EXHIBIT 10(y)
AMENDMENT
Dated as of August 31, 2001
to
RECEIVABLES PURCHASE AGREEMENT
Dated as of December 21, 1999
THIS AMENDMENT (this "Amendment") dated as of August 31, 2001 is
entered into among:
(i) AILIC RECEIVABLES CORPORATION, a Delaware corporation
("Seller"),
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(ii) AMERICAN INCOME LIFE INSURANCE COMPANY, an insurance company
organized under the laws of Indiana ("AIL"), as the initial
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Servicer (the Servicer together with the Seller, the "Seller
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Parties" and each a "Seller Party"),
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(iii) PREFERRED RECEIVABLES FUNDING CORPORATION, a Delaware
corporation ("PREFCO"),
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(iv) certain financial institutions parties hereto as the "Financial
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Institutions" (and, together with PREFCO, the "Purchasers"),
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and
(v) BANK ONE, NA (with headquarters in Chicago, Illinois), as agent
for the Purchasers (the "Agent").
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PRELIMINARY STATEMENT
Reference is made to that certain Receivables Purchase Agreement dated
as of December 21, 1999 (as amended, restated, supplemented or otherwise
modified since such date, the "Receivables Purchase Agreement") among the
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Seller, AIL, PREFCO, certain financial institutions and the Agent. Unless
defined elsewhere herein, capitalized terms used in this Agreement shall have
the meanings assigned to such terms in the Receivables Purchase Agreement.
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Among the assets and interests in property transferred under the
Receivables Purchase Agreement are accounts receivable commonly known as "agent
debit balances." The willingness of AIL to create agent debit balances is
dependent in large part on the expectation that the receipt of premiums from
Policy Holders shall provide the funds necessary to satisfy the payment
obligations represented by such agent debit balances. Likewise, the willingness
of any Person to purchase from AIL or the Seller any agent debit balances or
interest therein is dependent in large part on the ability of such Person to
claim an interest in the premiums from Policy Holders that are expected to
satisfy such payment obligations.
Under the terms and provisions of the Receivables Purchase Agreement,
the Purchasers heretofore have obtained, and will continue to obtain, an
interest in such premiums in connection with their purchases of interests in
agent debit balances. In light of the importance of the acquisition by the
Purchasers of an interest in the premiums, the parties have agreed to enter into
this Amendment to set forth certain clarifying provisions and certain additional
covenants relating to the interests held by the Purchasers in the premiums.
SECTION 1. Amendments to the Receivables Purchase Agreement. The
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Receivables Purchase Agreement is, effective the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 2 hereof, hereby
amended as follows:
1.1 Article II of the Receivables Purchase Agreement is amended to
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add the following new Section 2.7 thereto:
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Section 2.7 Application of Collections in respect of Premium
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Interest. Upon receipt by the Servicer, for the benefit of the
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Purchasers, of any amount in immediately available funds constituting
a portion of any Premium, the Servicer is instructed, unless and until
otherwise directed by the Agent, to apply such amount toward a
reduction in the Outstanding Balance of the related Receivable, such
application (a "Premium Application") to be based upon such
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information as may then be available to the Servicer and as may be
determined by the Servicer to be true, accurate and correct in respect
of the Outstanding Balance of such Receivable and the commissions then
owing to the Obligor on such Receivable and arising by reason of the
receipt by AIL of such Premium. Upon and to the extent of any Premium
Application in accordance with the foregoing, (i) the Agent and the
Purchasers waive any subrogation rights arising by statute or
otherwise in respect of any commissions due from AIL to the Obligor on
the affected Receivable, (ii) the Servicer shall be permitted to
provide AIL and the Seller such evidence as AIL and the Seller may
reasonably request to the effect that, by reason of such Premium
Application, the affected Obligor shall have received the economic
benefit of payment to it of any commission due in connection
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with the receipt by AIL of the related Premium and (iii) the
obligation of a Torchmark Entity under the second sentence of Section
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7.1(j) to remit to the Servicer an amount calculated in reference to
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the corresponding commission payable to such Obligor shall be deemed
satisfied. This Section 2.7 merely sets forth the anticipated
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accounting as among AIL, the Seller, the Agent and the Purchasers in
relation to any Premium (or portion thereof) remitted to the Servicer
for the benefit of the Agent and the Purchasers. Nothing contained
herein or otherwise in this Agreement shall give rise to, or be deemed
to be an assumption of, any obligation or liability on the part of the
Agent or any Purchaser, or any of their respective successors or
assigns, to pay any commission, fee or other remuneration, cost or
expense to any Obligor or any member of any Agent-Hierarchy in
connection with the receipt or application by AIL or any other Person
of any Premium or any other aspect of the arrangements in effect from
time to time between AIL and any such Obligor or Agent-Hierarchy.
1.2 Article VII of the Receivables Purchase Agreement is amended to
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add the following new Section 7.3 thereto:
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Section 7.3 Covenants Relating to Premium Interest. As
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contemplated in the definition herein of "Related Security", each
Purchaser Interest shall include, without limitation, an undivided
percentage ownership interest in each Premium Interest. In that
regard, until the date on which the Aggregate Unpaids shall have been
indefeasibly paid in full and this Agreement terminated in accordance
with its terms, each Seller Party hereby covenants that:
(a) Recordkeeping of Premium Interest. It shall (or
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shall cause the applicable Torchmark Entity to) maintain at all
times recordkeeping systems such that (i) at the time an
application for an Insurance Product is submitted by an Obligor,
and such Torchmark Entity shall have accepted such application
and agreed to issue the requested Insurance Product, a notation
is encoded or otherwise made on its books and records identifying
the commission and any similar fee that, in accordance with
arrangements then existing between the Torchmark Entities and
such Obligor and its Agent-Hierarchy, shall be payable to such
Obligor or to any member of such Obligor's Agent-Hierarchy upon
or in connection with the subsequent receipt by a Torchmark
Entity of any Premium relating to such Insurance Product, and
(ii) at the time any Premium relating to such Insurance Product
is remitted by the applicable Policy Holder, the applicable
Torchmark Entity shall be capable of immediately identifying the
amount of the
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commission payable to the applicable Obligor and its Agent-
Hierarchy.
(b) Remittance of Premium Interest. In accordance with
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Section 7.1(j), it shall (or shall cause the applicable Torchmark
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Entity to), immediately upon receipt of any Premium which is
subject to a Premium Interest, remit to the Servicer that portion
of such Premium equal to the Premium Interest therein. The
Seller represents and warrants that the Agent and the Purchasers
shall have a first priority ownership interest in each Premium
Interest, free and clear of any Adverse Claim, including, without
limitation, any claim of any Policy Holder, any Obligor and any
member of an Agent-Hierarchy.
(c) Opinions. It shall cause to be delivered to the Agent,
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not less frequently than once each year, an opinion of Indiana
insurance counsel (an "Indiana Regulatory Opinion") substantially
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in the form of Exhibit IX hereto. In the event there shall at
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any time be (i) a change in or in the interpretation of any law,
rule or regulation relating to any Torchmark Entity which, in the
reasonable judgment of the Agent or any Purchaser, brings into
question the continuing validity of any of the legal conclusions
stated in any Indiana Regulatory Opinion theretofore rendered to
the Agent and the Purchasers in connection with this Agreement,
or (ii) a material change in the staff of the Indiana Department
of Insurance or any similar or successor agency having any
oversight of any Torchmark Entity or the conduct of its business
(the "Insurance Regulatory Agency"), the Agent may request that,
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prior to the issuance of any Indiana Regulatory Opinion, the law
firm rendering such opinion shall confer with the Insurance
Regulatory Agency and seek confirmation that the legal
conclusions to be stated in such Indiana Regulatory Opinion
continue to be supported by the Insurance Regulatory Agency.
Notwithstanding the calculation of any Premium Interest in reference
to the commissions payable to any Obligor or its Agent-Hierarchy, the
transfer to the Purchasers hereunder of any Premium Interest shall
constitute the transfer of an asset of the Seller (which it shall have
acquired from AIL), and neither the Agent nor any Purchaser assumes
any obligation or liability to make any payment to any Obligor or its
Agent-Hierarchy in respect of any commission or similar payment due to
such Obligor or Agent-Hierarchy. Any such obligation to pay any
commission or similar fee to any Obligor or Agent-Hierarchy shall be
and remain an obligation of AIL.
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1.3 Exhibit I to the Receivables Purchase Agreement is amended to
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add the following new definitions thereto:
"Premium" means, with respect to any Insurance Product, any and
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all premiums received and to be received by AIL from the applicable
Policy Holder in connection with the issuance of such Insurance
Product.
"Premium Interest" means, with respect to any Premium received
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or receivable by AIL in respect of any Insurance Product that shall
have been arranged by any Obligor, a portion of such Premium equal in
amount to the commission or other similar fee that is or will be
payable to such Obligor by AIL upon remittance of such Premium to AIL.
1.4 Exhibit I to the Receivables Purchase Agreement is further
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amended to delete the definition therein of "Liquidity Termination Date" in
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its entirety and to substitute the following new definition therefor:
"Liquidity Termination Date" means August 30, 2002."
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1.5 Exhibit VIII to the Receivables Purchase Agreement is amended to
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delete such exhibit in its entirety and to substitute therefor the new
exhibit attached as Exhibit A to this Amendment.
1.6 The exhibits to the Receivables Purchase Agreement are further
amended to add as a new Exhibit IX the exhibit attached as Exhibit B to
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this Amendment.
SECTION 2. Conditions Precedent. This Amendment shall become
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effective and be deemed effective as of the date hereof upon receipt by the
Agent of
(i) counterparts of this Amendment executed by each of the Seller
Parties and the Purchasers;
(ii) counterparts of an amendment dated as of the date hereof to the
Receivables Sale Agreement, executed by each of the named parties thereto,
which amendment shall be in form and substance satisfactory to the Agent;
(iii) a reaffirmation of guaranty executed by Torchmark, substantially
in the form of Exhibit C hereto;
(iv) an opinion of Wood Xxxxx Xxxxxxx Xxxxxx & Xxxxxx, P.C.,
substantially in the form of Exhibit B hereto, accompanied by a letter from
Xx. Xxxxxxx X. Xxxx identifying the members of the staff of the Insurance
Regulatory Agency that he consulted prior to rendering such opinion;
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(v) a reaffirmation and date-down of the opinion issued by Xxxxxxx,
Xxxxxx & Xxxx, P.C. in connection with the initial closing of the
Receivables Purchase Agreement and relating to certain "true sale" issues,
in form and substance satisfactory to the Agent; and
(vi) an amended and restated Fee Letter, in form and substance
satisfactory to the Agent, together with any fees payable thereunder on the
date of closing of this Amendment.
SECTION 3. Covenants, Representations and Warranties of the Seller
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Parties.
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3.l Upon the effectiveness of this Amendment, each of the Seller
Parties hereby reaffirms all covenants, representations and warranties made by
it in the Receivables Purchase Agreement and agrees that all such covenants,
representations and warranties shall be deemed to have been re-made as of the
effective date of this Amendment.
3.2 Each of the Seller Parties hereby represents and warrants that
this Amendment constitutes a legal, valid and binding obligation of such Person,
enforceable against it in accordance with its terms.
SECTION 4. Reference to and Effect on the Receivables Purchase
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Agreement.
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4.l Upon the effectiveness of this Amendment, each reference in the
Receivables Purchase Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import shall mean and be a reference to the
Receivables Purchase Agreement, as amended hereby, and each reference to the
Receivables Purchase Agreement in any other document, instrument or agreement
executed and/or delivered in connection with the Receivables Purchase Agreement
shall mean and be a reference to the Receivables Purchase Agreement as amended
hereby.
4.2 Except as specifically amended above, the Receivables Purchase
Agreement and all other documents, instruments and agreements executed and/or
delivered in connection therewith shall remain in full force and effect and are
hereby ratified and confirmed.
4.3 The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of any Purchaser or
the Agent under the Receivables Purchase Agreement or any other document,
instrument or agreement executed in connection therewith, nor constitute a
waiver of any provision contained therein, except as specifically set forth
herein.
SECTION 5. Performance Guaranty. Section 9 of the Performance
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Guaranty sets forth the circumstances under which the Performance Guaranty shall
be
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released and terminated. The Agent, on behalf of itself and the Purchasers,
agrees for the benefit of the Performance Guarantor that, notwithstanding the
continued existence of any other "Guaranteed Obligations" at such time, the
Agent shall provide a written notice to the Performance Guarantor promptly
following the later to occur of (i) the Amortization Date (or any earlier date
as of which the parties to the Receivables Purchase Agreement agree that the
purchase facility contemplated thereunder shall terminate) and (ii) the
reduction to zero of the Capital and Aggregate Unpaids under the Receivables
Purchase Agreement, which written notice (a "Guaranty Release Notice") shall
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release and terminate the Performance Guaranty . The Performance Guaranty shall
be released and terminated effective upon issuance by the Agent of a Guaranty
Release Notice; provided that the terms and provisions of Sections 7(d), 8 and 9
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(except as expressly modified herein) of the Performance Guaranty shall remain
in full force and effect and shall survive any such release and termination.
Without limiting the generality of the foregoing, the Performance Guaranty shall
continue to be effective or shall be reinstated, as the case may be, following
the issuance of any Guaranty Release Notice upon the occurrence of any of the
circumstances described in the proviso in Section 9 of the Performance Guaranty.
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It is expressly understood that, to the extent the Performance Guaranty is
continued in effect or reinstated at any time following the issuance of a
Guaranty Release Notice, the claims of the Agent and the Purchasers thereunder
shall be limited to claims relating to the recovery of Capital or reimbursement
in respect of losses, costs or expenses that are in the nature of Aggregate
Unpaids.
SECTION 6. Execution in Counterparts. This Amendment may be executed
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in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 7. Governing Law. This Amendment shall be governed by and
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construed in accordance with the laws of the State of Illinois.
SECTION 8. Headings. Section headings in this Amendment are included
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herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
AILIC RECEIVABLES CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
Address: 0000 Xxxxx Xxxxxxxxxxx Xx.
XxXxxxxx, Xxxxx 00000
FAX: (000) 000-0000
Attention: Xxxxx Xxxxxx
AMERICAN INCOME LIFE INSURANCE COMPANY,
as Servicer
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
Address: 0000 Xxxxxx Xxxxx
Xxxx, Xxxxx 00000
FAX: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
Vice President and Treasurer
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PREFERRED RECEIVABLES FUNDING CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Title: Authorized Signatory
Address: c/o Bank One, NA, as Agent
Asset Backed Finance
Suite IL1-0079, 1-19
1 Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
BANK ONE, NA,
as a Financial Institution and as Agent
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Title: Authorized Signatory
Address: Bank One, NA
Asset Backed Finance
Suite IL1-0079, 1-19
1 Bank Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
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Exhibit A
to
Amendment
Dated as of August 31, 2001
NEW EXHIBIT VIII TO RECEIVABLES PURCHASE AGREEMENT
FORM OF MONTHLY REPORT
(Attached)
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Exhibit B
to
Amendment
Dated as of August 31, 2001
NEW EXHIBIT IX TO RECEIVABLES PURCHASE AGREEMENT
FORM OF INDIANA REGULATORY OPINION
(Attached)
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Exhibit C
to
Amendment
Dated as of August 31, 2001
FORM OF REAFFIRMATION OF PERFORMANCE GUARANTY
TORCHMARK CORPORATION ("Torchmark") hereby (a) acknowledges, and
consents to, the execution of the following documents, each dated on or as of
August 31, 2001 (collectively, the "Amendment Documents"):
(i) that certain Amendment to the Receivables Purchase
Agreement dated as of December 21, 1999, as amended and restated as of
March 31, 2000, among AILIC RECEIVABLES CORPORATION ("Seller"), AMERICAN
INCOME LIFE INSURANCE COMPANY ("AIL"), as the initial Servicer, PREFERRED
RECEIVABLES FUNDING CORPORATION ("PREFCO") and BANK ONE, NA (with
headquarters in Chicago, Illinois), as "Purchaser" and as "Agent";
(ii) that certain Amendment to the Receivables Sale Agreement
dated as of December 21, 1999, as amended and restated as of March 31,
2000, between the Seller and AIL; and
(iii) that certain amended and restated Fee Letter among the
Agent, PREFCO, the Seller and Torchmark;
(b) reaffirms all of its obligations under that certain Performance Guaranty
(the "Performance Guaranty") dated as of December 21, 1999 made by Torchmark and
(iii) acknowledges and agrees that such Performance Guaranty remains in full
force and effect (including, without limitation, with respect to the "Guaranteed
Obligations" and "Obligations" (each as defined in the Performance Guaranty)
after giving effect to the Amendment Documents), and such Performance Guaranty
is hereby ratified and confirmed.
Dated: August 31, 2001
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TORCHMARK CORPORATION
By ________________________
Title:
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