EXECUTION VERSION
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT (this "AGREEMENT") is made as of
December 9, 1998 by SUPERIOR NATIONAL INSURANCE GROUP, INC., a Delaware
corporation ("SUPERIOR") in favor of INSURANCE FUNDING LLC, a Delaware
limited liability company ("INSURANCE FUNDING"), EAGLEFUNDING CAPITAL
CORPORATION, a Delaware corporation (the "PURCHASER"), and BANCBOSTON
XXXXXXXXX XXXXXXXX INC. (the "DEAL AGENT").
Reference is made to (i) that certain Receivables Purchase and
Sale Agreement (as the same may from time to time be amended, restated,
supplemented or otherwise modified, the "ORIGINATOR SALE AGREEMENT") of even
date herewith between California Compensation Insurance Company, a California
corporation, Commercial Compensation Insurance Company, a New York
corporation, Combined Benefits Insurance Company, a California corporation
and Business Insurance Company, a Delaware corporation, as the originators
(each an "ORIGINATOR" and, collectively, the "ORIGINATORS"), and Insurance
Funding, as the buyer and (ii) that certain Receivables Purchase Agreement
(as the same may from time to time be amended, restated, supplemented or
otherwise modified, the "RECEIVABLES PURCHASE AGREEMENT") of even date
herewith among Insurance Funding, the Purchaser, the Deal Agent and Superior,
in its capacity as servicer thereunder. It is a condition precedent to the
willingness of Insurance Funding to enter into the Originator Sale Agreement
and to make the "Purchase" (as defined in the Originator Sale Agreement) from
the Originators thereunder and a condition precedent to the willingness of
the Purchaser and the Deal Agent to enter into the Receivables Purchase
Agreement and to make the "Purchase" (as defined in the Receivables Purchase
Agreement) from Insurance Funding thereunder, that Superior execute and
deliver this Agreement.
Section 1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms shall have the meanings set forth in the Receivables
Purchase Agreement and the Originator Sale Agreement, as applicable. As used
in this Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms
of the terms defined):
"AGGREGATE YIELD AND FEES" shall mean, for any Settlement
Date, the sum of accrued and unpaid (i) Servicer Fee, (ii) Yield, (iii)
Liquidity Fee, (iv) Program Fee and (v) Administrative Fee.
"DEFAULTED RECEIVABLE" shall have the meaning assigned thereto
in the Receivables Purchase Agreement, PROVIDED that such term shall include
any Receivable that has been written off Insurance Funding's or the
applicable Originator's books as uncollectible.
"DILUTION FACTORS" means, with respect to the Receivables, any
credits, rebates, freight charges, discounts, allowances, disputes,
chargebacks, allowances for early payments and other allowances or
adjustments granted in accordance with Insurance Funding's or an Originator's
usual practices.
"ELIGIBLE ACCOUNT BANK" means (a) any commercial bank
satisfactory to the Administrator and having (i) combined capital and surplus
of at least $250,000,000, (ii) a short-term debt rating of at least A-1 from
S&P, P-1 from Xxxxx'x and D-1 from DCR (if rated by DCR), and (iii) in a
manner acceptable to the Deal Agent and the Borrower, expressly waived all
contractual and equitable rights of set-off and combination of accounts it
may have with respect to the relevant Support Account, or (b) such other
commercial bank satisfactory to the Administrator and in respect of which
each of S&P, Xxxxx'x and DCR shall have delivered prior written confirmation
to the Administrator that the maintenance of the Support Account with such
commercial bank will not result in the reduction or withdrawal of the
respective ratings of the EagleFunding CP Notes.
"EQUITY INVESTMENT" shall have the meaning given such term in
the Recievables Purchase Agreement.
"FUNDED SUPPORT BALANCE" means an amount equal to the sum of
all payments made by Superior pursuant to paragraphs (a), (b), (c) and (d) of
SECTION 2 of this Agreement.
"NONCOMPLYING RECEIVABLE" means any Receivable with respect to
which (i) an Originator or Superior has received notice from Insurance
Funding or the Deal Agent (as Insurance Funding's assignee) that such
Receivable was not an Eligible Receivable as of the date purchased under the
Originator Sale Agreement or that such Originator otherwise breached any
representation, warranty or covenant made with respect to such Receivable
under the Originator Sale Agreement or (ii) Insurance Funding or Superior has
received notice from the Purchaser or the Deal Agent that such Receivable was
not an Eligible Receivable as of the date purchased under the Receivables
Purchase Agreement or that Insurance Funding otherwise breached any
representation, warranty or covenant made with respect to such Receivable
under the Receivables Purchase Agreement.
"SERVICER DOWNGRADE TERMINATION EVENT" shall have the meaning
assigned thereto in the Receivables Purchase Agreement.
"SUPPORT ACCOUNT" means a segregated trust account, in the
name of the Purchaser and referencing the name of the Deal Agent, maintained
at an Eligible Account Bank chosen by the Purchaser.
"SUPPORT ACCOUNT BALANCE" shall have the meaning assigned
thereto in paragraph (b) of SECTION 5 hereof.
"SUPPORT AMOUNT" means an amount equal to the Purchase Limit
in effect on the Closing Date TIMES 80%.
"SUPPORT DEFICIENCY AMOUNT" shall have the meaning assigned
thereto in paragraph (b) of SECTION 5 hereof.
"SUPPORT PAYMENT" shall have the meaning assigned thereto in
paragraph (b) of SECTION 5 hereof.
"TOTAL SUPPORT PAYMENT" shall have the meaning assigned
thereto in paragraph (b) of SECTION 5 hereof.
"UNFUNDED SUPPORT BALANCE" means an amount equal to the
Support Amount MINUS the Funded Support Balance.
Section 2. PERFORMANCE AND RECOURSE OBLIGATIONS. (a)
Superior does hereby unconditionally and irrevocably guarantee:
(i) to Insurance Funding and all of its successors and
assigns, the due and punctual performance and observance by each
Originator of all covenants, agreements, terms, conditions,
undertakings, indemnities and other obligations to be performed
and observed by each such Originator under the Originator Sale
Agreement and each of the other Transaction Documents to which
each such Originator is a party including, without limitation,
the due and punctual payment of all sums which are or may become
due and owing by each such Originator under the terms and
provisions of the Originator Sale Agreement, whether for fees,
expenses (including, without limitation, attorneys' fees),
indemnified amounts or otherwise, whether upon any termination or
for any other reason; and
(ii) to the Deal Agent and the Purchaser and all of their
respective successors and assigns, the due and punctual performance and
observance by Insurance Funding of all covenants, agreements, terms,
conditions, undertakings, indemnities and other obligations to be
performed and observed by Insurance Funding under the Receivables
Purchase Agreement and each of the other Transaction Documents to which
Insurance Funding is a party including, without limitation, the due and
punctual payment of all sums which are or may become due and owing by
Insurance Funding under the terms and provisions of the
Receivables Purchase Agreement, whether for fees, expenses (including,
without limitation, attorneys' fees), indemnified amounts or
otherwise, whether upon any termination or for any other reason;
PROVIDED, HOWEVER, that Superior shall only be obligated to make a payment
with respect to amounts under this SECTION 2(a) to the extent that the
aggregate amounts paid under this SECTION 2(a) (together with the aggregate
amounts paid under other provisions of this SECTION 2 other than 2(e)) does
not exceed an amount equal to the lesser of (i) the Support Amount and (ii)
the amounts necessary to reduce the Purchased Interest to zero. The
obligations of Superior under this SECTION 2(a) are in addition to, and not
in limitation or in lieu of, all other obligations of Superior under this
SECTION 2.
(b) In addition to and not in limitation of the foregoing,
Superior does hereby unconditionally and irrevocably agree, notwithstanding
any limitations on the recourse obligations of the Originators under the
Originator Sale Agreement or any limitations on the recourse obligations of
Insurance Funding under the Receivables Purchase Agreement, that Superior
shall, upon written demand from the Purchaser or the Deal Agent, pay to the
Purchaser and any other Person to whom the Purchaser may have assigned a
portion of the Purchased Interest under the Receivables Purchase Agreement an
amount equal to their respective percentage interests of the Outstanding
Balance of any Purchased Receivables which have become Defaulted Receivables;
PROVIDED, HOWEVER, that Superior shall only be obligated to make a payment
with respect to any such Defaulted Receivables under this SECTION 2(b) to the
extent that the aggregate amounts paid under this SECTION 2(b) (together with
the aggregate amounts paid under other provisions of this SECTION 2 other
than 2(e)) does not exceed an amount equal to the lesser of (i) the Support
Amount and (ii) the amounts necessary to reduce the Purchased Interest to
zero. The obligations of Superior under this SECTION 2(b) are in addition to,
and not in limitation or in lieu of, all other obligations of Superior under
this SECTION 2.
(c) In addition to and not in limitation of the foregoing,
Superior does hereby unconditionally and irrevocably agree, notwithstanding any
limitations on the recourse obligations of the Originators under the Originator
Sale Agreement or any limitations on the recourse obligations of Insurance
Funding under the Receivables Purchase Agreement, that Superior shall, upon
written demand from the Purchaser or the Deal Agent, (i) pay to the Purchaser
and any other Person to whom the Purchaser may have assigned a portion of the
Purchased Interest under the Receivables Purchase Agreement an amount equal to
their respective percentage interests of the Outstanding Balance of any
Purchased Receivables which are reasonably determined by the Purchaser or the
Deal Agent to be Noncomplying Receivables and (ii) pay to the Purchaser and any
other Person to whom the Purchaser may have assigned a portion of the Purchased
Interest under the Receivables Purchase Agreement an amount equal to their
respective percentage interests of the actual reduction in the Outstanding
Balance of any Purchased Receivables as a result of any of the Dilution Factors;
PROVIDED, HOWEVER, that Superior shall only be obligated to make a payment with
respect to any such Noncomplying Receivables or Dilutions Factors under this
SECTION 2(c) to the extent that the aggregate
amounts paid under the provisions of this SECTION 2(c) (together with the
aggregate amounts paid under other provisions of this SECTION 2 other than
2(e)) does not exceed an amount equal to the lesser of (i) the Support Amount
and (ii) the amounts necessary to reduce the Purchased Interest to zero. The
obligations of Superior under this SECTION 2(c) are in addition to, and not
in limitation or in lieu of, all other obligations of Superior under this
SECTIONS 2.
(d) Any payment owed by Superior under any of the foregoing
provisions of this SECTION 2 shall be due and owing upon the 5th Business Day
following Insurance Funding's, Purchaser's or Deal Agent's written demand
therefor. Superior shall pay interest on all amounts owed by it under this
Agreement at the per annum rate of 2% PLUS the Adjusted Base Rate, from the
date of demand for such amounts until such amounts are paid in full.
(e) Upon the occurrence of a Servicer Downgrade Termination
Event solely with respect to Superior, the Purchaser shall, by delivery of a
written notice to the Deal Agent and Superior, require Superior to deposit an
amount equal to the Unfunded Support Balance into the Support Account within
5 Business Days of receipt of such notice.
(i) The Purchaser and EagleFunding hereby grant to the
Deal Agent full power and authority, on behalf of the Purchaser and
Insurance Funding, to withdraw funds from the Support Account in
accordance with the terms of and for the purposes set forth in this
Agreement.
(ii) From and after the establishment of the Support
Account, and until the earlier of (i) the date upon which the balance of
the Support Account shall be zero and (ii) the termination date of this
Agreement as set forth in SECTION 9, all payments to be made by Superior
under this Agreement shall be made automatically by the Deal Agent from
the Support Account.
(iii) From and after the establishment of the Support
Account, and until the earlier of (i) the date upon which the balance of
the Support Account shall be zero and (ii) the termination date of this
Agreement as set forth in SECTION 9, at the direction of the Purchaser,
the Deal Agent shall from time to time invest and reinvest the funds on
deposit in such Support Account from time to time in Permitted
Investments. Notwithstanding anything herein to the contrary, neither
the Deal Agent nor the Purchaser shall have any liability for any loss
arising from any investment or reinvestment made by it in accordance
with, and pursuant to, the provisions hereof.
(v) If on the termination date of this Agreement as set
forth in SECTION 9, after giving effect to paragraph (b) of SECTION 5,
there are funds remaining in the Support Account, the Deal Agent shall
withdraw the balance of such funds and pay them to Superior.
Section 3. WAIVERS; VALIDITY OF OBLIGATIONS. (a) Superior
hereby waives promptness, diligence and notice of acceptance of this
Agreement, of any action taken or omitted in reliance hereon or of any
default in the payment of any sums or in the performance of any covenants,
agreements, terms, conditions, and any demand, protest or other notice of any
kind. Superior expressly waives the right to require Insurance Funding, the
Deal Agent or the Purchaser to protect, secure, perfect, insure, proceed
against or exhaust any security granted to it as security for the payment of
any sums due under the Transaction Documents or to exhaust any right or take
any action against any Originator or any other Person or any collateral.
Superior further agrees that the execution and delivery of this Agreement by
Superior shall be conclusive evidence against Superior that its obligations
under this Agreement are unconditional and absolute. Superior hereby
warrants to the Purchaser and the Deal Agent that it has adequate means to
obtain from the Originators and Insurance Funding on a continuing basis all
information concerning each of the Transaction Documents, the financial
condition of the Originators and Insurance Funding and the collectibility of
the Receivables, and that it is not relying on the Purchaser or the Deal
Agent to provide such information either now or in the future.
(b) The obligations of Superior under this Agreement
constitute a present and continuing guaranty of payment and not of
collectibility, shall be absolute and unconditional, shall not be subject to
any counterclaim, set-off, deduction or defense based upon any claim
Superior, any Originator, Insurance Funding or any Affiliate may have against
each other or against the Deal Agent, the Purchaser or any other Person and
shall remain in full force and effect without regard to and shall not be
released, discharged or in any way affected or impaired by, any thing, event,
happening, matter, circumstance or condition whatsoever (whether or not
Superior shall have any knowledge or notice thereof or consent thereto),
including, without limitation: (i) any amendment or modification of or
supplement to the Originator Sale Agreement, the Receivables Purchase
Agreement or any other Transaction Document or in connection therewith agreed
to by the requisite parties specified therein, or any assignment or transfer
of any interest of Insurance Funding, the Deal Agent or Purchaser therein,
including, without limitation, any renewal or extension of the terms of
payment of any sums due or contingently due thereunder or the granting of
time in respect of any payment, or any furnishing or acceptance of security
or any release of any security so furnished or accepted for the sum due or
contingently due under any Transaction Document or any addition of one or
more new or different Lock-Box Banks or eligibility criteria for the purchase
of Receivables and Purchased Interests thereunder; (ii) any waiver, consent,
extension, granting of time, forbearance, indulgence or other action or
inaction under or in respect of the Originator Sale Agreement, the
Receivables Purchase Agreement or any other Transaction Document or any
exercise or nonexercise of any right, remedy or power in respect thereof;
(iii) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or similar proceedings with respect to any
Originator or any other Person, or the properties or creditors of any of
them; (iv) the occurrence of any Trigger Event under the Receivables Purchase
Agreement, or any
invalidity or any unenforceability of, or any misrepresentation, irregularity
or other defect in, the Originator Sale Agreement, the Receivables Purchase
Agreement or any other Transaction Document or any other document to be
delivered in connection therewith; (v) any failure by Insurance Funding to
take any required steps to perfect and maintain perfected its 100% ownership
interest in any Receivable, Related Security related thereto or Collections
with respect thereto, or any failure by the Deal Agent or the Purchaser to
take any required steps to perfect and maintain perfected its respective
Purchased Interest in any Purchased Property; (vi) any transfer or purported
transfer, any consolidation or merger of an Originator or Insurance Funding
with or into any other corporation or entity, or any change whatsoever in the
objects, capital structure, constitution or business of an Originator or
Insurance Funding; (vii) any failure on the part of the Originators or
Insurance Funding to perform or comply with any term of the Originator Sale
Agreement, the Receivables Purchase Agreement or any other Transaction
Document or any other document to be delivered in connection therewith;
(viii) any suit or other action brought by any creditors of an Originator or
Insurance Funding for any reason whatsoever, including, without limitation,
any suit or action in any way attacking or involving the Originator Sale
Agreement, the Receivables Purchase Agreement or any other Transaction
Document or any other document to be delivered in connection therewith; or
(ix) any other fact or circumstance which might constitute a defense
available to, or a discharge of, an Originator or Insurance Funding or a
guarantor.
(c) Superior further acknowledges and agrees that the rights
and defenses waived by it pursuant to this Agreement include any right or
defense that it may have or be entitled to assert based upon or arising out
of any one or more of Sections 2787 to 2855, inclusive, of the California
Civil Code.
Section 4. REINSTATEMENT. The obligations of Superior in
respect of this Agreement shall continue to be effective or shall be
reinstated, as the case may be, if at any time any payment of any obligations
guaranteed hereunder is rescinded or must otherwise be returned by Insurance
Funding, the Deal Agent or the Purchaser upon the insolvency, bankruptcy or
reorganization of an Originator or Insurance Funding or otherwise, all as
though such payment had not been made.
Section 5. SUBROGATION. (a) If Superior shall make any payment
due in respect of the Originator Sale Agreement, the Receivables Purchase
Agreement or any other Transaction Document pursuant to this Agreement, it
shall, to the extent permitted by applicable law, be subrogated to the rights of
Insurance Funding, the Deal Agent and the Purchaser in respect of which such
payment was made; PROVIDED, HOWEVER, that such rights of subrogation and all
indebtedness and claims arising therefrom shall be, and Superior hereby declares
that they are, and shall at all times be, in all respects subordinate and junior
to all sums due or contingently due under the Originator Sale Agreement, the
Receivables Purchase Agreement or such Transaction Document in respect of which
payment was not made. Superior hereby agrees that the foregoing right of
subrogation shall not be effective until, and that it shall not be entitled to
receive any payment, under any condition, in respect of any such subrogated
claim unless and until, all sums which
may become due, or are stated in the Originator Sale Agreement, the
Receivables Purchase Agreement or such Transaction Document to become due,
shall have become due and shall have been paid in full or funds for their
payment shall have been duly and sufficiently provided. Superior further
agrees that, if, solely as a result of (i) the existence of this Agreement
and (ii) the application of Section 550 of the Bankruptcy Code, or any
similar provision of any state insolvency law, Insurance Funding, the
Purchaser or the Deal Agent is required in any bankruptcy or insolvency
proceeding to turn over or otherwise pay to the estate of an Originator or
Insurance Funding or lose the right to receive from an Originator's or
Insurance Funding's estate any amount representing or constituting a transfer
avoidable as to Insurance Funding, the Purchaser or the Deal Agent (which
transfer, but for the existence of this Agreement, would not have been
recoverable from any such Person), Superior agrees to pay or cause to be paid
to the Deal Agent, for the benefit of the Purchaser, an amount, in cash,
equal to such avoided or recovered amount.
(b) If, prior to the termination date of this Agreement
pursuant to SECTION 9, Superior made any payment due in respect of the
Originator Sale Agreement, the Receivables Purchase Agreement or any other
Transaction Document pursuant to this Agreement other than SECTION 2(e) (each
a "Support Payment" and collectively, the "Support Payments"), then, solely
to the extent funds are available from the sources set forth in clauses (i)
and (ii) below, Superior shall be entitled to reimbursement in an amount up
to the aggregate amount of all such Support Payments (the "Total Support
Payment Amount").
(i) If (A) prior to such termination of this Agreement
Superior funded the Support Account pursuant to SECTION 2(e), and (B)
following such termination of this Agreement, there are funds remaining
in the Support Account (the total amount of such funds, the "Support
Account Balance"), then the Deal Agent shall pay to Superior, solely
from the Support Balance, an amount equal to the lesser of (i) the
Total Support Payment Amount or (ii) the Support Account Balance.
(ii) If (A) (i) the Support Account Balance is
insufficient to pay the Total Support Payment Amount (the amount by
which the Total Support Payment Amount exceeds the Support Account
Balance, the "Support Deficiency Amount"), or (ii) Superior did not fund
the Support Account pursuant to SECTION 2(e) , and (B) following the
termination of this Agreement pursuant to SECTION 9, there are
Collections remaining in the Collection Account after the payment to the
Seller of its Equity Investment, then the Servicer shall pay to
Superior, solely from the Collections remaining in the Collection
Account, an amount equal to the lesser of (i) the Support Deficiency
Amount or (ii) the total amount of Collections remaining in the
Collection Account.
Section 6. REPRESENTATIONS AND WARRANTIES OF SUPERIOR. Superior
hereby represents and warrants as follows on and as of the date hereof and on
and as of each date
on which a purchase shall be made under the Originator Sale Agreement or the
Receivables Purchase Agreement:
(a) Superior is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and is
duly qualified to do business, and is in good standing, in every jurisdiction
in which the nature of its business requires it to be so qualified and the
failure to do so could reasonably be expected to have a material adverse
effect on Superior's ability to perform its obligations under this Agreement
or the other Transaction Documents to which it is a party.
(b) The execution, delivery and performance by Superior of
this Agreement and all other Transaction Documents to which it is a party,
(i) are within Superior's corporate powers, (ii) have been duly authorized by
all necessary corporate action, (iii) do not contravene (A) Superior's
charter or by-laws, (B) any law, rule or regulation applicable to Superior,
(C) any contractual restriction binding on or affecting Superior or its
property or (D) any order, writ, judgment, award, injunction or decree
binding on or affecting Superior or its property, and (iv) do not result in
or require the creation of any Adverse Claim upon or with respect to any of
its properties. This Agreement and each other Transaction Document to which
Superior is a party have each been duly executed and delivered by Superior.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by Superior of this
Agreement or any other Transaction Document to which it is a party.
(d) This Agreement and each other Transaction Document to
which Superior is a party constitutes the legal, valid and binding obligation
of Superior enforceable against it in accordance with their respective terms.
(e) (i) Superior has furnished to the Deal Agent (A) copies
of the audited consolidated balance sheets of Superior and its consolidated
subsidiaries as at December 31, 1997 audited consolidated statements of
income, shareholders' equity and cash flows for the fiscal year of Superior
and its consolidated subsidiaries then ended reported on by December 31,
1997, which financial statements present fairly in all material respects in
accordance with GAAP the financial position of Superior and its consolidated
subsidiaries as at December 31, 1997, and the results of operations of
Superior and its consolidated subsidiaries for the fiscal year of Superior
then ended, and (B) copies of the unaudited consolidated balance sheets of
Superior and its consolidated subsidiaries as at September 30, 1998, and the
related unaudited consolidated statements of income, shareholders' equity and
cash flows for the three-month period then ended, which financial statements
present fairly in all material respects in accordance with GAAP the financial
position of Superior and its consolidated subsidiaries as at September 30,
1998, and the results of operations of Superior and its consolidated
subsidiaries for the three-month period then ended; and (ii) since September
30, 1998, (A) no material adverse
change has occurred in the business, assets, liabilities, financial
condition, results of operations or business prospects of Superior and its
subsidiaries taken as a whole, and (B) no event has occurred or failed to
occur which has had, or can be reasonably expected to have, singly or in the
aggregate, a material adverse effect on the ability of Superior to perform
its obligations under this Agreement or any other Transaction Document to
which it is a party.
(f) There is no pending or threatened action or proceeding
affecting Superior or any of its subsidiaries before any court, governmental
agency or arbitrator that could reasonably be expected to have a material
adverse effect on the financial condition of Superior or any of its
subsidiaries, the ability of Superior to perform its obligations under this
Agreement or the other Transaction Documents to which it is a party or which
affects or purports to affect the legality, validity or enforceability of
this Agreement or any other Transaction Document.
(g) None of the information, exhibits, financial statements,
documents, books, records or reports furnished or to be furnished by Superior
to the Deal Agent or the Purchaser pursuant to the provisions of this
Agreement is or will be inaccurate in any material respect as of the date it
is or shall be dated or (except as otherwise disclosed to the Deal Agent or
the Purchaser, as the case may be, at such time) as of the date so furnished,
and no such document contains or will contain any material misstatement of
fact or omits or shall omit to state a material fact or any fact necessary to
make the statements contained therein not misleading.
(h) Superior has filed or caused to be filed all Federal,
state and local tax returns which are required to be filed by it, and has
paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which Superior has set aside
adequate reserves on its books in accordance with GAAP and which proceedings
have not given rise to any Adverse Claim.
(i) Superior does not have any direct ownership or other
financial interest in the Purchaser.
Section 7. COVENANTS OF SUPERIOR. Superior hereby covenants
that, until this Agreement is terminated in accordance with SECTION 9 hereof,
(a) Superior shall (x) comply in all material respects with
all applicable laws (including, without limitation, ERISA and the Code),
rules, regulations, orders and each of the Transaction Documents to which it
is a party and (y) preserve and maintain its corporate existence, rights,
franchises, qualifications and privileges where the failure to comply,
preserve or maintain could reasonably be expected to have a material adverse
effect on Superior's ability to perform its obligations under this Agreement
or any other Transaction Document to which it is a party;
(b) Superior will, except to the extent that Insurance
Funding or Superior (as Servicer under the Receivables Purchase Agreement)
has already delivered the same to the Deal Agent in accordance with Section
5.01 of the Receivables Purchase Agreement, promptly deliver to the Deal
Agent copies of all financial statements of Superior, reports to Superior's
security holders, registration statements and similar filings made by
Superior, ERISA notices, notices of litigation, notices of material adverse
change and similar information in the possession and/or under the control of
Superior or otherwise pertaining to Superior and its subsidiaries, all as
more particularly described in subsection (c) of Section 5.01 of the
Receivables Purchase Agreement;
(c) Superior will not (a) fail to comply in all material
respects with ERISA and the provisions of the Code applicable to the Benefit
Plans; (b) engage or permit any ERISA Affiliate to engage in any prohibited
transaction which would subject Superior to a material tax or penalty imposed
on a prohibited transaction; (c) permit to exist any accumulated funding
deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of the
Code, or funding deficiency with respect to any Benefit Plan other than a
Multiemployer Plan; (d) incur any liability to the PBGC over and above the
premiums required by law; or (e) terminate any Benefit Plan in a manner which
could result in the imposition of a lien on the property of Superior or any
such ERISA Affiliate.
(d) Superior will file or cause to be filed all federal,
state and local tax returns which are required to be filed by it. Superior
shall pay or cause to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which Superior shall have set
aside adequate reserves on its books in accordance with GAAP.
Section 8. NO PROCEEDINGS. Superior covenants and agrees
that it will not institute against, or join any other Person in instituting
against, either Insurance Funding or the Purchaser any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, for one year
and one day after the latest maturing commercial paper note issued by the
Purchaser is paid in full.
Section 9. TERMINATION. Subject to SECTION 4 hereof, this
Agreement shall terminate after the latest to occur of (i) the Collection
Date under the Receivables Purchase Agreement, (ii) the Termination Date
under the Originator Sale Agreement or (iii) the date all other amounts owed
to the Purchaser, the Deal Agent and any other Indemnified Party or Affected
Person by an Originator, Insurance Funding or Superior under this Agreement
and each of the other Transaction Documents to which Originator, Insurance
Funding or Superior is a party shall be paid in full
SECTION 10. GOVERNING LAW AND JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. SUPERIOR HEREBY AGREES TO
THE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK.
SUPERIOR IRREVOCABLY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND
ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE
AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.
SECTION 11. WAIVER OF JURY TRIAL. SUPERIOR WAIVES ITS RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. SUPERIOR AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, SUPERIOR FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.
Section 12. AMENDMENT AND WAIVER. No amendment or waiver of
any provision of this Agreement shall be effective unless in a writing signed
by Superior, Insurance Funding, the Purchaser and the Deal Agent and then
such amendment or waiver shall be effective only in the specific instance and
for the specific purpose for which given. No failure on the part of
Insurance Funding, the Purchaser or the Deal Agent to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver hereof; nor
shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right.
Section 13. SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of each of Insurance Funding, the Purchaser and the Deal Agent
and their respective successors and assigns. Each such Person shall have the
right to assign any and all of its or their rights hereunder to any other Person
and the Person acquiring any interest herein shall succeed to all of the rights
of the transferor thereof hereunder to the extent of such transfer. Without
limiting the foregoing, Superior acknowledges the assignment of Insurance
Funding's rights and interests hereunder pursuant to the Receivables Purchase
Agreement and agrees that, subject to the terms of the Receivables Purchase
Agreement, any such assignee of Insurance Funding (and any further assignee
of such assignee) shall have the right, as the assignee of Insurance Funding
(or the assignee of such assignee), to enforce Insurance Funding's rights and
remedies under this Agreement directly against Superior (including, without
limitation, the right to give or withhold any and all consents, requests,
notices, directions, approvals, demands, extensions or waivers under or with
respect to this Agreement or the obligations in respect of Superior hereunder
to the same extent as Insurance Funding may do), but without any obligation
on the part of any such assignee to perform any of the obligations of
Insurance Funding hereunder.
Section 14. COSTS AND EXPENSES. Superior shall pay on demand
all reasonable costs and expenses of Insurance Funding, the Purchaser or the
Agent or their respective successors and assigns incurred in connection with
the preparation, execution, delivery, administration, amendment or
modification of, or any waiver or consent issued in connection with, this
Agreement and the other documents to be delivered hereunder or in connection
herewith, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for Insurance Funding, the Purchaser, the
Deal Agent and their respective successors and assigns with respect thereto,
and with respect to advising Insurance Funding, the Purchaser, the Deal Agent
and their respective successors or assigns as to their respective rights and
remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith, and all reasonable costs and expenses,
if any (including reasonable counsel fees and expenses), incurred by
Insurance Funding, the Purchaser, the Deal Agent and their respective
successors and assigns in connection with the enforcement of this Agreement
and the other documents to be delivered hereunder or in connection herewith.
Section 15. EXECUTION IN COUNTERPARTS; SEVERABILITY;
INTEGRATION. This Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same agreement. In case any provision
in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby. This Agreement contains a final and complete integration
of all prior expressions of the parties hereto with respect to the subject
matter hereof, and shall constitute the entire agreement among the parties
hereto with respect to the subject matter hereof, superseding all prior oral
or written understandings.
Section 16. HEADINGS. The captions and headings of this
Agreement are for convenience of reference only and shall not affect the
interpretation hereof or thereof.
Section 17. CONFIDENTIALITY. Except to the extent otherwise
required by applicable laws, rules or regulation, unless the provider thereof
shall otherwise consent in writing, Superior agrees that it shall (i) maintain
the confidentiality of information obtained as a result of being a party hereto,
to any related documents or to any of the
transactions contemplated hereby or thereby (including, without limitation,
the contents of any summary of indicative terms and conditions with respect
to such transactions, and the provisions of this Agreement and any of the
other Transaction Documents) ("CONFIDENTIAL INFORMATION") and (ii) not
disclose, deliver or otherwise make available to any third party any part of
any such Confidential Information; PROVIDED, HOWEVER, that Superior may
disclose any Confidential Information (w) to its legal counsel, auditors and
accountants, (x) as may be required or requested by any governmental
authority, regulatory body or rating agency, (y) subject to a written
confidentiality agreement having terms substantially similar to this SECTION
17, to any financial institution or other party that extends or is
considering the extension of material debt or equity financing to Superior or
(z) as may be required or appropriate in response to a court order or in
connection with any litigation; PROVIDED, FURTHER, that Superior shall have
no obligation of confidentiality whatsoever in respect of any information
which may be generally available to the public or becomes available to the
public through no fault of Superior or any of its Affiliates.
[Support Agreement -- signature page]
IN WITNESS WHEREOF, the undersigned has caused this Agreement
to be signed by its duly authorized officer as of the date first set forth
above.
SUPERIOR NATIONAL INSURANCE
GROUP, INC.
By: /s/ XXXXXX X. XXXXX
----------------------------
Name: Xxxxxx X. Xxxxx
Title:
