EXHIBIT 10.17
SECOND AMENDMENT TO
RECEIVABLES PURCHASE AGREEMENT
AND AGREEMENT
This Second Amendment to Receivables Purchase Agreement and
Agreement ("Second Amendment") is made as of the 11th day of December, 1996, by
and among CITYSIDE FINANCE CORPORATION I, a Minnesota corporation ("Seller"),
CITYSIDE FINANCIAL SERVICES OF WISCONSIN, INC., a Wisconsin corporation (in its
capacity as seller of certain receivables, "Cityside", and in its capacity as
servicer of those receivables, "Servicer", CLIPPER RECEIVABLES CORPORATION, a
Delaware corporation ("Senior Purchaser"), NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association (in its capacity as subordinated
purchaser, "Subordinated Purchaser", and together with Senior Purchaser,
collectively "Purchasers"), STATE STREET BOSTON CAPITAL CORPORATION, a
Massachusetts corporation (the "Administrator"), NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association (in its capacity as
relationship bank, the "Relationship Bank") and X.X. Xxxxxxxx, Inc., a Minnesota
corporation ("CHR").
RECITALS
A. Seller, Servicer, Senior Purchaser, Subordinated Purchaser, the
Administrator and the Relationship Bank have entered into a Receivables Purchase
Agreement dated as of October 23, 1995 (as amended by a First Amendment dated as
of April 1, 1996, the "Purchase Agreement"), pursuant to which the Purchasers
have agreed to purchase undivided percentage interests in certain receivables
purchased by Seller from Cityside.
B. Seller wishes to extend and increase the size of the facility set
forth and described in the Purchase Agreement, wishes to increase certain
investment and purchase limits, establish a reserve fund and, pursuant to the
terms and subject to the conditions set forth in this Second Amendment, the
other parties hereto have agreed to such request.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Except as otherwise expressly set forth herein, all
capitalized terms used in this Second Amendment which are defined in the
Purchase Agreement shall have the same meanings assigned to them in the Purchase
Agreement.
2. Representations and Warranties of Seller. To induce Purchasers to
enter into this Second Amendment, Seller hereby represents and warrants to the
Purchaser, the Relationship Bank and the Administrator as follows:
(a) The Transaction Documents to which Seller is a party constitute
the legal, valid and binding agreements of Seller, are subject to no
defenses, counterclaims, rights of
offset or recoupment and are enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(b) The representations and warranties contained in Section 6.01 of
the Purchase Agreement are true and correct as of the date hereof as though
made on and as of this date, except to the extent that such representations
and warranties relate solely to an earlier date.
(c) No event has occurred and is continuing or would result from the
execution and delivery of this Second Amendment which constitutes or would
constitute a Liquidation Event, default or similar event under the Purchase
Agreement, any other Transaction Document or any other agreement,
indenture, evidence of indebtedness or other obligation of Seller.
3. Representation and Warranty of CHR. To induce Purchasers to enter
into this Second Amendment, CHR hereby represents and warrants to the
Purchasers, the Relationship Bank and the Administrator that the CHR Support
Agreement, as amended, constitutes the legal, valid and binding agreement of
CHR, is subject to no defenses, counterclaims, rights of offset or recoupment
and is enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
4. Amendment to Increase Facility Amount. The definition of "Facility
Amount" appearing in Appendix A to the Purchase Agreement is hereby restated in
its entirety to read as follows:
"'Facility Amount' shall mean $55,042,222.22, or such higher amount
as may be established in accordance with Section 1.05(b)".
5. Amendment of Senior Purchase Limit and Senior Investment Limit.
Section 1.01(b) of the Purchase Agreement is hereby amended by restating
Sections 1.01(b)(i)(A) through (D) in their entirety as follows:
"(A) the Senior Investment would not exceed the product of (x) 90%
and (y) the Facility Amount divided by 94% (the "Senior Purchase
Limit"),
(B) the Senior Investment would not exceed 90% of the Net
Receivables Balance (the "Senior Investment Limit"),
(C) the Subordinated Investment would not be less than 4% of the
Net Receivables Balance and
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(D) the Seller Amount would not be less than 6% of the Net
Receivables Balance; and".
6. Amendment of Subordinated Purchase Limit and Subordinated
Investment Limit. Section 1.01 of the Purchase Agreement is hereby amended by
restating Sections 1.01(b)(ii)(A) through (C) in their entirety as follows:
"(A) the Subordinated Investment would not exceed the product of (x)
4% and (y) the Facility Amount divided by 94% (the "Subordinated
Purchase Limit"),
(B) the Subordinated Investment would not exceed 4% of the Net
Receivables Balance (the "Subordinated Investment Limit"), and
(C) the Seller Amount would not be less than 6% of the Net
Receivables Balance".
7. Amendment of Purchase Prices. Section 1.01(c) of the Purchase
Agreement is hereby amended by replacing, (a) in subsection (i) thereof, the
phrase "equal to eighty-four percent (84%)" with the phrase "equal to ninety
percent (90%)" and (b) in subsection (ii) thereof, the phrase "equal to the
eight percent (8%)" with the phrase "equal to four percent (4%)".
8. Amendment of Purchasers' Percentages. Section 1.03(a) of the
Purchase Agreement is hereby amended by restating the opening and subsection (i)
thereof in their entirety as follows:
"(a) Calculations. On any date, the "Percentage" with respect to
Senior Purchaser and the Senior Interest shall be 90% (herein called the
"Senior Percentage"), and with respect to Subordinated Purchaser and the
Subordinated Interest shall be 4% (herein called the "Subordinated
Percentage"); provided that during any Liquidation Period, the Percentages
shall be as follows:
(i) prior to the occurrence of a Liquidation Event, the Senior
Percentage shall be 95.744681% and the Subordinated Percentage shall
be 4.255319%;"
9. Amendment to extend Termination Date. Clause (c) of the
definition of "Termination Date" appearing in Appendix A to the Purchase
Agreement is hereby restated in its entirety to read as follows:
"(c) October 30, 1998 or such later date as may be established
pursuant to Section 1.05".
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10. Amendments and Agreements Relating to Fee Provisions.
(a) Section 1.05(b) of the Purchase Agreement is hereby amended by
restating clause (ii) thereof in its entirety as follows:
"(ii) if any such increase is granted after the date of the Second
Amendment hereto, Seller shall be obligated to pay an additional one-
time fee equal to the amount set forth in the supplemental fee letter
of even date with the Second Amendment hereto, and".
(b) Section 1.05(c) of the Purchase Agreement is hereby amended by
restating clause (ii) thereof in its entirety as follows:
"(ii) if any such extension is granted after the date of the Second
Amendment hereto, Seller shall be obligated to pay an additional one-
time fee equal to the amount set forth in the supplemental fee letter
of even date with the Second Amendment hereto, and".
(c) With respect to the Program Fee referred to in Section 4.01 of
the Purchase Agreement, Seller hereby agrees that such Program Fee shall be
determined in accordance with a supplemental fee letter of even date with
the Second Amendment hereto.
11. Amendments in Connection with Establishment of Reserve Fund,
Trigger Events; Liquidation Events; Etc.
(a) Section 3.01(a) of the Purchase Agreement is hereby amended by
(i) restating the second sentence thereof in its entirety as follows:
"The Paying Agent shall establish for the benefit of the Purchasers
and Seller to the extent of their respective interests therein an
account (the 'Collection Account') and for the benefit of the
Purchasers a second account (the 'Reserve Account'), each of which
shall be a segregated trust account maintained with the Paying Agent.
All amounts on deposit in the Reserve Account shall at such time as
the Paying Agent shall have actual knowledge of the occurrence and
continuance of a Liquidation Event be paid by the Paying Agent on the
next following Settlement Date (A) to Senior Purchaser to reduce the
Senior Investment until reduced to zero or (B) if the Senior
Investment shall then be zero, to the Subordinated Purchaser to reduce
the Subordinated Investment also until reduced to zero. If at any time
the balance in the Reserve Account shall be required to be reduced to
zero because of the second proviso to the definition of Trigger
Threshold Amount, and if at such time no Liquidation Event or
Unmatured Liquidation Event shall have occurred and be continuing, the
Paying Agent shall deposit in the Collection Account for distribution
in accordance with Section 3.03 on the next following Settlement Date,
all funds then on deposit in the Reserve Account. Funds on
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deposit in the Reserve Account shall be invested in accordance with
Section 3.1 as if such Account were the Collection Account."
(b) Section 3.03(b)(ii) of the Purchase Agreement is hereby amended
by restating clause tenth thereof in its entirety as follows:
"tenth, any remaining amounts shall be paid to Seller; provided, that
upon the occurrence of a Trigger Event, the Capture Percentage of such
remaining amounts shall be deposited in the Reserve Account until the
amount on deposit therein shall equal the Trigger Threshold Amount at
which time any thereafter remaining amounts shall be paid to Seller;
provided, however, that if the Paying Agent has actual knowledge that
a Liquidation Event has occurred and is continuing, no further amounts
shall be deposited in the Reserve Account or paid to Seller and
instead all remaining amounts shall be deposited in the Collection
Account.".
(c) Section 9.01(g) of the Purchase Agreement is hereby restated in
its entirety as follows:
"(g) prior to the Purchase Termination Date, (i) the
Delinquency Ratio for the single month ending on any Cut-Off Date
shall exceed 3.50% or (ii) the Delinquency Ratio for the three month
period ending on any Cut-Off Date shall exceed 3.00% or (iii) the
Default Ratio for the single month ending on any Cut-Off Date shall
exceed 4.00% or (iv) the Default Ratio for the three month period
ending on any Cut-Off Date shall exceed 3.50%; or".
(d) Appendix A (Definitions) to the Purchase Agreement is hereby
amended by adding the following new definitions in the alphabetically
correct place in such Appendix A:
"'Reserve Account' has the meaning set forth in Section 3.01(a).
'Series A Trigger Event' means the occurrence of any one of the
following events: (a) the Delinquency Ratio for the single month
ending on any Cut-Off Date shall exceed 3.00% or (b) the Delinquency
Ratio for the three month period ending on any Cut-Off Date shall
exceed 2.50% or (c) the Default Ratio for the three month period
ending on any Cut-Off Date shall exceed 2.75%.
'Series B Trigger Event' means the occurrence of the following
event: the Default Ratio for the three-month period ending on any Cut-
Off Date shall exceed 3.25%.
'Trigger Event' means the occurrence of a Series A Trigger Event
and/or a Series B Trigger Event.
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'Trigger Threshold Amount' means 2.00% of the Net Receivables
Balance provided, that so long as no Trigger Event shall have occurred
or after the expiration of 60 days after an existing Trigger Event
shall have been cured to the satisfaction of the Relationship Bank
and the Administrator, the Trigger Threshold Amount shall be zero."
12. Amendments of Eligibility Requirements and Concentrations.
(a) Section 3.04 of the Purchase Agreement is hereby amended by
adding new subsection (d) as follows:
"(d) Chapter 13 Receivable Limit. With respect to any Chapter 13
Receivable, 65% of the Unpaid Balance thereof, when added to the then
existing Chapter 13 Concentration exceeds 2% of the Net Receivables
Balance of the entire Receivables Pool.".
(b) The definition of the term "Defaulted Receivable" is amended by
restating subsection (b) thereof in its entirety as follows:
"(b) as to which an Event of Bankruptcy as to the Obligor
thereunder, other than (x) a Chapter 7 Filing, or (y) a Chapter 13
Filing to the extent, in the case of such a Chapter 13 Filing only, of
35% of the balance, has occurred and remains continuing,".
(c) Appendix A (Definitions) to the Purchase Agreement is hereby
amended by adding the following new definitions in the alphabetically
correct place in such Appendix A:
"'Capture Percentage' shall mean (a) if no Trigger Event shall
then exist, 0%, (b) if a Series A Trigger Event shall then have
occurred and be continuing, 50% and (c) if a Series B Trigger Event
shall then have occurred and be continuing, whether or not a Series A
Trigger Event shall then exist and be continuing, 100%.
'Chapter 13 Concentration' means the aggregate of all Net Chapter
13 Receivables that are not Defaulted Receivables.
'Chapter 13 Filing' means, with respect to an Obligor, the naming
of such Obligor as debtor in a petition filed under Chapter 13 of the
United States Bankruptcy Code, and includes, without limitation, the
duration of any debt adjustment plan implemented pursuant to such
filing.
'Chapter 13 Receivable' means a Pool Receivable that is not a
Defaulted Receivable, but with respect to which the Obligor
thereunder is the subject of a Chapter 13 Filing.
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'Net Chapter 13 Receivable' means 65% of the Unpaid Balance of a
Pool Receivable that is not a Defaulted Receivable, but with respect
to which the Obligor thereunder is the subject of a Chapter 13 Filing.
'Second Amendment' means the Second Amendment to this Agreement
date as of December 11, 1996.".
13. Amendment to Negative Covenants of Seller. Section 7.06(h) of the
Purchase Agreement is hereby amended by deleting, in subsection (i)(B) thereof,
the number "$5,000,000" and inserting in lieu thereof, the number $6,250,000.
14. Amendments and Agreements related to Origination of Receivables
by Certain Affiliates of Seller.
(a) It shall be understood and agreed that Seller may from time to
time purchase Eligible Receivables for inclusion in the Receivables Pool
that have been originated by an Origination Affiliate subject to the terms
and conditions of the Purchase Agreement as amended by this Second
Amendment.
(b) The definition of "Eligible Receivable" appearing in Appendix A
to the Purchase Agreement is hereby amended by restating subsections (a)(i)
and (ii) thereof in their entirety to read as follows:
"(a) which, (i) was originated by a Dealer, Cityside or an
Origination Affiliate for the retail sale of a Financed Vehicle in the
ordinary course of business, (ii) was (A) originated or purchased by,
and validly assigned to, Cityside, (B) was purchased by, and validly
assigned to, Seller pursuant to the Purchase and Sale Agreement and
(C) if originated or purchased by an Origination Affiliate, was
originated on an Eligible Contract and was purchased by, and validly
assigned to, such Origination Affiliate, and was purchased by, and
validly assigned to, Cityside pursuant to an Affiliate Purchase
Agreement in a legal "true sale", without recourse and upon the
simultaneous payment in full of the amount of the purchase price
therefor,".
(c) Appendix A (Definitions) to the Purchase Agreement is hereby
further amended by adding the following new definitions in the
alphabetically correct place in such Appendix A:
"'Affiliate Purchase Agreement' means an agreement approved in
writing by the Relationship Bank, the Subordinated Purchaser and the
Administrator between Cityside and an Origination Affiliate,
providing for the purchase of Receivables by Cityside from an
Origination Affiliate which Receivables and related Contracts, and
their origination, administration and servicing conform in all
respects to the requirements of the Credit and Collection Policy as
the same may
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be amended or otherwise modified with the written consent of the
Relationship Bank, the Subordinated Purchaser and the Administrator.
'Origination Affiliate' means an Affiliate of Cityside in the
business of originating and purchasing automobile and light truck
installment sales contracts and promissory notes similar to the
Contracts pursuant to underwriting, origination and servicing
standards set forth in the Credit and Collection Policy."
15. Satisfaction of Conditions Under Sections 1.05(b) and (c) of
Purchase Agreement.
(a) In satisfaction of the conditions to increase the Facility
Amount set forth in Section 1.05(b) of the Purchase Agreement:
(i) Purchasers, the Administrator and the Relationship Bank
hereby approve the requested increase in the Facility Amount to
$55,042,222.22;
(ii) The Administrator acknowledges receipt from Seller of
written notice requesting such increase not less than 30 days prior to
the effective date thereof;
(iii) The Administrator has received written confirmation from
Standard & Poor's and Xxxxx'x Investors Service, Inc. confirming that
the existing ratings on the Commercial Paper Notes will remain
unchanged after giving effect to the increase contemplated in
paragraph 4; and
(iv) Norwest, in its separate capacity as Liquidity Agent, and
Senior Purchaser hereby confirm that the maximum amount of purchase
commitments available to Senior Purchaser under the Liquidity
Agreement has been increased to $53,754,000.00, which is the
appropriate amount of increase in light of the proposed increase in
the Facility Amount.
(b) In satisfaction of the conditions to extend the Termination Date
set forth in Section 1.05 (c) of the Purchase Agreement:
(i) Purchasers, the Administrator and the Relationship Bank
hereby approve the requested extension of clause (c) of the definition
of the Termination Date to October 30, 1998;
(ii) The Administrator acknowledges receipt from Seller of
written notice requesting such extension not less than 30 days prior
to the effective date thereof;
(iii) The Administrator has received written confirmation from
Standard & Poor's and Xxxxx'x Investors Service, Inc. confirming that
the
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existing ratings on the Commercial Paper Notes will remain unchanged
after giving effect to the extension contemplated in paragraph 7; and
(iv) Norwest, in its separate capacity as Liquidity Agent, and
Senior Purchaser hereby confirm that the maximum amount of purchase
commitments available to Senior Purchaser under the Liquidity
Agreement has been increased to $53,754,000.00, which is the
appropriate amount of increase in light of the proposed increase in
the Facility Amount.
16. Conditions Precedent. This Second Amendment shall not become
effective until the Relationship Bank and the Administrator shall have received
the following, in form and substance satisfactory to them, or shall have
confirmed, to their satisfaction, the following, as the case may be:
(a) This Second Amendment, duly executed on behalf of each Party
hereto.
(b) Written confirmation from Standard & Poor's and Xxxxx'x Investors
Service, Inc. confirming that the existing ratings on the Commercial Paper
Notes will remain unchanged after giving effect to this Second Amendment.
(c) An amendment to the Liquidity Agreement which shall (i) increase
the maximum amount of the purchase commitments thereunder to an amount not
less than $53,754,000, (ii) consent to this Second Amendment and (iii)
otherwise provide for such amendments or modifications thereof as the
Parties shall agree, duly executed on behalf of each Party thereto.
(d) Amendments to the Senior Purchaser Interest Rate Agreement, State
Street Interest Rate Agreement and Sevicer Interest Rate Agreement,
respectively, increasing the notional amount of each such agreement to a
maximum amount of $52,700,000, duly executed on behalf of each Party
thereto.
(e) Payment by Seller in full of all fees due the Purchasers, the
Administrator, the Relationship Bank and any other Person in connection
with this Second Amendment.
17. Miscellaneous.
(a) Seller hereby acknowledges, confirms and agrees that it shall
pay, immediately upon demand, all out-of-pocket costs and expenses incurred
by the Administrator, the Relationship Bank, the Liquidity Banks, either
Purchaser, the Custodian and the Paying Agent in connection with this
Second Amendment, including without limitation, all reasonable fees and
disbursements of counsel to the Purchasers incurred in connection with
preparation of this Second Amendment.
(b) Except as expressly amended hereby, all provisions of the
Transaction Documents shall remain in full force and effect. After the
effective date hereof, each
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reference in any Transaction Document, or any other document executed in
connection with the Purchase Agreement, to "this Agreement", "hereunder"
or "hereof" or words of like import referring to the Purchase Agreement
shall be deemed and refer to the Purchase Agreement as amended hereby.
(c) This Second Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed
to be an original and all of which counterparts, taken together, shall
constitute but one in the same one and the same instrument.
(d) The execution of this Second Amendment and acceptance of any
documents related hereto shall not be deemed a waiver of any Liquidation
Event, default or similar event under any Transaction Document, whether or
not existing on the date of this Second Amendment.
(e) This Second Amendment shall be governed by, and construed in
accordance with, the internal laws of the State of New York.
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IN WITNESS WHEREOF, the undersigned have executed this Second
Amendment as of the day and year first above mentioned.
CITYSIDE FINANCE CORPORATION I,
as Seller
By /s/ Xxxxxxx X. Xxxxxxxx
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Title President
-----------------------
CITYSIDE FINANCIAL SERVICES OF
WISCONSIN, INC., as Servicer
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Title President
-----------------------
X.X. XXXXXXXX, INC.,
as Support Party
By /s/ Xxxx X. Xxxxxx
-----------------------------
Title Vice President & CFO
-----------------------
CLIPPER RECEIVABLES CORPORATION,
as Senior Purchaser
By /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Title Vice President
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[SIGNATURE PAGE 1 TO SECOND AMENDMENT]
STATE STREET BOSTON CAPITAL CORPORATION
as Administrator
By /s/
----------------------------------------
Title Vice President
------------------------------------
NORWEST BANK MINNESOTA NATIONAL
ASSOCIATION, as Subordinated Purchaser
By /s/ Xxxxxx X. Xxx III
-------------------------------------
Title Vice President
------------------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Relationship Bank
By /s/ Xxxxxx X. Xxx III
-------------------------------------
Title Vice President
------------------------------
Acknowledged, Agreed to
and Accepted by:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Custodian,
Back-up Sevicer and Paying Agent
By /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Title
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[SIGNATURE PAGE 2 TO SECOND AMENDMENT]
