 Conditions Precedent to All Purchases
and Reinvestments 13
ARTICLE VII
COVENANTS 14
Section 7.1 Affirmative Covenants of Seller 14
Section 7.2 Negative Covenants of Seller 21
ARTICLE VIII
ADMINISTRATION AND COLLECTION 23
Section 8.1 Designation of Servicer 23
Section 8.2 Duties of Servicer 24
Section 8.3 Collection Notices 25
Section 8.4 Responsibilities of Seller 26
Section 8.5 Reports 26
Section 8.6 Servicing Fees 26
ARTICLE IX
AMORTIZATION EVENTS 26
Section 9.1 Amortization Events 26
Section 9.2 Remedies 29
ARTICLE X
INDEMNIFICATION 29
Section 10.1 INDEMNITIES BY SELLER 29
Section 10.2 Increased Cost and Reduced Return 33
Section 10.3 OTHER COSTS AND EXPENSES 34
ARTICLE XI
THE AGENT 34
Section 11.1 Authorization and Action 34
Section 11.2 Delegation of Duties 35
Section 11.3 Exculpatory Provisions 35
Section 11.4 Reliance by Agent 35
Section 11.5 Non-Reliance on Agent and Other
Purchasers 36
Section 11.6 Reimbursement and Indemnification 36
Section 11.7 Agent in its Individual Capacity 36
Section 11.8 Successor Agent 36
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS 37
Section 12.1 Assignments 37
Section 12.2 Participations 38
ARTICLE XIII
LIQUIDITY FACILITY 38
Section 13.1 Transfer to Financial Institutions 38
Section 13.2 Transfer Price Reduction Yield 39
Section 13.3 Payments to Conduits 39
Section 13.4 Limitation on Commitment to Purchase
from Conduits 39
Section 13.5 Defaulting Financial Institutions 39
Section 13.6 Terminating Financial Institutions 40
ARTICLE XIV
MISCELLANEOUS 41
Section 14.1 Waivers and Amendments 41
Section 14.2 Notices 42
Section 14.3 Ratable Payments 42
Section 14.4 Protection of Ownership Interests of the
Purchasers 42
Section 14.5 Confidentiality 43
Section 14.6 Bankruptcy Petition 44
Section 14.7 Limitation of Liability 44
Section 14.8 CHOICE OF LAW 44
Section 14.9 CONSENT TO JURISDICTION 44
Section 14.10 WAIVER OF JURY TRIAL 45
Section 14.11 Integration; Binding Effect; Survival of
Terms 45
Section 14.12 Counterparts; Severability; Section
References 45
Section 14.13 Bank One Roles 45
Section 14.14 Characterization 46
EXHIBITS AND SCHEDULES
Exhibit I Definitions
Exhibit II Form of Purchase Notice
Exhibit III Places of Business of the Seller Parties;
Locations of Records; Federal Employer
Identification Number(s)
Exhibit IV Names of Collection Banks; Collection Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Collection Account Agreement
Exhibit VII Form of Assignment Agreement
Exhibit VIII Credit and Collection Policy
Exhibit IX Form of Contract(s)
Exhibit X Form of Monthly Report
Schedule A Commitments of Financial Institutions
Schedule B Documents to be Delivered to the Agent
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement dated as of September
28, 1999 is among KN Receivables Corporation, a Delaware
corporation ("Seller"), the funding entities listed on Schedule A
to this Agreement (together with any of their respective
successors and assigns hereunder, the "Financial Institutions"),
Falcon Asset Securitization Company ("FALCON") and International
Securitization Corporation ("ISC"), (FALCON and ISC each being
referred to individually as a "Conduit" and collectively as the
"Conduits," and together with the Financial Institutions, the
"Purchasers") and Bank One, NA, as agent for the Purchasers
hereunder or any successor agent hereunder (together with its
successors and assigns hereunder, the "Agent"). Unless defined
elsewhere herein, capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Purchaser Interests to
the Purchasers from time to time.
The Conduits may, in their absolute and sole discretion,
purchase Purchaser Interests from Seller from time to time.
In the event that either Conduit declines to make any
purchase, the Financial Institutions shall, at the request of
Seller, purchase Purchaser Interests from time to time. In
addition, the Financial Institutions have agreed to provide a
liquidity facility to the Conduits in accordance with the terms
hereof.
Bank One, NA has been requested and is willing to act as
Agent on behalf of Conduits and the Financial Institutions in
accordance with the terms hereof.
1 ARTICLE PURCHASE ARRANGEMENTSARTICLE
2 PURCHASE ARRANGEMENTS
1.1 Section Purchase Facility .
1.2
(a) Upon the terms and subject to the conditions
hereof, Seller may, at its option, sell and assign Purchaser
Interests to the Agent for the benefit of one or more of the
Purchasers. In accordance with the terms and conditions set
forth herein, each Conduit may, at its option, instruct the Agent
to purchase on its behalf, or if such Conduit shall decline to
purchase, the Agent shall purchase, on behalf of the Financial
Institutions, Purchaser Interests from time to time in an
aggregate amount not to exceed at such time the lesser of (i) the
Purchase Limit and (ii) the aggregate amount of the Commitments
during the period from the date hereof to but not including the
Facility Termination Date.
(a) Seller may, upon at least 10 Business Days' notice
to the Agent, terminate in whole or reduce in part, ratably among
the Financial Institutions, the unused portion of the Purchase
Limit; provided that each partial reduction of the Purchase Limit
shall be in an amount equal to $5,000,000 or an integral multiple
thereof.
(b)
1.2 Section Increases . Seller shall provide the Agent
with at least two Business Days' prior notice in a form set forth
as Exhibit II hereto of each Incremental Purchase (a "Purchase
Notice"). Each Purchase Notice shall be subject to Section 6.2
hereof and, except as set forth below, shall be irrevocable and
shall specify the requested Purchase Price (which shall not be
less than $10,000,000) and date of purchase (which, in the case
of any Incremental Purchase (after the initial Incremental
Purchase hereunder), shall only be on a Settlement Date) and, in
the case of an Incremental Purchase to be funded by the Financial
Institutions, the requested Discount Rate and Tranche Period.
Following receipt of a Purchase Notice, the Agent will determine
whether either Conduit individually or both Conduits collectively
agree to make the entire proposed purchase. If the Conduits
decline to make the entire proposed purchase, Seller may cancel
the Purchase Notice or, in the absence of such a cancellation,
the portion of the Incremental Purchase of Purchaser Interests
that is not being made by the Conduits will be made by the
Financial Institutions. On the date of each Incremental
Purchase, upon satisfaction of the applicable conditions
precedent set forth in Article VI, each purchasing Conduit or
Financial Institution, as applicable, shall deposit to the
Facility Account, in immediately available funds, no later than
12:00 noon (Chicago time), an amount equal to (i) in the case of
a Conduit, such Conduit's share of the aggregate Purchase Price
of the Purchaser Interests Conduits are purchasing and (ii) in
the case of a Financial Institution, such Financial Institution's
Pro Rata Share of the aggregate Purchase Price of the Purchaser
Interests the Financial Institutions are purchasing.
1.3
1.4 Section Decreases . Seller shall provide the Agent
with prior written notice in conformity with the Required Notice
Period (a "Reduction Notice") of any proposed reduction of
Aggregate Capital from Collections. Such Reduction Notice shall
designate (i) the date (the "Proposed Reduction Date") upon which
any such reduction of Aggregate Capital shall occur (which date
shall give effect to the applicable Required Notice Period), and
(ii) the amount of Aggregate Capital to be reduced which shall be
applied ratably to the Purchaser Interests of the Conduits and
the Financial Institutions in accordance with the amount of
Capital (if any) owing to Conduits (ratably, based on their
respective Conduit Shares), on the one hand, and the amount of
Capital (if any) owing to the Financial Institutions (ratably,
based on their respective Pro Rata Shares), on the other hand
(the "Aggregate Reduction"). Only one (1) Reduction Notice shall
be outstanding at any time. No Aggregate Reduction will be made
following the occurrence of the Amortization Date without the
consent of the Agent.
1.1 Section Payment Requirements . All amounts to be paid
or deposited by Seller or Servicer pursuant to any provision of
this Agreement shall be paid or deposited in accordance with the
terms hereof no later than 11:00 a.m. (Chicago time) on the day
when due in immediately available funds, and if not received
before 11:00 a.m. (Chicago time) shall be deemed to be received
on the next succeeding Business Day. If such amounts are payable
to a Purchaser they shall be paid to the Agent, for the account
of such Purchaser, at ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
until otherwise notified by the Agent. Upon notice to Seller,
the Agent may debit the Facility Account for all amounts due and
payable hereunder. All computations of Financial Institution
Discount Rate, per annum fees calculated as part of any CP Costs,
per annum fees hereunder and per annum fees under the Fee Letter
shall be made on the basis of a year of 360 days for the actual
number of days elapsed. If any amount hereunder shall be payable
on a day which is not a Business Day, such amount shall be
payable on the next succeeding Business Day.
1.2
1.3
2 ARTICLE PAYMENTS AND COLLECTIONSARTICLE
3 PAYMENTS AND COLLECTIONS
1.1 Section Payments . Notwithstanding any limitation on
recourse contained in this Agreement, Seller shall immediately
pay to the Agent when due, for the account of the relevant
Purchaser or Purchasers on a full recourse basis, (i) such fees
as set forth in the Fee Letter (which fees shall be sufficient to
pay all fees owing to the Financial Institutions), (ii) all
amounts payable as Deemed Collections (which shall be immediately
due and payable by Seller and applied to reduce outstanding
Aggregate Capital hereunder in accordance with Sections 2.2 and
2.3 hereof), (iii) all amounts payable pursuant to Article X, if
any, (iv) all Servicer costs and expenses, including the
Servicing Fee, in connection with servicing, administering and
collecting the Receivables to the extent not paid directly to the
Servicer, (v) all Broken Funding Costs and (vi) all Default Fees
(collectively, the "Recourse Obligations"). If any Person fails
to pay any of the Recourse Obligations when due, such Person
agrees to pay, on demand, the Default Fee in respect thereof
until paid. CP Costs and all amounts payable as Financial
Institution Discount (collectively, the "Non-Recourse
Obligations") are payable only to the extent of Available Funds
as provided in Section 2.4. If the Non-Recourse Obligations are
not paid when due, the Default Fee shall accrue on such unpaid
amounts and shall be payable on the next date on which Non-
Recourse Obligations are payable. Notwithstanding the foregoing,
no provision of this Agreement or the Fee Letter shall require
the payment or permit the collection of any amounts hereunder in
excess of the maximum permitted by applicable law. If at any
▇▇▇▇ ▇▇▇▇▇▇ receives any Collections or is deemed to receive any
Collections, Seller shall immediately pay such Collections or
Deemed Collections to the Servicer for application in accordance
with the terms and conditions hereof and, at all times prior to
such payment, such Collections or Deemed Collections shall be
held in trust by Seller for the exclusive benefit of the
Purchasers and the Agent.
1.1 Section Collections Prior to Amortization . (a) On
each day prior to the Amortization Date, the Servicer shall set
aside and hold in trust the Purchasers' Collections for the
payment of any accrued and unpaid Aggregate Unpaids pursuant to
Section 2.4 or for a Reinvestment as provided in this Section
2.2. At any time any Collections or Deemed Collections are
received by the Servicer prior to the Amortization Date, (i) the
Servicer shall set aside such portion of the Purchasers'
Collections as shall be required to pay the amounts specified
pursuant to clauses first through eighth in Section 2.4, and (ii)
Seller hereby requests and the Purchasers (other than any
Terminating Financial Institutions) hereby agree to make,
simultaneously with such receipt, a reinvestment (each a
"Reinvestment") with that portion of the balance of each and
every Collection or Deemed Collection received by the Servicer
that is part of any Purchaser Interest (other than any Purchaser
Interests of Terminating Financial Institutions), such that after
giving effect to such Reinvestment, the amount of Capital of such
Purchaser Interest immediately after such receipt and
corresponding Reinvestment shall be equal to the amount of
Capital immediately prior to such receipt. On each Settlement
Date prior to the occurrence of the Amortization Date, the
Servicer shall remit to the Agent's account the amounts set aside
during the preceding Settlement Period that have not been subject
to a Reinvestment.
1.2
1.3 (b) Amounts set aside pursuant to clause seventh of
Section 2.4 to reduce the Capital of all Purchaser Interests of
Terminating Financial Institutions shall be applied ratably to
each Terminating Financial Institution according to its
respective Termination Percentage. Each Terminating Financial
Institution shall be allocated a ratable portion of the aggregate
Purchasers' Collections from the date of any assignment by any
Conduit pursuant to Section 13.6 (the "Termination Date") until
such Terminating Financing Institution's Capital shall be paid in
full. This ratable portion shall be calculated on the
Termination Date of each Terminating Financial Institution as a
percentage equal to (i) Capital of such Terminating Financial
Institution outstanding on its Termination Date, divided by (ii)
the Aggregate Capital outstanding on such Termination Date (the
"Termination Percentage"). Each Terminating Financial
Institution's Termination Percentage shall remain constant prior
to the Amortization Date. On and after the Amortization Date,
each Termination Percentage shall be disregarded, and each
Terminating Financial Institution's Capital shall be reduced
ratably with all Financial Institutions in accordance with
Section 2.3.
1.4
1.5 Section Collections Following Amortization . On the
Amortization Date and on each day thereafter, the Servicer shall
set aside and hold in trust, for the holder of each Purchaser
Interest, all the Purchasers' Collections.
1.6
1.7 Section Application of Collections . On each
Settlement Date, the Servicer shall distribute all Available
Funds with respect to the preceding Calculation Period in the
following order of priority, based upon the instructions set
forth in the Monthly Report prepared by the Servicer:
1.8
first, to the payment of the Servicer's reasonable out-
of-pocket costs and expenses in connection with servicing,
administering and collecting the Receivables incurred during
the related Accrual Period, including the servicing fee, if
Seller or one of its Affiliates is not then acting as the
Servicer;
second, any Available Funds remaining after the
application in clause first shall be applied to the
reimbursement of the Agent's costs of collection and
enforcement of this Agreement incurred during the related
Accrual Period;
third, any Available Funds remaining after the
applications in clauses first and second shall be applied
ratably for the ratable payment of all Non-Recourse
Obligations accrued during the related Accrual Period;
fourth, if the aggregate Purchaser Interests exceed
100% as of the last day of the related Calculation Period,
any Available Funds remaining after the applications in
clauses first through third shall be paid to the Agent in
reduction of Capital to the extent necessary to reduce the
aggregate Purchaser Interests to 100%;
fifth, if the Amortization Date occurs, any Available
Funds remaining after the applications in clauses first
through fourth shall be paid to the Agent in reduction of
Capital to the extent necessary to reduce Capital to zero;
sixth, any Available Funds remaining after the
applications in clauses first through fifth shall be applied
ratably for the ratable payment of all unpaid Recourse
Obligations accrued during the related Accrual Period,
provided that to the extent such Recourse Obligations relate
to the payment of Servicer costs and expenses, including the
Servicing Fee, when Seller or one of its Affiliates is
acting as the Servicer, such costs and expenses will not be
paid until after the payment in full of all other Recourse
Obligations;
seventh, if prior to the Amortization Date there are
one or more Terminating Financial Institutions with
Purchaser Interests greater than zero, an amount equal to
the product of (A) the sum of the Termination Percentages
for each of the Terminating Financial Institutions and (B)
the Available Funds remaining after the applications in
clauses first through sixth shall be paid to such
Terminating Financial Institutions in accordance with
Section 2.2(b) until such time as the Capital of all such
Purchaser Interests have been reduced to zero;
eighth, any Available Funds remaining after the
applications in clauses first through seventh shall be
applied ratably for the payment to the Servicer of the
Servicing Fee specified in Section 8.6; and
ninth, all remaining Available Funds shall (A) prior to
the Amortization Date, be set aside and held in trust by the
Servicer for a Reinvestment as provided in Section 2.2 and
(B) on and after the Amortization Date, be paid to Seller.
Collections applied to the payment of Aggregate Unpaids
shall be distributed in accordance with the aforementioned
provisions, and, giving effect to each of the priorities set
forth in Section 2.4 above, shall be shared ratably (within each
priority) among the Agent and the Purchasers in accordance with
the amount of such Aggregate Unpaids owing to each of them in
respect of each such priority.
1.1 Section Seller's Interest . The Servicer shall turn
over to the Seller any Collections which do not constitute
Purchasers' Collections, less all reasonable costs and expenses
of the Servicer for servicing, collecting and administering the
portion of the Receivables represented by such Collections.
1.2
1.3 Section Payment Rescission . No payment of any of the
Aggregate Unpaids shall be considered paid or applied hereunder
to the extent that, at any time, all or any portion of such
payment or application is rescinded by application of law or
judicial authority, or must otherwise be returned or refunded for
any reason. Seller shall remain obligated for the amount of any
payment or application so rescinded, returned or refunded, and
shall promptly pay to the Agent (for application to the Person or
Persons who suffered such recission, return or refund) the full
amount thereof, plus the Default Fee from the date of any such
recission, return or refunding; provided, however, that Seller
shall not be obligated to make any such payment to the Agent to
the extent that (i) such recission, return or refund arises in a
bankruptcy or insolvency proceeding of an Obligor, (ii) such
recission, return or refund relates to a Collection on a
Receivable previously received by the Servicer and (iii) the
Agent would not have received a corresponding payment out of
other Collections in the normal course pursuant to Section 2.4
(and the computations of the amounts to be paid pursuant thereto)
if such refunded Receivable (or portion thereof) had not been
collected in the first instance.
1.4
1.5 Section Purchaser Interests . Seller shall ensure that
the Purchaser Interests of the Purchaser shall at no time exceed
in the aggregate 100%, unless and only to the extent that such
excess results from a reduction in the Net Receivables Balance as
a result of a Receivable being written off as uncollectible. If
the aggregate of the Purchaser Interests of the Purchasers so
exceeds 100%, Seller shall pay to the Agent within one (1)
Business Day an amount to be applied to reduce the Aggregate
Capital (as allocated by the Agent), such that after giving
effect to such payment the aggregate of the Purchaser Interests
equals or is less than 100% as so calculated.
1.6
1 ARTICLE CONDUIT FUNDINGARTICLE
2 CONDUIT FUNDING
1.1 Section CP Costs . To the extent of Available Funds as
provided in clause third of Section 2.4, CP Costs shall accrue
with respect to the Capital associated with each Purchaser
Interest of each Conduit for each day that any Capital in respect
of such Purchaser Interest is outstanding. Each Purchaser
Interest of a Conduit funded substantially with Pooled Commercial
Paper will accrue CP Costs each day on a pro rata basis, based
upon the percentage share that the Capital in respect of such
Purchaser Interest represents in relation to all assets held by
such Conduit and funded substantially with Pooled Commercial
Paper.
1.1 Section CP Costs Payments . On each Yield Settlement
Date, the Servicer shall advance out of the Purchasers'
Collections to the Agent (for the benefit of each Conduit) an
aggregate amount equal to all accrued and unpaid CP Costs in
respect of the Capital associated with all Purchaser Interests of
such Conduit for the immediately preceding Accrual Period and all
other Yield Settlement Obligations in accordance with Article II.
The Servicer shall recoup such advance from the amounts set aside
for such Yield Settlement Date Obligations pursuant to the
applicable clause of Section 2.4.
1.2
1.3 Section Calculation of CP Costs . On the third
Business Day immediately preceding each Yield Settlement Date,
each Conduit shall calculate the aggregate amount of CP Costs for
the applicable Accrual Period and Agent shall notify Seller of
such aggregate amounts.
1.4
1 ARTICLE FINANCIAL INSTITUTION FUNDINGARTICLE
2 FINANCIAL INSTITUTION FUNDING
1.1 Section Financial Institution Funding . Each Purchaser
Interest of the Financial Institutions shall accrue Financial
Institution Discount for each day during its Tranche Period at
either the LIBO Rate or the Base Rate in accordance with the
terms and conditions hereof. Until Seller gives notice to the
Agent of another Discount Rate in accordance with Section 4.4,
the initial Discount Rate for any Purchaser Interest transferred
to the Financial Institutions pursuant to the terms and
conditions hereof shall be the Base Rate. If the Financial
Institutions acquire by assignment from any Conduit any Purchaser
Interest pursuant to Article XIII, each Purchaser Interest so
assigned shall each be deemed to have a new Tranche Period
commencing on the date of any such assignment.
1.1 Section Financial Institution Discount Payments . On
the Yield Settlement Date for each Purchaser Interest of the
Financial Institutions, the Servicer shall advance out of the
Purchasers' Collections to the Agent (for the benefit of the
Financial Institutions) an aggregate amount equal to the accrued
and unpaid Financial Institution Discount for the entire Tranche
Period of each such Purchaser Interest and all other Yield
Settlement Obligations then due and owing to the Financial
Institutions or the Agent in accordance with Article II. The
Servicer shall recoup such advance from the amounts set aside for
such Yield Settlement Date Obligations pursuant to the applicable
clause of Section 2.4.
1.2
(a) Section Selection and Continuation of Tranche Periods .
With consultation from (and approval not to be unreasonably
withheld by) the Agent, Seller shall from time to time request
Tranche Periods for the Purchaser Interests of the Financial
Institutions, provided that, if at any time the Financial
Institutions shall have a Purchaser Interest, Seller shall always
request Tranche Periods such that at least one Tranche Period
shall end on the date specified in Clause (A) of the definition
of Settlement Date.
(b)
(c) Seller or the Agent, upon notice to and consent by
the other received at least three (3) Business Days prior to the
end of a Tranche Period (the "Terminating Tranche") for any
Purchaser Interest, may, effective on the last day of the
Termination Tranche: (i) divide any such Purchaser Interest into
multiple Purchaser Interests, (ii) combine any such Purchaser
Interest with one or more other Purchaser Interests that have a
Terminating Tranche ending on the same day as such Terminating
Tranche or (iii) combine any such Purchaser Interest with a new
Purchaser Interest to be purchased on the day such Terminating
Tranche ends, provided, that in no event may a Purchaser Interest
of a Conduit be combined with a Purchaser Interest of the
Financial Institutions.
(d)
1.3 Section Financial Institution Discount Rates . Seller
may select the LIBO Rate or the Base Rate for each Purchaser
Interest of the Financial Institutions. Seller shall by 11:00
a.m. (Chicago time): (i) at least three (3) Business Days prior
to the expiration of any Terminating Tranche with respect to
which the LIBO Rate is being requested as a new Discount Rate and
(ii) at least one (1) Business Day prior to the expiration of any
Terminating Tranche with respect to which the Base Rate is being
requested as a new Discount Rate, give the Agent irrevocable
notice of the new Discount Rate for the Purchaser Interest
associated with such Terminating Tranche. Until Seller gives
notice to the Agent of another Discount Rate, the initial
Discount Rate for any Purchaser Interest transferred to the
Financial Institutions pursuant to the terms and conditions
hereof shall be the Base Rate.
1.4
(a) Section Suspension of the LIBO Rate . If any
Financial Institution notifies the Agent that it has determined
that funding its Pro Rata Share of the Purchaser Interests of the
Financial Institutions at a LIBO Rate would violate any
applicable law, rule, regulation, or directive of any
governmental or regulatory authority, whether or not having the
force of law, or that (i) deposits of a type and maturity
appropriate to match fund its Purchaser Interests at such LIBO
Rate are not available or (ii) such LIBO Rate does not accurately
reflect the cost of acquiring or maintaining a Purchaser Interest
at such LIBO Rate, then the Agent shall suspend the availability
of such LIBO Rate and require Seller to select the Base Rate for
any Purchaser Interest accruing Financial Institution Discount
Rate at such LIBO Rate.
(b)
(c) If less than all of the Financial Institutions
give a notice to the Agent pursuant to Section 4.5, each
Financial Institution which gave such a notice shall be obliged,
at the request of Seller, any Conduit or the Agent, to assign all
of its rights and obligations hereunder to (i) another Financial
Institution or (ii) another funding entity nominated by Seller or
the Agent that is acceptable to the Conduit and willing to
participate in this Agreement through the Liquidity Termination
Date in the place of such notifying Financial Institution;
provided that (i) the notifying Financial Institution receives
payment in full, pursuant to an Assignment Agreement, of an
amount equal to such notifying Financial Institution's Pro Rata
Share of the Capital and Financial Institution Discount owing to
all of the Financial Institutions and all accrued but unpaid fees
and other costs and expenses payable in respect of its Pro Rata
Share of the Purchaser Interests of the Financial Institutions,
and (ii) the replacement Financial Institution otherwise
satisfies the requirements of Section 12.1(b).
(d)
1 ARTICLE REPRESENTATIONS AND WARRANTIESARTICLE
2 REPRESENTATIONS AND WARRANTIES
1.1 Section Representations and Warranties of Seller
Parties . Seller hereby represents and warrants to the Agent and
the Purchasers, as to itself, as of the date hereof and as of the
date of each Incremental Purchase and the date of each
Reinvestment that:
(a) Corporate Existence and Power. Such Seller is a
corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing as a foreign
corporation, and has and holds all corporate power and all
governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which
its business is conducted except where a failure to do so will
cause a Material Adverse Effect.
(b)
(c) Power and Authority; Due Authorization Execution
and Delivery. The execution and delivery by Seller of this
Agreement and each other Transaction Document to which it is a
party, and the performance of its obligations hereunder and
thereunder and, in the case of Seller, Seller's use of the
proceeds of purchases made hereunder, are within its corporate
powers and authority and have been duly authorized by all
necessary corporate action on its part. This Agreement and each
other Transaction Document to which Seller is a party has been
duly executed and delivered by Seller.
(d)
(e) No Conflict. The execution and delivery by Seller
of this Agreement and each other Transaction Document to which it
is a party, and the performance of its obligations hereunder and
thereunder do not contravene or violate (i) its certificate or
articles of incorporation or by-laws, (ii) any law, rule or
regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by
which it or any of its property is bound, or (iv) any order,
writ, judgment, award, injunction or decree binding on or
affecting it or its property, and do not result in the creation
or imposition of any Adverse Claim on assets of Seller or its
Subsidiaries (except as created hereunder); and no transaction
contemplated hereby requires compliance with any bulk sales act
or similar law.
(f)
(g) Governmental Authorization. Other than the filing
of the financing statements required hereunder, 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 and delivery by Seller of this Agreement and each
other Transaction Document to which it is a party and the
performance of its obligations hereunder and thereunder.
(h)
(i) Actions, Suits. There are no actions, suits or
proceedings pending, or to the best of such Seller Party's
knowledge, threatened, against or affecting Seller, or any of its
properties, in or before any court, arbitrator or other body,
that could reasonably be expected to have a Material Adverse
Effect. Seller is not in default with respect to any order of
any court, arbitrator or governmental body.
(j)
(k) Binding Effect. This Agreement and each other
Transaction Document to which Seller is a party constitute the
legal, valid and binding obligations of Seller enforceable
against Seller in accordance with their respective terms, except
as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or
limiting creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(l)
(m) Accuracy of Information. All information
heretofore furnished by Seller or any of its Affiliates to the
Agent or the Purchasers for purposes of or in connection with
this Agreement, any of the other Transaction Documents or any
transaction contemplated hereby or thereby is, and all such
information hereafter furnished by Seller or any of its
Affiliates to the Agent or the Purchasers will be, true and
accurate in every material respect on the date such information
is stated or certified and does not and will not contain any
material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not
misleading.
(n)
(o) Use of Proceeds. No proceeds of any purchase
hereunder will be used (i) for a purpose that violates, or would
be inconsistent with, Regulation T, U or X promulgated by the
Board of Governors of the Federal Reserve System from time to
time or (ii) to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of
1934, as amended.
(p)
(q) Good Title. Immediately prior to each purchase
hereunder, Seller shall be the legal and beneficial owner of the
Receivables and Related Security with respect thereto, free and
clear of any Adverse Claim, except as created by the Transaction
Documents. There have been duly filed all financing statements
or other similar instruments or documents necessary under the UCC
(or any comparable law) of all appropriate jurisdictions to
perfect Seller's ownership interest in each Receivable, its
Collections and the Related Security.
(r)
(s) Perfection. This Agreement, together with the
filing of the financing statements contemplated hereby, is
effective to, and shall, upon each purchase hereunder, transfer
to the Agent for the benefit of the relevant Purchaser or
Purchasers (and the Agent for the benefit of such Purchaser or
Purchasers shall acquire from Seller) a valid and perfected first
priority undivided percentage ownership or security interest in
each Receivable existing or hereafter arising and in the Related
Security and Collections with respect thereto, free and clear of
any Adverse Claim, except as created by the Transactions
Documents. There have been duly filed all financing statements
or other similar instruments or documents necessary under the UCC
(or any comparable law) of all appropriate jurisdictions to
perfect the Agent's (on behalf of the Purchasers) ownership
interest in the Receivables, the Related Security and the
Collections.
(t)
(u) Places of Business and Locations of Records. The
principal places of business and chief executive office of Seller
and the offices where it keeps all of its Records are located at
the address(es) listed on Exhibit III or such other locations of
which the Agent has been notified in accordance with Section
7.2(a) in jurisdictions where all action required by Section
14.4(a) has been taken and completed. Seller's Federal Employer
Identification Number is correctly set forth on Exhibit III.
(v)
(w) Collections. The conditions and requirements set
forth in Section 7.1(j) and Section 8.2 have at all times been
satisfied and duly performed. The names and addresses of all
Collection Banks, together with the account numbers of the
Collection Accounts of Seller at each Collection Bank and the
post office box number of each Lock-Box, are listed on Exhibit
IV. Seller has not granted any Person, other than the Agent as
contemplated by this Agreement, dominion and control of any Lock-
Box or Collection Account, or the right to take dominion and
control of any such account at a future time or upon the
occurrence of a future event.
(x)
(y) Material Adverse Effect. (i) The initial Servicer
represents and warrants that since June 30, 1999, no event has
occurred that would have a material adverse effect on the
financial condition or operations of the initial Servicer and its
Subsidiaries or the ability of the initial Servicer to perform
its obligations under this Agreement, and (ii) Seller represents
and warrants that since the date of this Agreement, no event has
occurred that would have a material adverse effect on (A) the
financial condition or operations of Seller, (B) the ability of
Seller to perform its obligations under the Transaction
Documents, or (C) the collectibility of the Receivables generally
or any material portion of the Receivables.
(z)
(aa) Names. In the past five (5) years, Seller has not
used any corporate names, trade names or assumed names other than
the name in which it has executed this Agreement.
(bb)
(cc) Ownership of Seller. KNEI owns, directly or
indirectly, 100% of the issued and outstanding capital stock of
Seller, free and clear of any Adverse Claim. Such capital stock
is validly issued, fully paid and nonassessable, and there are no
options, warrants or other rights to acquire securities of
Seller.
(dd)
(ee) Not a Holding Company or an Investment Company.
Seller is not a "holding company" or a "subsidiary holding
company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or any successor
statute. Seller is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or any
successor statute.
(ff)
(gg) Compliance with Law. Seller has complied in all
respects with all applicable laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may
be subject and with respect to which a failure to comply will
cause a Material Adverse Effect. Each Receivable, together with
the Contract related thereto, does not contravene any laws, rules
or regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy), and no part of such
Contract is in violation of any such law, rule or regulation.
(hh)
(ii) Compliance with Credit and Collection Policy.
Seller has complied in all material respects with the Credit and
Collection Policy with regard to each Receivable and the related
Contract, and has not made any change to such Credit and
Collection Policy, except such material change as to which the
Agent has been notified in accordance with Section 7.1(a)(vii).
(jj)
(kk) Payments to Originators. With respect to each
Receivable transferred to Seller under the Receivables Sale
Agreement, Seller has given reasonably equivalent value to the
applicable Originator in consideration therefor and such transfer
was not made for or on account of an antecedent debt. No
transfer by the Originators of any Receivable under the
Receivables Sale Agreement is or may be voidable under any
section of the Bankruptcy Reform Act of 1978 (11 U.S.C. 101 et
seq.), as amended.
(a) Enforceability of Contracts. Each Contract with
respect to each Receivable is effective to create, and has
created, a legal, valid and binding obligation of the related
Obligor to pay the Outstanding Balance of the Receivable created
thereunder and any accrued interest thereon, enforceable against
the Obligor in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting
creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
(b)
(c) Eligible Receivables. Each Receivable included in
the Net Receivables Balance as an Eligible Receivable on the date
of its purchase under the Receivables Sale Agreement was an
Eligible Receivable on such purchase date.
(d)
(e) Net Receivables Balance. Seller has determined
that, immediately after giving effect to each purchase hereunder,
the Net Receivables Balance is at least equal to the sum of
(i) the Aggregate Capital, plus (ii) the Aggregate Reserves.
(f)
(g) Year 2000. Seller (i) has reviewed the areas
within its business and operations which could be adversely
affected by the Year 2000 Problem, (ii) has developed a Year 2000
Plan to address the Year 2000 Problem on a timely basis, (iii)
is taking all actions reasonably necessary to meet the schedule
and goals of the Year 2000 Plan and (iv) has established adequate
reserves to implement the Year 2000 Plan. Seller does not
reasonably anticipate that the Year 2000 Problem could have a
Material Adverse Effect.
(h)
(i) Accounting. The manner in which Seller accounts
for the transactions contemplated by this Agreement and the
Receivables Sale Agreement does not jeopardize the true sale
analysis.
(j)
(k) Type of Receivable. None of the Receivables
transferred to Seller under the Receivables Sale Agreement
resulted from the sale of an interest in minerals or the like
(including oil and gas) before extraction or at the well head or
the mine head.
(l)
1.2 Section Financial Institution Representations and
Warranties . Each Financial Institution hereby represents and
warrants to the Agent and the Conduits that:
1.3
(a) Existence and Power. Such Financial Institution
is a corporation or a banking association duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation or organization, and has all corporate power to
perform its obligations hereunder.
(b)
(c) No Conflict. The execution and delivery by such
Financial Institution of this Agreement and the performance of
its obligations hereunder are within its corporate powers, have
been duly authorized by all necessary corporate action, do not
contravene or violate (i) its certificate or articles of
incorporation or association or by-laws, (ii) any law, rule or
regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or any
of its property is bound, or (iv) any order, writ, judgment,
award, injunction or decree binding on or affecting it or its
property, and do not result in the creation or imposition of any
Adverse Claim on its assets. This Agreement has been duly
authorized, executed and delivered by such Financial Institution.
(d)
(e) Governmental Authorization. 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 and delivery by such Financial Institution of this
Agreement and the performance of its obligations hereunder.
(f)
(g) Binding Effect. This Agreement constitutes the
legal, valid and binding obligation of such Financial Institution
enforceable against such Financial Institution in accordance with
its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or limiting creditors' rights generally
and by general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law).
(h)
1 ARTICLE CONDITIONS OF PURCHASESARTICLE
2 CONDITIONS OF PURCHASES
(a) Section Conditions Precedent to Initial Incremental
Purchase . The initial Incremental Purchase of a Purchaser
Interest under this Agreement is subject to the conditions
precedent that the Agent shall have received on or before the
date of such purchase those documents listed on Schedule B and
the Agent shall have received all fees and expenses required to
be paid on such date pursuant to the terms of this Agreement and
the Fee Letter.
(a) Section Conditions Precedent to All Purchases and
Reinvestments . Each purchase of a Purchaser Interest (other than
pursuant to Section 13.1) and each Reinvestment shall be subject
to the further conditions precedent that in the case of each
such purchase or Reinvestment: (i) the Servicer shall have
delivered to the Agent on or prior to the date of such purchase,
in form and substance satisfactory to the Agent, all Monthly
Reports as and when due under Section 8.5 and (ii) upon the
Agent's request, the Servicer shall have delivered to the Agent
at least three (3) Business Days prior to such purchase or
Reinvestment an interim Monthly Report showing the amount of
Eligible Receivables; the Facility Termination Date shall not
have occurred; and (c) on the date of each such Incremental
Purchase or Reinvestment, the following statements shall be true
(and acceptance of the proceeds of such Incremental Purchase or
Reinvestment shall be deemed a representation and warranty by
Seller that such statements are then true):
(b)
(i) the representations and warranties set forth in
Section 5.1 are true and correct on and as of the date of such
Incremental Purchase or Reinvestment as though made on and as of
such date;
(ii) no event has occurred, or would result from such
Incremental Purchase or Reinvestment, that will constitute an
Amortization Event, and no event has occurred and is continuing,
or would result from such Incremental Purchase or Reinvestment,
that would constitute a Potential Amortization Event; and
(iii) the Aggregate Capital does not exceed the
Purchase Limit and the aggregate Purchaser Interests do not
exceed 100%.
It is expressly understood that each Reinvestment shall, unless
otherwise directed by the Agent or any Purchaser, occur
automatically on each day that the Servicer shall receive any
Collections without the requirement that any further action be
taken on the part of any Person and notwithstanding the failure
of Seller to satisfy any of the foregoing conditions precedent in
respect of such Reinvestment. The failure of Seller to satisfy
any of the foregoing conditions precedent in respect of any
Reinvestment shall give rise to a right of the Agent, which right
may be exercised at any time on demand of the Agent, to rescind
the related purchase and direct Seller to pay to the Agent for
the benefit of the Purchasers an amount equal to the Collections
prior to the Amortization Date that shall have been applied to
the affected Reinvestment.
1 ARTICLE COVENANTSARTICLE
2 COVENANTS
1.1 Section Affirmative Covenants of Seller . Until the
date on which the Aggregate Unpaids have been indefeasibly paid
in full and this Agreement terminates in accordance with its
terms, Seller hereby covenants, as to itself, as set forth below:
(a) Financial Reporting. Seller will maintain, for
itself and each of its Subsidiaries, a system of accounting
established and administered in accordance with generally
accepted accounting principles and furnish or cause to be
furnished to the Agent:
(b)
(i) Annual Reporting. Within 100 days after the
close of each of its respective fiscal years, financial
statements for such fiscal year certified by an Authorized
Officer of Seller, together with copies of the financial
statements of KNEI delivered pursuant to Section 4.1(a)(i)
of the Receivables Sale Agreement.
(i) Quarterly Reporting. Within 50 days after
the close of the first three (3) quarterly periods of each
of its respective fiscal years, balance sheets as at the
close of each such period and statements of income and
retained earnings and a statement of cash flows for the
period from the beginning of such fiscal year to the end of
such quarter, all certified by an Authorized Officer of
Seller, together with copies of the financial statements of
KNEI delivered pursuant to Section 4.1(a)(ii) of the
Receivables Sale Agreement.
(i) Compliance Certificate. Together with the
financial statements required to be furnished hereunder, a
compliance certificate in substantially the form of Exhibit
V signed by an Authorized Officer of Seller and dated the
date of such annual financial statement or such quarterly
financial statement, as the case may be together with copies
of the Certificates of KNEI delivered pursuant to Section
4.1(a)(iii) of the Receivables Sale Agreement.
(i) Notices under Transaction Documents.
Promptly upon its receipt of any notice, request for
consent, certification, report or other communication under
or in connection with any Transaction Document from any
Person other than the Agent or any Conduit, copies of the
same.
(i) Change in Credit and Collection Policy. At
least thirty (30) days prior to the effectiveness of any
material change in or material amendment to the Credit and
Collection Policy, and promptly after the effectiveness of
any other change in or amendment to the Credit and
Collection Policy, a copy of the Credit and Collection
Policy then in effect and a notice (A) indicating such
change or amendment, and (B) if such proposed change or
amendment would be reasonably likely to adversely affect the
collectibility of the Receivables or decrease the credit
quality of any newly created Receivables, requesting the
Agent's consent thereto.
(i) Other Information. Promptly, from time to
time, such other information, documents, records or reports
relating to the Receivables or the condition or operations,
financial or otherwise, of Seller as the Agent may from time
to time reasonably request in order to protect the interests
of the Agent and the Purchasers under or as contemplated by
this Agreement.
(a) Notices. Seller will notify the Agent in writing
of any of the following promptly upon learning of the occurrence
thereof, describing the same and, if applicable, the steps being
taken with respect thereto:
(b)
(i) Amortization Events or Potential Amortization
Events. The occurrence of each Amortization Event and each
Potential Amortization Event, by a statement of an
Authorized Officer of Seller.
(i) Judgment. The entry of any judgment or
decree against Seller, or the entry of any judgment or
decree against any Originator if the aggregate outstanding
amount of all judgments and decrees against all Originators
on a combined basis exceeds $60,000,000.
(i) Litigation. The institution of any
litigation, arbitration proceeding or governmental
proceeding against Seller or to which Seller becomes party,
or the institution of any litigation, arbitration or
governmental proceeding against any Originator or in which
such Originator becomes a party that remains unsettled for a
period of thirty (30) days from the commencement thereof and
involves claims of damages or any other relief which
reasonably may be expected to cause a Material Adverse
Effect.
(i) Material Adverse Effect. The occurrence of
any event or condition that has had, or could reasonably be
expected to have, a Material Adverse Effect.
(i) Termination Date. The occurrence of the
"Termination Date" under and as defined in the Receivables
Sale Agreement.
(i) Defaults Under Other Agreements. The
occurrence of a default or an event of default under any
other financing arrangement pursuant to which Seller is a
debtor or an obligor.
(i) Downgrade. Any downgrade in the rating of
any Indebtedness of any Originator by Standard and Poor's
Ratings Group or by ▇▇▇▇▇'▇ Investors Service, Inc., setting
forth the Indebtedness affected and the nature of such
change.
(a) Compliance with Laws and Preservation of Corporate
Existence. Seller will comply in all respects with all
applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject with
respect to which a failure to comply may reasonably be expected
to cause a Material Adverse Effect. Seller will preserve and
maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in
each jurisdiction where its business is conducted.
(b)
(c) Audits. Seller will furnish to the Agent from
time to time such information with respect to it and the
Receivables as the Agent may reasonably request. Seller will,
from time to time, during regular business hours as requested by
the Agent upon reasonable notice, permit the Agent, or its agents
or representatives (and shall cause the Originators to permit the
Agent or their agents or representatives), (i) to examine all
Records in the possession or under the control of such Person
relating to the Receivables and the Related Security, including,
without limitation, the related Contracts, and (ii) to visit the
offices and properties of such Person for the purpose of
examining such materials described in clause (i) above, and to
discuss matters relating to such Person's financial condition or
the Receivables and the Related Security or any Person's
performance under any of the Transaction Documents or any
Person's performance under the Contracts and, in each case, with
any of the officers or employees of Seller or the Servicer having
knowledge of such matters. Seller shall reimburse Agent promptly
for all of Agent's reasonable costs incurred in connection with
(i) so long as no Amortization Event or Potential Amortization
Event has occurred, not more than one such audit per calendar
year and (ii) following the occurrence and during the continuance
of an Amortization Event or a Potential Amortization Event, any
such audit.
(d)
(e) Keeping and Marking of Records and Books.
(f)
(i) Seller will (and will cause the Originators
to) maintain and implement administrative and operating
procedures (including, without limitation, an ability to
recreate records evidencing Receivables in the event of the
destruction of the originals thereof), and keep and maintain
all documents, books, records and other information
reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate
to permit the immediate identification of each new
Receivable and all Collections of and adjustments to each
existing Receivable). Seller will, and will require each
Originator to, give the Agent notice of any material change
in the administrative and operating procedures referred to
in the previous sentence.
(i) Seller will (and will cause the Originators
to) (A) on or prior to the date hereof, ▇▇▇▇ its master data
processing records relating to the Purchaser Interests with
a legend, acceptable to the Agent, describing the Purchaser
Interests and (B) following the occurrence and during the
continuance of an Amortization Event, upon the request of
the Agent (x) ▇▇▇▇ each Contract with a legend describing
the Purchaser Interests and (y) deliver to the Agent all
Contracts (including, without limitation, all multiple
originals of any such Contract) relating to the Receivables.
(a) Compliance with Contracts and Credit and
Collection Policy. Seller will (and will cause the Originators
to) timely and fully (i) perform and comply with all provisions,
covenants and other promises required to be observed by it under
the Contracts related to the Receivables with respect to which a
failure to perform or comply may reasonably be expected to
adversely affect the collectibility thereof, and (ii) comply in
all material respects with the Credit and Collection Policy in
regard to each Receivable and the related Contract. Seller will
pay when due any taxes payable in connection with the
Receivables, exclusive of taxes on or measured by income or gross
receipts of the Conduits, the Agent or any Financial Institution.
(b)
(c) Performance and Enforcement of Receivables Sale
Agreement. Seller will, and will require each Originator to,
perform each of their respective obligations and undertakings
under and pursuant to the Receivables Sale Agreement, will
purchase Receivables thereunder in strict compliance with the
terms thereof and will vigorously enforce the rights and remedies
accorded to Seller under the Receivables Sale Agreement. Seller
will take all actions to perfect and enforce its rights and
interests (and the rights and interests of the Agent and the
Purchasers as assignees of Seller) under the Receivables Sale
Agreement as the Agent may from time to time reasonably request,
including, without limitation, making claims to which it may be
entitled under any indemnity, reimbursement or similar provision
contained in the Receivables Sale Agreement.
(d)
(e) Ownership. Seller will (or will cause the
Originators to) take all necessary action to (i) vest legal and
equitable title to the Receivables, the Related Security and the
Collections purchased under the Receivables Sale Agreement
irrevocably in Seller, free and clear of any Adverse Claims other
than Adverse Claims in favor of the Agent and the Purchasers
(including, without limitation, the filing of all financing
statements or other similar instruments or documents necessary
under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Seller's interest in such Receivables,
Related Security and Collections and such other action to
perfect, protect or more fully evidence the interest of Seller
therein as the Agent may reasonably request), and (ii) establish
and maintain, in favor of the Agent, for the benefit of the
Purchasers, a valid and perfected first priority undivided
percentage ownership interest (and/or a valid and perfected first
priority security interest) in all Receivables, Related Security
and Collections to the full extent contemplated herein, free and
clear of any Adverse Claims other than Adverse Claims in favor of
the Agent for the benefit of the Purchasers (including, without
limitation, the filing of all financing statements or other
similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect the
Agent's (for the benefit of the Purchasers) interest in such
Receivables, Related Security and Collections and such other
action to perfect, protect or more fully evidence the interest of
the Agent for the benefit of the Purchasers as the Agent may
reasonably request).
(f)
(g) Purchasers' Reliance. Seller acknowledges that
the Purchasers are entering into the transactions contemplated by
this Agreement in reliance upon Seller's identity as a legal
entity that is separate from the Originators. Therefore, from
and after the date of execution and delivery of this Agreement,
Seller shall take all reasonable steps to maintain Seller's
identity as a separate legal entity and to make it manifest to
third parties that Seller is an entity with assets and
liabilities distinct from those of the Originators and any
Affiliates thereof and not just a division of any Originator or
any such Affiliate. Without limiting the generality of the
foregoing and in addition to the other covenants set forth
herein, Seller will:
(h)
(A) conduct its own business in its own name
and require that all full-time employees of Seller, if
any, identify themselves as such and not as employees
of any Originator (including, without limitation, by
means of providing appropriate employees with business
or identification cards identifying such employees as
Seller's employees);
(A) compensate all employees, consultants
and agents directly, from Seller's own funds, for
services provided to Seller by such employees,
consultants and agents and, to the extent any employee,
consultant or agent of Seller is also an employee,
consultant or agent of any Originator or any Affiliate
thereof, allocate the compensation of such employee,
consultant or agent between Seller and such Originator
or such Affiliate, as applicable, on a basis that
reflects the services rendered to Seller and such
Originator or such Affiliate, as applicable;
(A) have a separate telephone number, which
will be answered only in its name and separate
stationery, invoices and checks in its own name;
(A) conduct all transactions with the
Originators (including, without limitation, any
delegation of its obligations hereunder as Servicer)
strictly on an arm's-length basis, allocate all
overhead expenses (including, without limitation,
telephone and other utility charges) for items shared
between Seller and an Originator on the basis of actual
use to the extent practicable and, to the extent such
allocation is not practicable, on a basis reasonably
related to actual use;
(A) at all times have a Board of Directors
consisting of three members, at least one member of
which is an Independent Director;
(A) observe all corporate formalities as a
distinct entity, and ensure that all corporate actions
relating to (A) the selection, maintenance or
replacement of the Independent Director, (B) the
dissolution or liquidation of Seller or (C) the
initiation of, participation in, acquiescence in or
consent to any bankruptcy, insolvency, reorganization
or similar proceeding involving Seller, are duly
authorized by unanimous vote of its Board of Directors
(including the Independent Director);
(A) maintain Seller's books and records
separate from those of the Originators and any
Affiliate thereof and otherwise readily identifiable as
its own assets rather than assets of any Originator and
any Affiliate thereof;
(A) prepare its financial statements
separately from those of the Originators and insure
that any consolidated financial statements of the
Originators or any Affiliate thereof that include
Seller and that are filed with the Securities and
Exchange Commission or any other governmental agency
have notes clearly stating that Seller is a separate
corporate entity and that its assets will be available
first and foremost to satisfy the claims of the
creditors of Seller;
(A) except as herein specifically otherwise
provided and other than any commingling in the Chase
Collection Account which is provided for in Section
7.1(j) herein, maintain the funds or other assets of
Seller separate from, and not commingled with, those of
the Originators or any Affiliate thereof and only
maintain bank accounts or other depository accounts to
which Seller alone is the account party, into which
Seller alone makes deposits and from which Seller
alone (or the Agent hereunder) has the power to make
withdrawals;
(A) pay all of Seller's operating expenses
from Seller's own assets (except for certain payments
by an Originator or other Persons pursuant to
allocation arrangements that comply with the
requirements of this Section 7.1(i));
(A) operate its business and activities such
that: it does not engage in any business or activity
of any kind, or enter into any transaction or
indenture, mortgage, instrument, agreement, contract,
lease or other undertaking, other than the transactions
contemplated and authorized by this Agreement and the
Receivables Sale Agreement; and does not create, incur,
guarantee, assume or suffer to exist any indebtedness
or other liabilities, whether direct or contingent,
other than (1) as a result of the endorsement of
negotiable instruments for deposit or collection or
similar transactions in the ordinary course of
business, (2) the incurrence of obligations under this
Agreement, (3) the incurrence of obligations, as
expressly contemplated in the Receivables Sale
Agreement, to make payment to the Originators
thereunder for the purchase of Receivables from the
Originators under the Receivables Sale Agreement, and
(4) the incurrence of operating expenses in the
ordinary course of business of the type otherwise
contemplated by this Agreement;
(A) maintain its corporate charter in
conformity with this Agreement, such that it does not
amend, restate, supplement or otherwise modify its
Certificate of Incorporation or By-Laws in any respect
that would impair its ability to comply with the terms
or provisions of any of the Transaction Documents,
including, without limitation, Section 7.1(i) of this
Agreement;
(A) maintain the effectiveness of, and
continue to perform under the Receivables Sale
Agreement, such that it does not amend, restate,
supplement, cancel, terminate or otherwise modify the
Receivables Sale Agreement, or give any consent,
waiver, directive or approval thereunder or waive any
default, action, omission or breach under the
Receivables Sale Agreement or otherwise grant any
indulgence thereunder, without (in each case) the prior
written consent of the Agent;
(A) maintain its corporate separateness such
that it does not merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of
transactions, and except as otherwise contemplated
herein) all or substantially all of its assets (whether
now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any Person, nor at
any time create, have, acquire, maintain or hold any
interest in any Subsidiary.
(A) maintain at all times the Required
Capital Amount (as defined in the Receivables Sale
Agreement) and refrain from making any dividend,
distribution, redemption of capital stock or payment of
any subordinated indebtedness which would cause the
Required Capital Amount to cease to be so maintained;
and
(A) take such other actions as are necessary
on its part to ensure that the facts and assumptions
set forth in the opinion issued by ▇▇▇▇▇▇ & ▇▇▇▇▇▇, as
counsel for Seller, in connection with the closing or
initial Incremental Purchase under this Agreement and
relating to substantive consolidation issues, and in
the certificates accompanying such opinion, remain true
and correct in all material respects at all times.
(a) Collections. Seller will cause (1) all proceeds
from all Lock-Boxes to be directly deposited by a Collection Bank
into a Collection Account and (2) each Lock-Box and Collection
Account to be subject at all times to a Collection Account
Agreement that is in full force and effect. In the event any
payments relating to Receivables are remitted directly to Seller
or any Affiliate of Seller, Seller will remit (or will cause all
such payments to be remitted) directly to a Collection Bank and
deposited into a Collection Account within two (2) Business Days
following receipt thereof and, at all times prior to such
remittance, Seller will itself hold or, if applicable, will cause
such payments to be held in trust for the exclusive benefit of
the Agent and the Purchasers. Seller will maintain exclusive
ownership, dominion and control (subject to the terms of this
Agreement) of each Lock-Box and Collection Account and shall not
grant the right to take dominion and control of any Lock-Box or
Collection Account at a future time or upon the occurrence of a
future event to any Person, except to the Agent as contemplated
by this Agreement. Within 60 days following the Closing Date,
Seller will cause the Servicer to either (a) notify all Obligors
that are currently remitting payments to the Chase Collection
Account to redirect payments to one of the other Collection
Accounts (other than the Chase Collection Account) or to a newly
established account which is subject to a Collection Account
Agreement or (b) cease using the Chase Collection Account for any
purpose other than receiving and processing Collections, and
notify all Persons (other than Obligors) that are currently
remitting payments to the Chase Collection Account to redirect
payments to a newly established account.
(b)
(c) Minimum Net Worth. Seller shall at all times
maintain Net Worth of not less than the Required Capital Amount.
(d)
1.2 Section Negative Covenants of Seller . Until the date
on which the Aggregate Unpaids have been indefeasibly paid in
full and this Agreement terminates in accordance with its terms,
Seller hereby covenants that:
1.3
(a) Name Change, Offices and Records. Seller will not
change its name, identity or corporate structure (within the
meaning of Section 9-402(7) of any applicable enactment of the
UCC) or relocate its chief executive office or any office where
Records are kept, unless it shall have: (i) given the Agent at
least forty-five (45) days' prior written notice thereof and (ii)
delivered to the Agent all financing statements, instruments and
other documents requested by the Agent in connection with such
change or relocation.
(b)
(c) Change in Payment Instructions to Obligors.
Except as may be required by the Agent pursuant to Section
8.2(b), Seller will not add or terminate any bank as a Collection
Bank, or make any change in the instructions to Obligors
regarding payments to be made to any Lock-Box or Collection
Account, unless the Agent shall have received, at least ten (10)
days before the proposed effective date therefor, (i) written
notice of such addition, termination or change and (ii) with
respect to the addition of a Collection Bank or a Collection
Account or Lock-Box, an executed Collection Account Agreement
with respect to the new Collection Account or Lock-Box; provided,
however, that Seller may make changes in instructions to Obligors
regarding payments if such new instructions require such Obligor
to make payments to another existing Collection Account.
(d)
(e) Modifications to Contracts and Credit and
Collection Policy. Seller will not make any change to the Credit
and Collection Policy that could adversely affect the
collectibility of the Receivables or decrease the credit quality
of any newly created Receivables. Except as provided in Section
8.2(d), Seller, acting as Servicer or otherwise, will not, and
will not extend, amend or otherwise modify the terms of any
Receivable or any Contract related thereto other than in
accordance with the Credit and Collection Policy.
(f)
(g) Sales, Liens. Seller will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant
any option with respect to, or create or suffer to exist any
Adverse Claim upon (including, without limitation, the filing of
any financing statement) or with respect to, any Receivable,
Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box or
Collection Account, or assign any right to receive income with
respect thereto (other than, in each case, the creation of the
interests therein in favor of the Agent and the Purchasers
provided for herein), and Seller will defend the right, title and
interest of the Agent and the Purchasers in, to and under any of
the foregoing property, against all claims of third parties
claiming through or under Seller or the Originators. Seller will
not create or suffer to exist any mortgage, pledge, security
interest, encumbrance, lien, charge or other similar arrangement
on any of its inventory.
(h)
(i) Nature of Business; Other Agreements; Other
Indebtedness. Seller shall not engage in any business or
activity of any kind or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or other
undertaking, in each case other than the transactions
contemplated and authorized by this Agreement and the Receivables
Sale Agreement. Without limiting the generality of the
foregoing, Seller shall not create, incur, guarantee, assume or
suffer to exist any Indebtedness or other liabilities, whether
direct or contingent, other than:
(j)
(i) as a result of the endorsement of negotiable
instruments for deposit or collection or similar
transactions in the ordinary course of business,
(i) the incurrence of obligations under this
Agreement or any other Transaction Document,
(i) the incurrence of obligations, as expressly
contemplated in the Receivables Sale Agreement, to make
payment to the Originators thereunder for the purchase of
Receivables from the Originators under the Receivables Sale
Agreement, and
(i) the incurrence of operating expenses in the
ordinary course of business of the type otherwise
contemplated in Section 7.1(i) of this Agreement.
Seller may pay expenses permitted by Section 8.2(e)(iv) with the
proceeds of Subordinated Loans (to the extent that a Subordinated
Loan could be borrowed without rendering Seller's Net Worth less
than the Required Capital Amount). In the event Seller shall at
any time receive a Subordinated Loan under the Receivables Sale
Agreement, the obligations of Seller in connection therewith
shall be subordinated to the obligations of Seller to the
Purchasers and the Agent under this Agreement, on the terms
provided for in the Subordinated Note and the Receivables Sale
Agreement.
(a) Amendments to Receivables Sale Agreement. Seller
shall not, without the prior written consent of the Agent (which
consent shall not be unreasonably withheld or delayed):
(b)
(i) cancel or terminate the Receivables Sale
Agreement,
(i) give any consent, waiver, directive or
approval under the Receivables Sale Agreement,
(i) waive any default, action, omission or breach
under the Receivables Sale Agreement, or otherwise grant any
indulgence thereunder, or
(i) amend, supplement or otherwise modify any of
the terms of the Receivables Sale Agreement.
(a) Net Receivables Balance. At no time prior to the
Amortization Date shall Seller permit the Net Receivables Balance
to be less than an amount equal to the sum of (i) the aggregate
Capital of all the Purchaser Interests plus (ii) the Aggregate
Reserves.
(b)
(c) Termination Date Determination. Seller will not
designate the Termination Date (as defined in the Receivables
Sale Agreement), or send any written notice to Originator in
respect thereof, without the prior written consent of the Agent,
except with respect to the occurrence of such Termination Date
arising pursuant to Section 6.1(d) of the Receivables Sale
Agreement.
(d)
1 ARTICLE ADMINISTRATION AND COLLECTIONARTICLE
2 ADMINISTRATION AND COLLECTION
(a) Section Designation of Servicer . The servicing,
administration and collection of the Receivables shall be
conducted by such Person (the "Servicer") so designated from time
to time in accordance with this Section 8.1. Seller is hereby
designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms of this
Agreement. The Agent may at any time designate as Servicer any
Person to succeed Seller or any successor Servicer.
(a) Without the prior written consent of the Agent and
the Required Financial Institutions, Seller shall not be
permitted to delegate any of its duties or responsibilities as
Servicer to any Person other than (i) K N Energy, Inc. ("KNEI")
and (ii) with respect to certain Charged-Off Receivables, outside
collection agencies in accordance with its customary practices.
KNEI shall not be permitted to further delegate to any other
Person any of the duties or responsibilities of the Servicer
delegated to it by Seller. If at any time the Agent shall
designate as Servicer any Person other than Seller, all duties
and responsibilities theretofore delegated by Seller to KNEI may,
at the discretion of the Agent, be terminated forthwith on notice
given by the Agent to Seller.
(b)
(c) Notwithstanding the foregoing subsection (b), (i)
Seller shall be and remain primarily liable to the Agent and the
Purchasers for the full and prompt performance of all duties and
responsibilities of the Servicer hereunder and (ii) the Agent and
the Purchasers shall be entitled to deal exclusively with Seller
in matters relating to the discharge by the Servicer of its
duties and responsibilities hereunder. The Agent and the
Purchasers shall not be required to give notice, demand or other
communication to any Person other than Seller (with a copy to
KNEI as provided below Seller's signature hereto) in order for
communication to the Servicer and its sub-servicer or other
delegate with respect thereto to be accomplished. Seller, at all
times that it is the Servicer, shall be responsible for providing
any sub-servicer or other delegate of the Servicer with any
notice given to the Servicer under this Agreement.
(a) Section Duties of Servicer . The Servicer shall take
or cause to be taken all such actions as may be reasonably
necessary or advisable to collect each Receivable from time to
time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy.
(b)
(c) The Servicer will instruct all Obligors to pay all
Collections directly to a Lock-Box or Collection Account. The
Servicer shall effect a Collection Account Agreement
substantially in the form of Exhibit VI with each bank party to a
Collection Account at any time. In the case of any remittances
received in any Lock-Box or Collection Account that shall have
been identified, to the satisfaction of the Servicer, to not
constitute Collections or other proceeds of the Receivables or
the Related Security, the Servicer shall promptly remit such
items to the Person identified to it as being the owner of such
remittances. From and after the date the Agent delivers to any
Collection Bank a Collection Notice pursuant to Section 8.3, the
Agent may request that the Servicer, and the Servicer thereupon
promptly shall instruct all Obligors with respect to the
Receivables, to remit all payments thereon to a new depositary
account specified by the Agent and, at all times thereafter,
Seller and the Servicer shall not deposit or otherwise credit,
and shall not permit any other Person to deposit or otherwise
credit to such new depositary account any cash or payment item
other than Collections.
(d)
(e) The Servicer shall administer the Collections in
accordance with the procedures described herein and in Article
II. The Servicer shall set aside and hold in trust for the
account of Seller and the Purchasers their respective shares of
the Collections in accordance with Article II. The Servicer
shall, upon the request of the Agent, segregate, in a manner
acceptable to the Agent, all cash, checks and other instruments
received by it from time to time constituting Collections from
the general funds of the Servicer or Seller prior to the
remittance thereof in accordance with Article II. If the
Servicer shall be required to segregate Collections pursuant to
the preceding sentence, the Servicer shall segregate and deposit
with a bank designated by the Agent such allocable share of
Collections of Receivables set aside for the Purchasers on the
first Business Day following receipt by the Servicer of such
Collections, duly endorsed or with duly executed instruments of
transfer.
(f)
(g) The Servicer may, in accordance with the Credit
and Collection Policy, extend the maturity of any Receivable or
adjust the Outstanding Balance of any Receivable as the Servicer
determines to be appropriate to maximize Collections thereof;
provided, however, that such extension or adjustment shall not
alter the status of such Receivable as a Delinquent Receivable or
Charged-Off Receivable or limit the rights of the Agent or the
Purchasers under this Agreement. Notwithstanding anything to the
contrary contained herein, upon the occurrence and during the
continuance of an Amortization Event, the Agent shall have the
absolute and unlimited right to direct the Servicer to commence
or settle any legal action with respect to any Receivable or to
foreclose upon or repossess any Related Security.
(a) The Servicer shall hold in trust for Seller and
the Purchasers all Records that (i) evidence or relate to the
Receivables, the related Contracts and Related Security or (ii)
are otherwise necessary or desirable to collect the Receivables
and shall, as soon as practicable upon demand of the Agent
following the occurrence and during the continuance of an
Amortization Event, deliver or make available to the Agent
copies of all such Records, at a place selected by the Agent.
The Servicer shall, as soon as practicable following receipt
thereof turn over to Seller any cash collections or other cash
proceeds received with respect to Indebtedness not constituting
Receivables. The Servicer shall, from time to time at the
request of any Purchaser, furnish to the Purchasers (promptly
after any such request) a calculation of the amounts set aside
for the Purchasers pursuant to Article II.
(b)
(c) Any payment by an Obligor in respect of any
indebtedness owed by it to any Originator or Seller shall, except
as otherwise specified by such Obligor or otherwise required by
contract or law and unless otherwise instructed by the Agent, be
applied as a Collection of any Receivable of such Obligor
(starting with the oldest such Receivable) to the extent of any
amounts then due and payable thereunder before being applied to
any other receivable or other obligation of such Obligor.
(d)
(e)
1.2 Section Collection Notices . The Agent is authorized
at any time during the continuance of an Amortization Event to
date and to deliver to the Collection Banks the Collection
Notices. Seller hereby transfers to the Agent for the benefit of
the Purchasers, effective when the Agent delivers such notice,
the exclusive ownership and control of each Lock-Box and the
Collection Accounts. In case any authorized signatory of Seller
whose signature appears on a Collection Account Agreement shall
cease to have such authority before the delivery of such notice,
such Collection Notice shall nevertheless be valid as if such
authority had remained in force. Seller hereby authorizes the
Agent, and agrees that the Agent shall, following the occurrence
and during the continuance of an Amortization Event, be entitled
to (i) endorse Seller's name on checks and other instruments
representing Collections, (ii) enforce the Receivables, the
related Contracts and the Related Security and (iii) take such
action as shall be necessary or desirable to cause all cash,
checks and other instruments constituting Collections of
Receivables to come into the possession of the Agent rather than
Seller.
1.3
1.4 Section Responsibilities of Seller . Anything herein
to the contrary notwithstanding, the exercise by the Agent and
the Purchasers of their rights hereunder shall not release the
Servicer or Seller from any of their duties or obligations with
respect to any Receivables or under the related Contracts. The
Purchasers shall have no obligation or liability with respect to
any Receivables or related Contracts, nor shall any of them be
obligated to perform the obligations of Seller.
1.1 Section Reports . The Servicer shall prepare and
forward to the Agent (i) on the 20th day of each month and at
such times as the Agent shall request, a Monthly Report and (ii)
at such times as the Agent shall request, a listing by Obligor of
all Receivables together with an aging of such Receivables. The
Agent and the Purchasers acknowledge that Seller and the Servicer
do not have all necessary data to enable them to compute certain
ratios in respect of Defaulted Receivables and Dilutions prior to
September 1, 1998. Accordingly, the Servicer shall be permitted
to make any computations herein which pertain in part to periods
prior to such date without reference to periods prior to such
date.
1.2
1.3 Section Servicing Fees . In consideration of Seller's
agreement to act as Servicer hereunder, the Purchasers hereby
agree that, so long as Seller shall continue to perform as
Servicer hereunder, Seller shall be entitled to receive a fee
(the "Servicing Fee") on the first calendar day of each month, in
arrears for the immediately preceding month equal to 1.0% per
annum of the aggregate amount of outstanding Capital as
compensation for its servicing activities, which fee shall be
payable in accordance with the terms of Article III.
1.4
1 ARTICLE AMORTIZATION EVENTSARTICLE
2 AMORTIZATION EVENTS
1.1 Section Amortization Events . The occurrence of any
one or more of the following events shall constitute an
Amortization Event:
(a) The Servicer (so long as any Affiliate of KNEI is
the Servicer) or Seller shall fail (i) to make any payment or
deposit required hereunder when due and, for any such payment or
deposit which is not in respect of Capital, such failure
continues for one (1) Business Day, or (ii) to perform or observe
any covenant or agreement hereunder (other than as referred to in
clause (i) of this paragraph (a)) and such failure shall continue
for ten (10) Business Days after notice thereof has been given to
the Servicer (so long as any Affiliate of KNEI is the Servicer)
or Seller by the Agent.
(b)
(c) The Servicer (so long as any Affiliate of KNEI is
the Servicer) or Seller shall fail to perform or observe any
covenant contained in Article VII hereof and such failure shall
continue for ten (10) Business Days after notice thereof has been
given to the Servicer (so long as any Affiliate of KNEI is the
Servicer) or Seller by the Agent.
(d)
(e) Any representation, warranty, certification or
statement made by the Servicer (so long as any Affiliate of KNEI
is the Servicer) or Seller in this Agreement, any other
Transaction Document or in any other document delivered pursuant
hereto or thereto shall prove to have been incorrect when made or
deemed made.
(f)
(g) KNEI or any Subsidiary shall fail to make any
payment in respect of any Material Financial Obligations when due
or within any applicable grace period; provided, however, that if
any such failure is cured by KNEI or such Subsidiary or is waived
by the requisite percentage of holders of such Material Financial
Obligations entitled to so waive, then the Amortization Event
under this Agreement by reason of such failure shall be deemed to
have been cured.
(h)
(i) Any event or condition shall occur which results
in the acceleration of the maturity of any Material Debt or
enables (or, with the giving of notice or lapse of time or both,
would enable) the holder of such Debt or any Person acting on
such holder's behalf to accelerate the maturity thereof;
provided, however, that if any such acceleration is rescinded, or
any such event or condition is cured by KNEI or any Subsidiary or
is waived by the requisite percentage of holders of such Material
Debt entitled to so waive, then the Amortization Event under this
Agreement by reason of such acceleration, event or condition
shall be deemed to have been cured.
(j)
(i) Seller or Servicer (so long as any Affiliate of
KNEI is the Servicer) 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 Seller or such Servicer or any of its Material
Subsidiaries seeking to adjudicate it bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or
other similar official for it or any substantial part of its
property and such proceeding shall not be dismissed within
60 days of the filing thereof or (ii) Seller, such Servicer or
any of its Material Subsidiaries shall take any corporate action
to authorize any of the actions set forth in clause (i) above in
this subsection (e).
(ii)
(k) Seller shall fail to comply with the terms of
Section 2.7 hereof.
(l)
(m) The Three-Month Average Dilution Ratio shall
exceed 5% at any time.
(n) The Three-Month Average Default Ratio shall exceed
5% at any time.
(o)
(p) The Three-Month Average Variance Ratio shall
exceed 7% at any time.
(q)
(r) The Performance Guarantor's credit rating for its
long term senior unsecured debt obligations shall be reduced
below BB+ by Standard & Poor's Ratings Services or below Ba1 by
▇▇▇▇▇'▇ Investors Service, Inc., or either such rating agency
shall withdraw its rating.
(s)
(t) A Change of Control shall occur.
(u)
(v) KNEI ceases to own 100% of Seller.
(w)
(x) (i) Consolidated Debt of KNEI shall exceed 74.0%
of Consolidated Total Capitalization at any time; (ii) total Debt
of all Consolidated Subsidiaries (excluding Debt of a
Consolidated Subsidiary of KNEI to KNEI or to another
Consolidated Subsidiary of KNEI, shall exceed 10% of Consolidated
Debt of KNEI at any time or (iii) Consolidated Debt of each
Material Subsidiary shall exceed 65% of the Consolidated Total
Capitalization of such Material Subsidiary at any time.
(y)
(z) Consolidated Net Worth of KNEI shall be less than
an amount equal to the sum of (i) $1,236,000,000 plus (ii) 50% of
Consolidated Net Income for each fiscal quarter of KNEI ending
after December 30, 1998 and at or prior to such time (but only if
such Consolidated Net Income for such fiscal quarter is a
positive amount) at any time.
(a) KNEI shall fail to perform or observe any term,
covenant or agreement contained in the Credit Agreement and such
failure shall continue unremedied beyond any applicable grace or
cure period provided therein.
(b)
(c) One or more final judgments for the payment of
money shall be entered against Seller on claims not covered by
insurance or as to which the insurance carrier has denied its
responsibility, and such judgment shall continue unsatisfied and
in effect for thirty (30) consecutive days without a stay of
execution.
(d)
(e) Performance Guarantor shall fail to perform or
observe any term, covenant or agreement required to be performed
by it under the Performance Guaranty, or the Performance Guaranty
shall cease to be effective or to be the legally valid, binding
and enforceable obligation of Performance Guarantor, or
Performance Guarantor shall directly or indirectly contest in any
manner such effectiveness, validity, binding nature or
enforceability.
(f)
(g) The "Amortization Date" shall occur under the
Receivables Sale Agreement or any Originator shall for any reason
cease to transfer, or cease to have the legal capacity to
transfer, or otherwise be incapable of transferring Receivables
to Seller under the Receivables Sale Agreement.
(h)
(i) This Agreement shall terminate in whole or in part
(except in accordance with its terms), or shall cease to be
effective or to be the legally valid, binding and enforceable
obligation of Seller, or the Agent for the benefit of the
Purchasers shall cease to have a valid and perfected first
priority ownership/security interest in the Receivables, the
Related Security and the Collections with respect thereto and the
Collection Accounts.
(j)
1.2 Section Remedies . Upon the occurrence and during the
continuation of an Amortization Event, the Agent may, or upon the
direction of the Required Financial Institutions shall, take any
of the following actions: (i) replace the Person then acting as
Servicer if such Amortization Event arises from the actions of
the Servicer, (ii) declare the Amortization Date to have
occurred, whereupon the Amortization Date shall forthwith occur,
without demand, protest or further notice of any kind, all of
which are hereby expressly waived by Seller; provided, however,
that upon the occurrence of Amortization Event described in
Section 9.1(e), or of an actual or deemed entry of an order for
relief with respect to Seller or the Servicer (so long as any
Affiliate of KNEI is the Servicer) under the Federal Bankruptcy
Code, the Amortization Date shall automatically occur, without
demand, protest or any notice of any kind, all of which are
hereby expressly waived by Seller, (iii) to the fullest extent
permitted by applicable law, declare that the Default Fee shall
accrue with respect to any of the Aggregate Unpaids outstanding
at such time, (iv) deliver the Collection Notices to the
Collection Banks, and (v) notify Obligors of the Purchasers'
interest in the Receivables. The aforementioned rights and
remedies shall be in addition to all other rights and remedies of
the Agent and the Purchasers available under this Agreement, by
operation of law, at equity or otherwise, all of which are hereby
expressly preserved, including, without limitation, all rights
and remedies provided under the UCC, all of which rights shall be
cumulative.
ARTICLE INDEMNIFICATION
1 ARTICLE
INDEMNIFICATION
1.1 Section INDEMNITIES BY SELLER . WITHOUT LIMITING ANY
OTHER RIGHTS THAT THE AGENT OR ANY PURCHASER MAY HAVE HEREUNDER
OR UNDER APPLICABLE LAW, (A) SELLER HEREBY AGREES TO INDEMNIFY
(AND PAY UPON DEMAND TO) THE AGENT AND EACH PURCHASER AND THEIR
RESPECTIVE ASSIGNS, OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES
(EACH AN "INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL
DAMAGES, LOSSES, CLAIMS, TAXES, LIABILITIES, COSTS, EXPENSES AND
FOR ALL OTHER AMOUNTS PAYABLE, INCLUDING REASONABLE ATTORNEYS'
FEES (WHICH ATTORNEYS MAY BE EMPLOYEES OF THE AGENT OR SUCH
PURCHASER) AND DISBURSEMENTS (ALL OF THE FOREGOING BEING
COLLECTIVELY REFERRED TO AS "INDEMNIFIED AMOUNTS") AWARDED
AGAINST OR INCURRED BY ANY OF THEM ARISING OUT OF OR AS A RESULT
OF THIS AGREEMENT OR THE ACQUISITION, EITHER DIRECTLY OR
INDIRECTLY, BY A PURCHASER OF AN INTEREST IN THE RECEIVABLES,
AND (B) THE SERVICER HEREBY AGREES TO INDEMNIFY (AND PAY UPON
DEMAND TO) EACH INDEMNIFIED PARTY FOR INDEMNIFIED AMOUNTS AWARDED
AGAINST OR INCURRED BY ANY OF THEM ARISING OUT OF THE SERVICER'S
ACTIVITIES AS SERVICER HEREUNDER EXCLUDING, HOWEVER, IN ALL OF
THE FOREGOING INSTANCES UNDER THE PRECEDING CLAUSES (A) AND (B):
(i) INDEMNIFIED AMOUNTS TO THE EXTENT A FINAL
JUDGMENT OF A COURT OF COMPETENT JURISDICTION HOLDS THAT
SUCH INDEMNIFIED AMOUNTS RESULTED FROM GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY
SEEKING INDEMNIFICATION;
(i) INDEMNIFIED AMOUNTS TO THE EXTENT THE SAME
INCLUDES LOSSES IN RESPECT OF RECEIVABLES THAT ARE
UNCOLLECTIBLE ON ACCOUNT OF THE INSOLVENCY, BANKRUPTCY OR
LACK OF CREDITWORTHINESS OF THE RELATED OBLIGOR;
(i) TAXES IMPOSED BY THE JURISDICTION IN WHICH
SUCH INDEMNIFIED PARTY'S PRINCIPAL EXECUTIVE OFFICE IS
LOCATED, ON OR MEASURED BY THE OVERALL NET INCOME OF SUCH
INDEMNIFIED PARTY TO THE EXTENT THAT THE COMPUTATION OF SUCH
TAXES IS CONSISTENT WITH THE CHARACTERIZATION FOR INCOME TAX
PURPOSES OF THE ACQUISITION BY THE PURCHASERS OF PURCHASER
INTERESTS AS A LOAN OR LOANS BY THE PURCHASERS TO SELLER
SECURED BY THE RECEIVABLES, THE RELATED SECURITY, THE
COLLECTION ACCOUNTS AND THE COLLECTIONS;
(i) INDEMNIFIED AMOUNTS TO THE EXTENT THE SAME
ARE A RESULT OF A VIOLATION BY SUCH INDEMNIFIED PARTY OF ANY
BANKING OR SECURITIES LAWS OR REGULATIONS;
(i) INDEMNIFIED AMOUNTS TO THE EXTENT THEY
INCLUDE COSTS AND EXPENSES OF A TYPE REFERRED TO IN SECTIONS
10.2 AND 10.3 HEREOF, EXCEPT TO THE EXTENT PROVIDED IN
SECTIONS 10.2 AND 10.3;
(i) INDEMNIFIED AMOUNTS TO THE EXTENT THEY
CONSTITUTE STATE OR LOCAL FRANCHISE TAXES TO THE EXTENT THAT
THE INDEMNIFIED PARTY IS SUBJECT TO TAXATION IN THE
JURISDICTION IMPOSING SUCH FRANCHISE TAXES SOLELY FOR
REASONS OTHER THAN THE TRANSACTIONS CONTEMPLATED BY THE
TRANSACTION DOCUMENTS; AND
(i) INDEMNIFIED AMOUNTS THAT UNDER THE TERMS OF
CLAUSES (I) THROUGH (XVI) BELOW ARE EXPRESSLY EXCEPTED FROM
THE INDEMNIFICATION PROVISIONS OF SUCH CLAUSES.
PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS SENTENCE SHALL
LIMIT THE LIABILITY OF SELLER OR LIMIT THE RECOURSE OF THE
PURCHASERS TO SELLER FOR AMOUNTS OTHERWISE SPECIFICALLY PROVIDED
TO BE PAID BY SELLER UNDER THE TERMS OF THIS AGREEMENT. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING INDEMNIFICATION, BUT
SUBJECT TO THE LIMITATIONS SET FORTH IN CLAUSES (I) AND (II) OF
THIS PREVIOUS SENTENCE, SELLER SHALL INDEMNIFY THE AGENT AND THE
PURCHASERS FOR INDEMNIFIED AMOUNTS (INCLUDING, WITHOUT
LIMITATION, LOSSES IN RESPECT OF UNCOLLECTIBLE RECEIVABLES,
REGARDLESS OF WHETHER REIMBURSEMENT THEREFOR WOULD CONSTITUTE
RECOURSE TO SELLER) RELATING TO OR RESULTING FROM:
(i) ANY REPRESENTATION OR WARRANTY MADE BY SELLER
OR ANY ORIGINATOR (OR ANY OFFICERS OF ANY SUCH PERSON) UNDER
OR IN CONNECTION WITH THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY OTHER INFORMATION OR REPORT DELIVERED BY ANY
SUCH PERSON PURSUANT HERETO OR THERETO, WHICH SHALL HAVE
BEEN FALSE OR INCORRECT WHEN MADE OR DEEMED MADE;
(i) THE FAILURE BY SELLER OR ANY ORIGINATOR TO
COMPLY WITH ANY APPLICABLE LAW, RULE OR REGULATION WITH
RESPECT TO ANY RECEIVABLE OR CONTRACT RELATED THERETO, OR
THE NONCONFORMITY OF ANY RECEIVABLE OR CONTRACT INCLUDED
THEREIN WITH ANY SUCH APPLICABLE LAW, RULE OR REGULATION OR
ANY FAILURE OF ANY ORIGINATOR TO KEEP OR PERFORM ANY OF ITS
OBLIGATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
CONTRACT;
(i) ANY FAILURE OF SELLER OR ANY ORIGINATOR TO
PERFORM ITS DUTIES, COVENANTS OR OTHER OBLIGATIONS IN
ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT;
(i) ANY PRODUCTS LIABILITY, PERSONAL INJURY OR
DAMAGE SUIT, OR OTHER SIMILAR CLAIM ARISING OUT OF OR IN
CONNECTION WITH MERCHANDISE, INSURANCE OR SERVICES THAT ARE
THE SUBJECT OF ANY CONTRACT OR ANY RECEIVABLE;
(i) ANY DISPUTE, CLAIM, OFFSET OR DEFENSE (OTHER
THAN DISCHARGE IN BANKRUPTCY OF THE OBLIGOR) OF THE OBLIGOR
TO THE PAYMENT OF ANY RECEIVABLE (INCLUDING, WITHOUT
LIMITATION, A DEFENSE BASED ON SUCH RECEIVABLE OR THE
RELATED CONTRACT NOT BEING A LEGAL, VALID AND BINDING
OBLIGATION OF SUCH OBLIGOR ENFORCEABLE AGAINST IT IN
ACCORDANCE WITH ITS TERMS), OR ANY OTHER CLAIM RESULTING
FROM THE SALE OF THE MERCHANDISE OR SERVICE RELATED TO SUCH
RECEIVABLE OR THE FURNISHING OR FAILURE TO FURNISH SUCH
MERCHANDISE OR SERVICES;
(i) COMMINGLING OF COLLECTIONS OF RECEIVABLES AT
ANY TIME WITH OTHER FUNDS;
(i) ANY INVESTIGATION, LITIGATION OR PROCEEDING
RELATED TO OR ARISING FROM THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT, THE TRANSACTIONS CONTEMPLATED HEREBY,
THE USE OF THE PROCEEDS OF AN INCREMENTAL PURCHASE OR A
REINVESTMENT, THE OWNERSHIP OF THE PURCHASER INTERESTS OR
ANY OTHER INVESTIGATION, LITIGATION OR PROCEEDING RELATING
TO SELLER OR ANY ORIGINATOR IN WHICH ANY INDEMNIFIED PARTY
BECOMES INVOLVED AS A RESULT OF ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY;
(i) ANY INABILITY TO LITIGATE ANY CLAIM AGAINST
ANY OBLIGOR IN RESPECT OF ANY RECEIVABLE AS A RESULT OF SUCH
OBLIGOR BEING IMMUNE FROM CIVIL AND COMMERCIAL LAW AND SUIT
ON THE GROUNDS OF SOVEREIGNTY OR OTHERWISE FROM ANY LEGAL
ACTION, SUIT OR PROCEEDING;
(i) ANY AMORTIZATION EVENT DESCRIBED IN SECTION
9.1(D);
(i) ANY FAILURE OF SELLER TO ACQUIRE AND MAINTAIN
LEGAL AND EQUITABLE TITLE TO, AND OWNERSHIP OF ANY
RECEIVABLE AND THE RELATED SECURITY AND COLLECTIONS WITH
RESPECT THERETO FROM ANY ORIGINATOR, FREE AND CLEAR OF ANY
ADVERSE CLAIM (OTHER THAN AS CREATED HEREUNDER); OR ANY
FAILURE OF SELLER TO GIVE REASONABLY EQUIVALENT VALUE TO ANY
ORIGINATOR UNDER THE RECEIVABLES SALE AGREEMENT IN
CONSIDERATION OF THE TRANSFER BY SUCH ORIGINATOR OF ANY
RECEIVABLE, OR ANY ATTEMPT BY ANY PERSON TO VOID SUCH
TRANSFER UNDER STATUTORY PROVISIONS OR COMMON LAW OR
EQUITABLE ACTION;
(i) ANY FAILURE TO VEST AND MAINTAIN VESTED IN
THE AGENT FOR THE BENEFIT OF THE PURCHASERS, OR TO TRANSFER
TO THE AGENT FOR THE BENEFIT OF THE PURCHASERS, LEGAL AND
EQUITABLE TITLE TO, AND OWNERSHIP OF, A FIRST PRIORITY
PERFECTED UNDIVIDED PERCENTAGE OWNERSHIP INTEREST (TO THE
EXTENT OF THE PURCHASER INTERESTS CONTEMPLATED HEREUNDER) OR
SECURITY INTEREST IN THE RECEIVABLES, THE RELATED SECURITY
AND THE COLLECTIONS, FREE AND CLEAR OF ANY ADVERSE CLAIM
(EXCEPT AS CREATED BY THE TRANSACTION DOCUMENTS);
(i) THE FAILURE TO HAVE FILED, OR ANY DELAY IN
FILING, FINANCING STATEMENTS OR OTHER SIMILAR INSTRUMENTS OR
DOCUMENTS UNDER THE UCC OF ANY APPLICABLE JURISDICTION OR
OTHER APPLICABLE LAWS WITH RESPECT TO ANY RECEIVABLE, THE
RELATED SECURITY AND COLLECTIONS WITH RESPECT THERETO, AND
THE PROCEEDS OF ANY THEREOF, WHETHER AT THE TIME OF ANY
INCREMENTAL PURCHASE OR REINVESTMENT OR AT ANY SUBSEQUENT
TIME;
(i) ANY ACTION OR OMISSION BY SELLER WHICH
REDUCES OR IMPAIRS THE RIGHTS OF THE AGENT OR THE PURCHASERS
WITH RESPECT TO ANY RECEIVABLE OR THE VALUE OF ANY SUCH
RECEIVABLE;
(i) ANY ATTEMPT BY ANY PERSON TO VOID ANY
INCREMENTAL PURCHASE OR REINVESTMENT HEREUNDER UNDER
STATUTORY PROVISIONS OR COMMON LAW OR EQUITABLE ACTION;
(i) THE YEAR 2000 PROBLEM INVOLVING SELLER,
SERVICER (SO LONG AS ANY AFFILIATE OF KNEI IS THE SERVICER),
ANY ORIGINATOR OR ANY OBLIGOR; AND
(i) THE FAILURE OF ANY RECEIVABLE INCLUDED IN THE
CALCULATION OF THE NET RECEIVABLES BALANCE AS AN ELIGIBLE
RECEIVABLE TO BE AN ELIGIBLE RECEIVABLE AT THE TIME SO
INCLUDED.
1.1 Section Increased Cost and Reduced Return . If any
funding source shall be charged any fee, expense, or increased
cost on account of the adoption if any applicable law, rule or
regulation (including any applicable law, rule or regulation
regarding capital adequacy) or any change therein, or any change
in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency, in
each case occurring after the date hereof (a "Regulatory
Change"): (i) that subjects any funding source to any charge or
withholding on or with respect to any funding agreement or a
funding source's obligations under a funding agreement, or on or
with respect to receivables, or changes the basis of taxation of
payments to any funding source of any amounts payable under any
funding agreement (except for changes in the rate of tax on the
overall net income of a funding source or taxes excluded by
Section 10.1) or (ii) that imposes, modifies or deems applicable
any reserve, assessment, insurance charge, special deposit or
similar requirement against assets of, deposits with or for the
account of a funding source, or credit extended by a funding
source pursuant to a funding agreement or (iii) that imposes any
other condition the result of which is to increase the cost to a
funding source of performing its obligations under a funding
agreement, or to reduce the ate of return on a funding source's
capital as a consequence of its obligations under a funding
agreement, or to reduce the amount of any sum received or
receivable by a funding source under a funding agreement or to
require any payment calculated by reference to the amount of
interests or loans held or interest received by it, then, upon
demand by the agent, seller shall pay to the agent, for the
benefit of the relevant funding source, such amounts charged to
such funding source or such amounts to otherwise compensate such
funding source for such reduction.
1.2
1.3 Section OTHER COSTS AND EXPENSES . SELLER SHALL PAY TO
THE AGENT AND THE CONDUITS ON DEMAND ALL COSTS AND OUT-OF-POCKET
EXPENSES IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY
AND ADMINISTRATION OF THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREBY AND THE OTHER DOCUMENTS TO BE DELIVERED
HEREUNDER, INCLUDING WITHOUT LIMITATION, THE COST OF CONDUITS'
AUDITORS AUDITING THE BOOKS, RECORDS AND PROCEDURES OF SELLER
ONCE PER YEAR PRIOR TO THE OCCURRENCE OF AN AMORTIZATION EVENT
AND AT ANY TIME UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF
AN AMORTIZATION EVENT, REASONABLE FEES AND OUT-OF-POCKET EXPENSES
OF LEGAL COUNSEL FOR CONDUITS AND THE AGENT (WHICH SUCH COUNSEL
MAY BE EMPLOYEES OF CONDUITS OR THE AGENT) WITH RESPECT THERETO
AND WITH RESPECT TO ADVISING CONDUITS AND THE AGENT AS TO THEIR
RESPECTIVE RIGHTS AND REMEDIES UNDER THIS AGREEMENT. SELLER
SHALL PAY TO AGENT ON DEMAND ANY AND ALL COSTS AND EXPENSES OF
THE AGENT AND THE PURCHASERS, IF ANY, INCLUDING REASONABLE
COUNSEL FEES AND EXPENSES IN CONNECTION WITH THE ENFORCEMENT OF
THIS AGREEMENT AND THE OTHER DOCUMENTS DELIVERED HEREUNDER AND IN
CONNECTION WITH ANY RESTRUCTURING OR WORKOUT OF THIS AGREEMENT OR
SUCH DOCUMENTS, OR THE ADMINISTRATION OF THIS AGREEMENT FOLLOWING
AN AMORTIZATION EVENT; PROVIDED, HOWEVER, TO THE EXTENT FEASIBLE
AND A CONFLICT OF INTEREST DOES NOT EXIST, THE PURCHASERS SHALL
ALL USE THE SAME COUNSEL.
1.4
ARTICLE THE AGENT
1 ARTICLE
THE AGENT
1.1 Section Authorization and Action . Each Purchaser
hereby designates and appoints Bank One to act as its agent
hereunder and under each other Transaction Document, and
authorizes the Agent to take such actions as agent on its behalf
and to exercise such powers as are delegated to the Agent by the
terms of this Agreement and the other Transaction Documents
together with such powers as are reasonably incidental thereto.
The Agent shall not have any duties or responsibilities, except
those expressly set forth herein or in any other Transaction
Document, or any fiduciary relationship with any Purchaser, and
no implied covenants, functions, responsibilities, duties,
obligations or liabilities on the part of the Agent shall be read
into this Agreement or any other Transaction Document or
otherwise exist for the Agent. In performing its functions and
duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not
assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for any Seller or any of
such Seller Party's successors or assigns. The Agent shall not
be required to take any action that exposes the Agent to personal
liability or that is contrary to this Agreement, any other
Transaction Document or applicable law. The appointment and
authority of the Agent hereunder shall terminate upon the
indefeasible payment in full of all Aggregate Unpaids. Each
Purchaser hereby authorizes the Agent to execute each of the
Uniform Commercial Code financing statements, together with such
other instruments or documents determined by the Agent to be
necessary or desirable in order to perfect, evidence or more
fully protect the interest of the Purchasers contemplated
hereunder, on behalf of such Purchaser (the terms of which shall
be binding on such Purchaser).
1.1 Section Delegation of Duties . The Agent may execute
any of its duties under this Agreement and each other Transaction
Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining
to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
1.2
1.3 Section Exculpatory Provisions . Neither the Agent nor
any of its directors, officers, agents or employees shall be (i)
liable for any action lawfully taken or omitted to be taken by it
or them under or in connection with this Agreement or any other
Transaction Document (except for its, their or such Person's own
gross negligence or willful misconduct), or (ii) responsible in
any manner to any of the Purchasers for any recitals, statements,
representations or warranties made by Seller contained in this
Agreement, any other Transaction Document or any certificate,
report, statement or other document referred to or provided for
in, or received under or in connection with, this Agreement, or
any other Transaction Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement, or any other Transaction Document or any other
document furnished in connection herewith or therewith, or for
any failure of Seller to perform its obligations hereunder or
thereunder, or for the satisfaction of any condition specified in
Article VI, or for the perfection, priority, condition, value or
sufficiency of any collateral pledged in connection herewith.
The Agent shall not be under any obligation to any Purchaser to
ascertain or to inquire as to the observance or performance of
any of the agreements or covenants contained in, or conditions
of, this Agreement or any other Transaction Document, or to
inspect the properties, books or records of Seller. The Agent
shall not be deemed to have knowledge of any Amortization Event
or Potential Amortization Event unless the Agent has received
notice from Seller or a Purchaser.
1.4
1.5 Section Reliance by Agent . The Agent shall in all
cases be entitled to rely, and shall be fully protected in
relying, upon any document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to Seller),
independent accountants and other experts selected by the Agent.
The Agent shall in all cases be fully justified in failing or
refusing to take any action under this Agreement or any other
Transaction Document unless it shall first receive such advice
or concurrence of the Conduits or the Required Financial
Institutions or all of the Purchasers, as applicable, as it deems
appropriate and it shall first be indemnified to its satisfaction
by the Purchasers, provided that unless and until the Agent shall
have received such advice, the Agent may take or refrain from
taking any action, as the Agent shall deem advisable and in the
best interests of the Purchasers. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, in
accordance with a request of the Conduits or the Required
Financial Institutions or all of the Purchasers, as applicable,
and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Purchasers.
1.6
1.7 Section Non-Reliance on Agent and Other Purchasers .
Each Purchaser expressly acknowledges that neither the Agent, nor
any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by the Agent hereafter taken,
including, without limitation, any review of the affairs of
Seller, shall be deemed to constitute any representation or
warranty by the Agent. Each Purchaser represents and warrants to
the Agent that it has and will, independently and without
reliance upon the Agent or any other Purchaser and based on such
documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations,
property, prospects, financial and other conditions and
creditworthiness of Seller and made its own decision to enter
into this Agreement, the other Transaction Documents and all
other documents related hereto or thereto.
1.8
1.9 Section Reimbursement and Indemnification . The
Financial Institutions agree to reimburse and indemnify the Agent
and its officers, directors, employees, representatives and
agents ratably according to their Pro Rata Shares, to the extent
not paid or reimbursed by Seller (i) for any amounts for which
the Agent, acting in its capacity as Agent, is entitled to
reimbursement by Seller hereunder and (ii) for any other expenses
incurred by the Agent, in its capacity as Agent and acting on
behalf of the Purchasers, in connection with the administration
and enforcement of this Agreement and the other Transaction
Documents.
1.10
1.11 Section Agent in its Individual Capacity . The Agent
and its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with Seller or any
Affiliate of Seller as though the Agent were not the Agent
hereunder. With respect to the acquisition of Purchaser
Interests pursuant to this Agreement, the Agent shall have the
same rights and powers under this Agreement in its individual
capacity as any Purchaser and may exercise the same as though it
were not the Agent, and the terms "Financial Institution,"
"Purchaser," "Financial Institutions" and "Purchasers" shall
include the Agent in its individual capacity.
1.12
1.13 Section Successor Agent . The Agent may, upon five
days' notice to Seller and the Purchasers, and the Agent will,
upon the direction of all of the Purchasers (other than the
Agent, in its individual capacity) resign as Agent. If the Agent
shall resign, then the Required Financial Institutions during
such five-day period shall appoint from among the Purchasers a
successor agent. If for any reason no successor Agent is
appointed by the Required Financial Institutions during such five-
day period, then effective upon the termination of such five day
period, the Purchasers shall perform all of the duties of the
Agent hereunder and under the other Transaction Documents and
Seller shall make all payments in respect of the Aggregate
Unpaids directly to the applicable Purchasers and for all
purposes shall deal directly with the Purchasers. After the
effectiveness of any retiring Agent's resignation hereunder as
Agent, the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Transaction Documents
and the provisions of this Article XI and Article X shall
continue in effect for its benefit with respect to any actions
taken or omitted to be taken by it while it was Agent under this
Agreement and under the other Transaction Documents.
1.14
ARTICLE ASSIGNMENTS; PARTICIPATIONS
1 ARTICLE
ASSIGNMENTS; PARTICIPATIONS
(a) Section Assignments . Seller and each Financial
Institution hereby agree and consent to the complete or partial
assignment by each Conduit of all or any portion of its rights
under, interest in, title to and obligations under this Agreement
to the Financial Institutions pursuant to Section 13.1 or, with
consent of the Seller, which consent shall not be unreasonably
withheld to any other Person, and upon such assignment, such
Conduit shall be released from its obligations so assigned.
Further, Seller and each Financial Institution hereby agree that
any assignee of the Conduits of this Agreement or all or any of
the Purchaser Interests of the Conduits shall have all of the
rights and benefits under this Agreement as if the term "Conduit"
explicitly referred to such party, and no such assignment shall
in any way impair the rights and benefits of the Conduits
hereunder. Seller shall not have the right to assign its rights
or obligations under this Agreement.
(a) Any Financial Institution may at any time and from
time to time assign to one or more Persons ("Purchasing Financial
Institutions") all or any part of its rights and obligations
under this Agreement pursuant to an assignment agreement,
substantially in the form set forth in Exhibit VII hereto (the
"Assignment Agreement") executed by such Purchasing Financial
Institution and such selling Financial Institution. The consent
of each Conduit shall be required prior to the effectiveness of
any such assignment and, prior to an Amortization Event, the
consent of the Seller (which consent shall not be unreasonably
withheld) shall be required. Each assignee of a Financial
Institution must have a short-term debt rating of A-1 or better
by Standard & Poor's Ratings Group and P-1 by ▇▇▇▇▇'▇ Investor
Service, Inc. and must agree to deliver to the Agent, promptly
following any request therefor by the Agent or any Conduit, an
enforceability opinion in form and substance satisfactory to the
Agent and each Conduit. Upon delivery of the executed Assignment
Agreement to the Agent, such selling Financial Institution shall
be released from its obligations hereunder to the extent of such
assignment. Thereafter the Purchasing Financial Institution
shall for all purposes be an Financial Institution party to this
Agreement and shall have all the rights and obligations of an
Financial Institution under this Agreement to the same extent as
if it were an original party hereto and no further consent or
action by Seller, the Purchasers or the Agent shall be required.
(b)
(c) Each of the Financial Institutions agrees that in
the event that it shall cease to have a short-term debt rating of
A-1 or better by Standard & Poor's Ratings Services and P-1 by
▇▇▇▇▇'▇ Investors Service, Inc. (an "Affected Financial
Institution"), such Affected Financial Institution shall be
obliged, at the request of the Seller, any Conduit or the Agent,
to assign all of its rights and obligations hereunder to (x)
another Financial Institution or (y) another funding entity
nominated by the Agent and acceptable to each Conduit, and
willing to participate in this Agreement through the Liquidity
Termination Date in the place of such Affected Financial
Institution; provided that the Affected Financial Institution
receives payment in full, pursuant to an Assignment Agreement, of
an amount equal to such Financial Institution's Pro Rata Share of
the Capital and Financial Institution Discount owing to the
Financial Institutions and all accrued but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of
the Purchaser Interests of the Financial Institutions.
(d)
1.2 Section Participations . Any Financial Institution
may, in the ordinary course of its business at any time sell to
one or more Persons (each a "Participant") participating
interests in its Pro Rata Share of the Purchaser Interests of the
Financial Institutions, its obligation to pay each Conduit its
Acquisition Amounts or any other interest of such Financial
Institution hereunder. Notwithstanding any such sale by a
Financial Institution of a participating interest to a
Participant, such Financial Institution's rights and obligations
under this Agreement shall remain unchanged, such Financial
Institution shall remain solely responsible for the performance
of its obligations hereunder, and Seller, the Conduits and the
Agent shall continue to deal solely and directly with such
Financial Institution in connection with such Financial
Institution's rights and obligations under this Agreement. Each
Financial Institution agrees that any agreement between such
Financial Institution and any such Participant in respect of such
participating interest shall not restrict such Financial
Institution's right to agree to any amendment, supplement, waiver
or modification to this Agreement, except for any amendment,
supplement, waiver or modification described in Section
14.1(b)(i).
1.3
ARTICLE LIQUIDITY FACILITY
1 ARTICLE
LIQUIDITY FACILITY
1.1 Section Transfer to Financial Institutions . Each
Financial Institution hereby agrees, subject to Section 13.4,
that immediately upon written notice from any Conduit delivered
on or prior to the Liquidity Termination Date, it shall acquire
by assignment from such Conduit, without recourse or warranty,
its Pro Rata Share of one or more of the Purchaser Interests of
such Conduit as specified by such Conduit. Each such assignment
by a Conduit shall be made pro rata among all of the Financial
Institutions, except for pro rata assignments to one or more
Terminating Financial Institutions pursuant to Section 13.6.
Each such Financial Institution shall, no later than 12:00 noon
(Chicago time) on the date of such assignment, pay in immediately
available funds (unless payment is otherwise agreed between such
Conduit and any Financial Institution) to the Agent at an account
designated by the Agent, for the benefit of such Conduit, its
Acquisition Amount. Unless a Financial Institution has notified
the Agent that it does not intend to pay its Acquisition Amount,
the Agent may assume that such payment has been made and may, but
shall not be obligated to, make the amount of such payment
available to such Conduit in reliance upon such assumption. Each
Conduit hereby sells and assigns to the Agent for the ratable
benefit of the Financial Institutions, and the Agent hereby
purchases and assumes from such Conduit, effective upon the
receipt by such Conduit of the Conduit Transfer Price, the
Purchaser Interests of such Conduit which are the subject of any
transfer pursuant to this Article XIII.
1.1 Section Transfer Price Reduction Yield . If the
Adjusted Liquidity Price is included in the calculation of the
Conduit Transfer Price for any Purchaser Interest of a Conduit,
each Financial Institution agrees that the Agent shall pay to the
affected Conduit the Reduction Percentage of any Financial
Institution Discount received by the Agent with respect to such
Purchaser Interest.
1.2
1.3 Section Payments to Conduits . In consideration for
the reduction of the Conduit Transfer Prices applicable to a
Conduit by the Conduit Transfer Price Reductions applicable to
such Conduit, effective only at such time as the aggregate amount
of the Capital of the Purchaser Interests of the Financial
Institutions acquired from such Conduit equals the Conduit
Residual applicable to such Conduit, each Financial Institution
hereby agrees that the Agent shall not distribute to the
Financial Institutions and shall immediately remit to such
Conduit any Yield, Collections or other payments received by it
to be applied pursuant to the terms hereof or otherwise to reduce
the Capital of the Purchaser Interests of the Financial
Institutions.
1.4
1.5 Section Limitation on Commitment to Purchase from
Conduits . Notwithstanding anything to the contrary in this
Agreement, no Financial Institution shall have any obligation to
purchase any Purchaser Interest from any Conduit, pursuant to
Section 13.1 or otherwise, if:
1.6
(i) Such Conduit shall have voluntarily commenced
any proceeding or filed any petition under any bankruptcy,
insolvency or similar law seeking the dissolution,
liquidation or reorganization of such Conduit or taken any
corporate action for the purpose of effectuating any of the
foregoing; or
(i) involuntary proceedings or an involuntary
petition shall have been commenced or filed against such
Conduit by any Person under any bankruptcy, insolvency or
similar law seeking the dissolution, liquidation or
reorganization of such Conduit and such proceeding or
petition shall have not been dismissed.
1.1 Section Defaulting Financial Institutions . If one or
more Financial Institutions defaults in its obligation to pay its
Acquisition Amount pursuant to Section 13.1 (each such Financial
Institution shall be called a "Defaulting Financial Institution"
and the aggregate amount of such defaulted obligations being
herein called the "Conduit Transfer Price Deficit"), then upon
notice from the Agent, each Financial Institution other than the
Defaulting Financial Institutions (a "Non-Defaulting Financial
Institution") shall promptly pay to the Agent, in immediately
available funds, an amount equal to the lesser of (x) such Non-
Defaulting Financial Institution's proportionate share (based
upon the relative Commitments of the Non-Defaulting Financial
Institutions) of the Conduit Transfer Price Deficit and (y) the
unused portion of such Non-Defaulting Financial Institution's
Commitment. A Defaulting Financial Institution shall forthwith
upon demand pay to the Agent for the account of the Non-
Defaulting Financial Institutions all amounts paid by each Non-
Defaulting Financial Institution on behalf of such Defaulting
Financial Institution, together with interest thereon, for each
day from the date a payment was made by a Non-Defaulting
Financial Institution until the date such Non-Defaulting
Financial Institution has been paid such amounts in full, at a
rate per annum equal to the Federal Funds Effective Rate plus two
percent (2%). In addition, without prejudice to any other rights
that the affected Conduit may have under applicable law, each
Defaulting Financial Institution shall pay to such Conduit
forthwith upon demand, the difference between such Defaulting
Financial Institution's unpaid Acquisition Amount and the amount
paid with respect thereto by the Non-Defaulting Financial
Institutions, together with interest thereon, for each day from
the date of the Agent's request for such Defaulting Financial
Institution's Acquisition Amount pursuant to Section 13.1 until
the date the requisite amount is paid to such Conduit in full, at
a rate per annum equal to the Federal Funds Effective Rate plus
two percent (2%).
1.2
1.3 Section Terminating Financial Institutions .
1.4
(a) Each Financial Institution hereby agrees to
deliver written notice to the Agent not more than 30 Business
Days and not less than 5 Business Days prior to the Liquidity
Termination Date indicating whether such Financial Institution
intends to renew its Commitment hereunder. If any Financial
Institution fails to deliver such notice on or prior to the date
that is 5 Business Days prior to the Liquidity Termination Date,
such Financial Institution will be deemed to have declined to
renew its Commitment (each Financial Institution which has
declined or has been deemed to have declined to renew its
Commitment hereunder, a "Non-Renewing Financial Institution").
The Agent shall promptly notify Conduits of each Non-Renewing
Financial Institution and each Conduit, in its sole discretion,
may (A) to the extent of Commitment Availability, declare that
such Non-Renewing Financial Institution's Commitment shall, to
such extent, automatically terminate on a date specified by such
Conduit on or before the Liquidity Termination Date or (B) upon
one (1) Business Days' notice to such Non-Renewing Financial
Institution assign to such Non-Renewing Financial Institution on
a date specified by such Conduit its Pro Rata Share of the
aggregate Purchaser Interests then held by such Conduit, subject
to, and in accordance with, Section 13.1.
(b)
(c) In addition, any Conduit may, in its sole
discretion, at any time (x) to the extent of Commitment
Availability, declare that any Affected Financial Institution's
Commitment shall automatically terminate on a date specified by
such Conduit or (y) assign to any Affected Financial Institution
on a date specified by such Conduit its Pro Rata Share of the
aggregate Purchaser Interests then held by such Conduit, subject
to, and in accordance with, Section 13.1 (each Affected Financial
Institution or each Non-Renewing Financial Institution is
hereinafter referred to as a "Terminating Financial
Institution"). The parties hereto expressly acknowledge that any
declaration of the termination of any Commitment, any assignment
pursuant to this Section 13.6 and the order of priority of any
such termination or assignment among Terminating Financial
Institutions shall be made by each Conduit in its sole and
absolute discretion.
(d)
(e) Upon any assignment to a Terminating Financial
Institution as provided in this Section 13.6, any remaining
Commitment of such Terminating Financial Institution shall
automatically terminate. Upon reduction to zero of the Capital
of all of the Purchaser Interests of a Terminating Financial
Institution (after application of Collections thereto pursuant to
Sections 2.2 and 2.3) all rights and obligations of such
Terminating Financial Institution hereunder shall be terminated
and such Terminating Financial Institution shall no longer be a
"Financial Institution" hereunder; provided, however, that the
provisions of Article X shall continue in effect for its benefit
with respect to Purchaser Interests held by such Terminating
Financial Institution prior to its termination as a Financial
Institution.
(f)
ARTICLE MISCELLANEOUS
1 ARTICLE
MISCELLANEOUS
(a) Section Waivers and Amendments . No failure or delay
on the part of the Agent or any Purchaser in exercising any
power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy. The
rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific
instance and for the specific purpose for which given.
(a) No provision of this Agreement may be amended,
supplemented, modified or waived except in writing in accordance
with the provisions of this Section 14.1(b). Conduits, Seller
and the Agent, at the direction of the Required Financial
Institutions, may enter into written modifications or waivers of
any provisions of this Agreement, provided, however, that no such
modification or waiver shall:
(b)
(i) without the consent of each affected
Purchaser, (A) extend the Liquidity Termination Date or the
date of any payment or deposit of Collections by Seller or
the Servicer, (B) reduce the rate or extend the time of
payment of Financial Institution Discount or any CP Costs
(or any component of Financial Institution Discount or CP
Costs), (C) reduce any fee payable to the Agent for the
benefit of the Purchasers, (D) except pursuant to Article
XII hereof, change the amount of the Capital of any
Purchaser, any Financial Institution's Pro Rata Share
(except pursuant to Sections 13.1 or 13.5) or any Financial
Institution's Commitment, (E) amend, modify or waive any
provision of the definition of Required Financial
Institutions or this Section 14.1(b), (F) consent to or
permit the assignment or transfer by Seller of any of its
rights and obligations under this Agreement, (G) change the
definition of "Eligible Receivable," "Loss Reserve,"
"Conduit Transfer Price," "Purchaser Interest," "Deemed
Collections" or "Net Receivables Balance" or (H) amend or
modify any defined term (or any defined term used directly
or indirectly in such defined term) used in clauses (A)
through (G) above in a manner that would circumvent the
intention of the restrictions set forth in such clauses; or
(i) without the written consent of the then
Agent, amend, modify or waive any provision of this
Agreement if the effect thereof is to affect the rights or
duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the
Financial Institutions, but with the consent of Seller, the Agent
may amend this Agreement solely to add additional Persons as
Financial Institutions hereunder and (ii) the Agent, the Required
Financial Institutions and the Conduits may enter into amendments
to modify any of the terms or provisions of Article XI, Article
XII, Section 14.13 or any other provision of this Agreement
without the consent of Seller, provided that such amendment has
no negative impact upon Seller. Any modification or waiver made
in accordance with this Section 14.1 shall apply to each of the
Purchasers equally and shall be binding upon Seller, the
Purchasers and the Agent.
(i) Section Notices . Except as provided in this Section
14.2, all communications and notices provided for hereunder shall
be in writing (including bank wire, telecopy or electronic
facsimile transmission or similar writing) and shall be given to
the other parties hereto at their respective addresses or
telecopy numbers set forth on the signature pages hereof or at
such other address or telecopy number as such Person may
hereafter specify for the purpose of notice to each of the other
parties hereto. Each such notice or other communication shall be
effective if given by telecopy, upon the receipt thereof, if
given by mail, three (3) Business Days after the time such
communication is deposited in the mail with first class postage
prepaid or if given by any other means, when received at the
address specified in this Section 14.2. Seller hereby authorizes
the Agent to effect purchases and Tranche Period and Discount
Rate selections based on telephonic notices made by any Person
whom the Agent in good faith believes to be acting on behalf of
Seller. Seller agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice signed by an authorized
officer of Seller; provided, however, the absence of such
confirmation shall not affect the validity of such notice. If
the written confirmation differs from the action taken by the
Agent, the records of the Agent shall govern absent manifest
error.
(ii)
1.2 Section Ratable Payments . If any Purchaser, whether
by setoff or otherwise, has payment made to it with respect to
any portion of the Aggregate Unpaids owing to such Purchaser
(other than payments received pursuant to Section 10.2 or 10.3)
in a greater proportion than that received by any other Purchaser
entitled to receive a ratable share of such Aggregate Unpaids,
such Purchaser agrees, promptly upon demand, to purchase for cash
without recourse or warranty a portion of such Aggregate Unpaids
held by the other Purchasers so that after such purchase each
Purchaser will hold its ratable proportion of such Aggregate
Unpaids; provided that if all or any portion of such excess
amount is thereafter recovered from such Purchaser, such purchase
shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
1.3
(a) Section Protection of Ownership Interests of the
Purchasers . Seller agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and
documents, and take all actions, that may be necessary or
desirable, or that the Agent may request, to perfect, protect or
more fully evidence the Purchaser Interests, or to enable the
Agent or the Purchasers to exercise and enforce their rights and
remedies hereunder. At any time during the continuance of an
Amortization Event, the Agent may, or the Agent may direct Seller
or the Servicer to, notify the Obligors of Receivables, at
Seller's expense, of the ownership or security interests of the
Purchasers under this Agreement and may also direct that payments
of all amounts due or that become due under any or all
Receivables be made directly to the Agent or its designee.
Seller shall, at any Purchaser's request, withhold the identity
of such Purchaser in any such notification.
(b)
(c) If Seller fails to perform any of its obligations
hereunder, the Agent or any Purchaser may (but shall not be
required to) perform, or cause performance of, such obligation,
and the Agent's or such Purchaser's costs and expenses incurred
in connection therewith shall be payable by Seller as provided in
Section 10.3. Seller irrevocably authorizes the Agent at any
time and from time to time in the sole discretion of the Agent,
and appoints the Agent as its attorney-in-fact, to act on behalf
of Seller (i) to execute on behalf of Seller as debtor and to
file financing statements necessary or desirable in the Agent's
sole discretion to perfect and to maintain the perfection and
priority of the interest of the Purchasers in the Receivables and
(ii) to file a carbon, photographic or other reproduction of this
Agreement or any financing statement with respect to the
Receivables as a financing statement in such offices as the Agent
in its sole discretion deems necessary or desirable to perfect
and to maintain the perfection and priority of the interests of
the Purchasers in the Receivables. This appointment is coupled
with an interest and is irrevocable.
(d)
(e) Section Confidentiality . Seller and each Purchaser
shall maintain and shall cause each of its employees and officers
to maintain the confidentiality of this Agreement and the other
confidential or proprietary information with respect to the Agent
and Conduits and their respective businesses obtained by it or
them in connection with the structuring, negotiating and
execution of the transactions contemplated herein, except that
Seller and such Purchaser and its officers and employees may
disclose such information to Seller's and such Purchaser's
external accountants and attorneys and as required by any
applicable law or order of any judicial or administrative
proceeding.
(f)
(g) In the event that Seller, the Servicer or any
Affiliate of either of them (herein called "Subject Entities")
provides to the Agent or any Purchaser information belonging to
any of the Subject Entities, the Agent and the Purchasers shall
thereafter maintain such information in confidence in accordance
with the standards of care and diligence that each utilizes in
maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information
which (i) are disclosed to the Agent, the Financial Institutions
or Conduits by each other, (ii) are disclosed by the Agent or the
Purchasers to any prospective or actual assignee or participant
of any of them, (iii) are disclosed by the Agent to any rating
agency, Commercial Paper dealer or provider of a surety, guaranty
or credit or liquidity enhancement to Conduits or any entity
organized for the purpose of purchasing, or making loans secured
by, financial assets for which Bank One acts as the
administrative agent and to any officers, directors, employees,
outside accountants and attorneys of any of the foregoing, (iv)
are in the public domain, (v) hereafter become part of the public
domain without the Agent or the Purchasers breaching their
obligation of confidence to any Subject Entity, (vi) are
previously known by the Agent or the Purchasers from some source
other than any Subject Entity, (vii) are hereafter obtained by or
available to the Agent or the Purchasers from a third party who
owes no obligation of confidence to the Subject Entities with
respect to such information or through any other means other than
through disclosure by the Subject Entities, (viii) are disclosed
with Seller's consent, (ix) must be disclosed to any Governmental
Authority regulating the activities of the Agent or the
Purchasers, or (x) as may be required by law or regulation or
order of any Governmental Authority in any judicial, arbitration
or governmental proceeding.
(h)
1.4 Section Bankruptcy Petition . Seller, the Agent and
each Financial Institution hereby covenants and agrees that,
prior to the date that is one year and one day after the payment
in full of all outstanding senior Indebtedness of any Conduit or
any Financial Institution that is a special purpose bankruptcy
remote entity, it will not institute against, or join any other
Person in instituting against, such Conduit or any such entity
any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the
laws of the United States or any state of the United States.
1.5
1.6 Section Limitation of Liability . Except with respect
to any claim arising out of the willful misconduct or gross
negligence of Seller, the Servicer, any Originator or any
Conduit, the Agent or any Financial Institution, no claim may be
made by Seller, any Conduit, the Agent, any Financial Institution
or any other Person against any such Person or their respective
Affiliates, directors, officers, employees, attorneys or agents
for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory
of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and each such party hereby
waives, releases, and agrees not to ▇▇▇ upon any claim for any
such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.
1.7
1.8 Section CHOICE OF LAW . ALL PROVISIONS OF THIS
AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
TEXAS.
1.9
1.10 Section CONSENT TO JURISDICTION . SELLER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO,
ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON
PURSUANT TO THIS AGREEMENT AND EACH OF Seller HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVES 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 AGENT OR ANY PURCHASER TO BRING
PROCEEDINGS AGAINST SELLER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY SELLER AGAINST THE
AGENT OR ANY PURCHASER OR ANY AFFILIATE OF THE AGENT OR A
PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT
OR ANY DOCUMENT EXECUTED BY SELLER PURSUANT TO THIS AGREEMENT
SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
1.11
1.12 Section WAIVER OF JURY TRIAL . EACH PARTY HERETO
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY SELLER
PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.
1.13
1.14 Section Integration; Binding Effect; Survival of Terms
.
1.15
(a) This Agreement and each other transaction Document
contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
(b)
(c) This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and permitted assigns (including any trustee in bankruptcy).
This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms
and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and
remedies with respect to (i) any breach of any representation and
warranty made by Seller pursuant to Article V, (ii) the
indemnification and payment provisions of Article X, and Sections
14.5 and 14.6 shall be continuing and shall survive any
termination of this Agreement.
(d)
1.16 Section Counterparts; Severability; Section References
. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all
of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. Unless otherwise expressly
indicated, all references herein to "Article," "Section,"
"Schedule" or "Exhibit" shall mean articles and sections of, and
schedules and exhibits to, this Agreement.
1.17
1.18 Section Bank One Roles . Each of the Financial
Institutions acknowledges that Bank One acts, or may in the
future act, (i) as administrative agent for any Conduit or any
Financial Institution, (ii) as issuing and paying agent for the
Commercial Paper, (iii) to provide credit or liquidity
enhancement for the timely payment for the Commercial Paper and
(iv) to provide other services from time to time for any Conduit
or any Financial Institution (collectively, the "Bank One
Roles"). Without limiting the generality of this Section 14.13,
each Financial Institution hereby acknowledges and consents to
any and all Bank One Roles and agrees that in connection with any
Bank One Role, Bank One may take, or refrain from taking, any
action that it, in its discretion, deems appropriate, including,
without limitation, in its role as administrative agent for
Conduits, and the giving of notice to the Agent of a mandatory
purchase pursuant to Section 13.1.
1.19
(a) Section Characterization . It is the intention of
the parties hereto that each purchase hereunder shall constitute
and be treated as an absolute and irrevocable sale, which
purchase shall provide the applicable Purchaser with the full
benefits of ownership of the applicable Purchaser Interest.
Except as specifically provided in this Agreement, each sale of a
Purchaser Interest hereunder is made without recourse to Seller;
provided, however, that (i) Seller shall be liable to each
Purchaser and the Agent for all representations, warranties,
covenants and indemnities made by Seller pursuant to the terms of
this Agreement, and (ii) such sale does not constitute and is not
intended to result in an assumption by any Purchaser or the Agent
or any assignee thereof of any obligation of Seller or any
Originator or any other person arising in connection with the
Receivables, the Related Security, or the related Contracts, or
any other obligations of Seller or any Originator.
(b)
(c) It is further the express intent of the Seller,
Agent and each Purchaser that Section 9.102(d) of the Texas
Business and Commerce Code shall apply to all purchases and sales
of Receivables and Purchaser Interests hereunder. Each of the
Seller, Agent and each Purchaser agree that it will not account
for the transaction contemplated herein other than as a sale of
Receivables to the Purchasers, except that for purposes of all
taxes, the transactions contemplated hereby shall be treated as a
loan by the Purchasers (through the Agent) to the Seller that is
secured by the Receivables.
(d)
(e) In the event that the characterization in Section
14.14(b) is not respected for any reason, in addition to any
ownership interest which the Agent may from time to time acquire
pursuant hereto, Seller hereby grants to the Agent for the
ratable benefit of the Purchasers a valid and perfected security
interest in all of Seller's right, title and interest in, to and
under all Receivables now existing or hereafter arising, the
Collections, each Lock-Box, each Collection Account, all Related
Security, all other rights and payments relating to such
Receivables, and all proceeds of any thereof prior to all other
liens on and security interests therein to secure the prompt and
complete payment of the Aggregate Unpaids. The Agent and the
Purchasers shall have, in addition to the rights and remedies
that they may have under this Agreement, all other rights and
remedies provided to a secured creditor under the UCC and other
applicable law, which rights and remedies shall be cumulative.
(f)
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date hereof.
KN RECEIVABLES CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Title: Vice President and Treasurer
Address: One ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copy to:
K N Energy, Inc.
Address: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: _Rose ▇. ▇▇▇▇▇▇▇
FALCON ASSET SECURITIZATION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Authorized Signatory
Address: c/o Bank
One, NA, as Agent
Asset Backed Finance
Suite IL1-0079, 1-19
One Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
INTERNATIONAL SECURITIZATION CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Authorized Signatory
Address: c/o Bank
One, NA, as Agent
Asset Backed Finance
Suite IL1-0079, 1-19
One Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
BANK ONE, NA, as a Financial Institution
and as Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Title: Director
Address: Bank One, NA
Asset Backed Finance
Suite 0596, 1-21
One Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Accrual Period" means (i) unless the Agent has designated a
Special Settlement Date, each calendar month, provided that the
initial Accrual Period hereunder means the period from (and
including) the date of the initial purchase hereunder to (and
including) the last day of the calendar month thereafter and (ii)
if the Agent has designated any Special Settlement Date, such
period of time commencing on the day following the last day of
the preceding Accrual Period and ending on a day preceding such
Special Settlement Date as specified by the Agent.
"Acquisition Amount" means, on the date of any purchase from
any Conduit of Purchaser Interests pursuant to Section 13.1, (i)
with respect to any Financial Institution other than Bank One
(but including Bank One if it is at any time a Terminating
Financial Institution), the lesser of (a) such Financial
Institution's Pro Rata Share of the Conduit Transfer Price and
(b) such Financial Institution's unused Commitment and (ii) with
respect to Bank One solely in the instant of a purchase from any
Conduit of Purchaser Interests by all of the Financial
Institutions, the difference between (a) the Conduit Transfer
Price and (b) the aggregate amount payable by all other Financial
Institutions on such date pursuant to clause (i) above.
"Adjusted Liquidity Price" means, in determining the Conduit
Transfer Price for any Purchaser Interest, an amount equal to
RI~ LEFT [ (i)~DC~+~(ii)~ LEFT [ {NDR} over {1~+~(.50~x~ .10)}
RIGHT] ~RIGHT ]
where:
RI = the undivided percentage interest
evidenced by such Purchaser Interest.
DC = the Deemed Collections.
NDR = the Outstanding Balance of all
Receivables as to which any payment, or part
thereof, has not remained unpaid for sixty-
one (61) days or more from the original due
date for such payment.
Each of the foregoing shall be determined from the most recent
Monthly Report received from the Servicer.
"Adverse Claim" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's
assets or properties in favor of any other Person. Security
interests in favor of owners of interests in production provided
by a Section ▇-▇▇▇ ▇▇▇▇▇▇▇ shall not be considered "Adverse
Claims" so long as the applicable Originators timely pay such
interest owners in full all amounts due and owing to such
interest owners.
"Affected Financial Institution" has the meaning specified
in Section 12.1(c).
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with, such Person or any
Subsidiary of such Person. A Person shall be deemed to control
another Person if the controlling Person owns 10% or more of any
class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agent" has the meaning set forth in the preamble to this
Agreement.
"Aggregate Capital" means, on any date of determination, the
aggregate amount of Capital of all Purchaser Interests
outstanding on such date.
"Aggregate Reduction" has the meaning specified in Section
1.3.
"Aggregate Reserves" means, on any date of determination,
the sum of the Loss Reserve, the Discount and Servicing Fee
Reserve, the Variance Reserve and the Dilution Reserve.
"Aggregate Unpaids" means, at any time, an amount equal to
the sum of all, Aggregate Capital and all other unpaid
Obligations (whether due or accrued) at such time.
"Agreement" means this Receivables Purchase Agreement, as it
may be amended or modified and in effect from time to time.
"Amortization Date" means the earliest to occur of (i) the
day on which any of the conditions precedent set forth in Section
6.2 are not satisfied, (ii) the Business Day immediately prior to
the occurrence of an Amortization Event set forth in Section
9.1(f), (iii) the Business Day specified in a written notice from
the Agent following the occurrence of any other Amortization
Event, (iv) the date which is sixty (60) Business Days after the
Agent's receipt of written notice from Seller that it wishes to
terminate the facility evidenced by this Agreement, and (v) sixty
(60) days following the date of assignment by any Conduit to all
of the Financial Institutions pursuant to Section 13.1 hereof.
"Amortization Event" has the meaning specified in Article
IX.
"Assignment Agreement" has the meaning set forth in Section
12.1(b).
"Authorized Officer" means, with respect to any Person, its
president, corporate controller, treasurer or chief financial
officer.
"Available Funds" shall mean, on any Settlement Date, the
aggregate of (i) the aggregate Purchasers' Collections received
with respect to Receivables during the related Calculation
Period.
"Bank One" means Bank One, NA, in its individual capacity
and its successors.
"Base Rate" means a rate per annum equal to the corporate
base rate, prime rate or base rate of interest, as applicable,
announced by the Reference Bank from time to time, changing when
and as such rate changes.
"Broken Funding Costs" means for any Purchaser Interest
which: (X) (i) has its Capital reduced or terminated without
compliance with the notice requirements hereunder or (ii) is
assigned under Article XIII (other than assignments by Conduits
at a time that no Amortization Event or Potential Amortization
Event has occurred and is continuing) or terminated prior to the
date it was originally scheduled, the excess, if any, of (A) the
CP Costs or Financial Institution Discount (as applicable) that
would have accrued during the remainder of the tranche periods
for Commercial Paper determined by the Agent to relate to such
Purchaser Interest subsequent to the date of such reduction,
assignment or termination on the Capital of such Purchaser
Interest if such reduction or termination had not occurred or
such Reduction Notice had not been delivered, over (B) the sum of
(x) to the extent all or a portion of such Capital is allocated
to another Purchaser Interest, the CP Costs or Financial
Institution Discount (as applicable) actually accrued during such
periods on such Capital for the new Purchaser Interest, and (y)
to the extent such Capital is not allocated to another Purchaser
Interest, the income, if any, actually received during such
periods by the holder of such Purchaser Interest from investing
the portion of such Capital not so allocated or (Y) does not
become subject to an Aggregate Reduction following the delivery
of a Reduction Notice, the amount of CP Costs or Financial
Institution Discount, swap costs or other interest expense that
accrue for Commercial Paper or other funding sources determined
by the Agent to relate to such Purchaser Interest subsequent to
the date such Aggregate Reduction was designated to occur
pursuant to the Reduction Notice in the Capital of such Purchaser
Interest. In the event that the amount referred to in clause (B)
exceeds the amount referred to in clause (A), the relevant
Purchaser or Purchasers agree to pay to Seller the amount of such
excess. All Broken Funding Costs shall be due and payable
hereunder upon demand.
"Business Day" means any day on which banks are not
authorized or required to close in New York, New York or Chicago,
Illinois and The Depository Trust Company of New York is open for
business, and, if the applicable Business Day relates to any
computation or payment to be made with respect to the LIBO Rate,
any day on which dealings in dollar deposits are carried on in
the London interbank market.
"Calculation Period" means (i) unless the Agent has
designated a Special Settlement Date, each calendar month or
portion thereof which elapses during the term of the Agreement
and (ii) if the Agent has designated any Special Settlement Date,
such period of time commencing on the day following the last day
of the preceding Calculation Period and ending on a day preceding
such Special Settlement Date as specified by the Agent. The
first Calculation Period shall commence on the date of the
Purchase of Receivables hereunder and the final Calculation
Period shall terminate on the Amortization Date.
"Capital" of any Purchaser Interest means, at any time, (A)
the Purchase Price of such Purchaser Interest, minus (B) the sum
of the aggregate amount of Collections and other payments
received by the Agent which in each case are applied to reduce
such Capital in accordance with the terms and conditions of this
Agreement; provided that such Capital shall be restored (in
accordance with Section 2.5) in the amount of any Collections or
other payments so received and applied if at any time the
distribution of such Collections or payments are rescinded,
returned or refunded for any reason.
"Change of Control" means the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30% or
more of the outstanding shares of voting stock of any Seller.
"Change in Ownership" means KNEI shall cease to own, free
and clear of all Adverse Claims, all of the outstanding shares of
voting stock of Seller on a fully-diluted basis.
"Charged-Off Receivable" means a Receivable: (i) as to which
the Obligor thereof has taken any action, or suffered any event
to occur, of the type described in Section 9.1(f) (as if
references to Seller therein refer to such Obligor); (ii) as to
which the Obligor thereof, if a natural person, is deceased,
(iii) which, consistent with the Credit and Collection Policy,
would be written off Seller's books as uncollectible or (iv)
which has been identified by Seller as uncollectible.
"Chase Collection Account" means account number 323076947
maintained with Chase Manhattan Bank in the name of K N Energy,
Inc.
"Closing Date" means September 28, 1999.
"Collection Account" means each concentration account,
depositary account, lock-box account or similar account in which
any Collections are collected or deposited and which is listed on
Exhibit IV.
"Collection Account Agreement" means an agreement
substantially in the form of Exhibit VI among the Originator,
Seller, the Agent and a Collection Bank.
"Collection Bank" means, at any time, any of the banks
holding one or more Collection Accounts.
"Collection Notice" means a notice, in substantially the
form of Annex A to Exhibit VI, from the Agent to a Collection
Bank.
"Collections" means, with respect to any Receivable, all
cash collections and other cash proceeds in respect of such
Receivable, including, without limitation, all CP Costs,
Financial Institution Discount, Finance Charges or other related
amounts accruing in respect thereof and all cash proceeds of
Related Security with respect to such Receivable.
"Commercial Paper" means promissory notes of any Conduit
issued by such Conduit in the commercial paper market.
"Commitment" means, for each Financial Institution, the
commitment of such Financial Institution to purchase Purchaser
Interests from (i) Seller and (ii) Conduits, in an amount not to
exceed, (a) in the aggregate, the amount set forth opposite such
Financial Institution's name on Schedule A to this Agreement, as
such amount may be modified in accordance with the terms hereof
(including, without limitation, any termination of Commitments
pursuant to Section 13.6 hereof) and (b) with respect to any
individual purchase hereunder, its Pro Rata Share of the Purchase
Price therefor.
"Commitment Availability" means at any time the positive
difference (if any) between (a) an amount equal to the aggregate
amount of the Commitments at such time minus (b) the Aggregate
Capital at such time.
"Concentration Limit" means, at any time, for any Obligor,
3.33% of the aggregate Capital of the Purchaser Interests, or
such other higher amount (a "Special Concentration Limit") for
such Obligor designated by the Agent; provided, that in the case
of an Obligor and any Affiliate of such Obligor, the
Concentration Limit shall be calculated as if such Obligor and
such Affiliate are one Obligor; and provided, further, that
Conduits or the Required Financial Institutions may, upon not
less than three Business Days' notice to Seller, cancel any
Special Concentration Limit.
"Conduit Residual" means, for a Conduit, the sum of the
Conduit Transfer Price Reductions for such Conduit.
"Conduits" has the meaning set forth in the preamble to this
Agreement.
"Conduit Share" means, for each Conduit, a percentage equal
to (i) the Capital invested by such Conduit in Purchaser
Interests divided by (ii) the aggregate amount of all Capital
invested by all Conduits in Purchaser Interests.
"Conduit Transfer Price" means, with respect to the
assignment by any Conduit of one or more Purchaser Interests to
the Agent for the benefit of the Financial Institutions pursuant
to Section 13.1 (except as otherwise agreed between such Conduit
and any Financial Institution), the sum of (i) the lesser of (a)
the Capital of each such Purchaser Interest and (b) the Adjusted
Liquidity Price of each such Purchaser Interest and (ii) all
accrued and unpaid CP Costs for each such Purchaser Interest.
"Conduit Transfer Price Deficit" has the meaning set forth
in Section 13.5.
"Conduit Transfer Price Reduction" means in connection with
the assignment of a Purchaser Interest by any Conduit to the
Agent for the benefit of the Financial Institutions, the positive
difference between (i) the Capital of such Purchaser Interest and
(ii) the Adjusted Liquidity Price for such Purchaser Interest.
"Consolidated Assets" means the total amount of assets
appearing on the consolidated balance sheet of KNEI and its
Consolidated Subsidiaries, prepared in accordance with generally
accepted accounting principles as of the date of the most recent
regularly prepared consolidated financial statements prior to the
taking of any action for the purposes of which the determination
is being made.
"Consolidated Debt" of any Person means at any date the sum
(without duplication) of (i) the Debt of such Person and its
Consolidated Subsidiaries, determined on a consolidated basis as
of such date plus (ii) the excess (if any) of the Trust Preferred
Securities of such Person over 10% of the Consolidated Total
Capitalization of such Person at such date.
"Consolidated Net Income" means, for any period, the net
income of KNEI and its Consolidated Subsidiaries before
extraordinary items, determined on a consolidated basis for such
period.
"Consolidated Net Worth" of any Person means at any date the
sum (without duplication) of (i) the consolidated stockholders'
equity of such Person and its Consolidated Subsidiaries,
determined as of such date plus (ii) the Mandatorily Convertible
Preferred Stock of such Person plus (iii) the Trust Preferred
Securities of such Person; provided that the amount of Trust
Preferred Securities added pursuant to this clause (iii) shall
not exceed 10% of Consolidated Total Capitalization of such
Person at such date.
"Consolidated Subsidiary" of any Person means at any date
any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in its consolidated
financial statements if such statements were prepared as of such
date.
"Consolidated Total Capitalization" of any Person means at
any date the sum of Consolidated Debt of such Person and
Consolidated Net Worth of such Person, each determined as of such
date.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement, take-or-pay
contract or application for a letter of credit.
"Contract" means, with respect to any Receivable, any and
all instruments, agreements, invoices or other writings pursuant
to which such Receivable arises or which evidences such
Receivable.
"CP Costs" means, for each day, the sum of (i) discount or
yield accrued on Pooled Commercial Paper on such day, plus (ii)
any and all accrued commissions in respect of placement agents
and Commercial Paper dealers, and issuing and paying agent fees
incurred, in respect of such Pooled Commercial Paper for such
day, plus (iii) other costs associated with funding small or odd-
lot amounts with respect to all receivable purchase facilities
which are funded by Pooled Commercial Paper for such day, minus
(iv) any accrual of income net of expenses received on such day
from investment of collections received under all receivable
purchase facilities funded substantially with Pooled Commercial
Paper, minus (v) any payment received on such day net of expenses
in respect of Broken Funding Costs related to the prepayment of
any Purchaser Interest of any Conduit pursuant to the terms of
any receivable purchase facilities funded substantially with
Pooled Commercial Paper. In addition to the foregoing costs, if
Seller shall request any Incremental Purchase during any period
of time determined by the Agent in its sole discretion to result
in incrementally higher CP Costs applicable to such Incremental
Purchase, the Capital associated with any such Incremental
Purchase shall, during such period, be deemed to be funded by
Conduits in a special pool (which may include capital associated
with other receivable purchase facilities) for purposes of
determining such additional CP Costs applicable only to such
special pool and charged each day during such period against such
Capital.
"Credit Agreement" means the $600,000,000 364-Day Credit
Agreement dated as of January 8, 1999 among K N Energy, Inc., the
banks listed therein and ▇▇▇▇▇▇ Guaranty Trust Company of New
York as administrative agent (as amended, restated, supplemented
or otherwise modified from time to time), or any successor
facility.
"Credit and Collection Policy" means Seller's credit and
collection policies and practices relating to Contracts and
Receivables existing on the date hereof and summarized in Exhibit
VIII hereto, as modified from time to time in accordance with
this Agreement.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or
services, except trade accounts payable or deferred employee and
director compensation arising in the ordinary course of business,
(iv) all obligations of such Person as lessee which are
capitalized in accordance with generally accepted accounting
principles, (v) all non-contingent obligations of such Person to
reimburse any bank or other Person in respect of amounts paid
under a letter of credit or similar instrument, (vi) all Debt
secured by a Lien on any asset of such Person, whether or not
such Debt is otherwise an obligation of such Person, and (vii)
all Debt of others Guaranteed by such Person.
"Deemed Collections" means the aggregate of all amounts
Seller shall have been deemed to have received as a Collection of
a Receivable. Seller shall be deemed to have received a
Collection in full of a Receivable if at any time:
(a) the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective or
rejected goods or services, any discount or any
adjustment by an Originator or by the Servicer (other
than cash Collections on account of the Receivables) or
for any other reason not arising from the financial
inability of the Obligor to pay,
(ii) reduced or canceled as a result of a
setoff in respect of any claim by any Person (whether
such claim arises out of the same or a related
transaction or an unrelated transaction and whether
such claim relates to such Originator or any Affiliate
thereof other than Seller), or
(iii) is otherwise reduced as a result of
any of the factors set forth in the definition of
"Dilution," or
(b) any of the representations and warranties set
forth in Article V are no longer true with respect to any
Receivable or any Receivable which was represented to be an
Eligible Receivable on any date is determined by Seller or the
Agent to not have been an Eligible Receivable on such date.
"Default Fee" means with respect to any amount due and
payable by Seller in respect of any Aggregate Unpaids, an amount
equal to the greater of (i) $1000 and (ii) interest on any such
unpaid Aggregate Unpaids at a rate per annum equal to 2% above
the Base Rate, it being understood that a Default Fee shall not
accrue on a Receivable by reason of such Receivable becoming a
Defaulted Receivable.
"Default Ratio" means, for any Calculation Period, a ratio
(expressed as a percentage) equal to (i) the Outstanding Balance
of all Receivables which are more than sixty-one (61) and less
than ninety-one (91) days past due plus all Charged-Off
Receivables (without duplication) written off during such period
divided by (ii) the aggregate Original Balance of all Receivables
generated during the Calculation Period which ended three (3)
Calculation Periods prior to such Calculation Period.
"Defaulted Receivable" means a Receivable: (i) as to which
the Obligor thereof has taken any action, or suffered any event
to occur, of the type described in Section 9.1(f) (as if
references to Seller therein refer to such Obligor); (ii) as to
which the Obligor thereof, if a natural person, is deceased,
(iii) which, consistent with the Credit and Collection Policy,
would be written off Seller's books as uncollectible, (iv) which
has been identified by Seller as uncollectible in accordance with
the Credit and Collection Policy or (v) as to which any payment,
or part thereof, remains unpaid for sixty-one (61) days or more
from the original due date for such payment.
"Defaulting Financial Institution" has the meaning set forth
in Section 13.5.
"Delinquent Receivable" means a Receivable as to which any
payment, or part thereof, remains unpaid for thirty-one (31) days
or more from the original due date for such payment.
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction
(including any option with respect to any of the foregoing
transactions) or any combination of the foregoing transactions.
"Designated Obligor" means an Obligor indicated by the Agent
to Seller in writing.
"Dilution Horizon Ratio" means, as of any date as set forth
in the most recent Monthly Report, a ratio computed by dividing
(i) the aggregate Original Balance of all Receivables generated
during the most recently ended Calculation Period by (ii) the
aggregate Outstanding Balance of total Eligible Receivables as at
the last day of the most recently ended Calculation Period.
"Dilution Ratio" means, on any date, a percentage equal to a
fraction (i) the numerator of which is the aggregate amount of
Dilutions (excluding any positive Monthly Variance) which
occurred during the Calculation Period most recently ended prior
to such date, and (ii) the denominator of which is the aggregate
Original Balance of the Receivables generated during the second
full Calculation Period preceding such date.
"Dilution Reserve" means, on any date, an amount equal to
the product of (x) the greater of (i) 5% and (ii) the Dilution
Reserve Ratio then in effect and (y) the Net Receivables Balance
as of the close of business on the immediately preceding Business
Day.
"Dilution Reserve Ratio" means, as of any date, an amount
calculated as follows:
DRR = [(2.0 x ADR) + [(HDR-ADR) x (HDR/ADR]] x DHR
where:
DRR = the Dilution Reserve Ratio;
ADR = the average of the Dilution Ratios for the
past twelve Calculation Periods;
HDR = the highest average of the Dilution Ratios
for any three consecutive Calculation Periods during
the most recent twelve months; and
DHR = the Dilution Horizon Ratio.
The Dilution Reserve Ratio shall be calculated monthly in each
Monthly Report and such Dilution Reserve Ratio shall, absent
manifest error, be effective from the corresponding Settlement
Date until the next succeeding Settlement Date.
"Dilutions" means, at any time, the aggregate amount of
reductions in the Outstanding Balances of the Receivables as a
result of any positive Monthly Variance, setoff, discount,
rebate, trade-in credit, credit memo, inter-company entry,
adjustment or otherwise, other than (i) Cash Collections on
account of the Receivables and (ii) charge-offs.
"Discount and Servicing Fee Reserve" means, on any date, two
percent (2.0%) of the Net Receivables Balance.
"Effective Date" means the date the Credit Agreement became
effective in accordance with Section 3.01 thereof.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which (a) if a natural person, is a
resident of the United States or, if a corporation or other
business organization, is organized under the laws of the
United States or any political subdivision thereof and has
its chief executive office in the United States; (b) is not
an Affiliate of any of the parties hereto; (c) is not a
Designated Obligor; and (d) is not a government or a
governmental subdivision or agency,
(i) which is denominated and payable only in United
States dollars in the United States,
(i) which is not a Delinquent Receivable,
(i) which is not a Charged-Off Receivable,
(i) which by its terms is due and payable within 30
days of the original billing date therefor and has not had
its payment terms extended,
(i) which is an "account" within the meaning of
Section 9-106 of the UCC of all applicable jurisdictions,
(i) which is an account receivable representing all or
part of the sales price of merchandise, insurance or
services within the meaning of Section 3(c)(5) of the
Investment Company Act of 1940, as amended,
(i) which arises under a Contract that contains an
obligation to pay a specified sum of money, contingent only
upon the sale of goods or the provision of services by
Seller,
(i) which arises under a Contract in substantially the
form of one of the form of contracts set forth on Exhibit IX
hereto or otherwise approved by the Agent in writing, which,
together with such Receivable, is in full force and effect
and constitutes the legal, valid and binding obligation of
the related Obligor enforceable by Seller and its assignees
against such Obligor in accordance with its terms,
(i) which arises under a Contract which (A) does not
require the Obligor under such Contract to consent to the
transfer, sale or assignment of the rights and duties of the
Originator or any of its assignees under such Contract and
(B) does not contain a confidentiality provision that
purports to restrict the ability of any Purchaser to
exercise its rights under this Agreement, including, without
limitation, its right to review the Contract,
(i) which, together with the Contract related thereto,
does not contravene any law, rule or regulation applicable
thereto (including, without limitation, any law, rule and
regulation relating to truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy) and with respect
to which no part of the Contract related thereto is in
violation of any such law, rule or regulation,
(i) which is not subject to any affirmatively asserted
right of recission, set-off (in respect of all or any
portion of the Outstanding Balance thereof then being
proposed for inclusion in Net Receivables Balance as of any
date), counterclaim, any other defense (including defenses
arising out of violations of usury laws) of the applicable
Obligor or Originator or any other Adverse Claim, and the
Obligor thereon holds no right as against Originator to
cause Originator to repurchase the goods or merchandise the
sale of which shall have given rise to such Receivable
(except with respect to sale discounts effected pursuant to
the Contract, or defective goods returned in accordance with
the terms of the Contract),
(i) which satisfies all applicable requirements of the
Credit and Collection Policy,
(i) which was generated in the ordinary course of
Originator's business,
(i) which arises solely from the sale of goods or the
provision of services to the related Obligor by Originator,
and not by any other Person (in whole or in part), and
(i) as to which the Agent has not notified Seller that
the Agent has determined that such Receivable or class of
Receivables is not acceptable as an Eligible Receivable,
including, without limitation, because such Receivable
arises under a Contract that is not acceptable to the Agent.
(i) as to which Originator has satisfied and fully
performed all obligations on its part with respect to such
Receivable required to be fulfilled by it, and no further
action is required to be performed by any Person with
respect thereto other than payment thereon by the applicable
Obligor, and
(i) all right, title and interest to and in which has
been validly transferred by Originator directly to Seller
under and in accordance with the Receivables Sale Agreement,
and Seller has good and marketable title thereto free and
clear of any Adverse Claim.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Facility Account" means Seller's Account No. 102-0403 at
Bank One.
"Facility Termination Date" means the earliest of (i)
September 28, 2004, (ii) the Liquidity Termination Date and (iii)
the Amortization Date.
"Federal Bankruptcy Code" means Title 11 of the United
States Code entitled "Bankruptcy," as amended and any successor
statute thereto.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate per annum for each day during such
period equal to (a) the weighted average of the rates on
overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published
for such day (or, if such day is not a Business Day, for the
preceding Business Day) by the Federal Reserve Bank of New York
in the Composite Closing Quotations for U.S. Government
Securities; or (b) if such rate is not so published for any day
which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (Chicago time) for such day on such
transactions received by the Reference Bank from three federal
funds brokers of recognized standing selected by it.
"Fee Letter" means that certain letter agreement dated as of
the date hereof among Seller, the Originators and the Agent, as
it may be amended or modified and in effect from time to time.
"Finance Charges" means, with respect to a Contract, any
finance, interest, late payment charges or similar charges owing
by an Obligor pursuant to such Contract.
"Financial Institution Discount" means for each respective
Tranche Period relating to Purchaser Interests of the Financial
Institutions, an amount equal to the product of the applicable
Financial Institution Discount Rate for each Purchaser Interest
multiplied by the Capital of such Purchaser Interest for each day
elapsed during such Tranche Period, annualized on a 360 day
basis.
"Financial Institution Discount Rate" means, the LIBO Rate
or the Base Rate, as applicable, with respect to each Purchaser
Interest of the Financial Institutions.
"Financial Institutions" has the meaning set forth in the
preamble in this Agreement.
"Funding Agreement" means this Agreement and any agreement
or instrument executed by any Funding Source with or for the
benefit of any Conduit.
"Funding Source" means (i) any Financial Institution or (ii)
any insurance company, bank or other funding entity providing
liquidity, credit enhancement or back-up purchase support or
facilities to any Conduit.
"Guarantee" by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing
any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner
the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect
thereof (in whole or in part), provided that the term Guarantee
shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Incremental Purchase" means a purchase of one or more
Purchaser Interests which increases the total outstanding Capital
hereunder.
"Indebtedness" of a Person means such Person's (i)
obligations for borrowed money, (ii) obligations representing the
deferred purchase price of property or services (other than
accounts payable arising in the ordinary course of such Person's
business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by liens or payable
out of the proceeds or production from property now or hereafter
owned or acquired by such Person, (iv) obligations which are
evidenced by notes, acceptances, or other instruments, (v)
capitalized lease obligations, (vi) net liabilities under
interest rate swap, exchange or cap agreements, (vii) Contingent
Obligations and (viii) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of ERISA.
"Independent Director" shall mean a member of the Board of
Directors of Seller who is not at such time, and has not been at
any time during the preceding five (5) years, (A) a director,
officer, employee or affiliate of Seller, the Originators, or any
of their respective Subsidiaries or Affiliates, or (B) the
beneficial owner (at the time of such individual's appointment as
an Independent Director or at any time thereafter while serving
as an Independent Director) of any of the outstanding common
shares of Seller, the Originators, or any of their respective
Subsidiaries or Affiliates, having general voting rights;
"KNEI" means K N Energy, Inc., a Kansas corporation, and its
successors.
"LIBO Rate" means the rate per annum equal to the sum of (i)
(a) the rate at which deposits in U.S. Dollars are offered by the
Reference Bank to first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of the relevant Tranche Period, such
deposits being in the approximate amount of the Capital of the
Purchaser Interest to be funded or maintained, divided by (b) one
minus the maximum aggregate reserve requirement (including all
basic, supplemental, marginal or other reserves) which is imposed
against the Reference Bank in respect of Eurocurrency
liabilities, as defined in Regulation D of the Board of Governors
of the Federal Reserve System as in effect from time to time
(expressed as a decimal), applicable to such Tranche Period plus
(ii) 1.05% per annum. The LIBO Rate shall be rounded, if
necessary, to the next higher 1/16 of 1%.
"Liquidity Termination Date" means September 26, 2000.
"Loan" has the meaning set forth in the Credit Agreement.
"Lock-Box" means each locked postal box with respect to
which a bank who has executed a Collection Account Agreement has
been granted exclusive access for the purpose of retrieving and
processing payments made on the Receivables and which is listed
on Exhibit IV.
"Loss Horizon Ratio" means, for any day, a fraction
(calculated as a percentage) computed by dividing (i) the
aggregate Original Balance of all Receivables generated during
the two (2) most recently ended Calculation Periods by (ii) the
aggregate Outstanding Balance of total Eligible Receivables as at
the last day of the most recently ended Calculation Period.
"Loss Reserve" means, on any date, an amount equal to the
product of (x) the greater of (i) 10% and (ii) the Loss Reserve
Ratio then in effect and (y) the Net Receivables Balance as of
the close of business of the Servicer on the immediately
preceding Business Day.
"Loss Reserve Ratio" means, as of any date, an amount
calculated as follows:
LRR = 2.0 x DR x LHR, where
LRR = the Loss Reserve Ratio;
DR = the highest average of the Default Ratios for
any three consecutive Calculation Periods during the
most recently ended Calculation Period; and
LHR = the Loss Horizon Ratio.
The Loss Reserve Ratio shall be calculated monthly in each
Monthly Report and such Loss Reserve Ratio shall, absent manifest
error, be effective from the corresponding Settlement Date until
the next succeeding Settlement Date.
"Loss-to-Liquidation Ratio" means, as at the last day of any
calendar month, a percentage equal to (i) the amount of
Charged-Off Receivables which became Charged-Off Receivables
during such month, divided by (ii) the aggregate amount of
Collections during such month.
"Mandatorily Convertible Preferred Stock" means, with
respect to KNEI, preferred securities of a Subsidiary which are
(i) mandatorily convertible into common equity securities of KNEI
within approximately three years of their date of issuance, (ii)
issued in conjunction with, and pledged to secure, an obligation
to purchase common equity securities of KNEI within approximately
three years for an equal amount or (iii) otherwise structured in
a manner satisfactory to the Agent so as to ensure the issuance
of incremental common equity securities of KNEI in a
substantially equal amount within approximately three years.
"Material Adverse Effect" means a material adverse effect on
(i) the financial condition or operations of any Seller and its
Subsidiaries, (ii) the ability of any Seller to perform its
obligations under this Agreement, (iii) the legality, validity or
enforceability of this Agreement or any other Transaction
Document, (iv) any Purchaser's interest in the Receivables
generally or in any significant portion of the Receivables, the
Related Security or the Collections with respect thereto, or (v)
the collectibility of the Receivables generally or of any
material portion of the Receivables.
"Material Debt" means Debt (other than (i) the Notes and
(ii) Debt owing to KNEI or a Subsidiary) of KNEI and/or one or
more of its Subsidiaries, arising in one or more related or
unrelated transactions, in an aggregate principal or face amount
exceeding $75,000,000.
"Material Financial Obligations" means a principal or face
amount of Debt (other than (i) the Notes and (ii) Debt owing to
KNEI or a Subsidiary) and/or payment obligations in respect of
Derivatives Obligations of KNEI and/or one or more of its
Subsidiaries, arising in one or more related or unrelated
transactions, exceeding in the aggregate $125,000,000.
"Material Subsidiary" of a Person means any Subsidiary of
such Person the consolidated assets of which constitute 10% or
more of the Consolidated Assets of such Person.
"Monthly Report" means a report, in substantially the form
of Exhibit X hereto (appropriately completed), furnished by the
Servicer to the Agent pursuant to Section 8.5. In addition to
such other information as may be included therein, each Monthly
Report shall set forth the amounts to be distributed pursuant to
each clause of Section 2.4, as applicable.
"Monthly Variance" means the aggregate Original Balance of
all Receivables generated during a Calculation Period as
determined on the last day of such Calculation Period minus the
actual invoice amount for such Receivables.
"Net Receivables Balance" means, at any time, the aggregate
Outstanding Balance of all Eligible Receivables at such time
reduced by the aggregate amount by which the Outstanding Balance
of all Eligible Receivables of each Obligor and its Affiliates
exceeds the Concentration Limit for such Obligor.
"Non-Defaulting Financial Institution" has the meaning set
forth in Section 13.5.
"Non-Renewing Financial Institution" has the meaning set
forth in Section 13.6(a).
"Notes" means promissory notes of KNEI, substantially in the
form of Exhibit A to the Credit Agreement, evidencing the
obligation of KNEI to repay the Loans, and "Note" means any one
of such promissory notes issued under the Credit Agreement.
"Obligations" shall have the meaning set forth in Section
2.1.
"Obligor" means a Person obligated to make payments pursuant
to a Contract.
"Original Balance" means, with respect to any Receivable,
the Outstanding Balance of such Receivable on the date it was
generated.
"Originator" means K N Energy, Inc., a Kansas corporation,
and each Person that becomes an Additional Originator pursuant to
Section 1.8 of the Receivables Sale Agreement and who has not
ceased to be a party to this Agreement and the Receivables Sale
Agreement pursuant to Section 1.9 of the Receivables Sales
Agreement.
"Outstanding Balance" of any Receivable at any time means
the then outstanding principal balance thereof.
"Participant" has the meaning set forth in Section 12.2.
"Performance Guarantor" means K N Energy, Inc., a Kansas
corporation, and its successors.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint
stock company, trust, unincorporated association, joint venture
or other entity, or a government or any political subdivision or
agency thereof.
"Pooled Commercial Paper" means Commercial Paper notes of
any Conduit subject to any particular pooling arrangement by such
Conduit, but excluding Commercial Paper issued by such Conduit
for a tenor and in an amount specifically requested by any Person
in connection with any agreement effected by such Conduit.
"Potential Amortization Event" means an event which, with
the passage of time or the giving of notice, or both, would
constitute an Amortization Event.
"Proposed Reduction Date" has the meaning set forth in
Section 1.3.
"Pro Rata Share" means, for each Financial Institution, a
percentage equal to (i) the Commitment of such Financial
Institution, divided by (ii) the aggregate amount of all
Commitments of all Financial Institutions, hereunder, adjusted as
necessary to give effect to the application of the terms of
Sections 13.5 or 13.6.
"Purchase Limit" means $150,000,000.
"Purchase Notice" has the meaning set forth in Section 1.2.
"Purchase Price" means, with respect to any Incremental
Purchase of a Purchaser Interest, the amount paid to Seller for
such Purchaser Interest which shall not exceed the least of
(i) the amount requested by Seller in the applicable
Purchase Notice,
(i) the unused portion of the Purchase Limit on the
applicable purchase date and
(i) the excess, if any, of the Net Receivables
Balance (less the Aggregate Reserves) on the applicable
purchase date over the aggregate outstanding amount of
Aggregate Capital determined as of the date of the most
recent Monthly Report, without taking into account such
proposed Incremental Purchase.
"Purchasers" means each Conduit and each Financial
Institution, as applicable.
"Purchasers' Collections" means, for any period, with
respect to Receivables in existence prior to and on the
Amortization Date, the product of the aggregate Purchaser
Interest and the amount of Collections and Deemed Collections
with respect to such Receivables during such period.
"Purchaser Interest" means, at any time, an undivided
percentage ownership interest (computed as set forth below)
associated with a designated amount of Capital, selected pursuant
to the terms and conditions hereof in (i) each Receivable arising
prior to the time of the most recent computation or recomputation
of such undivided interest, (ii) all Related Security with
respect to each Receivable, and (iii) all Collections with
respect to, and other proceeds of, each Receivable. Each such
undivided percentage interest shall equal:
C over
{~NRB~-~AR}
where:
C = the Capital of such Purchaser Interest.
AR = the Aggregate Reserves.
NRB = the Net Receivables Balance.
Such undivided percentage ownership interest shall be initially
computed on its date of purchase. Thereafter, until the Facility
Termination Date, each Purchaser Interest shall be automatically
recomputed (or deemed to be recomputed) on each day prior to the
Facility Termination Date. The variable percentage represented
by any Purchaser Interest as computed ( or deemed recomputed) as
of the close of the business day immediately preceding the
Facility Termination Date shall remain constant at all times.
"Purchasing Financial Institution" has the meaning set
forth in Section 12.1(b).
"Receivable" means all accounts (as defined in Article
9.106 of the UCC) owed to Seller or an Originator (at the time it
arises, and before giving effect to any transfer or conveyance
under the Receivables Sale Agreement or hereunder) or in which
Seller or Originator has a security interest or other interest,
including without limitation, any indebtedness, obligation or
interest constituting an account under Article 9.102 of the UCC
arising in connection with the sale of goods or the rendering of
services by Originator, and further includes, without limitation,
the obligation to pay any Finance Charges with respect thereto.
Indebtedness and other rights and obligations arising from any
one transaction, including, without limitation, indebtedness and
other rights and obligations represented by an individual
invoice, shall constitute a Receivable separate from a Receivable
consisting of the indebtedness and other rights and obligations
arising from any other transaction; provided further, that any
indebtedness, rights or obligations referred to in the
immediately preceding sentence shall be a Receivable regardless
of whether the account debtor or Seller treats such indebtedness,
rights or obligations as a separate payment obligation.
"Receivables Sale Agreement" means that certain
Receivables Sale Agreement, dated as of the date hereof, between
the Originators and Seller, as the same may be amended, restated
or otherwise modified from time to time.
"Records" means, with respect to any Receivable, all
Contracts and other documents, books, records and other
information (including, without limitation, computer programs,
tapes, disks, punch cards, data processing software and related
property and rights) relating to such Receivable, any Related
Security therefor and the related Obligor.
"Reduction Notice" has the meaning set forth in Section
1.3.
"Reduction Percentage" means, for any Purchaser Interest
acquired by the Financial Institutions from any Conduit for less
than the Capital of such Purchaser Interest, a percentage equal
to a fraction the numerator of which is the Conduit Transfer
Price Reduction for such Purchaser Interest and the denominator
of which is the Capital of such Purchaser Interest.
"Reference Bank" means Bank One or such other bank as the
Agent shall designate with the consent of Seller.
"Regulatory Change" has the meaning set forth in Section
10.2(a).
"Reinvestment" has the meaning set forth in Section 2.2.
"Related Security" means, with respect to any Receivable:
(i) all of Seller's interest in the inventory and
goods (including returned or repossessed inventory or
goods), if any, the financing or lease of which by
Seller gave rise to such Receivable, and all insurance
contracts with respect thereto,
(ii) all other security interests or liens and
property subject thereto from time to time, if any,
purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements and
security agreements describing any collateral securing
such Receivable,
(iii) all guaranties, insurance and other
agreements or arrangements of whatever character from
time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to
such Receivable or otherwise,
(iv) all service contracts and other contracts and
agreements associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of Seller's right, title and interest in,
to and under the Receivables Sale Agreement in respect
of such Receivable, and
(vii) all proceeds of any of the foregoing.
"Required Capital Amount" means the greater of (i)
$4,500,000 and (ii) 3% of the Net Receivables Balance at such
time.
"Required Financial Institutions" means, at any time,
Financial Institutions with Commitments in excess of 66-2/3% of
the Purchase Limit.
"Required Notice Period" means the number of days
required notice set forth below applicable to the Aggregate
Reduction indicated below:
Aggregate Reduction Required Notice Period
#$100,000,000 two Business Days
$100,000,000 to $250,000,000 five Business Days
"Section 9.319 Statute" means Section 9.319 of the Texas
UCC (Texas Business and Commerce Code Annotated 9.319 (▇▇▇▇▇▇
1991); Section 9-319 of the Kansas UCC (Kansas Statutes Annotated
84-9-319 (Supp. 1994); Section 9-319 of the Wyoming UCC
(Wyoming Statutes 34-1-9-319 (1991)); the Oklahoma Oil and Gas
Owners' Lien Act (Oklahoma Statutes Annotated tit. 52 (West
1991); the Oil and Gas Products Lien Act of New Mexico (New
Mexico Statutes Annotated 48-9-1 through 48-9-8 (▇▇▇▇▇▇
1987)); the Mississippi Lien Act (Mississippi Code Annotated
53-3-41 (1990)), to the extent any such statute creates an
Adverse Claim in favor of an interest owner which would have
priority over any Purchaser's Purchaser Interest in the
Receivables and any comparable law of any other jurisdiction that
may now or hereafter be in effect.
"Seller" has the meaning set forth in the preamble to
this Agreement.
"Seller Interest" means, at any time, an undivided
percentage ownership interest of Seller in the Receivables,
Related Security and all Collections with respect thereto equal
to (i) one, minus (ii) the aggregate of the Purchaser Interests.
"Seller Parties" has the meaning set forth in the
preamble to this Agreement.
"Servicer" means at any time the Person (which may be the
Agent) then authorized pursuant to Article VIII to service,
administer and collect Receivables.
"Settlement Date" means (i) the 22nd day of each month,
(ii) the last day of the relevant Tranche Period in respect of
each Purchaser Interest of the Financial Institutions and (iii)
following the Amortization Date, each additional day designated
as a "Settlement Date" by the Agent by means of written notice to
Seller (each, a "Special Settlement Date").
"Settlement Period" means (i) prior to the Amortization
Date, in respect of each Purchaser Interest of Conduits, the
immediately preceding Accrual Period, (ii) in respect of each
Purchaser Interest of the Financial Institutions, the entire
Tranche Period of such Purchaser Interest and (iii) following the
Amortization Date, if the Agent designates any Special Settlement
Date, any period commencing on the day following the last day of
the preceding Settlement Period and ending on such day prior to
such Special Settlement Date as is designated by the Agent.
"Subject Entities" has the meaning set forth in Section
14.5(a) herein.
"Subsidiary" of a Person means (i) any corporation more
than 50% of the outstanding securities having ordinary voting
power of which shall at the time be owned or controlled, directly
or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, limited
liability company, joint venture or similar business organization
more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of Seller.
"Terminating Financial Institution" has the meaning set
forth in Section 13.6(a).
"Terminating Tranche" has the meaning set forth in
Section 4.3(b).
"Termination Date" has the meaning set forth in Section
2.2.
"Termination Percentage" has the meaning set forth in
Section 2.2.
"Three-Month Average Default Ratio" means, as of the last
day of any Calculation Period, the average of the Default Ratio
for such Calculation Period and each of the two immediately
preceding Calculation Periods.
"Three-Month Average Dilution Ratio" means, as of the
last day of any Calculation Period, the average of the Dilution
Ratio for such Calculation Period and each of the two immediately
preceding Calculation Periods.
"Three-Month Average Variance Ratio" means, as of each
Settlement Date, the average of the Variance Ratio for the
Calculation Period most recently ended and each of the two
immediately preceding Calculation Periods.
"Tranche Period" means, with respect to any Purchaser
Interest held by a Financial Institution:
(a) if the Financial Institution Discount Rate
for such Purchaser Interest is calculated on the basis
of the LIBO Rate, a period of one, two, three or six
months, or such other period as may be mutually
agreeable to the Agent and Seller, commencing on a
Business Day selected by Seller or the Agent pursuant to
this Agreement. Such Tranche Period shall end on the
day in the applicable succeeding calendar month which
corresponds numerically to the beginning day of such
Tranche Period, provided, however, that if there is no
such numerically corresponding day in such succeeding
month, such Tranche Period shall end on the last
Business Day of such succeeding month; or
(b) if the Financial Institution Discount Rate
for such Purchaser Interest is calculated on the basis
of the Base Rate, a period commencing on a Business Day
selected by Seller and agreed to by the Agent, provided
no such period shall exceed one month.
If any Tranche Period would end on a day which is not a Business
Day, such Tranche Period shall end on the next succeeding
Business Day, provided, however, that in the case of Tranche
Periods corresponding to the LIBO Rate, if such next succeeding
Business Day falls in a new month, such Tranche Period shall end
on the immediately preceding Business Day. In the case of any
Tranche Period for any Purchaser Interest of which commences
before the Amortization Date and would otherwise end on a date
occurring after the Amortization Date, such Tranche Period shall
end on the Amortization Date. The duration of each Tranche
Period which commences after the Amortization Date shall be of
such duration as selected by the Agent.
"Transaction Documents" means, collectively, this
Agreement, each Purchase Notice, the Receivables Sale Agreement,
each Collection Account Agreement, the Fee Letter, the
Subordinated Note (as defined in the Receivables Sale Agreement)
and all other instruments, documents and agreements executed and
delivered in connection herewith.
"Trust Preferred Securities" means, with respect to KNEI,
mandatorily redeemable capital trust securities of trusts which
are Subsidiaries and the subordinated debentures of KNEI in which
the proceeds of the issuance of such capital trust securities are
invested, including, without limitation, $275,000,000 of such
securities outstanding at the date of this Agreement.
"UCC" means the Uniform Commercial Code as from time to
time in effect in the specified jurisdiction.
"Variance Ratio" means, on any date, a percentage equal
to a fraction (i) the numerator of which is the absolute value of
the Monthly Variance for the second full Calculation Period
preceding such date and (ii) the denominator of which is the
aggregate Original Balance of Receivables generated during such
Calculation Period as determined on the last day of such
Calculation Period.
"Variance Reserve" means, on any date, an amount equal to
the product of (x) the greater of (i) 5% and (ii) the product of
(a) 2 and (b) the highest Three-Month Average Variance Ratio over
the preceding twelve month period and (y) the Net Receivables
Balance as of the close of business of the Servicer on the
immediately preceding Business Day.
"Year 2000 Plan" means a plan to prevent the Year 2000
Problem from having an adverse effect upon the business,
financial condition, operations, property or prospects of a
Person.
"Year 2000 Problem" means, with respect to any Person,
the risk that mission critical computer applications directly
used by that Person cannot or will not: (a) handle date
information involving any and all dates before, during and/or
after January 1, 2000, including accepting input, providing
output and performing date calculations in whole or in part; (b)
operate accurately without interruption on and in respect of any
and all dates before, during and/or after January 1, 2000; and
(c) store and provide date input information without creating any
ambiguity as to the century.
"Yield Settlement Date" means the 5th day of each month
(or if any such day is not a Business Day, the Yield Settlement
Date shall occur on the next succeeding Business Day).
"Yield Settlement Date Obligations" means all Obligations
other than amounts payable as Deemed Collections and Servicing
Fees payable to Seller or an Affiliate of Seller (each of which,
unless otherwise stated herein, shall be due and owing on the
first Yield Settlement Date after such obligation arises).
All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in
the State of Illinois, and not specifically defined herein, are
used herein as defined in such Article 9.
EXHIBIT II
FORM OF PURCHASE NOTICE
[Date]
Bank One, NA, as Agent
One Bank One Plaza, 21st Floor
Asset-Backed Finance
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: [▇▇▇ ▇▇▇▇▇▇]
Re: PURCHASE NOTICE
Ladies and Gentlemen:
Reference is hereby made to the Receivables Purchase
Agreement, dated as of _________, [19__, by and among
___________________, a ___________ corporation (the "Seller"),
______________________, as Servicer, the Financial Institutions,
Falcon Asset Securitization Corporation and International
Securitization Corporation ("Conduits"), and Bank One, NA, as
Agent (the "Receivables Purchase Agreement"). Capitalized terms
used herein shall have the meanings assigned to such terms in the
Receivables Purchase Agreement.
The Agent is hereby notified of the following Incremental
Purchase:
Purchase Price: $
Date of Purchase:
Requested Discount Rate: [LIBO Rate] [Base Rate] [Pooled
Commercial Paper rate]
Please credit the Purchase Price in immediately available
funds to our Facility Account [and then wire-transfer the
Purchase Price in immediately available funds on the
above-specified date of purchase to:
[Account Name]
[Account No.]
[Bank Name & Address]
[ABA #]
Reference:
Telephone advice to: [Name] @ tel. No. ( )
Please advise [Name] at telephone no ( )
_________________ if Conduits will not be making this purchase.
In connection with the Incremental Purchase to be made on
the above listed "Date of Purchase" (the "Purchase Date"), the
Seller hereby certifies that the following statements are true on
the date hereof, and will be true on the Purchase Date (before
and after giving effect to the proposed Incremental Purchase):
(i) the representations and warranties of the
Seller set forth in Section 5.1 of the Receivables Purchase
Agreement are true and correct on and as of the Purchase Date as
though made on and as of such date;
(ii) no event has occurred and is continuing, or
would result from the proposed Incremental Purchase, that will
constitute an Amortization Event or a Potential Amortization
Event;
(iii) the Facility Termination Date has
not occurred, the Aggregate Capital does not exceed the Purchase
Limit and the aggregate Purchaser Interests do not exceed 100%;
and
(iv) the amount of Aggregate Capital is $_________
after giving effect to the Incremental Purchase to be made on the
Purchase Date.
Very truly yours,
[SELLER]
By:
Name:
Title:
EXHIBIT III
PLACES OF BUSINESS OF SELLER;
LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)
Places of Business of Seller: One ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Location of Records: (a) Same as above
(b ) ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Federal Employer Identification Number: _________________
EXHIBIT IV
NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS
EXHIBIT V
FORM OF COMPLIANCE CERTIFICATE
To: Bank One, NA, as Agent
This Compliance Certificate is furnished pursuant to that
certain Receivables Purchase Agreement dated as of ________ ___,
1999 among KN Receivables Corporation (the "Seller"), the
Purchasers party thereto and Bank One, NA, as agent for such
Purchasers (the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of
Seller.
2. I have reviewed the terms of the Agreement and I have
made, or have caused to be made under my supervision, a detailed
review of the transactions and conditions of Seller and its
Subsidiaries during the accounting period covered by the attached
financial statements.
3. The examinations described in paragraph 2 did not
disclose, and I have no knowledge of, the existence of any
condition or event which constitutes an Amortization Event or
Potential Amortization Event, as each such term is defined under
the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of
this Certificate, except as set forth in paragraph 5 below.
4. Schedule I attached hereto sets forth financial data
and computations evidencing the compliance with certain covenants
of the Agreement, all of which data and computations are true,
complete and correct.
5. Described below are the exceptions, if any, to
paragraph 3 by listing, in detail, the nature of the condition or
event, the period during which it has existed and the action
which Seller has taken, is taking, or proposes to take with
respect to each such condition or event:
The foregoing certifications, together with the
computations set forth in Schedule I hereto and the financial
statements delivered with this Certificate in support hereof, are
made and delivered this day of, ____.
SCHEDULE I TO COMPLIANCE CERTIFICATE
A. Schedule of Compliance as of __________, ____ with
Section ___ of the Agreement. Unless otherwise
defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in
the Agreement.
This schedule relates to the month ended:
EXHIBIT VI
FORM OF COLLECTION ACCOUNT AGREEMENT
[On letterhead of name of Originator]
,
[Lock-Box Bank/Concentration Bank/Depositary Bank]
Re: Name of Originator.
Ladies and Gentlemen:
Reference is hereby made to P.O. Box #
in [city, state, zip code] (the "Lock-Box") of which you have
exclusive control for the purpose of receiving mail and
processing payments therefrom pursuant to that certain [name of
lock-box agreement) between you and [K N Energy, Inc.] (the
"Company") dated (the "Agreement"). You hereby
confirm your agreement to perform the services described therein.
Among the services you have agreed to perform therein, is to
endorse all checks and other evidences of payment, and credit
such payments to the Company's checking account no.
maintained with you in the name of the Company (the "Lock-Box
Account").
The Company hereby informs you that pursuant to
that certain Receivables Sale Agreement, dated as of ______ __,
1999 between the Company, the other Orginators specified therein
and KN Receivables Corporation (the "Seller"), the Company has
transferred all of its right, title and interest in and to, and
exclusive ownership and control of, the Lock-Box and the Lock-Box
Account to the Seller. The Company and the Seller hereby request
that the name of the Lock-Box Account be changed to [Name of
Originator], as Sub-Servicer."
The Company and Seller hereby irrevocably instruct
you, and you hereby agree, that upon receiving notice from Bank
One, NA ("Bank One") in the form attached hereto as Annex A: (i)
the name of the Lock-Box Account will be changed to Bank One for
itself and as agent (or any designee of Bank One) and Bank One
will have exclusive ownership of and access to the Lock-Box and
the Lock-Box Account, and neither the Company, the Seller, nor
any of their respective affiliates will have any control of the
Lock-Box or the Lock-Box Account or any access thereto, (ii) you
will either continue to send the funds from the Lock-Box to the
Lock-Box Account, or will redirect the funds as Bank One may
otherwise request, (iii) you will transfer monies on deposit in
the Lock-Box Account, at any time, as directed by Bank One, (iv)
all services to be performed by you under the Agreement will be
performed on behalf of Bank One, and (v) all correspondence or
other mail which you have agreed to send to the Company or the
Seller will be sent to Bank One at the following address:
Bank One, NA
Suite 0079, 21st Floor
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Credit Manager, Asset Backed
Securities Division
Moreover, upon such notice, Bank One for itself
and as agent will have all rights and remedies given to the
Company (and the Seller, as the Company's assignee) under the
Agreement. Seller agrees, however, to continue to pay all fees
and other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in
the Lock-Box Account or any other account established with you by
Bank One for the purpose of receiving funds from the Lock-Box are
subject to the liens of Bank One for itself and as agent, and
will not be subject to deduction, set-off, banker's lien or any
other right you or any other party may have against the Company
or the Seller except that you may debit the Lock-Box Account for
any items deposited therein that are returned or otherwise not
collected and for all charges, fees, commissions and expenses
incurred by you in providing services hereunder, all in
accordance with your customary practices for the charge back of
returned items and expenses.
THIS LETTER AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS. This letter agreement may be executed in any
number of counterparts and all of such counterparts taken
together will be deemed to constitute one and the same
instrument.
This letter agreement contains the entire
agreement between the parties, and may not be altered, modified,
terminated or amended in any respect, nor may any right, power or
privilege of any party hereunder be waived or released or
discharged, except upon execution by all parties hereto of a
written instrument so providing. In the event that any provision
in this letter agreement is in conflict with, or inconsistent
with, any provision of the Agreement, this letter agreement will
exclusively govern and control. Each party agrees to take all
actions reasonably requested by any other party to carry out the
purposes of this letter agreement or to preserve and protect the
rights of each party hereunder.
Please indicate your agreement to the terms of this
letter agreement by signing in the space provided below. This
letter agreement will become effective immediately upon execution
of a counterpart of this letter agreement by all parties hereto.
Very truly yours,
[ORIGINATOR]
By:
Name:
Title:
KN RECEIVABLES CORPORATION
By:
Name:
Title:
Acknowledged and agreed to
this day of
[COLLECTION BANK]
By:
Name:
Title:
BANK ONE, NA, as Agent
By:
Name:
Title:
ANNEX A
FORM OF NOTICE
[On letterhead of Bank One]
,
[Collection Bank/Depositary Bank/Concentration Bank]
Re: [Name of Originator]/KN Receivables
Corporation
Ladies and Gentlemen:
We hereby notify you that we are exercising our
rights pursuant to that certain letter agreement among [name of
Originator], KN Receivables Corporation, you and us, to have the
name of, and to have exclusive ownership and control of, account
number (the "Lock-Box Account") maintained with you,
transferred to us. Lock-Box Account will henceforth be a
zero-balance account, and funds deposited in the Lock-Box Account
should be sent at the end of each day to . You
have further agreed to perform all other services you are
performing under that certain agreement dated
between you and [Originator] on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
BANK ONE, NA
(for itself and as agent)
By:
Title:
EXHIBIT VII
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Assignment
Agreement") is entered into as of the ___ day of ____________,
____, by and between _______________ ("Assignor") and
_________________ ("Assignee").
PRELIMINARY STATEMENTS
A. This Assignment Agreement is being executed
and delivered in accordance with Section 12.1(a) of that certain
Receivables Purchase Agreement dated as of September 28, 1999 by
and among KN Receivables Corporation, Falcon Asset Securitization
Corporation, International Securitization Corporation, Bank One,
NA, as Agent, and the Financial Institutions party thereto (as
amended, modified or restated from time to time, the "Purchase
Agreement"). Capitalized terms used and not otherwise defined
herein are used with the meanings set forth or incorporated by
reference in the Purchase Agreement.
B. Assignor is a Financial Institution party to
the Purchase Agreement, and Assignee wishes to become a Financial
Institution thereunder; and
C. Assignor is selling and assigning to Assignee
an undivided ____________% (the "Transferred Percentage")
interest in all of Assignor's rights and obligations under the
Purchase Agreement and the Transaction Documents, including,
without limitation, Assignor's Commitment and (if applicable) the
Capital of Assignor's Purchaser Interests as set forth herein;
AGREEMENT
The parties hereto hereby agree as follows:
1. The sale, transfer and assignment effected by
this Assignment Agreement shall become effective (the "Effective
Date") two (2) Business Days (or such other date selected by the
Agent in its sole discretion) following the date on which a
notice substantially in the form of Schedule II to this
Assignment Agreement ("Effective Notice") is delivered by the
Agent to Conduits, Assignor and Assignee. From and after the
Effective Date, Assignee shall be a Financial Institution party
to the Purchase Agreement for all purposes thereof as if Assignee
were an original party thereto and Assignee agrees to be bound by
all of the terms and provisions contained therein.
2. If Assignor has no outstanding Capital under
the Purchase Agreement, on the Effective Date, Assignor shall be
deemed to have hereby transferred and assigned to Assignee,
without recourse, representation or warranty (except as provided
in paragraph 6 below), and Assignee shall be deemed to have
hereby irrevocably taken, received and assumed from Assignor, the
Transferred Percentage of Assignor's Commitment and all rights
and obligations associated therewith under the terms of the
Purchase Agreement, including, without limitation, the
Transferred Percentage of Assignor's future funding obligations
under Section 4.1 of the Purchase Agreement.
3. If Assignor has any outstanding Capital under
the Purchase Agreement, at or before 12:00 noon, local time of
Assignor, on the Effective Date Assignee shall pay to Assignor,
in immediately available funds, an amount equal to the sum of (i)
the Transferred Percentage of the outstanding Capital of
Assignor's Purchaser Interests (such amount, being hereinafter
referred to as "Assignee's Capital"); (ii) all accrued but unpaid
(whether or not then due) Financial Institution Discount Rate
attributable to Assignee's Capital; and (iii) accruing but unpaid
fees and other costs and expenses payable in respect of
Assignee's Capital for the period commencing upon each date such
unpaid amounts commence accruing, to and including the Effective
Date ("Assignee's Acquisition Cost");
whereupon, Assignor shall be deemed to have sold, transferred and
assigned to Assignee, without recourse, representation or
warranty (except as provided in paragraph 6 below), and Assignee
shall be deemed to have hereby irrevocably taken, received and
assumed from Assignor, the Transferred Percentage of Assignor's
Commitment and the Capital of Assignor's Purchaser Interests (if
applicable) and all related rights and obligations under the
Purchase Agreement and the Transaction Documents, including,
without limitation, the Transferred Percentage of Assignor's
future funding obligations under Section 4.1 of the Purchase
Agreement.
4. Concurrently with the execution and delivery
hereof, Assignor will provide to Assignee copies of all documents
requested by Assignee which were delivered to such Assignor
pursuant to the Purchase Agreement.
5. Each of the parties to this Assignment
Agreement agrees that at any time and from time to time upon the
written request of any other party, it will execute and deliver
such further documents and do such further acts and things as
such other party may reasonably request in order to effect the
purposes of this Assignment Agreement.
6. By executing and delivering this Assignment
Agreement, Assignor and Assignee confirm to and agree with each
other, the Agent and the Financial Institutions as follows: (a)
other than the representation and warranty that it has not
created any Adverse Claim upon any interest being transferred
hereunder, Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements,
warranties or representations made by any other Person in or in
connection with the Purchase Agreement or the Transaction
Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of Assignee, the Purchase
Agreement or any other instrument or document furnished pursuant
thereto or the perfection, priority, condition, value or
sufficiency of any collateral; (b) Assignor makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of Assignor, any Obligor, any
Assignor Affiliate or the performance or observance by Assignor,
any Obligor, any Assignor Affiliate of any of their respective
obligations under the Transaction Documents or any other
instrument or document furnished pursuant thereto or in
connection therewith; (c) Assignee confirms that it has received
a copy of the Purchase Agreement and copies of such other
Transaction Documents, together with such other documents and
information as it has requested and deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment Agreement; (d) Assignee will, independently and
without reliance upon the Agent, Conduits, Assignor or any other
Financial Institution or Assignee 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 Purchase Agreement and the Transaction Documents; (e)
Assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the
Transaction Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental
thereto; and (g) Assignee agrees that it will perform in
accordance with their terms all of the obligations which, by the
terms of the Purchase Agreement and the Transaction Documents,
are required to be performed by it as a Financial Institution or,
when applicable, as a Assignee.
7. Each party hereto represents and warrants to
and agrees with the Agent that it is aware of and will comply
with the provisions of the Purchase Agreement, including, without
limitation, Sections 4.1, 13.1 and 14.6 thereof.
8. Schedule I hereto sets forth the revised
Commitment of Assignor and the Commitment of Assignee, as well as
administrative information with respect to Assignee.
9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS.
10. Assignee hereby covenants and agrees that,
prior to the date which is one year and one day after the payment
in full of all senior indebtedness for borrowed money of
Conduits, it will not institute against, or join any other Person
in instituting against, Conduits any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any
state of the United States.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment Agreement to be executed by their respective duly
authorized officers of the date hereof.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
SCHEDULE I TO ASSIGNMENT AGREEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
Date: _______________, ____
Transferred Percentage: ________%
▇-▇ ▇-▇ ▇-▇ ▇-▇
Assignor Commitment Commitment
(prior to (after
giving giving
effect to effect to Ratable
the the Outstanding Share of
Assignment Assignment Capital Outstanding
Agreement) Agreement) if any Capital
▇-▇ ▇-▇ ▇-▇
Assignee Commitment
(after
giving
effect to Ratable
the Outstanding Share of
Assignment Capital Outstanding
Agreement if any Capital
Address for Notices
Attention:
Phone:
Fax:
SCHEDULE II TO ASSIGNMENT AGREEMENT
EFFECTIVE NOTICE
TO:________________________, Assignor
________________________
________________________
________________________
TO:________________________, Assignee
________________________
________________________
________________________
The undersigned, as Agent under the Receivables
Purchase Agreement dated as of ______, ____ by and among
___________, a ____________ corporation, _____________, as
Servicer, Falcon Asset Securitization Corporation,
______________________, Bank One, NA, as Agent, and the Financial
Institutions party thereto, hereby acknowledges receipt of
executed counterparts of a completed Assignment Agreement dated
as of ____________, ____ between __________________, as Assignor,
and __________________, as Assignee. Terms defined in such
Assignment Agreement are used herein as therein defined.
1. Pursuant to such Assignment Agreement, you
are advised that the Effective Date will be ______________, ____.
2. Each Conduit hereby consents to the
Assignment Agreement as required by Section 12.1(b) of the
Receivables Purchase Agreement.
[3. Pursuant to such Assignment Agreement,
Assignee is required to pay $____________ to Assignor at or
before 12:00 noon (local time of Assignor) on the Effective Date
in immediately available funds.]
Very truly yours,
BANK ONE, NA, individually and
as Agent
By:__________________________
Title:_______________________
FALCON ASSET SECURITIZATION
CORPORATION
By: ____________________________
Authorized Signatory
EXHIBIT VIII
CREDIT AND COLLECTION POLICY
EXHIBIT IX
FORM OF CONTRACT(S)
EXHIBIT X
FORM OF MONTHLY REPORT
[In addition to such other information as may be
included on this exhibit, each Monthly Report should set forth
the following with respect to the related Calculation Period (as
defined in the Receivables Sale Agreement): (i) the aggregate
Outstanding Balance of Receivables created and conveyed by
Originator to Seller in purchases pursuant to the Receivables
Sale Agreement during such Calculation Period, as well as the Net
Receivables Balance included therein, (ii) the aggregate purchase
price payable to Originator in respect of such purchases,
specifying the Discount Factor (as defined in the Receivables
Sale Agreement) in effect for such Calculation Period and the
aggregate Purchase Price Credits (as defined in the Receivables
Sale Agreement) deducted in calculating such aggregate purchase
price, (iii) the aggregate amount of funds received by the
Servicer during such Calculation Period which are to be applied
as Reinvestments, (iv) the increase or decrease in the amount
outstanding under the Subordinated Note (as defined in the
Receivables Sale Agreement) as of the end of such Calculation
Period after giving effect to the application of funds toward the
aggregate purchase price and the restrictions on Subordinated
Loans (as defined in the Receivables Sale Agreement) set forth in
Section 1.2(a)(ii) of the Receivables Sale Agreement, and (v) the
amount of any capital contribution made by Originator to Seller
as of the end of such Calculation Period pursuant to Section
1.2(b) of the Receivables Sale Agreement.]
The above is a true and accurate accounting
pursuant to the terms of the Receivables Purchase Agreement dated
[month, day, year] (the "Agreement"), by and among [Seller's
name] and Bank One, NA as Agent, and I have no knowledge of the
existence of any conditions or events which constitute an
Amortization Event or Potential Amortization Event, as each such
term is defined under the Agreement, during or at the end of the
accounting period covered by this monthly report or as of the
date of this certificate, except as set forth below.
By:______________________
Name:___________________
Title:____________________
Company Name:___________
Date:____________________
SCHEDULE A
COMMITMENTS OF FINANCIAL INSTITUTIONS
Financial Institution Commitment
SCHEDULE B
DOCUMENTS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
PART I: Documents to be Delivered in Connection with the
Receivables Sale Agreement
1. Executed copies of the Receivables Sale Agreement,
duly executed by the parties thereto.
1. Copy of the Resolutions of the Board of Directors
of each Originator certified by its Secretary,
authorizing such Originator's execution, delivery
and performance of the Receivables Sale Agreement
and the other documents to be delivered by it
thereunder.
1. Articles or Certificate of Incorporation of each
Originator certified by the Secretary of State of
the jurisdiction of incorporation of such
Originator.
1. Good Standing Certificate for each Originator
issued by the Secretaries of State of its state of
incorporation and each jurisdiction where it has
material operations.
1. A certificate of the Secretary of each Originator
certifying: (i) the names and signatures of the
officers authorized on its behalf to execute the
Receivables Sale Agreement and any other documents
to be delivered by it thereunder and (ii) a copy of
such Originator's By-Laws.
1. Pre-filing state and federal tax lien, judgment
lien and UCC lien searches against each Originator
from the following jurisdictions:
1. Signed financing statements for all jurisdictions
as may be necessary or, in the opinion of Seller
(or its assigns), desirable, under the UCC of all
appropriate jurisdictions or any comparable law in
order to perfect the ownership interests
contemplated by the Receivables Sale Agreement.
1. Signed UCC termination statements, if any,
necessary to release all security interests and
other rights of any Person in the Receivables,
Contracts or Related Security previously granted by
each Originator.
1. Executed Collection Account Agreements for each
Lock-Box and Collection Account.
1. Favorable opinions of legal counsel for each
Originator reasonably acceptable to Seller (or its
assigns) in the form attached hereto as Annex B.
1. A "true sale" opinion and "substantive
consolidation" opinion of counsel for each
Originator with respect to the transactions
contemplated by the Receivables Sale Agreement.
1. A Compliance Certificate.
1. Executed copies of the Subscription Agreement (as
defined in the Receivables Sale Agreement).
1. Executed copies of the Subordinated Note (as
defined in the Receivables Sale Agreement) by
Seller in favor of each Originator.
PART II: Documents to Be Delivered in Connection with the
Agreement
1. Executed copies of the Agreement, duly executed by
the parties thereto.
1. Copy of the Resolutions of the Board of Directors
of Seller certified by its Secretary authorizing
such Person's execution, delivery and performance
of this Agreement and the other documents to be
delivered by it hereunder.
1. Articles or Certificate of Incorporation of Seller
certified by the Secretary of State of its
jurisdiction of incorporation.
1. Good Standing Certificate for Seller issued by the
Secretaries of State of its state of incorporation
and each jurisdiction where it has material
operations.
1. A certificate of the Secretary of Seller certifying
(i) the names and signatures of the officers
authorized on its behalf to execute this Agreement
and any other documents to be delivered by it
hereunder and (ii) a copy of such Person's By-Laws.
1. Pre-filing state and federal tax lien, judgment
lien and UCC lien searches against Seller from the
following jurisdictions:
1. Signed financing statements for all jurisdictions
as may be necessary or, in the opinion of the
Agent, desirable, under the UCC of all appropriate
jurisdictions or any comparable law in order to
perfect the ownership interests contemplated by
this Agreement.
1. Signed UCC termination statements, if any,
necessary to release all security interests and
other rights of any Person in the Receivables,
Contracts or Related Security previously granted by
Seller.
1. Executed copies of Collection Account Agreements
for each Lock-Box and Collection Account.
1. Favorable opinions of legal counsel for Seller
reasonably acceptable to the Agent in the form
attached hereto as Annex C.
1. If requested by any Conduit or the Agent, a
favorable opinion of legal counsel for each
Financial Institution, reasonably acceptable to the
Agent which addresses the following matters:
-- This Agreement has been duly authorized
by all necessary corporate action of
such Financial Institution.
-- This Agreement has been duly executed
and delivered by such Financial
Institution and, assuming due
authorization, execution and delivery by
each of the other parties thereto,
constitutes a legal, valid and binding
obligation of such Financial
Institution, enforceable against such
Financial Institution in accordance with
its terms.
1. A Compliance Certificate.
1. The Fee Letter.
1. A Monthly Report as at September 28, 1999.