EXECUTION COPY
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Contract Funding Corp.
Seller
Gold Coast Finance, Inc.
Collection Agent
and
SunAmerica Financial Resources, Inc.
Facility Agent and Purchaser
RECEIVABLES PURCHASE AND SALE AGREEMENT
Dated as of September 18, 1996
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S-3
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.......................................................1
Section 1.1 Certain Defined Terms.....................................1
Section 1.2 Other Terms...............................................16
Section 1.3 Computation of Time Periods...............................17
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES...............................17
Section 2.1 Facility; Assignment......................................17
Section 2.2 Making Purchases..........................................17
Section 2.3 Increase of the Commitment................................18
Section 2.4 Purchased Interest........................................18
Section 2.5 Settlement Procedures During Revolving Period.............18
Section 2.6 Settlement Procedures During Amortization Period..........19
Section 2.7 General Settlement Procedures.............................20
Section 2.8 Payments and Computations, Etc............................21
Section 2.9 Seller's Payment of Yield, Capital and Fees...............21
Section 2.10 Increased Costs...........................................22
Section 2.11 Increased Capital.........................................22
Section 2.12 Taxes.....................................................23
Section 2.13 Extensions of Stated Termination Date.....................24
Section 2.14 Grant of Security Interest................................24
ARTICLE III CONDITIONS OF PURCHASES.........................................25
Section 3.1 Condition Precedent to Initial Purchase...................25
Section 3.2 Conditions Precedent to All Purchases and Reinvestments...28
ARTICLE IV REPRESENTATIONS AND WARRANTIES...................................29
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Section 4.1 Representations and Warranties of the Seller..............29
ARTICLE V GENERAL COVENANTS OF THE SELLER...................................31
Section 5.1 Affirmative Covenants of the Seller.......................31
Section 5.2 Reporting Requirements of the Seller......................34
Section 5.3 Negative Covenants of the Seller..........................36
ARTICLE VI ADMINISTRATION AND COLLECTION....................................37
Section 6.1 Establishment of Accounts.................................37
Section 6.2 Designation of Collection Agent...........................38
Section 6.3 Standard of Care; Inspection; Audits......................38
Section 6.4 Duties of Collection Agent................................39
Section 6.7 Further Action Evidencing Purchases.......................43
Section 6.8 Cost and Expenses of Collection Agent.....................44
Section 6.9 Collection Agent Not to Resign............................44
Section 6.10 Representations and Warranties of the Collection Agent....44
ARTICLE VII EVENTS OF INVESTMENT INELIGIBILITY..............................45
Section 7.1 Events of Investment Ineligibility........................45
ARTICLE VIII COLLECTION AGENT DEFAULTS......................................49
Section 8.1 Collection Agent Defaults.................................49
ARTICLE IX THE FACILITY AGENT...............................................51
Section 9.1 Authorization and Action..................................51
Section 9.2 Facility Agent's Reliance, Etc............................51
Section 9.3 Indemnification...........................................52
ARTICLE X ASSIGNMENTS OF PURCHASED INTERESTS................................53
Section 10.1 Assignment................................................53
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Section 10.2 Annotation of Assignment..................................53
ARTICLE XI GRANT OF SECURITY INTEREST.......................................53
Section 11.1 Grant of Security Interest................................53
Section 11.2 Security for Obligations..................................53
Section 11.3 Seller Remains Liable.....................................53
Section 11.4 Further Assurances........................................54
Section 11.5 Payments With Respect to Collateral.......................54
Section 11.6 Facility Agent May Perform................................54
Section 11.7 The Facility Agent's Duties...............................55
Section 11.8 Remedies..................................................55
ARTICLE XII INDEMNIFICATION................................................55
Section 12.1 Indemnities by the Seller.................................55
Section 12.2 Indemnities by the Collection Agent.......................57
ARTICLE XIII MISCELLANEOUS..................................................57
Section 13.1 Amendments, Etc...........................................57
Section 13.2 Notices, Etc..............................................58
Section 13.3 No Waiver; Remedies.......................................58
Section 13.4 Binding Effect; Assignability.............................58
Section 13.4 Binding Effect; Assignability.............................58
Section 13.6 Costs, Expenses and Taxes.................................58
Section 13.7 Confidentiality...........................................59
Section 13.8 Execution in Counterparts; Severability...................60
Section 13.9 Release...................................................60
Section 13.10 Consent to Jurisdiction; Waiver of Jury Trial.............60
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EXHIBITS
Exhibit A Assignment
Exhibit B Purchaser Report
Exhibit C Approved Insurer List
Exhibit D Insurance Carrier Exposure Report
Exhibit E Opinion of Counsel
Exhibit F Receivables Origination Agreement
Exhibit G USA Guaranty
Exhibit H Consent and Agreement
SCHEDULES
Schedule I Form of Contract
Schedule II Approved Indebtedness
Schedule III Procedures
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This RECEIVABLES PURCHASE AND SALE AGREEMENT (this "Agreement")
dated as of September 18, 1996 is among CONTRACT FUNDING CORP., a Delaware
corporation (the "Seller"), GOLD COAST FINANCE, INC., a Florida corporation
("Gold Coast"), and SUNAMERICA FINANCIAL RESOURCES, INC., a Delaware corporation
("Purchaser" and, in its capacity as agent for Purchaser, together with its
successors, "Facility Agent").
PRELIMINARY STATEMENTS:
(1) Certain terms which are capitalized and used throughout this
Agreement (in addition to those defined above) are defined in Article I of this
Agreement.
(2) The Seller owns Receivables which the Seller intends to sell to
Purchaser from time to time.
(3) Purchaser desires to purchase Pool Receivables from the Seller
as provided herein.
(4) In consideration of the reinvestment in Receivables of daily
Collections, the Seller will sell to Purchaser additional Receivables as part of
the Purchased Interest until such reinvestment is terminated. It is intended
that such daily reinvestment of Collections be effected by an automatic daily
adjustment to the Purchased Interest.
(5) Gold Coast is willing to act as initial Collection Agent.
(6) SunAmerica Financial Resources, Inc. is willing to act as
Facility Agent.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted Rate" for any Fixed Period means an interest rate per
annum equal to 2.85% per annum above the LIBO Rate for such Fixed Period;
provided, however, that if either (i) the introduction of or any change in or in
the interpretation of any law or regulation shall make it unlawful, or any
central bank or other governmental authority asserts that it is unlawful for
Purchaser or any successive Assignee to obtain funds in the London interbank
market during such Fixed Period or (ii) Citibank is unable for any reason to
establish its LIBO Rate for such Fixed Period or (iii) the LIBO Rate will not
adequately reflect the cost to such Purchaser
or any successive Assignee of making a Purchase of or maintaining the Purchased
Interest during such Fixed Period, then the "Adjusted Rate" for such Fixed
Period shall be an interest rate per annum equal the Alternate Base Rate plus
2.25% in effect from time to time; provided, further, however, that the Facility
Agent and the Seller may agree in writing from time to time upon a different
"Adjusted Rate".
"Adjusted Tangible Net Worth" means total assets excluding goodwill
and other intangibles minus total liabilities, as determined in accordance with
generally accepted accounting principles, plus any Permitted Subordinated Debt.
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or other type of preferential arrangement having the practical
effect of a lien or security interest.
"Affiliate" means as to any Person, any other Person that (x)
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or (y) is a director or officer of such Person or of
any other Person that, directly or indirectly, is in control of, is controlled
by or is under common control with such Person.
"Affiliated Obligor" means any Obligor which is an Affiliate of
another Obligor.
"Alternate Base Rate" means, for any period, a fluctuating interest
rate per annum as shall be in effect from time to time, which rate per annum
shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank in New York,
New York, from time to time as Citibank's base rate; or
(b) 1/2 of one percent above the latest three-week moving average of
secondary market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average being determined weekly on each Monday (or, if such
day is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit dealers to and published by the Federal
Reserve Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank from
three New York certificate of deposit dealers of recognized standing selected by
Citibank, in either case adjusted to the nearest 1/4 of one percent or, if there
is no nearest 1/4 of one percent, to the next higher 1/4 of one percent.
"Amortization Period" means the period from, and including, the
Termination Date to, and including, the Collection Date.
"Approved Insurer" means (i) an insurance company approved by
Purchaser in its discretion and listed on the Approved Insurer List and (ii) an
insurance company (or related group of insurers) (other than insurance companies
organized outside of the United States of America, Canada or Europe) as to which
the Outstanding Balance of all Receivables relating thereto as a percentage of
the Outstanding Balance of all Pool Receivables is less than 0.5%.
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"Approved Insurer List" means a list prepared by the Facility Agent
listing all Approved Insurers from time to time and designating each Approved
Insurer as a Xxxxx 0, Xxxxx 0, Xxxxx 0 or Level 4 Insurer, the initial list of
which is attached as Exhibit C, as such list may be amended, modified or
supplemented from time to time pursuant to Section 6.5(c). Each related group of
insurers will be designated the same Level and each Approved Insurer described
in clause (ii) of the definition of "Approved Insurer" will be designated as a
Level 3 Insurer (unless otherwise specified from time to time by the Facility
Agent).
"Assignee" means an assignee of Purchaser's rights and obligations
hereunder (or any portion thereof) including without limitation the Purchased
Interest (or any portion thereof).
"Assignment" means an assignment by the Seller to the Facility Agent
for the benefit of Purchaser, in substantially the form of Exhibit A hereto,
evidencing the sale of the Receivables and the Purchased Interest.
"Auditor" means a firm of nationally recognized independent
certified public accountants selected by the Seller and approved by the Facility
Agent in the exercise of its reasonable discretion.
"Business Day" means any day on which banks are not authorized or
required to close in Xxx Xxxx Xxxx xx Xxx Xxxxxxx, Xxxxxxxxxx and, if the
applicable Business Day relates to any computation made with respect to the LIBO
Rate, any day on which dealings are carried on in the London interbank market.
"Capital" means, with respect to the Purchased Interest, the
original amount paid to the Seller for Pool Receivables at the time of their
acquisition by Purchaser pursuant to Sections 2.1 and 2.2 reduced from time to
time by Collections received and distributed on account of such Capital pursuant
to Section 2.6; provided, however, that if such Capital shall have been reduced
by any distribution of any portion of Collections and thereafter such
distribution is rescinded or must otherwise be returned to any Selling Party,
any Obligor or any other Person for any reason, such Capital shall be increased
by the amount of such distribution, all as though such distribution had not been
made.
"Citibank" means Citibank, N.A., a national banking association.
"Collateralized Portion" means, as at any date of determination with
respect to any Receivable, the amount equal to the Outstanding Balance of such
Receivable minus the Uncollateralized Portion of such Receivable.
"Collection Account" means the special account (account number
0601001020540) of the Facility Agent for the benefit of Purchaser maintained at
the office of SunTrust Bank, Miami, N.A.
"Collection Agent" means at any time the Person (including the
Facility Agent) then authorized pursuant to Article VI to service, administer
and collect Pool Receivables.
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"Collection Agent Default" has the meaning specified in Section 8.1.
"Collection Agent Fee" has the meaning specified in Section 2.9.
"Collection Date" means the date following the Termination Date on
which the aggregate outstanding Capital shall have been reduced to zero and each
of the Facility Agent, the Collection Agent, Purchaser and the Indemnified
Parties shall have received all Yield, Capital, Collection Agent Fee and other
fees and other amounts payable to it hereunder with respect to the Purchased
Interest or otherwise.
"Collections" means, with respect to any Pool Receivable, all cash
collections and other cash proceeds of or related to such Pool Receivable,
including, without limitation, all cash proceeds of Related Security with
respect to such Pool Receivable, and any Collection of such Pool Receivable
deemed to have been received pursuant to Section 2.7 or 2.9(b).
"Commitment" means $25,000,000 as such amount may be increased
pursuant to Section 2.3.
"Concentration Limit" means at any time, for any Obligor, 0.25%;
provided, however, that in the case of an Obligor with any Affiliated Obligor,
the Concentration Limit shall be calculated as if such Obligor and such
Affiliated Obligor are one Obligor.
"Consent and Agreement" means the Consent and Agreement dated the
date hereof among the Originators and the Seller, substantially in the form of
Exhibit H hereto.
"Contract" means an agreement between an Originator and an Obligor,
in substantially the form of one of the forms of written contract set forth in
Schedule I hereto or otherwise approved from time to time by the Facility Agent
and in each case is approved for use in the applicable jurisdiction by the
applicable governmental authority, if required by law or such governmental
authority and complies with all applicable laws of the applicable jurisdiction
pursuant to or under which such Obligor shall be obligated to repay the
Originator's financing of such Obligor's insurance premiums.
"CP Rate" for any Fixed Period means the rate per annum, as
determined on each day of such Fixed Period by Purchaser, equal to the sum of
(i) the rate applicable to 30-day commercial paper (high-grade unsecured notes
sold by dealers) as reported in The Wall Street Journal plus (ii) 2.75%. For any
Saturday, Sunday or other day on which The Wall Street Journal is not published,
the rate described in clause (i) shall be the last rate so reported.
"Credit and Collection Policy" means the Seller's credit and
collection policies and practices in effect on the date of the initial Purchase
and as modified and supplemented by the credit and collection policies and
practices listed on Schedule III hereto relating to Contracts and Receivables of
the Seller, as modified in compliance with Section 5.3(g).
"Debt" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have
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been or should be, in accordance with generally accepted accounting principles,
recorded as capital leases, (v) obligations under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (iv) above, and (vi) any other indebtedness which would be classified as
debt under generally accepted accounting principles including asset sales with
recourse.
"Default Ratio" means the ratio (expressed as a percentage) computed
as of the last day of each calendar month by dividing (i) the aggregate
Outstanding Balance of all Pool Receivables that were Defaulted Receivables on
such date or would have been Defaulted Receivables on such date had they not
been written off the books of the Seller during such month by (ii) the aggregate
Outstanding Balance of all Pool Receivables on such date.
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof, remains unpaid for 121
days or more from the date of cancellation of the Related Policy;
(ii) as to which any payment, or part thereof, remains unpaid for
151 days or more from the date due where the Related Policy has not been
cancelled;
(iii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in Section 7.1(g),
unless such Receivable arose after such action was taken or such event
occurred; or
(iv) which, consistent with the Credit and Collection Policy, has
been or would be written off the Seller's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of the last day of each calendar month by dividing (i) the aggregate
Outstanding Balance of all Pool Receivables that were Delinquent Receivables at
the end of such month by (ii) the aggregate Outstanding Balance of all Pool
Receivables on such date.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and:
(i) as to which any payment, or part thereof, remains unpaid after
the date of cancellation of the Related Policy;
(ii) as to which any payment, or part thereof, remains unpaid for 31
days or more from the date due where the Related Policy has not been
cancelled; or
(iii) which, consistent with the Credit and Collection Policy, has
been or would be classified as delinquent by the Seller.
"Designated Obligor" means, at any time, each Obligor; provided,
however, that any Obligor shall cease to be a Designated Obligor upon at least
three Business Days' notice by
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the Facility Agent to the Seller based upon credit or other considerations
applicable to such Obligor which could materially adversely affect the
collectibility of any Receivable owed by such Obligor.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto or of any Selling Party, and is not
a federal government or a federal governmental subdivision or agency;
(ii) the Obligor of which at the time of the initial creation of an
interest therein hereunder is a Designated Obligor;
(iii) the Outstanding Balance of which, when combined with the
aggregate Outstanding Balance of all other Pool Receivables owed by the
Obligor of such Receivable at such time, does not exceed the Special
Concentration Limit, if any, at such time for such Obligor or, if none,
the product of the Concentration Limit multiplied by the aggregate
Outstanding Balance of the Pool Receivables which are Eligible Receivables
at such time;
(iv) which is not a Defaulted Receivable, and which at the time of
the initial creation of an interest therein hereunder is not a Delinquent
Receivable;
(v) the Related Policy of which (A) is a valid (i.e., policy number
issued or insurer bound to issue), short-term (not more than one year)
insurance policy written by an Approved Insurer and (B) permits
cancellation on not more than 30 days' notice (except where longer notice
is required by law);
(vi) the Uncollateralized Portion of which, when combined with the
Uncollateralized Portion of all other Receivables, does not exceed the
lesser of (i) 25% of the Adjusted Tangible Net Worth of USA Finance on a
consolidated basis and (ii) 10% of the aggregate Outstanding Balance of
the Pool Receivables which are Eligible Receivables at such time;
(vii) in respect of which, according to the Contract related
thereto, the first installment payment is due no more than 30 days after
the effective date of the Related Policy;
(viii) a purchase of which with the proceeds of notes would
constitute a "current transaction" within the meaning of Section 3(a)(3)
of the Securities Act of 1933, as amended;
(ix) which is an "account," a "general intangible" or "chattel
paper" within the meaning Section 9-105 or 9-106, as applicable, of the
UCC of the jurisdiction the law of which governs the perfection of the
interest created by a Purchased Interest;
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(x) which is denominated and payable only in United States dollars
in the United States, and is payable by an Obligor under a Contract;
(xi) which arises under a Contract which has been duly authorized
and which, together with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor of such
Receivable enforceable against such Obligor in accordance with its terms
and is not subject to any dispute, offset, counter-claim or defense
whatsoever (except the discharge in bankruptcy of such Obligor);
(xii) which, together with the Contract related thereto, does not
contravene any laws, rules or regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to insurance,
usury, consumer protection, truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices
and privacy) and with respect to which no party to the Contract related
thereto is in violation of any such law, rule or regulation;
(xiii) which is, immediately prior to the time of the initial
creation of an interest therein hereunder, legally and beneficially owned
by the Seller free and clear of any Adverse Claim except as created or
permitted hereunder, and the assignment of which hereunder is not
prohibited by the applicable Contract or any Related Security with respect
thereto or applicable law;
(xiv) which satisfies in all material respects the Credit and
Collection Policy, including without limitation all requirements as to the
selection of the agency and underwriter for all insurance policies issued
to Obligors;
(xv) which is secured by a first priority perfected security
interest in unearned and return insurance premiums payable by an Approved
Insurer relating to such Receivable; provided (A) in the case of a Related
Insurer that is a Level 1 Insurer, that the Outstanding Balance of such
Receivable, when combined with the aggregate Outstanding Balance of all
other Receivables which are so secured by such unearned and return
premiums payable by such Level 1 Insurer, does not exceed 20% of the
aggregate Outstanding Balance of the Pool Receivables which are Eligible
Receivables at such time, (B) in the case of a Related Insurer that is a
Level 2 Insurer, that the Outstanding Balance of such Receivable, when
combined with the aggregate Outstanding Balance of all other Receivables
which are so secured by such unearned and return premiums payable by such
Level 2 Insurer, does not exceed 12% of the aggregate Outstanding Balance
of the Pool Receivables which are Eligible Receivables at such time, (C)
in the case of a Related Insurer that is a Level 3 Insurer, that the
Outstanding Balance of such Receivable, when combined with the aggregate
Outstanding Balance of all other Receivables which are so secured by such
unearned and return premiums payable by such Level 3 Insurer, does not
exceed 10% of the aggregate Outstanding Balance of the Pool Receivables
which are Eligible Receivables at such time, and (D) in the case of a
Related Insurer that is a Level 4 Insurer, that the Outstanding Balance of
such Receivable, when combined with the aggregate
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Outstanding Balance of all other Receivables which are so secured by such
unearned and return premiums payable by such Level 4 Insurer, does not
exceed 2% of the aggregate Outstanding Balance of the Pool Receivables
which are Eligible Receivables at such time; and provided, further, until
March 31, 1997, Receivables arising from loans for other than personal,
family or household purposes shall be deemed Eligible Receivables if they
would otherwise qualify as Eligible Receivables (but for this clause(xv))
and do not exceed, in the aggregate, 5% of the aggregate Outstanding
Balance of all Pool Receivables;
(xvi) as to which, at or prior to the time of the initial creation
of an interest therein hereunder, the Facility Agent has not notified the
Seller that the Facility Agent has determined in its sole reasonable
discretion based on reasonable credit considerations reasonably applied
that such Receivable (or class of Receivables) is not acceptable for
purchase by Purchaser hereunder;
(xvii) (A) where the Related Insurer relating to such Receiveable is
not incorporated in any state of the United States of America or the
District of Columbia (an "alien insurer"), and the proceeds of the
financing giving rise to such Receivable have been paid solely to a
licensed surplus lines broker who is the direct contact with the foreign
broker representing the alien insurer, or (B) (i) where the Related
Insurer relating to such Receiveable incorporated in any state of the
United States of America or the District of Columbia and the proceeds of
the financing giving rise to such Receivable have been paid solely to the
Related Insurer, its authorized agent or any other Person authorized in
writing by the Related Insurer to receive payment on behalf of such
Related Insurer or (ii) evidencing a financing of premiums for insurance
policies for other than personal, family or household purposes, where the
proceeds of the financing giving rise to such Receivables have been paid
to a Person not authorized to receive payments of premiums on behalf of a
Related Insurer, applicable notices are sent to all parties as specified
in item 2 of Schedule III and the Related Insurer, its agent or a person
authorized by such Related Insurer to receive payments on behalf of such
insurer has actually received such financing proceeds; and
(xviii) which arises from the financing of a single premium of
$50,000 or more with respect to a Related Policy issued by a Related
Insurer or of multiple premiums aggregating $50,000 or more with respect
to Related Policies issued by Related Insurers in the same affiliated
group as long as written verification from such Related Insurer(s)
verifying the existence of such polic(ies), the amount of such premium(s),
the name and address of the insured and other relevant policy details has
been obtained by the applicable Originators.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Estimated Unearned Premium" means, as at any date of determination
with respect to any Eligible Receivable, (i) in the case of a Related Insurer
that is not in conservatorship, liquidation or similar proceedings and where no
action has been initiated to
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place such Related Insurer in conservatorship, liquidation or similar
proceedings, the amount of the unearned or returned premium securing payment of
the loan or other financing which gave rise to such Receivable (based on a pro
rata return) that would exist on the date that is (a) 15 days after the date on
which the next installment of such loan or other financing is due (in other
words, the number of days from the applicable date of determination to the date
the applicable Related Insurer would be expected to receive a request for
cancellation of the Related Policy(ies) assuming the next installment of such
loan or other financing is not paid (or, if later, the date that is the
requested cancellation date) plus the average number of days before such Related
Insurer is expected to actually cancel such Related Policy(ies) plus (b) if the
Related Policy(ies) require that any third party be notified of any cancellation
of such Related Policy(ies), the number of days notice required to be given to
such third party before such Related Policy(ies) may be cancelled plus 10 days
(such 10 days being the current average estimated time for issuance of such
third party notices by the Related Insurer after receipt of the cancellation
request) or (ii) in the case of all other Related Insurers the present value
(calculated as of the date determined pursuant to the clause (i) above) of the
amount of any right, if any, to receive state guaranty fund reimbursements in
respect of the Related Policy(ies).
"Eurodollar Reserve Percentage" of Citibank means, for any Fixed
Period, the reserve percentage applicable during such Fixed Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or, if more than one such percentage shall be so applicable, the
daily average of such percentages for those days in such Fixed Period during
which any such percentage shall be so applicable) for determining the maximum
reserve requirement (including, but not limited to, any emergency, supplemental
or other marginal reserve requirement), for Citbank in respect of liabilities or
assets consisting of or including Eurocurrency liabilities (as that term is
defined in Regulation D of the Board of Governors of the Federal Reserve System
as in effect from time to time) having a term equal to such Fixed Period.
"Event of Investment Ineligibility" has the meaning specified in
Section 7.1.
"Event of Purchase Ineligibility" means any failure to satisfy the
condition set forth in Section 3.2(b)(iii).
"Facility" means the agreement of Purchaser to make Purchases
pursuant to Article II.
"Facility Agent" has the meaning specified in the preamble to this
Agreement.
"Facility Fee" has the meaning specified in Section 2.9.
"Facility Termination Date" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date of termination of the Facility pursuant
to Section 7.1, or (iii) the date of termination of the principal funding
sources of Purchaser for the sale of new or additional Receivables by Purchaser
and its Affiliates.
"Fixed Period" means, with respect to the Purchased Interest, (A)
(i) when Yield is computed by reference to the CP Rate (1) initially the period
commencing on the date of a
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Purchase and ending on the last day of the calendar month in which the Purchase
was made and (2) thereafter a calendar month or (ii) when Yield is computed by
reference to the Adjusted Rate one month or such lesser period selected by the
Facility Agent provided, however, that: (I) the first Fixed Period shall begin
on the day the initial Purchase is made and end on the last day of the calendar
month in which such Purchase was made; and (II) in the case of any Fixed Period
for the Purchased Interest which commences before the Termination Date and would
otherwise end on a date occurring after the Termination Date, such Fixed Period
shall end on the Termination Date and the duration of each Fixed Period which
commences on or after the Termination Date shall be of such duration as shall be
selected by the Facility Agent, or (B) such other period not exceeding sixty
days, unless mutually agreed, as selected by the Facility Agent.
"Gold Coast" has the meaning specified in the Preliminary Statements
to this Agreement.
"Indemnified Party" means any one of Purchaser, any Assignee thereof
(and such Assignee's assignees), any participant of any Assignee (or such
Assignee's assignee), the Facility Agent, its assignees or any Affiliate of any
thereof, and "Indemnified Parties" means all of Purchaser, such Assignee(s) (and
assignee(s) thereof), participants, the Facility Agent and such Affiliates and
their respective assignees.
"Insurance Carrier Exposure Report" means a report, in substantially
the form of Exhibit D hereto, furnished by the Collection Agent to the Facility
Agent and Purchaser pursuant to Section 6.4.
"Interest Account" has the meaning specified in Section 6.1.
"Interest Collections" means, with respect to any Pool Receivable, any
Collections in respect of any interest, late fees or other charges accrued on
the loan giving rise to such Pool Receivable as determined pursuant to the
procedures set forth in Section 2.7.
"Level 1 Insurer," "Level 2 Insurer," "Level 3 Insurer," and "Level
4 Insurer," as applicable, means an Approved Insurer which Purchaser in its sole
reasonable discretion, based upon A.M. Best Company, Inc. or other applicable
ratings and credit and other considerations deemed relevant or appropriate from
time to time by Purchaser, designates (as evidenced by the Approved Insurer
List) as a "Level 1 Insurer," "Level 2 Insurer," "Level 3 Insurer," or "Level 4
Insurer," as the case may be. As a general principle, for purposes of this
Agreement, subject to other applicable ratings, credit and other considerations
referred to above, insurance companies with A.M. Best ratings of "A+" and "A"
will be designated as Level 1 Insurers, insurance companies with A.M. Best
ratings of "A-" and "B+" will be designated as Level 2 Insurers, insurance
companies with A.M. Best ratings of "B" and "B-" will be designated as Level 3
Insurers, and insurance companies with A.M. Best ratings below "B-" will be
designated as Level 4 Insurers. The Seller acknowledges that, as a result of the
application of such other ratings and considerations by Purchaser, insurance
companies may be designated above or below the Level that would generally apply
to such insurance companies based on A.M. Best ratings.
10
"LIBO Rate" means, for any Fixed Period in respect of which Yield is
computed by reference to the Adjusted Rate, an interest rate per annum equal to
the rate per annum obtained by dividing (i) the rate at which deposits in U.S.
dollars are offered by the principal office of Citibank in London, England to
prime banks in the London interbank market at 11:00 a.m. (London time) two
Business Days before the first day of such Fixed Period for a period equal to
such Fixed Period by (ii) a percentage equal to 100% minus Citibank's Eurodollar
Reserve Percentage for such Fixed Period.
"Liquidation Day" for the Purchased Interest means either (i) each
day during any Settlement Period on which the conditions set forth in Section
3.2 are not satisfied (and such failure of conditions is not waived by
Purchaser), provided that such conditions are also not satisfied (and such
failure of conditions is not waived by Purchaser) on any succeeding day during
such Settlement Period, or (ii) each day which occurs on or after the
Termination Date.
"Liquidation Fee" means, for the Purchased Interest for any Fixed
Period during which any Liquidation Day or Termination Date occurs, the amount,
if any, by which (i) the additional Yield (calculated without taking into
account any Liquidation Fee) which would have accrued on the reductions of
Capital during such Fixed Period (as so computed) if such reductions had
remained as Capital, exceeds (ii) the income, if any, received by Purchaser from
Purchaser's investing the proceeds of such reductions of Capital.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each calendar month by dividing (i)
an amount equal to the aggregate Outstanding Balance of all Pool Receivables
written off by the Seller, or which should have been written off by the Seller,
in accordance with the Credit and Collection Policy during the 6-month period
ending on such date, such aggregate Outstanding Balance having been reduced by
the aggregate amount of Collections in respect of such Pool Receivables during
such 6-month period, by (ii) the aggregate amount of Collections of principal
received during such 6-month period with respect to Pool Receivables. The amount
written off or which should have been written off shall equal the sum of the
principal, earned income and late charges with respect to the applicable
Receivable.
"National-Wide" means National-Wide Premium Finance Corporation, a
Florida corporation.
"Net Receivables Pool Balance" means at any time the product equal
to the Outstanding Balance of the Pool Receivables in the Receivables Pool at
such time multiplied by the applicable Receivables Purchase Rate reduced by the
sum of (i) the aggregate Outstanding Balance of the Defaulted Receivables in the
Receivables Pool at such time, (ii) if at such time the product of (A) the most
recent Portfolio Yield Percentage multiplied by (B) the percentage obtained by
dividing the dollar weighted average of the respective lengths of the remaining
terms of the respective Pool Receivables at such time expressed in number of
months (but in no event to exceed 12) by 12 is a percentage that is less than
6%, an amount equal to (1) the difference between 6% and such product multiplied
by (2) the aggregate Outstanding Balance of Pool Receivables at such time, (iii)
unearned income on the Pool Receivables, (iv) unfunded amounts under Contracts
relating to Pool Receivables and (v) the aggregate
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Uncollateralized Portion of all Pool Receivables in excess of 1% of the
aggregate Outstanding Balance of all Pool Receivables at such time, and
increased by 50% of the aggregate amount of drafts funded by an Originator
within 10 days prior to the date of determination and for which Contracts have
not yet been received by the applicable Originator.
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Originator" means Gold Coast or National-Wide and "Originators"
mean Gold Coast and National-Wide.
"Origination Agreement" means the Receivables Origination Agreement
dated the date hereof among the Originators and the Seller, substantially in the
form of Exhibit F hereto.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Permitted Subordinated Debt" means (A) indebtedness of USA Finance
listed on Schedule II hereto and as to which the holder of such indebtedness has
executed and delivered to Facility Agent an acknowledgement of subordination in
a form acceptable to Facility Agent and (B) indebtedness of USA Finance, Gold
Coast or National-Wide which (i) matures no earlier than one year from its date
of issuance, (ii) requires no principal payments of any kind prior to one year
from date of issuance, (iii) has an interest rate not in excess of 15% and (iv)
contains subordination provisions no less favorable to Purchaser than the
subordination provisions in the indebtedness listed on Schedule II hereto as
modified and supplemented by the acknowledgement of subordination referred to in
clause (A).
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Portfolio Yield Percentage" means the percentage computed as of the
last day of each calendar month by dividing (i) the product of (A) the aggregate
amount of the Interest Collections during such month multiplied by (B) 12, by
(ii) the aggregate Outstanding Balance of all Pool Receivables on such date.
"Principal Account" has the meaning specified in Section 6.1.
"Principal Collections" means all Collections other than Interest
Collections.
"Provisional Liquidation Day" means any day which could be a
Liquidation Day but for the proviso in clause (i) of the definition of
"Liquidation Day."
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"Purchase" means a purchase by Purchaser of Pool Receivables from
the Seller pursuant to Article II.
"Purchase Documents" means this Agreement, the Assignment, the
Consent and Agreement, the Origination Agreement, the Rights Agreement, the USA
Guaranty and any other agreement, document or instrument at any time furnished
or delivered pursuant hereto or in connection herewith or in furtherance of this
Agreement, in each case as amended, supplemented or otherwise modified from time
to time.
"Purchased Interest" means, at any time, the interest at such time
of Purchaser or any successive Assignee thereof, in (i) all Receivables now
existing and hereafter arising, (ii) all Related Security with respect to such
Receivables and (iii) all Collections with respect to, and other proceeds of,
such Receivables. The Purchased Interest shall be determined from time to time
pursuant to the provisions of Section 2.4.
"Purchaser Rate" for any Fixed Period means the CP Rate for such
Fixed Period; provided, however, that if Purchaser shall not, at any time and
for any reason, directly or indirectly, fund its Purchase or maintenance of such
Purchased Interest for such Fixed Period by reference to short-term commercial
paper rates the "Purchaser Rate" for such Fixed Period shall then be the
Adjusted Rate.
"Purchaser Report" means a report, in substantially the form of
Exhibit B hereto, furnished by the Collection Agent to the Facility Agent and
Purchaser pursuant to Section 6.4.
"Receivable" means the indebtedness of any Obligor under a Contract
arising from the making of loans by an Originator to purchasers or prospective
purchasers of insurance from any insurer and includes the right to payment of
any interest, late charges or finance charges and other obligations of such
Obligor with respect thereto.
"Receivables Pool" means at any time the aggregation of each then
outstanding Receivable in respect of which the Obligor is a Designated Obligor
or, as to any Receivable in existence on such date, was a Designated Obligor on
the date of any Purchase or reinvestment pursuant to Section 2.5.
"Receivables Purchase Rate" means (i) with respect to any Receivable
as to which the Related Policy is issued by a Level 1 Insurer, 95%, (ii) with
respect to any Receivable as to which the Related Policy is issued by a Level 2
Insurer, 90%, (iii) with respect to any Receivable as to which the Related
Policy is issued by a Level 3 Insurer, 85%, and (iv) with respect to any
Receivable as to which the Related Policy is issued by a Level 4 Insurer, 75%.
"Reinvestment Termination Date" means that Business Day which the
Seller designates or, if the conditions precedent in Section 3.2 are not
satisfied such Business Day which the Facility Agent designates, as the
Reinvestment Termination Date for such Purchased Interests by notice to the
Facility Agent and Purchaser (if the Seller so designates) at least three
Business Days prior to such Business Day, or to the Seller and Purchaser (if the
Facility Agent so designates) at least one Business Day prior to such Business
Day; provided, that if the Seller
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so designates such Reinvestment Termination Date as a direct result of
Purchaser's rejection of a bona fide request by the Seller to increase the
Commitment pursuant to and in accordance with Section 2.3, then the Reinvestment
Termination Date shall occur on the earliest of: (1) the date any Selling Party
enters into an agreement to finance or sell Receivables; (2) the date which is
120 days after the date Purchaser rejects such request; and (3) the date on
which any other Termination Date occurs.
"Related Insurer" means, in relation to any Pool Receivable, any
insurer that issued or is to issue insurance with respect to which the loan
giving rise to such Pool Receivable was made.
"Related Policy" means with respect to any Receivable the insurance
policy the unearned and return insurance premiums under which secure the payment
of such Receivable.
"Related Security" means with respect to any Receivable:
(i) all of the interest of the Seller in any right to receive
payment from a Related Insurer in respect of unearned or return insurance
premiums, and in respect of loss payments which reduce such premiums,
securing payment of the loan or other financing which gave rise to such
Receivable, and any right to receive state guaranty fund reimbursements in
respect of any Related Insurer;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with all financing statements signed by an Obligor describing any
collateral securing such Receivable; and
(iii) all guarantees, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the Contract related to such
Receivable or otherwise, and all rights of the Seller under the
Origination Agreement.
"Responsible Officer" means any of the following officers of any
Selling Party: the chairman, the chief executive officer, the president, the
chief financial officer, the chief operating officer, the chief investment
officer, the controller or the treasurer, or any officer performing
substantially the same function as any of the officers listed above.
"Restricted Payment" means:
(i) any dividend or other distribution, direct or indirect, on
account of any shares of any class of capital stock of the Seller now or
hereafter outstanding, except a dividend payable solely in shares of that
class of capital stock to the holders of that class;
(ii) any redemption, conversion, exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of capital stock of the Seller now or
hereafter outstanding;
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(iii) any payment or prepayment of principal of, premium, if any, or
interest on, redemption, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Debt of
the Seller; and
(iv) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any
class of capital stock of the Seller now or hereafter outstanding.
"Revolving Period" means the period from, and including, the date of
the initial Purchase to, but not including, the Termination Date.
"Rights Agreement" means that certain Rights Agreement dated as of
September 18, 1996 among Gold Coast, National-Wide, USA Finance and the
Purchaser. "Selling Party" means the Seller or any Originator or USA Finance and
"Selling Parties" means all of the Seller, the Originators and USA Finance.
"Service Termination Notice" has the meaning specified in Section
8.1.
"Service Transfer" has the meaning specified in Section 8.1.
"Settlement Period" means each period commencing on the first day of
each Fixed Period and ending on the last day of such Fixed Period, and, on and
after the Termination Date, such period (including, without limitation, a period
of one day) as shall be selected from time to time by the Facility Agent or, in
the absence of any such selection, each period of thirty days from the last day
of the immediately preceding Settlement Period.
"Special Concentration Limit" for any Obligor means at any time such
dollar amount specified for such Obligor by the Facility Agent, collectively, in
writing delivered to the Seller; provided, however, that the Facility Agent may
cancel or modify any Special Concentration Limit upon at least three Business
Days' notice to the Seller.
"Standard Amortization Period" means an Amortization Period which
results solely from (i) the Seller's designation of a Reinvestment Termination
Date as a direct result of Purchaser's rejection of a bona fide request by the
Seller to increase the Commitment pursuant to and in accordance with Section 2.3
or (ii) a notice from the Facility Agent pursuant to Section 3.2(b)(iii) which
notice is delivered as a result of Purchaser's institutional decision to no
longer purchase assets such as the Receivables.
"Stated Termination Date" means September 30, 1999, as the same may
be extended pursuant to Section 2.13.
"Tangible Net Worth" means total assets excluding goodwill and other
intangibles minus total liabilities, as determined in accordance with generally
accepted accounting principles.
"Taxes" has the meaning specified in Section 2.12(a).
15
"Termination Date" means the earlier of (i) the Reinvestment
Termination Date and (ii) the Facility Termination Date.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the specified jurisdiction.
"Uncollateralized Portion" means, as at any date of determination
with respect to any Receivable, the amount, if any, by which the Outstanding
Balance of such Receivable is less than the Estimated Unearned Premium.
"USA Finance" means USA Finance, Inc., a Delaware corporation.
"USA Guaranty" means the USA Guaranty dated the date hereof made by
USA Finance in favor of the Facility Agent, Purchaser and the Indemnified
Parties, substantially in the form of Exhibit G hereto.
"Yield" means for the Purchased Interest for any Fixed Period, the
product of
PR x C x ED + LF
----------------
BI
where:
PR = the Purchaser Rate for the Purchased Interest for such Fixed
Period;
C = the Capital of the Purchased Interest during such Fixed Period;
BI = 360;
ED = the actual number of days elapsed during such Fixed Period; and
LF = the Liquidation Fee, if any, for the Purchased Interest for
such Fixed Period; provided that to the extent any calculation of
Yield includes a Liquidation Fee, the Facility Agent shall give
notice to the Seller of such inclusion together with a calculation
in reasonable detail of the Liquidation Fee (which calculation shall
be conclusive and binding for all purposes, absent manifest error);
provided, however, that no provision of any Purchase Document shall require the
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law; and provided, further, that Yield shall not be considered paid
by any distribution if at any time such distribution is rescinded or must
otherwise be returned for any reason.
Section 1.2 Other Terms All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
16
Section 1.3 Computation of Time Periods Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
Section 2.1 Facility; Assignment On the terms and conditions
hereinafter set forth, Purchaser shall make Purchases from time to time during
the Revolving Period. Under no circumstances shall Purchaser make any Purchase
or the Seller request any Purchase if, after giving effect to such Purchase, the
aggregate outstanding Capital would exceed the Commitment. In addition, under no
circumstances shall Purchaser make any Purchase if, after giving effect to such
Purchase, the aggregate outstanding Capital would equal or exceed the Net
Receivables Pool Balance at such time. Purchaser shall, with the proceeds of
Collections attributable to the Purchased Interest, reinvest pursuant to Section
2.5 in additional Receivables by making an appropriate readjustment of such
Purchased Interest.
On the date of the initial Purchase, the Seller hereby sells,
assigns, transfers, and conveys to Facility Agent for the account of Purchaser
and each successive Assignee pursuant to the Assignment, and the Purchased
Interest shall include, (i) each and every Receivable now existing as well as
each and every Receivable which may arise at any time after the date hereof,
(ii) all Related Security with respect to each such Receivable, (iii) each and
every Collection with respect to each such Receivable and (iv) all proceeds,
products or any other distributions of, from or in respect of any of the
foregoing, including, without limitation, whatever is receivable or received
when any of the foregoing is sold, exchanged, collected or otherwise disposed
of, whether such disposition is voluntary or involuntary.
Section 2.2 Making Purchases The Seller may request Purchases no
more than twice a week. Each Purchase by Purchaser shall be made on notice from
the Seller to the Facility Agent, given not later than 2:00 P.M. (Los Angeles
time) on the third Business Day before the date of such Purchase. Each such
notice of a proposed Purchase shall be by telephone, telecopier, telex or cable
(in the case of telephonic notice confirmed immediately in writing) and
specifying (i) the aggregate Outstanding Balance of the Pool Receivables
requested to be Purchased, (ii) the requested aggregate amount of Purchase
(which shall be $250,000 or integral multiples of $100,000 in excess thereof) to
be paid to the Seller and (iii) the requested Business Day of such Purchase. On
the date of each Purchase, Purchaser shall, upon satisfaction of the applicable
conditions set forth in Article III, make available to the Facility Agent an
amount equal to such Purchase by deposit of such amount in same day funds to the
Collection Account, and, after receipt by the Facility Agent of such funds, the
Facility Agent will cause such funds to be made immediately available to the
Seller by intrabank transfer to account number 060100102-0061 at SunTrust Bank,
Miami, N.A. or by wire transfer of immediately available funds to such other
account designated in writing by Seller to the Facility Agent.
17
Each notice of a Purchase from the Seller delivered pursuant to this
Section 2.2 shall be irrevocable and binding on the Seller. The Seller shall
indemnify Purchaser against any actual loss or expense incurred by Purchaser as
a result of any failure to fulfill on or before the date of any Purchase the
applicable conditions set forth in Article III which loss or expense arises as a
result of any actual loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by Purchaser to fund such
Purchase when such Purchase, as a result of such failure, is not made on such
date.
Section 2.3 Increase of the Commitment The Seller may from time to
time request Purchaser to increase the Commitment in increments of $5,000,000 up
to an aggregate amount not to exceed $35,000,000 by delivering to the Facility
Agent at least 30 calendar days' prior written notice of such request specifying
the requested date and amount of such increase, accompanied by financial
projections and other information supporting the requested increase, and
Purchaser may, in its sole discretion, agree to such increase. Purchaser shall
promptly notify the Facility Agent in writing whether it has determined to
increase the Commitment and the conditions for such increase. If Purchaser
determines to increase the Commitment, then upon the satisfaction of such
conditions, each such increase shall automatically become effective without any
further action by any party hereto or any other Person.
Section 2.4 Purchased Interest Purchased Interest.
The Purchased Interest shall be initially computed as of the opening
of business of the Collection Agent on the date of the initial Purchase.
Thereafter until the Termination Date, the Purchased Interest shall be
automatically recomputed as of the close of business of the Collection Agent on
each day (other than a Liquidation Day). The Purchased Interest shall remain
constant from the time as of which any such computation or recomputation is made
until the time as of which the next such recomputation, if any, shall be made.
The Purchased Interest, as computed as of the day immediately preceding the
Termination Date, shall remain constant at all times on and after such
Termination Date. The Purchased Interest shall become zero at such time as
Purchaser shall have received all accrued Yield and shall have recovered all
Capital and all other amounts owed hereunder by the Seller to Purchaser, and the
Collection Agent shall have received the accrued Collection Agent Fee.
Section 2.5 Settlement Procedures During Revolving Period During
Revolving Period.
(a) Daily Settlement. On each day (other than a Liquidation Day or a
Provisional Liquidation Day) during each Settlement Period in the Revolving
Period for the Purchased Interest, the Collection Agent shall: (i) deposit or
cause to be deposited in the Collection Account Collections of all Pool
Receivables received on the immediately preceding day, and (ii) direct the
Facility Agent to (A) reinvest an amount equal to the amount of the estimated
Principal Collections from such deposit, for the benefit of Purchaser, by
recomputation of the Purchased Interest pursuant to Section 2.4 as of the end of
such day, (B) transfer an amount equal to any remaining amount of the estimated
Principal Collections to the Seller; provided, however, that, to the extent that
the Facility Agent or Purchaser shall be required for any reason to pay over any
amount of Collections which shall have been previously reinvested for the
account of Purchaser pursuant hereto, such amount shall be
18
deemed not to have been so applied but rather to have been retained by the
Seller and paid over for the account of Purchaser and, notwithstanding any
provision hereof to the contrary, Purchaser shall have a claim for such amount
and (C) retain the amount of the Interest Collections from such deposit in the
Interest Account.
(b) Periodic Settlement. On the first day following each Settlement
Period in the Revolving Period, the Collection Agent shall direct the Facility
Agent to make the following distributions in the listed order of priority from
amounts on deposit in the Interest Account and, to the extent not sufficient, in
the Principal Account: (i) for the account of Purchaser the amount of the
accrued Yield for such Settlement Period; (ii) the amount of any indemnities,
costs, fees and other amounts owing to the Facility Agent, any Indemnified
Party, Purchaser or the Collection Agent (if other than a Selling Party); (iii)
to the Collection Agent, the amount of the accrued Collection Agent Fee; and
(iv) an amount equal to the amount of any remaining funds to the Seller;
provided that, after the making of the distributions in clauses (i) and (ii)
above, to the extent Capital exceeds the Net Receivables Pool Balance, amounts
on deposit in the Principal Account and, to the extent such amounts in the
Principal Account are not sufficient, in the Interest Account will be applied to
reduce Capital to an amount equal to the Net Receivables Pool Balance.
Section 2.6 Settlement Procedures During Amortization Period ing
Amortization Period.
(a) Daily Settlement. On each day (including a Liquidation Day and a
Provisional Liquidation Day) during each Settlement Period in the Amortization
Period for the Purchased Interest, the Collection Agent shall: (i) deposit or
cause to be deposited in the Collection Account Collections of all Pool
Receivables received on the immediately preceding day, and (ii) direct the
Facility Agent to (A) retain the amount of the Principal Collections from such
deposit in the Principal Account and (B) retain the amount of the Interest
Collections from such deposit in the Interest Account; provided, however, if
amounts are so retained pursuant to this Section 2.6(a) on any Provisional
Liquidation Day which is subsequently determined not to be a Liquidation Day,
such amounts shall be applied pursuant to Section 2.5(a) on the day of such
subsequent determination.
(b) Periodic Settlement. On the first day following each Settlement
Period for the Purchased Interest during the Amortization Period, the Collection
Agent shall direct the Facility Agent to make the following distributions in the
listed order of priority from amounts on deposit in the Interest Account and the
Principal Account:
(i) to Purchaser, in reduction of Capital in an amount equal to the
aggregate outstanding principal balance of Defaulted Receivables;
(ii) to Purchaser, in payment of the accrued Yield;
(iii) to Purchaser, Facility Agent and the Indemnified Parties, in
payment of any other amounts (including indemnities, costs, fees and other
amounts) owing to Purchaser, Facility Agent or the Indemnified Parties,
including fees and expenses
19
payable to any substitute Collection Agent and indemnities and fees and
disbursements of counsel;
(iv) to the Collection Agent, in payment of the accrued Collection
Agent Fee and/or the fees of any substitute Collection Agent;
(v) (A) in the case of an Amortization Period other than a Standard
Amortization Period, (1) so long as no Collection Agent Default has
occurred and is continuing and no Event of Investment Ineligibility has
occurred, all remaining funds in the Principal Account and 50% of
remaining funds in the Interest Account to Purchaser, in reduction of
Capital, or (2) if a Collection Agent Default has occurred and is
continuing or an Event of Investment Ineligibility has occurred, to
Purchaser, all remaining funds in reduction (to zero) of Capital, and
(B) in the case of a Standard Amortization Period, (1) so long as no
Collection Agent Default has occurred and is continuing and no Event of
Investment Ineligibility has occurred, 90% of remaining funds in the Principal
Account to Purchaser, in reduction of Capital, or (2) if a Collection Agent
Default has occurred and is continuing or an Event of Investment Ineligibility
has occurred, to Purchaser all remaining funds in reduction (to zero) of
Capital; and
(vi) an amount equal to any remaining funds to the Seller.
Section 2.7 General Settlement Procedures If on any day the
Outstanding Balance of a Pool Receivable is either reduced or cancelled as a
result of (i) any cancellation of a Contract prior to the date on which the
Seller has made funds available to or for the account of any related Obligor, or
(ii) any prepayment by any Obligor of amounts payable to the Seller under a
Contract, or (iii) any adjustment, or any other modification to, termination of,
or rejection of, any Contract by any Selling Party or any Affiliate thereof
(other than in the case of any adjustment or modification, in respect of a Pool
Receivable which shall have remained unpaid for 26 days or more from the
original due date therefor, made in accordance with the provisions of Section
6.4 by the Collection Agent), or (iv) a setoff in respect of any claim by the
Obligor thereof against any Selling Party or any Affiliate thereof (whether such
claim arises out of the same or a related transaction or an unrelated
transaction), the Seller shall be deemed to have received on such day a
Collection of such Receivable in the amount of such reduction or cancellation
and shall make the deposit required in connection therewith pursuant to Section
5.1(h) unless a different date is specified by the Facility Agent in which case
such payment shall be made on such date specified by the Facility Agent. If on
any day any of the representations or warranties in Section 4.1(h) is no longer
true with respect to a Pool Receivable, the Seller shall be deemed to have
received on such day a Collection in full of such Pool Receivable and shall make
the deposit required in connection therewith pursuant to Section 5.1(h). Except
as stated in the preceding sentences of this Section 2.7 or as otherwise
required by law or the underlying Contract, all Collections received from an
Obligor of any Receivable shall be applied (A) to Receivables then outstanding
of such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, except if payment is designated by such Obligor for
application to specific Receivables, and (B) first, to principal
20
and other amounts owed by such Obligor in respect of such Receivable other than
accrued interest and late fees, and, second, to accrued interest and late fees
in respect of such Receivable.
Section 2.8 Payments and Computations, Etc All amounts to be paid or
deposited by the Seller or the Collection Agent hereunder shall be paid or
deposited in accordance with the terms hereof no later than 3:00 P.M. (Los
Angeles time) on the day when due in lawful money of the United States of
America in same day funds to the Collection Account, except for daily deposits
of Collections by the Collection Agent pursuant to Section 6.4 which shall be
deposited in the Collection Account no later than the Business Day of receipt in
the form so received (with any necessary endorsement). The Seller shall, to the
extent permitted by law, pay to the Facility Agent interest on all amounts not
paid or deposited when due hereunder at the Alternate Base Rate plus 2.0%,
payable on demand, provided, however, that such interest rate shall not at any
time exceed the maximum rate permitted by applicable law. Such interest shall be
retained by the Facility Agent except to the extent that such failure to make a
timely payment or deposit has continued beyond the date for distribution by the
Facility Agent of such overdue amount to Purchaser or to any other Indemnified
Party, in which case such interest accruing after such date shall be for the
account of, and distributed by the Facility Agent to, Purchaser or to such
Indemnified Party, as applicable. All computations of interest and all
computations of Yield and fees hereunder shall be made on the basis of a year of
360 days for the actual number of days (including the first but excluding the
last day) elapsed.
Section 2.9 Seller's Payment of Yield, Capital and Fees Yield,
Capital and Fees.
(a) If the funds on deposit in the Collection Account on the first
Business Day following any Settlement Period are insufficient for the Facility
Agent to distribute such funds, in the order required, in payment in full of the
accrued Yield on the Purchased Interest, the Seller shall on such first day pay
to the Facility Agent for the account of Purchaser the amount of such
insufficiency.
(b) If the funds on deposit in the Collection Account on the first
Business Day following any Settlement Period pursuant to Section 2.6 are
insufficient for the Facility Agent to distribute such funds, in the order
required in such Section, in payment in full of Capital, the Seller shall be
deemed to have received Collections of the Defaulted Receivables described in
clause (iii) below and shall on such first day pay to the Facility Agent for the
account of Purchaser an amount equal to the least of (i) such insufficiency,
(ii) the aggregate amount of Interest Collections and Collection Agent Fee paid
from time to time to the Seller (as Collection Agent, in the case of any
Collection Agent Fee) by the Collection Agent pursuant to Section 2.6 (and not
previously paid by the Seller to the Facility Agent pursuant to this Section
2.9(b)), and (iii) an amount equal to the aggregate outstanding principal
balance of Defaulted Receivables (such outstanding balance being reduced by the
amount thereof with respect to which Capital shall have been reduced on the last
day of any prior Settlement Period as a result of the Facility Agent's
distribution of funds attributable to Interest Collections pursuant to Section
2.6 or payments by the Seller pursuant to this Section 2.9(b)).
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(c) Purchaser shall pay to the Collection Agent a collection fee
(the "Collection Agent Fee") of 1.00% per annum on the average daily amount of
Capital of Purchaser, from the date of the initial Purchase hereunder until the
Collection Date, payable on the first Business Day following each Settlement
Period; provided, however, that, upon at least three Business Days' notice to
the Facility Agent, the Collection Agent (if not a Selling Party or any
Affiliate thereof) may elect to be paid, as such fee, another percentage per
annum on the average daily amount of Capital or such other amount as may be
agreed among the Facility Agent, Purchaser and such Collection Agent, such
amount not to exceed 4.00% per annum of the average daily amount of Capital of
Purchaser; and provided, further, that such fee shall be payable only from
Collections pursuant to, and subject to the priority of payments set forth in,
Sections 2.5 and 2.6.
(d) During the Revolving Period, the Seller shall pay to the
Facility Agent, a facility fee (the "Facility Fee") equal to the average daily
amount by which the Commitment exceeds the amount of Capital multiplied by (i)
for the period from the date of execution of this Agreement to the 3-month
anniversary of such execution date, .125% per annum, (ii) for the period from
the 3-month anniversary of such execution date to the 6-month anniversary of
such execution date, .25% per annum, and (iii) thereafter, .375% per annum;
provided, however, no Facility Fee shall accrue or be payable for the period
commencing on the date on which Capital first equals or exceeds $24,500,000 and
ending on the date thereafter on which Capital is $17,500,000 or less. The
Facility Fee is payable in arrears monthly on the first Business Day of each
month.
Section 2.10 Increased Costs If, due to either (i) any change in
Regulation D of the Board of Governors of the Federal Reserve System, (ii) the
introduction of or any change in or in the interpretation of any law or
regulation or (iii) the compliance with any guideline or request from any
central bank or other governmental authority made after the date hereof (whether
or not having the force of law), there shall be any increase in the cost to (or,
in the case of Regulation D of the Board of Governors of the Federal Reserve
System, there shall be imposed a cost on) any Indemnified Party of agreeing to
make or making the Purchases or purchasing or maintaining the Purchased Interest
or portions thereof or interests therein, then the Seller shall from time to
time, within ten days after demand, and delivery to the Seller of the
certificate referred to in the last sentence of this Section 2.10, by such
Indemnified Party (or by the Facility Agent for the account of such Indemnified
Party) (with a copy of such demand and certificate to the Facility Agent, unless
delivered thereby), pay to the Facility Agent for the account of such
Indemnified Party additional amounts sufficient to compensate such Indemnified
Party for such increased or imposed cost. Each Indemnified Party party hereto
agrees to use its best efforts promptly to notify the Seller of any event
referred to in clause (i), (ii) or (iii) above, provided that the failure to
give such notice shall not affect the rights of any Indemnified Party under this
Section 2.10. A certificate in reasonable detail as to the basis for and the
amount of such increased cost, submitted to the Seller and the Facility Agent by
such Indemnified Party (or by the Facility Agent for the account of such
Indemnified Party) shall be conclusive and binding for all purposes, absent
manifest error.
Section 2.11 Increased Capital If any Indemnified Party determines
that the introduction of or any change in any law or regulation or any guideline
or request from any
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central bank or other governmental authority made after the date hereof (whether
or not having the force of law) affects or would affect the amount of capital
required or expected to be maintained by such Indemnified Party or any
corporation controlling such Indemnified Party and that the amount of such
capital is increased by or based upon the existence of such Indemnified Party's
commitment to purchase the Purchased Interest or portions thereof or interests
therein, or to maintain the Purchased Interest or portions or interests, then,
within ten days after demand, and delivery to the Seller of the certificate
referred to in the last sentence of this Section 2.11, by such Indemnified Party
(or by the Facility Agent for the account of such Indemnified Party) (with a
copy of such demand and certificate to the Facility Agent, unless delivered
thereby) the Seller shall pay to such Indemnified Party from time to time, as
specified by such Indemnified Party, additional amounts sufficient to compensate
such Indemnified Party in light of such circumstances, to the extent that such
Indemnified Party reasonably determines such increase in capital to be allocable
to the existence of any such commitment. Each Indemnified Party hereto agrees to
use its best efforts promptly to notify the Seller of any event referred to in
the first sentence of this Section 2.11, provided that the failure to give such
notice shall not affect the rights of any Indemnified Party under this Section
2.11. A certificate in reasonable detail as to the basis for, and the amount of,
such compensation submitted to the Seller and the Facility Agent by such
Indemnified Party (or by the Facility Agent for the account of such Indemnified
Party) shall, in the absence of manifest error, be conclusive and binding for
all purposes.
Section 2.12 Taxes (a) Any and all payments by the Seller or
deposits from Collections hereunder shall be made, in accordance with Section
2.9, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Indemnified Party, (i)
taxes or other charges imposed on its income, and franchise taxes imposed on it,
by the jurisdiction under the laws of which such Indemnified Party is organized
or any political subdivision thereof or by any jurisdiction or any political
subdivision thereof in which such Indemnified Party holds any asset in
connection with this Agreement, and (ii) any taxes or other charges imposed by
the United States by means of withholding at the source to the extent in effect,
and applicable on the date hereof to payments to be made hereunder to such
Indemnified Party (after taking into account the forms to be provided in
accordance with subsection (e) below) (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Seller or the Collection Agent or the Facility
Agent shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Indemnified Party, (i) the sum payable by the Seller
shall be increased as may be necessary so that after the Seller or the
Collection Agent or the Facility Agent has made all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) such Indemnified Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Seller or the Collection
Agent or the Facility Agent shall make such deductions and (iii) the Seller or
the Collection Agent or the Facility Agent shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Seller agrees to pay any present or future
sales, stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise
23
from any payment made by the Seller or the Collection Agent or the Facility
Agent hereunder or from the execution, delivery or performance of, or otherwise
with respect to, any Purchase Document (hereinafter referred to as "Other
Taxes").
(c) The Seller will indemnify each Indemnified Party for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.12) paid by such Indemnified Party and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto except as a
result of the gross negligence or willful misconduct of such Indemnified Party,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within ten days from the date such
Indemnified Party makes written demand therefor.
(d) Within 30 days after the date of any payment by the Seller of
Taxes, the Seller will furnish to the Facility Agent, at its address referred to
in Section 11.2, the original or a certified copy of a receipt evidencing
payment thereof.
Section 2.13 Extensions of Stated Termination Date The Seller may
from time to time request extensions of the Stated Termination Date for
additional one-year periods upon at least 90 days written notice from the Seller
to the Facility Agent. Such extensions may be granted or not granted in the
Facility Agent's sole discretion. Any failure to respond shall be a rejection of
the requested extension.
Section 2.14 Grant of Security Interest It is the express intent of
the parties hereto that the transfer of the Receivables and their respective
Related Security and Collections by the Seller to the Facility Agent for the
benefit of the Purchaser, as contemplated by this Agreement be, and be treated
as, sales and not secured loans secured by the Receivables and their respective
Related Security and Collections, and that Facility Agent for the benefit of the
Purchaser shall acquire, pursuant to the terms of this Agreement, ownership of
all of Seller's right, title and interest in and to the items referred in
clauses (i), (ii) and (iii) of the definition of "Purchased Interest." If,
however, notwithstanding the intent of the parties, such transactions are deemed
to be loans to the Seller, the Seller hereby assigns and grants to the Facility
Agent for the benefit of itself and the Purchaser and each Indemnified Party a
first priority security interest in all of such Seller's right, title and
interest in, to and under all of the following, whether now or hereafter
existing: (a) all Receivables, all their respective Related Security and all
Collections related thereto, (b) the Collection Account, all funds on deposit
therein and all certificates and instruments, if any, from time to time
evidencing such account and funds on deposit therein, all investments made with
such funds, all claims thereunder or in connection therewith, all contract
rights (including under insurance policies) and other rights relating thereto
and all interest, dividends, moneys, instruments, securities and other property
from time to time received, receivable or otherwise distributed in respect or in
exchange for any or all of the foregoing and anything else constituting part of
the Purchased Interest, and (c) all proceeds and amounts received or receivable
by the Collection Agent or the Seller under any or all of the foregoing, to
secure the prompt payment and performance of all obligations of Seller arising
in connection with this Agreement and each other Purchase Document, whether now
or hereafter existing, due or to become due, direct or indirect, or absolute or
contingent, including, without
24
limitation, all indemnified amounts, all payments on account of Collections
received or deemed to be received and all fees. This Agreement shall constitute
a security agreement under applicable law with regard to the security interest
granted pursuant to this Section 2.14.
ARTICLE III
CONDITIONS OF PURCHASES
Section 3.1 Condition Precedent to Initial Purchase The initial
Purchase hereunder is subject to the prior or concurrent satisfaction of all of
the following conditions:
I. The Facility Agent shall have received on or before the earlier of
September 20, 1996 and the date of the initial Purchase hereunder the following,
each (unless otherwise indicated) dated such date, in form and substance
satisfactory to, and in sufficient copies for, the Facility Agent:
(a) The Assignment, duly executed by the Seller.
(b) (i) Acknowledgment copies or stamped receipt copies of (or other
evidence satisfactory to Facility Agent of the filing of) proper financing
statements, duly filed on or before the date of the initial Purchase, naming the
Seller as debtor and the Facility Agent, as agent for Purchaser, as secured
party, or other similar instruments or documents, as may be necessary or, in the
opinion of the Facility Agent, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect Purchaser's ownership interests
created or purported to be created hereby; and
(ii) Acknowledgment copies or stamped receipt copies of proper
financing statements, if any, necessary to release all Adverse Claims of any
Person in the Receivables, Related Security, Collections or Contracts previously
granted by the Seller.
(c) Officially certified recent evidence of the due incorporation
and good standing of the Seller under the laws of the State of Delaware and
evidence of the Seller's good standing and authority to conduct business under
the laws of Florida, and copies of its by-laws certified by its Secretary or an
Assistant Secretary.
(d) Certified copies of the resolutions of the Board of Directors of
the Seller approving this Agreement, the other Purchase Documents and the other
documents to be delivered by it hereunder and the transactions contemplated
hereby and thereby.
(e) A certificate of the Secretary or Assistant Secretary of the
Seller certifying the names and true signatures of the officers of the Seller
authorized to sign this Agreement, the other Purchase Documents and the other
documents to be delivered by it hereunder.
(f) A favorable opinion of Xxxxxxxx Xxxxxxxxx Professional
Corporation, counsel for the Seller, the Originators and USA Finance on the date
of the initial Purchase,
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substantially in the form of Exhibit E hereto and as to such other matters as
the Facility Agent may reasonably request.
(g) A certificate from a Responsible Officer of the Seller to the
effect that the Seller, as of the date of the initial Purchase, has no
outstanding Debt or existing commitments to extend credit.
(h) Officially certified recent evidence of the due incorporation
and good standing of each of the Originators and USA Finance under the laws of
their respective states of incorporation, and evidence of each Originator's good
standing and authority to conduct business under the laws of Florida and
Tennessee, and of USA Finance's good standing and authority to conduct business
under the laws of Florida.
(i) A certificate of a Responsible Officer of the Collection Agent
certifying that each Contract has been properly identified as an asset of
Purchaser in the Collection Agent's records and the file relating thereto is
complete in all material respects and acknowledging that the Collection Agent is
holding such Contracts as custodian for Purchaser.
(j) The Origination Agreement, duly executed by the Seller and each
Originator.
(k) The Assignment (Origination Agreement), duly executed by the
Originators.
(l) Acknowledgment copies or stamped receipt copies of (or other
evidence satisfactory to Facility Agent of the filing of) UCC-1 Financing
Statements, duly filed on or before the date of the initial Purchase, naming
each Originator, as debtor, and the Seller, as secured party, or other similar
instruments or documents, as may be necessary or, in the opinion of the Facility
Agent, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect Seller's ownership interests created or purported to
be created by the Origination Agreement.
(m) Acknowledgment copies or stamped receipt copies of proper
financing statements, if any, necessary to release all Adverse Claims of any
Person in the Receivables, Related Security, Collections or Contracts previously
granted by the Originators.
(n) Certified requests for information, dated on or a recent date
prior to the date of the initial Purchase, listing the financing statements
referred to in subsection (l) above and all other effective financing statements
filed in the jurisdictions referred to in subsection (l) above that name any
Originator (under its present name and any previous name) as debtor, together
with copies of such financing statements (none of which (except those filed
pursuant to subsection (l) above) shall cover any Receivables, Related Security,
Collections or Contracts).
(o) A certificate of a Responsible Officer of each Originator and
USA Finance to the effect that such Originator and USA Finance have no
outstanding Debt or
26
existing commitments to extend credit except for certain subordinated
indebtedness approved in writing by Purchaser and listed on Schedule III.
(p) Copies of all consents, approvals and related documents required
in connection with the transaction including (i) the consent of First Western
Bank with respect to the termination of the Premium Finance Contract Purchase
and Servicing Agreement dated as of August 11, 1995, (ii) a duly executed payout
letter from First Western Bank regarding termination of such agreement and
satisfactory evidence of the repurchase by Gold Coast of all Contracts from
First Western Bank, (iii) a duly executed xxxx of sale transferring all
Contracts purchased by First Western Bank under such Purchase Agreement to Gold
Coast, (iv) duly executed termination statements necessary to terminate all
interest of First Western Bank in the Receivables, (v) evidence satisfactory of
the delivery to the Collection Agreement of all Contracts relating to
Receivables from First Western Bank, and (vi) such other documents as Facility
Agreement may require.
(q) The USA Guaranty, duly executed by USA Finance.
(r) The Rights Agreement, duly executed by each Selling Party.
(s) A certificate of the Secretary or an Assistant Secretary of USA
Finance certifying (a) its charter and by-laws, (b) the resolutions adopted by
its Board of Directors, and (c) the names and true signatures of its officers
executing the Purchase Documents.
(t) The Consent and Agreement, duly executed by the Seller and each
Originator.
(u) The initial Purchaser Report, Insurance Carrier Exposure Report,
a Receivables aging report for the immediately preceding month and such other
reports regarding the Pool Receivables and the initial Purchase as may be
specified by the Facility Agent.
(v) A license and custody agreement or other agreement enabling the
Facility Agent and Purchaser to operate Selling Parties' premium finance
receivable accounting and operations systems on an IBM AS/400 computer system
including an assignment of the Escrow Agreement among USA Finance, Unicorp Data
Processing, Inc. and SunTrust Bank, Miami, N.A., as Escrow Agent.
(w) A pro forma balance sheet of the Seller giving effect to the
transactions occurring on the date of the initial Purchase.
(x) A demand promissory note in aggregate principal amount of
$500,000 duly executed by USA Finance in favor of SunAmerica Financial
Resources, Inc. (the "USA Finance Note") and a pledge agreement securing the USA
Finance Note duly executed and delivered by USA Finance together with stock
certificate(s) evidencing 100% of the capital stock of the Seller with undated
stock powers in blank duly executed by USA Finance.
(y) Evidence satisfactory to Facility Agent and Purchaser that the
Collection Agent has obtained the insurance required by Section 6.4(f).
27
(z) Confirmation from Unicorp Data Processing, Inc. of the transfer
of the Unicorp software license to USA Finance and its subsidiaries.
(aa) An Archival Services and Storage Order between Xxxxxx Xxxxx
Archives and USA Finance concerning the storage of daily backup tapes and
providing access to the Facility Agent.
(bb) A certificate of a Responsible Officer of the Seller regarding
the Credit and Collection Policy of the Seller as of the date of the initial
Purchase.
Such other documents, instruments, agreements, certificates and informations as
the Facility Agent or Purchaser may request.
II. The Facility Agent and Purchaser shall have completed their due
diligence investigation of the Selling Parties, and shall be satisfied with the
results thereof.
Section 3.2 Conditions Precedent to All Purchases and Reinvestments
Each Purchase (including the initial Purchase) hereunder and the right of the
Collection Agent to reinvest in Pool Receivables those Collections attributable
to the Purchased Interest pursuant to Section 2.5 or 2.6 shall be subject to the
further conditions precedent that:
(a) with respect to any such Purchase, on or prior to the date of
such Purchase, the Collection Agent shall have delivered to the Facility Agent,
in form and substance satisfactory to the Facility Agent and each Agent, a
completed Purchaser Report, dated as of the last day of the week immediately
preceding the date of such Purchase, together with such additional information
as may be reasonably requested by the Facility Agent;
(b) on the date of such Purchase or reinvestment the following
statements shall be true (and the acceptance by the Seller of the proceeds of
such Purchase or reinvestment shall constitute a representation and warranty by
the Seller that on the date of such Purchase or reinvestment such statements are
true):
(i) The representations and warranties contained in Sections 4.1 and
6.10 of this Agreement are correct in all material respects on and as of the
date of such Purchase or reinvestment, before and after giving effect to such
Purchase or reinvestment and to the application of the proceeds therefrom, as
though made on and as of such date except to the extent that they expressly
relate to a date prior to such date,
(ii) No event has occurred and is continuing, or would result from
such Purchase or reinvestment or from the application of the proceeds therefrom,
which constitutes an Event of Investment Ineligibility or would constitute an
Event of Investment Ineligibility but for the requirement that notice be given
or time elapse or both, and
(iii) The Facility Agent shall not have delivered to the Seller a
notice that Purchaser shall not make any further Purchases hereunder and/or that
the Collection Agent shall not reinvest in any Pool Receivables on behalf of
Purchaser as a result of Purchaser's institutional decision to no longer
purchase assets such as the Receivables and none of the
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following have occurred: (1) the Seller or any of its Affiliates shall have
entered into an agreement to finance or sell Receivables; (2) 120 days shall
have elapsed from the giving of such notice by the Facility Agent; or (3) a
Termination Date; and
(c) the Facility Agent shall have received such other approvals,
opinions or documents as the Facility Agent may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Seller The Seller
represents and warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction indicated at the
beginning of this Agreement and is duly qualified to do business, and is in good
standing, in every jurisdiction where the nature of its business requires it to
be so qualified.
(b) The execution, delivery and performance by the Seller of the
Purchase Documents, and all other instruments and documents to be delivered by
it hereunder, and the transactions contemplated hereby and thereby, and the
Seller's use of the proceeds of Purchases and reinvestments, are within the
Seller's corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (i) the Seller's charter or by-laws or (ii) law or any
Contract or Related Security or any other contractual restriction binding on or
affecting the Seller, and do not result in or require the creation of any
Adverse Claim (other than pursuant hereto) upon or with respect to any of its
properties; and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law. No consent of any stockholder of any Selling
Party is required in connection with the execution, delivery and performance of
the Purchase Documents.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Seller of any Purchase
Document or any other instrument or document to be delivered by it hereunder, or
for the perfection of or the exercise by the Facility Agent or any Indemnified
Party of their respective rights and remedies under the Purchase Documents and
such other instruments and documents, except for the filings of the financing
statements referred to in Article III, all of which, on or prior to the date of
the initial Purchase, will have been duly made and be in full force and effect.
(d) This Agreement is, and each other Purchase Document when
delivered hereunder will be, the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with their respective terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, and other similar laws affecting
creditors' rights generally or by general principles of equity.
29
(e) The consolidated balance sheets of USA Finance and its
consolidated subsidiaries as at December 31, 1995, and the related consolidated
statements of income and cash flows of USA Finance and its consolidated
subsidiaries for the fiscal year then ended, copies of which have been furnished
to the Facility Agent fairly present the consolidated financial condition of USA
Finance and its consolidated subsidiaries as at such date and the consolidated
results of the operations of USA Finance and its consolidated subsidiaries for
the period ended on such date, all in accordance with generally accepted
accounting principles consistently applied, and since December 31, 1995, there
has been no material adverse change in such consolidated condition or
operations.
(f) There is no pending or threatened action or proceeding affecting
any Selling Party before any court, governmental agency or arbitrator (i) which
is reasonably likely to materially adversely affect (A) the consolidated
financial condition or operations of any Selling Party or (B) the ability of any
Selling Party to perform its obligations under any Purchase Document or any
other instrument or document to be delivered by it hereunder, or (ii) which
purports to affect the legality, validity or enforceability of any Purchase
Document or any such other instrument or document.
(g) No proceeds of any Purchase or reinvestment will be used to
acquire any equity security of a class which is registered pursuant to Section
12 of the Securities Exchange Act of 1934.
(h) Immediately prior to the initial creation of an interest in any
Pool Receivable hereunder, the Seller is the legal and beneficial owner of such
Pool Receivable and the Related Security with respect thereto free and clear of
any Adverse Claim except as created by this Agreement. Each Pool Receivable is
an Eligible Receivable on the date of the initial creation of an interest
therein hereunder. No event has occurred which may adversely affect the
collectibility of any material amount of the Pool Receivables. Upon each
Purchase or reinvestment, Purchaser (and if applicable, its Assignees) will
acquire a valid and perfected first priority ownership interest in each Pool
Receivable then existing or thereafter arising and in the Related Security and
Collections with respect thereto free and clear of any Adverse Claim. No
effective financing statement or other instrument similar in effect covering any
Contract or any Pool Receivable or Related Security or Collections with respect
thereto is on file in any recording office, except those filed in favor of the
Facility Agent and its Assignees relating to this Agreement.
(i) Each Purchaser Report and each Insurance Carrier Exposure
Report, information, exhibit, financial statement, document, book, record or
report furnished or to be furnished at any time by or on behalf of any Selling
Party to the Facility Agent or any other Indemnified Party in connection with
any Purchase Document is or will be accurate in all material respects as of its
date or (except as otherwise disclosed to the Facility Agent or such Indemnified
Party, as the case may be, at such time) as of the date so furnished, and no
such document contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which they
were made, not misleading.
30
(j) The chief place of business and chief executive office of the
Seller and the office where the Seller keeps its records concerning the Pool
Receivables are located at the address of the Seller specified in Section 13.2
hereto (or at such other locations, notified to the Facility Agent in accordance
with Section 5.1(f), in jurisdictions where all action required by Section 6.7
has been taken and completed).
(k) Neither the Seller nor any Affiliate of the Seller has any
direct or indirect ownership or other financial interest in Purchaser or the
Facility Agent.
(l) Each Purchase and each reinvestment of Collections in Pool
Receivables will constitute a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended.
(m) USA Finance owns 100% of the outstanding shares of capital stock
of the Seller free and clear of any Adverse Claim other than the Adverse Claim
in favor of SunAmerica Financial Resources, Inc.
(n) No transaction contemplated by this Agreement requires
compliance with, or will be subject to avoidance under, any bulk sales act or
similar law.
(o) For reporting and accounting purposes, the Seller will treat the
transfer of the Receivables pursuant to this Agreement as an absolute assignment
or sale of the Receivables, and the Seller has not accounted for or treated the
transactions in any other manner inconsistent with such treatment.
(p) None of the Selling Parties is an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(q) The Seller is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement; the Seller has not
incurred Debt beyond its ability to pay; and the Seller, after giving effect to
the transactions contemplated by this Agreement, will have an adequate amount of
capital to conduct its business in the foreseeable future.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
Section 5.1 Affirmative Covenants of the Seller Until the Collection
Date, the Seller will:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Pool Receivables and related Contracts, Related
Security and Collections with respect thereto, including without limitation the
payment before the same becomes delinquent of all material taxes, assessments
and governmental charges imposed upon the Seller or its property except to the
extent contested in good faith and by proper proceedings and for which it is
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maintaining adequate reserves in accordance with generally accepted accounting
principles (unless such non-payment could subject the Facility Agent or any
other Indemnified Party to civil or criminal penalty or liability or involve any
material risk of the sale, forfeiture or loss of any of the property, rights or
interests covered hereunder).
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the conduct of its business
requires it to be so qualified.
(c) Audits. (i) At any time and from time to time during regular
business hours, permit the Facility Agent or its agents or representatives, (A)
to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of the Seller or its agents or designees
relating to Pool Receivables and the Related Security, including, without
limitation, the related Contracts, and (B) to visit the offices and properties
of the Seller and its agents and designees for the purpose of examining such
materials described in clause (A) above, and to discuss matters relating to Pool
Receivables and the Related Security or performance of any Selling Party
hereunder or under the Contracts with any of the officers or employees of the
Seller having knowledge of such matters, (ii) permit the Facility Agent or its
agents or representatives to audit a significant portion of the Receivables and
the Related Policies on a monthly or more frequent basis, and (iii) upon the
request of the Facility Agent, at least annually, at the expense of the
Collection Agent (if a Selling Party), cause the Auditor to perform and deliver
to the Facility Agent an audit with respect to the Pool Receivables and the
Credit and Collection Policy and the performance of the Seller of its
obligations, covenants and duties under this Agreement, on a scope and in a form
reasonably requested by the Facility Agent for such audit.
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Pool Receivables in the event of the
destruction of the originals thereof), and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Pool Receivables (including, without limitation, records
adequate to permit the daily identification of each new Pool Receivable and all
Collections of and adjustments to each existing Pool Receivable).
(e) Performance and Compliance with Receivables, Contracts and
Related Security. At its expense timely and fully perform and comply with all
material provisions, covenants and other promises required to be observed by it
under the Contracts related to the Pool Receivables or under any Related
Security.
(f) Location of Records. Keep its chief place of business and chief
executive office and the office where it keeps the originals of its records
concerning the Pool Receivables at the address of the Seller referred to in
Section 4.1(j) or specified in writing to the Facility Agent or upon 30 days'
prior written notice to the Facility Agent, at any other locations in a
jurisdiction where all action required by Section 6.7 shall have been taken.
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(g) Credit and Collection Policies. Comply in all material respects
with the Credit and Collection Policy in regard to each Pool Receivable and the
related Contract and Related Security.
(h) Collections. Segregate and hold in trust or cause to be
segregated and held in trust any Collections received by or on behalf of the
Seller and deposit such Collections directly to the Collection Account on the
Business Day of the Seller's receipt or deemed receipt thereof.
(i) Computer Access. At all times provide the Facility Agent or its
agents or representatives with access (via a license and custody agreement or
otherwise) to software which will enable the Facility Agent to operate the
Selling Parties' premium finance receivable accounting and operations systems
utilized by the Selling Parties on the date of the initial Purchase or any other
system and related software acceptable to the Facility Agent.
(j) Endorsement of Contracts. With respect to Receivables arising
after the date of the initial Purchase, cause, within two Business Days of its
origination, the Contract relating to each Pool Receivable to be endorsed
(conspicuously on the front or back thereof) by a stamp containing the following
legend and which is otherwise acceptable to the Facility Agent:
"THIS CONTRACT AND ALL SECURITY THEREFOR HAS BEEN SOLD
AND ASSIGNED TO SUNAMERICA FINANCIAL RESOURCES, INC.
(AND ITS ASSIGNEES) PURSUANT TO THE RECEIVABLES PURCHASE
AND SALE AGREEMENT DATED AS OF SEPTEMBER 18, 1996, AMONG
CONTRACT FUNDING CORP., AS SELLER, GOLD COAST FINANCE,
INC. AS COLLECTION AGENT AND SUNAMERICA FINANCIAL
RESOURCES INC., AS FACILITY AGENT AND PURCHASER."
(k) Delivery of Contracts. Upon request of the Facility Agent, cause
the original Contracts relating to the Pool Receivables to be delivered to
Purchaser or a bailee designated by the Facility Agent.
(l) Purchase of Receivables from an Originator. With respect to each
outstanding Pool Receivable, purchase such Pool Receivable from the Originator
to which it was owed, and pay to such Originator, an amount in cash at least
equal to the fair market value of such Receivable as determined by the Seller
and such Originator and computed by subtracting from the face amount of such
Receivable a discount that reflects (among other things) the cost to the Seller
of owning such Receivable (including, without limitation, the Seller's cost of
funding its purchase of such Receivable) and the estimated costs (taking into
account collection risks) of collection of such Receivable.
(m) Origination Agreement. Timely perform in all material respects
its obligations under and comply with the Origination Agreement, maintain or
cause to be
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maintained the Origination Agreement in full force and effect, enforce the
Origination Agreement in accordance with its terms, and promptly take all action
thereunder as may from time to time be reasonably requested by the Facility
Agent or Purchaser.
(n) Additional Covenants. Comply with the following covenants:
(i) At all times, at least two of the directors of the Seller shall
be independent directors who shall at no time be a shareholder or an
officer, employee of the Seller or a shareholder or a director, officer or
employee of any shareholder or Affiliate of the Seller, or a natural
person related by affinity or consanguinity to any of the foregoing.
(ii) The Seller shall maintain separate, identifiable office space
and will observe all customary formalities of independent corporate
existence.
(iii) The Seller shall maintain separate corporate records and books
of account from those of any Selling Party or any other Person and the
Seller shall not commingle its funds or other assets with those of any
other Person.
(iv) The Seller will hold appropriate meetings of its Board of
Directors and stockholders, or take actions by unanimous written consent
if permitted by applicable law, to authorize the Seller's corporate
actions.
(v) The Seller will at all times hold itself out to the public under
the Seller's own name, as a separate and distinct entity from its
Affiliates.
(vi) The Seller will not engage in business transactions with any
Affiliate unless it is approved by the Board of Directors (including
approval by all independent directors) as a transaction with terms and
conditions available at the time to the Seller at least as favorable to
the Seller as for comparable transactions on an arm's length basis with
unaffiliated Persons.
(o) Initial Contracts. Within seven days of the date of the initial
Purchase, cause each Contract relating to each Pool Receivable existing on the
date of the initial Purchase to be endorsed (conspicuously on the front or back
thereof) by a stamp containing the legend set forth in Section 5.1(j) and which
is otherwise acceptable to the Facility Agent.
Section 5.2 Reporting Requirements of the Seller Until the
Collection Date, the Seller will furnish to the Facility Agent:
(a) as soon as available and in any event within 30 days after the
end of each month of each fiscal year of the Seller, consolidated and
consolidating balance sheets of USA Finance and its consolidated subsidiaries as
of the end of such month and consolidated and consolidating statements of income
and cash flows of USA Finance and its consolidated subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such month, certified by any Responsible Officer of the Seller;
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(b) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Seller,
consolidated and consolidating balance sheets of USA Finance and its
consolidated subsidiaries as of the end of such quarter and consolidated and
consolidating statements of income and cash flows of USA Finance and its
consolidated subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such quarter, certified by any
Responsible Officer of the Seller;
(c) as soon as available and in any event within 90 days after the
end of each fiscal year of the Seller, audited consolidated and consolidating
financial statements of USA Finance and its consolidated subsidiaries for such
year certified by the Auditor;
(d) as soon available and in any event within 45 days after the end
of each quarter of each fiscal year of the Seller, consolidated and
consolidating balance sheets of USA Finance and its consolidated subsidiaries as
of the end of such quarter and consolidated and consolidating statements of
income and cash flows of USA Finance and its consolidated subsidiaries for the
period commencing at the end of the previous fiscal year and ending with the end
of such quarter, certified by any Responsible Officer of the Seller;
(e) as soon as possible and in any event within two Business Days
after any Responsible Officer obtains knowledge of the occurrence of each Event
of Investment Ineligibility and each event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Investment Ineligibility,
continuing on the date of such statement, a statement of any Responsible Officer
setting forth details of such Event of Investment Ineligibility or event and the
action which the Seller has taken and proposes to take with respect thereto;
(f) promptly after the sending or filing thereof, copies of all
reports which any Selling Party sends to any of its securityholders or
creditors, and copies of all reports and registration statements which any
Selling Party or any subsidiary files with the Securities and Exchange
Commission or any national securities exchange;
(g) promptly after the filing or receiving thereof, copies of all
reports and notices which the Seller or any subsidiary files under ERISA with
the Internal Revenue Service or the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor or which the Seller or any subsidiary receives from
such Corporation;
(h) on or before January 31 of each year, beginning in 1997, a
certificate of a Responsible Officer stating that the Seller has, during the
preceding year, observed all of the requisite corporate formalities and
conducted its business and operations in such a manner as required for the
Seller to maintain its separate corporate existence from any other entity; and
(i) such other information, documents, records or reports respecting
the Receivables, the Related Security or the Contracts or the condition or
operations, financial or otherwise, of the Seller or any of its subsidiaries as
the Facility Agent may from time to time reasonably request.
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Section 5.3 Negative Covenants of the Seller Until the Collection
Date, the Seller will not, without the written consent of Facility Agent:
(a) Debt. Create, incur, assume, guaranty, or otherwise become or
remain liable with respect to any Debt.
(b) Adverse Claims. Except as otherwise provided herein, create,
incur, assume or suffer to exist any Adverse Claim on or with respect to any
property or asset (including any document or instrument with respect to goods or
accounts receivable) of the Seller, whether now owned or hereafter acquired, or
any income or profits therefrom.
(c) Guaranties. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, any liabilities or obligation of any other Person.
(d) Restricted Payments. Declare, order, pay, make or set apart any
sum for any Restricted Payment if an Event of Investment Ineligibility has
occurred and is continuing.
(e) Restriction on Fundamental Changes. Take any of the following
actions: (i) amend, modify or waive any term or provision of its certificate of
incorporation, by-laws or other organizational document or any term or provision
of any material contract, lease, agreement or other arrangement; (ii) enter into
any transaction of merger or consolidation; (iii) liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution); (iv) convey, sell, lease,
sublease, transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business or assets, except as contemplated
by the Purchase Documents; or (v) acquire by purchase or otherwise all or any
substantial part of the business or assets of, or stock or other evidence of
beneficial ownership of, any Person, except as contemplated by the Purchase
Documents.
(f) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 6.4, extend, amend or otherwise modify the terms of any
Pool Receivable, or amend, modify or waive any term or condition of any Contract
or Related Security related thereto.
(g) Change in Business or Credit and Collection Policy. (i) Engage
in any business or activity other than in connection with or relating to, or the
carrying out of the activities described in, this Agreement and the other
Purchase Documents or (ii) make any change in the Credit and Collection Policy,
which change would be reasonably likely to impair the collectibility of any Pool
Receivable.
(h) Change in Payment Instructions to Obligors or Related Insurers.
Give any instructions to Obligors or Related Insurers regarding payments to be
made which are inconsistent with the terms of this Agreement and the other
Purchase Documents.
(i) Deposits to the Collection Account. Deposit or otherwise credit,
or cause or permit to be so deposited or credited, to the Collection Account
cash or cash proceeds other than Collections of Pool Receivables.
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(j) Change of Name, Etc. Change its name or identity, or its chief
executive office, unless at least 30 days prior to the effective date of any
such change the Seller delivers to the Facility Agent UCC financing statements,
executed by the Seller to such financing statements, necessary to reflect such
change and to continue the perfection of the ownership interests created by the
Purchase Documents.
(k) No Subsidiaries. Form, create or acquire any subsidiary.
(l) Amendments. Amend the Origination Agreement or the Consent and
Agreement.
(m) Collateralization. Permit the aggregate Uncollateralized Portion
of all Receivables to exceed the lesser of (i) 25% of the Adjusted Tangible Net
Worth of USA Finance on a consolidated basis and (ii) 10% of the aggregate
Outstanding Balance of the Pool Receivables on any date.
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section 6.1 Establishment of Accounts tablishment of Accounts
(a) Collection Account. The Facility Agent, for the benefit of
Purchaser, shall establish and maintain or cause to be established and
maintained the Collection Account. The Facility Agent shall have the power to
withdraw funds from the Collection Account on the basis of the data provided to
it by the Collection Agent pursuant to this Article VI, as otherwise provided
herein and as directed by Purchaser.
(b) The Interest and Principal Accounts. The Facility Agent, for the
benefit of Purchaser, shall establish and maintain two separate sub-accounts of
the Collection Account designated as the "Interest Account" and the "Principal
Account," respectively. The Facility Agent shall have the power to withdraw
funds from the Interest Account and the Principal Account on the basis of the
data provided to it by the Collection Agent pursuant to this Article VI for the
purpose of carrying out the Facility Agent's duties hereunder, as otherwise
provided herein and as directed by Purchaser. The Principal Account and the
Interest Account shall be book entry accounts; provided that the Facility Agent
at all times shall maintain accurate records reflecting each transaction in the
Principal Account and the Interest Account and that the funds held therein at
all times shall be held for the benefit of Purchaser.
(c) Administration of the Accounts. Funds on deposit in the Interest
Account shall at all times be interest-bearing or, at the Facility Agent's
option, invested by the Facility Agent in accordance with the investment
instructions of Purchaser and interest and other earnings thereon will be added
to funds on deposit in the Interest Account. The Facility Agent shall be fully
protected in following the investment instructions of Purchaser, and shall have
no obligation to keep the funds fully invested at all times or to make any
investments other than in accordance with such written investment instructions.
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Section 6.2 Designation of Collection Agent The Pool Receivables
shall be serviced, administered and collected by the Person (the "Collection
Agent") designated to do so from time to time in accordance with this Section
6.2 and the other provisions of this Agreement. Until the Facility Agent
designates a new Collection Agent, Gold Coast is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Collection Agent
pursuant to the terms hereof. The Facility Agent may at its election at any time
upon the occurrence and during the continuance of an Event of Investment
Ineligibility or a Collection Agent Default designate as Collection Agent any
Person (including the Facility Agent) to succeed Gold Coast or any successor
Collection Agent, if such Person (other than itself) shall agree in writing to
perform the duties and obligations of the Collection Agent pursuant to the terms
hereof. The Collection Agent may (i) with the prior written consent of the
Facility Agent, subcontract with any of its Affiliates (other than the Seller)
to service, administer or collect the Pool Receivables, and (ii) with the prior
written consent of the Facility Agent, subcontract with any other Person to
service, administer or collect the Pool Receivables, provided in the case of
each of clauses (i) and (ii) that the Person with whom the Collection Agent so
subcontracts shall not become the Collection Agent hereunder and the Collection
Agent shall remain liable for the performance of the duties and obligations of
the Collection Agent pursuant to the terms hereof, and any failure of such
subcontractor to perform any duty or obligation shall be a failure of the
Collection Agent to perform such duty or obligation.
Section 6.3 Standard of Care; Inspection; Audits (a) In managing,
administering, servicing, and making collections on the Receivables pursuant to
this Agreement, the Collection Agent will exercise that degree of skill and care
consistent with the highest degree of skill and care that the Collection Agent
exercises with respect to similar Receivables serviced by the Collection Agent
for its own account, and if higher, which first class personal lines insurance
premium finance servicers customarily utilize.
(b) The Facility Agent and Purchaser and their respective
representatives shall at all times upon reasonable prior notice have full and
free access during normal business hours to all books, correspondence, and
written and computer records of the Collection Agent as appropriate to verify
the Collection Agent's compliance with this Agreement, and the Facility Agent
and Purchaser and their respective representatives may examine and audit the
same, and make photocopies thereof, and the Collection Agent agrees to render to
the Facility Agent and the Purchaser and their respective representatives, at
such party's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Until the Collection Date, the
Collection Agent (if a Selling Party or any Affiliate thereof) further agrees
that it will (i) furnish to the Facility Agent as soon as available and in any
event within 90 days after the end of each fiscal year of the Collection Agent,
audited consolidated financial statements of the Collection Agent and its
consolidated subsidiaries for such year certified by the Auditor, (ii) permit
the Facility Agent or its agents or representatives, at the Collection Agent's
expense, to audit a significant portion of the Receivables and the Related
Policies on a monthly or more frequent basis, and (iii) upon the request of the
Facility Agent, at least annually, at the expense of the Collection Agent (if a
Selling Party), cause the Auditor to perform and deliver to the Facility Agent
or allow the Facility Agent to perform an audit with respect to the Pool
Receivables and the Credit and Collection Policy and the performance of the
Collection Agent of its obligations, covenants and duties under this Agreement,
on a scope and
38
in a form reasonably requested by the Facility Agent for such audit; provided
that the maximum amount of fees and expenses to be paid by the Collection Agent
for audits conducted by employees of the Facility Agent shall not exceed $5,000
in any calendar year.
Section 6.4 Duties of Collection Agent ies of Collection Agent
(a) Collections. The Collection Agent shall send or cause to be sent
to each Obligor a coupon book or monthly invoice instructing such Obligor to
make all payments to the applicable Originator for deposit in the Collection
Account and, in the case of the delivery of coupon books by a Person other than
the Collection Agent, shall obtain a written warranty directly from such Obligor
to the effect that such Obligor has received a coupon book. The Collection Agent
shall take or cause to be taken all such actions as may be necessary or
advisable to collect each Pool Receivable from time to time, all in accordance
with applicable laws, rules and regulations, with reasonable care and diligence,
and in accordance with the applicable Credit and Collection Policy and in order
to maximize collections of Receivables at all times. In furtherance thereof, the
Collection Agent shall (i) send a notice of "intent to cancel" to any Obligor on
the earliest date permitted by applicable law, plus a reasonable grace period
not to exceed 15 days, (ii) send a cancellation notice to any Obligor on the
earliest date permitted by applicable law, plus a reasonable grace period not to
exceed 5 days (after taking into account the grace period for the notice of
"intent to cancel"), if payment in full has not been received from such Obligor
by such date and (iii) send a notice of financed premiums to the Related Insurer
(or insurance agent authorized in writing by the Related Insurer) within two
days of acceptance of the related Contract. Each of the Seller, Purchaser and
the Facility Agent hereby appoints as its agent the Collection Agent, from time
to time designated pursuant to Section 6.1, to enforce its respective rights and
interests in and under the Pool Receivables, the Related Security and the
related Contracts. All Collections received by the Collection Agent shall be
segregated and held in trust for the account of Purchaser and deposited in the
Collection Account no later than the Business Day of receipt by the Collection
Agent of such Collections.
(b) Records. The Collection Agent shall, during the period it is
Collection Agent hereunder, maintain such books of account and other records as
will enable the Facility Agent to determine the status of each Pool Receivable
and related Contract and will enable the Pool Receivables to be serviced, in
accordance with the terms of this Agreement, by a successor Collection Agent
following a Service Transfer. At all times the Collection Agent shall utilize
procedures acceptable to Purchaser in order to document and verify the right of
the Originators, Seller and/or Purchaser to receive payment from a Related
Insurer in respect of unearned or return insurance premiums regarding a Related
Policy financed by a Receivable, including without limitation, documentation
that with respect to the origination of Receivables establishes the existence
and authority level of all insurance intermediaries (i.e. managing general
agents, surplus lines brokers or other insurance entities involved in the
insurance placement process) between the applicable Related Insurer and the
retail insurance producer selling such Related Policy.
39
(c) Allocation of Collections. The Collection Agent shall, prior to
the close of business on the day any Collections are deposited in the Collection
Account, allocate such Collections between:
(i) the aggregate amount of Interest Collections processed on such
date of processing; and
(ii) the aggregate amount of Principal Collections processed on such
date of processing.
(d) Extensions. If no Event of Investment Ineligibility or Event of
Purchase Ineligibility shall have occurred and be continuing, the Collection
Agent, may, in accordance with the applicable Credit and Collection Policy,
extend the maturity or adjust the Outstanding Balance of any Pool Receivable
which shall have remained unpaid for 26 days or more from the original due date
therefor as the Collection Agent may determine to be appropriate to maximize
Collections thereof so long as not more than .25% of the Outstanding Balance of
all Pool Receivables are not past due more than 45 days from the original due
date and not cancelled. The Seller shall deliver to the Collection Agent, and
the Collection Agent shall hold in trust for Purchaser all documents,
instruments and records (including, without limitation, computer tapes or disks)
which evidence or relate to Pool Receivables or Related Security. Upon request
of the Facility Agent, the Collection Agent shall deliver the original Contracts
related to the Pool Receivables and such other documents as may be specified by
the Facility Agent to Purchaser or a bailee designated by the Facility Agent or
its Assignee.
(e) Reports.
(i) Daily. On each Business Day, the Collection Agent will (A) send
to the Facility Agent (or to an off-site storage facility designated by
the Facility Agent and to which the Facilty Agent shall at all times have
access) a backup tape with all data on the Collection Agent's accounting
and operations systems relating to the Receivables and (B) prepare and
forward to the Facility Agent a daily cash receipts journal setting forth
(1) the aggregate amount of Collections processed by the Collection Agent
on the preceding Business Day and the allocation of such Collections
between the Interest Account and the Principal Account and (2) the
aggregate amount of Receivables as of the close of business on the
preceding Business Day.
(ii) Weekly. On or before the Tuesday of each week (or, if such day
is not a Business Day, the next succeeding Business Day), the Collection
Agent shall prepare and forward to the Facility Agent and Purchaser (A) a
Purchaser Report as of the close of business of the Collection Agent on
the last day of the immediately preceding week, (B) a summary and analysis
as to the aging of the aggregate Pool Receivables as of such last day, (C)
an Insurance Carrier Exposure Report relating to each Related Insurer
related to any Pool Receivable as of such last day, (D) a Purchase Report
setting forth the amount of new Purchases and reinvestments during the
prior week, and (E) a listing by Obligor of all Pool Receivables as of
such last day and specifying with respect to each Receivable, the date of
the related Contract, the Related Insurer, the total premium,
40
the down payment amount, the amount financed, the finance charge, the
monthly payment amount, the total number of payments and the annual
percentage rate.
(iii) Monthly. The Collection Agent shall prepare and forward to the
Facility Agent by the fifth Business Day each month, (A) a detailed
Receivables aging report for the immediately preceding month and (B) a
list identifying the top ten Obligors of the Seller measured by
outstanding Pool Receivables and the outstanding amount of Pool
Receivables owing from such Obligors as of the last day of the preceding
month.
(iv) Other. On or prior to the day the Facility Agent is required to
make a distribution with respect to a Settlement Period pursuant to
Section 2.5 or 2.6, the Seller will advise the Facility Agent of each
Liquidation Day and each Provisional Liquidation Day occurring during such
Settlement Period; provided, however, that, if the Seller is not the
Collection Agent, the Seller shall advise the Collection Agent of the
occurrence of each such Liquidation Day and each Provisional Liquidation
Day occurring during such Settlement Period on or prior to such day.
(f) Errors and Omissions Insurance. The Collection Agent shall
maintain, at its own expense, an errors and omissions insurance policy, with
broad coverage on all officers, employees or other Persons (including any
subcontractor) acting on behalf of the Collection Agent in any capacity with
regard to the Receivables to handle funds, money, documents and papers relating
to the Receivables. Any such errors and omissions insurance shall protect and
insure the Collection Agent against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of such Persons,
shall be maintained in a form that would meet the requirements of prudent
institutional insurance premium finance servicers and shall be in the amount of
$1,000,000 per occurrence with a deductible no greater than $10,000. No
provision of this Section 6.4(f) requiring such errors and omissions insurance
shall diminish or relieve the Collection Agent from its duties and obligations
as set forth in this Agreement. The errors and omissions policy will be provided
by insurers rated no less than "A" by Standard & Poor's Corporation or "A2" by
Moody's Investors, Inc. or as otherwise approved by the Facility Agent. In the
event any such insurer is downgraded, the Collection Agent will replace the
provider no later than the next renewal date of the policy. Any such insurance
policy shall (i) not be cancelled without the insurer giving prior written
notice to the Facility Agent immediately following the giving or receipt of such
notice as is required or allowed under the terms of such insurance policy and
(ii) not be modified without ten days' prior written notice by the insurer to
the Facility Agent.
(g) Direct Computer Access. The Collection Agent shall provide the
Facility Agent at least ten (10) hours per week of direct computer access to the
Collection Agent's premium finance receivable accounting and operations systems
by peer-to-peer communications or other communication method or computer access
system acceptable to Facility Agent.
Section 6.5 Rights of the Facility Agent and Purchaser
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(a) The Facility Agent and Purchaser and their respective designees
and assignees will be entitled, among other things, to (i) monitor the
collection and posting of all deposits related to the Receivables including
payments of principal, interest, fees and refunds (including the review of daily
deposit, receipt and application reports generated by the Collection Agent),
(ii) monitor the servicing of the Receivables by the Collection Agent, (iii)
review the premium finance agreement files relating to the Receivables and (iv)
at the election of either, notify at any time at the Seller's expense the
Obligors of, and the Related Insurers relating to, Pool Receivables, or any of
them, of the ownership thereof and of the Purchased Interest by Purchaser.
(b) At any time following the designation of a Collection Agent
other than a Selling Party pursuant to Section 6.2:
(i) The Facility Agent may direct the Obligors of, and the Related
Insurers relating to, Pool Receivables, or any of them, to make payment of
all amounts due or to become due to the Seller under any Pool Receivable
directly to the Facility Agent or its designee.
(ii) The Seller shall, at the Facility Agent's request, and at the
Seller's expense, give notice of such ownership to such Obligors and
Related Insurers and direct them to make such payments directly to the
Facility Agent or its designee.
(iii) The Seller shall, at the Facility Agent's request, (A)
assemble all of the documents, instruments and other records (including,
without limitation, computer tapes and disks) which evidence the Pool
Receivables, and the related Contracts and Related Security, or which are
otherwise necessary or desirable to collect such Pool Receivables or
Related Security, and shall make the same available to the Facility Agent
at a place selected by the Facility Agent or its designee, and (B)
segregate all cash, checks and other instruments received by it from time
to time constituting Collections of Pool Receivables in a manner
acceptable to the Facility Agent and shall, promptly upon receipt, remit
all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Facility Agent or its designee.
(iv) The Facility Agent may take any and all steps in the Seller's
name and on behalf of the Seller and Purchaser necessary or desirable, in
the determination of the Facility Agent, to collect all amounts due under
any and all Pool Receivables, including, without limitation, endorsing the
Seller's name on checks and other instruments representing Collections,
enforcing such Pool Receivables and the related Contracts and Related
Security, and adjusting, settling or compromising the amount or payment
thereof, in the same manner and to the same extent as the Seller might
have done.
(c) The Facility Agent shall prepare and maintain the Approved
Insurer List. The Facility Agent may at any time and from time to time review
the Approved Insurer List to determine if any insurers should be added or
removed or limited or if any designation should change, in each case in the
Facility Agent's sole reasonable discretion based upon A.M. Best Company, Inc.
or other applicable ratings and credit and other considerations deemed relevant
42
or appropriate from time to time by the Facility Agent in its sole discretion.
The Seller may request additions to the Approved Insurer List or redesignation
of assigned Levels not more than once in any week. The Facility Agent will use
reasonable efforts to respond to any such request within seven Business Days,
provided that the Facility Agent and Purchaser will not incur any liability for
failure to respond within such time period.
In the event the Facility Agent changes the designation of any
Approved Insurer to a lower Level (i) Pool Receivables relating to such Approved
Insurer originated after such change in designation shall be subject to the new
concentration limit and Receivables Purchase Rate for such Approved Insurer
resulting from such change and (ii) in all reports and other information and for
all other purposes under this Agreement, the Seller and the Collection Agent
shall statistically segregate the Receivables relating to such Approved Insurer
originated after such change in designation from those originated before such
change; provided that in no event shall the aggregate Eligible Receivables
relating to such Approved Insurer exceed the concentration limit applicable to
such Approved Insurer prior to such change in designation.
Section 6.6 Responsibilities of the Seller. Anything herein to the
contrary notwithstanding:
(a) The Seller shall perform all of its obligations under the
Contracts related to the Pool Receivables and with respect to the Related
Security to the same extent as if the Purchased Interest had not been sold
hereunder and the exercise by the Facility Agent of its rights hereunder shall
not relieve the Seller from such obligations or its obligations with respect to
Pool Receivables and Related Security; and
(b) Neither the Facility Agent nor any other Indemnified Party shall
have any obligation or liability with respect to any Pool Receivables or related
Contracts or Related Security, nor shall any of them be obligated to perform any
of the obligations of the Seller thereunder.
Section 6.7 Further Action Evidencing Purchases (a) The Seller
agrees that from time to time, at its expense, it will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Facility Agent may reasonably
request, in order to perfect, protect or more fully evidence the Purchased
Interest, or to enable Purchaser or the Facility Agent to exercise and enforce
any of their respective rights and remedies hereunder or under the Assignment or
as is necessary or appropriate to maximize collections by Purchaser of the
Receivables. Without limiting the generality of the foregoing, the Seller will
upon the request of the Facility Agent: (i) execute and file such financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or desirable, or as the
Facility Agent may so request, in order to perfect, protect or evidence the
Purchased Interest; (ii) in accordance with applicable law and pursuant to the
instructions of the Facility Agent, exercise any power of attorney granted in
favor of the Seller by any Obligor under any Contract or otherwise; and (iii)
during any period during which any Event of Investment Ineligibility shall have
occurred and is continuing, xxxx its master data processing records evidencing
such
43
Pool Receivables and related Contracts and Related Security with the legend set
forth in Section 5.1(j).
(b) The Seller hereby authorizes the Facility Agent to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relating to all or any of the Contracts, or Pool
Receivables and the Related Security and Collections with respect thereto now
existing or hereafter arising without the signature of the Seller where
permitted by law. A photocopy or other reproduction of this Agreement or any
financing statement covering all or any of the Contracts, or Pool Receivables
and the Related Security and Collections with respect thereto shall be
sufficient as a financing statement where permitted by law.
(c) If the Seller fails to perform any agreement contained herein,
the Facility Agent may itself perform, or cause performance of, such agreement,
and the expenses of the Facility Agent incurred in connection therewith shall be
payable by the Seller under Section 11.1 or Section 12.6, as applicable.
Section 6.8 Cost and Expenses of Collection Agent The cost and
expenses incurred by the Collection Agent in carrying out its duties hereunder,
including, without limitation, the fees and expenses incurred in connection with
the enforcement of Receivables, shall be paid by the Collection Agent and the
Collection Agent shall not be entitled to any reimbursement hereunder.
Section 6.9 Collection Agent Not to ResignThe Collection Agent shall
not resign from the obligations and duties hereby imposed on it hereunder except
upon determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law, and (ii) there is no reasonable action which
can be taken to make the performance of its duties hereunder permissible under
applicable law. Any such determination permitting the resignation of the
Collection Agent pursuant to clause (i) hereof shall be evidenced by an opinion
of counsel to such effect delivered to the Facility Agent. No such resignation
shall be effective until a successor Collection Agent shall have assumed the
responsibilities and obligations of the Collection Agent in accordance herewith.
Section 6.10 Representations and Warranties of the Collection Agent
The Collection Agent represents and warrants as follows:
(a) The Collection Agent is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation
and has full corporate power, authority, and legal right to own its property and
conduct its business as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations under
this Agreement and the other Purchase Documents. The Collection Agent is duly
qualified to do business and is in good standing as a foreign corporation, in
every jurisdiction where the nature of its business requires it to be so
qualified.
(b) The execution, delivery and performance by the Collection Agent
of the Purchase Documents, and all other instruments and documents to be
delivered by it hereunder,
44
and the transactions contemplated hereby and thereby, are within the Collection
Agent's corporate powers, have been duly authorized by all necessary corporate
action, and do not contravene (i) the Collection Agent's charter or by-laws or
(ii) law or any Contract or Related Security or any other contractual
restriction binding on or affecting the Collection Agent, and do not result in
or require the creation of any Adverse Claim (other than pursuant hereto) upon
or with respect to any of its properties.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Collection Agent of any
Purchase Document or any other instrument or document to be delivered by it
hereunder, or for the perfection of or the exercise by the Facility Agent,
Purchaser or any Indemnified Party of their respective rights and remedies under
the Purchase Documents and such other instruments and documents, except for
those referred to in Article III, all of which, on or prior to the date of the
initial Purchase, will have been duly made and be in full force and effect.
(d) This Agreement is, and each other Purchase Document when
delivered hereunder will be, the legal, valid and binding obligation of the
Collection Agent enforceable against the Collection Agent in accordance with
their respective terms, except to the extent that enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, and other similar laws
affecting creditors' rights generally or by general principles of equity.
(e) There is no pending or threatened action or proceeding affecting
the Collection Agent before any court, governmental agency or arbitrator which
is reasonably likely to materially adversely affect (i) the consolidated
financial condition or operations of the Collection Agent or (ii) the ability of
the Collection Agent to perform its obligations under any Purchase Document or
any other instrument or document to be delivered by it hereunder, or which
purports to affect the legality, validity or enforceability of any Purchase
Document or any such other instrument or document.
(f) The collection practices used by the Collection Agent with
respect to the Receivables have been and will be, in all material respects,
legal, proper, prudent and customary in the servicing of insurance premium
finance receivables.
(g) The servicing of Receivables contemplated by this Agreement is
in the ordinary course of business of the Collection Agent.
ARTICLE VII
EVENTS OF INVESTMENT INELIGIBILITY
Section 7.1 Events of Investment Ineligibility If any of the
following events ("Events of Investment Ineligibility") shall occur and be
continuing:
(a) (i) The Collection Agent (if a Selling Party or any other
Affiliate of the Seller) shall fail to perform or observe any term, covenant or
agreement hereunder (other than as referred to in clauses (ii) and (iii) of this
Section 7.1(a)) and such failure shall remain unremedied for five Business Days
or (ii) the Collection Agent (if a Selling Party or any other
45
Affiliate of the Seller) or the Seller shall fail to make any deposit of
Collections for, or to make any payment in respect of, reduction of Capital when
such deposit or payment is due to be made hereunder or (iii) the Collection
Agent (if a Selling Party or any other Affiliate of the Seller) or the Seller
shall fail to make any payment or deposit of interest, fees, indemnities or
expenses or other amounts (other than as referred to in clause (ii) of this
Section 7.1(a)) to be made by it hereunder or under any other Purchase Document
within two Business Days following the date when due, or shall fail to make any
other payment or deposit to be so made by it when due; or
(b) The Seller shall fail to perform or observe any term, covenant
or agreement contained in Section 5.1(n), 5.1(o), 5.2(d) or 5.3; or
(c) Any representation or warranty or statement made by any Selling
Party (or any of their respective officers) under or in connection with this
Agreement, any other Purchase Document or any other document delivered in
connection herewith (including without limitation any Purchaser Report or
Insurance Carrier Exposure Report) shall prove to have been incorrect in any
material respect when made or renewed; or
(d) Any Selling Party shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, any other Purchase
Document or any other document delivered in connection herewith on its part to
be performed or observed and any such failure shall remain unremedied for 10
days after written notice thereof shall have been given to such Selling Party by
the Facility Agent or a Responsible Officer becomes aware; or
(e) Any Selling Party shall fail to pay any principal of or premium
or interest on any Debt which is outstanding in a principal amount of at least
$50,000 in the aggregate when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or any default shall occur under the USA Finance Note; or
(f) Any Purchase or any reinvestment pursuant to Section 2.5 shall
for any reason (other than pursuant to the terms hereof) cease to create, or the
Purchased Interest shall for any reason cease to be, a valid and perfected first
priority ownership interest in each Pool Receivable and the Related Security and
Collections with respect thereto or the Assignment shall for any reason cease to
evidence in Purchaser legal and equitable title to, and ownership of, an
ownership interest in Pool Receivables and Related Security; or
46
(g) Any Selling Party shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against any Selling Party seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or any Selling Party shall take any corporate action to
authorize any of the actions set forth above in this subsection (g); or
(h) (i) The average Default Ratio as at the last day of any two
consecutive calendar months shall exceed 3%; or (ii) the average Delinquency
Ratio as at the last day of any two consecutive calendar months shall exceed
15%; (iii) or the Loss-to-Liquidation Ratio (A) as at the last day of any
calendar month ending on or prior to December 31, 1996 shall exceed 3.125%, (B)
as at the last day of any calendar month beginning after December 31, 1996 and
ending on or prior to March 31, 1997 shall exceed 2.6%, or (C) as at the last
day of any calendar month beginning after March 31, 1997 shall exceed 2%; or
(iv) as at the last day of any calendar month, the ratio (expressed as a
percentage) computed as of the last day of such calendar month by dividing (i)
the aggregate amount of unearned interest on all Pool Receivables by (ii) the
aggregate Outstanding Balance of all Pool Receivables on such date is less than
5%; or
(i) The Net Receivables Pool Balance shall be less than the
outstanding Capital and such event shall continue for two consecutive Business
Days after the date Seller knows of such event or the date on which written
notice of such event shall have been given to the Seller by the Facility Agent
or Purchaser; or
(j) The Portfolio Yield Percentage as at the last day of any
calendar month shall be less than 18%; or
(k) There shall have occurred, in the opinion of the Facility Agent,
any material adverse change in the financial condition or operations of any
Selling Party since December 31, 1995, or there shall have occurred any event or
condition which could materially adversely affect the collectibility of the Pool
Receivables, or there shall have occurred any other event or condition which
could materially adversely affect the ability of the Seller or any Originator to
collect Pool Receivables or the ability of any Selling Party to perform its
obligations under this Agreement or any other Purchase Document, or any
Originator shall have its insurance premium finance license suspended,
cancelled, withdrawn or revoked in any jurisdiction where the Outstanding
Balance of Pool Receivables owing by Obligors residing in such jurisdiction
exceeds $500,000 or there shall be imposed on any Selling Party a fine or
administrative penalty of $15,000 or more; or
47
(l) (i) USA Finance shall at any time cease to own, directly 100% of
the outstanding shares of capital stock of the Seller or such stock shall become
subject to any lien other than a lien in favor of Purchaser or the Facility
Agent; (ii) USA Finance shall at any time cease to own directly 100% of the
outstanding shares of capital stock of Gold Coast or National-Wide or such stock
shall become subject to any lien; (iii) Xxxxx Xxxxxxxxxx ceases to be the Chief
Executive Officer of USA Finance; (iv) Xxxxxx X. Xxxxxxxx ceases to be Chairman
of the Board of USA Finance and Xxxx Xxxxxxxx ceases to be President and Chief
Operating Officer of USA Finance; or (v) Xxxxxxx X. Xxxxxxxx ceases to be the
Chairman of the Board of USA and is not replaced within 30 days with a person
reasonably acceptable to Purchaser or Xxxx Xxxxxxxx ceases to be President and
Chief Operating Officer of USA Finance and is not replaced within 30 days with a
person reasonably acceptable to Purchaser; or
(m) A Collection Agent Default shall have occurred; or
(n) The errors and omissions insurance required by Section 6.4(f) is
terminated or not renewed; or
(o) (i) Adjusted Tangible Net Worth of USA Finance is less than
$3,000,000 plus 50% of the consolidated net income of USA Finance from the date
of the initial Purchase; (ii) Tangible Net Worth of Gold Coast or National-Wide
is less than the greater of $35,000 and the amount of statutory net worth
required by any state in which Gold Coast or National-Wide, as the case may be,
is licensed to do business; or (iii) Tangible Net Worth of the Seller is less
than zero; or
(p) Any deficiency noted in any audit performed in connection with
or relating to this Agreement shall not have been cured to the Facility Agent's
satisfaction within thirty days of the issuance of the audit report noting such
deficiency; or
(q) A final judgment is rendered against any Selling Party in an
amount greater than $100,000 which is not covered by insurance and, within
thirty days after entry thereof, such judgment is not discharged or execution
thereof stayed pending appeal, or within thirty days after the expiration of any
such stay, such judgment is not discharged; or
(r) Any material provision of the Origination Agreement, the Rights
Agreement or the USA Guaranty after delivery thereof pursuant to Section 3.1
shall for any reason cease to be valid and binding on any Selling Party party
thereto, or any such Selling Party shall so state in writing or USA Finance
shall revoke the USA Guaranty or deny or disaffirm its obligations thereunder;
or
(s) (i) any litigation (including, without limitation, any
derivative action), arbitration proceedings or governmental proceedings not
disclosed to Purchaser prior to the date of the execution and delivery of this
Agreement is pending against any Selling Party, or (ii) any material development
not so disclosed has occurred in any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental proceedings so
disclosed, which, in the case of clause (i) or (ii) above, has a reasonable
likelihood of causing a
48
material adverse effect on the collectibility of the Receivables or the ability
of any Selling Party to perform hereunder or under the Purchase Documents; or
(t) failure of USA Finance and its subsidiaries to establish and
implement any policy, practice, system or procedure set forth in Schedule III by
the applicable date set forth in Schedule III or the failure thereafter to
maintain such policy, practice system or procedure; or
(u) any default shall occur under the Demand Promissory Note dated
as of September 18, 1996 made by USA Finance in favor or Purchaser,
then, and in any such event, the Facility Agent may, with the consent of
Purchaser, by notice to the Seller declare the Facility Termination Date to have
occurred, whereupon the Facility Termination Date shall forthwith occur, without
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Seller; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Seller under the Federal
Bankruptcy Code, the Facility Termination Date shall automatically occur,
without demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Seller. Upon any such termination of the Facility, the
Facility Agent and Purchaser shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and remedies
provided under the UCC of the applicable jurisdiction and other applicable laws,
which rights shall be cumulative. Without limiting the foregoing or the general
applicability of Article X hereof, Purchaser may elect to assign the Purchased
Interest or any portion thereof to an Assignee following the occurrence of any
Event of Investment Ineligibility.
ARTICLE VIII
COLLECTION AGENT DEFAULTS
Section 8.1 Collection Agent Defaults If any of the following events
(a "Collection Agent Default") shall occur and be continuing:
(a) any failure by the Collection Agent to deliver any Collection
Agent's report to the Facility Agent pursuant to Section 6.4 or to make any
payment, transfer or deposit hereunder or to give instructions or notice to the
Facility Agent to make any payment, transfer, or deposit hereunder; or
(b) failure on the part of the Collection Agent duly to observe or
perform in any material respect any other covenants or agreements of the
Collection Agent set forth in any Purchase Document, which continues unremedied
for a period of 10 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Collection Agent
by the Facility Agent; or the Collection Agent shall assign its duties under
this Agreement, except as permitted by Section 6.2; or
(c) any representation, warranty, or certification made by the
Collection Agent in any Purchase Document or in any certificate delivered
pursuant to this Agreement shall prove to have been incorrect when made, which
has a material adverse effect on the rights of Purchaser or the ability of
Collection Agent to perform its obligations hereunder, and which
49
continues to be incorrect in any material respect for a period of 15 days after
the date on which written notice of such failure shall have been given to the
Collection Agent by the Facility Agent; or
(d) The Collection Agent shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Collection Agent seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Collection Agent shall take any corporate action
to authorize any of the actions set forth above in this subsection (d); or
(e) a final judgment is rendered against Gold Coast while acting as
Collection Agent in an amount greater than $100,000 or any other Collection
Agent not an Affiliate of Seller in an amount greater than $250,000 which is not
covered by insurance and, within 30 days after entry thereof, such judgment is
not discharged or execution thereof stayed pending appeal, or within 30 days
after the expiration of any such stay, such judgment is not discharged; or
(f) the declaration of an event of default by the lender under any
loan or credit agreement given by Collection Agent in connection with any single
credit facility extended to Collection Agent which has at the time of the
declaration of such default an outstanding principal balance of $50,000 or more;
or
(g) or a Termination Date occurs;
then, the Facility Agent, by notice then given in writing to the Collection
Agent (a "Service Termination Notice"), may terminate all of the rights and
obligations of the Collection Agent as Collection Agent under this Agreement
(such termination being herein called a "Service Transfer"). After receipt by
the Collection Agent of such Service Termination Notice, all authority and power
of the Collection Agent under this Agreement shall pass to and be vested in
successor Collection Agent (which may be the Facility Agent or a Person
designated by the Facility Agent and, without limitation, the Facility Agent is
hereby irrevocably authorized and empowered (such authorization coupled with an
interest) by Collection Agent (upon the failure of the Collection Agent to
cooperate) to execute and deliver, on behalf of the Collection Agent, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Collection Agent to execute or deliver such documents or
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such Service Transfer.
50
The Collection Agent agrees to cooperate with the Facility Agent and
such successor Collection Agent in effecting the Service Transfer hereunder,
including, without limitation, the transfer to such successor Collection Agent
of all authority of the Collection Agent to service the Pool Receivables
provided for under this Agreement and all authority over all Collections which
shall on the date of transfer be held by the Collection Agent for deposit, or
which have been deposited by the Collection Agent or the Facility Agent in the
Collection Account or which shall thereafter be received with respect to the
Pool Receivables, and in assisting the successor Collection Agent and in
enforcing all rights under this Agreement including, without limitation,
allowing the successor Collection Agent personnel access to the Collection
Agent's premises for the purpose of collecting payments on the Pool Receivables
made at such premises. The Collection Agent shall promptly transfer its
electronic records relating to the Contracts to the successor Collection Agent
in such electronic form as the successor Collection Agent may reasonably request
and shall promptly transfer to the successor Collection Agent all other records,
correspondence, and documents necessary for the continued servicing of the Pool
Receivables in the manner and at such times as the successor Collection Agent
shall reasonably request. The Collection Agent shall deliver the files relating
to the Pool Receivables to the successor Collection Agent.
ARTICLE IX
THE FACILITY AGENT
Section 9.1 Authorization and Action Purchaser hereby appoints and
authorizes the Facility Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement, the other Purchase Documents and each
other instrument or document furnished pursuant hereto as are delegated to the
Facility Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto, and is hereby authorized and empowered to make
the withdrawals and payments from the Collection Account, the Principal Account
and the Interest Account in accordance with this Agreement. As to any matters
not expressly provided for by this Agreement (including, without limitation,
enforcement of the Assignment, the other Purchase Documents and such other
instruments and documents), the Facility Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instruction of Purchaser, and such instructions shall be
binding upon all parties hereto and all Assignees; provided, however, that the
Facility Agent shall not be required to take any action which exposes the
Facility Agent to personal liability or which is contrary to this Agreement, the
Assignment, the other Purchase Documents or any other instrument or document
furnished pursuant hereto or applicable law. The Facility Agent agrees to give
to Purchaser prompt notice of each notice given to it by the Seller, or by it to
the Seller, pursuant to the terms of this Agreement, the Assignment, the other
Purchase Documents or any other instrument or document furnished pursuant
hereto.
Section 9.2 Facility Agent's Reliance, Etc Neither the Facility
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them as Facility Agent
under or in connection with this Agreement, the Assignment, the other Purchase
Documents or any other instrument or document furnished pursuant hereto
(including, without limitation, the Facility Agent's servicing, administering or
51
collecting Pool Receivables as Collection Agent pursuant to Section 6.2), except
for its or their own gross negligence or willful misconduct. Without limiting
the generality of the foregoing, except as otherwise agreed by the Facility
Agent and Purchaser, the Facility Agent: (i) may consult with legal counsel
(including counsel for the Seller), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no warranty or representation to Purchaser or
any other Indemnified Party and shall not be responsible to Purchaser or any
other Indemnified Party for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement, the
Assignment, the other Purchase Documents or any other instrument or document
furnished pursuant hereto; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement, the Assignment, the other Purchase Documents or
any other instrument or document furnished pursuant hereto on the part of the
Seller or to inspect the property (including the books and records) of the
Seller; (iv) shall not be responsible to Purchaser or other Indemnified Party
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the Assignment, the other Purchase
Documents or any other instrument or document furnished pursuant hereto; and (v)
shall incur no liability under or in respect of this Agreement, the Assignment,
the other Purchase Documents or any other instrument or document furnished
pursuant hereto by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be by
telecommunication) believed by it to be genuine and signed or sent by the proper
party or parties.
Section 9.3 Indemnification Purchaser agrees to indemnify the
Facility Agent (to the extent not reimbursed by the Seller), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the
Facility Agent, in any way relating to or arising out of this Agreement, the
Assignment, the other Purchase Documents or any other instrument or document
furnished pursuant hereto or any action taken or omitted by the Facility Agent
under this Agreement, the Assignment, the other Purchase Documents or any such
instrument or document, provided that Purchaser shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Facility
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing but subject to the provisos to the preceding sentence, Purchaser
agrees to reimburse the Facility Agent promptly upon demand for any
out-of-pocket expenses (including counsel fees) incurred by the Facility Agent,
respectively, in connection with the administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
the Assignment, the other Purchase Documents or any other instrument or document
furnished pursuant hereto, to the extent the Facility Agent is not reimbursed
for such expenses by the Seller.
52
ARTICLE X
ASSIGNMENTS OF PURCHASED INTERESTS
Section 10.1 Asignment This Agreement may not be assigned by the
Seller. The Facility Agent and Purchaser may at any time assign all or any
portion of their respective rights and obligations under this Agreement to any
Person. The Seller consents and agrees that Purchaser intends to and is entitled
to assign the Purchased Interest (or any portion thereof) to any Person. The
Seller agrees to perform its obligations hereunder for the benefit of any
Assignee and that any Assignee may and is entitled to (but shall have no
obligation to) enforce the provisions of this Agreement and exercise the rights
of Purchaser to enforce the obligations of the Seller hereunder without the
consent or joinder of Purchaser.
Section 10.2 Annotation of Assignment Purchaser may annotate the
Assignment to reflect any assignments made pursuant to Section 10.1 or
otherwise.
ARTICLE XI
GRANT OF SECURITY INTEREST
Section 11.1 Grant of Security Interest The Seller hereby assigns
and pledges to the Facility Agent for the benefit of itself, Purchaser and each
other Indemnified Party from time to time, and hereby grants to the Facility
Agent for the benefit of itself, Purchaser and each other Indemnified Party from
time to time, a security interest in and to, all of the Seller's right, title
and interest in and to the following (collectively the "Collateral"):
(a) the Origination Agreement;
(b) all rights to receive moneys due and to become due under or
pursuant to the Origination Agreement;
(c) the right to perform under the Origination Agreement and to
compel performance and otherwise exercise all remedies thereunder; and
(d) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds which constitute property of the types
described in clauses (a) through (c) of this Section 11.1).
Section 11.2 Security for Obligations The assignment, pledge and
security interest granted under this Article XI secures the payment of all
obligations of the Seller now or hereafter existing from time to time under this
Agreement and the other Purchase Documents, whether for Collections received or
deemed to have been received by the Seller, interest, fees, costs, expenses,
taxes, indemnification or otherwise (all such obligations being the
"Obligations.").
Section 11.3 Seller Remains Liable Anything herein to the contrary
notwithstanding, (a) the Seller shall remain liable under the Origination
Agreement to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Facility Agent of any of the
53
rights hereunder shall not release the Seller from any of its duties or
obligations under the Origination Agreement, and (c) neither the Facility Agent
nor Purchaser nor any other Indemnified Party shall have any obligation or
liability under the Origination Agreement by reason of this Article XI, nor
shall the Facility Agent or Purchaser or any other Indemnified Party be
obligated to perform any of the obligations or duties of the Seller thereunder.
Section 11.4 Further Assurances (a) The Seller agrees that from time
to time, at the expense of the Seller, the Seller will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary, or that the Facility Agent may reasonably request, in order to
perfect, protect or more fully evidence the assignment and security interest
granted or purported to be granted hereby or to enable the Facility Agent to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, the Seller will
upon the request of the Facility Agent execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary, or as the Facility Agent may reasonably request,
in order to perfect, protect or evidence the assignment and security interest
granted or purported to be granted hereby.
(b) The Seller hereby authorizes the Facility Agent to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of the Seller where
permitted by law, and the Facility Agent shall notify the Seller of each such
filing. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.
Section 11.5 Payments With Respect to Collateral (a) The Seller
agrees, and has effectively so instructed each other party to the Origination
Agreement, that all payments due or to become due by any Originator under
Section 9 of the Origination Agreement shall be made directly to the Facility
Agent by direct deposit to the Collection Account and that all other payments
(including, without limitation, payments under Section 3 of the Origination
Agreement) shall be made in accordance with the provisions of the Origination
Agreement. If the Seller receives any such payments which would otherwise be
payable to the Facility Agent, within three Business Days following its receipt
thereof it will deposit such payments to the Collection Account.
(b) Except as set forth in Section 11.8, all moneys received
pursuant to subsection (a) above shall be applied to the payment of any
Obligations payable, and remaining unpaid, by the Seller at the time of such
receipt, and all remaining moneys shall be released by the Facility Agent to the
Seller or at its order.
Section 11.6 Facility Agent May Perform If the Seller fails to
perform any agreement contained herein, the Facility Agent may itself perform,
or cause performance of, such agreement, and the reasonable expenses of the
Facility Agent incurred in connection therewith shall be payable by the Seller
under Section 13.6.
54
Section 11.7 The Facility Agent's Duties The powers conferred on the
Facility Agent hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the safe custody of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Facility Agent shall have no duty
as to the taking of any necessary steps to preserve rights against any parties
or any other rights pertaining to any Collateral or as against any parties or
any other rights pertaining to any Collateral. The Facility Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which it accords its own property.
Section 11.8 Remedies If any Event of Investment Ineligibility shall
have occurred and be continuing:
(a) The Facility Agent may exercise any and all rights and remedies
of the Seller under or in connection with the Origination Agreement or otherwise
in respect of the Collateral, including, without limitation, any and all rights
of the Seller to demand or otherwise require performance of any provision of the
Origination Agreement.
(b) The Facility Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the UCC
in effect in the State of California (whether or not such UCC applies to the
affected Collateral).
(c) All payments received by the Seller in respect of the Collateral
shall be received in trust for the benefit of the Facility Agent, shall be
segregated from other funds of the Seller and shall be forthwith paid over to
the Facility Agent in the same form as so received (with any necessary
endorsement).
(d) All payments made in respect of the Collateral, and all cash
proceeds in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral, received by the Facility Agent will be
promptly applied (after payment of any amounts payable to the Facility Agent
pursuant to Section 13.6) in whole or in part by the Facility Agent for
Purchaser or the applicable Indemnified Parties against all or any part of the
Obligations in such order as the Facility Agent shall elect. Any surplus of such
payments or cash proceeds held by the Facility Agent and remaining after payment
in full of all the Obligations shall be paid over to the Seller or to whomsoever
may be lawfully entitled to receive such surplus.
ARTICLE XII
INDEMNIFICATION
Section 12.1 Indemnities by the Seller Without limiting any other
rights which any Indemnified Party may have hereunder or under applicable law,
the Seller hereby agrees to indemnify each Indemnified Party from and against
any and all claims, losses and liabilities (including reasonable attorneys'
fees) (all of the foregoing being collectively referred to as "Indemnified
Amounts") growing out of or resulting from this Agreement or any
55
document related hereto or the use of proceeds of Purchases or reinvestments or
the ownership of the Purchased Interest or in respect of any Receivable or any
Contract or Related Security, excluding, however, (a) Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Receivables or (c) any income taxes incurred
by such Indemnified Party arising out of or as a result of this Agreement or any
document related hereto or the ownership of the Purchased Interest or in respect
of any Receivable or any Contract or Related Security. Without limiting or being
limited by the foregoing, the Seller shall pay on demand to each Indemnified
Party any and all amounts necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts relating to or resulting from:
(i) any Receivable becoming a Pool Receivable which is not at the
date thereof an Eligible Receivable or which thereafter ceases to be an
Eligible Receivable;
(ii) reliance on any representation or warranty or statement made or
deemed made by the Seller (or any of its officers) under or in connection
with this Agreement, or any other Purchase Document (including without
limitation any Purchaser Report or Insurance Carrier Exposure Report)
which shall have been incorrect when made;
(iii) the failure by the Seller or the Collection Agent to comply
with any applicable law, rule or regulation with respect to any Pool
Receivable or the related Contract or any Related Security, or the
nonconformity of any Pool Receivable or the related Contract or any
Related Security with any such applicable law, rule or regulation;
(iv) the failure to vest in Purchaser a valid and perfected
ownership interest in the Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collections in respect
thereof, free and clear of any Adverse Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables in, or purporting to be in, the Receivables Pool and the
Related Security and Collections in respect thereof, whether at the time
of any Purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
in, or purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting
from any insurance policy related to such Receivable or the furnishing or
failure to furnish such insurance policy;
(vii) any failure of the Seller to perform its duties or obligations
in accordance with the provisions of Article VI, or any failure of the
Seller to perform its duties or
56
obligations under any Contract or under this Agreement or any other
Purchase Document;
(viii) any investigation, litigation or proceeding related to this
Agreement or any other document or the use of proceeds of Purchases or
reinvestments or the ownership of the Purchased Interest or in respect of
any Receivable, Related Security or Contract;
(ix) the commingling of Collections of Pool Receivables at any time
with other funds;
(x) any claim by any Assignee; or
(xi) during any period during which any Selling Party is the
Collection Agent, any cancellation of any insurance policy in such a
manner (due to timing or otherwise) that would cause the unearned or
return premiums related thereto to be less than those premiums otherwise
returnable upon proper and timely cancellation of such policy in
accordance with the Credit and Collection Policy.
Any amount payable under the indemnification provisions of this
Section 12.1 shall be paid by the Seller to the Facility Agent for the account
of the appropriate Indemnified Party within twenty Business Days following such
Indemnified Party's demand therefor given in writing to the Seller with a copy
to the Facility Agent.
Section 12.2 Indemnities by the Collection Agent The Collection
Agent hereby agrees to indemnify each Indemnified Party from all Indemnified
Amounts in respect of any action taken, or failure to take any action by the
Collection Agent (but with respect to any successor Collection Agent not an
Affiliate of the Seller, not by any predecessor Collection Agent) with respect
to any Receivable. This indemnity shall survive any Service Transfer (but a
Collection Agent's obligations under this Section 12.2 shall not relate to any
actions of any successor Collection Agent after a Service Transfer) and any
payment of the amount owing under any Receivable; provided, however, that in the
case of a successor Collection Agent not an Affiliate of the Seller, such
indemnity shall apply only in respect of any negligent action taken, negligent
failure to take any action, reckless disregard of duties hereunder, bad faith,
or willful misconduct by such successor Collection Agent in any way relating to
or arising out of this Agreement or the obligations created hereby. The
Collection Agent's obligations under this Section 12.2 shall survive termination
of this Agreement.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Amendments, Etc No amendment or waiver of any provision
of this Agreement or any other Purchase Document, and no consent to any
departure by the Seller or the Collection Agent herefrom, shall in any event be
effective unless the same shall be in writing and signed by Purchaser, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
57
Section 13.2 Notices, Etc All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telecommunication) and mailed, telecommunicated or delivered, as to
each party hereto, at its address set forth under its name on the signature
pages hereof or at such other address as shall be designated by such party in a
written notice to the other parties hereto. All such notices and communications
shall, when mailed or telecommunicated, be effective when deposited in the mails
or telecommunicated, respectively, except that notices and communications to the
Facility Agent pursuant to Article II shall not be effective until received by
the Facility Agent.
Section 13.3 No Waiver; Remedies No failure on the part of the
Facility Agent, Purchaser or any other Indemnified Party to exercise, and no
delay in exercising, any right hereunder or under any other Purchase Document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 13.4 Binding Effect; Assignability This Agreement shall be
binding upon and inure to the benefit of the Seller, the Collection Agent, the
Facility Agent, Purchaser and each other Indemnified Party and their respective
successors and assigns (subject to the limitations on assignment contained
herein), except that the Seller shall not have the right to assign its rights or
obligations hereunder or any interest herein without the prior written consent
of Purchaser. This Agreement shall create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Collection Date; provided, however, that
rights and remedies with respect to the indemnification provisions of Article
XII and Section 13.6 shall be continuing and shall survive any termination of
this Agreement.
Section 13.4 Binding Effect; Assignability This Agreement and the
Assignment shall be governed by, and construed in accordance with, the laws of
the State of New York, except to the extent that perfection or the effect of
non-perfection of the interests of Purchaser, or remedies hereunder, in respect
of the Receivables, any Related Security or any Collections in respect thereof
are governed by the laws of a jurisdiction other than the State of New York.
Section 13.6 Costs, Expenses and Taxes (a) In addition to the rights
of indemnification granted to the Indemnified Parties under Article XII hereof,
(i) the Seller agrees to pay on demand all out-of-pocket expenses (including
travel, lodging, meal and car expenses) of Facility Agent and Purchaser relating
to consulting and other services provided by a senior operations officer of the
Facility Agent to the Seller and the other Selling Parties for a period of
approximately one month and (ii) the Seller agrees to pay on demand all other
costs and expenses in connection with the preparation, execution, delivery,
administration (including periodic auditing), modification and amendment of this
Agreement, the Assignment, and the other Purchase Documents, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Facility Agent and Purchaser with respect thereto and with respect to advising
the Facility Agent and Purchaser as to its rights and remedies under this
Agreement or any other Purchase Document; provided, however, that, with respect
to clause (ii), in connection with the preparation, execution and delivery of
the documents required in
58
connection with the initial Purchase under Section 3.1 hereof the Seller shall
only be obligated to pay out-of-pocket fees and expenses (including reasonable
fees of Facility Agent's counsel plus disbursements incurred before and after
the delivery of the letter agreement relating hereto) not exceeding $100,000.
The Seller further agrees to pay on demand all costs and expenses, if any
(including, without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations, legal proceedings
or otherwise) of this Agreement, the Assignment, and the other Purchase
Documents, including, without limitation, reasonable counsel fees and expenses
in connection with the enforcement of rights under this Section 13.6(a).
(b) In addition, the Seller shall pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement, the Assignment or
any other Purchase Document, and agrees to save each Indemnified Party harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
Section 13.7 Confidentiality (a) Except to the extent otherwise
required by applicable law, each of the Seller and the Collection Agent agrees
to maintain the confidentiality of this Agreement, the Assignment and the other
Purchase Documents delivered hereunder (and all drafts thereof) and not to
disclose this Agreement, the Assignment or any other Purchase Documents or such
drafts to third parties (other than to its Affiliates and to its and its
Affiliates' respective directors, officers, employees, accountants or counsel);
provided, however, that this Agreement may be disclosed to third parties to the
extent such disclosure is (i) required in connection with a sale of securities
of the Seller, the Originators or USA Finance, (ii) made solely to persons who
are legal counsel for the purchaser or underwriter of such securities, (iii)
limited in scope to the provisions of Articles V, VII, XII and, to the extent
defined terms are used in Articles V, VII and XII, such terms defined in Article
I of this Agreement and (iv) made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the Facility
Agent; and provided, further, however, that Seller or the Collection Agent may
disclose any such information (A) as has become generally available to the
public, (B) as may be required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over the Seller or its Affiliates (whether in the
United States or elsewhere), (C) as may be required or appropriate in response
to any summons or subpoena or in connection with any litigation or regulatory
proceeding or (D) in order to comply with any law, order, regulation or ruling
applicable to the Seller, the Collection Agent or its Affiliates.
(b) Each of the Facility Agent and Purchaser agrees to maintain the
confidentiality of, and not to disclose (other than to employees, auditors,
accountants, counsel or other representatives of the Facility Agent, Purchaser
and their respective Affiliates, whether existing at the date of this Agreement
or any subsequent time, or to another Person if such Person or such Person's
holding or parent company or the Facility Agent or Purchaser in its sole
discretion determines that any such Person needs to have access to such
information in connection with the business or operations of the Facility Agent
or Purchaser, who shall in each case be instructed to maintain such
confidentiality), any information with respect the Seller which is furnished
pursuant to this Agreement, provided that each of the Facility Agent and
59
Purchaser may disclose any such information (i) as has become generally
available to the public, (ii) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or Federal regulatory
body having or claiming to have jurisdiction over the Facility Agent or
Purchaser or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or elsewhere)
or their successors, (iii) as may be required or appropriate in response to any
summons or subpoena or in connection with any litigation or regulatory
proceeding, (iv) in order to comply with any law, order, regulation or ruling
applicable to the Facility Agent or Purchaser, or (v) to any Assignee or
prospective Assignee.
Section 13.8 Execution in Counterparts; Severability This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement. In case any provision in or obligation under this
Agreement or any Assignment shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. The
acknowledgements attached to the signature pages of this Agreement are
incorporated in and made a part of this Agreement by this reference.
Section 13.9 Release If during or upon the commencement of a
Standard Amortization Period, any Selling Party enters into an agreement to
finance or sell Receivables, the Facility Agent agrees to release, without
recourse or warranty, any interest in any Receivable originated after the
commencement of such Standard Amortization Period, such release to be at the
expense of Seller.
Section 13.10 Consent to Jurisdiction; Waiver of Jury Trial Waiver
of Jury Trial.
(a) THE SELLER, THE COLLECTION AGENT, THE FACILITY AGENT AND
PURCHASER HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET
FORTH UNDER ITS NAME ON THE SIGNATURE PAGES HEREOF AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE
U.S. MAILS, POSTAGE PREPAID. THE SELLER, THE COLLECTION AGENT, THE FACILITY
AGENT AND PURCHASER EACH HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
SELLER, THE COLLECTION AGENT, THE FACILITY AGENT AND PURCHASER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER
60
PERMITTED BY LAW OR AFFECT ANY PARTY'S RIGHT TO BRING ANY ACTION OR PROCEEDING
IN THE COURTS OF ANY OTHER JURISDICTION.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
61
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CONTRACT FUNDING CORP.,
as Seller
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
Address: One Commerce Center
Suite 000
00xx & Xxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:______________________________
Telecopy No: (302)
GOLD COAST FINANCE, INC.,
as Collection Agent
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
Address: 0000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Telecopy No.:(000) 000-0000
S-1
SUNAMERICA FINANCIAL RESOURCES, INC.
as Facility Agent and Purchaser
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Executive Vice President
Address: 00000 Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
With copy to: Xxxxxxxx X. Xxxxxxx
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Telecopy No.: (000)000-0000
S-2
EXHIBIT A
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, in accordance with the Receivables Purchase and Sale
Agreement (as amended, supplemented or otherwise modified from time to time, the
"Purchase Agreement"; capitalized terms used but not defined herein are used
with the meanings ascribed thereto in the Purchase Agreement) dated as of
September 18, 1996, among Contract Funding Corp., as Seller, Gold Coast Finance,
Inc., as Collection Agent, and SunAmerica Financial Resources, Inc., as
Purchaser and, in its capacity as agent for Purchaser, Facility Agent, the
undersigned does hereby sell, transfer, assign, set over and otherwise convey
without recourse (except as expressly provided in the Purchase Agreement) to
Facility Agent for the account of Purchaser and each successive Assignee thereof
all right, title, and interest of the undersigned, whether now owned or
hereafter acquired, in, to and under the following: (i) all Receivables, (ii)
all Related Security with respect to such Receivables including, without
limitation, (A) all of the interest of the undersigned in any right to receive
payment from a Related Insurer in respect of unearned or return insurance
premiums, and in respect of loss payments which reduce such premiums, securing
payment of the loan or other financing which gave rise to such Receivables, and
any right to receive state guaranty fund reimbursements in respect of any
Related Insurer, (B) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Receivables,
whether pursuant to the Contract related to such Receivables or otherwise,
together with all financing statements signed by an Obligor describing any
collateral securing such Receivables, (C) all guarantees, insurance and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Receivables whether pursuant to the Contract relating
to such Receivables or otherwise and all rights of the undersigned under the
Origination Agreement, (iii) all cash collections and other proceeds of or
related to such Receivables including, without limitation, all cash proceeds of
Related Security with respect to such Receivables, and any collections of such
Receivables deemed to have been received pursuant to the Purchase Agreement and
(iv) all proceeds in any way derived from any of the foregoing. The foregoing
sale does not constitute and is not intended to result in the creation, or any
assumption by the Facility Agent, Purchaser or any Assignee of any obligation of
the Seller, any Originator, insurers or any other Person in connection with the
Receivables, any insurance policy or any agreement or instrument relating to any
of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
This Assignment shall be governed by, and construed in accordance with the
laws of the State of New York. The acknowledgment attached hereto is
incorporated in and made a part of this Assignment by this reference.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ____ day of September, 1996.
CONTRACT FUNDING CORP.,
a Delaware corporation
By
--------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
EXHIBIT F
FORM OF RECEIVABLES ORIGINATION AGREEMENT
This RECEIVABLES ORIGINATION AGREEMENT dated as of September 18, 1996 is
among GOLD COAST FINANCE, INC., a Florida corporation ("Gold Coast"),
NATIONAL-WIDE PREMIUM FINANCE CORPORATION, a Florida corporation
("National-Wide" and, collectively with Gold Coast, as sellers, the "Sellers"),
and CONTRACT FUNDING CORP., a Delaware corporation, as purchaser ("Funding").
PRELIMINARY STATEMENTS:
(1) The Sellers and Funding wish to set forth the terms pursuant to which
the Receivables (as defined in the Purchase Agreement (as hereinafter defined))
and related property are to be sold by the Sellers to Funding, which Receivables
and related property will be transferred by Funding, pursuant to the Receivables
Purchase and Sale Agreement dated as of September 18, 1996 (said Agreement, as
it may be amended, modified or supplemented from time to time, being the
"Purchase Agreement"), among Contract Funding Corp., as seller, Gold Coast
Finance, Inc., as collection agent, and SunAmerica Financial Resources, Inc., as
facility agent and purchaser, to SunAmerica Financial Resources, Inc.
(2) Terms not defined in this Agreement shall have the meanings assigned to
such terms in the Purchase Agreement.
(3) It is a condition precedent to the making of Purchases by Purchaser
under the Purchase Agreement that the Sellers and Funding shall have executed,
delivered and become bound by this Agreement.
NOW, THEREFORE, the parties agree as follows:
Section 1. Purchase and Sale of Receivables. (a) Each Seller will, from
time to time until the Termination Date, forthwith sell to Funding, and Funding
will, from time to time until the Termination Date, forthwith purchase from such
Seller, to be included in the Receivables Pool, all right, title and interest of
such Seller in and to all (i) present and future Receivables, (ii) Collections
and other proceeds and (iii) Related Security (collectively, the "Transferred
Property"), if any, with respect thereto, which Receivables are owed from time
to time to such Seller by Designated Obligors for a purchase price at least
equal to the fair market value of such Receivables computed as set forth in
Section 5.1(l) of the Purchase Agreement (the "Purchase Price"). Funding and
each Seller further agree that each such purchase and sale of each such
Receivable, and the Collections and other proceeds and Related Security with
respect thereto, is
made hereby and shall be effective the later of the date such Receivable is
created or the date of this Agreement.
(b) In consideration for the Receivables, Funding shall on the effective
date of each purchase and sale pay to the Sellers in cash an amount equal to the
Purchase Price.
(c) In connection with the foregoing conveyance, each Seller agrees to
record and file, at its own expense, a financing statement with respect to the
Receivables now existing and hereafter created meeting the requirements of
applicable state law in such manner as is necessary to perfect the sale of the
Receivables to Funding, and the proceeds thereof (and any continuation
statements as are required by applicable state law), and to deliver a
file-stamped copy of each such financing statement (or continuation statement)
or other evidence of such filings (which may, for purposes of this Section,
consist of telephone confirmation of such filing with the file-stamped copy of
each such filing to be provided to Funding in due course), as soon as is
practicable after receipt by such Seller thereof. Each Seller further agrees, at
its own expense, on or prior to the date of this Agreement to execute an
Assignment substantially in the form of Exhibit A hereto.
The parties hereto intend that each conveyance hereunder be a sale of the
Receivables and the other Transferred Property from each Seller to Funding and
not a financing secured by such assets; and the beneficial interest in and title
to the Receivables and the other Transferred Property shall not be a part of
such Seller's estate in the event of the filing of a bankruptcy petition by or
against Seller under any bankruptcy law. In the event that any conveyance
hereunder is for any reason not considered a sale, the parties intend that this
Agreement constitute a security agreement (as defined in the UCC as in effect in
the State of California) under the UCC, and each Seller hereby grants to Funding
a first priority perfected security interest in, to and under the Receivables
and the other Transferred Property, and other property conveyed hereunder and
all proceeds of any of the foregoing for the purpose of securing payment and
performance of all obligations of such Seller to Funding, and that this
Agreement constitute a security agreement under applicable law.
Section 2. Covenants of Sellers. Each Seller hereby agrees as follows:
(a) Such Seller shall make each sale hereunder of Receivables to be
transferred by such Seller to Funding hereunder in accordance with Section
5.1(l) of the Purchase Agreement.
(b) Such Seller will comply in all material respects with all
applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Receivables transferred or to be
transferred by it to Funding hereunder and related Contracts, Related
Security and Collections with respect thereto, including without limitation
the payment before the same becomes delinquent of all taxes, assessments
and governmental charges imposed upon such Seller or its property except to
the extent contested in good faith and by proper proceedings and for
2
which it is maintaining adequate reserves in accordance with generally
accepted accounting principles.
(c) Such Seller will preserve and maintain its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation,
and qualify and remain qualified in good standing as a foreign corporation
in each jurisdiction where the nature of its business requires it to be so
qualified.
(d) Such Seller will, at any time and from time to time during regular
business hours, permit the Facility Agent and Purchaser, individually or
collectively, or their respective agents or representatives, (i) to examine
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the possession
or under the control of such Seller relating to Pool Receivables and the
Related Security, including, without limitation, the related Contracts, and
(ii) to visit the offices and properties of such Seller for the purpose of
examining such materials described in clause (i) above, and to discuss
matters relating to Pool Receivables and the Related Security or any
Selling Party's performance hereunder or under the Purchase Agreement or
any other Purchase Document or the Contracts with any of the officers or
employees of such Seller having knowledge of such matters.
(e) Such Seller will maintain and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing Receivables transferred or to be transferred by it to
Funding hereunder in the event of the destruction of the originals
thereof), and keep and maintain, all documents, books, records and other
information reasonably necessary for the collection of all Receivables
transferred or to be transferred by it to Funding hereunder (including,
without limitation, records adequate to permit the daily identification of
each new such Receivable and all Collections of and adjustments to each
existing such Receivable).
(f) Such Seller will timely perform and comply in all material
respects with all provisions, covenants and other promises required to be
observed by it under the Contracts related to the Pool Receivables or under
any Related Security.
(g) Such Seller will keep its chief place of business and chief
executive office at the address of such Seller referred to in Section 6(h)
hereof or, upon 30 days' prior written notice to the Facility Agent, at any
other locations in a jurisdiction where all action required by Section 8
hereof shall have been taken.
(h) Such Seller will comply in all material respects with each
applicable Credit and Collection Policy in regard to any of the Receivables
transferred or to be transferred by it to Funding hereunder and the related
Contracts and Related Security with respect thereto.
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(i) Such Seller will hold in trust all Collections received by such
Seller (including, without limitation any Collections deemed to have been
received by such Seller pursuant to Section 3 hereof) and deposit such
Collections directly (that is, without any interim deposit to any deposit
account) to the Collection Account on the Business Day of such Seller's
receipt or deemed receipt thereof.
(j) Such Seller will furnish to Funding:
(i) as soon as possible and in any event within two Business Days
after any Responsible Officer of such Seller obtains knowledge of the
occurrence of each Event of Investment Ineligibility and each event
which, with the giving of notice or lapse of time, or both, would
constitute an Event of Investment Ineligibility, continuing on the
date of such statement, a statement of any Responsible Officer of such
Seller (unless a statement with respect to such Event of Investment
Ineligibility or event has previously been so furnished by any
Responsible Officer of Funding pursuant to Section 5.2(d) of the
Purchase Agreement) setting forth details of such Event of Investment
Ineligibility or event and the action which such Seller has taken and
proposes to take with respect thereto; and
(ii) such other information, documents, records or reports
respecting the Receivables, the Related Security or the Contracts or
the condition or operations, financial or otherwise, of such Seller or
any of its subsidiaries as the Facility Agent or Purchaser may from
time to time reasonably request.
(k) Such Seller will not sell, assign (by operation of law or
otherwise) or otherwise transfer, or grant any option with respect to, or
create or suffer to exist any Adverse Claim upon or with respect to, any
Receivable transferred or to be transferred by such Seller to Funding
hereunder or any Related Security or Collections in respect thereof, or
upon or with respect to any related Contract or any account to which any
Collections of any such Receivable are sent, or assign any right to receive
income in respect thereof.
(l) Except as otherwise permitted in Section 6.4 of the Purchase
Agreement, such Seller will not extend, amend or otherwise modify the terms
of any Receivable transferred or to be transferred by such Seller to
Funding hereunder, or amend, modify or waive any term or condition of any
Contract or Related Security related thereto.
(m) Such Seller will not, except as required by law or regulation or
regulatory authorities (as notified in writing to the Facility Agent at
least ten Business Days prior to such change), make any change in the
character of its business or in any Credit and Collection Policy, which
change would be reasonably likely to impair the collectibility of any
Receivable transferred or to be transferred by such Seller to Funding
hereunder.
4
(n) Such Seller will not deposit or otherwise credit, or cause or
permit to be so deposited or credited, to the Collection Account cash or
cash proceeds other than Collections of Pool Receivables and Related
Security.
(o) Such Seller will not merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (except as
contemplated hereby) to any Person.
(p) Such Seller will not change its name or identity, or its chief
executive office, unless at least 30 days prior to the effective date of
any such change such Seller delivers to the Facility Agent UCC financing
statements, executed by Funding and such Seller, necessary to reflect such
change and to continue the perfection of the ownership interests created by
the Purchase Documents.
(q) Each Seller agrees to treat this conveyance for all purposes
(including without limitation tax and financial accounting purposes) as a
sale on all relevant books, records, tax returns, financial statements and
other applicable documents.
(r) Each Seller shall at all times provide the Facility Agent or its
agents or representatives with access (via a license and custody agreement
or otherwise) to software which will enable the Facility Agent to operate
such Seller's premium finance receivable accounting and operations systems
on an IBM AS/400 computer or other system acceptable to the Facility Agent.
Section 3. Collections; Yield Maintenance. Each Seller hereby agrees that
if on any day the Outstanding Balance of a Receivable transferred by such Seller
to Funding hereunder is either reduced or cancelled as a result of (a) any
cancellation of a Contract prior to the date on which Funding has made funds
available to or for the account of any related Obligor, or (b) such Seller's
receipt of any prepayment by any Obligor of amounts payable under a Contract, or
(c) any adjustment, or any other modification to, termination of, or rejection
of, any Contract by any Selling Party or any Affiliate thereof (other than any
adjustment or modification made in accordance with the provisions of Section 6.4
of the Purchase Agreement by Gold Coast as Collection Agent), or (d) a setoff in
respect of any claim by the Obligor thereof against any Selling Party or any
Affiliate thereof (whether such claim arises out of the same or a related
transaction or an unrelated transaction), such Seller shall be deemed to have
received on such day a Collection of such Receivable in the amount of such
reduction or cancellation and shall make the deposit required in connection
therewith pursuant to Section 2(i) hereof. If on any day any of the
representations or warranties in Section 6(g) hereof proves not to have been
true when made or deemed made hereunder with respect to a Receivable transferred
by any Seller to Funding hereunder, such Seller shall be deemed to have received
on such day a Collection in full of such Receivable and shall make the deposit
required in connection therewith pursuant to Section 2(i) hereof. All
Collections received from an Obligor of any Receivable shall be applied (A) to
Receivables then outstanding of such Obligor in the order of the age of such
Receivables, starting
5
with the oldest such Receivable, except if payment is designated by such Obligor
for application to specific Receivables, and (B) first, to principal and other
amounts owed by such Obligor in respect of such Receivable other than accrued
interest and late fees, and second, to accrued interest and late fees in respect
of such Receivable. If the funds on deposit in the Collection Account on the
first Business Day following any Settlement Period are insufficient for the
Facility Agent to distribute such funds, in the order required, in payment in
full of the accrued Yield on the Purchased Interest, the Sellers, as joint and
several obligors, shall on such first day pay directly to the Facility Agent for
the account of Purchaser the amount of such insufficiency.
Section 4. Performance of Agreements. Each Seller consents to, and agrees
to perform all actions required to be, or contemplated as being, performed by it
under, and to do all other actions required for the performance and observance
of, the terms and provisions of Articles V and VI of the Purchase Agreement with
respect to such Seller or the Transferred Property.
Section 5. Payments. Each Seller agrees that all payments and deposits to
be made by it under this Agreement will be made in accordance with Sections 2.8
and 2.12 of the Purchase Agreement.
Section 6. Representations and Warranties of the Sellers. Each Seller
hereby represents and warrants as follows:
(a) Such Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction indicated at the
beginning of this Agreement and is duly qualified to do business, and is in
good standing, in every jurisdiction where the nature of its business
requires it to be so qualified.
(b) The execution, delivery and performance by such Seller of this
Agreement, and the transactions contemplated hereby, and such Seller's use
of the proceeds of Purchases and reinvestments, are within such Seller's
corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (i) such Seller's charter or by-laws or (ii) law
or any Contract or Related Security or any other contractual restriction
binding on or affecting such Seller, and do not result in or require the
creation of any Adverse Claim (other than pursuant hereto) upon or with
respect to any of its properties; and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by such Seller of this
Agreement, or for the perfection of or the exercise by Funding, the
Facility Agent, Purchaser, or any Indemnified Party of their respective
rights and remedies under this Agreement or the other Purchase Documents,
except for the filings of the financing statements referred to in Article
III of the Purchase Agreement, all of which, on or prior to
6
the date of the initial Purchase, will have been duly made and be in full
force and effect.
(d) This Agreement is the legal, valid and binding obligation of such
Seller enforceable against such Seller in accordance with its terms, except
to the extent that its enforceability may be limited by the applicable
bankruptcy, insolvency, reorganization, and other similar laws affecting
creditors' rights generally or by general principles of equity.
(e) There is no pending or, to the knowledge of such Seller,
threatened action or proceeding affecting such Seller or any of its
subsidiaries before any court, governmental agency or arbitrator (i) which
is reasonably likely to materially adversely affect (A) the consolidated
financial condition or operations of such Seller and its consolidated
subsidiaries taken as a whole or (B) the ability of such Seller or Funding
to perform its obligations under this Agreement, the Purchase Agreement, or
the other Purchase Documents, or (ii) which purports to affect the
legality, validity or enforceability of the Purchase Agreement or the other
Purchase Documents.
(f) No proceeds of any Purchase or reinvestment will be used by such
Seller to acquire any equity security of a class which is registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
(g) Immediately prior to the transfer hereunder to Funding of any
Receivable by such Seller, such Seller is the legal and beneficial owner of
such Receivable and the Related Security with respect thereto free and
clear of any Adverse Claim except as created by this Agreement or the
Purchase Agreement. Upon each transfer hereunder to Funding of any
Receivable by such Seller, Funding will acquire a valid and perfected first
priority ownership interest in such Receivable and in the Related Security
and Collections with respect thereto free and clear of any Adverse Claim
except as created by this Agreement or by the Purchase Agreement. No
effective financing statement or other instrument similar in effect
covering any Receivable transferred or to be transferred by such Seller to
Funding hereunder or any Contract or Related Security or Collections with
respect thereto is on file in any recording office, except those filed in
favor of the Facility Agent relating to the Purchase Agreement.
(h) The chief place of business and chief executive office of such
Seller are located at 0000 Xxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxx, Xxxxxxx
00000.
(i) Neither such Seller nor any Affiliate of such Seller has any
direct or indirect ownership or other financial interest in the Facility
Agent or Purchaser.
(j) Funding has purchased each outstanding Receivable to be
transferred hereunder by such Seller and shall have paid to such Seller in
cash, on
7
the date of effectiveness of such purchase, an amount at least equal to the
fair market value of such Receivable as determined by Funding and such
Seller computed by subtracting from the face amount of such Receivable, a
discount that reflects (among other things) the cost to Funding of owning
such Receivable (including, without limitation, Funding's cost of funding
its purchase of such Receivable) and the estimated costs (taking into
account collection risks) of collection of such Receivable. Each such
purchase shall not have been made for or on account of an antecedent debt
owed by such Seller to Funding and no such transfer is or may be voidable
or subject to avoidance under any section of the Bankruptcy Reform Act of
1978 (11 U.S.C. (section) 101 et seq.), as amended, or any successor
statute.
Section 7. Rights of Funding. (a) In addition to the obligations of the
Sellers under Section 2(i), Each Seller shall at Funding's request segregate all
cash, checks and other instruments received by it from time to time constituting
Collections of Pool Receivables in a manner acceptable to Funding and shall
remit, promptly upon receipt, all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Facility Agent or
its designee.
(b) Each Seller shall at Funding's request, at such Seller's expense,
notify at any time the Obligors of, or Related Insurers relating to, Pool
Receivables, or any of them, of the ownership of the Transferred Property and
direct such Obligors, or any of them, that payments of amounts payable under
Pool Receivables be made directly to the Facility Agent or its designee.
(c) Each Seller hereby authorizes Funding to take any and all steps in such
Seller's name and on behalf of such Seller, Funding and Purchaser, necessary or
desirable in the determination of Funding, and in compliance with all applicable
laws, rules and regulations, to collect all amounts due under Pool Receivables
transferred by such Seller to Funding hereunder, including, without limitation,
endorsing such Seller's name on checks and other instruments representing
Collections, enforcing such Pool Receivables and the Related Security and the
related Contracts, and adjusting, settling or compromising the amount or payment
thereof, in the same manner and to the same extent as such Seller might have
done.
Section 8. Further Assurances. Each Seller agrees that from time to time,
at its expense, it will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary, or that the
Facility Agent may at its election, reasonably request in order to perfect,
protect or more fully evidence the sales of Receivables by such Seller to
Funding hereunder, or to enable any of them or the Facility Agent or any Agent
to exercise or enforce any of their respective rights under the Purchase
Agreement or the other Purchase Documents or hereunder. Without limiting the
generality of the foregoing, each Seller will, upon the request of the Facility
Agent: (i) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary, or as the Facility Agent may reasonably request,
in order to perfect, protect or evidence such sales hereunder; (ii) in
accordance with applicable law and pursuant to the instructions of the Facility
Agent, exercise any power of attorney granted in favor of such Seller (or
Funding, whether or not
8
through such Seller) by any Obligor under any Contract or otherwise; and (iii)
xxxx its master data processing records evidencing Receivables transferred by
such Seller to Funding hereunder and related Contracts and Related Security with
a legend similar to the legend set forth in Section 5.1(j) of the Purchase
Agreement (treating Funding as Purchaser and substituting this Agreement for the
Purchase Agreement). Each Seller hereby authorizes Funding to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relating to all or any of the Receivables transferred or to be
transferred by it to Funding hereunder and the Contracts, Related Security and
Collections with respect thereto now existing or hereafter arising without the
signature of such Seller where permitted by law. A photocopy or other
reproduction of this Agreement or any financing statement covering all or and of
such Receivables and the Contracts, Related Security and Collections with
respect thereto shall be sufficient as a financing statement where permitted by
law. If any Seller fails to perform any agreement contained herein, Funding may
itself perform, or cause performance of, such agreement, and the expenses of
Funding incurred in connection therewith shall be payable by such Seller.
Section 9. Indemnification. Without limiting any other rights which Funding
may have hereunder or under the Purchase Agreement or under applicable law, each
Seller hereby agrees to indemnify Funding from and against any and all claims,
losses and liabilities actually incurred by Funding as a result of a demand for
a comparable amount from Funding by any Indemnified Party or Parties under
Section 12.1 of the Purchase Agreement (including reasonable attorneys' fees)
(all of the foregoing being collectively referred to as "Indemnified Amounts")
growing out of or resulting from or relating to this Agreement or the Purchase
Agreement or such Seller's use of proceeds of Purchases or reinvestments or in
respect of any Receivable transferred or to be transferred by such Seller to
Funding hereunder or any Contract or Related Security in respect thereof,
excluding, however, in the case of Indemnified Amounts resulting from any such
demand by any such Indemnified Party, (a) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement or the Purchase Agreement) for uncollectible Receivables or
Related Security, or (c) any income taxes incurred by such Indemnified Party
arising out of or as a result of this Agreement, the Purchase Agreement, or any
other Purchase Documents or in respect of any Receivable or any Contract or
Related Security. Without limiting or being limited by the foregoing, each
Seller shall pay on demand to Funding any and all amounts necessary to indemnify
Funding from and against any and all Indemnified Amounts relating to or
resulting from:
(i) any Receivable transferred by such Seller to Funding hereunder
which is not on the date of such transfer an Eligible Receivable or which
thereafter ceases to be an Eligible Receivable:
(ii) reliance on any representation or warranty made (including
without limitation pursuant to Section 3.2 of the Purchase Agreement) by or
on behalf of such Seller (or any of its officers) under or in connection
with this Agreement or the Purchase Agreement or any other document
delivered under this Agreement or the Purchase Agreement (including without
limitation any Purchaser Report or Insurance Carrier Exposure Report) which
shall have been incorrect when made;
9
(iii) the failure by such Seller to comply with any applicable law,
rule or regulation with respect to any Receivable transferred or to be
transferred by it to Funding hereunder or the related Contract or any
Related Security in respect thereof, or the nonconformity of any such
Receivable or the related Contract or any such Related Security with any
such applicable law, rule or regulation;
(iv) the failure to vest in Funding a first priority perfected
ownership interest in the Receivables transferred or to be transferred by
such Seller to Funding hereunder and the Related Security and Collections
in respect thereof, free and clear of any Adverse Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables transferred or to be transferred by such Seller to Funding
hereunder and the Related Security and Collections in respect thereof,
whether at the time of any Purchase or reinvestment or at any subsequent
time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
transferred or to be transferred by such Seller to Funding hereunder and
in, or purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such Receivable or the related Contract not
being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting from
any insurance policy related to such Receivable or the furnishing or
failure to furnish such insurance policy;
(vii) any failure of such Seller, if applicable at such time, as
Collection Agent or otherwise, to perform its duties or obligations in
accordance with the provisions of Article VI of the Purchase Agreement, or
any failure of such Seller to perform its duties or obligations under any
Contract or under this Agreement or any other document furnished under this
Agreement or the Purchase Agreement;
(viii) any third party investigation, litigation or proceeding related
to this Agreement or the Purchase Agreement or any other document furnished
under this Agreement or the Purchase Agreement or such Seller's use of
proceeds of Purchases or reinvestments or the ownership of the Purchased
Interest or in respect of any Receivable transferred or to be transferred
by such Seller to Funding hereunder or any Related Security or Contract in
respect thereof;
(ix) the commingling of Collections of Receivables transferred or to
be transferred by such Seller to Funding or the Collection Agent hereunder
at any time with other funds;
10
(x) any claim by any Assignee;
(xi) during any period during which, and to the extent, such Seller is
the Collection Agent, or a subcontracting agent of the Collection Agent,
any cancellation of any insurance policy in such a manner (due to timing or
otherwise) that would cause the unearned or return premiums related thereto
to be less than those premiums otherwise returnable upon proper and timely
cancellation of such policy in accordance with the applicable Credit and
Collection Policy; or
(xii) any civil or criminal penalty or other liability, or any sale,
forfeiture or loss of any of the property, rights or interests covered
hereunder, arising out of or in connection with the non-payment of taxes,
assessments or other governmental charges imposed upon such Seller or its
property.
Section 10. Amendment. No amendment or waiver of any provision of this
Agreement, and no consent to any departure by any Seller herefrom, shall in any
event be effective unless the same shall be in writing and signed by Funding and
the Facility Agent, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No amendment shall be effective against any Seller unless the same shall
be in writing and signed by such Seller.
Section 11. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of each Seller and Funding, and their respective
successors and assigns, except that no Seller shall have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Facility Agent. This Agreement shall create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Collection Date. All representations and
warranties and covenants shall survive the conveyance of the Transferred
Property hereunder and Funding's conveyance of the Transferred Property to the
Facility Agent.
Section 12. No Waiver; Remedies. No failure on the part of Funding or the
Facility Agent to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 13. Entire Agreement. This Agreement comprises the complete and
integrated agreement of the parties on the subject matters hereof and, except as
otherwise provided herein, supersedes all prior agreements, written or oral, in
the subject matters hereof.
Section 14. Conveyance of Receivables and Transferred Property by Funding.
Each Seller acknowledges that Funding intends, pursuant to the Purchase
Agreement, to convey the Receivables and the other Transferred Property,
together with its rights under this Agreement, to the Facility Agent for the
benefit of itself, Purchaser and the other Indemnified Parties. Each Seller
acknowledges and consents to such conveyance and waives any further notice
thereof and
11
covenants and agrees that the representations, warranties and covenants of the
Sellers contained in this Agreement and the rights of Funding hereunder are
intended to benefit the Facility Agent, Purchaser and the other Indemnified
Parties. In furtherance of the foregoing, the Sellers covenant and agree to
perform their respective duties and obligations hereunder for the benefit of the
Facility Agent and that, notwithstanding anything to the contrary in this
Agreement, the Sellers shall be directly liable to the Facility Agent (without
regard to any failure by the Collection Agent or Funding to perform their
respective duties and obligations hereunder or under the Purchase Agreement) and
that the Facility Agent may enforce directly the duties and obligations of the
Sellers under this Agreement against the Sellers for the benefit of itself,
Purchaser and the other Indemnified Parties without the consent or joinder of
Funding.
Section 15. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, except to the
extent that the perfection or the effect of non-perfection of the interests of
Funding, or remedies hereunder, in respect of the Receivables, any Related
Security or any Collections in respect thereof, are governed by the laws of a
jurisdiction other than the State of New York. The acknowledgment attached
hereto is incorporated in and made a part of this Note by this reference.
Section 16. Costs and Expenses. The Sellers will pay all expenses incident
to the performance of its obligations under this Agreement and the Sellers, as
joint and several obligors, agree to pay all reasonable out-of-pocket costs and
expenses of Funding and the Facility Agent, including fees and expenses of
counsel, in connection with the perfection as against third parties of Funding's
or the Facility Agent's right, title and interest in and to the Transferred
Property and the enforcement of any obligations of the Sellers hereunder.
Section 17. Counterparts; Severability. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
Section 18. Nonpetition Covenant. Each Seller agrees that it shall not
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against Funding under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official of Funding or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of Funding.
12
IN WITNESS WHEREOF, the parties have caused this Receivables Origination
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
Very truly yours,
GOLD COAST FINANCE, INC.
By:
-------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
NATIONAL-WIDE PREMIUM
FINANCE CORPORATION
By:
-------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
CONTRACT FUNDING CORP.
By:
-------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
ACKNOWLEDGED AND AGREED:
SUNAMERICA FINANCIAL RESOURCES, INC.
By:
----------------------------------
Xxxxxxxx X. Xxxxxxx
Senior Vice President
S-1
EXHIBIT G
[FORM OF USA GUARANTY]
USA GUARANTY
THIS GUARANTY ("Guaranty") is executed as of September 18, 1996 by USA
Finance, Inc., a Delaware corporation ("Guarantor") in favor of SunAmerica
Financial Resources, Inc. ("SAFR"), a Delaware corporation, as Purchaser and, in
its capacity as agent for Purchaser, Facility Agent, and the Indemnified Parties
(the Purchaser, Facility Agent and Indemnified Parties are collectively referred
to as the "Guaranteed Persons" and individually as a "Guaranteed Person").
PRELIMINARY STATEMENTS
A. Contract Funding Corp., as Seller, Gold Coast Finance, Inc. ("Gold
Coast") and SAFR are entering into a Receivables Purchase and Sale Agreement (as
amended, supplemented or otherwise modified from time to time, the "Purchase
Agreement") dated as of September 18, 1996, pursuant to which, subject to the
terms and conditions thereof, Purchaser will purchase Receivables and Gold Coast
will act as initial Collection Agent (for purposes of this Guaranty, "Collection
Agent" shall mean Gold Coast or any affiliate of Gold Coast which may succeed
Gold Coast as Collection Agent).
B. Seller, Gold Coast and National-Wide Premium Finance Corporation
("National-Wide") are entering into a Receivables Origination Agreement (the
"Origination Agreement") dated as of September 18, 1996, pursuant to which,
subject to terms and conditions thereof, Originators will sell Receivables to
Seller and perform other duties with respect to the Receivables.
C. Guarantor is the owner of 100% of the capital stock of each of Gold
Coast and National-Wide and will receive substantial direct and indirect
benefits from the transactions contemplated by the Purchase Agreement and other
Purchase Documents.
D. It is a condition precedent to the purchase of the Receivables that
Guarantor executes this Guaranty and delivers it to the Facility Agent for the
benefit of the Guaranteed Persons.
In consideration of the execution of the Purchase Agreement by SAFR,
and the purchase of the Receivables by the Purchaser, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Guarantor, Guarantor agrees as follows:
1. Definitions. Unless otherwise defined in this Guaranty, all
capitalized terms used in this Guaranty, including the opening paragraph and
Preliminary Statements hereof, shall have the meanings ascribed to such terms in
the Purchase Agreement.
2. Guaranty of Obligations. Guarantor absolutely, irrevocably and
unconditionally guarantees the full and timely payment and performance of: (a)
all of the obligations of Collection Agent under the Purchase Agreement
including without limitation (i) the servicing, administering and collecting of
the Receivables pursuant to the Purchase Agreement on behalf of the Purchaser
and any Assignees and the making of deposits and remittances required by
Collection Agent to the Collection Account, and (ii) the payment of all amounts
and indemnities payable by the Collection Agent pursuant to the Purchase
Agreement; and (b) all of the obligations of Gold Coast and National-Wide under
the Origination Agreement and other Purchase Documents (collectively, the
"Obligations").
3. Validity of Obligations; Irrevocability. Guarantor agrees that its
obligations under this Guaranty shall be unconditional, irrespective of (i) the
validity, enforceability, discharge, disaffirmance, settlement or compromise (by
any Person including a trustee in bankruptcy or other similar official) of the
Obligations or of the Purchase Agreement, (ii) the absence of any attempt to
collect the Obligations from Collection Agent, Gold Coast, National-Wide or any
guarantor or other Person, (iii) the waiver or consent by any Guaranteed Person
with respect to any provision of any instrument or agreement evidencing the
Obligations, (iv) any change of the time, manner or place of payment or
performance, or any other term of any of the Obligations, (v) any law,
regulation or order of any jurisdiction affecting any term of any of the
Obligations or rights of any Guaranteed Person with respect thereto, (vi) the
failure by Facility Agent or any Person to take any steps to perfect and
maintain perfected its interest in the Receivables or other property acquired by
the Facility Agent from the Seller or any security or collateral related to the
Obligations, (vii) the commencement of any bankruptcy, insolvency or similar
proceeding with respect to Collection Agent, Gold Coast or National-Wide or
(viii) any legal or equitable discharge or defense of a guarantor. Guarantor
agrees that no Guaranteed Person shall be under any obligation to xxxxxxxx any
assets in favor of or against or in payment of any or all of the Obligations.
Guarantor further agrees that, to the extent that Collection Agent, Gold Coast
or National-Wide makes a payment or payments to any Guaranteed Person, which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to such
payor, its estate, a trustee, receiver or any other party, including without
limitation, Guarantor, under any bankruptcy, insolvency or similar state or
federal law, or otherwise, then to the extent of such payment or repayment, the
Obligations or part thereof which has been paid, reduced or satisfied by such
amount shall be automatically reinstated and continued in full force and effect,
without further action or notice, as of the date such initial payment, reduction
or satisfaction occurred. Guarantor waives all presentments, demands for
performance, notices of dishonor and notices of acceptance of this Guaranty.
Guarantor agrees that its obligations under this Guaranty shall be irrevocable.
4. Representations and Warranties. Guarantor hereby represents and
warrants to each of the Guaranteed Persons as follows:
2
(a) Organization, etc. Guarantor is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and has full corporate power, authority and legal right to own or
lease all of its properties and assets, to carry on its business as it is now
being conducted and to execute, deliver and perform this Guaranty. Guarantor is
duly qualified as a foreign corporation in good standing under the laws of each
other jurisdiction in which the nature of its business requires such
qualification and in which failure to so qualify would render this Guaranty
unenforceable or would have an adverse effect on such Guarantor's ability to
perform its obligations under this Guaranty.
(b) Authorization; Valid Agreement. The execution, delivery and
performance of this Guaranty have been duly authorized by all required corporate
or other action on the part of Guarantor, and this Guaranty constitutes the
legal, valid and binding obligation of Guarantor, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, conservatorship, receivership, liquidation or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
(c) No Conflicts. The execution, delivery and performance by
Guarantor of this Guaranty does not and will not (a) contravene its charter or
by-laws, (b) violate any provision of, or require any filing, registration,
consent or approval under, any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Guarantor; (c) result in a breach of or constitute a default or
require any consent under any indenture or loan or credit agreement or any other
agreement, lease or instrument to which Guarantor is a party or by which it or
its properties may be bound or affected or (d) result in, or require, the
creation or imposition of any lien upon or with respect to any of the properties
now owned or hereafter acquired by Guarantor.
(d) No Proceedings. There are no proceedings or investigations
pending, or, to the best knowledge of Guarantor, threatened against Guarantor
before any governmental authority (i) asserting the invalidity of this Guaranty,
(ii) seeking to prevent the consummation of the transactions contemplated by
this Guaranty, (iii) seeking any determination or ruling that would adversely
affect the performance by Guarantor of its obligations under this Guaranty or
(iv) seeking any determination or ruling that would adversely affect the
validity or enforceability of this Guaranty.
5. Covenants. Guarantor shall not and shall not permit any of its
subsidiaries to (i) directly or indirectly, order, pay, make or set apart any
sum for any prepayment or redemption of any kind of any Permitted Subordinated
Debt, except regularly scheduled interest and principal payments as and when
due, or (ii) upon the occurrence of a default under the Note or any event which
permits any Guaranteed Person to demand payment hereunder make any payment of
any kind, whether for principal, interest or otherwise, with respect to any of
the Permitted Subordinated Debt. Guarantor shall deliver to SAFR upon execution
of this Guaranty, a complete list of the names and addresses of each holder of
Permitted Subordinated Debt and within 10 days of any issuance of Permitted
Subordinated Debt or notice of any change in the name or address of any holder
or representative of Permitted Subordinated Debt, shall deliver to SAFR an
updated and complete list of holders (and any representative of any holder) of
Permitted Subordinated Debt.
3
6. Independent Obligations. The obligations of Guarantor hereunder are
undertaken as primary obligor, jointly and severally with, and independently of,
the obligations of Collection Agent, Gold Coast, National-Wide or any other
obligor, guarantor or Person, and action or actions may be brought or prosecuted
directly against Guarantor whether or not action is brought first or at all
against Collection Agent, Gold Coast, National-Wide or any other obligor,
guarantor or Person, against any collateral security or any other circumstance
whatsoever, and whether or not Collection Agent, Gold Coast, National-Wide or
any other obligor, guarantor or Person is joined in any such action or actions,
or any claims or demands are made or are not made, or any action is taken on or
against Collection Agent, Gold Coast, National-Wide any other obligor, guarantor
or Person or any collateral security or otherwise.
7. Waivers. Without limiting any other provision hereof, to the fullest
extent permitted by applicable law, Guarantor hereby waives: (i) any defense
arising by reason of any invalidity or unenforceability of Collection Agent's,
Gold Coast's, or National-Wide's obligations in respect of the Purchase
Agreement and the Purchase Documents, any manner in which any Guaranteed Person
has exercised (or not exercised) its rights and remedies under the Purchase
Agreement and the Purchase Documents, or any cessation from any cause whatsoever
of the liability of the Collection Agent, Gold Coast, National-Wide or any other
obligor, guarantor or Person; (ii) all presentments, demands for performance,
notices of nonperformance, protests, notices of protest, notices of dishonor and
notices of acceptance of the Purchase Agreement and the Purchase Documents;
(iii) any release of collateral security provided under the Purchase Agreement
or other Purchase Documents; (iv) notice of any indulgences, extensions,
consents or waivers given to Collection Agent, Gold Coast, National-Wide or any
other obligor, guarantor or Person, notice of the occurrence of any potential
default or Event of Default under the Purchase Agreement or default or event of
default (or the like) under any of the Purchase Documents, or other notice of
any kind whatsoever; (v) any right or claim of right to cause any Guaranteed
Person to proceed against Collection Agent, Gold Coast, National-Wide or any
other obligor, guarantor or Person in any particular order, to proceed against
or exhaust any collateral security held by any Guaranteed Person at any time or
to pursue any other right or remedy whatsoever at any time; (vi) any requirement
of diligence or promptness on any Guaranteed Person's part in (X) making any
claim or demand on or commencing suit against Collection Agent, Gold Coast,
National-Wide or any other obligor, guarantor or Person, and (Y) otherwise
enforcing any Guaranteed Person's rights in respect of the Purchase Agreement or
the Purchase Documents; and (vii) any duty of any Guaranteed Person to advise
Guarantor of any information known to any Guaranteed Person regarding the
financial condition of Collection Agent, Gold Coast, National-Wide or any other
circumstance, it being agreed that Guarantor assumes responsibility for being
and keeping informed of such condition or any such circumstance.
Without limiting the generality of the foregoing, to the fullest extent
permitted by applicable law, Guarantor specifically waives all defenses
Guarantor may have based upon any election of remedies by any Guaranteed Person
which destroys Guarantor's rights to proceed against Collection Agent, Gold
Coast, National-Wide or any other obligor, guarantor or Person for
reimbursement, contribution or otherwise, including any loss of rights that it
may suffer by reason of any rights, powers, remedies or defenses of Collection
Agent, Gold Coast or National-Wide in connection with any laws limiting,
qualifying or discharging indebtedness of or remedies against Collection Agent,
Gold Coast or National-Wide, and Guarantor hereby agrees not to exercise or
pursue, so long as any of the
4
Obligations remain unsatisfied, any right to reimbursement, subrogation, or
contribution from Collection Agent, Gold Coast or National-Wide in respect of
payments hereunder.
8. Significance of Waivers. Guarantor represents, warrants and agrees
that each of the waivers set forth herein are made with such Guarantor's full
knowledge of their significance and consequences, with the understanding that
events giving rise to any defense waived may diminish, destroy or otherwise
adversely affect rights which such Guarantor otherwise may have against
Collection Agent, Gold Coast, National-Wide or any other obligor, guarantor or
Person, or against collateral, and that under the circumstances the waivers are
reasonable.
9. Nonpetition Covenant. Guarantor shall not petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Seller under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Seller or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Seller.
10. Governing Law. This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of New York.
11. Jurisdiction; Jury Trial Waiver; Agent for Service of Process.
Guarantor hereby irrevocably consents that any legal action or proceeding
against it or any of its property arising out of or in any way connected
herewith may be instituted in any state or United States federal court located
in the State of New York, and by execution and delivery hereof, Guarantor hereby
irrevocably submits to the non-exclusive jurisdiction of the aforesaid courts in
any such legal action or proceeding, and to service of process out of such
courts by registered mail. Guarantor hereby waives trial by jury.
12. Counterparts. This Guaranty may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all such
counterparts together shall constitute but one and the same instrument.
5
IN WITNESS WHEREOF, this Guaranty has been duly executed by Guarantor
as of the date and year first above written.
USA FINANCE, INC.,
as Guarantor
By:_______________________________
Xxxxxxx X. Xxxxxxxxxx
Chief Executive Officer
Acknowledged and accepted:
SUNAMERICA FINANCIAL RESOURCES, INC.
By:_________________________________________
Xxxxxxxx X. Xxxxxxx
Senior Vice President
6
EXHIBIT H
FORM OF CONSENT AND AGREEMENT
Dated: ________________, 1996
GOLD COAST FINANCE, INC.
0000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
NATIONAL-WIDE PREMIUM FINANCE CORP.
0000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
We hereby notify you that we have assigned and pledged to SunAmerica
Financial Resources, Inc. as facility agent (together with its successors and
assigns from time to time, the "Facility Agent") for the benefit of itself,
affiliates, assigns and participants from time to time, and certain other
beneficiaries from time to time (collectively the "Purchaser"), and have granted
to the Facility Agent for the benefit of itself and the Purchaser from time to
time a security interest in and to, all of our right, title and interest in and
to the following (collectively the "Collateral"):
(1) the Receivables Origination Agreement dated as September 18, 1996,
as the same may be amended, supplemented or otherwise modified from time to
time (the "Origination Agreement," the terms defined therein being used
herein as therein defined), from each of you to us (together with our
successors and assigns, "Funding");
(2) all rights to receive moneys due and to become due under or
pursuant to the Origination Agreement;
(3) the right to perform under the Origination Agreement and to compel
performance and otherwise exercise all remedies thereunder; and
(4) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds which constitute property of the
types described in clauses (1) through (3) above).
In connection with the assignment, pledge and grant described above, we
hereby irrevocably instruct you, and by your execution in the space provided on
the last page hereof you hereby agree for the benefit of the Facility Agent and
the Purchaser, as follows:
(a) You shall make (i) all payments to be made by you to Funding under
paragraph 9 of the Origination Agreement directly to the Facility Agent by
payment to the account (account number 0601001020540) of the Facility Agent
maintained at the office of SunTrust Bank, Miami, N.A. or otherwise in
accordance with the instructions of the Facility Agent and (ii) all other
payments to be made by you under the Origination Agreement (including,
without limitation, payments under paragraph 3 of the Origination
Agreement) in accordance with the provisions of the Origination Agreement.
(b) All payments to be made by you to Funding or Facility Agent under
or in connection with the Origination Agreement shall be made by you
irrespective of, and without deduction for, any counterclaim, defense,
recoupment or set-off, and shall be final, and you will not seek to recover
from Funding, the Facility Agent or Purchaser for any reason any such
payment once made.
(c) The Facility Agent shall be entitled, as and to the extent agreed
among the Purchaser and the Facility Agent, to exercise any and all of our
rights and remedies under the Origination Agreement, including without
limitation our rights, if any, to make requests, demands for payment and
other demands, determinations and designations, to amend, supplement or
modify, to give consents or waivers, and to deliver notices to you, and to
receive notices, requests, reports and other information to be delivered by
you, from time to time thereunder; and you shall in all respects comply
with and perform in respect of such exercise. Neither the Facility Agent
nor Purchaser shall have any obligation or liability with respect to any of
our obligations under the Origination Agreement.
In order to induce Purchaser to purchase interests from time to time in
Receivables, by execution of this letter you hereby acknowledge and agree:
(i) You hereby reaffirm for the benefit of the Facility Agent and the
Purchaser the representations and warranties made by you in paragraph 6 of
the Origination Agreement.
(ii) The Origination Agreement is (A) the legal, valid and binding
obligation of each party thereto enforceable against you and each other
party thereto in accordance with its terms, in each case except to the
extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, and other similar laws affecting creditors'
rights generally or by general principles of equity, and (B) in full force
and effect, and payments by you that are payable at any time to the
Facility Agent are not subject to any dispute, offset, counterclaim or
defense whatsoever.
Upon your execution in the space provided below, this letter shall be
binding upon you and your successors, and shall inure to the benefit of the
Facility Agent and the Purchaser and their respective successors, transferees
and assigns from time to time. This letter shall be governed by and construed in
accordance with the laws of the State of New York.
Please consent to the pledge, assignment and grant described in the first
paragraph hereof, and agree to the provisions of this letter, by signing in the
space provided below on two of the enclosed copies hereof and send both signed
copies to the Facility Agent at its address at 00000 Xxxxxxx Xxxx., Xxxxx 0000,
Xxxxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx.
Very truly yours,
CONTRACT FUNDING CORP.
By:
-------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
Each of the undersigned
consents to the pledge,
assignment and grant and
agrees to the above provisions
as of the date first above written:
GOLD COAST FINANCE, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
NATIONAL-WIDE PREMIUM FINANCE CORPORATION
By:
------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
