Note: The Company is seeking confidential treatment of certain portions of this
Exhibit pursuant to Rule 24b-2 and has omitted portions of this Exhibit pending
a determination on such request. The omitted portions have been filed with the
Commission in connection with the Company's request for confidential treatment.
PURCHASE AND SALE AGREEMENT
Dated as of April 11, 1997
Between
KBK Financial, Inc.
INDIVIDUALLY AND AS THE INITIAL SERVICER,
and
KBK Receivables Corporation
AS THE INITIAL PURCHASER
TABLE OF CONTENTS
PAGE
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
1.1 Agreement to Purchase and Sell.............................. 2
1.2 Timing of Purchases......................................... 2
1.3 Consideration for Purchases................................. 3
1.4 No Recourse................................................. 3
1.5 No Assumption of Obligations Relating to Receivables,
Related Assets or Contracts............................... 3
1.6 Intention of the Parties.................................... 3
ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1 Calculation of Purchase Price............................... 4
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING; ETC.
3.1 Purchase Price Payments..................................... 5
3.2 The Purchaser Notes......................................... 6
3.3 Application of Collections and Other Funds.................. 6
3.4 Servicing of Receivables and Related Assets................. 7
3.5 Purchase Price Adjustments.................................. 7
3.6 Payments and Computations, Etc.............................. 8
3.7 Contribution of Receivables................................. 8
3.8 Reconveyance of Receivables................................. 8
ARTICLE IV
CONDITIONS TO PURCHASES
4.1 Conditions Precedent to Initial Purchase.................... 8
4.2 Certification as to Representations and Warranties.......... 10
4.3 Effect of Payment of Purchase Price......................... 10
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of KBK....................... 10
5.2 Representations and Warranties of the Initial Purchaser..... 15
ARTICLE VI
GENERAL COVENANTS OF KBK
6.1. Affirmative Covenants of KBK................................ 16
6.2 Reporting Requirements of KBK............................... 18
6.3 Negative Covenants of KBK................................... 19
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE PURCHASED ASSETS
7.1 Rights of the Initial Purchaser............................. 21
7.2 Responsibilities of KBK..................................... 21
7.3 Further Action Evidencing Purchases......................... 22
7.4 Collection of Receivables; Rights of the Initial Purchaser
and Its Assignees......................................... 23
7.5 Application of Collections.................................. 24
ARTICLE VIII
TERMINATION
8.1 Termination Resulting From Purchase Termination Event....... 24
8.2 Automatic Termination....................................... 25
8.3 Additional Remedies......................................... 25
ARTICLE IX
INDEMNIFICATION
9.1 Indemnities by KBK.......................................... 25
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ARTICLE X
MISCELLANEOUS
10.1 Amendments; Waivers; Etc.................................... 28
10.2 Notices, Etc................................................ 28
10.3 Cumulative Remedies......................................... 29
10.4 Binding Effect; Assignability; Survival of Provisions....... 29
10.5 GOVERNING LAW............................................... 29
10.6 Costs, Expenses and Taxes................................... 29
10.7 SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES............ 30
10.8 WAIVER OF JURY TRIAL........................................ 31
10.9 Integration................................................. 31
10.10 Captions and Cross References............................... 31
10.11 Execution in Counterparts................................... 31
10.12 Acknowledgment and Consent.................................. 31
10.13 No Partnership or Joint Venture............................. 32
10.14 No Proceedings.............................................. 32
10.15 Confidentiality............................................. 32
10.16 Interest.................................................... 33
-iii-
PURCHASE AND SALE AGREEMENT
This Agreement (this "AGREEMENT"), dated as of April 11, 1997, is made
between KBK FINANCIAL, INC., a Delaware corporation ("KBK" or the "ORIGINATOR"),
as seller, as contributor and as initial Servicer, and KBK RECEIVABLES
CORPORATION, a Delaware corporation, as purchaser and contributee (the "INITIAL
PURCHASER").
DEFINITIONS
Except as otherwise specifically provided herein, capitalized terms used
in this Agreement have the meanings ascribed to such terms in APPENDIX A to the
Receivables Purchase Agreement, dated as of even date herewith, among the
Initial Purchaser, KBK, as initial Servicer, XXX Receivables Corporation,
XXX Corporation, as Administrator, and XXX Bank, as Relationship Bank
(as the same may be amended, modified or supplemented from time to time, the
"XXX AGREEMENT".
RECITALS
WHEREAS, KBK wishes to sell Receivables and Related Assets with respect
thereto that it now owns and from time to time hereafter will own to the Initial
Purchaser, and the Initial Purchaser is willing, on the terms and subject to the
conditions contained in this Agreement, to purchase such Receivables and Related
Assets from KBK at such times;
WHEREAS, on the Initial Purchase Date, KBK is transferring certain
Receivables and Related Assets to the Initial Purchaser as a contribution to the
Initial Purchaser in return for shares of the common stock of the Initial
Purchaser; and
WHEREAS, the Initial Purchaser has entered into the XXX Agreement pursuant
to which, among other things, the Initial Purchaser may sell to XXX an
undivided percentage ownership interest in the Receivables and Related Assets;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 AGREEMENT TO PURCHASE AND SELL. On the terms and subject to
the conditions set forth in this Agreement (including, without limitation,
ARTICLE IV), KBK agrees to sell to the Initial Purchaser, and hereby sells to
the Initial Purchaser, and the Initial Purchaser agrees to purchase from KBK,
and hereby purchases from KBK, at the times set forth in SECTION 1.2, but prior
to the Purchase Termination Date,
(a) all of KBK's right, title and interest in, to and under all
Receivables (other than Receivables and Related Assets contributed
by KBK to the Initial Purchaser pursuant to SECTION 3.7 (the
"CONTRIBUTED RECEIVABLES")),
(b) all of KBK's right, title and interest in and to, but not the
obligations under all Related Security with respect to all such
Receivables,
(c) all of KBK's right, title and interest in and to all books and
records evidencing or otherwise relating to such Receivables, and
(d) all Collections in respect of, and other proceeds of, any of the
foregoing.
The items listed above in CLAUSES (B), (C) and (D) in relation to any
Receivables are herein collectively called the "RELATED ASSETS". The Receivables
(including the Contributed Receivables) and the Related Assets are herein
sometimes collectively called the "PURCHASED ASSETS". The Initial Purchaser's
foregoing commitment to purchase Receivables and Related Assets is herein called
the "FACILITY". Each purchase of Receivables and Related Assets by the Initial
Purchaser hereunder is herein called a "PURCHASE".
SECTION 1.2 TIMING OF PURCHASES.
(a) INITIAL PURCHASES. All of KBK's right, title and interest in the
Receivables that exist at the opening of KBK's business on the Initial Purchase
Date (other than Contributed Receivables) and in the Related Assets with respect
thereto shall be deemed to have been sold to the Initial Purchaser on the
Initial Purchase Date without further action by any Person.
(b) REGULAR PURCHASES. After the date of the initial Purchase hereunder
until the Purchase Termination Date, all of KBK's right, title and interest in
and to each Receivable and in the Related Assets with respect thereto shall be
deemed to have been sold to the Initial Purchaser pursuant hereto immediately
(and without further action by any Person) upon the creation of such Receivable.
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SECTION 1.3 CONSIDERATION FOR PURCHASES. On the terms and subject to the
conditions set forth in this Agreement, the Initial Purchaser agrees to make
Purchase Price payments to KBK, and to reflect all contributions, in accordance
with ARTICLE III.
SECTION 1.4 NO RECOURSE. Except as specifically provided in this
Agreement, the purchase, sale and contribution of Receivables and Related Assets
under this Agreement shall be without recourse to KBK; PROVIDED that KBK shall
be liable to the Initial Purchaser for all representations, warranties,
covenants and indemnities made by KBK pursuant to the terms of this Agreement.
SECTION 1.5 NO ASSUMPTION OF OBLIGATIONS RELATING TO RECEIVABLES, RELATED
ASSETS OR CONTRACTS. Neither the Initial Purchaser nor the Servicer (in such
capacity) nor any XXX Party shall have any obligation or liability with
respect to any Receivables, any Related Assets, any Contract related to any
Receivable, any Factoring Agreement related to any Receivable or any other
purchase orders or other agreements related to any Receivable, nor shall the
Initial Purchaser, the Servicer (in such capacity), nor any XXX Party have
any obligation or liability to any Obligor, any Obligee or other customer or
client of KBK (including, without limitation, any obligation to perform any of
the obligations of the Originator or any Obligee under any such Receivables,
Related Assets, Contracts, Factoring Agreements or other related purchase orders
or other agreements). No such obligation or liability is intended to be assumed
by the Initial Purchaser, the Servicer (in such capacity), or any XXX Party,
and any such assumption is expressly disclaimed.
SECTION 1.6 INTENTION OF THE PARTIES. It is the express intent of the
parties hereto that the transfers of the Receivables (other than Contributed
Receivables) and Related Assets by KBK to the Initial Purchaser, as contemplated
by this Agreement, be, and be treated as, sales and not as secured loans secured
by the Receivables and Related Assets. If, however, notwithstanding the intent
of the parties, such transactions are deemed to be loans, or if for any reason
and to the extent that title to the Receivables and the Related Assets with
respect thereto is not vested in the Initial Purchaser, KBK hereby grants to the
Initial Purchaser a present, continuing security interest in all of KBK's right,
title and interest in and to the Receivables and the Related Assets now existing
and hereafter created, all monies due or to become due and all amounts received
with respect thereto, and all proceeds thereof, to secure all of KBK's
obligations hereunder. It is also the express intention of the parties hereto
that the transfers of Contributed Receivables by KBK to the Initial Purchaser be
treated as contributions to the capital of the Initial Purchaser.
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ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 CALCULATION OF PURCHASE PRICE. On each day when Receivables
are purchased by the Initial Purchaser from KBK pursuant to ARTICLE I hereof
(each such date, a "PAYMENT DATE"), subject to SECTIONS 3.1(B) and (D), the
"PURCHASE PRICE" to be paid to KBK on such day for the Receivables and Related
Assets that are to be sold by KBK on such day shall be determined in accordance
with the following formula:
PP = UB X FMVD
WHERE:
PP = Purchase Price (to be paid to KBK in accordance with the
terms of ARTICLE III) as calculated on such Payment Date.
UB = (i) for purposes of calculating the Purchase Price on the
date of the initial Purchase hereunder, the aggregate Unpaid
Balance of all Receivables that existed and were owing to KBK
as measured as at the Initial Purchase Date (plus accrued
interest on any Receivables arising under Inventory Financing
Agreements), LESS an amount equal to the sum of the aggregate
Unpaid Balance of all Contributed Receivables, and
(ii) for purposes of calculating the Purchase Price for
Receivables on each Payment Date thereafter, the aggregate
Unpaid Balance of the Receivables described in SECTION 1.2(B)
hereof that were sold by KBK to the Initial Purchaser on such
Payment Date (plus accrued interest on any Receivables arising
under Inventory Financing Agreements).
FMVD = Fair Market Value Discount, as measured on such Payment Date,
which is equal to (I) with respect to Receivables arising
under Inventory Financing Agreements, 1.00, and (II) with
respect to all other Receivables, the quotient (expressed as
percentage) of (a) one DIVIDED by ------- (b) the sum of (i)
one, plus (ii) the product of (A) the Prime Rate on such
Payment Date plus XXX% and (B) a fraction, the numerator of
which is the Average Maturity (calculated as of the preceding
Cut-Off Date) and the denominator of which is 365, plus (iii)
in the event that the three month rolling average of the
Default Ratio (as calculated the last day of the month next
preceding such Payment Date) exceeds XXX%, an amount equal to
such excess.
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"AVERAGE MATURITY" means, at any time, that period of days equal to the
average days sales outstanding of the Pool Receivables calculated by the
Servicer as of the most recent CutOff Date.
"PRIME RATE" means a PER ANNUM rate equal to the "prime rate" as published
in the "Money Rates" section of The Wall Street Journal or such other
publication that the parties may agree to from time to time.
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING; ETC.
SECTION 3.1 PURCHASE PRICE PAYMENTS.
(a) On each Payment Date, on the terms and subject to the conditions of
this Agreement, the Initial Purchaser shall pay to KBK the Purchase Price for
the Receivables and Related Assets to be purchased on such day by (i) making a
cash payment to or at the direction of KBK to the extent that the Initial
Purchaser has cash available to make such payment pursuant to SECTION 3.3, and
(ii) automatically increasing the principal amount outstanding under the
Purchaser Note issued to KBK by the amount of the excess, if any, of the
Purchase Price to be paid to KBK for such Receivables and Related Assets OVER
the amount of any payment made on such day pursuant to CLAUSE (I) next above.
(b) On each Payment Date, the Initial Purchaser shall reduce the Purchase
Price payable to KBK for the Receivables and Related Assets that the Initial
Purchaser is to purchase on such day by an amount (the "PURCHASE PRICE
ADJUSTMENTS") equal to the difference between (i) the sum of (A) the Dilution
Adjustment (as defined in SECTION 3.5(B)), if any, for the immediately preceding
Business Day, PLUS (B) the Noncomplying Receivables Adjustment (as defined in
SECTION 3.5(A)), if any, for the immediately preceding Business Day, MINUS (ii)
the amount of any payments that the Initial Purchaser shall have received on the
immediately preceding Business Day on account of Collections due with respect to
Noncomplying Receivables that have been included in an Purchase Price Adjustment
previously deducted or paid in accordance with this SECTION 3.1.
(c) If the Purchase Price Adjustments on any Payment Date exceed the
Purchase Price payable by the Initial Purchaser to KBK on such day, then the
principal amount of the Purchaser Note shall be automatically reduced by the
amount of such excess; PROVIDED, that if the Purchaser Note has been reduced to
zero, then KBK shall pay to the Initial Purchaser in cash the amount of such
Purchase Price Adjustments on the next succeeding Business Day; and PROVIDED
FURTHER, HOWEVER, that at any time (y) when a Liquidation Event or Unmatured
Liquidation Event exists or (z) on or after the Purchase Termination Date, the
amount of any such credit shall be paid by KBK to the Initial Purchaser by
deposit in immediately available
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funds into the Collection Account for application by Servicer to the same extent
as if Collections of the applicable Receivable in such amount had actually been
received on such date.
SECTION 3.2 THE PURCHASER NOTES.
(a) On or prior to the Initial Purchase Date, the Initial Purchaser shall
deliver to KBK a promissory note in the form of EXHIBIT 3.2 payable to the order
of KBK (as it may be amended, supplemented, endorsed or otherwise modified from
time to time, together with any promissory notes issued from time to time in
substitution therefor or renewal thereof in accordance with the Transaction
Documents, being herein called the "PURCHASER NOTE"), which Purchaser Note
shall, in accordance with its terms, be subordinated to all interests in
Receivables and Related Assets and all obligations of the Initial Purchaser, of
any nature, now or hereafter arising under or in connection with the XXX
Purchase Agreement. The Purchaser Note shall be payable in full on the date
which is 91 days after the Final Payout Date. The Purchaser Note shall bear
interest during each Settlement Period at the rate per annum set forth therein.
The Initial Purchaser may prepay all or part of the outstanding balance of the
Purchaser Note from time to time without any premium or penalty, unless such
prepayment would result in a default in the Initial Purchaser's payment of any
other amount required to be paid by it under any Transaction Document.
(b) The Servicer shall make all appropriate recordkeeping entries with
respect to the Purchaser Note to reflect the payments of the Initial Purchaser
thereon and adjustments thereof. The Servicer's books and records shall
constitute rebuttable presumptive evidence of the principal amount of and
accrued interest on the Purchaser Note at any time. KBK hereby irrevocably
authorizes the Servicer to xxxx the Purchaser Note "CANCELLED" and to return the
Purchaser Note to the Initial Purchaser upon the full and final payment thereof
after the Purchase Termination Date.
SECTION 3.3 APPLICATION OF COLLECTIONS AND OTHER FUNDS. If, on any day,
the Initial Purchaser receives (a) Collections that it is not required to hold
in trust for, or remit to, the XXX Parties pursuant to the XXX Agreement or
(b) proceeds of any sale of or reinvestment in the Asset Interest under the XXX
Agreement, the Initial Purchaser shall apply all such funds in their entirety as
follows:
(i) FIRST, to pay or set aside funds for the payment of its accrued
expenses, and for the payment of expenses expected to be incurred during
the current Settlement Period and the next following Settlement Period to
the extent not covered by funds expected to be received by the Initial
Purchaser as described above during such period;
(ii) SECOND, to pay the Purchase Price pursuant to SECTION 3.1 for
Receivables and Related Assets to be purchased by the Initial Purchaser on
such day; and
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(iii) THIRD, subject to Section 7.03(h) of the XXX Agreement, to
repay accrued and unpaid interest on, and to ratably prepay any accrued
interest on or outstanding principal of, the Purchaser Note.
SECTION 3.4 SERVICING OF RECEIVABLES AND RELATED ASSETS. Consistent with
the Initial Purchaser's ownership of the Receivables and the Related Assets, the
Initial Purchaser shall have the sole right to service, administer and collect
the Receivables, to assign such right and to delegate such right to others. In
consideration of the Initial Purchaser's purchase of the Receivables and the
Related Assets, KBK agrees to cooperate fully with the Initial Purchaser to
facilitate the full and proper performance of such duties and obligations for
the benefit of the Initial Purchaser and the XXX Parties. To the extent that
the Initial Purchaser, individually or through the Servicer, has granted or
grants powers of attorney to the Administrator under the XXX Agreement, KBK
hereby grants a corresponding power of attorney on the same terms to the Initial
Purchaser. KBK hereby acknowledges and agrees that the Initial Purchaser, in all
of its capacities, shall assign to the Administrator for the benefit of the
XXX Parties such powers of attorney and other rights and interests granted
by KBK to the Initial Purchaser hereunder, and agrees to cooperate fully with
the Administrator in the exercise of such rights.
SECTION 3.5 PURCHASE PRICE ADJUSTMENTS.
(a) If, with respect to any Receivable transferred to the Initial
Purchaser hereunder (including any Contributed Receivable), on any day the
Initial Purchaser, the Originator, the Servicer or the Administrator shall
determine that any of the representations or warranties set forth in SECTION
5.1(D), (K) or (W) is not true with respect to any Receivable, then, on such
day, KBK shall be deemed to have received on such day a Collection of such
Receivable (a "NONCOMPLYING RECEIVABLE") in an amount equal to the Unpaid
Balance of such Receivable (herein the sum of all such amounts for all
Noncomplying Receivables on any day being collectively called the "NONCOMPLYING
RECEIVABLES ADJUSTMENT"), and KBK shall pay the amount of the Noncomplying
Receivables Adjustment to the Initial Purchaser in the manner provided for in
SECTIONS 3.1(B) and (C).
(b) If on any day any Receivable (including any Contributed Receivable) is
(i) reduced or cancelled as a result of any defective, rejected or returned
goods or services, any cash discount, or any adjustment by the Originator or any
Affiliate thereof, (ii) reduced or cancelled as a result of a setoff in respect
of any claim by the Obligor thereof against the Obligee or the Originator or any
Affiliate thereof (whether such claim arises out of the same or a related or an
unrelated transaction), (iii) reduced on account of the obligation of the
Originator to pay to the related Obligor any rebate or refund, (iv) reduced as a
result of any incorrect xxxxxxxx, allowances, chargebacks, credits or any other
reductions or cancellations that are unrelated to the ability of the Obligor to
pay such Receivable, or (v) reduced or cancelled or subject to reduction or
cancellation as a result of any violation of the related Contract by the related
Obligee or the Originator (each of the reductions and cancellations described
above in CLAUSES (I) through (V) being herein called a "DILUTION ADJUSTMENT"),
then KBK shall be deemed to have
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received on such day a Collection of such Receivable in the amount of such
Dilution Adjustment and KBK shall pay such amount to the Initial Purchaser in
the manner provided in SECTIONS 3.1(B) and 3.1(C).
SECTION 3.6 PAYMENTS AND COMPUTATIONS, ETC. All amounts to be paid by KBK
or the Servicer to the Initial Purchaser hereunder shall be paid in accordance
with the terms hereof no later than 12:00 noon (New York time) on the day when
due in Dollars in immediately available funds to such account as the Initial
Purchaser may from time to time specify in writing. Payments received by the
Initial Purchaser after such time on any Business Day shall be deemed to have
been received on the next Business Day. In the event that any payment becomes
due on a day which is not a Business Day, then such payment shall be made on the
next succeeding Business Day. If KBK or the Servicer fails to pay when due any
amount payable by it hereunder, then KBK or the Servicer shall, to the extent
permitted by law, pay to the Initial Purchaser, on demand, interest on such
unpaid amount from the date such amount was due until paid in full, at a rate
per annum equal to XXX% per annum above the Alternate Base Rate; PROVIDED,
HOWEVER, that such interest rate 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.
SECTION 3.7 CONTRIBUTION OF RECEIVABLES. On the Closing Date, KBK shall,
and hereby does, contribute to the capital of the Initial Purchaser, Receivables
and Related Assets with respect thereto consisting of Receivables of KBK that
existed on the Initial Cut-Off Date, beginning with the oldest of such
Receivables and continuing chronologically thereafter, and all or an undivided
interest in the most recent of such Contributed Receivables such that the
aggregate Unpaid Balance of all such Contributed Receivables shall be equal to
$5,000,000.
SECTION 3.8 RECONVEYANCE OF RECEIVABLES. In the event that KBK has paid
the Initial Purchaser the full Unpaid Balance of any Receivable pursuant to
SECTION 3.5, the Initial Purchaser shall reconvey such Receivable and the
Related Assets with respect thereto to KBK, without recourse, representation or
warranty, but free and clear of all liens created by the Initial Purchaser. The
Initial Purchaser shall take any and all actions (and shall instruct XXX and
the Administrator to take any and all actions) reasonably requested by KBK, at
the expense of KBK, to assign to KBK all of the Initial Purchaser's right, title
and interest in and to such Receivables and the Related Assets with respect
thereto.
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial Purchase
hereunder is subject to the condition precedent that the Initial Purchaser shall
have received each
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of the following (with copies to the Administrator), on or before the date of
such Purchase, each (unless otherwise indicated) dated such date and each in
form and substance satisfactory to the Initial Purchaser and the Administrator:
(a) The XXX Agreement, duly executed by the parties thereto, together with
evidence reasonably satisfactory to the Initial Purchaser that all conditions
precedent to the initial purchase of an Asset Interest thereunder (other than
any condition relating to the effectiveness of the purchase commitment under
this Agreement) shall have been met;
(b) A certificate of the Secretary or Assistant Secretary of KBK
certifying (i) the names and the signatures of the incumbent officers of KBK
authorized to sign this Agreement and the other Transaction Documents to be
delivered by it (on which certificate the Initial Purchaser may conclusively
rely until such time as the Initial Purchaser shall receive a revised
certificate meeting the requirements of this subsection (b)), (ii) that the copy
of the articles or certificate of incorporation of KBK attached thereto and duly
certified by the Secretary of State of Delaware as of a recent date acceptable
to the Initial Purchaser is a complete and correct copy thereof and that the
same has not been amended, modified or supplemented and is in full force and
effect as of the date thereof, (iii) that the copy of the by-laws of KBK
attached thereto is a complete and correct copy thereof and that such by-laws
have not been amended, modified or supplemented and are in full force and effect
as of the date thereof, and (iv) the resolutions of KBK's board of directors
approving and authorizing the execution, delivery and performance by KBK of this
Agreement and the other Transaction Documents to which it is a party, and that
such resolutions have not been amended, modified or rescinded and are in full
force and effect as of the date thereof;
(c) Copies of good standing certificates for KBK issued by the Secretary
of State of Delaware and by the appropriate official of each other jurisdiction
where such qualification is required under SECTION 6.1(B);
(d) Acknowledgment copies (or other evidence of filing reasonably
acceptable to the Initial Purchaser) of (i) proper financing statements (Form
UCC-1), filed on or prior to the date of the initial Purchase in the State of
Texas and in such other jurisdictions as the Initial Purchaser may reasonably
request, substantially in the form of EXHIBIT 4.1(D) or in such other form as
the Administrator may reasonably request (with such changes, if any, as the
Initial Purchaser may find acceptable in its discretion), naming KBK as the
debtor and seller of Receivables and Related Assets, the Initial Purchaser as
the secured party and purchaser and Purchaser as assignee; and (ii) such other,
similar instruments or documents, if any, as may be necessary or, in the opinion
of the Initial Purchaser, desirable under the UCC or any comparable law of all
appropriate jurisdictions to perfect the sale by KBK to the Initial Purchaser of
the Receivables and Related Assets;
(e) Search reports provided in writing to the Administrator by Xxxxxx &
Xxxxxx L.L.P., (i) listing all effective financing statements or other, similar
instruments or documents
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that name KBK as debtor and that are filed in the jurisdictions in which filings
were made pursuant to CLAUSE (D) above and in such other jurisdictions as the
Initial Purchaser shall reasonably request, together with copies of such
financing statements (none of which, other than (x) any of the financing
statements or other instruments or documents described in CLAUSE (D) above, and
(y) any financing statements which shall have been terminated (and of which the
Initial Purchaser shall have received satisfactory evidence of termination),
shall cover any Receivables or Related Assets), and (ii) listing all tax liens
and judgment liens (if any) filed against KBK in the jurisdictions described
therein and showing no such Liens;
(f) A favorable opinion of Xxxxxx & Xxxxxx L.L.P., special counsel to KBK,
in substantially the form of EXHIBIT 4.1(F)-1 and a favorable opinion of
XxXxxxxxxx Xxxxxxxx, special Louisiana counsel to KBK, in substantially the form
of EXHIBIT 4.1(F)-2; and
(g) Such other agreements, instruments, certificates, opinions and other
documents as the Initial Purchaser or the Administrator may reasonably request.
SECTION 4.2 CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. KBK, by
accepting the Purchase Price paid for each purchase of Receivables and Related
Assets on any day, shall be deemed to have certified that its representations
and warranties contained in ARTICLE V are true and correct on and as of such
day, with the same effect as though made on and as of such day.
SECTION 4.3 EFFECT OF PAYMENT OF PURCHASE PRICE. Upon the payment of the
Purchase Price (whether in cash or by an increase in the principal amount
outstanding under the Purchaser Note pursuant to SECTION 3.1) for any Purchase,
title to the Receivables and the Related Assets included in such Purchase shall,
subject to SECTION 1.6, vest in the Initial Purchaser, whether or not the
conditions precedent to such Purchase were in fact satisfied; PROVIDED that the
Initial Purchaser shall not be deemed to have waived any claim it may have under
this Agreement for the failure by KBK in fact to satisfy any such condition
precedent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF KBK. In order to induce the
Initial Purchaser to enter into this Agreement and to make Purchases and accept
contributions hereunder, KBK hereby represents and warrants to the Initial
Purchaser as follows:
(a) ORGANIZATION AND GOOD STANDING. KBK has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware with power and authority to own its properties and to conduct its
business as such properties are presently owned and such business is presently
conducted, and had at all relevant times, and now has, all
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necessary power, authority and legal right to acquire and own the Receivables
and Related Assets and to sell the Receivables and Related Assets to the Initial
Purchaser.
(b) DUE QUALIFICATION. KBK is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which (i) the ownership or lease of property
or the conduct of its business requires such qualification, licenses or
approvals and (ii) the failure so to qualify or to obtain such licenses and
approvals could reasonably be expected to have a Material Adverse Effect.
(c) POWER AND AUTHORITY; DUE AUTHORIZATION. KBK (i) has all necessary
power, authority and legal right (A) to execute and deliver this Agreement and
the other Transaction Documents to which it is a party, (B) to carry out the
terms of this Agreement and the other Transaction Documents to which it is a
party, (C) to sell, contribute and assign the Receivables and Related Assets to
the Initial Purchaser on the terms and conditions provided in this Agreement
and, (D) to service the Receivables and the Related Assets in accordance with
this Agreement and the XXX Agreement, and (ii) has duly authorized by all
necessary corporate action the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and the
sale, contribution and assignment described in CLAUSE (I)(C) above.
(d) VALID SALE OR CONTRIBUTION; BINDING OBLIGATIONS. (i) This Agreement
constitutes a valid sale or contribution, as the case may be, transfer and
assignment of the Receivables to the Initial Purchaser, enforceable against
creditors of, and purchasers from, KBK, and (ii) this Agreement constitutes, and
each other Transaction Document to be signed by KBK when duly executed and
delivered will constitute, a legal, valid and binding obligation of KBK,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws from
time to time in effect affecting the enforcement of creditors' rights generally
and by general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents and the fulfillment of the
terms hereof and thereof will not (i) conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, the articles or certificate of incorporation
or by-laws of KBK, or any indenture, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or other agreement or instrument to which
KBK is a party or by which it or any of its properties is bound, (ii) result in
the creation or imposition of any Lien upon any of KBK's properties pursuant to
the terms of any such indenture, loan agreement, receivables purchase agreement,
mortgage, deed of trust, or other agreement or instrument, other than this
Agreement and the other Transaction Documents, or (iii) violate any law or any
order, rule, or regulation applicable to KBK of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction
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over KBK or any of its properties, if such violation could reasonably be
expected to have a Material Adverse Effect.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending, or
to KBK's knowledge threatened, before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement or any other Transaction Document, (ii) seeking to
prevent the sale or contribution and assignment of the Receivables under, or the
consummation of any of the other transactions contemplated by, this Agreement or
any other Transaction Document, (iii) seeking any determination or ruling that
might have a Material Adverse Effect or (iv) seeking to adversely affect the
federal income tax attributes of the Purchases hereunder.
(g) BULK SALES ACT. No transaction contemplated hereby requires compliance
with any bulk sales act or similar law.
(h) GOVERNMENT APPROVALS. No authorization or approval or other action by,
and no notice to or filing with, any Governmental Authority or regulatory body
is required for the due execution, delivery and performance by KBK of this
Agreement and each other Transaction Document to which it is a party, except for
(i) the filing of the UCC financing statements referred to in ARTICLE V, and
(ii) the filing of any UCC continuation statements and amendments from time to
time required in relation to any UCC financing statements filed in connection
with this Agreement, as provided in SECTION 7.3(A), all of which, at the time
required in such ARTICLE V or SECTION 7.3(A), as applicable, shall have been
duly made and shall be in full force and effect.
(i) LITIGATION. No injunction, decree or other decision has been issued or
made by any court, Governmental Authority or instrumentality thereof that
prevents, and, to KBK's knowledge, no threat by any person has been made to
attempt to obtain any such decision that would prevent, KBK from conducting a
material part of its business operations.
(j) MARGIN REGULATIONS. The use of all funds obtained by KBK under this
Agreement or any other Transaction Document will not conflict with or contravene
any of Regulations G, T, U or X promulgated by the Board of Governors of the
Federal Reserve System from time to time.
(k) QUALITY OF TITLE. (i) Immediately prior to the sale or transfer of a
Receivable hereunder to the Initial Purchaser, KBK has a valid and perfected
ownership interest in such Receivable and all Related Assets with respect
thereto, free and clear of any Lien (other than any Permitted Lien); (ii) when
the Initial Purchaser accepts the Contributed Receivables or makes a Purchase,
it shall have acquired a valid and perfected ownership interest in each Pool
Receivable and all Related Assets with respect thereto, free and clear of any
Lien (other than any Permitted Lien); and (iii) no financing statement or other
instrument similar in effect covering any Pool Receivable, any interest therein,
or any Related Assets with respect thereto
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is on file in any recording office except such as may be filed (1) in favor of
the Originator or the Initial Purchaser in accordance with the Contracts, (2) in
favor of the Initial Purchaser in connection with this Agreement, (3) in favor
of XXX or the Administrator in accordance with the XXX Agreement, or (4)
otherwise in connection with any Permitted Lien. Appropriately completed UCC
financing statements necessary to evidence the conveyance of Receivables from
the applicable Obligees under the Factoring Agreements to KBK have been filed in
the appropriate offices, and all other actions required to perfect KBK's
interest in such Receivables have been performed in accordance with applicable
law.
(l) ACCURATE REPORTS. No information, exhibit, financial statement,
document, book, record or report furnished or to be furnished, in each case in
writing, by or on behalf of KBK or its Affiliates to the Initial Purchaser or
the XXX Parties in connection with this Agreement, in each case as of the
date it was or will be dated or certified, was or will be inaccurate in any
material respect, contained or will contain any material misstatement of fact or
omitted or will omit to state any fact necessary to make the statements
contained therein, in the context in which they are made, not materially
misleading.
(m) OFFICES. The principal place of business and chief executive office of
KBK is located at the address set forth under its signature hereto, and the
offices where KBK keeps all its books, records and documents evidencing
Receivables, the related Contracts, the Factoring Agreements and all purchase
orders and other agreements related to such Receivables are located at the
addresses specified in SCHEDULE 5.1(M) (or at such other locations, notified to
the Initial Purchaser in accordance with SECTION 6.1(F), in jurisdictions where
all action required by SECTION 7.3 has been taken and completed).
(n) SERVICING PROGRAMS. No license or approval is required for the Initial
Purchaser's use of any program used by Servicer in the servicing of the
Receivables, other than those which have been obtained and are in full force and
effect.
(o) RECEIVABLES. Each of the Receivables constitutes an "account,"
"chattel paper," an "instrument" or a "general intangible" as such terms are
defined in the UCC.
(p) LEGAL NAMES. KBK has not (i) been known by any legal name other than
its corporate name as of the date hereof, except to the extent permitted
otherwise pursuant to SECTION 6.3(H) or (ii) been the subject of any merger or
other corporate reorganization that resulted in a change of name, identity or
corporate structure. Neither KBK nor the Initial Purchaser uses trade names
(except as set forth on Schedule 6.02(k) to the XXX Agreement) other than their
respective actual corporate names.
(q) INVESTMENT COMPANY ACT. KBK is not, and is not controlled by, an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended.
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(r) FINANCIAL CONDITION. (i) The consolidated balance sheet of KBK and its
consolidated subsidiaries as at December 31, 1996 and the related statements of
income and shareholders' equity of KBK and its consolidated subsidiaries for the
fiscal year then ended, certified by KPMG Peat Marwick LLP independent certified
public accountants, copies of which have been furnished to the Initial
Purchaser, the Relationship Bank and the Administrator, fairly present the
consolidated financial condition, business, business prospects and operations of
KBK and its consolidated subsidiaries as at such date and the consolidated
results of the operations of KBK and its consolidated subsidiaries for the
period ended on such date, all in accordance with GAAP consistently applied,
(ii) since December 31, 1996 there has been no material adverse change in any
such condition, business, business prospects or operations and (iii) on the date
hereof, and on the date of each sale of Receivables by KBK to the Initial
Purchaser (both before and after giving effect to such sale), KBK shall be
Solvent.
(s) TAXES. KBK has filed all tax returns and reports required by law to
have been filed by it and has paid all taxes and governmental charges thereby
shown to be owing, except any such taxes which are not yet delinquent or are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with generally accepted accounting
principles shall have been set aside on its books.
(t) COMPLIANCE WITH APPLICABLE LAWS. KBK is in compliance, in all material
respects, with the requirements of all applicable laws, rules, regulations, and
orders of all Governmental Authorities (including, without limitation,
Regulation Z, laws, rules and regulations relating to usury, truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy and all other consumer laws applicable to the
Receivables, related Contracts and the related Factoring Agreements), except, in
each case, to the extent same could not reasonably be expected to have a
Material Adverse Effect.
(u) RELIANCE ON SEPARATE LEGAL IDENTITY. KBK is aware that the Secured
Parties are entering into the Transaction Documents to which they are parties in
reliance upon the Initial Purchaser's identity as a legal entity separate from
KBK.
(v) PURCHASE PRICE. The Purchase Price payable by the Initial Purchaser to
KBK hereunder is intended by the KBK and the Initial Purchaser to be consistent
with the terms that would be obtained in an arm's length sale. The Servicer's
Fee payable to KBK is intended to be consistent with terms that would be
obtained in an arm's length servicing arrangement.
(w) ELIGIBILITY OF RECEIVABLES. Unless otherwise identified to the Initial
Purchaser on the date of the purchase hereunder, each Receivable purchased
hereunder is on the date of purchase an Eligible Receivable and, so long as KBK
is the Servicer, each Receivable included as an Eligible Receivable in the
calculation of Net Pool Balance is an Eligible Receivable as of the date of such
calculation.
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(x) MARKING OF RECORDS. KBK has marked its master data processing records
with a legend, acceptable to the Initial Purchaser and the Administrator,
stating that the Receivables and the Related Assets with respect thereto, have
been sold in accordance with this Agreement.
(y) CERTAIN DEFINITIONS. With respect to this Agreement, the term
"Solvent" is defined as follows:
"SOLVENT" means, with respect to any Person at any time, a condition
under which:
(i) the fair value and present fair saleable value of such Person's
total assets is, on the date of determination, greater than such Person's
total liabilities (including contingent and unliquidated liabilities) at
such time;
(ii) such Person is and shall continue to be able to
pay all of its liabilities as such liabilities mature; and
(iii) such Person does not have unreasonably small capital with
which to engage in its current and in its anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or unliquidated liabilities
at any time shall be that amount which, in light of all the facts and
circumstances then existing, represents the amount which can reasonably be
expected to become an actual or matured liability;
(B) the "fair value" of an asset shall be the amount which may be
realized within a reasonable time either through collection or sale of
such asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount which
a capable and diligent business person could obtain for such asset from an
interested buyer who is willing to purchase such asset under ordinary
selling conditions; and
(D) the "present fair saleable value" of an asset means the amount
which can be obtained if such asset is sold with reasonable promptness in
an arm's length transaction in an existing and not theoretical market.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASER. The
Initial Purchaser hereby represents and warrants that (a) this Agreement (i) has
been duly executed and delivered by the Initial Purchaser and (ii) constitutes
the Initial Purchaser's legal, valid and binding obligation, enforceable against
the Initial Purchaser in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar laws
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from time to time in effect affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law, and (b) the
execution, delivery and performance of this Agreement do not violate any
applicable law or any agreement to which the Initial Purchaser is a party or by
which its properties are bound.
ARTICLE VI
GENERAL COVENANTS OF KBK
SECTION 6.1. AFFIRMATIVE COVENANTS OF KBK. From the date hereof until the
Final Payout Date, KBK will:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects with all
applicable laws, rules, regulations and orders with respect to the Pool
Receivables, the related Contracts and the related Factoring Agreements.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation or organization, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification might reasonably be expected to have a Material Adverse Effect.
(c) AUDITS. (i) At any time and from time to time upon reasonable notice
during regular business hours, permit the Initial Purchaser, the Administrator,
the Relationship Bank or any of their agents or representatives, including any
certified public accountants or other auditors acceptable to the Administrator
and Relationship Bank, (A) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of KBK relating to Pool
Receivables and Related Assets, including, without limitation, the related
Contracts, the related Factoring Agreements and related purchase orders and
other agreements, and (B) to visit the offices and properties of KBK for the
purpose of examining such materials described in CLAUSE (I)(A) next above, and
to discuss matters relating to Receivables or KBK's performance hereunder with
any of the officers or employees of KBK having knowledge of such matters; (ii)
permit the Initial Purchaser, the Administrator, the Relationship Bank or any of
their agents or representatives, upon the reasonable prior request of the
Initial Purchaser, the Administrator or the Relationship Bank, to meet with the
independent auditors of KBK, to review such auditors' work papers (including,
without limitation, work papers relating to any audit report or audit opinion
described in SECTION 6.2(G)) and otherwise to review with such auditors the
books and records of KBK with respect to the Receivables and Related Assets; and
(iii) without limiting the provisions of CLAUSE (I) next above, from time to
time (A) upon reasonable notice during regular business hours, not more than
four times in any calendar year, or (B) on request of the Initial Purchaser,
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the Administrator or the Relationship Bank at any time when a Purchase
Termination Event or a Liquidation Event or Unmatured Liquidation Event under
the XXX Agreement shall have occurred and be continuing, permit certified public
accountants or other auditors acceptable to the Administrator and Relationship
Bank to conduct a review of KBK's books and records with respect to the Pool
Receivables and Related Assets.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Pool 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 Pool Receivables (including, without limitation, records
adequate to permit the daily identification of outstanding Unpaid Balances by
Obligor and related debit and credit details of the Receivables and all
Collections of and adjustments to existing Receivables).
(e) LOCATION OF OFFICES AND RECORDS. Keep its chief place of business and
chief executive office, and the offices where it keeps its records concerning
the Receivables, all related Contracts, all related Factoring Agreements and all
purchase orders and other agreements related to the Receivables (and all
original documents relating thereto), at the address(es) referred to in SECTION
5.1(M) or, upon 30 days' prior written notice to the Administrator, at such
other locations in jurisdictions where all action required by SECTION 7.3 shall
have been taken and completed.
(f) CREDIT AND COLLECTION POLICIES. Comply in all material respects with
the Credit and Collection Policy in regard to each Pool Receivable, the related
Contract and the related Factoring Agreement (if any).
(g) COLLECTIONS. Instruct all Obligors to cause all Collections on Pool
Receivables to be (i) deposited in Lock-Box Accounts which are covered by
Lock-Box Agreements, (ii) deposited in the Collection Account or (iii) deposited
to certain post-office boxes designated by the Servicer; PROVIDED, HOWEVER, that
in the case of Collections on Receivables deposited to such post office boxes,
the Servicer shall deposit such Collections in Lock-Box Accounts which are
covered by Lock-Box Agreements within two (2) Business Days of receipt.
(h) TRANSACTION DOCUMENTS. Perform and comply in all material respects
with all of its covenants and agreements set forth in the other Transaction
Documents to which it is a party.
(i) PERFORMANCE AND COMPLIANCE WITH POOL RECEIVABLES, CONTRACTS AND
FACTORING AGREEMENTS. At its expense timely and fully perform and comply with
all material provisions, covenants and other provisions, if any, required to be
observed by it under the Contracts and Factoring Agreements related to the Pool
Receivables.
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SECTION 6.2 REPORTING REQUIREMENTS OF KBK. From the date hereof until the
Final Payout Date, unless the Initial Purchaser shall otherwise consent in
writing, KBK will furnish to the Initial Purchaser, the Administrator and the
Relationship Bank:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event
within 45 days after the end of each of the first three quarters of each fiscal
year of KBK, copies of the quarterly financial statements of KBK and its
Subsidiaries prepared on a consolidated basis and on a consolidating basis, in
each case in conformity with GAAP, duly certified by the chief financial officer
of KBK;
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any event
within 90 days after the end of each fiscal year of KBK, copies of the audited
annual financial statements of KBK and its Subsidiaries prepared on a
consolidated basis and on a consolidating basis, in each case in conformity with
GAAP, duly certified by independent certified public accountants of recognized
national standing selected by KBK;
(c) REPORTS TO HOLDERS AND EXCHANGES. In addition to the reports required
by SUBSECTIONS (A) and (B) next above, promptly upon the filing thereof, copies
of any reports that KBK files with the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended, and regulations thereunder, as
from time to time in effect;
(d) ERISA. Promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any Reportable Event defined in Article IV
of ERISA which KBK files under ERISA with the Internal Revenue Service, the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor or receives
from the Pension Benefit Guaranty Corporation;
(e) PURCHASE TERMINATION EVENTS, ETC. As soon as possible and in any event
within five (5) days after obtaining actual knowledge of the occurrence of any
Purchase Termination Event or Unmatured Purchase Termination Event, a written
statement of the chief financial officer or chief accounting officer of KBK
setting forth details of such event and the action that KBK proposes to take
with respect thereto;
(f) LITIGATION. As soon as possible and in any event within five (5)
Business Days of KBK's obtaining actual knowledge thereof, notice of (i) any
litigation, investigation or proceeding which may exist at any time which could
reasonably be expected to have a Material Adverse Effect and (ii) any
development in previously disclosed litigation which development could
reasonably be expected to have a Material Adverse Effect;
(g) AUDIT OF RECEIVABLES. Within one (1) year of the date of this
Agreement, and at least once during each calendar year thereafter, PROVIDED that
no more than one (1) year elapses between each audit report, an audit report,
prepared by KPMG Peat Marwick LLP or such other nationally recognized
independent certified public accountants, selected by KBK and reasonably
acceptable to the Initial Purchaser, the Administrator and the Relationship
Bank, as of a date no
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more than 90 days prior to the date of such audit report, substantially in the
form of the report delivered pursuant to Section 5.01(n) of the XXX Agreement
and covering such other matters as the Initial Purchaser, the Administrator or
the Relationship Bank may reasonably request;
(h) CHANGE IN BUSINESS, CREDIT AND COLLECTION POLICY OR CREDIT INSURANCE
POLICIES. Prior to its effective date, notice of (i) any material change in the
character of KBK's business, and (ii) any material change in the Credit and
Collection Policy (whether or not permitted by SECTION 6.3(C)); and
(i) OTHER. Promptly, from time to time, such other information, documents,
records or reports respecting the Receivables or the condition or operations,
financial or otherwise, of KBK, including any reports that Initial Purchaser has
furnished to KBK or any other Person under the XXX Agreement, as the Initial
Purchaser, the Administrator or the Relationship Bank may from time to time
reasonably request in order to protect the interests of the Initial Purchaser,
the Administrator or Purchaser under or as contemplated by this Agreement and
the other Transaction Documents.
SECTION 6.3 NEGATIVE COVENANTS OF KBK. From the date hereof until the
Final Payout Date, KBK will not:
(a) SALES, LIENS, ETC. (i) Except as otherwise provided herein and in the
other Transaction Documents, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien (other than any
Permitted Lien) upon or with respect to, any Pool Receivable or related Contract
or Related Security, or any interest therein, or any LockBox Account to which
any Collections of any Pool Receivable are sent, or any right to receive income
or proceeds from or in respect of any of the foregoing, and (ii) assert any
interest in the Pool Receivables, except as Servicer or subservicer; PROVIDED,
HOWEVER, that KBK shall be permitted to sell, assign or otherwise dispose of, or
create or suffer to exist any Lien upon or with respect to, any Pool Receivable
which has been repurchased by KBK from the Initial Purchaser (and the purchase
price paid therefor), or interest therein, and any Contract or Related Security
with respect thereto.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Extend, amend or otherwise
modify the terms of any Pool Receivable, or amend, modify or waive any material
term or condition of any Contract (other than provisions relating to fees and
prepayment penalties and providing for the payment and enforcement thereof) or
the provisions of a Factoring Agreement described in clause (iv) of the
definition of "Related Security" related thereto except as permitted as Servicer
under Section 8.02 of the XXX Agreement; PROVIDED, HOWEVER, that KBK may
terminate financing under a Factoring Agreement or Inventory Financing
Agreement, provided that such termination shall not amend or modify any Pool
Receivable created prior to such termination.
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(c) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Make any change in
the character of its business or in the Credit and Collection Policy, which
change would, in either case, impair the collectibility of any Pool Receivable
or otherwise materially adversely affect the interests or remedies of Initial
Purchaser under this Agreement or any other Transaction Document.
(d) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS. Add or terminate any bank
as a Lock-Box Bank or as a Collection Account Bank from those listed in SCHEDULE
7.03(D) to the XXX Agreement or make any change, or permit the Obligees to make
any changes, in instructions to Obligors regarding payments to be made to KBK,
Initial Purchaser or Servicer or payments to be made to any Lock-Box Bank unless
(i) the Initial Purchaser (with the consent of the Administrator and the
Relationship Bank) shall have approved such addition, termination or change, and
(ii) the Initial Purchaser and the Administrator shall have received duly
executed copies of Lock-Box Agreements with each new Lock-Box Bank or Collection
Account Agreement with the new Collection Account Bank, as the case may be.
(e) CHANGES TO CERTAIN DOCUMENTS. Except as otherwise permitted herein or
the XXX Agreement, enter into any amendment or modification of or supplement to
any of the other Transaction Documents to which it is a party.
(f) MERGERS, ACQUISITIONS, SALES, ETC. Unless the Relationship Bank shall
have consented thereto, be a party to any merger or consolidation, or purchase
or otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership or joint venture interest in, any other Person, or,
except in the ordinary course of its business, sell, transfer, convey or lease
substantially all of its assets (other than pursuant to this Agreement and the
other Transaction Documents), except for (i) any such merger or consolidation of
or by any wholly-owned Subsidiary into KBK, (ii) any such purchase or other
acquisition by KBK of the assets or stock of any wholly-owned Subsidiary and
(iii) any such sale, transfer, conveyance lease or assignment by KBK to any
wholly-owned Subsidiary.
(g) NEGATIVE PLEDGES. Enter into or assume any agreement (other than this
Agreement and the other Transaction Documents) prohibiting the creation or
assumption of any Lien upon any Pool Receivables or Related Assets, whether now
owned or hereafter acquired, as contemplated by the Transaction Documents, or
otherwise prohibiting or restricting any transaction contemplated hereby or by
the other Transaction Documents.
(h) CHANGE IN NAME. Change its corporate name or the name under or by
which it does business, unless it shall have given the Servicer, the Initial
Purchaser, the Administrator and the Relationship Bank 30 days' prior written
notice thereof and unless, prior to any such change in name, KBK shall have
filed (or shall have caused to be filed) such financing statements or amendments
as the Servicer, the Initial Purchaser or the Administrator determines may be
necessary to continue the perfection of the Initial Purchaser's interest in the
Receivables and Related Assets.
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(i) DEPOSITS TO COLLECTION ACCOUNT. Deposit or otherwise credit, or cause
or permit to be so deposited or credited, to the Collection Account any cash or
cash proceeds other than Collections of Pool Receivables.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE PURCHASED ASSETS
SECTION 7.1 RIGHTS OF THE INITIAL PURCHASER.
(a) KBK hereby authorizes the Initial Purchaser, the Servicer and/or their
respective designees to take any and all steps in KBK's name and on behalf of
KBK that the Initial Purchaser, the Servicer and/or their respective designees
determine are necessary or desirable to collect all amounts due under any and
all Purchased Assets, including, without limitation, endorsing the name of KBK
on checks and other instruments representing Collections and enforcing all
Receivables and Related Assets.
(b) The Initial Purchaser shall have no obligation to account for, to
replace, to substitute or to return any Purchased Asset to KBK. The Initial
Purchaser shall have no obligation to account for, or to return to KBK,
Collections, or any interest or other finance charge collected pursuant thereto,
without regard to whether such Collections and charges are in excess of the
Purchase Price for such Purchased Assets.
(c) The Initial Purchaser shall have the unrestricted right to further
assign, transfer, deliver, hypothecate, subdivide or otherwise deal with the
Purchased Assets, and all of the Initial Purchaser's right, title and interest
in, to and under this Agreement, on whatever terms the Initial Purchaser shall
determine, pursuant to the XXX Agreement or otherwise.
(d) The Initial Purchaser shall have the sole right to retain any gains or
profits created by buying, selling or holding the Purchased Assets and shall
have the sole risk of and responsibility for losses or damages created by such
buying, selling or holding.
SECTION 7.2 RESPONSIBILITIES OF KBK. Anything herein to the contrary
notwithstanding:
(a) KBK agrees to deliver directly to the Servicer (for the Initial
Purchaser's account), within one (1) Business Day of receipt thereof, any
Collections that it receives, in the form so received, and agrees that all such
Collections shall be deemed to be received in trust for the Initial Purchaser
and shall be maintained and segregated separate and apart from all other funds
and moneys of KBK until delivery of such Collections to the Servicer.
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(b) KBK shall perform all of its obligations hereunder and its obligations
(if any) under the Contracts and Factoring Agreements related to the Pool
Receivables and Related Assets and under the related purchase orders to the same
extent as if such Receivables had not been sold, and the exercise by the Initial
Purchaser or its designee or assignee of the Initial Purchaser's rights
hereunder or in connection herewith shall not relieve KBK from such obligations.
(c) KBK hereby grants to the Initial Purchaser an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to take in
the name of KBK all steps necessary or advisable to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or transmitted
by KBK or transmitted or received by the Initial Purchaser (whether or not from
KBK) in connection with any Purchased Asset.
SECTION 7.3 FURTHER ACTION EVIDENCING PURCHASES. KBK agrees that from time
to time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, in order to perfect,
protect or more fully evidence the contribution or purchase of the Pool
Receivables and the Related Assets by the Initial Purchaser hereunder, or to
enable the Initial Purchaser to exercise or enforce any of its rights hereunder
or under any other Transaction Document. KBK further agrees from time to time,
at its expense, promptly to take all action that the Initial Purchaser, the
Servicer or the Administrator may reasonably request in order to perfect,
protect or more fully evidence such purchase of the Pool Receivables and the
Related Assets or to enable the Initial Purchaser or XXX (as the assignees
of the Initial Purchaser) to exercise or enforce any of its or their respective
rights hereunder or under any other Transaction Document in respect of the
Receivables and the Related Assets. Without limiting the generality of the
foregoing, upon the request of the Initial Purchaser, KBK will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as the Initial Purchaser or the Administrator may reasonably determine
to be necessary or appropriate; and
(b) xxxx the master data processing records evidencing the Pool
Receivables and, if requested by the Initial Purchaser or the Administrator,
legend, or cause the related Obligees to legend, the related Contracts.
KBK hereby authorizes the Initial Purchaser or its designee to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Receivables and Related
Assets of KBK, in each case whether now existing or hereafter generated. If KBK
fails to perform any of its agreements or obligations under this Agreement, the
Initial Purchaser or its designee may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the
reasonable expenses of the Initial Purchaser or its designee or assignee
incurred in connection therewith shall be payable by KBK under SECTION 10.6.
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SECTION 7.4 COLLECTION OF RECEIVABLES; RIGHTS OF THE INITIAL PURCHASER AND
ITS ASSIGNEES.
(a) KBK hereby transfers to the Administrator on behalf of XXX (as
transferee of the Asset Interest in the Purchased Assets) the ownership of, and
the exclusive dominion and control over, all Lock-Box Accounts owned by KBK, and
KBK hereby agrees to take any further action that the Initial Purchaser or the
Administrator may reasonably request in connection with such transfer. In no
event shall the rights of the Administrator as set forth in this SECTION 7.4
constitute or be deemed to constitute a waiver of any rights that the Initial
Purchaser may have in amounts on deposit in the Lock-Box Accounts.
(b) At any time following the designation of a Servicer other than KBK
pursuant to the XXX Agreement:
(i) The Initial Purchaser or the Administrator may direct the
Obligors of Pool Receivables, or any of them, to pay all amounts payable
under any Pool Receivable directly to the Administrator or its designee.
(ii) KBK shall, at the Initial Purchaser's or the Administrator's
request and at KBK's expense, give notice of such ownership to each such
Obligor and direct that payments be made directly to the Administrator or
its designee.
(iii) KBK shall, at the Initial Purchaser's or the Administrator's
request, (A) assemble all of the documents, instruments and other records
(including, without limitation, computer programs, tapes and disks) which
evidence the Pool Receivables, and the related Contracts and Related
Security, or which are otherwise necessary or desirable to collect such
Receivables, and make the same available at a place selected by the
Administrator, and (B) segregate all cash, checks and other instruments
received by it from time to time constituting Collections of Pool
Receivables, in a manner reasonably acceptable to the Administrator, and
promptly upon receipt remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the
Administrator or its designee.
(iv) KBK and the Initial Purchaser each hereby authorizes the
Administrator to take any and all steps in KBK's name and on behalf of KBK
and the Initial Purchaser that are necessary or desirable, in the
reasonable determination of the Administrator to collect all amounts due
under any and all Purchased Assets, including, without limitation, giving
orders to carriers or other bailees of goods covered by Receivables to
change the consignee of such goods or to release and deliver such goods to
the relevant Obligors, endorsing the Initial Purchaser's and/or KBK's name
on checks and other instruments representing Collections and enforcing the
Receivables, Related Assets and the Contracts related to such Receivables.
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SECTION 7.5 APPLICATION OF COLLECTIONS. Any payment by an Obligor in
respect of any indebtedness owed by it to KBK shall, except as otherwise
specified by such Obligor or otherwise required by contract or law, be applied,
first, as a Collection of any Receivable or the Receivables of such Obligor to
the extent of any amounts then due and payable thereunder and, second, to any
other indebtedness of such Obligor to KBK.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION RESULTING FROM PURCHASE TERMINATION EVENT.
(a) PURCHASE TERMINATION EVENTS. Each of the following events or
occurrences described in this SECTION 8.1(A) shall constitute a "PURCHASE
TERMINATION EVENT":
(i) (A) A Liquidation Event of the type described in Section
10.01(a)(ii) of the XXX Agreement shall have occurred or (B) a Liquidation
Event shall have occurred (other than a Liquidation Event described in
SUBCLAUSE (A) above), and the Administrator shall have declared the
commencement of the Liquidation Period; or
(ii) KBK (A) shall fail to make any payment or deposit to be made by
it when due under ARTICLE III and such failure shall remain unremedied for
one (1) Business Day, or (B) shall fail to make any other payment or
deposit to be made by it hereunder or under any other Transaction Document
to which it is a party within two (2) Business Days (ten (10) days with
respect to payment obligations under SECTION 9.1 or SECTION 10.6) after
notice from the relevant payee or, if later, when such payment is
otherwise due hereunder or under such other Transaction Document; or
(iii) Any representation or warranty made or deemed to be made by
KBK (or any of its officers) under or in connection with this Agreement,
any other Transaction Document or any other information or report
delivered pursuant hereto or thereto shall prove to have been false or
incorrect in any material respect when made or deemed made and such
condition (other than a breach of any of the representations set forth in
SECTION 5.1(D), (K) or (W) for which KBK has satisfied its payment
obligations under SECTION 3.5) shall continue unremedied for a period of
ten (10) Business Days after (A) written notice thereof shall have been
given to KBK by the Servicer or the Initial Purchaser or (B) KBK has
actual knowledge thereof; or
(iv) KBK shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement on its part to be performed or
observed and such failure shall remain unremedied for five (5) Business
Days after (A) written notice
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thereof shall have been given to KBK by the Servicer or the Initial
Purchaser or (B) KBK has actual knowledge thereof; or
(v) The representation set forth in SECTION 5.1(R)(II) shall
no longer be true;
or
(vi) An Event of Bankruptcy shall have occurred with respect to KBK.
(b) OPTIONAL TERMINATION BY THE INITIAL PURCHASER. Upon the occurrence of
a Purchase Termination Event (other than a Purchase Termination Event described
in SECTION 8.1(A)(VI)), the Initial Purchaser, with the consent of the
Administrator, shall have the option, by notice to KBK (with a copy to the
Administrator), to terminate its obligations to purchase Receivables under this
Agreement. Notwithstanding the occurrence of the Purchase Termination Date, all
obligations of KBK under the Transaction Documents that shall have arisen prior
to the Purchase Termination Date shall survive until each such Obligation has
been finally and fully paid and performed by KBK.
SECTION 8.2 AUTOMATIC TERMINATION. The agreement of KBK to sell
Receivables hereunder, and the agreement of the Initial Purchaser to purchase
Receivables from KBK hereunder, shall terminate automatically on the earlier to
occur of (a) a Purchase Termination Event of the type described in SECTION
8.1(A)(VI) and (b) the date on which the Liquidation Period shall have commenced
under the XXX Agreement.
SECTION 8.3 ADDITIONAL REMEDIES. Upon any termination of the Facility as a
result of the occurrence of a Purchase Termination Event, the Initial Purchaser
shall have, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of each
applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of a Purchase
Termination Event hereunder shall not deny to the Initial Purchaser any remedy
in addition to termination of the Facility to which the Initial Purchaser may be
otherwise appropriately entitled, whether by statute or applicable law, at law
or in equity.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNITIES BY KBK.
(a) INDEMNIFICATION. Without limiting any other rights which any
Indemnified Party (as defined below) may have hereunder or under applicable law,
KBK hereby agrees to indemnify the Initial Purchaser, each of its successors,
permitted transferees and assigns (including without limitation, XXX), each
"INDEMNIFIED PARTY" as defined in the XXX
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Purchase Agreement, and all officers, directors, shareholders, controlling
Persons, employees and agents of any of the foregoing (each of the foregoing
Persons being individually called an "INDEMNIFIED PARTY"), forthwith on demand
(which demand shall be accompanied by a statement setting forth the reason for
such demand and a calculation of the amount thereof), from and against any and
all damages, losses, claims (whether on account of settlements or otherwise, and
whether or not the relevant Indemnified Party is a party to any action or
proceeding that gives rise to any Indemnified Losses (as defined below)),
judgments, liabilities and related costs and expenses (including reasonable
attorneys' fees and disbursements) awarded against or incurred by any of them
arising out of or as a result of any of the following (all of the foregoing
being collectively called "INDEMNIFIED LOSSES"):
(i) any transfer by KBK of any interest in any Pool Receivable or
Related Assets other than the transfer of Receivables by KBK to the
Initial Purchaser pursuant to this Agreement;
(ii) any representation or warranty made by KBK under or in
connection with this Agreement or any other Transaction Document, or any
other information or report delivered by or on behalf of KBK pursuant
hereto, which shall have been false, incorrect or misleading in any
material respect when made or deemed made or delivered, as the case may
be;
(iii) the failure by KBK to comply with any applicable law, rule or
regulation with respect to any Pool Receivable, the related Contract or
the related Factoring Agreement (if any), or the nonconformity of any Pool
Receivable, the related Contract or the related Factoring Agreement (if
any) with any such applicable law, rule or regulation;
(iv) the failure to vest in the Initial Purchaser the ownership of
the Pool Receivables, free and clear of any Lien, other than any Permitted
Lien, whether existing at the time of any Purchase or at any time
thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables or Related Assets as required under the Transaction Documents,
whether at the time of any contribution or Purchase or at any time
thereafter;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Pool Receivable
(including, without limitation, a defense based on such Pool Receivable's
or the related Contract's 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 services
related to such Receivable or the furnishing or failure to furnish such
merchandise or services;
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(vii) any matter described in SECTION 3.5(A) or (B) (to the extent
of any Indemnified Losses not fully covered by a Noncomplying Receivable
Adjustment or Dilution Adjustment);
(viii) any failure of KBK, as Servicer or otherwise, to perform its
duties or obligations in accordance with this Agreement;
(ix) any products liability claim arising out of or in connection
with merchandise or services that are the subject of any Pool Receivable;
(x) any breach of any related Contract with respect to any Pool
Receivable by the Originator (to the extent of any Indemnified Losses not
fully covered by a Noncomplying Receivable Adjustment or Dilution
Adjustment);
(xi) any litigation, proceedings or investigation against KBK; and
(xii) any tax or governmental fee or charge (but not including taxes
upon or measured by net income), all interest and penalties thereon or
with respect thereto, and all out-of-pocket costs and expenses, including
the reasonable fees and expenses of counsel in defending against the same,
which may arise by reason of the contribution, purchase or ownership of
the Pool Receivables or any interest therein or in any goods which secure
any such Receivables.
Notwithstanding the foregoing (and with respect to CLAUSE (II) below, without
prejudice to the rights that the Initial Purchaser may have pursuant to the
other provisions of this Agreement or the provisions of any of the other
Transaction Documents), in no event shall any Indemnified Party be indemnified
for any Indemnified Losses (i) resulting from gross negligence or willful
misconduct on the part of such Indemnified Party, or (ii) to the extent the same
includes losses in respect of Receivables and reimbursement therefor that would
constitute credit recourse to KBK or the Servicer for the amount of any
Receivable or Related Asset not paid by the related Obligor (except as otherwise
specifically provided in this SECTION 9.1). IT IS THE EXPRESS INTENT OF THE
PARTIES HERETO THAT SUCH INDEMNIFIED PARTY BE INDEMNIFIED FOR INDEMNIFIED LOSSES
(SUBJECT TO THE EXCLUSIONS SET FORTH ABOVE) RESULTING FROM THE ORDINARY, SOLE OR
CONTRIBUTORY NEGLIGENCE OF SUCH INDEMNIFIED PARTY.
(b) CONTEST OF TAX CLAIM; AFTER-TAX BASIS. If any Indemnified Party shall
have notice of any attempt to impose or collect any tax or governmental fee or
charge for which indemnification will be sought from KBK under SECTION
9.1(A)(XII), such Indemnified Party shall give prompt and timely notice of such
attempt to KBK and KBK shall have the right, at its expense, to participate in
any proceedings resisting or objecting to the imposition or collection of any
such tax, governmental fee or charge. Indemnification hereunder shall be in an
amount necessary to make the Indemnified Party whole after taking into account
any tax consequences
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to the Indemnified Party of the payment of any of the aforesaid taxes and the
receipt of the indemnity provided hereunder or of any refund of any such tax
previously indemnified hereunder, including the effect of such tax or refund on
the amount of tax measured by net income or profits which is or was payable by
the Indemnified Party.
(c) CONTRIBUTION. If for any reason the indemnification provided above in
this SECTION 9.1 (and subject to the exceptions set forth therein) is
unavailable (other than by reason of a final adjudication by a court of
competent jurisdiction that a claim is not within the scope of such
indemnification) to an Indemnified Party or is insufficient to hold an
Indemnified Party harmless, then KBK shall contribute to the maximum amount
payable or paid by such Indemnified Party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by such Indemnified Party on the one hand and KBK on
the other hand, but also the relative fault of such Indemnified Party (if any)
and KBK and any other relevant equitable considerations.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 AMENDMENTS; WAIVERS; ETC.
(a) The provisions of this Agreement may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
signed by the Initial Purchaser and KBK (with respect to an amendment) or by the
Initial Purchaser (with respect to a waiver or consent by it) and in either case
with the consent of the Administrator, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) No failure or delay on the part of the Initial Purchaser, any
Indemnified Party or any XXX Party or any other third party beneficiary in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No notice to or demand on KBK in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or approval by the Initial
Purchaser, the Administrator or the Servicer under this Agreement shall, except
as may otherwise be stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval under this Agreement shall
require any similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION 10.2 NOTICES, ETC. All notices and other communications to be
given hereunder to any party hereto shall be given to such party at its address
or facsimile number set forth under its signature hereto and otherwise in
accordance with Section 14.02 of the XXX Agreement. Copies of all notices and
other communications provided for hereunder
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shall be delivered to the Administrator at its address for notices set forth in
the XXX Agreement. All notices and communications provided for hereunder shall
be effective in accordance with the last sentence of Section 14.02 of the XXX
Agreement.
SECTION 10.3 CUMULATIVE REMEDIES. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. Without limiting
the foregoing, KBK hereby authorizes the Initial Purchaser, at any time and from
time to time, to the fullest extent permitted by law, to set off, against any
obligations that are then due and payable of KBK, or that are not then due and
payable from KBK but are accruing in respect of the then current month, any and
all indebtedness at any time owing by the Initial Purchaser to or for the credit
or the account of KBK.
SECTION 10.4 BINDING EFFECT; ASSIGNABILITY; SURVIVAL OF PROVISIONS. This
Agreement shall be binding upon and inure to the benefit of the Initial
Purchaser and KBK and their respective successors and permitted assigns. KBK may
not assign any of its rights hereunder or any interest herein without the prior
written consent of the Initial Purchaser and the Administrator. 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 the
Final Payout Date or such time as the parties hereto shall agree. The rights and
remedies with respect to any breach of any representation and warranty made by
KBK pursuant to ARTICLE V and the indemnification and payment provisions of
ARTICLE IX and SECTIONS 10.6 and 10.14 shall be continuing and shall survive any
termination of this Agreement.
SECTION 10.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE PERFECTION
OF THE INTERESTS OF THE INITIAL PURCHASER IN THE RECEIVABLES AND THE RELATED
ASSETS ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
SECTION 10.6 COSTS, EXPENSES AND TAXES. In addition to the obligations of
KBK under ARTICLE IX, KBK agrees to pay on demand:
(a) all reasonable out-of-pocket and other costs and expenses (including
reasonable attorneys' fees and expenses incurred at or before any trial or on
appeal or otherwise) incurred by the Initial Purchaser or any successor in
interest to the Initial Purchaser, in connection with:
(i) the preparation, negotiation, execution and delivery of this
Agreement and the other Transaction Documents, any amendment of or consent
or waiver under any of the Transaction Documents which is requested or
proposed by KBK (whether or not consummated), or the enforcement against
KBK of, or any actual or claimed breach by KBK of, including, without
limitation, the reasonable fees and expenses of counsel to the
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Initial Purchaser or any successor in interest incurred at or before any
trial or on appeal or otherwise in connection with any of the foregoing or
in advising such Person as to its respective rights and remedies under any
of the Transaction Documents in connection with any of the foregoing;
(ii) the administration (including periodic auditing as provided for
herein) of this Agreement and the other Transaction Documents, including,
to the extent provided in SECTION 6.1(C), all reasonable out-of-pocket
expenses (including reasonable fees and expenses of independent
accountants and of the Relationship Bank with respect to audits conducted
thereby), incurred in connection with any review of KBK's books and
records either prior to the execution and delivery hereof or pursuant to
SECTION 6.1(C) or 6.2(G); and
(b) all stamp and other taxes (excluding upon or measured by net income)
and fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement or the other Transaction
Documents, and KBK agrees to indemnify each Indemnified Party against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
SECTION 10.7 SUBMISSION TO JURISDICTION; WAIVER OF IMMUNITIES. EACH PARTY
HERETO HEREBY IRREVOCABLY ACKNOWLEDGES AND AGREES THAT:
(A) IT IRREVOCABLY (I) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED
STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF
ANY TEXAS STATE COURT, IN EITHER CASE SITTING IN FORT WORTH, TEXAS IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (II) AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY
IN SUCH TEXAS STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (III)
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(B) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE
OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION,
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN
CONNECTION WITH THIS AGREEMENT.
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SECTION 10.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), ACTIONS OF ANY
OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL NOT BE TRIED BEFORE A JURY.
SECTION 10.9 INTEGRATION. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and thereof and
shall together constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
SECTION 10.10 CAPTIONS AND CROSS REFERENCES. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise provided
herein, references in this Agreement to any "Section," "Exhibit" or "Schedule"
are to such Section of or Exhibit or Schedule to this Agreement, as the case may
be. The words "herein," "hereof," and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the appendices, exhibits
and schedules hereto, as the same may from time to time be amended or
supplemented and not to any particular section, subsection or clause contained
in this Agreement.
SECTION 10.11 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
SECTION 10.12 ACKNOWLEDGMENT AND CONSENT.
(a) KBK, individually and as initial Servicer, acknowledges that,
contemporaneously herewith or at any time hereafter, the Initial Purchaser is
assigning or will assign to XXX, pursuant to the XXX Agreement, one or more
undivided interests in all of the Initial Purchaser's rights, title and interest
in, to and under the Purchased Assets, this Agreement and all of the other
Transaction Documents. KBK, individually and as initial Servicer, hereby
consents to such assignments, including, without limitation, the assignment by
the Initial Purchaser to XXX of (i) the right of the Initial Purchaser, at
any time, to enforce this
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Agreement against KBK and the obligations of KBK thereunder, (ii) the right to
appoint a successor to the Servicer as set forth therein, (iii) the right, at
any time, to give or withhold any and all consents, requests, notices,
directions, approvals, demands, extensions or waivers under or with respect to
this Agreement, any other Transaction Document or the obligations in respect of
KBK hereunder or thereunder to the same extent as the Initial Purchaser may do,
and (iv) all of the Initial Purchaser's rights, remedies, powers and privileges,
and all claims of the Initial Purchaser against KBK, under or with respect to
this Agreement and the other Transaction Documents (whether arising pursuant to
the terms of this Agreement or otherwise available at law or in equity). Each of
the parties hereto acknowledges and agrees that the XXX Parties are third
party beneficiaries of the rights of the Initial Purchaser arising hereunder and
under the other Transaction Documents to which KBK is a party.
(b) KBK hereby agrees to execute all agreements, instruments and
documents, and to take all other action, that the Initial Purchaser or the
Administrator determines is necessary or reasonably desirable to evidence its
consent described in SUBSECTION (A) above.
(c) KBK hereby acknowledges that its obligations to XXX, as assignee
of the Initial Purchaser, are and shall be, to the extent permitted by
applicable law or not prohibited by any order of any court or administrative or
regulatory authority, absolute and unconditional under any and all circumstances
and shall be unaffected by any claims, offsets or other defenses KBK may have
against the Initial Purchaser (other than in respect of the Purchaser Note), and
KBK agrees that it shall not interpose any such claims, offsets or defenses as a
defense to its performance of its obligations under the Transaction Documents to
which it is a party.
SECTION 10.13 NO PARTNERSHIP OR JOINT VENTURE. Nothing contained in this
Agreement shall be deemed or construed by the parties hereto or by any third
person to create the relationship of principal and agent or of partnership or of
joint venture.
SECTION 10.14 NO PROCEEDINGS. KBK hereby agrees that it will not institute
against the Initial Purchaser or XXX, or join any other Person in
instituting against the Initial Purchaser or XXX, any insolvency proceeding
(namely, any proceeding of the type referred to in the definition of "EVENT OF
BANKRUPTCY") so long as (in relation to the Initial Purchaser) the Final Payout
Date shall not have occurred or there shall not have elapsed one (1) year PLUS
one (1) day since the Final Payout Date (or in relation to XXX) any
commercial paper notes issued by XXX shall be outstanding or there shall not
have elapsed one (1) year PLUS one (1) day since the last day on which any such
commercial paper note shall have been outstanding.
SECTION 10.15 CONFIDENTIALITY. KBK hereby acknowledges and agrees to be
bound by the provisions of Section 14.08 of the XXX Agreement as if it were a
party thereto. The Initial Purchaser, for the benefit of KBK, hereby
acknowledges and agrees to be bound by the provisions of Section 14.07 of the
XXX Agreement to the same extent as the XXX Parties.
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SECTION 10.16 INTEREST. It is the express intent of the parties that
Article 5069-1.14 of the Texas Revised Civil Statutes apply to the Purchases
occurring under this Agreement. Without limitation to such intent or to the
express intent of the parties set forth in the first and third sentences of
SECTION 1.6 hereof, if the Purchases occurring under this Agreement are ever
determined to constitute financing arrangements, the parties hereto intend that
the Initial Purchaser shall conform strictly to usury laws applicable to it, if
any. Accordingly, if the transactions contemplated hereby would be usurious
under applicable law, if any, then, in that event, notwithstanding anything to
the contrary in this Agreement or any other agreement entered into in connection
with this Agreement, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under applicable law that is contracted
for, taken, reserved, charged or received by the Initial Purchaser under this
Agreement or under any other agreement entered into in connection with this
Agreement shall under no circumstances exceed the Highest Lawful Rate and any
excess shall be cancelled automatically and, if theretofore paid, shall at the
option of the Initial Purchaser be applied on the principal amount due the
Initial Purchaser or refunded by the Initial Purchaser to KBK, and (ii) in the
event that the maturity of any amount due is accelerated or in the event of any
prepayment or repurchase, then such consideration that constitutes interest
under law applicable to the Initial Purchaser, may never include more than the
Highest Lawful Rate and excess interest, if any, to the Initial Purchaser,
provided for in this Agreement or otherwise shall be cancelled automatically as
of the date of such acceleration, prepayment or repurchase and, if theretofore
paid, shall, at the option of the Initial Purchaser be credited by the Initial
Purchaser on the principal amount due to the Initial Purchaser or refunded by
the Initial Purchaser to KBK. All sums paid or agreed to be paid to the Initial
Purchaser for the use, forbearance or detention of sums due hereunder shall, to
the extent permitted under applicable law, be amortized, prorated, allocated and
spread throughout the full term of the payments until payment in full so that
the rate or amount of interest or account of such payments does not exceed the
applicable usury ceiling. To the extent that Article 5069-1.04 of the Texas
Revised Civil Statutes is relevant to the Initial Purchaser for purposes of
determining the Highest Lawful Rate, the Initial Purchaser hereby elects to
determine the applicable rate ceiling under such Article by the indicated
(weekly) rate ceiling from time to time in effect, subject to the Initial
Purchaser's right subsequently to change such method in accordance with
applicable law. The term "Highest Lawful Rate" as used herein means the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received under this Agreement, under
laws applicable to the Initial Purchaser that are presently in effect or, to the
extent allowed by law, under such applicable laws that may hereafter be in
effect in that allow a higher maximum nonusurious interest rate than applicable
laws now allow. Article 5069, Chapter 15 of the Texas Revised Civil Statutes
(which regulates certain revolving credit loans and revolving triparty accounts)
shall not apply to this Agreement.
-33-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
KBK FINANCIAL, INC., individually and as initial
Servicer
By: ___________________________________
Name: _________________________________
Title: ________________________________
Address:
2200 City Center II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
KBK RECEIVABLES CORPORATION, as Initial
Purchaser
By: ___________________________________
Name: _________________________________
Title: ________________________________
Address:
2200 City Center II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
