Exhibit 4.44
PURCHASE AND SALE AGREEMENT
DATED AS OF FEBRUARY 6, 2001
BETWEEN
KU RECEIVABLES LLC
AND
KENTUCKY UTILITIES COMPANY
TABLE OF CONTENTS
PAGE
ARTICLE I AGREEMENT TO PURCHASE AND SELL.................................................................2
1.1 Agreement To Purchase and Sell......................................................................2
1.2 Timing of Purchases.................................................................................3
1.3 Consideration for Purchases.........................................................................3
1.4 Purchase and Sale Termination Date..................................................................3
1.5 Intention of the Parties............................................................................3
ARTICLE II CALCULATION OF PURCHASE PRICE..................................................................3
2.1 Calculation of Purchase Price.......................................................................3
ARTICLE III PAYMENT OF PURCHASE PRICE......................................................................4
3.1 Contribution of Receivables and Initial Purchase Price Payment......................................4
3.2 Subsequent Purchase Price Payments..................................................................5
3.3 Settlement as to Specific Receivables and Dilution..................................................5
3.4 Reconveyance of Receivables.........................................................................7
ARTICLE IV CONDITIONS OF PURCHASES........................................................................7
4.1 Conditions Precedent to Initial Purchase............................................................7
4.2 Certification as to Representations and Warranties..................................................9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR...............................................9
5.1 Organization and Good Standing......................................................................9
5.2 Due Qualification...................................................................................9
5.3 Power and Authority; Due Authorization..............................................................9
5.4 Valid Sale; Binding Obligations.....................................................................9
5.5 No Violation.......................................................................................10
5.6 Proceedings........................................................................................10
5.7 Bulk Sales Acts....................................................................................10
5.8 Government Approvals...............................................................................10
5.9 Financial Condition................................................................................10
5.10 Licenses, Contingent Liabilities, and Labor Controversies..........................................11
5.11 Margin Regulations.................................................................................11
5.12 Quality of Title...................................................................................11
5.13 No Proceeds for Registered Securities..............................................................11
5.14 Accuracy of Information............................................................................12
5.15 Offices12..........................................................................................12
5.16 Trade Names........................................................................................12
5.17 Taxes..............................................................................................12
5.18 Compliance with Applicable Laws....................................................................12
5.19 Reliance on Separate Legal Identity................................................................12
5.20 Utility Holding Company............................................................................12
5.21 Payments to Originator.............................................................................13
5.22 Investment Company.................................................................................13
5.23 Financial Interests................................................................................13
5.24 Obligation of Obligor..............................................................................13
5.25 Lock-Boxes.........................................................................................13
5.26 Credit and Collection Policy.......................................................................13
5.27 Transaction Documents..............................................................................14
ARTICLE VI COVENANTS OF THE ORIGINATOR ..................................................................14
6.1 Affirmative Covenants..............................................................................14
6.2 Reporting Requirements.............................................................................15
6.3 Negative Covenants.................................................................................16
6.4 Lock-Box Banks.....................................................................................17
6.5 Accounting for Purchases...........................................................................17
6.6 Transaction Documents..............................................................................17
6.7 Substantive Consolidation..........................................................................18
ARTICLE VII ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE RECEIVABLES...............................19
7.1 Rights of the Company..............................................................................19
7.2 Responsibilities of the Originator.................................................................19
7.3 Further Action Evidencing Purchases................................................................20
7.4 Application of Collections.........................................................................21
ARTICLE VIII PURCHASE AND SALE TERMINATION EVENTS..........................................................21
8.1 Purchase and Sale Termination Events...............................................................21
8.2 Remedies...........................................................................................22
ARTICLE IX INDEMNIFICATION...............................................................................22
9.1 Indemnities by the Originator......................................................................22
ARTICLE X MISCELLANEOUS.................................................................................25
10.1 Amendments, etc....................................................................................25
10.2 Notices, etc.......................................................................................25
10.3 No Waiver; Cumulative Remedies.....................................................................25
10.4 Binding Effect; Assignability......................................................................26
10.5 Governing Law......................................................................................26
10.6 Costs, Expenses and Taxes..........................................................................26
10.7 Waiver of Jury Trial...............................................................................26
10.8 Captions and Cross References; Incorporation by Reference..........................................26
10.9 Execution in Counterparts..........................................................................27
10.10 Acknowledgment and Agreement.......................................................................27
10.11 No Proceedings.....................................................................................27
EXHIBIT A - Form of Purchase Report
EXHIBIT B - Form of Company Note
EXHIBIT C - Form of Originator Assignment Certificate
EXHIBIT D - Office Locations
EXHIBIT E - Trade Names
PURCHASE AND SALE AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT (this "AGREEMENT"), dated as of February
6, 2001, is between KENTUCKY UTILITIES COMPANY, a Kentucky and Virginia
corporation ("KU"), as the initial Servicer (in such capacity, the "Servicer")
and as the originator (in such capacity, the "Originator"), and KU RECEIVABLES
LLC, a Delaware limited liability company (the "Company").
DEFINITIONS
Unless otherwise indicated, certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I to the Receivables Purchase
Agreement of even date herewith (as the same may be amended, supplemented or
otherwise modified from time to time, the "Receivables Purchase Agreement")
among KU, the Company, Market Street Funding Corporation, PNC Bank, National
Association, Mellon Bank, N.A and Three Rivers Funding Corporation. All
references herein to months are to calendar months unless otherwise expressly
indicated.
BACKGROUND
1. The Company is a special purpose entity, all of the issued and
outstanding equity of which is owned by KU.
2. The Originator generates Receivables in the ordinary course of its
business.
3. The Originator, in order to finance its business, wishes to sell
Receivables to the Company, and the Company is willing, on the terms and subject
to the conditions set forth herein, to purchase Receivables from the Originator.
4. The Originator and the Company intend this transaction to be a true sale
of Receivables by the Originator to the Company providing the Company with the
full benefits of ownership of the Receivables and the Originator and the Company
do not intend the transactions hereunder to be, or for any purpose to be,
characterized as a loan from the Company to the Originator.
5. The Company intends to sell the Purchased Interest in the Receivables
pursuant to the Receivables Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
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ARTICLE I
AGREEMENT TO PURCHASE AND SELL
1.1 AGREEMENT TO PURCHASE AND SELL. On the terms and subject to the
conditions set forth in this Agreement (including ARTICLE IV), the Originator
agrees to sell to the Company, and the Company agrees to purchase from the
Originator, from time to time on or after the Closing Date, but before the
Purchase and Sale Termination Date, all of the Originator's right, title and
interest in and to:
(a) each Receivable of the Originator that existed and was owing to
the Originator as at the closing of the Originator's business on December
31, 2000 (the "CUT-OFF DATE") other than Receivables contributed pursuant
to SECTION 3.1 (the "Contributed Receivables");
(b) each Receivable created by the Originator from and including the
Cut-off Date to and including the Purchase and Sale Termination Date;
(c) all rights to, but not the obligations under, all Related
Security;
(d) all monies due or to become due with respect to any of the
foregoing;
(e) all books and records related to any of the foregoing; and
(f) all collections and other proceeds of any of the foregoing (as
defined in the
New York UCC) that are or were received by the Originator on
or after Cut-off Date, including, without limitation, all funds which
either are received by the Originator, the Company or the Servicer from or
on behalf of the Obligors in payment of any amounts owed (including,
without limitation, invoice price, finance charges, interest and all other
charges) in respect of Receivables, or are applied to such amounts owed by
the Obligors (including, without limitation, insurance payments that the
Originator or Servicer applies in the ordinary course of its business to
amounts owed in respect of any Receivable and net proceeds of sale or other
disposition of repossessed goods or other collateral or property of the
Obligors or any other parties directly or indirectly liable for payment of
such Receivables).
All purchases and contributions hereunder shall be made without recourse, but
shall be made pursuant to, and in reliance upon, the representations, warranties
and covenants of the Originator set forth in this Agreement and each other
Transaction Document. No obligation or liability to any Obligor on any
Receivable is intended to be assumed by the Company hereunder, and any such
assumption is expressly disclaimed. The Company's foregoing commitment to
purchase Receivables and the proceeds and rights described in
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CLAUSES (c) through (f)(collectively, the "RELATED RIGHTS") is herein called
the "PURCHASE FACILITY."
1.2 TIMING OF PURCHASES.
(a) CLOSING DATE PURCHASES. The Originator's entire right, title and
interest in (i) each Receivable that existed and was owing to the
Originator as at the Cut-off Date (other than Contributed Receivables, as
defined in SECTION 1.1), (ii) all Receivables created by the Originator
from and including the Cut-off Date, to and including the Closing Date, and
(iii) all Related Rights in respect of the foregoing automatically shall be
sold to the Company on the Closing Date.
(b) REGULAR PURCHASES. After the Closing Date, until the Purchase and
Sale Termination Date, each Receivable (and the Related Rights in respect
thereof) created by the Originator shall be sold to the Company, and each
such sale shall be deemed to have occurred (without further action) upon
the creation of such Receivable.
1.3 CONSIDERATION FOR PURCHASES. On the terms and subject to the conditions
set forth in this Agreement, the Company agrees to make Purchase Price payments
to the Originator and to reflect all contributions in accordance with
ARTICLE III.
1.4 PURCHASE AND SALE TERMINATION DATE. The "PURCHASE AND SALE TERMINATION
DATE" shall be the earliest to occur of (a) the date of the termination of this
Agreement pursuant to SECTION 8.2 and (b) the Payment Date immediately following
the day on which the Originator shall have given notice to the Company at or
prior to 10:00 a.m. (
New York City time) that the Originator desires to
terminate this Agreement.
1.5 INTENTION OF THE PARTIES. It is the express intent of the parties
hereto that the transfers of the Receivables and Related Rights by the
Originator to the Company, as contemplated by this Agreement be, and be treated
as, sales or contributions, as applicable and not as secured loans secured by
the Receivables and Related Rights. If, however, notwithstanding the intent of
the parties, such transactions are deemed to be loans, the Originator hereby
grants to the Company a first priority security interest in all of the
Originator's right, title and interest in and to the Receivables and the Related
Rights now existing and hereafter created by the Originator, all monies due or
to become due and all amounts received with respect thereto, and all proceeds
thereof, to secure all of the Originator's obligations hereunder.
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ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1 CALCULATION OF PURCHASE PRICE. On the Closing Date and two Business
Days prior to each Settlement Date, the Servicer shall deliver to the Company
and the Originator a report in substantially the form of EXHIBIT A (each such
report being herein called a "PURCHASE REPORT") with respect to the matters set
forth therein and the Company's purchases of Receivables from the Originator:
(a) that are to be made on the Closing Date, reflecting Receivables
existing as of the Cut-off Date (in the case of the Purchase Report to be
delivered on the Closing Date), or
(b) that were made during the immediately preceding calendar month (in the
case of each subsequent Purchase Report).
The "PURCHASE PRICE" (to be paid to the Originator in accordance with the terms
of ARTICLE III) for the Receivables and the Related Rights that are purchased
hereunder from the Originator shall be determined in accordance with the
following formula:
PP = OB X FMVD
WHERE:
PP = Purchase Price for each Receivable as calculated on the relevant
Payment Date.
OB = the Outstanding Balance of such Receivable.
FMVD= Fair Market Value Discount, as measured on such Payment Date,
which is equal to the quotient (expressed as percentage) of (a)
one DIVIDED by (b) the sum of (i) one, plus (ii) the product of
(A) the Prime Rate on such Payment Date plus .25% and (B) a
fraction, the numerator of which is the Day's Sales Outstanding
(calculated as of the last day of the calendar month next
preceding such Payment Date) and the denominator of which is
365.
"PAYMENT DATE" means (i) the Closing Date and (ii) each Business Day
thereafter that the Originator is open for business.
"PRIME RATE" means the rate described in part (a) of the definition of
Market Street Base Rate.
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ARTICLE III
PAYMENT OF PURCHASE PRICE
3.1 CONTRIBUTION OF RECEIVABLES AND INITIAL PURCHASE PRICE PAYMENT. (a) On
the Closing Date the Originator shall, and hereby does, contribute to the
capital of the Company Receivables and Related Rights with respect thereto
consisting of each Receivable of the Originator that existed and was owing to
the Originator on the Closing Date beginning with the oldest of such Receivables
and continuing chronologically thereafter such that the aggregate Outstanding
Balance of all such Contributed Receivables shall be equal to $3,000,000.
(b) On the terms and subject to the conditions set forth in this Agreement,
the Company agrees to pay to the Originator the Purchase Price for the purchase
to be made from the Originator on the Closing Date partially in cash (in an
amount to be agreed between the Company and the Originator and set forth in the
initial Purchase Report) and partially by issuing a promissory note in the form
of EXHIBIT B to the Originator with an initial principal balance equal to the
remaining Purchase Price (such promissory note, as it may be amended,
supplemented, indorsed or otherwise modified from time to time, together with
any promissory notes issued from time to time in substitution therefor or
renewal thereof in accordance with the Transaction Documents, being herein
called the "COMPANY NOTE").
3.2 SUBSEQUENT PURCHASE PRICE PAYMENTS. On each Payment Date falling after
the Closing Date, on the terms and subject to the conditions set forth in this
Agreement, the Company shall pay to the Originator the Purchase Price for the
Receivables generated by the Originator during the immediately preceding month
as follows:
(a) FIRST, the Purchase Price shall be paid in cash to the extent the
Company has cash available therefor; and
(b) SECOND, to the extent any portion of the Purchase Price remains
unpaid, the principal amount outstanding under the Company Note issued to
the Originator shall be increased by an amount equal to such remaining
Purchase Price.
Servicer shall make all appropriate record keeping entries with respect to
the Company Note or otherwise to reflect the foregoing payments and Servicer's
books and records shall constitute rebuttable presumptive evidence of the
principal amount of and accrued interest on the Company Note at any time.
Furthermore, Servicer shall hold the Company Note for the benefit of the
Originator. The Originator hereby irrevocably authorizes Servicer to ▇▇▇▇ the
Company Note "CANCELLED" and to return the Company Note to the Company upon the
final payment thereof after the occurrence of the Purchase and Sale Termination
Date.
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3.3 SETTLEMENT AS TO SPECIFIC RECEIVABLES AND DILUTION.
(a) If on the day of purchase or contribution of any Receivable from the
Originator hereunder, any of the representations or warranties set forth in
SECTIONS 5.4 AND 5.12 of the Originator is not true with respect to such
Receivable, or as a result of any action or inaction of the Originator, on any
day any of the representations or warranties set forth in Sections 5.4 and 5.12
is no longer true with respect to such a Receivable, then the Purchase Price
with respect to such Receivables (or in the case of a Contributed Receivable,
the Outstanding Balance of such Receivable (the "Contributed Value")) shall be
reduced by an amount equal to the Outstanding Balance of such Receivable and
shall be accounted to the Originator as provided in SUBSECTION (c) below;
PROVIDED, that if the Company thereafter receives payment on account of
Collections due with respect to such Receivable, the Company promptly shall
deliver such funds to the Originator.
(b) If, on any day, the Outstanding Balance of any Receivable (including
any Contributed Receivable) purchased or contributed hereunder is reduced or
adjusted downward as a result of any defective, rejected or returned goods or
services, or any revision, cancellation, allowance, discount or other adjustment
(except a setoff in the ordinary course in connection with a Security Deposit or
Obligor Payment Plan or pursuant to the terms of an Energy Wholesale Contract or
any revision, cancellation, allowance, discount or other adjustment to any
Receivable to the extent such Receivable is uncollectible in whole or part on
account of the lack of creditworthiness of, or any Insolvency Event related to,
the related Obligor) made by the Originator, the Company, the Servicer or any
Affiliate thereof or any setoff or dispute between the Originator, the Company,
the Servicer or any Affiliate thereof and an Obligor as indicated on the books
of the Company (or, for periods prior to the Closing Date, the books of the
Originator), then the Purchase Price or Contributed Value, as the case may be,
with respect to such Receivable shall be reduced by the amount of such net
reduction and shall be accounted to the Originator as provided in SUBSECTION (c)
below; PROVIDED, HOWEVER that if the Servicer is not the Originator or an
Affiliate of the Company or the Originator, no such reduction and accounting
will be required for any reduction or downward adjustment of a Receivable
resulting from such Servicer's failure to comply with applicable Legal
Requirements.
(c) Any reduction in the Purchase Price (or Contributed Value) of any
Receivable pursuant to SUBSECTION (a) or (b) above shall be applied as a credit
for the account of the Company against the Purchase Price of Receivables
subsequently purchased by the Company from the Originator hereunder; PROVIDED,
HOWEVER if there have been no purchases of Receivables from the Originator (or
insufficiently large purchases of Receivables) to create a Purchase Price
sufficient to so apply such credit against, the amount of such credit
(i) shall be paid in cash to the Company by the Originator in the
manner and for application as described in the following proviso, or
6
(ii) shall be deemed to be a payment under, and shall be deducted from
the principal amount outstanding under, the Company Note;
PROVIDED, FURTHER, that at any time (y) when a Termination Event or Unmatured
Termination Event exists under the Receivables Purchase Agreement or (z) on or
after the Purchase and Sale Termination Date, the amount of any such credit
shall be paid by the Originator to the Company by deposit in immediately
available funds into the relevant Lock-Box Account for application by Servicer
to the same extent as if Collections of the applicable Receivable in such amount
had actually been received on such date.
(d) Each Purchase Report (other than the Purchase Report delivered on the
Closing Date) shall include, in respect of the Receivables previously generated
by the Originator (including Contributed Receivables), a calculation of the
aggregate reductions described in SUBSECTION (a) or (b) relating to such
Receivables since the last Purchase Report delivered hereunder, as indicated on
the books of the Company (or, for such period prior to the Closing Date, the
books of the Originator).
(e) Except as provided in CLAUSE (b), or as otherwise required by
applicable Legal Requirements or the relevant Contract, all Collections received
from an Obligor of any Receivable shall be applied to the Receivables of such
Obligor in the order of the age of such Receivables, starting with the oldest
such Receivable, unless such Obligor designates in writing its payment for
application to specific Receivables.
3.4 RECONVEYANCE OF RECEIVABLES. In the event that the Originator has paid
to the Company the full Outstanding Balance of any Receivable pursuant to
SECTION 3.3, the Company shall reconvey such Receivable to the Originator,
without representation or warranty, but free and clear of all liens created by
the Company.
ARTICLE IV
CONDITIONS OF PURCHASES
4.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
hereunder is subject to the condition precedent that Servicer (on the Company's
behalf) shall have received, on or before the Closing Date, the following, each
(unless otherwise indicated) dated the Closing Date, and each in form and
substance satisfactory to Servicer (acting on the Company's behalf):
(a) An Originator Assignment Certificate in the form of EXHIBIT C from
the Originator, duly completed, executed and delivered by the Originator;
(b) A copy of the resolutions of the Board of Directors of the
Originator approving the Transaction Documents to be delivered by it and
the transactions
7
contemplated hereby and thereby, certified by the respective Secretary or
Assistant Secretary of the Originator;
(c) Good standing certificates for the Originator issued as of a
recent date acceptable to Servicer by the Secretary of State of the
jurisdiction of the Originator's incorporation and the jurisdiction where
such Originator's chief executive office is located;
(d) A certificate of the Secretary or Assistant Secretary of the
Originator certifying the names and true signatures of the officers
authorized on such Person's behalf to sign the Transaction Documents to be
delivered by it (on which certificate Servicer and the Company may
conclusively rely until such time as Servicer shall receive from such
Person a revised certificate meeting the requirements of this SUBSECTION
(d));
(e) The certificate or articles of incorporation or other
organizational document of the Originator, duly certified by the Secretary
of State of the jurisdiction of such Originator's incorporation as of a
recent date acceptable to Servicer, together with a copy of the by-laws of
the Originator, each duly certified by the Secretary or an Assistant
Secretary of the Originator;
(f) Originals of the proper financing statements (Form UCC-1) that
have been duly executed and name the Originator as the debtor/seller and
the Company as the secured party/purchaser (and the Administrator, as
assignee of the Company) of the Receivables generated by the Originator as
may be necessary or, in Servicer's or the Administrator's opinion,
desirable under the UCC of all appropriate jurisdictions to perfect the
Company's ownership interest in all Receivables and such other rights,
accounts, instruments and moneys (including, without limitation, Related
Security) in which an ownership or security interest may be assigned to it
hereunder;
(g) A written search report from a Person satisfactory to Servicer
listing all effective financing statements that name the Originator as
debtor or seller and that are filed in the jurisdictions in which filings
were made pursuant to the foregoing SUBSECTION (f), together with copies of
such financing statements (none of which, except for those described in the
foregoing SUBSECTION (f), shall cover any Receivable or any Related Rights
which are to be sold to the Company hereunder), and tax and judgment lien
search reports from a Person satisfactory to Servicer showing no evidence
of such liens filed against the Originator;
(h) A favorable opinion of ▇▇▇▇▇▇▇, Carton & ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇, counsel to the Originator, in form and substance satisfactory to
Servicer and the Administrator;
8
(i) The Company Note in favor of the Originator, duly executed by the
Company; and
(j) A certificate from an officer of the Originator to the effect that
the Servicer and the Originator have placed on the most recent, and have
taken all steps reasonably necessary to ensure that there shall be placed
on each subsequent, data processing report or other books and records that
it generates which are of the type that a proposed purchaser or lender
would use to evaluate the Receivables, the following legend (or the
substantive equivalent thereof): "THE RECEIVABLES DESCRIBED HEREIN HAVE
BEEN SOLD BY THE ORIGINATOR TO KU RECEIVABLES LLC PURSUANT TO A
PURCHASE
AND SALE AGREEMENT, DATED AS OF FEBRUARY 6, 2001, AS AMENDED, BETWEEN
KENTUCKY UTILITIES COMPANY, AND KU RECEIVABLES LLC; AND AN UNDIVIDED,
FRACTIONAL OWNERSHIP INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS BEEN
SOLD TO MARKET STREET FUNDING CORPORATION, THREE RIVERS FUNDING CORPORATION
AND THE OTHER PURCHASERS PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT,
DATED AS OF FEBRUARY 6, 2001, AS AMENDED, AMONG KENTUCKY UTILITIES COMPANY,
AS THE SERVICER, KU RECEIVABLES LLC, MARKET STREET FUNDING CORPORATION,
THREE RIVERS FUNDING CORPORATION AND THE OTHER PURCHASERS THEREUNDER AND
PNC BANK, NATIONAL ASSOCIATION AS ADMINISTRATOR."
4.2 CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. The Originator, by
accepting the Purchase Price related to each purchase of Receivables generated
by the Originator, shall be deemed to have certified that the representations
and warranties contained in ARTICLE V are true and correct on and as of such
day, with the same effect as though made on and as of such day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
In order to induce the Company to enter into this Agreement and to make
purchases and accept contributions hereunder, the Originator hereby makes with
respect to itself, the representations and warranties set forth in this
ARTICLE V.
5.1 ORGANIZATION AND GOOD STANDING. The Originator has been duly organized
and is validly existing as a corporation in good standing under the laws of the
Commonwealth of Kentucky and the Commonwealth of Virginia, with power and
authority to own its properties and to conduct its business as such properties
are presently owned and such business is presently conducted.
9
5.2 DUE QUALIFICATION. The Originator is duly licensed or qualified to do
business as a foreign corporation in good standing in the jurisdiction where its
chief executive office is located and in all other jurisdictions in which (a)
the ownership or lease of its property or the conduct of its business requires
such licensing or qualification and (b) the failure to be so licensed or
qualified would have a Material Adverse Effect.
5.3 POWER AND AUTHORITY; DUE AUTHORIZATION. The Originator has (a) all
necessary power, authority and legal right (i) to execute and deliver, and
perform its obligations under, each Transaction Document to which it is a party
and (ii) to generate, own, sell, contribute and assign Receivables on the terms
and subject to the conditions herein and therein provided; and (b) duly
authorized such execution and delivery and such sale, contribution and
assignment and the performance of such obligations by all necessary corporate
action.
5.4 VALID SALE; BINDING OBLIGATIONS. Each sale or contribution, as the case
may be, made by the Originator pursuant to this Agreement shall constitute a
valid sale or contribution, as the case may be, transfer, and assignment of
Receivables to the Company, enforceable against creditors of, and purchasers
from, the Originator; and this Agreement constitutes, and each other Transaction
Document to be signed by the Originator, when duly executed and delivered, will
constitute, a legal, valid, and binding obligation of the Originator,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
5.5 NO VIOLATION. The consummation of the transactions contemplated by this
Agreement and the other Transaction Documents and the fulfillment of the terms
hereof or thereof, (a) will not contravene or result in a default under or
conflict with: (i) the Originator's charter or by-laws or (ii) any indenture,
loan agreement, mortgage, deed of trust or other material agreement or
instrument to which it is a party or by which it is bound; (b) will not in any
material respect contravene or conflict with: (i) any Legal Requirement
applicable to it, or (ii) any order, writ, judgment, award, injunction or decree
binding on or affecting it or any of its property; and (c) will not result in or
require the creation of any material Adverse Claim (other than those
specifically contemplated thereby) upon or with respect to any of its
properties.
5.6 PROCEEDINGS. Except as disclosed in the SEC Reports or as otherwise
disclosed to the Administrator and each Purchaser Agent, there is no action,
suit, proceeding or investigation pending before any Governmental Authority or
arbitrator (a) asserting the invalidity of any Transaction Document, (b) seeking
to prevent the issuance of the Originator's Originator Assignment Certificate or
the consummation of any of the transactions contemplated by any Transaction
Document, or (c) that is reasonably likely to have an effect of the type
described in clauses (b) through (c) of the definition of Material Adverse
Effect.
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5.7 BULK SALES ACTS. No transaction contemplated hereby requires compliance
with, or will be subject to avoidance under, any bulk sales act or similar law.
5.8 GOVERNMENT APPROVALS. Except for the filing of the UCC Financing
Statements referred to in ARTICLE IV, no authorization, approval or other action
by, and no notice to or filing with, any Governmental Authority or other Person
is required for the due execution, delivery and performance by the Originator of
this Agreement or any other Transaction Document to which it is a party that has
not been made or obtained.
5.9 FINANCIAL CONDITION.
(a) MATERIAL ADVERSE CHANGE. The balance sheets of the Originator and
its consolidated Subsidiaries as at December 31, 1999, and the related
statements of income and retained earnings for the fiscal year then ended,
copies of which have been furnished to the Administrator and each Purchaser
Agent, fairly present the financial condition of the Originator and its
consolidated Subsidiaries as at such date and the results of the operations of
the Originator and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently applied,
and, since December 31, 1999 there has been no event or circumstances which have
had an effect of the type described in clauses (b) through (e) of the definition
of Material Adverse Effect (except for those disclosed in the SEC Reports prior
to the Closing Date).
(b) SOLVENT. On the date hereof, and on the date of each purchase
hereunder (both before and after giving effect to such purchase), the
Originator shall be Solvent.
5.10 LICENSES, CONTINGENT LIABILITIES, AND LABOR CONTROVERSIES.
(a) The Originator has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership
of its properties or to the conduct of its business, which violation or
failure to obtain would be reasonably likely to have a Material Adverse
Effect.
(b) There are no labor controversies pending against the Originator
that have had (or are reasonably likely to have) an effect of the type
described in clauses (b) through (e) of the definition of Material Adverse
Effect.
5.11 MARGIN REGULATIONS. No use of any funds acquired by the Originator
under this Agreement will conflict with or contravene any of Regulations T, U
and X promulgated by the Federal Reserve Board from time to time.
11
5.12 QUALITY OF TITLE.
(a) Each Receivable of the Originator (together with the Related
Rights with respect to such Receivable) which is to be sold to the Company
hereunder is or shall be owned by the Originator, free and clear of any
Adverse Claim, except as provided herein and in the Receivables Purchase
Agreement. Whenever the Company makes a purchase or accepts a contribution
hereunder, it shall have acquired and shall continue to have maintained a
valid and perfected ownership interest (free and clear of any Adverse
Claim) in all Receivables generated by the Originator and all Collections
related thereto, and in the Originator's entire right, title and interest
in and to the Related Rights with respect thereto.
(b) No effective financing statement or other instrument similar in
effect covering any Receivable generated by the Originator or any Related
Rights is on file in any recording office except such as may be filed in
favor of the Company or the Originator, as the case may be, in accordance
with this Agreement or in favor of the Administrator (for the benefit of
the Purchasers) in accordance with the Receivables Purchase Agreement.
(c) Unless otherwise identified to the Company on the date of the
purchase or contribution hereunder, each Receivable purchased hereunder is
on the date of purchase or contribution, an Eligible Receivable.
5.13 NO PROCEEDS FOR REGISTERED SECURITIES. No proceeds of any purchase or
reinvestment will be used to acquire any equity security of a class that is
registered pursuant to Section 12 of the Securities Exchange Act of 1934.
5.14 ACCURACY OF INFORMATION. All factual written information heretofore or
contemporaneously furnished (and prepared) by the Originator to the Company, the
Servicer or the Administrator for purposes of or in connection with any
Transaction Document, Information Package or any transaction contemplated hereby
or thereby is, and all other such factual written information hereafter
furnished (and prepared) by the Originator to the Company or the Administrator
pursuant to or in connection with any Transaction Document will be, true and
accurate in every material respect on the date as of which such information is
dated 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.
5.15 OFFICES. The Originator's principal place of business and chief
executive office is located at the address set forth on EXHIBIT D for such place
of business and office, and the offices where the Originator keeps all its
books, records and documents evidencing its Receivables, the related Contracts
and all other agreements related to the Receivables are located at the addresses
specified in EXHIBIT D (or at such other locations, notified to Servicer and the
Administrator in accordance with SECTION 6.1(f), in jurisdictions where all
action required by SECTION 7.3 has been taken and completed).
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5.16 TRADE NAMES. The Originator does not use any trade name other than its
actual corporate name and the trade names set forth in EXHIBIT E. From and after
the date that fell five (5) years before the date hereof, except as set forth in
Exhibit F, the Originator has not been known by any legal name other than its
corporate name as of the date hereof, nor has the Originator been the subject of
any merger or other corporate reorganization.
5.17 TAXES. The Originator has filed all tax returns and reports required
by law to have been filed by it and has paid all material taxes and governmental
charges thereby shown to be owing, except any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books.
5.18 COMPLIANCE WITH APPLICABLE LAWS. The Originator is in compliance with
the requirements of all applicable Legal Requirements, and orders of all
governmental authorities, a breach of any of which, individually or in the
aggregate, would be reasonably likely to have a Material Adverse Effect and the
Originator is not in violation of any order of any court, arbitrator or
Governmental Authority, which could have a Material Adverse Effect.
5.19 RELIANCE ON SEPARATE LEGAL IDENTITY. The Originator acknowledges that
the Purchasers and the Administrator are entering into the Receivables Purchase
Agreement in reliance upon the Company's identity as a legal entity separate
from the Originator.
5.20 UTILITY HOLDING COMPANY. KU has complied in all material respects with
the requirements, rules and regulations of the Public Utility Holding Company
Act of 1935, as amended.
5.21 PAYMENTS TO ORIGINATOR. With respect to each Receivable transferred to
the Company hereunder, the Purchase Price received by the Originator constitutes
reasonably equivalent value in consideration therefor and such transfer was not
made for or on account of an antecedent debt. No transfer by the Originator of
any Receivable hereunder is or may be voidable under any section of the
Bankruptcy Reform Act of 1978 (11 U.S.C. Sections 101 et seq.), as amended.
5.22 INVESTMENT COMPANY. The Originator is not an "investment company," or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.23 FINANCIAL INTERESTS. Neither the Originator nor any of its Affiliates
has any direct or indirect ownership or financial interest in any Purchaser.
5.24 OBLIGATION OF OBLIGOR. Pursuant to each Contract with respect to each
Receivable or applicable Legal Requirements, such Receivable is effective to
create, and
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has created, a legal, valid and binding obligation of the related Obligor to pay
the Outstanding Balance of such Receivable and any accrued interest thereon,
enforceable against the Obligor in accordance with its terms, except as such
enforcement may be limited by applicable Legal Requirements or 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).
5.25 LOCK-BOXES. The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts (if any) at such
Lock-Box Banks and the number and location of the KU Post-Office Box, are
specified in SCHEDULE II to the Receivables Purchase Agreement (or as have been
identified in a notice to the Administrator in accordance with the Agreement)
and, from and after the 30th day after the Closing Date, all Lock-Box Accounts
are or will be subject to (and Travelers will be a party to) Lock-Box Agreements
(except as otherwise agreed to in writing by the Administrator). Twenty-one days
after the Administrator's written request and at all times thereafter, the KU
Post-Office Box shall be subject to a Lock-Box Agreement. Originator has not
granted to any Person, other than the Administrator and Servicer as contemplated
by the Receivables Purchase Agreement, dominion and control of any Lock-Box
Account or the KU Post-Office Box, and no party other than the Administrator has
the right to take dominion and control of any such account or post office box or
Collections deposited with Travelers at a future time or upon the occurrence of
a future event.
5.26 CREDIT AND COLLECTION POLICY. The Originator and its Affiliates (other
than the Company, as to which the Originator makes no representation) have
complied in all material respects with the Credit and Collection Policy and
applicable Legal Requirements with regard to each Receivable.
5.27 TRANSACTION DOCUMENTS. The Originator has complied in all material
respects with all of the terms, covenants and agreements contained in this
Agreement and the other Transaction Documents to which it is a party.
ARTICLE VI
COVENANTS OF THE ORIGINATOR
6.1 AFFIRMATIVE COVENANTS. From the date hereof until the first day
following the Purchase and Sale Termination Date, the Originator will, unless
the Administrator and the Company shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects with
all applicable Legal Requirements except where the failure to so comply
would not have a Material Adverse Effect.
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(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its
corporate existence, rights, franchises, qualifications and privileges,
except to the extent that the failure to pursue and maintain such
existence, rights, franchises, qualifications and privileges would not have
a Material Adverse Effect.
(c) AUDIT. From time to time during regular business hours, but no
more frequently than annually unless (x) a Purchase and Sale Termination
Event has occurred and is continuing or (y) in the opinion of the Company
or the Administrator (with the consent or at the direction of the Majority
Purchasers) reasonable grounds for insecurity exist with respect to the
collectibility of a material portion of the Receivables or with respect to
the Originator's performance or ability to perform in any material respect
its obligations under the Agreement, as reasonably requested in advance
(unless a Termination Event or Unmatured Termination Event exists) by the
Company or Administrator, permit the Company or Administrator, or its
agents or representatives: (i) to examine and make copies of and abstracts
from all books, records and documents (including computer tapes and disks)
in the possession or under the control of the Originator relating to
Receivables and the Related Security, including the related Contracts, and
(ii) to visit the offices and properties of the Originator for the purpose
of examining such materials described in CLAUSE (i) above, and to discuss
matters relating to Receivables and the Related Security or the
Originator's performance under the Transaction Documents or under the
Contracts or applicable Legal Requirements with any of the officers,
employees, agents or contractors of the Originator having knowledge of such
matters and (iii) without limiting the CLAUSES (i) and (ii) above, to
engage certified public accountants or other auditors acceptable to the
Company and the Administrator to conduct at the Originator's expense, a
review of the Originator's books and records with respect to the
Receivables.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables and the related
Contracts it generates in the event of the destruction of the originals
thereof), and keep and maintain all documents, books, records, computer
tapes and disks and other information reasonably necessary or advisable for
the collection of such Receivables (including, without limitation, records
adequate to permit the daily identification of each new Receivable and all
Collections of and adjustments to each existing Receivable).
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES, APPLICABLE LEGAL
REQUIREMENTS AND CONTRACTS. Timely and fully perform and comply, at its
expense, with all material provisions, covenants and other promises
required to be observed by it under the Contracts or applicable Legal
Requirements and all other agreements related to the Receivables that it
generates.
15
(f) LOCATION OF RECORDS. Keep its principal place of business and
chief executive office (as such terms or similar terms are used in this
applicable UCC), and the offices where it keeps its records concerning or
related to Receivables, at the address(es) specified on EXHIBIT D for both
catagories or, upon 30 days' prior written notice to the Company and the
Administrator, at such other locations in jurisdictions where all action
required by SECTION 7.3 shall have been taken and completed.
(g) CREDIT AND COLLECTION POLICIES. Comply in all material respects
with its Credit and Collection Policy in connection with the Receivables
that it generates and all Contracts or applicable Legal Requirements.
(h) POST OFFICE BOXES. On or prior to the date hereof, deliver to
Servicer (on behalf of the Company) a certificate from an authorized
officer of the Originator to the effect that the name of the renter of all
post office boxes into which Collections may from time to time be mailed
has been changed to the name of the Company (unless such post office boxes
are in the name of the relevant Lock-Box Banks).
6.2 REPORTING REQUIREMENTS. From the date hereof until the first day
following the Purchase and Sale Termination Date, the Originator will, unless
Servicer (on behalf of the Company) and the Administrator shall otherwise
consent in writing, furnish to the Company and the Administrator:
(a) PURCHASE AND SALE TERMINATION EVENTS. As soon as possible after
knowledge of the occurrence of, and in any event within three Business Days
after knowledge of the occurrence of each Purchase and Sale Termination
Event or each Unmatured Purchase and Sale Termination Event in respect of
the Originator, the statement of the chief financial officer, chief
accounting officer, treasurer, secretary or any Vice President of the
Originator describing such Purchase and Sale Termination Event or Unmatured
Purchase and Sale Termination Event and the action that the Originator
proposes to take with respect thereto, in each case in reasonable detail;
(b) UCC FILING INFORMATION. At least thirty days before any change in
the Originator's name or any other change requiring the amendment of UCC
financing statements, a notice setting forth such changes and the effective
date thereof;
(c) PROCEEDINGS. Promptly after the Originator obtains knowledge
thereof, notice of any: (A) litigation, investigation or proceeding that
may exist at any time between the Originator or any of its Affiliates and
any Governmental Authority that, if not cured or if adversely determined,
as the case may be, would have a Material Adverse Effect, (B) litigation or
proceeding adversely affecting the Originator or any of its Affiliates in
which the amount involved is $500,000 or
16
more and not covered by insurance or in which injunctive or similar relief
is sought, (C) material litigation or proceeding relating to any
Transaction Document or (D) material adverse developments that have
occurred with respect to any previously disclosed litigation, proceedings
and investigations;
(d) OTHER. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the conditions
or operations, financial or otherwise, of the Originator as the Company,
any Purchaser, any Purchaser Agent or the Administrator may from time to
time reasonably request in order to protect the interests of the Company,
any Purchaser Agent, any Purchaser or the Administrator under or as
contemplated by the Transaction Documents.
6.3 NEGATIVE COVENANTS. From the date hereof until the date following the
Purchase and Sale Termination Date, the Originator agrees that, unless Servicer
(on behalf of the Company) and the Administrator shall otherwise consent in
writing, it shall not:
(a) SALES, LIENS, ETC. Except as otherwise provided herein or in any
other Transaction Document, sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist any Adverse Claim
upon or with respect to, any Receivable or related Contract or Related
Security, or any interest therein, or any Collections thereon, or assign
any right to receive income in respect thereof.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise
required by applicable Legal Requirements or permitted by SECTION 4.2(a) of
the Receivables Purchase Agreement, extend, amend or otherwise modify the
terms of any Receivable in any material respect generated by it, or amend,
modify or waive, in any material respect, any term or condition of any
Contract related thereto or waive any right granted by the applicable Legal
Requirements related thereto, or permit the Servicer (so long as the
Servicer is an Affiliate of the Originator) to take any of the foregoing
actions.
(c) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Except as
required by applicable Legal Requirements, make any change in the character
of its business or materially alter its Credit and Collection Policy, which
change would have a material adverse effect on the terms and conditions or
the collectibility of a material portion of the Receivables, or make any
other material change in the Credit and Collection Policy without prior
written notice to the Administrator and each Purchaser Agent.
(d) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES OR CHATTEL
PAPER. Take any action to cause or permit any Receivable generated by it to
17
become evidenced by any "instrument" or "chattel paper" (as defined in the
New York UCC).
(e) MERGERS, ACQUISITIONS, SALES, ETC. (i) Be a party to any merger or
consolidation or (ii) directly or indirectly sell, transfer, assign, convey
or lease (A) whether in one or a series of transactions, all or
substantially all of its assets, or (B) any Receivables or any interest
therein (other than pursuant to this Agreement).
6.4 LOCK-BOX BANKS. Add or terminate any bank or other entity as a Lock-Box
Bank or any account as a Lock-Box Account from those listed in EXHIBIT G to the
Receivables Purchase Agreement, make any change to the KU Post Office Box, make
any change in its instructions to Obligors regarding payments to be made to the
Company, the Servicer, Travelers or any Lock-Box Account (or related post office
box or the KU Post Office Box), make any change in its instructions to Travelers
regarding the handling of Collections or make any changes in its procedures for
processing Collections received in the KU Post Office Box, unless the
Administrator and the Majority Purchasers shall have consented thereto (which
consent shall not be unreasonably withheld, conditioned or delayed) in writing
and the Administrator shall have received copies of all agreements and documents
(including Lock-Box Agreements) that it may reasonably request in connection
therewith.
6.5 ACCOUNTING FOR PURCHASES. Account for or treat (whether in financial
statements or otherwise) the transactions contemplated hereby in any manner
other than as a contribution and as sales of the Receivables and Related Rights
by the Originator to the Company.
6.6 TRANSACTION DOCUMENTS. Without the prior written consent of the
Administrator and the Majority Purchasers, amend, modify, supplement, waive,
revoke or terminate any Transaction Document to which it is a party or enter
into, execute, deliver or otherwise become bound by any agreement, instrument,
document or other arrangement that restricts the right of the Originator to: (i)
amend, supplement, amend and restate or otherwise modify the provisions of
ARTICLE II of the Receivables Purchase Agreement, EXHIBIT V to the Receivables
Purchase Agreement or ARTICLES V, VI and VIII of this Agreement or any ratio,
percentage, equation or time frame contained in any definition (other than the
definitions of Purchase Limit and Facility Termination Date) contained in
EXHIBIT I to the Receivables Purchase Agreement or (ii) extend or renew, or to
waive any right under, this Agreement or any other Transaction Documents,
PROVIDED THAT the Originator may enter into, execute, deliver or otherwise
become bound by any agreement, instrument, document or other arrangement that
requires termination of this Agreement based upon the level of Total Reserves.
6.7 SUBSTANTIVE CONSOLIDATION. The Originator hereby acknowledges that
this Agreement and the other Transaction Documents are being entered into in
reliance upon the Company's identity as a legal entity separate from the
Originator and its Affiliates.
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Therefore, from and after the date hereof, the Originator shall take all
reasonable steps necessary to make it apparent to third Persons that the Company
is an entity with assets and liabilities distinct from those of the Originator
and any other Person, and is not a division of the Originator, its Affiliates or
any other Person. Without limiting the generality of the foregoing and in
addition to and consistent with the other covenants set forth herein, the
Originator shall take such actions as shall be required in order that:
(a) the Originator shall not be involved in the day to day management
of the Company;
(b) the Originator shall maintain separate corporate records and books
of account from the Company and otherwise will observe corporate
formalities and have a separate area from the Company for its business;
(c) the financial statements and books and records of the Originator
shall be prepared after the date of creation of the Company to reflect and
shall reflect the separate existence of the Company; PROVIDED, that the
Company's assets and liabilities may be included in a consolidated
financial statement issued by an affiliate of the Company; PROVIDED,
HOWEVER, that any such consolidated financial statement shall make clear
that the Company's assets are not available to satisfy the obligations of
such affiliate;
(d) except as permitted by the Receivables Purchase Agreement, (i) the
Originator shall maintain its assets separately from the assets of the
Company, (ii) and the Originator's assets, and records relating thereto,
have not been, are not, and shall not be, commingled with those of the
Company;
(e) all of the Company's business correspondence and other
communications shall be conducted in the Company's own name and on its own
stationery;
(f) the Originator shall not act as an agent for the Company, other
than KU in its capacity as the Servicer, and in connection therewith, shall
present itself to the public as an agent for the Company and a legal entity
separate from the Company;
(g) the Originator shall not conduct any of the business of the
Company in its own name;
(h) the Originator shall not pay any liabilities of the Company out of
its own funds or assets;
(i) the Originator shall maintain an arm's-length relationship with
the Company;
19
(j) the Originator shall not assume or guarantee or become obligated
for the debts of the Company or hold out its credit as being available to
satisfy the obligations of the Company;
(k) the Originator shall not acquire obligations of the Company, other
than the Company Note;
(l) the Originator shall allocate fairly and reasonably overhead or
other expenses that are properly shared with the Company, including,
without limitation, shared office space;
(m) the Originator shall identify and hold itself out as a separate
and distinct entity from the Company;
(n) the Originator shall correct any known misunderstanding regarding
its separate identity from the Company;
(o) the Originator shall not enter into, or be a party to, any
transaction with the Company, except in the ordinary course of its business
and on terms which are intrinsically fair and not less favorable to it than
would be obtained in a comparable arm's-length transaction with an
unrelated third party; and
(p) the Originator shall not pay the salaries of the Company's
employees, if any.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
7.1 RIGHTS OF THE COMPANY. The Originator hereby authorizes the Company,
Servicer, the Administrator or their respective designees to take any and all
steps permitted by applicable Legal Requirements in the Originator's name
necessary or desirable, in their respective determination, to collect all
amounts due under any and all Receivables, including, without limitation,
indorsing the name of the Originator on checks and other instruments
representing Collections and enforcing such Receivables and the provisions of
the related Contracts (or exercising any rights under the applicable Legal
Requirements) that concern payment and/or enforcement of rights to payment.
7.2 RESPONSIBILITIES OF THE ORIGINATOR. Anything herein to the contrary
notwithstanding:
(a) COLLECTION PROCEDURES. The Originator agrees: (i) to instruct all
Obligors to make payments of all Receivables to one of the following: (A)
one or
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more Lock-Box Accounts or to post office boxes to which only Lock-Box Banks
have access (and shall instruct the Lock-Box Banks to cause all items and
amounts relating to such Receivables received in such post office boxes to
be removed and deposited into a Lock-Box Account on a daily basis), (B) the
KU Post Office Box and (C) Travelers payment centers (and shall instruct
the Travelers to cause all items and amounts relating to such Receivables
received in such payment centers to be removed and deposited into a
Lock-Box Account within three days of Traveler's receipt of such items and
amounts); and (ii) deposit, or cause to be deposited, any Collections
received by it, the Servicer or the Company into Lock-Box Accounts not
later than one Business Day after receipt thereof and agrees that all such
Collections shall be deemed to be received in trust for the Company and
shall be set aside and segregated until such transfer. Except as otherwise
agreed to in writing by the Administrator and the Majority Purchasers,
thirty (30) days after the Closing Date each Lock-Box Account (other than
Lock-Box Accounts maintained at Community Banks) shall at all times be
subject to, and Travelers shall at all times be a party to, a Lock-Box
Agreement. Twenty-one (21) days after the Administrator's written request
and at all times thereafter, the KU Post Office Box shall be subject to a
Lock-Box Agreement. The Originator will not (and will not permit the
Servicer or the Company to) deposit or otherwise credit, or cause or permit
to be so deposited or credited, to any Lock-Box Account or the KU Post
Office Box cash or cash proceeds other than Collections.
(b) The Originator shall perform its obligations hereunder, and the
exercise by the Company or its designee of its rights hereunder shall not
relieve the Originator from such obligations.
(c) Except for compliance with Legal Requirements in respect thereto,
none of the Company, Servicer or the Administrator shall have any
obligation or liability to any Obligor or any other third Person with
respect to any Receivables, Contracts or applicable Legal Requirements
related thereto or any other related agreements, nor shall the Company,
Servicer, any Purchaser or the Administrator be obligated to perform any of
the obligations of the Originator thereunder.
(d) The Originator hereby grants to the Administrator an irrevocable
power of attorney, with full power of substitution, coupled with an
interest, to take in the name of the Originator all steps necessary or
advisable to indorse, negotiate or otherwise realize on any writing or
other right of any kind held or transmitted by the Originator or
transmitted or received by the Company (whether or not from the Originator)
in connection with any Receivable.
7.3 FURTHER ACTION EVIDENCING PURCHASES. The Originator agrees that from
time to time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that Servicer, the
Company or the Administrator may reasonably request in order to perfect, protect
or more fully evidence the Receivables
21
and Related Rights purchased by or contributed to the Company hereunder, or to
enable the Company to exercise or enforce any of its rights hereunder or under
any other Transaction Document. Without limiting the generality of the
foregoing, upon the request of Servicer, the Originator will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate; and
(b) ▇▇▇▇ the master data processing records and other books and
records that evidence or list (i) such Receivables and (ii) related
Contracts with the legend set forth in SECTION 4.1(j).
The Originator hereby authorizes the Company or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Receivables and Related Rights now
existing or hereafter generated by the Originator. If the Originator fails to
perform any of its agreements or obligations under this Agreement, the Company
or its designee may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the Company or
its designee incurred in connection therewith shall be payable by Originator as
provided in SECTION 9.1.
7.4 APPLICATION OF COLLECTIONS. Any payment by an Obligor in respect of any
indebtedness owed by it to the Originator shall, except as otherwise specified
by such Obligor or otherwise required by contract or law and unless otherwise
instructed by the Company or the Administrator, be applied as a Collection of
any Receivable or Receivables of such Obligor to the extent of any amounts then
due and payable thereunder before being applied to any other indebtedness of
such Obligor.
ARTICLE VIII
PURCHASE AND SALE TERMINATION EVENTS
8.1 PURCHASE AND SALE TERMINATION EVENTS. Each of the following events or
occurrences described in this SECTION 8.1 shall constitute a "PURCHASE AND SALE
TERMINATION EVENT":
(a) A Termination Event (as defined in the Receivables Purchase
Agreement) shall have occurred and, in the case of a Termination Event
(other than one described in paragraph (f) of Exhibit V of the Receivables
Purchase Agreement), the Administrator shall have declared the Facility
Termination Date to have occurred; or
22
(b) The Originator shall fail to make any payment or deposit to be
made by it hereunder when due and such failure shall remain unremedied for
two (2) Business Days; or
(c) Any representation or warranty made or deemed to be made by the
Originator (or any of its officers) under or in connection with this
Agreement, any other Transaction Documents or any other information or
report delivered pursuant hereto or thereto shall prove to have been false
or incorrect in any material respect when made or deemed made and shall
remain incorrect or untrue for seven (7) Business Days after notice to the
Originator of such inaccuracy; or
(d) The Originator shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and such failure shall remain unremedied for seven
(7) Business Days after written notice thereof shall have been given by
Servicer to the Originator.
8.2 REMEDIES.
(a) OPTIONAL TERMINATION. Upon the occurrence of a Purchase and Sale
Termination Event, the Company (and not Servicer) shall have the option by
notice to the Originator (with a copy to the Administrator) to declare the
Purchase and Sale Termination Date to have occurred.
(b) REMEDIES CUMULATIVE. Upon any termination of the Purchase Facility
pursuant to this SECTION 8.2 (a), the Company shall have, in addition to
all other rights and remedies under this Agreement or otherwise, all other
rights and remedies provided under the UCC of each applicable jurisdiction
and other applicable laws, which rights shall be cumulative. Without
limiting the foregoing, the occurrence of the Purchase and Sale Termination
Date shall not deny the Company any remedy in addition to termination of
the Purchase Facility to which the Company may be otherwise appropriately
entitled, whether at law or equity.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNITIES BY THE ORIGINATOR. Without limiting any other rights which
the Company may have hereunder or under applicable law, the Originator hereby
agrees to indemnify the Company and each of its officers, directors, employees
and agents (each of the foregoing Persons being individually called a "PURCHASE
AND SALE INDEMNIFIED PARTY"), forthwith on demand, from and against any and all
damages, losses, claims, judgments, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively called "PURCHASE AND SALE INDEMNIFIED AMOUNTS") awarded
against or incurred by any of them arising out of or as a
23
result of the failure of the Originator to perform its obligations under this
Agreement, any other Transaction Document or arising out of the claims asserted
against a Purchase and Sale Indemnified Party relating to the transactions
contemplated herein or therein or the use of proceeds thereof or therefrom,
EXCLUDING, HOWEVER, (i) Purchase and Sale Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Purchase and Sale Indemnified Party, (ii) any indemnification which has the
effect of recourse with respect to any Receivable to the extent that such
Receivable is uncollectible in whole or part on account of the lack of credit
worthiness or any Insolvency Proceeding of the related Obligor and (iii) any tax
based upon or measured by net income or gross receipts (except a tax imposed by
the jurisdiction under the laws of which such Purchase and Sale Indemnified
Party is organized or otherwise is considered doing business (unless such
Purchase and Sale Indemnified Party would not be considered doing business in
such jurisdiction, but for having entered into, or engaged in the transactions
in connection with, this Agreement or any other Transaction Document) or any
political subdivision thereof). Without limiting the foregoing, the Originator
indemnifies each Purchase and Sale Indemnified Party for Purchase and Sale
Indemnified Amounts relating to or resulting from:
(a) the transfer by the Originator of an interest in any Receivable to
any Person other than the Company;
(b) the breach of any representation or warranty made by the
Originator (or any of its officers) under or in connection with this
Agreement or any other Transaction Document, or any information or report
delivered by the Originator pursuant hereto or thereto which shall have
been false or incorrect when made or deemed made;
(c) the failure by the Originator to comply with any applicable Legal
Requirement with respect to any Receivable generated by the Originator or
the related Contract or applicable Legal Requirement under which any
Receivable arises, or the nonconformity of any Receivable or the related
Contract with any such applicable Legal Requirement;
(d) the failure to vest and maintain vested in the Company an
ownership interest in the Receivables generated by the Originator free and
clear of any Adverse Claim, other than an Adverse Claim arising solely as a
result of an act of the Company, whether existing at the time of the
purchase or contribution of such Receivables or at any time thereafter;
(e) the failure, to the extent resulting from an action or inaction of
Originator or any Affiliate thereof, to file, or any delay in filing,
financing statements or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws with respect to
any Receivables or purported Receivables generated by the Originator,
whether at the time of any purchase or contribution or at any subsequent
time;
24
(f) any dispute, claim, offset or defense (other than any reduction,
revision or discharge in any Insolvency Proceeding relating to the Obligor)
of the Obligor to the payment of any Receivable or purported Receivable
generated by the Originator (including, without limitation, a defense not
connected to an Insolvency Event based on such Receivable's, the related
Contract's or applicable Legal Requirements 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 goods or
services related to any such Receivable or the furnishing of or failure to
furnish such goods or services or relating to any collection activity with
respect to such Receivable by the Originator or any Affiliate thereof;
(g) any products liability or other claim, investigation, litigation
or proceeding arising out of or in connection with merchandise, insurance
or services that give rise to a Receivable;
(h) any tax or governmental fee or charge (other than any tax excluded
pursuant to CLAUSE (iii) in the exclusion in the preceding sentence), all
interest and penalties thereon or with respect thereto, and all
out-of-pocket costs and expenses, including the reasonable fees and
expenses of counsel in defending against the same, which may arise by
reason of the purchase or ownership of the Receivables or any Related
Security connected with any such Receivables;
(i) any failure of the Originator or any Affiliate of the Originator
to perform its duties or obligations in accordance with the provisions
hereof or under the Contracts or applicable Legal Requirements; and
(j) any obligation or liability of any Purchase and Sale Indemnified
Party to any Obligor or any other third Person with respect to any
Receivables, Contracts or applicable Legal Requirements related thereto,
other than any obligation or liability resulting from the Servicer (if the
Servicer is not the Originator or an Affiliate of the Originator) failing
to comply with applicable Legal Requirements, or any obligation of any
Purchase and Sale Indemnified Party to perform any of the obligations of
the Originator with respect to any Receivables, Contracts or applicable
Legal Requirements related thereto.
If for any reason the indemnification provided above in this SECTION 9.1 is
unavailable to a Purchase and Sale Indemnified Party or is insufficient to hold
such Purchase and Sale Indemnified Party harmless to the extent contemplated
hereby, then the Originator shall contribute to the amount paid or payable by
such Purchase and Sale Indemnified Party to the maximum extent permitted under
applicable law.
25
ARTICLE X
MISCELLANEOUS
10.1 AMENDMENTS, ETC.
(a) The provisions of this Agreement may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing
and consented to by the Company, Servicer, the Administrator, the Majority
Purchasers and the Originator (with respect to an amendment) or by the
Company, the Administrator and the Majority Purchasers (with respect to a
waiver or consent by them).
(b) No failure or delay on the part of the Company, Servicer, the
Originator or any third party beneficiary in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to
or demand on the Company, Servicer or the Originator in any case shall
entitle it to any notice or demand in similar or other circumstances. No
waiver or approval by the Company or Servicer under this Agreement shall,
except as may otherwise be stated in such waiver or approval, be applicable
to subsequent transactions. No waiver or approval under this Agreement
shall require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
(c) The Transaction Documents contain a final and complete integration
of all prior expressions by the parties hereto with respect to the subject
matter thereof and shall constitute the entire agreement among the parties
hereto with respect to the subject matter thereof, superseding all prior
oral or written understandings.
10.2 NOTICES, ETC. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage-prepaid, or by facsimile, to the intended party at the address or
facsimile number of such party set forth under its name on the signature pages
hereof or at such other address or facsimile number as shall be designated by
such party in a written notice to the other parties hereto. All such notices and
communications shall be effective, (i) if personally delivered, when received,
(ii) if sent by certified mail three (3) Business Days after having been
deposited in the mail, postage prepaid, and (iii) if transmitted by facsimile,
when sent, receipt confirmed by telephone or electronic means.
10.3 NO WAIVER; CUMULATIVE REMEDIES. Without limiting the foregoing, the
Originator hereby authorizes the Company, at any time and from time to time, to
the fullest extent permitted by law, to set off against any obligations of the
Originator to the
26
Company arising in connection with the Transaction Documents (including, without
limitation, amounts payable pursuant to SECTION 9.1) that are then due and
payable or that are not then due and payable but are accruing in respect of the
then current Yield Period, any and all indebtedness at any time owing by the
Company to or for the credit or the account of the Originator.
10.4 BINDING EFFECT; ASSIGNABILITY. This Agreement shall be binding upon
and inure to the benefit of the Company, Servicer and the Originator and their
respective successors and permitted assigns. The Originator may not assign any
of its rights hereunder or any interest herein without the prior written consent
of the Company and the Administrator, except as otherwise herein specifically
provided. 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 such time as the parties hereto shall agree. The rights
and remedies with respect to any breach of any representation and warranty made
by the Originator pursuant to ARTICLE V and the indemnification and payment
provisions of ARTICLE IX and SECTION 10.6 shall be continuing and shall survive
any termination of this Agreement.
10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
10.6 COSTS, EXPENSES AND TAXES. In addition to the obligations of the
Originator under ARTICLE IX, the Originator agrees to pay on demand:
(a) all reasonable costs and expenses in connection with the
enforcement against the Originator or any Affiliate of the Originator of
this Agreement, the Originator Assignment Certificate and the other
Transaction Documents; and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of
this Agreement or the other Transaction Documents to be delivered
hereunder, and agrees to indemnify each Purchase and Sale Indemnified Party
against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
10.7 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR
RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND
27
AGREES THAT (A) ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT BEFORE A JURY AND (B) ANY PARTY HERETO (OR ANY ASSIGNEE OR THIRD PARTY
BENEFICIARY OF THIS AGREEMENT) MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY OTHER
PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.
10.8 CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE. The various
captions (including, without limitation, the table of contents) in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section or Exhibit are to such Section or
Exhibit of this Agreement, as the case may be. APPENDIX A and the Exhibits
hereto are hereby incorporated by reference into and made a part of this
Agreement.
10.9 EXECUTION IN COUNTERPARTS. 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.
10.10 ACKNOWLEDGMENT AND AGREEMENT. By execution below, the Originator
expressly acknowledges and agrees that all of the Company's rights, title, and
interests in, to, and under this Agreement (but not its obligations), shall be
assigned by the Company pursuant to the Receivables Purchase Agreement, and the
Originator consents to such assignment. Each of the parties hereto acknowledges
and agrees that the Administrator, each Purchaser Agent and each Purchaser are
third party beneficiaries of the rights of the Company arising hereunder and
under the other Transaction Documents to which the Originator is a party.
10.11 NO PROCEEDINGS. Each of the Company, the Servicer and the Originator,
hereby covenants and agrees that it will not institute against, or join any
other Person in instituting against, any Conduit Purchaser any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, for one year
and one day after the latest maturing Note issued by such Conduit Purchaser is
paid in full. The provision of this SECTION 10.12 shall survive any termination
of this Agreement.
[SIGNATURES FOLLOW]
28
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
KU RECEIVABLES LLC
By:
------------------------------
Name:
Title:
Address:
KU Receivables LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
KENTUCKY UTILITIES COMPANY,
as Initial Servicer and as the Originator
By:
------------------------------
Name:
Title:
Address:
Kentucky Utilities Company
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
29
EXHIBIT A
FORM OF PURCHASE REPORT
ORIGINATOR: Kentucky Utilities Company
PURCHASER: KU Receivables LLC
DATE: ________________
XI. OUTSTANDING BALANCE OF RECEIVABLES PURCHASED:
_______________
XII. FAIR MARKET VALUE DISCOUNT:
1/(1 + ((Prime Rate + .25%) X Days' Sales Outstanding ))
-----------------------
365
Prime Rate = __________________
Days' Sales Outstanding = __________________
XIII. PURCHASE PRICE (I X II) = $_______________
Exhibit A
EXHIBIT B
FORM OF COMPANY NOTE
New York,
New York
[ ], 2001
FOR VALUE RECEIVED, the undersigned, KU Receivables LLC (the "Company"), a
Delaware limited liability company, promises to pay to Kentucky Utilities
Company, a Kentucky and Virginia corporation ("KU"), on the terms and subject to
the conditions set forth herein and in the
Purchase and Sale Agreement referred
to below, the aggregate unpaid Purchase Price of all Receivables purchased by
the Company from KU pursuant to such
Purchase and Sale Agreement, as such unpaid
Purchase Price is shown in the records of Servicer.
1.
PURCHASE AND SALE AGREEMENT. This Company Note is the Company Note
described in, and is subject to the terms and conditions set forth in, that
certain
Purchase and Sale Agreement of even date herewith (as the same may be
amended, supplemented, amended and restated or otherwise modified in accordance
with its terms, the "
PURCHASE AND SALE AGREEMENT"), between the Company and KU.
Reference is hereby made to the
Purchase and Sale Agreement for a statement of
certain other rights and obligations of the Company and KU.
2. DEFINITIONS. Capitalized terms used (but not defined) herein have the
meanings assigned thereto in Exhibit I to the Receivables Purchase Agreement (as
defined in the Purchase and Sale Agreement). In addition, as used herein, the
following terms have the following meanings:
"BANKRUPTCY PROCEEDINGS" has the meaning set forth in CLAUSE (b) of
PARAGRAPH 9 hereof.
"FINAL MATURITY DATE" means the Payment Date immediately following the
date that falls one hundred twenty one (121) days after the Purchase and
Sale Termination Date.
"INTEREST PERIOD" means the period from and including a Settlement Date
(or, in the case of the first Interest Period, the date hereof) to but
excluding the next Settlement Date.
"SENIOR INTERESTS" means, collectively, (i) all accrued Discount, (ii)
all fees payable by the Company
to the Senior Interest Holders pursuant to the Receivables Purchase
Agreement, (iii) all amounts payable pursuant to SECTION 1.7 and 1.8 of the
Receivables Purchase Agreement, (iv) the Aggregate Investment and (v) all
other obligations owed by the Company to the Senior Interest Holders under
the Receivables Purchase Agreement and other Transaction Documents that are
due and payable, together with any and all interest and Discount accruing
on any such amount after the commencement of any Bankruptcy Proceedings,
notwithstanding any provision or rule of law that might restrict the rights
of any Senior Interest Holder, as against the Company or anyone else, to
collect such interest.
"SENIOR INTEREST HOLDERS" means, collectively, the Purchaser, the
Administrator and the Indemnified Parties.
"SUBORDINATION PROVISIONS" means, collectively, CLAUSES (a) through (l)
of PARAGRAPH 9 hereof.
"TELERATE SCREEN RATE" means, for any Interest Period, the rate for
thirty day commercial paper denominated in dollars which appears on Page
1250 of the Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace
that page on that service for the purpose of displaying dollar commercial
paper rates) at approximately 9:00 a.m.,
New York City time, on the first
day of such Interest Period.
3. INTEREST. Subject to the Subordination Provisions set forth below, the
Company promises to pay interest on this Company Note as follows:
(a) Prior to the Final Maturity Date, the aggregate unpaid Purchase
Price from time to time outstanding during any Interest Period shall bear
interest at a rate PER ANNUM equal to the Telerate Screen Rate for such
Interest Period, as determined by Servicer; and
(b) From (and including) the Final Maturity Date to (but excluding) the
date on which the entire aggregate unpaid Purchase Price payable to KU is
fully paid, such aggregate unpaid Purchase Price from time to time
outstanding shall bear interest at a rate PER ANNUM equal to the "Prime
Rate" as published in the "Money Rates" section of the Wall Street Journal
or
such other publication as determined by the Administrator in its sole
discretion.
4. INTEREST PAYMENT DATES. Subject to the Subordination Provisions set
forth below, the Company shall pay accrued interest on this Company Note on each
Settlement Date, and shall pay accrued interest on the amount of each principal
payment made in cash on a date other than a Settlement Date at the time of such
principal payment.
5. BASIS OF COMPUTATION. Interest accrued hereunder that is computed by
reference to the Telerate Screen Rate shall be computed for the actual number of
days elapsed on the basis of a 360-day year, and interest accrued hereunder that
is computed by reference to the rate described in PARAGRAPH 3(b) of this Company
Note shall be computed for the actual number of days elapsed on the basis of a
365- or 366-day year.
6. PRINCIPAL PAYMENT DATES. Subject to the Subordination Provisions set
forth below, payments of the principal amount of this Company Note shall be made
as follows:
(a) The principal amount of this Company Note shall be reduced by an
amount equal to each payment deemed made pursuant to SECTION 3.3 of the
Purchase and Sale Agreement; and
(b) The entire remaining unpaid Purchase Price of all Receivables
purchased by the Company from KU pursuant to the Purchase and Sale
Agreement shall be due and payable on the Final Maturity Date.
Subject to the Subordination Provisions set forth below, the principal amount of
and accrued interest on this Company Note may be prepaid on any Business Day
without premium or penalty.
7. PAYMENT MECHANICS. All payments of principal and interest hereunder are
to be made in lawful money of the United States of America.
8. ENFORCEMENT EXPENSES. In addition to and not in limitation of the
foregoing, but subject to the Subordination Provisions set forth below and to
any limitation imposed by applicable law, the Company agrees to pay all
expenses, including reasonable attorneys' fees and legal expenses, incurred by
KU in seeking to collect any amounts payable hereunder which are not paid when
due.
9. SUBORDINATION PROVISIONS. Company covenants and agrees, and KU and any
other holder of this Company Note (collectively, KU and any such other holder
are called the "HOLDER"), by its acceptance of this Company Note, likewise
covenants and agrees on behalf of itself and any holder of this Company Note,
that the payment of the principal amount of and interest on this Company Note is
hereby expressly subordinated in right of payment to the payment and performance
of the Senior Interests to the extent and in the manner set forth in the
following clauses of this PARAGRAPH 9:
(a) No payment or other distribution of the Company's assets of any kind
or character, whether in cash, securities, or other rights or property,
shall be made on account of this Company Note except to the extent such
payment or other distribution is (i) permitted under PARAGRAPH 1(m) of
EXHIBIT IV of the Receivables Purchase Agreement or (ii) made pursuant to
CLAUSE (a) or (b) of PARAGRAPH 6 of this Company Note;
(b) In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar event relating to the
Company, whether voluntary or involuntary, partial or complete, and whether
in bankruptcy, insolvency or receivership proceedings, or upon an
assignment for the benefit of creditors, or any other marshalling of the
assets and liabilities of the Company or any sale of all or substantially
all of the assets of the Company other than as permitted by the Purchase
and Sale Agreement (such proceedings being herein collectively called
"BANKRUPTCY PROCEEDINGS"), the Senior Interests shall first be paid and
performed in full and in cash before KU shall be entitled to receive and to
retain any payment or distribution in respect of this Company Note. In
order to implement the foregoing: (i) all payments and distributions of any
kind or character in respect of this Company Note to which Holder would be
entitled except for this CLAUSE (b) shall be made directly to the
Administrator (for the benefit of the Senior Interest Holders); (ii) Holder
shall promptly file a claim or claims, in the form required in any
Bankruptcy Proceedings, for the full outstanding amount of this Company
Note, and shall use commercially reasonable efforts to cause said claim or
claims to be approved and all payments and other distributions in respect
thereof to be made directly to the Administrator (for the benefit of the
Senior Interest Holders) until the Senior Interests shall have been
paid and performed in full and in cash; and (iii) Holder hereby irrevocably
agrees that the Purchaser (or the Administrator acting on the Purchaser's
behalf), may in the name of Holder or otherwise, demand, ▇▇▇ for, collect,
receive and receipt for any and all such payments or distributions, and
file, prove and vote or consent in any such Bankruptcy Proceedings with
respect to any and all claims of Holder relating to this Company Note, in
each case until the Senior Interests shall have been paid and performed in
full and in cash;
(c) In the event that Holder receives any payment or other distribution
of any kind or character from the Company or from any other source
whatsoever, in respect of this Company Note, other than as expressly
permitted by the terms of this Company Note, such payment or other
distribution shall be received in trust for the Senior Interest Holders and
shall be turned over by Holder to the Administrator (for the benefit of the
Senior Interest Holders) forthwith. Holder will ▇▇▇▇ its books and records
so as clearly to indicate that this Company Note is subordinated in
accordance with the terms hereof. All payments and distributions received
by the Administrator in respect of this Company Note, to the extent
received in or converted into cash, may be applied by the Administrator
(for the benefit of the Senior Interest Holders) first to the payment of
any and all expenses (including reasonable attorneys' fees and legal
expenses) paid or incurred by the Senior Interest Holders in enforcing
these Subordination Provisions, or in endeavoring to collect or realize
upon this Company Note, and any balance thereof shall, solely as between KU
and the Senior Interest Holders, be applied by the Administrator (in the
order of application set forth in SECTION 1.4(d)(ii) of the Receivables
Purchase Agreement) toward the payment of the Senior Interests; but as
between the Company and its creditors, no such payments or distributions of
any kind or character shall be deemed to be payments or distributions in
respect of the Senior Interests;
(d) Notwithstanding any payments or distributions received by the Senior
Interest Holders in respect of this Company Note, while any Bankruptcy
Proceedings are pending Holder shall not be subrogated to the then existing
rights of the Senior Interest Holders in respect of the Senior Interests
until the Senior Interests have been paid and performed in full and in
cash. If no Bankruptcy Proceedings are pending, Holder shall only be
entitled to exercise any subrogation
rights that it may acquire (by reason of a payment or distribution to the
Senior Interest Holders in respect of this Company Note) to the extent that
any payment arising out of the exercise of such rights would be permitted
under PARAGRAPH 1(m) of EXHIBIT IV of the Receivables Purchase Agreement;
(e) These Subordination Provisions are intended solely for the purpose
of defining the relative rights of Holder, on the one hand, and the Senior
Interest Holders on the other hand. Nothing contained in these
Subordination Provisions or elsewhere in this Company Note is intended to
or shall impair, as between the Company, its creditors (other than the
Senior Interest Holders) and Holder, the Company's obligation, which is
unconditional and absolute, to pay Holder the principal of and interest on
this Company Note as and when the same shall become due and payable in
accordance with the terms hereof or to affect the relative rights of Holder
and creditors of the Company (other than the Senior Interest Holders);
(f) Holder shall not, until the Senior Interests have been paid and
performed in full and in cash, (i) cancel, waive, forgive, transfer or
assign, or commence legal proceedings to enforce or collect, or subordinate
to any obligation of the Company, howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, or now or hereafter
existing, or due or to become due, other than the Senior Interests, this
Company Note or any rights in respect hereof or (ii) convert this Company
Note into an equity interest in the Company, unless Holder shall have
received the prior written consent of the Administrator and the Purchaser
in each case;
(g) Holder shall not, without the advance written consent of the
Administrator and the Purchaser, commence, or join with any other Person in
commencing, any Bankruptcy Proceedings with respect to the Company until at
least one year and one day shall have passed since the Senior Interests
shall have been paid and performed in full and in cash;
(h) If, at any time, any payment (in whole or in part) of any Senior
Interest is rescinded or must be restored or returned by a Senior Interest
Holder (whether in connection with Bankruptcy Proceedings or otherwise),
these Subordination Provisions shall continue to be effective or shall be
reinstated, as the case may be, as though such payment had not been made;
(i) Each of the Senior Interest Holders may, from time to time, at its
sole discretion, without notice to Holder, and without waiving any of its
rights under these Subordination Provisions, take any or all of the
following actions: (i) retain or obtain an interest in any property to
secure any of the Senior Interests; (ii) retain or obtain the primary or
secondary obligations of any other obligor or obligors with respect to any
of the Senior Interests; (iii) extend or renew for one or more periods
(whether or not longer than the original period), alter or exchange any of
the Senior Interests, or release or compromise any obligation of any nature
with respect to any of the Senior Interests; (iv) amend, supplement, amend
and restate, or otherwise modify any Transaction Document; and (v) release
its security interest in, or surrender, release or permit any substitution
or exchange for all or any part of any rights or property securing any of
the Senior Interests, or extend or renew for one or more periods (whether
or not longer than the original period), or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to any
such rights or property;
(j) Holder hereby waives: (i) notice of acceptance of these
Subordination Provisions by any of the Senior Interest Holders; (ii) notice
of the existence, creation, non-payment or non-performance of all or any of
the Senior Interests; and (iii) all diligence in enforcement, collection or
protection of, or realization upon, the Senior Interests, or any thereof,
or any security therefor;
(k) Each of the Senior Interest Holders may, from time to time, on the
terms and subject to the conditions set forth in the Transaction Documents
to which such Persons are party, but without notice to Holder, assign or
transfer any or all of the Senior Interests, or any interest therein; and,
notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Senior Interests shall be and remain
Senior Interests for the purposes of these Subordination Provisions, and
every immediate and successive assignee or transferee of any of the Senior
Interests or of any interest of such assignee or transferee in the Senior
Interests shall be entitled to the benefits of these Subordination
Provisions to the same extent as if such assignee or transferee were the
assignor or transferor; and
(l) These Subordination Provisions constitute a continuing offer from
the holder of this Company Note to all Persons who become the holders of,
or who continue to hold, Senior Interests; and these Subordination
Provisions are made for the benefit of the Senior Interest Holders, and the
Administrator may proceed to enforce such provisions on behalf of each of
such Persons.
10. GENERAL. No failure or delay on the part of KU in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No amendment,
modification or waiver of, or consent with respect to, any provision of this
Company Note shall in any event be effective unless (i) the same shall be in
writing and signed and delivered by the Company and Holder and (ii) all consents
required for such actions under the Transaction Documents shall have been
received by the appropriate Persons.
11. MAXIMUM INTEREST. Notwithstanding anything in this Company Note to the
contrary, the Company shall never be required to pay unearned interest on any
amount outstanding hereunder and shall never be required to pay interest on the
principal amount outstanding hereunder at a rate in excess of the maximum
nonusurious interest rate that may be contracted for, charged or received under
applicable federal or state law (such maximum rate being herein called the
"HIGHEST LAWFUL RATE"). If the effective rate of interest which would otherwise
by payable under this Company Note would exceed the Highest Lawful Rate, or if
the holder of this Company Note shall receive any unearned interest or shall
receive monies that are deemed to constitute interest which would increase the
effective rate of interest payable by the Company under this Company Note to a
rate in excess of the Highest Lawful Rate, then (i) the amount of interest which
would otherwise by payable by the Company under this Company Note shall be
reduced to the amount allowed by applicable law, and (ii) any unearned interest
paid by the Company or any interest paid by the Company in excess of the Highest
Lawful Rate shall be refunded to the Company. Without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received by KU under this Company Note that are made for the purpose of
determining whether such rate exceeds the Highest Lawful Rate applicable to KU
(such Highest Lawful Rate being herein called the "KU'S MAXIMUM PERMISSIBLE
RATE") shall be made, to the extent permitted by usury laws applicable to KU
(now
or hereafter enacted), by amortizing, prorating and spreading in equal parts
during the actual period during which any amount has been outstanding hereunder
all interest at any time contracted for, charged or received by KU in connection
herewith. If at any time and from time to time (i) the amount of interest
payable to KU on any date shall be computed at KU's Maximum Permissible Rate
pursuant to the provisions of the foregoing sentence and (ii) in respect of any
subsequent interest computation period the amount of interest otherwise payable
to KU would be less than the amount of interest payable to KU computed at KU's
Maximum Permissible Rate, then the amount of interest payable to KU in respect
of such subsequent interest computation period shall continue to be computed at
KU's Maximum Permissible Rate until the total amount of interest payable to KU
shall equal the total amount of interest which would have been payable to KU if
the total amount of interest had been computed without giving effect to the
provisions of the foregoing sentence.
12. NO NEGOTIATION. This Company Note is not negotiable.
13. GOVERNING LAW. THIS COMPANY NOTE HAS BEEN DELIVERED IN
NEW YORK,
NEW
YORK, AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF
NEW YORK.
14. CAPTIONS. Paragraph captions used in this Company Note are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Company Note.
KU RECEIVABLES LLC
By:
----------------------------
Exhibit B
EXHIBIT C
FORM OF ORIGINATOR ASSIGNMENT CERTIFICATE
Reference is made to the Purchase and Sale Agreement of even date herewith
(as the same may be amended, supplemented, amended and restated or otherwise
modified from time to time, the "PURCHASE AND SALE AGREEMENT") between the
undersigned, Kentucky Utilities Company ("KU"), and KU Receivables LLC (the
"COMPANY"). Unless otherwise defined herein, capitalized terms used herein have
the meanings provided in the Purchase and Sale Agreement or in EXHIBIT I to the
Receivables Purchase Agreement (as defined in the Purchase and Sale Agreement),
as applicable.
The undersigned hereby sells, assigns and transfers unto the Company and
its successors and assigns all right, title and interest of the undersigned in
and to:
(n) each Receivable of the undersigned that existed and was owing to
the undersigned as of the Cut-off Date other than Receivables
contributed pursuant to SECTION 3.1 of the Purchase and Sale
Agreement;
(b) each Receivable created by the undersigned from and including the
Cut-off Date to and including the Purchase and Sale Termination
Date;
(c) all rights to, but not the obligations under, all Related
Security;
(d) all monies due or to become due with respect to any of the
foregoing;
(e) all books and records related to any of the foregoing; and
(f) all collections and other proceeds of any of the foregoing (as
defined in the applicable UCC) that are or were received by the undersigned
on or after the Cut-off Date, including, without limitation, all funds
which either are received by the undersigned, the Company or the Servicer
from or on behalf of the Obligors in payment of any amounts owed
(including, without limitation, invoice price, finance charges, interest
and all other charges) in respect of Receivables, or are applied to such
amounts owed by the Obligors (including, without limitation, insurance
payments that the undersigned or the Servicer applies in the ordinary
course of its business to amounts owed in respect of any Receivable and net
proceeds of sale or other disposition of repossessed goods or other
collateral or property of the Obligors or any other parties directly or
indirectly liable for payment of such Receivables).
This Originator Assignment Certificate is made without recourse but on the
terms and subject to the conditions set forth in the Transaction Documents to
which the undersigned is a party. The undersigned acknowledges and agrees that
the Company and its successors and assigns are accepting this Originator
Assignment Certificate in reliance on the representations, warranties and
covenants of the undersigned contained in the Transaction Documents to which the
undersigned is a party.
THIS ORIGINATOR ASSIGNMENT CERTIFICATE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE PURCHASE AND SALE AGREEMENT AND THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Originator Assignment
Certificate to be duly executed and delivered by its duly authorized officer
this ___ day of , 2001.
KENTUCKY UTILITIES COMPANY
By:
--------------------------------
Name:
--------------------------------
Title:
-------------------------------
Exhibit C
EXHIBIT D
OFFICE LOCATIONS
CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS,
OFFICE WHERE RECORDS ARE KEPT:
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▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
OTHER OFFICE(S) WHERE RECORDS ARE KEPT:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Exhibit D
EXHIBIT E
TRADE NAMES
Old Dominion Power Company
Exhibit E