RECEIVABLES PURCHASE AGREEMENT
Dated as of October 20, 1995
Among
APR FUNDING CORPORATION
as Seller
and
AGENCY PREMIUM RESOURCE, INC.
as Servicer
ANUHCO, INC.
as Parent
and
CLIPPER RECEIVABLES CORPORATION
as Purchaser
and
STATE STREET BOSTON CAPITAL CORPORATION
as Administrator
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Relationship Bank
TABLE OF CONTENTS
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitments to Purchase; Limits on Purchaser's
Obligations
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's
Interests
SECTION 1.03. Reinvestments
SECTION 1.04. Asset Interest; Purchaser's Share
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Selection of Asset Tranches
SECTION 2.02. Computation of Purchaser's Total Investment and
Purchaser's Tranche Investment
SECTION 2.03. Computation of Earned Discount
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures for Collections of Principal
Receivables
SECTION 3.02. Settlement Procedures for Collections of Finance
Charge Receivables
SECTION 3.03. General Settlement Procedures
SECTION 3.04. Deemed Collections; Reduction of Purchaser's Total
Investment, Etc
SECTION 3.05. Payments and Computations, Etc
SECTION 3.06. Treatment of Collections and Deemed Collection
SECTION 3.07. Repurchases
SECTION 3.08. Custody Arrangement
SECTION 3.09. Establishment of Collection Account; Investments by
Relationship Bank
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees
SECTION 4.02. Yield Protection
SECTION 4.03. Funding Losses
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase
SECTION 5.02. Conditions Precedent to All Purchases and
Reinvestments
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller
SECTION 6.02. Representations and Warranties of APR
SECTION 6.03. Representations and Warranties of Parent
Section 6.04. Breach of Representations and Warranties
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants of Seller
SECTION 7.02. Reporting Requirements of Seller
SECTION 7.03. Negative Covenants of Seller
SECTION 7.04. Affirmative Covenants of APR
SECTION 7.05. Reporting Requirements of APR
SECTION 7.06. Negative Covenants of APR
SECTION 7.07. Affirmative Covenants of Parent
SECTION 7.08. Reporting Requirements of Parent
SECTION 7.09. Negative Covenant of Parent
SECTION 7.10. Special Covenant of Seller, APR and Parent
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer
SECTION 8.02. Duties of Servicer
SECTION 8.03. Rights of the Administrator
SECTION 8.04. Responsibilities of Seller
SECTION 8.05. Further Action Evidencing Purchases and
Reinvestments
SECTION 8.06. Application of Collections
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Intrest
SECTION 9.02. Further Assurances
SECTION 9.03. Remedies
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events
SECTION 10.02. Remedies
ARTICLE XI
THE ADMINISTRATOR; RELATIONSHIP BANK
SECTION 11.01. Authorization and Action
SECTION 11.02. Administrator's and Relationship Bank's Reliance,
Etc
SECTION 11.03. State Street Capital and Norwest and Affiliate
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST; TRANSFER DATE
SECTION 12.01. Restrictions on Assignments
SECTION 12.02. Rights of Assignee
SECTION 12.03. Evidence of Assignment
SECTION 12.04. Rights of the Banks, Collateral Agent and
Collection Agent
SECTION 12.05. Transfer Date
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities by Seller, APR and Parent
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc
SECTION 14.02. Notices, Etc.
SECTION 14.03. No Waiver; Remedies
SECTION 14.04. Binding Effect; Survival
SECTION 14.05. Costs, Expenses and Taxes
SECTION 14.06. No Proceedings
SECTION 14.07. Confidentiality of Seller Information
SECTION 14.08. Confidentiality of Program Information
SECTION 14.09. Captions and Cross References
SECTION 14.10. Integration
SECTION 14.11. Governing Law
SECTION 14.12. Waiver Of Jury Trial
SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities
SECTION 14.14. Execution in Counterparts
SECTION 14.15. No Recourse Against Other Parties
SECTION 14.16. Covenant to Cooperate
SECTION 14.17. Advice From Independent Counsel
APPENDICES
APPENDIX A Definitions
SCHEDULES
SCHEDULE 6.01(i) Description of Material Adverse Changes of
Seller
SCHEDULE 6.01(j) Description of Litigation of Seller
SCHEDULE 6.01(n) List of Offices of Seller where Records Are
Kept
SCHEDULE 6.01(o) List of Lock-Box Banks
SCHEDULE 6.01(p)-1 Forms of Contracts
SCHEDULE 6.01(p)-2 Description of Credit and Collection Policy
SCHEDULE 6.02(h) Description of Material Adverse Changes of APR
SCHEDULE 6.02(i) Description of Litigation of APR
SCHEDULE 6.02(k) List of Offices of APR
SCHEDULE 6.03(h) Description of Material Adverse Changes of
Parent
SCHEDULE 6.03(i) Description of Litigation of Parent
SCHEDULE 7.03(h) Schedule of Indebtedness of Seller
SCHEDULE 7.06(i) Schedule of Indebtedness of APR
EXHIBITS
EXHIBIT 1.02 Form of Notice
EXHIBIT 3.03 Settlement Statement to be Provided as of Cut-
Off Date
EXHIBIT 5.01(g) Form of Lock-Box Agreement
EXHIBIT 5.01(k)-1 Form of Opinion of Counsel for Seller as to
Authority, Perfection, Etc.
EXHIBIT 5.01(k)-2 Form of Opinion of Counsel to Parent as to
Authority, Etc.
EXHIBIT 5.01(l)-1 Form of "True Sale" Opinion of Counsel for
Seller
EXHIBIT 5.01(l)-2 Form of "Non-Substantive Consolidation"
Opinion of Counsel for Seller
EXHIBIT 5.01(m) Form of Survey of Counsel for Seller
EXHIBIT 5.01(p) Form of Accountant's Letter
EXHIBIT 5.01(q) Form of Pay-Off Letter
EXHIBIT A Form of Tax Sharing Agreement
RECEIVABLES PURCHASE AGREEMENT
Dated as of October 20, 1995
THIS IS A RECEIVABLES PURCHASE AGREEMENT, among APR FUNDING
CORPORATION, a Delaware corporation ("Seller"), AGENCY PREMIUM
RESOURCE, INC. ("APR"), a Kansas corporation ("Servicer"), ANUHCO,
INC., a Delaware corporation ("Parent"), CLIPPER RECEIVABLES
CORPORATION ("Clipper"), a Delaware corporation ("Purchaser"),
STATE STREET BOSTON CAPITAL CORPORATION, a Massachusetts
corporation ("State Street Capital"), as administrator for
Purchaser under the Program Administration Agreement (in such
capacity, the "Administrator") and Norwest Bank Minnesota, National
Association, a national banking association, as a referral agent
for Purchaser under the Relationship Bank Agreement (in such
capacity, together with any successors thereto in such capacity,
the "Relationship Bank" and in its individual capacity, "Norwest").
Unless otherwise indicated, capitalized terms used in this
Agreement are defined in Appendix A.
Background
1. Seller has, and expects to have and/or to purchase from APR
(APR in such capacity the "Originator") pursuant to the terms and
subject to the conditions of the Purchase and Sale Agreement (the
"Purchase and Sale Agreement") dated as of October 20, 1995 between
Seller and APR, Pool Receivables originated in the ordinary course
of the Originator's premium finance loan business in which Seller
intends to sell undivided percentage ownership interests. Seller
has requested Purchaser, and Purchaser has agreed, subject to the
terms and conditions contained in this Agreement, to purchase such
undivided percentage ownership interests (referred to herein
collectively as the "Asset Interest") from Seller from time to time
during the term of this Agreement.
2. Seller and Purchaser also desire that, subject to the terms
and conditions of this Agreement, certain of the daily Collections
in respect of the Asset Interest be reinvested in Pool Receivables,
which reinvestments shall constitute part of the Asset Interest.
3. Clipper, as Purchaser, expects to fund its acquisition and
maintenance of the Asset Interest through the issuance of
Commercial Paper Notes. Commercial paper funding hereunder is
available solely from Clipper. Clipper has entered into a
Liquidity Agreement which generally provides for the purchase by
the Liquidity Providers of percentage interests in the Asset
Interest in the event Clipper is unable to fund such Asset is
required to fund the Asset Interest in accordance with, and under
the terms of, the Liquidity Agreement. Clipper has also entered
into a Credit Agreement with the Credit Bank providing for the
issuance of a letter of credit to provide credit support for
Clipper, including support for the payment of Commercial Paper
Notes under circumstances when funding is not available under the
Liquidity Agreement prior to the Transfer Date (as defined herein).
As provided in the Liquidity Agreement, Clipper may transfer the
Asset Interest to the Backup Purchaser after the Transfer Date.
The Backup Purchaser will upon such transfer assume the rights, and
certain of the duties and obligations of Clipper as Purchaser under
this Agreement and the other Transaction Documents (as hereinafter
provided), including the Asset Interest, and will thereafter be the
Purchaser hereunder.
4. In order to induce the Purchaser to enter into this Agreement
and to purchase the Asset Interest hereunder, Parent has agreed to
provide to Purchaser certain limited indemnification, as further
described herein.
5. APR has been requested, and is willing, to act as initial
Servicer.
6. State Street Capital has been requested, and is willing, to
act as the Administrator.
7. Norwest has been requested, and is willing, to act as the
Relationship Bank.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitments to Purchase; Limits on Purchaser's
Obligations. Upon the terms and subject to the conditions of this
Agreement (including, without limitation, those contained in
Article V), from time to time prior to the Termination Date, Seller
may request on or before the third Business Day preceding each
Settlement Date that Purchaser purchase on the next succeeding
Settlement Date from Seller undivided percentage ownership
interests in Pool Receivables, all related Contracts, all Related
Security, Collections and all other proceeds, including books and
records with respect to such Pool Receivables (each being a
"Purchase") and Purchaser shall make such Purchase at such times
and upon the terms and subject to the conditions set forth herein;
provided, that Purchaser shall make no Purchase if, after giving
effect thereto, the Purchaser's Total Investment would exceed
$30,000,000 (the "Purchase Limit"); and provided further that each
Purchase made pursuant to this Section 1.01 shall have a purchase
price of at least $500,000.
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's
Interests.
(a) Notice of Purchase. Each Purchase from Seller by Purchaser
shall be made on notice from Seller to the Administrator and the
Relationship Bank (substantially in the form of Exhibit 1.02)
received by them not later than 12:00 noon (New York City time) on
the third Business Day preceding the date of such proposed
Purchase. Each such notice of a proposed Purchase shall specify
the desired amount and date of such Purchase.
(b) Funding of Purchase. On the date of each Purchase, Purchaser
shall, upon satisfaction of the applicable conditions set forth in
Article V, make available to the Administrator at the
Administrator's Office the amount of its Purchase in same day
funds, and after receipt by the Administrator of such funds, the
Administrator will make such funds immediately available to Seller
at such office.
(c) Assignment of Asset Interests. Seller hereby sells, assigns
and transfers to Purchaser, effective on and as of the date of each
Purchase by the Purchaser hereunder, the Asset Interest in the Pool
Receivables, the related Contracts, the Related Security and all
Collections in respect of, and other proceeds of, any of the
foregoing.
SECTION 1.03. Reinvestments.
(a) On the close of business on each day prior to the Liquidation
Date during the period from the date hereof to the Termination
Date, Servicer will, on Purchaser's behalf, out of Purchaser's
Share of Collections, apply and pay over to Seller, Purchaser's
Share on account of Principal Collections for the Purchase from
Seller of undivided percentage ownership interests in Pool
Receivables, related Contracts, Related Security, Collections and
all other proceeds, including books and records with respect to
such Pool Receivables (each such purchase being a "Reinvestment");
provided that if after giving effect to such Reinvestment the
Purchaser's Share with respect to Principal Receivables would
exceed 100%, then, Servicer shall not reinvest, but shall set aside
in the Collection Account and hold for the benefit of Purchaser
pursuant to Section 1.03(b) and shall pay over to the Administrator
on the next Settlement Date for application in accordance with the
terms hereof, a portion of such Collections which, together with
other Collections previously set aside and then so held, shall
equal the amount necessary to reduce the Purchaser's Share with
respect to Principal Receivables to 100%; and provided, further,
that if the conditions precedent to Reinvestment in clause (a), (b)
or (d) of Section 5.02 are not satisfied, then Servicer shall not
reinvest any of such remaining Collections. For purposes of
determining whether Collections on account of Principal Receivables
may be reinvested pursuant to this Section 1.03, the Net Pool
Balance used in calculating Purchaser's Share of Principal
Receivables shall be calculated net of the principal portion of
Adverse Determination Receivables.
(b) Unreinvested Collections. Servicer shall set aside and hold
in trust and shall retain in the Collection Account for the benefit
of Purchaser all Collections which pursuant to Section 1.03(a), may
not be reinvested in the Pool Receivables and related property. If
at any time the amount of Collections so set aside may again be
reinvested pursuant to Section 1.03(a) and the conditions precedent
to Reinvestment set forth in clauses (a), (b) and (d) of Section
5.02 are satisfied, then the Servicer shall withdraw such
Collections from the Collection Account and apply such Collections
(or, if less, a portion of such Collections equal to the amount of
such excess) to the making of Reinvestments.
(c) Payment of Amounts Set Aside. Prior to the occurrence of the
Liquidation Date, Servicer and thereafter the Relationship Bank
shall pay all amounts set aside in the Collection Account pursuant
to Section 1.03(b) to the Administrator for the account of
Purchaser on the Business Day preceding each Settlement Date.
Servicer shall pay over and deposit any amounts received by it
which otherwise would be required to be deposited in the Collection
Account, to the extent not previously deposited therein, to the
Collection Account within one Business Day of receipt thereof.
(d) Reduction of Purchaser's Total Investment. The Purchaser's
Total Investment shall not be reduced by the amount of Collections
set aside pursuant to this Section 1.03, whether or not on deposit
in the Collection Account, unless and until such Collections are
actually delivered to the Administrator pursuant hereto.
SECTION 1.04 Asset Interest; Purchaser's Share.
(a) Components of Asset Interest. For purposes of this Agreement,
"Asset Interest" means, at any time, Purchaser's combined undivided
percentage ownership interests at such time in (i) all then
outstanding Pool Receivables, (ii) all related Contracts, (iii) all
Related Security with respect to such Pool Receivables and such
Contracts, and (iv) all books and records with respect to such Pool
Receivables and such Contracts, and (v) all Collections with
respect to, and other proceeds of, such Pool Receivables, Contracts
and Related Security. The amount of such Asset Interest shall
mean, with respect to Principal Receivables and Finance Charge
Receivables, the respective Purchaser's Shares determined pursuant
to Section 1.04(b).
(b) Purchaser's Share. (i) Principal Receivables.
(A) "Purchaser's Share" shall mean, with respect to Principal
Receivables, the percentage calculated by dividing (x) the sum of
the Purchaser's Total Investment plus the Default Reserve (as
determined pursuant to Section 1.04(b)(i)(D) below) by (y) the Net
Pool Balance; provided that, Purchaser's Share with respect to
Principal Receivables shall not exceed 100%; and provided, further,
that after the occurrence of the Liquidation Date, Purchaser's
Share with respect to Principal Receivables shall be deemed to be
Purchaser's Share with respect to Principal Receivables as of the
day immediately preceding such Liquidation Date.
(B) On each day "Purchaser's Share of Collections" on account of
Principal Receivables shall be equal to the product of (x) the
related Purchaser's Share with respect to Principal Receivables on
such day and (y) the amount of the Collections on account of
Principal Receivables on such day. "Purchaser's Share of Defaulted
Receivables" shall mean, on any day, the product of (x) Purchaser's
Share with respect to Principal Receivables on such day and (y) the
amount of Receivables becoming Defaulted Receivables on such day.
(C) On each day after the occurrence of the Liquidation Date,
Seller's Share of Collections on account of Principal Receivables
shall not be paid to Seller, but shall be retained in the
Collection Account. Notwithstanding the foregoing, on each day
after the Transfer Date, if on any such day there shall be an
unreimbursed amount under the Servicer LOC, Seller's Share of
Collections shall not be retained in the Collection Account, but
shall be paid to Norwest on the next following Settlement Date in
an amount equal to the lesser of (i) such unreimbursed amount and
(ii) the amount of Seller's Share of Collections that would be
required to be retained in the Collection Account. If the amount
of Purchaser's Share of Collections on account of Principal
Receivables received or deemed received on or prior to the date
that each and every Pool Receivable is scheduled to have amortized
in accordance with the related Contract shall be insufficient to
reduce the Purchaser's Total Investment plus any unreimbursed
amounts under the Servicer LOC to zero, then on such date Purchaser
shall withdraw (from amounts actually retained in the Collection
Account pursuant to the two preceding sentences) such funds from
the Collection Account in the amount of the lesser of (x) the
amount of such deficiency attributable to Purchaser's Share of
Defaulted Receivables and (y) 100% of the Collections on account of
Seller's Share of Collections then on deposit in the Collection
Account. Prior to the occurrence of the Liquidation Date, Servicer
shall pay to Seller on each day, Seller's Share of Collections on
account of Principal Receivables received on such day.
(D) (x) The "Default Reserve" on any day means an amount as
follows:
DR = (( 1 divided by 1-RP ) - 1) x PI
where:
DR = the Default Reserve on such day;
RP = the Reserve Percentage at the close of business of Purchaser
on such day, as determined pursuant to Section
1.04(b)(i)(D)(y);
PI = the related Purchaser's Total Investment at the opening of
business of Purchaser on such day; and
(y) "Reserve Percentage" means, with respect to any Settlement
Date the greater of (1) 10.71% and (2) the product of 1.35 times
the highest annualized three month average Default Ratio for any of
the three Settlement Periods preceding such Settlement Date
(calculated for use with respect to the first two Settlement Dates
on a pro forma basis for such number of calendar months preceding
the date hereof as necessary to make such calculation; each such
calendar month shall be deemed to be a Settlement Period for
purposes of this clause (y)).
(ii) Finance Charge Receivables.
(A) "Purchaser's Share" shall mean, on any day with respect to
Finance Charge Receivables, 100%; subject, however, to the
applications to Earned Discount, Program Fee, Servicer's Fee,
Defaulted Receivables and Designated Obligations as provided for in
Section 3.02.
(B) On each day, "Purchaser's Share of Collections" on account of
Finance Charge Receivables shall be equal to the product of (x) the
related Purchaser's Share with respect to Finance Charge
Receivables and (y) the amount of the Collections on account of
Finance Charge Receivables received or deemed received on such day.
(iii) Defeasance. With respect to the Asset Interest: (x) at such
time as the Purchaser's Total Investment equals zero, then the
related Purchaser's Share with respect to Principal Receivables
shall equal zero, and (ii) at such time as the related unpaid
Earned Discount equals zero, and no amounts are owing in respect of
the related Program Fee, Servicer's Fee, Designated Obligations or
other amounts under this Agreement, then the related Purchaser's
Share with respect to Finance Charge Receivables shall also equal
zero.
(c) Frequency of Computation. The respective Purchaser's Shares
with respect to the Asset Interest shall be initially computed as
of the opening of business of Servicer on the date of Purchase of
the Asset Interest from Seller. Thereafter until the Asset
Interest shall be reduced to zero, such Purchaser's Shares shall be
deemed to be automatically recomputed as of the close of business
of Servicer on the Cut-Off Date for each Settlement Period, and
such Purchaser's Shares shall constitute the percentage ownership
interest in Pool Receivables on such date owned by Purchaser. Such
Purchaser's Shares shall remain constant from the time as of which
any such computation or recomputation is made or deemed to be made
until the time as of which the next such recomputation, if any,
shall be made or deemed to be made. In addition, the Administrator
or the Relationship Bank may require Servicer to provide a
Settlement Statement for purposes of computing the Asset Interest
as of any other date, and the Servicer agrees to do so within two
(2) Business Days of its receipt of the Administrator's or the
Relationship Bank's request.
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Selection of Asset Tranches. The Administrator
shall, from time to time for purposes of computing Earned Discount,
divide the Asset Interest into Asset Tranches, and the applicable
Earned Discount Rate may be different for each Asset Tranche.
Purchaser's Total Investment shall be allocated to each Asset
Tranche by the Administrator to reflect the funding sources for the
Asset Interest, so that:
(a) there will be one or more Asset Tranches, selected by the
Administrator, reflecting the portion of the Asset Interest funded
by Liquidity Purchases;
(b) there will be one or more Asset Tranches, selected by the
Administrator, reflecting the portion of the Asset Interest funded
by Credit Draws; and
(c) there will be an Asset Tranche equal to the excess of
Purchaser's Total Investment over the aggregate amounts allocated
at such time pursuant to clauses (a) and (b) above, which Asset
Tranche shall reflect the portion of the Asset Interest funded by
Commercial Paper Notes;
provided, that, after the occurrence of the Transfer Date, all
Asset Tranches will be selected by the Liquidity Agent and will be
funded solely by Liquidity Purchases.
SECTION 2.02. Computation of Purchaser's Total Investment and
Purchaser's Tranche Investment. In making any determination of
Purchaser's Total Investment and Purchaser's Tranche Investment,
the following rules shall apply:
(a) Purchaser's Total Investment shall not be considered reduced
by any allocation, setting aside or distribution of any portion of
Collections unless such Collections shall have been actually
delivered to the Administrator pursuant hereto;
(b) Purchaser's Total Investment shall not be considered reduced
by any distribution of any portion of Collections if at any time
such distribution is rescinded or must otherwise be returned for
any reason; and
(c) if there is any reduction in Purchaser's Total Investment,
there shall be a corresponding reduction in a Purchaser's Tranche
Investment with respect to one or more Asset Tranches selected by
the Administrator in its discretion.
SECTION 2.03. Computation of Earned Discount. In making any
determination of Earned Discount, the following rules shall apply:
(a) the Administrator shall determine the Earned Discount accruing
with respect to each Asset Tranche, and each Yield Period therefor
(or, in the case of the Asset Tranche funded by Commercial Paper
Notes, each Settlement Period), in accordance with the definition
of Earned Discount;
(b) no provision of this Agreement shall require the payment or
permit the collection of Earned Discount in excess of the maximum
permitted by applicable law; and
(c) Earned Discount for any Asset Tranche shall not be considered
paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.
ARTICLE III
SETTLEMENTS
SECTION 3.01 Settlement Procedures for Collections of Principal
Receivables. On each day, Servicer shall deem an amount equal to
Purchaser's Share of Collections on account of Principal
Receivables received or deemed received on such day to be received
in respect of the Asset Interest; and
(a) prior to the occurrence of the Liquidation Date, except to the
extent otherwise set forth in Section 1.03, Servicer on behalf of
the Purchaser shall apply the full amount of Purchaser's Share of
such Collections to reduce the Purchaser's Total Investment and
after such reduction apply such amount to Reinvestments as provided
in Section 1.03(a), in additional undivided percentage ownership
interests in Pool Receivables. Any such application shall
automatically increase the Purchaser's Total Investment. The
recomputed Purchaser's Share with respect to Principal Receivables,
after giving effect to the reduction and increase of Purchaser's
Total Investment shall constitute the percentage ownership interest
in Principal Receivables on such day owned by Purchaser with regard
to the Asset Interest; and
(b) after the occurrence of the Liquidation Date, on each
Settlement Date the Administrator on behalf of Purchaser shall
apply the full amount of Purchaser's Share of such Collections to
reduce Purchaser's Total Investment.
SECTION 3.02 Settlement Procedures for Collections of Finance
Charge Receivables.
(a) Daily Set Aside. On each day Servicer shall set aside and
hold in trust for Purchaser Purchaser's Share of Collections on
account of Finance Charge Receivables in respect of the Asset
Interest for such day.
(b) Delivery to the Administrator.
(i) On each day, Servicer shall calculate the excess, if any, of
(x) the Collections on account of Finance Charge Receivables set
aside on and prior to such day pursuant to Section 3.02(a), over
(y) the aggregate unpaid amount of Earned Discount, Program Fee,
Servicer's Fee and any other Designated Obligations, accrued in
respect of the Asset Interest (estimated based on the previous
month); and (A) prior to the Liquidation Date, such excess, if any,
shall be paid to the Seller or (B) after the occurrence of the
Liquidation Date, such excess if any, shall be retained in the
Collection Account for application in accordance with Sections
3.02(c) and (d). During the related Settlement Period, Servicer
shall hold in trust in the Collection Account the amounts described
in clause (y) above.
(ii) Prior to the occurrence of the Liquidation Date, on the
Business Day preceding each Settlement Date, Servicer shall
withdraw from the Collection Account and deliver to the
Administrator, from the funds set aside pursuant to Section 3.02(a)
and not paid over to the Seller pursuant to Section 3.02(b)(i), an
amount which shall equal the unpaid Earned Discount, Program Fee
and Servicer's Fee for such Settlement Period, plus any other
Designated Obligations required for application by the
Administrator pursuant to Sections 3.02(c) and (d) below. After
the occurrence of the Liquidation Date, the Relationship Bank on
behalf of the Administrator shall withdraw such amounts on such
Settlement Date from the Collection Account (to the extent on
deposit therein).
(c) Application of Funds to Earned Discount, etc. Subject to
receipt of funds set aside pursuant to Section 3.02(a) and
withdrawn and paid over pursuant to Section 3.02(b), the
Administrator shall, on each Settlement Date, distribute them in
the following order: (i) first, to the Custodian, for the payment
of the accrued and unpaid fees and expenses due under the Custody
Agreement for the related Settlement Period (including any accrued
and unpaid amounts from any prior Settlement Period), (ii) second
to Servicer, if not APR or an Affiliate of APR, for the payment of
the accrued and unpaid Servicer's Fee (provided that, if the Backup
Servicer shall be the Servicer, only the Senior Portion of such
Servicer's Fee shall be payable pursuant to this clause second) for
the related Settlement Period (including any accrued and unpaid
amounts from any Prior Settlement Period), (iii) third, to
Purchaser for the payment of the accrued and unpaid Earned Discount
for the related Settlement Period (including any accrued and unpaid
amounts from any prior Settlement Period), (iv) fourth, to
Purchaser for the payment of the accrued and unpaid Program Fee for
the related Settlement Period (including any accrued and unpaid
amounts from any prior Settlement Period), (v) fifth, to Purchaser,
the Administrator, the Relationship Bank, the Custodian or any
other Person (not APR or an Affiliate of APR) hereunder, as the
case may be, in payment of any Designated Obligations, owing to
such Person hereunder (including any accrued and unpaid amounts
from any prior Settlement Period), (vi) sixth, to Servicer, if the
Backup Servicer, for the payment of the accrued and unpaid
Subordinated Portion of the Servicer's Fee for the related
Settlement Period (including any accrued and unpaid amounts from
any prior Settlement Period), (vii) seventh, to Norwest, if any
reimbursement obligation shall then exist under the Servicer LOC,
the amount of such unreimbursed obligation, (viii) eighth, if APR
or any Affiliate of APR is Servicer, to Servicer for the payment of
the accrued and unpaid Servicer's Fee for the related Settlement
Period (including any accrued and unpaid amounts from any prior
Settlement Period), and (ix) ninth, any remaining amounts shall,
prior to the occurrence of the Liquidation Date, be paid to Seller
and, after the occurrence of the Liquidation Date, be distributed
in accordance with Section 3.02(d).
(d) Application to Defaulted Receivables and Delinquent
Receivables during Liquidation Period. After the occurrence of the
Liquidation Date, the Administrator shall, after giving effect to
the distributions pursuant to Sections 3.02(b) and (c), distribute
and apply any remaining Collections on account of Finance Charge
Receivables as follows: (i) first, to Purchaser toward payment of
Purchaser's Share of Defaulted Receivables, which payment shall be
deemed a Collection on account of Principal Receivables, and (ii)
second, to the account of Seller; provided that, with regard to
clause (ii) above, if Purchaser's Total Investment shall not then
have been reduced to zero, such balance shall remain in the
Collection Account to be applied on each Settlement Date following
thereafter in accordance with clause first above until the date on
which Purchaser's Total Investment and all other amounts payable to
the Purchaser, the Administrator and the Relationship Bank shall
have been reduced to zero.
SECTION 3.03 General Settlement Procedures. The parties hereto
will take the following actions with respect to each Settlement
Period:
(a) Settlement Statement. On the fifth Business Day following the
Cut-Off Date for such Settlement Period, Servicer shall deliver to
the Relationship Bank and the Administrator a hard copy and a
computer diskette (or such information via modem) containing the
information described in Exhibit 3.03 (each, a "Settlement
Statement"), including a listing of all Contracts (by contract
number, Direct Obligor and amount financed) transferred by the
Originator to the Seller in the preceding Monthly Period.
(b) Notification of Earned Discount; Other Amounts Due. On the
second Business Day following such Cut-Off Date, the Administrator
or the Relationship Bank shall notify Servicer and the Relationship
Bank of (i) the amount of Earned Discount accrued during such
Settlement Period, and (ii) all fees (including the Program Fee and
the Servicer's Fee) and Designated Obligations and other amounts
accrued and payable by Seller under this Agreement.
(c) Non-Distribution of Servicer's Fee. If the Administrator
consents (which consent may be revoked at any time), the amounts
(if any) set aside pursuant to Section 3.02 in respect of
Servicer's Fee may be retained by Servicer, in which case no
distribution shall be made in respect of Servicer's Fee pursuant to
Section 3.02 above.
(d) Allocations of Obligor's Payments. Except as provided for
herein or as otherwise required by law or the underlying Contract,
all Collections received from an Obligor of any Receivable shall be
applied to Receivables then outstanding of such Obligor in the
order of the age of such Receivables, starting with the oldest such
Receivable, except if payment is designated by such Obligor for
application to specific Receivables or can be readily identified to
specific Receivables, in which case it shall be applied to such
specified Receivables. For each Settlement Period Collections will
be allocated so that all Collections up to the amount of Finance
Charge Receivables billed in respect of the immediately preceding
Settlement Period will be deemed Collections of Finance Charge
Receivables and the remaining amount of such Collections will be
deemed Collections of Principal Receivables.
(e) Collection Account: Deposits and Withdrawals.
(i) Deposits to Collection Account. Each of Seller and Servicer
will, with respect to Collections in respect of Pool Receivables
received by them, and will cause each Lock-Box Bank, with respect
to Collections in respect of Pool Receivables received in any lock-
box to, deposit such Collections in the Collection Account
immediately upon identification thereof, but in no event later than
one Business Days after receipt thereof. Such amounts to be
deposited in the Collection Account by Seller, Servicer or the
Relationship Bank shall include, but not be limited to, the
following: (x) any and all Collections and other payments in
respect of Receivables (whether on account of Principal
Receivables, Finance Charge Receivables or otherwise), related
Contracts, and Related Security and any proceeds thereof, (y) all
amounts transferred from the Lock-Box Accounts, and (z) all
Indemnified Amounts paid by Seller, APR or Parent for Receivables
required to be repurchased pursuant to Section 3.07(b) or on
account of a breach of representation or warranty with respect
thereto or for any other reason. Servicer (or its designee or
successor) shall notify the Administrator and the Relationship Bank
of the amount of funds deposited in the Collection Account not
received from Pool Receivables and the Administrator (if it shall
agree with Servicer) shall remit such funds as soon as practicable
after such notification to such account as Servicer (or its
designee or successor) shall designate. In addition, the
Administrator shall deposit all drawings on the Servicer LOC in the
Collection Account.
(ii) Withdrawals from Collection Account. Prior to the
Liquidation Date, the Relationship Bank shall permit APR, as
Servicer, to access the Collection Account in connection with its
duties as Servicer and, in that connection APR, as such Servicer,
may withdraw funds on deposit therein in accordance with, and for
the purposes permitted under, the provisions of the Transaction
Documents. Upon the occurrence of the Liquidation Date, (x) APR's
right of access to the Collection Account shall terminate
immediately without any further action by any Person being required
(but APR shall be permitted to make deposits in each case with the
consent of the Relationship Bank) and (y) the Relationship Bank or
its designee shall thereafter make all withdrawals in accordance
with the terms hereof or may transfer funds to the Liquidation
Collection Account and shall make such withdrawals from the
Liquidation Collection Account as if it were the Collection
Account.
(f) Permitted Dividends. Seller may remit to APR Permitted
Dividends, if any, on the Business Day next following each
Settlement Date. Unless specifically permitted hereunder or under
any other Transaction Document to pay for Receivables, in payment
of fees, etc., Seller shall make no other payments to APR or any
Affiliate of APR.
(g) Servicer LOC. If, with respect to any Settlement Date
following the Liquidation Date and prior to the Transfer Date, the
Servicer LOC Funding Conditions shall have occurred, the
Administrator shall, on the second Business Day preceding such
Settlement Date, make a drawing under the Servicer LOC in an amount
not to exceed the Servicer LOC Available Amount. The Administrator
shall deposit the proceeds of such drawing in the Collection
Account for distribution on the related Settlement Date in
accordance with the terms hereof. If at any time Northland
Insurance Company's Concentration Limit (as determined in the
definition of Excess Concentration Deduction) is reduced to 2% the
Servicer LOC shall automatically terminate on the later of (x) 120
days thereafter and (y) such time thereafter as Purchaser's Share
shall be equal to or less than 100%.
SECTION 3.04. Deemed Collections; Reduction of Purchaser's Total
Investment, Etc.
(a) Deemed Collections. If on any day
(i) the Unpaid Balance of any Pool Receivable is
(A) reduced as a result of any dispute or complaint, any cash
discount, or any adjustment by Seller, APR or Servicer or any
Affiliate of Seller, APR or Servicer,
(B) reduced or cancelled as a result of a setoff in respect of any
claim by the Obligor thereof against Seller, APR or any Affiliate
of Seller, APR (whether such claim arises out of the same or a
related or an unrelated transaction), or
(C) reduced on account of the obligation of Seller or APR or any
Affiliate thereof to pay to the related Obligor any rebate or
refund, or
(D) less than the amount included in calculating the Net Pool
Balance for purposes of any Settlement Statement, or
(ii) any of the representations or warranties of Seller set forth
in Section 6.01(l) or (p) were not true when made with respect to
any Eligible Receivable that is a Pool Receivable or any Pool
Receivable represented to be an Eligible Receivable, or any of the
representations or warranties of Seller set forth in
Section 6.01(l) are no longer true with respect to any Eligible
Receivable that is a Pool Receivable,
then, on such day, Seller shall be deemed to have received a
Collection (such Collection, a "Deemed Collection") of such Pool
Receivable;
(I) in the case of clause (i) above, in the amount of such
reduction or cancellation or the difference between the actual
Unpaid Balance and the amount included in calculating such Net Pool
Balance, as applicable; and
(II) in the case of clause (ii) above, in the amount of the Unpaid
Balance of such Pool Receivable.
(b) Seller's Optional Reduction of Purchaser's Total Investment.
Seller may at any time elect to reduce the Purchaser's Total
Investment as follows:
(i) Seller shall give the Administrator and the Relationship Bank
at least three (3) Business Days' prior written notice of such
reduction (including the amount of such proposed reduction and the
proposed date on which such reduction will commence),
(ii) on the proposed date of commencement of such reduction and on
each day thereafter, Servicer shall refrain from reinvesting
Collections on account of Principal Receivables pursuant to Section
1.03 until the amount thereof not so reinvested shall equal the
desired amount of reduction, and
(iii) Servicer shall hold such Collections in trust for Purchaser
on the next succeeding Settlement Date, pending payment to the
Administrator (or if Collections are then being retained in the
Collection Account, such Collections shall be held therein), as
provided in Sections 1.03 and 3.01;
provided that,
(A) the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $100,000, and the
Purchaser's Total Investment after giving effect to such reduction
shall be not less than $10,000,000 (unless Purchaser's Total
Investment shall thereby be reduced to zero),
(B) Seller shall use reasonable efforts to attempt to choose a
reduction amount, and the date of commencement thereof, so that
such reduction shall commence and conclude in the same Settlement
Period, and
(C) After giving effect to such reduction, Purchaser's Share on
account of Principal Receivables does not exceed 100%.
SECTION 3.05. Payments and Computations, Etc.
(a) Payments. All amounts to be paid or deposited by Seller or
Servicer to the Administrator or any other Person hereunder (other
than amounts payable under Section 4.02) shall be paid or deposited
in accordance with the terms hereof no later than 12:00 noon (New
York time) on the day when due in lawful money of the United States
of America in same day funds (i) in the case of amounts to be paid
or deposited in respect of accrued and unpaid Earned Discount or in
reduction of Purchaser's Total Investment, to the Collateral Agent
at The First National Bank of Chicago, ABA no. 000000000, clearing
account no. 4811-5377, for further credit to account no. 21-201949-
7, ref. Clipper Receivables Corporation, att. Xxxxxxx Xxxxxxx, and
(ii) in the case of all fees, expenses and other amounts (other
than amounts payable under Section 4.02), to the Administrator at
State Street Bank and Trust Company, ABA no. 000000000, account no.
00000000/Clipper Receivables Corporation, att. Xxx Xxxxxxxxx, ext
4-3844, ref. Route Code 5, Function 5.
(b) Late Payments. Seller or Servicer, as applicable, shall, to
the extent permitted by law, pay to Purchaser interest on all
amounts not paid or deposited when due hereunder at 2% per annum
above the Alternate Base Rate, payable on demand, provided,
however, that such interest rate shall not at any time exceed the
maximum rate permitted by applicable law.
(c) Method of Computation. All computations of interest, Earned
Discount, any fees payable under Sections 4.01(b) and (c) and any
other fees payable by Seller to Purchaser, the Administrator or the
Relationship Bank in connection with Purchases hereunder shall be
made on the basis of a year of 360 days for the actual number of
days (including the first day but excluding the last day) elapsed.
SECTION 3.06. Treatment of Collections and Deemed Collections.
Seller shall forthwith deposit in the Collection Account, all
Collections deemed received by Seller pursuant to Section 3.04 and
such Collections shall be held or distributed as Earned Discount,
accrued Servicer's Fee, repayment of Purchaser's Total Investment,
etc. to the same extent as if such Collections had actually been
received on the date of such deposit in the Collection Account.
Parent hereby agrees to make such deposits of such Collections in
Seller's stead to the extent Seller does not make such deposits as
and when required; provided that, Parent shall not be required to
make such deposits in an aggregate amount in excess of $3,000,000
if the Deemed Collections pursuant to Section 3.04 are the result
of insurance agent fraud. So long as Seller shall hold any
Collections or deemed Collections required to be paid to Servicer,
Purchaser, Relationship Bank, the Administrator or Collateral
Agent, it shall hold such Collections in trust and shall clearly
xxxx its records to reflect such trust.
SECTION 3.07 Repurchases.
(a) If on any Settlement Date the Purchaser's Total Investment
shall equal or be less than 5% of the greatest amount of
Purchaser's Total Investment at any time prior to such Settlement
Date, Seller shall be entitled to repurchase the Asset Interest on
such Settlement Date. Seller shall give Purchaser at least five
Business Days' prior written notice of such repurchase and upon
payment of the repurchase price therefor, as hereinafter provided,
Purchaser shall be obligated to reconvey its entire interest in the
Asset Interest to Seller pursuant to an assignment acceptable to
the parties, but without representation or warranty except that the
interest assigned is free of offset, liens and other encumbrances
created by the assignor. Seller shall pay such repurchase price in
cash to the Administrator on behalf of Purchaser (including any
holder of any Asset Tranche) in an amount equal to the sum of (i)
all accrued and unpaid Earned Discount in respect of the Asset
Interest, (ii) the Purchaser's Total Investment therein, (iii) the
aggregate of other amounts then owed hereunder by Seller to
Purchaser, Relationship Bank or Administrator and (iv) the accrued
and unpaid Servicer's Fee. Upon receipt of the aforesaid
repurchase price the Administrator shall distribute it (i) to
Purchaser (including the holder of any Asset Tranche) (a) in
payment of the accrued and unpaid Earned Discount, (b) in reduction
of the Purchaser's Total Investment and (c) in payment of any other
amounts owed by Seller hereunder to Purchaser (including the holder
of any Asset Tranche), Relationship Bank or Administrator, in each
case until reduced to zero, and (ii) to Servicer in payment of the
accrued and unpaid Servicer's Fee, also until reduced to zero.
(b) If at any time an Adverse Determination occurs Seller shall
within three Business Days of Seller's knowledge thereof notify
Purchaser of such Adverse Determination, and Seller shall, if
Purchaser in its sole discretion so demands, (i) within five
Business Days after notice has been given to the Purchaser or by
the Purchaser to the Seller, repurchase Purchaser's ownership
interest in the Adverse Determination Receivables, or (ii) at the
end of the related applicable Yield Periods, repurchase Purchaser's
ownership interest in the Adverse Determination Receivables. In
the case of a repurchase under clause (i) or (ii) above, upon
payment by Seller of the repurchase price therefor, as hereinafter
provided, Purchaser shall be obligated to reconvey its entire
interest in such Adverse Determination Receivables to Seller
pursuant to an assignment acceptable to the parties, but without
representation or warranty except as to the assignor's good title,
free of offset, liens and other encumbrances as to the interest
assigned. To the extent required above, Seller shall pay such
repurchase price in cash to the Administrator on behalf of
Purchaser in an amount equal to the sum of (A) the product of (x)
the Purchaser's Share on account of Principal Receivables
multiplied by (y) the then Unpaid Principal Balance of such Adverse
Determination Receivables plus (B) Purchaser's Share on Account of
Finance Charge Receivables received and not paid over to Purchaser
or the Administrator in respect of such Adverse Determination
Receivables. Upon receipt of such repurchase price Purchaser shall
apply such repurchase price to reduce Purchaser's Total Investment
and any accrued and unpaid Earned Discount, Program Fee, Servicer's
Fee and Designated Obligations. Upon such receipt, such Adverse
Determination Receivables shall thereupon be deemed removed from
the Receivables Pool for all purposes hereunder. A repurchase of
Purchaser's ownership interest in Adverse Determination Receivables
shall not substitute for or limit the applicable indemnification
obligations under Article XIII. In the event that any Indemnified
Party shall incur or expects to incur any demonstrable loss or
expense as a result of the redeployment of amounts received
pursuant to clause (i) above, then, within five Business Days after
written notice from Purchaser to Seller, Seller shall pay to
Purchaser such additional amounts as will (in the reasonable
determination of the Indemnified Parties) reimburse the Indemnified
Parties for such demonstrable loss or expense. Such written notice
shall, in the absence of demonstrable error, be conclusive and
binding on Seller. This Section 3.07(b) shall survive the
termination of this Agreement.
SECTION 3.08. Custody Arrangement. Seller and Servicer shall
enter into the Custody Agreement with the Custodian, the
Administrator and the Relationship Bank on or prior to the date
hereof. On each Wednesday of each calendar week Seller and
Servicer shall, unless the Administrator and the Relationship Bank
shall otherwise agree in writing, deliver to the Custodian on
behalf of Purchaser and Seller in accordance with their respective
interests each and every Contract (not previously delivered to the
Custodian) subject to an APR Purchase under the Purchase and Sale
Agreement and/or subject to a Purchase or Reinvestment hereunder
prior to such Wednesday; provided that, with respect to any
Contract as to which adequate reproductions cannot be made for
servicing purposes due to the poor quality of the original thereof,
Servicer may retain custody of such Contract, but shall hold it in
trust for the benefit of Purchaser and Seller in accordance with
their respective interests; provided, further, that the number of
Contracts so held in trust shall not exceed 1% of all Contracts
then owned by Seller. A schedule identifying the Contracts by
contract number, Direct Obligor and amount financed shall be
delivered to the Custodian on or before the delivery of such
Contracts on such Wednesday; all such schedules for each Settlement
Period shall be attached to the Settlement Statement for such
Settlement Period along with a certification by Seller and Servicer
as to the accuracy of such schedules.
SECTION 3.09. Establishment of Collection Account; Investments by
Relationship Bank.
(a) Collection Account. On or before the first Purchase, the
Relationship Bank shall establish, for the benefit of the Purchaser
and the Seller, to the extent of their respective interests
therein, an account (the "Collection Account"), which shall be a
demand deposit account maintained in the name of the Relationship
Bank for the benefit of the Purchaser and the other Secured Parties
initially with Mercantile Bank of Kansas City or with any other
financial institution acceptable to the Relationship Bank and the
Administrator. Subject to the further provisions of this Section
3.09(a), the Relationship Bank shall, upon receipt or upon transfer
from another account, as the case may be, deposit into the
Collection Account all amounts received by it which are required to
be deposited therein in accordance with the provisions hereof
including all proceeds of drawings under the Servicer LOC. All
such amounts and all investments made with such amounts, including
all income and other gain from such investments, shall be held by
the Relationship Bank in the Collection Account or the Liquidation
Collection Account as part of the Receivables Pool as herein
provided, subject to withdrawal by, or at the direction of, it or
the Administrator in accordance with, and for the purposes
specified in the provisions of, this Agreement. Neither the
Administrator nor the Relationship Bank shall have any right of
set-off with respect to the Collection Account or the Liquidation
Collection Account or any investment therein, whether or not
commingled. Notwithstanding any other provision herein, it shall
be understood that after the occurrence of the Liquidation Date,
the Relationship Bank may, or upon request of the Administrator,
shall transfer all amounts at any time on deposit (whether or not
required to be held in the Collection Account) in the Collection
Account to a segregated trust account maintained with and in the
name of the Relationship Bank for the benefit of Purchaser and
Seller to the extent of their respective interests therein (such
account the "Liquidation Collection Account").
(b) Administration of Payments. Unless otherwise advised by
Servicer in writing, the Relationship Bank may assume that any
amount remitted to it by Servicer or any Lock-Box Bank is to be
deposited into the Collection Account. The Relationship Bank may
establish from time to time such deadline or deadlines as it shall
determine are reasonable or necessary in the administration hereof
after which all amounts received or collected by the Relationship
Bank on any day shall not be deemed to have been received or
collected until the next succeeding Business Day.
(c) Investments. Pursuant to one or more Seller Orders received
from Seller, all or a portion of the amounts in the Collection
Account and the Liquidation Collection Account shall be invested
and reinvested by the Relationship Bank in one or more Eligible
Investments. Subject to the restrictions on the maturity of
investments set forth in Section 3.09(e), each such Seller Order
may authorize the Relationship Bank to make the specific Eligible
Investments set forth therein, to make Eligible Investments from
time to time consistent with the general instructions set forth
therein, or to make specific Eligible Investments pursuant to
instructions received in writing or by facsimile transmission from
the employees or agents of Seller or the Servicer, as the case may
be, identified therein, in each case in such amounts as such Seller
Order shall specify. Seller agrees to report as income for
financial reporting and tax purposes (to the extent reportable) all
investment earnings on amounts in the Collection Account. Each of
Seller and Servicer agrees to give appropriate and timely
investment directions to the Relationship Bank so that there will
not be more than two Business Days in any one calendar year at the
end of which funds in the Collection Account or the Liquidation
Collection Account are not invested, directly or indirectly,
pursuant to a Seller Order in Eligible Investments that mature on
or after the opening of business on the next Business Day.
(d) Investments in the Absence of a Seller Order. In the event
that (i) Seller shall have failed to give investment directions to
the Relationship Bank by 9:30 A.M. Minneapolis, Minnesota, time on
any Business Day on which there may be uninvested cash or (ii) a
Liquidation Event or Unmatured Liquidation Event shall have
occurred and be continuing, then the Relationship Bank shall invest
such funds in Eligible Investments as directed by it or the
Administrator or, if no such directions are given, in Eligible
Investments described in clause (e) of the definition thereof. All
investments made by the Relationship Bank shall mature no later
than the maturity date therefor permitted by Section 3.09(e).
(e) Maturity of Investments. No investment of any amount held in
the Collection Account or the Liquidation Collection Account shall
mature later than the Business Day immediately preceding the
Settlement Date which is scheduled to occur immediately following
the date of investment for application in accordance with the
provisions of this Agreement. All income or other gains from the
investment of moneys deposited in the Collection Account or the
Liquidation Collection Account, as applicable, shall be deposited
by the Relationship Bank in the affected account immediately upon
receipt. Any net loss (determined on a month by month basis)
resulting from such investment of amounts in the Collection Account
or the Liquidation Collection Account, as applicable, shall be
charged to Seller, which, upon notice thereof by the Relationship
Bank, shall reimburse the Collection Account or the Liquidation
Collection Account, as applicable, for such loss.
(f) Form of Investment. Any investment of funds in the Collection
Account or the Liquidation Collection Account shall be made under
the following terms and conditions:
(i) each such investment shall be made in the name of the
Relationship Bank (in its capacity as such) or in the name of a
nominee of the Relationship Bank, in either case for the benefit of
the Purchaser and the other Secured Parties; and
(ii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Relationship Bank or
its agent and the Relationship Bank shall have sole possession of
such instrument, and all income on such investment.
(g) Relationship Bank Not Liable. The Relationship Bank shall not
in any way be held liable by reason of any insufficiency in the
Collection Account or the Liquidation Collection Account resulting
from losses on investments made in accordance with the provisions
of this Section 3.09 (but the Relationship Bank shall at all times
remain liable for its own debt obligations, if any, constituting
part of such investments). The Relationship Bank shall not be
liable for any investment made by it in accordance with this
Section 3.09 on the grounds that it could have made a more
favorable investment.
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees.
(a) Arrangement Fee. Seller shall pay to the Administrator, for
the account of Purchaser and the Relationship Bank, an arrangement
fee ("Arrangement Fee") in the Arrangement Fee Amount payable on
the date hereof.
(b) Program Fee. From the date hereof until the date, following
the Termination Date on which Purchaser's Total Investment shall be
reduced to zero, Seller shall pay to Purchaser a program fee
("Program Fee") for each day in such period equal to the sum of (i)
the product of (x) the Purchaser's Tranche Investment in respect of
the Asset Tranche funded by Commercial Paper Notes on such day,
times (y) the Program Fee Rate, times (z) 1/360; provided, however,
the rate set forth in clause (y) shall be increased to the
Liquidation Program Fee Rate after the occurrence of a Liquidation
Event plus (ii), prior to the occurrence of the Termination Date,
the product of (x) the Non-Use Rate times (y) the Purchase Limit
less Purchaser's Total Investment on such day. Such Program Fee
shall be paid in arrears, on the Settlement Date for each
Settlement Period and on the Final Payout Date, in the amount of
such Program Fee that shall have accrued during such Settlement
Period (or portion thereof) or other period then ending and which
shall not have been previously paid.
SECTION 4.02. Yield Protection.
(a) If (i) Regulation D or (ii) any Regulatory Change occurring
after the date hereof
(A) shall subject an Affected Party to any tax, duty or other
charge with respect to any Asset Interest owned by or funded by it,
or any obligations or right to make Purchases or Reinvestments or
to provide funding therefor, or shall change the basis of taxation
of payments to the Affected Party of any Purchaser's Total
Investments or Earned Discount owned by, owed to or funded in whole
or in part by it or any other amounts due under this Agreement in
respect of the Asset Interest owned by or funded by it or its
obligations or rights, if any, to make Purchases or Reinvestments
or to provide funding therefor (except for changes in the rate of
tax on the overall net income of such Affected Party imposed by the
United States of America or any state thereof (unless, with respect
to a state, other than the state in which such Affected Party's
chief executive offices are located, resulting from, or arising out
of, the transactions contemplated under the Transaction Documents)
and, if such Affected Party's principal executive office is not in
the United States of America, by the jurisdiction where such
Affected Party's principal office in the United States is located);
or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board, but excluding any reserve included in the
determination of Earned Discount), special deposit or similar
requirement against assets of any Affected Party, deposits or
obligations with or for the account of any Affected Party or with
or for the account of any affiliate (or entity deemed by the
Federal Reserve Board to be an affiliate) of any Affected Party, or
credit extended by any Affected Party; or
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party;
(D) shall impose any other condition affecting any Asset Interest
owned or funded in whole or in part by any Affected Party, or its
obligations or rights, if any, to make Purchases or Reinvestments
or to provide funding therefor; or
(E) shall change the rate for, or the manner in which the Federal
Deposit Insurance Corporation (or a successor thereto) assesses,
deposit insurance premiums or similar charges;
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of Regulation D
referred to above, to impose a cost on) (I) an Affected Party
funding or making or maintaining any Purchases or Reinvestments,
any purchases, reinvestments, or loans or other extensions of
credit under the Liquidity Agreement, or any Credit Draw, or any
commitment of such Affected Party with respect to any of the
foregoing, or (II) the Administrator or the Relationship Bank for
continuing its or Seller's or APR's relationship with Purchaser
(Seller shall at no time, with regard to Regulation D, be required
to pay an increased cost hereunder in excess of the actual
increased cost imposed on the Affected Party),
(y) to reduce the amount of any sum received or receivable by an
Affected Party under this Agreement, or under the Liquidity
Agreement or the Credit Agreement with respect thereto, or
(z) in the sole determination of such Affected Party, to reduce
the rate of return on the capital of an Affected Party as a
consequence of its obligations hereunder or arising in connection
herewith to a level below that which such Affected Party could
otherwise have achieved,
then within thirty days after demand by such Affected Party (which
demand shall be accompanied by a statement setting forth the basis
of such demand), Seller shall pay directly to such Affected Party
such additional amount or amounts as will compensate such Affected
Party for such additional or increased cost or such reduction.
(b) Each Affected Party will promptly notify Seller and the
Administrator of any event of which it has knowledge which will
entitle such Affected Party to compensation pursuant to this
Section 4.02; provided, however, no failure to give or delay in
giving such notification shall adversely affect the rights of any
Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this
Section 4.02, an Affected Party may use any reasonable averaging
and attribution methods that it (in its sole discretion) shall deem
applicable. Any Affected Party when making a claim under this
Section 4.02 shall submit to Seller a statement as to such
increased cost or reduced return (including calculation thereof in
reasonable detail), which statement shall, in the absence of
demonstrable error, be conclusive and binding upon Seller.
SECTION 4.03. Funding Losses. In the event that any Liquidity
Bank shall incur any loss or expense (including any loss or expense
incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such Liquidity Bank to make any
Liquidity Purchase or maintain any Liquidity Purchase) as a result
of (i) any settlement with respect to Purchaser's Tranche
Investment of any Asset Tranche funded by a Liquidity Purchase
being made on any day other than the scheduled last day of an
applicable Yield Period with respect thereto, or (ii) any Purchase
not being made in accordance with a request therefore under Section
1.02, then, upon written notice from the Administrator to Seller
and Servicer, Seller shall pay to Servicer, and Servicer shall pay
to the Administrator for the Account of such Liquidity Bank, the
amount of such loss or expense. Such written notice (which shall
include calculations in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding upon the Seller and
Servicer.
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase. The
initial Purchase hereunder is subject to the condition precedent
that the Administrator shall have received, on or before the date
of such Purchase, the following, each (unless otherwise indicated)
dated such date and in form and substance satisfactory to the
Administrator:
(a) A copy of the resolutions of the Board of Directors of Seller,
APR and Parent approving this Agreement, the Purchase and Sale
Agreement and the other Transaction Documents, as applicable, to be
delivered by them hereunder and the transactions contemplated
hereby and thereby, certified in each case by its Secretary or
Assistant Secretary;
(b) Good standing certificates (i) for Seller, APR and Parent
issued by the Secretaries of State of Delaware and Kansas, as
applicable.
(c) A certificate of the Secretary or Assistant Secretary of
Seller, APR and Parent certifying the names and true signatures of
the officers authorized on their behalf to sign, as applicable,
this Agreement, the Sale and Purchase Agreement and the other
Transaction Documents to be delivered by them hereunder (on which
certificate the Administrator, the Relationship Bank and Purchaser
may conclusively rely until such time as Purchaser shall receive
from Seller, APR and/or Parent, as applicable, a revised
certificate meeting the requirements of this subsection (c));
(d) The Articles of Incorporation of Seller, APR and Parent, duly
certified by the Secretary of State of their respective states of
incorporation, as of a recent date acceptable to the Administrator
and the Relationship Bank, together with a copy of the By-laws of
Seller, APR and Parent, duly certified by the Secretary or an
Assistant Secretary of Seller, APR or Parent, respectively;
(e) Copies of acknowledgment copies of (i) proper Financing
Statements (Form UCC-1), naming APR, as Originator, as the assignor
of Receivables and Seller, as Initial Purchaser, as assignee, and
Purchaser as assignee of such Financing Statement, (ii) proper
Financing Statements (Form UCC-1), naming Seller as the assignor of
Receivables or an undivided interest therein and Purchaser as
assignee, (iii) proper Financing Statements (Form UCC-1), naming
Seller assignor of Receivables or an undivided interest therein and
Backup Purchaser as assignee and (iv) proper terminations of
Financing Statements (Form UCC-3), terminating any and all
Financing Statements which cover any Receivable or Contract;
(f) A search report (including tax, ERISA and judgment liens)
provided in writing to the Administrator and the Relationship Bank
by Polsinelli, White, Xxxxxxxx & Xxxxxxx, listing all effective
financing statements that name Seller or APR as debtor and that are
filed in the jurisdictions in which filings were made pursuant to
subsection (e) above, together with copies of such financing
statements (none of which shall cover any Receivables or
Contracts);
(g) Duly executed Lock-Box Agreements with the Lock-Box Banks;
(h) Duly executed Purchase and Sale Agreement;
(i) Duly executed Custody Agreement;
(j) Duly executed Backup Servicing Agreement;
(k) (A) Opinion of Polsinelli, White, Xxxxxxxx & Shalton, counsel
to Seller as to perfection, authority and other matters and (B)
Opinion of Hillix, Brewer, Hoffhaus, Whittaker & Xxxxxx, L.L.C.,
counsel to Parent, as to authority and other matters, in
substantially the forms and attached as Exhibit 5.01(k)-1 and
5.01(k)-2;
(l) Opinions of Polsinelli, White, Xxxxxxxx & Shalton, counsel to
Seller, as to "true sale" and "non-substantive consolidation" in
substantially the forms attached as Exhibits 5.01(l)-1 and 5.01(l)-
2;
(m) Legal Survey of Polsinelli, White, Xxxxxxxx Xxxxxxx, counsel
to Seller, as to "perfection in unearned premiums" in substantially
the form of Exhibit 5.01(m);
(n) Such sublicenses as Purchaser, the Administrator or the
Relationship Bank shall require with regard to all programs leased
by Seller or APR and used in the servicing of the Receivables Pool;
(o) Such powers of attorney as Purchaser, the Administrator or the
Relationship Bank shall reasonably request to enable them to
collect all amounts due under any and all Pool Receivables;
(p) Evidence that Servicer has marked its master data processing
records to reflect Purchaser's undivided ownership interest in each
Pool Receivable;
(q) A Pay-Off Letter executed by Bank of America National Trust &
Savings Association, substantially in the form of Exhibit 5.01(q);
(r) An executed copy of the Tax Sharing Agreement among Parent and
its "affiliated group of companies" (including APR and Seller);
(s) (i) A pro forma Settlement Statement, prepared in respect of
the proposed initial Purchase, assuming a Cut-Off Date of Thursday,
October 19, 1995, (ii) schedule of information for Receivables
included in the initial Purchase in an electronic format acceptable
to the Relationship Bank, and (iii) implementation of Settlement
reporting procedures and formats satisfactory to the Administrator
and the Relationship Bank;
(t) A report in form and substance satisfactory to the
Administrator from the Relationship Bank as to a pre-closing due
diligence audit of the Receivables and the Servicer and its
procedures by the Relationship Bank;
(u) Duly executed Liquidity Agreement;
(v) Written approval by the Credit Bank of this Agreement;
(w) Certified copy of the Credit and Collection Policy of APR and
Seller;
(x) Satisfactory completion of due diligence (including the
collateral audit by Norwest) by Administrator and Norwest;
(y) Letters from the rating agencies then rating the Commercial
Paper Notes, confirming in effect that the existing ratings of the
Commercial Paper Notes will remain in effect after giving effect to
the transactions contemplated hereby; and
(z) Such other further documents and information as Purchaser, the
Administrator or the Relationship Bank shall reasonably request.
SECTION 5.02. Conditions Precedent to All Purchases and
Reinvestments. Each Purchase (including the initial Purchase) and
each Reinvestment hereunder shall be subject to the further
conditions precedent that on the date of such Purchase or
Reinvestment the following statements shall be true (and Seller by
accepting the amount of such Purchase or by receiving the proceeds
of such Reinvestment shall be deemed to have certified that):
(a) the representations and warranties contained in Sections 6.01,
6.02 and 6.03 hereof and in the Purchase and Sale Agreement are
correct on and as of such day as though made on and as of such day
and shall be deemed to have been made on such day,
(b) no event has occurred and is continuing, or would result from
such Purchase or Reinvestment, that constitutes a Liquidation Event
or Unmatured Liquidation Event,
(c) except as provided in Section 3.08, for each Receivable
included in a Purchase or Reinvestment, a fully executed Contract
shall have been delivered to the Custodian (as Purchaser's
designee), no later than the Wednesday following such Purchase or
Reinvestment,
(d) after giving effect to each proposed Purchase or Reinvestment,
(i) Purchaser's Total Investment will not exceed the Purchase Limit
and (ii) Purchaser's Share with respect to Principal Receivables
will not exceed 100%, and
(e) the Liquidation Date shall not have occurred;
provided, however, the absence of the occurrence and continuance of
an Unmatured Liquidation Event shall not be a condition
precedent to any Reinvestment on any day which does not cause the
Purchaser's Total Investment, after giving effect to such
Reinvestment or Purchase, to exceed the Purchaser's Total
Investment as of the opening of business on such day.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01 Representations and Warranties of Seller. In order
to induce the Purchaser, the Administrator and Relationship Bank to
enter into this Agreement and the other Transaction Documents,
Seller represents and warrants to each of them as follows:
(a) Organization and Good Standing. Seller 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
necessary power, authority, and legal right to acquire, own,
dispose of, and otherwise deal with, the Pool Receivables.
(b) Due Qualification. Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all
necessary approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including,
without limitation, such business as a "premium finance company")
requires such qualification or approvals.
(c) Power and Authority: Due Authorization. Seller has (i) duly
authorized by all necessary action, and has all necessary power,
authority and legal right to (A) execute and deliver this
Agreement, the Purchase and Sale Agreement and the other
Transaction Documents to which it is a party, (B) carry out the
terms of the Transaction Documents, and (C) sell and assign the
Asset Interest on the terms and conditions herein provided and (ii)
has duly authorized by all necessary corporate action the
execution, delivery and performance of this Agreement, the Purchase
and Sale Agreement and the other Transaction Documents and the sale
and assignment of the Asset Interest on the terms and conditions
herein provided.
(d) Valid Sale: Binding Obligations. This Agreement constitutes
a valid sale, transfer, and assignment of the Asset Interest to
Purchaser, enforceable against creditors of, and purchasers from,
Seller and APR; and this Agreement constitutes, and each other
Transaction Document to be signed by Seller when duly executed and
delivered will constitute, a legal, valid and binding obligation of
Seller 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.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement, the Purchase and Sale Agreement and
the other Transaction Documents and the fulfillment of the terms
hereof will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or
by-laws of Seller, or any indenture, loan agreement, mortgage, deed
of trust, receivables purchase or other securitization agreement or
other agreement or instrument to which Seller is a party or by
which it is bound, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, loan agreement, mortgage, deed of trust, receivables
purchase agreement or other securitization agreement or other
agreement or instrument, other than this Agreement, or violate any
law or any order, rule, or regulation applicable to Seller or
(except for Adverse Determinations disclosed in writing to
Purchaser as assignee of Seller) of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller (or Purchaser as
assignee of Seller) or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or threatened, against Seller or its Affiliates, or any
other Person, before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (A)
asserting the invalidity of this Agreement, the Purchase and Sale
Agreement or any other Transaction Document, (B) seeking to prevent
the sale and assignment of the Asset Interest or the consummation
of any of the transactions contemplated by this or any other
Transaction Document, (C) seeking any determination or ruling that
might adversely affect (i) the performance by Seller or APR of its
obligations under this Agreement, or (ii) the validity or
enforceability of this Agreement, the Purchase and Sale Agreement,
any other Transaction Document, the Receivables or the Contracts or
(D) seeking to adversely affect the federal income tax attributes
of the Purchases and Reinvestments 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 Seller of this Agreement, the Purchase
and Sale Agreement or any other Transaction Document except for the
filing of the UCC Financing Statements referred to in Article V,
all of which, at the time required in Article V, shall have been
duly made and shall be in full force and effect.
(i) [reserved].
(j) Litigation. No injunction, decree or other decision has been
issued or made by any court, government or agency or
instrumentality thereof that has, and no threat by any person has
been made to attempt to obtain any such decision that would have,
a material adverse effect on a significant part of its business
operations except as described in Schedule 6.01(j).
(k) Margin Regulations. The use of all funds acquired by Seller
under this Agreement will not conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of
the Federal Reserve system from time to time.
(l) Quality of Title. Each Pool Receivable is, together with the
related Contract and all other agreements related to such Pool
Receivable, owned by Seller free and clear of any Lien (other than
any Lien arising solely as the result of any action taken by
Purchaser (or any assignee thereof) or by the Administrator or the
Relationship Bank) except as provided herein; and when Purchaser
makes a Purchase it shall have acquired and shall continue to have
maintained a valid and perfected first priority undivided
percentage ownership interest to the extent of the Asset Interest
in each Pool Receivable, each related Contract and in the Related
Security and Collections with respect thereto free and clear of any
Lien (other than any Lien arising solely as the result of any
action taken by Purchaser (or any assignee thereof) or by the
Administrator or the Relationship Bank); and no financing statement
or other instrument similar in effect covering any Pool Receivable,
any interest therein, the related Contracts, or the Related
Security or Collections with respect thereto is on file in any
recording office except such as may be filed in favor of (i) APR in
accordance with the Contracts, (ii) in favor of Seller in
accordance with the Purchase and Sale Agreement, (iii) in favor of
Purchaser in accordance with this Agreement or in connection with
any Lien arising solely as the result of any action taken by
Purchaser (or any assignee thereof) or by the Administrator or the
Relationship Bank or (iv) in favor of the Collateral Agent.
(m) Accurate Reports. No Settlement Statement (if prepared by
Seller or any Affiliate of Seller, or to the extent that
information contained therein was supplied by Seller or any
Affiliate of Seller), information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by
Seller to the Administrator, the Relationship Bank or Purchaser in
connection with this Agreement or any other Transaction Document
was or will be inaccurate in any material respect as of the date it
was or will be dated or (except as otherwise disclosed to the
Administrator, the Relationship Bank and Purchaser, as the case may
be, at such time) as of the date so furnished, or contained or will
contain any material misstatement of fact or omitted or will omit
to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
(n) Offices. The chief place of business and chief executive
office of Seller are located at the address of Seller referred to
in Section 14.02 and the offices where Seller keeps all its books,
records and documents evidencing Pool Receivables, the related
Contracts and all purchase orders and other agreements related to
such Pool Receivables are located at the addresses specified in
Schedule 6.01(n) (or at such other locations, notified to the
Administrator and the Relationship Bank in accordance with Section
7.01(e), in jurisdictions where all action required by Section 8.05
has been taken and completed).
(o) Lock-Box Accounts. The names and addresses of all the Lock-
Box Banks, together with the account numbers of the lock-box
accounts of Seller at such Lock-Box Banks, are specified in
Schedule 6.01(o) (or have been notified to Purchaser in accordance
with Section 7.03(d)).
(p) Eligible Receivables. Each Receivable included in the Net
Pool Balance as an Eligible Receivable on the date of any Purchase
or Reinvestment shall in fact be an Eligible Receivable.
(q) Investment Company Act. Seller is not an investment company
or a company controlled by an investment company within the meaning
of the Investment Company Act of 1940, as amended.
(r) Solvency. After giving effect to each Purchase and each
Reinvestment and immediately after giving effect to Seller's and
the Originator's obligations now or hereafter arising pursuant to
any Transaction Document and to each transaction contemplated
thereby, (i) the fair saleable value of the assets of Seller will
exceed its liabilities, and (ii) Seller will be solvent, will be
able to pay its debts generally as they mature, will own property
with a fair saleable value greater than the amount required to pay
its debts, and will have capital sufficient to carry on its
business as then constituted.
(s) Servicing Programs. No license or approval is required for
the Administrator's or the Relationship Bank'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.
(t) Direct Obligor. No funds have been advanced by Seller to or
on behalf of any Direct Obligor.
(u) Contractual Due Dates, Etc. No Contract has been extended or
otherwise modified, unless in manner, scope and content in
accordance with the provisions of this Agreement and the Credit and
Collection Policy.
(v) Licensing. Seller is properly licensed as a premium finance
loan company in each jurisdiction in which licensing is required
for it to own premium finance loans with a nexus to such
jurisdiction.
(w) Transfers. No purchase of an interest in Receivables by
Purchaser from Seller or by Seller from Originator constitutes a
fraudulent transfer or fraudulent conveyance or is otherwise void
or voidable under similar laws or principles, the doctrine of
equitable subordination or for any other reason.
(x) Purchase and Sale Agreement. Each of the representations and
warranties made by Seller and the Originator in the Purchase and
Sale Agreement is true and correct as of the date or dates made.
(y) Use of Proceeds. Neither Seller nor any Originator will use
the proceeds of the Purchases hereunder to acquire a security in a
transaction subject to Section 13 or 14 of the Securities Exchange
Act of 1934.
(z) Tax. Seller has filed each and every tax return required to
be filed by it in each jurisdiction in which it is required to do
so and has paid in each such jurisdiction all taxes required to be
paid by it on a consolidated basis.
(aa) No Liquidation Event. No event has occurred and is
continuing and no condition exists which constitutes a Liquidation
Event or an Unmatured Liquidation Event.
(bb) ERISA. The Seller is in compliance in all material respects
with ERISA and there exists no lien in favor of the Pension Benefit
Guaranty Corporation on any of the Receivables.
SECTION 6.02 Representations and Warranties of APR. APR In order
to induce the Purchaser, the Administrator and Relationship Bank to
enter into this Agreement and the other Transaction Documents,
represents and warrants to each of them as follows:
(a) Organization and Good Standing. APR has been duly organized
and is validly existing as a corporation in good standing under the
laws of the State of Kansas, 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 necessary power, authority,
and legal right to acquire, own, dispose of, and service the Pool
Receivables.
(b) Due Qualification. APR is duly qualified to do business as a
foreign corporation in good standing, and has obtained all
necessary approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including,
without limitation, such business as a "premium finance company")
requires such qualification approvals.
(c) Power and Authority: Due Authorization. APR has (i) duly
authorized by all necessary action, and has all necessary power,
authority and legal right to (A) execute and deliver this
Agreement, the Purchase and Sale Agreement and the other
Transaction Documents to which it is a party, (B) carry out the
terms of the Transaction Documents, (C) sell and assign the
Receivables on the terms and conditions provided in the Purchase
and Sale Agreement and (D) service the Receivables on the terms and
conditions herein provided and (ii) has duly authorized by all
necessary corporate action the execution, delivery and performance
of this Agreement, the Purchase and Sale Agreement and the other
Transaction Documents and the sale and assignment of the Asset
Interest on the terms and conditions herein provided.
(d) Binding Obligations. This Agreement constitutes, and each
other Transaction Document to be signed by APR when duly executed
and delivered will constitute, a legal, valid and binding
obligation of APR 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.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement, the Purchase and Sale Agreement and
the other Transaction Documents and the fulfillment of the terms
hereof and thereof will not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of
incorporation or by-laws of APR, or any indenture, loan agreement,
mortgage, deed of trust, receivables purchase or other
securitization agreement or other agreement or instrument to which
APR is a party or by which it is bound, or result in the creation
or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, loan agreement, mortgage, deed of
trust, receivables purchase agreement or other securitization
agreement or other agreement or instrument, other than this
Agreement, or violate any law or any order, rule, or regulation
applicable to APR or (except for Adverse Determinations disclosed
in writing to Seller and Purchaser as assignees of APR) of any
court or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction
over APR (or Purchaser and Seller as assignees of APR) or any of
its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or threatened, against APR or its Affiliates, or any other
Person, before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality (A) asserting the
invalidity of this Agreement, the Purchase and Sale Agreement or
any other Transaction Document, (B) seeking to prevent the sale and
assignment of the Asset Interest or the consummation of any of the
transactions contemplated by this or any other Transaction
Document, (C) seeking any determination or ruling that might
adversely affect (i) the performance by APR or Servicer of its
obligations under this Agreement, or (ii) the validity or
enforceability of this Agreement, the Purchase and Sale Agreement,
any other Transaction Document, the Receivables or the Contracts or
(D) seeking to adversely affect the federal income tax attributes
of the Purchases and Reinvestments hereunder.
(g) 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 APR of this Agreement, the Purchase and
Sale Agreement or any other Transaction Document except for the
filing of the UCC Financing Statements referred to in Article V,
all of which, at the time required in Article V, shall have been
duly made and shall be in full force and effect.
(h) Financial Condition. (x) The consolidated balance sheet of
APR and its consolidated subsidiaries, if any, as at December 31,
1994, and the related statements of income and cash flow of APR and
its consolidated subsidiaries, if any, for the year then ended
certified by KPMG Peat Marwick, independent accountants, and the
unaudited consolidated interim balance sheet of APR and its
consolidated subsidiaries as at September 30, 1995, and the related
interim statement of income, copies of each of which have been
furnished to Purchaser, each fairly present the consolidated
financial position of APR and its consolidated subsidiaries as at
such date and the consolidated results of the operations of APR and
its consolidated subsidiaries for the period ended on such date,
all in accordance with generally accepted accounting principles
consistently applied, and (y) since September 30, 1995 there has
been no material adverse change in any such condition, business,
business prospects or operations except as described in Schedule
6.02(h).
(i) Litigation. No injunction, decree or other decision has been
issued or made by any court, government or agency or
instrumentality thereof that has, and no threat by any person has
been made to attempt to obtain any such decision that would have,
a material adverse effect on a significant part of its business
operations except as described in Schedule 6.02(i).
(j) Accurate Reports. No Settlement Statement (if prepared by APR
or any Affiliate of APR, or to the extent that information
contained therein was supplied by APR or any Affiliate of APR),
information, exhibit, financial statement, document, book, record
or report furnished or to be furnished by APR to the Administrator,
the Relationship Bank or Purchaser in connection with this
Agreement or any other Transaction Document was or will be
inaccurate in any material respect as of the date it was or will be
dated or (except as otherwise disclosed to the Administrator, the
Relationship Bank and Purchaser, as the case may be, at such time)
as of the date so furnished, or contained or will contain any
material misstatement of fact or omitted or will omit to state a
material fact or any fact necessary to make the statements
contained therein not materially misleading.
(k) Offices. The chief place of business and chief executive
office of APR are located at the address of APR referred to in
Section 14.02 and the offices where APR keeps all its books,
records and documents evidencing Pool Receivables, the related
Contracts and all purchase orders and other agreements related to
such Pool Receivables are located at the addresses specified in
Schedule 6.02(k) (or at such other locations, notified to the
Administrator and the Relationship Bank in accordance with Section
7.01(e), in jurisdictions where all action required by Section 8.05
has been taken and completed).
(l) Servicing Programs. No license or approval is required by the
Administrator's or the Relationship Bank's use of any program used
by APR in the servicing of the Receivables, other than those which
have been obtained and are in full force and effect.
(m) Contractual Due Dates, Etc. No Contract has been extended or
otherwise modified, unless in manner, scope and content in
accordance with the provisions of this Agreement and the Credit and
Collection Policy.
(n) Licensing. APR is properly licensed as a premium finance loan
company in each jurisdiction in which licensing is required and in
which it is originating, enforcing and/or servicing Receivables
pursuant to the terms of the Transaction Documents (provided, that
it shall be understood that APR is in discussions with the State of
Florida relating to its recent acquisition by Parent).
(o) Confirmation. With respect to each Contract and related
Receivable serviced by it and included in the Receivables Pool,
Servicer has obtained written confirmation of the existence,
accuracy and terms of the related insurance policy.
SECTION 6.03 Representations and Warranties of Parent. In order
to induce the Purchaser, the Administrator and Relationship Bank to
enter into this Agreement and the other Transaction Documents,
Parent represents and warrants to each of them as follows:
(a) Organization and Good Standing. Parent 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.
(b) Due Qualification. Parent 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 the
ownership or lease of property or the conduct of its business
requires such qualification, licenses or approvals and where the
failure to be so qualified or to obtain such licenses or approvals
would have a material adverse effect upon Parent's financial
condition, results of operations, business or prospects.
(c) Power and Authority: Due Authorization. Parent has duly
authorized by all necessary action, and has all necessary power,
authority and legal right to (A) execute and deliver the
Transaction Documents to be executed and delivered by it and (B)
carry out the terms of the Transaction Documents.
(d) Binding Obligations. This Agreement constitutes, and each
other Transaction Document to be signed by Parent when duly
executed and delivered will constitute, a legal, valid and binding
obligation of Parent 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.
(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
conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or by-laws of
Parent, or any indenture, loan agreement, mortgage, deed of trust,
receivables purchase agreement or other securitization agreement or
other agreement or instrument to which Parent is a party or by
which it is bound, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, loan agreement, mortgage, deed of trust, receivables
purchase agreement or other securitization agreement or other
agreement or instrument, other than this Agreement, or violate any
law or any order, rule, or regulation applicable to Parent of any
court or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction
over Parent or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or threatened, against Parent or its Affiliates, or any
other Person, before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (A)
asserting the invalidity of this Agreement or any other Agreement
Document, (B) seeking to prevent the sale of the Asset Interest
hereunder or the consummation of any of the transactions
contemplated by this or any other Agreement Document, or (C)
seeking any determination or ruling that might adversely affect (i)
the performance by Parent, Seller or Servicer of its obligations
under this Agreement, or (ii) the validity or enforceability of
this Agreement, any other Agreement Document, the Receivables or
the Contracts.
(g) 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 Parent of this Agreement or any other
Transaction Document to be executed by Parent.
(h) Financial Condition. (x) The consolidated balance sheet of
Parent and its consolidated subsidiaries as at December 31, 1994,
and the related statements of income and cash flow of Parent and
its consolidated subsidiaries for the year then ended certified by
Xxxxxx Xxxxxxxx & Co., L.L.C., independent accountants, and the
unaudited consolidated interim balance sheet of Parent and its
consolidated subsidiaries as at June 30, 1995, and the related
interim statement of income, copies of each of which have been
furnished to Purchaser, each fairly present the consolidated
financial position of Parent and its consolidated subsidiaries as
at such date and the consolidated results of the operations of
Parent and its consolidated subsidiaries for the period ended on
such date, all in accordance with generally accepted accounting
principles (subject, in the case of any interim financial
statements, to normal and non-material year-end adjustments)
consistently applied, and (y) since June 30, 1995 there has been no
material adverse change in any such condition, business, business
prospects or operations except as described in Schedule 6.03(h).
(i) Litigation. No injunction, decree or other decision has been
issued or made by any court, government or agency or
instrumentality thereof that has, and no threat by any person has
been made to attempt to obtain any such decision that would have,
a material adverse effect on a significant part of its business
operations except as described in Schedule 6.03(i).
(j) Offices. The chief place of business and chief executive
office of Parent are located at the address of Parent referred to
in the signature pages hereto.
Section 6.04 Breach of Representations and Warranties.
(a) Breach of Representations and Warranties. Upon discovery by
APR, Parent, Servicer or Seller of a breach of any of the
representations and warranties set forth in this Article VI, the
party discovering such breach shall give written notice to the
Administrator, the Relationship Bank and the Purchaser within three
(3) Business Days of such discovery.
(b) Survival of Certain Representations and Warranties. The
representations and warranties provided in the Article VI shall
survive the purchase of the related Receivables under the Purchase
and Sale Agreement and of the Asset Interest therein by Purchaser,
the delivery of the Contracts to Purchaser or Purchaser's designee
and the termination of this Agreement or any other Transaction
Document.
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants of Seller. From the date
hereof until the Final Payout Date, Seller will, unless the
Administrator and the Relationship Bank shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with
respect to (i) the Pool Receivables and related Contracts and (ii)
its business operations except where non-compliance would not have
a material adverse effect on such business operations.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified
in good standing as a foreign corporation in each jurisdiction
where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would materially adversely
affect (i) the interests of Purchaser hereunder or (ii) the ability
of Seller or Servicer to perform their respective obligations
hereunder.
(c) Audits. At any time and from time to time during regular
business hours, upon such notice, if any, as shall be reasonable
under the circumstances, permit the Administrator and/or the
Relationship Bank (at Seller's expense), or their respective agents
or representatives, (i) 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 Seller relating to Pool Receivables, including,
without limitation, the related Contracts and other agreements, and
(ii) to visit the offices and properties of Seller for the purpose
of examining such materials described in clause (i) next above, and
to discuss matters relating to Pool Receivables or Seller's
performance hereunder or under any other Transaction Document with
any of the officers or employees of Seller having knowledge of such
matters; and without limiting the foregoing, from time to time upon
request of the Administrator and/or the Relationship Bank, permit
certified public accountants or other auditors acceptable to them
to conduct, at Seller's expense, a review of Seller's books and
records.
(d) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by
it under the Contracts related to the Pool Receivables and all
other agreements related to such Pool Receivables.
(e) Location of Records. Keep its chief place of business and
chief executive office, and the offices where it keeps its records
concerning the Pool Receivables, all related Contracts and all
other agreements related to such Pool Receivables (and all original
documents relating thereto), at the address(es) of Seller referred
to in Section 6.01(n) or, upon 30 days' prior written notice to the
Administrator and the Relationship Bank, at such other locations in
jurisdictions where all action required by Section 8.05 shall have
been taken and completed.
(f) Credit and Collection Policies. Comply in all material
respects with Servicer's Credit and Collection Policy in regard to
each Pool Receivable and the related Contract.
(g) Collections. Cause all Collections of Pool Receivables to be
deposited within one Business Day directly with a Lock-Box Bank.
(h) Semi-Annual Procedures. Use its best efforts to fully
cooperate with the Relationship Bank's semi-annual collateral
audit.
(i) Rights under Purchase and Sale Agreement. Exercise all of its
rights under or in connection with the Purchase and Sale Agreement
to the fullest extent thereof except to the extent otherwise
consented to in writing by the Relationship Bank and the
Administrator.
(j) Licensing. File applications to obtain licenses as a premium
finance company in Texas, Illinois, Missouri, Tennessee and Kansas
on or before December 31, 1995 and thereafter, unless the
Relationship Bank and the Administrator shall otherwise consent,
file such applications to obtain such licenses within 60 days after
the date on which the aggregate amount of Principal Receivables
originated in a state in which Seller has no license but that has
a premium finance statute equals or exceeds 1% of the Net Pool
Balance.
SECTION 7.02. Reporting Requirements of Seller. From the date
hereof until the Final Payout Date, Seller will, unless the
Administrator and the Relationship Bank shall otherwise consent in
writing, furnish to the Administrator and the Relationship Bank:
(a) Monthly Financial Statements. As soon as available and in any
event on or before the thirtieth day following each calendar month,
copies of the unaudited monthly financial statements of Seller
prepared in accordance with generally accepted accounting
principles.
(b) 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 Seller files under ERISA with
the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which Seller
receives from the Pension Benefit Guaranty Corporation;
(c) Liquidation Events. As soon as possible and in any event
within two Business Days after the occurrence of each Liquidation
Event and each Unmatured Liquidation Event, a written statement of
the chief financial officer or chief accounting officer of Seller
setting forth details of such event and the action that Seller
proposes to take with respect thereto;
(d) Litigation and Other Proceedings. As soon as possible and in
any event within three Business Days of Seller's knowledge thereof,
notice of (i) any litigation, investigation, inquiry or proceeding
which may exist at any time which could have a material adverse
effect on the business, operations, property or financial condition
of Seller or impair the ability of Seller to perform its
obligations under this Agreement or which could result in an
Adverse Determination, (ii) any material adverse development in any
previously disclosed litigation, investigation, inquiry or
proceeding and (iii) any Adverse Determination; and
(e) Audit of Pool Receivables. As soon as available and in any
event within 90 days after the end of each fiscal year of Seller,
a copy of an audit report, prepared by nationally recognized
independent certified public accountants, of the Pool Receivables,
as at the end of the fiscal year of Seller, verifying the aggregate
Unpaid Balance of the Pool Receivables, the Delinquent Receivables
and the Defaulted Receivables.
(f) Change in Credit and Collection Policy. Prior to its
effective date, notice of any change in the character of Seller's
business or in Servicer's Credit and Collection Policy.
(g) Material Change. As soon as practicable but in no event later
than the second Business Day following the occurrence, notification
of any material adverse change in Seller's financial or operating
condition.
(h) Purchase and Sale Agreement. Promptly after receipt thereof,
copies of all documents and other information delivered by
Originator to Seller pursuant to the Purchase and Sale Agreement.
(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 Seller as the
Administrator or the Relationship Bank may from time to time
reasonably request in order to protect the interests of the
Administrator or Purchaser under or as contemplated by this
Agreement.
SECTION 7.03. Negative Covenants of Seller. From the date hereof
until the Final Payout Date, Seller will not, without the prior
written consent of the Administrator and the Relationship Bank:
(a) Sales, Liens, Etc. Except as otherwise provided herein, sell,
assign (by operation of law or otherwise) or otherwise dispose of,
or create or suffer to exist any Lien upon or with respect to, any
Pool Receivable or related Contract or Related Security, or any
interest (including Seller's retained interest hereunder) therein,
or any lock-box 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.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 8.02, extend, amend or otherwise modify the
terms of any Pool Receivable, or amend, modify or waive any term or
condition of any Contract related thereto.
(c) Change in Business. Make any change in the character of its
business.
(d) Change in Payment Instructions to Obligors. Add or terminate
any bank as a Lock-Box Bank from those listed in Schedule 6.01(o)
or make or permit any change in Servicer's instructions to Obligors
regarding payments to be made to Seller or Servicer or payments to
be made to any Lock-Box Bank, unless the Administrator and the
Relationship Bank shall have received notice of such addition,
termination or change and duly executed copies of Lock-Box
Agreements with each new Lock-Box Bank.
(e) Mergers, Acquisitions, Sales, etc. 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 all or any substantial part of its assets, or sell
or assign with or without recourse any Receivables or any interest
therein (other than pursuant hereto).
(f) Restricted Payments. Purchase or redeem, or permit any
Subsidiary to purchase or redeem, any shares of the capital stock
of Seller, declare or pay any dividends thereon (other than
Permitted Dividends and stock dividends which may be paid no more
frequently than quarterly), make any distribution to stockholders
or set aside any funds for any such purpose, or prepay, purchase or
redeem, or permit any Subsidiary to purchase, any subordinated
indebtedness of Seller except as permitted under the Tax Allocation
Agreement and any agreement allocating overhead to the extent such
agreement has been approved by the Administrator and the
Relationship Bank.
(g) Deposits to Special Accounts. Deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box
Account or the Collection Account cash or cash proceeds other than
Collections of Pool Receivables.
(h) Incurrence of Indebtedness. Incur or permit to exist any
indebtedness or liability on account of deposits or advances or for
borrowed money or for the deferred purchase price of any property
or services, except indebtedness approved by the Administrator and
the Relationship Bank and listed in Schedule 7.03(h).
(i) Amendments to Purchase and Sale Agreement. Amend, supplement,
waive the application of any provision of, amend and restate or
otherwise modify the Purchase and Sale Agreement except in each
case (i) in accordance with the terms thereof and (ii) with the
prior written consent of the Administrator and the Relationship
Bank.
(j) No Subsidiaries. Acquire any voting or economic interest in
any other Person.
SECTION 7.04. Affirmative Covenants of APR. From the date hereof
until the Final Payout Date, APR will, unless the Administrator or
the Relationship Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with
respect to (i) the Pool Receivables and related Contracts and (ii)
its business operations (particularly relating to origination and
servicing) except where non-compliance would not have a material
adverse effect on such business operations.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified
in good standing as a foreign corporation in each jurisdiction
where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would materially adversely
affect (i) the interests of Purchaser hereunder or (ii) the ability
of APR or Seller to perform their obligations hereunder or under
the other Transaction Documents.
(c) Audits. At any time and from time to time during regular
business hours, upon such notice, if any, as shall be reasonable
under the circumstances, permit the Administrator and/or the
Relationship Bank (at APR's expense), or their respective agents or
representatives, (i) 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 APR relating to Pool Receivables, including, without
limitation, the related Contracts and other agreements, and (ii) to
visit the offices and properties of APR for the purpose of
examining such materials described in clause (i) next above, and to
discuss matters relating to Pool Receivables or APR's performance
hereunder or under any other Transaction Document with any of the
officers or employees of APR having knowledge of such matters; and
without limiting the foregoing, from time to time upon request of
the Administrator and/or the Relationship Bank, permit certified
public accountants or other auditors acceptable to them to conduct,
at APR's expense, a review of APR's books and records.
(d) Keeping of Records and Books of Account. (i) 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), (ii) 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 each new
Pool Receivable and all Collections of and adjustments to each
existing Pool Receivable) and (iii) identify (and xxxx) in each of
its records (including computer records) each Receivable included
in the Receivables Pool as so included.
(e) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by
it under the Contracts related to the Pool Receivables and all
other agreements related to such Pool Receivables.
(f) Location of Records. Keep its chief place of business and
chief executive office, and the offices where it keeps its records
concerning the Pool Receivables, all related Contracts and all
other agreements related to such Pool Receivables (and all original
documents relating thereto), at the address(es) of APR referred to
in Section 6.01(n) or, upon 30 days' prior written notice to the
Administrator and the Relationship Bank, at such other locations in
jurisdictions where all action required by Section 8.05 shall have
been taken and completed.
(g) Credit and Collection Policies. Comply in all material
respects with its Credit and Collection Policy in regard to each
Pool Receivable and the related Contract.
(h) Collections. Cause all Collections of Pool Receivables to be
deposited within one Business Day directly with a Lock-Box Bank.
(i) Cancellation of Certain Insurance Policies. With regard to
any Pool Receivable, cancel the related insurance policy in
accordance with the Credit and Collection Policy, unless non-
cancellation thereof will not materially and adversely impact the
related Pool Receivable or the Receivables Pool taken as a whole.
(j) Semi-Annual Procedures. Use its best efforts to fully
cooperate with the Relationship Bank's semi-annual collateral
audit.
(k) Purchase and Sale Agreement. Comply with all of its
obligations under the Purchase and Sale Agreement.
SECTION 7.05. Reporting Requirements of APR. From the date hereof
until the Final Payout Date, APR will, unless the Administrator and
the Relationship Bank shall otherwise consent in writing, furnish
to the Administrator and the Relationship Bank:
(a) Financial Statements. As soon as available and in any event
within 90 days after each fiscal year of APR, and within 30 days
after each fiscal month of APR, copies of the financial statements
of APR and its Subsidiaries prepared on a consolidated basis and on
a consolidating basis, in each case in conformity with generally
accepted accounting principles, duly certified by the treasurer of
APR or, in the case of the annual consolidated financial
statements, by KPMG Peat Marwick or other independent certified
public accountants of recognized standing selected by APR and
acceptable to the Administrator and the Relationship Bank; together
with a monthly certificate from the treasurer, in each case
containing a computation of the Default Ratio, the Delinquency
Ratio, the Excess Yield Ratio and the Cancellation Ratio and
containing a computation of, and showing compliance with, the
financial restrictions contained in Section 7.06(e), 7.06(f),
7.06(h), 10.01(h), 10.01(i), 10.01(j) and 10.01(k).
(b) 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 APR files under ERISA with the
Internal Revenue Service, the Pension Benefit Guaranty Corporation
or the U.S. Department of Labor or which APR receives from the
Pension Benefit Guaranty Corporation:
(c) Liquidation Events. As soon as possible and in any event
within two Business Days after the occurrence of each Liquidation
Event and each Unmatured Liquidation Event, a written statement of
the chief financial officer or chief accounting officer of APR
setting forth details of such event and the action that APR
proposes to take with respect thereto;
(d) Litigation and Other Proceedings. As soon as possible and in
any event within three Business Days of APR's knowledge thereof,
notice of (i) any litigation, investigation, inquiry or proceeding
which may exist at any time which could have a material adverse
effect on the business, operations, property or financial condition
of APR or impair the ability of APR to perform its obligations
under this Agreement or which could result in an Adverse
Determination, (ii) any material adverse development in any
previously disclosed litigation, investigation, inquiry or
proceeding and (iii) any Adverse Determination;
(e) Change in Credit and Collection Policy. Prior to its
effective date, notice of any change in the character of APR's
business or in the Credit and Collection Policy.
(f) Material Change. As soon as practicable but in no event later
than the second Business Day following the occurrence, notification
of any material adverse change in APR's financial or operating
condition.
(g) 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 APR as the
Administrator or the Relationship Bank may from time to time
reasonably request in order to protect the interests of the
Administrator or Purchaser under or as contemplated by this
Agreement.
SECTION 7.06. Negative Covenants of APR. From the date hereof
until the Final Payout Date, APR will not, without the prior
written consent of the Administrator and the Relationship Bank:
(a) Sales, Liens, Etc. Except as otherwise provided herein, sell,
assign (by operation of law or otherwise) or otherwise dispose of,
or create or suffer to exist any Lien upon or with respect to, any
Pool Receivable or related Contract or Related Security, or any
interest (including Seller's retained interest) therein, or any
lock-box 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.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 8.02, extend, amend or otherwise modify the
terms of any Pool Receivable, or amend, modify or waive any term or
condition of any Contract related thereto.
(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.
(d) Change in Payment Instructions to Obligors. Add or terminate
any bank as a Lock-Box Bank from those listed in Schedule 6.01(o)
or make any change in its instructions to Obligors regarding
payments to be made to Seller or Servicer or payments to be made to
any Lock-Box Bank, unless the Administrator and the Relationship
Bank shall have received notice of such addition, termination or
change and duly executed copies of Lock-Box Agreements with each
new Lock-Box Bank.
(e) Minimum Net Worth. Permit APR's consolidated tangible net
worth to be less than $8,000,000 plus 50% of APR's earnings (if
positive) on a cumulative basis thereafter as calculated from
December 31, 1994. (Consolidated tangible net worth shall mean the
consolidated net worth of APR and the Subsidiaries after
subtracting therefrom the aggregate amount of any intangible assets
of APR and its Subsidiaries, including, without limitation,
goodwill, software systems, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks and brand names
and APR's earnings shall mean APR's after tax net income.)
(f) Mergers, Acquisitions, Sales, etc. 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 all or any substantial part of its assets, or sell
or assign with or without recourse any receivables (other than
pursuant hereto).
(g) Restricted Payments. Purchase or redeem, or permit any
Subsidiary to purchase or redeem, any shares of the capital stock
of APR, declare or pay any dividends (unless expressly permitted by
the Administrator and the Relationship Bank) thereon, make any
distribution to stockholders (including, without limitation, of
operating or other funds to Parent) or set aside any funds for any
such purpose, or prepay, purchase or redeem, or permit any
Subsidiary to prepay, purchase or redeem, any subordinated
indebtedness of APR, or purchase any debt owed by any Affiliate of
APR or make any loan to any Affiliate of APR except that APR may
make permitted payments (i) under the Tax Sharing Agreement in
accordance with the terms thereof, (provided that in no case shall
such amount exceed Seller's pro rata allocation), (ii) under the
Subordinated Line not in excess of the amount permitted thereafter
and (iii) in respect of Allocated Expenses.
(h) Incurrence of Indebtedness. Incur or permit to exist, or
permit any Subsidiary to incur or permit to exist, any indebtedness
or liability on account of deposits or advances or for borrowed
money or for the deferred purchase price of any property or
services, except (i) indebtedness of Subsidiaries to APR and to
other Subsidiaries not exceeding in the aggregate $100,000 at any
one time outstanding, (ii) current accounts payable arising in the
ordinary course of business and (iii) other indebtedness
outstanding on the date hereof and listed on Schedule 7.06(i);
notwithstanding the foregoing, APR may maintain a Subordinated Line
with Parent in an amount not to exceed $5,000,000.
(i) Deposits to Special Accounts. Deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections of Pool
Receivables.
SECTION 7.07 Affirmative Covenants of Parent. From the date
hereof until the Final Payout Date, Parent will, unless the
Administrator and the Relationship Bank shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders with
respect to its business operations except where non-compliance
would not have a material adverse effect on such business
operations.
(b) Preservation of Corporate Existence. Preserve and maintain
its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified
in good standing as a foreign corporation in each jurisdiction
where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would materially adversely
affect the ability of Parent or APR to perform their respective
obligations hereunder.
(c) Purchase and Sale Agreement. Cause APR to comply with each of
the terms and provisions of the Purchase and Sale Agreement.
SECTION 7.08 Reporting Requirements of Parent. From the date
hereof until the Final Payout Date, Parent will, unless the
Administrator and the Relationship Bank shall otherwise consent in
writing, furnish to 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 Parent, copies of Parent's
quarterly financial reports, on Form 10-Q, as filed with the
Securities and Exchange Commission (or if Parent is no longer
required to file such Form 10-Q, Parent shall furnish such
financial reports containing the information typically found on
Form 10-Q), certified by the chief financial officer or chief
accounting officer of Parent;
(b) Annual Financial Statements. As soon as available and in any
event within 90 days after the end of each fiscal year of Parent,
a copy of Parent's Annual Report, on Form 10-K, as filed with the
Securities and Exchange Commission (or if Parent is no longer
required to file such Form 10-K, Parent shall furnish such
financial reports containing information typically found on Form
10-K) and as reported on by nationally recognized independent
certified public accountants;
(c) Reports to Holders and Exchanges. In addition to the reports
required by subsections (a) and (b) next above, promptly upon the
Relationship Bank's request, copies of any reports which Parent
sends to any of its securityholders, and any reports or
registration statements that Parent files with the Securities and
Exchange Commission;
(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 Parent files under ERISA with
the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which Parent
receives from such Corporation;
(e) Litigation and Other Proceedings. As soon as possible and in
any event within three Business Days of Parent's knowledge thereof,
notice of (i) any litigation, investigation, inquiry or proceeding
which may exist at any time which could have a material adverse
effect on the business, operations, property or financial condition
of Parent or impair the ability of Parent to perform its
obligations under this Agreement and (ii) any material adverse
development in any previously disclosed litigation, investigation,
inquiry or proceeding; and
(f) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the
conditions or operations, financial or otherwise, of Parent as
Purchaser may from time to time reasonably request in order to
protect the interests of Purchaser.
SECTION 7.09 Negative Covenant of Parent. From the date hereof
until the Final Payout Date, Parent will not, without the prior
written consent of the Administrator and the Relationship Bank,
permit its consolidated tangible net worth (as such term is defined
in Section 7.06(e)) to be less than $50 million.
SECTION 7.10 Special Covenant of Seller, APR and Parent. From the
date hereof until the Final Payout Date, Seller, APR and Parent
agree that Seller shall be operated in such a manner that it will
not be substantively consolidated in the bankruptcy estate of any
Affiliate such that the separate corporate existence of Seller
would be disregarded in the event of a bankruptcy or insolvency of
any Affiliate, and Seller is and shall be operated in such a manner
that no Affiliate shall be substantively consolidated in the
bankruptcy estate of Seller, such that, in the event that Seller
were to be a debtor in a case under the Bankruptcy Code, the
separate existence of Seller or the separate corporate existence of
APR, or the separate existence of any other Affiliate, would be
disregarded so as to lead to substantive consolidation of the
assets and liabilities of APR, Parent or any other Affiliate with
the bankruptcy estate of Seller, and in that regard;
(a) Seller shall maintain separate corporate records and books of
account from that of any Affiliate, including, but not limited to,
APR and Parent, hold regular meetings and otherwise observe
corporate formalities and shall keep and maintain its place of
business separate and apart from the place of business of any
Affiliate, including APR and Parent, and Seller shall have a
separately designated address and phone listing for its business
offices;
(b) the financial statements and books and records of Seller, APR
and Parent and any Affiliate prepared after the date hereof (which
may be consolidated statements for certain financial and tax
reporting purposes) shall reflect the separate existence of and
separate financial condition of the Seller, APR and Parent and any
other Affiliate;
(c) Seller shall maintain its funds and other assets separately
from the funds and other assets of any Affiliate, including, but
not limited to APR and Parent (including through the maintenance of
a separate bank account); Seller's funds and other assets and
records relating thereto will be separately identifiable and shall
not be commingled with those of any Affiliate, including, but not
limited to APR and Parent, and the creditors of APR and Parent
shall be entitled to be satisfied out of their own assets prior to
any value becoming available to the shareholders of Seller;
(d) except to the limited extent permitted under Section 7.10(p),
no Affiliate of Seller shall guarantee Seller's obligations or
advance funds to Seller for the payment of expenses or otherwise;
(e) Seller, APR and Parent will conduct their respective
businesses solely in their own name so as not to mislead others as
to their identity, and particularly APR and Parent on the one hand
and Seller on the other hand will use their best respective efforts
to avoid the appearance of conducting business on behalf of Seller
on the one hand and APR and Parent on the other hand or that any of
Seller's assets are available to pay the creditors of APR or Parent
or any other Affiliates, and, without limiting the generality of
the foregoing, all oral or written communications shall be
conducted by Seller in its own name and on its own stationary;
(f) except in the limited instances set forth herein, Seller will
not act as an agent of Parent or APR or any Affiliate, and no
Affiliate (including APR and Parent) will act as an agent of
Seller, but instead Seller shall present itself to the public as a
corporation separate from any other Person, independently engaged
in the business of purchasing Receivables and related Contracts;
(g) Seller, APR and Parent will act and conduct their respective
businesses in such a way that it would not be reasonable for a
third party to rely on the assets of one to satisfy the obligations
of the others;
(h) Seller shall obtain proper authorization from its board of
directors for any material corporate action to be engaged in by
Seller;
(i) Seller will maintain its own separate bank account and will
pay all of its own operating expenses and liabilities solely and
exclusively from its own funds;
(j) the annual financial statements of Seller, APR and Parent
shall disclose the effects of their transactions in accordance with
generally accepted accounting principles and shall disclose that
the assets of Seller will only be available to satisfy the claims
of Seller's creditors;
(k) all resolutions, consents to action, agreements, and any other
instruments of Seller underlying the transactions described in this
Agreement and in the other Transaction Documents shall be
continuously maintained as official records by Seller, separately
identified and held apart from the records of the APR, Parent and
each of the Affiliates thereof;
(l) Seller shall remain a limited purpose corporation whose
activities are restricted in accordance with its Certificate of
Incorporation;
(m) Seller shall hold no ownership or equity interests in any
Person;
(n) neither APR nor Parent nor any other Affiliate shall engage in
any intercompany transactions with Seller except for the
transactions set forth in this Agreement (or reasonably related
thereto), the Purchase and Sale Agreement and the other Transaction
Documents;
(o) at least one of the directors of Seller shall be an
independent director, which independent director shall at no time
be a member, partner, director (other than as the independent
director of Seller), officer or employee of Seller, APR or Parent
or any Affiliate thereof; and
(p) although the organization expenses of Seller have been paid by
APR, operating expenses and liabilities of Seller shall be paid
solely and exclusively by Seller from its own funds (it being
understood that APR may make capital contributions to Seller).
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer.
(a) APR as Initial Servicer. The servicing, administering and
collection of the Pool Receivables shall be conducted by the Person
designated as Servicer hereunder ("Servicer") from time to time in
accordance with this Section 8.01. Until the Administrator or the
Relationship Bank gives to APR a Successor Notice (as defined in
Section 8.01(b) APR is hereby designated as, and hereby agrees to
perform the duties and obligations of, Servicer pursuant to the
terms hereof.
(b) Successor Notice; Servicer Transfer Events. Upon APR's
receipt of a notice from the Administrator or Relationship Bank of
the Administrator's or Relationship Bank's designation of the
Backup Servicer as the Servicer or any other Person acceptable to
the Administrator and the Relationship Bank (a "Successor Notice"),
APR agrees that it will terminate its activities as Servicer
hereunder in a manner that the Administrator and the Relationship
Bank believes will facilitate the transition of the performance of
such activities to the new Servicer, and such new Servicer shall
assume each and all of APR's obligations to service and administer
such Receivables, on the terms and subject to the conditions herein
set forth, and APR shall use its best efforts to assist the
Administrator and the Relationship Bank (or their designee) in
assuming such obligations. The Administrator and Relationship Bank
agree not to give APR a Successor Notice until after the occurrence
of any Liquidation Event (any such Liquidation Event being herein
called a "Servicer Transfer Event"), in which case such Successor
Notice may be given at any time in the Administrator's or the
Relationship Bank's discretion. If APR disputes the occurrence of
a Servicer Transfer Event, APR may take appropriate action to
resolve such dispute; provided that APR must terminate its
activities hereunder as Servicer and allow the newly designated
Servicer to perform such activities on the date provided by the
Administrator or Relationship Bank as described above,
notwithstanding the commencement or continuation of any proceeding
to resolve the aforementioned dispute.
(c) Subcontracts. Servicer may, with the prior consent of the
Administrator, subcontract with any other person for servicing,
administering or collecting the Pool Receivables, provided that
Servicer shall remain liable for the performance of the duties and
obligations of Servicer pursuant to the terms hereof.
SECTION 8.02. Duties of Servicer.
(a) Appointment; Duties in General. Each of Seller, Purchaser,
Relationship Bank and the Administrator hereby appoints as its
agent Servicer, as from time to time designated pursuant to Section
8.01, to enforce its rights and interests in and under the Pool
Receivables, the Related Security and the related Contracts.
Servicer shall take or cause to be taken all such actions as may be
necessary or advisable to collect each Pool Receivable from time to
time, all in accordance with applicable laws, rules and
regulations, with such care and diligence as is customary in
servicing insurance premium finance contracts in the industry or,
if higher, the servicing standards it applies to such contracts,
and in accordance with the Credit and Collection Policy; such
duties to include, but not be limited to, the following: (i)
documentation, collection, enforcement and administration of the
Receivables, (ii) servicing in accordance with stated contract
processing, collections, and cash disbursement policies and
procedures, and all other procedures and standards set forth in the
Credit and Collection Policy, (iii) maintaining and documenting
Purchaser's first priority perfected security interest in the
Receivables Pool, including those steps necessary to ensure a
perfected security interest in the unearned premiums, (iv)
depositing and paying over of all amounts to such Persons or
accounts and as and when required by the terms of any Transaction
Document, (v) preparing and delivering reports and electronic data
to facilitate Settlements, Reinvestments, Purchases, periodic
audits, etc., (vi) delivering periodic data to the Backup Servicer
as required pursuant to the Backup Servicing Agreement and (vii)
using its best efforts to fully cooperate with any new Servicer at
any time designated hereunder.
(b) Documents and Records. Seller shall, and shall require the
Originator to, deliver to Servicer, and Servicer shall hold in
trust for Seller, Originator and Purchaser in accordance with their
respective interests, all documents, instruments and records
(including, without limitation, computer tapes or disks) that
evidence or relate to Pool Receivables.
(c) Certain Duties to Seller. Servicer shall, as soon as
practicable following receipt, subject to Article III, turn over to
Seller (i) that portion of Collections of Pool Receivables
representing its undivided interest therein, less, in the event APR
is no longer Servicer, all reasonable and appropriate out-of-pocket
costs and expenses of Servicer of servicing, collecting and
administering the Pool Receivables to the extent not covered by the
Servicer's Fee received by it, and (ii) the Collections of any
Receivable which is not a Pool Receivable. Servicer, if other than
APR, shall, as soon as practicable upon demand, deliver to Seller
all documents, instruments and records in its possession that
evidence or relate to Receivables of Seller other than Pool
Receivables, and copies of documents, instruments and records in
its possession that evidence or relate to Pool Receivables.
(d) Termination. Servicer's authorization under this Agreement
shall terminate upon the Final Payout Date.
(e) Power of Attorney. Seller hereby grants to Servicer an
irrevocable power of attorney, with full power of substitution,
coupled with an interest, to take in the name of Seller all steps
which are necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or
transmitted by Seller or transmitted or received by Purchaser
(whether or not from Seller) in connection with any Receivable.
SECTION 8.03. Rights of the Administrator and the Relationship
Bank.
(a) Notice to Obligors. At any time the Administrator or the
Relationship Bank may notify the Obligors of Pool Receivables, or
any of them, of the ownership of Asset Interests by Purchaser.
(b) Notice to Lock-Box Banks. At any time following the earliest
to occur of (i) the occurrence of the Liquidation Date, (ii) the
commencement of the Liquidation Period, and (iii) the warranty in
Section 6.02(h)(y) shall no longer be true, the Administrator and
the Relationship Bank are hereby authorized to give notice to the
Lock-Box Banks, as provided in the Lock-Box Agreements, of the
transfer to the Relationship Bank of dominion and control over the
lock-boxes and related accounts to which the Obligors of Pool
Receivables make payments. Seller hereby transfers to the
Relationship Bank, effective when the Administrator or the
Relationship Bank shall give notice to the Lock-Box Banks as
provided in the Lock-Box Agreements, the exclusive dominion and
control over such lock-boxes and accounts, and shall take any
further action that the Administrator or the Relationship Bank may
reasonably request to effect such transfer.
(c) Rights on Servicer Transfer Event. At any time following the
designation of a Servicer other than APR pursuant to Section 8.01:
(i) The Administrator and/or the Relationship Bank may direct the
Obligors of Pool Receivables, or any of them, to pay all amounts
payable under any Pool Receivable directly to the Collateral Agent.
(ii) Seller and APR shall, at the Administrator's or Relationship
Bank's request and at Seller's expense, give notice of such
ownership to each said Obligor and direct that payments be made
directly to the Collateral Agent.
(iii) Seller and APR shall, at the Administrator's or Relationship
Bank'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 Pool Receivables, and make
the same available to the Administrator at a place selected by the
Administrator or the Relationship Bank, and (B) segregate all cash,
checks and other instruments received by it from time to time
constituting Collections of Pool Receivables in a manner 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 Collateral Agent.
(iv) Each of Seller and Purchaser hereby authorizes each of the
Administrator and the Relationship Bank, and grants to the
Administrator and the Relationship Bank an irrevocable power of
attorney, to take any and all steps in Seller's name and on behalf
of Seller and Purchaser which are necessary or desirable, in the
determination of the Administrator or the Relationship Bank, to
collect all amounts due under any and all Pool Receivables,
including, without limitation, endorsing Seller's name on checks
and other instruments representing Collections and enforcing such
Pool Receivables and the related Contracts; provided that the
Administrator and the Relationship Bank shall not exercise their
rights under such Power of Attorney unless a Servicer Transfer
Event shall have occurred and be continuing.
SECTION 8.04. Responsibilities of Seller. Anything herein to the
contrary notwithstanding:
(a) Contracts. Seller and APR shall perform all of their
respective obligations under the Contracts related to the Pool
Receivables and under other agreements to the same extent as if the
Asset Interest had not been sold hereunder and the exercise by the
Administrator or the Relationship Bank or their designees of their
rights hereunder shall not relieve Seller and APR from such
obligations.
(b) Limitation of Liability. The Administrator, the Relationship
Bank and Purchaser shall not have any obligation or liability with
respect to any Pool Receivables, Contracts related thereto or any
other related purchase orders or other agreements, nor shall any of
them be obligated to perform any of the obligations of Seller,
Originator or APR thereunder.
SECTION 8.05. Further Action Evidencing Purchases and
Reinvestments.
(a) Further Assurances. Seller and APR agree that from time to
time, at Seller's expense, they will promptly execute and deliver
all further instruments and documents, and take all further action
that the Administrator or the Relationship Bank or their designees
may reasonably request in order to perfect, protect or more fully
evidence the Purchases hereunder and the resulting Asset Interest,
or to enable Purchaser, the Relationship Bank or the Administrator
or their designees to exercise or enforce any of their respective
rights hereunder or under any Transaction Document. Without
limiting the generality of the foregoing, Seller and APR will upon
the request of the Administrator or the Relationship Bank or its
designee:
(i) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate;
(ii) xxxx conspicuously each Contract evidencing each Pool
Receivable with a legend, acceptable to the Administrator,
evidencing that the Asset Interest has been sold in accordance with
this Agreement; and
(iii) xxxx the master data processing records evidencing such Pool
Receivables and related Contracts with such legend.
(b) Additional Financing Statements; Performance by Administrator.
Seller hereby authorizes the Administrator or the Relationship Bank
or their designees to file one or more financing or continuation
statements, and amendments thereto and assignments thereof,
relative to all or any of the Pool Receivables and the Related
Security now existing or hereafter arising in the name of Seller or
APR. If Seller fails to perform any of its agreements or
obligations under this Agreement, the Administrator or the
Relationship Bank or their designees may (but shall not be required
to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Administrator, the Relationship
Bank and their designees, as the case may be, incurred in
connection therewith shall be payable by Seller as provided in
Section 14.05.
(c) Continuation Statements; Opinion. Without limiting the
generality of subsection (a), Seller will, not earlier than six (6)
months and not later than three (3) months prior to the fifth
anniversary of the date of filing of the financing statement
referred to in Section 5.01(e) or any other financing statement
filed pursuant to this Agreement or in connection with any Purchase
hereunder, unless the Termination Date shall have occurred and
Purchaser's Total Interest shall have been reduced to zero, execute
and deliver and file or cause to be filed an appropriate
continuation statement with respect to such financing statement.
SECTION 8.06. Application of Collections. Any payment by an
Obligor in respect of any indebtedness owed by it to Seller or APR
shall, except as otherwise specified by such Obligor, required by
the underlying Contract or law or unless the Administrator
instructs otherwise, be applied, first, as a Collection of any Pool
Receivable or Receivables then outstanding of such Obligor in the
order of the age of such Pool Receivables, starting with the oldest
of such Pool Receivable and, second, to any other indebtedness of
such Obligor.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest. To secure all
obligations of Seller, and Servicer (if APR) in its capacity as
Servicer, arising in connection with this Agreement and each other
Transaction Document, whether now or hereafter existing, due or to
become due, direct or indirect, or absolute or contingent,
including, without limitation, all Indemnified Amounts, payments on
account of Collections received or deemed to be received and fees,
in each case pro rata according to the respective amounts thereof,
Seller hereby assigns and grants to Purchaser, for the benefit of
the Secured Parties, a security interest in all of Seller's (i)
right, title and interest (including specifically any undivided
interest retained by Seller hereunder) now or hereafter existing
in, to and under all the Receivables, the Related Security, the
related Contracts and all Collections with regard thereto and
proceeds thereof and (ii) rights, remedies, powers and privileges
under and in respect of the Purchase and Sale Agreement, the Lock-
Box Agreement and related lock-box account.
SECTION 9.02. Further Assurances. The provisions of Section 8.05
shall apply to the security interest granted under Section 9.01 as
well as to the Purchases, Reinvestments and all the Asset Interests
hereunder.
SECTION 9.03. Remedies. Upon the occurrence of a Liquidation
Event, Purchaser and the Relationship Bank shall have, with respect
to the collateral granted pursuant to Section 9.01, and in addition
to all other rights and remedies available to Purchaser or the
Administrator under this Agreement or other applicable law, all the
rights and remedies of a secured party upon default under the UCC.
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events. The following events shall be
"Liquidation Events" hereunder:
(a) (i) Servicer (if APR or any Affiliate of APR) shall fail to
perform or observe any term, covenant or agreement that is an
obligation of Servicer hereunder (other than as referred to in
clause (ii) next following) and such failure shall remain
unremedied for three Business Days or (ii) Servicer (if APR or any
Affiliate of APR) shall fail to make any payment or deposit to be
made by it hereunder when due; or
(b) Any representation or warranty made or deemed to be made by
Seller, APR or Parent (or any of their officers) under or in
connection with this Agreement or any other Transaction Document or
any Settlement Statement or other information or report delivered
pursuant hereto shall prove to have been false or incorrect in any
material respect when made; or
(c) Seller, APR or Parent shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement or
any of the other Transaction Documents on their part to be
performed or observed and any such failure shall remain unremedied
for five Business Days after (i) written notice thereof shall have
been given by the Administrator or the Relationship Bank to Seller,
APR or Parent, as applicable, or (ii) either Seller or APR has
actual knowledge thereof; or
(d)(i) A default or a similar event, as the case may be, shall
have occurred and be continuing under any instrument or agreement
evidencing, securing or providing for (A) the issuance of
indebtedness for borrowed money aggregating for all such agreements
in excess of $150,000 of, or guaranteed by, APR, or $5,000,000 of,
or guaranteed by, Parent or (B) pursuant to which APR or Parent
shall have sold interests in receivables to, or shall otherwise
have financed receivables with, any Person, where the purchaser's
investment is in the aggregate for all such transactions in excess
of $150,000 in the case of APR or $5,000,000 in the case of Parent,
which default or similar event, if unremedied, uncured, or unwaived
(with or without the passage of time or the giving of notice) would
permit acceleration of the maturity of such indebtedness or would
require the permanent reduction of such purchaser's investment and
such default or similar event shall have continued unremedied,
uncured or unwaived for a period long enough to permit such
acceleration or reduction and any notice of default or similar
event required to permit acceleration or reduction shall have been
given; or
(e) Adverse Determinations shall have occurred in three or more
states or in states in which Direct or Insurance Obligors reside
representing the aggregate of 5% or more of the Receivables in the
Receivables Pool; or
(f) An Event of Bankruptcy shall have occurred and remain
continuing with respect to Seller, APR or Parent or any Affiliate
of any thereof; or
(g) (i) Any material litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by Seller to the
Administrator, the Relationship Bank and Purchaser prior to the
date of execution and delivery of this Agreement is pending against
Seller, APR or Parent or any Affiliate of any thereof, or (ii) any
material development not so disclosed has occurred in any
litigation (including, without limitation, derivative actions),
arbitration proceedings or governmental proceedings so disclosed,
which, in the case of clause (i) or (ii), in the opinion of the
Administrator or the Relationship Bank, has a reasonable likelihood
of having a Material Adverse Effect; or
(h) The average Excess Yield Ratio at any Cut-Off Date calculated
for the three most recent Settlement Periods (calculated with pro
forma calculations of the Excess Yield Ratio for the number of
calendar months preceding the date hereof necessary to make the
calculations required by this paragraph (h)) is less than 3.00%; or
(i) The average Default Ratio at any Cut-Off Date calculated for
the three most recent Settlement Periods (calculated with pro
forma calculations of the Default Ratio for the number of calendar
months preceding the date hereof necessary to make the calculations
required by this paragraph (i)) exceeds 1.00%; or
(j) The average Cancellation Ratio at any Cut-Off Date calculated
for the three most recent Settlement Periods (calculated with pro
forma calculations of the Cancellation Ratio for the number of
calendar months preceding the date hereof necessary to make the
calculations required by this paragraph (j)) exceeds 4.00%; or
(k) The Delinquency Ratio at any Cut-Off Date exceeds 3.00%; or
(l) There shall exist any event or occurrence that has a
reasonable possibility of causing a Material Adverse Effect; or
(m) The Purchaser's Share on account of Principal Receivables
shall at any time exceed 100%; or
(n) Any of Seller, Parent or APR is subject to a Change-in-
Control; or
(o) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard
to any of the assets of Seller, APR or Parent and such lien shall
not have been released within five days, or the Pension Benefit
Guaranty Corporation shall, or shall indicate its intention to,
file notice of a lien pursuant to Section 4068 of the Employee
Retirement Income Security Act of 1974 with regard to any of the
assets of Seller, APR or Parent or any of their Affiliates; or
(p) Failure to obtain a Liquidity Agreement in substitution for
the then existing Liquidity Agreement on or before 30-days prior to
the expiration of the commitments of the Liquidity Banks
thereunder; or
(q) prior to the Transfer Date, (i) A Downgrading Event with
respect to a Liquidity Bank shall have occurred and been continuing
for not less than 45 days, (ii) the Downgraded Liquidity Bank shall
not have been replaced by a Qualifying Liquidity Bank pursuant to
a Liquidity Agreement in form and substance acceptable to Purchaser
and the Administrator, and (iii) the commitment of such Downgraded
Liquidity Bank under the Liquidity Agreement shall not have been
funded or collateralized in such a manner that such Downgrading
Event will not result in a reduction or withdrawal of the credit
rating applied to the Commercial Paper Notes by any of the rating
agencies then rating the Commercial Paper Notes; provided, that no
Termination Event shall be deemed to have occurred pursuant to this
Section 10.01(q) if (x) the parties hereto agree to permanently
reduce the Purchase Limit by the commitment amount of such
Downgraded Liquidity Bank at the end of the 45 day period referred
to in clause (i) and (y) the Purchaser's Total Investment does not
exceed such revised Purchase Limit after such time; or
(r) a Purchase and Sale Termination Event shall have occurred; or
(s) Purchaser shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 10.02. Remedies.
(a) Optional Liquidation. Upon the occurrence of a Liquidation
Event (other than a Liquidation Event described in subsection (f)
of Section 10.01), the Administrator and the Relationship Bank
shall, at the request, or may with the consent, of Purchaser, by
notice to Seller declare the Purchase Termination Date to have
occurred and the Liquidation Period to have commenced.
(b) Automatic Liquidation. Upon the occurrence of a Liquidation
Event described in subsection (f) of Section 10.01, the Purchase
Termination Date shall occur and the Liquidation Period shall
commence automatically.
(c) Additional Remedies. Upon any Purchase Termination Date
pursuant to this Section 10.02, no Purchases or Reinvestments
thereafter will be made, and the Administrator, Purchaser and the
Relationship Bank shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC and other laws of each applicable
jurisdiction and other applicable laws, which rights shall be
cumulative.
ARTICLE XI
THE ADMINISTRATOR; RELATIONSHIP BANK
SECTION 11.01. Authorization and Action. Pursuant to the Program
Administration Agreement and the Relationship Bank Agreement,
Purchaser has appointed and authorized the Administrator and the
Relationship Bank (or their respective designees) to take such
action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Administrator or the
Relationship Bank by the terms hereof, together with such powers as
are reasonably incidental thereto.
SECTION 11.02. Administrator's and Relationship Bank's Reliance,
Etc. The Administrator, the Relationship Bank and their directors,
officers, agents or employees shall not be liable for any action
taken or omitted to be taken by it or them under or in connection
with the Transaction Documents (including, without limitation, the
servicing, administering or collecting Pool Receivables as Servicer
pursuant to Section 8.01), except for its or their own gross
negligence or willful misconduct. Without limiting the generality
of the foregoing, each of the Administrator and the Relationship
Bank: (a) may consult with legal counsel (including counsel for
Seller), independent certified public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (b) makes no
warranty or representation to Purchaser or any other holder of any
interest in Pool Receivables and shall not be responsible to
Purchaser or any such other holder for any statements, warranties
or representations made in or in connection with any Transaction
Document; (c) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or
conditions of any Transaction Document on the part of Seller, APR
or Parent or to inspect the property (including the books and
records) of Seller, APR or Parent; (d) shall not be responsible to
Purchaser or any other holder of any interest in Pool Receivables
for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Transaction Document; and
(e) shall incur no liability under or in respect of this Agreement
by acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing (which may be by
facsimile or telex) believed by it to be genuine and signed or sent
by the proper party or parties.
SECTION 11.03. State Street Capital and Norwest and Affiliates.
State Street Capital and Norwest and any of their respective
Affiliates may generally engage in any kind of business with
Seller, APR or Parent or any Obligor, any of their respective
Affiliates and any Person who may do business with or own
securities of Seller, APR or Parent or any Obligor or any of their
respective Affiliates, all as if State Street Capital and Norwest
were not the Administrator and the Relationship Bank, respectively,
and without any duty to account therefor to Purchaser or any other
holder of an interest in Pool Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST; TRANSFER DATE
SECTION 12.01. Restrictions on Assignments.
(a) Except as set forth in Section 12.05, neither Seller, APR,
Parent, nor Norwest, individually or as the Relationship Bank
(except as otherwise provided in the Relationship Bank Agreement)
nor the Administrator, may assign its rights, or delegate its
duties hereunder or any interest herein without the prior written
consent of the Administrator and the Relationship Bank. Purchaser
may not assign its rights hereunder (although it may delegate its
duties hereunder as expressly indicated herein) or the Asset
Interest (or any portion thereof or interest therein) to any Person
without the prior written consent of Seller which consent shall not
be unreasonably withheld; provided, however, that, without the
prior consent of any Person:
(i) Purchaser may assign all or any part of its rights and
interests in the Transaction Documents, together with all or any
portion of its interest in the Asset Interest, to the Backup
Purchaser, any Liquidity Bank, the Liquidity Agent, State Street
Capital or Norwest, or any of them, or any Affiliate of any of
them, or to any "bankruptcy remote" special purpose entity the
business of which is administered by State Street Capital or any
Affiliate of State Street Capital or Norwest or any Affiliate of
Norwest; and
(ii) Purchaser may assign and grant a security interest in all of
its rights in the Transaction Documents, together with all of its
rights and interest in the Asset Interest, to the Collateral Agent
and the Liquidity Agent, to secure Purchaser's obligations under or
in connection with the Commercial Paper Notes, the Liquidity
Agreement, the Credit Agreement and any letter of credit issued
thereunder, and certain other obligations of Purchaser incurred in
connection with the funding of the Purchases and Reinvestments
hereunder, which assignment and grant of a security interest (and
any subsequent assignment by the Collateral Agent and/or the
Liquidity Agent) shall not be considered an "assignment" for
purposes of Section 12.01 or, prior to the enforcement of such
security interest, for purposes of any other provision of this
Agreement.
(b) Seller agrees to advise the Administrator within five Business
Days after notice to Seller of any proposed assignment by Purchaser
of the Asset Interest (or any portion thereof), not otherwise
permitted under subsection (a), of Seller's consent or non-consent
to such assignment and if it does not consent, the reasons
therefor. If Seller does not consent to such assignment, Purchaser
may immediately assign such Asset Interest (or portion thereof) to
State Street Capital, Norwest or any Affiliate of State Street
Capital or Norwest. All of the aforementioned assignments shall be
upon such terms and conditions as Purchaser and the assignee may
mutually agree.
SECTION 12.02. Rights of Assignee. Upon the assignment by
Purchaser in accordance with this Article XII, the assignee
receiving such assignment shall have all of the rights of Purchaser
with respect to the Transaction Documents and the Asset Interest
(or such portion thereof as has been assigned).
SECTION 12.03. Evidence of Assignment. Any assignment of the Asset
Interest (or any portion thereof) to any Person may be evidenced by
such instrument(s) or document(s) as may be satisfactory to
Purchaser, the Relationship Bank, the Administrator and the
assignee.
SECTION 12.04. Rights of the Banks, Collateral Agent and Collection
Agent. Seller hereby agrees that, upon notice to Seller, the
Collateral Agent and/or the Collection Agent may exercise all the
rights of the Administrator and the Purchaser hereunder, with
respect to the Asset Interest (or any portions thereof), and
Collections with respect thereto, which are owned by Purchaser, and
all other rights and interests of Purchaser in, to or under this
Agreement or any other Transaction Document. Without limiting the
foregoing, upon such notice Collateral Agent and/or the Collection
Agent may request Servicer to segregate Purchaser's Share of
Collections from Seller's Share, require Collections to be retained
in the Collection Account, may give a Successor Notice pursuant to
Section 8.01(a), may give or require the Administrator or
Relationship Bank to give notice to the Lock-Box Banks as referred
to in Section 8.03(b) and may direct the Obligors of Pool
Receivables to make payments in respect thereof directly to an
account designated by them, in each case, to the same extent as the
Administrator or the Purchaser might have done.
SECTION 12.05. Transfer Date.
(a) Effect of Transfer Date. Upon the occurrence of the Transfer
Date under the Liquidity Agreement, the Purchaser will sell,
transfer and assign and the Backup Purchaser will purchase and
accept, all of Purchaser's right, title and interest in the Asset
Interest, this Agreement and each other Transaction Document.
Except to the limited extent set forth herein and in the Liquidity
Agreement, from and after the Transfer Date, the Backup Purchaser
shall automatically and without any further action required by any
Person, assume all rights, interests and duties of the Purchaser
hereunder and under each other Transaction Document. Additionally,
from and after the Transfer Date, the Relationship Bank shall
automatically and without any further action required by any
Person, assume, except as specifically set forth in any Transaction
Document, all rights, interests and duties of the Administrator,
the Collateral Agent and the Collection Agent hereunder and under
each other Transaction Document.
(b) Certain Terminations. After the Transfer Date, the outgoing
Purchaser's, the Administrator's, the Collateral Agent's and the
Collection Agent's rights and obligations under this Agreement and
each other Transaction Document shall terminate automatically and
shall be of no further force or effect, except, in the case of
rights, with respect to Indemnified Amounts and other amounts
(including pursuant to Section 4.02) due them and to the extent
specifically set forth herein; and with respect to obligations and
liabilities, as set forth in paragraph (c) below. In addition, all
provisions of this Agreement requiring the consent of any Rating
Agency shall from and after the Transfer Date be of no further
force or effect as to such required consent.
(c) Obligations and Liabilities. It shall be understood and
agreed that neither the Backup Purchaser nor the Liquidity Agent
shall hereunder, or under any other Transaction Document, assume,
or be deemed to have assumed, other than as specifically provided
in the Liquidity Agreement or hereunder any obligation or liability
of the outgoing Purchaser, the Administrator, the Collateral Agent,
the Collection Agent or any other Person; and the assumption of any
such obligation or liability is hereby expressly disclaimed.
(d) Purchaser After Transfer Date. Subject to Sections 12.05(b)
and (c) above, from and after the Transfer Date the Backup
Purchaser shall be the Purchaser for all purposes hereunder; and
Seller, Servicer and Parent shall no longer deal with the outgoing
Purchaser in connection with the Transaction Documents except to
the extent of matters relating to events occurring prior to the
Transfer Date.
(e) Permitted Assignment. The assignments by Purchaser
contemplated pursuant to this Section 12.05 shall be permitted
assignments pursuant to Section 12.01(a)(i) and shall, except as
specifically set forth in this Section 12.05, be implemented
hereunder as if made pursuant to such Section 12.01(a)(i).
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities by Seller, APR and Parent.
(a) General Indemnity. Without limiting any other rights which
any such Person may have hereunder or under applicable law, Seller,
APR and Parent hereby agree to jointly and severally indemnify each
of the Administrator, Purchaser, the Liquidity Banks, the Credit
Bank, the Relationship Bank, the Backup Purchaser, the Liquidity
Agent, each of their respective Affiliates, and all successors,
transferees, participants and assigns and all officers, directors,
shareholders, controlling persons, employees and agents of any of
the foregoing (each an "Indemnified Party"), forthwith on demand,
from and against any and all damages, losses, claims, liabilities
and related costs and expenses, including reasonable attorneys'
fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred
by any of them arising out of or relating to the Transaction
Documents or the ownership or funding of the Asset Interest or in
respect of any Receivable or any Contract, excluding, however, (a)
Indemnified Amounts to the extent determined by a court of
competent jurisdiction to have resulted from gross negligence or
willful misconduct on the part of such Indemnified Party and (b)
recourse (except as otherwise specifically provided in this
Agreement) for Defaulted Receivables. Without limiting the
foregoing, Seller, APR and Parent shall jointly and severally
indemnify each Indemnified Party for Indemnified Amounts arising
out of or relating to:
(i) the transfer by Seller of any interest in any Receivable other
than the transfer of an Asset Interest to Purchaser pursuant to
this Agreement and the grant of a security interest to Purchaser
pursuant to Section 9.01;
(ii) any representation, warranty or covenant made by Seller, APR
or Parent (or any of their officers or Affiliates) under or in
connection with any Transaction Document, any Settlement Statement
or any other information or report delivered by or on behalf of
Seller, APR or Parent pursuant hereto, which shall have been false,
incorrect or misleading in any material respect when made or deemed
made;
(iii) the failure by Seller or APR to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the
related Contract, or the nonconformity of any Pool Receivable or
the related Contract with any such applicable law, rule or
regulation;
(iv) the failure to vest and maintain vested in Purchaser an
undivided percentage ownership interest, to the extent of the Asset
Interest, in the Receivables in, or purporting to be in, the
Receivables Pool, free and clear of any Lien, other than a Lien
arising solely as a result of an act of Purchaser, the
Administrator or the Relationship Bank, whether existing at the
time of any Purchase or Reinvestment of such Asset Interest 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
or similar laws of any applicable jurisdiction or other applicable
laws with respect to any Receivables in, or purporting to be in,
the Receivables Pool, whether at the time of any Purchase or
Reinvestment or at any time thereafter;
(vi) any dispute, claim, offset or defense (other than discharge
in bankruptcy) of any Obligor to the payment of any Receivable in,
or purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such 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 making of loans or the sale or
provision of services related to such Receivable or the furnishing
or failure to furnish such loans or services;
(vii) any failure of Seller, Parent or APR to perform their
respective duties or obligations in accordance with the provisions
of this Agreement, including, without limitation, Article VIII and
Sections 4.02 and 3.07(b);
(viii) any products liability claim arising out of or in
connection with loans, products or services that are the subject of
any Pool Receivable;
(ix) 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
purchase or ownership of any Asset Interest, or any other interest
in the Pool Receivables or in any goods which secure any such Pool
Receivables;
(x) the failure by Seller or APR to vest and maintain vested in
Purchaser a valid and first priority security interest in any and
all unearned premium related to each Pool Receivable;
(xi) (A) any proceeding, investigation or inquiry which does or
could result in an Adverse Determination, (B) any Adverse
Determination or (C) Seller's failure to be qualified, licensed or
to have obtained necessary approvals as a premium finance company
in any jurisdiction in which such qualification, license or
approvals are required;
(xii) the failure to cancel any insurance policy on which a
payment is more than 31 days (or, if earlier, the date specified in
the related Contract) past due.
(xiii) the occurrence of a Liquidation Event or Unmatured
Liquidation Event under Section 10.01(e).
Notwithstanding the foregoing, Parent shall not be liable for any
Indemnified Amount in excess of $3,000,000 arising solely out of
insurance agent fraud.
(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 Seller, APR or Parent under Section 13.01(a)(ix), such
Indemnified Party shall give prompt and timely notice of such
attempt to them and Seller, APR or Parent shall have the right, at
their 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 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 13.01 is unavailable to an Indemnified Party
or is insufficient to hold an Indemnified Party harmless, then
Seller, APR or Parent shall contribute to the amount paid or
payable 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 Seller, APR or Parent on the other hand but
also the relative fault of such Indemnified Party as well as any
other relevant equitable considerations. Notwithstanding the
foregoing, Parent shall not be liable for any Indemnified Amount in
excess of $3,000,000 arising solely out of such insurance agent
fraud.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by Seller,
APR or Parent therefrom shall in any event be effective unless the
same shall be in writing and signed by (a) Seller, APR or Parent,
the Administrator, the Relationship Bank and Purchaser (with
respect to an amendment) or (b) the Administrator and Purchaser
(with respect to a waiver or consent by them) or Seller, APR or
Parent (with respect to a waiver or consent by them), as the case
may be, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
The parties acknowledge that, before entering into such an
amendment or granting such a waiver or consent, Purchaser may also
be required to obtain the approval of some or all of the Liquidity
Banks and/or the Credit Bank or to obtain confirmation from certain
rating agencies that such amendment, waiver or consent will not
result in a withdrawal or reduction of the ratings of the
Commercial Paper Notes.
SECTION 14.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in
writing (including facsimile communication) and shall be personally
delivered or sent by express mail or courier or by certified mail,
postage prepaid, or by facsimile, to the intended party at the
address or facsimile number of such party set forth under its name
on the signature pages hereof or at such other address or facsimile
number as shall be designated by such party in a written notice to
the other parties hereto. All such notices and communications
shall be effective, (a) if personally delivered or sent by express
mail or courier or if sent by certified mail, when received, and
(b) if transmitted by facsimile, when sent, receipt confirmed by
telephone or electronic means.
SECTION 14.03. No Waiver; Remedies. No failure on the part of the
Administrator, the Relationship Bank, any Affected Party, any
Indemnified Party, Purchaser or any other holder of the Asset
Interest (or any portion thereof) to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law. Without limiting
the foregoing, each of State Street Capital, individually and as
Administrator, Norwest, individually and as Relationship Bank, the
Collateral Agent, the Credit Bank and each Liquidity Bank is hereby
authorized by Seller, APR or Parent at any time and from time to
time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by State Street Capital, the Collateral Agent and
such Liquidity Bank to or for the credit or the account of Seller,
APR or Parent, now or hereafter existing under this Agreement, to
the Administrator, any Affected Party, any Indemnified Party or
Purchaser, or their respective successors and assigns.
SECTION 14.04. Binding Effect; Survival. This Agreement shall be
binding upon and inure to the benefit of Seller, APR, Parent, the
Administrator, the Relationship Bank, Purchaser and their
respective successors and assigns, and the provisions of Section
4.02 and Article XIII shall inure to the benefit of the Affected
Parties and the Indemnified Parties, respectively, and their
respective successors and assigns; provided, however, nothing in
the foregoing shall be deemed to authorize any assignment not
permitted by Section 12.01. 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. The rights and remedies with
respect to any breach of any representation and warranty made by
Seller, APR or Parent pursuant to Article VI and the
indemnification and payment provisions of Article XIII and Sections
4.02, 14.05, 14.06, 14.07, 14.09 and 14.15 shall be continuing and
shall survive any termination of this Agreement.
SECTION 14.05. Costs, Expenses and Taxes. In addition to its
obligations under Article XIII, Seller, APR and Parent agree to
jointly and severally pay on demand:
(a) all costs and expenses incurred by the Administrator, the
Relationship Bank, the Credit Bank, the Collateral Agent and the
Purchaser and their respective Affiliates in connection with the
negotiation, preparation (including, without limitation, electronic
data preparation), execution and delivery, the administration
(including periodic auditing) or the enforcement of, or any actual
or claimed breach of, this Agreement and the other Transaction
Documents, including, without limitation (i) the reasonable fees
and expenses of counsel to any of such Persons incurred in
connection with any of the foregoing or in advising such Persons as
to their respective rights and remedies under any of the
Transaction Documents, and (ii) all reasonable out-of-pocket
expenses (including reasonable fees and expenses of independent
accountants), incurred in connection with any review of Seller's
and/or APR's books and records either prior to the execution and
delivery hereof or pursuant to Sections 7.01(c) and 7.04(c); and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and
recording of this Agreement or the other Transaction Documents, and
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 14.06. No Proceedings. Seller, APR, Parent, Servicer,
State Street Capital (individually and as Administrator) and
Norwest (individually and as Relationship Bank) each hereby agrees
that it will not institute against Purchaser, or join any other
Person in instituting against Purchaser, any insolvency proceeding
(namely, any proceeding of the type referred to in the definition
of Event of Bankruptcy) so long as any Commercial Paper Notes
issued by Purchaser shall be outstanding or there shall not have
elapsed one year plus one day since the last day on which any such
Commercial Paper Notes shall have been outstanding. The foregoing
shall not limit Seller's, APR's or Parents's right to file any
claim in or otherwise take any action with respect to any
insolvency proceeding that was instituted by any Person other than
Seller, APR or Parent.
SECTION 14.07. Confidentiality of Seller Information.
(a) Confidential Seller Information. Each party hereto (other
than Seller) acknowledges that certain of the information provided
to such party by or on behalf of Seller, APR or Parent in
connection with this Agreement and the transactions contemplated
hereby is or may be confidential, and each such party severally
agrees that, unless Seller shall otherwise agrees in writing, and
except as provided in subsection (b), such party will not disclose
to any other person or entity: (i) any information regarding, or
copies of, any non-public financial statements, reports and other
information furnished by Seller, APR or Parent to Purchaser or the
Administrator and designated by them as such, or (ii) any other
information regarding Seller, APR or Parent ("Seller Parties")
which is designated by Seller to such party in writing as
confidential (collectively, "Seller Information"); provided,
however, "Seller Information" shall not include (A) any information
which is or becomes generally available on a nonconfidential basis
from a source other than Seller Party, or which was known to such
party on a nonconfidential basis prior to its disclosure by Seller
Party, or (B) information regarding the nature, scope and structure
of this Agreement and the basic terms hereof.
(b) Disclosure. Notwithstanding subsection (a), each party may
disclose any Seller Information:
(i) to any of such party's independent attorneys, consultants and
auditors, and to each Liquidity Bank, the Credit Bank, any dealer
or placement agent for Purchaser's commercial paper, and any actual
or potential assignees of, or participants in, any of the rights or
obligations of Purchaser, any Liquidity Bank, the Credit Bank, the
Administrator or the Relationship Bank under or in connection with
this Agreement, who (A) in the good faith belief of such party,
have a need to know such Seller Information, (B) are informed by
such party of the confidential nature of the Seller Information and
the terms of this Section 14.07, and (C) are subject to
confidentiality restrictions generally consistent with this Section
14.07,
(ii) to any rating agency that maintains a rating for Purchaser's
commercial paper or is considering the issuance of such a rating,
for the purposes of reviewing the credit of Purchaser in connection
with such rating,
(iii) to any other party to this Agreement, for the purposes
contemplated hereby,
(iv) as may be required by any municipal, state, federal or other
regulatory body having or claiming to have jurisdiction over such
party, in order to comply with any law, order, regulation,
regulatory request or ruling applicable to such party,
(v) subject to subsection (c), in the event such party is legally
compelled (by interrogatories, requests for information or copies,
subpoena, civil investigative demand or similar process) to
disclose such Seller Information, or.
(vi) if it or any of its representatives is requested or becomes
legally compelled (by interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process)
to disclose any of the Seller Information.
(c) Survival. This Section 14.07 shall survive termination of
this Agreement.
SECTION 14.08. Confidentiality of Program Information.
(a) Confidential Information. Each party hereto acknowledges that
State Street Capital and Norwest regard the structure of the
transactions contemplated by this Agreement to be proprietary, and
each such party severally agrees that:
(i) it will not disclose without the prior consent of State Street
Capital and Norwest (other than to the directors, employees,
auditors, counsel or affiliates (collectively, "representatives"))
of such party, each of whom shall be informed by such party of the
confidential nature of the Information (as defined below) and of
the terms of this Section 14.08, (A) any information regarding the
pricing in, or copies of, this Agreement or any transaction
contemplated hereby, (B) any information regarding the
organization, business or operations of Purchaser generally or the
services performed by the Administrator or the Relationship Bank
for Purchaser, or (C) any information which is furnished by State
Street Capital or Norwest to such party and which is designated by
State Street Capital or Norwest to such party in writing or
otherwise as confidential or not otherwise available to the general
public (the information referred to in clauses (A), (B) and (C) is
collectively referred to as the "Program Information"); provided,
however, that such party may disclose any such Program Information
(I) to any other party to this Agreement for the purposes
contemplated hereby, (II) as may be required by any municipal,
state, federal or other regulatory body having or claiming to have
jurisdiction over such party, (III) in order to comply with any
law, order, regulation, regulatory request or ruling applicable to
such party, or (IV) in the event such party is legally compelled
(by interrogatories, requests for information or copies, subpoena,
civil investigative demand or similar process) to disclose any such
Program Information (provided that such party provides State Street
Capital and Norwest the opportunity to contest such actions on
behalf of such party);
(ii) it will use the Program Information solely for the purposes
of evaluating, administering and enforcing the transactions
contemplated by this Agreement and making any necessary business
judgments with respect thereto; and
(iii) it will, upon demand, return (and cause each of its
representatives to return) to State Street Capital and/or Norwest,
all documents or other written material received from State Street
Capital and/or Norwest, as the case may be, in connection with
(a)(i)(B) or (C) above and all copies thereof made by such party
which contain the Information.
(b) Availability of Confidential Information. This Section 14.08
shall be inoperative as to such portions of the Program Information
which are or become generally available to the public or such party
on a nonconfidential basis from a source other than State Street
Capital or Norwest or were known to such party on a nonconfidential
basis prior to its disclosure by State Street Capital or Norwest.
(c) Survival. This Section 14.08 shall survive termination of
this Agreement.
SECTION 14.09. 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 indicated, references in this
Agreement to any Section, Appendix, Schedule or Exhibit are to such
Section of or Appendix, Schedule or Exhibit to this Agreement, as
the case may be, and references in any Section, subsection, or
clause to any subsection, clause or subclause are to such
subsection, clause or subclause of such Section, subsection or
clause.
SECTION 14.10. Integration. This Agreement, together with Fee
Letter, contains a final and complete integration of all prior
expressions by the parties hereto with respect to the subject
matter hereof and shall constitute the entire understanding among
the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings.
SECTION 14.11. Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS
AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF
PURCHASER IN THE RECEIVABLES IS GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14.12. Waiver Of Jury Trial. SELLER, APR AND PARENT HEREBY
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT,
ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT
OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities. EACH
OF SELLER, APR AND PARENT HEREBY 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 NEW YORK STATE COURT, IN EITHER CASE SITTING
IN NEW YORK, NEW YORK 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 NEW YORK 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.
SECTION 14.14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by the 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 14.15. No Recourse Against Other Parties. No recourse
under any obligation, covenant or agreement of Purchaser contained
in this Agreement shall be had against any stockholder, employee,
officer, director, or incorporator of Purchaser, provided, however,
that nothing in thisSection 14.15 shall relieve any of the
foregoing Persons from any liability which such Person may
otherwise have for his/her or its gross negligence or willful
misconduct.
SECTION 14.16 Covenant to Cooperate. Seller, Servicer and
Purchaser covenant to provide each other with all data and
information required to be provided by them hereunder at the times
required hereunder, and additionally covenant to reasonably
cooperate with each other in providing any additional information
required by any of them in connection with their respective duties
hereunder.
SECTION 14.17 Advice From Independent Counsel. The parties hereto
understand that this Agreement is a legally binding agreement that
may affect such party's rights. Each party hereto represents to
the other that it has received legal advice from counsel of its
choice regarding the meaning and legal significance of this
Agreement and that it is satisfied with its legal counsel and the
advice received from it.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE TO FOLLOW]
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.
APR FUNDING CORPORATION, as Seller
By /s/ C. Xxx XxXxxxxx
Title President
0000 Xxxx 000xx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
AGENCY PREMIUM RESOURCE, INC., as initial Servicer
By /s/ C. Xxx XxXxxxxx
Title President
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: C. Xxx XxXxxxxx
ANUHCO, INC., as Parent
By /s/ Xxxxxxx X. X'Xxxx
Title: President
0000 Xxxx 000xx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. X'Xxxx
CLIPPER RECEIVABLES CORPORATION, as Purchaser
By /s/ Xxxxxxx X. Xxxx
Title Vice President
X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
STATE STREET BOSTON CAPITAL CORPORATION, as Administrator
By /s/ S. Xxxx Xxxx
Title
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Clipper Funds
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Relationship Bank
By /s/ Xxxxxx X. Xxxx, III.
Title Vice President
Norwest Center
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: Structured Finance
APPENDIX A
DEFINITIONS
This is Appendix A to the Receivables Purchase Agreement dated
as of October 20, 1995 among APR Funding Corporation, Agency
Premium Resource, Inc., Anuhco, Inc., Clipper Receivables
Corporation, State Street Boston Capital Corporation, as
Administrator and Norwest Bank Minnesota, National Association, as
Relationship Bank (as amended, supplemented or otherwise modified
from time to time, this "Agreement"). Each reference in this
Appendix A to any Section, Appendix or Exhibit refers to such
Section of or Appendix or Exhibit to this Agreement.
A. Defined Terms. As used in this Agreement, unless the context
requires a different meaning, the following terms have the meanings
indicated herein below:
"Administrator" has the meaning set forth in the preamble.
"Administrator's Office" means the office of the Administrator at
000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention:
Clipper Funds, or such other address as shall be designated by the
Administrator in writing to Seller and Purchaser.
"Adverse Determination" means an act, conclusion, ruling
determination, finding or opinion, formal or informal, by any
Regulator, the result of which is that (i) Purchaser or Backup
Purchaser was, is or will be required to be regulated, licensed or
qualified as a premium finance company or its equivalent under any
applicable law, order, rule or regulation on account of Purchaser's
or Backup Purchaser's purchase or holding of the Asset Interest in
any Pool Receivables, or (ii) for any Person, not Purchaser or
Backup Purchaser and not already licensed or qualified as an
insurance premium finance company, engaged in a transaction
similar, in the reasonable judgment of Purchaser the Administrator
or the Relationship Bank, to that under this Agreement whereby such
Person purchases or holds an ownership interest in receivables or
undivided interests in receivables evidenced by insurance premium
finance contracts, such Person is, was or will be required to be
regulated, licensed or qualified as a premium finance company or
its equivalent under any applicable law, order, rule or regulation
on account of such Person's purchase or holding of such receivables
or undivided interests in such receivables.
"Adverse Determination Receivables" means those Pool Receivables
that create or support a nexus with a jurisdiction, as determined
by the applicable laws, orders, rules or regulations of that
jurisdiction, the result of such nexus being that Purchaser or
Backup Purchaser is directly subject to an Adverse Determination
pursuant to clause (i) of the definition of Adverse Determination,
or could eventually be directly subject to an Adverse Determination
similar to any Adverse Determination described in clause (ii) of
the definition of Adverse Determination.
"Affected Party" means each of Purchaser, each Liquidity Bank, any
assignee or participant of Purchaser or any Liquidity Bank, the
Credit Bank, any assignee or participant of the Credit Bank, State
Street Capital, any successor to State Street Capital as
Administrator, Norwest, any successor to Norwest as Relationship
Bank or Backup Purchaser, any sub-agent of the Administrator, the
Collateral Agent, any successor of First Chicago as Collateral
Agent, any co-agent or sub-agent of the Collateral Agent and any
holding company of the Administrator or Norwest.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by, or under common control with,
such Person.
"Allocated Expenses" means the share of expenses reasonably
determined by Parent to be incurred by Parent as holding company
for APR and its subsidiaries in such capacity as such holding
company and reasonably allocated to APR and its subsidiaries.
"Alternate Base Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of
(a) the rate of interest most recently announced by the Liquidity
Agent in Minneapolis, Minnesota, as its base rate; and
(b) the Federal Funds Rate (as defined below) most recently
determined by the Liquidity Agent plus 3.0% per annum.
The Alternate Base Rate is not necessarily intended to be the
lowest rate of interest determined by the Liquidity Agent in
connection with extensions of credit.
"APR" has the meaning set forth in the preamble.
"Arrangement Fee" has the meaning set forth in Section 4.01(a).
"Arrangement Fee Amount" has the meaning set forth in the Fee
Letter.
"Asset Interest" has the meaning set forth in Section 1.04(a).
"Asset Tranche" means at any time a portion of the Asset Interest
selected by the Administrator pursuant to Section 2.01.
"Backup Purchaser" means Norwest and its successors and assigns as
Backup Purchaser pursuant to the Liquidity Agreement.
"Backup Servicer" means Norwest Financial Coast, Inc., as Backup
Servicer pursuant to the Backup Servicing Agreement.
"Backup Servicing Agreement" means that certain Backup Servicing
Agreement dated as of October 20, 1995 among the Backup Servicer,
the Administrator, the Relationship Bank, APR and Seller, as the
same may be amended or otherwise modified from time to time.
"Best's Rating" means at any time the rating published in the then
most recent edition of Best's Insurance Reports, Property-Casualty
for the Insurance Obligor in question; provided however that if
pursuant to clause (a), or clause (c) of the last paragraph of the
definition of the term "Excess Concentration Deduction," a single
rating is to be determined for a group of Insurance Obligors that
are Affiliates, the "Best's Rating" of such group and of each
Insurance Obligor in such group shall be the "Pooled Rating"
thereof (as defined therein), or, if no Pooled Rating has been
assigned to such group, the lowest Best's Rating of any of the
individual Insurance Obligors in such group. If Best's Insurance
Reports, Property-Casualty ceases to be published at any time,
Purchaser shall choose a reasonably equivalent substitute rating
criteria, and appropriate modifications to this Agreement will be
made to reflect such substitution.
"Business Day" means a day on which both (a) the Administrator at
its principal office in Boston, Massachusetts is open for business
and (b) commercial banks in New York City and Minneapolis,
Minnesota are not authorized or required to be closed for business.
"Cancellation Ratio" means, as of the Cut-Off Date for any
Settlement Period, a fraction (expressed as a percentage) (a) the
numerator of which is the average Unpaid Principal Balance of all
Pool Receivables the related insurance policies of which were
cancelled during the preceding Settlement Period on account of non-
payment by the related Obligor and (b) the denominator of which is
the average aggregate Unpaid Principal Balance of all Pool
Receivables during such Settlement Period.
"Change in Control" means any of the following:
(a) the acquisition, by any Person or two or more Persons acting
on concert, of beneficial ownership (within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act), of 50% or more of the
issued and outstanding shares of the capital stock (including all
warrants, options, conversion rights, and other rights to purchase
or convert into such stock) of Parent on a fully diluted basis,
except for (i) acquisitions of newly issued shares of the capital
stock of Parent for fair market value, and (ii) acquisitions of
newly issued shares of the capital stock of Parent by employee
benefit plans sponsored by Parent or any of its Subsidiaries for
fair market value;
(b) the failure of Parent to own (directly or through wholly-owned
Subsidiaries, free and clear of all liens, 100% of the outstanding
voting stock of APR or the failure of APR to own (directly or
through wholly-owned Subsidiaries of APR), free and clear of all
liens, 100% of the outstanding voting stock of Seller;
(c) the creation or imposition of any Lien on any shares of
capital stock of Seller; or
(d) the failure of C. Xxx XxXxxxxx to remain and function as
President and Chief Operating Officer of APR.
"Clipper" has the meaning set forth in the recitals.
"Collateral Agent" means First Chicago in its capacity as
collateral agent, together with any successors thereto, under the
Security Agreement.
"Collection Account" has the meaning set forth in Section 3.09.
"Collection Agent" means First Chicago as the Collection Agent
under the Program Supplement, and any successor Collection Agent
appointed for purposes of the transactions contemplated in the
Transaction Documents pursuant to the Program Supplement.
"Collections" means, with respect to any Receivable, all funds (a)
received by Seller, APR or Servicer from or on behalf of the
related Obligors in payment of any amounts owed (including, without
limitation, principal, finance charges, interest and all other
charges and fees) in respect of such Receivable, or applied to such
amounts owed by such Obligors (including, without limitation,
payments under guaranties, from state guaranty funds or other
Related Security, refunds of unearned insurance premiums upon
termination of insurance policies, insurance payments that Seller,
APR or Servicer applies in the ordinary course of its business to
amounts owed in respect of such Receivables and net proceeds of
sale or other disposition of repossessed goods or other collateral
or property of the Obligor or any other party directly or
indirectly liable for payment of such Receivable and available to
be applied thereon), and (b) deemed to have been received by
Seller, APR or any other party as a Collection pursuant to Section
3.04.
"Commercial Paper Holders" means the holders from time to time of
the Commercial Paper Notes.
"Commercial Paper Notes" means short-term promissory notes issued
or to be issued by Purchaser to fund its investments in accounts
receivable or other financial assets.
"Contract" means any contract, instrument or other writing entered
into by Seller or APR in the ordinary course of its business in
connection with, or evidencing, loans made by Seller or APR to any
Obligor to finance such Obligor's payment of unearned insurance
premiums in respect of one or more insurance policies issued by one
or more insurance carriers, including, without limitation, any
writing relating to the assignment of all unearned premiums
pertaining to the insurance policy or policies for which premium
payments are being financed, any designation of Seller as a loss
payee thereunder, and any guaranty by the insurance agents that
sold the related insurance policy or policies.
"CP Rate" for any period means a rate per annum calculated by the
Administrator equal to the sum of (i) the rate or, if more than one
rate, the weighted average of the rates, determined by converting
to an interest-bearing equivalent rate per annum the discount rate
(or rates) at which Commercial Paper Notes on each day during such
period have been sold by the commercial paper placement agents
selected by the Administrator, plus (ii) the commissions and
charges charged by such commercial paper placement agents with
respect to such Commercial Paper Notes, expressed as a percentage
of such face amount and converted to an interest-bearing equivalent
rate per annum.
"Credit Agreement" means and includes (a) the Credit Agreement,
dated as of September 24, 1992 between Purchaser and the Credit
Bank and (b) any other agreement (other than the Liquidity
Agreement) hereafter entered into by Purchaser providing for the
issuance of one or more letters of credit for the account of
Purchaser, the making of loans to Purchaser or any other extensions
of credit to or for the account of Purchaser to support all or any
part of Purchaser's payment obligations under its Commercial Paper
Notes or to provide an alternate means of funding Purchaser's
investments in accounts receivable or other financial assets, in
each case as amended, supplemented or otherwise modified from time
to time.
"Credit and Collection Policy" means those credit and collection
policies and practices relating to Contracts and Receivables
described in Schedule 6.01(p)-2, as modified without violating
Section 7.03(c).
"Credit Bank" means and includes State Street Bank, as lender to
Purchaser and as issuer of a letter of credit for Purchaser's
account under the Credit Agreement, and any other or additional
bank or other financial institution now or hereafter extending
credit or having a commitment to extend credit to or for the
account of Purchaser under the Credit Agreement.
"Credit Draw" means a loan in respect of, or a purchase of a
percentage interest in, the Asset Interest made by the Credit Bank
pursuant to the Credit Agreement or a disbursement made by the
Credit Bank under a letter of credit issued pursuant to the Credit
Agreement.
"Custodian" means Norwest or any successor custodian acceptable to
the Administrator and the Relationship Bank.
"Custody Agreement" means the Custody Agreement dated as of October
20, 1995 among Seller, Servicer, Custodian, Relationship Bank, the
Administrator and Purchaser, as amended, supplemented or otherwise
modified from time to time or any successor custody agreement
acceptable to the Administrator and Norwest.
"Cut-Off Date" means the last day of each Settlement Period.
"Deemed Collection" has the meaning set forth in Section 3.04.
"Default Ratio" means, at any time, the fraction, expressed as a
percentage, computed as of the most recent Cut-Off Date (i) the
numerator of which is the Unpaid Principal Balance of Receivables
that became Defaulted Receivables (net of recoveries) during the
preceding Settlement Period ending on such Cut-Off Date and (ii)
the denominator of which is the Net Pool Balance during such
Settlement Period.
"Default Reserve" has the meaning set forth in Section
1.04(b)(i)(D).
"Defaulted Receivable" means a Receivable and related Contract:
(i) as to which any payment, or part thereof, remains unpaid for
(x) 30 or more days (or such earlier date as specified in the
related Contract) from the original due date for such payment
without cancellation of all of the related insurance policies or
(y) 181 or more days after cancellation of all such policies, (ii)
as to which the Obligor thereof becomes the subject of an Event of
Bankruptcy or, if applicable, becomes subject to rehabilitation or
similar proceeding (it being understood that Direct Obligors
wishing to enter into a new Contract that are subject to bankruptcy
proceedings and which have obtained a court order permitting
Servicer to cancel the related (without further notification to the
Court) Contract the Receivables of which are or will be included in
the Receivables Pool shall not be subject to this clause (ii)),
(iii) as to which payments have been extended, or the terms of
payment thereof rewritten, whether by amendment, modification or
through a new contract without Purchaser's consent, (iv) as to
which 45 or more days have passed since receipt of the related
unearned premium or notification to Seller or Servicer that the
related unearned premium has been fully earned or (v) which is a
charged-off Receivable.
"Delinquency Ratio" means, at any time, the fraction, expressed as
a percentage, computed as of the most recent Cut-Off Date (i) the
numerator of which is the Unpaid Principal Balance of Delinquent
Receivables at such time and (ii) the denominator of which is the
Unpaid Principal Balance of all Receivables in the Receivables Pool
at such time.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and (i) as to which any payment, or part thereof,
remains unpaid for 91 days or more since cancellation.
"Designated Obligations" means any amounts then owed under this
Agreement by Seller or APR, which amounts shall have been so
designated by the Administrator or the Relationship Bank to Seller
and APR, whether owed to Purchaser, Administrator, Relationship
Bank or Servicer, other than Earned Discount, Program Fee and
Servicer's Fee.
"Designated Obligor" means, at any time, all Obligors of Seller
except any such Obligor as to which the Administrator has, at least
three Business Days prior to the date of determination, given
notice to Seller that such Obligor shall not be considered a
Designated Obligor.
"Direct Obligor" means, with respect to any Receivable, the
borrower of the loan under any Contract.
"Dollars" means dollars in lawful money of the United States of
America.
"Downgraded Liquidity Bank" means a Liquidity Bank which has been
the subject of a Downgrading Event.
"Downgrading Event" with respect to any Person means the lowering
of the rating with regard to the short-term securities of such
Person to below (i) A-1 by Standard & Poor's Corporation, or (ii)
P-1 by Xxxxx'x Investors Service, Inc.
"Earned Discount" means, for any Yield Period with respect to any
Asset Tranche, or, in the case of the Asset Tranche funded by
commercial Paper Notes, for any Settlement Period:
PTI x ER x ED + LF
360
where:
PTI =the daily average (calculated at the close of business each
day) of the Purchaser's Tranche Investment in such Asset Tranche
during such Yield Period or Settlement Period, as applicable,
ER =the Earned Discount Rate for such Yield Period or Settlement
Period,
ED =the actual number of days elapsed during such Yield Period or
Settlement Period, and
LF =the Liquidation Fee, if any, during such Yield Period or
Settlement Period.
"Earned Discount Rate" means for any Yield Period with respect to
any Asset Tranche, or, in the case of the Asset Tranche funded by
commercial Paper Notes, for any Settlement Period:
(a) in the case of an Asset Tranche funded by a Liquidity
Purchase, the Alternate Base Rate for such Asset Tranche and such
Yield Period;
(b) in the case of an Asset Tranche funded by a Credit Draw, a
rate per annum equal for each day during the Settlement Period to
the Alternate Base Rate in effect on such day plus 2% per annum;
and
(c) for the Asset Tranche funded by Commercial Paper Notes, the CP
Rate for the related Yield Period or for such Settlement Period, as
applicable;
provided, however, that on any day when any Liquidation Event or
Unmatured Liquidation Event shall have occurred and be continuing
the Earned Discount Rate for each Asset Tranche shall mean a rate
per annum equal to the Alternate Base Rate plus 2% per annum.
"Eligible Agent" means a licensed agent of an Eligible Insurance
Carrier approved by APR in accordance with its Credit and
Collection Policy.
"Eligible Contract" means a Contract in one of the forms set forth
in Schedule 6.01(p)-1 or otherwise approved by the Administrator.
"Eligible Insurance Carrier" shall mean at any date any insurance
company that meets each of the following requirements: (a) it is
not the subject of any Event of Bankruptcy, and is not otherwise
being rehabilitated or supervised and (b) it has a Best's Rating of
B- or better or is one of the following: National Council on
Compensation Insurance, Inc. or Underwriters at Lloyds, London.
"Eligible Investments" means any one or more of the following
obligations or securities:
(a) direct non-callable obligations of, and non-callable
obligations fully guaranteed by, the United States of America, or
any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(b) demand and time deposits in, certificates of deposits of, and
bankers' acceptances issued by, any depository institution or trust
company (including the indenture trustee acting in its commercial
capacity) incorporated under the laws of the United States of
America or any state thereof, having a combined capital and surplus
of at least $500,000,000, and subject to supervision and
examination by federal and/or state banking authorities, so long as
at the time of such investment or contractual commitment providing
for such investment the commercial paper or other short-term debt
obligations of such depository institution or trust company (or, in
the case of a depository institution that is the principal
subsidiary of a holding company, the commercial paper or other
short-term debt obligations of such holding company) have one of
the two highest short-term credit rating available from Xxxxx'x
Investors Service, Inc. and Standard & Poor's Corporation;
(c) repurchase obligations with respect to and collateralized by
(i) any security described in clause (b) above or (ii) any other
security issued or guaranteed by an agency or instrumentality of
the United States of America, in each case entered into with a
depository institution or trust company (acting as principal) of
the type described in clause (b) above, provided that the
Relationship Bank has taken delivery of such security;
(d) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations, but excluding
Commercial Paper Notes) payable on demand or on a specified date
not more than one year after the date of issuance thereof having
the highest short-term credit rating from Moody's and Standard &
Poor's corporation at the time of such investment; and
(e) shares in a mutual fund investing solely in short term
securities of the United States government and/or securities
described in clause (c) above where the mutual fund custodian has
taken delivery of the collateralizing securities, provided that
(i) such fund shall have one of the two highest short-term credit
rating available from Moody's and Standard & Poor's Corporation and
(ii) such shares shall be freely transferable by the holder on a
daily basis.
"Eligible Receivable" means, at any time, a Receivable:
(i) (A) which arose from a fixed rate, fully amortizing loan (x)
with a maturity of nine months or less, and (y) for which the
minimum down payment is at least 20% (or, if greater, the amount
required such that the related loan is fully collateralized by
unearned premium and unearned commission at the time the related
policy is required to be cancelled for non-payment) and which down
payment exceeds the related agent's commission, or (B) which arose
from a fixed rate, fully amortizing loan (x) with a maturity of
between ten and thirty months, (y) the downpayment of which is the
greater of 10% or the amount which is required for the unearned
premium to fully collateralize the loan and which down payment
exceeds the related agent's commission and (z) which is a policy
type that is not auditable by the related Insurance Obligor (for
purposes of this clause (i), down payment percent shall be computed
by rounding to the nearest full 1%);
(ii) the related loan of which was (1) made by Seller or APR to or
on behalf of a Person that used all of the proceeds of such loan to
pay premiums on property, business liability, xxxxxxx'x
compensation, casualty insurance and other similar types of
insurance policies or personal auto insurance policies issued by an
Eligible Insurance Carrier and owned by such Person and (2) was
fully disbursed to such Eligible Insurance Carrier, its agent or
such Person (provided that if such loan was partially disbursed the
amount so disbursed shall be eligible hereunder);
(iii) which, (x) if the perfection of Purchaser's undivided
ownership interest therein is governed by the laws of a
jurisdiction where the Uniform Commercial Code -- Secured
Transactions is in force, constitutes a general intangible as
defined in the Uniform Commercial Code as in effect in such
jurisdiction, and (y) if the perfection of Purchaser's undivided
ownership interest therein is governed by the law of any
jurisdiction where the Uniform Commercial Code -- Secured
Transactions is not in force, Seller has furnished to Purchaser
such opinions of counsel and other evidence as has reasonably been
requested, establishing to the reasonable satisfaction of Purchaser
that such Purchaser's undivided ownership interest and other rights
with respect thereto are not significantly less protected and
favorable than such rights under the Uniform Commercial Code;
(iv) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto, and is not a government or
a governmental subdivision or agency;
(v) the related originating insurance agent of which is an
Eligible Agent of an Eligible Insurance Carrier and makes no
guarantees (and permits no other agent to make guarantees) in
respect of such Receivable (provided that, the portion of such
Receivable, if any, that is not so guaranteed shall be deemed to be
an "Eligible Receivable" unless it is excluded under any other
subsection of this definition).
(vi) the Direct Obligor of which is not the Direct Obligor of any
Receivable for which a related insurance policy was cancelled by
Seller or Servicer for non-payment;
(vii) which is not (A) a Delinquent Receivable on the date of its
inclusion in the Net Pool Balance or (B) a Defaulted Receivable;
(viii) the related insurance policy of which is required to be
canceled if payment on such Receivable is not received within 30
days of its due date (or, if earlier, the date required in the
related Contract);
(ix) with regard to which the warranty of Seller in Section
6.01(l) is true and correct;
(x) (A) the sale of an undivided interest in which does not
contravene or conflict with any law, and (B) in the case of
Receivables generated by the Originator, the sale of which to
Seller does not contravene or conflict with any law;
(xi) which is denominated and payable only in Dollars in the United
States;
(xii) which arises under a Contract, substantially in the form of
Schedule 6.01(p)-1 hereto (or, if not in the form of Schedule
6.01(p)-1, in such form as does not deviate in any material
substantive manner from Schedule 6.01(p)-1 without the express
written consent of the Administrator or the Relationship Bank),
that (w) is in the possession of Servicer, (ii) has been duly
authorized and that, together with such Receivable, is in full
force and effect and constitutes the legal, valid and binding
obligation of the Obligor of such Receivable enforceable against
such Obligor in accordance with its terms, (y) was stamped with an
assignment to Seller and further assignment of an ownership
interest to Purchaser and (z) the terms of which (including payment
instructions to the Obligors thereon and the due date thereon) have
not been modified unless in accordance with the Credit and
Collection Policy;
(xiii) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, 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 with respect to which no
party to the Contract related thereto is in violation of any such
law, rule or regulation in any material respect if such violation
would impair the collectibility of such Receivable;
(xiv) which is secured by a first priority perfected security
interest in and assignment of the right to cancel all of the
insurance policies financed in whole or in part with the proceeds
of the related loan upon the occurrence of a default under the
related Contract and the right to receive all payments of unearned
premiums owed upon such cancellation and, to the extent permitted
by applicable law or regulation, the designation of Seller as a
loss payee under such policies;
(xv) which at the time of its designation as a Pool Receivable is
not an Adverse Determination Receivable;
(xvi) which at the time of its designation as a Pool Receivable
does not create or support a nexus with a jurisdiction (x)
conducting, formally or informally, a proceeding, investigation or
inquiry that could in the Administrator's or the Relationship
Bank's judgment result in an Adverse Determination or (y) that
could require Purchaser to be licensed as a premium finance loan
company;
(xvii) if any Receivables to be included in a Purchase shall
result from a bulk or portfolio purchase, the Relationship Bank
shall have approved the inclusion of such Receivables in writing
after conducting a collateral audit of the Receivables purchased by
Seller or APR in a bulk or portfolio purchase;
(xviii) which (x) satisfies all applicable requirements of the
Credit and Collection Policy and (y) complies with such other
criteria and requirements (other than those relating to the
collectibility of such Receivable) as the Administrator or the
Relationship Bank may from time to time specify to Seller following
thirty days' notice;
(xiv) as to which neither the Administrator nor the Relationship
Bank has notified Seller that the Administrator or the Relationship
Bank has determined, in its sole discretion, that such Receivable
(or class of Receivables) is not acceptable for purchase hereunder;
and
(xv) the related Net Excess Contract Yield of which is greater
than zero.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Bankruptcy" shall be deemed to have occurred with respect
to a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding
up, or composition or readjustment of debts of such person, the
appointment of a trustee, receiver, conservator custodian,
liquidator, assignee, sequestrator or the like for such Person or
all or substantially all of its assets, or any similar action with
respect to such Person under any law relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment
of debts, and in the case of any Person other than an Insurance
Obligor such case or proceeding shall continue undismissed, or
unstayed and in effect, for a period of 60 consecutive days; or an
order for relief in respect of such Person shall be entered in an
involuntary case under the federal bankruptcy laws or other similar
laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) for, such Person or for
any substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail to, or admit
in writing its inability to, pay its debts generally as they become
due, or, if a corporation or similar entity, its board of directors
shall vote to implement any of the foregoing. It shall be
understood and agreed that Parent's and American Freight System,
Inc.'s 1988 insolvency shall not be deemed Events of Bankruptcy
hereunder.
"Excess Concentration Deduction" means the aggregate of each of the
following categories:
(A) Insurance Obligors and NCCI. The amount by which (x) the
unpaid principal balance of Eligible Receivables having the same
Insurance Obligor exceeds (y) the percentage (as shown below) of
the unpaid principal balance of all Eligible Receivables (the
"Concentration Limits").
Solely for the purpose of this definition, all the Insurance
Obligors (i) which operate under a common Pooling Arrangement, (ii)
which reinsure all their net business through an Affiliate in a
Pooling Arrangement, or (ii) which are otherwise rated by S&P or
Moody's with reference to common ownership or management, shall be
deemed a single Insurance Obligor.
1. If the Insurance Obligor is rated by one of Moody's or S&P:
Lower of Moody's/S&P Rating Concentration Limit
Aa3/AA- to Aaa/AAA 7.5%
A3/A- to A1/A+ 5.0%
Baa3/BBB- to Baa1/BBB+ 3.0%
Ba1/BB+ and lower 2.0%
2. If the Insurance Obligor is not rated by Moody's or S&P but is
rated by A.M. Best:
Best's Rating Concentration Limit
B to A++ 2.0%
B- 0.5%
3. If the Insurance Obligor is one of the following:
Insurance Obligor Concentration Limit
Northland Insurance Company 3.0%
(provided that Northland at the time of computation carries an A.M.
Best's Rating of "A" or better; if Northland is downgraded below
"A" by A.M. Best, or if Norwest is downgraded by S&P's or Moody's
below "A-1/P-1", the Concentration Limit shall thereafter be
automatically be deemed permanently reduced to 2.0%)
Lloyd's" 2.0%
(provided that no further significant deterioration, in the opinion
of the Administrator and the Relationship Bank occurs with respect
to Lloyd's claim paying ability).
NCCI Worker's Compensation Pool 4.0%
"Pooling Arrangement" shall mean a business arrangement under which
Affiliates pool 100% of their net business.
"Affiliate" shall mean, with respect to an insurance carrier, any
other insurance carrier operating under common management or
ownership.
(B) Direct Obligors. The amount by which (x) the unpaid principal
balance of Eligible Receivables having the same Direct Obligor
exceeds (y) the percentage (as shown below) of the unpaid principal
balance of all Eligible Receivables (the "Concentration Limits")
Concentration Limit
1. Any three (3) Direct Obligors 2.0% each
2. All other Direct Obligors 1.0% each
(C) Agents. The amount by which (x) the unpaid principal balance
of Eligible Receivables having the same Agent exceeds (y) the
percentage (as shown below) of the unpaid principal balance of all
Eligible Receivables (the "Concentration Limits")
Concentration Limit
1. The Lockton Companies 10.0%
2. All other Agents 5.0%
(D) Auto Insurance. The amount by which (x) the unpaid principal
balance of Eligible Receivables for personal automobile insurance
policies exceeds (y) the percentage (as shown below) of the unpaid
principal balance of all Eligible Receivables (the "Concentration
Limits")
Concentration Limit
1. Personal Auto 5.0%
(E) Policy Type. The amount by which (x) the unpaid principal
balance of Eligible Receivables having a policy type of voluntary
or involuntary worker's compensation exceeds (y) the percentage (as
shown below) of the unpaid principal balance of all Eligible
Receivables (the "Concentration Limits")
Concentration Limit
1. Workers compensation policies 40.0%
(F) Loan Terms. The amount by which (x) the unpaid principal
balance of Eligible Receivables for policies that have been
originated under Loan Term "B" exceeds (y) the percentage (as shown
below) of the unpaid principal balance of all Eligible Receivables
(the "Concentration Limits")
Concentration Limit
1. Loan Term "B" 5.0%
(G) Direct Obligors as debtors in possession. The amount by which
(x) the unpaid principal balance of Eligible Receivables for
policies originated with Direct Obligors wishing to enter into new
Contracts (and not previously the Direct Obligor on any Contract
with Seller or APR) already operating under bankruptcy court
protection that have received court approval for Servicer to be
able to cancel the related insurance policy exceeds (y) the
percentage (as shown below) of the unpaid principal balance of all
Eligible Receivables (the "Concentration Limits").
Concentration Limit
1. Direct Obligors as debtors
in possession 0.5%
it being understood that, for the purposes of the determination of
the percentages set forth above: (i) solely for the purposes of
subsection (A), if a Receivable is secured by insurance policies
issued by more than one Insurance Obligor, the Unpaid Principal
Balance of such Receivable shall be allocated among such insurance
policies on a reasonable basis and the portion of such Receivable
allocated to the insurance policies issued by any single Insurance
Obligor shall be deemed to be a separate Receivable, (ii) to the
extent that the Unpaid Principal Balance of any Receivable
constitutes a portion of any "excess" calculated pursuant to any of
subsections (A) to (C), such portion of such Unpaid Principal
Balance of such Receivable shall not be counted under clause (x) or
clause (y) of any other of such subsections that would otherwise be
applicable thereto, and (iii) no Receivable shall be counted under
clause (x) or clause (y) of such subsections unless it is both a
Pool Receivable and an Eligible Receivable.
In addition, the sum of the following shall also be included in the
calculation of the Excess Concentration Deduction:
(i) the amount by which on any Settlement Date the Unpaid
Principal Balance of Eligible Receivables originated in a state in
which Seller is required to be licensed as a premium finance
company pursuant to Section 7.01(j), and has not applied for such
license in accordance with Section 7.01(j), exceeds one percent
(1%) of the Net Pool Balance on such Settlement Date; and
(ii) the amount by which on any Settlement Date the Unpaid
Principal Balance of Eligible Receivables with respect to which all
or any part of unearned premium has been received from the related
Insurance Obligor exceeds one percent (1%) of the Net Pool Balance
on such Settlement Date.
"Excess Yield Ratio" means, at any time, the fraction, expressed as
an annualized percentage, computed as of the most recent Cut-Off
Date (a) the numerator of which is (i) the sum of, calculated for
such Settlement Period, (x) Purchaser's Share of Finance Charge
Receivables at such time plus (y) recoveries in respect of
Defaulted Receivables received during the Settlement Period for
such Cut-Off Date less (ii) the sum of (w) the Servicer's Fee for
such Settlement Period plus (x) the Program Fee for such Settlement
Period plus (y) the Earned Discount for such Settlement Period plus
(z) Defaulted Receivables for such Settlement Period and (b) the
denominator of which is the Unpaid Principal Balance of all
Receivables in the Receivables Pool for the preceding Settlement
Period.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal (for each day during such period) to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of Chicago; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by State Street Bank from three federal funds
brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto or to the functions
thereof.
"Fee Letter" means the Fee Letter dated as of October 20, 1995.
"Finance Charge Receivable" means the portion of any Pool
Receivable that is not the related Principal Receivable, including,
without limitation, the right to the payment of finance charges,
interest payments, late payment charges, collection fees, extension
fees and other amounts actually accrued thereon on a current basis.
"Final Payout Date" means the date following the Termination Date
on which Purchaser's Total Investment shall have been reduced to
zero and all other amounts payable by Seller under the Transaction
Documents shall have been paid in full.
"First Chicago" means The First National Bank of Chicago, a
national banking association.
"Indemnified Amounts" has the meaning set forth in Section 13.01.
"Indemnified Party" has the meaning set forth in Section 13.01.
"Insurance Obligor" with respect to any Receivable, means any
insurance carrier and its Affiliates that has issued and is
carrying any of the insurance policies for which premiums are
financed in whole or in part with the proceeds of such Receivable;
and related Insurance Obligor means with respect to any such
Receivable, such insurance carrier.
"Lien" means a lien, security interest, charge, or encumbrance, or
other right or claim of any Person other than (i) a potential claim
or right (that has not yet been asserted) of a trustee appointed
for an Obligor in connection with any Event of Bankruptcy and (ii)
an unfiled lien for taxes accrued but not yet payable.
"Liquidation Collection Account" has the meaning set forth in
Section 3.09(a).
"Liquidation Date" means the occurrence of any of the following:
(i) a Liquidation Event, (ii) the Termination Date and (iii) the
first day of a Liquidation Period.
"Liquidation Event" has the meaning set forth in Section 10.01.
"Liquidation Fee" means, for each Asset Tranche (or portion
thereof) for each day in any Yield Period or Settlement Period
(computed without regard to clause (iii) of the proviso of the
definition of "Yield Period") during the Liquidation Period, the
amount, if any, by which:
(a) the additional Earned Discount (calculated without taking into
account any Liquidation Fee) which would have accrued on the
reductions of the Purchaser's Tranche Investment with respect to
such Asset Tranche during such Yield Period or Settlement Period
(as so computed) if such reductions had not been made exceeds,
(b) the income, if any, received by Purchaser from investing the
proceeds of such reductions of the Purchaser's Tranche Investment.
"Liquidation Period" means the period commencing on the date on
which the conditions precedent to Purchases and Reinvestments set
forth in Section 5.02 are not satisfied (or expressly waived by
Purchaser) and the Administrator shall have notified Seller,
Servicer and the Relationship Bank in writing that the Liquidation
period has commenced, and ending on the Final Payout Date.
"Liquidation Program Fee Rate" has the meaning set forth in the Fee
Letter.
"Liquidity Agent" means Norwest as agent for the Liquidity Banks
under the Liquidity Agreement, or any successor
to Norwest in such capacity.
"Liquidity Agreement" means and includes (a) the Liquidity Asset
Purchase Agreement dated as of October 20, 1995 among Purchaser, as
seller, State Street Capital, as Program Administrator, Norwest as
Liquidity Agent, and certain other financial institutions, as
purchasers, and (b) any other agreement hereafter entered into by
Purchaser providing for the making of purchases, loans or other
extensions of credit to Purchaser secured by a direct or indirect
security interest in the Asset Interest (or any portion thereof),
to support all or part of Purchaser's payment obligations under the
Commercial Paper Notes or to provide an alternate means of funding
Purchaser's investments in accounts receivable or other financial
assets, and under which the amount available from such extensions
of credit is limited to an amount calculated by reference to the
value or eligible unpaid balance of such -- accounts receivable or
other financial assets or any portion thereof or the level of deal-
specific credit enhancement available with respect thereto, as such
Liquidity Agreement or other agreement may be amended, supplemented
or otherwise modified from time to time.
"Liquidity Bank" means any one of, and "Liquidity Banks" means all
of the commercial lending institutions that are at any time parties
to the Liquidity Agreement.
"Liquidity Purchase" means a purchaser of a percentage interest in
the Asset Interest loan made by one or more Liquidity Banks (or
simultaneous loans made by the Liquidity Banks) pursuant to the
Liquidity Agreement.
"Lock-Box Agreement" means a letter agreement, in substantially the
form of Exhibit 5.01(a), between Seller and any Lock-Box Bank.
"Lock-Box Bank" means any of the banks holding one or more lock-box
accounts for receiving Collections from Pool Receivables.
"Material Adverse Effect" with respect to any event or
circumstance, a material adverse effect on:
(i) the business, assets, financial condition, operations or
prospects of Seller, APR or Parent;
(ii) the ability of Seller, APR or Parent to perform its
obligations under this Agreement or any other Transaction Document;
(iii) the validity, enforceability or collectibility of this
Agreement, any other Transaction Document, the Receivables or the
related Contracts; or
(iv) the status, existence, perfection, priority or enforceability
of Purchaser's interest in the Pool Receivables.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor
thereof.
"Net Excess Contract Yield" means, with respect to any Receivable
on the date of the Purchase or Reinvestment with respect thereto,
the interest rate on the related Contract minus carrying costs
minus net defaults; where "carrying costs" means the sum of the
then applicable Earned Discount Rate plus the then applicable
Program Fee Rate plus the then applicable Servicer Fee Rate; and
where "net defaults" means a fraction (expressed as a percentage)
the numerator of which was the amount of Receivables that became
Defaulted Receivables (net of recoveries) during the preceding
Settlement Period (or calendar month) and the denominator of which
is the Net Pool Balance as of the beginning of such Settlement
Period (or calendar month).
"Net Pool Balance" means at any time the Unpaid Principal Balance
of the Eligible Receivables in the Receivables Pool at such time
reduced by the aggregate Excess Concentration Deduction at such
time.
"Non-Use Rate" has the meaning set forth in the Fee Letter.
"Obligor" means any Person directly or indirectly obligated to make
payments on or with respect to any Receivable. Such term shall
include, without limitation, any Direct Obligor and all Insurance
Obligors pursuant to a Contract.
"Originator" means APR in its capacity as the Originator under the
Purchase and Sale Agreement.
"Permitted Dividend" means any dividend that is to paid by Seller
to APR prior to the Liquidation Date out of payments or
distributions made by Servicer to Seller under Sections 3.2(c) or
(d) or out of Seller's Share of Collections on account of Principal
Receivables.
"Person" means an individual, partnership, limited liability
company, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture,
government or any agency or political subdivision thereof or any
other entity.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Principal Receivable" means the portion of any Pool Receivable
that is related to the unpaid principal of the related loan.
"Program Administration Agreement" means the Program Administration
Agreement dated as of September 24, 1992 between Purchaser and
State Street Capital, as Program Administrator, as the same may be
amended, supplemented or otherwise modified from time to time.
"Program Documents" means the documents relating to the Purchaser's
commercial paper program, including the Program Administration
Agreement, the Security Agreement and the Program Supplement.
"Program Fee" has the meaning set forth in Section 4.01(b).
"Program Fee Rate" has the meaning set forth in the Fee Letter.
"Program Information" has the meaning set forth in Section 14.08.
"Program Supplement" means the supplement to the Program Documents,
dated as of June 28, 1995, among the Purchaser, the Administrator
and certain other parties, as the same may be amended, supplemented
or otherwise modified from time to time.
"Purchase" has the meaning set forth in Section 1.01.
"Purchase and Sale Agreement" means that certain Purchase and Sale
Agreement dated as of October 20, 1995 between Seller and APR as
the same may be amended or otherwise supplemented from time to
time.
"Purchase and Sale Termination Event" has the meaning set forth in
the Purchase and Sale Agreement.
"Purchase Limit" has the meaning set forth in Section 1.01.
"Purchase Termination Date" means that day on which a Liquidation
Event has occurred and is continuing, and
(a) the Administrator declares a Purchase Termination Date in a
notice to Seller in accordance with Section 10.02(a); or
(b) in accordance with Section 10.02(b), becomes the Purchase
Termination Date automatically.
"Purchaser" has the meaning set forth in the preamble.
"Purchaser's Share" had the meaning set forth in Section 1.04(b).
"Purchaser's Share of Collections" has the meaning set forth in
Section 1.04(b).
"Purchaser's Share of Defaulted Receivables" has the meaning set
forth in Section 1.04(b).
"Purchaser's Total Investment" means at any time with respect to
the Asset Interest an amount equal to (a) the aggregate of the
amounts theretofore paid to Seller for Purchases pursuant to
Section 1.01, less (b) the aggregate amount of Collections
theretofore received and actually distributed to Purchaser on
account of such Purchaser's Total Investment pursuant to Section
1.03.
"Purchaser's Tranche Investment" means in relation to any Asset
Tranche the amount of the Purchaser's Total Investment allocated by
the Administrator to an Asset Tranche pursuant to Section 2.01,
provided, that at all times the aggregate amounts allocated to all
Asset Tranches shall equal the Purchaser's Total Investment.
"Qualifying Liquidity Bank" means a Liquidity Bank with a rating of
its short-term securities equal to or higher than
(i) A-1 by Standard & Poor's Corporation and (ii) P-1 by Xxxxx'x
Investors Service, Inc.
"Receivable" means the indebtedness of any Obligor under a Contract
whether constituting an account, chattel paper, an instrument or a
general intangible, and includes (i) the right to payment of such
indebtedness and any interest or finance charges and other
obligations of such Obligor with respect thereto, (ii) all other
rights under such Contract, including insurance policy cancellation
rights, (iii) all right, title and interest of Seller and
Originator in, to and under the insurance contract underlying such
Contract and any and all other direct or indirect guaranties or
security therefor, and (iv) all proceeds of the foregoing.
"Receivables Pool" means at any time all then outstanding
Receivables owned by Seller, other than (i) Receivables theretofore
reconveyed to Seller pursuant to Section 3.07 and (ii) the
Receivables specifically excluded from the Receivables Pool in a
written certificate, executed and delivered by Purchaser and Seller
on or before the date of the initial Purchase hereunder.
"Regulation D" means Regulation D of the Federal Reserve Board, or
any other regulation of the Federal Reserve Board that prescribes
reserve requirements applicable to nonpersonal time deposits or
"Eurocurrency Liabilities" as presently defined in Regulation D, as
in effect from time to time.
"Regulator" means any federal, state or local regulatory or
governmental body, agency or official.
"Regulatory Change" means, relative to any Affected Party
(a) any change in (or the adoption, implementation, change in
phase-in or commencement of effectiveness of) any
(i) United States federal or state law or foreign law applicable to
such Affected Party;
(ii) regulation, interpretation, directive, requirement or request
(whether or not having the force of law) applicable to such
Affected Party of (A) any court, government authority charged with
the interpretation or administration of any law referred to in
clause (a)(i) or of (B) any fiscal, monetary or other authority
having jurisdiction over such Affected Party; or
(iii) generally accepted accounting principles or regulatory
accounting principles applicable to such Affected Party and
affecting the application to such Affected Party of any law,
regulation, interpretation, directive, requirement or request
referred to in clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement,
request or accounting principles referred to in clause (a)(i),
(a)(ii) or (a)(iii) above.
"Reinvestment" has the meaning set forth in Section 1.03.
"Related Security" means, with respect to any Pool Receivable (i)
all of Seller's right, title and interest in and to all Contracts
or other agreements that relate to such Pool Receivable, (ii) all
of Seller's interest in the insurance policies, if any, relating to
such Pool Receivable including, without limitation, the right to
terminate such policies and to receive unearned premiums payable
upon such termination and, to the extent permitted by applicable
law or regulations, the designation of Seller as first priority
loss payee under such insurance policies, (iii) all other security
interests or liens and property subject thereto from time to time
purporting to secure payment of such Pool Receivable, whether
pursuant to the Contract related to such Pool Receivable or
otherwise, (iv) the assignment to Purchaser of all UCC financing
statements and notices to insurance companies covering any
collateral securing payment of such Pool Receivable, and (v) all
guaranties and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such
Pool Receivable whether pursuant to the Contract related to such
Pool Receivable or otherwise. The interest of Purchaser in any
Related Security is only to the extent of its Asset Interest, as
more fully described in the definition of Asset Interest. The
interest of Purchaser in any Related Security is only to the extent
of Purchaser's undivided interest, as more fully described in the
definition of Asset Interest.
"Relationship Bank" has the meaning set forth in the preamble.
"Relationship Bank Agreement" means the Relationship Bank
Agreement, dated as of September 24, 1992, among Purchaser, the
Administrator and the Relationship Bank, as such agreement may be
amended, supplemented or otherwise modified from time to time.
"Reserve Percentage" has the meaning set forth in Section
1.04(b)(i)(D).
"Scheduled Termination Date" means October 20, 1998. The Scheduled
Termination Date may be extended for an additional period of one
year on each October 20, beginning October 20, 1997 by written
notice of request given by Seller to the Administrator and the
Relationship Bank at least 60 days prior to such October 20, and
written notice of acceptance given by the Administrator and the
Relationship Bank not later than 45 days thereafter.
"Secured Parties" means Purchaser, the Backup Purchaser, the
Administrator, the Relationship Bank, the Indemnified Parties and
the Affected Parties.
"Security Agreement" means the Security Agreement dated as of
September 24, 1992, between Purchaser, as grantor, and the
Collateral Agent, as secured party, as the same may be amended,
supplemented or otherwise modified from time to time.
"Seller" has the meaning set forth in the preamble.
"Seller Information" has the meaning set forth in Section 14.07(a).
"Seller Party" has the meaning set forth in Section 14.07(a).
"Seller Order" means a direction letter, in such form as the
Relationship Bank and Seller may approve, specifying the Eligible
Investments in which funds in the Collection Account shall be
invested pursuant to Section 3.09.
"Seller's Share" means, on any day, (a) with respect to Principal
Receivables, one (1) minus the Purchaser's Share with respect to
Principal Receivables on such day and (b) with respect to Finance
Charge Receivables, zero, subject, however, to the applications set
forth in Section 3.2.
"Seller's Share of Collections" on account of Principal Receivables
means on any day an amount equal to the product of (x) the related
Seller's Share with respect to Principal Receivables on such day
and (y) the amount of Collections on account of Principal
Receivables on such day. "Seller's Share of Collections" on account
of Finance Charge Receivables shall be calculated on each
Settlement Date and shall be equal to the amount payable to Seller
pursuant to Section 3.2(c) and (d).
"Senior Portion" has the meaning set forth in the definition of
Servicer's Fee.
"Servicer" has the meaning set forth in Section 8.01(a).
"Servicer LOC" means that certain letter of credit dated as of
October 20, 1995, issued by Norwest to Administrator on behalf of
Purchaser, as the same may be amended, supplemented or otherwise
modified from time to time.
"Servicer LOC Available Amount" means, on any day, the least of (i)
the amount by which Eligible Receivables with respect to which
Northland Insurance Company is the Insurance Obligor exceed 2% of
the Net Pool Balance as reported on the most recent Settlement
Statement, (ii) $300,000 less the amount previously drawn by the
Administrator under the Servicer LOC and (iii) 1% of the Net Pool
Balance as reported on the most recent Settlement Statement.
"Servicer LOC Funding Conditions" means, as determined on each
Settlement Date, the occurrence of each of the following:
(a) Eligible Receivables, other than those with respect to which
Northland Insurance Company is the Insurance Obligor, that are
Defaulted Receivables on such day equal or exceed 5.95% of the Net
Pool Balance on such Settlement Date; and
(b) Eligible Receivables with respect to which Northland Insurance
Company is the Insurance Obligor that are Defaulted Receivables on
such day and arise out of the occurrence of an Event of Bankruptcy
with respect to Northland Insurance Company equal or exceed 2.00%
of the Net Pool Balance on such Settlement Date.
"Servicer Transfer Event" has the meaning set forth in Section
8.01(b).
"Servicer's Fee" accrued for any day means
(a) an amount equal to the product of (x) .50% per annum, times
(y) the amount of the Purchaser's Total Investment at the close of
business on such day, times (z) 1/360; or
(b) on and after the date the Backup Servicer shall be the
Servicer, an amount equal to (x) 1.00% per annum, times (y) the Net
Pool Balance, times (z) 1/360 (it being understood that the first
50% of the amount so calculated shall be the "Senior Portion" and
the next 50% shall be the "Subordinated Portion" of such Servicing
Fee).
"Settlement" means the payments and other actions provided for on
the Cut-Off Date for each Settlement Period.
"Settlement Date" means the 10th Business Day of each calendar
month, and each day after the occurrence of the Termination Date
that the Administrator or the Relationship Bank shall so designate.
"Settlement Period" means
(a) the period from the date of the initial Purchase hereunder to
the close of business on the last day of the same calendar month;
and
(b) thereafter, each period from the opening of business on the
first day of each calendar month to and including the close of
business day on the last day of such calendar month;
provided, however, that
(i) any Settlement Period which would otherwise end on a day which
is not a Business Day shall be extended to the next succeeding
Business Day; and
(ii) the last Settlement Period shall end on the date on which the
Asset Interest has been reduced to zero and all other fees and
expenses owed by Seller or APR hereunder shall have been paid in
full.
"Settlement Statement" has the meaning set forth in Section
3.03(a).
"S&P" means Standard and Poor's Corporation, or any successor
thereof.
"State Street Bank" means State Street Bank & Trust Company, a bank
organized under the laws of the Commonwealth of Massachusetts.
"State Street Capital" has the meaning set forth in the preamble.
"Subsidiary" means a corporation of which Seller, APR or Parent
and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary
voting power for the election of directors.
"Subordinated Line" means that certain subordinated credit
agreement between Parent and APR in the form and as to dollar
amount approved by the Administrator and the Relationship Bank as
_______________.
"Subordinated Portion" has the meaning set forth in the definition
of Servicer's Fee.
"Successor Notice" has the meaning set forth in Section 8.01(b).
"Tax Sharing Agreement" means that certain Tax Sharing Agreement in
the form approved by the Administrator and the Relationship Bank as
Exhibit B.
"Termination Date" means the earliest of
(a) the date of termination (whether by scheduled expiration,
termination on default or otherwise) of either the Liquidity Banks'
commitments under the Liquidity Agreement or the Credit Bank's
commitment under the Credit Agreement;
(b) the Purchase Termination Date; and
(c) the Scheduled Termination Date.
"Transaction Documents" means this Agreement, the Purchase and Sale
Agreement, the Liquidity Agreement, the Custody Agreement, the
Backup Servicing Agreement, the Lock-Box Agreements and the other
documents to be executed and delivered in connection herewith and
therewith.
"Transfer Date" means the date on which the initial Purchaser
hereunder will transfer the Asset Interest to the Backup Purchaser
pursuant to the Liquidity Agreement.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction or jurisdictions.
"Unmatured Liquidation Event" means any event which, with the
giving of notice or lapse of time, or both, would become a
Liquidation Event.
"Unpaid Balance" of any Receivable means at any time the Unpaid
Principal Balance thereof plus the unpaid amount thereof consisting
of Finance Charge Receivables.
"Unpaid Principal Balance" of any Receivable means at any time the
unpaid principal amount thereof.
"Yield Period" with respect to any Asset Tranche funded by a
Liquidity Purchase or Credit Draw means
(a) the period commencing on the date of the initial Purchase of
the Asset Interest, the making of such Liquidity Purchase or Credit
Draw or the creation of such Asset Tranche pursuant to Section 2.01
(whichever is latest) and ending such number of days thereafter as
the Administrator shall select; and
(b) each period commencing on the last day of the immediately
preceding Yield Period for the related Asset Tranche and ending
such number of days thereafter as the Administrator shall select;
provided, however, that
(i) any such Yield Period (other than a Yield Period consisting of
one day) which would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day, in which
case if such succeeding Business Day is in a different calendar
month, such Yield Period shall instead be shortened to the next
preceding Business Day);
(ii) in the case of Yield Periods of one day for any Asset Tranche,
(A) the initial Yield Period shall be the date such Yield Period
commences as described in clause (a) above; and (B) any
subsequently occurring Yield Period which is one day shall, if the
immediately preceding Yield Period is more than one day, be the
last day of such immediately preceding Yield Period is one day,
shall be the next day following such immediately preceding Yield
Period; and
(iii) any Yield Period for any Asset Tranche which commences before
the Termination Date and would otherwise end on a date occurring
after such Termination Date, such Yield Period shall end on such
Termination Date and the duration of each such Yield Period which
commences on or after the Termination Date for such Asset Tranche
shall be of such duration as shall be selected by the
Administrator.
B. Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in
the State of New York and not specifically defined herein, are used
herein as defined in such Article 9.
C. Computation of Time Periods. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified
date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but
excluding".
SCHEDULES AND EXHIBITS
to Receivables Purchase Agreement
SCHEDULES
SCHEDULE 6.01(i) Description of Material Adverse Changes of
Seller
SCHEDULE 6.01(j) Description of Litigation of Seller
SCHEDULE 6.01(n) List of Offices of Seller where Records Are
Kept
SCHEDULE 6.01(o) List of Lock-Box Banks
SCHEDULE 6.01(p)-1 Forms of Contracts
SCHEDULE 6.01(p)-2 Description of Credit and Collection Policy
SCHEDULE 6.02(h) Description of Material Adverse Changes of APR
SCHEDULE 6.02(i) Description of Litigation of APR
SCHEDULE 6.02(k) List of Offices of APR
SCHEDULE 6.03(h) Description of Material Adverse Changes of
Parent
SCHEDULE 6.03(i) Description of Litigation of Parent
SCHEDULE 7.03(h) Schedule of Indebtedness of Seller
SCHEDULE 7.06(i) Schedule of Indebtedness of APR
EXHIBITS
EXHIBIT 1.02 Form of Notice
EXHIBIT 3.03 Settlement Statement to be Provided as of Cut-
Off Date
EXHIBIT 5.01(g) Form of Lock-Box Agreement
EXHIBIT 5.01(k)-1 Form of Opinion of Counsel for Seller as to
Authority, Perfection, Etc.
EXHIBIT 5.01(k)-2 Form of Opinion of Counsel for Parent as to
Authority, Etc.
EXHIBIT 5.01(l)-1 Form of "True Sale" Opinion of Counsel for
Seller
EXHIBIT 5.01(l)-2 Form of "Non-Substantive Consolidation"
Opinion of Counsel for Seller
EXHIBIT 5.01(m) Form of Survey of Counsel for Seller
EXHIBIT 5.01(q) Form of Pay-Off Letter
EXHIBIT A Form of Tax Sharing Agreement
SCHEDULE 6.01(i)
Description of Material Adverse Changes of Seller
None
SCHEDULE 6.01(j)
Description of Litigation of Seller
None
SCHEDULE 6.01(n)
List of Offices of Seller where Records are Kept
0000 Xxxx 000xx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000
SCHEDULE 6.01(o)
List of Lock-Box Banks
1. Mercantile Bank of Kansas City, N.A.
SCHEDULE 6.01(p)-1
Forms of Contracts
SCHEDULE 6.01(p)-2
Description of Credit and Collection Policy
SCHEDULE 6.02(h)
Description of Material Adverse Changes of APR
None
SCHEDULE 6.02(i)
Description of Litigation of APR
1. AGENCY PREMIUM RESOURCE, INC. VS X. X. XXXXXXX, INC. et al,
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CASE #92-
Z-1707
2. XXXXXXX XXXX D/B/A CHRISTIAN COMMUNITY PRESCHOOL VS JACOMO
INSURARNCE SERVICES, AGENCY PREMIUM RESOURCE, INC. AND GUARANTEE
NATIONAL INSURANCE COMPANY CIRCUIT COURT OF XXXXXXX COUNTY,
MISSOURI AT KANSAS CITY CASE #CV95-13145
3. AGENCY PREMIUM RESOURCE, INC. VS FRAME CONTRACTORS, INC. AND
XXXX XXXXXXXXXX, individually CIRCUIT COURT OF GREEN COUNTY,
MISSOURI CASE #193CC3158
4. COLLECTION CASES IN ORDINARY COURSE OF BUSINESS
SCHEDULE 6.02(k)
List of Offices of APR where Records are Kept
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxx 00000
SCHEDULE 6.03(h)
Description of Material Adverse Changes of Parent
None
SCHEDULE 6.03(i)
Description of Litigation of Parent
1. On January 12, 1994 a complaint was filed in the District Court
of Xxxxxxx county, Kansas, against Parent, American Freight System,
Inc. ("AFS") and certain employees of those companies by a former
employee of AFS. Such complaint alleges breach of contract,
promissory estoppel, tortious interference, and misrepresentation
and fraud, as it relates to an alleged incentive compensation
arrangement between the former employee and AFS. The suit claims,
from Parent and others, actual damages in excess of $2 million and
punitive damages of $5 million.
2 Other immaterial litigation incidental to the ordinary course of
Parent's business.
SCHEDULE 7.03(h)
Schedule of Indebtedness of Seller
$1,000.00 owed to Anuhco, Inc.
SCHEDULE 7.06(i)
Schedule of Indebtedness of APR
Creditor Indebtedness
Anuhco, Inc. $ 73,975
American Freight System, Inc. $ 1,223
Agency Services, Inc. ("ASI") $ 15,833*
Capital Lease Obligation $ 16,061
* $3,155,285 account payable to ASI offset by $3,139,452 account
receivable from ASI; Net indebtedness to ASI is $15,833.
EXHIBIT 1.02 - Form of Notice
EXHIBIT 3.01(a) - Form of Information Package
EXHIBIT 3.03 - Settlement Statement
EXHIBIT 5.01(g) - Form of Collateral Account and Lock-Box Agreement
EXHIBIT 5.01(k)-1 - Form of Opinion of Counsel to
Seller - Authority, Perfection, Etc.
EXHIBIT 5.01(k)-2 - Form of Opinion of Counsel to Parent -
Authority, Etc.
EXHIBIT 5.01(l)-1 - Form of "True Sale" Opinion of Counsel
EXHIBIT 5.01(l)-2 - Form of "Non-Substantive" Opinion of Counsel
EXHIBIT 5.01(m) - Form of Survey Counsel
EXHIBIT 5.01(q) - Form of Pay-Off Letter
EXHIBIT A - Form of Tax Sharing Agreement
