EXHIBIT 10.6
SALE AND ASSIGNMENT AGREEMENT
BETWEEN
FEDERATED PREMIUM FINANCE, INC.,
AS ORIGINATOR,
AND
FPF, INC.
DATED AS OF SEPTEMBER __, 1997
TABLE OF CONTENTS
PAGE
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ARTICLE I
CERTAIN DEFINITIONS.......................................... 2
ARTICLE II
PURCHASE, SALE AND CONTRIBUTION OF PREMIUM RECEIVABLES
Section 2.01. Purchase and Sale of Eligible Premium Receivables........... 2
Section 2.02. Additional Sales of Premium Receivables..................... 3
Section 2.03. The Acquisition Date Closings............................... 5
Section 2.04. Characterization of Assignment; Financing Statements........ 5
Section 2.05. Ownership of Servicer Documents............................. 6
Section 2.06. Fees........................................................ 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Originator............ 6
ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Obligation of FPF............................. 7
Section 4.02. Conditions to Obligation of the Originator.................. 9
ARTICLE V
COVENANTS OF THE ORIGINATOR
Section 5.01. Protection of Right, Title and Interest..................... 9
Section 5.02. Other Liens or Interests.................................... 10
Section 5.03. Principal Executive Office.................................. 10
Section 5.04. Costs and Expenses.......................................... 10
Section 5.05. Notice to Obligors; Notice to Insurance Companies........... 10
Section 5.06. Additional Sales of Premium Receivables..................... 11
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Section 5.07. No Impairment of Premium Receivables; Payments to Obligors.. 11
Section 5.08. INTENTIONALLY LEFT BLANK.................................... 11
Section 5.09. Activities of Originator.................................... 12
Section 5.10. Agreement Not to Institute Bankruptcy Proceedings........... 12
Section 5.11. Additional Affirmative Covenants............................ 12
ARTICLE VI
PROVIDING OF NOTICE.......................................... 14
ARTICLE VII
INDEMNIFICATION.............................................. 14
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Obligations of Originator................................... 15
Section 8.02. Reacquisition Events........................................ 15
Section 8.03. FPF's Assignment of Reacquired Premium Receivables.......... 16
Section 8.04. Assignment to Trustee; Further Cooperation.................. 16
Section 8.05. Amendment................................................... 17
Section 8.06. Waivers..................................................... 17
Section 8.07. Notices..................................................... 17
Section 8.08. Costs and Expenses.......................................... 17
Section 8.09. Representations............................................. 18
Section 8.10. Third Party Beneficiaries................................... 18
Section 8.11. Lender to Receive Reports................................... 18
Section 8.12. Governing Law............................................... 18
Section 8.13. Jurisdiction................................................ 18
Section 8.14. Waiver of Jury Trial........................................ 19
Section 8.15. Severability of Provisions.................................. 19
Section 8.16. Counterparts................................................ 19
Section 8.17. Captions.................................................... 19
Section 8.18. Legal Holidays.............................................. 19
Section 8.19. Advice from Independent Counsel............................. 19
Section 8.20. Judicial Interpretation..................................... 20
Section 8.21. Confidentiality............................................. 20
EXHIBIT A--Assignment..................................................... A-1
EXHIBIT B--Schedule of Premium Receivables................................ B-1
EXHIBIT C--Form of Notice to Insurers..................................... C-1
EXHIBIT D--Sample Premium Finance Agreement............................... D-1
2
EXHIBIT E--Form of Notice to Obligor...................................... E-1
EXHIBIT F--Representations and Warranties................................. F-1
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SALE AND ASSIGNMENT AGREEMENT
This SALE AND ASSIGNMENT AGREEMENT is made as of September __, 1997, by
and between FEDERATED PREMIUM FINANCE, INC., a Florida corporation having its
principal place of business at 000 X. Xxxxxxx Xxxx Xxxx., Xxxxxxx Xxxx, Xxxxxxx
00000 (the "Originator"), and FPF, INC., a Colorado corporation, having its
principal place of business at 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxx 00000 ("FPF").
WHEREAS, the Originator has (a) originated Premium Receivables to
finance payments by Obligors of premiums for the purchase of personal lines
insurance policies, and (b) entered into the Premium Finance Agreements which
evidence such Premium Receivables; and
WHEREAS, in connection with origination of the Premium Receivables, the
Originator, in the ordinary course of its business, obtains a security interest
arising under statutory authority or otherwise in the unearned premiums,
dividends and loss payments with respect to the insurance policies, and also
obtains a security interest arising under statutory authority or otherwise in
state or industry guaranty funds for the reimbursement of unearned premiums from
failed insurance carriers; and
WHEREAS, pursuant to the terms of this Agreement, the Originator
desires to Sell all of its right, title and interest in, to and under such
Premium Receivables to FPF; and
WHEREAS, pursuant to the terms of a Revolving Loan Agreement, Flatiron
Funding Company, LLC (the "Lender") has set forth the terms pursuant to which it
will loan funds to FPF, which loan or loans will be secured by the Premium
Receivables acquired by FPF pursuant to this Agreement and pledged and assigned
by FPF to the Lender pursuant to such Revolving Loan Agreement; and
WHEREAS, pursuant to the terms of this Agreement, FPF and the
Originator have set forth the terms pursuant to which (a) the Originator will
Sell all of its right, title and interest in, to and under the Premium
Receivables identified as described herein to FPF, and (b) during the term of
the Revolving Loan Agreement, additional Premium Receivables shall from time to
time be Sold by the Originator to FPF; and
WHEREAS, pursuant to the Premium Receivable Servicing Agreement, the
Originator has agreed to service the Conveyed Property on behalf of FPF,
Flatiron, the Lender and the Lender's Funding Source; and
WHEREAS, the Lender may from time to time pledge and assign its
interests in the Premium Receivables and the other Conveyed Property to the
Lender's Funding Source, a trust, trustee or other financing entity.
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
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ARTICLE I
CERTAIN DEFINITIONS
Capitalized terms used but not otherwise defined in this Agreement
shall have the meaning set forth in the Agreement of Definitions, dated as of
the date hereof, by and among the Originator, FPF, Flatiron, the Residual
Interest Holder and the Lender.
"AGREEMENT" means this Sale and Assignment Agreement and all amendments
hereof and supplements hereto.
"STATE" means the State of Florida.
ARTICLE II
PURCHASE, SALE AND CONTRIBUTION OF PREMIUM RECEIVABLES
Section 2.01. PURCHASE AND SALE OF ELIGIBLE PREMIUM RECEIVABLES. On or
prior to the Closing Date and on any subsequent Acquisition Date, subject to the
terms and conditions of this Agreement, the Originator agrees to Sell to FPF,
and FPF agrees to purchase from the Originator, all Eligible Premium Receivables
originated and then owned by the Originator; provided, however, there shall be a
$5,000 minimum purchase on each Closing Date or subsequent Acquisition Date, as
the case may be. The Eligible Premium Receivables to be Sold and purchased
hereunder on the Closing Date shall be identified on a Schedule of Premium
Receivables attached to an Assignment. For purposes of this Agreement,
Endorsement Additions purchased hereunder shall constitute Acquisition Date
Premium Receivables on the Acquisition Date immediately following the date of
the Endorsement Addition.
(a) INITIAL SALE OF ELIGIBLE PREMIUM RECEIVABLES. On or prior
to the Closing Date and simultaneously with the transactions
contemplated pursuant to the Revolving Loan Agreement, the Residual
Agreement and this Agreement, the Originator shall Sell to FPF, without
recourse, except as specifically provided herein, a 100% interest in
all right, title and interest of the Originator in, to and under the
Closing Date Premium Receivables identified on the Schedule of Premium
Receivables delivered in connection with such Sale (the "Closing Date
Conveyed Property"). The consideration for the Closing Date Premium
Receivables shall be the Acquisition Price.
(b) CLOSING DATE PREMIUM RECEIVABLES' ACQUISITION PRICE. In
consideration for the Closing Date Conveyed Property, FPF shall, on the
Closing Date, pay from its own funds or cause the Lender to pay to the
Originator the Acquisition Price in such manner as may be agreed to
between the Originator and FPF; provided, however, that the Acquisition
Price to be paid on the Closing Date by, or on behalf of, FPF to the
Originator shall be net of the Residual Advance, which FPF hereby
agrees to direct the Residual Interest Holder to pay directly to the
Originator pursuant to Section 2.02 of the Residual Agreement unless,
at the direction of FPF pursuant to Section 2.02 of the Residual
Agreement, such Residual Advance has been paid to FPF for payment to be
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made to the Originator pursuant to this Section 2.01(b). The Originator
acknowledges and agrees that if any funds to be used by FPF to purchase
such Closing Date Premium Receivables (i) are to be funded by the
Lender, such funds shall be disbursed by the Lender pursuant to Section
1.02 of the Revolving Loan Agreement and/or (ii) are to be funded by
the Residual Interest Holder, such funds shall be disbursed by the
Residual Interest Holder pursuant to Section 2.02 of the Residual
Agreement. The Originator further acknowledges that, notwithstanding
the source of funds for the Acquisition Price, all such Sales shall be
deemed Sales by the Originator to FPF.
(c) SALES OF ELIGIBLE PREMIUM RECEIVABLES DURING LOAN TERM. On
each Acquisition Date during the term of the Revolving Loan Agreement,
the Originator shall Sell to FPF, without recourse, except as
specifically provided herein, and FPF shall purchase from the
Originator, a 100% interest in all right, title and interest of the
Originator in, to and under the Acquisition Date Premium Receivables
identified on a Schedule of Premium Receivables delivered in connection
with such Sale (collectively, the "Acquisition Date Conveyed
Property").
(d) ACQUISITION DATE PREMIUM RECEIVABLES' ACQUISITION PRICE.
In consideration for the Acquisition Date Conveyed Property, upon two
Business Days' prior notice given by the Originator to FPF, FPF shall,
on each Acquisition Date, pay from its own funds or cause the Lender to
pay to the Originator the Acquisition Price in such manner as may be
agreed to between the Originator and FPF; provided, however, that the
Acquisition Price to be paid on each such Acquisition Date by, or on
behalf of, FPF to the Originator shall be net of the Residual Advance,
which FPF hereby agrees to direct the Residual Interest Holder to pay
directly to the Originator pursuant to Section 2.02 of the Residual
Agreement unless, at the direction of FPF pursuant to Section 2.02 of
the Residual Agreement, such Residual Advance has been paid to FPF for
payment to be made to the Originator pursuant to this Section 2.01(d).
The Originator acknowledges and agrees that if any funds to be used by
FPF to purchase such Acquisition Date Premium Receivables (i) are to be
funded by the Lender, such funds shall be disbursed by the Lender
pursuant to Section 1.02 of the Revolving Loan Agreement and/or (ii)
are to be funded by the Residual Interest Holder, such funds shall be
disbursed by the Residual Interest Holder pursuant to Section 2.02 of
the Residual Agreement. The Originator further acknowledges that,
notwithstanding the source of funds for the Acquisition Price, all such
Sales shall be deemed Sales by the Originator to FPF.
Section 2.02. ADDITIONAL SALES OF PREMIUM RECEIVABLES. On or prior to
the Closing Date, subject to the terms and conditions of this Agreement, the
Originator agrees to Sell to FPF, and FPF agrees to purchase from the
Originator, all remaining Premium Receivables originated or acquired and then
owned by the Originator or its Affiliates (except (i) those Eligible Premium
Receivables to be sold pursuant to Section 2.01 and (ii) any Premium Receivable
which, as of the Closing Date, was not originated or acquired in accordance, or
does not comply, with all requirements of applicable federal, state and local
laws and all regulations thereunder) (the "Additional Premium Receivables"). It
is intended that the Additional Premium Receivables to be Sold pursuant to this
Section 2.02 will not be Eligible Premium Receivables. Such Additional
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Premium Receivables to be Sold and purchased hereunder on the Closing Date shall
be identified on a Schedule of Premium Receivables attached to an Assignment.
For purposes of this Agreement, Endorsement Additions Sold hereunder shall
constitute Acquisition Date Premium Receivables on the Acquisition Date
immediately following the date of the Endorsement Addition.
(a) INITIAL SALE OF ADDITIONAL PREMIUM RECEIVABLES. On or
prior to the Closing Date and simultaneously with the transactions
contemplated pursuant to the Revolving Loan Agreement and hereunder,
the Originator shall Sell to FPF, without recourse, except as
specifically provided herein, a 100% interest in all right, title and
interest of the Originator in, to and under the Additional Premium
Receivables identified on the Schedule of Premium Receivables delivered
in connection with such Sale (the "Closing Date Additional Conveyed
Property").
(b) CLOSING DATE ADDITIONAL PREMIUM RECEIVABLES' ACQUISITION
PRICE. In consideration for the Closing Date Additional Conveyed
Property, FPF shall, on the Closing Date, pay from its own funds to the
Originator the Acquisition Price in such manner as may be agreed to
between the Originator and FPF; provided, however, that the Acquisition
Price to be paid on the Closing Date by FPF to the Originator shall be
net of the Residual Advance, which FPF hereby agrees to direct the
Residual Interest Holder to pay directly to the Originator pursuant to
Section 2.02 of the Residual Agreement. The Originator hereby
acknowledges and agrees that if any funds to be used by FPF to purchase
such Additional Premium Receivables on the Closing Date are to be
funded by the Residual Interest Holder, such funds shall be disbursed
by the Residual Interest Holder pursuant to Section 2.02 of the
Residual Agreement. The Originator further acknowledges that,
notwithstanding the source of funds for the Acquisition Price, all such
Sales shall be deemed Sales by the Originator to FPF.
(c) SALES OF ADDITIONAL PREMIUM RECEIVABLES DURING LOAN TERM.
On each Acquisition Date during the term of the Revolving Loan
Agreement, the Originator shall Sell to FPF, without recourse, except
as specifically provided herein, and FPF shall purchase from the
Originator, a 100% interest in all right, title and interest of the
Originator in, to and under the Acquisition Date Additional Premium
Receivables identified on a Schedule of Premium Receivables delivered
in connection with such Sale (collectively, the "Acquisition Date
Additional Conveyed Property").
(d) ACQUISITION DATE ADDITIONAL PREMIUM RECEIVABLES'
ACQUISITION PRICE. In consideration for the Acquisition Date Additional
Conveyed Property, upon two Business Days' prior notice given by the
Originator to FPF, FPF shall, on each Acquisition Date, pay from its
own funds to the Originator the Acquisition Price in such manner as may
be agreed to between the Originator and FPF; provided, however, that
the Acquisition Price to be paid on each Acquisition Date by FPF to the
Originator shall be net of the Residual Advance, which FPF hereby
agrees to direct the Residual Interest Holder to pay directly to the
Originator pursuant to Section 2.02 of the Residual Agreement. The
Originator hereby acknowledges and agrees that if any funds to be used
by FPF to purchase such
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Additional Premium Receivables on any Acquisition Date are to be funded
by the Residual Interest Holder, such funds shall be disbursed by the
Residual Interest Holder pursuant to Section 2.02 of the Residual
Agreement. The Originator further acknowledges that, notwithstanding
the source of funds for the Acquisition Price, all such Sales shall be
deemed Sales by the Originator to FPF.
Section 2.03. THE ACQUISITION DATE CLOSINGS. The Sale and purchase of
the Acquisition Date Premium Receivables on each Acquisition Date during the
term of the Revolving Loan Agreement shall take place at the offices of the
Originator specified on page 1 hereof or such other location as FPF and the
Originator may reasonably agree.
Section 2.04. CHARACTERIZATION OF ASSIGNMENT; FINANCING STATEMENTS.
(a) The Originator and FPF intend that each purchase and Sale
under Section 2.01 and Section 2.02 be treated as a true and absolute
Sale of all of the Originator's right, title and interest in, to and
under the Premium Receivables identified on the Schedule of Premium
Receivables delivered in connection with each such Sale, together with
all of the Loan Documents and Servicer Documents, all proceeds of the
foregoing and all of the Originator's rights to any payment from the
Obligors and any and all rights against any Obligor with respect to
such Premium Receivables and other related property and all collateral
and guaranties with respect to such Premium Receivables and other
related property (collectively, the "Conveyed Property"), and not a
transfer intended as a security interest. However, if, notwithstanding
such intention, a determination is made by a court with appropriate
jurisdiction over the matter that such transfer shall not be treated as
a true and absolute Sale, this Agreement shall be deemed to constitute
a security agreement and the transactions effected hereby shall be
deemed to constitute a secured financing, and the Originator hereby
pledges and grants to FPF a first priority Lien on, and security
interest in, to and under, all of Originator's right, title and
interest in, to and under the Premium Receivables and any other related
Conveyed Property as collateral for and as security for all amounts
paid and to be paid by FPF to the Originator and any obligations
created by or owing to the Originator pursuant to this Agreement.
(b) On the Closing Date with respect to the Closing Date
Premium Receivables and, only with respect to clause (i) below, on each
Acquisition Date with respect to the related Acquisition Date Premium
Receivables, (i) the Originator shall record and file, at FPF's sole
expense, appropriate UCC-3 termination statements with respect to any
previous Liens on the Conveyed Property being Sold hereunder (but not
with respect to any UCC-1s filed to perfect the Sale of any Conveyed
Property to the Originator or any prior transferor) and (ii) the
Originator shall record and file, at FPF's sole expense, a UCC-1
financing statement in each jurisdiction in which required by
applicable law, executed by the Originator, as seller or debtor, and
naming FPF, as purchaser or secured party, identifying the Conveyed
Property as collateral, meeting the requirements of the laws of each
such jurisdiction and in such manner as is necessary to perfect the
Sale of the Conveyed Property to FPF as of such date. The Originator
shall
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deliver file-stamped copies, or other evidence satisfactory to FPF of
such filings, to FPF on the Closing Date or Acquisition Date, as the
case may be.
Section 2.05. OWNERSHIP OF SERVICER DOCUMENTS. The Originator agrees
that if it retains possession of Servicer Documents with respect to its
activities as Servicer under the Premium Receivable Servicing Agreement, that
such Servicer Documents will remain the property of FPF and will be held in
trust by the Originator, as Servicer, for the benefit of FPF hereunder, for the
benefit of the Lender pursuant to the Revolving Loan Agreement and for the
benefit of the Lender's Funding Source or any other financing Person.
Section 2.06. FEES. In consideration of the purchase commitment
pursuant to the provisions hereof, the Originator agrees to pay, on behalf of
FPF, to the Lender the unpaid balance of the Closing Fee, in satisfaction of
Section 1.03(a) of the Revolving Loan Agreement, payable immediately upon the
execution of this Agreement by the Originator. The Closing Fee is fully earned
and non-refundable as of the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR.
(a) The Originator hereby represents and warrants to FPF as of
the Closing Date and each subsequent Acquisition Date, each of the
representations and warranties contained in Sections 1 and 2 of Exhibit
F hereto.
(b) The Originator hereby represents and warrants to FPF as of
the Closing Date and each subsequent Acquisition Date and, with respect
to Eligible Premium Receivables as of any date of determination, each
of the representations and warranties contained in (i) Section 3 of
Exhibit F hereto as to each of the Eligible Premium Receivable and (ii)
Section 4 of Exhibit F hereto as to each of the Additional Premium
Receivables, and which is Sold to FPF hereunder on such date, on which
FPF relies in accepting such Premium Receivable.
(c) The representations and warranties made by the Originator
in Section 3.01(a) and (b), subject to Section 8.02 hereof, shall
survive the Sale of each such Premium Receivable to FPF, the Grant of
each such Premium Receivable to the Lender and the subsequent Grant or
pledge to the Lender's Funding Source or other financing Person
pursuant to the provisions of the Revolving Loan Agreement.
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ARTICLE IV
CONDITIONS
Section 4.01. CONDITIONS TO OBLIGATION OF FPF. The obligation of FPF to
purchase the Conveyed Property on the Closing Date or any Acquisition Date is
subject to the satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of the Originator hereunder shall be true, correct and
complete on the Closing Date or Acquisition Date, as the case may be,
with the same effect as if then made, and the Originator shall have
performed all obligations to be performed by it hereunder on or prior
to the Closing Date or Acquisition Date, as the case may be.
(b) NO BREACH OF COVENANTS. As of the Closing Date or
Acquisition Date, as the case may be, the Originator shall be in
compliance with all covenants made by the Originator hereunder.
(c) NO DEFAULTS. As of the Closing Date or Acquisition Date,
as the case may be, no Amortization Event has occurred and is
continuing.
(d) FILES MARKED; FILES AND RECORDS OWNED BY FPF. The
Originator shall, at its own expense, on or prior to the Closing Date
or Acquisition Date, as the case may be, indicate in its files and its
Servicer Documents that the Conveyed Property Sold on such date has
been Sold to FPF pursuant to this Agreement, and Granted by FPF to the
Lender, and the Originator shall deliver to FPF, and the Lender or its
designee on the Closing Date or such Acquisition Date, as the case may
be, a Schedule of Premium Receivables certified by the Chairman, the
President, the Vice President or the Treasurer of the Originator to be
true, correct and complete. Further, the Originator hereby agrees that
the Servicer Documents, computer files and other physical records of
the Premium Receivables maintained by the Originator as Servicer or
subservicer will bear an indication reflecting that the Premium
Receivables have been Sold to FPF pursuant to this Agreement, and
Granted by FPF to the Lender and its assignees (including, without
limitation, the Lender's Funding Source), and that all documents
relating thereto held by the Originator as Servicer pursuant to the
Servicing Agreement or otherwise are owned by FPF and have been Granted
to the Lender.
(e) DOCUMENTS TO BE DELIVERED BY THE ORIGINATOR TO FPF ON THE
CLOSING DATE AND EACH ACQUISITION DATE.
(i) THE ASSIGNMENT. On the Closing Date with
respect to the Closing Date Premium Receivables and on each
Acquisition Date with respect to the related Acquisition Date
Premium Receivables, the Originator shall execute and deliver
an Assignment and a Schedule of Premium Receivables with
respect to the Conveyed Property being Sold hereunder on such
date.
(ii) EVIDENCE OF UCC FILINGS. On the Closing Date
with respect to the Closing Date Premium Receivables and on
each Acquisition Date with respect to the related Acquisition
Date Premium Receivables, the Originator shall (A)
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provide evidence satisfactory to FPF that any previous Liens
on the Conveyed Property have been released and (B) deliver to
FPF file-stamped copies, or other evidence, satisfactory to
FPF of the UCC filings required pursuant to Section 2.04(b)
hereof.
(iii) LOAN DOCUMENTS. The Lender or its designee, as
custodian for FPF, shall retain possession of the Loan
Documents, including, without limitation, the original Premium
Finance Agreements, evidencing the Premium Receivables being
Sold on such date; provided, that all such original Premium
Finance Agreements shall be stamped with the Assignment Stamp.
(f) SPECIAL CONDITIONS FOR CLOSING DATE. With respect to FPF's
obligations to purchase or acquire Premium Receivables on the Closing
Date:
(i) UCC AND TAX LIEN SEARCH. The delivery to FPF of
a UCC and tax lien search of the Originator satisfactory to
FPF.
(ii) OPINIONS. Receipt by counsel to FPF of such
opinions of counsel to the Originator as FPF shall reasonably
request, in form and substance satisfactory to FPF.
(iii) SECRETARY'S CERTIFICATE. A certificate executed
by the Secretary or Assistant Secretary of the Originator,
certifying as to the following, which shall be attached to
such certificate (A) a copy of the certificate of
incorporation or other charter document of the Originator, (B)
a copy of the bylaws of the Originator, (C) a copy of the
resolutions of the Board of Directors of the Originator
authorizing the execution, delivery and performance by the
Originator of this Agreement, the Premium Receivable Servicing
Agreement and the Agreement of Definitions (collectively, the
"Originator Documents") and the transactions contemplated
hereunder and thereunder, (D) a copy of each insurance premium
finance license held by the Originator together with a
certification by the Originator that no other licenses are
required to conduct its business in accordance with all
applicable laws, rules and regulations, and (E) the names and
true signatures of the officers authorized on its behalf to
sign the Originator Documents, all in form and substance
satisfactory to FPF.
(iv) GOOD STANDING CERTIFICATES. A good standing
certificate (or its equivalent) for the Originator issued by
(A) the Secretary of State of its state of formation, and (B)
the Secretary of State of each state in which it does business
or is purchasing or servicing Premium Receivables, to the
extent that such activities require qualification to do
business in such states.
(v) PAYMENT OF CLOSING FEE. The Originator shall
have paid, on behalf of FPF, to the Lender or its designee,
the Closing Fee then due pursuant to Section 2.06.
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(g) OTHER TRANSACTIONS. The transactions contemplated by (i)
the Revolving Loan Agreement with respect to Advances thereunder and
(ii) the Residual Agreement with respect to Residual Advances
thereunder, shall each have been consummated on the Closing Date or
Acquisition Date, as the case may be.
(h) Originator shall provide to FPF evidence of Originator's
error and omissions insurance coverage in an amount not less than
$500,000 with a deductible of not more than $10,000 per occurrence,
written by an insurance company and under policy language as may be
directed by or approved by FPF, naming both FPF and Lender as a named
insured and loss payee.
Section 4.02. CONDITIONS TO OBLIGATION OF THE ORIGINATOR. The
obligation of the Originator to Sell the Conveyed Property to FPF on the Closing
Date and on each Acquisition Date is subject to the satisfaction of all
obligations to be performed by FPF hereunder on or prior to the Closing Date or
such Acquisition Date, as the case may be.
ARTICLE V
COVENANTS OF THE ORIGINATOR
Section 5.01. PROTECTION OF RIGHT, TITLE AND INTEREST.
(a) FILINGS. The Originator shall cause all termination
statements, or partial releases, as the case may be, with respect to
prior Liens, financing statements and continuation statements and any
other necessary documents covering the right, title and interest of
FPF, the Lender and the Lender's assignee(s), if any, in, to and under
the Conveyed Property to be promptly executed and filed, and at all
times to be kept recorded, registered and filed, all in such manner and
in such places as may be required by law fully to preserve and protect
the right, title and interest of FPF hereunder and the Lender or its
assignee(s) under the Revolving Credit and Term Loan Agreement to the
Conveyed Property. The Originator shall deliver to FPF or its designee
file-stamped, complete copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available
but in any event within 30 days following such recordation,
registration or filing. FPF shall cooperate with the Originator in
connection with the obligations set forth above and shall execute any
and all documents reasonably required to fulfill the intent of this
Section 5.01(a).
(b) CORPORATE CHANGE. At least 30 days prior to the Originator
making any change in its name, identity or organizational structure
which would make any termination statement, financing statement or
continuation statement filed in accordance with Section 5.01(a)
seriously misleading within the applicable provisions of the UCC or any
title statute, the Originator shall give FPF and the Lender notice of
any such change and shall execute and file such termination statements,
financing statements or amendments as may be necessary or reasonably
required by FPF, the Lender or the
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Lender's assignee(s) to continue the perfection of the respective
interests of FPF, the Lender and the Lender's assignee(s), if any, in
the Conveyed Property.
Section 5.02. OTHER LIENS OR INTERESTS. Except for the Sale hereunder
or as specified herein, the Originator shall not Sell to any other Person, or
Grant, incur, assume or suffer to exist any Lien on the Conveyed Property Sold
hereunder or on any interest therein, and the Originator shall defend the right,
title and interest of FPF and the Lender in, to and under such Conveyed Property
against all claims of third parties claiming through or under the Originator.
Section 5.03. PRINCIPAL EXECUTIVE OFFICE. The Originator shall
maintain, from the date of this Agreement, its principal executive office in the
State. The Originator shall not change the location of its sole place of
business or principal executive office, or change its name, identity or
corporate or other structure, unless (A) it has first given to FPF, the Servicer
and the Lender at least 30 days prior written notice of such change and (B)
before such change becomes effective, it takes all action required by Section
5.01(b) as a result of such change.
Section 5.04. COSTS AND EXPENSES. The Originator agrees to pay all
reasonable costs and disbursements in connection with the perfection, as against
all third parties, of the Sale to FPF of the Originator's right, title and
interest in, to and under the Conveyed Property.
Section 5.05. NOTICE TO OBLIGORS; NOTICE TO INSURANCE COMPANIES.
(a) The Originator shall at FPF's expense, either (i) send or
cause to be sent, within 15 days after the Closing Date or the related
Acquisition Date, as the case may be, by first class mail, postage
prepaid, written notice to each Obligor, or (ii) provide written notice
in the related Premium Finance Agreement, each substantially similar in
form and substance to Exhibit E attached hereto, to the effect that the
Premium Receivable has been Sold by the Originator to FPF pursuant to
this Sale and Assignment Agreement and Granted by FPF to the Lender
pursuant to the Revolving Loan Agreement and that all payments with
respect to such Premium Receivable are required to be made payable as
specified in such notice. Evidence satisfactory to Flatiron shall be
delivered to Flatiron, on or before the thirtieth day following the
Closing Date or Acquisition Date, as the case may be, indicating that
the written notice described in the immediately preceding sentence was
timely mailed or delivered to each Obligor.
(b) With respect to all Premium Receivables, the Originator
shall deliver at FPF's expense or cause to be delivered within 15 days
after the Closing Date or Acquisition Date, as the case may be, by
first class mail, postage prepaid, written notice substantially in the
form of Exhibit C attached hereto to each insurer, that the Originator
has provided financing to the Obligor, that the Obligor's Premium
Receivable has been Sold by the Originator to FPF, and Granted by FPF
to the Lender, and that all payments with respect to such Premium
Receivable are required to be paid, on and after the date of receipt of
such notice, to the Servicer as specified in such notice. Evidence
satisfactory to Flatiron shall be delivered to Flatiron, on or before
the thirtieth day following the Closing
10
Date or Acquisition Date, as the case may be, indicating that the
written notice described in the immediately preceding sentence was
timely mailed to each insurer.
(c) The Originator shall promptly respond to reasonable
inquiries from FPF or third parties confirming the Sale of the Conveyed
Property hereunder and the Grant of the Conveyed Property to the
Lender.
Section 5.06. ADDITIONAL SALES OF PREMIUM RECEIVABLES. Subject to
Availability and the terms of the Revolving Loan Agreement, the Originator shall
Sell to FPF and FPF shall purchase subject to the terms and conditions hereof on
each Acquisition Date during the term of the Revolving Loan Agreement, all
Premium Receivables originated or acquired and then owned by the Originator or
its Affiliates except for those Premium Receivables that were not originated or
acquired in accordance, or do not comply, with all requirements of applicable
federal, state and local laws and all regulations thereunder. Such Sale shall
occur within 45 days of origination or acquisition by the Originator or at such
later date as may be mutually agreed to, from time to time, by FPF and
Originator. This covenant and agreement shall be for the benefit of FPF, the
Lender, the Lender's Funding Source and the trustee for the benefit of any
investors in any pool of loans containing the loan contemplated by the Revolving
Loan Agreement, and any such Person may enforce its legal or equitable rights,
remedies or claims hereunder.
Section 5.07. NO IMPAIRMENT OF PREMIUM RECEIVABLES; PAYMENTS TO
OBLIGORS.
(a) The Originator shall not do anything to impair FPF's or
the Lender's rights in and to any of the Conveyed Property Sold and
purchased hereunder or Granted under the Revolving Loan Agreement.
(b) The Originator shall make all payments to any Obligor
necessary to prevent such Obligor from offsetting any earlier
overpayment to the Originator, as the case may be, against any amounts
any such Obligor owes on the Conveyed Property.
Section 5.08. INTENTIONALLY LEFT BLANK.
Section 5.09. ACTIVITIES OF ORIGINATOR. The Originator and any
Affiliate, other than the Residual Interest Holder, thereof shall (i) maintain
its books and records and assets separate from the books and records of those of
the Residual Interest Holder, (ii) maintain separate bank accounts such that no
funds of the Originator or any Affiliate thereof shall be commingled with funds
of the Residual Interest Holder, (iii) conduct its businesses in separately
defined office space from that of the Residual Interest Holder with separate
stationery from that of the Residual Interest Holder, (iv) pay all of its own
expenses, (v) observe all statutory formalities, (vi) conduct its operations so
as not to be substantively consolidated with any other Person or to have its
separate existence disregarded in any state or federal proceeding, and (vii)
keep in full effect its existence, rights and franchises as a corporation under
the laws of its state of organization and obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of its activities in all
material respects. Neither the Originator nor any Affiliate thereof shall
guarantee the
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indebtedness of, or make loans to, the Residual Interest Holder. All audited
financial statements of the Originator or any Affiliate thereof that are
consolidated with those of the Residual Interest Holder will contain detailed
notes clearly stating that (i) all of the Residual Interest Holder's assets are
owned by the Residual Interest Holder and not available to satisfy the claims of
creditors of any other Person, and (ii) the Residual Interest Holder is a
separate Person with creditors who have received ownership and/or security
interests in the Residual Interest Holder's assets. The Originator and any
Affiliate thereof shall maintain arm's length relationships with the Residual
Interest Holder. Neither the Originator nor any Affiliate thereof shall hold
itself out to be responsible for the debts of the Residual Interest Holder or
the decisions or actions respecting the daily business and affairs of the
Residual Interest Holder.
Section 5.10. AGREEMENT NOT TO INSTITUTE BANKRUPTCY PROCEEDINGS. The
Originator shall not voluntarily institute any proceedings to adjudicate FPF,
the Lender or the Residual Interest Holder bankrupt or insolvent, consent to the
institution of bankruptcy or insolvency proceedings against FPF, the Lender or
the Residual Interest Holder, file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of FPF, the Lender, the
Residual Interest Holder or a substantial part of its or their property or admit
its or their inability to pay its or their debts generally as they become due or
authorize any of the foregoing to be done or taken on behalf of FPF, the Lender
or the Residual Interest Holder.
Section 5.11. ADDITIONAL AFFIRMATIVE COVENANTS.
(a) COMPLIANCE WITH LAWS, ETC. The Originator shall comply in
all material respects with all applicable laws, rules, regulations and
orders, such compliance to include, without limitation, paying before
the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent
contested in good faith.
(b) TANGIBLE NET WORTH AND CAPITAL ADEQUACY/NO OTHER
INDEBTEDNESS. The Originator shall maintain in common or preferred
equity or a combination equity and unsecured subordinated debt (the
"Subordinated Debt"), not less than that amount which is equal to the
greater of (i) 7.5% of the principal balance of all Premium Receivables
purchased by FPF hereunder, or (ii) the total of 100% of the
outstanding balance of all Premium Receivables purchased by FPF
hereunder that are not Eligible Premium Receivables. The terms and
conditions of any Subordinated Debt shall be satisfactory to FPF and
Lender in their sole discretion and any Subordinated Debt lender shall
have entered into a subordination and standby agreement with FPF
containing terms and conditions satisfactory to FPF. For purposes of
this Section 5.11(b), tangible equity means stockholders equity less
intercompany or Affiliate receivables.
(c) REPORTING REQUIREMENTS. The Originator shall furnish to
FPF and to the Lender or its designee:
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(i) within 45 days after the end of each fiscal
quarter of the Originator (commencing with the quarter ending
June 30, 1997), an unaudited balance sheet and income
statement (prepared in accordance with GAAP without
accompanying notes) for the Originator and its subsidiaries
covering the preceding quarter, in each case certified by a
principal financial officer of the Originator to be true,
accurate and complete copies of such financial statements;
(ii) on the earlier of (A) fifteen days after
delivery by an Independent Public Accountant, if any, to the
Originator or (B) March 15 of each year beginning March 15,
1998 a balance sheet and income statement (prepared in
accordance with GAAP) for the Originator and its subsidiaries
covering such preceding fiscal year prepared by the Originator
or its accountants, in each case certified by a principal
financial officer of the Originator to be true, accurate and
complete copies of such financial statements;
(iii) promptly after the filing or receiving thereof,
copies of all reports and notices, if any, which the
Originator or any subsidiary files under ERISA with the
Internal Revenue Service or PBGC or the U.S. Department of
Labor or which the Originator or any subsidiary receives from
any such Person;
(iv) promptly after filing thereof, copies of all
federal and state tax returns filed by, or on behalf of, the
Originator; and
(v) such other information respecting the condition
or operations, financial or otherwise, of the Originator or
any of its subsidiaries as FPF may from time to time
reasonably request.
(d) REPORT ON PROCEEDINGS. Promptly upon (but in no event more
than five Business Days following) the Originator becoming aware of:
(i) any pending investigation of the Originator,
any of its Affiliates or their respective employees,
including, without limitation, the Residual Interest Holder,
by any governmental authority or agency;
(ii) any court or administrative proceeding which
involves the possibility of materially and adversely affecting
the properties, business, prospects, profits, management,
financial position, results of operation or general condition
of the Originator or any of its Affiliates; or
(iii) an event or development (including, without
limitation, a change in any relevant law or regulation) which
could have a material adverse impact on the properties,
business, prospects, profits, management, financial position,
results of operations or general condition of the Originator
or any of its Affiliates, including, without limitation, the
Residual Interest Holder;
such information shall be provided by the Originator to FPF.
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(e) CHANGE IN CONTROL. The Originator shall provide prompt
written notice to FPF if (i) more than ten percent (10%) of the
ownership interest in the Originator is changed after the Closing Date,
(ii) any Person which is a corporation, partnership, trust or other
entity owning more than ten percent (10%) interest in the Originator is
dissolved or liquidated or merged with or into any other Person or for
any period of more than 10 days ceases to exist in its present form and
(where applicable) in good standing and duly qualified under the laws
of the jurisdiction of its incorporation or formation and any
jurisdiction in which such standing or qualification is necessary or
advisable in connection with the conduct of business or (iii) the
Originator commences a sale of all or substantially all of its assets,
except for the Sale of the Conveyed Property by the Originator to FPF
under this Agreement.
(f) CAPITAL EXPENDITURES/OTHER INDEBTEDNESS. The Originator
agrees not to incur any other indebtedness after the Closing
Date without the prior written consent of FPF; provided,
however, this prohibition shall not apply to the 21st Century
Company or its Affiliates. Notwithstanding the above
prohibition, if (i) Originator is in compliance with its
obligations under the Borrowing Documents and (ii) Flatiron
denies a written request by Originator to increase the Maximum
Credit Commitment to $5,000,000, then FPF shall not
unreasonably withhold their consent to Originator incurring
additional indebtedness so long as FPF's and Lender's
interests under any of the Borrowing Documents are not
impaired thereby and so long as FPF continues to enjoy a first
priority interest in all of Originator's Premium Receivables.
(g) MAINTENANCE OF EXISTENCE. The Originator shall not
dissolve or liquidate in whole or in part.
ARTICLE VI
PROVIDING OF NOTICE
The Originator, upon learning of any failure on the part of the
Originator or FPF to observe or perform in any material respect any covenant,
representation or warranty of the Originator or FPF set forth in this Agreement,
the Revolving Loan Agreement, the Residual Agreement or the Premium Receivable
Servicing Agreement, as applicable, shall promptly notify FPF and the Lender of
such failure.
ARTICLE VII
INDEMNIFICATION
(a) The Originator shall indemnify FPF, the Lender, its
assignees (including, without limitation, the Lender's Funding Source)
and all of their respective officers, directors, employees, agents and
any trustee having an interest in the Conveyed Property
14
(collectively, the "Originator Indemnified Parties") for any loss,
cost, liability or expense as a result of any material breach of any of
its representations and warranties contained herein or arising from the
fraudulent acts of Originator. These indemnity obligations shall be in
addition to any obligation that the Originator may otherwise have.
(b) The Originator hereby agrees to indemnify each of the
Originator Indemnified Parties for, and to hold each of them harmless
against, any loss, cost, liability or expense incurred without
negligence or bad faith on such Originator Indemnified Party's part,
arising out of, or in connection with, the Originator's failure to
carry out its duties under this Agreement or as a result of its
fraudulent acts and for breach of any representation or warranty made
by the Originator hereunder or arising from the fraudulent acts of
Originator, including, without limitation, the costs and expenses of
defending itself against any claim in connection therewith.
(c) The parties agree that the Originator Indemnified Parties,
as a group, shall be entitled to counsel separate from the Originator
to the extent the Originator's interests are adverse in any manner to
the interests of the Originator Indemnified Parties or to the extent
that the Originator Indemnified Parties have defenses available to it
that are not available to the Originator.
(d) Such payment obligations and indemnification shall survive
the termination of this Agreement and the Revolving Loan Agreement and
payment of all obligations thereunder.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. OBLIGATIONS OF ORIGINATOR. The obligations of the
Originator under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Premium Receivable or Conveyed
Property.
Section 8.02. REACQUISITION EVENTS.
(a) The Originator hereby covenants and agrees to deliver to
FPF, the Residual Interest Holder and the Lender prompt written notice
of the occurrence of a breach of any of the Originator's
representations and warranties contained in Section 3 of Exhibit F
hereof with respect to any Eligible Premium Receivable Sold hereunder
which materially adversely affects the interests of FPF, the Lender or
the holder of any interest in any such Premium Receivable and which is
not cured within five Business Days of discovery or receipt of notice
thereof (any such breach, which has not been cured within such five-day
cure period, in accordance with this Section 8.02 shall constitute a
"Reacquisition Event"). Immediately upon the occurrence of any
Reacquisition Event, FPF shall, upon notice by FPF to the Originator
and the Residual Interest Holder, deem the related Premium Receivable
as not being an Eligible Premium Receivable and shall require the
Originator to repurchase such Premium Receivable and the other Conveyed
15
Property related thereto at the Reacquisition Amount, unless, so long
as the related Premium Receivable at the time of such Reacquisition
Event was originated or acquired in accordance, and complied, with all
requirements of applicable federal, state and local laws and all
regulations thereunder, the Residual Interest Holder elects to make a
Supplemental Residual Advance pursuant to the Residual Agreement. In
the event that a Supplemental Residual Advance is made hereunder, the
related Premium Receivable shall thereafter be deemed an Additional
Premium Receivable for purposes of this Agreement. In connection with
the foregoing, FPF shall require (i) the Originator to remit any such
Reacquisition Amount or (ii) the Residual Interest Holder to remit any
such Supplemental Residual Advance, as the case may be, to the Servicer
not later than five Business Days after the occurrence of such
Reacquisition Event; provided, however, that, in the event that the
Originator is to repurchase such Residual Advance, FPF may instead
deduct the Reacquisition Amount from the Acquisition Price payable to
the Originator on any Acquisition Date occurring within five Business
Days after the occurrence of a Reacquisition Event. The reacquisition
obligation of the Originator pursuant to this Section 8.02 shall be a
full recourse obligation of the Originator.
(b) 21st Century Holding Corp. as an Affiliate of Originator,
hereby agrees to repurchase (i) the Premium Receivables referred to in
Section 8.02(a) upon the failure of (A) the Originator to do so or (B)
the Residual Interest Holder to elect to make a Supplemental Residual
Advance, each as provided therein, and (ii) any Premium Receivables
originated by the Originator in a fraudulent manner. Xxxxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx hereby jointly and severally
agree that, only if 21st Century Holding Corp. at any time ceases to
own 100% of the ownership interest in Originator or otherwise has
become insolvent, commenced any bankruptcy proceedings, had a receiver
appointed over any of its properties or is generally not paying its
debts as the same become due and payable, then they shall be obligated
to repurchase (i) the Premium Receivables referred to in Section
8.02(a) upon the failure of (A) the Originator to do so or (B) the
Residual Interest Holder to elect to make a Supplemental Residual
Advance, each as provided therein, and (ii) any Premium Receivables
originated by the Originator in a fraudulent manner.
Section 8.03. FPF'S ASSIGNMENT OF REACQUIRED PREMIUM RECEIVABLES. With
respect to all Reacquired Premium Receivables, FPF shall assign and shall cause
the Lender to assign, without recourse, except as specified herein,
representation or warranty, to the Originator all of FPF's and the Lender's
right, title and interest in, to and under such Reacquired Premium Receivables,
and all security and documents relating thereto.
Section 8.04. ASSIGNMENT TO TRUSTEE; FURTHER COOPERATION. The
Originator and FPF acknowledge that all or a portion of FPF's right, title and
interest in the Conveyed Property and this Agreement may be Granted or assigned
by FPF to the Lender and by the Lender to any designee of the Lender, including,
without limitation, the Lender's Funding Source, or to a financing Person or a
trustee, for the benefit of investors acquiring an interest in the Conveyed
Property. The Originator and FPF consent to such Grant by the Lender or any
designee of the Lender to the Lender's Funding Source or any such Person or
trustee and agree that the Lender's
16
Funding Source or any such Person or trustee, for the benefit of such investors,
or such investors shall be entitled to enforce the terms of this Agreement and
the rights, benefits and responsibilities of FPF and the Lender hereunder
directly against the Originator, whether or not a Residual Agreement Default or
an Amortization Event or an Event of Servicing Default shall have occurred, and
that each of the representations, warranties and agreements contained in this
Agreement and the rights of FPF created hereunder are intended for the benefit
of such designee, Person, trustee and investors.
Upon notice having been given to the Originator or FPF by the Lender of
its intention to pledge, assign, grant or sell its interest in any advance under
the Revolving Loan Agreement, the Originator agrees, at its expense, to
cooperate and provide such documentation and certificates as the Lender may
reasonably request with respect to such pledge, assignment, grant or sale
consistent with the indemnification, covenants, representations and warranties
contained herein.
Section 8.05. AMENDMENT. This Agreement may be amended from time to
time by a written amendment duly executed and delivered by the Originator and
FPF with the prior written consent of the Lender or the Lender's designees, as
the case may be, and no waiver of any of the terms hereof shall be effective
unless it is in writing and signed by the party or parties whose rights are
being waived and the Lender or the Lender's designee, as the case may be.
Section 8.06. WAIVERS. No failure or delay on the part of FPF, the
Lender or any designee of the Lender in exercising any power, right or remedy
under this Agreement or any other Borrowing Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
remedy preclude any other or further exercise thereof or the exercise of any
other power, right or remedy; provided, however, if FPF, Lender or its designee
has knowingly and consistently waived any right or remedy under this Agreement
as to any act of omission made by Originator for a period of twelve months or
more, then such entity may not claim that such act or omission constitutes a
default under this Agreement entitling FPF, Lender or such designee to exercise
the right or remedy that would otherwise have been available under this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any rights consequent thereon, except to the extent expressly so waived.
Each of the rights, powers and remedies described in this Agreement and the
other Borrowing Documents is cumulative and not exclusive of, and shall not
prejudice, any other right, power or remedy provided in this Agreement, the
other Borrowing Documents or by law. Each such right, power and remedy may be
exercised from time to time as deemed necessary by FPF, the Lender or the
Lender's assignee(s), as applicable, and in such order and manner as such
applicable party may determine. The Originator hereby acknowledges and agrees
that, with respect to a violation or breach by the Originator of any
representation, warranty, covenant or other term or provision of this Agreement
or any of the other Borrowing Documents to which it is a party, it shall be the
Originator's obligation to prepare and obtain a written waiver for such breaches
or violations from FPF. FPF may grant or deny any such requested waiver in its
sole and absolute discretion. At no time may the Originator infer a course of
dealing among the parties that would negate the requirement to obtain a written
waiver from FPF.
17
Section 8.07. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered personally
or mailed by first-class registered or certified mail, postage prepaid, or by
telephonic facsimile transmission, electronic mail and overnight delivery
service, postage prepaid, to the parties to this Agreement; provided, that
notices shall be effective upon receipt, and in any case addressed as provided
in the first paragraph of this Agreement or in the Revolving Loan Agreement.
Section 8.08. COSTS AND EXPENSES. The Originator shall pay all expenses
incident to the performance of its obligations under this Agreement and the
Originator agrees to pay all reasonable out-of-pocket costs and expenses of FPF
and the Lender, including fees and expenses of counsel, in connection with the
perfection as against third parties of the Sale to FPF of the Originator's
right, title and interest in, to and under the Conveyed Property, and the
enforcement of any obligation of the Originator hereunder and of the Grant of
the Conveyed Property to the Lender.
Section 8.09. REPRESENTATIONS. The respective agreements,
representations, warranties and other statements by the Originator and FPF set
forth in or made pursuant to this Agreement shall remain in full force and
effect and will survive the Closing Date or Acquisition Date, as the case may
be.
Section 8.10. THIRD PARTY BENEFICIARIES. This Agreement shall inure to
the benefit of the Lender and, after the Lender's assignment thereof, each
assignee (including, without limitation, the Lender's Funding Source), designee,
trustee and each investor acquiring an interest in any advance made under the
Revolving Loan Agreement and any trustee with respect thereto and their
respective successors and assigns. Without limiting the generality of the
foregoing, all representations, covenants and agreements in this Agreement which
expressly confer rights upon the Lender or FPF shall be for the benefit of and
run directly to each assignee, designee, investor and trustee, and the Lender,
each such investor, trustee, assignee or designee shall be entitled to rely on
and enforce such representations, covenants and agreements to the same extent as
if it were a party hereto.
Section 8.11. LENDER TO RECEIVE REPORTS. Copies of all reports and
notices to be provided hereunder shall be simultaneously sent to the Lender and
its designee(s) at such address(es) as the Lender may designate.
Section 8.12. GOVERNING LAW. THIS AGREEMENT AND THE ASSIGNMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE
OF COLORADO WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS.
Section 8.13. JURISDICTION. THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF COLORADO AND
THE UNITED STATES DISTRICT COURT OF COLORADO IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY ASSIGNMENT AND THE PARTIES HEREBY
18
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH COURTS. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING AND IRREVOCABLY CONSENT TO
THE SERVICE OF ANY SUMMONS AND COMPLAINT AND ANY OTHER PROCESS BY THE MAILING OF
COPIES OF SUCH PROCESS TO THEM AT THEIR RESPECTIVE ADDRESSES AS SPECIFIED IN
SECTION 8.07. THE PARTIES HEREBY AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
SECTION 8.13 SHALL AFFECT THE RIGHT OF FPF TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OR ORDER
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT OR ANY
ASSIGNMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
Section 8.14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY ASSIGNMENT.
Section 8.15. SEVERABILITY OF PROVISIONS. Any part, provision,
agreement, representation, warranty or covenant of this Agreement which is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties waive
any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, agreement,
representation, warranty or covenant of this Agreement shall deprive any party
of the economic benefit intended to be conferred by this Agreement, the parties
shall negotiate in good faith to develop a structure the economic effect of
which is as nearly as possible the same as the economic effect of the
transactions contemplated hereunder without regard to such invalidity.
Section 8.16. COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which shall be
deemed to be an original, and together shall constitute and be one and the same
instrument.
Section 8.17. CAPTIONS. The article, paragraph and other headings
contained in this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
19
Section 8.18. LEGAL HOLIDAYS. In the case where the date on which any
action required to be taken, document required to be delivered or payment
required to be made is not a Business Day in New York, New York or Denver,
Colorado, such action, delivery or payment need not be made on that date, but
may be made on the next succeeding Business Day.
Section 8.19. ADVICE FROM INDEPENDENT COUNSEL. The parties understand
that this Agreement is a legally binding agreement that may affect such party's
rights. Each party 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.
Section 8.20. JUDICIAL INTERPRETATION. Should any provision of this
Agreement require judicial interpretation, it is agreed that a court
interpreting or construing the same shall not apply a presumption that the terms
hereof shall be more strictly construed against any Person by reason of the rule
of construction that a document is to be construed more strictly against the
Person who itself or through its agent prepared the same, it being agreed that
each party has participated in the preparation of this Agreement.
Section 8.21. CONFIDENTIALITY. FPF and Flatiron have provided and may
from time to time in the future provide the Originator with certain Flatiron
Information. In consideration for being furnished with the Flatiron Information,
the Originator agrees that the Flatiron Information shall be kept confidential
by the Originator and shall not, without Flatiron's or FPF's prior written
consent, be disclosed or used by the Originator, in any manner whatsoever, in
whole or in part, and shall not be used or disclosed by the Originator other
than in connection with the transactions contemplated under the Borrowing
Documents. Notwithstanding the foregoing, nothing herein shall prohibit the
Originator from disclosing the Flatiron Information if required by law or
regulation or to any of its agents, Affiliates, employees, officers, directors,
attorneys, accountants or advisors; provided, that the Originator shall use its
best efforts to cause each such recipient to keep such Flatiron Information
confidential.
(SIGNATURE PAGE FOLLOWS)
20
IN WITNESS WHEREOF, the parties hereto have caused this Sale and
Assignment Agreement to be executed by their respective officers thereunto duly
authorized as of the date and year first above written.
FEDERATED PREMIUM FINANCE, INC.
FPF, INC.
Xxxxx X. Xxxxx, Executive Vice President
Agreed to with respect to Section 8.02(b):
By _______________________
Xxxxxx X. Xxxxxx
By _______________________
Xxxxxxx X. Xxxxxx
By _______________________
Xxxxxx X. Xxxxxxx
21st CENTURY HOLDING CORP.
By _______________________
Name: ____________________
Title: ___________________
21
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Sale and Assignment
Agreement dated as of September __, 1997 (the "Agreement") by and between the
undersigned (the "Originator") and FPF, Inc. ("FPF"), the undersigned does
hereby Sell unto FPF, without recourse, except as may otherwise expressly be
provided in the Agreement, all right, title and interest of the undersigned in,
to and under the Premium Receivables identified on the Schedule of Premium
Receivables attached hereto as Exhibit B.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Agreement, each of which the undersigned hereby restates and reaffirms, and is
to be governed by the Agreement.
The undersigned hereby certifies that to his actual knowledge after
reasonable inquiry (a) the Schedule of Premium Receivables attached hereto as
Exhibit B is true, correct and complete as of the date hereof and (b) all
conditions precedent in accordance with Section 4.01 of the Agreement have been
satisfied as of the date hereof.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of September __, 1997.
FEDERATED PREMIUM FINANCE, INC.
1
EXHIBIT B
SCHEDULE OF PREMIUM RECEIVABLES
[CLOSING DATE] [ACQUISITION DATE] , 199
INSURANCE CUT-OFF
NAME AND POLICY ENDORSEMENT DATE ORIGINAL CURRENT
LOAN ADDRESS OF INSURANCE INSURANCE MATURITY ADDITIONS PRINCIPAL PRINCIPAL PRINCIPAL
NUMBER OBLIGOR COMPANY POLICY NUMBER DATE Y/N BALANCE BALANCE BALANCE
------ ------- ------- ------------- ---- --- ------- ------- -------
Page 1 of 2
1
AMOUNT OF AMOUNT OF PREMIUM AMOUNT OF DRAFT
LOAN RETURN PREMIUM LENDER'S CURRENT SCHEDULED NEXT PAYMENT RECEIVABLE TO INSURANCE DRAFT DATE OF
NUMBER PARITY ADVANCE APR PAYMENT DUE DATE MATURITY DATE COMPANY NUMBER DRAFT
------ ------ ------- --- ------- -------- ------------- ------- ------ -----
Page 2 of 2
NOTICE SENT TO
INSURANCE NOTICE SENT TO
COMPANY Y/N OBLIGOR Y/N
----------- -----------
Page 2 of 2
2
EXHIBIT C
FORM OF NOTICE TO INSURERS
[Co Name]
[Co Address]
[Co City], [Co State] [Co Zip]
[Date of Sale]
To whom it may concern:
WE ARE PROVIDING THE FOLLOWING NOTICE TO YOU FOR INFORMATIONAL PURPOSES ONLY. IT
IS IMPORTANT FOR YOU TO REALIZE THAT THIS NOTICE DOES NOT AFFECT THE INSURANCE
COVERAGE YOUR COMPANY PROVIDES IN ANY WAY. IT IS SOLELY TO NOTIFY YOU THAT
FEDERATED PREMIUM FINANCE, INC. ("FEDERATED") THE PREMIUM FINANCE COMPANY WHICH
FINANCES A PORTION OF YOUR INSUREDS' PREMIUMS, HAS SOLD CERTAIN PREMIUM FINANCE
LOANS TO A THIRD PARTY WHO HAS OBTAINED A CORPORATE LOAN FROM FLATIRON FUNDING
COMPANY, LLC ("FFC"), AND THE RELATED LOAN DOCUMENTS REQUIRE THAT WE NOTIFY YOU
OF THAT FACT.
You are hereby notified that Federated has provided premium financing
to each insured named on the attached list of insureds with corresponding policy
number (each a "Policy") and contract pursuant to a premium finance agreement
(the "Premium Finance Agreement") between Federated and such insured. As of the
date set forth above, Federated will have absolutely sold, assigned, transferred
and conveyed all of its right, title and interest in, to and under each Premium
Finance Agreement and its rights thereunder and all of its rights and interests
under the corresponding Policy and payments of any kind made under the Policy to
FPF, Inc. ("FPF"), which will pledge the Premium Finance Agreement and its
rights thereunder and all of its rights and interests under the corresponding
Policy and payments of any kind made under the Policy to Norwest Bank Colorado,
N.A., as trustee on behalf of FFC, and FFC will pledge the Premium Finance
Agreement and its rights thereunder and all of its rights and interests under
the corresponding Policy and payments of any kind made under the Policy to
Norwest Bank Colorado, N.A, as trustee or custodian under the applicable trust
or custodial agreement (the "Trustee"). Federated will continue to service the
Premium Finance Agreement on behalf of FPF, FFC and the Trustee, as their
interests may appear, until further notice. All inquiries regarding this notice
may be made in writing to: Flatiron Credit Company, Inc., X.X. Xxx 00000,
Xxxxxx, Xxxxxxxx 00000.
[Name]
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EXHIBIT D
SAMPLE PREMIUM FINANCE AGREEMENT
1
EXHIBIT E
FORM OF NOTICE TO OBLIGOR
(EITHER BY LETTER OR BY INCLUSION
OF PARAGRAPH NOTICE IN
PREMIUM FINANCE AGREEMENT)
--------------------------------------------------------------------------------
THIS IS A NOTICE, FOR INFORMATIONAL PURPOSES
ONLY. DO NOT MAKE ANY CHANGES TO YOUR
PAYMENT PROCESS OR PAYMENT AMOUNTS.
ESTO ES SOLAMENTE UN AVISO, PARA INFORMACION
UNICAMENTE, POR FAVOR, NO COMBIEN EL MODO DE
PROCESO O PAGO DE CANTIDAD DE DINERO.
--------------------------------------------------------------------------------
[Date]
[Name]
[Address]
[City], [State] [Zip]
Re: Insurance Policy Number: [CONTRACT]
Dear Insured:
FEDERATED PREMIUM FINANCE, INC. ("FEDERATED") IS THE COMPANY WHICH
FINANCED YOUR INSURANCE PREMIUM(S). FEDERATED IS PROVIDING THE FOLLOWING NOTICE
TO YOU FOR INFORMATIONAL PURPOSES ONLY. THE NOTICE IS SIMPLY TO LET YOU KNOW
THAT FEDERATED PREMIUM FINANCE, INC. HAS SOLD THE INTEREST IN YOUR PREMIUM LOAN
TO A THIRD PARTY WHO HAS OBTAINED A CORPORATE LOAN. WE ARE REQUIRED TO NOTIFY
YOU OF THAT FACT. IT IS VERY IMPORTANT FOR YOU TO REALIZE THAT:
1. FEDERATED PREMIUM FINANCE, INC. WILL CONTINUE TO SERVICE YOUR
PREMIUM LOAN ON BEHALF ON THE FINANCE COMPANY (AS DEFINED BELOW) AND THE TRUSTEE
(AS DEFINED BELOW).
2. THIS NOTICE DOES NOT AFFECT YOUR INSURANCE COVERAGE IN ANY WAY.
3. YOU SHOULD CONTINUE MAKING YOUR MONTHLY PAYMENTS IN THE SAME
AMOUNTS, USING YOUR CURRENT COUPONS, AND MAILING THEM TO THE SAME ADDRESS YOU
HAVE USED IN THE PAST.
4. THE TERMS OF YOUR PREMIUM FINANCE AGREEMENT DO NOT CHANGE IN ANY WAY
AS A RESULT OF THIS NOTICE.
You are hereby notified that Federated Premium Finance, Inc.
("Federated") has sold the entire interest in the above-referenced premium
finance agreement (the "Loan") and all of its rights and interests under the
corresponding insurance policy (the "Policy") and payments of any kind made
under the Policy to FPF, Inc. (the "Finance Company"), and that concurrently
with such sale, the Finance Company has pledged the Loan and such rights and
interests of Federated in the Policy and payments of any kind made under the
Policy to Norwest Bank Colorado, N.A., as trustee (the "Trustee"), as security
for a loan. Please continue to direct all payments to: Federated Premium
Finance, Inc. 000 X. Xxxxxxx Xxxx Xxxx., Xxxxxxx Xxxx, Xxxxxxx 00000. Any
1
inquiries regarding this notice may be made in writing to: Flatiron Credit
Company, Inc., X.X. Xxx 00000, Xxxxxx, Xxxxxxxx 00000.
Federated Premium Finance, Inc.
Mr. Xxx Xxxxxx, President
--------------------------------------------------------------------------------
THIS IS A NOTICE ONLY, FOR INFORMATIONAL
PURPOSES ONLY. DO NOT MAKE ANY CHANGES TO YOUR PAYMENT
PROCESS OR PAYMENT AMOUNTS.
--------------------------------------------------------------------------------
2
EXHIBIT F
REPRESENTATIONS AND WARRANTIES
Section 1. GENERAL REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
WITH RESPECT TO SECTION 3.01(A) OF THE SALE AND ASSIGNMENT AGREEMENT.
(a) ORGANIZATION, ETC. The Originator is duly organized and is
validly existing as a corporation in good standing under the laws of
the state of its organization with full power and authority to execute
and deliver, to the extent that the Originator is a party thereto, the
Borrowing Documents and to perform the terms and provisions thereof.
(b) DUE QUALIFICATION. The Originator is duly qualified to do
business as a foreign business entity in good standing, and has
obtained all required licenses and approvals, if any, in all
jurisdictions in which the ownership or lease of property or the
conduct of its business requires such qualifications (except those
jurisdictions in which failure to be so qualified would not have an
adverse effect on the business or operations of the Originator or any
Conveyed Property), and has complied with all federal, state and local
laws and regulations in connection with the origination of the Premium
Receivables and the Sale thereof under the Sale and Assignment
Agreement.
(c) DUE AUTHORIZATION. The execution, delivery and performance
by the Originator of the Borrowing Documents to which it is a party
have been duly authorized by all necessary action of the Originator, do
not and will not conflict with any provision of its constituent
documents, and do not and will not conflict with or result in a breach
which would constitute (with or without notice or lapse of time) a
default under any agreement binding upon or applicable to it or its
property, and to its actual knowledge with reasonable inquiry do not
require any approval or consent of any governmental agency or authority
and do not conflict with any law or governmental regulation or court
decree applicable to it or its property.
(d) NO LITIGATION. No litigation or administrative proceeding
of or before any court, tribunal or governmental body is presently
pending, or threatened, against the Originator or its properties or, to
the extent that the Originator is a party thereto, with respect to the
Borrowing Documents, which, if adversely determined could, in the
reasonable opinion of the Originator, have an adverse effect on the
transactions contemplated by the Borrowing Documents or on the
Originator's ability to perform any of its obligations thereunder.
(e) ENFORCEABILITY. The Borrowing Documents to which the
Originator is a party constitute valid, legal and binding obligations
of the Originator, enforceable against the Originator in accordance
with the terms thereof, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
1
creditor's rights generally and to general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR WITH
RESPECT TO SECTION 3.01(A) OF THE SALE AND ASSIGNMENT AGREEMENT.
(a) POWER AND AUTHORITY. The Originator, without further
consent, approval or authorization, has the power and authority to
execute and deliver the Borrowing Documents to which it is a party and
to carry out their respective terms; the Originator has full power and
authority to Sell the Conveyed Property and other property from time to
time Sold to FPF under the Sale and Assignment Agreement; and there are
no injunctions, writs, restraining orders or any other order of any
nature which adversely affects the Originator's performance of the
Borrowing Documents, any other related agreement to which the
Originator is a party or any transactions contemplated thereby.
(b) NO VIOLATION. The consummation of the transactions
contemplated by the Borrowing Documents to which the Originator is a
party and the fulfillment of the terms thereof do not conflict with,
result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or bylaws of the Originator, or any
indenture, agreement or other instrument to which the Originator is a
party or by which it or its properties is bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument
(other than the Sale and Assignment Agreement); nor to the actual
knowledge of Originator with reasonable inquiry, violate any applicable
laws, rules, regulations or orders regarding the conduct of the
Originator's business or the ownership of its properties; nor to the
actual knowledge of Originator with reasonable inquiry, violate any law
or any order, rule or regulation applicable to the Originator of any
court or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
the Originator or its properties except, in each case, for such
violations, conflicts, breaches, Liens and defaults which could not, in
the reasonable judgment of the Originator, have an adverse effect on
the condition (financial or otherwise) of the Originator, any Conveyed
Property or the Originator's obligations under the Borrowing Documents
to which it is a party.
(c) ABILITY TO PERFORM. There has been no impairment in the
ability of Originator to perform its obligations under the Borrowing
Documents to which it is a party.
(d) NO MATERIAL LIABILITIES. The Originator does not have
material liabilities or obligations other than those previously
disclosed in writing to FPF.
(e) NO MATERIAL MISSTATEMENTS OR OMISSIONS. No information,
certificate of an officer or statement furnished in writing or report
delivered to FPF or the Lender by
2
the Originator contains any untrue statement of a material fact or
omits a material fact necessary to make such information, certificate,
statement or report not misleading. There is no fact peculiar to the
Originator or any Affiliate of the Originator or, to its actual
knowledge after reasonable inquiry, any Premium Receivable or Obligor,
which it has not disclosed to FPF in writing which could materially
adversely affect the Originator's ability to perform the transactions
contemplated by the Borrowing Documents to which the Originator is a
party.
(f) NO UNPAID TAXES. All tax returns required to be filed by
the Originator in any jurisdiction have in fact been filed, and all
taxes, assessments, fees, claims and other governmental charges upon it
or any subsidiary or upon any of their respective properties, income or
franchises (including, without limitation, any taxes required to be
paid by the Originator relating to all payroll, FICA, unemployment and
other taxes, assessments, fees, claims and other charges relating to
the employees of the Originator), shown to be due and payable on such
returns have been paid; provided, that the Originator shall not be
required to pay or discharge any such tax, assessment, fee, claim or
other charge which is being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained
in accordance with GAAP. To the best of the Originator's knowledge, all
such tax returns were true and correct and neither it nor any
subsidiary knows of any contemplated or proposed additional tax
assessment against it in any material amount or of any basis therefor.
(g) ADEQUATE PROVISIONS FOR TAXES. The provisions for taxes on
the Originator's books are in accordance with GAAP.
(h) ERISA. No contribution failure has occurred with respect
to any Pension Plan sufficient to give rise to a lien under Section
302(f) of ERISA and no notice of intent to terminate a Pension Plan has
been filed, nor has any Pension Plan been terminated under Section
4041(e) of ERISA, nor has the PBGC instituted proceedings to terminate,
or appoint a trustee to administer, a Pension Plan, and no event has
occurred or condition exists which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan.
(i) SOLVENCY. The fair salable value of the assets on a going
concern basis of the Originator and its subsidiaries, on an undivided
and a consolidated basis, as of the time of, and after giving effect
to, each Sale of the Premium Receivables under the Sale and Assignment
Agreement, is in excess of the total amount of their respective
liabilities. With respect to the Closing Date and any Acquisition Date,
as the case may be, at the close of the immediately preceding fiscal
quarter of the Originator, the Originator had a positive net worth.
(j) PRINCIPAL EXECUTIVE OFFICE. The principal executive office
of the Originator is, and for a period of not less than four months
preceding the Closing Date
3
has been, the notice address in the opening paragraph of the Sale and
Assignment Agreement.
(k) LEGAL NAMES. "Federated Premium Finance, Inc." is the only
legal name under which the Originator currently is operating its
business. The Originator has not changed its name in the last six (6)
years (or such shorter period of time during which the Originator was
in existence) and does not have any other trade names, fictitious
names, assumed names or "doing business as" names.
(l) VALID BUSINESS REASONS; NO FRAUDULENT TRANSFERS. The
transactions contemplated by the Sale and Assignment Agreement are in
the ordinary course of the Originator's business and the Originator has
valid business reasons for selling the related Conveyed Property rather
than obtaining a secured loan with the Conveyed Property as collateral.
At the time of each Sale: (i) the Originator Sold the related Conveyed
Property to FPF without any intent to hinder, delay, or defraud any
current or future creditor of the Originator; (ii) the Originator was
not insolvent or did not become insolvent as a result of any Sale;
(iii) the Originator was not engaged and was not about to engage in any
business or transaction for which any property remaining with the
Originator would constitute unreasonably small capital or for which the
remaining assets of the Originator are unreasonably small in relation
to the business of the Originator or the transaction; (iv) the
Originator did not intend to incur, and did not believe or reasonably
should not have believed, that it would incur, debts beyond its ability
to pay as they become due; and (v) the consideration paid by FPF to the
Originator for the related Conveyed Property was equivalent to the fair
market value of such related Conveyed Property.
(m) FINANCIAL STATEMENT DISCLOSURE. The Originator has been
advised that from and after the date of each Sale, the financial
statements of the Originator will disclose that, under GAAP, on each
respective Sale the Originator Sold ownership of the Premium
Receivables.
(n) OTHER AGREEMENTS. The Originator is not a party to any
indenture, loan or credit agreement, lease or other instrument or
agreement which is likely to have a material adverse effect on the
business, properties, assets, operations or operation, financial or
otherwise, of the Originator or the ability of the Originator to
perform its obligations under any Borrowing Document to which it is a
party.
(o) NO MATERIAL ADVERSE CHANGE. No material adverse change has
occurred in the business, properties, operating results, prospects,
assets, Premium Receivables Portfolio, operations or condition,
financial or otherwise, of the Originator from the Closing Date or the
immediately preceding Acquisition Date, as the case may be.
(p) INTENT. The Sale and Assignment Agreement and all related
documents describe each transfer of the Premium Receivables by the
Originator to FPF as a Sale and
4
evidence the clear intention by the Originator to effectuate a Sale of
such Premium Receivables.
(q) CONSIDERATION. The consideration received by the
Originator for the Premium Receivables is or will be paid in full to
the Originator immediately upon each Sale of the Premium Receivables to
FPF, and no provision exists whereby the consideration will be modified
after the date of such Sale.
(r) CONTROL. After each Sale, the Originator will have
relinquished all powers and rights with respect to the Premium
Receivables, other than the Servicer's powers and rights as Servicer
under the Premium Receivables Servicing Agreement.
(s) RECOURSE. Neither FPF nor any other Person has any
recourse or right of chargeback to the Originator with respect to the
Premium Receivables, other than the repurchase obligation described in
paragraph (v) below.
(t) REPURCHASES. The Originator has no obligation to
repurchase any Premium Receivables except to repurchase a Premium
Receivable in the event of a breach of its representations and
warranties with respect thereto in the Sale and Assignment Agreement.
The representations and warranties of the Originator in the Sale and
Assignment Agreement describe the authority of the Originator to sell
the Premium Receivables and the characteristics of the Premium
Receivables, including those pertaining to the origination and
performance of the Premium Receivables before the Sale. They do not
include any representation or warranty of collectibility or future
performance of the Premium Receivables.
(u) SERVICING FEE. The Originator, as Servicer, will act as a
servicer of the Premium Receivables under the Premium Receivable
Servicing Agreement. Any servicing fee payable to the Servicer will not
exceed the normal and customary servicing fee that an unaffiliated
third Person would normally expect to receive in connection with
servicing premium finance receivables having characteristics similar to
the Premium Receivables.
(v) SERVICING ARRANGEMENTS. The servicing arrangements among
FPF, Flatiron, the Lender and the Servicer are of the type of
arrangements standard in the premium finance receivables industry
between unaffiliated Persons and do not give the Servicer greater
rights, or impose greater obligations or liabilities, with respect to,
or any greater interest in, Premium Receivables than those enjoyed by
servicers of similar receivables under servicing arrangements
negotiated at arm's length between unaffiliated Persons.
Section 3. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO SECTION
3.01(B)(I) OF THE SALE AND ASSIGNMENT AGREEMENT.
5
(a) PREMIUM RECEIVABLES. Each Premium Receivable Sold and
purchased under the Sale and Assignment Agreement, and on any other
date of determination, in order to be an Eligible Premium Receivable
shall have all of the following characteristics as of the Closing Date
or any Acquisition Date on which such Premium Receivables are Sold and
purchased under the Sale and Assignment Agreement, or on any other date
of determination as the case may be:
(i) Each Premium Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the
Obligor thereon, enforceable by the holder thereof in
accordance with its terms.
(ii) Each Premium Receivable has been fully and
effectively Sold by the Originator to FPF pursuant to the Sale
and Assignment Agreement and (A) vests in FPF a valid,
perfected, subsisting and enforceable ownership interest in
favor of FPF in such Premium Receivable and (B) in the event
that, notwithstanding the Originator's and FPF's contrary
intention, a court with appropriate jurisdiction over the
matter determines that such transfer is not a Sale, vests in
FPF a valid, perfected, subsisting and enforceable first
priority security interest in favor of FPF in such Premium
Receivable.
(iii) Each Premium Finance Agreement contains
customary and enforceable provisions such that the rights and
remedies of the holder thereof are adequate to enforce the
Realization Provisions (and the Lender shall be entitled to
enforce all such rights under the Premium Finance Agreement)
and no Premium Receivable is subject to any proceedings or
investigations pending, or threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Originator or its
properties: (A) asserting the invalidity of such Premium
Receivable; (B) seeking to prevent the enforcement of such
Premium Receivable; or (C) seeking any determination or ruling
that may adversely affect the payment on or enforceability of
such Premium Receivable.
(iv) Each Premium Receivable was originated in a
state where the Originator is licensed (if required to be
licensed) to do business as an insurance premium finance
company, and the Originator is acting in accordance with, and
each Premium Receivable does not (and did not at the time of
origination) contravene, any federal, state or local laws,
rules or regulations applicable thereto or contract between
the Originator and FPF applicable thereto, and no party to any
such contract is in contravention of any such law, rule or
regulation.
(v) Each Premium Receivable was originated in the
United States of America by the Originator or purchased by the
Originator from another premium finance company in the
ordinary course of the Originator's business of financing
insurance premiums written through independent insurance
agents and brokers or
6
insurance companies directly, in either case, through the
application of and consistent with the Originator's standard
procedures in a fashion not less stringent taken as a whole
than those other Premium Receivables owned by the Originator,
and are in conformity with the Originator's underwriting
standards.
(vi) Each Premium Receivable is payable in U.S.
Dollars.
(vii) Each Premium Receivable is evidenced by only
one written contract, in the form of a Premium Finance
Agreement, properly completed and executed without variations,
which Premium Finance Agreement has been or will be delivered
to the Lender or its agent, with notation of the Sale and
subsequent Grant thereof, on or before the Closing Date or
Acquisition Date, as the case may be.
(viii) Each Premium Receivable provides, according to
its original or modified terms, that the amount payable
thereunder will be paid in level payments that fully amortize
such Premium Receivable by its stated term and which amount
will be due in a maximum of ten consecutive equal monthly
payments (if financing an annual policy), and a maximum of
four consecutive equal monthly payments (if financing a
six-month policy) with the first payment due not later than 34
days following the inception date of the related insurance
policy.
(ix) No Premium Receivable is payable by an Obligor
which is the United States or any agency or state thereof or
which Obligor is located (within the meaning of the UCC as
enacted in the state of origination) in any jurisdiction
outside of the United States of America.
(x) No Premium Receivable has terms which have been
extended or modified other than through Endorsement Additions,
the originals of which have been included in the Loan
Documents delivered to the Lender or its agent.
(xi) No Premium Receivable or related Premium Finance
Agreement has been satisfied, cancelled, is more than 45 days
past due or is subject to a right of rescission, setoff,
counterclaim, subordination, recoupment or defense which has
been asserted or threatened with respect to such Premium
Receivable, nor have the Realization Provisions securing such
Premium Receivable been released from the Lien granted by the
Obligor.
(xii) No Premium Receivable has any Liens or claims
which have been filed or claimed that would be Liens prior to,
or equal or subordinate with, the Realization Provisions
granted by the Obligor pursuant to such Premium Receivable.
(xiii) No Premium Receivable is a Defaulted Premium
Receivable.
7
(xiv) Except with respect to assignments or pledges
of security interests to lenders with respect to financing
obtained by the Originator, which interests has been released
prior to the Sale of the Premium Receivables to FPF, no
Premium Receivable has been Sold or pledged by the Originator
to any Person other than FPF; immediately prior to the Sale
contemplated by the Sale and Assignment Agreement, the
Originator had good title to such Premium Receivable free and
clear of all Liens and, immediately upon the Sale of the
Premium Receivables contemplated by the Sale and Assignment
Agreement, FPF will have good title to the Premium
Receivables, free and clear of all Liens.
(xv) As of the Closing Date or the Acquisition Date,
as the case may be, the Obligor with respect to each Premium
Receivable is not subject to any bankruptcy or insolvency
proceeding.
(xvi) Each Premium Receivable relates to an insurance
policy issued by an Eligible Insurance Company and as
evidenced by a policy number, or in the absence of a policy,
number, a binder number.
(xvii) No Premium Receivable relates to an insurance
policy which is deemed fully earned in the case of a claim.
(xviii) Each Premium Receivable is evidenced by proof
of payment to the insurance agent or the Issuing Insurance
Company equal to an amount not less than the original
principal amount of such Premium Receivable and any amount
remaining due on the related insurance policy to the
applicable insurance agent or Issuing Insurance Company has
been paid in full by, or on behalf of, the related Obligor.
(xix) No Premium Receivable has been originated in,
nor is subject to the laws of, any jurisdiction under which
the Sale of such Premium Receivable would be unlawful, void or
voidable.
(b) SCHEDULE OF PREMIUM RECEIVABLES. The information set forth
in each Schedule of Premium Receivables is true and correct in all
material respects as of the opening of business on the Closing Date or
Acquisition Date, as the case may be, and no selection procedures
believed to be adverse to FPF or the Lender have been utilized in
selecting the Premium Receivables for inclusion therein.
(c) TITLE. It is the intention of the Originator that the Sale
from the Originator to FPF contemplated by the Sale and Assignment
Agreement constitutes a true Sale of the Conveyed Property to FPF and
that the Conveyed Property not be part of the Originator's property for
any purpose under state or federal law. The Sale and Assignment
Agreement constitutes a valid Sale to FPF of all of the Originator's
right, title and interest in and to the Conveyed Property.
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(d) ALL FILINGS MADE. Without in any way limiting the
intention of the Originator and FPF to treat all transfers hereunder as
Sales, all filings (including, without limitation, UCC filings)
necessary in any jurisdiction to give FPF a first priority perfected
ownership interest in the Conveyed Property have been made not later
than the Closing Date and the respective Acquisition Date, as the case
may be, and copies of the filed stamped financing statements shall be
delivered to FPF within five Business Days of receipt by the Originator
or its agent from the appropriate secretary of state but not later than
30 days after the Closing Date or the Acquisition Date, as the case may
be.
(e) SALES NOT SUBJECT TO BULK TRANSFER ACT. Each Sale of
Conveyed Property by the Originator pursuant to the Sale and Assignment
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(f) INTENTIONALLY LEFT BLANK
(g) FAIR CONSIDERATION. The consideration to be received by
the Originator in exchange for each Sale of Conveyed Property
(including the right to receive all payments due or to become due
thereunder) is fair consideration having value equivalent to or in
excess of the value of the assets being Sold by it.
Section 4. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR WITH
RESPECT TO SECTION 3.01(B)(II) OF THE SALE AND ASSIGNMENT AGREEMENT. The
Originator makes each of the representations and warranties with respect to the
Premium Receivables specified in Sections 3(b), 3(c), 3(d), 3(e), 3(f) and 3(g)
of this Exhibit F.
Section 5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Without
limitation of Section 3.01(c) of the Sale and Assignment Agreement, the
representations and warranties set forth in this Exhibit F shall survive the
date of the respective Borrowing Documents. Upon discovery by the Originator or
FPF of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the other
parties to the Borrowing Documents; provided, however, that failure to give such
notice shall not affect the rights of such other parties with respect to such
breach.
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