RECEIVABLES PURCHASE AGREEMENT
Dated as of December 31, 1996
Among
APR FUNDING CORPORATION
as Seller
and
UNIVERSAL PREMIUM ACCEPTANCE CORPORATION
individually and as Servicer ,
ANUHCO, INC.
as Parent
and
EAGLEFUNDING CAPITAL CORPORATION
as Purchaser
and
THE FIRST NATIONAL BANK OF BOSTON
AS AGENT
TABLE OF CONTENTS
ARTICLE I PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitments to Purchase; Limits on
Purchaser's Obligations................................2
SECTION 1.02. Purchase Procedures; Assignment of
Purchaser's Interests..................................2
SECTION 1.03. Reinvestments....................................3
SECTION 1.04. Asset Interest; Purchaser's Share................5
ARTICLE II COMPUTATIONAL RULES
SECTION 2.01. Selection of Asset Tranches......................8
SECTION 2.02. Computation of Purchaser's Total Investment and
Purchaser's Tranche Investment..........9
SECTION 2.03. Computation of Earned Discount...................9
ARTICLE III SETTLEMENTS
SECTION 3.01. Settlement Procedures for Collections of
Principal Receivables.................................10
SECTION 3.02. Settlement Procedures for Collections of
Finance Charge Receivables............................11
SECTION 3.03. General Settlement Procedures...................13
SECTION 3.04. Deemed Collections; Reduction of Purchaser's
Total Investment, Etc.................................16
SECTION 3.05. Payments and Computations, Etc..................18
SECTION 3.06. Treatment of Collections and Deemed Collections.19
SECTION 3.07. Repurchases.....................................19
SECTION 3.08. Custody Arrangement.............................21
SECTION 3.09. Establishment of Collection Account:
Investments by Agent..................................21
ARTICLE IV FEES AND YIELD PROTECTION
SECTION 4.01. Fees............................................24
SECTION 4.02. Yield Protection................................25
SECTION 4.03. Funding Losses..................................28
ARTICLE V CONDITIONS OF PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase........28
SECTION 5.02. Conditions Precedent to All Purchases and
Reinvestments.................................32
ARTICLE VI REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller........33
SECTION 6.02. Representations and Warranties of UPAC..........39
SECTION 6.03. Representations and Warranties of Parent........43
SECTION 6.04. Breach of Representations and Warranties........45
ARTICLE VII GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants of Seller.................46
SECTION 7.02. Reporting Requirements of Seller................48
SECTION 7.03. Negative Covenants of Seller....................50
SECTION 7.04. Affirmative Covenants of UPAC...................52
SECTION 7.05. Reporting Requirements of UPAC..................54
SECTION 7.06. Negative Covenants of UPAC......................56
SECTION 7.07. Affirmative Covenants of Parent.................59
SECTION 7.08. Reporting Requirements of Parent................59
SECTION 7.09. Negative Covenants of Parent....................61
SECTION 7.10. Special Covenant of Seller, UPAC and Parent.....61
ARTICLE VIII ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer.........................64
SECTION 8.02. Duties of Servicer..............................65
SECTION 8.03. Rights of the Agent.............................67
SECTION 8.04. Responsibilities of Seller......................68
SECTION 8.05. Further Action Evidencing Purchases and
Reinvestments.........................................69
SECTION 8.06. Application of Collections......................70
ARTICLE IX SECURITY INTEREST
SECTION 9.01. Grant of Security Interest......................70
SECTION 9.02. Further Assurances..............................71
SECTION 9.03. Remedies........................................71
ARTICLE X LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events.............................71
SECTION 10.02. Remedies.......................................76
ARTICLE XI THE AGENT
SECTION 11.01. Authorization and Action.......................76
SECTION 11.02. Agent's Reliance, Etc..........................76
SECTION 11.03. Bank of Boston and Affiliates..................77
ARTICLE XII ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments....................77
SECTION 12.02. Rights of Assignee.............................78
SECTION 12.03. Evidence of Assignment.........................79
SECTION 12.04. Rights of the Banks and Collateral Agent.......79
ARTICLE XIII INDEMNIFICATION
SECTION 13.01. Indemnities by Seller and UPAC.................79
ARTICLE XIV MISCELLANEOUS
SECTION 14.01. Amendments, Etc................................83
SECTION 14.02. Notices, Etc...................................83
SECTION 14.03. No Waiver; Remedies............................84
SECTION 14.04. Binding Effect; Survival.......................84
SECTION 14.05. Costs, Expenses and Taxes......................84
SECTION 14.06. No Proceedings.................................85
SECTION 14.07. Confidentiality of Seller Information..........85
SECTION 14.08. Confidentiality of Program Information.........87
SECTION 14.09. Captions and Cross References..................89
SECTION 14.10. Integration....................................89
SECTION 14.11. Governing Law..................................89
SECTION 14.12. Waiver Of Jury Trial...........................89
SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities..89
SECTION 14.14. Execution in Counterparts......................90
SECTION 14.15. No Recourse Against Other Parties..............90
SECTION 14.16. Covenant to Cooperate..........................90
SECTION 14.17. Advice From Independent Counsel................90
RECEIVABLES PURCHASE AGREEMENT
Dated as of December 31, 1996
This RECEIVABLES PURCHASE AGREEMENT, among APR FUNDING CORPORATION, a
Delaware corporation ("Seller"), UNIVERSAL PREMIUM ACCEPTANCE CORPORATION, a
Missouri corporation, individually ("UPAC") and as Servicer (in such capacity,
the "Servicer"), ANUHCO, INC., a Delaware corporation ("Parent"), EAGLEFUNDING
CAPITAL CORPORATION, a Delaware corporation ("Purchaser") and THE FIRST NATIONAL
BANK OF BOSTON (as "Agent", as "Custodian" and in its individual capacity, "Bank
of Boston"). Unless otherwise indicated, capitalized terms used in this
Agreement are defined in Appendix A.
Background
1. Seller has, and expects to have and/or to purchase from the
"Originators" pursuant to the terms and subject to the conditions of the
Purchase and Sale Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time (the
" Purchase and Sale Agreement" ) among the Seller, APR, UPAC and UPAC of
California, Pool Receivables originated in the ordinary course of the
Originators' respective premium finance loan businesses in which Seller intends
to sell undivided percentage ownership interests. Seller has requested
Purchaser, and Purchaser has agreed, subject to the terms and conditions
contained in this Agreement, to purchase such undivided percentage ownership
interests (referred to herein collectively as the " Asset Interest" ) from
Seller from time to time during the term of this Agreement.
2. Seller and Purchaser also desire that, subject to the terms
and conditions of this Agreement, certain of the daily Collections in respect of
the Asset Interest be reinvested in Pool Receivables, which reinvestments shall
constitute part of the Asset Interest.
3. EagleFunding Capital Corporation, as Purchaser, expects to
fund its acquisition and maintenance of the Asset Interest through the issuance
of Commercial Paper Notes. Commercial paper funding hereunder is available
solely from the Purchaser. The Purchaser has entered into a Liquidity Agreement
which generally provides for loans by the Liquidity Providers to the Purchaser
to facilitate its purchase of percentage interests in the Asset Interest in the
event the Purchaser is unable or unwilling to fund its acquisition and/or
maintenance of any such Asset Interest with Commercial Paper Notes.
4. In order to induce the Purchaser to enter into this Agreement
and to purchase the Asset Interest hereunder, Parent has agreed to provide to
Purchaser certain limited indemnification, as further described herein.
5. UPAC has been requested, and is willing, to act as initial
Servicer.
6. The First National Bank of Boston has been requested, and is
willing, to act as the Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01.
Commitments to Purchase; Limits on Purchaser's Obligations. Upon the terms and
subject to the conditions of this Agreement (including, without limitation,
those contained in Article V) , from time to time prior to the Termination Date,
Seller may request on or before the last Business Day of any calendar week that
Purchaser purchase on the last Business Day of the immediately succeeding
calendar week from Seller undivided percentage ownership interests in Pool
Receivables, all related Contracts, all Related Security, Collections and all
other proceeds, including books and records with respect to such Pool
Receivables (each being a " Purchase" ) and Purchaser shall make such Purchase
at such times and upon the terms and subject to the conditions set forth
herein; provided , that Purchaser shall make no Purchase if, after giving effect
thereto, the Purchaser's Total Investment would exceed $50,000,000 (the
" Purchase Limit") ; provided; however , that each Purchase made pursuant to
this Section 1.01 shall have a purchase price of at least $250,000.
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests
(a) Notice of Purchase . Each Purchase from Seller by
Purchaser shall be made on notice from Seller to the Agent (substantially
in the form of Exhibit 1.02 ) received by the Agent not later than 12:00
noon (New York City time) on the last Business Day of the calendar week
preceding the date of such proposed Purchase (which shall be the last
Business Day of the calendar week following the date of such notice). Each
such notice of a proposed Purchase shall specify the desired amount and
date of such Purchase and the requested Yield Periods, funding sources and
allocations thereto of the Purchaser's Total Investment associated with
such Purchase; it being understood and agreed , that the Purchaser shall
have no obligation or commitment to fund any Purchase or any Asset Tranche
with Commercial Paper Notes, but may agree to do so at its option. The
Agent will notify the Purchaser of the request for a Purchase and the terms
thereof. The Purchaser shall notify the Agent as to whether the proposed
Yield Period, funding sources and allocations of the amount of such
Purchase to such Yield Period are reasonably acceptable to it, and if not,
what Yield Periods and allocations are acceptable to it. If the Purchaser
and the Seller can not agree on terms prior to the close of business on the
date of such notice, then the Purchaser shall allocate the Purchaser's
Tranche Investment relating to such Purchase to Asset Tranches accruing
Earned Discount at the Adjusted Eurodollar Rate or the CP Rate, as selected
by the Purchaser in its sole discretion, for Yield Periods of not more than
30 days (as selected by the Agent); it being understood and agreed , that
if the Purchaser is then able to issue Commercial Paper Notes in respect of
this transaction, the Agent shall allocate such amount to an Asset Tranche
accruing Earned Discount at the CP Rate.
(b) Funding of Purchase . On the date of each Purchase,
Purchaser shall, upon satisfaction of the applicable conditions set forth
in Article VI make available to the Agent at the Agent's Office the amount
of its Purchase in same day funds, and after receipt by the Agent of such
funds, the Agent will make such funds immediately available to Seller at
such office.
(c) Assignment of Asset Interests . Seller hereby sells,
assigns and transfers to Purchaser, effective on and as of the date of each
Purchase and Reinvestment by the Purchaser hereunder, the Asset Interest in
the Pool Receivables, the related Contracts, the Related Security and all
Collections in respect of, and other proceeds of, any of the foregoing.
SECTION 1.03. Reinvestments
(a) On the close of business on each day prior to the
Liquidation Date during the period from the date hereof to the Termination
Date, Servicer will, on Purchaser's behalf, out of Purchaser's Share of
Collections, apply and pay over to Seller, Purchaser's Share on account of
Collections of Principal Receivables for the Purchase from Seller of
undivided percentage ownership interests in Pool Receivables, related
Contracts, Related Security, Collections and all other proceeds, including
books and records with respect to such Pool Receivables (each such purchase
being a " Reinvestment "); provided that if after giving effect to such
Reinvestment the Purchaser's Share with respect to Principal Receivables
would exceed 100%, then, Servicer shall not reinvest, but shall set aside
in the Collection Account and hold for the benefit of Purchaser pursuant
to Section 1.03(b ) and shall pay over to the Agent on the next Settlement
Date for application in accordance with the terms hereof, a portion of such
Collections which, together with other Collections previously set aside and
then so held, shall equal the amount necessary to reduce the Purchaser's
Share with respect to Principal Receivables to 100%;
and provided, further , that if the conditions precedent to Reinvestment in
clause (a) , (b) or (d) of Section 5.02 are not satisfied, then
Servicer shall not reinvest any of such remaining Collections. For
purposes of determining whether Collections on account of Principal
Receivables may be reinvested pursuant to this Section 1.03 , the Net Pool
Balance used in calculating Purchaser's Share of Principal Receivables
shall be calculated net of the principal portion of Adverse Determination
Receivables.
(b) Unreinvested Collections . Servicer shall set aside and
hold in trust and shall retain in the Collection Account for the benefit of
Purchaser all Collections which pursuant to Section 1.03(a) , may not be
reinvested in the Pool Receivables and related property. If at any time
the amount of Collections so set aside may again be reinvested pursuant
to Section 1.03(a ) and the conditions precedent to Reinvestment set forth
in clauses (a) , (b) and ( d ) of Section 5.02 are satisfied, then the
Servicer shall withdraw such Collections from the Collection Account and
apply such Collections (or, if less, a portion of such Collections equal to
the amount of such excess) to the making of Reinvestments.
(c) Payment of Amounts Set Aside . Prior to the occurrence of
the Termination Date, Servicer, and thereafter the Agent shall pay all
amounts set aside in the Collection Account pursuant to Section 1.03(b ) to
the Agent for the account of Purchaser on the Business Day preceding each
Settlement Date whereupon the Agent shall remit such amounts to the
Purchaser on such Settlement Date in reduction of the Purchaser's Total
Investment. Servicer shall pay over and deposit any amounts received by it
which otherwise would be required to be deposited in the Collection
Account, to the extent not previously deposited therein, to the Collection
Account within one Business Day of receipt thereof.
(d) Reduction of Purchaser's Total Investment . The
Purchaser's Total Investment shall not be reduced by the amount of
Collections set aside pursuant to this Section 1.03 , whether or not on
deposit in the Collection Account, unless and until such Collections are
actually delivered by the Agent to the Purchaser pursuant
to Section 1.03(c) .
SECTION 1.04. Asset Interest; Purchaser's Share .
(a) Components of Asset Interest . For purposes of this
Agreement, " Asset Interest " means, at any time, Purchaser's combined
undivided percentage ownership interests at such time in (i) all then
outstanding Pool Receivables, (ii) all related Contracts, (iii) all Related
Security with respect to such Pool Receivables and such Contracts, and (iv)
all books and records with respect to such Pool Receivables and such
Contracts, and (v) all Collections with respect to, and other proceeds of,
such Pool Receivables, Contracts and Related Security. The amount of such
Asset Interest shall mean, with respect to Principal Receivables and
Finance Charge Receivables, the respective Purchaser's Shares determined
pursuant to Section 1.04(b) .
(b) Purchaser's Share . (i) Principal Receivables .
(A) " Purchaser's Share " shall mean, with respect to Principal
Receivables, the percentage calculated by dividing (x) the sum of
the Purchaser's Total Investment plus the Default Reserve (as
determined pursuant to Section 1.04(b)(i)(D) below) by (y) the
Net Pool Balance; provided that , for purposes of allocating
Collections or Principal Receivables, Purchaser's Share with
respect to Principal Receivables shall not exceed 100%;
and provided, further , that after the occurrence of the
Liquidation Date, Purchaser's Share with respect to Principal
Receivables shall be deemed to be Purchaser's Share with respect
to Principal Receivables as of the day immediately preceding such
Liquidation Date.
(B) On each day " Purchaser's Share of Collections " on account of
Principal Receivables shall be equal to the product of (x) the
related Purchaser's Share with respect to Principal Receivables
on such day and (y) the amount of the Collections on account of
Principal Receivables on such day.
" Purchaser's Share of Defaulted Receivables " shall mean, on
any day, the product of (x) Purchaser's Share with respect to
Principal Receivables on such day and (y) the amount of
Receivables becoming Defaulted Receivables on such day.
(C) On each day after the occurrence of the Liquidation Date,
Seller's Share of Collections on account of Principal Receivables
shall not be paid to Seller, but shall be retained in the
Collection Account. If the amount of Purchaser's Share of
Collections on account of Principal Receivables received or
deemed received on or prior to the date that each and every Pool
Receivable is scheduled to have amortized in accordance with the
related Contract shall be insufficient to reduce the Purchaser's
Total Investment to zero, then on such date the Agent shall
withdraw (from amounts actually retained in the Collection
Account pursuant to the two preceding sentences) and remit to the
Purchaser such funds from the Collection Account in the amount of
the lesser of (x) the amount of such deficiency attributable to
Purchaser's Share of Defaulted Receivables and (y) 100% of the
Collections on account of Seller's Share of Collections then on
deposit in the Collection Account. After the Final Payout Date,
all remaining amounts in the Collection Account shall be paid to
the Seller. Prior to the occurrence of the Liquidation Date,
Servicer shall pay to Seller on each day, Seller's Share of
Collections on account of Principal Receivables received on such
day.
(D) (x) The " Default Reserve " on any day means an amount as
follows:
DR= (__1___) -1) x PI
((1-RP ) )
where :
DR = the Default Reserve on such day;
RP = the Reserve Percentage at the close of business of Purchaser
on such day, as determined pursuant
to Section 1.04(b)(i)(D)(y) ;
PI = the related Purchaser's Total Investment at the opening of
business of Purchaser on such day; and
(y) " Reserve Percentage " means, with respect to any
Settlement Date the greater of (1) 10.00% and (2) the product of
1.35 times the highest annualized three month average Default
Ratio for any three consecutive Settlement Periods preceding such
Settlement Date (calculated for use with respect to the first two
Settlement Dates on a pro forma basis for such number of
consecutive calendar months preceding the date hereof as
necessary to make such calculation; each such calendar month
shall be deemed to be a Settlement Period for purposes of
this clause (y) ).
(ii) Finance Charge Receivables .
(A) " Purchaser's Share " shall mean, on any day with respect to
Finance Charge Receivables, 100%; subject , however , to the
applications to Earned Discount, Program Fee, Liquidity Fee,
Servicer's Fee, Defaulted Receivables and Designated Obligations
as provided for in Section 3.02 .
(B) On each day, " Purchaser's Share of Collections " on account of
Finance Charge Receivables shall be equal to the product of (x)
the related Purchaser's Share with respect to Finance Charge
Receivables and (y) the amount of the Collections on account of
Finance Charge Receivables received or deemed received on such
day.
(iii) Defeasance . With respect to the Asset Interest: (x) at
such time as the Purchaser's Total Investment equals zero, then the
related Purchaser's Share with respect to Principal Receivables shall
equal zero, and (ii) at such time as the related unpaid Earned
Discount equals zero, and no amounts are owing in respect of the
related Program Fee, Liquidity Fee, Servicer's Fee, Designated
Obligations or other amounts under this Agreement, then the related
Purchaser's Share with respect to Finance Charge Receivables shall
also equal zero.
(c) Frequency of Computation . The respective Purchaser's
Shares with respect to the Asset Interest shall be initially computed
as of the opening of business of Servicer on the date of Purchase of
the Asset Interest from Seller. Thereafter until the Asset Interest
shall be reduced to zero, such Purchaser's Shares shall be recomputed
(i) on the date of each Purchase made hereunder which increases the
Purchaser's Total Investment (as calculated after giving effect to
such Purchaser) (ii) on each Weekly Report Date (as calculated as of
the last Business Day of the calendar week preceding such Weekly
Report Date) and (iii) as of the close of business on the day
immediately preceding the Termination Date, and such Purchaser's
Shares shall constitute the percentage ownership interest in Pool
Receivables on such date owned by Purchaser. Such Purchaser's Shares
shall remain constant from the time as of which any such computation
or recomputation is made or deemed to be made until the time as of
which the next such recomputation, if any, shall be made or deemed to
be made. In addition, the Agent may require Servicer to provide a
report more frequently than weekly for purposes of computing the Asset
Interest as of any other date, and the Servicer agrees to do so within
two (2) Business Days of its receipt of the Agent's request therefor,
and such Asset Interest would then be in effect until such time as
such amount is again recomputed or deemed recomputed. The Asset
Interest shall remain constant as calculated in clause (iii) above
from and after the Termination Date.
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Selection of Asset Tranches . For purposes of
computing Earned Discount, the Seller and the Agent (subject to the limitations
set forth herein) shall, upon each Purchase and upon the expiration or
termination of the Yield Period applicable to such Asset Tranche, divide the
Asset Interest into Asset Tranches, and the applicable Earned Discount Rate may
be different for each Asset Tranche. Purchaser's Total Investment shall be
allocated to each selected Asset Tranche by the Agent to reflect the funding
sources for the Asset Interest, so that:
(a) there may be one or more Asset Tranches reflecting the
portion of the Asset Interest funded by Liquidity Advances; and
(b) there may be one or more Asset Tranches reflecting the
portion of the Asset Interest funded by Commercial Paper Notes;
provided , that at all times the Purchaser's Total Investment shall be fully
allocated to one or more Asset Tranches; and provided , further , that, after
the occurrence of the Liquidation Date, all Asset Tranches will be selected by
the Agent and will be funded solely by Liquidity Advances, and all then
outstanding Asset Tranches funded by Commercial Paper Notes shall be terminated
and reallocated to Asset Tranches funded by Liquidity Advances.
SECTION 2.02.
Computation of Purchaser's Total Investment and Purchaser's Tranche Investment
. In making any determination of Purchaser's Total Investment and Purchaser's
Tranche Investment, the following rules shall apply:
(a) Purchaser's Total Investment shall not be considered
reduced by any allocation, setting aside or distribution of any
portion of Collections unless such Collections shall have been
actually delivered by the Agent to the Purchaser pursuant hereto;
(b) Purchaser's Total Investment shall not be considered
reduced by any distribution of any portion of Collections if at any
time such distribution is rescinded or must otherwise be returned for
any reason; and
(c) if there is any reduction in Purchaser's Total
Investment, there shall be a corresponding reduction in a Purchaser's
Tranche Investment with respect to one or more Asset Tranches selected
by the Agent in its discretion.
SECTION 2.03. Computation of Earned Discount . In making any
determination of Earned Discount, the following rules shall apply:
(a) the Agent shall determine the Earned Discount accruing
with respect to each Asset Tranche, and each Yield Period therefor, in
accordance with the definition of Earned Discount;
(b) no provision of this Agreement shall require the payment
or permit the collection of Earned Discount in excess of the maximum
permitted by applicable law; and
(c) Earned Discount for any Asset Tranche shall not be
considered paid by any distribution if at any time such distribution
is rescinded or must otherwise be returned for any reason.
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures for Collections of Principal
Receivables. On each day, Servicer shall deem an amount equal to Purchaser's
Share of Collections on account of Principal Receivables received or deemed
received on such day to be received in respect of the Asset Interest; and
(a) prior to the occurrence of the Liquidation Date, except to
the extent otherwise set forth in Section 1.03 , Servicer on behalf of
the Purchaser shall apply the full amount of Purchaser's Share of such
Collections to reduce the Purchaser's Total Investment and after such
reduction apply such amount to Reinvestments as provided
in Section 1.03(a) , in additional undivided percentage ownership
interests in Pool Receivables. Any such application shall
automatically increase the Purchaser's Total Investment (to the same
amount as was outstanding immediately prior to the application of such
amounts to Purchaser's Total Investment). The recomputed Purchaser's
Share with respect to Principal Receivables, after giving effect to
the reduction and increase of Purchaser's Total Investment shall
constitute the percentage ownership interest in Principal Receivables
on such day owned by Purchaser with regard to the Asset Interest; and
(b) after the occurrence of the Liquidation Date, on each
Settlement Date the Agent shall deliver to the Purchaser, and the
Purchaser shall apply, the full amount of Purchaser's Share of such
Collections, plus other such Collections to which the Purchaser is
entitled pursuant to Section 1.04(b)(i)(C) above, to reduce
Purchaser's Total Investment.
SECTION 3.02. Settlement Procedures for Collections of Finance Charge
Receivables
(a) Daily Set Aside . On each day Servicer shall set aside and
hold in trust for Purchaser, Purchaser's Share of Collections on
account of Finance Charge Receivables in respect of the Asset Interest
for such day.
(b) Delivery to the Agent .
(i) On each day, Servicer shall calculate the excess, if
any, of (x) the Collections on account of Finance Charge
Receivables set aside on and prior to such day pursuant
to Section 3.02(a) , over (y) the aggregate unpaid amount of
Earned Discount, Liquidity Fee, Program Fee, Servicer's Fee and
any other Designated Obligations (estimated based on the previous
month) accrued in respect of the Asset Interest; and (A) prior to
the Liquidation Date, such excess, if any, shall be paid to the
Seller or (B) after the occurrence of the Liquidation Date, such
excess if any, shall be retained in the Collection Account for
application in accordance with Sections 3.02(c ) and (d). Until
remitted in payment of amounts due hereunder, Servicer shall hold
in trust in the Collection Account the amounts described in
clause (y) above;
(ii) Prior to the occurrence of the Termination Date, the
Servicer, and thereafter the Agent, shall, on each Business Day
preceding an Earned Discount Payment Date for any Asset Tranche,
withdraw from the Collection Account and deliver to the Agent,
from the funds set aside pursuant to Section 3.02(a) (but only
to the extent that such amounts exceed the accrued and unpaid
fees due to the Custodian under the Custody Agreement and, from
and after the Servicer Transfer Event, accrued and unpaid fees
and expenses due to the Servicer) and not paid over to the Seller
pursuant to Section 3.02(b)(i) , an amount equal to the accrued
and unpaid Earned Discount on such Asset Tranche for application
as set forth in Section 3.02(c) .
(iii) Prior to the occurrence of the Termination Date, on
the Business Day preceding each Settlement Date, Servicer shall
withdraw from the Collection Account and deliver to the Agent,
from the funds set aside pursuant to Section 3.02(a ) and not
paid over to the Seller pursuant to Section 3.02(b)(i) , an
amount which shall equal the unpaid Liquidity Fee, Program Fee
and Servicer's Fee for such Settlement Period, plus any other
Designated Obligations required for application by the Agent
pursuant to Sections 3.02(c ) and (d) below; provided that no
amounts shall be withdrawn from the Collection Account for
payments of amounts set forth in clauses (iii)-(vii) of
Section 3.02(c) to the extent there would then be insufficient
funds on deposit therein to pay all accrued but unpaid Earned
Discount at such time. After the occurrence of the Termination
Date, the Agent shall withdraw such amounts on such Settlement
Date, as applicable, from the Collection Account (to the extent
on deposit therein).
(c) Application of Funds to Earned Discount, Fees, etc .
Subject to receipt of funds set aside pursuant to Section 3.02(a ) and
withdrawn and paid over pursuant to Section 3.02(b) , the Agent shall
(x) on each Earned Discount Payment Date, distribute to the Purchaser
the amount of any accrued but unpaid Earned Discount due on such date,
and (y) on each Settlement Date, distribute them in the following
order: (i) first , to the Custodian, for the payment of the accrued
and unpaid fees due under the Custody Agreement for the related
Settlement Period (including any accrued and unpaid fees from any
prior Settlement Period), (ii) second to Servicer, if not an
Originator or the Parent or an Affiliate of an Originator or the
Parent, for the payment of the accrued and unpaid Servicer's Fee for
the related Settlement Period (including any accrued and unpaid
amounts from any Prior Settlement Period), (iii) third , to Purchaser
for the payment of the accrued and unpaid Program Fee and Liquidity
Fee for the related Settlement Period (including any accrued and
unpaid amounts from any prior Settlement Period), (iv) fourth , to
Purchaser, the Agent, any Liquidity Bank, or any other Person (other
than the Parent or any of its Subsidiaries or Affiliates) hereunder,
as the case may be, in payment of any Designated Obligations, owing to
such Person hereunder (including any accrued and unpaid amounts from
any prior Settlement Period), (v) fifth , to the Custodian, for the
payment of the accrued and unpaid expenses due under the Custody
Agreement for the related Settlement Period (including any accrued and
unpaid amounts from any prior Settlement Period), (vi) sixth , if an
Originator, the Parent or any Affiliate of an Originator or the Parent
is Servicer, to Servicer for the payment of the accrued and unpaid
Servicer's Fee for the related Settlement Period (including any
accrued and unpaid amounts from any prior Settlement Period), and
(vii) seventh , any remaining amounts shall, prior to the occurrence
of the Liquidation Date, be paid to Seller and, after the occurrence
of the Liquidation Date, be distributed in accordance
with Section 3.02(d) . To the extent insufficient funds exist to pay
all of the foregoing amounts, such amounts shall be paid in the order
of priority set forth above and pro rata as among such amounts of
equal priority.
(d)
Application to Defaulted Receivables and Delinquent Receivables
during Liquidation Period . After the occurrence of the Liquidation
Date, the Agent shall, after giving effect to the distributions
pursuant to Sections 3.02(b ) and (c) , distribute and apply any
remaining Collections on account of Finance Charge Receivables (to the
extent in excess of any accrued but unpaid Earned Discount at such
time) as follows: (i) first , to Purchaser toward payment of
Purchaser's Share of Defaulted Receivables, which payment shall be
deemed a Collection on account of Principal Receivables, and
(ii) second , to the account of Seller; provided that , with regard to
clause ( ii ) above, if Purchaser's Total Investment shall not then
have been reduced to zero, such balance shall remain in the Collection
Account to be applied on each Settlement Date following thereafter in
accordance with clause first above until the date on which
Purchaser's Total Investment and all other amounts payable to the
Purchaser, the Agent, or any Liquidity Banks shall have been reduced
to zero.
SECTION 3.03. General Settlement Procedures . The parties hereto
will take the following actions:
(a) Settlement Statement . On the fifth Business Day following
the Cut-Off Date for each Settlement Period, Servicer shall deliver to
the Agent a report (together, if requested by the Agent, with a
computer diskette containing such information) containing the
information described in Exhibit 3.03(a) (each, a
" Settlement Statement") , including a listing of all Contracts (by
contract number, Direct Obligor and amount financed) transferred by
the Originators to the Seller during such Settlement Period.
(b) Weekly Report . On each Weekly Report Date, Servicer shall
deliver to the Agent a report (together, if requested by the Agent,
with a computer diskette containing such information) containing the
information described in Exhibit 3.03(b) (each a " Weekly Report ").
(c) Notification of Earned Discount: Other Amounts Due . On
the Business Day immediately preceding any Earned Discount Payment
Date, the Agent shall notify Servicer of the approximate amount of
Earned Discount that will be payable on such Earned Discount Payment
Date. In addition, on the second Business Day following such Cut-Off
Date, the Agent shall notify Servicer of the amount of all fees
(including the Program Fee, Liquidity Fee and the Servicer's Fee) and
Designated Obligations and other amounts accrued and payable by Seller
under this Agreement.
(d) Non-Distribution of Servicer's Fee . If the Agent consents
(which consent may be revoked at any time), the amounts (if any) set
aside pursuant to Section 3.02 in respect of Servicer's Fee may be
retained by Servicer, in which case no distribution shall be made in
respect of Servicer's Fee pursuant to Section 3.02 above.
(e) Allocations of Obligor's Payments . Except as provided for
herein or as otherwise required by law or the underlying Contract, all
Collections received from an Obligor of any Receivable shall be
applied to Pool Receivables then outstanding of such Obligor in the
order of the age of such Pool Receivables, starting with the oldest
such Pool Receivable, except if payment is designated by such Obligor
for application to specific Receivables or can be readily identified
to specific Receivables, in which case it shall be applied to such
specified Receivables. For each Settlement Period Collections will be
allocated so that all Collections up to the amount of Finance Charge
Receivables billed in respect of the immediately preceding Settlement
Period will be deemed Collections of Finance Charge Receivables and
the remaining amount of such Collections will be deemed Collections of
Principal Receivables.
(f) Collection Account: Deposits and Withdrawals .
(i) Deposits to Collection Account . Each of Seller and
Servicer will, with respect to Collections in respect of Pool
Receivables received by them, and will cause each Lock-Box Bank,
with respect to Collections in respect of Pool Receivables
received in any lock-box to, deposit such Collections in the
Collection Account immediately upon identification thereof, but
in no event later than one Business Days after receipt thereof.
Such amounts to be deposited in the Collection Account by Seller,
Servicer or the applicable Lock-Box Banks shall include, but not
be limited to, the following: (x) any and all Collections and
other payments in respect of Receivables (whether on account of
Principal Receivables, Finance Charge Receivables or otherwise),
related Contracts, and Related Security and any proceeds thereof,
(y) all amounts transferred from the Lock-Box Accounts, and (z)
all Indemnified Amounts paid by Seller, the Originators or Parent
for Receivables required to be repurchased pursuant
to Section 3.07(b ) or on account of a breach of representation
or warranty with respect thereto or for any other reason.
Servicer (or its designee or successor) shall notify the Agent of
the amount of funds deposited in the Collection Account not
received from Pool Receivables and the Agent (if it shall agree
with Servicer) shall remit (or cause the Servicer to remit) such
funds as soon as practicable after such notification to such
account as Servicer (or its designee or successor) shall
designate.
(ii) Withdrawals from Collection Account . Prior to the
Termination Date, the Agent shall permit the Servicer, to access
the Collection Account in connection with its duties as Servicer
and, in that connection the Servicer, may withdraw funds on
deposit therein in accordance with, and for the purposes
permitted under, the provisions of the Transaction Documents.
Upon the occurrence of the Termination Date, (x) the Servicer's
right of access to the Collection Account shall terminate
immediately without any further action by any Person being
required (but the Servicer shall be permitted to make deposits in
each case with the consent of the Agent) and (y) the Agent or its
designee (which may be the Backup Servicer) shall thereafter make
all withdrawals in accordance with the terms hereof or may
transfer funds to the Liquidation Collection Account and shall
make such withdrawals from the Liquidation Collection Account as
if it were the Collection Account.
(g) Permitted Dividends . So long as no Liquidation Event or
Unmatured Liquidation Event then exists or would result therefrom, the
Seller may remit Permitted Dividends, if any, to APR on the Business
Day next following each Settlement Date. Unless specifically
permitted hereunder or under any other Transaction Document to pay for
Receivables, in payment of fees, etc., Seller shall make no other
payments to any of the Originators or any of their or any Affiliate.
SECTION
3.04. Deemed Collections; Reduction of Purchaser's Total Investment, Etc .
(a) Deemed Collections . If on any day
(i) the Unpaid Balance of any Pool Receivable is
(A) reduced as a result of any dispute or complaint, any
cash discount, or any adjustment by Seller, the
applicable Originator or Servicer or any Affiliate of
Seller, the applicable Originator or Servicer,
(B) reduced or canceled as a result of a setoff in respect
of any claim by the Obligor thereof against Seller, the
applicable Originator or any Affiliate of Seller, the
applicable Originator (whether such claim arises out of
the same or a related or an unrelated transaction), or
(C) reduced on account of the obligation of Seller or any
Affiliate of Seller or the applicable Originator to pay
to the related Obligor any rebate or refund, or
(D) less than the amount included in calculating the Net
Pool Balance for purposes of any Settlement Statement,
or
(ii) any of the representations or warranties of Seller set
forth in Section 6.01(l ) or (p) were not true when made with
respect to any Eligible Receivable that is a Pool Receivable or
any Pool Receivable represented to be an Eligible Receivable, or
any of the representations or warranties of Seller set forth
in Section 6.01(l ) are no longer true with respect to any
Eligible Receivable that is a Pool Receivable,
then, on such day, Seller shall be deemed to have received a
Collection (such Collection, a " Deemed Collection" ) of such Pool
Receivable
(I) in the case of clause (i) above, in the amount of such
reduction or cancellation or the difference between the actual
Unpaid Balance and the amount included in calculating such Net
Pool Balance, as applicable; and
(II) in the case of clause (ii) above, in the amount of the
Unpaid Balance of such Pool Receivable.
(b)
Seller's Optional Reduction of Purchaser's Total Investment .
Seller may at any time elect to reduce the Purchaser's Total
Investment as follows:
(i) Seller shall give the Agent at least three (3) Business
Days' prior written notice of such reduction (including the
amount of such proposed reduction and the proposed date on which
such reduction will commence),
(ii) on the proposed date of commencement of such reduction
and on each day thereafter, Servicer shall refrain from
reinvesting Collections on account of Principal Receivables
pursuant to Section 1.03 until the amount thereof not so
reinvested shall equal the desired amount of reduction, and
(iii) Servicer shall hold such Collections in trust for
Purchaser on the next succeeding Settlement Date, pending payment
to the Agent (or if Collections are then being retained in the
Collection Account, such Collections shall be held therein), as
provided in Sections 1.03 and 3.01 ;
provided that,
(A) the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of
$100,000 in excess of such amount, and the Purchaser's
Total Investment after giving effect to such reduction
shall be not less than $10,000,000 (unless Purchaser's
Total Investment shall thereby be reduced to zero),
(B) Seller shall use reasonable efforts to attempt to
choose a reduction amount, and the date of commencement
thereof, so that such reduction shall commence and
conclude in the same Settlement Period, and
(C) After giving effect to such reduction, Purchaser's
Share on account of Principal Receivables does not
exceed 100%.
SECTION 3.05. Payments and Computations, Etc .
(a) Payments . All amounts to be paid or deposited by Seller
or Servicer to the Agent or any other Person hereunder (other than
amounts payable under Section 4.02 ) shall be paid or deposited in
accordance with the terms hereof no later than 12:00 noon (New York
time) on the day when due in lawful money of the United States of
America in same day funds to the Agent's account at Bankers Trust
Company, 0 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Account No. 22062,
ABA No.: 000-000-000; Reference: APR Funding Collateral Account.
(b) Late Payments . Seller or Servicer, as applicable, shall,
to the extent permitted by law, pay to Purchaser interest on all
amounts not paid or deposited when due hereunder at 2%
per annum above the Base Rate, payable on demand,
provided, however , that such interest rate shall not at any time
exceed the maximum rate permitted by applicable law.
(c) Method of Computation . All computations of interest,
Earned Discount any fees payable under Sections 4.01(b ) and (c) and
any other fees payable by Seller to the Purchaser or the Agent
hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last
day) elapsed.
SECTION 3.06. Treatment of Collections and Deemed Collections.
Seller shall forthwith deposit in the Collection Account all Collections deemed
received by Seller pursuant to Section 3.04 and such Collections shall be held
or distributed as Earned Discount, accrued Servicer's Fee, accrued Program Fees,
accrued Liquidity Fees, repayment of Purchaser's Total Investment, etc. to the
same extent as if such Collections had actually been received on the date of
such deposit in the Collection Account. So long as Seller shall hold any
Collections or deemed Collections required to be paid to Servicer, Purchaser or
the Agent, it shall hold such Collections in trust and shall clearly xxxx its
records to reflect such trust.
SECTION 3.07. Repurchases .
(a) If on any Settlement Date the Purchaser's Total Investment
shall equal or be less than 5% of the greatest amount of Purchaser's
Total Investment at any time prior to such Settlement Date, Seller
shall be entitled to repurchase the Asset Interest on such Settlement
Date. Seller shall give Purchaser at least five Business Days' prior
written notice of such repurchase and upon payment of the repurchase
price therefor, as hereinafter provided, Purchaser shall be obligated
to reconvey its entire interest in the Asset Interest to Seller
pursuant to an assignment acceptable to the parties, but without
representation or warranty except that the interest assigned is free
of offset, liens and other encumbrances created by the assignor.
Seller shall pay such repurchase price in cash to the Agent on behalf
of Purchaser in an amount equal to the sum of (i) all accrued and
unpaid Earned Discount plus any Liquidation Fee owing with respect
thereto as a result of the early termination of any Yield Period, (ii)
the Purchaser's Total Investment therein, (iii) the aggregate of other
amounts then owed hereunder by Seller to Purchaser, any Liquidity
Bank, or Agent and (iv) the accrued and unpaid Servicer's Fee. Upon
receipt of the aforesaid repurchase price the Agent shall distribute
it (i) to Purchaser or the Agent, as applicable (a) in payment of the
accrued and unpaid Earned Discount and Liquidation Fee (if any), (b)
in reduction of the Purchaser's Total Investment and (c) in payment of
any other amounts owed by Seller hereunder to Purchaser, any Liquidity
Bank or Agent, in each case until reduced to zero, and (ii) to
Servicer in payment of the accrued and unpaid Servicer's Fee, also
until reduced to zero.
(b) If at any time an Adverse Determination occurs Seller shall
within three Business Days of Seller's knowledge thereof notify
Purchaser of such Adverse Determination, and Seller shall, if
Purchaser in its sole discretion so demands, (i) within five Business
Days after notice has been given to the Purchaser or by the Purchaser
to the Seller, repurchase Purchaser's ownership interest in the
Adverse Determination Receivables, or (ii) at the end of the related
applicable Yield Periods, repurchase Purchaser's ownership interest in
the Adverse Determination Receivables. In the case of a repurchase
under clause (i) or (ii) above, upon payment by Seller of the
repurchase price therefor, as hereinafter provided, Purchaser shall be
obligated to reconvey its entire interest in such Adverse
Determination Receivables to Seller pursuant to an assignment
acceptable to the parties, but without representation or warranty
except as to the assignor's good title, free of offset, liens and
other encumbrances as to the interest assigned. To the extent
required above, Seller shall pay such repurchase price in cash to the
Agent on behalf of Purchaser in an amount equal to the sum of (A) the
product of (x) the Purchaser's Share on account of Principal
Receivables multiplied by (y) the then Unpaid Principal Balance of
such Adverse Determination Receivables plus (B) Purchaser's Share on
Account of Finance Charge Receivables received and not paid over to
Purchaser or the Agent in respect of such Adverse Determination
Receivables. Upon receipt of such repurchase price Purchaser shall
apply such repurchase price to reduce Purchaser's Total Investment and
any accrued and unpaid Earned Discount, Liquidity Fee, Program Fee,
Servicer's Fee and Designated Obligations. Upon such receipt, such
Adverse Determination Receivables shall thereupon be deemed removed
from the Receivables Pool for all purposes hereunder. A repurchase of
Purchaser's ownership interest in Adverse Determination Receivables
shall not substitute for or limit the applicable indemnification
obligations under Article XIII . In the event that any Indemnified
Party shall incur or expects to incur any demonstrable loss or expense
as a result of the redeployment of amounts received pursuant to
clause (i) above, then, within five Business Days after written
notice from Purchaser to Seller, Seller shall pay to Purchaser such
additional amounts as will (in the reasonable determination of the
Indemnified Parties) reimburse the Indemnified Parties for such
demonstrable loss or expense. Such written notice shall, in the
absence of demonstrable error, be conclusive and binding on Seller.
This Section 3.07(b ) shall survive the termination of this Agreement.
SECTION 3.08. Custody Arrangement . Seller and Servicer shall enter
into the Custody Agreement with the Custodian and the Agent on or prior to the
date hereof. On each Wednesday of each calendar week Seller and Servicer shall,
unless the Agent shall otherwise agree in writing, deliver to the Custodian on
behalf of Purchaser and Seller in accordance with their respective interests
each and every Contract (not previously delivered to the Custodian) Purchased by
the Seller under the Purchase and Sale Agreement and/or subject to a Purchase or
Reinvestment hereunder prior to such Wednesday; provided that , with respect to
any Contract as to which adequate reproductions cannot be made for servicing
purposes due to the poor quality of the original thereof, Servicer may retain
custody of such Contract, but shall hold it in trust for the benefit of the
Agent, the Purchaser and Seller in accordance with their respective
interests; provided, further , that the number of Contracts so held by the
Servicer in trust shall not exceed 1% of all Contracts then owned by Seller. A
schedule identifying the Contracts by contract number, Direct Obligor and amount
financed thereunder shall be delivered to the Custodian on or before the
delivery of such Contracts on such Wednesday; all such schedules for each
Settlement Period shall be attached to the Settlement Statement for such
Settlement Period along with a certification by Seller and Servicer as to the
accuracy of such schedules.
SECTION
3.09. Establishment of Collection Account: Investments by Agent
(a) Collection Account . On or before the first Purchase, the
Agent shall establish, for the benefit of the Purchaser and the
Seller, to the extent of their respective interests therein, an
account (the " Collection Account") , which shall be a demand deposit
account maintained by the Originators, the exclusive dominion and
control of which have been conveyed by the Originators to the Seller
and by the Seller to the Agent, for the benefit of the Purchaser,
pursuant to the Lock-Box Agreement. Subject to the further provisions
of this Section 3.09(a) , the Agent shall, upon receipt or upon
transfer from another account, as the case may be, deposit into the
Collection Account all amounts received by it which are required to be
deposited therein in accordance with the provisions hereof. All such
amounts and all investments made with such amounts, including all
income and other gain from such investments, shall be held by the
Agent in the Collection Account or the Liquidation Collection Account
as part of the Receivables Pool as herein provided, subject to
withdrawal for the purposes specified in the provisions of, this
Agreement. The Agent (other than for the account of the Purchaser)
shall not have any right of set-off with respect to the Collection
Account or the Liquidation Collection Account or any investments
therein, whether or not commingled. Notwithstanding any other
provision herein, it shall be understood that the Agent, after the
occurrence of the Termination Date, shall have the right to transfer
any of the amounts at any time on deposit (whether or not required to
be held in the Collection Account) in the Collection Account to a
segregated trust account maintained with and in the name of the Agent
for the benefit of Purchaser and Seller to the extent of their
respective interests therein (such account the
" Liquidation Collection Account ").
(b) Administration of Payments . Unless otherwise advised by
Servicer in writing, the Agent may assume that any amount remitted to
it by Servicer, the Seller or any Lock-Box Bank is to be deposited
into the Collection Account. The Agent may establish from time to
time such deadline or deadlines as it shall determine are reasonable
or necessary in the administration hereof after which all amounts
received or collected by the Agent on any day-shall not be deemed to
have been received or collected until the next succeeding Business
Day.
(c) Investments . Pursuant to one or more Seller Orders
received from Seller, all or a portion of the amounts in the
Collection Account and the Liquidation Collection Account shall be
invested and reinvested by the Agent in one or more Eligible
Investments. Subject to the restrictions on the maturity of
investments set forth in Section 3.09(e) , each such Seller Order may
authorize the Agent to make the specific Eligible Investments set
forth therein, to make Eligible Investments from time to time
consistent with the general instructions set forth therein, or to make
specific Eligible Investments pursuant to instructions received in
writing or by facsimile transmission from the employees or agents of
Seller or the Servicer, as the case may be, identified therein, in
each case in such amounts as such Seller Order shall specify. Seller
agrees to report as income for financial reporting and tax purposes
(to the extent reportable) all investment earnings on amounts in the
Collection Account. Each of Seller and Servicer agrees to give
appropriate and timely investment directions to the Agent so that
there will not be more than two Business Days in any one calendar year
at the end of which funds in the Collection Account or the Liquidation
Collection Account are not invested, directly or indirectly, pursuant
to a Seller Order in Eligible Investments that mature on or after the
opening of business on the next Business Day.
(d) Investments in the Absence of a Seller Order . In the
event that (i) Seller shall have failed to give investment directions
to the Agent by 9:30 A.M. on any Business Day on which there may be
uninvested cash or (ii) a Liquidation Event or Unmatured Liquidation
Event shall have occurred and be continuing, then the Agent shall
invest such funds in Eligible Investments as it deems appropriate in
its sole discretion. All investments made by the Agent shall mature
no later than the maturity date therefor permitted
by Section 3.09(e) .
(e) Maturity of Investments . No investment of any amount held
in the Collection Account or the Liquidation Collection Account shall
mature later than the Business Day immediately preceding the Earned
Discount Payment Date or Settlement Date which is scheduled to occur
immediately following the date of investment for application in
accordance with the provisions of this Agreement. All income or other
gains from the investment of moneys deposited in the Collection
Account or the Liquidation Collection Account, as applicable, shall be
deposited by the Agent in the affected account immediately upon
receipt. Any net loss (determined on a month by month basis)
resulting from such investment of amounts in the Collection Account or
the Liquidation Collection Account, as applicable, shall be charged to
Seller, which, upon notice thereof by the Agent, shall reimburse the
Collection Account or the Liquidation Collection Account, as
applicable, for such loss.
(f) Form of Investment . Any investment of funds in the
Collection Account or the Liquidation Collection Account shall be made
under the following terms and conditions:
(i) each such investment shall be made in the name of the
Agent (in its capacity as such) or in the name of a nominee of
the Agent, in either case for the benefit of the Purchaser and
the other Secured Parties; and
(ii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Agent or its agent
and the Agent shall have sole possession of such instrument, and
all income on such investment.
(g) Agent Not Liable . The Agent shall not in any way be held
liable by reason of any insufficiency in the Collection Account or the
Liquidation Collection Account resulting from losses on investments
made in accordance with the provisions of this Section 3.09 (but the
Agent shall at all times remain liable for its own debt obligations,
if any, constituting part of such investments). The Agent shall not
be liable for any investment made by it in accordance with this
Section 3.09 on the grounds that it could have made a more favorable
investment.
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees
(a) Arrangement Fee . Seller shall pay to (x) the Agent,
for its own account, an arrangement fee (" Arrangement Fee ") in the
Arrangement Fee Amount payable on the date hereof and (y) the Agent,
for the account of the Purchaser, an acceptance fee
(" Acceptance Fee ") in the Acceptance Fee Amount payable on the date
hereof.
(b) Program Fee . From the date hereof until the date,
following the Termination Date on which Purchaser's Total Investment
shall be reduced to zero, Seller shall pay to the Agent, for the sole
benefit of the Purchaser, a program fee (" Program Fee ") equal to the
product of (x) the average daily amount of the Purchaser's Total
Investment during the period for which such fee is being calculated,
times (y) the Program Fee Rate. Such Program Fee shall be paid in
arrears, on the Settlement Date for each Settlement Period and on the
Final Payout Date, in the amount of such Program Fee that shall have
accrued during such Settlement Period (or portion thereof) or other
period then ending and which shall not have been previously paid.
(c) Liquidity Fee . From the date hereof until the
Liquidity Commitment Termination Date under (and as such term is
defined in) the Liquidity Agreement, Seller shall pay to Agent, for
allocation to the Liquidity Providers thereunder in such proportions
as shall be agreed upon by the Agent, the Purchaser and each such
Liquidity Provider pursuant to a separate letter agreement, a
liquidity fee (the " Liquidity Fee ") equal to the product of (x) the
daily average amount of the Liquidity Commitments under (and as such
term is defined in) the Liquidity Agreement during the period for
which such fee is being calculated, times (y) the Liquidity Fee Rate.
Such Liquidity Fee shall be paid in arrears, on the Settlement Date
for each Settlement Period and on the Liquidity Commitment Termination
Date, in the amount of such Liquidity Fee that shall have accrued
during such Settlement Period (or portion thereof) or other period
then ending and which shall not have been previously paid.
SECTION 4.02. Yield Protection
(a) If (i) Regulation D or (ii) any Regulatory Change
occurring after the date hereof
(A) shall subject an Affected Party to any tax, duty or other charge
with respect to any Asset Interest owned by or funded by it, or
any obligations or right to make Purchases or Reinvestments or to
provide funding there for, or shall change the basis of taxation
of payments to the Affected Party of any Purchaser's Total
Investments or Earned Discount owned by, owed to or funded in
whole or in part by it or any other amounts due under this
Agreement in respect of the Asset Interest owned by or funded by
it or its obligations or rights, if any, to make Purchases or
Reinvestments or to provide funding there for (except for changes
in the rate of tax on the overall net income of such Affected
Party imposed by the United States of America or any state
thereof (unless, with respect to a state, other than the state in
which such Affected Party's chief executive offices are located,
resulting from, or arising out of, the transactions contemplated
under the Transaction Documents) and, if such Affected Party's
principal executive office is not in the United States of
America, by the jurisdiction where such Affected Party's
principal office in the United States is located); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Federal Reserve
Board, but excluding any reserve included in the determination of
Earned Discount), special deposit or similar requirement against
assets of any Affected Party, deposits or obligations with or for
the account of any Affected Party or with or for the account of
any affiliate (or entity deemed by the Federal Reserve Board to
be an affiliate) of any Affected Party, or credit extended by any
Affected Party; or
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party;
(D) shall impose any other condition affecting any Asset Interest
owned or funded in whole or in part by any Affected Party, or its
obligations or rights, if any, to make Purchases or Reinvestments
or to provide funding therefor; or
(E) shall change the rate for, or the manner in which the Federal
Deposit Insurance Corporation (or a successor thereto) assesses,
deposit insurance premiums or similar charges;
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of Regulation D
referred to above, to impose a cost on) (I) an Affected Party
funding or making or maintaining any Purchases or Reinvestments,
any purchases, reinvestments, or loans or other extensions of
credit under the Liquidity Agreement or any commitment of such
Affected Party with respect to any of the foregoing, or (II) the
Agent for continuing its or Seller's or the Originator's
relationship with Purchaser (Seller shall at no time, with regard
to Regulation D, be required to pay an increased cost hereunder
in excess of the actual increased cost imposed on the Affected
Party),
(y) to reduce the amount of any sum received or receivable
by an Affected Party under this Agreement or under the Liquidity
Agreement with respect thereto, or
(z) in the sole determination of such Affected Party, to
reduce the rate of return on the capital of an Affected Party as
a consequence of its obligations hereunder or arising in
connection herewith to a level below that which such Affected
Party could otherwise have achieved,
then within thirty days after demand by such Affected Party (which
demand shall be accompanied by a statement setting forth the basis of
such demand), Seller shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party
for such additional or increased cost or such reduction.
(b) Each Affected Party will promptly notify Seller and the
Agent of any event of which it has knowledge which will entitle such
Affected Party to compensation pursuant to
this Section 4.02 ; provided , however , no failure to give or delay
in giving such notification shall adversely affect the rights of any
Affected Party to such compensation.
(c) In determining any amount provided for or referred to in
this Section 4.02 , an Affected Party may use any reasonable averaging
and attribution methods that it (in its sole discretion) shall deem
applicable. Any Affected Party when making a claim under this
Section 4.02 shall submit to Seller a statement as to such increased
cost or reduced return (including calculation thereof in reasonable
detail), which statement shall, in the absence of demonstrable error,
be conclusive and binding upon Seller.
SECTION 4.03. Funding Losses . In the event that the Purchaser shall
incur any loss or expense (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the
Purchaser to make any Purchase Advance) as a result of (i) any settlement with
respect to Purchaser's Tranche Investment of any Asset Tranche being made on any
day other than the scheduled last day of an applicable Yield Period or
Settlement Date with respect thereto, or (ii) any Purchase not being made in
accordance with a request therefore under Section 1.02 , then, upon written
notice from the Agent to Seller and Servicer, Seller shall pay to Servicer, and
Servicer shall pay to the Agent for the Account of the Purchaser, the amount of
such loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding upon the Seller and Servicer.
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase . The initial
Purchase hereunder is subject to the condition precedent that the Agent shall
have received, on or before the date of such Purchase, the following, each
(unless otherwise indicated) dated such date and in form and substance
satisfactory to the Agent:
(a) A copy of the resolutions of the Board of Directors of each
of the Seller, APR, UPAC, UPAC of California and Parent approving this
Agreement, the Purchase and Sale Agreement and the other Transaction
Documents, as applicable, to be delivered by them hereunder and the
transactions contemplated hereby and thereby, certified in each case
by its respective Secretary or Assistant Secretary;
(b) Good standing certificates (i) for each of Seller, APR and
Parent issued by the Secretaries of State of Delaware and Kansas, as
applicable, (ii) for UPAC issued by the Secretaries of State of
Missouri and Kansas, and (iii) for UPAC of California issued by the
Secretaries of State of California and Kansas.
(c) A certificate of the Secretary or Assistant Secretary of
each of the Seller, APR, UPAC, UPAC of California and Parent
certifying the names and true signatures of the officers authorized on
their behalf to sign, as applicable, this Agreement, the Purchase and
Sale Agreement and the other Transaction Documents to be delivered by
them hereunder (on which certificate the Agent and Purchaser may
conclusively rely until such time as the Agent shall receive from
Seller, APR, UPAC, UPAC of California and/or Parent, as applicable, a
revised certificate meeting the requirements of this subsection (c) );
(d) The Articles of Incorporation of Seller, APR, UPAC, UPAC of
California and Parent, duly certified by the Secretary of State of
their respective states of incorporation, as of a recent date
acceptable to the Agent, together with a copy of the By-laws of
Seller, APR, UPAC, UPAC of California and Parent, duly certified by
the Secretary or an Assistant Secretary of Seller, APR, UPAC, UPAC of
California, or Parent, respectively;
(e) Copies of acknowledgment copies of (i) proper Financing
Statements (Form UCC-1), naming APR, as Originator, as the assignor of
Receivables, Seller, as secured party/purchaser, and Purchaser as
assignee of such Financing Statements, (ii) proper Financing
Statements (Form UCC-1), naming UPAC as the assignor of Receivables,
Seller as secured party/purchaser, and Purchaser as assignee of such
Financing Statements, (iii) proper Financing Statements (Form UCC-1),
naming UPAC of California as the assignor of Receivables, Seller as
secured party/purchaser, and Purchaser as assignee of such Financing
Statements, (iv) proper Financing Statements (Form UCC-1), naming
Seller as the assignor of Receivables or an undivided interest therein
and Purchaser as assignee and (v) proper terminations of Financing
Statements (Form UCC-3), terminating any and all Financing Statements
which cover any Receivable or Contract;
(f) Copies of search reports (including tax, UCC, ERISA and
judgment liens) provided in writing to the Agent, listing all
effective financing statements that name Seller, APR, UPAC or UPAC of
California as debtor and that are filed in or relate to the
jurisdictions in which filings were made pursuant to
subsection (e) above, together with copies of such financing
statements (none of which shall cover any Receivables or Contracts);
(g) Duly executed Lock-Box Agreements with the Lock-Box Banks;
(h) Duly executed Purchase and Sale Agreement;
(i) Duly executed Custody Agreement;
(j) Duly executed Backup Servicing Agreement;
(k) (A) Opinion of Polsinelli, White, Xxxxxxxx & Xxxxxxx,
counsel to Seller and the Originators as to perfection, authority and
other matters and (B) Opinion of Hillix, Brewer, Hoffhaus, Whittaker &
Xxxxxx, L.L.C., counsel to Parent, as to authority and other matters,
in substantially the forms and attached as Exhibit 5.01(k)-
1 and 5.01(k)-2 ;
(l) Opinions of Polsinelli, White, Xxxxxxxx & Shalton, counsel
to Seller, as to "true sale" and "non-substantive consolidation" in
substantially the forms attached as Exhibits 5.01(l)-1 and 5.01(l)-
2 ;
(m) [Reserved];
(n) Such sublicenses as Purchaser or the Agent shall require
with regard to all programs leased by Seller, APR, UPAC or UPAC of
California and used in the servicing of the Receivables Pool;
(o) Such powers of attorney as Purchaser or the Agent shall
reasonably request to enable them to collect all amounts due under any
and all Pool Receivables;
(p) Evidence that each of the Originators and the Seller has
marked its master data processing records to reflect Purchaser's
undivided ownership interest in each Pool Receivable;
(q) Pay-Off Letters executed by (i) each of Clipper Receivables
Corporation, State Street Boston Capital Corporation as administrator
and program administrator, Norwest Bank Minnesota, National
Association and each of the financial institutions party to a certain
Liquidity Asset Purchase Agreement dated as of October 20, 1995 among
such parties and the Seller, and (ii) Bank of Boston in connection
with that certain Restated Secured Credit Agreement dated as of July
29, 1994 (as amended) among UPAC, UPAC of California, Bank of Boston,
and Sumitomo Bank Ltd., in each case, substantially in the form of
Exhibit 5.01(q)-1 and 5.01(q)-2 , respectively;
(r) An executed copy of the Tax Sharing Agreement among Parent
and its "affiliated group of companies" (including APR, UPAC, UPAC of
California and Seller), a copy of which is attached
as Exhibit 5.01(r) ;
(s) (i) A Settlement Statement, prepared in respect of the
proposed initial Purchase, assuming a Cut-Off Date of November 30,
1996, (ii) a Weekly Report covering the week ended December 20, 1996,
(iii) schedule of information for Receivables included in the initial
Purchase in an electronic format acceptable to the Agent, and (iv)
implementation of Settlement reporting procedures and formats
satisfactory to the Agent;
(t) A report in form and substance satisfactory to the Agent as
to a pre-closing due diligence audit of the Receivables, the Servicer
and the Servicer's procedures by BDO Xxxxxxx;
(u) Duly executed Liquidity Agreement;
(v) Duly executed Fee Letter;
(w) Certified copy of the Credit and Collection Policy of each
of APR, UPAC and UPAC of California;
(x) Satisfactory completion of due diligence (including the
collateral audit) by the Agent;
(y) Letters from the rating agencies then rating the Commercial
Paper Notes, confirming in effect that the existing ratings of the
Commercial Paper Notes will remain in effect after giving effect to
the transactions contemplated hereby;
(z) the Arrangement Fee; and
(aa) Such other further documents, certificates, information
and/or approvals as Purchaser, the Agent or any Liquidity Bank shall
reasonably request.
SECTION 5.02.
Conditions Precedent to All Purchases and Reinvestments . Each Purchase
(including the initial Purchase) and each Reinvestment hereunder shall be
subject to the further conditions precedent that on the date of such Purchase or
Reinvestment (i) in the case of a Purchase, the Seller shall have delivered a
Weekly Report to the Agent covering the calendar week ending immediately prior
to the week in which such Purchase is to be effected and (ii) the following
statements shall be true (and Seller by accepting the amount of such Purchase or
by receiving the proceeds of such Reinvestment shall be deemed to have certified
that):
(a) the representations and warranties contained
in Sections 6.01 , 6.02 and 6.03 hereof and in the Purchase and
Sale Agreement are correct on and as of such day as though made on and
as of such day and shall be deemed to have been made on such day,
(b) no event has occurred and is continuing, or would result
from such Purchase or Reinvestment, that constitutes a Liquidation
Event or Unmatured Liquidation Event,
(c) except as provided in Section 3.08 , for each Receivable
included in a Purchase or Reinvestment, a fully executed Contract
shall have been delivered to the Custodian (as Purchaser's designee),
no later than the Wednesday following such Purchase or Reinvestment,
(d) after giving effect to each proposed Purchase or
Reinvestment, (i) Purchaser's Total Investment will not exceed the
Purchase Limit and (ii) Purchaser's Share with respect to Principal
Receivables will not exceed 100%, and
(e) the Liquidation Date shall not have occurred;
provided, however , the absence of the occurrence and continuance of an
Unmatured Liquidation Event shall not be a condition precedent to any
Reinvestment on any day which does not cause the Purchaser's Total Investment,
after giving effect to such Reinvestment or Purchase, to exceed the Purchaser's
Total Investment as of the opening of business on such day.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller . In order to
induce the Purchaser and the Agent to enter into this Agreement and the other
Transaction Documents, Seller represents and warrants to each of them as
follows:
(a) Organization and Good Standing . Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted, and had at
all relevant times, and now has, all necessary power, authority, and
legal right to acquire, own, dispose of, and otherwise deal with, the
Pool Receivables.
(b) Due Qualification . Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary approvals, in all jurisdictions in which the ownership
or lease of property or the conduct of its business (including,
without limitation, such business as a "premium finance company")
requires such qualification or approvals.
(c) Power and Authority: Due Authorization . Seller has (i)
duly authorized by all necessary action, and has all necessary power,
authority and legal right to (A) execute and deliver this Agreement,
the Purchase and Sale Agreement and the other Transaction Documents to
which it is a party, (B) carry out the terms of the Transaction
Documents, and (C) sell and assign the Asset Interest on the terms and
conditions herein provided and (ii) has duly authorized by all
necessary corporate action the execution, delivery and performance of
this Agreement, the Purchase and Sale Agreement and the other
Transaction Documents and the sale and assignment of the Asset
Interest on the terms and conditions herein provided.
(d) Valid Sale: Binding Obligations . This Agreement
constitutes a valid sale, transfer, and assignment of the Asset
Interest to Purchaser, enforceable against creditors of, and
purchasers from, Seller and each of the Originators; and this
Agreement constitutes, and each other Transaction Document to be
signed by Seller when duly executed and delivered will constitute, a
legal, valid and binding obligation of Seller enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Violation . The consummation of the transactions
contemplated by this Agreement, the Purchase and Sale Agreement and
the other Transaction Documents and the fulfillment of the terms
hereof will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or by-
laws of Seller, or any indenture, loan agreement, mortgage, deed of
trust, receivables purchase or other securitization agreement or other
agreement or instrument to which Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, loan
agreement, mortgage, deed of trust, receivables purchase agreement or
other securitization agreement or other agreement or instrument, other
than this Agreement and the Purchase and Sale Agreement, or violate
any law or any order, rule, or regulation applicable to Seller or
(except for Adverse Determinations disclosed in writing to Purchaser
as assignee of Seller) of any court or of any federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller (or Purchaser as
assignee of Seller) or any of its properties.
(f) No Proceedings . There are no proceedings or
investigations pending, or threatened, against Seller or its
Affiliates, or any other Person, before any court, regulatory body,
administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement, the
Purchase and Sale Agreement or any other Transaction Document, (B)
seeking to prevent the sale and assignment of the Asset Interest or
the consummation of any of the transactions contemplated by this or
any other Transaction Document, (C) seeking any determination or
ruling that might adversely affect (i) the performance by Seller, the
Parent, the Servicer or any of the Originators of its respective
obligations under this Agreement or any of the other Transaction
Documents, or (ii) the validity or enforceability of this Agreement,
the Purchase and Sale Agreement, any other Transaction Document, the
Receivables or the Contracts or (D) seeking to adversely affect the
federal income tax attributes of the Purchases and Reinvestments
hereunder.
(g) Bulk Sales Act . No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(h) Government Approvals . No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by Seller of this Agreement, the Purchase and
Sale Agreement or any other Transaction Document except for the filing
of the UCC Financing Statements referred to in Article V , all of
which, at the time required in Article V , shall have been duly made
and shall be in full force and effect.
(i) Financial Condition . Since December 31, 1995 there has
been no material adverse change in the financial condition, business,
business prospects or operations of the Seller.
(j) Litigation . No injunction, decree or other decision has
been issued or made by any court, government or agency or
instrumentality thereof that has, and no threat by any person has been
made to attempt to obtain any such decision that would have, a
material adverse effect on a significant part of its business
operations except as described in Schedule 6.01(j) .
(k) Margin Regulations . The use of all funds acquired by
Seller under this Agreement will not conflict with or contravene any
of Regulations G, T, U and X promulgated by the Board of Governors of
the Federal Reserve system from time to time.
(l) Quality of Title . Each Pool Receivable is, together with
the related Contract and all other agreements related to such Pool
Receivable, owned by Seller free and clear of any Lien (other than any
Lien arising solely as the result of any action taken by the Agent or
the Purchaser (or any assignee thereof)) except as provided herein;
and when Purchaser makes a Purchase it shall have acquired and shall
continue to have maintained a valid and perfected first priority
undivided percentage ownership interest to the extent of the Asset
Interest in each Pool Receivable, each related Contract and in the
Related Security and Collections with respect thereto free and clear
of any Lien (other than any Lien arising solely as the result of any
action taken by the Agent or the Purchaser (or any assignee thereof));
and no financing statement or other instrument similar in effect
covering any Pool Receivable, any interest therein, the related
Contracts, or the Related Security or Collections with respect thereto
is on file in any recording office except such as may be filed in
favor of (i) the Originators in accordance with the Contracts, (ii) in
favor of Seller and the Agent in accordance with the Purchase and Sale
Agreement or (iii) in favor of the Agent in accordance with this
Agreement or in connection with any Lien arising solely as the result
of any action taken by the Agent or the Purchaser (or any assignee
thereof).
(m) Accurate Reports . No Settlement Statement (if prepared by
Seller or any Affiliate of Seller, or to the extent that information
contained therein was supplied by Seller or any Affiliate of Seller),
information, exhibit, financial statement, document, book, record or
report furnished or to be furnished by Seller to the Agent or
Purchaser in connection with this Agreement or any other Transaction
Document was or will be inaccurate in any material respect as of the
date it was or will be dated or (except as otherwise disclosed to the
Agent and Purchaser, as the case may be, at such time) as of the date
so furnished, or contained or will contain any material misstatement
of fact or omitted or will omit to state a material fact or any fact
necessary to make the statements contained therein not materially
misleading.
(n) Offices . The chief place of business and chief executive
office of Seller are located at the address of Seller referred to in
Section 14.02 and the offices where Seller keeps all its books,
records and documents evidencing Pool Receivables, the related
Contracts and all purchase orders and other agreements related to such
Pool Receivables are located at the addresses specified
in Schedule 6.01(n ) (or at such other locations, notified to the
Agent in accordance with Section 7.01(e) , in jurisdictions where all
action required by Section 8.05 has been taken and completed).
(o) Lock-Box Accounts . The names and addresses of all the
Lock-Box Banks, together with the account numbers of the lock-box
accounts of Seller at such Lock-Box Banks, are specified
in Schedule 6.01(o ) (or have been notified to Purchaser in accordance
with Section 7.03(d)) .
(p) Eligible Receivables . Each Receivable included in the Net
Pool Balance as an Eligible Receivable on the date of any Purchase or
Reinvestment shall in fact be an Eligible Receivable.
(q) Investment Company Act . Seller is not an investment
company or a company controlled by an investment company within the
meaning of the Investment Company Act of 1940, as amended.
(r) Solvency . After giving effect to each Purchase and each
Reinvestment and immediately after giving effect to Seller's and each
Originator's obligations now or hereafter arising pursuant to any
Transaction Document and to each transaction contemplated thereby, (i)
the fair saleable value of the assets of Seller will exceed its
liabilities, and (ii) Seller will be solvent, will be able to pay its
debts generally as they mature, will own property with a fair saleable
value greater than the amount required to pay its debts, and will have
capital sufficient to carry on its business as then constituted.
(s) Servicing Programs No license or approval is required for
the Agent's or the Servicer's use of any program used by Servicer or
any of the Originators in the servicing of the Receivables, other than
those which have been obtained and are in full force and effect. The
Seller hereby unconditionally and irrevocably grants to the Agent, the
Purchaser and the Servicer a royalty free, non-exclusive license or
sublicense to use all programs and other computer software used by the
Seller or any Originator in the monitoring, servicing and/or
collection of any Contracts or related Receivables and upon such
licensee's or sublicensee's request, the Seller shall make available
to such licensee or sublicensee a copy of such program or software in
machine-readable form and to the extent necessary or convenient to
operate such program or software, access during normal business hours
to any of the Seller's computer or computer hardware to facilitate the
use of such program or software.
(t) Direct Obligor . No funds have been advanced by Seller to
or on behalf of any Direct Obligor.
(u) Contractual Due Dates, Etc . No Contract has been extended
or otherwise modified, unless in manner, scope and content in
accordance with the provisions of this Agreement and the Credit and
Collection Policy of the Originator originating such Receivable.
(v) Licensing . Each Originator is properly licensed as a
premium finance loan company in each jurisdiction in which licensing
is required for it to own premium finance loans with a nexus to such
jurisdiction.
(w) Transfers . No purchase of an interest in Receivables by
Purchaser from Seller or by Seller from any Originator constitutes a
fraudulent transfer or fraudulent conveyance or is otherwise void or
voidable under similar laws or principles, the doctrine of equitable
subordination or for any other reason.
(x) Purchase and Sale Agreement and Parent Support Agreement .
Each of the representations and warranties made by Seller and the
Originators in the Purchase and Sale Agreement and by the Parent in
the Parent Support Agreement is true and correct as of the date or
dates made, and each such agreement is in full force and effect.
(y) Use of Proceeds . Neither Seller nor any Originator will
use the proceeds of the Purchases hereunder to acquire a security in a
transaction subject to Section 13 or 14 of the Securities Exchange Act
of 1934.
(z) Tax . Seller has filed each and every tax return required
to be filed by it in each jurisdiction in which it is required to do
so and has paid in each such jurisdiction all taxes required to be
paid by it on a consolidated basis.
(aa) No Liquidation Event . No event has occurred and is
continuing and no condition exists which constitutes a Liquidation
Event or an Unmatured Liquidation Event.
(bb) ERISA . The Seller is in compliance in all material
respects with ERISA and there exists no lien in favor of the Pension
Benefit Guaranty Corporation on any of the Receivables.
SECTION 6.02. Representations and Warranties of UPAC . UPAC
(individually and as Servicer hereunder), in order to induce the Purchaser and
the Agent to enter into this Agreement and the other Transaction Documents,
represents and warrants to each of them as follows:
(a) Organization and Good Standing . UPAC has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Missouri, with power and authority to
own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted, and had at
all relevant times, and now has, all necessary power, authority, and
legal right to acquire, own, dispose of, and service the Pool
Receivables.
(b) Due Qualification . UPAC is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including, without
limitation, such business as a "premium finance company") requires
such qualification approvals.
(c) Power and Authority: Due Authorization . UPAC has (i) duly
authorized by all necessary action, and has all necessary power,
authority and legal right to (A) execute and deliver this Agreement,
the Purchase and Sale Agreement and the other Transaction Documents to
which it is a party, (B) carry out the terms of the Transaction
Documents, (C) sell and assign the Receivables on the terms and
conditions provided in the Purchase and Sale Agreement and (D) service
the Receivables on the terms and conditions herein provided and (ii)
has duly authorized by all necessary corporate action the execution,
delivery and performance of this Agreement, the Purchase and Sale
Agreement and the other Transaction Documents and the sale and
assignment of the Asset Interest on the terms and conditions herein
provided.
(d) Binding Obligations . This Agreement constitutes, and each
other Transaction Document to be signed by UPAC when duly executed and
delivered will constitute, a legal, valid and binding obligation of
UPAC enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation . The consummation of the transactions
contemplated by this Agreement, the Purchase and Sale Agreement and
the other Transaction Documents and the fulfillment of the terms
hereof and thereof will not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice
or lapse of time) a default under, the articles of incorporation or
by-laws of UPAC, or any indenture, loan agreement, mortgage, deed of
trust, receivables purchase or other securitization agreement or other
agreement or instrument to which UPAC is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, loan
agreement, mortgage, deed of trust, receivables purchase agreement or
other securitization agreement or other agreement or instrument, other
than this Agreement, the Security Agreement and the Purchase and Sale
Agreement, or violate any law or any order, rule, or regulation
applicable to UPAC or (except for Adverse Determinations disclosed in
writing to Seller, the Agent and Purchaser as assignees of UPAC) of
any court or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
UPAC (or Purchaser, the Agent and Seller as assignees of UPAC) or any
of its properties.
(f) No Proceedings . There are no proceedings or
investigations pending, or threatened, against UPAC or its Affiliates,
or any other Person, before any court, regulatory body, administrative
agency, or other tribunal or governmental instrumentality (A)
asserting the invalidity of this Agreement, the Purchase and Sale
Agreement or any other Transaction Document, (B) seeking to prevent
the sale and assignment of the Asset Interest or the consummation of
any of the transactions contemplated by this or any other Transaction
Document, (C) seeking any determination or ruling that might adversely
affect (i) the performance by UPAC or Servicer of its obligations
under this Agreement, or (ii) the validity or enforceability of this
Agreement, the Purchase and Sale Agreement, any other Transaction
Document, the Receivables or the Contracts or (D) seeking to adversely
affect the federal income tax attributes of the Purchases and
Reinvestments hereunder.
(g) Government Approvals . No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by UPAC of this Agreement, the Purchase and
Sale Agreement or any other Transaction Document except for the filing
of the UCC Financing Statements referred to in Article V , all of
which, at the time required in Article V , shall have been duly made
and shall be in full force and effect.
(h) Financial Condition . (x) The consolidated balance sheet
of UPAC, UPAC of California and their consolidated subsidiaries, if
any, as at December 31, 1995, and the related statements of income and
cash flow of UPAC and its consolidated subsidiaries, if any, for the
year then ended certified by their independent certified public
accounting firm, and the unaudited consolidated interim balance sheet
of UPAC, UPAC of California and their consolidated subsidiaries as at
September 30, 1996, and the related interim statement of income,
copies of each of which have been furnished to the Agent and
Purchaser, each fairly present the consolidated financial position of
UPAC, UPAC of California and their consolidated subsidiaries as at
such date and the consolidated results of the operations of UPAC, UPAC
of California and their consolidated subsidiaries for the period ended
on such date, all in accordance with generally accepted accounting
principles consistently applied, and (y) since September 30, 1996
there has been no material adverse change in any such condition,
business, business prospects or operations except as described
in Schedule 6.02(h) .
(i) Litigation . No injunction, decree or other decision has
been issued or made by any court, government or agency or
instrumentality thereof that has, and no threat by any person has been
made to attempt to obtain any such decision that would have, a
material adverse effect on a significant part of its business
operations except as described in Schedule 6.02(i) .
(j) Accurate Reports . No Settlement Statement (if prepared by
UPAC or any Affiliate of UPAC, or to the extent that information
contained therein was supplied by UPAC or any Affiliate of UPAC),
information, exhibit, financial statement, document, book, record or
report furnished or to be furnished by UPAC to the Agent or Purchaser
in connection with this Agreement or any other Transaction Document
was or will be inaccurate in any material respect as of the date it
was or will be dated or (except as otherwise disclosed to the Agent
and Purchaser, as the case may be, at such time) as of the date so
furnished, or contained or will contain any material misstatement of
fact or omitted or will omit to state a material fact or any fact
necessary to make the statements contained therein not materially
misleading.
(k) Offices . The chief place of business and chief executive
office of UPAC are located at the address of UPAC referred to in
Section 14.02 and the offices where UPAC keeps all its books, records
and documents evidencing Pool Receivables, the related Contracts and
all purchase orders and other agreements related to such Pool
Receivables are located at the addresses specified
in Schedule 6.02(k ) (or at such other locations, notified to the
Agent in accordance with Section 7.01(e) , in jurisdictions where all
action required by Section 8.05 has been taken and completed).
(l) Servicing Programs . No license or approval is required
for the Agent's use of any program used by UPAC in the servicing of
the Receivables, other than those which have been obtained and are in
full force and effect.
(m) Contractual Due Dates, Etc . No Contract has been extended
or otherwise modified, unless in manner, scope and content in
accordance with the provisions of this Agreement and the Credit and
Collection Policy of the applicable Originator originating such
Receivable.
(n) Licensing . UPAC is properly licensed as a premium finance
loan company in each jurisdiction in which licensing is required and
in which it is originating, enforcing and/or servicing Receivables
pursuant to the terms of the Transaction Documents.
(o) Confirmation . With respect to each Contract and related
Receivable serviced by it and included in the Receivables Pool,
Servicer has obtained written confirmation of the existence, accuracy
and terms of the related insurance policy.
SECTION 6.03. Representations and Warranties of Parent . In order to
induce the Purchaser and the Agent to enter into this Agreement and the other
Transaction Documents, Parent represents and warrants to each of them as
follows:
(a) Organization and Good Standing . Parent has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted.
(b) Due Qualification . Parent is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business
requires such qualification, licenses or approvals and where the
failure to be so qualified or to obtain such licenses or approvals
would have a material adverse effect upon Parent's financial
condition, results of operations, business or prospects.
(c) Power and Authority: Due Authorization . Parent has duly
authorized by all necessary action, and has all necessary power,
authority and legal right to (A) execute and deliver the Transaction
Documents to be executed and delivered by it and (B) carry out the
terms of the Transaction Documents.
(d) Binding Obligations . This Agreement constitutes, and each
other Transaction Document to be signed by Parent when duly executed
and delivered will constitute, a legal, valid and binding obligation
of Parent enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation . The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents and
the fulfillment of the terms hereof and thereof will not conflict
with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of Parent, or any indenture,
loan agreement, mortgage, deed of trust, receivables purchase
agreement or other securitization agreement or other agreement or
instrument to which Parent is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, loan
agreement, mortgage, deed of trust, receivables purchase agreement or
other securitization agreement or other agreement or instrument, or
violate any law or any order, rule, or regulation applicable to Parent
of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over Parent or any of its properties.
(f) No Proceedings . There are no proceedings or
investigations pending, or threatened, against Parent or its
Affiliates, or any other Person, before any court, regulatory body,
administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement or any
other Transaction Document, (B) seeking to prevent the sale of the
Asset Interest hereunder or the consummation of any of the
transactions contemplated by this or any other Agreement Document, or
(C) seeking any determination or ruling that might adversely affect
(i) the performance by Parent, Seller, any of the Originators or
Servicer of its obligations under this Agreement or the other
Transaction Documents, or (ii) the validity or enforceability of this
Agreement, any other Transaction Document, the Receivables or the
Contracts.
(g) Government Approvals . No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution,
delivery and performance by Parent of this Agreement or any other
Transaction Document to be executed by Parent.
(h) Financial Condition . (x) The consolidated balance sheet
of Parent and its consolidated subsidiaries as at December 31, 1995,
and the related statements of income and cash flow of Parent and its
consolidated subsidiaries for the year then ended certified by its
independent certified public accounting firm, and the unaudited
consolidated interim balance sheet of Parent and its consolidated
subsidiaries as at September 30, 1996, and the related interim
statement of income, copies of each of which have been furnished to
Purchaser, each fairly present the consolidated financial position of
Parent and its consolidated subsidiaries as at such date and the
consolidated results of the operations of Parent and its consolidated
subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles (subject, in the case of any
interim financial statements, to normal and non-material year-end
adjustments) consistently applied, and (y) since September 30, 1996
there has been no material adverse change in any such condition,
business, business prospects or operations except as described
in Schedule 6.03(h) .
(i) Litigation . No injunction, decree or other decision has
been issued or made by any court, government or agency or
instrumentality thereof that has, and no threat by any person has been
made to attempt to obtain any such decision that would have, a
material adverse effect on a significant part of its business
operations except as described in Schedule 6.03(i) .
(j) Offices . The chief place of business and chief executive
office of Parent are located at the address of Parent referred to in
the signature pages hereto.
SECTION 6.04. Breach of Representations and Warranties.
(a) Breach of Representations and Warranties . Upon discovery
by UPAC, Parent, Servicer or Seller of a breach of any of the
representations and warranties set forth in this Article VI, the party
discovering such breach shall give written notice thereof to the Agent
and the Purchaser within three (3) Business Days of such discovery.
(b) Survival of Certain Representations and Warranties . The
representation and warranties provided in the Article VI shall
survive the purchase of the related Receivables under the Purchase and
Sale Agreement and of the Asset Interest therein by Purchaser, the
delivery of the Contracts to Purchaser or Purchaser's designee and the
termination of this Agreement or any other Transaction Document.
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants of Seller . From the date hereof
until the Final Payout Date, Seller will, unless the Agent shall otherwise
consent in writing:
(a) Compliance with Laws, Etc . Comply in all material
respects with all applicable laws, rules, regulations and orders with
respect to (i) the Pool Receivables and related Contracts and (ii) its
business operations except where noncompliance would not have a
material adverse effect on such business operations.
(b) Preservation of Corporate Existence . Preserve and
maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would
materially adversely affect (i) the interests of the Agent and the
Purchaser hereunder or (ii) the ability of the Parent, the Seller or
the Servicer to perform their respective obligations hereunder.
(c) Audits . At any time and from time to time during regular
business hours, upon such notice, if any, as shall be reasonable under
the circumstances, permit the Agent (at Seller's expense), or its
agents or representatives, (i) to examine and make copies of and
abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the
control of Seller relating to Pool Receivables, including, without
limitation, the related Contracts and other agreements, and (ii) to
visit the offices and properties of Seller for the purpose of
examining such materials described in clause (i) next above, and to
discuss matters relating to Pool Receivables or Seller's performance
hereunder or under any other Transaction Document with any of the
officers or employees of Seller having knowledge of such matters; and
without limiting the foregoing, from time to time upon request of the
Agent, permit certified public accountants or other auditors
acceptable to them to conduct, at Seller's expense, a review of
Seller's books and records.
(d) Performance and Compliance with Receivables and Contracts .
At its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Pool Receivables and all other
agreements related to such Pool Receivables.
(e) Location of Records . Keep its chief place of business and
chief executive office, and the offices where it keeps its records
concerning the Pool Receivables, all related Contracts and all other
agreements related to such Pool Receivables (and all original
documents relating thereto), at the address(es) of Seller referred to
in Section 6.01(n or, upon 30 days' prior written notice to the
Agent, at such other locations in jurisdictions where all action
required by Section 8.05 shall have been taken and completed.
(f) Credit and Collection Policies . Comply in all material
respects with the applicable Credit and Collection Policy in regard to
each Pool Receivable and the related Contract.
(g) Collections . Cause all Collections of Pool Receivables to
be deposited within one Business Day directly with a Lock-Box Bank.
(h) [Reserved]
(i) Rights and Obligations under Purchase and Sale Agreement .
Exercise all of its rights and perform all of its obligations under or
in connection with the Purchase and Sale Agreement to the fullest
extent thereof except to the extent otherwise consented to in writing
by the Agent.
SECTION 7.02. Reporting Requirements of Seller . From the date
hereof until the Final Payout Date, Seller will, unless the Agent shall
otherwise consent in writing, furnish to the Agent.
(a) Financial Statements . As soon as available and (i) in any
event within 30 days after the end of each calendar month, copies of
the unaudited monthly consolidating financial statements of Seller,
UPAC, UPAC of California and APR prepared in accordance with generally
accepted accounting principles consistently applied and (ii) in any
event within 90 days after the end of each fiscal year of the Seller,
(x) unaudited annual consolidating financial statements of each of the
Seller, UPAC, UPAC of California and APR for the fiscal year then
ended, prepared in accordance with generally accepted accounting
principles consistently applied and (y) audited annual consolidated
financial statement of the Parent and its consolidated subsidiaries
for the fiscal year then ended, prepared in accordance with generally
accepted accounting principles consistently applied and certified by
the Parent's accountants (which shall be a nationally recognized
independent certified public accounting firm) as fairly presenting the
financial condition and results of operations of the Parent and its
consolidated subsidiaries for the period covered thereby.
(b) ERISA . Promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any Reportable Event
defined in Article IV of ERISA which Seller or any ERISA Affiliate of
Seller files under ERISA with the Internal Revenue Service, the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor
or which Seller or any ERISA Affiliate of Seller receives from the
Pension Benefit Guaranty Corporation;
(c) Liquidation Events . As soon as possible and in any event
within two Business Days after the occurrence of each Liquidation
Event and each Unmatured Liquidation Event, a written statement of the
chief financial officer or chief accounting officer of Seller setting
forth details of such event and the action that Seller proposes to
take or cause to be taken with respect thereto, and the Purchaser
shall promptly after its receipt thereof forward a copy of such notice
(or otherwise give notice of its receipt of such notice) to each of
the rating agencies then rating its Commercial Paper Notes;
(d) Litigation and Other Proceedings . As soon as possible and
in any event within three Business Days of Seller's knowledge thereof,
notice from the Seller of (i) any litigation, investigation, inquiry
or proceeding which may exist at any time which could have a material
adverse effect on the business, operations, property or financial
condition of Seller, Parent or any Originator or impair the ability of
Seller, Parent or any Originator to perform its respective obligations
under this Agreement or any other Transaction Document or which could
result in an Adverse Determination, (ii) any material adverse
development in any previously disclosed litigation, investigation,
inquiry or proceeding and (iii) any Adverse Determination, and, in
each case, the Purchaser shall promptly after its receipt thereof
forward a copy of such notice (or otherwise give notice of its receipt
of such notice) to each of the rating agencies then rating its
Commercial Paper Notes;
(e) Audit of Pool Receivables . Together with the annual
financial statements required to be delivered pursuant
to Section 7.02(a)(y) , a copy of an audit report, prepared by
Seller's accountants (which shall be a nationally recognized
independent certified public accounting firm), of the Pool
Receivables, as at the end of the fiscal year of Seller, verifying the
aggregate Unpaid Balance of the Pool Receivables, the Delinquent
Receivables and the Defaulted Receivables.
(f) Change in Credit and Collection Policies . Immediately
upon becoming aware thereof, notice of any material change or proposed
material change in the character of any Originator's business or in
any Originator's Credit and Collection Policy, and the Purchaser shall
promptly after its receipt of any such notice forward a copy of such
notice (or otherwise give notice of its receipt of such notice) to
each of the rating agencies then rating its Commercial Paper Notes.
(g) Material Change . As soon as practicable but in no event
later than the second Business Day following the occurrence, notice of
any material adverse change in Seller's or any Originator's financial
or operating condition.
(h) Purchase and Sale Agreement . Promptly after receipt
thereof, copies of all documents and other information delivered by
the Originators to Seller pursuant to the Purchase and Sale Agreement.
(i) Other . Promptly, from time to time, such other
information, documents, records or reports respecting the Receivables
or the condition or operations, financial or otherwise, of Seller,
Parent or the Originators as the Agent may from time to time
reasonably request in order to protect the interests of the Agent
and/or the Purchaser under or as contemplated by this Agreement.
(j) Notice . Within five Business Days of its acquisition,
generation or other origination of a Contract and/or its related
Receivable, provide notice (or otherwise cause notice to be provided)
to (x) the relevant Obligors of its ownership interest in such
Receivable (which notice may be set forth in the form of Contract to
be executed by such Obligor) and (y) to the relevant insurance carrier
obligated to pay unearned premiums under any relevant insurance policy
of the assignment to the relevant Originator of the right to payment
of such unearned premiums, it being agreed that , notice in the
form of Exhibit 7.02(j)-1 and Exhibit 7.02(j)-2 will be sufficient
for clauses (x) and (y), respectively, above.
SECTION 7.03. Negative Covenants of Seller . From the date hereof
until the Final Payout Date, Seller will not, without the prior written consent
of the Agent:
(a) Sales, Liens, Etc . Except as otherwise provided herein
and the Purchase and Sale Agreement, sell, assign (by operation of law
or otherwise) or otherwise dispose of, or create or suffer to exist
any Lien upon or with respect to, any Pool Receivable or related
Contract or Related Security, or any interest (including Seller's
retained interest hereunder) therein, or any lock-box account to which
any Collections of any Pool Receivable are sent, or any right to
receive income or proceeds from or in respect of any of the foregoing.
(b) Extension or Amendment of Receivables . Except as
otherwise permitted in Section 8.02 , extend, amend or otherwise
modify the terms of any Pool Receivable, or amend, modify or waive any
term or condition of any Contract related thereto.
(c) Change in Business . Make any change in the character of
its business.
(d) Change in Payment Instructions to Obliqors Add or terminate
any bank as a Lock-Box Bank from those listed in Schedule 6.01(o ),
make or permit any change in Servicer's instructions to Obligors
regarding payments to be made to Seller or Servicer or payments to be
made to any Lock-Box Bank, unless, in any case, the Agent shall have
received notice of such addition, termination or change and duly
executed copies of Lock-Box Agreements with each new Lock-Box Bank.
(e) Mergers, Acquisitions, Sales, etc . Be a party to any
merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any
partnership or joint venture interest in, any other Person, or, except
in the ordinary course of its business, sell, transfer, convey or
lease all or any substantial part of its assets, or sell or assign
with or without recourse any Receivables or any interest therein
(other than pursuant hereto).
(f) Restricted Payments . Purchase or redeem, or permit any
Subsidiary to purchase or redeem, any shares of the capital stock of
Seller, declare or pay any dividends thereon (other than Permitted
Dividends and stock dividends which may be paid no more frequently
than monthly), make any distribution to stockholders or set aside any
funds for any such purpose, or prepay, purchase or redeem, or permit
any Subsidiary to purchase, any subordinated indebtedness of Seller
except as permitted under the Tax Sharing Agreement and any agreement
allocating overhead to the extent such agreement has been approved by
the Agent.
(g) Deposits to Special Accounts . Deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any
Lock-Box Account or the Collection Account cash or cash proceeds other
than Collections of Pool Receivables.
(h) Incurrence of Indebtedness . Incur or permit to exist any
indebtedness or liability on account of deposits or advances or for
borrowed money or for the deferred purchase price of any property or
services, other than (i) under the Subordinated Notes or (ii) any
other indebtedness approved by the Agent and listed
in Schedule 7.03(h) .
(i)
Amendments to Purchase and Sale Agreement and Parent Support Agr
eement . Amend, supplement, waive the application of any provision
of, amend and restate or otherwise modify the Purchase and Sale
Agreement (including, adding any Originators thereunder) or the Parent
Support Agreement, except, in each case (x) in accordance with the
terms thereof and (y) with the prior written consent of the Agent.
(j) No Subsidiaries . Acquire any voting or economic interest
in any other Person.
SECTION 7.04. Affirmative Covenants of UPAC. From the date hereof
until the Final Payout Date, UPAC (individually and as Servicer) will, unless
the Agent shall otherwise consent in writing:
(a) Compliance with Laws, Etc . Comply in all material
respects with all applicable laws, rules, regulations and orders with
respect to (i) the Pool Receivables and related Contracts and (ii) its
business operations (particularly relating to origination and
servicing) except where noncompliance would not have a material
adverse effect on such business operations.
(b) Preservation of Corporate Existence . Preserve and
maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would
materially adversely affect (i) the interests of Purchaser hereunder
or (ii) the ability of UPAC or Seller to perform their obligations
hereunder or under the other Transaction Documents.
(c) Audits . At any time and from time to time during regular
business hours, upon such notice, if any, as shall be reasonable under
the circumstances, permit the Agent (at the reasonable expense of
UPAC), or its agents or representatives, (i) to examine and make
copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the
possession or under the control of UPAC relating to Pool Receivables,
including, without limitation, the related Contracts and other
agreements, and (ii) to visit the offices and properties of UPAC for
the purpose of examining such materials described in
clause (i) immediately above, and to discuss matters relating to Pool
Receivables or UPAC's performance hereunder or under any other
Transaction Document with any of the officers or employees of UPAC
having knowledge of such matters; and without limiting the foregoing,
from time to time upon request of the Agent, permit certified public
accountants or other auditors acceptable to them to conduct, at the
reasonable expense of UPAC, a review of UPAC's books and records.
(d) Keeping of Records and Books of Account . (i) Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Pool Receivables
in the event of the destruction of the originals thereof) and keep and
maintain, all documents, books, records and other information, in each
case, reasonably necessary or advisable for the collection of all Pool
Receivables (including, without limitation, records adequate to permit
the daily identification of each new Pool Receivable and all
Collections of and adjustments to each existing Pool Receivable) and
(ii) identify (and xxxx) in each of its records and on each Contract
(including computer records) each Receivable included in the
Receivables Pool as so included.
(e) Performance and Compliance with Receivables and Contracts .
At its expense timely and fully perform and comply with all material
provisions, covenants and-other promises required to be observed by it
under the Contracts related to the Pool Receivables and all other
agreements related to such Pool Receivables.
(f) Location of Records . Keep its chief place of business and
chief executive office, and the offices where it keeps its records
concerning the Pool Receivables, all related Contracts and all other
agreements related to such Pool Receivables (and all original
documents relating thereto), at the address(es) of UPAC referred to
in Section 6.01(n ) or, upon 30 days' prior written notice to the
Agent, at such other locations in jurisdictions where all action
required by Section 8.05 shall have been taken and completed.
(g) Credit and Collection Policies . Comply in all material
respects with the applicable Credit and Collection Policy in regard to
each Pool Receivable and the related Contract.
(h) Collections . Cause all Collections of Pool Receivables to
be deposited within one Business Day directly with a Lock-Box Bank.
(i) Cancellation of Certain Insurance Policies . With regard
to any Pool Receivable, cancel the related insurance policy in
accordance with the applicable Credit and Collection Policy, unless
non-cancellation thereof will not materially and adversely impact the
related Pool Receivable or the Receivables Pool taken as a whole.
(j) Purchase and Sale Agreement . Comply with all of its
obligations under the Purchase and Sale Agreement.
SECTION 7.05. Reporting Requirements of UPAC From the date hereof
until the Final Payout Date, UPAC will, unless the Agent shall otherwise consent
in writing, furnish to the Agent:
(a) Financial Statements . As soon as available and in any
event within 90 days after each fiscal year of UPAC, and within 30
days after each fiscal month of UPAC, copies of the consolidated
financial statements of UPAC, UPAC of California and their
consolidated Subsidiaries prepared on a consolidated basis and on a
consolidating basis, in each case in conformity with generally
accepted accounting principles, duly certified by the treasurer of
UPAC; together with a monthly certificate from the treasurer, in each
case containing a computation (so long as UPAC is the Servicer) of the
Default Ratio, the Delinquency Ratio, the Excess Yield Ratio and the
Cancellation Ratio and containing a computation of, and showing
compliance with, the financial restrictions contained
in Section 7.06(e) , 7.06(f) , 7.06(h) , 10.01(h) , 10.01(i) ,
10.01(j) and 10.01(k) .
(b) ERISA . Promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any Reportable Event
defined in Article IV of ERISA which UPAC or any ERISA Affiliate of
UPAC's files under ERISA with the Internal Revenue Service, the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor
or which UPAC or any ERISA Affiliate of UPAC's receives from the
Pension Benefit Guaranty Corporation:
(c) Liquidation Events . As soon as possible and in any event
within two Business Days after the occurrence of each Liquidation
Event and each Unmatured Liquidation Event, a written statement of the
chief financial officer or chief accounting officer of UPAC setting
forth details of such event and the action that UPAC proposes to take
with respect thereto;
(d) Litigation and Other Proceedings . As soon as possible and
in any event within three Business Days of UPAC's knowledge thereof,
notice of (i) any litigation, investigation, inquiry or proceeding
which may exist at any time which could have a material adverse effect
on the business, operations, property or financial condition of UPAC
or impair the ability of UPAC, the Parent or the Seller to perform its
respective obligations under this Agreement or the other Transaction
Documents or which could result in an Adverse Determination, (ii) any
material adverse development in any previously disclosed litigation,
investigation, inquiry or proceeding and (iii) any Adverse
Determination;
(e) Change in Credit and Collection Policy . Prior to its
effective date, notice of any material change in the character of
UPAC's business or in its Credit and Collection Policy.
(f) Material Change . As soon as practicable but in no event
later than the second Business Day following the occurrence,
notification of any material adverse change in UPAC's financial or
operating condition.
(g) Other . Promptly, from time to time, such other
information, documents, records or reports respecting the Receivables
or the condition or operations, financial or otherwise, of UPAC or, to
the extent it is Servicer, any other Originator or the Seller, as in
any case the Agent may from time to time reasonably request in order
to protect the interests of the Agent or Purchaser under or as
contemplated by this Agreement.
SECTION 7.06. Negative Covenants of UPAC . From the date hereof
until the Final Payout Date, UPAC will not, without the prior written consent of
the Agent:
(a) Sales, Liens, Etc . Except as otherwise provided herein
sell, assign (by operation of law or otherwise) or otherwise dispose
of, or create or suffer to exist any Lien upon or with respect to, any
Pool Receivable or related Contract or Related Security, or any
interest (including Seller's retained interest) therein, or any lock-
box account to which any Collections of any Pool Receivable are sent,
or any right to receive income or proceeds from or in respect of any
of the foregoing.
(b) Extension or Amendment of Receivables . Except as
otherwise permitted in Section 8.02 , extend, amend or otherwise
modify the terms of any Pool Receivable, or amend, modify or waive any
term or condition of any Contract related thereto.
(c) Change in Business or Credit and Collection Policy . Make
any material change in the character of its business or in its Credit
and Collection Policy.
(d) Change in Payment Instructions to Obligors . Add or
terminate any bank as a Lock-Box Bank from those listed in
Schedule 6.01(o) or make any change in its instructions to Obligors
regarding payments to be made to Seller or Servicer or payments to be
made to any Lock-Box Bank, unless the Agent shall have received notice
of such addition, termination or change and duly executed copies of
Lock-Box Agreements with each new Lock-Box Bank.
(e) Minimum Net Worth . Permit UPAC's consolidated tangible
net worth to be less than $5,000,000. (Consolidated tangible net worth
shall mean the consolidated net worth of UPAC and its Subsidiaries
after subtracting there from the aggregate amount of any intangible
assets of UPAC and its Subsidiaries, including, without limitation,
goodwill, software systems, franchises, licenses, patents, trademarks,
trade names, copyrights, service marks and brand names and UPAC's
earnings shall mean UPAC's after tax net income.)
(f) Mergers, Acquisitions, Sales, etc . Be a party to any
merger or consolidation, or convey, transfer, lease or otherwise dis-
pose of (whether in one transaction or in a series of transactions),
all or substantially all of its assets (whether now owned or hereafter
acquired), or acquire all or substantially all of the assets or
capital stock or other ownership interest of any Person; provided ,
however , that (i) UPAC may merge or consolidate with, or acquire all
or substantially all of the assets of any other Originator and (ii)
UPAC may merge or consolidate with, or acquire all or substantially
all of the assets or capital stock or other ownership interest of any
other Person so long as (1) no Liquidation Event or Unmatured
Liquidation Event is then outstanding or would result therefrom and
(2) immediately after giving effect to such merger, consolidation or
acquisition, as the case may be, UPAC shall be the surviving entity of
such merger, consolidation or acquisition and the net worth of UPAC on
a consolidated basis will equal or exceed that of UPAC immediately
prior to such merger, consolidation or acquisition; and provided ,
further , it is expressly understood and agreed that, unless
otherwise agreed to by the Agent and the Purchaser, neither (x) the
accounts receivable and other similar assets of such other party to
such merger, consolidation or acquisition (whether such accounts
receivable or other similar assets existed prior to such merger,
consolidation or acquisition or arise or are created thereafter out of
or in connection with what had been the operations of such other
party), nor (y) the accounts receivable and other similar assets
acquired by an Originator from a Person (other than another
Originator) in an acquisition of less than all or substantially all of
such Person's assets (by way of example and not limitation, the
purchase by an Originator of a single portfolio of Receivables from a
third party), shall be deemed in any event to be Eligible Receivables
hereunder except to the extent that:
(1) the aggregate Unpaid Principal Balance of all such
Receivables acquired through purchase, merger or consolidation
and which have not been previously designated by the Agent and
the Purchaser as being Eligible Receivables does not exceed, at
any time, 5% of the Net Pool Balance at such time; and
(2) the aggregate Unpaid Principal Balance of all such
Receivables acquired through any specific merger, consolidation
or any acquisition or purchase (or any related series of
acquisitions or purchases) and which have not previously been
designated by the Agent and the Purchaser as being Eligible
Receivables does not exceed, at any time, 2.5% of the Net Pool
Balance at such time.
(g) Restricted Payments . Purchase or redeem, or permit any
Subsidiary to purchase or redeem, any shares of the capital stock of
UPAC, declare or pay any dividends (unless expressly permitted by the
Agent) thereon, make any distribution to stockholders (including,
without limitation, of operating or other funds to Parent) or set
aside any funds for any such purpose, or prepay, purchase or redeem,
or permit any Subsidiary to prepay, purchase or redeem, any
subordinated indebtedness of UPAC, or purchase any debt owed by any
Affiliate of UPAC or make any loan to any Affiliate of UPAC, except
that (x) UPAC and any Subsidiaries may make permitted payments (i)
under the Tax Sharing Agreement in accordance with the terms thereof,
(provided that in no case shall such amount exceed Seller's pro rata
allocation), (ii) under the Subordinated Line not in excess of the
amount permitted thereunder and (iii) in respect of Allocated
Expenses, and (y) UPAC may make loans to the Seller as contemplated in
the Purchase and Sale Agreement to facilitate the ongoing purchase of
Receivables by the Seller from the Originators thereunder.
(h) Incurrence of Indebtedness . Incur, guaranty or permit to
exist any indebtedness or liability on account of deposits or advances
or for borrowed money or for the deferred purchase price of any
property or services, except (i) indebtedness to other Subsidiaries
not exceeding in the aggregate $100,000 at any one time outstanding,
(ii) current accounts payable arising in the ordinary course of
business, (iii) indebtedness of the Seller to any Originators under
the Subordinated Notes for the purchase price of Receivables purchased
by the Seller from the Originators pursuant to the Purchase and Sale
Agreement, (iv) unsecured indebtedness of UPAC in respect of
outstanding deposits made to such Originator by referring agents in
the ordinary course of its respective business, not to exceed at any
time of determination hereunder, in the aggregate for UPAC and UPAC of
California, the sum of $1,000,000 plus 10% of the excess (if any) of
the consolidated tangible net worth of UPAC and UPAC of California and
their consolidated subsidiaries at such time over $5,000,000, and (v)
other indebtedness outstanding on the date hereof and listed
on Schedule 7.06(i) ; notwithstanding the foregoing, UPAC and the
other Originators may maintain a Subordinated Line with Parent in an
amount not to exceed $5,000,000, in the aggregate, with respect to all
of the Originators.
(i) Deposits to Special Accounts . Deposit or otherwise
credit, or cause or permit to be so deposited or credited, to Lock-
Boxes or the Collection Account cash or cash proceeds other than
Collections of Pool Receivables.
SECTION 7.07. Affirmative Covenants of Parent . From the date hereof
until the Final Payout Date, Parent will, unless the Agent shall otherwise
consent in writing:
(a) Compliance with Laws, Etc . Comply, and cause each of the
Seller and the Originators to comply in all material respects with all
applicable laws, rules, regulations and orders with respect to its
business operations except where non-compliance would not have a
material adverse effect on such business operations.
(b) Preservation of Corporate Existence . Preserve and
maintain its corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would
materially adversely affect the ability of Parent, the Seller, UPAC or
any of the Originators to perform their respective obligations
hereunder and under the other Transaction Documents.
(c) Purchase and Sale Agreement . Cause each of the
Originators to comply with each of the terms and provisions of the
Purchase and Sale Agreement.
SECTION 7.08. Reporting Requirements of Parent From the date hereof
until the Final Payout Date, Parent will, unless the Agent shall otherwise
consent in writing, furnish to the Agent:
(a) Quarterly Financial Statements . As soon as available and
in any event within 45 days after the end of each of the first three
quarters of each fiscal year of Parent, copies of Parent's quarterly
financial reports, on Form 10-Q, as filed with the Securities and
Exchange Commission (or if Parent is no longer required to file such
Form 10-Q, Parent shall furnish such financial reports containing the
information typically found on Form 10-Q), certified by the chief
financial officer or chief accounting officer of Parent;
(b) Annual Financial Statements . As soon as available and in
any event within 90 days after the end of each fiscal year of Parent,
a copy of Parent's Annual Report, on Form 10-K, as filed with the
Securities and Exchange Commission (or if Parent is no longer required
to file such Form 10-K, Parent shall furnish such financial reports
containing information typically found on Form 10-K) and as reported
on by nationally recognized independent certified public accountants;
(c) Reports to Holders and Exchanges . In addition to the
reports required by subsections (a) and (b) next above, promptly
upon the Agent's request, copies of any reports which Parent sends to
any of its Security holders, and any reports or registration
statements that Parent files with the Securities and Exchange
Commission;
(d) ERISA . Promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any Reportable Event
defined in Article IV of ERISA which Parent or any ERISA Affiliate of
the Parent files under ERISA with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor
or which Parent or any ERISA Affiliate of the Parent receives from
such Corporation;
(e) Litigation and Other Proceedings . As soon as possible and
in any event within three Business Days of Parent's knowledge thereof,
notice of (i) any litigation, investigation, inquiry or proceeding
which may exist at any time which could have a material adverse effect
on the business, operations, property or financial condition of
Parent, any of the Originators or the Seller or impair the ability of
Parent, any of the Originators or the Seller to perform its
obligations under this Agreement and the other Transaction Documents
and (ii) any material adverse development in any previously disclosed
litigation, investigation, inquiry or proceeding; and
(f) Other . Promptly, from time to time, such other
information, documents, records or reports respecting the Receivables
or the conditions or operations, financial or otherwise, of Parent,
any of the Originators or the Seller as Purchaser may from time to
time reasonably request in order to protect the interests of the Agent
and the Purchaser.
SECTION 7.09. Negative Covenants of Parent . From the date hereof
until the Final Payout Date, Parent will not, without the prior written consent
of the Agent:
(a) Tangible Net Worth . Permit its consolidated tangible net
worth (as such term is defined in Section 7.06(e) ) to be less than
$50,000,000.
(b) Amendments to Parent Support Agreement . Amend,
supplement, waive the application of any provision of, amend and
restate or otherwise modify the Parent Support Agreement, except, in
each case (x) in accordance with the terms thereof and (y) with the
prior written consent of the Agent.
SECTION 7.10. Special Covenant of Seller, UPAC and Parent . From the
date hereof until the Final Payout Date, Seller, UPAC and Parent agree that
Seller shall (and Parent shall cause each of the Originators to operate such
that the Seller shall) be operated in such a manner that it will not be
substantively consolidated in the bankruptcy estate of any Affiliate such that
the separate corporate existence of Seller would be disregarded in the event of
a bankruptcy or insolvency of any Affiliate, and Seller is and shall be operated
in such a manner that no Affiliate shall be substantively consolidated in the
bankruptcy estate of Seller, such that, in the event that Seller were to be a
debtor in a case under the Bankruptcy Code, the separate existence of Seller or
the separate corporate existence of UPAC, or the separate existence of any other
Affiliate or Originator, would be disregarded so as to lead to substantive
consolidation of the assets and liabilities of UPAC, any other Originator,
Parent or any other Affiliate with the bankruptcy estate of Seller, and in that
regard:
(a) Seller shall maintain separate corporate records and books
of account from that of any Affiliate, including, but not limited to,
the Originators and Parent, hold regular meetings and otherwise
observe corporate formalities and shall keep and maintain its place of
business separate and apart from the place of business of any
Affiliate, including the Originators and Parent, and Seller shall have
a separately designated address and phone listing for its business
offices;
(b) the financial statements and books and records of Seller,
each of the Originators and Parent and any Affiliate prepared after
the date hereof (which may be consolidated statements for certain
financial and tax reporting purposes) shall reflect the separate
existence of and separate financial condition of the Seller, each of
the Originators and Parent and any other Affiliate and shall disclose
(i) the effects of their transactions pursuant hereto and the Purchase
and Sale Agreement in accordance with generally accepted accounting
principles and (ii) that the assets of Seller will only be available
to satisfy the claims of Seller's creditors;
(c) Seller shall maintain its funds and other assets separately
from the funds and other assets of any Affiliate, including, but not
limited to the Originators and Parent (including through the
maintenance of a separate bank account); Seller's funds and other
assets and records relating thereto will be separately identifiable
and shall not be commingled with those of any Affiliate, including,
but not limited to the Originators and Parent, and the creditors of
the Originators and Parent shall be entitled to be satisfied out of
their own assets prior to any value becoming available to the
shareholders of Seller;
(d) except to the limited extent permitted under
Section 7.10(p) or as expressly permitted under the Purchase and Sale
Agreement, no Affiliate of Seller shall guarantee Seller's obligations
or advance funds to Seller for the payment of expenses or otherwise;
(e) Seller, each Originator and Parent will conduct their
respective businesses solely in their own name so as not to mislead
others as to their identity, and particularly the Originators and
Parent on the one hand and Seller on the other hand will use their
best respective efforts to avoid the appearance of conducting business
on behalf of Seller on the one hand and the Originators and Parent on
the other hand or that any of Seller's assets are available to pay the
creditors of any Originator or Parent or any other Affiliates, and,
without limiting the generality of the foregoing, all oral or written
communications shall be conducted by Seller in its own name and on its
own stationary;
(f) except in the limited instances set forth herein, Seller
will not act as an agent of Parent or any Originator or any Affiliate,
and no Affiliate (including the Originators and Parent) will act as an
agent of Seller, but instead Seller shall present itself to the public
as a corporation separate from any other Person, independently engaged
in the business of purchasing Receivables and related Contracts;
(g) Seller, each Originator and Parent will act and conduct
their respective businesses in such a way that it would not be
reasonable for a third party to rely on the assets of one to satisfy
the obligations of the others;
(h) Seller shall obtain proper authorization from its board of
directors for any material corporate action to be engaged in by
Seller;
(i) Seller will maintain its own separate bank account and will
pay all of its own operating expenses and liabilities solely and
exclusively from its own funds;
(j) all resolutions, consents to action, agreements, and any
other instruments of Seller underlying the transactions described in
this Agreement and in the other Transaction Documents shall be
continuously maintained as official records by Seller, separately
identified and held apart from the records of the Originators, Parent
and each of the Affiliates thereof;
(k) Seller shall remain a limited purpose corporation whose
activities are restricted in accordance with its Certificate of
Incorporation;
(l) Seller shall hold no ownership or equity interests any
Person;
(m) neither any of the Originators nor Parent nor any other
Affiliate shall engage in any intercompany transactions with Seller
except for the transactions set forth or expressly contemplated in
this Agreement (or reasonably related thereto), the Purchase and Sale
Agreement and the other Transaction Documents;
(n) at least one of the directors of Seller shall be an
independent director, which independent director shall at no time be a
member, partner, director (other than as the independent director of
Seller), officer or employee of Seller, any Originator or Parent or
any Affiliate of any of the foregoing;
(o) although the organization expenses of Seller have been paid
by APR, operating expenses and liabilities of Seller shall be paid
solely and exclusively by Seller from its own funds (it being
understood that APR may from time to time make capital contributions
to Seller); and
(p) Seller, Originators and Parent shall comply with all
assumptions regarding the maintenance of Seller's separate corporate
existence set forth in the opinions of counsel described
in Section 5.01(l) .
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer .
(a) UPAC as Initial Servicer . The servicing, administering
and collection of the Pool Receivables shall be conducted by the
Person designated as Servicer hereunder ("Servicer") from time to time
in accordance with this Section 8.01 . Until the Agent gives to UPAC
a Successor Notice (as defined in Section 8.01(b) ), UPAC is hereby
designated as, and hereby agrees to perform the duties and obligations
of, Servicer pursuant to the terms hereof.
(b) Successor Notice; Servicer Transfer Events . Upon UPAC's
receipt of a notice from the Agent of the Agent's designation of the
Backup Servicer or any other Person acceptable to the Agent as
Servicer (a " Successor Notice "), UPAC agrees that it will terminate
its activities as Servicer hereunder in a manner that the Agent
believes will facilitate the transition of the performance of such
activities to the new Servicer, and such new Servicer shall assume
each and all of UPAC's obligations to service and administer such
Receivables, on the terms and subject to the conditions herein set
forth, and UPAC shall use its best efforts to assist the Agent (or its
designee) in assuming such obligations. The Agent agrees not to give
UPAC a Successor Notice until after the occurrence of any Liquidation
Event (any such Liquidation Event being herein called a
" Servicer Transfer Event "), in which case such Successor Notice may
be given at any time in the Agent's discretion. If UPAC disputes the
occurrence of a Servicer Transfer Event, UPAC may take appropriate
action to resolve such dispute; provided that UPAC must terminate its
activities hereunder as Servicer and allow the newly designated
Servicer to perform such activities on the date provided by the Agent
as described above, notwithstanding the commencement or continuation
of any proceeding to resolve the aforementioned dispute. Each
successor Servicer and the Backup Servicer agree to be bound by the
provisions of Section 2.1 of the Purchase and Sale Agreement.
(c) Subcontracts . Servicer may, with the prior consent of the
Agent, subcontract with any other person for servicing, administering
or collecting the Pool Receivables, provided that Servicer shall
remain liable for the performance of the duties and obligations of
Servicer pursuant to the terms hereof; and provided, further that the
Agent shall be deemed to have consented to the Servicer's
subcontracting with any Originator to perform the servicing,
administering and collecting of such Originator's own Receivables
until such time as a Successor Notice shall be delivered in accordance
with the immediately preceding Section 8.01(b) .
SECTION 8.02. Duties of Servicer .
(a) Appointment; Duties in General . Each of Seller, Purchaser
and Agent hereby appoints as its agent Servicer, as from time to time
designated pursuant to Section 8.01 , to enforce its rights and
interests in and under the Pool Receivables, the Related Security and
the related Contracts. Servicer shall take or cause to be taken all
such actions as may be necessary or advisable to collect each Pool
Receivable from time to time, all in accordance with applicable laws,
rules and regulations, with such care and diligence as is customary in
servicing insurance premium finance contracts in the industry or, if
higher, the servicing standards it-applies to such contracts, and in
accordance with the Credit and Collection Policies; such duties to
include, but not be limited to, the following: (i) documentation,
collection, enforcement and administration of the Receivables, (ii)
servicing in accordance with stated contract processing, collections,
and cash disbursement policies and procedures, and all other
procedures and standards set forth in the Credit and Collection
Policies, (iii) maintaining and documenting Purchaser's and Agent's
first priority perfected security interest in the Receivables Pool,
including those steps necessary to ensure a perfected security
interest in the unearned premiums, (iv) depositing and paying over of
all amounts to such Persons or accounts and as and when required by
the terms of any Transaction Document, (v) preparing and delivering
reports and electronic data to facilitate Settlements, Reinvestments,
Purchases, periodic audits, etc., (vi) delivering periodic data to the
Backup Servicer as required pursuant to the Backup Servicing Agreement
and (vii) using its best efforts to fully cooperate with any new
Servicer at any time designated hereunder.
(b) Documents and Records . The Seller shall deliver to the
Servicer, and Servicer shall hold in trust for Seller, the
Originators, the Agent and Purchaser in accordance with their
respective interests, all documents, instruments and records
(including, without limitation, computer tapes or disks) that evidence
or relate to Pool Receivables.
(c) Certain Duties to Seller . Servicer shall, as soon as
practicable following receipt, subject to Article III, turn over to
Seller (i) that portion of Collections of Pool Receivables
representing its undivided interest therein, less, in the event UPAC,
the Parent, any other Originator or any Affiliate of any of the
foregoing is no longer Servicer, all reasonable and appropriate out-
of-pocket costs and expenses of Servicer of servicing, collecting and
administering the Pool Receivables to the extent not covered by the
Servicer's Fee received by it, and (ii) the Collections of any
Receivable which is not a Pool Receivable. Servicer, if other than
UPAC, the Parent, any other Originator or any Affiliate of any of the
foregoing, shall, as soon as practicable upon demand, deliver to
Seller all documents, instruments and records in its possession that
evidence or relate to Receivables of Seller other than Pool
Receivables, and copies of documents, instruments and records in its
possession that evidence or relate to Pool Receivables.
(d) Termination . Servicer's authorization under this
Agreement shall terminate upon the Final Payout Date.
(e) Power of Attorney . Seller hereby grants to Servicer an
irrevocable power of attorney, with full power of substitution,
coupled with an interest, to take in the name of Seller all steps
which are necessary or advisable to endorse, negotiate or otherwise
realize on any writing or other right of any kind held or transmitted
by Seller or transmitted or received by Purchaser (whether or not from
Seller) in connection with any Receivable.
SECTION 8.03. Rights of the Agent .
(a) Notice to Obligors . At any time the Agent may notify the
Obligors of Pool Receivables, or any of them, of the ownership of
Asset Interests by Purchaser.
(b) Notice to Lock-Box Banks . Seller hereby transfers to the
Agent exclusive dominion and control of all of its bank accounts and
related lock-boxes into which Collections are remitted, deposited or
concentrated, and hereby agrees to take any further action that the
Agent may reasonably request to effect such transfer. The Agent
agrees to permit the Seller and the Originators to continue to operate
such accounts in accordance with their customary business practices
until such time following the earliest to occur of (i) the occurrence
of the Liquidation Date, (ii) the commencement of the Liquidation
Period, and (iii) the breach of the warranty in Section 6.02(h)(v) as
the Agent may elect to notify the Lock-Box Banks to cease taking
directions with respect to any such accounts or lock-boxes from the
Seller, the Servicer and/or the applicable Originator, as the case may
be.
(c) Rights on Servicer Transfer Event . At any time following
the designation of a Servicer other than UPAC, the Parent, any other
Originator or any Affiliate of any of the foregoing pursuant
to Section 8.01 :
(i) The Agent may direct the Obligors of Pool Receivables,
or any of them, to pay all amounts payable under any Pool
Receivable directly to the Agent.
(ii) Seller and UPAC shall, at the Agent's request and at
Seller's expense, give notice of such ownership to each said
Obligor and direct that payments be made directly to the Agent.
(iii) Seller and UPAC shall, and shall cause each of the
other Originators to, at the Agent's request, (A) assemble all of
the documents, instruments and other records (including, without
limitation, computer programs, tapes and disks) which evidence
the Pool Receivables, and the related Contracts and Related
Security, or which are otherwise necessary or desirable to
collect such Pool Receivables, and make the same available to the
Agent at a place selected by the Agent, and (B) segregate all
cash, checks and other instruments received by it from time to
time constituting Collections of Pool Receivables in a manner
acceptable to the Agent and promptly upon receipt, remit all such
cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Agent.
(iv) Each of Seller and Purchaser hereby authorizes the
Agent, and grants to the Agent an irrevocable power of attorney,
to take any and all steps in Seller's name and on behalf of
Seller and Purchaser which are necessary or desirable, in the
determination of the Agent, to collect all amounts due under any
and all Pool Receivables, including, without limitation,
endorsing Seller's and/or the applicable Originator's name on
checks and other instruments representing Collections and
enforcing such Pool Receivables and the related Contracts;
provided that the Agent shall not exercise their rights under
such Power of Attorney unless a Servicer Transfer Event shall
have occurred and be continuing.
SECTION 8.04. Responsibilities of Seller . Anything herein to the
contrary notwithstanding:
(a) Contracts . Seller and UPAC shall perform all of their
respective obligations under the Contracts related to the Pool
Receivables and under other agreements to the same extent as if the
Asset Interest had not been sold hereunder or under the Purchase and
Sale Agreement and the exercise by the Agent or its designees of their
rights hereunder shall not relieve Seller or UPAC from such
obligations.
(b) Limitation of Liability . Neither the Agent nor the
Purchaser shall have any obligation or liability with respect to any
Pool Receivables, Contracts related thereto or any other related
purchase orders or other agreements, nor shall either of them be
obligated to perform any of the obligations of Seller, the applicable
Originator or UPAC thereunder.
SECTION 8.05. Further Action Evidencing Purchases and Reinvestments.
(a) Further Assurances . Seller and UPAC agree that from time
to time, at the reasonable expense of the Seller's, they will promptly
execute and deliver all further instruments and documents, and take
all further action that the Agent or its designees may reasonably
request in order to perfect, protect or more fully evidence the
Purchases hereunder and the resulting Asset Interest, or to enable
Purchaser, the Agent or its designees to exercise or enforce any of
their respective rights hereunder or under any Transaction Document.
Without limiting the generality of the foregoing, Seller and UPAC
will, upon the request of the Agent or its designee:
(i) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or
appropriate;
(ii) xxxx conspicuously each Contract evidencing each Pool
Receivable with a legend, acceptable to the Agent, evidencing
that the Asset Interest has been sold in accordance with this
Agreement; and
(iii) xxxx the master data processing records evidencing
such Pool Receivables and related Contracts with such legend.
(b) Additional Financing Statements; Performance by Agent .
Seller and UPAC hereby authorize the Agent or its designees to file
one or more financing or continuation statements, and amendments
thereto and assignments thereof, relative to all or any of the Pool
Receivables and the Related Security now existing or hereafter arising
in the name of Seller or UPAC. If Seller, UPAC or Parent fails to
perform any of its agreements or obligations under this Agreement, the
Agent or its designees may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and
the expenses of the Agent and its designees, as the case may be,
incurred in connection therewith shall be payable by Seller as
provided in Section 14.05 .
(c) Continuation Statements; Opinion . Without limiting the
generality of subsection (a) , Seller will not earlier than six (6)
months and not later than three (3) months prior to the fifth
anniversary of the date of filing of the financing statements referred
to in Section 5.01(e) or any other financing statement filed pursuant
to this Agreement or the Purchase and Sale Agreement or in connection
with any Purchase hereunder, unless the Termination Date shall have
occurred and Purchaser's Total Interest shall have been reduced to
zero, execute and deliver and file or cause to be filed an appropriate
continuation statements with respect to such financing statements.
SECTION 8.06. Application of Collections {tc \l2 "SECTION 8.06.
Application of Collections }. Any payment by an Obligor in respect of any
indebtedness owed by it to Seller or an Originator shall, except as otherwise
specified by such Obligor, required by the underlying Contract or law or unless
the Agent instructs otherwise, be applied, first , as a Collection of any Pool
Receivable or Receivables then outstanding of such Obligor in the order of the
age of such Pool Receivables, starting with the oldest of such Pool Receivable
and, second , to any other indebtedness of such Obligor.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest . To secure all obligations
of Seller, and Servicer (if UPAC, any Originator, the Parent or any Affiliate of
any of the foregoing) in its capacity as Servicer, arising in connection with
this Agreement and each other Transaction Document, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, all Indemnified Amounts, payments on account of
Collections received or deemed to be received and fees, in each case
pro rata according to the respective amounts thereof, Seller hereby assigns and
grants to the Agent, for the benefit of the Secured Parties, a security interest
in all of Seller's (i) right, title and interest (including specifically any
undivided interest retained by Seller hereunder) now or hereafter existing in,
to and under all the Receivables, the Related Security, the related Contracts
and all Collections with regard thereto and proceeds thereof and (ii) rights,
remedies, powers and privileges under and in respect of the Purchase and Sale
Agreement, the Parent Support Agreement, the Lock-Box Agreements and related
lock-box accounts.
SECTION 9.02. Further Assurances . The provisions of
Section 8.05 shall apply to the security interest granted under
Section 9.01 as well as to the Purchases, Reinvestments and all the Asset
Interests hereunder.
SECTION 9.03. Remedies . Upon the occurrence of a Liquidation Event,
Purchaser and the Agent shall have, with respect to the collateral granted
pursuant to Section 9.01 , and in addition to all other rights and remedies
available to Purchaser or the Agent under this Agreement or other applicable
law, all the rights and remedies of a secured party upon default under the UCC.
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation The following events shall be
" Liquidation Events " hereunder:
(a) (i) Servicer (if UPAC, any Originator, the Parent or any
Affiliate of any of the foregoing) shall fail to perform or observe
any term, covenant or agreement that is an obligation of Servicer
hereunder (other than as referred to in clause ( ii ) next
following) and such failure shall remain unremedied for three Business
Days or (ii) Servicer (if UPAC, any Originator, the Parent or any
Affiliate of any of the foregoing) shall fail to make any payment or
deposit to be made by it hereunder when due; or
(b) Any representation or warranty made or deemed to be made by
Seller, UPAC, and other Originator or Parent (or any of their
officers) under or in connection with this Agreement or any other
Transaction Document or any Settlement Statement or other information
or report delivered pursuant hereto shall prove to have been false or
incorrect in any material respect when made; or
(c) Seller, UPAC, any other Originator or Parent shall fail to
perform or observe any other term, covenant or agreement contained in
this Agreement or any of the other Transaction Documents on their part
to be performed or observed and any such failure shall remain
unremedied for five Business Days after (i) written notice thereof
shall have been given by the Agent to Seller, UPAC, any such other
Originator or Parent, as applicable, or (ii) either Seller, Parent or
UPAC obtained actual knowledge thereof; or
(d) (i) A default or a similar event, as the case may be, shall
have occurred and be continuing under any instrument or agreement
evidencing, securing or providing for (A) the issuance of indebtedness
for borrowed money aggregating for all such agreements in excess of
$150,000 of, or guaranteed by, any Originator, or $5,000,000 of, or
guaranteed by, Parent or (B) pursuant to which any Originator or
Parent shall have sold interests in receivables to, or shall otherwise
have financed receivables with, any Person, where the purchaser's
investment is in the aggregate for all such transactions in excess of
$150,000 in the case of such Originator or $5,000,000 in the case of
Parent, which default or similar event, if unremedied, uncured, or
unwaived (with or without the passage of time or the giving of notice)
would permit acceleration of the maturity of such indebtedness or
would require the permanent reduction of such purchaser's investment
and such default or similar event shall have continued unremedied,
uncured or unwaived for a period long enough to permit such
acceleration or reduction and any notice of default or similar event
required to permit acceleration or reduction shall have been given; or
(e) Adverse Determinations shall have occurred in three or more
states or in states in which Direct or Insurance Obligors reside
representing the aggregate of 5% or more of the Receivables in the
Receivables Pool; or
(f) An Event of Bankruptcy shall have occurred and remain
continuing with respect to Seller, any Originator or Parent or any
Affiliate of any thereof; or
(g) (i) Any material litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental
proceedings not disclosed in writing by Seller the Parent or any
Originator to the Agent and Purchaser prior to the date of execution
and delivery of this Agreement is pending against Seller, any
Originator or Parent or any Affiliate of any thereof, or (ii) any
material development not so disclosed has occurred in any litigation
(including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings so disclosed, which, in the
case of clause (i) or (ii) , in the opinion of the Agent, has a
reasonable likelihood of having a Material Adverse Effect; or
(h) The average Excess Yield Ratio at any Cut-Off Date
calculated for the three most recent Settlement Periods (calculated
with pro forma calculations of the Excess Yield Ratio for the number
of calendar months preceding the date hereof necessary to make the
calculations required by this paragraph (h) ) is less than 3.00%; or
(i) The average Default Ratio at any Cut-Off Date calculated for
the three most recent Settlement Periods (calculated with pro forma
calculations of the Default Ratio for the number of calendar months
preceding the date hereof necessary to make the calculations required
by this paragraph (i) ) exceeds 1.00%; or
(j) The average Cancellation Ratio at any Cut-Off Date
calculated for the three most recent Settlement Periods (calculated
with pro forma calculations of the Cancellation Ratio for the number
of calendar months preceding the date hereof necessary to make the
calculations required by this paragraph (j) ) exceeds 4.00%; or
(k) The Delinquency Ratio at any Cut-Off Date exceeds 3.00%; or
(l) There shall exist any event or occurrence that has a
reasonable possibility of causing a Material Adverse Effect; or
(m) The Purchaser's Share on account of Principal Receivables
shall at any time exceed 100% and such excess shall not have been
eliminated within 2 Business Days after the date of any Weekly Report,
Settlement Statement or other report disclosing such excess; or
(n) Any of Seller, Parent or Originator is subject to a Change-
in-Control; or
(o) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to
any of the assets of Seller, any Originator, Parent or any ERISA
Affiliate of any of the foregoing and such lien shall not have been
released within five days, or the Pension Benefit Guaranty Corporation
shall, or shall indicate its intention to, file notice of a lien
pursuant to Section 4068 of the Employee Retirement Income Security
Act of 1974 with regard to any of the assets of Seller, any such
Originator, Parent or any such ERISA Affiliate; or
(p) Failure to obtain a Liquidity Agreement in substitution for
the then existing Liquidity Agreement on or before 30-days prior to
the expiration of the commitments of the Liquidity Banks thereunder or
the Liquidity Agreement is otherwise terminated (unless immediately
prior to such termination, the Liquidity Agreement shall have been
funded or collateralized in such a manner that such failure to
substitute or such termination will not result in a reduction or
withdrawal of the credit rating applied to the Commercial Paper Notes
by any of the rating agencies then rating the Commercial Paper Notes);
it being understood and agreed that the Agent shall use reasonable
efforts to obtain such a substitute Liquidity Agreement, but neither
the Agent nor the Bank of Boston shall have any liability for failing
to do so nor shall they have any obligation to provide such a facility
themselves; or
(q) (i) A Downgrading Event with respect to a Liquidity Bank
shall have occurred and been continuing for not less than 45 days,
(ii) the Downgraded Liquidity Bank shall not have been replaced by a
Qualifying Liquidity Bank under the Liquidity Agreement, and (iii) the
commitment of such Downgraded Liquidity Bank under the Liquidity
Agreement shall not have been funded or collateralized in such a
manner that such Downgrading Event will not result in a reduction or
withdrawal of the credit rating applied to the Commercial Paper Notes
by any of the rating agencies then rating the Commercial Paper
Notes; provided , that no Termination Event shall be deemed to have
occurred pursuant to this Section 10.01(q ) if (x) the parties hereto
agree to permanently reduce the Purchase Limit by the commitment
amount of such Downgraded Liquidity Bank at the end of the 45 day
period referred to in clause (i) and (y) the Purchaser's Total
Investment does not exceed such revised Purchase Limit after such
time; it being understood and agreed that the Agent shall use
reasonable efforts to replace any Downgraded Liquidity Bank, but
neither the Agent nor Bank of Boston shall have any liability for
failing to do so nor shall they have any obligation to assume the
commitment of such Downgraded Liquidity Bank themselves; or
(r) any Liquidity Bank terminates, refuses to perform or
defaults in the performance of its Funding commitment under the
Liquidity Agreements, provided , that no Termination Event shall be
deemed to have occurred pursuant to this Section 10.01(r) if (x) the
parties hereto agree to permanently reduce the Purchase Limit by the
unfunded commitment amount of such terminating or defaulting Liquidity
Bank and after giving effect thereto to the Purchaser's Total
Investment would not exceed such revised Purchase Limit or (y) such
terminating or defaulting Liquidity Bank is replaced under the
Liquidity Agreement by a Qualifying Liquidity Bank or such default is
cured, in either case, within one Business Day after the Agent's
receipt of actual knowledge of the termination or default by such
Liquidity Bank under the Liquidity Agreement ;
it being understood and agreed that the Agent shall use reasonable
efforts to obtain a replacement Liquidity Bank to substitute for such
recalcitrant of defaulting Liquidity Bank, but neither the Agent nor
Bank of Boston shall have any liability for failing to do so nor shall
they have any obligation to assume the commitment of such Liquidity
Bank themselves; or
(s) a Purchase and Sale Termination Event shall have occurred;
or
(t) Purchaser shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended; or
(u) the Parent Support Agreement shall cease to be in full force
and effect or the Parent or any other Person shall assert the
invalidity or unenforceability thereof.
SECTION 10.02. Remedies .
(a) Optional Liquidation . Upon the occurrence of a
Liquidation Event (other than a Liquidation Event described in
subsections (f),(p),(q), (r) or (u) of Section 10.01 ), the Agent
shall, at the request, or may with the consent, of Purchaser, by
notice to Seller declare the Purchase Termination Date to have
occurred and the Liquidation Period to have commenced.
(b) Automatic Liquidation . Upon the occurrence of a
Liquidation Event described in
subsections (f),(p),(q),(r) or (u) of Section 10.01 , the Purchase
Termination Date shall occur and the Liquidation Period shall commence
automatically.
(c) Additional Remedies . Upon any Purchase Termination Date
pursuant to this Section 10.02 , no Purchases or Reinvestments
thereafter will be made, and the Agent and Purchaser shall have, in
addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC and
other laws of each applicable jurisdiction and other applicable laws,
which rights shall be cumulative.
ARTICLE XI
THE AGENT
SECTION 11.01. Authorization and ActionPurchaser has appointed and
authorized the Agent (or its respective designees) to take such action as agent
on its behalf and to exercise such powers under this Agreement as are delegated
to the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto.
SECTION 11.02. Agent's Reliance, Etc . The Agent and its directors,
officers, agents or employees shall not be liable for any action taken or
omitted to be taken by it or them under or in connection with the Transaction
Documents (including, without limitation, the servicing, administering or
collecting Pool Receivables as Servicer pursuant to Section 8.01 ), except for
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (a) may consult with legal counsel
(including counsel for Seller), independent certified public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to
Purchaser or any other holder of any interest in Pool Receivables and shall not
be responsible to Purchaser or any such other holder for any statements,
warranties or representations made in or in connection with any Transaction
Document; (c) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Transaction Document on the part of Seller, any of the Originators or Parent or
to inspect the property (including the books and records) of Seller, any of the
Originators or Parent; (d) shall not be responsible to Purchaser or any other
holder of any interest in Pool Receivables for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Transaction
Document; and (e) shall incur no liability under or in respect of this Agreement
by acting upon any notice (including notice by telephone), consent, certificate
or other instrument or writing (which may be by facsimile or telex) believed by
it to be genuine and signed or sent by the proper party or parties.
SECTION 11.03. Bank of Boston and Affiliates . Bank of Boston and
any of its respective Affiliates may generally engage in any kind of business
with Seller, any of the Originators or Parent or any Obligor, any of their
respective Affiliates and any Person who may do business with or own securities
of Seller, any of the Originators or Parent or any Obligor or any of their
respective Affiliates, all as if Bank of Boston was not the Agent hereunder and
without any duty to account there for to Purchaser or any other holder of an
interest in Pool Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments .
(a) Except as set forth in Section 12.05 , neither Seller,
UPAC, nor Parent, may assign its rights, or delegate its duties
hereunder or any interest herein without the prior written consent of
the Agent. Purchaser may not assign its rights hereunder (although it
may delegate its duties hereunder as expressly indicated herein) or
the Asset Interest (or any portion thereof or interest therein) to any
Person without the prior written consent of Seller which consent shall
not be unreasonably withheld; provided , however , that, without the
prior consent of any Person:
(i) Purchaser may assign all or any part of its rights and
interests in the Transaction Documents, together with all or any
portion of its interest in the Asset Interest, to any "bankruptcy
remote" special purpose entity the business of which is
administered by Bank of Boston or any Affiliate; and
(ii) Purchaser may assign and grant a security interest
in all of its rights in the Transaction Documents, together with
all of its rights and interest in the Asset Interest, to the
Collateral Agent to secure Purchaser's obligations under or in
connection with the Commercial Paper Notes and the Liquidity
Agreement and certain other obligations of Purchaser incurred in
connection with the funding of the Purchases and Reinvestments
hereunder, which assignment and grant of a security interest (and
any subsequent assignment by the Collateral Agent) shall not be
considered an "assignment" for purposes of Section 12.01 or,
prior to the enforcement of such security interest, for purposes
of any other provision of this Agreement.
(b) Seller agrees to advise the Agent within five Business
Days after notice to Seller of any proposed assignment by Purchaser of
the Asset Interest (or any portion thereof), not otherwise permitted
under subsection (a) , of Seller's consent or non-consent to such
assignment and if it does not consent, the reasons therefor. If
Seller does not consent to such assignment, Purchaser may. immediately
assign such Asset Interest (or portion thereof) to Bank of Boston or
any Affiliate of Bank of Boston. All of the aforementioned
assignments shall be upon such terms and conditions as Purchaser and
the assignee may mutually agree.
SECTION 12.02. Rights of Assignee . Upon the assignment by Purchaser
in accordance with this Article XII , the assignee receiving such assignment
shall have all of the rights of Purchaser with respect to the Transaction
Documents and the Asset Interest (or such portion thereof as has been assigned)
SECTION 12.03. Evidence of Assignment . Any assignment of the Asset
Interest (or any portion thereof) to any Person may be evidenced by such
instrument(s) or document(s) as may be satisfactory to Purchaser, the Agent and
the assignee.
SECTION 12.04. Rights of the Banks and Collateral Agent . Seller
hereby agrees that, upon notice to Seller, the Collateral Agent may exercise all
the rights of the Agent and the Purchaser hereunder, with respect to the Asset
Interest (or any portions thereof), and Collections with respect thereto, which
are owned by Purchaser, and all other rights and interests of Purchaser in, to
or under this Agreement or any other Transaction Document. Without limiting the
foregoing, upon such notice the Collateral Agent may request Servicer to
segregate Purchaser's Share of Collections from Seller's Share, require
Collections to be retained in the Collection Account, may give a Successor
Notice pursuant to Section 8.01(a) , may give or require the Agent to give
notice to the Lock-Box Banks as referred to in Section 8.03(b ) and may direct
the Obligors of Pool Receivables to make payments in respect thereof directly to
an account designated by them, in each case, to the same extent as the Agent or
the Purchaser might have done.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities by Seller .
(a) General Indemnity . Without limiting any other rights which
any such Person may have hereunder or under applicable law, Seller hereby agrees
to indemnify each of the Purchaser, the Liquidity Banks, the Enhancement
Providers, the Backup Servicer and the Agent, each of the foregoing's respective
Affiliates, and all successors, transferees, participants and assigns and all
officers, directors, shareholders, controlling persons, employees and agents of
any of the foregoing (each an " Indemnified Party "), forthwith on demand, from
and against any and all damages, losses, claims, liabilities and related costs
and expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as " Indemnified Amounts ") awarded
against or incurred by any of them arising out of or relating to the Transaction
Documents or the ownership or funding of the Asset Interest or in respect of any
Receivable or any Contract, excluding , however , (a) Indemnified Amounts to
the extent determined by a court of competent jurisdiction to have resulted from
gross negligence or willful misconduct on the part of such Indemnified Party, or
(b) recourse (except as otherwise specifically provided in this Agreement) for
Defaulted Receivables. Without limiting the foregoing, Seller hereby
indemnifies each Indemnified Party for Indemnified Amounts arising out of or
relating to:
(i) the transfer by Seller of any interest in any Receivable
other than the transfer of an Asset Interest to Purchaser
pursuant to this Agreement and the grant of a security interest
to Purchaser pursuant to Section 9.01 ;
(ii) any representation or warranty made by Seller,
UPAC (individually or as Servicer) or Parent (or any of their
officers or Affiliates) under or in connection with any
Transaction Document, any Settlement Statement or any other
information or report delivered by or on behalf of Seller, UPAC
(individually or as Servicer) or Parent pursuant hereto, which
shall have been false, incorrect or misleading in any material
respect when made or deemed made;
(iii) the failure by Seller or any applicable Originator to
comply with any applicable law, rule or regulation with respect
to any Pool Receivable or the related Contract, or the
nonconformity of any Pool Receivable or the related Contract with
any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in Purchaser an
undivided percentage ownership interest, to the extent of the
Asset Interest, in the Receivables in, or purporting to be in,
the Receivables Pool, free and clear of any Lien, other than a
Lien arising solely as a result of an act of Purchaser or the
Agent, whether existing at the time of any Purchase or
Reinvestment of such Asset Interest or at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the
UCC or similar laws of any applicable jurisdiction or other
applicable laws with respect to any Receivables in, or purporting
to be in, the Receivables Pool, whether at the time of any
Purchase or Reinvestment or at any time thereafter;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of any Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool
(including, without limitation, a defense based on such
Receivable's or the related Contract's not being a legal, valid
and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the
making of loans or the sale or provision of services related to
such Receivable or the furnishing or failure to furnish such
loans or services;
(vii) any failure of Seller, Parent, Servicer (if UPAC or an
Affiliate of UPAC) or any Originator to perform their respective
duties or obligations in accordance with the provisions of this
Agreement, including, without limitation, Article VIII and
Sections 4.02 and 3.07(b) , or any of the other Transaction
Documents;
(viii) any products liability claim arising out of or in
connection with loans, products or services that are the subject
of any Pool Receivable;
(ix) any tax or governmental fee or charge (but not
including taxes upon or measured by net income), all interest and
penalties thereon or with respect thereto, and all out-of-pocket
costs and expenses, including the reasonable fees and expenses of
counsel in defending against the same, which may arise by reason
of the purchase or ownership of any Asset Interest, or any other
interest in the Pool Receivables or in any goods which secure any
such Pool Receivables;
(x) the failure by Seller or UPAC to vest and maintain
vested in Purchaser a valid and first priority security interest
in any and all unearned premium related to each Pool Receivable;
(xi) (A) any proceeding, investigation or inquiry which does
or could result in an Adverse Determination, (B) any Adverse
Determination or (C) Seller's, any Originator's or the
Purchaser's failure to be qualified, licensed or to have obtained
necessary approvals as a premium finance company in any
jurisdiction in which such qualification, license or approvals
are required;
(xii) the failure to cancel any insurance policy on which a
payment is more than 31 days (or, if earlier, the date specified
in the related Contract) past due; or
(xiii) the occurrence of a Liquidation Event or Unmatured
Liquidation Event under Section 10.01(e) ; or
(xiv) any insurance fraud relating to any Receivable.
(b) Contest of Tax Claim; After-Tax Basis . If any
Indemnified Party shall have notice of any attempt to impose or
collect any tax or governmental fee or charge for which
indemnification will be sought from Seller
under Section 13.01(a)(ix) , such Indemnified Party shall give prompt
and timely notice of such attempt to it and Seller shall have the
right, at their expense, to participate in any proceedings resisting
or objecting to the imposition or collection of any such tax,
governmental fee or charge. Indemnification hereunder shall be in an
amount necessary to make the Indemnified Party whole after taking into
account any tax consequences to the Indemnified Party of the payment
of any of the aforesaid taxes and the receipt of the indemnity
provided hereunder or of any refund of any such tax previously
indemnified hereunder, including the effect of such tax or refund on
the amount of tax measured by net income or profits which is or was
payable by the Indemnified Party.
(c) Contribution . If for any reason the indemnification
provided above in this Section 13.01 is unavailable to an Indemnified
Party or is insufficient to hold an Indemnified Party harmless, then
Seller shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and Seller
on the other hand but also the relative fault of such Indemnified
Party as well as any other relevant equitable considerations.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc . No amendment or waiver of any
provision of this Agreement nor consent to any departure by Seller, UPAC or
Parent therefrom shall in any event (unless otherwise provided herein) be
effective unless the same shall be in writing and signed by (a) Seller, UPAC,
Parent, the Agent and Purchaser (with respect to an amendment) or (b) the Agent
and Purchaser (with respect to a waiver or consent by them) or Seller, UPAC or
Parent (with respect to a waiver or consent by them), as the case may be, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. The parties acknowledge that, before
entering into such an amendment or granting such a waiver or consent, Purchaser
may also be required to obtain the approval of some or all of the Liquidity
Banks and/or the Collateral Agent. In addition, the parties acknowledge that
prior to entering into any material amendment to this Agreement or any amendment
or modification to the definition hereunder of " Excess Concentration Deduction
" at any time that the Commercial Paper Notes are being rated, the Purchaser
shall be required to obtain written confirmation from each of the rating
agencies then rating the Commercial Paper Notes that such amendment, waiver or
consent will not result in a withdrawal or reduction of the ratings of the
Commercial Paper Notes. The Purchaser shall send or cause to be sent to each
such rating agency, copies of all amendments, waivers or other modifications to
this agreement prior to the execution thereof by all of the parties thereto.
SECTION 14.02. Notices, Etc . All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier or by certified mail, postage prepaid, or by facsimile,
to the intended party at the address or facsimile number of such party set forth
under its name on the signature pages hereof or at such other address or
facsimile number as shall be designated by such party in a written notice to the
other parties hereto. All such notices and communications shall be effective,
(a) if personally delivered or sent by express mail or courier or if sent by
certified mail, when received, and (b) if transmitted by facsimile, when sent,
receipt confirmed by telephone or electronic means.
SECTION 14.03. No Waiver; Remedies . No failure on the part of the
Agent, any Affected Party, any Indemnified Party, Purchaser, the Collateral
Agent or any other holder of the Asset Interest (or any portion thereof) to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Without limiting the foregoing, each of the Affected
Parties and the Indemnified Parties is hereby authorized by Seller, UPAC or
Parent at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by any such Affected Party or Indemnified Party to or for the credit
or the account of Seller, UPAC or Parent, now or hereafter existing under this
Agreement, to any such Affected Party or Indemnified Party, or their respective
successors and assigns.
SECTION 14.04. Binding Effect; Survival This Agreement shall be
binding upon and inure to the benefit of Seller, UPAC, Parent, the Agent, the
Purchaser and their respective successors and assigns, and the provisions of
Sections 4.02 and 14.03 and Article XIII shall inure to the benefit of the
Affected Parties and the Indemnified Parties, respectively, and their respective
successors and assigns; provided , however , nothing in the foregoing shall be
deemed to authorize any assignment not permitted by Section 12.01 . This
Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until the Final Payout Date. The rights and remedies with respect to any breach
of any representation and warranty made by Seller, UPAC or Parent pursuant to
Article VI and the indemnification and payment provisions of
Article XIII and Sections 4.02 , 14.05 , 14.06 , 14.07 , 14.08 and 14.15
shall be continuing and shall survive any termination of this Agreement.
SECTION 14.05. Costs, Expenses and Taxes.
In addition to its obligations under Article XIII , the Seller hereby
agrees to jointly and severally pay on demand:
(a) all costs and expenses incurred by the Agent, the Collateral
Agent, the Liquidity Banks, the Liquidity Agent and the Purchaser and
their respective Affiliates in connection with the negotiation,
preparation (including, without limitation, electronic data
preparation), execution and delivery, the administration (including
periodic auditing) or the enforcement of, or any actual or claimed
breach of, this Agreement and the other Transaction Documents,
including, without limitation (i) the reasonable fees and expenses of
counsel to any of such Persons incurred in connection with any of the
foregoing or in advising such Persons as to their respective rights
and remedies under any of the Transaction Documents, and (ii) all
reasonable out-of-pocket expenses (including reasonable fees and
expenses of independent accountants), incurred in connection with any
review of Seller's, the Parent's, the Originators' and/or UPAC's books
and records either prior to the execution and delivery hereof or
pursuant to Sections 7.01(c ) and 7.04(c) ; and
(b) all stamp and other taxes and fees payable or determined to
be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other Transaction Documents, and
agrees to indemnify each Indemnified Party against any liabilities
with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
SECTION 14.06. No Proceedings . Seller, UPAC, Parent, Servicer, each
hereby agrees that it will not, and will not permit any other Originator to,
institute against Purchaser, or join any other Person in instituting against
Purchaser, any insolvency proceeding (namely, any proceeding of the type
referred to in the definition of Event of Bankruptcy) so long as any Commercial
Paper Notes issued by Purchaser shall be outstanding or there shall not have
elapsed one year plus one day since the last day on which any such Commercial
Paper Notes shall have been outstanding. The foregoing shall not limit
Seller's, UPAC's, Parents's, Servicer's or any other Originator's right to file
any claim in or otherwise take any action with respect to any insolvency
proceeding that was instituted by any Person other than Seller, UPAC, Parent,
Servicer or any such other Originator.
SECTION 14.07. Confidentiality of Seller Information .
(a) Confidential Seller Information . Each party hereto (other
than Seller and its Affiliates) acknowledges that certain of the
information provided to such party by or on behalf of Seller, UPAC,
Parent or any Originator in connection with this Agreement and the
transactions contemplated hereby is or may be confidential, and each
such party severally agrees that, unless Seller shall otherwise agrees
in writing, and except as provided in subsection (b) , such party will
not disclose to any other person or entity: (i) any information
regarding, or copies of, any non-public financial statements, reports
and other information furnished by Seller, UPAC, Parent or any
Originator to Purchaser or the Agent and designated by them as being
confidential, or (ii) any other information regarding Seller, UPAC,
Parent or any Originator (" Seller Parties ") which is designated by
Seller to such party in writing as confidential (collectively,
" Seller Information "); provided , however , " Seller Information
" shall not include (A) any information which is or becomes generally
available on a nonconfidential basis from a source other than Seller
Party, or which was known to such party on a nonconfidential basis
prior to its disclosure by Seller Party, or (B) information regarding
the nature, scope and structure of this Agreement, the other
Transaction Documents and the basic terms hereof.
(b) Disclosure . Notwithstanding subsection (a) , each party
may disclose any Seller Information:
(i) to any of such party's independent attorneys,
consultants and auditors, and to each Liquidity Bank, Enhancement
Provider, Liquidity Agent, Collateral Agent, any dealer or
placement agent for Purchaser's commercial paper, and any actual
or potential assignees of, or participants in, any of the rights
or obligations of Purchaser, any Liquidity Bank, the Enhancement
Provider, or the Agent under or in connection with this
Agreement, who (A) in the good faith belief of such party, have a
need to know such Seller Information, (B) are informed by such
party of the confidential nature of the Seller Information and
the terms of this Section 14.07 , and are subject to
confidentiality restrictions generally consistent with
this Section 14.07 ,
(ii) to any rating agency that maintains a rating for
Purchaser's commercial paper or is considering the issuance of
such a rating, for the purposes of reviewing the credit of
Purchaser in connection with such rating,
(iii) to any other party to this Agreement or any agreement
relating to the Purchaser's receivables purchase program, for the
purposes contemplated hereby or relating hereto,
(iv) as may be required by any municipal, state, federal or
other regulatory body having or claiming to have jurisdiction
over such party, in order to comply with any law, order,
regulation, regulatory request or ruling applicable to such
party,
(v) subject to subsection (c) , in the event such party is
legally compelled (by interrogatories, requests for information
or copies, subpoena, civil investigative demand or similar
process) to disclose such Seller Information, or,
(vi) if it or any of its representatives is requested or
becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or
similar process) to disclose any of the Seller Information.
(c) Survival . This Section 14.07 shall survive termination
of this Agreement.
SECTION 14.08. Confidentiality of Program Information .
(a) Confidential Information . Each party hereto acknowledges
that Bank of Boston and the Purchaser regard the structure of the
transactions contemplated by this Agreement to be proprietary, and
each such party severally agrees that:
(i) it will not disclose without the prior consent of Bank
of Boston (other than to the directors, employees, auditors,
counsel or affiliates (collectively, "representatives")) of such
party, each of whom shall be informed by such party of the
confidential nature of the Information (as defined below) and of
the terms of this Section 14.08 , (A) any information regarding
the pricing in, or copies of, this Agreement or any transaction
contemplated hereby, (B) any information regarding the
organization, business or operations of Purchaser or the
Liquidity Agreement or Enhancement Agreements generally or the
services performed by the Agent for Purchaser, or (C) any
information which is furnished by Bank of Boston, the Agent, the
Purchaser, the Collateral Agent, the Liquidity Agent, the
Liquidity Banks or the Enhancement Provider to such party and
which is designated by such disclosing party to such other party
in writing or otherwise as confidential or not otherwise
available to the general public (the information referred to in
clauses (A), (B) and (C) is collectively referred to as the
" Program Information "); provided , however , that such party
may disclose any such Program Information (I) to any other party
to this Agreement for the purposes contemplated hereby, (II) as
may be required by any municipal, state, federal or other
regulatory body having or claiming to have jurisdiction over such
party, (III) in order to comply with any law, order, regulation,
regulatory request or ruling applicable to such party, or (IV) in
the event such party is legally compelled (by interrogatories,
requests for information or copies, subpoena, civil investigative
demand or similar process) to disclose any such Program
Information (provided that such party provides Bank of Boston the
opportunity to contest such actions on behalf of such party);
(ii) it will use the Program Information solely for the
purposes of evaluating, administering and enforcing the
transactions contemplated by this Agreement and making any
necessary business judgments with respect thereto; and
(iii) it will, upon demand, return (and cause each of its
representatives to return) to Bank of Boston, all documents or
other written material received from any of the disclosing
parties described therein, in connection with (a)(i)(B) or
(C) above, and all copies thereof made by such party which
contain the confidential Program Information.
(b) Availability of Confidential Information . This
Section 14.08 shall be inoperative as to such portions of the Program
Information which are or become generally available to the public or
such party on a nonconfidential basis from a source other than any of
the persons described in clause (a)(i)(C) above or were known to such
party on a nonconfidential basis prior to its disclosure by any of the
persons described in clause (a)(i)(C) above .
(c) Survival . This Section 14.08 shall survive termination
of this Agreement.
SECTION 14.09. Captions and Cross References . The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION 14.10. Integration . This Agreement, together with the Fee
Letter, contains a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
SECTION 14.11. GOVERNING LAW . THIS AGREEMENT, INCLUDING THE RIGHTS
AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE PERFECTION OF THE INTERESTS OF PURCHASER IN THE RECEIVABLES IS
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14.12. WAIVER OF JURY TRIAL . SELLER, UPAC AND PARENT HEREBY
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR
OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT A JURY.
SECTION 14.13. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES . EACH
OF SELLER, UPAC AND PARENT HEREBY ACKNOWLEDGES AND AGREES THAT:
(A) IT IRREVOCABLY (I) SUBMITS TO THE JURISDICTION, FIRST, OF
ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION
IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING
IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, (II) AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW
YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (III)
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF
AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(B) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT
TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY
IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS
AGREEMENT.
SECTION 14.14. Execution in Counterparts . This Agreement may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement.
SECTION 14.15. No Recourse Against Other Parties . No recourse under
any obligation, covenant or agreement of Purchaser contained in this Agreement
shall be had against any stockholder, employee, officer, director, or
incorporator of Purchaser, provided , however , that nothing in this
Section 14.15 shall relieve any of the foregoing Persons from any liability
which such Person may otherwise have for his/her or its gross negligence or
willful misconduct.
SECTION 14.16. Covenant to Cooperate . Seller, Servicer, Parent,
UPAC, the Agent and Purchaser covenant to provide each other with all data and
information required to be provided by them hereunder at the times required
hereunder, and additionally covenant to reasonably cooperate with each other in
providing any additional information required by any of them in connection with
their respective duties hereunder.
SECTION 14.17. Advice From Independent Counsel . The parties hereto
understand that this Agreement is a legally binding agreement that may affect
such party's rights. Each party hereto represents to the other that it has
received legal advice from counsel of its choice regarding the meaning and legal
significance of this Agreement and that it is satisfied with its legal counsel
and the advice received from it.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
APR FUNDING CORPORATION,
as Seller
By
Title
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
UNIVERSAL PREMIUM ACCEPTANCE CORPORATION,
individually and
as initial Servicer
By
Title
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: C. Xxx XxXxxxxx
ANUHCO, INC.
as Parent
By
Title:
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. X'Xxxx
EAGLEFUNDING CAPITAL CORPORATION,
as Purchaser
By: The First National Bank of Boston, as its
attorney-in-fact
By:
Title:
c/o The First National Bank of Boston
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone No.: 617/000-0000
Facsimile No.: 617/434-9591
Attention: Xxxx Xxxxx
THE FIRST NATIONAL BANK OF BOSTON,
as Agent
By
Title
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone No.: 617/000-0000
Facsimile No.: 617/434-9591
Attention: Xxxx Xxxxx
APPENDIX A
DEFINITIONS
This is Appendix A to the Receivables Purchase Agreement dated as of
December 31, 1996 among APR Funding Corporation, Universal Premium Acceptance
Corporation, Anuhco, Inc., EagleFunding Capital Corporation and The First
National Bank of Boston, as Agent (as amended, supplemented or otherwise
modified from time to time, this "Agreement"). Each reference in this
Appendix A to any Section, Appendix or Exhibit refers to such Section of or
Appendix or Exhibit to this Agreement.
A. Defined Terms . As used in this Agreement, unless the context
requires a different meaning, the following terms have the meanings indicated
herein below:
" Acceptance Fee " has the meaning set forth in Section 4.01(a) .
" Acceptance Fee Amount " has the meaning set forth in the Fee
Letter.
" Adjusted Eurodollar Rate " means, with respect to any Yield Period
for any Asset Tranche, an interest rate per annum equal to the sum of:
(a) the LIBOR Spread; plus
(b) the quotient, stated as a percentage, of (i) the per annum rate
determined by Agent (rounded upwards if necessary to the next multiple of 1/16th
of 1%) at which Dollar deposits in an amount equal to the Purchaser's Tranche
Investment allocated to such Asset Tranche for a period approximating such Yield
Period are offered by Bank of Boston based on information presented on Telerate
Page 3750 as of 11:00 a.m. London time on the second Business Day prior to the
first day of such Asset Tranche, divided by (ii) a number equal to 1.00
minus the Eurodollar Reserve Percentage, if applicable.
" Adverse Determination " means any formal act, conclusion, ruling,
determination, finding, opinion, law, regulation or formal pronouncement by or
of any Regulator having authority, the result of which is that (i) Purchaser
was, is or will be required to be regulated, licensed or qualified as a premium
finance company or its equivalent under any applicable law, order, rule or
regulation on account of Purchaser's purchase or holding of the Asset Interest
in any Pool Receivables, or (ii) any Person, other than the Purchaser and which
is not already licensed or qualified as an insurance premium finance company,
engaged in a transaction similar, in the reasonable judgment of Purchaser or the
Agent, to that under this Agreement whereby such Person purchases or holds an
ownership interest in receivables or undivided interests in receivables
evidenced by insurance premium finance contracts, such Person is, was or will be
required to be regulated, licensed or qualified as a premium finance company or
its equivalent under any applicable law, order, rule or regulation on account of
such Person's purchase or holding of such receivables or undivided interests in
such receivables.
" Adverse Determination Receivables " means those Pool Receivables
that create or support a nexus with a jurisdiction, as determined by the
applicable laws, orders, rules or regulations of that jurisdiction, the result
of such nexus being that Purchaser is directly subject to an Adverse
Determination pursuant to clause (i) of the definition of Adverse
Determination, or could eventually be directly subject to an Adverse
Determination similar to any Adverse Determination described in clause (ii) of
the definition of Adverse Determination.
" Affected Party " means each of the Agent, the Purchaser, the
Liquidity Agent, the Collateral Agent, the Enhancement Providers, each Liquidity
Bank, the Custodian and any agent of any of the foregoing and all of the
foregoing's successors, assigns and/or participants.
" Affiliate " when used with respect to a Person means any other
Person controlling, controlled by, or under common control with, such Person.
" Agent " has the meaning set forth in the preamble .
" Agent's Office " means the office of the Agent at 000 Xxxxxxx
Xxxxxx, Mail Stop: 01-09-03, Xxxxxx Xxxxxxxxxxxxx 00000, Attention: Xxxx Xxxxx,
or such other address as shall be designated by the Agent in writing to Seller
and Purchaser.
" Allocated Expenses means the share of expenses reasonably
determined by Parent to be incurred by Parent as holding company for APR, UPAC,
UPAC of California and each of their respective subsidiaries in such capacity as
such holding company and reasonably allocated to either APR, UPAC, UPAC of
California and such Person's respective subsidiaries.
" Alternate Base Rate " means, with respect to any Yield Period for
any Asset Tranche, an interest rate per annum equal to the Adjusted Eurodollar
Rate or the Base Rate as the Seller shall so select and the Agent shall approve
in accordance with the terms of this Agreement; provided , however , that the
" Alternate Base Rate " for such Purchaser Tranche Investment allocated to such
Yield Period shall be the Base Rate if (a) on or before the first day of such
Yield Period, a Liquidity Bank shall have notified the Agent that a Eurodollar
Disruption Event has occurred, (b) such Yield Period is a period of 1 to 29
days, or (c) the Purchaser Tranche Investment to be allocated to such Yield
Period is less than $1,000,000.
" APR " means Agency Premium Resource, Inc., a Kansas corporation.
" Arrangement Fee " has the meaning set forth in Section 4.01(a)
" Arrangement Fee Amount " has the meaning set forth in the Fee
Letter.
" Asset Interest " has the meaning set forth in Section 1.04(a) .
" Asset Tranche " means at any time a portion of the Asset Interest
selected by the Seller or the Agent, as applicable, pursuant to Section 2.01.
" Backup Servicer " means Bank of Boston, as Backup Servicer pursuant
to the Backup Servicing Agreement.
" Backup Servicing Agreement " means that certain Backup Servicing
Agreement dated as of December 31, 1996 among the Backup Servicer, the Agent,
the Servicer and the Seller, as the same may be amended or otherwise modified
from time to time.
" Bank of Boston " has the meaning set forth in the recitals.
" Base Rate " means, on any date, a fluctuating rate of interest per
annum equal to the higher of (a) the per annum rate of interest announced from
time to time by Bank of Boston at its head office in Boston, Massachusetts as
its "base rate" and (b) 0.50% per annum above the Federal Funds Rate. The Base
Rate is not necessarily intended to be the lowest rate of interest offered to
its customers.
" Best's Rating " means at any time the rating published in the then
most recent edition of Best's Insurance Reports, Property-Casualtv for the
Insurance Obligor in question; provided however that if pursuant
to clause (a) , or clause (c) of the last paragraph of the definition of the
term "Excess Concentration Deduction," a single rating is to be determined for a
group of Insurance Obligors that are Affiliates, the "Best's Rating" of such
group and of each Insurance Obligor in such group shall be the "Pooled Rating"
thereof (as defined therein), or, if no Pooled Rating has been assigned to such
group, the lowest Best's Rating of any of the individual Insurance Obligors in
such group. If Best's Insurance Reports. Propertv-Casualtv ceases to be
published at any time, Purchaser shall choose a reasonably equivalent substitute
rating criteria, and appropriate modifications to this Agreement will be made to
reflect such substitution.
" Business Day " means a day on which (a) the Agent at its principal
office in Boston, Massachusetts is open for business, (b) commercial banks in
New York City are not authorized or required to be closed for business and (c)
if the term " Business Day " is used in connection with the Adjusted Eurodollar
Rate, dealings in Dollars are carried on in the London Interbank Market.
" Cancellation Ratio " means, as of the Cut-Off Date for any
Settlement Period, a fraction (expressed as a percentage) (a) the numerator of
which is the average Unpaid Principal Balance of all Pool Receivables the
related insurance policies of which were cancelled during the preceding
Settlement Period on account of non-payment by the related Obligor and (b) the
denominator of which is the average aggregate Unpaid Principal Balance of all
Pool Receivables during such Settlement Period.
" Change in Control " means any of the following:
(a) the acquisition, by any Person or two or more Persons acting
on concert, of beneficial ownership (within the meaning of Sections
13(d) and 14(d) (2) of the Exchange Act), of 50% or more of the issued
and outstanding shares of the capital stock (including all warrants,
options, conversion rights, and other rights to purchase or convert
into such stock) of Parent on a fully diluted basis, except for (i)
acquisitions of newly issued shares of the capital stock of Parent for
fair market value, and (ii) acquisitions of newly issued shares of the
capital stock of Parent by employee benefit plans sponsored by Parent
or any of its Subsidiaries for fair market value;
(b) the failure of Parent to own (directly or through wholly-
owned Subsidiaries, free and clear of all liens, 100% of the
outstanding voting stock of each of the Originators or the failure of
APR to own (directly or through wholly-owned Subsidiaries of APR),
free and clear of all liens, 100% of the outstanding voting stock of
Seller; or
(c) the creation or imposition of any Lien on any shares of
capital stock of Seller.
" Collateral Agent " means the Person from time to time acting in the
capacity as Collateral Agent under the Security Agreement.
" Collection Account " has the meaning set forth in Section 3.09.
" Collections " means, with respect to any Receivable, all funds (a)
received from or on behalf of the related Obligors in payment of any amounts
owed (including, without limitation, principal, finance charges, interest and
all other charges and fees) in respect of such Receivable, or applied to such
amounts owed by such Obligors (including, without limitation, payments under
guaranties, from state guaranty funds or other Related Security, refunds of
unearned insurance premiums upon termination of insurance policies, insurance
payments that Seller, any of the Originators or Servicer applies in the ordinary
course of its business to amounts owed in respect of such Receivables and net
proceeds of sale or other disposition of repossessed goods or other collateral
or property of the Obligor or any other party directly or indirectly liable for
payment of such Receivable and available to be applied thereon), and (b) deemed
to have been received by Seller, any of the Originators or any other party as a
Collection pursuant to Section 3.04.
" Commercial Paper Notes " means short-term promissory notes issued
or to be issued by Purchaser to fund its investments in accounts receivable or
other financial assets.
" Contract " means any contract, instrument or other writing entered
into by Seller or an Originator in the ordinary course of its business in
connection with, or evidencing, loans made by Seller or such Originator to any
Obligor to finance such Obligor's payment of unearned insurance premiums in
respect of one or more insurance policies issued by one or more insurance
carriers, including, without limitation, any writing relating to the assignment
of all unearned premiums pertaining to the insurance policy or policies for
which premium payments are being financed, any designation of Seller or such
Originator as a loss payee thereunder, and any guaranty by the insurance agents
that sold the related insurance policy or policies.
" CP Disruption Event " means the inability of the Purchaser, at any
time, whether as a result of a prohibition, a contractual restriction or any
other event or circumstance whatsoever, to raise funds through the issuance of
its Commercial Paper Notes (whether or not constituting Commercial Paper Notes
issued to fund Purchases hereunder) in the United States commercial paper
market.
" CP Rate " means, with respect to any Yield Period for any Asset
Tranche, the rate equivalent to the rate (or if more than one rate, the weighted
average of the rates) at which Commercial Paper Notes of the Purchaser having a
term equal to such Yield Period and issued to fund the applicable Purchase or
maintenance of such Asset Tranche by the Purchaser may be sold by any placement
agent or commercial paper dealer selected by the Purchaser, as agreed between
each such agent or dealer and the Purchaser and notified by the Purchaser to the
Agent; provided , however , if the rate (or rates) as agreed between any such
agent or dealer and the Purchaser with regard to any Yield Period for the
applicable Asset Tranche is a discount rate (or rates), the " CP Rate " for
such Yield Period shall be the rate (or if more than one rate, the weighted
average of the rates) resulting from converting such discount rate (or rates) to
an interest-bearing equivalent rate per annum .
" Credit and Collection Policy " means, with respect to any
Receivables originated by an Originator, the credit and collection policies and
practices of such Originator relating to such Receivables and the contracts
relating thereto, copies of each of which shall have been provided to the Agent
concurrently herewith (or, in the case of any new Originator, prior to or
concurrently with such Person becoming an Originator), as the same may be
modified from time to time without violating Section 7.03(c) .
" Custodian " means Bank of Boston or any successor custodian
acceptable to the Agent.
" Custody Agreement " means the Custody Agreement dated as of December
31, 1996 among Seller, Servicer, Custodian, Agent and Purchaser, as amended,
supplemented or otherwise modified from time to time or any successor custody
agreement acceptable to the Agent.
" Cut-Off Date " means the last day of each Settlement Period.
" Deemed Collection " has the meaning set forth in Section 3.04.
" Default Ratio " means, at any time, the fraction, expressed as a
percentage, computed as of the most recent Cut-Off Date (i) the numerator of
which is the Unpaid Principal Balance of Receivables that became Defaulted
Receivables (net of recoveries) during the preceding Settlement Period ending on
such Cut-Off Date and (ii) the denominator of which is the Net Pool Balance
during such Settlement Period.
" Default Reserve " has the meaning set forth
in Section 1.04(b)(i)(D) .
" Defaulted Receivable " means a Receivable and related Contract: (i)
as to which any payment, or part thereof, remains unpaid for (x) 30 or more days
(or such earlier date as specified in the related Contract) from the original
due date for such payment without cancellation of all of the related insurance
policies or (y) 181 or more days after cancellation of all such policies, (ii)
as to which the Obligor thereof becomes the subject of an Event of Bankruptcy
or, if applicable, becomes subject to rehabilitation or similar proceeding (it
being understood that Direct Obligors wishing to enter into a new Contract that
are subject to bankruptcy proceedings and which have obtained a court order
permitting Servicer (without further notification to the Court) to cancel the
related Contract, the Receivables under which are or will be included in the
Receivables Pool shall not be subject to this clause (ii)), (iii) as to which
payments have been extended, or the terms of payment thereof rewritten, whether
by amendment, modification or through a new contract without Purchaser's
consent, (iv) as to which 45 or more days have passed since receipt of the
related unearned premium or notification to Seller or Servicer that the related
unearned premium has been fully earned or (v) which is a charged-off Receivable.
" Delinquency Ratio " means, at any time, the fraction, expressed as
a percentage, computed as of the most recent Cut-Off Date (i) the numerator of
which is the Unpaid Principal Balance of Delinquent Receivables at such time and
(ii) the denominator of which is the Unpaid Principal Balance of all Receivables
in the Receivables Pool at such time.
" Delinquent Receivable " means a Receivable that is not a Defaulted
Receivable and as to which any payment, or part thereof, remains unpaid for 91
days or more since cancellation.
" Designated Obligations " means any amounts then owed under this
Agreement by Seller or UPAC, which amounts shall have been so designated by the
Agent to Seller and UPAC, whether owed to Purchaser, Agent, any other Affected
Party or Servicer, other than Earned Discount, Program Fee and Servicer's Fee.
" Designated Obligor " means, at any time, all Obligors of the
Originators except any such Obligor as to which the Agent has, at least three
Business Days prior to the date of determination, given notice to Seller that
such Obligor shall not be considered a Designated Obligor.
" Direct Obligor " means, with respect to any Receivable, the borrower
of the loan under any Contract.
" Dollars " means dollars in lawful money of the United States of
America.
" Downgraded Liquidity Bank " means a Liquidity Bank which has been
the subject of a Downgrading Event.
" Downgrading Event " with respect to any Person means the lowering of
the rating with regard to the short-term securities of such Person to below (i)
A-1 by Standard & Poor's Ratings Group or (ii) P-l by Xxxxx'x Investors Service,
Inc.
" Earned Discount " means, for any Yield Period with respect to any
Asset Tranche,
PTI x ER x ED + LF
360
where :
PTI = the daily average (calculated at the close of business each
day) of the Purchaser's Tranche Investment in such Asset
Tranche during such Yield Period,
ER = the Earned Discount Rate for such Yield Period,
ED = the actual number of days elapsed during such Yield Period,
and
LF = the Liquidation Fee, if any, during such Yield Period.
" Earned Discount Payment Date " with respect to any Asset Tranche
means the last day of such Asset Tranche; provided , that with respect to any
Asset Tranche accruing Earned Discount at the Adjusted Eurodollar Rate and
having an initial Yield Period in excess of one month, the
" Earned Discount Payment Date " for such Asset Tranche shall be deemed to
occur at the end of each 30-day period that such Asset Tranche is outstanding
and on the last day of such Asset Tranche.
" Earned Discount Rate " means for any Yield Period with respect to
any Asset Tranche:
(a) in the case of an Asset Tranche funded by a Liquidity
Advance, either the Adjusted LIBOR Rate or the Base Rate applicable to
such Asset Tranche for such Yield Period; and
(b) for any Asset Tranche funded by Commercial Paper Notes, the
CP Rate applicable to such Asset Tranche for the related Yield Period;
provided , however , that on any day when any Liquidation Event or Unmatured
Liquidation Event shall have occurred and be continuing the Earned Discount Rate
for each Asset Tranche shall mean a rate per annum equal to the Base Rate plus
2% per annum .
" Eligible Agent " means a licensed agent of an Eligible Insurance
Carrier approved by an Originator in accordance with its Credit and Collection
Policy.
" Eligible Contract " means a Contract substantially in one of the
forms set forth in Schedule 6.01(p)-1 or otherwise satisfying the criteria set
forth on Schedule 6.01(p)-3 .
" Eligible Insurance Carrier " shall mean at any date any insurance
company that meets each of the following requirements: (a) it is not the subject
of any Event of Bankruptcy, and is not otherwise being rehabilitated or
supervised and (b) it has a Best's Rating of B- or better or is one of the
following: National Council on Compensation Insurance, Inc. or Underwriters at
Lloyds, London.
" Eligible Investments " means any one or more of the following
obligations or securities:
(a) direct non-callable obligations of, and non-callable
obligations fully guaranteed by, the United States of America, or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(b) demand and time deposits in, certificates of deposits of,
and bankers' acceptances issued by, any depository institution or
trust company (including the indenture trustee acting in its
commercial capacity) incorporated under the laws of the United States
of America or any state thereof, having a combined capital and surplus
of at least $500,000,000, and subject to supervision and examination
by federal and/or state banking authorities, so long as at the time of
such investment or contractual commitment providing for such
investment the commercial paper or other short-term debt obligations
of such depository institution or trust company (or, in the case of a
depository institution that is the principal subsidiary of a holding
company, the commercial paper or other short-term debt obligations of
such holding company) have one of the two highest short-term credit
rating available from Xxxxx'x Investors Service, Inc. and Standard &
Poor's Ratings Group;
(c) repurchase obligations with respect to and collateralized by
(i) any security described in clause (b) above or (ii) any other
security issued or guaranteed by an agency or instrumentality of the
United States of America, in each case entered into with a depository
institution or trust company (acting as principal) of the type
described in clause (b) above, provided that the Agent has taken
delivery of such security;
(d) commercial paper (including both non- interest-bearing
discount obligations and interest-bearing obligations, but excluding
Commercial Paper Notes) payable on demand or on a specified date not
more than one year after the date of issuance thereof having the
highest short-term credit rating from Moody's and Standard & Poor's
Ratings Group at the time of such investment; and
(e) shares in a mutual fund investing solely in short term
securities of the United States government and/or securities described
in clause (c) above where the mutual fund custodian has taken
delivery of the collateralizing securities, provided that (i) such
fund shall have one of the two highest short-term credit rating
available from Moody's and Standard & Poor's Ratings Group and (ii)
such shares shall be freely transferable by the holder on a daily
basis.
" Eligible Receivable " means, at any time, a Receivable:
(i) (A) which arose from a fixed rate, fully amortizing loan (x)
with a maturity of nine months or less, and (y) (1) for which the
minimum down payment is at least 10%, (2) the down payment for which
exceeds the related agent's commission, and (3) which loan is at such
time fully collateralized by unearned premium and unearned commission
such that if the related policy is required to be canceled for non-
payment at such time or at any time thereafter the loan is fully
collateralized at the time of effectiveness of such cancellation, or
(B) which arose from a fixed rate, fully amortizing loan (x) with a
maturity of between ten and thirty months and (y) the downpayment of
which is the greater of 10% or the amount which is required for the
unearned premium to fully collateralize the loan and which down
payment exceeds the related agent's commission (a Receivable of the
type described in this subclause (B) being a " Loan Term B ") (for
purposes of this clause (i) , down payment percent shall be computed
by rounding to the nearest full 1%);
(ii) the related loan of which was (1) made (either directly or
by purchase of an existing loan) in the ordinary course of business by
Seller or an Originator to or on behalf of a Person that used all of
the proceeds of such loan to pay premiums on property, business
liability, xxxxxxx'x compensation, casualty insurance and other
similar types of insurance policies or personal auto insurance
policies issued by an Eligible Insurance Carrier and owned by such
Person and (2) was fully disbursed to such Eligible Insurance Carrier,
its agent or such Person (provided that if such loan was partially
disbursed the amount so disbursed shall be eligible hereunder);
(iii) which, (x) if the perfection of Purchaser's undivided
ownership interest therein is governed by the laws of a jurisdiction
where the Uniform Commercial Code -- Secured Transactions is in force,
constitutes a general intangible as defined in the Uniform Commercial
Code as in effect in such jurisdiction, and (y) if the perfection of
Purchaser's undivided ownership interest therein is governed by the
law of any jurisdiction where the Uniform Commercial Code -- Secured
Transactions is not in force, Seller has furnished to Purchaser such
opinions of counsel and other evidence as has reasonably been
requested, establishing to the reasonable satisfaction of Purchaser
that such Purchaser's undivided ownership interest and other rights
with respect thereto are not significantly less protected and
favorable than such rights under the Uniform Commercial Code;
(iv) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto, and is not a government or a
governmental subdivision or agency;
(v) the related originating insurance agent of which is an
Eligible Agent of an Eligible Insurance Carrier;
(vi) the Direct Obligor of which is not the Direct Obligor of
Receivables in respect of which the insurance policies relating to
fifty percent or more of such Receivables (as determined based on the
Principal Receivables) have been canceled by Seller, any Originator or
Servicer for non-payment;
(vii) which is not (A) a Delinquent Receivable on the date of its
inclusion in the Net Pool Balance or (B) a Defaulted Receivable;
(viii) the related insurance policy of which is required to be
canceled if payment on such Receivable is not received within 30 days
of its due date (or, if earlier, the date required in the related
Contract);
(ix) with regard to which the warranty of Seller
in Section 6.01(l ) is true and correct;
(x) (A) the sale of an undivided interest in which does not
contravene or conflict with any law, and (B) in the case of
Receivables generated by the Originator, the sale of which to Seller
does not contravene or conflict with any law;
(xi) which is denominated and payable only in Dollars in the
United States;
(xii) which arises under a Contract, substantially in the form of
Schedule 6.01(p)-1 hereto (or, if not in the form
of Schedule 6.01(p)-1 , in such form as does not deviate in any
material substantive manner from Schedule 6.01(p)-1 or the
requirements of Schedule 6.01(p)-3 , in either case, without the
express written consent of the Agent), that (w) is in the possession
of the Custodian, (ii) has been duly authorized and that, together
with such Receivable, is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor of such Receivable
enforceable against such Obligor in accordance with its terms, (y) was
stamped with an assignment to Seller and further assignment of an
ownership interest to Purchaser and (z) the terms of which (including
payment instructions to the Obligors thereon and the due date thereon)
have not been modified unless in accordance with the applicable Credit
and Collection Policy;
(xiii) which, together with the Contract related thereto, does
not contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to the
Contract related thereto is in violation of any such law, rule or
regulation in any material respect if such violation would impair the
collectibility of such Receivable;
(xiv) which is secured by a first priority perfected security
interest in and assignment of the right to cancel all of the insurance
policies financed in whole or in part with the proceeds of the related
loan upon the occurrence of a default under the related Contract and
the right to receive all payments of unearned premiums owed upon such
cancellation and, to the extent permitted by applicable law or
regulation, the designation of Seller as a loss payee under such
policies;
(xv) which at the time of its designation as a Pool Receivable is
not an Adverse Determination Receivable; provided , that upon the
Seller becoming obligated to repurchase any such Pool Receivable
pursuant to Section 3.07(b) , such Pool Receivable shall cease to be
an Eligible Receivable hereunder;
(xvi) which at the time of its designation as a Pool Receivable
does not create or support a nexus with a jurisdiction (x) conducting
a formal proceeding, investigation or inquiry that could in the
Agent's judgment result in an Adverse Determination or (y) that could
require Purchaser to be licensed as a premium finance loan company;
(xvii) if any Receivables to be included in a Purchase shall
result from a bulk or portfolio purchase, unless otherwise provided
pursuant to Section 7.06(f) of this Agreement or Section 5.3(e) of
the Purchase and Sale Agreement, the Agent shall have approved the
inclusion of such Receivables in writing after conducting a collateral
audit of the Receivables purchased by Seller or any applicable
Originator in a bulk or portfolio purchase;
(xviii) which (x) satisfies all applicable requirements of the
applicable Credit and Collection Policy and (y) complies with such
other criteria and requirements (other than those relating to the
collectibility of such Receivable) as the Agent may from time to time
specify to Seller following thirty days' notice; and
(xix) as to which the Agent has not notified Seller that the
Agent has determined, in its sole discretion, that such Receivable (or
class of Receivables) is not acceptable for purchase hereunder.
" Enhancement Provider " means any provider of any credit enhancement
or credit support to the Purchaser in connection with receivables purchase
facilities entered into by the Purchaser.
" ERISA " means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time.
" ERISA Affiliate " means, with respect to any Person, (i) any
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code, as in effect
from time to time (the " Code ") as such Person; (ii) a trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with such Person, or (iii) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person, any corporation described in clause (i) above or any trade or busi-
ness described in clause (ii) above.
" Eurocurrency Liabilities " has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
" Eurodollar Disruption Event " means, with respect to all Asset
Tranches in respect of which Earned Discount for the applicable Yield Period is
accruing at the Adjusted Eurodollar Rate, any of the following: (a) a
determination by the Purchaser, any Liquidity Bank or the Liquidity Agent that
it would be contrary to law or to the directive of any central bank or other
governmental authority (whether or not having the force of law) to obtain United
States dollars in the London interbank market to make, fund or maintain any
Asset Tranche for such Yield Period, (b) the failure of Bank of Boston to
furnish timely information for purposes of determining the Adjusted Eurodollar
Rate, (c) a determination by a Liquidity Bank that the Adjusted Eurodollar Rate
does not accurately reflect the cost to such Liquidity Bank of making, funding
or maintaining any such Asset Tranche for such Yield Period or (d) the inability
of a Liquidity Bank to obtain United States dollars in the London interbank
market to make, fund or maintain such Asset Tranche for such Yield Period.
" Eurodollar Reserve Percentage " means, for any day with respect to
an Asset Tranche allocated to Yield Period in respect of which Earned Discount
accrues at the Adjusted Eurodollar Rate, means the maximum rate (expressed as a
decimal) at which any lender subject thereto would be required to maintain
reserves under Regulation D of the Board of Governors of the Federal Reserve
System (or any successor or similar regulations relating to such reserve
requirements) against Eurocurrency Liabilities, if such liabilities were
outstanding. The Eurodollar Reserve Percentage shall be adjusted automatically
on and as of the effective date of any change in the maximum rate described
above.
" Event of Bankruptcy " shall be deemed to have occurred with respect
to a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding
up, or composition or readjustment of debts of such person, the
appointment of a trustee, receiver, conservator, custodian,
liquidator, assignee, sequestrator or the like for such Person or all
or substantially all of its assets, or any similar action with respect
to such Person under any law relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, and
in the case of any Person other than an Insurance Obligor such case or
proceeding shall continue undismissed, or unstayed and in effect, for
a period of 60 consecutive days; or an order for relief in respect of
such Person shall be entered in an involuntary case under the federal
bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar law now
or hereafter in effect, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) for, such Person
or for any substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail to, or admit in
writing its inability to, pay its debts generally as they become due,
or, if a corporation or similar entity, its board of directors shall
vote to implement any of the foregoing. It shall be understood and
agreed that Parent's and American Freight System, Inc.'s 1988
insolvency shall not be deemed Events of Bankruptcy hereunder.
" Excess Concentration Deduction " means the aggregate of each of the
following categories:
(A) Insurance Obligors and NCCI. The amount by which (x) the unpaid
principal balance of Eligible Receivables having the same Insurance
Obligor exceeds (y) the percentage (as shown below) of the unpaid
principal balance of all Eligible Receivables (the
" Concentration Limit" )
Solely for the purpose of this definition, all the Insurance Obligors
(i) which operate under a common Pooling Arrangement, (ii) which
reinsure all their net business through an Affiliate in a Pooling
Arrangement, or (iii) which are otherwise rated by S&P or Moody's with
reference to common ownership or management, shall be deemed a
single Insurance Obligor.
1. If the Insurance Obligor is rated by one of Moody's or S&P:
Lower of Moodv's/S&P Rating Concentration Limit
Aaa/AAA 10.0%
Aa3/AA- to Aa1/AA+ 8.0%
A3/A- to A1/A+ 5.0%
Baa3/BBB- to Baa1/BBB+ 3.0%
Ba1/BB+ and lower 2.0%
2. If the Insurance Obligor is not rated by Moody's or S&P but is
rated by A.M. Best:
Best's Rating Concentration Limit
B to A++ 2.0%
B- 0.5%
3. If the Insurance Obligor is one of the following:
Insurance Obligor Concentration Limit
Any of the following
Insurance Obligors:
" Lloyd's " 4.0%
(provided that no further significant deterioration, in the opinion of
the Agent occurs with respect to Lloyd's claim paying ability).
Amica Mutual Insurance 4.0%
(provided that if such Insurance Obligor is downgraded below "BBB-" by
Standard & Poor's Ratings Group, the Concentration Limit for such
Obligor shall be reduced to 2.0%)
Britamco Underwriters, Inc. 4.0%
" Pooling Arrangement " shall mean a business arrangement under which
Affiliates pool 100% of their net business.
" Affiliate " shall mean, with respect to an insurance carrier, any
other insurance carrier operating under common management or
ownership.
(B) Direct Obligors. The amount by which (x) the unpaid principal
balance of Eligible Receivables having the same Direct Obligor
exceeds (y) the percentage (as shown below) of the unpaid principal
balance of all Eligible Receivables (the " Concentration Limit")
Concentration Limit
1. All Direct Obligors 2.0% each
(C) Agents. The amount by which (x) the unpaid principal balance of
Eligible Receivables having the same Agent exceeds (y) the percentage
(as shown below) of the unpaid principal balance of all Eligible
Receivables (the " Concentration Limit")
Concentration Limit
1. The Lockton Companies 10.0%
2. Wycon Corp. 10.0%
3. All other Agents 5.0%
(D) Auto Insurance. The amount by which (x) the unpaid principal balance
of Eligible Receivables for personal automobile insurance policies
exceeds (y) the percentage (as shown below) of the unpaid principal
balance of all Eligible Receivables (the " Concentration Limit")
Concentration Limit
1. Personal Auto 10.0%
(E) Policy Type. The amount by which (x) the unpaid principal balance of
Eligible Receivables having a policy type of voluntary or involuntary
worker's compensation exceeds (y) the percentage (as shown below) of
the unpaid principal balance of all Eligible Receivables (the
"Concentration Limit")
Concentration Limit
1. Workers compensation policies 30.0%
(F) Loan Terms. The amount by which (x) the unpaid principal balance of
Eligible Receivables for policies that have been originated under Loan
Term "B" exceeds (y) the percentage (as shown below) of the unpaid
principal balance of all Eligible Receivables (the "Concentration
Limit")
Concentration Limit
1. Loan Term "B" 5.0%
(G) Direct Obligors as debtors in possession. The amount by which (x) the
unpaid principal balance of Eligible Receivables for policies
originated with Direct Obligors wishing to enter into new Contracts
(and not previously the Direct Obligor on any Contract with Seller or
any Originator) already operating under bankruptcy court protection
that have received court approval for Servicer to be able to cancel
the related insurance policy exceeds (y) the percentage (as shown
below) of the unpaid principal balance of all Eligible Receivables
(the "Concentration Limit")
Concentration Limit
1. Direct Obligors as debtors
in possession 2.0%
it being understood that, for the purposes of the determination of the
percentages set forth above: (i) solely for the purposes of subsection (A) , if
a Receivable is secured by insurance policies issued by more than one
Insurance Obligor, the Unpaid Principal Balance of such Receivable shall be
allocated among such insurance policies on a reasonable basis and the
portion of such Receivable allocated to the insurance policies issued by any
single Insurance Obligor shall be deemed to be a separate Receivable, (ii)
to the extent that the Unpaid Principal Balance of any Receivable
constitutes a portion of any "excess" calculated pursuant to any of
subsections (A) to (C) , such portion of such Unpaid Principal Balance of
such Receivable shall not be counted under clause (x) or clause (v) of any
other of such subsections that would otherwise be applicable thereto, and
(iii) no Receivable shall be counted under clause (x) or clause (y) of such
subsections unless it is both a Pool Receivable and an Eligible Receivable.
In addition, the Excess Concentration Deduction shall include the
amount by which on any Settlement Date the Unpaid Principal Balance of Eligible
Receivables with respect to which all or any part of unearned premium has been
received from the related Insurance Obligor exceeds one percent (1%) of the
Net Pool Balance on such Settlement Date.
" Excess Yield Ratio " means, at any time, the fraction, expressed as
an annualized percentage, computed as of the most recent Cut-Off Date (a) the
numerator of which is (i) the sum of, calculated for such Settlement Period, (x)
Purchaser's Share of Finance Charge Receivables at such time plus (y) recoveries
in respect of Defaulted Receivables received during the Settlement Period for
such Cut-Off Date less (ii) the sum of (w) the Servicer's Fee for such
Settlement Period plus (x) the Program Fee for such Settlement Period plus (y)
the Earned Discount for such Settlement Period plus (z) Defaulted Receivables
for such Settlement Period and (b) the denominator of which is the Unpaid
Principal Balance of all Receivables in the Receivables Pool for the preceding
Settlement Period.
" Exchange Act " means the Securities and Exchange Act of 1934, as
amended.
" Federal Funds Rate " means, for any period, a fluctuating interest
rate per annum equal (for each day during such period) to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
" Federal Reserve Board " means the Board of Governors of the Federal
Reserve System, or any successor thereto or to the functions thereof.
" Fee Letter " means the Fee Letter dated as of December 31, 1996.
" Final Payout Date " means the date following the Termination Date
on which Purchaser's Total Investment shall have been reduced to zero and all
other amounts payable by Seller under the Transaction Documents shall have been
paid in full.
" Finance Charge Receivable " means the portion of any Pool
Receivable that is not the related Principal Receivable, including, without
limitation, the right to the payment of finance charges, interest payments, late
payment charges, collection fees, extension fees and other amounts actually
accrued thereon on a current basis.
" Indemnified Amounts " has the meaning set forth in Section 13.01.
" Indemnified Partv " has the meaning set forth in Section 13.01.
" Insurance Obligor " with respect to any Receivable, means any
insurance carrier and its Affiliates that has issued and is carrying any of the
insurance policies for which premiums are financed in whole or in part with the
proceeds of such Receivable; and related Insurance Obligor means with respect
to any such Receivable, such insurance carrier.
" LIBOR Spread " means the per annum rate set forth in the Fee
Letter.
" Lien " means a lien, security interest, charge, or encumbrance, or
other right or claim of any Person other than (i) a potential claim or right
(that has not yet been asserted) of a trustee appointed for an Obligor in
connection with any Event of Bankruptcy and (ii) an unfiled lien for taxes
accrued but not yet payable.
" Liquidation Collection Account " has the meaning set forth
in Section 3.09(a).
" Liquidation Date " means the occurrence of any of the following:
(i) a Liquidation Event, (ii) the Termination Date and (iii) the first day of a
Liquidation Period; provided , however , that in the case of a Liquidation Date
occurring and existing solely as a result of the occurrence of a Liquidation
Event, then upon the waiver or cure of such Liquidation Event, such Liquidation
Date shall be deemed not to have occurred.
" Liquidation Event " has the meaning set forth in Section 10.01 .
" Liquidation Fee " means, for each Asset Tranche (or portion
thereof) for each day in any Yield Period or Settlement Period (computed without
regard to clause (iii) of the proviso of the definition of "Yield Period")
during the Liquidation Period, the amount, if any, by which:
(a) the additional Earned Discount (calculated without taking
into account any Liquidation Fee) which would have accrued on the
reductions of the Purchaser's Tranche Investment with respect to such
Asset Tranche during such Yield Period or Settlement Period (as so
computed) if such reductions had not been made exceeds,
(b) the income, if any, received by Purchaser from investing the
proceeds of such reductions of the Purchaser's Tranche Investment.
" Liquidation Period " means the period commencing on the date on
which the conditions precedent to Purchases and Reinvestments set forth in
Section 5.02 are not satisfied (or expressly waived by Purchaser) and the Agent
shall have notified Seller and the Servicer in writing that the Liquidation
Period has commenced, and ending on the Final Payout Date.
" Liquidation Program Fee Rate " has the meaning set forth in the Fee
Letter.
" Liquidity Advance " means an advance by the Liquidity Banks to the
Purchaser under the Liquidity Agreement.
" Liquidity Agent " means Bank of Boston as agent for the Liquidity
Banks under the Liquidity Agreement, or any successor
to Bank of Boston in such capacity.
" Liquidity Agreement " means that certain Liquidity Agreement of
even date herewith among EagleFunding Capital Corporation, as Borrower, Bank of
Boston and certain other Liquidity Banks, the Liquidity Agent, and the
Collateral Agent, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
" Liquidity Bank " means any one of, and " Liquidity Banks " means
all of, the commercial lending institutions that are at any time parties to the
Liquidity Agreement as "Liquidity Providers."
" Liquidity Fee " has the meaning set forth in Section 4.01(b) .
" Liquidity Fee Rate " has the meaning set forth in the Fee Letter.
" Loan Term 'B' " has the meaning set forth in clause (i)(B) of the
definition of " Eligible Receivable ."
" Lock-Box Agreement " means a letter agreement, in substantially the
form of Exhibit 5.01(g) , among Seller, the Originator whose Receivables are the
subject of such letter agreement, and any Lock-Box Bank.
" Lock-Box Bank " means any of the banks holding one or more lock-box
accounts for receiving or concentrating Collections of Pool Receivables.
" Material Adverse Effect " with respect to any event or
circumstance, a material adverse effect on:
(i) the business, assets, financial condition, operations or
prospects of Seller, an Originator or Parent;
(ii) the ability of Seller, an Originator or Parent to perform
its obligations under this Agreement or any other Transaction
Document;
(iii) the validity, enforceability or collectibility of this
Agreement, any other Transaction Document, the Receivables or the
related Contracts; or
(iv) the status, existence, perfection, priority or
enforceability of Purchaser's interest in the Pool Receivables.
" Moody's " means Xxxxx'x Investors Service, Inc., or any successor
thereof.
" Net Excess Contract Yield " means, with respect to any Receivable
on the date of the Purchase or Reinvestment with respect thereto, the interest
rate on the related Contract minus carrying costs minus net defaults; where
" carrying costs " means the sum of the then applicable Earned Discount Rate
plus the then applicable Program Fee Rate plus the then applicable Servicer Fee
Rate; and where " net defaults " means a fraction (expressed as a percentage)
the numerator of which was the amount of Receivables that became Defaulted
Receivables (net of recoveries) during the preceding Settlement Period (or
calendar month) and the denominator of which is the Net Pool Balance as of the
beginning of such Settlement Period (or calendar month)
" Net Pool Balance " means at any time the Unpaid Principal Balance
of the Eligible Receivables in the Receivables Pool at such time reduced by the
aggregate Excess Concentration Deduction at such time.
" Non-Use Rate " has the meaning set forth in the Fee Letter.
" Obligor " means any Person directly or indirectly obligated to make
payments on or with respect to any Receivable. Such term shall include, without
limitation, any Direct Obligor and all Insurance Obligors pursuant to a
Contract.
" Originator " means APR, UPAC, UPAC of California or any other
wholly-owned direct or indirect Subsidiary of Parent that becomes a party to the
Purchase and Sale Agreement as an "Originator" thereunder, and " Originators "
means all such Persons collectively.
" Parent Support Agreement " means that certain Parent Support
Agreement of even date herewith executed by the Parent in favor of the Seller,
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
" Permitted Dividend " means any dividend that is to be paid by
Seller to APR prior to the Liquidation Date out of payments or distributions
made by Servicer to Seller under Sections 3.02(c ) or (d) or out of Seller's
Share of Collections on account of Principal Receivables.
" Person " means an individual, partnership, limited liability
company, corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture, government or any agency or political
subdivision thereof or any other entity.
" Pool Receivable " means a Receivable in the Receivables Pool.
" Principal Receivable " means the portion of any Pool Receivable
that is related to the unpaid principal of the related loan.
" Program Fee " has the meaning set forth in Section 4.01(b).
" Program Fee Rate " has the meaning set forth in the Fee Letter.
" Program Information " has the meaning set forth in Section 14.08 .
" Purchase " has the meaning set forth in Section 1.01 .
" Purchase and Sale Agreement " means that certain Purchase and Sale
Agreement dated as of December 31, 1996 among Seller, the Originators from time
to time parties thereto and the Servicer, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
" Purchase and Sale Termination Event " has the meaning set forth in
the Purchase and Sale Agreement.
" Purchase Limit " has the meaning set forth in Section 1.01.
" Purchase Termination Date " means that day on which a Liquidation
Event has occurred and is continuing, and
(a) the Agent declares a Purchase Termination Date in a notice
to Seller in accordance with Section 10.02(a) ; or
(b) in accordance with Section 10.02(b) , becomes the Purchase
Termination Date automatically.
" Purchaser " has the meaning set forth in the preamble.
" Purchaser's Share " had the meaning set forth in Section 1.04(b) .
" Purchaser's Share of Collections " has the meaning set forth
in Section 1.04(b) .
" Purchaser's Share of Defaulted Receivables " has the meaning set
forth in Section 1.04(b) .
" Purchaser's Total Investment " means at any time with respect to
the Asset Interest an amount equal to (a) the aggregate of the amounts
theretofore paid to Seller for Purchases pursuant to Section 1.01 , less (b)
the aggregate amount of Collections theretofore received and actually
distributed to Purchaser on account of such Purchaser's Total Investment
pursuant to Section 1.03 .
" Purchaser's Tranche Investment " means in relation to any Asset
Tranche the amount of the Purchaser's Total Investment allocated by the Agent to
an Asset Tranche pursuant to Section 2.01 , provided , that at all times the
aggregate amounts allocated to all Asset Tranches shall equal the Purchaser's
Total Investment.
" Qualifying Liquidity Bank " means a Liquidity Bank with a rating of
its short-term securities equal to or higher than (i) A-1 by Standard & Poor's
Ratings Group and (ii) P-1 by Xxxxx'x Investors Service, Inc.
" Receivable " means the indebtedness of any Obligor under a Contract
whether constituting an account, chattel paper, an instrument, investment
property, or a general intangible, and includes (i) the right to payment of
such indebtedness and any interest or finance or late charges or penalties
and other obligations of such Obligor with respect thereto, (ii) all other
rights under such Contract, including insurance policy cancellation rights,
(iii) all right, title and interest of Seller and the applicable Originator
in, to and under the insurance contract underlying such Contract and any and
all other direct or indirect guaranties or security therefor, and (iv) all
proceeds of the foregoing.
" Receivables Pool " means at any time all then outstanding
Receivables owned by Seller, other than (i) Receivables theretofore reconveyed
to Seller pursuant to Section 3.07 and (ii) the Receivables specifically
excluded from the Receivables Pool in a written certificate, executed and
delivered by Purchaser and Seller on or before the date of the initial Purchase
hereunder.
" Regulation D " means Regulation D of the Federal Reserve Board, or
any other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
" Regulator " means any federal, state or local regulatory or
governmental body, agency or official.
" Regulatory Change " means, relative to any Affected Party
(a) any change in (or the adoption, implementation, change in
phase-in or commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to
such Affected Party of (A) any court, government authority
charged with the interpretation or administration of any law
referred to in clause (a)(i) or of (B) any fiscal, monetary or
other authority having jurisdiction over such Affected Party; or
(iii) generally accepted accounting principles or regulatory
accounting principles applicable to such Affected Party and
affecting the application to such Affected Party of any law,
regulation, interpretation, directive, requirement or request
referred to in clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement,
request or accounting principles referred to in clause (a)(i) ,
(a)(ii) or (a)(iii) above.
" Reinvestment " has the meaning set forth in Section 1.03 .
" Related Security " means, with respect to any Pool Receivable (i)
all of Seller's right, title and interest in and to all Contracts or other
agreements that relate to such Pool Receivable, (ii) all of Seller's interest in
the insurance policies, if any, relating to such Pool Receivable including,
without limitation, the right to terminate such policies and to receive unearned
premiums payable upon such termination and, to the extent permitted by
applicable law or regulations, the designation of Seller as first priority loss
payee under such insurance policies, (iii) all other security interests or liens
and property subject thereto from time to time purporting to secure payment of
such Pool Receivable, whether pursuant to the Contract related to such Pool
Receivable or otherwise, (iv) the assignment to Purchaser of all UCC financing
statements and notices to insurance companies covering any collateral securing
payment of such Pool Receivable, (v) all of the Seller's rights and remedies in,
to and under the Purchase and Sale Agreement and the Parent Support Agreement,
and (vi) all guaranties and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Pool
Receivable whether pursuant to the Contract related to such Pool Receivable or
otherwise. The interest of Purchaser in any Related Security is only to the
extent of its Asset Interest, as more fully described in the definition of Asset
Interest.
" Reserve Percentage " has the meaning set forth
in Section 1.04(b)(i)(D) .
" Scheduled Termination Date " means December 30, 1999. The Scheduled
Termination Date may be extended for an additional period of one year by written
notice of request given by Seller to the Agent at least 60 days prior to the
then current Scheduled Termination Date, and written notice of acceptance given
by the Agent and the Purchaser not later than 45 days thereafter.
" Secured Parties " means Purchaser, the Agent, the Liquidity Banks,
the Indemnified Parties and the Affected Parties.
" Securitv Agreement " means the Security Agreement of even date
herewith between Purchaser, as grantor, and the Collateral Agent, as secured
party, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
" Seller " has the meaning set forth in the preamble .
" Seller Information " has the meaning set forth
in Section 14.07(a) .
" Seller Partv " has the meaning set forth in Section 14.07(a) .
" Seller Order " means a direction letter, in such form as the Agent
and Seller may approve, specifying the Eligible Investments in which funds in
the Collection Account shall be invested pursuant to Section 3.09 .
" Seller's Share " means, on any day, (a) with respect to Principal
Receivables, one (1) minus the Purchaser's Share with respect to Principal
Receivables on such day and (b) with respect to Finance Charge Receivables,
zero, subject, however, to the applications set forth in Section 3.2 .
" Seller's Share of Collections " on account of Principal Receivables
means on any day an amount equal to the product of (x) the related Seller's
Share with respect to Principal Receivables on such day and (y) the amount of
Collections on account of Principal Receivables on such day.
" Seller's Share of Collections " on account of Finance Charge Receivables
shall be calculated on each Settlement Date and shall be equal to the amount
payable to Seller pursuant to Section 3.2(c ) and (d) .
" Servicer " has the meaning set forth in Section 8.01(a).
" Servicer Transfer Event " has the meaning set forth
in Section 8.01(b)
" Servicer's Fee " accrued for any day means
(a) an amount equal to the product of (x) 1.00% per annum ,
times (y) the amount of the Purchaser's Total Investment at the close
of business on such day, times (z) 1/360; or
(b) on and after the date the Backup Servicer shall be the
Servicer, an amount equal to (x) 1.00% per annum , times (y) the Net
Pool Balance, times (z) 1/360.
" Settlement " means the payments and other actions provided for on
the Cut-Off Date for each Settlement Period.
" Settlement Date " means the 10th Business Day of each calendar
month, and each day after the occurrence of the Termination Date that the Agent
shall so designate as such.
" Settlement Period " means
(a) the period from the date of the initial Purchase hereunder
to the close of business on the last day of the same calendar month;
and
(b) thereafter, each period from the opening of business on the
first day of each calendar month to and including the close of
business day on the last day of such calendar month;
provided , however , that
(i) any Settlement Period which would otherwise end on a
day which is not a Business Day shall be extended to the next
succeeding Business Day; and
(ii) the last Settlement Period shall end on the Final
Payout Date.
" Settlement Statement " has the meaning set forth
in Section 3.03(a) .
" S&P " means Standard and Poor's Corporation, or any successor
thereof.
" Subordinated Note " means any of the Subordinated Intercompany
Revolving Notes executed by the Seller in favor of an Originator under and
pursuant to the Purchase and Sale Agreement (as the same may be amended,
restated, substituted or otherwise modified from time to time), and
" Subordinated Notes " means all such notes collectively.
" Subsidiary " means a corporation of which Seller, APR, UPAC, UPAC
of California, any other Originator or Parent and/or its other Subsidiaries own,
directly or indirectly, such number of outstanding shares as have more than 50%
of the ordinary voting power for the election of directors.
" Subordinated Line " means that certain subordinated credit line
available from the Parent for each of the Originators, collectively, in the form
and as to dollar amount approved by the Agent.
" Successor Notice " has the meaning set forth in Section 8.01(b) .
" Tax Sharing Agreement " means that certain Tax Sharing Agreement
among the Parent and its consolidated subsidiaries, a copy of which is attached
as Exhibit 5.01(r) .
" Termination Date " means the earliest of
(a) the date of termination (whether by scheduled expiration,
termination on default or otherwise) of the Liquidity Banks'
commitments under the Liquidity Agreement;
(b) the Purchase Termination Date; and
(c) the Scheduled Termination Date.
" Transaction Documents " means this Agreement, the Purchase and Sale
Agreement, the Parent Support Agreement, the Liquidity Agreement, the Custody
Agreement, the Backup Servicing Agreement, the Fee Letter, the Lock-Box
Agreements and the other documents to be executed and delivered in connection
herewith and therewith.
" UCC " means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction or jurisdictions.
" Unmatured Liquidation Event " means any event which, with the
giving of notice or lapse of time, or both, would become a Liquidation Event.
" UPAC " has the meaning set forth in the Preamble.
" UPAC of California " means UPAC of California, Inc., a California
corporation.
" Unpaid Balance " of any Receivable means at any time the Unpaid
Principal Balance thereof plus the unpaid amount thereof consisting of Finance
Charge Receivables.
" Unpaid Principal Balance " of any Receivable means at any time the
unpaid principal amount thereof.
" Weekly Report " has the meaning set forth in Section 3.03(b) .
" Weekly Report Date " means Tuesday of each calendar week, or, if
such day is not a Business Day, the immediately succeeding Business Day.
" Yield Period " with respect to any Asset Tranche means:
(a) if Earned Discount is computed by reference to the CP Rate, a
period of 1 to and including 45 days;
(b) if Earned Discount in respect thereof is computed by
reference to the Adjusted Eurodollar Rate, a period of one, two or
three months; and
(c) if Earned Discount in respect thereof is computed at the Base
Rate, a period of 1 to and including 29 days, in each case, as
selected by the Seller (subject to the approval of the Agent) in
accordance with Section 2.01; provided, however, that from and
after the Liquidation Date, the Agent shall have the right to
allocate outstanding Purchaser's Total Investment to Yield Periods
of such duration as shall be selected by it; and provided,
further, that:
(i) any Yield Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day;
provided , however , that if Earned Discount in respect of such Yield
Period is computed by reference to the Adjusted Eurodollar Rate, and such
next succeeding Business Day is in the next calendar month, then such
Yield Period shall end on the next preceding Business Day;
(ii) whenever any Yield Period as to which Earned Discount accrues at
the Adjusted Eurodollar Rate commences on the last Business Day in a month
or on a day for which there is no numerically corresponding day in the
month in which such Yield Period ends, the last day of such Yield Period
shall occur on the last Business Day of the last complete month through
which such Yield Period was scheduled to remain in effect;
(iii) if a CP Disruption Event shall have occurred and be continuing,
the Purchaser, or the Agent on the Purchaser's behalf, may, upon notice to
the Seller, terminate any Asset Tranche then in effect and funded by
Commercial Paper Notes;
(iv) all Yield Periods which commence before the Liquidation Date and
would otherwise end on a date occurring after the Liquidation Date shall
end on the Liquidation Date;
(v) if the Purchaser or any Liquidity Bank shall notify the Agent
that a Eurodollar Disruption Event as described in clause (a) of the
definition of " Eurodollar Disruption Event " has occurred, the Agent
shall in turn so notify the Seller, whereupon all Asset Tranches in
respect of which Earned Discount accrues at the Adjusted Eurodollar
Rate for the then current Yield Period shall immediately be converted
into Asset Tranches in respect of which Earned Discount accrues at the
Base Rate for the remainder of such Yield Period; and
(vi) if the Purchaser and the Seller shall not have agreed as to the
reallocation and funding of any Asset Tranche in respect of which the Yield
Period is expiring by the close of business on the third Business Day
preceding the date of such expiration, then the Purchaser's Tranche
Investment allocated to such Asset Tranche shall be allocated to Asset
Tranches accruing Yield at either the Adjusted Eurodollar Rate or the CP
Rate, as selected by the Purchaser by notice thereof to the Agent, for a
Yield Period of 30 days.
The Purchaser shall, on the first day of each Yield Period, notify the Agent of
the Earned Discount Rate for the Purchaser Tranche Investment allocated to each
such Yield Period.
B. Other Terms . All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC in the State of New York
and not specifically defined herein) are used herein as defined in such
Article 9.
C. Computation of Time Periods . Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
SCHEDULES AND EXHIBITS
to Receivables Purchase Agreement
SCHEDULES
SCHEDULE 6.01(j) Description of Litigation of Seller
SCHEDULE 6.01(n) List of Offices of Seller where Records Are
Kept
SCHEDULE 6.01(o) List of Lock-Box Banks
SCHEDULE 6.01(p)-1 Forms of Contracts
SCHEDULE 6.01(p)-2 Description of Credit and Collection Policy
SCHEDULE 6.01(p)-3 Contract Term Criteria
SCHEDULE 6.02(h) Description of Material Adverse Changes of
UPAC
SCHEDULE 6.02(i) Description of Litigation of UPAC
SCHEDULE 6.02(k) List of Offices of UPAC
SCHEDULE 6.03(h) Description of Material Adverse Changes of
Parent
SCHEDULE 6.03(i) Description of Litigation of Parent
SCHEDULE 7.03(h) Schedule of Indebtedness of Seller
SCHEDULE 7.06(i) Schedule of Indebtedness of UPAC
EXHIBITS
EXHIBIT 1.02 Form of Notice
EXHIBIT 3.03(a) Form of Settlement Statement
EXHIBIT 3.03(b) Form of Weekly Report
EXHIBIT 5.01(g) Form of Lock-Box Agreement
EXHIBIT 5.01(k)-1 Form of Opinion of Counsel for Seller as to
Authority, Perfection, Etc.
EXHIBIT 5.01(k)-2 Form of Opinion of Counsel for Parent as to
Authority, Etc.
EXHIBIT 5.01(1)-1 Form of "True Sale" Opinion of Counsel for
Seller
EXHIBIT 5.01(l)-2 Form of "Non-Substantive Consolidation"
Opinion of Counsel for Seller
EXHIBIT 5.01(q)-1 Form of Pay-Off Letter - Norwest
EXHIBIT 5.01(q)-2 Form of Pay-Off Letter - Bank of Boston
EXHIBIT 5.01(r) Tax Sharing Agreement
EXHIBIT 7.02(j)-1 Notice to Obligors
EXHIBIT 7.02(j)-2 Notice to Insurance Carriers
