Exhibit 10.73
United PanAm Financial Corp.
0000 Xxxxxx xx xxx Xxxxx, #0000
Xxx Xxxxxxx, XX 00000
Tel (000) 000-0000 FAX (000) 000-0000
January 6, 1998
Xx. Xxxxxxx X. Xxxxxx
President and CEO
NIPF Holding Company
0000 X. Xxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Xx. Xxxxxx X. Xxxxx
Vice President
Providian National Bank
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxx and Xx. Xxxxx:
The purpose of this letter agreement is to confirm our agreement regarding the
business arrangement described below (the "Transaction") between United PanAm
Financial Corp. ("United PanAm"), Pan American Bank, FSB ("PanAm Bank") and BPN
Corporation ("BPN" and, together with United PanAm and PanAm Bank, the "Buyer"),
NIPF Holding Company ("NIPF Holding"), National Consumer Services, Inc. ("NCSI")
and National IPF Company ("NIPF" and, together with NIPF Holding and NCSI,
"NIPF") and Providian National Bank, formerly known as First Deposit National
Bank ("Providian").
NIPF and Providian have been engaged in the business of insurance premium
finance for several years, and NIPF currently services insurance premium
business for Providian under the Commonwealth name (the "Commonwealth
Portfolio"). NIPF also services IPF loans for IPF Receivables Funding Trust B
(the "SunAmerica Portfolio") and IPF Receivables Funding Trust A (the "Teachers
Portfolio"). Collectively, all business and other matters related to the
Commonwealth Portfolio, the SunAmerica Portfolio and the Teachers Portfolio,
whether existing on or after the date of this letter, is referred to as the
"Existing Business".
On or about January 7, 1998, the Notification Date, NIPF and Providian expect to
commence a process that effectively will remove them from the premium finance
business in California. NIPF will continue to service all the premium finance
contracts on Providian's books now and the new business that will be written
during January 1998. NIPF and Providian shall set a date after which it will
not accept new business in California. This service period is expected to last
approximately 12-18 months (the "Run-Off Period").
NIPF Holding Company
January 6, 1999
Page 2
Following are the terms of the Transaction.
1. In consideration for the agreement of NIPF and Providian contained
herein, and concurrent with the execution and delivery of this letter, the Buyer
shall pay (i) to NIPF $325,000 in cash by wire transfer of immediately available
funds to NIPF's account designated by NIPF, and (ii) to Providian $225,000 in
cash by wire transfer of immediately available funds to Providian's account
designated by Providian. NIPF will immediately wire $100,000 to PanAm Bank for
deposit, for the ownership and benefit of BPN Corporation as security to Buyer
for the future financing of broker fees for Xxxxxxx & Associates. The Buyer
assumes no liabilities of NIPF.
2. On and after the Notification Date, the Buyer shall have the right to
write and finance all new and renewal business related to the Commonwealth
Portfolio for the account of PanAm Bank through the PanAm Bank's "ClassicPlan"
venture with BPN.
3. During the Run-Off Period, the Buyer may use the names "Commonwealth"
or "Commonwealth Premium Finance" only in conjunction with communications that
identify the Buyer as a successor to Xxxxxxxxx's IPF business in California.
Without limiting the generality of the foregoing, the Buyer may not use the
names "Commonwealth" or "Commonwealth Premium Finance" to originate new business
during the Run-Off Period. After the termination of the Run-Off Period, the
Buyer will own the names "Commonwealth" and "Commonwealth Premium Finance" in
connection with the origination of new business. Both Providian and NIPF
covenant not to sell, license or otherwise transfer the names "Commonwealth" or
"Commonwealth Premium Finance" to any third-party. Notwithstanding the
foregoing, NIPF and Providian may continue to use the names "Commonwealth" or
"Commonwealth Premium Finance" for the purpose of collecting the Commonwealth
Portfolio after the Run-Off Period.
4. For a period of three years commencing on the date of this letter,
neither NIPF nor any company now or hereafter owned or controlled by NIPF, in
whole or in part, shall directly or indirectly participate or engage in the
insurance premium finance business in California, either as an owner, partner,
financier, shareholder, manager, operator or otherwise; provided, the foregoing
shall not prohibit and inhibit in any manner the ability of NIPF to collect and
service the "Existing Business".
In addition, for a period of three years commencing on the date of this
letter, Providian shall not compete with the Buyer in the business of financing
insurance premiums for direct personal lines auto business and small ticket
commercial (under $250,000) generated through producers in a manner similar to
now existing Commonwealth Premium Finance or ClassicPlan IPF loan contract
generation; provided, however, that nothing herein shall restrict Providian from
financing the products of Providian and its affiliates or from collecting and
servicing the Commonwealth Portfolio.
NIPF Holding Company
January 6, 1999
Page 3
5. After the Notification Date, the Buyer will own whatever rights that
NIPF and Providian have in the computer equipment, modems, printers, forms and
fixtures provided to any producers and agents located in California. NIPF and
Providian make no representations or warranties regarding the existence or its
ownership of such equipment. Providian and XXXX hereby quit claim to right and
title to such equipment and transfer title to Buyer. XXXX and Providian will
make available for review their current files of Commonwealth producer
agreements.
6. Within 10 days of the execution of this letter, NIPF will supply Buyer
without further consideration, and without representation and warranty, a
complete configuration and software adequate to run the Commonwealth servicing,
and quotation software sufficient to operate the commercial portfolio at the
Buyer's location. This configuration will consist of a P.C. network with
approximately 5-6 P.C.s and associated software.
7. NIPF shall not sell, license or otherwise transfer any rights in and
to NTF's proprietary software that NIPF uses to service the Commonwealth
Portfolio (the "Commonwealth Software"), except as it would relate to its use by
NIPF or a back-up servicer for Providian, SunAmerica, SunAmerica Life Insurance
Company ("SunAmerica"), and/or Teachers Insurance and Annuity Associates of
America ("Teachers") for the sole purpose of continuing the collection and
recovery of the Commonwealth Portfolio, the SunAmerica Portfolio and/or the
Teachers Portfolio. At the end of the Run-Off Period, NIPF agrees to transfer
all of its right, title and interest in the Commonwealth Software to the Buyer
without further consideration and without any representations or warranties
subject to the rights of SunAmerica, Teachers, or any Servicers of the
SunAmerica Portfolio or the Teachers Portfolio to use such software for the sole
purpose of continuing the collection and recovery of the SunAmerica Portfolio
and/or the Teachers Portfolio, as the case may be. Buyer has the option to use
the Commonwealth Software any time after the Notification Date at its operations
center. The parties agree that a breach of the foregoing three sentences would
irreparably harm the Buyer, and that the Buyer may seek equitable action,
including injunction, to enforce such provision.
8. Concurrent with the execution and delivery of this letter agreement,
the parties are executing and delivering an agreement regarding the details of
the transition to the Buyer of the auto business and the operation of
Providian's commercial business in California (the "Operating Agreement").
9. As part of its termination of new business in California, NIPF will
send a letter to the agents that have produced business for Providian during
1997 who are not terminated prior to the Notification Date (the "Initial
Producer Letter"). As a part of the Operating Agreement, the Buyer, NIPF and
Providian shall agree on the form and contents of the Initial Producer Letter.
10. The Buyer will have the opportunity to speak with a few of
Commonwealth's largest producers in California immediately after receipt of
funds specified in Paragraph 1.
NIPF Holding Company
January 6, 1999
Page 4
11. During the Run-off Period, the Buyer shall not directly solicit for
employment or employ any person who is now employed by NIPF; provided, however,
that upon execution and delivery of this letter and the consideration set forth
above, the Buyer and NIPF will arrange a mutually convenient time for the Buyer
to discuss employment opportunities with NIPF's representative sales force and
internal sales and marketing staff.
12. Whether or not the transactions contemplated hereby are consummated,
each of the parties hereto will pay its own costs and expenses incurred in
connection with the preparation and negotiation of this letter agreement.
13. Each party hereto agrees to hold harmless each other party for any
loss or expense it may incur as a result of (1) its actions or failure to act
pursuant to the terms of the Letter Agreement between the parties dated January
6, 1998 or the ClassicPlan Operating Agreement between the parties dated January
6, 1998, and (2) its gross negligence or wilful misconduct. XXXX agrees to hold
harmless Buyer for any loss or expense it may incur as a result of NIPF's
origination of loans or servicing of the Commonwealth Portfolio. Xxxxx agrees
to hold harmless NIPF and Providian for any loss or expense it may incur which
relates to the ClassicPlan Program, or any loan funded by Buyer (whether or not
written on ClassicPlan paper). Nothing herein shall affect existing
indemnification or hold harmless obligations between Providian and NIPF.
14. All notices and other communication provided for in this letter
agreement shall be in writing and delivered by registered or certified mail,
postage prepaid, or delivered by overnight courier (for next business day
delivery) or telecopied, addressed as follows, or at such other address as any
of the parties hereto may hereafter designate by notice to the other parties
given in accordance with this paragraph:
If to the Seller:
National IPF Company
0000 X. Xxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
NIPF Holding Company
January 6, 1999
Page 5
If to Providian:
Providian National Bank
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
If to the Buyer:
BPN Corporation
00000 Xxxxxxxx Xxxxxx
Xxxxx, XX 00000
Attention: Xxxx Xxxxxx
If you are in agreement with the foregoing, please so indicate by signing in the
space set forth below, whereupon this letter shall constitute our binding
agreement in accordance with the terms and provisions set forth above.
Sincerely yours,
United PanAm Financial Corp.
Pan American Bank, FSB
Lawrence Grill
President
Agreed and accepted by:
BPN Corporation
By: /s/ Xxxx Xxxxxx
________________________
Xxxx Xxxxxx
President
NIPF Holding Company
January 6, 1999
Page 6
NIPF Holding Company
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
____________________________
Xxxxxxx X. Xxxxxxx, Xx.
President and CEO
Providian National Bank
By: /s/ Xxxxxx X. Xxxxx
____________________________
Xxxxxx X. Xxxxx
Vice President-Treasury and Finance
