RECEIVABLES SALE AGREEMENT
Dated as of September 28, 1999
BETWEEN
K N ENERGY, INC.
as the Originator
AND
OTHER ORIGINATORS SPECIFIED HEREIN
AND
KN RECEIVABLES CORPORATION
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I
AMOUNTS AND TERMS 2
Section 1.1 Purchases of Receivables 2
Section 1.2 Payment for the Purchase 3
Section 1.3 Purchase Price Credit Adjustments 5
Section 1.4 Payments and Computations, Etc 6
Section 1.5 Allocation of Purchase Price and
Indemnification 6
Section 1.6 Transfer of Records 7
Section 1.7 Characterization 8
Section 1.8 Additional Originators 8
Section 1.9 Withdrawal of Originator 9
ARTICLE II
REPRESENTATIONS AND WARRANTIES 9
Section 2.1 Representations and Warranties of
Originators 9
ARTICLE III
CONDITIONS OF PURCHASES 14
Section 3.1 Conditions Precedent to Purchase 14
Section 3.2 Conditions Precedent to Subsequent
Payments 14
Section 3.3 Conditions Precedent to Purchase from
Additional Originators 14
ARTICLE IV
COVENANTS 16
Section 4.1 Affirmative Covenants of KNEI 16
Section 4.2 Affirmative Covenants of Each Originator
19
Section 4.3 Negative Covenants of the Originators
22
ARTICLE V
ADMINISTRATION AND COLLECTION 23
Section 5.1 Designation of Sub-Servicer 23
Section 5.2 Duties of Sub-Servicer 24
Section 5.3 Collection Rights 25
Section 5.4 Responsibilities of the Sub-Servicer and
Originators
26
Section 5.5 Reports 26
Section 5.6 Sub-Servicer Fee 26
ARTICLE VI
AMORTIZATION EVENTS 26
Section 6.1 Amortization Events 26
Section 6.2 Remedies 28
ARTICLE VII
INDEMNIFICATION 28
Section 7.1 INDEMNITIES BY KNEI 28
Section 7.2 Other Costs and Expenses 33
Section 7.3 LIABILITY OF ADDITIONAL ORIGINATORS TO
KNEI AND INDEMNIFIED PARTIES 33
ARTICLE VIII
MISCELLANEOUS 33
Section 8.1 Waivers and Amendments 33
Section 8.2 Notices 34
Section 8.3 Protection of Ownership Interests of
Buyer 34
Section 8.4 Confidentiality 35
Section 8.5 Bankruptcy Petition 35
Section 8.6 CHOICE OF LAW 36
Section 8.7 CONSENT TO JURISDICTION 36
Section 8.8 WAIVER OF JURY TRIAL 36
Section 8.9 Integration; Binding Effect; Survival of
Terms 37
Section 8.10 Counterparts; Severability; Section
References 37
Exhibits and Schedules
Exhibit I - Definitions
Exhibit II - Places of Business; Locations of Records;
Federal Employer Identification Number(s); Other
Names
Exhibit III - Lock-Boxes; Collection Accounts; Collection
Banks
Exhibit IV - Form of Compliance Certificate
Exhibit V - Credit and Collection Policy
Exhibit VI - Form of Subscription Agreement
Exhibit VII - Form of Subordinated Note
Exhibit VIII - Form of Joinder Supplement
Exhibit IX - Form of Performance Guaranty
Schedule A List of Documents to Be Delivered to Buyer
Prior to the Purchase
RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of September
28, 1999, is by and between K N Energy, Inc., a Kansas
corporation ("KNEI"), and certain Additional Originators as
specified herein (KNEI and the Additional Originators, each an
"Originator," collectively "Originators") and KN Receivables
Corporation, a Delaware corporation ("Buyer"). Unless defined
elsewhere herein, capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Each Originator now owns, and from time to time
hereafter will own, Receivables. The Originators wish to
sell and assign to Buyer, and Buyer wishes to purchase from
the Originators, all of each Originator's right, title and
interest in and to such Receivables, together with the
Related Security and Collections with respect thereto.
The Originators and Buyer intend the transactions
contemplated hereby to be true sales of the Receivables from
the Originators to Buyer, providing Buyer with the full
benefits of ownership of the Receivables, and the
Originators and Buyer do not intend these transactions to
be, or for any purpose to be characterized as, loans from
Buyer to the Originators.
Following the purchase of Receivables from the
Originators, Buyer will sell undivided interests therein and
in the associated Related Security and Collections pursuant
to that certain Receivables Purchase Agreement dated as of
September 28, 1999 (as the same may from time to time
hereafter be amended, supplemented, restated or otherwise
modified, the "Purchase Agreement") among Buyer, Falcon
Asset Securitization Corporation ("FALCON"), International
Securitization Corporation ("ISC") (FALCON and ISC each
being referred to individually as a "Conduit" and
collectively as the "Conduits"), the financial institutions
from time to time party thereto as "Financial Institutions"
and Bank One, NA or any successor agent appointed pursuant
to the terms of the Purchase Agreement, as agent for the
Conduits and such Financial Institutions (in such capacity,
the "Agent"). The Conduits and the Financial Institutions
together are referred to herein as the Purchasers.
1. ARTICLE AMOUNTS AND TERMS
a. Section Purchases of Receivables .
b.
i. Effective on the date hereof, in consideration
for the Purchase Price and upon the terms and subject to the
conditions set forth herein, each Originator does hereby sell,
assign, transfer, set-over and otherwise convey to Buyer, without
recourse (except to the extent expressly provided herein), and
Buyer does hereby purchase from each Originator, all of such
Originator's right, title and interest in and to all Receivables
existing as of the close of business on the Business Day
immediately prior to the date hereof and all Receivables
thereafter arising through and including the Amortization Date,
together, in each case, with all Related Security relating
thereto and all Collections thereof. In accordance with the
preceding sentence, on the date hereof, Buyer shall acquire all
of such Originator's right, title and interest in and to all
Receivables existing as of the close of business on the Business
Day immediately prior to the date hereof and thereafter arising
through and including the Amortization Date, together with all
Related Security relating thereto and all Collections thereof;
provided, that, Buyer shall be obligated to pay the Purchase
Price therefor in accordance with Section 1.2.
i. It is the intention of the parties hereto that
the Purchase of Receivables made hereunder shall constitute a
"sale of accounts" (as such term is used in Article 9 of the
UCC), which sale is absolute and irrevocable and provides Buyer
with the full benefits of ownership of the Receivables. It is
further the intention of the Parties hereto that Section 9.102(d)
of the Texas Business and Commerce Code shall apply to all
purchases and sales of Receivables and Related Security and
Collections with respect thereto. Except for the Purchase Price
Credits owed pursuant to Section 1.3, the sale of Receivables
hereunder is made without recourse to the Originators; provided,
however, that (i) each Originator shall be liable to Buyer for
all representations, warranties and covenants made by such
Originator pursuant to the terms of the Transaction Documents to
which such Originator is a party, and (ii) such sale does not
constitute and is not intended to result in an assumption by
Buyer or any assignee thereof of any obligation of any Originator
or any other Person arising in connection with the Receivables,
the related Contracts and/or other Related Security or any other
obligations of such Originator. In view of the intention of the
parties hereto that the Purchase of Receivables made hereunder
shall constitute a sale of such Receivables rather than loans
secured thereby, each Originator agrees that it will, on or prior
to the date hereof and in accordance with Section 4.1(e)(ii),
xxxx its master data processing records relating to the
Receivables with a legend acceptable to Buyer and to the Agent
(as Buyer's assignee), evidencing that Buyer has purchased such
Receivables as provided in this Agreement and to note in its
financial statements that its Receivables have been sold to
Buyer. Upon the request of Buyer or the Agent (as Buyer's
assignee), each Originator will 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 to perfect and maintain the perfection
of Buyer's ownership interest in the Receivables and the Related
Security and Collections with respect thereto, or as Buyer or the
Agent (as Buyer's assignee) may reasonably request.
ii.
b. Section Payment for the Purchase .
c.
i. The Purchase Price for the Purchase of
Receivables in existence on the close of business on the Business
Day immediately preceding the date hereof (the "Initial Cutoff
Date") shall be payable in full by Buyer to KNEI on the date
hereof, and shall be paid to KNEI in the following manner:
ii.
(1) by delivery of immediately available funds,
to the extent of funds made available to Buyer in connection with
its subsequent sale of an interest in such Receivables to the
Purchasers under the Purchase Agreement, and
(1) the balance by accepting a contribution to
its capital and/or with the proceeds of a borrowing from KNEI of
a subordinated revolving loan (each, a "Subordinated Loan") in
such amounts as determined by Buyer; provided that such borrowing
pursuant to a Subordinated Loan would not cause Buyer's Net Worth
to be less than the Required Capital Amount.
The Purchase Price for each Receivable coming into existence
after the Initial Cutoff Date shall be due and owing in full by
Buyer to each Originator or its designee on the date each such
Receivable came into existence (except that Buyer may, with
respect to any such Purchase Price, offset against such Purchase
Price any amounts owed by such Originator to Buyer hereunder and
which have become due but remain unpaid) and shall be paid to
such Originator in the manner provided in the following
paragraphs (b), (c) and (d).
i. With respect to any Receivables coming into
existence after the date hereof, on each Settlement Date, Buyer
shall pay to KNEI for the account of the Originators the Purchase
Price for each Purchase from such Originator during the related
Calculation Period as follows:
ii.
first, by delivery of immediately available funds,
to the extent of funds available to Buyer from its
subsequent sale of an interest in such Receivables to the
Agent for the benefit of the Purchasers under the Purchase
Agreement or otherwise;
second, with the proceeds of any Subordinated
Loans from KNEI to Buyer in an amount not to exceed the
lesser of (i) the remaining unpaid portion of such Purchase
Price and (ii) the maximum Subordinated Loan that could be
borrowed without rendering Buyer's Net Worth less than the
Required Capital Amount; and
third, unless KNEI has declared the Amortization
Date to have occurred by accepting a contribution to Buyer's
capital pursuant to the Subscription Agreement in an amount
equal to the remaining unpaid balance of such Purchase
Price.
Subject to the limitations set forth in Section 1.2(a)(ii), KNEI
irrevocably agrees to advance each Subordinated Loan requested by
Buyer on or prior to the Amortization Date. The Subordinated
Loans owing to KNEI shall be evidenced by, and shall be payable
in accordance with the terms and provisions of the Subordinated
Note and shall be payable solely from funds which Buyer is not
required under the Purchase Agreement to set aside for the
benefit of, or otherwise pay over to, the Agent for the benefit
of the Purchasers.
i. On each Business Day during each Calculation
Period after the date hereof, all Collections and all proceeds of
the Incremental Purchases received by Buyer under the Purchase
Agreement and not required to be paid to Purchasers pursuant to
the Purchase Agreement shall be paid to KNEI for the account of
the Originators as payments toward the Purchase Price of
Receivables sold or to be sold by the Originators to Buyer during
such Calculation Period. Although amounts shall be paid directly
to KNEI for the benefit of the Originators on each Business Day
in accordance with the first sentence of this paragraph,
settlement of the Purchase Price between Buyer and KNEI shall be
effected on a monthly basis on Settlement Dates with respect to
all Receivables coming into existence during the same Calculation
Period and based on the information contained in the Monthly
Report for the Calculation Period then most recently ended.
Although settlement for each Calculation Period shall be effected
on the related Settlement Date, increases or decreases in the
amount owing under the Subordinated Note made pursuant to clause
second of paragraph (b) above and any contribution of capital to
Buyer made pursuant to clause third of paragraph (b) above shall
be deemed to have occurred and shall be effective as of the last
Business Day of such Calculation Period.
a. Section Purchase Price Credit Adjustments . If on
any day:
b.
i. the Outstanding Balance of a Receivable is:
(1) reduced as a result of any defective or
rejected goods or services, any discount or any adjustment by an
Originator (other than cash Collections on account of the
Receivables) or for any other reason not arising from the
financial inability of the Obligor to pay,
(1) reduced or canceled as a result of a setoff
in respect of any claim by any Person (whether such claim arises
out of the same or a related transaction or an unrelated
transaction and whether such claim relates to such Originator or
any Affiliate thereof other than Buyer), or
(1) is otherwise reduced as a result of any of
the factors set forth in the definition of "Dilution," or
i. any of the representations and warranties made
by such Originator set forth in Article II are no longer true
with respect to any Receivable or any Receivable which was
represented to be a Continuing Eligible Receivable on any date is
determined by Buyer or the Agent to not have been a Continuing
Eligible Receivable on such date,
ii.
iii. then, in such event, Buyer shall be entitled to a credit
(each, a "Purchase Price Credit") against the Purchase Price
otherwise payable hereunder to KNEI on behalf of the Originators
equal to the full amount of such reduction or cancellation (in
the case of clause (a)) or the Outstanding Balance of such
Receivable (in the case of clause (b)). If, on any Purchase
Date, such Purchase Price Credit exceeds the Original Balance of
the Receivables coming into existence on any day, then KNEI on
behalf of such Originator shall pay the remaining amount of such
Purchase Price Credit in cash within 5 Business Days thereafter,
provided that if the Amortization Date has not occurred, KNEI on
behalf of such Originator shall be allowed to deduct the
remaining amount of such Purchase Price Credit from any
indebtedness owed to KNEI under the Subordinated Note. It is
understood and agreed that the obligation of KNEI to provide such
Purchase Price Credits to Buyer and to make such cash payments as
are required by the preceding sentence shall, if such obligation
is fulfilled in a timely fashion, constitute the sole remedy
against KNEI on behalf of such Originator for such circumstances
available to Buyer and its assigns.
iv.
b. Section Payments and Computations, Etc . All
amounts to be paid or deposited by Buyer hereunder shall be paid
or deposited in accordance with the terms hereof on the day when
due in immediately available funds to the account of KNEI
designated from time to time by KNEI or as otherwise directed by
KNEI. In the event that any payment owed by any Person hereunder
becomes due on a day that is not a Business Day, then such
payment shall be made on the next succeeding Business Day. If
any Person fails to pay any amount hereunder when due, such
Person agrees to pay, on demand, the Default Fee in respect
thereof until paid in full; provided, however, that such Default
Fee shall not at any time exceed the maximum rate permitted by
applicable law. All computations of interest payable hereunder
shall be made on the basis of a year of 360 days for the actual
number of days (including the first but excluding the last day)
elapsed.
c.
d. Section Allocation of Purchase Price and
Indemnification .
e.
i. As described in Sections 1.2 and 1.3, Buyer
shall pay the Purchase Price for Receivables generated by all
Originators to KNEI in full performance and satisfaction of
Buyer's Purchase Price payment obligations hereunder. KNEI shall
be solely responsible to properly allocate and remit such
payment, and all other Buyer Payments, to the Originators in
respect of the Receivables sold by each such Originator. On each
date on which KNEI receives any Buyer Payment, on and subject to
the conditions set forth in this Agreement, KNEI shall make an
allocation and remittance of such Buyer Payment among the
Originators as follows:
ii.
first, on each day on which an Originator (other than
KNEI) sells Receivables to Buyer, any cash received from
Buyer shall be distributed among each such Originator (other
than KNEI) in proportion to the unpaid amount of the
Purchase Price of all Receivables sold by such Originator on
such day;
second, as of each day on which an Originator (other
than KNEI) sells Receivables to Buyer and as of which KNEI
makes a Subordinated Loan or a capital contribution to
Buyer, KNEI (on behalf of Buyer) shall distribute to such
Originator (other than KNEI) an amount equal to the
remaining unpaid Purchase Price of all Receivables sold by
such Originator on such day (it being intended that (i) each
Originator other than KNEI shall be entitled to receive 100
per cent of the Purchase Price of its Receivables as of the
day on which such Receivables are sold to Buyer and (ii)
that the making of Subordinated Loans or a capital
contribution by KNEI to Buyer shall provide the funds as of
such day to make up the shortfall in cash owed to any such
Originator); and
third, all remaining payments by Buyer to KNEI shall be
retained by KNEI and applied, first, to the unpaid amount of
the Purchase Price of all Receivables theretofore sold by
KNEI to Buyer, and second, to the amounts owing on the
Subordinated Note.
i. Each Originator agrees that:
ii.
(1) Buyer's payment to KNEI, as such
Originator's agent, of the Purchase Price for any Receivable
originated by such Originator shall constitute full payment to
such Originator for such Receivable; and
(1) Upon such payment to KNEI by Buyer,
such Originator shall look only to KNEI for the proper allocation
and remittance of Buyer Payments for such Receivables and shall
indemnify and hold Buyer harmless for any act, omission, failure
or error by KNEI in connection with the proper allocation or
remittance of any amounts due to such Originator from KNEI.
a. Section Transfer of Records .
b.
(a) In connection with the Purchase of Receivables
hereunder, each Originator hereby sells, transfers, assigns and
otherwise conveys to Buyer all of such Originator's right and
title to and interest in the Records insofar as they relate to
all Receivables sold hereunder, without the need for any further
documentation in connection with the Purchase. In connection
with such transfer, such Originator hereby grants to each of
Buyer, the Agent and the Servicer an irrevocable, non-exclusive
license to use, without royalty or payment of any kind, all
software used by such Originator to account for the Receivables,
to the extent necessary to administer the Receivables, whether
such software is owned by such Originator or is owned by others
and used by such Originator under license agreements with respect
thereto, provided that, to the extent the consent of any third
party licensor to make such grant is required, the grant is
limited to the extent such consent has been obtained; and
provided further that should the consent of any licensor of such
Originator to such grant of the license described herein be
required, such Originator hereby agrees that upon the request of
Buyer (or the Agent as Buyer's assignee), such Originator will
use its reasonable efforts to obtain the consent of such third-
party licensor. The license granted hereby shall be irrevocable,
and shall terminate on the date this Agreement terminates in
accordance with its terms.
(b) Each Originator (i) shall take such action
requested by Buyer and/or the Agent (as Buyer's assignee), from
time to time hereafter, that may be necessary or appropriate to
ensure that Buyer and its assigns under the Purchase Agreement
have an enforceable ownership interest in the Records relating to
the Receivables purchased from such Originator hereunder, and
(ii) shall use its reasonable efforts to ensure that Buyer, the
Agent and the Servicer each has an enforceable right (whether by
license or sublicense or otherwise) to use all of the computer
software used to account for the Receivables and/or to recreate
such Records.
a. Section Characterization . If, notwithstanding
the intention of the parties expressed in Section 1.1(b), any
sale or contribution by an Originator to Buyer of Receivables,
Related Security and Collections with respect thereto hereunder
shall be characterized as a secured loan and not a sale or such
sale shall for any reason be ineffective or unenforceable, then
this Agreement shall be deemed to constitute a security agreement
under the UCC and other applicable law. For this purpose and
without being in derogation of the parties' intention that the
sale of Receivables, Related Security and Collections with
respect thereto hereunder shall constitute a true sale thereof,
each Originator hereby grants to Buyer a duly perfected security
interest in all of such Originator's right, title and interest
in, to and under all Receivables now existing and hereafter
arising, all Collections and Related Security with respect
thereto, and all proceeds of the foregoing, which security
interest shall be prior to all other Adverse Claims thereto.
After the occurrence of an Amortization Event, Buyer and its
assigns shall have, in addition to the rights and remedies which
they may have under this Agreement, all other rights and remedies
provided to a secured creditor after default under the UCC and
other applicable law, which rights and remedies shall be
cumulative.
b.
c. Section Additional Originators . Effective upon
the execution and delivery of a Joinder Supplement, each Person
executing such Joinder Supplement in the capacity of an
Additional Originator shall become an Additional Originator
hereunder; provided, that:
d.
(a) such Person shall be a direct or indirect
wholly-owned Subsidiary of KNEI;
(b) the Agent shall have consented to such
Person becoming an Additional Originator, such consent
(which shall be in the sole discretion of the Agent) to
be evidenced by the Agent's execution and delivery of
the applicable Joinder Supplement; and
(c) no Receivables shall be
purchased from such Person
hereunder until on or after the
date (the "Additional Originator
Closing Date") on which all
conditions specified in Section 3.3
have been satisfied with respect to
such Originator.
a. Section Withdrawal of Originator . Any
Originator may terminate further sales of interests in its
Receivables hereunder by providing at least fifteen days' notice
to Buyer and Agent of such withdrawal. On the date set forth in
such notice (the "Withdrawal Date"), such Originator shall
discontinue any further sale of interests in Receivables and
shall only be party to this Agreement to the extent that Buyer
continues to have an interest in any Purchased Receivables
acquired from such Originator or any amounts remain payable by
Buyer or such Originator to the other hereunder. No such
withdrawal shall affect the Originator's representations or
agreements concerning Purchased Receivables or Related Security
in which Buyer retains an interest or any related Collections.
1. ARTICLE REPRESENTATIONS AND WARRANTIES
a. Section Representations and Warranties of
Originators . Each Originator hereby represents and warrants to
Buyer that:
i. Corporate Existence and Power. Such Originator
is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and is duly
qualified to do business and is in good standing as a foreign
enterprise in each jurisdiction where the nature of its business
requires such qualification and has and holds all full power and
authority and all governmental licenses, authorizations, consents
and approvals required to carry on its business in each
jurisdiction in which its business is conducted except where a
failure to do so will not cause a Material Adverse Effect.
ii.
iii. Power and Authority; Due Authorization
Execution and Delivery. The execution and delivery by such
Originator of this Agreement and each other Transaction Document
to which it is a party, and the performance of its obligations
hereunder and thereunder and, such Originator's use of the
proceeds of the Purchase made hereunder, are within its corporate
powers and authority and have been duly authorized by all
necessary corporate action on its part. This Agreement and each
other Transaction Document to which such Originator is a party
has been duly executed and delivered by such Originator.
iv.
v. No Conflict. The execution and delivery by
such Originator of this Agreement and each other Transaction
Document to which it is a party, and the performance of its
obligations hereunder and thereunder do not contravene or violate
(i) its certificate or articles of incorporation or by-laws (or
equivalent organizational documents), (ii) any law, rule or
regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by
which it or any of its property is bound, or (iv) any order,
writ, judgment, award, injunction or decree binding on or
affecting it or its property, and do not result in the creation
or imposition of any Adverse Claim on assets of such Originator
or its Subsidiaries (except as created hereunder) and no
transaction contemplated hereby requires compliance with any bulk
sales act or similar law.
vi.
vii. Governmental Authorization. Other than the
filing of the financing statements required hereunder, no
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is
required for the due execution and delivery by such Originator of
this Agreement and each other Transaction Document to which it is
a party and the performance of its obligations hereunder and
thereunder.
viii.
ix. Actions, Suits. There are no actions, suits
or proceedings pending, or to the best of such Originator's
knowledge, threatened, against or affecting such Originator, or
any of its properties, in or before any court, arbitrator or
other body, that could reasonably be expected to have a Material
Adverse Effect. Such Originator is not in default with respect
to any order of any court, arbitrator or governmental body.
x.
xi. Binding Effect. This Agreement and each
other Transaction Document to which such Originator is a party
constitute the legal, valid and binding obligations of such
Originator enforceable against such Originator in accordance with
their respective terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or limiting creditors' rights generally
and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
xii.
xiii. Accuracy of Information. All
information heretofore furnished by such Originator or any of its
Affiliates to Buyer (or its assigns) for purposes of or in
connection with this Agreement, any of the other Transaction
Documents or any transaction contemplated hereby or thereby is,
and all such information hereafter furnished by such Originator
or any of its Affiliates to Buyer (or its assigns) will be, true
and accurate in every material respect on the date such
information is stated or certified and does not and will not
contain any material misstatement of fact or omit to state a
material fact or any fact necessary to make the statements
contained therein not misleading.
xiv.
xv. Use of Proceeds. No proceeds of the Purchase
hereunder will be used (i) for a purpose that violates, or would
be inconsistent with, Regulation T, U or X promulgated by the
Board of Governors of the Federal Reserve System from time to
time or (ii) to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of
1934, as amended.
xvi.
xvii. Good Title. Immediately prior to the
time each Receivable came into existence, such Originator shall
be the legal and beneficial owner of each such Receivable and
Related Security with respect thereto, free and clear of any
Adverse Claim, except as created by the Transaction Documents.
There have been duly filed all financing statements or other
similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect such
Originator's ownership interest in each Receivable, its
Collections and the Related Security.
xviii.
xix. Perfection. This Agreement, together with
the filing of the financing statements contemplated hereby, is
effective to transfer to Buyer (and Buyer shall acquire from such
Originator) legal and equitable title to, with the right to sell
and encumber each Receivable existing and hereafter arising,
together with the Related Security and Collections with respect
thereto, free and clear of any Adverse Claim, except as created
by the Transactions Documents. There have been duly filed all
financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect Buyer's ownership interest
in the Receivables, the Related Security and the Collections.
xx.
xxi. Places of Business. The principal places of
business and chief executive office of such Originator and the
offices where it keeps all of its Records are located at the
address(es) listed on Exhibit II or such other locations of which
Buyer has been notified in accordance with Section 4.2(a) in
jurisdictions where all action required by Section 4.2(a) has
been taken and completed. Such Originator's Federal Employer
Identification Number is correctly set forth on Exhibit II.
xxii.
xxiii. Collections. The conditions and
requirements set forth in Section 4.1(j) have at all times been
satisfied and duly performed. The names and addresses of all
Collection Banks, together with the account numbers of the
Collection Accounts of such Originator at each Collection Bank
and the post office box number of each Lock-Box, are listed on
Exhibit III.
xxiv.
xxv. Material Adverse Effect. Since June 30, 1999
no event has occurred that would have a Material Adverse Effect.
xxvi.
xxvii. Names. In the past five (5) years, KNEI
has not used any corporate names, trade names or assumed names
other than the name in which it has executed this Agreement. As
of the date of the applicable Joinder Supplement, in the five
years prior to such date, the applicable Additional Originator
has not used any corporate names, trade names, or assumed names
other than those listed on the applicable Joinder Supplement.
xxviii.
xxix. Ownership of Buyer. KNEI owns, directly
or indirectly, 100% of the issued and outstanding capital stock
of Buyer, free and clear of any Adverse Claim. Such capital
stock is validly issued, fully paid and nonassessable, and there
are no options, warrants or other rights to acquire securities of
Buyer.
xxx.
xxxi. Not a Holding Company or an Investment
Company. Such Originator is not a "holding company" or a
"subsidiary holding company" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as
amended, or any successor statute. Such Originator is not an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended, or any successor statute.
xxxii.
xxxiii. Compliance with Law. Such Originator
has complied in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject and with respect to which a
failure to comply will cause a Material Adverse Effect. Each
Receivable, together with the Contract related thereto, does not
contravene any laws, rules or regulations applicable thereto (in
cluding, without limitation, laws, rules and regulations relating
to truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and
privacy), and no part of such Contract is in violation of any
such law, rule or regulation.
xxxiv.
xxxv. Compliance with Credit and Collection
Policy. Such Originator has complied in all material respects
with the Credit and Collection Policy with regard to each
Receivable and the related Contract, and has not made any change
to such Credit and Collection Policy, except such material change
as to which Buyer (or its assigns) has been notified in
accordance with Section 4.1(a)(vii).
xxxvi.
xxxvii. Payments to Originator. With respect to
each Receivable transferred to Buyer hereunder, the Purchase
Price received by such 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
such Originator of any Receivable hereunder is or may be voidable
under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C.
101 et seq.), as amended.
xxxviii.
xxxix. Enforceability of Contracts. Each
Contract with respect to each Receivable is effective to create,
and has created, a legal, valid and binding obligation of the
related Obligor to pay the Outstanding Balance of the Receivable
created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting
creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
xl.
xli. Eligible Receivables. Each Receivable
included in the Net Receivables Balance as an Eligible Receivable
on the date it came into existence was an Eligible Receivable on
such date.
xlii.
xliii. Year 2000. Such Originator (i) has
reviewed the areas within its business and operations which could
be adversely affected by the Year 2000 Problem, (ii) has
developed a Year 2000 Plan to address the Year 2000 Problem on a
timely basis, (iii) is taking all actions necessary to meet the
schedule and goals of the Year 2000 Plan and (iv) has established
adequate reserves to implement the Year 2000 Plan. Such
Originator does not reasonably anticipate that the Year 2000
Problem could have a Material Adverse Effect.
xliv.
xlv. Accounting. The manner in which such
Originator accounts for the transactions contemplated by this
Agreement does not jeopardize the true sale analysis.
xlvi.
xlvii. Compliance with Representations. On and
as of the date of the Purchase and on and as of each subsequent
date each Receivable came into existence, such Originator hereby
represents and warrants that all of the other representations and
warranties set forth in this Article II are true and correct on
and as of each such date (and after giving effect to all
Receivables in existence on each such date) as though made on and
as of each such date.
xlviii.
xlix. Type of Receivable. None of the
Receivables transferred to Buyer under this Agreement resulted
from the sale of an interest in minerals or the like (including
oil and gas) before extraction or at the well head or the mine
head.
1. ARTICLE CONDITIONS OF PURCHASES
i. Section Conditions Precedent to Purchase . The
initial Purchase under this Agreement is subject to the
conditions precedent that Buyer shall have received on or before
the date of such purchase those documents listed on Schedule A
and all of the conditions to the Purchase under the Purchase
Agreement shall have been satisfied or waived in accordance with
the terms thereof.
a. Section Conditions Precedent to Subsequent
Payments . Buyer's obligation to pay for Receivables coming into
existence after the date hereof shall be subject to the further
condition precedent that the Facility Termination Date shall not
have occurred. Each Originator represents and warrants that the
representations and warranties set forth in Article II are true
and correct on and as of the date each Receivable came into
existence as though made on and as of such date.
b.
c. Section Conditions Precedent to Purchase from
Additional Originators . The Purchase under this Agreement from
an Additional Originator is subject to the conditions precedent
that, on or before the Additional Originator Closing Date for
such Additional Originator:
d.
i. the following documents shall have been
delivered:
ii.
(1) a certificate from each such Additional
Originator's Secretary certifying:
1) an attached copy of its Certificate of
Incorporation or other charter document(s)
(certified within 30 days prior to the
Additional Originator Closing Date by the
Secretary of State of its jurisdiction of
formation or incorporation);
2) an attached copy of its by-laws, operating
agreement or other constitutional
document(s);
3) an attached copy of resolutions of
its Board of Directors or other governing
body authorizing its execution, delivery and
performance of the Joinder Supplement, the
Sale Agreement and related documents; and
4) the names, titles and specimen
signatures of its officers authorized to
execute and deliver the Joinder Supplement,
the Sale Agreement and related documents;
(1) good standing certificates for each such
Additional Originator from the states in which it is formed and
in which it has principal operations certified by each such state
within 30 days prior to the Additional Originator Closing Date;
(1) state and federal tax lien, judgment lien
and UCC lien searches against each such Additional Originator
from the state in which its Chief Executive Office is located
(the "Filing State") and as applicable for tax and judgment
liens;
(1) executed UCC financing statements naming
each such Additional Originator, as debtor, PRC, as secured
party, and Bank One, NA, as Agent, as assignee of secured party,
for filing with the Secretary of State of the Filing State;
(1) opinions from each such Additional
Originator's counsel, in form and substance reasonably
satisfactory to the Agent, regarding corporate, UCC, true sale,
non-consolidation and other matters with respect to each such
Additional Originator;
(1) an Officer's Certificate from KNEI to the
effect that no Amortization Event or Potential Amortization Event
has occurred and is continuing;
(1) an executed Collection Agreement with
respect to each such Additional Originator's Collection Accounts;
and
(1) a Monthly Report which reflects the
addition of the Receivables of such Additional Originator and the
Net Receivables Balance and Aggregate Reserves for such
Additional Originator. For purposes of all calculations hereunder
and under the Purchase Agreement, the Net Receivables Balance and
Aggregate Reserves for the Additional Originator shown in such
supplement shall supersede or supplement the calculation of such
items in the then outstanding Monthly Report, effective as of the
Additional Originator Closing Date.
1. ARTICLE COVENANTS
a. Section Affirmative Covenants of KNEI . Until the
date on which this Agreement terminates in accordance with its
terms, KNEI, in its capacity as Originator, hereby covenants as
set forth below:
i. Financial Reporting. KNEI will maintain, for
itself and each of its Subsidiaries, a system of accounting
established and administered in accordance with generally
accepted accounting principles, and furnish to Buyer (or its
assigns):
ii.
(1) Annual Reporting. Within 100 days after
the close of each of its respective fiscal years, audited,
unqualified financial statements (which shall include balance
sheets, statements of income and retained earnings and a
statement of cash flows) for KNEI and its consolidated
subsidiaries for such fiscal year certified in a manner
acceptable to Buyer (and its assigns) by independent public
accountants acceptable to Buyer (and its assigns).
(1) Quarterly Reporting. Within 50 days after
the close of the first three (3) quarterly periods of each of its
respective fiscal years, balance sheets of KNEI as at the close
of each such period and statements of income and retained
earnings and a statement of cash flows for KNEI for the period
from the beginning of such fiscal year to the end of such
quarter, all certified by its chief financial officer.
(1) Compliance Certificate. Together with the
financial statements required hereunder, a compliance certificate
in substantially the form of Exhibit IV signed by KNEI's
Authorized Officer and dated the date of such annual financial
statement or such quarterly financial statement, as the case may
be.
(1) Shareholders Statements and Reports.
Promptly upon the furnishing thereof to the shareholders of KNEI
copies of all financial statements, reports and proxy statements
so furnished.
(1) S.E.C. Filings. Promptly upon the filing
thereof, copies of all registration statements and annual,
quarterly, monthly or other regular reports which KNEI or any of
its Subsidiaries files with the Securities and Exchange
Commission.
(1) Copies of Notices. Promptly upon its
receipt of any notice, request for consent, financial statements,
certification, report or other communication under or in
connection with any Transaction Document from any Person other
than Buyer, the Agent or the Conduits, copies of the same.
(1) Change in Credit and Collection Policy. At
least thirty (30) days prior to the effectiveness of any material
change in or amendment to the Credit and Collection Policy, a
copy of the Credit and Collection Policy then in effect and a
notice indicating such change or amendment.
(1) Other Information. Promptly, from time to
time, such other information, documents, records or reports
relating to the Receivables or the condition or operations,
financial or otherwise, of KNEI as Buyer (or its assigns) may
from time to time reasonably request in order to protect the
interests of Buyer (and its assigns) under or as contemplated by
this Agreement.
i. Notices. KNEI will notify Buyer (or its
assigns) in writing of any of the following promptly upon
learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken with respect thereto:
ii.
(1) Amortization Events or Potential
Amortization Events. The occurrence of each Amortization Event
and each Potential Amortization Event, by a statement of an
Authorized Officer of KNEI.
(1) Litigation. The institution of any
litigation, arbitration, proceeding or governmental proceeding
against any Originator or any of its Subsidiaries, or to which
such Originator or any of its Subsidiaries becomes party, in
either case which (A) remains unsettled for a period of 90 days
from the commencement thereof and involves claims for damages or
relief in an amount which could reasonably be expected to have a
Material Adverse Effect, or (B) has resulted in a final judgment
or judgments for the payment of money in an amount which has a
Material Adverse Effect.
(1) Material Adverse Effect. The occurrence of
any event or condition that has, or could reasonably be expected
to have, a Material Adverse Effect.
(1) Defaults Under Other Agreements. The
occurrence of a default or an event of default under any other
financing arrangement pursuant to which KNEI is a debtor or an
obligor pursuant to which KNEI has an obligation of $50,000,000
or more.
(1) Downgrade of the KNEI. Any downgrade
in the rating of any Indebtedness of KNEI or any of its
Subsidiaries by Standard and Poor's Ratings Services or by
Xxxxx'x Investors Service, Inc., setting forth the Indebtedness
affected and the nature of such change.
(2)
b. Section Affirmative Covenants of Each Originator .
Until the date this Agreement shall terminate in accordance with
its terms, each Originator, in its capacity as an Originator,
covenants and agrees as follows:
c.
i. Compliance with Laws and Preservation of
Corporate Existence. Such Originator will comply in all respects
with all applicable laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be
subject with respect to which a failure to comply may reasonably
be expected to cause a Material Adverse Effect. Such Originator
will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified in good standing
as a foreign enterprise in each jurisdiction where its business
is conducted and where a failure to qualify would cause a
Material Adverse Effect.
ii.
iii. Audits. Such Originator will furnish to
Buyer (or its assigns) from time to time such information with
respect to it and the Receivables as Buyer (or its assigns) may
reasonably request. Such Originator will, from time to time,
during regular business hours as requested by Buyer (or its
assigns), upon reasonable notice, permit Buyer (or its assigns)
or their respective agents or representatives, (i) to examine and
make copies of and abstracts from all Records in the possession
or under the control of such Originator relating to the
Receivables and the Related Security, including, without
limitation, the related Contracts, and (ii) to visit the offices
and properties of such Originator for the purpose of examining
such materials described in clause (i) above, and to discuss
matters relating to such Originator's financial condition or the
Receivables and the Related Security or such Originator's
performance under any of the Transaction Documents or such
Originator's performance under the Contracts and, in each case,
with any of the officers or employees of such Originator having
knowledge of such matters. Such Originator shall reimburse Buyer
promptly for all of Buyer's reasonable costs incurred in
connection with (i) so long as no Amortization Event or Potential
Amortization Event has occurred, not more than one such audit per
calendar year and (ii) following the occurrence of an
Amortization Event or a Potential Amortization Event, any such
audit.
iv.
v. Keeping and Marking of Records and Books.
vi.
(1) Such Originator will maintain and implement
administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables
in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, records and other
information reasonably necessary or advisable for the collection
of all Receivables (including, without limitation, records
adequate to permit the immediate identification of each new
Receivable and all Collections of and adjustments to each
existing Receivable). Such Originator will give Buyer (or its
assigns) notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(1) Such Originator will (A) on or prior to the
date hereof, xxxx its master data processing records relating to
the Receivables with a legend, acceptable to Buyer (or its
assigns), describing Buyer's ownership interests in the
Receivables and further describing the Purchaser Interests of the
Agent (on behalf of the Purchasers) under the Purchase Agreement
and (B) following the occurrence of an Amortization Event, upon
the request of Buyer (or its assigns), (x) xxxx each Contract
with a legend describing Buyer's ownership interests in the
Receivables and further describing the Purchaser Interests of the
Agent (on behalf of the Purchasers) and (y) deliver to Buyer (or
its assigns) all Contracts (including, without limitation, all
multiple originals of any such Contract) relating to the
Receivables.
i. Compliance with Contracts and Credit and
Collection Policy. Such Originator will timely and fully (i)
perform and comply with all provisions, covenants and other
promises required to be observed by it under the Contracts
related to the Receivables with respect to which a failure to
perform or comply may reasonably be expected to adversely affect
the collectibility thereof, and (ii) comply in all respects with
the Credit and Collection Policy in regard to each Receivable and
the related Contract. Such Originator will pay when due any
taxes payable in connection with the Receivables, exclusive of
taxes on or measured by income or gross receipts of Buyer and its
assigns.
ii.
iii. Ownership. Such Originator will take all
necessary action to establish and maintain, irrevocably in Buyer,
legal and equitable title to the Receivables, the Related
Security and the Collections, free and clear of any Adverse
Claims other than Adverse Claims in favor of Buyer (and its
assigns) (including, without limitation, the filing of all
financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect Buyer's interest in such
Receivables, Related Security and Collections and such other
action to perfect, protect or more fully evidence the interest of
Buyer as Buyer (or its assigns) may reasonably request).
iv.
v. Purchasers' Reliance. Such Originator
acknowledges that the Agent and the Purchasers are entering into
the transactions contemplated by the Purchase Agreement in
reliance upon Buyer's identity as a legal entity that is separate
from such Originator and any Affiliates thereof. Therefore, from
and after the date of execution and delivery of this Agreement,
such Originator will take all reasonable steps including, without
limitation, all steps that Buyer or any assignee of Buyer may
from time to time reasonably request to maintain Buyer's identity
as a separate legal entity and to make it manifest to third
parties that Buyer is an entity with assets and liabilities
distinct from those of such Originator and any Affiliates thereof
and not just a division of such Originator. Without limiting the
generality of the foregoing and in addition to the other
covenants set forth herein, such Originator (i) will not hold
itself out to third parties as liable for the debts of Buyer nor
purport to own the Receivables and other assets acquired by
Buyer, (ii) will take all other actions necessary on its part to
ensure that Buyer is at all times in compliance with the
covenants set forth in Section 7.1(i) of the Purchase Agreement
and (iii) will cause all tax liabilities arising in connection
with the transactions contemplated herein or otherwise to be
allocated between such Originator and Buyer on an arm's-length
basis and in a manner consistent with the procedures set forth in
U.S. Treasury Regulations 1.1502-33(d) and 1.1552-1.
vi.
vii. Collections. Such Originator will cause (1)
all proceeds from all Lock-Boxes to be directly deposited by a
Collection Bank into a Collection Account and (2) each Lock-Box
and Collection Account to be subject at all times to a Collection
Account Agreement that is in full force and effect. In the event
any payments relating to Receivables are remitted directly to
Originator or any Affiliate of such Originator, such Originator
will remit (or will cause all such payments to be remitted)
directly to a Collection Bank for deposit into a Collection
Account within two (2) Business Days following receipt thereof
and, at all times prior to such remittance, such Originator will
itself hold or, if applicable, will cause such payments to be
held in trust for the exclusive benefit of Buyer and its assigns.
Such Originator will transfer exclusive ownership, dominion and
control of each Lock-Box and Collection Account to Buyer and,
will not grant the right to take dominion and control of any Lock-
Box or Collection Account at a future time or upon the occurrence
of a future event to any Person, except to Buyer (or its assigns)
as contemplated by this Agreement and the Purchase Agreement.
viii.
ix. Taxes. Such Originator will file all tax
returns and reports required by law to be filed by it and
promptly pay all taxes and governmental charges at any time
owing.
x.
xi. Obligations under Purchase Agreement. Such
Originator covenants and agrees to fully perform all of the
obligations of an Originator set forth in the Purchase Agreement.
xii.
b. Section Negative Covenants of the Originators .
Until the date on which this Agreement terminates in accordance
with its terms, each Originator hereby covenants that:
c.
i. Name Change, Offices and Records. Such
Originator will not change its name, identity or corporate
structure (within the meaning of Section 9-402(7) of any
applicable enactment of the UCC) or relocate its chief executive
office or any office where Records are kept unless it shall have:
(i) given Buyer (and its assigns) at least forty-five (45) days'
prior written notice thereof and (ii) delivered to Buyer (or its
assigns) all financing statements, instruments and other
documents requested by Buyer (or its assigns) in connection with
such change or relocation.
ii.
iii. Change in Payment Instructions to Obligors.
Such Originator will not add or terminate any bank as a
Collection Bank, or make any change in the instructions to
Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless Buyer (and its assigns) shall have
received, at least ten (10) days before the proposed effective
date therefor, (i) written notice of such addition, termination
or change and (ii) with respect to the addition of a Collection
Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Account or
Lock-Box; provided, however, that such Originator may make
changes in instructions to Obligors regarding payments if such
new instructions require such Obligor to make payments to another
existing Collection Account.
iv.
v. Modifications to Contracts and Credit and
Collection Policy. Such Originator will not make any change to
the Credit and Collection Policy that could adversely affect the
collectibility of the Receivables or decrease the credit quality
of any newly created Receivables. Except as otherwise permitted
in its capacity as Servicer pursuant to Article VIII of the
Purchase Agreement, such Originator will not extend, amend or
otherwise modify the terms of any Receivable or any Contract
related thereto other than in accordance with the Credit and
Collection Policy.
vi.
vii. Sales, Liens. Such Originator will not sell,
assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to, or create or suffer to
exist any Adverse Claim upon (including, without limitation, the
filing of any financing statement) or with respect to, any
Receivable, Related Security or Collections, or upon or with
respect to any Contract under which any Receivable arises, or any
Lock-Box or Collection Account, or assign any right to receive
income with respect thereto (other than, in each case, the
creation of the interests therein in favor of Buyer provided for
herein), and such Originator will defend the right, title and
interest of Buyer in, to and under any of the foregoing property,
against all claims of third parties claiming through or under
such Originator. Such Originator shall not create nor suffer to
exist any mortgage, pledge, security interest, encumbrance, lien,
charge or other similar arrangement on any of its inventory.
viii.
ix. Accounting for Purchase. Such Originator
will not, and will not permit any Affiliate to, account for or
treat (whether in financial statements or otherwise) the
transactions contemplated hereby in any manner other than the
sale of the Receivables and the Related Security by such
Originator to Buyer or in any other respect account for or treat
the transactions contemplated hereby in any manner other than as
a sale of the Receivables and the Related Security by such
Originator to Buyer.
x.
2. ARTICLE ADMINISTRATION AND COLLECTION
a. Section Designation of Sub-Servicer .
b.
i. The servicing, administration and collection of
the Receivables shall be conducted by the Servicer so designated
from time to time in accordance with Section 8.1(a) of the
Purchase Agreement. KNEI is hereby designated as, and hereby
agrees to act as, sub-servicer (the "Sub-Servicer") for Buyer in
Buyer's capacity as the initial Servicer designated pursuant to
the terms of the Purchase Agreement, and KNEI agrees in such
capacity as Sub-Servicer to perform all of the duties and
obligations of the Servicer set forth herein and in the Purchase
Agreement with respect to the Receivables, the Related Security
related thereto and Collections thereof. If the Agent appoints a
new Servicer pursuant to the terms hereof, KNEI shall no longer
be required to act as Sub-Servicer hereunder unless it so
consents.
i. KNEI further agrees that, so long as it shall
remain as Sub-Servicer, it shall be directly liable to the Agent
and the Purchasers for the full and prompt performance of all
such duties and responsibilities of the Servicer; provided that
(i) nothing in this Agreement shall eliminate Buyer's primary
liability to the Agent and the Purchasers for its duties as
Servicer (for so long as Buyer is the Servicer or the Servicer is
an Affiliate thereof or is appointed by Buyer), (ii) Buyer and
its assigns shall retain sole responsibility and authority for
withdrawing funds from each Collection Account, and (iii) the
Agent and the Purchasers shall be entitled to deal exclusively
with Buyer in matters relating to the discharge by the Servicer
of its duties pursuant to Section 8.1 of the Purchase Agreement.
ii.
iii. Without the prior written consent of Buyer
and its assignees, KNEI shall not be permitted to delegate any of
its duties or responsibilities as Sub-Servicer to any Person
other than an Originator. If at any time, pursuant to the terms
and conditions of the Purchase Agreement, the Agent shall
designate as Servicer any Person other than Buyer, all duties and
responsibilities theretofore delegated by Buyer to the Sub-
Servicer shall be terminated forthwith.
a. Section Duties of Sub-Servicer .
b.
i. The Sub-Servicer shall take or cause to be
taken all such actions as may be reasonably necessary or
advisable to collect each Receivable from time to time, all in
accordance with applicable laws, rules and regulations, with
reasonable care and diligence, and in accordance with the Credit
and Collection Policy, in each case to the same extent required
of such Originator under Section 4.2(d).
i. The Sub-Servicer shall use its reasonable best
efforts to segregate, on each Business Day, in a manner
reasonably acceptable to Buyer and the Agent, all cash, checks
and other instruments received by it from time to time
constituting Collections from the general funds of the Sub-
Servicer prior to the remittance thereof to Buyer. The Sub-
Servicer shall remit to Buyer all Collections of Receivables not
later than the Business Day immediately following receipt of such
Collections. The Sub-Servicer shall cause Collections to be
applied as described herein and in the Purchase Agreement.
ii.
iii. The Sub-Servicer, may, in accordance with the
Credit and Collection Policy, extend the maturity of any
Receivable or adjust the Outstanding Balance of any Receivable as
the Sub-Servicer may determine to be appropriate to maximize
Collections thereof; provided, however, that such extension or
adjustment shall not alter the status of such Receivable as a
Delinquent Receivable or Defaulted Receivable or limit the rights
of the Agent or the Purchasers under the Purchase Agreement.
Notwithstanding anything to the contrary contained herein, from
and after the occurrence of an Amortization Event, Buyer shall
have the absolute and unlimited right to direct the Sub-Servicer
to commence or settle any legal action with respect to any
Receivable or to foreclose upon or repossess any Related
Security.
iv.
v. The Sub-Servicer shall hold in trust for
Buyer and its assignees, in accordance with their respective
interests, all Records that it is required to maintain hereunder,
the related Contracts and Related Security or that are otherwise
necessary or desirable to collect the Receivables and (to the
fullest extent permitted to do so without violating contractual
restrictions imposed by licensors as provided in Section 1.6(a)
herein or the confidentiality provisions of any such contract)
shall, as soon as reasonably practicable upon demand of Buyer
upon the occurrence and during the continuance of an Amortization
Event, deliver or make available to Buyer copies of all such
Records at the chief executive office of such Sub-Servicer.
vi.
vii. Any payment by an Obligor in respect of any
indebtedness owed by it to any Originator in connection with a
Receivable shall, except as otherwise required by contract or law
and unless otherwise instructed by Buyer, be applied as a
Collection to such Receivable or Receivables of such Obligor
originated by such Originator as shall be designated by such
Originator.
viii.
ix. If KNEI is terminated as Sub-Servicer, KNEI
as Sub-Servicer agrees to cooperate with Buyer and the successor
Sub-Servicer in effecting the termination of the responsibilities
and rights of KNEI to conduct servicing hereunder, and shall (to
the fullest extent permitted to do so without violating
contractual restrictions imposed by licensors as provided in
Section1.5(a) herein or the confidentiality provisions of any
such contract) promptly transfer to the successor Sub-Servicer
copies of all records, correspondence and documents necessary for
the continued servicing of the Receivables, and shall do and
accomplish all other acts or things necessary or appropriate to
effect the transfer of servicing rights.
x.
b. Section Collection Rights . KNEI hereby authorizes
Buyer and the Servicer, and agrees that each of Buyer and the
Servicer shall, if KNEI is terminated as Sub-Servicer, be
entitled to (i) endorse its name on checks and other instruments
representing Collections, (ii) enforce the Receivables and the
Related Security and (iii) take such action as shall be necessary
or desirable to cause all cash, checks and other instruments
constituting Collections of Receivables to come into the
possession of the Servicer or its designees, on behalf of Buyer
and its assignees, rather than KNEI.
c.
d. Section Responsibilities of the Sub-Servicer and
Originators . Anything herein to the contrary notwithstanding,
the exercise by Buyer (or its assignees) of its rights hereunder
shall not release any Sub-Servicer or any Originator from any of
their respective duties or obligations with respect to any
Receivables or under the related Contracts. Neither Buyer nor any
of its assignees (including any Servicer) shall have any
obligation or liability with respect to any Receivables or
related Contracts, nor shall any of them be obligated to perform
the obligations of such Sub-Servicer or Originator.
e.
f. Section Reports . Not later than the third
Business Day preceding each Settlement Date, the Sub-Servicer
shall prepare and forward to Buyer and the Agent a Monthly Report
for the related Calculation Period (or other comparable report
for such period as may be applicable).
g.
h. Section Sub-Servicer Fee . In consideration of the
Sub-Servicer's agreement to perform the duties and obligations of
the Servicer under the Purchase Agreement, Buyer hereby agrees
that, so long as KNEI shall continue to perform as Sub-Servicer
hereunder, Buyer shall, within 30 days of each Settlement Date,
pay over to KNEI a monthly fee in an amount equal to (i) a per
annum rate not to exceed 1% agreed to by Buyer and KNEI from time
to time, multiplied by (ii) the average Outstanding Balance of
the Receivables held by Buyer (without taking account of any
interests therein sold pursuant to the Purchase Agreement) during
the related Calculation Period, such fee to be calculated to
provide the Sub-Servicer reasonable compensation for its
servicing activities. Such fee shall be payable for each
Calculation Period on the related Settlement Date and may be
payable with the proceeds of any Subordinated Loan (to the extent
that a Subordinated Loan could be borrowed without rendering
Buyer's Net Worth less than the Required Capital Amount).
i.
1. ARTICLE AMORTIZATION EVENTS
a. Section Amortization Events . The occurrence of
any one or more of the following events shall constitute an
Amortization Event:
i. Any Originator shall fail (i) to make any
payment or deposit required hereunder when due and such failure
continues for one (1) Business Day, or (ii) to perform or observe
any covenant or agreement hereunder (other than as referred to in
clause (i) of this paragraph (a)) or any other Transaction
Document to which it is a party and such failure shall continue
for ten (10) Business Days after notice thereof has been given to
such Originator by Buyer (or its assignees).
ii.
iii. Any representation, warranty, certification
or statement made by any Originator in this Agreement, any other
Transaction Document or in any other document delivered pursuant
hereto or thereto shall prove to have been incorrect when made or
deemed made.
iv.
v. KNEI or any Subsidiary shall fail to make any
payment in respect of any Material Financial Obligations when due
or within any applicable grace period; provided, however, that if
any such failure is cured by KNEI or such Subsidiary or is waived
by the requisite percentage of holders of such Material Financial
Obligations entitled to so waive, then the Amortization Event
under this Agreement by reason of such failure shall be deemed to
have been cured.
vi.
vii. Any event or condition shall occur which
results in the acceleration of the maturity of any Material Debt
or enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such Debt or any Person acting
on such holder's behalf to accelerate the maturity thereof;
provided, however, that if any such acceleration is rescinded, or
any such event or condition is cured by KNEI or any Subsidiary or
is waived by the requisite percentage of holders of such Material
Debt entitled to so waive, then the Amortization Event under this
Agreement by reason of such acceleration, event or condition
shall be deemed to have been cured.
viii.
(1) Any Originator or any of its Material
Subsidiaries shall generally not pay its debts as such debts
become due or shall admit in writing its inability to pay its
debts generally or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or
against any Originator or any of its Material Subsidiaries
seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee or other similar official
for it or any substantial part of its property, and such
proceedings shall not be dismissed within 60 days of the filing
thereof or (ii) any Originator or any of its Material
Subsidiaries shall take any corporate action to authorize any of
the actions set forth in the foregoing clause (i) of this
subsection (d).
(2)
ix. A Change of Control of KNEI shall occur.
x.
xi. One or more final judgments for the payment
of money shall be entered against any Originator on claims not
covered by insurance or as to which the insurance carrier has
denied its responsibility, and such judgment shall continue
unsatisfied and in effect for thirty (30) consecutive days
without a stay of execution.
xii.
b. Section Remedies . Upon the occurrence and during
the continuation of an Amortization Event, Buyer may take any of
the following actions: (i) declare the Amortization Date to have
occurred, whereupon the Amortization Date shall forthwith occur,
without demand, protest or further notice of any kind, all of
which are hereby expressly waived by such Originator; provided,
however, that upon the occurrence of Amortization Event described
in Section 6.1(d), or of an actual or deemed entry of an order
for relief with respect to such Originator under the Federal
Bankruptcy Code, the Amortization Date shall automatically occur,
without demand, protest or any notice of any kind, all of which
are hereby expressly waived by such Originator and (ii) to the
fullest extent permitted by applicable law, declare that the
Default Fee shall accrue with respect to any amounts then due and
owing by Buyer to such Originator. The aforementioned rights and
remedies shall be in addition to all other rights and remedies of
Buyer and its assigns available under this Agreement, by
operation of law, at equity or otherwise, all of which are hereby
expressly preserved, including, without limitation, all rights
and remedies provided under the UCC, all of which rights shall be
cumulative.
c.
2. ARTICLE INDEMNIFICATION
a. Section INDEMNITIES BY KNEI . WITHOUT LIMITING
ANY OTHER RIGHTS THAT BUYER MAY HAVE HEREUNDER OR UNDER
APPLICABLE LAW, KNEI HEREBY AGREES TO INDEMNIFY BUYER AND ITS
ASSIGNS, OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES (EACH AN
"INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL DAMAGES,
LOSSES, CLAIMS, TAXES, LIABILITIES, COSTS, EXPENSES AND FOR ALL
OTHER AMOUNTS PAYABLE, INCLUDING REASONABLE ATTORNEYS' FEES
(WHICH ATTORNEYS MAY BE EMPLOYEES OF BUYER) AND DISBURSEMENTS
(ALL OF THE FOREGOING BEING COLLECTIVELY REFERRED TO AS
"INDEMNIFIED AMOUNTS") AWARDED AGAINST OR INCURRED BY ANY OF THEM
ARISING OUT OF OR AS A RESULT OF THIS AGREEMENT OR THE
ACQUISITION, EITHER DIRECTLY OR INDIRECTLY, BY BUYER OF AN
INTEREST IN THE RECEIVABLES, EXCLUDING, HOWEVER:
(1) INDEMNIFIED AMOUNTS TO THE EXTENT A FINAL
JUDGMENT OF A COURT OF COMPETENT JURISDICTION HOLDS THAT SUCH
INDEMNIFIED AMOUNTS RESULTED FROM GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY SEEKING
INDEMNIFICATION;
(1) INDEMNIFIED AMOUNTS TO THE EXTENT THE SAME
INCLUDES LOSSES IN RESPECT OF RECEIVABLES THAT ARE UNCOLLECTIBLE
ON ACCOUNT OF THE INSOLVENCY, BANKRUPTCY OR LACK OF
CREDITWORTHINESS OF THE RELATED OBLIGOR; OR
(1) TAXES IMPOSED BY THE JURISDICTION IN
WHICH SUCH INDEMNIFIED PARTY'S PRINCIPAL EXECUTIVE OFFICE IS
LOCATED, ON OR MEASURED BY THE OVERALL NET INCOME OF SUCH
INDEMNIFIED PARTY TO THE EXTENT THAT THE COMPUTATION OF SUCH
TAXES IS CONSISTENT WITH THE INTENDED TAX CHARACTERIZATION;
(1) INDEMNIFIED AMOUNTS TO THE EXTENT THE SAME
ARE A RESULT OF A VIOLATION BY SUCH INDEMNIFIED PARTY OF ANY
BANKING OR SECURITIES LAWS OR REGULATIONS;
(1) INDEMNIFIED AMOUNTS TO THE EXTENT THEY
INCLUDE COSTS AND EXPENSES OF A TYPE REFERRED TO IN SECTION 7.2
HEREOF, EXCEPT TO THE EXTENT PROVIDED IN SECTION 7.2;
(1) INDEMNIFIED AMOUNTS TO THE EXTENT THEY
CONSTITUTE STATE OR LOCAL FRANCHISE TAXES TO THE EXTENT THAT THE
INDEMNIFIED PARTY IS SUBJECT TO TAXATION IN THE JURISDICTION
IMPOSING SUCH FRANCHISE TAXES SOLELY FOR REASONS OTHER THAN THE
TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS; AND
(1) INDEMNIFIED AMOUNTS THAT UNDER THE TERMS OF
CLAUSES (I) THROUGH (XIV) BELOW ARE EXPRESSLY EXCEPTED FROM THE
INDEMNIFICATION PROVISIONS OF SUCH CLAUSES.
PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN THIS SENTENCE SHALL
LIMIT THE LIABILITY OF KNEI OR LIMIT THE RECOURSE OF BUYER TO
KNEI FOR AMOUNTS OTHERWISE SPECIFICALLY PROVIDED TO BE PAID BY
KNEI UNDER THE TERMS OF THIS AGREEMENT. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING INDEMNIFICATION, BUT SUBJECT TO THE
LIMITATIONS SET FORTH IN CLAUSES (I) AND (II) OF THIS PREVIOUS
SENTENCE, KNEI SHALL INDEMNIFY BUYER FOR INDEMNIFIED AMOUNTS
(INCLUDING, WITHOUT LIMITATION, LOSSES IN RESPECT OF
UNCOLLECTIBLE RECEIVABLES, REGARDLESS OF WHETHER REIMBURSEMENT
THEREFOR WOULD CONSTITUTE RECOURSE TO SELLER) RELATING TO OR
RESULTING FROM:
(i) ANY REPRESENTATION OR WARRANTY MADE BY ANY
ORIGINATOR (OR ANY OFFICERS OF SUCH ORIGINATOR) UNDER OR IN
CONNECTION WITH THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR
ANY OTHER INFORMATION OR REPORT DELIVERED BY SUCH ORIGINATOR
PURSUANT HERETO OR THERETO, WHICH SHALL HAVE BEEN FALSE OR
INCORRECT WHEN MADE OR DEEMED MADE;
(i) THE FAILURE BY ANY ORIGINATOR, TO COMPLY
WITH ANY APPLICABLE LAW, RULE OR REGULATION WITH RESPECT TO ANY
RECEIVABLE OR CONTRACT RELATED THERETO, OR THE NONCONFORMITY OF
ANY RECEIVABLE OR CONTRACT INCLUDED THEREIN WITH ANY SUCH
APPLICABLE LAW, RULE OR REGULATION OR ANY FAILURE OF ANY
ORIGINATOR TO KEEP OR PERFORM ANY OF ITS OBLIGATIONS, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY CONTRACT;
(i) ANY FAILURE OF ANY ORIGINATOR TO PERFORM
ITS DUTIES, COVENANTS OR OTHER OBLIGATIONS IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT;
(i) ANY PRODUCTS LIABILITY OR SIMILAR CLAIM
ARISING OUT OF OR IN CONNECTION WITH MERCHANDISE, INSURANCE OR
SERVICES THAT ARE THE SUBJECT OF ANY CONTRACT;
(i) ANY DISPUTE, CLAIM, OFFSET OR DEFENSE
(OTHER THAN DISCHARGE IN BANKRUPTCY OF THE OBLIGOR) OF THE
OBLIGOR TO THE PAYMENT OF ANY RECEIVABLE (INCLUDING, WITHOUT
LIMITATION, A DEFENSE BASED ON SUCH RECEIVABLE OR THE RELATED
CONTRACT NOT BEING A LEGAL, VALID AND BINDING OBLIGATION OF SUCH
OBLIGOR ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS), OR
ANY OTHER CLAIM RESULTING FROM THE SALE OF THE MERCHANDISE OR
SERVICE RELATED TO SUCH RECEIVABLE OR THE FURNISHING OR FAILURE
TO FURNISH SUCH MERCHANDISE OR SERVICES;
(i) THE COMMINGLING OF COLLECTIONS OF
RECEIVABLES AT ANY TIME WITH OTHER FUNDS;
(i) ANY INVESTIGATION, LITIGATION OR PROCEEDING
RELATED TO OR ARISING FROM THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, THE
USE OF THE PROCEEDS OF A PURCHASE, THE OWNERSHIP OF THE
RECEIVABLES OR ANY OTHER INVESTIGATION, LITIGATION OR PROCEEDING
RELATING TO ANY ORIGINATOR IN WHICH ANY INDEMNIFIED PARTY BECOMES
INVOLVED AS A RESULT OF ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY;
(i) ANY INABILITY TO LITIGATE ANY CLAIM AGAINST
ANY OBLIGOR IN RESPECT OF ANY RECEIVABLE AS A RESULT OF SUCH
OBLIGOR BEING IMMUNE FROM CIVIL AND COMMERCIAL LAW AND SUIT ON
THE GROUNDS OF SOVEREIGNTY OR OTHERWISE FROM ANY LEGAL ACTION,
SUIT OR PROCEEDING;
(i) ANY AMORTIZATION EVENT DESCRIBED IN SECTION
6.1(D);
(i) ANY FAILURE TO VEST AND MAINTAIN VESTED IN
BUYER, OR TO TRANSFER TO BUYER, LEGAL AND EQUITABLE TITLE TO, AND
OWNERSHIP OF, THE RECEIVABLES, THE RELATED SECURITY AND THE
COLLECTIONS, FREE AND CLEAR OF ANY ADVERSE CLAIM;
(i) THE FAILURE TO HAVE FILED, OR ANY DELAY IN
FILING, FINANCING STATEMENTS OR OTHER SIMILAR INSTRUMENTS OR
DOCUMENTS UNDER THE UCC OF ANY APPLICABLE JURISDICTION OR OTHER
APPLICABLE LAWS WITH RESPECT TO ANY RECEIVABLE, THE RELATED
SECURITY AND COLLECTIONS WITH RESPECT THERETO, AND THE PROCEEDS
OF ANY THEREOF, WHETHER AT THE TIME OF THE PURCHASE OR AT ANY
SUBSEQUENT TIME;
(i) ANY ACTION OR OMISSION BY ANY ORIGINATOR
WHICH REDUCES OR IMPAIRS THE RIGHTS OF BUYER WITH RESPECT TO ANY
RECEIVABLE OR THE VALUE OF ANY SUCH RECEIVABLE;
(i) ANY ATTEMPT BY ANY PERSON TO VOID ANY
PURCHASE HEREUNDER UNDER STATUTORY PROVISIONS OR COMMON LAW OR
EQUITABLE ACTION; AND
(i) THE YEAR 2000 PROBLEM INVOLVING KNEI OR ANY
ORIGINATOR.
1.1 Section Other Costs and Expenses . Knei shall pay
to buyer on demand all costs and out-of-pocket expenses in
connection with the preparation, execution, delivery and
administration of this agreement, the transactions contemplated
hereby and the other documents to be delivered hereunder. Knei
shall pay to buyer on demand any and all costs and expenses of
buyer, if any, including reasonable counsel fees and expenses in
connection with the enforcement of this agreement and the other
documents delivered hereunder and in connection with any
restructuring or workout of this agreement or such documents, or
the administration of this agreement following an amortization
event.
1.2
1.3 Section LIABILITY OF ADDITIONAL ORIGINATORS TO
KNEI AND INDEMNIFIED PARTIES . NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN, KNEI SHALL HAVE THE RIGHT TO SEEK CONTRIBUTION
FROM ANY ADDITIONAL ORIGINATOR FOR ANY INDEMNIFIED LOSSES WHICH
IT INDEMNIFIED BUT WHICH WERE CAUSED, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, BY SUCH ADDITIONAL ORIGINATOR'S ACTION
OR INACTION. IN ADDITION, IF KNEI FAILS TO PERFORM ITS
INDEMNIFICATION OR REIMBURSEMENT OBLIGATIONS IN A TIMELY FASHION,
THEN THE ADDITIONAL ORIGINATORS SHALL BE JOINTLY AND SEVERALLY
LIABLE TO EACH INDEMNIFIED PARTY FOR ALL LOSSES SUBJECT TO
INDEMNIFICATION OR REIMBURSEMENT PURSUANT TO THIS AGREEMENT.
1.4
1 ARTICLE MISCELLANEOUS
(a) Section Waivers and Amendments . No failure or
delay on the part of Buyer (or its assigns) in exercising any
power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy. The
rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific
instance and for the specific purpose for which given.
(a) No provision of this Agreement may be amended,
supplemented, modified or waived except in writing signed by all
Originators and Buyer and, to the extent required under the
Purchase Agreement, the Agent and the Financial Institutions or
the Required Financial Institutions.
(b)
(i) Section Notices . Except as provided below, all
communications and notices provided for hereunder shall be in
writing (including bank wire, telecopy or electronic facsimile
transmission or similar writing) and shall be given to the other
parties hereto at their respective addresses or telecopy numbers
set forth on the signature pages hereof or at such other address
or telecopy number as such Person may hereafter specify for the
purpose of notice to each of the other parties hereto. Each such
notice or other communication shall be effective if given by
telecopy, upon the receipt thereof, if given by mail, three (3)
Business Days after the time such communication is deposited in
the mail with first class postage prepaid or if given by any
other means, when received at the address specified in this
Section 8.2.
(ii)
(c) Section Protection of Ownership Interests of Buyer
. Each Originator agrees that from time to time, at its
expense, it will promptly execute and deliver all instruments and
documents, and take all actions, that may be necessary or
desirable, or that Buyer (or its assigns) may request, to
perfect, protect or more fully evidence the Purchaser Interests,
or to enable Buyer (or its assigns) to exercise and enforce their
rights and remedies hereunder. At any time during the
continuance of an Amortization Event, Buyer (or its assigns) may,
at the Originator's sole cost and expense, direct an Originator
to notify the Obligors of Receivables of the ownership interests
of Buyer under this Agreement and may also direct that payments
of all amounts due or that become due under any or all
Receivables be made directly to Buyer or its designee.
(d)
(e) If any Originator fails to perform any of its
obligations hereunder, Buyer (or its assigns) may (but shall not
be required to) perform, or cause performance of, such
obligation, and Buyer's (or such assigns') costs and expenses
incurred in connection therewith shall be payable by such
Originator as provided in Section 7.2. Each Originator
irrevocably authorizes Buyer (and its assigns) at any time and
from time to time in the sole discretion of Buyer (or its
assigns), and appoints Buyer (and its assigns) as its
attorney(es)-in-fact, to act on behalf of the Originator (i) to
execute on behalf of the Originator as debtor and to file
financing statements necessary or desirable in Buyer's (or its
assigns') sole discretion to perfect and to maintain the
perfection and priority of the interest of Buyer in the
Receivables and (ii) to file a carbon, photographic or other
reproduction of this Agreement or any financing statement with
respect to the Receivables as a financing statement in such
offices as Buyer (or its assigns) in their sole discretion deem
necessary or desirable to perfect and to maintain the perfection
and priority of Buyer's interests in the Receivables. This
appointment is coupled with an interest and is irrevocable.
(f)
(g) Section Confidentiality . Each Originator shall
maintain and shall cause each of its respective employees and
officers to maintain the confidentiality of this Agreement and
the other confidential proprietary information with respect to
the Agent and the Conduits and their respective businesses
obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated
herein, except that such Originator and its officers and
employees may disclose such information to such Originator's
external accountants and attorneys and as required by any
applicable law or order of any judicial or administrative
proceeding.
(h)
(i) In the event that any Originator provides to
Buyer, the Agent or any Purchaser information belonging to such
Originator, Buyer, the Agent and the Purchasers shall thereafter
maintain such information in confidence in accordance with the
standards of care and diligence that each utilizes in maintaining
its own confidential information. This obligation of confidence
shall not apply to such portions of the information which (i) are
disclosed to Buyer, the Agent, the Financial Institutions or
Conduits by each other, (ii) are disclosed by Buyer, the Agent or
the Purchasers to any prospective or actual assignee or
participant of any of them, (iii) are disclosed by the Agent to
any rating agency, Commercial Paper dealer or provider of a
surety, guaranty or credit or liquidity enhancement to Conduits
or any entity organized for the purpose of purchasing, or making
loans secured by, financial assets for which Bank One acts as the
administrative agent and to any officers, directors, employees,
outside accountants and attorneys of any of the foregoing, (iv)
are in the public domain, (v) hereafter become part of the public
domain without Buyer, the Agent or the Purchasers breaching their
obligation of confidence to such Originator, (vi) are previously
known by Buyer, the Agent or the Purchasers from some source
other than such Originator, (vii) are hereafter obtained by or
available to Buyer, the Agent or the Purchasers from a third
party who owes no obligation of confidence to such Originator
with respect to such information or through any other means other
than through disclosure by such Originator, (viii) are disclosed
with such Originators consent, (ix) must be disclosed to any
Governmental Authority regulating the activities of Buyer, the
Agent or the Purchasers, or (x) as may be required by law or
regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding.
(j)
1.2 Section Bankruptcy Petition . Each Originator and
each Buyer hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all
outstanding senior Indebtedness of each Conduit, it will not
institute against, or join any other Person in instituting
against, such Conduit any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any
state of the United States.
1.3
1.4 Section CHOICE OF LAW . ALL PROVISIONS OF THIS
AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
TEXAS.
1.5
1.6 Section CONSENT TO JURISDICTION . EACH ORIGINATOR
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH
ORIGINATOR PURSUANT TO THIS AGREEMENT AND EACH ORIGINATOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS
TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER (OR ITS ASSIGNS) TO
BRING PROCEEDINGS AGAINST ANY OR ALL OF THE ORIGINATORS IN THE
COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY
ORIGINATOR AGAINST BUYER (OR ITS ASSIGNS) OR ANY AFFILIATE
THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR
ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS
AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
1.7
1.8 Section WAIVER OF JURY TRIAL . EACH PARTY HERETO
HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY SUCH
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER OR THEREUNDER.
1.9
1.10 Section Integration; Binding Effect; Survival of
Terms .
1.11
(a) This Agreement, the Subordinated Note, the
Subscription Agreement and each Collection Account Agreement
contain the final and complete integration of all prior
expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
(b)
(c) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns (including any trustee in bank
ruptcy). This Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until
terminated in accordance with its terms; provided, however, that
the rights and remedies with respect to (i) any breach of any
representation and warranty made by the Originators pursuant to
Article II, (ii) the indemnification and payment provisions of
Article VII, and Section 8.5 shall be continuing and shall
survive any termination of this Agreement.
(d)
1.12 Section Counterparts; Severability; Section
References . This Agreement may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall
constitute one and the same Agreement. Any provisions of this
Agreement which are prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. Unless otherwise expressly indicated, all
references herein to "Article," "Section," "Schedule" or
"Exhibit" shall mean articles and sections of, and schedules and
exhibits to, this Agreement.
1.13
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date hereof.
K N ENERGY, INC.
By:/s/ Xxxx X. Xxxxxxx
Title: Vice President and Treasurer
Address:370 Xxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
KN RECEIVABLES CORPORATION
By: /s/ Xxxx X. Xxxxxxx
Title: Vice President and Treasurer
Address:One Xxxxx Center
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Exhibit I
Definitions
This is Exhibit I to the Agreement (as hereinafter
defined). As used in the Agreement and the Exhibits, Schedules
and Annexes thereto, capitalized terms have the meanings set
forth in this Exhibit I (such meanings to be equally applicable
to the singular and plural forms thereof). If a capitalized term
is used in the Agreement, or any Exhibit, Schedule or Annex
thereto, and not otherwise defined therein or in this Exhibit I,
such term shall have the meaning assigned thereto in Exhibit I to
the Purchase Agreement.
"Additional Originator Closing Date" means, as to any
Person, the first date upon which such Person becomes an
Additional Originator hereunder pursuant to Section 1.8 of this
Agreement.
"Additional Originator" means each Person who becomes a
party to this Agreement from time to time for the purpose of
selling its Receivables to Buyer pursuant to Section 1.8 and who
has not ceased to be a party to the Agreement and the Purchase
Agreement pursuant to Section 1.9 of this Agreement.
"Agent" has the meaning set forth in the Preliminary
Statements to the Agreement.
"Agreement" means the Receivables Sale Agreement dated
as of September 28, 1999, between Originator and Buyer, as the
same may be amended, restated or otherwise modified.
"Aggregate Reserves" has the definition set forth in
the Purchase Agreement.
"Amortization Date" means the earliest to occur of (i)
the Facility Termination Date, (ii) any Business Day so
designated by Originator or Buyer, and (ii) the Business Day
immediately prior to the occurrence of an Amortization Event set
forth in Section 6.1(d), (iii) the Business Day specified in a
written notice from Buyer to Originator following the occurrence
of any other Amortization Event, and (iv) the date which is 60
Business Days after Buyer's receipt of written notice from
Originator that it wishes to terminate the facility evidenced by
this Agreement.
"Amortization Event" has the meaning set forth in
Section 6.1 of the Agreement.
"Authorized Officer" means, with respect to each
Originator, its corporate controller or chief financial officer.
"Base Rate" means a rate per annum equal to the
corporate base rate, prime rate or base rate of interest, as
applicable, announced by the Reference Bank from time to time,
changing when and as such rate changes.
"Business Day" means any day on which banks are not
authorized or required to close in New York, New York or Chicago,
Illinois and The Depository Trust Company of New York is open for
business.
"Buyer" has the meaning set forth in the preamble to
the Agreement.
"Buyer Payment" means any payment from Buyer of the
Purchase Price for Receivables or any payment by Buyer of any
amount owed in respect of Subordinated Loans.
"Calculation Period" means each calendar month or
portion thereof which elapses during the term of the Agreement.
The first Calculation Period shall commence on the date of the
Purchase of Receivables hereunder and the final Calculation
Period shall terminate on the Amortization Date.
"Change of Control" means the acquisition by any
Person, or two or more Persons acting in concert, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of
30% or more of the outstanding shares of voting stock of KNEI.
"Collection Account" means each concentration account,
depositary account, lock-box account or similar account in which
any Collections are collected or deposited that is subject to a
Collection Agreement.
"Collection Agreement" means, in the case of any actual
or proposed Collection Account, an agreement in substantially the
form of Exhibit VI hereto.
"Collections" means, with respect to any Receivable,
all cash collections and other cash proceeds in respect of such
Receivable, including, without limitation, all cash proceeds of
Related Security with respect to such Receivable and all Deemed
Collections.
"Continuing Eligible Receivable" means, as of any date
of determination, a Receivable that (i) as of the date on which
it was sold to Buyer under the Agreement, met all eligibility
criteria in the definition of "Eligible Receivable" and (ii) as
of such date of determination, meets all eligibility criteria in
the definition of "Eligible Receivable."
"Credit and Collection Policy" means the applicable
Originator's credit and collection policies and practices
relating to Contracts and Receivables existing on the date hereof
and summarized in Exhibit V, as modified from time to time in
accordance with the Agreement.
"Deemed Collections" means the aggregate of all amounts
that Buyer shall be entitled to receive a Purchase Price Credit
for pursuant to Section 1.3 herein.
"Default Fee" means a per annum rate of interest equal
to the sum of (i) the Base Rate, plus (ii) 2% per annum, it being
understood that a Default Fee shall not accrue on a Receivable by
reason of such Receivable becoming a Defaulted Receivable.
"Defaulted Receivable" means a Receivable: (i) as to
which the Originator thereof has taken any action, or suffered
any event to occur, of the type described in Section 6.1(e);
(ii) as to which the Originator thereof, if a natural person, is
deceased, (iii) which, consistent with the Credit and Collection
Policy, would be written off Originator's books as uncollectible,
(iv) which has been identified by Originator as uncollectible in
accordance with the Credit and Collection Policy or (v) as to
which any payment, or part thereof, remains unpaid for sixty-one
(61) days or more from the original due date for such payment.
"Delinquent Receivable" means a Receivable as to which
any payment, or part thereof, remains unpaid for thirty-one (31)
days or more from the original due date for such payment.
"Dilutions" means, at any time, the aggregate amount of
reductions in the Outstanding Balances of the Receivables as a
result of any setoff, discount, rebate, trade-in credit, credit
memo, inter-company entry, adjustment or otherwise, other than
(i) cash Collections on account of the Receivables and
(ii) charge-offs.
"Discount Factor" means a percentage calculated to
provide Buyer with a reasonable return on its investment in the
Receivables after taking account of (i) the time value of money
based upon the anticipated dates of collection of the Receivables
and the cost to Buyer of financing its investment in the
Receivables during such period and (ii) the risk of nonpayment by
the Obligors. The Originators and Buyer may agree from time to
time to change the Discount Factor based on changes in one or
more of the items affecting the calculation thereof, provided
that any change to the Discount Factor shall take effect as of
the commencement of a Calculation Period, shall apply only
prospectively and shall not affect the Purchase Price payment in
respect of Purchase which occurred during any Calculation Period
ending prior to the Calculation Period during which the
Originators and Buyer agree to make such change.
"Eligible Receivable" has the meaning set forth in the
Purchase Agreement.
"FALCON" has the meaning set forth in the Preliminary
Statements to the Agreement.
"Federal Bankruptcy Code" means Title 11 of the United
States Code entitled "Bankruptcy", as amended and any successor
statute thereto.
"Initial Cutoff Date" has the meaning set forth in
Section 1.2(a) hereof.
"Intended Tax Characterization" means, for income tax
purposes, the characterization of the acquisition by the
Purchasers of Purchaser Interests under the Purchase Agreement as
a loan or loans by the Purchasers to Buyer secured by the
Receivables, the Related Security and the Collections.
"ISC" has the meaning set forth in the Preliminary
Statements to the Agreement.
"KNEI" means K N Energy, Inc., a Kansas corporation,
and its successors.
"Material Adverse Effect" means a material adverse
effect on (i) the financial condition or operations of the
applicable Originator and its Subsidiaries, (ii) the ability of
the applicable Originator to perform its obligations under the
Agreement or any other Transaction Document, (iii) the legality,
validity or enforceability of the Agreement or any other
Transaction Document, (iv) the applicable Originator's, Buyer's,
the Agent's or any Purchaser's interest in the Receivables
generally or in any significant portion of the Receivables, the
Related Security or Collections with respect thereto, or (v) the
collectibility of the Receivables generally or of any material
portion of the Receivables.
"Material Debt" has the meaning set forth in the
Receivables Purchase Agreement
"Material Financial Obligations" has the meaning set
forth in the Receivables Purchase Agreement.
"Material Subsidiary" has the meaning set forth in the
Receivables Purchase Agreement.
"Net Worth" means as of the last Business Day of each
Calculation Period preceding any date of determination, the
excess, if any, of (a) the aggregate Outstanding Balance of the
Receivables at such time, over (b) the sum of (i) the aggregate
Capital outstanding at such time, plus (ii) the aggregate
outstanding principal balance of the Subordinated Loans
(including any Subordinated Loan proposed to be made on the date
of determination).
"Original Balance" means, with respect to any
Receivable, the Outstanding Balance of such Receivable on the
date it was purchased by Buyer.
"Originator" has the meaning set forth in the preamble
to the Agreement.
"Potential Amortization Event" means an event which,
with the passage of time or the giving of notice, or both, would
constitute an Amortization Event.
"Purchase" means the purchase under the Agreement by
Buyer from Originator of the Receivables, the Related Security
and the Collections related thereto, together with all related
rights in connection therewith.
"Purchase Agreement" has the meaning set forth in the
Preliminary Statements to the Agreement.
"Purchase Price" means, with respect to any Purchase on
any date, the aggregate price to be paid by Buyer to an
Originator for such Purchase in accordance with Section 1.2 of
the Agreement for the Receivables, Collections and Related
Security being sold to Buyer on such date, which price shall
equal (i) the product of (x) the Original Balance of such
Receivables, multiplied by (y) one minus the Discount Factor then
in effect, minus (ii) any Purchase Price Credits to be credited
against the Purchase Price otherwise payable in accordance with
Section 1.3 of the Agreement.
"Purchase Price Credit" has the meaning set forth in
Section 1.3 of the Agreement.
"Purchased Receivables" means, collectively, all
Receivables existing on the date of the Purchase hereunder, and
all Receivables arising thereafter through and including the
Amortization Date, all Related Security associated therewith, all
Collections in respect of any Receivables or any Related
Security, all proceeds of the foregoing, and all Collection
Accounts and all balances, checks, money orders and other
instruments from time to time therein, which in each case have
been sold to Buyer hereunder.
"Purchaser" has the meaning set forth in the Purchase
Agreement.
"Receivable" means all accounts (as defined in Article
9.106 of the UCC) owed to an Originator (without giving effect to
any transfer or conveyance under the Agreement) or Buyer (after
giving effect to the transfers under the Agreement) constituting
an account under Article 9.102 of the UCC arising in connection
with the sale or the rendering of services by such Originator and
includes, without limitation, the obligation to pay any Finance
Charges with respect thereto. Indebtedness and other rights and
obligations arising from any one transaction, including, without
limitation, indebtedness and other rights and obligations
represented by an individual invoice, shall constitute a
Receivable separate from a Receivable consisting of the
indebtedness and other rights and obligations arising from any
other transaction.
"Related Security" means, with respect to any
Receivable:
(i) all of each Originator's interest
in inventory and goods (including returned or repossessed
inventory or goods), if any, the financing of which by such
Originator gave rise to such Receivable, and all insurance
contracts with respect thereto,
(i) all other security interests or liens and
property subject thereto from time to time, if any, purporting to
secure payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise, together with
all financing statements and security agreements describing any
collateral securing such Receivable,
(i) all guaranties, insurance and other
agreements or arrangements of whatever character from time to
time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise,
(i) all service contracts and other contracts
and agreements associated with such Receivable,
(i) all Records related to such Receivable, and
(i) all proceeds of any of the foregoing.
"Required Capital Amount" means the greater of (i)
$4,500,000 and (ii) 3% of the Net Receivables Balance at such
time.
"Settlement Date" means the 22nd day of each calendar
month.
"Subordinated Loan" has the meaning set forth in
Section 1.2(a) of the Agreement.
"Subordinated Note" means a promissory note in
substantially the form of Exhibit VIII hereto as more fully
described in Section 1.2 of the Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time
to time.
"Subscription Agreement" means that certain Stockholder
and Subscription Agreement, dated as of September 28, 1999,
between KNEI and Buyer, substantially in the form of Exhibit VII
hereto.
"Subsidiary" of a Person means (i) any corporation more
than 50% of the outstanding securities having ordinary voting
power of which shall at the time be owned or controlled, directly
or indirectly, by such Person or by one or more of its
Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, limited
liability company, joint venture or similar business organization
more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
"Transaction Documents" means, collectively, this
Agreement, the Purchase Agreement, each Collection Account
Agreement, the Subordinated Note, the Subscription Agreement and
all other instruments, documents and agreements executed and
delivered in connection herewith.
All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in
the State of Texas, and not specifically defined herein, are used
herein as defined in such Article 9.
Exhibit II
Places of Business; Locations of Records;
Federal Employer Identification Number(s); Other Names
Places of Business: One Xxxxx Center
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Locations of Records: (a) Same as above
(b) 000 Xxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Federal Employer Identification Number:
Corporate, Partnership Trade and Assumed Names:
Exhibit III
Lock-boxes; Collection Accounts; Collection Banks
Exhibit IV
Form of Compliance Certificate
This Compliance Certificate is furnished pursuant to
that certain Receivables Sale Agreement dated as of September 28,
1999, between K N Energy, Inc. and the Additional Originators
specified therein, ("Originators") and KN Receivables Corporation
(the "Agreement"). Capitalized terms used and not otherwise
defined herein are used with the meanings attributed thereto in
the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ______________ of Originator.
2. I have reviewed the terms of the Agreement and I
have made, or have caused to be made under my supervision, a
detailed review of the transactions and conditions of Originator
and its Subsidiaries during the accounting period covered by the
attached financial statements.
3. The examinations described in paragraph 2 did not
disclose, and I have no knowledge of, the existence of any
condition or event which constitutes an Amortization Event or a
Potential Amortization Event, as each such term is defined under
the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of
this Certificate, except as set forth below.
4. Described below are the exceptions, if any, to
paragraph 3 by listing, in detail, the nature of the condition or
event, the period during which it has existed and the action
which Originator has taken, is taking, or proposes to take with
respect to each such condition or event:
The foregoing certifications, together with the
computations set forth in Schedule I hereto and the financial
statements delivered with this Certificate in support hereof, are
made and delivered this day of , 19__.
______________________________
[Name]
Exhibit V
Credit and Collection Policy
Exhibit VI
Form of Subscription Agreement
STOCKHOLDER AND SUBSCRIPTION AGREEMENT
THIS STOCKHOLDER AND SUBSCRIPTION AGREEMENT (this
"Agreement"), dated as of September 28, 1999, is entered into by
and between KN Receivables Corporation, a Delaware corporation,
("SPV") and K N Energy, INC., a Kansas corporation ("Parent").
Except as otherwise specifically provided herein, capitalized
terms used in this Agreement have the meanings ascribed thereto
in the Receivables Sale Agreement, dated as of even date
herewith, between SPV and Parent (as amended, restated,
supplemented or otherwise modified from time to time, the "Sale
Agreement").
RECITALS
A. SPV has been organized under the laws of the State
of Delaware for the purpose of, among other things, purchasing,
holding, financing, receiving and transferring accounts
receivable and related assets originated or otherwise held by
Parent and/or its Subsidiaries.
B. Contemporaneously with the execution and delivery of
this Agreement: (i) Parent, various Additional Originators and
SPV have entered into the Sale Agreement pursuant to which Parent
and such Additional Originators have, from and after the Purchase
date thereunder and prior to the termination date specified
therein, sold all of their Receivables, Collections and Related
Security to SPV; and (ii) SPV, Parent, as Servicer, certain
financial institutions party thereto as "Purchasers," and Bank
One, NA, as the "Agent," have entered into a Receivables Purchase
Agreement (as amended, restated, supplemented or otherwise
modified from time to time, the "Purchase Agreement") pursuant to
which SPV will sell "Purchaser Interests" to the Agent for the
benefit of the Purchasers.
C. SPV desires to sell shares of its capital stock to
Parent, and Parent desires to purchase such shares, on the terms
set forth in this Agreement.
3
NOW, THEREFORE, SPV and Parent agree as follows:
1. Section Purchase and Sale of Capital Stock.
Parent hereby purchases from SPV, and SPV hereby sells to Parent,
1,000 shares of common stock, par value $1.00 per share, of SPV
(the "Common Stock") for the Stock Purchase Price set forth in
Section 2(a). The shares of Common Stock being purchased under
this Agreement are referred to herein as the "Shares." Within
three (3) Business Days from the date hereof, SPV shall deliver
to Parent a certificate registered in Parent's name representing
the Shares.
2.
3. Section Consideration for Shares and Capital
Contributions.
4.
(a) Consideration for Shares. To induce SPV to
enter into the Sale Agreement and to enable SPV to fund its
obligations thereunder by consummating the transactions
contemplated by the Purchase Agreement, and in reliance upon the
representations and warranties set forth herein, Parent hereby
pays to SPV on the date hereof the sum of $1,000 (the "Stock
Purchase Price") in consideration of the purchase of the Shares.
The Stock Purchase Price shall take the form of a transfer of
cash, except that Parent may, in lieu of cash payment of the
Stock Purchase Price, offset the amount of the Stock Purchase
Price against the purchase price otherwise payable by SPV to
Parent on the Purchase date pursuant to the Sale Agreement.
(b)
(c) Contributions After Initial Closing Date.
From time to time Parent may make additional capital
contributions to SPV. All such contributions shall take the form
of a cash transfer, except that SPV agrees to, in lieu of cash
payment thereof, offset the amount of such contributions against
the purchase price for Receivables otherwise payable by SPV to
Parent on the date of such capital contributions. All of the
Receivables so paid for through such offset shall constitute
purchased Receivables within the meaning of the Sale Agreement
and shall be subject to all of the representations, warranties
and indemnities otherwise made thereunder. It is expressly
understood and agreed that Parent has no obligations under this
Agreement or otherwise to make any capital contributions from and
after payment of the Stock Purchase Price.
(d)
5. Section Representations and Warranties of SPV.
SPV represents and warrants to Parent as follows:
6.
(a) SPV is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to
carry on its business as proposed to be conducted on the date
hereof.
(b)
(c) SPV has all requisite legal and corporate
power to enter into this Agreement, to issue the Shares and to
perform its other obligations under this Agreement.
(d)
(e) Upon receipt by SPV of the Stock Purchase
Price and the issuance of the Shares to Parent, the Shares will
be duly authorized, validly issued, fully paid and nonassessable.
(f)
(g) SPV has taken all corporate action necessary
for its authorization, execution and delivery of, and, its
performance under, this Agreement.
(h)
(i) This Agreement constitutes a legally valid
and binding obligation of SPV, enforceable against SPV in
accordance with its terms, except that 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.
(j)
(k) SPV has filed its Certificate of
Incorporation in the form attached hereto as Annex A with the
Secretary of State of Delaware and (ii) adopted By-laws in the
form attached hereto as Annex B.
(l)
(m) The issuance of the Shares by SPV hereunder
is legally permitted by all laws and regulations to which SPV is
subject.
(n)
7. Section Representations and Warranties of Parent.
Parent represents and warrants to SPV as follows:
8.
(a) Parent is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Kansas, and has all requisite corporate power and authority to
carry on its business as conducted on the date hereof.
(b)
(c) Parent has all requisite legal and corporate
power to enter into this Agreement, to purchase the Shares and to
perform its other obligations under this Agreement.
(d)
(e) Parent has taken all corporate action
necessary for its authorization, execution and delivery of, and
its performance under, this Agreement.
(f)
(g) This Agreement constitutes a legally valid
and binding obligation of Parent, enforceable against Parent in
accordance with its terms, except that 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.
(h)
(i) Parent is purchasing the Shares for
investment for its own account, not as a nominee or agent, and
not with a view to any distribution of any part thereof. Parent
has no current intention of selling, granting a participation in,
or otherwise distributing, the shares.
(j)
(k) Parent understands that the Shares have not
been registered under the Securities Act of 1933, as amended, or
under any other Federal or state law, and that SPV does not
contemplate such a registration.
(l)
(m) Parent has such knowledge, sophistication and
experience in financial and business matters that it is capable
of evaluating the merits and risks of the transactions
contemplated by this Agreement, and has made such investigations
in connection herewith as have been deemed necessary or desirable
to make such evaluation.
(n)
(o) The purchase of the Shares by Parent is
legally permitted by all laws and regulations to which Parent is
subject.
(p)
9. Section Restrictions on Transfer Imposed by the
Act; Legend.
10.
(a) Legend. Each certificate representing any
Shares shall be endorsed with the following legend:
(b)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES ACT. SUCH SECURITIES SHALL
NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE
TRANSFERRED OR DISPOSED OF ABSENT SUCH REGISTRATION, UNLESS,
IN THE OPINION OF THE CORPORATION'S COUNSEL, SUCH
REGISTRATION IS NOT REQUIRED. IN ADDITION, THESE SECURITIES
HAVE BEEN ISSUED OR SOLD IN RELIANCE ON SECTION 4(2) OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER
SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH
ACT.
(a) Registration of Transfers. SPV need not
register a transfer of any Shares unless the conditions specified
in the legend set forth in Section 5(a) hereof are satisfied.
SPV may also instruct its transfer agent (which may be SPV) not
to register the transfer of any Shares unless the conditions
specified in the legend set forth in Section 5(a) hereof are
satisfied.
(b)
2. Section Agreement to Vote. Parent hereby agrees
and covenants to vote all of the shares of Common Stock now or
hereafter owned by it, whether beneficially or otherwise, as is
necessary at a meeting of stockholders of SPV, or by written
consent in lieu of any such meeting, to cause to be elected to,
and maintained on, SPV's board of directors at least one (1)
person meeting the qualifications of an Independent Director and
selected in accordance with the provisions of the Certificate of
Incorporation and By-Laws of SPV.
3.
4. Section Successors and Assigns. Each party agrees
that it will not assign, sell, transfer, delegate, or otherwise
dispose of, whether voluntarily or involuntarily, or by operation
of law, any right or obligation under this Agreement except in
connection with a transfer of Shares in compliance with the terms
and conditions hereof, as contemplated by Section 5(b) above, or
otherwise in accordance with the terms hereof. Any purported
assignment, transfer or delegation in violation of this Section 7
shall be null and void ab initio. Subject to the foregoing
limits on assignment and delegation and except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the parties hereto, their respective heirs,
legatees, executors, administrators, assignees and legal
successors.
5.
6. Section Amendments and Waivers. Any term hereof
may be amended and the observance of any term hereof may be
waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of
SPV and Parent. Any amendment or waiver so effected shall be
binding upon SPV and Parent.
7.
8. Section Further Acts. Each party agrees to
perform any further acts and execute and deliver any document
which may be reasonably necessary to carry out the provisions of
this Agreement.
9.
10. Section Counterparts. This Agreement may be
executed in any number of counterparts, and all of such
counterparts together will be deemed one instrument.
11.
12. Section Notices. Any and all notices,
acceptances, statements and other communications to Parent in
connection herewith shall be in writing, delivered personally, by
facsimile or certified mail, return receipt requested, and shall
be addressed to the address of Parent indicated on the stock
transfer register of SPV or, if no address is so indicated, to
the address provided to SPV pursuant to the Sale Agreement unless
changed by written notice to SPV or its successor.
13.
14. Section GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE
STATE OF ILLINOIS, EXCEPT AND TO THE EXTENT THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE IS APPLICABLE.
15.
16. Section Entire Agreement. This Agreement,
together with the Sale Agreement and the documents expressly to
be delivered in connection therewith, constitute the entire
understanding and agreement between the parties hereto with
subject matter hereof and thereof.
17.
18. Section Severability of this Agreement. In case
any provision of this Agreement shall be invalid or
unenforceable, the validity, legality and enforceability of the
remaining shall not in any way be affected or impaired thereby.
19.
IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first above written.
1.
2.
1. KN RECEIVABLES CORPORATION
By:
Name:
Title:
K N ENERGY, INC.
By:
Name:
Title:
ANNEX A to Subscription Agreement
Certificate of Incorporation
Annex B to Subscription Agreement
By-Laws
Exhibit VII
Form of Subordinated Note
SUBORDINATED NOTE
______________, 1999
1. Note. FOR VALUE RECEIVED, the undersigned, KN
Receivables Corporation, a Delaware corporation ("SPV"), hereby
unconditionally promises to pay to the order of K N Energy, Inc.,
a Kansas corporation ("Lender"), in lawful money of the United
States of America and in immediately available funds, on the date
following the Amortization Date which is one year and one day
after the date on which (i) the Outstanding Balance of all
Receivables (other than Receivables which are uncollectible on
account of insolvency, bankruptcy or lack of creditworthiness of
the related Obligor) sold under the "Sale Agreement" referred to
below has been reduced to zero and (ii) Lender and each other
Originator under the Sale Agreement has paid to Buyer all
indemnities, adjustments and other amounts which may be owed
thereunder in connection with the Purchases (the "Collection
Date"), the aggregate unpaid principal sum outstanding of all
"Subordinated Loans" made from time to time by Lender to SPV
pursuant to and in accordance with the terms of that certain
Receivables Sale Agreement dated as of September 28, 1999 between
the Lender and other Originators and SPV (as amended, restated,
supplemented or otherwise modified from time to time, the "Sale
Agreement"). Reference to Section 1.2 of the Sale Agreement is
hereby made for a statement of the terms and conditions under
which the loans evidenced hereby have been and will be made. All
terms which are capitalized and used herein and which are not
otherwise specifically defined herein shall have the meanings
ascribed to such terms in the Sale Agreement.
2. Interest. SPV further promises to pay interest on
the outstanding unpaid principal amount hereof from the date
hereof until payment in full hereof at a rate equal to the Base
Rate; provided, however, that if SPV shall default in the payment
of any principal hereof, SPV promises to pay, on demand, interest
at the rate of the Base Rate plus 2.00% per annum on any such
unpaid amounts, from the date such payment is due to the date of
actual payment. Interest shall be payable on the first Business
Day of each month in arrears; provided, however, that SPV may
elect on the date any interest payment is due hereunder to defer
such payment and upon such election the amount of interest due
but unpaid on such date shall constitute principal under this
Subordinated Note. The outstanding principal of any loan made
under this Subordinated Note shall be due and payable on the
Collection Date and may be repaid or prepaid at any time without
premium or penalty.
3. Principal Payments. Lender is authorized and
directed by SPV to enter on the grid attached hereto, or, at its
option, in its books and records, the date and amount of each
loan made by it which is evidenced by this Subordinated Note and
the amount of each payment of principal made by SPV, and absent
manifest error, such entries shall constitute prima facie
evidence of the accuracy of the information so entered; provided
that neither the failure of Lender to make any such entry or any
error therein shall expand, limit or affect the obligations of
SPV hereunder.
4. Subordination. The indebtedness evidenced by this
Subordinated Note is subordinated to the prior payment in full of
all of SPV's recourse obligations under that certain Receivables
Purchase Agreement dated as of September 28, 1999 by and among
SPV, various "Purchasers" from time to time party thereto, and
Bank One, NA, as the "Agent" (as amended, restated, supplemented
or otherwise modified from time to time, the "Purchase
Agreement"). The subordination provisions contained herein are
for the direct benefit of, and may be enforced by, the Agent and
the Purchasers and/or any of their respective assignees
(collectively, the "Senior Claimants") under the Purchase
Agreement. Until the date on which all "Capital" outstanding
under the Purchase Agreement has been repaid in full and all
other obligations of SPV and/or the Servicer thereunder and under
the "Fee Letter" referenced therein (all such obligations,
collectively, the "Senior Claim") have been indefeasibly paid and
satisfied in full, Lender shall not demand, accelerate, xxx for,
take, receive or accept from SPV, directly or indirectly, in cash
or other property or by set-off or any other manner (including,
without limitation, from or by way of collateral) any payment or
security of all or any of the indebtedness under this
Subordinated Note or exercise any remedies or take any action or
proceeding to enforce the same; provided, however, that (i)
Lender hereby agrees that it will not institute against SPV any
proceeding of the type described in Section 5.1(d) of the Sale
Agreement unless and until the Collection Date has occurred and
(ii) nothing in this paragraph shall restrict SPV from paying, or
Lender from requesting, any payments under this Subordinated Note
so long as SPV is not required under the Purchase Agreement to
set aside for the benefit of, or otherwise pay over to, the funds
used for such payments to any of the Senior Claimants pursuant to
the Purchase Agreement and further provided that the making of
such payment would not otherwise violate the terms and provisions
of the Purchase Agreement. Should any payment, distribution or
security or proceeds thereof be received by Lender in violation
of the immediately preceding sentence, Lender agrees that such
payment shall be segregated, received and held in trust for the
benefit of, and deemed to be the property of, and shall be
immediately paid over and delivered to the Agent for the benefit
of the Senior Claimants.
5. Bankruptcy; Insolvency. Upon the occurrence of
any proceeding of the type described in Section 5.1(d) of the
Sale Agreement involving SPV as debtor, then and in any such
event the Senior Claimants shall receive payment in full of all
amounts due or to become due on or in respect of Capital and the
Senior Claim (including "CP Costs" and "Yield" as defined and as
accruing under the Purchase Agreement after the commencement of
any such proceeding, whether or not any or all of such CP Costs
or Yield is an allowable claim in any such proceeding) before
Lender is entitled to receive payment on account of this
Subordinated Note, and to that end, any payment or distribution
of assets of SPV of any kind or character, whether in cash,
securities or other property, in any applicable insolvency
proceeding, which would otherwise be payable to or deliverable
upon or with respect to any or all indebtedness under this
Subordinated Note, is hereby assigned to and shall be paid or
delivered by the Person making such payment or delivery (whether
a trustee in bankruptcy, a receiver, custodian or liquidating
trustee or otherwise) directly to the Agent for application to,
or as collateral for the payment of, the Senior Claim until such
Senior Claim shall have been paid in full and satisfied.
6. Amendments. This Subordinated Note shall not be
amended or modified except in accordance with Section 7.1 of the
Sale Agreement. The terms of this Subordinated Note may not be
amended or otherwise modified without the prior written consent
of the Agent for the benefit of the Purchasers.
7. GOVERNING LAW. THIS SUBORDINATED NOTE HAS BEEN
MADE AND DELIVERED AT CHICAGO, ILLINOIS, AND SHALL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED
IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF
ILLINOIS. WHEREVER POSSIBLE EACH PROVISION OF THIS SUBORDINATED
NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS
SUBORDINATED NOTE SHALL BE PROHIBITED BY OR INVALID UNDER
APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE
REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
SUBORDINATED NOTE.
8. Waivers. All parties hereto, whether as makers,
endorsers, or otherwise, severally waive presentment for payment,
demand, protest and notice of dishonor. Lender additionally
expressly waives all notice of the acceptance by any Senior
Claimant of the subordination and other provisions of this
Subordinated Note and expressly waives reliance by any Senior
Claimant upon the subordination and other provisions herein
provided.
9. Assignment. This Subordinated Note may not be
assigned, pledged or otherwise transferred to any party other
than Lender without the prior written consent of the Agent, and
any such attempted transfer shall be void.
10. Sharing of Amounts Received Pursuant to
Subordinated Note. Lender will share all amounts received
pursuant to this Subordinated Note in accordance with Section 1.5
of the Sale Agreement.
KN RECEIVABLES CORPORATION
By:_____________________________
Title:
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount
Amount of of Unpaid
Subordinated Principal Principal Notation
Date Loan Paid Balance made by
EXHIBIT VIII
FORM OF JOINDER SUPPLEMENT
JOINDER SUPPLEMENT
(the "Company"), a , hereby joins in the
Receivables Sale Agreement ("Sale Agreement"), dated as of
__________, by and between K N Energy, Inc., certain other
originators as specified therein and KN Receivables Corporation
(as amended, restated, supplemented or otherwise modified from
time to time). Except as otherwise specifically provided herein,
capitalized terms used in this joinder have the meanings ascribed
thereto in the Sale Agreement.
The Company agrees to be bound by the terms of, and to
perform all of the obligations of an Originator and Additional
Originator under, the Sale Agreement and all related agreements.
For purposes of the Sale Agreement, the Company's chief executive
office, address for notices, primary location of records,
Collection Accounts and Federal Employer Identification Number
are as set forth below. In the past five years, the Company has
not used any corporate names, trade names or assumed names other
than those set forth below. The "Additional Originator Closing
Date" for the Company shall be _________________, ______.
Dated:
---------------------------
By:
Its:
Chief Executive Office:
Address for Notices:
Primary Location of Records:
Federal Employer Identification Num-
ber:
Collection Accounts:
Trade/Assumed Names:
Acknowledged and agreed to this _____ day of
___________, 1999 that the Performance Guaranty will apply to
obligations of this Additional Originator.
K N ENERGY, INC., as
Performance Guarantor
By:___________________________________
Name:
Title:
Address:
EXHIBIT IX
FORM OF PERFORMANCE GUARANTY
PERFORMANCE GUARANTY
This Performance Guaranty (the "Guaranty"), dated as of
, 1999 is executed by K N Energy, Inc. (the
"Performance Guarantor") in favor of the Beneficiaries defined
below.
Recitals
The Performance Guarantor and the Additional
Originators as specified and defined therein (each an
"Originator", collectively "Originators") have entered into a
Receivables Sale Agreement with KN Receivables Corporation
("KRC") dated as of September 28, 1999 (as amended, modified,
renewed or extended and in effect from time to time, the "Sale
Agreement"), pursuant to which the Originators, subject to the
terms and conditions contained therein, are selling their
respective rights, titles and interests in Receivables to KRC.
Furthermore, KRC has entered into a Receivables
Purchase Agreement dated as of September 28, 1999 (as amended,
modified, renewed or extended and in effect from time to time,
the "Purchase Agreement" and together with the Sale Agreement,
the "Agreements"), with the Purchasers party thereto and Bank
One, NA, as Agent for such Purchasers, pursuant to which the
Purchasers, subject to the terms and conditions contained
therein, may purchase interests in KRC's Receivables.
KRC is a Subsidiary of the Performance Guarantor and
the Performance Guarantor is expected to receive substantial
direct and indirect benefits from the sale of Receivables by the
Originators to KRC pursuant to the Sale Agreement and the
purchase of interests in the Receivables of KRC by the Purchasers
pursuant to the Purchase Agreement (which benefits are hereby
acknowledged).
As an inducement for the Purchasers to purchase
interests in KRC's Receivables, the Performance Guarantor has
agreed to guaranty the due and punctual performance by all
Additional Originators of their obligations under the Sale
Agreement and the Purchase Agreement.
It is a condition precedent to the Purchasers agreeing
to purchase interests in KRC's Receivables pursuant to the
Purchase Agreement that the Performance Guarantor execute and
deliver to the Agent a performance guaranty in favor of the Agent
and the Purchasers (each, a "Beneficiary" and together, the
"Beneficiaries") substantially in the form hereof.
The Performance Guarantor wishes to guaranty the due
and punctual performance by each Additional Originator of its
obligations to the Beneficiaries under or in respect of the Sale
Agreement and the Purchase Agreement, as provided herein.
NOW, THEREFORE, the Performance Guarantor hereby agrees
as follows:
1. Definitions. As used herein:
"Obligations" means, collectively, (i) all covenants,
agreements, terms, conditions and indemnities to be performed and
observed by the Additional Originators under and pursuant to the
Sale Agreement and each other document executed and delivered by
the Additional Originators pursuant to the Sale Agreement,
including, without limitation, the due and punctual payment of
all sums which are or may become due and owing by the Additional
Originators under the Sale Agreement or the Fee Letter whether
for Discount, Funding Charges, fees, expenses (including counsel
fees), indemnified amounts or otherwise, whether upon any
termination or for any other reason and (ii) all obligations of
the Additional Originators under the Purchase Agreement.
All capitalized terms used herein, and not otherwise
defined herein, shall have their respective meanings as defined
in the Agreements.
2. Guaranty of Performance of Obligations. The
Performance Guarantor hereby guarantees to the Beneficiaries the
full and punctual payment and performance by the Additional
Originators of the Obligations. This Guaranty is an absolute,
unconditional and continuing guaranty of the full and punctual
performance of all of the Obligations of the Additional
Originators under the Agreements and each other document executed
and delivered by the Additional Originators pursuant to the
Agreements and is in no way conditioned upon any requirement that
the Beneficiaries first attempt to collect any amounts owing by
the Additional Originators to the Purchasers from KRC or resort
to any collateral security, any balance of any deposit account or
credit on the books of any Purchaser in favor of the Additional
Originators or any other Person or other means of obtaining
payment. Should any Originator default in the payment or
performance of any of the Obligations, the Agent or any one of
the Purchasers may cause the immediate performance by the
Performance Guarantor of the Obligations and cause any such
payment Obligations to become forthwith due and payable to the
Beneficiaries, without demand or notice of any nature (other than
as expressly provided herein), all of which are expressly waived
by the Performance Guarantor. Notwithstanding the foregoing,
this Guaranty is not a guarantee of the collection of any of the
Receivables and the Performance Guarantor shall not be
responsible for any Obligations to the extent the failure to
perform such Obligations by the Additional Originators results
from Receivables being uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related
Obligor or any action or inaction of such Obligor (other than any
arising from disputes, claims, offsets, setoffs, defenses or
other matters as more fully set forth in subclause (v) of Section
9.1 of the Purchase Agreement); provided that nothing herein
shall relieve the Additional Originators from performing in full
their Obligations under the Purchase Agreement or the Performance
Guarantor of its undertaking hereunder with respect to the full
performance of such duties.
3. Performance Guarantor's Further Agreements to Pay.
The Performance Guarantor further agrees, as the principal
obligor and not as a guarantor only, to pay to the Beneficiaries,
forthwith upon 30 days following written notice in funds
immediately available to the Beneficiaries, all reasonable and
documented out-of-pocket costs and expenses (including court
costs and legal expenses) incurred or expended by such
Beneficiaries in connection with enforcement of this Guaranty and
together with interest on amounts recoverable under this Guaranty
from the time when such amounts become due until payment, at a
rate of interest (computed for the actual number of days elapsed
based on a 360 day year) equal to the Base Rate plus 2% per
annum, such rate of interest changing when and as the Base Rate
changes.
4. Waivers by Performance Guarantor; Agent's and
Purchasers' Freedom to Act. The Performance Guarantor waives
notice of acceptance of this Guaranty, notice of any action taken
or omitted by any Beneficiary in reliance on this Guaranty, and
any requirement that the Beneficiaries be diligent or prompt in
making demands under this Guaranty, giving notice of any
Amortization Event, other default or omission by the Additional
Originators or asserting any other rights of any Beneficiary
under this Guaranty. The Performance Guarantor warrants that it
has adequate means to obtain from the Additional Originators, on
a continuing basis, information concerning the financial
condition of the Additional Originators, and that it is not
relying on the Agent or Beneficiaries to provide such
information, now or in the future. The Performance Guarantor
also irrevocably waives all defenses (i) that at any time may be
available in respect of the Obligations by virtue of any statute
of limitations, valuation, stay, moratorium law or other similar
law now or hereafter in effect or (ii) that arise under the law
of suretyship, including impairment of collateral. Each of the
Beneficiaries shall be at liberty, without giving notice to or
obtaining the assent of the Performance Guarantor and without
relieving the Performance Guarantor of any liability under this
Guaranty, to deal with the Additional Originators and with each
other party who now is or after the date hereof becomes liable in
any manner for any of the Obligations, in such manner as any
Beneficiary in its sole discretion deems fit, and to this end the
Performance Guarantor agrees that the validity and enforceability
of this Guaranty, including without limitation, the provisions of
7 hereof, shall not be impaired or affected by any of the
following: (a) any extension, modification or renewal of, or
indulgence with respect to, or substitutions for, the Obligations
or any part thereof or any agreement relating thereto at any
time; (b) any failure or omission to enforce any right, power or
remedy with respect to the Obligations or any part thereof or any
agreement relating thereto, or any collateral securing the
Obligations or any part thereof; (c) any waiver of any right,
power or remedy or of any Amortization Event or default with
respect to the Obligations or any part thereof or any agreement
relating thereto; (d) any release, surrender, compromise,
settlement, waiver, subordination or modification, with or
without consideration, of any other obligation of any person or
entity with respect to the Obligations or any part thereof; (e)
the enforceability or validity of the Obligations or any part
thereof or the genuineness, enforceability or validity of any
agreement relating thereto or with respect to the Obligations or
any part thereof; (f) the application of payments received from
any source to the payment of any payment Obligations of the
Additional Originators or any part thereof or amounts which are
not covered by this Guaranty even though the Beneficiaries might
lawfully have elected to apply such payments to any part or all
of the payment Obligations of the Additional Originators or to
amounts which are not covered by this Guaranty; (g) the existence
of any claim, setoff or other rights which the Performance
Guarantor may have at any time against the Additional Originators
in connection herewith or any unrelated transaction; (h) any
assignment or transfer of the Obligations or any part thereof; or
(i) any failure on the part of the Additional Originators to
perform or comply with any term of the Agreements or any other
document executed in connection therewith or delivered
thereunder, all whether or not the Performance Guarantor shall
have had notice or knowledge of any act or omission referred to
in the foregoing clauses (a) through (i) of this Section.
5. Unenforceability of Obligations Against the
Additional Originators. Notwithstanding (a) any change of
ownership of the Additional Originators or the insolvency,
bankruptcy or any other change in the legal status of the
Additional Originators; (b) the change in or the imposition of
any law, decree, regulation or other governmental act which does
or might impair, delay or in any way affect the validity,
enforceability or the payment when due of the Obligations; (c)
the failure of the Additional Originators or the Performance
Guarantor to maintain in full force, validity or effect or to
obtain or renew when required all governmental and other
approvals, licenses or consents required in connection with the
Obligations or this Guaranty, or to take any other action
required in connection with the performance of all obligations
pursuant to the Obligations or this Guaranty; or (d) if any of
the moneys included in the Obligations have become irrecoverable
from the Additional Originators for any other reason other than
final payment in full of the payment Obligations in accordance
with their terms, this Guaranty shall nevertheless be binding on
the Performance Guarantor. This Guaranty shall be in addition to
any other guaranty or other security for the Obligations, and it
shall not be rendered unenforceable by the invalidity of any such
other guaranty or security. In the event that acceleration of
the time for payment of any of the Obligations is stayed upon the
insolvency, bankruptcy or reorganization of the Additional
Originators or for any other reason with respect to the
Additional Originators, all such amounts then due and owing with
respect to the Obligations under the terms of the Agreements, or
any other agreement evidencing, securing or otherwise executed in
connection with the Obligations, shall be immediately due and
payable by the Performance Guarantor.
6. Representations and Warranties.
6.1. Binding Effect. The Performance Guarantor has
the corporate power and authority and legal right to execute and
deliver this Guaranty, perform its obligations hereunder and
consummate the transactions therein contemplated. The execution
and delivery by the Performance Guarantor of this Guaranty, the
performance of its obligations and consummation of the
transactions contemplated hereunder have been duly authorized by
proper corporate proceedings, and this Guaranty constitutes the
legal, valid and binding obligation of the Performance Guarantor
enforceable against the Performance Guarantor in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general
applicability and by the effect of general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law).
6.2. No Conflict; Government Consent. The execution,
delivery and performance by the Performance Guarantor of this
Guaranty are within its corporate powers, have been duly
authorized by all necessary corporate action, do not contravene
or violate (i) its certificate of incorporation or by-laws, (ii)
any law, rule or regulation applicable to it the contravention or
violation of which would or could reasonably be expected to have
a Material Adverse Effect, (iii) any restrictions under any
material agreement, contract or instrument to which it is a party
or by which it or any of its property is bound, the contravention
or violation of which would or could reasonably be expected to
have a Material Adverse Effect or (iv) any material order, writ,
judgment, award, injunction or decree binding on or affecting it
or its property, the contravention or violation of which would or
could reasonably be expected to have a Material Adverse Effect
and do not result in the creation or imposition of any Adverse
Claim on assets of the Performance Guarantor (except as created
under the Transaction Documents).
7. Subrogation; Subordination. Until the Obligations
are paid in full, the Performance Guarantor shall not enforce or
otherwise exercise any right of subrogation to any of the rights
of any Purchaser against the Additional Originators and,
notwithstanding anything to the contrary contained herein, until
the Obligations are paid in full, hereby waives all rights of
subrogation (whether contractual, under Section 509 of the United
States Bankruptcy Code, at law or in equity or otherwise) to the
claims of the Beneficiaries against the Additional Originators
and all contractual, statutory or legal or equitable rights of
contribution, reimbursement, indemnification and similar rights
and "claims" (as that term is defined in the United States
Bankruptcy Code) which the Performance Guarantor might now have
or hereafter acquire against the Additional Originators that
arises from the existence or performance of the Performance
Guarantor's obligations hereunder; the Performance Guarantor will
not claim any setoff, recoupment or counterclaim against the
Additional Originators in respect of any liability of the
Performance Guarantor to the Additional Originators; and the
Performance Guarantor waives any benefit of and any right to
participate in any collateral security which may be held by the
Beneficiaries. The payment of any amounts due with respect to
any indebtedness of the Additional Originators now or thereafter
owed to the Performance Guarantor is hereby subordinated to the
prior payment in full of all of the Obligations; provided, that
as long as no Amortization Event has occurred and is continuing,
the Performance Guarantor shall be permitted to receive any and
all payments required under such indebtedness without respect to
such subordination. The Performance Guarantor agrees that, after
the occurrence of any default in the payment or performance of
any of the Obligations, the Performance Guarantor will not
demand, xxx for or otherwise attempt to collect any such
indebtedness of the Additional Originators to the Performance
Guarantor until all of the Obligations shall have been paid and
performed in full. If, notwithstanding the foregoing sentence,
the Performance Guarantor shall collect, enforce or receive any
amounts in respect of such indebtedness while any Obligations are
still unperformed or outstanding, such amounts shall be
collected, enforced and received by the Performance Guarantor as
trustee for the Beneficiaries and be paid over to the Agent on
account of the Obligations without affecting in any manner the
liability of the Performance Guarantor under the other provisions
of this Guaranty. The provisions of this 7 shall be
supplemental to and not in derogation of any rights and remedies
of the Beneficiaries under any separate subordination agreement
which the Beneficiaries may at any time and from time to time
enter into with the Performance Guarantor.
8. Termination of Guaranty. The Performance
Guarantor's obligations hereunder shall continue in full force
and effect until all Obligations are finally paid and satisfied
in full and the Purchase Agreement is terminated, provided that
this Guaranty shall continue to be effective or shall be
reinstated, as the case may be, if at any time payment or other
satisfaction of any of the Obligations is rescinded or must
otherwise be restored or returned upon the bankruptcy,
insolvency, or reorganization of the Additional Originators or
otherwise, as though such payment had not been made or other
satisfaction occurred, whether or not the Agent is in possession
of this Guaranty. No invalidity, irregularity or
unenforceability by reason of the Bankruptcy Code or any
insolvency or other similar law, or any law or order of any
government or agency thereof purporting to reduce, amend or
otherwise affect the Obligations shall impair, affect, be a
defense to or claim against the obligations of the Performance
Guarantor under this Guaranty.
9. Effect of Bankruptcy. This Guaranty shall survive
the insolvency of the Additional Originators and the commencement
of any case or proceeding by or against the Additional
Originators under the federal Bankruptcy Code or other federal,
state or other applicable bankruptcy, insolvency or
reorganization statutes. No automatic stay under the federal
Bankruptcy Code with respect to the Additional Originators or
other federal, state or other applicable bankruptcy, insolvency
or reorganization statutes to which the Additional Originators is
subject shall postpone the obligations of the Performance
Guarantor under this Guaranty.
10. Taxes. All payments made by the Performance
Guarantor hereunder shall be made without withholding for or on
account of any present or future Taxes unless otherwise required
by law. If any such withholding is so required, the Performance
Guarantor shall make the withholding, pay the amount withheld to
the appropriate authority before penalties attach thereto or
interest accrues thereon and pay such additional amount as may be
necessary to ensure that the net amount actually received by the
Person entitled to receive such payment free and clear of such
Taxes (including such Taxes on such additional amount), and all
penalties or interest thereon, is equal to the amount that such
Person(as the case may be) would have received had such
withholding not been made, except to the extent such withholding
(x) is in payment of, and serves as an effective credit for,
Excluded Taxes payable by such Person(as the case may be) or
(y) would not have been imposed if such Person pays any such
Taxes, penalties or interest for which the Performance Guarantor
is responsible, the Performance Guarantor shall reimburse such
Person for that payment in accordance with Section 7.5 of the
Sale Agreement. If the Performance Guarantor pays any such Taxes,
penalties or interest, it shall deliver official tax receipts (or
certified copies thereof) evidencing that payment to such Person
on whose account such withholding was made (with a copy to the
Agent if not the recipient of the original) on or before the
thirtieth day after payment (or as soon thereafter as the
Performance Guarantor is able to obtain such receipts).
11. Further Assurances. The Performance Guarantor
agrees to do all such things and execute all such documents as
the Beneficiaries may reasonably consider necessary or desirable
to give full effect to this Guaranty and to perfect and preserve
the rights and powers of the Beneficiaries hereunder.
12. Successors and Assigns. This Guaranty shall be
binding upon the Performance Guarantor, its successors and
assigns, and shall inure to the benefit of and be enforceable by
the Beneficiaries and their successors, transferees and assigns.
The Performance Guarantor may not assign or transfer any of its
obligations hereunder without the prior written consent of each
of the Purchasers. Without limiting the generality of the
foregoing sentence, the Beneficiaries may, subject to Article
XIII of the Purchase Agreement, assign or otherwise transfer the
Agreements, any other documents executed in connection therewith
or delivered thereunder or any other agreement or note held by
them evidencing, securing or otherwise executed in connection
with the Obligations, or sell participations in any interest
therein, to any other entity or other person, and such other
entity or other person shall thereupon become vested, to the
extent set forth in the agreement evidencing such assignment,
transfer or participation, with all the rights in respect thereof
granted to the Beneficiaries herein.
13. Amendments and Waivers. No amendment or waiver
of any provision of this Guaranty nor consent to any departure by
the Performance Guarantor therefrom shall be effective unless the
same shall be in writing and signed by the Agent and the
Performance Guarantor. No failure on the part of any Beneficiary
to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
14. Notices. All notices and other communications
called for hereunder shall be made in writing and, unless
otherwise specifically provided herein, shall be deemed to have
been duly made or given when delivered by hand or mailed first
class, postage prepaid, or, in the case of telegraphic,
telecopied or telexed notice, when transmitted, answer back
received, addressed as follows: if to the Performance Guarantor,
at the address set forth beneath its signature hereto, and if to
the Beneficiaries, at the addresses set forth for each respective
Beneficiary on the signature pages of the Purchase Agreement, or
at such other addresses as each of the Performance Guarantor or
any of the Beneficiaries may designate in writing to the other.
15. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF ILLINOIS.
16. CONSENT TO JURISDICTION. EACH OF THE PERFORMANCE
GUARANTOR AND THE BENEFICIARIES HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, THE
AGREEMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION THEREWITH
OR DELIVERED THEREUNDER AND EACH OF THE PERFORMANCE GUARANTOR AND
THE BENEFICIARIES HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.
17. Miscellaneous. This Guaranty constitutes the
entire agreement of the Performance Guarantor with respect to the
matters set forth herein. No failure on the part of the Agent to
exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The rights
and remedies herein provided are cumulative and not exclusive of
any remedies provided by law or any other agreement, and this
Guaranty shall be in addition to any other guaranty of or
collateral security for any of the Obligations. The provisions
of this Guaranty are severable, and in any action or proceeding
involving any state corporate law, or any state or federal
bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of the
Performance Guarantor hereunder would otherwise be held or
determined to be avoidable, invalid or unenforceable on account
of the amount of the Performance Guarantor's liability under this
Guaranty, then, notwithstanding any other provision of this
Guaranty to the contrary, the amount of such liability shall,
without any further action by the Performance Guarantor or the
Beneficiaries, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in
such action or proceeding. The invalidity or unenforceability of
any one or more sections of this Guaranty shall not affect the
validity or enforceability of its remaining provisions. Captions
are for the ease of reference only and shall not affect the
meaning of the relevant provisions. The meanings of all defined
terms used in this Guaranty shall be equally applicable to the
singular and plural forms of the terms defined.
* * * *
IN WITNESS WHEREOF, the Performance Guarantor has caused
this Performance Guaranty to be executed and delivered as of the
date first above written.
K N ENERGY, INC.
By:
Name:
Title:
Telecopy: __________________
Schedule A
DOCUMENTS TO BE DELIVERED TO BUYER
ON OR PRIOR TO THE PURCHASE
1. Copy of the Resolutions of the Board of Directors of each
Originator certified by its Secretary, authorizing
Originator's execution, delivery and performance of the
Agreement and the other documents to be delivered by it
thereunder.
2. Articles or Certificate of Incorporation, Partnership
Agreement (or equivalent organizational documents) of each
Originator certified by the Secretary of State of the
jurisdiction of incorporation or formation of such
Originator.
3. Good Standing Certificate for each Originator issued by the
Secretary of State of each jurisdiction where it has
material operations.
4. A certificate of the Secretary of each Originator
certifying: (i) the names and signatures of the officers
authorized on its behalf to execute the Agreement and any
other documents to be delivered by it thereunder and (ii) a
copy of such Originator's By-Laws.
5. Signed financing statements in all jurisdictions as may be
necessary or, in the opinion of Buyer (or its assigns),
desirable, under the UCC of all appropriate jurisdictions or
any comparable law in order to perfect the ownership
interests contemplated by the Agreement.
6. Signed UCC termination statements, if any, necessary to
release all security interests and other rights of any
Person in the Receivables, Contracts or Related Security
previously granted by Originator.
7. Executed Collection Account Agreements for each Lock-Box and
Collection Account.
8. A favorable opinion of legal counsel for each Originator
reasonably acceptable to Buyer (or its assigns) in the form
attached hereto as Annex B.
10. A "true sale" opinion and "substantive consolidation"
opinion of counsel for each Originator with respect to the
transactions contemplated by the Agreement and the Purchase
Agreement.
11. A Compliance Certificate.
12. A direction letter executed by each Originator authorizing
Buyer and its assigns, and directing warehousemen to allow
Buyer and its assigns, to inspect and make copies from such
Originator's books and records maintained at off-site data
processing or storage facilities.
13. A Monthly Report as at September 28, 1999.
_______________________________
1FOOTER B HAS BEEN ENTERED (DRAFT)
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