EXHIBIT 10.4
THIRD AMENDED AND RESTATED
FINANCING SERVICES AND CONTRIBUTED CAPITAL AGREEMENT
THIRD AMENDED AND RESTATED FINANCING SERVICES AND CONTRIBUTED CAPITAL
AGREEMENT ("Agreement") dated as of the 3rd day of November, 0000, xxxxxxx
XXXXXXXX XXXXXX COOPERATIVE, INCORPORATED (the "Cooperative"), a Virginia
corporation, and STATESMAN FINANCIAL CORPORATION ("Statesman"), a Virginia
corporation.
Cooperative desires from time to time to sell to Statesman certain
accounts receivable owing to it and certain installment sales contracts, and
Statesman is interested in purchasing such receivables and installment sales
contracts. The parties desire to set forth the terms and conditions upon which
such sales may be made. The Cooperative also desires to have Statesman issue
from time to time credit cards to customers of the Cooperative and its Local
Cooperatives and Dealerships, to extend from time to time asset based financing
to customers of the Cooperative pursuant to separate agreements to be entered
into between each such customer and Statesman and to lease personal property
from time to time to customers of the Cooperative, Local Cooperatives and
Dealerships. Therefore, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have the
same meaning when used in the plural and vice versa):
"Accounts Receivable - Local Cooperative" means the amounts advanced by
the Cooperative to a Local Cooperative and owing from time to time from such
Local Cooperative to the Cooperative.
"Agreement" means this Financing Services and Contributed Capital
Agreement, as it may be amended, supplemented, or modified from time to time.
"Approved Contracts" means those Installment Sales Contracts arising
out of the sale of goods by a Retail Service or a customer of the Cooperative
which have been approved in advance by Statesman as evidenced by a Statesman
Approval Number.
"Asset Based Financing" means financing of a Dealership by Statesman
secured by accounts receivable, inventory, equipment, including rolling stock,
real estate and other fixed assets, or any of such items.
"Average Total Delinquency Percentage" means with respect to each of
Retail Accounts, Grain Marketing Accounts and Accounts Receivable - Local
Cooperatives (each a "type" of Receivable) that percentage determined by
dividing the average total delinquent Receivables of that type (including any
Receivables of that type sold to Statesman which are delinquent), measured as of
the last day of each calendar month, for the twelve-month period ending on the
last Business Day of the calendar month preceding a settlement date by the
average total Receivables of that type owing the Cooperative (including those
sold to Statesman), measured as of the last day of each calendar month, for the
same twelve-month period. "Average Total Delinquency Percentage" means with
respect to Wholesale Accounts that percentage determined by dividing the average
total delinquent Wholesale Accounts (including any Wholesale Accounts sold to
Statesman which are delinquent), measured as of the last day of each calendar
month, for the twelve-month period ending on the last Business Day of the
calendar month preceding the date of determination by the average total
Wholesale Accounts owing the Cooperative (including those sold to Statesman),
measured as of the last day of each calendar month, for the same twelve-month
period.
"Average Total Delinquency Percentage Variance" means with respect to
each of Retail Accounts, Grain Marketing Accounts and Accounts Receivable -
Local Cooperatives (each a "type" of Receivable) the difference, regardless of
which is greater, between (i) the Average Total Delinquency Percentage for that
type of Receivables computed as of the last Business Day of the calendar month
preceding any settlement date and (ii) the percentage obtained by dividing the
total delinquent Receivables of that type (including Receivables of that type
sold to Statesman which are delinquent) on such date by the total Receivables of
that type (including those sold to Statesman) on such date. "Average Total
Delinquency Percentage Variance" means with respect to Wholesale Accounts the
difference, regardless of which is greater, between (i) the Average Total
Delinquency Percentage for Wholesale Accounts computed as of the last Business
Day of the calendar month preceding the date of determination and (ii) the
percentage obtained by dividing the total delinquent Wholesale Accounts
(including Wholesale Accounts sold to Statesman which are delinquent) on such
date by the total Wholesale Accounts (including those sold to Statesman) on such
date.
"Balances Owed" means the net amount payable to the Cooperative on
Receivables as a result of goods sold or services performed, or both, after
adjustment for all rebates, credits and all other adjustments made by the
Cooperative on all Purchased Receivables.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in Richmond, Virginia, are authorized or required to
close under applicable law.
"Collateral" means any property which is subject to a purchase money
security interest securing the obligations of the obligor on a Purchased
Contract.
"Dealership" means any wholesale customer of the Cooperative which has
purchased merchandise or products from the Cooperative for resale to its
customers and shall include a private dealer of the Cooperative but shall not
include a Retail Service or a Local Cooperative.
"Default" means any of the events specified in Article X, whether or
not any requirement for the giving of notice or the lapse of time, or both, has
been satisfied.
"Dispute" has the meaning set forth in Section 4.06.
"Eligible Contracts" means Installment Sales Contracts arising out of
the sale of goods by Retail Services or a customer of the Cooperative other than
Approved Contracts which Statesman has determined to purchase from the
Cooperative.
"Eligible Receivables" means Receivables which Statesman has determined
to purchase from the Cooperative.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"ERISA Reportable Event" means any of the events specified in Section
10.01(j) or (k), provided that any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.
"Event of Default" means any of the events specified in Section 10.01,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"GAAP" means generally accepted accounting principles consistently
applied with respect to a corporation conducting a business the same as or
similar to that of the Cooperative and its Subsidiaries, if any, as in effect
from time to time.
"Grain Marketing Accounts" means amounts owed to the Cooperative for
the purchase of grain commodities, whether evidenced by open account, note, or
otherwise or any combination thereof.
"Headquarters" means the office of Statesman at 6606 West Broad Street,
Post Office Box 25567, Xxxxxxxx, Xxxxxxxx 00000.
"Historical Charge Off Percentage" means with respect to each of Retail
Accounts, Grain Marketing Accounts and Accounts Receivable - Local Cooperatives
(each a "type" of Receivable) that percentage which is obtained by dividing (a)
the sum of (i) gross bad debt expense of the Cooperative for Receivables of that
type for any fiscal year and (ii) the gross bad debt expense of Statesman for
such fiscal year on Receivables of that type purchased from the Cooperative by
(b) the total dollar volume for sales which generate Receivables of that type
(whether cash or non-cash) of the Cooperative for such fiscal year.
"Independent Cooperative" means a cooperative which is not a Local
Cooperative.
"Installment Sales Contract" means a written agreement providing for
the deferred payment of the purchase price of goods sold in the ordinary course
of business.
"Installment Sales Financing" means the purchasing by Statesman of
chattel paper (as defined in Article 9 of the Uniform Commercial Code of
Virginia) arising out of a sale of merchandise by a Retail Service, Local
Cooperative or Dealership.
"Leases" means contracts for the lease of personal property for a fixed
period of time by Statesman to the Cooperative, a Local Cooperative, a
Dealership or a customer of either.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code of Virginia or comparable law of any jurisdiction to evidence
any of the foregoing).
"Local Cooperative" means any corporation which is managed by the
Cooperative under a management agreement or contract.
"Manufacturer" means the original equipment manufacturer of goods
offered for sale by the Cooperative.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Cooperative or to which the Cooperative is
or may be required to make contributions under ERISA.
"Net Balance" means the outstanding balance owing on an Installment
Sales Contract including any applicable late charges but exclusive of any
unearned finance charges as provided for in such Installment Sales Contract.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.
"Plan" means any employee welfare plan established or maintained by the
Cooperative or to which the Cooperative has made contributions in the past or
may in the future be required to make contributions under ERISA.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time.
"Purchased Contracts" means Approved Contracts and Eligible Contracts
which have been purchased by Statesman from the Cooperative or a customer of the
Cooperative.
"Purchased Receivables" means Eligible Receivables which have been
purchased by Statesman from the Cooperative.
"Purchased Wholesale Accounts" means Wholesale Accounts which have been
purchased by Statesman from the Cooperative.
"Receivables" means the amounts owing the Cooperative from time to time
for the sale of goods or the performance of services in the ordinary course of
business and shall include Retail Accounts, Grain Marketing Accounts, and
Accounts Receivable - Local Cooperatives.
"Receivables Certificate" means the certificate referred to in Section
2.03(1).
"Reserve Account" means the account established under the provisions of
Section 2.04.
"Retail Accounts" means amounts owing the Cooperative arising out of
the sale in the ordinary course of business of goods and services by Retail
Services, which amounts are not evidenced by Installment Sales Contracts.
"Retail Service" means any retail store owned and operated by the
Cooperative.
"Southern States Credit Card Program" means the program of Statesman to
approve revolving or open-end credit in specific amounts for individual
customers of the Cooperative, Local Cooperatives and Dealerships, to extend
credit to such customers for the purchase of goods from the Cooperative, Local
Cooperatives and Dealerships and to settle periodically with the Cooperative,
Local Cooperatives and Dealerships for purchases made by customers pursuant to
that program, as such program may exist from time to time.
"Statesman Approval Number" means a number given by Statesman to a
Retail Service to evidence that a particular Installment Sales Contract is an
Approved Contract.
"Subsidiary" means any corporation the majority of the voting shares of
which at the time are owned directly or indirectly by the Cooperative and/or by
one or more Subsidiaries of the Cooperative.
"Termination Date" means that date on which certain obligations of the
parties hereunder may be terminated as provided in Section 11.04.
"Wholesale Accounts" means any obligation arising out of the sale of
goods or the performance of services in the ordinary course of business which is
not an Account Receivable - Local Cooperative, Grain Marketing Account, or
Retail Account.
"Wholesale Reserve Account" means the account established under the
provisions of Section 4.04.
ARTICLE II
ACCOUNTS RECEIVABLE FINANCING
SECTION 2.01. PURCHASE OF RECEIVABLES. Statesman may from time to time,
at its option upon the terms and subject to the conditions contained in this
Agreement, purchase Receivables from the Cooperative, provided that Statesman
has determined in its sole and absolute discretion that such Receivables are
acceptable to it (which acceptable Receivables are herein referred to as the
"Eligible Receivables"), and in no event shall Statesman purchase Receivables if
after such purchase the aggregate amount owing on all Receivables purchased by
Statesman from the Cooperative shall exceed ONE HUNDRED MILLION DOLLARS
($100,000,000). All such purchases shall be made without recourse to the
Cooperative except so far as Statesman shall have the right to make charges to
the Reserve Account as provided in Section 2.05, and nothing contained herein
shall obligate Statesman to purchase any Receivables.
SECTION 2.02. OFFER TO SELL. The Cooperative may from time to time
offer to sell Receivables to Statesman as herein provided, but, except as the
parties may otherwise agree, no Receivable from any obligor shall be sold unless
all accounts owing from such obligor to the Cooperative are sold, and no Retail
Account arising out of a sale at any Retail Service shall be sold unless all
Retail Accounts arising out of sales at such Retail Service are sold.
SECTION 2.03. PROCEDURES.
(1) Prior to 11:00 a.m. (Richmond, Virginia, time) on the tenth
Business Day of each month, or such later day as may be agreed to by Statesman,
the Cooperative shall deliver to Statesman by hand or send by telecopy a
certificate substantially in the form of Exhibit A attached hereto (a
"Receivables Certificate") with the blanks therein appropriately completed and
reflecting the following information for the preceding month:
(a) the amount of all Receivables arising out of sales of
goods or services during the preceding month, if any, which were sold by the
Cooperative to Statesman as of the end of such preceding month;
(b) Receivables which were previously sold to Statesman under
the provisions of this Article II showing the outstanding balances as of the
last day of the preceding month in the aggregate for Retail Accounts, Grain
Marketing Accounts and Accounts Receivable - Local Cooperatives;
(c) Receivables which were previously sold to Statesman
pursuant to this Article II upon which there was any change in the outstanding
balance during such month, and all debits and credits thereon, including without
limitation payments and other remittances by or on behalf of the account
obligor, credits, rebates and adjustments, showing in the aggregate for Retail
Accounts, Grain Marketing Accounts and Accounts Receivable - Local Cooperatives
the prior balance, the amount and nature of adjustments and the balance as of
the last day of the preceding month;
(d) the Cooperative shall promptly make available to
Statesman, at Statesman's request, listings of accounts with balances and other
referenced amounts by obligor that are referred to in Sections 2.03(1)(a), (b)
and (c).
(2) Not later than 11:00 a.m. (Richmond, Virginia, time) on the fifth
Business Day after receipt by Statesman of the Receivables Certificate,
Statesman shall pay to the Cooperative the amount by which (a) the aggregate
outstanding balance on each Receivable it has purchased exceeds (b) the Purchase
Discount (as herein defined) and the amount, if any, to be placed in the Reserve
Account pursuant to Section 2.04, provided, however, that Statesman may choose
not to pay for any Receivable evidenced by a promissory note or other instrument
unless such note or other instrument has been endorsed and delivered to
Statesman.
(3) Promptly upon delivery of the certificate described in Section
2.03(1), the Cooperative shall assign and transfer as provided in such
certificate those Receivables Statesman is purchasing and all proceeds thereof,
cash or non-cash.
(4) (a) For purposes of this Article II, the Purchase Discount for
Retail Accounts shall be the product obtained by multiplying the outstanding
balance of the Retail Accounts being purchased by (i) the average Historical
Charge Off Percentage of the Cooperative for Retail Accounts for the three
preceding fiscal years times (ii) the sum of 1 plus the Average Total
Delinquency Percentage Variance for Retail Accounts, plus the anticipated
interest charges for the current month relating to the outstanding purchased
Retail Accounts. Such amount shall be computed according to the following
formula:
Discount = Retail Accounts being purchased x [(aHCO%) x
(1 + ADV)] + AIC
where
aHCO% = average Historical Charge Off Percentage for Retail
Accounts for the three preceding fiscal years which
for purposes of this calculation shall not be less
than .35% or such other percentage as may be from
time to time agreed to by the Cooperative and
Statesman.
ADV = Average Total Delinquency Percentage Variance for
Retail Accounts.
AIC = the anticipated interest charges for the current
month for borrowings relating to outstanding Retail
Accounts purchased by Statesman.
(b) For purposes of this Article II, the Purchase Discount for
Grain Marketing Accounts shall be the product obtained by multiplying the
outstanding balance of the Grain Marketing Accounts being purchased by (i) the
average Historical Charge Off Percentage of the Cooperative for Grain Marketing
Accounts for the three preceding fiscal years times (ii) the sum of 1 plus the
Average Total Delinquency Percentage Variance for Grain Marketing Accounts, plus
the anticipated interest charges for the current month relating to the
outstanding purchased Grain Marketing Accounts. Such amount shall be computed
according to the following formula:
Discount = Grain Marketing Accounts being purchased x
[(aHCO%) x (1 + ADV)] + AIC
where
aHCO% = average Historical Charge Off Percentage for Grain
Marketing Accounts for the three preceding fiscal
years which for purposes of this calculation shall
not be less than .15% or such other percentage as may
be from time to time agreed to by the Cooperative and
Statesman.
ADV = Average Total Delinquency Percentage Variance for
Grain Marketing Accounts.
AIC = the anticipated interest charges for the current
month for borrowings relating to outstanding Grain
Marketing Accounts purchased by Statesman.
(c) For purposes of this Article II, the Purchase Discount for
Accounts Receivable - Local Cooperatives shall be the product obtained by
multiplying the outstanding balance of the Accounts Receivable - Local
Cooperatives being purchased by (i) the average Historical Charge Off Percentage
of the Cooperative for Accounts Receivable - Local Cooperatives for the three
preceding fiscal years times (ii) the sum of 1 plus the Average Total
Delinquency Percentage Variance for Accounts Receivable - Local Cooperatives,
plus the anticipated interest charges for the current month relating to the
outstanding purchased Accounts Receivable - Local Cooperatives. Such amount
shall be computed according to the following formula:
Discount = Accounts Receivable - Local Cooperatives being
purchased x [(aHCO%) x (1 + ADV)] + AIC
where
aHCO% = average Historical Charge Off Percentage for
Accounts Receivable - Local Cooperatives for the
three preceding fiscal years which for purposes of
this calculation shall not be less than .05% or such
other percentage as may be from time to time agreed
to by the Cooperative and Statesman.
ADV = Average Total Delinquency Percentage Variance for
Accounts Receivable - Local Cooperatives.
AIC = the anticipated interest charges for the current
month for borrowings relating to outstanding Accounts
Receivable - Local Cooperatives purchased by
Statesman.
Notwithstanding anything to the contrary contained in this Agreement, a
portion of such purchase price shall be placed in the reserve account described
in Section 2.04.
SECTION 2.04. RESERVE ACCOUNT. Statesman shall place in a reserve
account (the "Reserve Account") an amount not to exceed one-eighth of one
percent (0.125%) of the aggregate outstanding balance on each Receivable it
elects to purchase, provided, however, that in no event shall any additional
amount be deducted from the Purchase Price paid to the Cooperative or placed in
the Reserve Account if the aggregate amount in the Reserve Account is equal to
or greater than one quarter of one percent (0.25%) of the aggregate unpaid
balance of all Receivables which Statesman has purchased from the Cooperative
(including the Receivables being paid for on such date). Funds in the Reserve
Account need not be segregated from other funds of Statesman. If at the end of
any fiscal year of Statesman, the balance in the Reserve Account after charges
to the Reserve Account as permitted in Section 2.05 is greater than one-eighth
of one percent (0.125%) of the balance owing on Receivables which Statesman has
purchased from the Cooperative, no Event of Default shall have occurred and be
continuing and no obligation of the Cooperative to Statesman is then due and
payable, Statesman will upon request of the Cooperative remit such excess to the
Cooperative.
SECTION 2.05. CHARGES TO RESERVE ACCOUNT. Statesman may in its sole and
absolute discretion charge losses on Purchased Receivables related to Credit
Risk (as defined in Section 4.06) against the Reserve Account. Statesman agrees
to add to the Reserve Account the amount received as a recovery less associated
collection costs on any losses on Purchased Receivables which were previously
charged to the Reserve Account. Statesman shall notify the Cooperative promptly
in writing of any such reduction in the Reserve Account. As of the end of each
month, Statesman will provide the Cooperative with a report of transactions in
the Reserve Account during such month showing the balance in such account as of
the end of such month.
SECTION 2.06. PAYMENTS FROM THE COOPERATIVE. Monthly with the delivery
of each Receivables Certificate the Cooperative shall remit to Statesman in
immediately available funds an amount equal to the sum of (i) all payments
received by the Cooperative during the preceding month on Purchased Receivables,
(ii) all rebates or credits on any Purchased Receivable allowed by the
Cooperative during the preceding month, and (iii) all other adjustments made by
the Cooperative on any Purchased Receivable during such month which resulted in
a reduction of the amount owing thereon, minus any proceeds the Cooperative has
collected on Purchased Receivables and paid to Statesman since the delivery of
the previous Receivables Certificate.
SECTION 2.07. METHOD OF PAYMENT. All payments from the Cooperative to
Statesman under the terms of this Agreement shall be made to Statesman in
immediately available funds in Richmond, Virginia. Whenever any payment is
scheduled to be made on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day.
SECTION 2.08. FACILITY FEES FOR PURCHASE OF RECEIVABLES. The
Cooperative will pay to Statesman by the tenth Business Day of each month, or
such later day as may be agreed to by Statesman, a Facility Fee in such amount
as shall be agreed upon from time to time by the Cooperative and Statesman.
SECTION 2.09. COLLECTION OF RECEIVABLES. Statesman hereby authorizes
the Cooperative to collect Purchased Receivables, subject to direction and
control, but Statesman may, without cause or notice, curtail or terminate said
authority at any time. Upon receipt of all checks, drafts, cash and other
remittance in payments of or on account of the Purchased Receivables, the
Cooperative will account to Statesman for such proceeds as herein provided. The
Cooperative will endorse all checks, drafts and other items evidencing such
proceeds where necessary to permit collection of such items, which endorsement
Statesman is also hereby authorized to make, as attorney-in-fact on behalf of
the Cooperative.
The Cooperative will pay all proceeds it collects on Purchased
Receivables to Statesman monthly no later than the tenth Business Day of each
month or at such other intervals as Statesman may from time to time request.
If the Cooperative receives any promissory note or other instrument
(other than a check) in payment of or on account of any Purchased Receivable, it
will immediately endorse the same and deliver it to Statesman.
Within ten (10) days of receipt of a written request of Statesman, the
Cooperative will notify the obligor on each Purchased Receivable to make
payments to Statesman at its Headquarters or at such other address as Statesman
shall have furnished to the Cooperative in writing and shall promptly deliver to
Statesman all proceeds of any Purchased Receivables then held by the
Cooperative. From and after receipt of such request, the Cooperative will
promptly forward to Statesman all checks, drafts, cash and other remittances
received by it in payment of or on account of any Purchased Receivable.
If the Cooperative shall fail to notify account obligors to make
payments to Statesman as herein provided, and in any event upon the occurrence
of an Event of Default, Statesman may so notify such account obligors.
SECTION 2.10. REPURCHASE OF RECEIVABLES. If the Cooperative shall at
any time determine not to sell to Statesman the Retail Accounts arising out of
sales made at any Retail Service, the Cooperative will with the consent of
Statesman promptly repurchase from Statesman all Retail Accounts arising out of
sales made at such Retail Service which Statesman has previously purchased from
it. The purchase price for such Retail Accounts will be the Balances Owed on the
Retail Accounts giving credit for all payments received by Statesman to the date
of sale to the Cooperative.
ARTICLE III
INSTALLMENT SALES FINANCING
SECTION 3.01. GENERAL. Statesman will from time to time, upon the terms
and subject to the conditions contained in this Agreement, purchase from the
Cooperative Approved Contracts. Statesman may from time to time, at its option
upon the terms and subject to the conditions contained in this Agreement,
purchase from the Cooperative other Installment Sales Contracts arising out of
the sale of goods by Retail Services, which Installment Sales Contracts
Statesman has determined in its sole and absolute discretion to be acceptable
(which contracts are herein referred to as "Eligible Contracts"). Nothing
contained herein shall obligate Statesman to purchase any Installment Sales
Contract other than those Installment Sales Contracts which have been approved
in advance by Statesman as evidenced by a Statesman Approval Number (which
contracts are herein referred to as "Approved Contracts").
SECTION 3.02. NON-RECOURSE PURCHASES. Statesman will from time to time
upon the terms and subject to the conditions contained in this Agreement,
purchase Approved Contracts from the Cooperative. Such purchases shall be
without recourse to the Cooperative except as specifically provided for herein.
SECTION 3.03. FULL RECOURSE OPTION.
(1) Statesman may from time to time, at its option upon the terms and
subject to the conditions contained in this Agreement, purchase from the
Cooperative Installments Sales Contracts arising out of the sales of goods by
Retail Services, which Installment Sales Contracts Statesman has determined in
its sole and absolute discretion to be acceptable (which contracts are herein
referred to as "Eligible Contracts"), notwithstanding the fact that such
contracts have not been previously approved by Statesman and do not bear an
appropriate Statesman Approval Number. All purchases of such contracts shall be
subject to full recourse to the Cooperative as provided in paragraph (2) of this
Section 3.03.
(2) If any installment on any Installment Sales Contract purchased
under the provisions of this Section 3.03 is not paid within ninety (90) days of
the date it is scheduled to be paid, upon written demand by Statesman, the
Cooperative will repurchase such contract immediately for its Net Balance.
SECTION 3.04. PURCHASE PRICE; DELIVERY OF PURCHASED CONTRACTS. The
purchase price for Approved Contracts and Eligible Contracts shall be the Net
Balance or such other amount as may from time to time be agreed to in writing by
the Cooperative and Statesman. Upon receipt of an Approved Contract or Eligible
Contract duly endorsed and all related credit information, and the satisfaction
of all the conditions set forth in Article VI hereof, provided no Event of
Default shall have occurred and be continuing, and provided Statesman shall not
then be entitled to require that the Cooperative repurchase Purchased Contracts
under the provisions of Section 3.03 hereof, Statesman shall pay the Cooperative
in cash the purchase price for each such Approved Contract or Eligible Contract.
Promptly thereafter, the Cooperative will notify each obligor on each such
Purchased Contract to make all future payments to Statesman at its Headquarters.
The Cooperative authorizes Statesman to insert its name, or the name of any
other assignee, in the space provided therefor in the assignment clause of all
Purchased Contracts and to return to the Cooperative all Installment Sales
Contracts not purchased. Statesman will identify in writing those contracts it
agrees to purchase and will return those contracts it declines to purchase. The
Cooperative is authorized to cancel the endorsement on each Installment Sales
Contract which Statesman does not purchase.
SECTION 3.05. WARRANTIES.
(1) By the delivery and sale of each such Installment Sales Contract
under the provisions of Section 3.02 or Section 3.03, the Cooperative warrants
to Statesman that:
(a) It has good title to such Installment Sales Contract or is
authorized to obtain payment on behalf of one who has good title and the sale
and transfer thereof are otherwise rightful;
(b) Each such Installment Sales Contract is a binding
obligation arising from the sale of merchandise by a Retail Service in the
ordinary course of business as described in the contract to a person or entity
specified therein as the obligor and constitutes the valid and legally binding
obligation of such obligor enforceable in accordance with its terms; such
contract states the full agreement of the parties and arises out of legally
sufficient consideration;
(c) All signatures on such Installment Sales Contract are
genuine or authorized and all obligors thereon have the capacity to execute such
contract;
(d) Such Installment Sales Contract has not been materially
altered;
(e) No obligor on such Installment Sales Contract has any
defense against the Cooperative which is good against it;
(f) The conduct of the Cooperative in making the sale out of
which each contract arose was in all material respects in compliance with all
applicable laws and was not induced by fraud, false or misleading
representations or any other manner of unfair or deceptive trade practices or
other unlawful conduct;
(g) All credit information concerning the obligors on such
contracts was obtained and recorded in strict compliance with all applicable
state and federal laws, and the Cooperative has no reason to believe that any
such information is false, misleading or incomplete in any respect;
(h) All current credit information with respect to such
obligors has been accurately reported to Statesman;
(i) The Installment Sales Contract forms provided by Statesman
have not been altered, modified or supplemented in any respect;
(j) All information required to be disclosed in such forms has
been accurately recorded therein and the Cooperative has complied with the
Truth-in-Lending Act and all other applicable disclosure laws, federal and
state;
(k) No fee has been charged with respect to any contract and
no such contract includes any deferred payment price or other charge which
violates any applicable usury law or consumer protection law;
(l) Such Installment Sales Contract contains all of the terms
and conditions of the agreement between the Cooperative and the obligors with
respect to such purchase and the Cooperative has not entered into any other
agreement with the obligor with respect to such contract and has not waived or
agreed to waive any term or condition contained in the form or taken any other
action which might result in any constructive or implied waiver or modification
thereof;
(m) Each down payment shown in each Installment Sales Contract
has actually been received in cash from the obligor or a person paying such
amount on behalf of the obligor and no part thereof has been directly or
indirectly advanced by the Cooperative;
(n) Each trade-in shown in each Installment Sales Contract has
actually been delivered to the Cooperative and the amount recorded in the
contract accurately reflects the agreed value thereof;
(o) All aspects of the sale have been in strict compliance
with all applicable consumer protection acts and regulations, including without
limitation the Truth-in-Lending Act, the Equal Credit Opportunity Act and any
applicable state law;
(p) All applicants for credit have been given all notices
required by applicable law;
(q) The Cooperative has no knowledge of any insolvency
proceeding involving any party obligated on such Installment Sales Contract; and
(r) Such Installment Sales Contract is not subject to any
claim, lien, security interest, charge or other encumbrance in favor of any one
other than the Cooperative and Statesman, and the Cooperative has not offered
such Contract for sale to any purchaser other than Statesman.
(2) The Cooperative further represents and warrants that it is and
shall be solvent at the time of each sale of any Installment Sales Contract.
SECTION 3.06. REMEDIES OF STATESMAN WITH RESPECT TO INSTALLMENT SALES
CONTRACTS PURCHASED UNDER THE PROVISIONS OF THIS ARTICLE THREE.
(1) Breach of Warranty. If any warranty made by the Cooperative under
the provisions of Section 3.05 of this Agreement shall prove to have been false
in any material respect as it relates to any Purchased Contract, the Cooperative
covenants and agrees promptly upon written demand by Statesman to purchase such
Purchased Contract for the Net Balance in immediately available funds. Statesman
covenants and agrees that upon receipt of such payment it will cancel the
endorsement and deliver such Purchased Contract to the Cooperative at the
address stated in Section 11.07 of this Agreement. Statesman represents and
warrants to the Cooperative with respect to each such Installment Sales Contract
that the Net Balance paid to it is the Net Balance of such contract and that
except as disclosed in a writing accompanying such contract, Statesman has not
released any party to such contract from its obligation thereunder, released any
security interest directly securing such contract or consented to any reduction
in the amount owing thereon or the extension of the due date for any payment or
installment thereunder. Such transfer from Statesman to the Cooperative will be
without recourse and except as provided in the immediately preceding sentence,
without representation or warranty of any nature or type.
(2) Determination of Breach. For the purpose of determining whether or
not any warranty made by the Cooperative under the provisions of Section 3.05
was false and that the Cooperative is therefore obliged to repurchase any
Purchased Contract, the Cooperative shall be bound by a written statement of an
officer of Statesman that in the reasonable judgment of Statesman it has
determined that any obligor under any Purchased Contract has refused to make any
scheduled payment under such contract because of any fact which has been
represented as otherwise by the Cooperative to Statesman under the provisions of
Section 3.05 hereof.
SECTION 3.07. CONTRACT FORMS. Statesman will provide and the
Cooperative will use forms of contracts and credit applications previously
approved by Statesman. In the event Statesman determines that any previously
approved form should not be used, it will so advise the Cooperative and the
Cooperative will discontinue any use of such form.
SECTION 3.08. PAYMENTS. The Cooperative will cause each Retail Service
on the day of receipt of any payment on any Purchased Contract to report such
payment to Statesman at its Headquarters. The Cooperative covenants and agrees
that all payments received by it on Purchased Contracts will be charged to the
Cooperative's intercompany accounts payable to Statesman and paid to Statesman
in collected funds no less frequently than every five (5) business days. In the
event the Cooperative shall fail to endorse any check or other item when
necessary to permit its collection, Statesman is authorized, as its
attorney-in-fact to make such endorsement on behalf of the Cooperative.
SECTION 3.09. OBLIGOR COMPLAINTS AND RETURNED MERCHANDISE.
(1) The Cooperative shall, within three (3) Business Days of its
receipt, provide Statesman with a copy of any written complaint from any
obligor(s) relating to any Purchased Contract or any merchandise or service
purchased thereunder;
(2) If the purchaser under any Purchased Contract returns merchandise,
for any reason, within 10 days from the date of the sale, the Cooperative will
fully reimburse such purchaser for any down payment and immediately repurchase
the Purchased Contract from Statesman for its Net Balance.
SECTION 3.10. MODIFICATIONS, EXTENSIONS. Statesman may, without
affecting the agreements of the Cooperative herein, change, modify, extend or
renew the dates and amounts of the periodic installment payments in any
Purchased Contract.
SECTION 3.11. WARRANTY, SERVICE, OR SIMILAR AGREEMENTS. The Cooperative
covenants and agrees to indemnify and hold Statesman harmless from any and all
losses arising out of the breach of any performance or extended warranties and
all service or similar agreements made by Manufacturer, the Cooperative, or any
other Person relating to merchandise which is the subject of any Purchased
Contract, even if any such warranty, service, or similar agreements are not
immediately effective. Unless such agreement expressly provides otherwise, the
Cooperative agrees to provide repairs and service to the purchaser of the
merchandise at its usual rates of charge.
SECTION 3.12. REPOSSESSION.
(1) The Cooperative will, at Statesman's request, act as its agent in
the repossession of any property described in any Purchased Contract in
accordance with all applicable laws and in that capacity take certain actions,
including the transportation of the property from its location to the
Cooperative's place of business, repair and restoration of the property to a
marketable condition, and storage, without storage fee. Statesman will
compensate the Cooperative for its reasonable actual costs in such
transportation, repair, and restoration, except as covered by an extended
warranty or service agreement. In the event Statesman directs the Cooperative on
its behalf to sell the property, it will pay the Cooperative such commission as
is agreed upon from time to time by the Cooperative and Statesman and as
evidenced by Statesman's letter. The Cooperative agrees to sell said property in
accordance with the applicable provisions of the Uniform Commercial Code, as it
may be amended from time to time, and other applicable law.
(2) Where an extended warranty or service agreement is included in the
sales contract purchased, the Cooperative hereby agrees to perform at its
expense or have performed such warranty or service work under the terms of such
extended warranty or service agreement. A pro rata refund will be paid in cash
to Statesman of the unearned identifiable charge assessed for the extended
warranty or service agreement, which will then be credited to any balance due on
such Purchased Contract.
ARTICLE IIIA
CREDIT CARD FINANCING
Section 3A.01. Approval of Customer's Credit. Statesman agrees to
review information on customers of the Cooperative, Local Cooperatives and
Dealerships recorded on its Statesman Revolving Credit Card Application and
Agreement forms and submitted to it by the Cooperative, a Local Cooperative or a
Dealership and to approve extending open-end or revolving credit to such
customers in a specific dollar amount or to deny such credit.
Section 3A.02. Purchases By Credit Card Customers. After Statesman has
approved the credit of a customer in the Southern States Credit Card Program, so
long as the customer pays his or her account in accordance with the terms
thereof established from time to time by Statesman and otherwise complies with
the terms thereof and is not bankrupt or insolvent, Statesman will extend credit
to such customer up to the preapproved dollar limit for the purchase of goods
and services from the Cooperative, a Local Cooperative or a Dealership.
Section 3A.03. Approval of Requests to Change Credit. Statesman agrees
upon request of the Cooperative, a Local Cooperative or a Dealership to review
information on customers of the Cooperative, such Local Cooperative or such
Dealership and to approve changing the amount of open-end or revolving credit
for such customers to a specific dollar amount or to deny such change.
Section 3A.04. Settlement for Purchases. Statesman will periodically
settle with the Cooperative and each Local Cooperative and Dealership for
purchases made from the Cooperative or such Local Cooperative or Dealership, as
the case may be, under the Southern States Credit Card Program by periodically
crediting to the Cooperative or such Local Cooperative or Dealership, as the
case may be, the aggregate amount of such purchases since the last settlement
date, net of the applicable merchant's discount as may be agreed to from time to
time by the Cooperative or such Local Cooperative or Dealership, as the case may
be, and Statesman. All sales under the Southern States Credit Card Program made
in accordance with the instructions provided from time to time by Statesman to
the Cooperative, the Local Cooperatives and the Dealerships will be without
recourse. Statesman may, however, require the Cooperative, a Local Cooperative
or a Dealership to reimburse it for certain purchases as may be agreed to from
time to time by Statesman and the Cooperative, such Local Cooperative or such
Dealership. The parties acknowledge and agree that in the event of any conflict
between the terms hereof and any other agreement between the parties or between
Statesman and a Local Cooperative or a Dealership with respect to such rights
and obligations, the terms of the other agreement shall govern.
ARTICLE IIIB
ASSET BASED FINANCING
SECTION 3B.01. GENERAL. From time to time at the request of the
Cooperative, Statesman may extend asset based financing to customers of the
Cooperative. Such financing shall be extended pursuant to separate agreements to
be entered into between each such customer and Statesman.
SECTION 3B.02. TERMS AND CONDITIONS. Nothing contained herein shall
obligate Statesman to extend any asset based financing to any person. All
decisions with respect to asset based financing shall be made by Statesman in
its sole discretion, subject to such agreements as Statesman may enter into from
time to time with its asset based borrowers.
ARTICLE IIIC
PERSONAL PROPERTY LEASING
SECTION 3C.01. APPROVAL OF CUSTOMER'S CREDIT. Statesman agrees to
review information on customers of the Cooperative, Local Cooperatives and
Dealerships recorded on its Statesman application forms for the lease of liquid
propane tanks (or other personal property then being leased by Statesman) and
submitted to it by the Cooperative, a Local Cooperative or a Dealership and to
approve leasing such property to such customers or to determine not to lease
such property.
SECTION 3C.02. PAYMENT FOR LEASED PROPERTY. If Statesman approves the
lease of personal property, it will promptly notify the Cooperative or the Local
Cooperative or Dealership which requested such lease, and if it has received a
properly completed Lease Agreement appropriately signed by the customer and the
Cooperative, the Local Cooperative or the Dealership, as the case may be, it
will remit to the Cooperative, or to the Local Cooperative or Dealership which
requested such lease the invoice price of the leased equipment.
SECTION 3C.03. COLLECTION OF RENT. The Cooperative, or the Local
Cooperative or Dealership which requested the lease will serve as the agent of
Statesman in the collection of the monthly rent due under the lease and will
remit to Statesman monthly from the proceeds of liquid propane sold to the
lessee the monthly rentals due under the lease.
ARTICLE IV
FINANCING WHOLESALE ACCOUNTS
SECTION 4.01. PURCHASE OF WHOLESALE ACCOUNTS. Statesman shall from time
to time, upon the terms and subject to the conditions contained in this
Agreement, purchase Wholesale Accounts from the Cooperative, provided that
Statesman has determined in its sole and absolute discretion that such Wholesale
Accounts are acceptable to it and as to which approval has not been withdrawn by
Statesman as provided below. All such purchases shall be made without recourse
to the Cooperative except as provided in Sections 4.09 and 4.11 and except so
far as Statesman shall have the right to make charges to the Wholesale Reserve
Account as provided in Section 4.05.
SECTION 4.02. REPAYMENT TERMS OFFERED ON CREDIT SALES. The Cooperative
agrees to provide Statesman with a comprehensive list of all credit repayment
plans (the "Repayment Terms") which it plans to offer to Cooperative Wholesale
Account customers. Statesman will review the Repayment Terms to be offered prior
to their implementation by the Cooperative and will advise the Cooperative of
its acceptance of the proposed Repayment Terms. Statesman will purchase only
those invoices which are in conformity with the preestablished Repayment Terms
which have been approved by Statesman. The Cooperative will not make any changes
in the Repayment Terms offered to the Wholesale Account customers without first
obtaining Statesman's written approval.
The requested credit line, anticipated sales volume, financial
information, credit application and any other information which Statesman in its
sole discretion may request shall be obtained by the Cooperative and each and
every sale to Wholesale Accounts shall be made only in accordance with the
Statesman approved Repayment Terms and the Statesman Approval, which may be
withdrawn at any time before actual delivery of merchandise or rendition of
services to the customer.
SECTION 4.03. PROCEDURES.
(1) Prior to the generation of new receivables, the Cooperative will
provide to Statesman information concerning customers to which the Cooperative
plans to sell merchandise or render a service which will result in the creation
of a Wholesale Receivable. Statesman will review the information and determine
in its sole and absolute discretion the terms under which the Cooperative may
sell to the customer such that Statesman will purchase the resulting Wholesale
Account (the "Statesman Approval"). Any customer which has been approved by
Statesman will hereinafter be referred to as an "Approved Wholesale Account."
Statesman will notify the Cooperative in writing of its decision.
(2) Not later than 10:00 a.m. (Richmond, Virginia, time) on each
Business Day, the Cooperative will provide to Statesman information on Approved
Wholesale Accounts being offered to Statesman for purchase. This information
shall include all information which Statesman may reasonably request and shall
be in a form satisfactory to Statesman.
(3) Not later than 12 noon (Richmond, Virginia, time) on the same
Business Day, Statesman will confirm to the Cooperative those Approved Wholesale
Accounts it is purchasing and will prepare and deliver its check drawn on
Crestar Bank, Richmond, Virginia, or other bank satisfactory to the Cooperative,
or make an ACH transfer or wire transfer, for the face amount of the Wholesale
Accounts which Statesman is purchasing less any amount to be placed in the
Wholesale Reserve Account pursuant to Section 4.04 and less the Purchase
Discount for Wholesale Accounts. Statesman may choose not to pay for any
Wholesale Account evidenced by a promissory note or other instrument unless such
note or other instrument has been endorsed and delivered to Statesman.
(4) For purposes of this Article IV, the Purchase Discount for
Wholesale Accounts shall be the product obtained by multiplying the outstanding
balance of the Wholesale Accounts being purchased by (i) the average Historical
Charge Off Percentage of the Cooperative for Wholesale Accounts for the three
preceding fiscal years times (ii) the sum of 1 plus the Average Total
Delinquency Percentage Variance for Wholesale Accounts, plus the anticipated net
interest charges for the current month relating to the outstanding purchased
Wholesale Accounts. Such amount shall be computed according to the following
formula:
Discount = Wholesale Accounts being purchased x [(aHCO%) x
(1 + ADV)] + AIC
where
aHCO% = average Historical Charge Off Percentage for
Wholesale Accounts for the three preceding fiscal
years which for purposes of this calculation shall
not be less than .35% or such other percentage as may
be from time to time agreed to by the Cooperative and
Statesman.
ADV = Average Total Delinquency Percentage Variance for
Wholesale Accounts.
AIC = the amount by which the anticipated interest
charges for the current month for borrowings relating
to outstanding Wholesale Accounts purchased by
Statesman exceed the finance charges anticipated to
be collected during such month by Statesman on
Wholesale Accounts.
(5) Upon receipt of such payment, the Cooperative shall sell, assign,
and convey to Statesman and without any further action on its part, shall be
deemed to have sold, assigned and conveyed to Statesman each such Approved
Wholesale Account, and all of the Cooperative's interest in the goods
represented by such Wholesale Accounts and in all goods that may be returned by
customers obligated on such Wholesale Accounts, all its rights as an unpaid
vendor or lienor, all its rights of stoppage in transit, replevin and
reclamation relating thereto, all its rights in and to all security therefor and
guarantees thereof, and guarantees thereto, all of its rights against third
parties with respect thereto, and all other proceeds thereof, cash or non-cash.
Any goods so recovered or returned shall be segregated in a manner acceptable to
Statesman and held for Statesman's account as owner. The Cooperative shall
notify Statesman promptly of all such returned or recovered goods.
(6) Statesman may at any time and from time to time revoke the
Statesman Approval with respect to any customer of the Cooperative or reduce the
amount of Wholesale Accounts owing from such customer which it will purchase
from the Cooperative or change the Repayment Term approved for such customer. It
will promptly notify the Cooperative of its decision to revoke the Statesman
Approval for any Wholesale Account, or to reduce the amount of such Account or
change terms and Statesman shall not be obligated to purchase any Wholesale
Account arising out of the delivery of any merchandise to or the commencement of
any service for such obligor which occurs after such notice is given to the
Cooperative except as Statesman shall have otherwise agreed. The revocation or
alteration of the Statesman Approval with respect to a customer shall not affect
the right of the Cooperative to extend credit for merchandise or services to any
customer, but all payments received from such customer shall be applied to
earliest invoices first, and payments shall be applied to invoices included in
Wholesale Accounts purchased by Statesman before they are applied to invoices
arising after the revocation or alteration of the Statesman Approval with
respect to such customer or the reduction of the amount of credit approved for
such customer.
SECTION 4.04. WHOLESALE RESERVE ACCOUNT. Statesman shall place in a
reserve account (the "Wholesale Reserve Account") an amount not to exceed
one-eighth of one percent (0.125%) of the aggregate outstanding balance on each
invoice it elects to purchase, provided, however that in no event shall any
additional amount be deducted from the amount paid to the Cooperative under this
Article IV or placed in the Wholesale Reserve Account if the aggregate amount in
the Wholesale Reserve Account is equal to or greater than one quarter of one
percent (0.25%) of the aggregate unpaid balance of all Wholesale Accounts which
Statesman has purchased from the Cooperative (including the invoices being
purchased on such date). Funds in the Wholesale Reserve Account need not be
segregated from other funds of Statesman. If at the end of any fiscal year of
Statesman, the balance in the Wholesale Reserve Account after charges to the
Reserve Account as provided in Section 4.05 is greater than one-eighth of one
percent (0.125%) of the balance owing on Wholesale Accounts which Statesman has
purchased from the Cooperative, no Event of Default shall have occurred and be
continuing and no obligation of the Cooperative to Statesman is then due and
payable, Statesman will upon request of the Cooperative remit such excess to the
Cooperative.
SECTION 4.05. CHARGES TO WHOLESALE RESERVE ACCOUNT. Statesman may in
its sole and absolute discretion charge losses on Purchased Wholesale Accounts
related to Credit Risk as set forth in Section 4.06 against the Wholesale
Reserve Account. Statesman agrees to add to the Wholesale Reserve Account the
amount received as a recovery less associated collection costs on any losses on
purchased Wholesale Accounts which were previously charged to the Wholesale
Reserve Account. Statesman shall notify the Cooperative promptly in writing of
any such reduction in the Wholesale Reserve Account. As of the end of each
month, Statesman will provide the Cooperative with a report of transactions in
the Wholesale Reserve Account during such month showing the balance in such
account as of the end of such month.
SECTION 4.06. CREDIT RISK. On all Purchased Wholesale Accounts,
Statesman agrees to assume any loss which is due solely to the financial
inability of the customer to pay at maturity (the "Credit Risk") unless the
representation contained in paragraph (l)(i) of Section 4.10 was not true at the
time Statesman purchased such Wholesale Account, provided the customer has
received and accepted the goods and/or services which gave rise to such
Purchased Wholesale Account without any Dispute. The term "Dispute" shall mean
any dispute, deduction, claim, offset, defense or counterclaim of any kind,
including, without limitation, any dispute relating to goods or services already
paid for or relating to any obligation to the Cooperative other than the
Wholesale Account on which payment is being withheld.
SECTION 4.07. FACILITY FEE FOR PURCHASED WHOLESALE ACCOUNTS. The
Cooperative will pay to Statesman by the tenth Business Day of each month, or
such later day as may be agreed to by Statesman, a Facility Fee in such amount
as shall be agreed upon from time to time by the Cooperative and Statesman.
SECTION 4.08. PAYMENTS FROM THE COOPERATIVE. If any remittances on
Wholesale Accounts which have been purchased by Statesman are made directly to
the Cooperative, the Cooperative shall immediately deliver them to Statesman in
Richmond, Virginia, in precisely the form received, and until they are so
delivered they shall be held in trust by the Cooperative for the benefit of
Statesman.
SECTION 4.09. DISPUTES. The Cooperative will promptly notify Statesman
of and settle at the Cooperative's cost and expense, including attorneys' fees,
all Disputes relating to Wholesale Accounts which Statesman has purchased.
However, if any Dispute is not settled by the Cooperative within sixty days
after the invoice date or within such shorter period as Statesman may determine,
Statesman may settle, compromise or litigate such Dispute in Statesman's or the
Cooperative's name upon such terms as Statesman in Statesman's sole discretion
may deem advisable and for the Cooperative's account and risk. Statesman may
also at its discretion and without notice to the Cooperative take possession of
and sell any returned goods at such prices and upon such terms as Statesman
deems advisable. The Cooperative shall promptly pay to Statesman any deficiency,
and all costs and expenses, including attorneys' fees, resulting from any such
Dispute, and if the Cooperative fails to pay such amount, Statesman may deduct
it from any payment it is required to make to the Cooperative under the terms of
this Agreement.
SECTION 4.10. WARRANTIES.
(1) With respect to each Approved Wholesale Account which the
Cooperative offers to sell under this Article IV, the Cooperative warrants to
Statesman that:
(a) It has good title to such Wholesale Account, there is no
restriction on its sale and transfer and the sale and transfer thereof is
otherwise rightful;
(b) Such Wholesale Account is a binding obligation arising
from the sale of merchandise or the provision of a service by the Cooperative in
the ordinary course of business, as described in the invoice relating to such
transaction, to a person or entity specified therein as the obligor, arises out
of legally sufficient consideration, and constitutes the valid and legally
binding obligation of such obligor enforceable in accordance with its terms;
(c) No invoice has not been materially altered;
(d) The obligor on such Wholesale Account has no defense
against the Cooperative which is good against it;
(e) The conduct of the Cooperative in making the sale or sales
out of which such Wholesale Account arose was in all material respects in
compliance with all applicable laws and was not induced by fraud, false or
misleading representations or any other manner of unfair or deceptive trade
practices or other unlawful conduct;
(f) All credit information concerning the obligor on such
Wholesale Account was obtained and recorded in strict compliance with all
applicable state and federal laws, and the Cooperative has no reason to believe
that any such information is false, misleading or incomplete in any respect;
(g) All current credit information with respect to such
obligor has been accurately reported to Statesman;
(h) The terms and conditions of the agreement between the
Cooperative and the obligor with respect to such Wholesale Account, including
the Repayment Terms, are not materially different from those approved by
Statesman for such obligor, and the Cooperative has not amended or waived or
agreed to amend or waive any such term or condition or taken any other action
which might result in any constructive or implied waiver or modification
thereof;
(i) The Cooperative has no knowledge of any insolvency
proceeding involving the obligor on such Wholesale Account; and
(j) Such Wholesale Account is not subject to any claim, lien,
security interest, charge or other encumbrance in favor of any one other than
the Cooperative and Statesman, and the Cooperative has not offered such
Wholesale Account for sale to any purchaser other than Statesman.
(2) The Cooperative further represents and warrants that it is and
shall be solvent at the time of each sale of Wholesale Accounts.
SECTION 4.11. REMEDIES OF STATESMAN WITH RESPECT TO WHOLESALE ACCOUNTS
PURCHASED UNDER THE PROVISIONS OF THIS ARTICLE FOUR.
(1) Breach of Warranty. If any warranty made by the Cooperative under
the provisions of Section 4.10 of this Agreement shall prove to have been false
in any material respect as it relates to any Wholesale Account purchased by
Statesman, the Cooperative covenants and agrees promptly upon written demand by
Statesman to purchase such Wholesale Account for the net balance owing thereon
in immediately available funds. Statesman covenants and agrees that upon receipt
of such payment it will promptly transfer and assign such Wholesale Account and
all proceeds thereof to the Cooperative. Statesman represents and warrants to
the Cooperative with respect to each such Wholesale Account it sells back to the
Cooperative that the net balance paid to it is the net balance owing on such
Wholesale Account and that except as disclosed in a writing at the time of such
sale, Statesman has not released the obligor thereon of its obligation
thereunder, or consented to any reduction in the amount owing thereon or the
extension of the due date for any payment or installment thereunder. Such
transfer from Statesman to the Cooperative will be without recourse and except
as provided in the immediately preceding sentence, without representation or
warranty of any nature or type.
(2) Determination of Breach. For the purpose of determining whether or
not any warranty made by the Cooperative under the provisions of Section 4.10
was false and that the Cooperative is therefore obliged to repurchase any
Wholesale Account, the Cooperative shall be bound by a written statement of an
officer of Statesman that in the reasonable judgment of Statesman it has
determined that any obligor under any Wholesale Account has refused to make any
scheduled payment under such contract because of any fact which has been
represented as otherwise by the Cooperative to Statesman under the provisions of
Section 4.10 hereof.
SECTION 4.12. WHOLESALE ACCOUNTS WHICH ARE NOT APPROVED. Statesman may
from time to time purchase Wholesale Accounts other than Approved Wholesale
Accounts at such price as may from time to time be agreed to by the parties
hereto. Except for the price and the absence of any obligation of Statesman to
purchase such Wholesale Accounts, and to the extent the parties may otherwise
agree at the time of such sale, all aspects of such sales shall be similar to
the sales of Approved Wholesale Accounts.
SECTION 4.13. NOTICE TO OBLIGORS; STATEMENTS. Statesman may notify the
obligor on each Wholesale Account that Statesman purchases from the Cooperative
that such account has been purchased by Statesman and that all payments with
respect to such Wholesale Accounts and inquiries with respect thereto should be
addressed to Statesman at its address. Such notice may at the option of
Statesman be given in the name of the Cooperative or of Statesman. Thereafter,
Statesman will maintain the records with respect to each such account and send
appropriate statements to each obligor thereon.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce Statesman to purchase Receivables, Installment Sales
Contracts and Wholesale Accounts from it, the Cooperative represents and
warrants to Statesman as follows:
SECTION 5.01. SUBSIDIARIES. The Cooperative has the following
Subsidiaries and none others:
Name of Subsidiary Percentage Owned by Cooperative
Mountain State Greenhouses, Inc. 100%
SSC Insurance Agency, Inc. 100%
Southern States Holdings, Inc. 100%
Southern States Underwriters, Inc. 100%
Virginia Seed Service, Inc. 100%
Xxxxxx, Inc. 100%
SECTION 5.02. GOOD STANDING. Each of the Cooperative and its
Subsidiaries is a corporation organized and existing in good standing under the
laws of its respective jurisdiction of incorporation and each has the corporate
power to own its property and to carry on its business as now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it therein or in
which the transaction of its business makes such qualification necessary.
SECTION 5.03. CORPORATE AUTHORITY. The Cooperative has full power and
authority to enter into this Agreement, to sell Receivables, Approved Contracts,
Eligible Contracts and Wholesale Accounts, to execute and deliver Receivables
Certificates and instruments conveying such Receivables and contracts, to
endorse contracts and to incur the obligations provided for herein, all of which
have been duly authorized by all proper and necessary corporate action. No
consent or approval of stockholders or of any public authority is required as a
condition to the validity of this Agreement or the sale of any Receivable,
Installment Sales Contract or Wholesale Account.
SECTION 5.04. BINDING AGREEMENTS. This Agreement constitutes, and each
endorsement by the Cooperative of a Purchased Contract, when made and such
Purchased Contract is delivered pursuant hereto for value received, will
constitute, the valid and legally binding obligations of the Cooperative
enforceable against the Cooperative in accordance with its terms.
SECTION 5.05. LITIGATION. There are no proceedings pending or, so far
as the officers of the Cooperative know, threatened before any court or
administrative agency that, in the opinion of the officers of the Cooperative,
will materially adversely affect the financial condition or operations of the
Cooperative or any of its Subsidiaries.
SECTION 5.06. NO CONFLICTING AGREEMENTS. There is no charter, bylaw or
preference stock provision of the Cooperative or any of its Subsidiaries and no
provision of any existing mortgage, indenture, contract or agreement binding on
the Cooperative or any of its Subsidiaries or affecting their respective
properties that would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement or the sale or transfer
of any Receivable, Installment Sales Contract or Wholesale Account.
SECTION 5.07. BALANCE SHEET. The consolidated balance sheet of the
Cooperative and its Subsidiaries as of June 30, 1997, and the related statements
of income and retained earnings and changes in cash flow for the period then
ended certified by Coopers & Xxxxxxx L.L.P., and the unaudited consolidated
balance sheet of the Cooperative and its Subsidiaries as of September 30, 1997,
and the related statement of income for the period then ended, heretofore
delivered to Statesman, are complete and correct and fairly present the
financial condition of the Cooperative and its Subsidiaries and the results of
their operations and transactions in their surplus accounts as of the dates and
for the periods referred to therein and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the period involved. There are no liabilities, direct or indirect,
fixed or contingent of the Cooperative or any of its Subsidiaries as of the
dates of such balance sheets that are not reflected therein or in the notes
thereto. There has been no material adverse change in the financial condition or
operations of the Cooperative since the dates of those balance sheets, and there
has been no other material adverse change in the Cooperative.
SECTION 5.08. LICENSES. The Cooperative has all licenses necessary or
desirable for it to conduct its businesses as presently being conducted and such
businesses are in compliance with all applicable laws in all material respects.
SECTION 5.09. EMPLOYEE BENEFIT PENSION PLANS. No fact, including but
not limited to, any Reportable Event as defined in Section 4043 of ERISA, exists
in connection with any employee benefit pension plan of the Cooperative covered
by said Act, which might constitute grounds for the termination of any such plan
by the PBGC or for the appointment of any trustee to administer any such plan by
the appropriate United States District Court.
SECTION 5.10. RECEIVABLES FREE OF LIENS. Except as the Cooperative has
expressly disclosed to Statesmen in writing, no Receivable is subject to any
mortgage, pledge, security interest or other lien or encumbrance of any kind.
ARTICLE VI
CONDITIONS
The Cooperative will not offer to sell any Receivables, Installment
Sales Contracts or Wholesale Accounts to Statesman unless:
SECTION 6.01. LEGAL MATTERS. It shall have satisfied any legal concerns
reported to the Cooperative by Statesman or its counsel with respect to the
purchase of any Receivable, Installment Sales Contract or Wholesale Account.
SECTION 6.02. EVIDENCE OF CORPORATE ACTION. Statesman shall have
received certified copies of papers evidencing all corporate action taken by the
Cooperative to authorize this Agreement and the sale of Receivables, Installment
Sales Contracts and Wholesale Accounts, and such other papers as Statesman may
reasonably require.
SECTION 6.03. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties set forth in Article V hereof shall be true and
correct as of the date of such offer, except to the extent they relate solely to
an earlier date.
SECTION 6.04. ABSENCE OF DEFAULTS. No Event of Default as defined in
Section 10.01 shall have occurred and be continuing and no event shall have
occurred or condition exist which with the giving of notice or lapse of time or
both would constitute such an Event of Default.
SECTION 6.05. CERTIFICATE OF INCUMBENCY. The Cooperative shall have
delivered to Statesman in a form satisfactory to Statesman a list setting forth
the names and signatures of each officer or employee of the Cooperative who is
authorized to sign Receivables Certificates, to transfer Receivables and to
transfer and endorse Installment Sales Contracts, together with the signature of
such person.
SECTION 6.06. FINANCING STATEMENTS. Statesman shall have received
receipted copies of financing statements in appropriate form and showing they
have been filed in the appropriate offices to satisfy the filing requirements of
the applicable Uniform Commercial Code relating to the sale of accounts.
SECTION 6.07. OPINION OF COUNSEL FOR THE COOPERATIVE. Statesman shall
have received a favorable written opinion of counsel for the Cooperative dated
as of the date of the first purchase of Receivables, Installment Sales Contracts
or Wholesale Accounts hereunder, and, if so requested by Statesman, annually
thereafter, as to all matters referred to in Article V, except Sections 5.07,
5.08 and 5.09, that financing statements in the appropriate form have been filed
in the appropriate offices in which to file financing statements for any
Receivables sold by the Cooperative and stating that as of the date of such
opinion the indices to financing statements in such offices do not disclose any
financing statements of record showing the Cooperative or any of its
Subsidiaries as debtor and including a description of any accounts, contract
rights, general intangibles or other rights to the payment of money of such
debtor.
SECTION 6.08. CREDIT STANDARDS. The Cooperative shall have delivered to
Statesman a written statement of its then current standards for extending credit
to its customers and its collection policy for Receivables, Installment Sales
Contracts and Wholesale Accounts, together with any applicable additions
thereto, deletions therefrom or modifications thereof.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Cooperative covenants and agrees with Statesman that so long as the
Cooperative may offer to sell Receivables, Installment Sales Contracts or
Wholesale Accounts to Statesman hereunder and until payment in full of all
Purchased Receivables, Purchased Contracts and Purchased Wholesale Accounts and
performance of all other obligations of the Cooperative hereunder, the
Cooperative will:
SECTION 7.01. FINANCIAL STATEMENTS. Furnish to Statesman (i) as soon as
available, but in no event more than forty-five (45) days after the end of each
quarterly period in each of its fiscal years, a balance sheet of the Cooperative
as of the close of such quarter and a profit and loss statement to the close of
such quarter, certified by the chief financial officer of the Cooperative and
accompanied by a certificate of that officer stating whether any event has
occurred that constitutes an Event of Default hereunder or that would constitute
such an Event of Default with the giving of notice or the lapse of time, or
both, and, if so, stating the facts with respect thereto; (ii) as soon as
available, but in no event more than ninety (90) days after the close of each of
the Cooperative's fiscal years, a copy of the annual audit report of the
Cooperative in reasonable detail, substantially similar to the financial
statements referred to in Section 5.07 above, prepared in accordance with
generally accepted accounting principles applied on a basis consistent with that
of the preceding year and certified by Coopers & Xxxxxxx L.L.P. or other
independent certified public accountants of recognized national standing, which
report shall include a balance sheet of the Cooperative as of the end of such
fiscal year, a statement of income and retained earnings for such fiscal year
and changes in cash flow for such fiscal year, accompanied by a certificate of
said accountants stating whether any event existed as of the end of such fiscal
year that constituted an Event of Default hereunder or that would constitute
such an Event of Default with the giving of notice or the lapse of time, or
both, and, if so, stating the facts with respect thereto; (iii) promptly upon
their becoming available, copies of all financial statements, reports, notices,
and proxy statements sent by the Cooperative to patrons or stockholders and of
all regular, periodic and special reports or any registration statement filed by
the Cooperative or any of its Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or any governmental authority succeeding
to any or all of the functions of the Securities and Exchange Commission; and
(iv) such additional information, reports, or statements, including interim
financial statements, as Statesman may from time to time reasonably request. The
Cooperative will also upon request permit Statesman and its agents to inspect
its books and records.
SECTION 7.02. TAXES. Pay and discharge all taxes, assessments, and
governmental charges upon it, its income, and its properties prior to the date
on which penalties are attached thereto, unless and to the extent only that such
taxes, assessments, and governmental charges shall be contested by it in good
faith and by appropriate proceedings, and the Cooperative shall have set aside
on its books adequate reserves with respect to any such tax, assessment or
charge so contested.
SECTION 7.03. BUSINESS PLAN. Furnish to Statesman as soon as available,
but in any event within 120 days after the Cooperative's new fiscal year, a copy
of the Cooperative's new fiscal year business plan which will contain, but not
be limited to, projected balance sheets, profit and loss statements, changes in
cash flow each prepared in accordance with generally accepted accounting
principles consistently applied, estimated usage of indebtedness, and
assumptions utilized in preparing the business plan.
SECTION 7.04. PAYMENT OF OBLIGATIONS. Pay and discharge at or before
their maturity all its indebtedness and other obligations and liabilities,
except when the same may be contested in good faith and by appropriate
proceedings, and the Cooperative shall have set aside on its books adequate
reserves with respect to any such obligation or liability.
SECTION 7.05. INSURANCE. Maintain adequate insurance with responsible
companies satisfactory to Statesman in such amounts and against such risks as is
customarily carried by owners of similar businesses and property.
SECTION 7.06. CORPORATE EXISTENCE, LICENSES, PERMITS, ETC. Maintain its
corporate existence in good standing and maintain all permits and licenses
necessary or desirable for the conduct of its business.
SECTION 7.07. PROPERTIES. Maintain, preserve, and protect all
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and keep the same in good repair,
working order, and condition, and from time to time make or cause to be made all
necessary and proper repairs, renewals, replacements, betterments, and
improvements thereto so that the business carried on in connection therewith may
be properly and advantageously conducted at all times, and permit Statesman and
its agents to enter upon and inspect such properties.
SECTION 7.08. EMPLOYEE BENEFIT PENSION PLANS. Promptly during each
year, pay contributions that in the judgment of the chief executive and chief
financial officers of the Cooperative after reasonable inquiry are believed
adequate to meet at least the minimum funding standards set forth in Sections
302 through 305 of ERISA, with respect to each employee benefit plan of the
Cooperative, if any, covered by that Act; file each annual report required to be
filed pursuant to Section 103 of ERISA in connection with each such plan for
each year; and notify Statesman within ten (10) days of the occurrence of a
Reportable Event (as defined in Section 4043 of ERISA) that might constitute
grounds for termination of any such plan by PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any such
plan, provided that nothing contained herein shall prohibit the Cooperative from
terminating any such plan if it has theretofore complied with the provisions of
this Section.
SECTION 7.09. COMPLIANCE WITH LAWS. The Cooperative shall not knowingly
be in violation of any laws, ordinances, governmental rules and regulations
(collectively "Laws") to which it is subject and will not knowingly fail to
obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its property or to the conduct of its business,
which violation or failure to obtain might materially adversely affect the
business, profit, operations, or condition (financial or otherwise) of the
Cooperative, provided, however, that the Cooperative shall be deemed to have
complied with this provision so long as it is contesting in good faith and by
the appropriate proceedings the violation of any such law and has set aside on
its books adequate reserves in respect thereof, if so required, in accordance
with generally accepted accounting principles. Without limiting the foregoing,
the Cooperative agrees to comply, and to cause all persons occupying, leasing or
renting any properties of the Cooperative to comply with all laws relating to
environmental protection.
SECTION 7.10. RECORD RETENTION. Retain records of compliance with all
applicable consumer protection laws and the log of any complaints for the longer
of twenty-five (25) months or any time period required by applicable law.
SECTION 7.11. BOOKS AND RECORDS. Maintain complete and accurate books
and records with respect to all transactions with all account obligors of
Purchased Receivables and Purchased Wholesale Accounts and all parties obligated
on Purchased Contracts, including without limitation records of all sales,
deliveries, charges, payments, discounts, allowances and other credits, make
such records available for inspection by Statesman and its agents at all
reasonable times and upon request of Statesman deliver the same to Statesman at
its Headquarters.
SECTION 7.12. COOPERATION. The Cooperative will cooperate with
Statesman in all reasonable respects in collecting any Receivables, Installment
Sales Contracts or Wholesale Accounts which Statesman has acquired from the
Cooperative, but nothing contained herein shall obligate the Cooperative to
incur any out of pocket expenses.
ARTICLE VIII
NEGATIVE COVENANTS
The Cooperative covenants and agrees with Statesman that so long as the
Cooperative may offer to sell Receivables, Installment Sales Contracts or
Wholesale Accounts to Statesman hereunder and until payment in full of all
Purchased Receivables, Purchased Contracts and Purchased Wholesale Accounts and
performance of all other obligations of the Cooperative hereunder, without the
written consent of Statesman, the Cooperative will not:
SECTION 8.01. MORTGAGES AND PLEDGES. Create, incur, assume, or suffer
to exist any mortgage, pledge, lien, or other encumbrance of any kind upon, or
any security interest in, any of its property or assets, whether now owned or
hereafter acquired, except (i) liens for taxes not yet delinquent or being
contested in good faith and by appropriate proceedings; (ii) liens in connection
with workers' compensation, unemployment insurance, or other social security
obligations; (iii) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
or appeal bonds, and other obligations of like nature arising in the ordinary
course of business; (iv) mechanic's, xxxxxxx'x, materialman's, landlord's,
carrier's, or other like liens arising in the ordinary course of business with
respect to obligations that are not due or that are being contested in good
faith; (v) those mortgages, pledges, liens, and encumbrances reflected in the
financial statements referred to in Section 5.07 above; (vi) mortgages, pledges,
liens, and encumbrances in favor of Statesman; (vii) zoning restrictions,
easements, licenses, restrictions on the use of real property or minor
irregularities in the title thereto, which do not, in the opinion of the
Cooperative, materially impair the use of such property in the operation of the
business of the Cooperative or the value of such property for the purposes of
such business; and (viii) any mortgage, encumbrance or other lien upon, or
security interest in, any property hereafter acquired by the Cooperative created
contemporaneously with such acquisition to secure or provide for the payment or
financing of any part of the purchase price thereof, or the assumption of any
mortgage, encumbrance or lien upon, or security interest in, any such property
hereafter acquired existing at the time of such acquisition, or the acquisition
of any such property subject to any mortgage, encumbrance or other lien or
security interest without the assumption thereof, provided that each such
mortgage, encumbrance, lien or security interest shall attach only to the
property so acquired and fixed improvements thereon. Nothing contained in this
Section 8.01 shall prohibit the Cooperative from entering into any lease
required to be capitalized by generally accepted accounting principles in
accordance with the Financial Accounting Standards Board Statement No. 13
(Accounting for Leases) in effect on the date of this Agreement, provided such
lease is not otherwise prohibited by the terms of this Agreement.
SECTION 8.02. MERGER, ACQUISITION OR SALE OF ASSETS. (1) Enter into any
merger or consolidation with, or acquire all or substantially all of the assets
of, any person, firm, joint venture, or corporation, unless the Cooperative is
the surviving corporation and upon the consummation of its merger the net worth
of the surviving corporation is not less than the net worth of the Cooperative
prior to the merger and there shall exist no Event of Default as defined in
Section 10.01, provided, however, that in the case of any merger of a Local
Cooperative, as defined in Article I Section 1.01, the Cooperative's Chief
Financial Officer shall certify to Statesman Financial Corporation that the
Cooperative has Net Worth in an amount not less than 95% of the Net Worth of the
Cooperative immediately prior to such merger and no event shall have occurred or
condition exist which with the giving of notice or lapse of time, or both, would
constitute such an Event of Default, or (2) sell, lease, or otherwise dispose of
all or substantially all of its assets except in the ordinary course of its
business.
SECTION 8.03. CHANGES IN NAME; LOCATION. Without giving Statesman at
least sixty (60) days prior written notice, change its name, its principal place
of business or the place in which it may keep its records relating to
Receivables, Installment Sales Contracts and Wholesale Accounts.
SECTION 8.04. AMENDMENT OF PAYMENT TERMS. Amend or modify any Purchased
Receivable, Purchased Contract or Purchased Wholesale Account or consent to the
extension of the time of any payment or release of any collateral securing the
obligation of the obligor or otherwise waive any term or condition of such
Purchased Receivable, Purchased Contract or Purchased Wholesale Account except
to the extent the Cooperative may deem appropriate to facilitate the ultimate
collection of such obligation.
SECTION 8.05. CREDIT STANDARDS; COLLECTION POLICY. Amend in any
material respect its standards for extending credit to its customers or its
collection policy for Receivables, Installment Sales Contracts and Wholesale
Accounts; or make any other amendment or modification to such standards or
policy without having given Statesman not less than ten (10) days prior written
notice thereof.
ARTICLE IX
CONTRIBUTED CAPITAL PLAN
SECTION 9.01. DEFINITIONS. As used in this Article the following terms
shall have the following definitions:
"Contributed Capital Rate" means the ratio of debt to tangible net
worth which institutional lenders extending credit to Statesman require it to
maintain from time to time, whether such ratio is stated as an affirmative or
negative covenant, and in the event Statesman is required to maintain different
ratios on different dates, "Contributed Capital Rate" means the ratio which is
in effect on the applicable TAPOS Determination Date.
"Determination Period" or "Determination Periods" means the calendar
month, the six calendar month period and the twelve calendar month period
immediately preceding the TAPOS Determination Date.
"Minimum Class A Investment" means the number of shares of Statesman
Class A Preferred Stock determined by Statesman as follows:
MI = (HT/(PV x R)) - RE
where
MI = Minimum Class A Investment (stated at the par value).
HT = the highest TAPOS computed for the Cooperative during
any of the three Determination Periods.
PV = the par value of one share of the Statesman Class A
Preferred Stock.
R = the Contributed Capital Rate, expressed as a decimal.
RE = As of the TAPOS Determination Date (x) the product
of (i) the percentage of the total outstanding common
stock of Statesman held by the Cooperative and (ii)
the sum of Statesman's Retained Earnings and Paid In
Capital divided by (y) the par value of Class A
Preferred Stock.
If the Minimum Class A Investment computed using this formula is a
fraction, it will be rounded upward to the next whole number of shares.
"TAPOS" means calculated total program outstanding as determined by
Statesman for each of the three Determination Periods according to the following
formula:
TAPOS = RPP + NR + ISF + WA + ABL + CCR + L + NBC - TD - SAP
where
RPP = average Purchased Receivables previously purchased
and outstanding during such Determination Period.
NR = Eligible Receivables tendered for purchase
subsequent to the end of the previous Determination
Period.
ISF = average net Purchased Contracts outstanding during
such Determination Period.
WA = average net Purchased Wholesale Accounts
outstanding during such Determination Period.
ABL = average Asset Based Financing loans outstanding to
one or more Dealerships of the Cooperative during
such Determination Period.
CCR = average amount outstanding on accounts of customers
of the Cooperative, Local Cooperatives and
Dealerships under the Southern States Credit Card
Program during such Determination Period.
L = average Leases outstanding to the Cooperative,
Local Cooperatives, Dealerships and customers of
either during such Determination Period.
NBC = average investment (stated at par value) which
Statesman was required to maintain in CoBANK ACB
(formerly the National Bank for Cooperatives) during
such Determination Period in support of Cooperative
related borrowings.
TD = average term debt which is excluded in the
determination of the Contributed Capital Rate during
such Determination Period.
SAP = average outstanding Class A Preferred Stock of
Statesman held by the Cooperative during such
Determination Period (stated at the par value).
In the computation for a Determination Period of one month, the amounts
of RPP, ISF, WA, ABL, CCR, L, NBC, TD and SAP as of the last Business Day of
such calendar month shall be used as the average for such month. In computations
for other Determination Periods, the average for each such amount shall be
computed using the outstanding amounts as of the last Business Day of each month
in such Determination Period.
"TAPOS Determination Date" means the date during each calendar month on
which the month-end calculation is made to determine the amount due.
SECTION 9.02. PURCHASE OF STOCK. Upon the delivery to Statesman of the
first Receivables Certificate hereunder the Cooperative will purchase Statesman
Class A Preferred Stock with such par value as will cause it to have a Minimum
Class A Investment in Statesman Class A Preferred Stock and on each TAPOS
Determination Date thereafter it will acquire such additional Statesman Class A
Preferred Stock if any as may be necessary for it to maintain a Minimum Class A
Investment.
SECTION 9.03. REDEMPTION OF CLASS A PREFERRED STOCK. Statesman
covenants and agrees that if on any TAPOS Determination Date the amount of
Statesman Class A Preferred Stock held by the Cooperative exceeds the Minimum
Class A Investment computed as of such date, it will, subject to the provisions
of Section 9.04, upon written demand by the Cooperative redeem for cash at its
par value those shares held by the Cooperative which are in excess of the
Minimum Class A Investment determined as of such date. The Cooperative covenants
and agrees that notwithstanding the provisions contained in paragraph (v) of
subsection 5(b) of Article II of the Articles of Incorporation of Statesman the
Cooperative shall not have any right to redeem shares held by it except as
provided herein.
SECTION 9.04. CUMULATIVE OBLIGATIONS. The obligation of the Cooperative
hereunder to purchase Statesman Class A Preferred Stock shall be in addition to
any other undertaking the Cooperative may have entered into or may hereafter
enter into to purchase such stock as a result of Asset Based Financing or
Installment Sales Financing provided by Statesman to any Local Cooperative,
Independent Cooperative or Dealership of the Cooperative or any lease financing
by Statesman for the Cooperative, and the obligations of the Cooperative to
purchase Statesman Class A Preferred Stock under, or as a condition to, each
such financing arrangement shall be cumulative.
ARTICLE X
EVENTS OF DEFAULT
SECTION 10.01. Each of the following shall constitute an "Event of
Default" hereunder:
(a) Default shall be made in the payment of any amount payable
hereunder, when and as the same becomes due and payable, whether at the stated
maturity thereof or by acceleration or otherwise; or
(b) Default shall be made in the due observance or performance
of any other term, covenant, or agreement contained in this Agreement; or
(c) Any representation or warranty made by the Cooperative
herein, or in any Receivables Certificate or any statement or representation
made in any other certificate, report, or opinion delivered pursuant hereto
shall prove to have been incorrect in any material respect when made; or
(d) The Cooperative or any Subsidiary of the Cooperative shall
become insolvent or unable to meet its obligations as they mature, make an
assignment for the benefit of creditors, consent to the appointment of a trustee
or a receiver, or admit in writing its inability to pay its debts as they
mature; or
(e) A trustee or receiver shall be appointed for the
Cooperative or any Subsidiary of the Cooperative or for a substantial part of
its properties without the consent of the Cooperative or such Subsidiary and not
be discharged within thirty (30) days; or
(f) Bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceedings shall be instituted by or against the Cooperative or any
Subsidiary of the Cooperative, and, if instituted against it, be consented to by
the Cooperative or such Subsidiary or remain undismissed for a period of thirty
(30) days; or
(g) Any default shall be made with respect to any obligation
for the payment of borrowed money of the Cooperative or any Subsidiary of the
Cooperative when due or the performance of any other obligation incurred in
connection with any indebtedness for borrowed money of the Cooperative or any
Subsidiary of the Cooperative, if the effect of such default is to accelerate
the maturity of such indebtedness; or
(h) Any final judgment for the payment of money in excess of
ONE HUNDRED THOUSAND DOLLARS ($100,000.00) which in the opinion of Statesman is
not adequately insured or indemnified against shall be rendered against the
Cooperative or any Subsidiary of the Cooperative and the same shall remain
undischarged for a period of thirty (30) days during which time execution shall
not be effectively stayed; or
(i) Any substantial part of the properties of the Cooperative
or any Subsidiary of the Cooperative shall be sequestered or attached and shall
not have been returned to the possession of the Cooperative or such Subsidiary
or released from such attachment within thirty (30) days; or
(j) The occurrence of a Reportable Event as defined in Section
4043 of ERISA which might constitute grounds for termination of any employee
benefit plan of the Cooperative or any Subsidiary of the Cooperative covered by
ERISA by PBGC or grounds for the appointment by the appropriate United States
District Court of a trustee to administer any such plan; or
(k) Complete or partial withdrawal under Section 4201 or 4204
of ERISA from a Multiemployer Plan by any other party which is or may be
required under the provisions of ERISA to make a contribution to such Plan,
except as a result of the merger of such party with the Cooperative.
Upon the occurrence and continuation of any Event of Default, Statesman
may, by notice to the Cooperative take any or all of the following actions: (i)
terminate any obligation it may have to review any Receivables, Installment
Sales Contract or Wholesale Account tendered to it, (ii) terminate any
obligation it may otherwise have to purchase any Eligible Receivable, any
Approved Contract, any Eligible Contract or any Wholesale Account, (iii)
terminate any obligation it may have to repay to the Cooperative any part of the
Reserve Account so long as any Purchased Receivable shall remain unpaid, and
(iv) terminate any obligation it may have to repay to the Cooperative any part
of the Wholesale Reserve Account so long as any Purchased Wholesale Account
shall remain unpaid.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. INDEMNIFICATION.
(a) The Cooperative shall indemnify Statesman, its officers,
directors, agents and employees and hold them and each of them harmless from and
against all loss, cost, damage, and expense, including reasonable attorney fees,
at any time incurred:
(1) because of any liability of the Cooperative,
Manufacturer, or any other Person (other than Statesman) related to any
merchandise which is the subject of any sale or to any service performed or
goods furnished by the Cooperative, Manufacturer, or any other Person or entity
in connection with any sale out of which any Purchased Receivable, Purchased
Contract or Purchased Wholesale Account arose, including, but not limited to,
services performed under any warranty or other agreement obligating the
Cooperative, Manufacturer, or other Person or entity to perform such services or
furnish goods; or
(2) because of any liability of the Cooperative for
any action at any time taken or omitted to be taken by the Cooperative.
(b) The Cooperative covenants and agrees to indemnify
Statesman, its officers, directors, employees, and agents and hold them and each
of them harmless from and against all loss, cost, damage, and expense, including
reasonable attorneys' fees, at any time incurred by them or any of them because
of any violation of state or Federal law or regulation by the Cooperative or
other illegal or actionable conduct resulting from acts or omissions by the
Cooperative or its agents in connection with the sale of merchandise, providing
of services or extension of credit.
SECTION 11.02. NOTICES.
(a) By Statesman. In consideration of the Agreement of the
Cooperative to make a capital investment in Statesman based upon the amount of
asset based loans made by Statesman to customers of the Cooperative, Statesman
covenants and agrees to use its best efforts to notify the Cooperative promptly
in the event it terminates its agreement to extend asset based financing to any
Dealership of the Cooperative (as defined in the Agreement), if it gives any
notice to any such Dealership of any event of default under the terms of any
financing agreement between such Dealership and Statesman, if any such
Dealership defaults in the payment of any obligation for principal or interest
owing to Statesman and such default continues for a period of ten (10) days or
more, or if any officer of Statesman has knowledge that any condition exists or
event has occurred with respect to such Dealership which constitutes grounds for
the termination by Statesman of its financing arrangements with such Dealership
or which would constitute such grounds with the giving of notice or lapse of
time or both.
(b) By Cooperative. In consideration of the agreement by
Statesman to provide the Cooperative with such notices, the Cooperative
covenants and agrees it will promptly notify Statesman upon the occurrence of
any of the following events: the Cooperative puts any such Dealership on C.O.D.
or otherwise limits sales to such Dealership, or terminates any existing
agreement between the Cooperative and any such Dealership; any such Dealership
makes any material misrepresentation to the Cooperative; there is a material
change in the management or ownership of such Dealership; any material adverse
change occurs in the financial condition or operations of such Dealership; or if
to the knowledge of any executive officer of the Cooperative an event of default
has occurred under any agreement between any such Dealership and the Cooperative
or any condition exists or event has occurred which with the giving of notice or
lapse of time or both would constitute such an Event of Default.
SECTION 11.03. FAILURE TO RECORD SECURITY INSTRUMENT. No failure
(intentional or inadvertent) by Statesman to file any financing statement
relating to a security instrument (whether conditional sales contract, chattel
mortgage, or security agreement) contained in or arising out of any Eligible
Contract or any Receivable shall impair or void the obligations of the
Cooperative hereunder.
SECTION 11.04. TERMINATION. This Agreement may be terminated by either
party hereto by giving the other party ninety days (90) prior written notice of
such termination prior to any anniversary date of this Agreement. No such
termination shall affect any rights of the parties accruing up to the date of
final payment of all Purchased Contracts, Purchased Receivables, Purchased
Wholesale Accounts and Southern States Credit Card Program outstandings
previously purchased or relieve the Cooperative from ownership requirements for
Statesman Class A Preferred Stock as required in Section 9.02.
SECTION 11.05. SUCCESSORS. The covenants, representations, and
agreements herein set forth shall be binding upon the parties hereto and their
successors and assigns.
SECTION 11.06. AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement shall in any event be
effective unless the same shall be in writing and signed by Statesman, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION 11.07. NOTICES, ETC. All notices and other communications
provided for under this Agreement shall be in writing and mailed, faxed,
telegraphed or delivered, if to the Cooperative at its address at:
SOUTHERN STATES COOPERATIVE, INCORPORATED
0000 XXXX XXXXX XXXXXX (ZIP 23230)
POST XXXXXX XXX 00000
XXXXXXXX, XXXXXXXX 00000
ATTENTION: XX. X. X. XXXXXXX
and if to Statesman, at its address at
STATESMAN FINANCIAL CORPORATION
0000 XXXX XXXXX XXXXXX (ZIP 23230)
XXXX XXXXXX XXX 00000
XXXXXXXX, XXXXXXXX 00000
ATTENTION: XX. XXXX X. XXXXXX
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 11.07. All such notices and communications shall, when mailed,
be effective when deposited addressed as aforesaid.
SECTION 11.08. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 11.09. HEADINGS. Article and Section headings in this Agreement
are included in such Agreement for the convenience of reference only and shall
not constitute a part of the Agreement for any other purpose.
SECTION 11.10. GOVERNING LAW. This Agreement has been entered into, and
shall be governed in all respects by, the laws of the Commonwealth of Virginia.
SECTION 11.11. SURVIVAL. All warranties, representations and covenants
made by the Cooperative herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under
this Agreement, shall be considered to have been relied upon by Statesman and
shall survive the delivery to Statesman of the Receivables, Purchased Contracts
and Purchased Wholesale Accounts purchased pursuant hereto regardless of any
investigation made by Statesman or on its behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Cooperative hereunder. Except as otherwise expressly provided herein, all
covenants made by the Cooperative hereunder or under any other agreement or
instrument shall be deemed continuing until the Purchased Contracts, Purchased
Receivables and Purchased Wholesale Accounts and all other liabilities and
obligations of the Cooperative to Statesman are satisfied in full.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
ATTEST: By: ___________________________
__________________
Title: ________________________
STATESMAN FINANCIAL CORPORATION
ATTEST: By: ___________________________
___________________
Title: ________________________
