EXHIBIT 10(p)
SALE AND LEASEBACK AGREEMENT BETWEEN 21ST CENTURY INSURANCE COMPANY AND GENERAL
ELECTRIC CAPITAL CORPORATION
MASTER LEASE AGREEMENT
dated as of December 31, 2002 ("AGREEMENT")
THIS AGREEMENT, is between GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF
AND AS AGENT FOR CERTAIN PARTICIPANTS ("LESSOR") and 21ST CENTURY INSURANCE
COMPANY ("LESSEE"). Lessor has an office at 0 XXXXX XXXX XXXXX, XXXXX 000, XXXX
XXXXXX, XX 00000. Lessee is a corporation organized and existing under the laws
of the State of California. Lessee's mailing address and chief place of
business is 0000 XXXXXXXXXX XXXXXX, XXXXXXXX XXXXX, XX 00000. This Agreement
contains the general terms that apply to the leasing of Equipment from Lessor to
Lessee. Additional terms that apply to the Equipment (term, rent, options,
etc.) shall be contained on a schedule ("SCHEDULE").
1. LEASING:
(a) Lessor agrees to lease to Lessee, and Lessee agrees to lease from
Lessor, the equipment, software and other property (collectively, "EQUIPMENT")
described in any Schedule signed by both parties.
(b) Lessor shall purchase Equipment from the manufacturer or supplier
("SUPPLIER") and lease it to Lessee if on or before the Last Delivery Date
(specified in the Schedule) Lessor receives (i) a Schedule for the Equipment,
(ii) evidence of insurance which complies with the requirements of Section 8,
and (iii) such other documents as Lessor may reasonably request. Each of the
documents required above must be in form and substance satisfactory to Lessor.
Lessor hereby appoints Lessee its agent for inspection and acceptance of the
Equipment from the Supplier. Once the Schedule is signed, the Lessee may not
cancel the Schedule.
2. TERM, RENT AND PAYMENT:
(a) The rent payable for the Equipment and Lessee's right to use the
Equipment shall begin on the earlier of (i) the date when the Lessee signs the
Schedule and accepts the Equipment or (ii) when Lessee has accepted the
Equipment under a Certificate of Acceptance ("LEASE COMMENCEMENT DATE"). The
term of this Agreement shall be the period specified in the applicable Schedule.
The word "term" shall include all basic and any renewal terms.
(b) Lessee shall pay rent to Lessor at its address stated above, except
as otherwise directed by Lessor. Rent payments shall be in the amount set forth
in, and due as stated in the applicable Schedule. If any Advance Rent (as
stated in the Schedule) is payable, it shall be due when the Lessee signs the
Schedule. Advance Rent shall be applied to the first rent payment and the
balance, if any, to the final rent payment(s) under such Schedule. In no event
shall any Advance Rent or any other rent payments be refunded to Lessee. If
rent is not paid within ten (10) days of its due date, Lessee agrees to pay a
late charge of three cents ($.03) per dollar on, and in addition to, the amount
of such rent but not exceeding the lawful maximum, if any.
3. TAXES: If permitted by law, Lessee shall report and pay promptly all
taxes, fees and assessments due, imposed, assessed or levied against any
Equipment (or purchase, ownership, delivery, leasing, possession, use or
operation thereof), this Agreement (or any rents or receipts hereunder), any
Schedule, Lessor or Lessee by any governmental entity or taxing authority during
or related to the term of this Agreement, including, without limitation, all
license and registration fees, and all sales, use, personal property, excise,
gross receipts, franchise, stamp or other taxes, imposts, duties and charges,
together with any penalties, fines or interest thereon (collectively "TAXES").
Lessee shall have no liability for Taxes imposed by the United States of America
or any State or political subdivision thereof which are on or measured by the
net income of Lessor. Lessee shall promptly reimburse Lessor (on an after tax
basis) for any Taxes charged to or assessed against Lessor. Lessee shall send
Lessor a copy of each report or return and evidence of Lessees payment of Taxes
upon request.
4. REPORTS:
(a) If any tax or other lien shall attach to any Equipment, Lessee will
notify Lessor in writing, within ten (10) days after Lessee becomes aware of the
tax or lien. The notice shall include the full particulars of the tax or lien
and the location of such Equipment on the date of the notice.
(b) (i) Lessee will deliver to Lessor Lessee's complete financial
statements, certified by a recognized firm of certified public accountants,
within ninety (90) days of the close of each fiscal year of Lessee. Lessee will
deliver to Lessor copies of Lessee's quarterly financial report certified by the
chief financial officer of Lessee, within ninety (90) days of the close of each
fiscal quarter of Lessee.
(ii) Lessee will deliver to Lessor all Forms 10-K and 10Q, if any,
filed by Lessee or Guarantor with the Securities and Exchange Commission ("SEC")
within thirty (30) days after the date on which they are filed. Lessee will
deliver or otherwise furnish the following financial statements to Lessor within
15 days of the applicable statutory due dates thereof (timely availability of
such financial statements on the Lessee's website [xxx.00xx.xxx] with concurrent
notice to Lessor that the same are available shall constitute delivery for
purposes of this section): (A) annual and quarterly financial
statements as filed by Lessee's parent, 21st Century Insurance Group, with the
SEC on Forms 10-K and 10-Q, respectively, including such CFO and CEO
certifications and opinions or reports of independent auditors as may be
required by applicable securities law; and (B) such other financial statements
as are required to be filed by Lessee with the California Department of
Insurance or such other state insurance regulatory agency as may have primary
regulatory jurisdiction regarding Lessee, including such officer certifications
as may be required by applicable state insurance regulation or form required by
the National Association of Insurance Commissioners. Lessor agrees that by
furnishing all of these SEC Forms, financial statements and other information
required under the preceding sentences of this paragraph (b)(ii), or making them
publicly available in electronic form in accordance therewith, Lessee shall also
be deemed to have satisfied the requirements of paragraph (b)(i).
(c) Lessor may inspect any Equipment during normal business hours after
giving Lessee reasonable prior notice, and Lessor will be responsible for any
costs incurred by it in connection with such inspection so long as no default
has occurred and is then continuing.
(d) Lessee will keep the Equipment at the Equipment Location (specified
in the applicable Schedule) and will give Lessor prior written notice of any
relocation of Equipment. If Lessor requests, Lessee will promptly notify Lessor
in writing of the location of any Equipment.
(e) If any Equipment is lost or damaged (where the estimated repair
costs would exceed the greater of ten percent (10%) of the original Equipment
cost or ten thousand and 00/100 dollars ($10,000)), or is otherwise involved in
an accident causing personal injury or property damage, Lessee will promptly and
fully report the event to Lessor in writing.
(f) Within thirty (30) days after any request by Lessor, Lessee will
furnish a certificate of an authorized officer of Lessee stating that he has
reviewed the activities of Lessee and that, there exists no default or event
which with notice or lapse of time (or both) would become such a default.
(g) Lessee shall promptly notify Lessor of (i) any change in the
name of Lessee or (ii) any change in the state of its incorporation or
registration or type of its organization.
(h) Lessee shall not register any of the Equipment with the U.S. Copyright
Office or the U.S. Patent and Trademark Office unless (i) Lessee provides Lessor
with written notice at least thirty (30) days prior to the effective date of any
such registration and (ii) at Lessee's sole cost and expense, execute, deliver
and file any documents or filings and take any other action requested by Lessor
in order to perfect or preserve Lessor's security interest in the Equipment with
the U.S. Copyright Office or the U.S. Patent and Trademark Office.
5. DELIVERY, USE AND OPERATION:
(a) Lessee represents that it is in possession of all of the Equipment.
(b) Lessee agrees that the Equipment will be used by Lessee solely in
the conduct of its business and in a manner complying with all applicable laws,
regulations and insurance policies, and Lessee shall not discontinue use of the
Equipment. Notwithstanding the foregoing, Lessee may discontinue using an item
of Equipment if Lessee replaces such discontinued Equipment by complying with
all of the following to Lessor's satisfaction: (i) Lessor receives ten (10)
Business Days' prior written notice thereof, (ii) on or before the date such
item of Equipment is discontinued, Lessee duly conveys to Lessor title to, or a
first priority, perfected security interest against, an item of Equipment of the
same make and model number as the item of Equipment being discontinued, and
(iii) Lessee complies with the other provisions of this Section 5(b). Such
replacement Equipment shall be free and clear of all Liens, have a value,
utility, and useful life at least equal to, and be in as good an operating
condition as, the item of Equipment being replaced, assuming such item of
Equipment was in the condition and repair required by the terms hereof
immediately prior to its being discontinued. Lessee shall furnish to Lessor
such documents to evidence such conveyance as Lessor shall request. Upon full
compliance by Lessee with the terms of this paragraph, Lessor will transfer to
Lessee all of Lessor's right, title and interest, if any, in and to such item of
Equipment so replaced, which transfer shall be "AS-IS, WHERE-IS", AND WITHOUT
RECOURSE OR WARRANTY OF ANY KIND WHATSOEVER. Each such replacement item of
Equipment, shall, after such conveyance to Lessor, be deemed an item of
"Equipment", as defined herein.
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(c) Lessee will not move any Equipment from the location specified on
the Schedule, without (i) the prior written consent of Lessor, if such
relocation is to a location not identified on the Schedule, or (ii) prior
written notice to Lessor, if the items of Equipment that are then being
relocated have an aggregate Capitalized Lessor's Cost of at least $500,000.
From time to time, but no more frequently that twice per calendar year (unless a
default has occurred and is then continuing), Lessor may request that Lessee
provide Lessor with a written report detailing the location of the Equipment as
at the time of the report. Lessee will deliver any such report to Lessor within
fifteen (15) Business Days of Lessor's request.
(d) Lessee will keep the Equipment free and clear of all liens and
encumbrances other than those which result from acts of Lessor and at all times
during the term of this Agreement and any Schedule Lessor's interest in the
Equipment shall be perfected and prior to the interest of any other party.
(e) Lessor shall not disturb Lessee's quiet enjoyment of the Equipment
during the term of the Agreement unless a default has occurred and is continuing
under this Agreement.
6. MAINTENANCE:
(a) Lessee will, at its sole expense, maintain each unit of Equipment
in good operating order and repair, normal wear and tear excepted. The Lessee
shall also maintain the Equipment in accordance with manufacturer's
recommendations. Lessee shall make all alterations or modifications required to
comply with any applicable law, rule or regulation during the term of this
Agreement. If Lessor requests, Lessee shall affix plates, tags or other
identifying labels showing ownership thereof by Lessee and Lessor's security
interest therein. The tags or labels shall be placed in a prominent position on
each unit of Equipment.
(b) Lessee will not attach or install anything on the Equipment that
will impair the originally intended function or use of such Equipment without
the prior written consent of Lessor. All additions, parts, supplies,
accessories, and equipment ("ADDITIONS") furnished or attached to any Equipment
that are not readily removable shall become subject to the lien of Lessor. All
Additions shall be made only in compliance with applicable law. Lessee will not
attach or install any Equipment to or in any other personal or real property
without the prior written consent of Lessor.
7. STIPULATED LOSS VALUE: If for any reason any unit of Equipment becomes
worn out, lost, stolen, destroyed, irreparably damaged or unusable ("CASUALTY
OCCURRENCES"), Lessee shall promptly and fully notify Lessor in writing. Lessee
shall pay Lessor the sum of (i) the Stipulated Loss Value (see Schedule) of the
affected unit determined as of the rent payment date prior to the Casualty
Occurrence; and (ii) all rent and other amounts which are then due under this
Agreement on the Payment Date (defined below) for the affected unit. The
Payment Date shall be the next rent payment date after the Casualty Occurrence.
Upon payment of all sums due hereunder, the term of this lease as to such unit
shall terminate.
8. INSURANCE:
(a) As between Lessee and Lessor, Lessee shall bear the entire risk of
any loss, theft, damage to, or destruction of, any unit of Equipment from any
cause whatsoever from the time the Equipment is shipped to Lessee.
(b) Lessee agrees, at its own expense, to keep all Equipment insured
for such amounts and against such hazards as Lessor may reasonably require. All
such policies shall be with companies, and on terms, reasonably satisfactory to
Lessor. The insurance shall include coverage for damage to or loss of the
Equipment, liability for personal injuries, death or property damage. Lessor
shall be named as additional insured with a loss payable clause in favor of
Lessor, as its interest may appear, irrespective of any breach of warranty or
other act or omission of Lessee. The insurance shall provide for liability
coverage in an amount equal to at least ONE MILLION U.S. DOLLARS ($1,000,000.00)
total liability per occurrence, unless otherwise stated in any Schedule. The
casualty/property damage coverage shall be in an amount equal to the higher of
the
Stipulated Loss value or the full replacement cost of the Equipment. No
insurance shall be subject to any co-insurance clause. The insurance policies
shall provide that the insurance may not be altered or canceled by the insurer
until after thirty (30) days written notice to Lessor. Lessee agrees to deliver
to Lessor evidence of insurance reasonably satisfactory to Lessor.
(c) Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make
proof of loss and claim for insurance, and to make adjustments with insurers and
to receive payment of and execute or endorse all documents, checks or drafts in
connection with insurance payments with respect to the Equipment. Lessor shall
not act as Lessees attorney-in-fact unless Lessee is in default under this
Agreement or any Schedule. Lessee shall pay any reasonable expenses of Lessor
in adjusting or collecting insurance with respect to the transactions
contemplated herein. Lessee will not make adjustments with insurers except with
respect to claims for damage to any unit of Equipment where the repair costs are
less than the lesser of ten percent (10%) of the original Equipment cost or ten
thousand and 00/100 dollars ($10,000). Lessor may, at its option, apply
proceeds of insurance, in whole or in part, to (i) repair or replace Equipment
or any portion thereof, or (ii) satisfy any obligation of Lessee to Lessor under
this Agreement.
9. RETURN OF EQUIPMENT:
(a) At the expiration or termination of this Agreement or any Schedule,
unless Lessee has exercised its purchase option pursuant to Sections 17 or 18
hereof, Lessee shall perform any testing and repairs required to place the units
of Equipment in the same condition and appearance as when received by Lessee
(reasonable wear and tear excepted) and in good working order for the original
intended purpose of the Equipment. If required the units of Equipment shall be
deinstalled, disassembled and crated by an authorized manufacturer's
representative or such other service person as is reasonably satisfactory to
Lessor. Lessee shall remove installed markings that are not necessary for the
operation, maintenance or repair of the Equipment. All Equipment will be
cleaned, cosmetically acceptable, and in such condition (reasonable wear and
tear excepted) as to permit its immediate installation into use in a similar
environment for which the Equipment was originally intended to be used. All
waste material and fluid must be removed from the Equipment and disposed of in
accordance with then current waste disposal laws. Lessee shall return the units
of Equipment to a location within the continental United States as Lessor shall
direct. Lessee shall obtain and pay for a policy of transit insurance for the
redelivery period in an amount equal to the replacement value of the Equipment.
The transit insurance must name Lessor as the loss payee. The Lessee shall pay
for all costs to comply with this section (a).
(b) Until Lessee has fully complied with the requirements of Section
9(a) above, Lessee's rent payment obligation and all other obligations under
this Agreement shall continue from month to month notwithstanding any expiration
or termination of the lease term. After the expiration or termination of this
Agreement or any Schedule, Lessor may terminate the Lessee's right to use the
Equipment upon ten (10) days notice to Lessee.
(c) Lessee shall provide to Lessor a detailed inventory of all
components of the Equipment in such detail as Lessor may request provided such
details are recorded in Lessee's asset management records. Lessee shall also
provide an up-to-date copy of all other documentation pertaining to the
Equipment within fifteen (15) Business Days of Lessor's request. All service
manuals, blue prints, process flow diagrams, operating manuals, inventory and
maintenance records shall be given to Lessor at least ninety (90) days and not
more than one hundred twenty (120) days prior to lease termination, unless
Lessee has exercised its purchase option pursuant to Sections 17 or 18 hereof.
(d) Lessee shall make the Equipment available for on-site operational
inspections by potential purchasers at least one hundred twenty (120) days prior
to and continuing up to lease termination, unless Lessee has exercised its
purchase option pursuant to Sections 17 or 18 hereof. Lessor shall provide
Lessee with reasonable notice prior to any inspection. Lessee shall provide
personnel, power and other requirements necessary to demonstrate electrical,
hydraulic and mechanical systems for each item of Equipment.
(e) At the expiration or termination of this Agreement or any Schedule,
unless Lessee has exercised its purchase option pursuant to Sections 17 or 18
hereof, Lessee shall, at its expense, comply with the following on or before
such expiration or termination: (i) upon the request of Lessor, immediately
disable the Software and deliver to Lessor all media containing the Software,
any related source codes and all related manuals (Lessee agrees that Lessor may
enter Lessee's premises to confirm that Lessee has complied with the foregoing
request), (ii) upon the request of Lessor revoking Lessee's right to use the
Software, shall immediately cease using the Software (Lessee agrees that Lessor
may enter Lessee's premises to confirm that Lessee has complied with the
foregoing demand), (iii) upon the request of Lessor, cause the licensor or the
original software consulting firm of any Software to deinstall the Software in a
commercially reasonable manner in accordance with the vendor's recommendations
and reinstall the Software for use by Lessor or in a third party's system in a
commercially reasonable manner in accordance with the vendor's recommendations,
(iv) execute and deliver to Lessor an assignment agreement assigning to Lessor
all of Lessee's rights as licensee or otherwise under each Software License
Agreement relating to Software, and (v) deliver to Lessor a consent from each
licensor of Software whereby the licensor consents to the aforesaid assignment
and the sublicense of the related Software to any third party selected by Lessor
who agrees, in a written statement delivered to the licensor, that all Software
shall remain the property of the licensor or its supplier, and that such third
party's use of the Software shall be subject to, and that such third party shall
abide by, all relevant license or other provisions applicable to the Software
contained in the Software License Agreement.
10. DEFAULT AND REMEDIES:
(a) Lessor may in writing declare this Agreement in default if: (i)
Lessee breaches its obligation to pay rent or any other sum when due and fails
to cure the breach within ten (10) days; (ii) Lessee breaches any of its
insurance obligations under Section 8; (iii) Lessee breaches any of its other
obligations and fails to cure that breach within thirty (30)
days after written notice from Lessor; (iv) any representation or warranty made
by Lessee in connection with this Agreement shall be false or misleading in any
material respect; (v) Lessee or any guarantor or other obligor for the Lessee's
obligations hereunder ("GUARANTOR") becomes insolvent or ceases to do business
as a going concern; (vi) any Equipment is illegally used; (vii) a petition is
filed by or against Lessee or any Guarantor under any bankruptcy or insolvency
laws and in the event of an involuntary petition, the petition is not dismissed
within forty-five (45) days of the filing date; (viii) there is a default in or
a revocation or anticipatory repudiation of any Guarantor's obligations under
any guaranty issued in connection with this Agreement; (ix) Lessee or any
guarantor shall be in default under any obligation for borrowed money, for the
deferred purchase price of property or any lease agreement and the applicable
grace period with respect thereto shall have expired; (x) Lessee or any
guarantor shall have terminated its existence, consolidated with, merged into or
conveyed or leased substantially all of its assets as an entirety to any person
(such actions being referred to as an "EVENT"), unless not less than sixty (60)
days prior to such Event: (A) such person is organized and existing under the
laws of the United States or any state, and executes and delivers to Lessor an
agreement containing an effective assumption by such person of the due and
punctual performance of this Lease or guaranty thereof, as the case may be, and
(B) Lessor is reasonably satisfied as to the credit worthiness of such person;
or (xi) there is a change in controlling ownership of the issued and outstanding
capital stock of Lessee or any Guarantor at any time, including, by way of
example, and not limitation, if American International Group Inc. fails to
directly or indirectly own fifty percent (50%) or more, or have controlling
ownership of, the issued and outstanding capital stock of Lessee or any
Guarantor at any time. Any provision of this Agreement to the contrary
notwithstanding, Lessor may exercise all rights and remedies hereunder
independently with respect to each Schedule.
(b) AFTER A DEFAULT HEREUNDER, AT THE REQUEST OF LESSOR, LESSEE SHALL
COMPLY WITH THE PROVISIONS OF SECTION 9(A). LESSEE HEREBY AUTHORIZES LESSOR TO
PEACEFULLY ENTER ANY PREMISES WHERE ANY EQUIPMENT MAY BE AND TAKE POSSESSION OF
THE EQUIPMENT. LESSEE SHALL IMMEDIATELY PAY TO LESSOR WITHOUT FURTHER DEMAND AS
LIQUIDATED DAMAGES FOR LOSS OF A BARGAIN AND NOT AS A PENALTY, THE STIPULATED
LOSS VALUE OF THE EQUIPMENT (CALCULATED AS OF THE RENT PAYMENT DATE PRIOR TO THE
DECLARATION OF DEFAULT), AND ALL RENTS AND OTHER SUMS THEN DUE UNDER THIS
AGREEMENT AND ALL SCHEDULES. LESSOR MAY TERMINATE THIS AGREEMENT AS TO ANY OR
ALL OF THE EQUIPMENT. A TERMINATION SHALL OCCUR ONLY UPON WRITTEN NOTICE BY
LESSOR TO LESSEE AND ONLY AS TO THE UNITS OF EQUIPMENT SPECIFIED IN ANY SUCH
NOTICE. LESSOR MAY, BUT SHALL NOT BE REQUIRED TO, SELL EQUIPMENT AT PRIVATE OR
PUBLIC SALE, IN BULK OR IN PARCELS, WITH OR WITHOUT NOTICE, AND WITHOUT HAVING
THE EQUIPMENT PRESENT AT THE PLACE OF SALE. LESSOR MAY ALSO, BUT SHALL NOT BE
REQUIRED TO, LEASE, OTHERWISE DISPOSE OF OR KEEP IDLE ALL OR PART OF THE
EQUIPMENT. LESSOR MAY USE LESSEE'S PREMISES FOR A REASONABLE PERIOD OF TIME FOR
ANY OR ALL OF THE PURPOSES STATED ABOVE WITHOUT LIABILITY FOR RENT, COSTS,
DAMAGES OR OTHERWISE. THE PROCEEDS OF SALE, LEASE OR OTHER DISPOSITION, IF ANY,
SHALL BE APPLIED IN THE FOLLOWING ORDER OF PRIORITIES: (I) TO PAY ALL OF
LESSOR'S COSTS, CHARGES AND EXPENSES INCURRED IN TAKING, REMOVING, HOLDING,
REPAIRING AND SELLING, LEASING OR OTHERWISE DISPOSING OF EQUIPMENT; THEN, (II)
TO THE EXTENT NOT PREVIOUSLY PAID BY LESSEE, TO PAY LESSOR ALL SUMS DUE FROM
LESSEE UNDER THIS AGREEMENT; THEN (III) TO REIMBURSE TO LESSEE ANY SUMS
PREVIOUSLY PAID BY LESSEE AS LIQUIDATED DAMAGES; AND THEN (IV) TO LESSEE, IF
THERE EXISTS ANY SURPLUS. LESSEE SHALL IMMEDIATELY PAY ANY DEFICIENCY IN (I)
AND (II) ABOVE.
(c) In addition to the foregoing rights after a default hereunder or a
default or a termination under any software license agreement relating to any
Equipment consisting of software that is licensed by Lessee (a "Software License
Agreement"), Lessee shall, at its own expense, (i) upon the request of Lessor,
immediately disable any or all of the Equipment consisting of software
("Software") and deliver to Lessor all media containing the Software, any
related source codes and all related manuals (Lessee agrees that Lessor may
enter Lessee's premises to confirm that Lessee has complied with the foregoing
request), (ii) upon the request of Lessor revoking Lessee's right to use the
Software, shall immediately cease using the Software (Lessee agrees that Lessor
may enter Lessee's premises to confirm that Lessee has complied with the
foregoing demand), (iii) upon the request of Lessor, cause the licensor or the
original software consulting firm of any Software to deinstall the Software in a
commercially reasonable manner in accordance with the vendor's recommendations
and reengineer the Software for use in a third party's system and provide
consulting services to Lessor and such third party regarding the installation,
engineering and use of the Software, and (iv) use its best efforts, subject to
the applicable licensor's consent, to promptly take all actions and execute and
deliver and cause to be executed and delivered all documents reasonably
requested by Lessor to assign to Lessor all of Lessee's rights as licensee or
otherwise under the applicable Software License Agreement. Upon such
assignment, Lessee's rights with respect to such Software shall cease, and
Lessee shall use its best efforts to cause the licensor of the Software to
consent to such assignment and to consent to a sublicense of the related
Software to a third party, in which case Lessee's rights with respect to such
Software shall cease, provided: (i) Lessor notifies the licensor in writing and
(ii) such third party agrees, in a written statement delivered to the licensor,
that all Software shall remain the property of the licensor or its supplier, as
applicable, and that such third party's use of the Software shall be subject to,
and that such third party shall abide by, all relevant license or other
provisions applicable to the Software contained in the Software License
Agreement.
(d) The foregoing remedies are cumulative, and any or all thereof may be
exercised instead of or in addition to each other or any remedies at law, in
equity, or under statute. Lessee waives notice of sale or other disposition
(and the time and place thereof), and the manner and place of any advertising.
Lessee shall pay Lessor's actual attorney's fees incurred in connection with the
enforcement, assertion, defense or preservation of Lessor's rights and remedies
under this Agreement, or if prohibited by law, such lesser sum as may be
permitted. Waiver of any default shall not be a waiver of any other or
subsequent default.
(e) Any default under the terms of this or any other agreement between
Lessor and Lessee may be declared by Lessor a default under this and any such
other agreement.
11. ASSIGNMENT: LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, ENCUMBER OR SUBLET
ANY EQUIPMENT OR THE INTEREST OF LESSEE IN THE EQUIPMENT, THIS AGREEMENT OR ANY
SCHEDULE WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR. Lessor may, without the
consent of or
notice to Lessee, assign this Agreement, any Schedule or the right to enter into
a Schedule. Lessee agrees that if Lessee receives written notice of an
assignment from Lessor, Lessee will pay all rent and all other amounts payable
under any assigned Schedule to such assignee or as instructed by Lessor. Lessee
also agrees to confirm in writing receipt of the notice of assignment as may be
reasonably requested by assignee. Lessee hereby waives and agrees not to assert
against any such assignee any defense, set-off, recoupment claim or counterclaim
that Lessee has or may at any time have against Lessor for any reason
whatsoever. Lessee acknowledges that it has been advised that (i) General
Electric Capital Corporation shall act hereunder and under certain Schedules
executed pursuant hereto as agent for certain third party participants (each
being herein referred to as a "PARTICIPANT" and, collectively, as the
"PARTICIPANTS") and (ii) the interest of Lessor in this Agreement, the
Schedules, related instruments and documents and/or the Equipment may be
conveyed to, in whole or in part, and may be used as security for financing
obtained from, one or more third parties or Participants without the consent of
Lessee (the "SYNDICATION"). Lessee agrees reasonably to cooperate with Lessor in
connection with the Syndication, including the execution and delivery of such
other documents, instruments, notices, opinions, certificates and
acknowledgements as reasonably may be required by Lessor or any such
Participant; provided, however, in no event shall Lessee be required to consent
to any change that would adversely affect any of the economic terms of the
transactions contemplated herein. Subject always to the foregoing, this
Agreement inures to the benefit of, and is binding upon, the successors and
assigns of the parties hereto.
12. NET LEASE: Lessee is unconditionally obligated to pay all rent and
other amounts due for the entire lease term no matter what happens, even if the
Equipment is damaged or destroyed, if it is defective or if Lessee no longer can
use it. Lessee is not entitled to reduce or set-off against rent or other
amounts due to Lessor or to anyone to whom Lessor assigns this Agreement or any
Schedule whether Lessee's claim arises out of this Agreement, any Schedule, any
statement by Lessor, Lessor's liability or any manufacturer's liability, strict
liability, negligence or otherwise.
13. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify Lessor or any Participant or
their respective agents, employees, successors and assigns (on an after tax
basis) from and against any and all losses, damages, penalties, injuries,
claims, actions and suits, including legal expenses, of whatsoever kind and
nature arising out of or relating to the Equipment or this Agreement, except to
the extent the losses, damages, penalties, injuries, claims, actions, suits or
expenses result from Lessor's or such Participant's gross negligence or willful
misconduct ("CLAIMS"). This indemnity shall include, but is not limited to,
Lessor's strict liability in tort and Claims, arising out of (i) the selection,
manufacture, purchase, acceptance or rejection of Equipment, the ownership of
Equipment during the term of this Agreement, and the delivery, lease,
possession, maintenance, uses, condition,
return or operation of Equipment (including, without limitation, latent and
other defects, whether or not discoverable by Lessor or Lessee and any claim for
patent, trademark or copyright infringement or environmental damage) or (ii) the
condition of Equipment sold or disposed of after use by Lessee, any sublessee or
employees of Lessee. Lessee shall, upon request, defend any actions based on, or
arising out of, any of the foregoing.
(b) All of Lessor's and each Participant's rights, privileges and
indemnities contained in this Section 13 shall survive the expiration or other
termination of this Agreement. The rights, privileges and indemnities contained
herein are expressly made for the benefit of, and shall be enforceable by Lessor
and each Participant and their successors and assigns.
14. DISCLAIMER: LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT
WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT
MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE
EQUIPMENT LEASED UNDER THIS AGREEMENT OR ANY COMPONENT THEREOF, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS,
QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE,
USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE.
All such risks, as between Lessor and Lessee, are to be borne by Lessee.
Without limiting the foregoing, Lessor shall have no responsibility or liability
to Lessee or any other person with respect to any of the following: (i) any
liability, loss or damage caused or alleged to be caused directly or indirectly
by any Equipment, any inadequacy thereof, any deficiency or defect (latent or
otherwise) of the Equipment, or any other circumstance in connection with the
Equipment; (ii) the use, operation or performance of any Equipment or any risks
relating to it; (iii) any interruption of service, loss of business or
anticipated profits or consequential damages; or (iv) the delivery, operation,
servicing, maintenance, repair, improvement or replacement of any Equipment.
If, and so long as, no default exists under this Agreement, Lessee shall be, and
hereby is, authorized during the term of this Agreement to assert and enforce,
whatever claims and rights Lessor may have against any Supplier of the Equipment
at Lessee's sole cost and expense, in the name of and for the account of Lessor
and/or Lessee, as their interests may appear.
15. REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee makes each of the
following representations and warranties to Lessor on the date hereof and on the
date of execution of each Schedule:
(a) Lessee has adequate power and capacity to enter into, and perform
under, this Agreement and all related documents (together, the "DOCUMENTS").
Lessee is duly qualified to do business wherever necessary to carry on its
present business and operations, including the jurisdiction(s) where the
Equipment is or is to be located.
(b) The Documents have been duly authorized, executed and delivered by
Lessee and constitute valid, legal and binding agreements, enforceable in
accordance with their terms, except to the extent that the enforcement of
remedies may be limited under applicable bankruptcy and insolvency laws.
(c) No approval, consent or withholding of objections is required from
any governmental authority or entity with respect to the entry into or
performance by Lessee of the Documents except such as have already been
obtained.
(d) The entry into and performance by Lessee of the Documents will not:
(i) violate any judgment, order, law or regulation applicable to Lessee or any
provision of Lessee's Certificate of Incorporation or bylaws; or (ii) result in
any breach of, constitute a default under or result in the creation of any lien,
charge, security interest or other encumbrance upon any Equipment pursuant to
any indenture, mortgage, deed of trust, bank loan or credit agreement or other
instrument (other than this Agreement) to which Lessee is a party.
(e) There are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Lessee, which if decided against Lessee will have a material adverse effect on
the ability of Lessee to fulfill its obligations under this Agreement.
(f) The Equipment accepted under any Certificate of Acceptance is and
will remain tangible personal property (other than any software constituting
Equipment).
(g) Each financial statement delivered to Lessor has been prepared in
accordance with generally accepted accounting principles consistently applied
(or applicable statutory accounting principles, as the case may be). Since the
date of the most recent financial statement, there has been no material adverse
change.
(h) Lessee's exact legal name is as set forth in the first sentence of
this Agreement and Lessee is and will be at all times validly existing and in
good standing under the laws of the State of its incorporation (specified in the
first sentence of this Agreement).
(h) The Equipment will at all times be used for commercial or
business purposes.
(j) None of the Software that is owned by Lessee and not licensed by Lessee
from a third party has been registered with the U.S. Copyright Office or
recorded with the U.S. Patent and Trademark Office.
16. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY SAVINGS;
SOFTWARE LICENSE AGREEMENTS:
(a) For income tax purposes, the parties hereto agree that it is their
mutual intention that Lessee shall be considered the owner of the Equipment.
Accordingly, Lessor agrees (i) to treat Lessee as the owner of the Equipment on
its federal income tax return, (ii) not to take actions or positions
inconsistent with such treatment on or with respect to its federal income tax
return, and (iii) not to claim any tax benefits available to an owner of the
Equipment on or with respect to its federal income tax return. The foregoing
undertakings by Lessor shall not be violated by Lessor's taking a tax position
inconsistent with the foregoing sentence to the extent such a position is
required by law or is taken through inadvertence so long as such inadvertent tax
position is reversed by Lessor promptly upon its discovery. Lessor shall in no
event be liable to Lessee if Lessee fails to secure any of the tax benefits
available to the owner of the Equipment.
(b) Lessee hereby grants to Lessor a first security interest in (i) the
Equipment, together with all additions, attachments, accessions, accessories and
accessions thereto whether or not furnished by the Supplier of the Equipment and
any and all substitutions, replacements or exchanges therefor, and any and all
insurance and/or other proceeds of the property in and against which a security
interest is granted hereunder and (ii) Lessee's rights under any Software
License Agreement relating to the Software, any upgrades of the Software and any
rights to indemnification, warranty or guaranty payable to Lessee from time to
time with respect to the foregoing and any insurance and other proceeds thereof.
This security interest is given to secure the payment and performance of all
debts, obligations and liabilities of any kind whatsoever of Lessee to Lessor,
now existing or arising in the future under this Agreement or any Schedules
attached hereto, and any renewals, extensions and modifications of such debts,
obligations and liabilities.
(c) It is the intention of the parties hereto to comply with any
applicable usury laws to the extent that any Schedule is determined to be
subject to such laws; accordingly, it is agreed that, notwithstanding any
provision to the contrary in any Schedule or this Agreement, in no event shall
any Schedule require the payment or permit the collection of interest in excess
of the maximum amount permitted by applicable law. If any such excess interest
is contracted for, charged or received under any Schedule or this Agreement, or
in the event that all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under any Schedule or this Agreement shall exceed the maximum amount of
interest permitted by applicable law, then in such event (i) the provisions of
this paragraph shall govern and control, (ii) neither Lessee nor any other
person or entity now or hereafter liable for the payment hereof shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the maximum amount of interest permitted by applicable law, (iii) any such
excess which may have been collected shall be either applied as a credit against
the then unpaid principal balance or refunded to Lessee, at the option of the
Lessor, and (iv) the effective rate of interest shall be automatically reduced
to the maximum lawful contract rate allowed under applicable law as now or
hereafter construed by the courts having jurisdiction thereof. It is further
agreed that without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged or received under any Schedule or this Agreement which are made for
the purpose of determining whether such rate exceeds the maximum lawful contract
rate, shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the indebtedness evidenced hereby, all interest at any time
contracted for, charged or received from Lessee or otherwise by Lessor in
connection with such indebtedness; provided, however, that if any applicable
state law is amended or the law of the United States of America preempts any
applicable state law, so that it becomes lawful for Lessor to receive a greater
interest per annum rate than is presently allowed, the Lessee agrees that, on
the effective date of such amendment or preemption, as the case may be, the
lawful maximum hereunder shall be increased to the maximum interest per annum
rate allowed by the amended state law or the law of the United States of
America.
(d) Lessee hereby acknowledges and agrees that, notwithstanding the
assignment of any Software License Agreement relating to any Software, (i)
Lessee shall maintain its interest in such Software for the duration of the
Software License Agreement; (ii) Lessee shall remain solely responsible under
the Software License Agreement for the observance and the performance of all of
the conditions and obligations to be observed and performed by Lessee
thereunder, (iii) Lessee shall make all claims under the Software License
Agreement solely against the software licensor; (iv) Lessee shall pay promptly
when due all taxes, license fees, assessments and other charges levied or
assessed on any of the Software; and (v) Lessor shall not have any duty,
responsibility, obligation or liability under any Software License Agreement by
reason of any assignment therein to Lessor.
17. EARLY PURCHASE OPTION:
(a) Lessee may purchase on an AS IS BASIS all (but not less than all)
of the Equipment on any Schedule on any Rent Payment Date after the First
Termination Date specified in the applicable Schedule but prior to the last Rent
Payment Date of such Schedule (the "EARLY PURCHASE DATE"), for a price equal to
(i) the Termination Value (calculated as of the Early Purchase Date) for the
Equipment, and (ii) all rent and other sums due and unpaid as of the Early
Purchase Date (the "EARLY OPTION PRICE"), plus all applicable sales taxes.
Lessee must notify Lessor of its intent to purchase the Equipment in writing at
least thirty (30) days, but not more than two hundred seventy (270) days, prior
to the Early Purchase Date. If Lessee is in default or if the Schedule or this
Agreement has already been terminated, Lessee may not purchase the Equipment.
(The purchase option granted by this subsection shall be referred to herein as
the "EARLY PURCHASE OPTION").
(b) If Lessee exercises its Early Purchase Option, then on the Early
Purchase Date, Lessee shall pay the Early Option Price, plus all applicable
sales taxes, to Lessor in cash.
18. END OF LEASE PURCHASE OPTION: Lessee may, at lease expiration, purchase
all (but not less than all) of the Equipment on any Schedule on an AS IS BASIS
for cash equal to the amount indicated on such Schedule (the "OPTION PAYMENT"),
plus all applicable sales taxes. The Option Payment, plus all applicable sales
taxes, shall be due and payable in immediately available funds on the expiration
date of such Schedule. Lessee must notify Lessor of its intent to purchase the
Equipment in writing at least one hundred eighty (180) days prior to the
expiration date of the Schedule. If Lessee is in default, or if the Schedule or
this Agreement has already been terminated, Lessee may not purchase the
Equipment.
19. MISCELLANEOUS:
(a) LESSEE AND LESSOR UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE AND LESSOR.
THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS
WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(b) All Equipment shall at all times remain personal property even
though it may be attached to real property. The Equipment shall not become part
of any other property by reason of any installation in, or attachment to, other
real or personal property.
(c) Time is of the essence of this Agreement. Lessor's failure at any
time to require strict performance by Lessee of any of the provisions hereof
shall not waive or diminish Lessor's right at any other time to demand strict
compliance with this Agreement. Lessee agrees, upon Lessor's request, to
execute any instrument necessary or expedient for filing, recording or
perfecting the interest of Lessor pursuant to the Uniform Commercial Code, the
U.S. Copyright Act or the U.S. patent and trademark laws. In addition, Lessee
hereby authorizes Lessor to file a financing statement and amendments thereto
describing the Equipment described in any and all Schedules now and hereafter
executed pursuant hereto and adding any other collateral described therein and
containing any other information required by the applicable Uniform Commercial
Code. Lessee irrevocably grants to Lessor the power to sign Lessee's name, and
on its behalf, to execute and file financing statements and other documents
pertaining to any or all of the Equipment. All
notices required to be given hereunder shall be deemed adequately given if sent
by registered or certified mail to the addressee at its address stated herein,
or at such other place as such addressee may have specified in writing. This
Agreement and any Schedule and Annexes thereto constitute the entire agreement
of the parties with respect to the subject matter hereof. NO VARIATION OR
MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF ANY OF ITS PROVISIONS OR
CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED
REPRESENTATIVE OF THE PARTIES HERETO.
(d) If Lessee does not comply with any provision of this Agreement,
Lessor shall have the right, but shall not be obligated, to effect such
compliance, in whole or in part. All reasonable amounts spent and obligations
incurred or assumed by Lessor in effecting such compliance shall constitute
additional rent due to Lessor. Lessee shall pay the additional rent within five
business days after the date Lessee receives notice from Lessor requesting
payment. Lessor's effecting such compliance shall not be a waiver of Lessee's
default.
(e) Any rent or other amount not paid to Lessor when due shall bear
interest, from the due date until paid, at the lesser of eighteen percent (18%)
per annum or the maximum rate allowed by law. Any provisions in this Agreement
and any Schedule that are in conflict with any statute, law or applicable rule
shall be deemed omitted, modified or altered to conform thereto.
(f) Lessee hereby irrevocably authorizes Lessor to adjust the
Capitalized Lessor's Cost up or down by no more than ten percent (10%) within
each Schedule to account for equipment change orders, equipment returns,
invoicing errors, and similar matters. Lessee acknowledges and agrees that the
rent shall be adjusted as a result of the change in the Capitalized Lessor's
Cost. Lessor shall send Lessee a written notice stating the final Lessors Cost,
if it has changed.
(g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT
OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT.
(h) Any cancellation or termination by Lessor, pursuant to the
provisions of this Agreement, any Schedule, supplement or amendment hereto, of
the lease of any Equipment hereunder, shall not release Lessee from any then
outstanding obligations to Lessor hereunder.
(i) This Agreement, the Schedule and all of the other Documents may be
executed in counterparts. To the extent that any Schedule would constitute
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest therein may be
created through the transfer or possession of this Agreement in and of itself
without the transfer or possession of the original of a Schedule executed
pursuant to this Agreement and incorporating this Agreement by reference; and no
security interest in this Agreement and a Schedule may be created by the
transfer or possession of any counterpart of the Schedule other than the
original thereof, which shall be identified as the document marked Original and
all other counterparts shall be marked Duplicate.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF 21ST CENTURY INSURANCE COMPANY
AND AS AGENT FOR CERTAIN PARTICIPANTS
By:_____________________________________
By:___________________________
Name:___________________________________
Name:_________________________
Title:____________________________________
Title:________________________
001 (6/87)
CORPORATE LESSEE'S
BOARD OF DIRECTORS RESOLUTION
The undersigned hereby certifies: (i) that she/he is the Secretary of 21ST
CENTURY INSURANCE COMPANY (THE "CORPORATION"); (ii) that the following is a true
and correct copy of resolutions duly adopted at a meeting of the Board of
Directors of the Corporation duly held on the ____________________ day of
____________________, 2002; and (iii) that said resolutions have not been
amended, rescinded, modified or revoked, and are in full force and effect:
"RESOLVED, that each of the officers of this Corporation, whose name
appears below:
__________________________________ ______________________________
__________________________________
President Treasurer
__________________________________ ______________________________
_____
Vice President Secretary
or the duly elected or appointed successor in office of any or all of them, be,
and hereby is, authorized and empowered in the name and on behalf of this
Corporation to enter into, execute and deliver a master lease agreement with
GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS (together with its successors and assigns, if any, "LESSOR") as
Lessor, providing for the leasing to (or sale and leaseback by) this
Corporation, from time to time, of certain equipment; and
FURTHER RESOLVED, that each officer of this Corporation be, and hereby is,
authorized and empowered in the name and on behalf of this Corporation to enter
into, execute and deliver any documents and to do and perform all other acts and
deeds which may be necessary or appropriate to effectuate the lease (or sale and
leaseback) of equipment from Lessor and to secure and carry out the transactions
contemplated thereby; and
FURTHER RESOLVED, that the Lessor may rely upon the aforesaid resolutions
until receipt by it of written notice of any change."
IN WITNESS WHEREOF, I have set my hand and affixed the seal of the
Corporation this ____________________ day of ____________________, 2002.
_________________________________________
(CORPORATE SEAL) Secretary
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, made as of December 31, 2002 ("AGREEMENT"), by and
between General Electric Capital Corporation, for itself and as agent for
certain Participants, with an address at 0 Xxxxx Xxxx Xxxxx Xxxxx 000, Xxxx
Xxxxxx, XX 00000 (together with its successors and assigns, if any, "SECURED
PARTY"), and 21st Century Insurance Company, a corporation organized and
existing under the laws of the state of California, with its chief executive
offices located at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx Xxxxx, XX 00000
("CUSTOMER").
In consideration of the promises herein contained and of certain other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Customer and Secured Party hereby agree as follows:
1. CREATION OF SECURITY INTEREST:
Customer hereby gives, grants and assigns to Secured Party, its successors and
assigns forever, a security interest in and against any and all equipment,
software and other property listed on the collateral schedule annexed hereto or
made a part hereof ("COLLATERAL SCHEDULE"), Customer's rights under any Software
License Agreement relating to any of the Collateral that consists of software,
any upgrades of the Collateral and any rights to indemnification, warranty or
guaranty payable to Customer from time to time with respect to the foregoing,
and in and against any and all additions, attachments, accessories and
accessions thereto, any and all substitutions, replacements or exchanges
therefor, and any and all insurance and/or other proceeds thereof (all of the
foregoing being hereinafter individually and collectively referred to as the
"COLLATERAL"). The foregoing security interest is given to secure the payment
and performance of any and all installments of rent, other amounts, obligations
and liabilities of any kind, nature or description whatsoever (whether due or to
become due) of Customer to Secured Party under that certain Master Lease
Agreement identified on the Collateral Schedule and the Schedules executed
pursuant thereto (collectively, the "LEASE"), this Agreement, and/or any related
documents (the Lease, this Agreement and all such related documents being
hereinafter collectively referred to as the "TRANSACTION DOCUMENTS"), and any
renewals, extensions and modifications of such debts, obligations and
liabilities (all of the foregoing being hereinafter referred to as the
"INDEBTEDNESS").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CUSTOMER:
Customer hereby represents, warrants and covenants that: (a) Customer is, and
will remain, duly organized, existing and in good standing under the laws of the
State set forth in the first paragraph of this Agreement, has its chief
executive offices at the location set forth in such paragraph, and is, and will
remain, duly qualified and licensed in every jurisdiction wherever necessary to
carry on its business and operations; (b) Customer has adequate power and
capacity to enter into, and to perform its obligations, under each of the
Transaction Documents; (c) the Transaction Documents have been duly authorized,
executed and delivered by Customer and constitute legal, valid and binding
agreements enforceable under all applicable laws in accordance with their terms,
except to the extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws; (d) no approval, consent or
withholding of objections is required from any governmental authority or
instrumentality with respect to the entry into, or performance by, Customer of
any of the Transaction Documents, except such as may have already been obtained;
(e) the entry into and performance by Customer of the Transaction Documents will
not (i) violate any of the organizational documents of Customer or any
judgment, order, law or regulation applicable to Customer, or (ii) result in
any breach of, constitute a default under, or result in the creation of any
lien, claim or encumbrance on any of Customer's property (except for liens in
favor of Secured Party) pursuant to, any indenture mortgage, deed of trust, bank
loan, credit agreement, or other agreement or instrument to which Customer is a
party; (f) there are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Customer which could, in the aggregate, have a material adverse effect on
Customer, its business or operations, or its ability to perform its obligations
under the Transaction Documents; (g) all financial statements delivered to
Secured Party in connection with the Indebtedness have been prepared in
accordance with generally accepted accounting principles, and since the date of
the most recent financial statement, there has been no material adverse change;
(h) the Collateral is not, and will not be, used by Customer for personal,
family or household purposes; (i) the Collateral is, and will remain, in good
condition and repair and Customer will not be negligent in the care and use
thereof; (j) Customer is, and will remain, the sole and lawful owner, and in
20
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; (k) the Collateral is,
and will remain, free and clear of all liens, claims and encumbrances of every
kind, nature and description (except for liens in favor of Secured Party); (l)
Customer's exact legal name is as set forth in the first sentence of this
Agreement; (m) none of the Collateral consisting of Software that is owned by
Customer and not licensed by Customer from a third party has been registered
with the U.S. Copyright Office or recorded with the U.S. Patent and Trademark
Office; and (n) Customer shall not register any of the Collateral consisting of
software that is owned by Customer and not licensed by Customer from a third
party with the U.S. Copyright Office or the U.S. Patent and Trademark Office
unless (i) Customer provides Secured Party with written notice at least thirty
(30) days prior to the effective date of any such registration and (ii) at
Customer's sole cost and expense, execute, deliver and file any documents or
filings and take any other action requested by Secured Party in order to perfect
or preserve Secured Party's security interest in the Equipment with the U.S.
Copyright Office or the U.S. Patent and Trademark Office.
3. COLLATERAL:
(a) Until the declaration of any default hereunder, Customer shall remain in
possession of the Collateral; provided, however, that Secured Party shall have
the right to possess (i) any chattel paper, document, certificate of title or
instrument that constitutes a part of the Collateral or possession of which may
be required to perfect Secured Party's interest in the Collateral, and (ii) any
other Collateral which because of its nature may require that Secured Party's
security interest therein be perfected by possession. Secured Party, its
successors and assigns, and their respective agents, shall have the right to
examine and inspect any of the Collateral at any time during normal business
hours, and Secured Party will be responsible for any costs incurred by it in
connection with such inspection so long as no default has occurred and is then
continuing. Upon any request from Secured Party, Customer shall provide Secured
Party with notice of the then current location of the Collateral. (b) Customer
shall (i) use the Collateral only in its trade or business, (ii) maintain all
of the Collateral in good condition and working order, (iii) use and maintain
the Collateral only in compliance with all applicable laws, and (iv) keep all
of the Collateral free and clear of all liens, claims and encumbrances (except
for liens in favor of Secured Party). (c) Customer shall not, without the prior
written consent of Secured Party, (i) part with possession of any of the
Collateral (except to Secured Party or for maintenance and repair), (ii) remove
any of the Collateral from the continental United States, or (iii) sell, rent,
lease, mortgage, grant a security interest in or otherwise transfer or encumber
(except for liens in favor of Secured Party) any of the Collateral. (d)
Customer shall pay promptly when due all taxes, license fees, assessments and
public and private charges levied or assessed on any of the Collateral, on the
use thereof, or on this Agreement or any of the other Transaction Documents. At
its option, Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance, insurance and preservation of the Collateral or to effect
compliance with the terms of this Agreement or any of the other Transaction
Documents. Customer shall reimburse Secured Party, on demand, for any and all
costs and expenses incurred by Secured Party in connection therewith and agrees
that such reimbursement obligation shall be secured hereby. (e) Customer shall,
at all times, keep accurate and complete records of the Collateral, and Secured
Party, its successors and assigns, and their respective agents, shall have the
right to examine, inspect, and make extracts from all of Customer's books and
records relating to the Collateral at any time during normal business hours, and
such inspecting party will be responsible for any costs incurred by it in
connection with such inspection so long as no default has occurred and is then
continuing. (f) Any third person at any time and from time to time holding all
or any portion of the Collateral shall be deemed to, and shall, hold the
Collateral as the agent of, and as pledge holder for, Secured Party. At any
time and from time to time, Secured Party may give notice to any third person
holding all or any portion of the Collateral that such third person is holding
the Collateral as the agent of, and as pledge holder for, the Secured Party.
4. INSURANCE:
The Collateral shall at all times be held at Customer's risk, and Customer shall
keep it insured against loss or damage by fire and extended coverage perils,
theft, burglary, and for any or all Collateral which are vehicles, for risk of
loss by collision, and where reasonably requested by Secured Party, against
other risks as required thereby, for the full replacement value thereof, with
companies, in amounts and under policies reasonably acceptable to Secured Party.
Customer shall, if Secured Party so requires, deliver to Secured Party policies
or certificates of insurance evidencing such coverage. Each policy shall name
Secured Party as loss payee thereunder, shall provide for coverage to Secured
Party regardless of the breach by Customer of any warranty or representation
made therein, shall not be subject to co-insurance, and shall provide for thirty
(30) days written notice to Secured Party of the cancellation or material
modification thereof. Customer hereby appoints Secured Party as its attorney in
fact to make
21
proof of loss, claim for insurance and adjustments with insurers, and to execute
or endorse all documents, checks or drafts in connection with payments made as a
result of any such insurance policies. Proceeds of insurance shall be applied,
at the option of Secured Party, to repair or replace the Collateral or to reduce
any of the Indebtedness secured hereby.
5. REPORTS:
(a) Customer shall promptly notify Secured Party in the event of (i) any change
in the name of Customer or the type of organization of Customer, (ii) any
relocation of its chief executive offices, (iii) any relocation of any of the
Collateral, (iv) any of the Collateral being lost, stolen, missing, destroyed,
materially damaged or worn out, or (v) any lien, claim or encumbrance attaching
or being made against any of the Collateral (other than liens in favor of
Secured Party). (b) Customer agrees to comply with Section 4(b) of the Lease.
Secured Party may at any reasonable time examine the books and records of
Customer and make copies thereof.
6. FURTHER ASSURANCES:
(a) Customer shall, upon request of Secured Party, furnish to Secured Party such
further information, execute and deliver to Secured Party such documents and
instruments (including, without limitation, Uniform Commercial Code financing
statements) and do such other acts and things, as Secured Party may at any time
reasonably request relating to the perfection or protection of the security
interest created by this Agreement or for the purpose of carrying out the intent
of this Agreement, whether pursuant to the Uniform Commercial Code, the U.S.
Copyright Act, the U.S. patent and trademark laws or otherwise. Without
limiting the foregoing, Customer shall cooperate and do all acts deemed
necessary or advisable by Secured Party to continue in Secured Party a perfected
first security interest in the Collateral, and shall obtain and furnish to
Secured Party any subordinations, releases, landlord, lessor, or mortgagee
waivers, and similar documents as may be from time to time requested by, and
which are in form and substance reasonably satisfactory to, Secured Party. (b)
Customer hereby grants to Secured Party the power to sign Customer's name and
generally to act on behalf of Customer to execute and file applications for
title, transfers of title, financing statements, notices of lien and other
documents pertaining to any or all of the Collateral. Customer shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain such certificate showing the lien hereof with respect to the Collateral
and promptly deliver same to Secured Party. (c) Customer shall indemnify and
defend the Secured Party, the Participants and their respective successors and
assigns, and their respective directors, officers and employees, from and
against any and all claims, actions and suits (including, without limitation,
related attorneys' fees) of any kind, nature or description whatsoever arising,
directly or indirectly, in connection with any of the Collateral. (d) Customer
hereby authorizes Secured Party to file a financing statement and amendments
thereto describing the Collateral and adding any other collateral described
therein and containing any other information required by the applicable Uniform
Commercial Code, U.S. Copyright Act or U.S. patent and trademark laws.
7. EVENTS OF DEFAULT:
Customer shall be in default under this Agreement and each of the other
Transaction Documents upon the occurrence of any of the following "EVENT(S) OF
DEFAULT": (a) Customer fails to pay any installment or other amount due or
coming due under any of the Transaction Documents within ten (10) days after its
due date; (b) any attempt by Customer, without the prior written consent of
Secured Party, to sell, rent, lease, mortgage, grant a security interest in, or
otherwise transfer or encumber (except for liens in favor of Secured Party) any
of the Collateral; (c) Customer fails to procure, or maintain in effect at all
times, any of the insurance on the Collateral in accordance with Section 4 of
this Agreement; (d) Customer breaches any of its other obligations under any of
the Transaction Documents and fails to cure the same within thirty (30) days
after written notice thereof; (e) any warranty, representation or statement
made by Customer in any of the Transaction Documents or otherwise in connection
with any of the Indebtedness shall be false or misleading in any material
respect; (f) any of the Collateral being subjected to, or being threatened
with, attachment, execution, levy, seizure or confiscation in any legal
proceeding or otherwise; (g) any default by Customer under the Lease or any
other Transaction Documents.
8. REMEDIES ON DEFAULT:
22
(a) Upon the occurrence of an Event of Default under this Agreement, the Secured
Party, at its option, may declare any or all of the Indebtedness (including,
without limitation, the Lease) to be immediately due and payable, without demand
or notice to Customer or any Guarantor. The obligations and liabilities
accelerated thereby shall bear interest (both before and after any judgment)
until paid in full at the lower of eighteen percent (18%) per annum or the
maximum rate not prohibited by applicable law. (b) Upon such declaration of
default, Secured Party shall have all of the rights and remedies of a Secured
Party under the Uniform Commercial Code, and under any other applicable law.
Without limiting the foregoing, Secured Party shall have the right to (i)
notify any customer of Customer or any obligor on any instrument which
constitutes part of the Collateral to make payment to the Secured Party, (ii)
with or without legal process, enter any premises where the Collateral may be
and take possession and/or remove said Collateral from said premises, (iii)
sell the Collateral at public or private sale, in whole or in part, and have the
right to bid and purchase at said sale, and/or (iv) lease or otherwise dispose
of all or part of the Collateral, applying proceeds therefrom to the obligations
then in default. If requested by Secured Party, Customer shall promptly
assemble the Collateral and make it available to Secured Party at a place to be
designated by Secured Party which is reasonably convenient to both parties.
Secured Party may also render any or all of the Collateral unusable at the
Customer's premises and may dispose of such Collateral on such premises without
liability for rent or costs. Any notice which Secured Party is required to give
to Customer under the Uniform Commercial Code of the time and place of any
public sale or the time after which any private sale or other intended
disposition of the Collateral is to be made shall be deemed to constitute
reasonable notice if such notice is given to the last known address of Customer
at least five (5) days prior to such action. In addition to the foregoing
rights after a default hereunder or a default or a termination under any
software license agreement relating to any Collateral consisting of software
that is licensed by Customer (a "Software License Agreement"), Customer shall,
at its own expense, (i) upon the request of Secured Party, immediately disable
any or all of the Equipment consisting of software ("Software") and deliver to
Secured Party all media containing the Software and all related manuals
(Customer agrees that Secured Party may enter Customer's premises to confirm
that Customer has complied with the foregoing request), (ii) upon the request of
Secured Party revoking Customer's right to use the Software, shall immediately
cease using the Software (Customer agrees that Secured Party may enter
Customer's premises to confirm that Customer has complied with the foregoing
demand), (iii) upon the request of Secured Party, cause the licensor or the
original software consulting firm of any Software to deinstall the Software in a
commercially reasonable manner in accordance with the vendor's recommendations
and reengineer the Software for use in a third party's system and provide
consulting services to Secured Party and such third party regarding the
installation, engineering and use of the Software, and (iv) use its best
efforts, subject to the applicable licensor's consent, to promptly take all
actions and execute and deliver and cause to be executed and delivered all
documents reasonably requested by Secured Party to assign to Secured Party all
of Customer's rights as licensee or otherwise under the applicable Software
License Agreement. Upon such assignment, Customer's rights with respect to such
Software shall cease, and Customer shall use its best efforts to cause the
licensor of the Software to consent to such assignment and to consent to a
sublicense of the related Software to a third party, in which case Customer's
rights with respect to such Software shall cease, provided: (i) Secured Party
notifies the licensor in writing and (ii) such third party agrees, in a written
statement delivered to the licensor, that all Software shall remain the property
of the licensor or its supplier, as applicable, and that such third party's use
of the Software shall be subject to, and that such third party shall abide by,
all relevant license or other provisions applicable to the Software contained in
the Software License Agreement (c) Proceeds from any sale or lease or other
disposition shall be applied: first, to all costs of repossession, storage, and
disposition including without limitation attorneys', appraisers', and
auctioneers' fees; second, to discharge the obligations then in default; third,
to discharge any other Indebtedness of Customer to Secured Party, whether as
obligor, endorser, guarantor, surety or indemnitor; fourth, to expenses incurred
in paying or settling liens and claims against the Collateral; and lastly, to
Customer, if there exists any surplus. Customer shall remain fully liable for
any deficiency. (d) In the event that any of the Transaction Documents are
placed in the hands of an attorney for collection of money due or to become due
or to obtain performance of any provision hereof, Customer agrees to pay all
reasonable attorneys' fees incurred by Secured Party, and further agrees that
payment of such fees is secured hereunder. Customer and Secured Party agree
that such fees to the extent not in excess of twenty percent (20%) of subject
amount owing after default (if permitted by law, or such lesser sum as may
otherwise be permitted by law) shall be deemed reasonable. (e) Secured Party's
rights and remedies hereunder or otherwise arising are cumulative and may be
exercised singularly or concurrently. Neither the failure nor any delay on the
part of the Secured Party to exercise any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. Secured Party shall not be
deemed to have waived any of its rights hereunder or under any other agreement,
instrument or paper signed by Customer unless such waiver be in writing and
signed by Secured Party. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. (f) CUSTOMER
HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT,
ANY OF THE OTHER TRANSACTION DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY,
ANY DEALINGS BETWEEN CUSTOMER AND SECURED PARTY RELATING TO
23
THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE
RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN CUSTOMER AND SECURED PARTY. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION
OR ANY RELATED TRANSACTION. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
9. MISCELLANEOUS:
(a) This Agreement, the Lease and/or any of the other Transaction Documents may
be assigned, in whole or in part, by Secured Party without notice to
Customer, and Customer hereby waives any defense, counterclaim or
cross-complaint by Customer against any assignee, agreeing that Secured
Party shall be solely responsible therefor. (b) All notices to be given in
connection with this Agreement shall be in writing, shall be addressed to
the parties at their respective addresses set forth hereinabove (unless and
until a different address may be specified in a written notice to the other
party), and shall be deemed given (i) on the date of receipt if delivered
in hand or by facsimile transmission, (ii) on the next business day after
being sent by express mail, and (iii) on the fourth business day after
being sent by regular, registered or certified mail. As used herein, the
term "business day" shall mean and include any day other than Saturdays,
Sundays, or other days on which commercial banks in New York, New York are
required or authorized to be closed. (c) Secured Party may correct patent
errors herein and fill in all blanks herein or in the Collateral Schedule
consistent with the agreement of the parties. (d) Time is of the essence
hereof. This Agreement shall be binding, jointly and severally, upon all
parties described as the "CUSTOMER" and their respective heirs, executors,
representatives, successors and assigns, and shall inure to the benefit of
Secured Party, its successors and assigns. (e) This Agreement and its
Collateral Schedule constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior
understandings (whether written, verbal or implied) with respect thereto.
This Agreement and its Collateral Schedule shall not be changed or
terminated orally or by course of conduct, but only by a writing signed by
both parties hereto. Section headings contained in this Agreement have been
included for convenience only, and shall not affect the construction or
interpretation hereof. (f) This Agreement shall continue in full force and
effect until all of the Indebtedness has been indefeasibly paid in full to
Secured Party. This Agreement shall automatically be reinstated in the
event that Secured Party is ever required to return or restore the payment
of all or any portion of the Indebtedness (all as though such payment had
never been made). (g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE
LOCATION OF THE COLLATERAL.
24
IN WITNESS WHEREOF, Customer and Secured Party, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.
SECURED PARTY: CUSTOMER:
GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF 21ST CENTURY INSURANCE COMPANY
AND AS AGENT FOR CERTAIN PARTICIPANTS
By:_____________________________________________ By:___________________________
Name:___________________________________________ Name:_________________________
Title:__________________________________________ Title:________________________
25
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, made as of December 31, 2002 ("AGREEMENT"), by and
between General Electric Capital Corporation, for itself and as agent for
certain Participants, with an address at 0 Xxxxx Xxxx Xxxxx Xxxxx 000, Xxxx
Xxxxxx, XX 00000 (together with its successors and assigns, if any, "SECURED
PARTY"), and 21st Century Insurance Group, a California corporation organized
and existing under the laws of the state of California, with its chief executive
offices located at 0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx Xxxxx, XX 00000
("GUARANTOR").
In consideration of the promises herein contained and of certain other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor and Secured Party hereby agree as follows:
1. CREATION OF SECURITY INTEREST:
Guarantor hereby gives, grants and assigns to Secured Party, its successors and
assigns forever, a security interest in and against any and all equipment,
software and other property listed on the collateral schedule annexed hereto or
made a part hereof ("COLLATERAL SCHEDULE"), Guarantor's rights under any
Software License Agreement relating to any of the Collateral that consists of
software, any upgrades of the Collateral and any rights to indemnification,
warranty or guaranty payable to Guarantor from time to time with respect to the
foregoing, and in and against any and all additions, attachments, accessories
and accessions thereto, any and all substitutions, replacements or exchanges
therefor, and any and all insurance and/or other proceeds thereof (all of the
foregoing being hereinafter individually and collectively referred to as the
"COLLATERAL"). The foregoing security interest is given to secure the payment
and performance of any and all installments of rent, other amounts, obligations
and liabilities of any kind, nature or description whatsoever (whether due or to
become due) of Guarantor to Secured Party under that certain Corporate Guaranty
identified on the Collateral Schedule (the "GUARANTY"), this Agreement, and/or
any related documents (the Guaranty, this Agreement and all such related
documents being hereinafter collectively referred to as the "TRANSACTION
DOCUMENTS"), and any renewals, extensions and modifications of such debts,
obligations and liabilities (all of the foregoing being hereinafter referred to
as the "INDEBTEDNESS").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GUARANTOR:
Guarantor hereby represents, warrants and covenants that: (a) Guarantor is, and
will remain, duly organized, existing and in good standing under the laws of the
State set forth in the first paragraph of this Agreement, has its chief
executive offices at the location set forth in such paragraph, and is, and will
remain, duly qualified and licensed in every jurisdiction wherever necessary to
carry on its business and operations; (b) Guarantor has adequate power and
capacity to enter into, and to perform its obligations, under each of the
Transaction Documents; (c) the Transaction Documents have been duly authorized,
executed and delivered by Guarantor and constitute legal, valid and binding
agreements enforceable under all applicable laws in accordance with their terms,
except to the extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws; (d) no approval, consent or
withholding of objections is required from any governmental authority or
instrumentality with respect to the entry into, or performance by, Guarantor of
any of the Transaction Documents, except such as may have already been obtained;
(e) the entry into and performance by Guarantor of the Transaction Documents
will not (i) violate any of the organizational documents of Guarantor or any
judgment, order, law or regulation applicable to Guarantor, or (ii) result in
any breach of, constitute a default under, or result in the creation of any
lien, claim or encumbrance on any of Guarantor's property (except for liens in
favor of Secured Party) pursuant to, any indenture mortgage, deed of trust, bank
loan, credit agreement, or other agreement or instrument to which Guarantor is a
party; (f) there are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Guarantor which could, in the aggregate, have a material adverse effect on
Guarantor, its business or operations, or its ability to perform its obligations
under the Transaction Documents; (g) all financial statements delivered to
Secured Party in connection with the Indebtedness have been prepared in
accordance with generally accepted accounting principles, and since the date of
the most recent financial statement, there has been no material adverse change;
(h) the Collateral is not, and will not be, used by Guarantor for personal,
family or household purposes; (i) the Collateral is, and will remain, in good
condition and repair and
26
Guarantor will not be negligent in the care and use thereof; (j) Guarantor is,
and will remain, the sole and lawful owner, and in possession of, the
Collateral, and has the sole right and lawful authority to grant the security
interest described in this Agreement; (k) the Collateral is, and will remain,
free and clear of all liens, claims and encumbrances of every kind, nature and
description (except for liens in favor of Secured Party); (l) Guarantor's exact
legal name is as set forth in the first sentence of this Agreement; (m) none of
the Collateral consisting of Software that is owned by Guarantor and not
licensed by Guarantor from a third party has been registered with the U.S.
Copyright Office or recorded with the U.S. Patent and Trademark Office; and (n)
Guarantor shall not register any of the Collateral consisting of software that
is owned by Guarantor and not licensed by Guarantor from a third party with the
U.S. Copyright Office or the U.S. Patent and Trademark Office unless (i)
Guarantor provides Secured Party with written notice at least thirty (30) days
prior to the effective date of any such registration and (ii) at Guarantor's
sole cost and expense, execute, deliver and file any documents or filings and
take any other action requested by Secured Party in order to perfect or preserve
Secured Party's security interest in the Equipment with the U.S. Copyright
Office or the U.S. Patent and Trademark Office.
3. COLLATERAL:
(a) Until the declaration of any default hereunder, Guarantor shall remain in
possession of the Collateral; provided, however, that Secured Party shall have
the right to possess (i) any chattel paper, document, certificate of title or
instrument that constitutes a part of the Collateral or possession of which may
be required to perfect Secured Party's interest in the Collateral, and (ii) any
other Collateral which because of its nature may require that Secured Party's
security interest therein be perfected by possession. Secured Party, its
successors and assigns, and their respective agents, shall have the right to
examine and inspect any of the Collateral at any time during normal business
hours, and Secured Party will be responsible for any costs incurred by it in
connection with such inspection so long as no default has occurred and is then
continuing. Upon any request from Secured Party, Guarantor shall provide
Secured Party with notice of the then current location of the Collateral. (b)
Guarantor shall (i) use the Collateral only in its trade or business, (ii)
maintain all of the Collateral in good condition and working order, (iii) use
and maintain the Collateral only in compliance with all applicable laws, and
(iv) keep all of the Collateral free and clear of all liens, claims and
encumbrances (except for liens in favor of Secured Party). (c) Guarantor shall
not, without the prior written consent of Secured Party, (i) part with
possession of any of the Collateral (except to Secured Party or for maintenance
and repair), (ii) remove any of the Collateral from the continental United
States, or (iii) sell, rent, Guaranty, mortgage, grant a security interest in or
otherwise transfer or encumber (except for liens in favor of Secured Party) any
of the Collateral. (d) Guarantor shall pay promptly when due all taxes, license
fees, assessments and public and private charges levied or assessed on any of
the Collateral, on the use thereof, or on this Agreement or any of the other
Transaction Documents. At its option, Secured Party may discharge taxes, liens,
security interests or other encumbrances at any time levied or placed on the
Collateral and may pay for the maintenance, insurance and preservation of the
Collateral or to effect compliance with the terms of this Agreement or any of
the other Transaction Documents. Guarantor shall reimburse Secured Party, on
demand, for any and all costs and expenses incurred by Secured Party in
connection therewith and agrees that such reimbursement obligation shall be
secured hereby. (e) Guarantor shall, at all times, keep accurate and complete
records of the Collateral, and Secured Party, its successors and assigns, and
their respective agents, shall have the right to examine, inspect, and make
extracts from all of Guarantor's books and records relating to the Collateral at
any time during normal business hours, and such inspecting party will be
responsible for any costs incurred by it in connection with such inspection so
long as no default has occurred and is then continuing. (f) Any third person at
any time and from time to time holding all or any portion of the Collateral
shall be deemed to, and shall, hold the Collateral as the agent of, and as
pledge holder for, Secured Party. At any time and from time to time, Secured
Party may give notice to any third person holding all or any portion of the
Collateral that such third person is holding the Collateral as the agent of, and
as pledge holder for, the Secured Party.
4. INSURANCE:
The Collateral shall at all times be held at Guarantor's risk, and Guarantor
shall keep it insured against loss or damage by fire and extended coverage
perils, theft, burglary, and for any or all Collateral which are vehicles, for
risk of loss by collision, and where reasonably requested by Secured Party,
against other risks as required thereby, for the full replacement value thereof,
with companies, in amounts and under policies reasonably acceptable to Secured
Party. Guarantor shall, if Secured Party so requires, deliver to Secured Party
policies or certificates of insurance evidencing such coverage. Each policy
shall name Secured Party as loss payee thereunder, shall provide for coverage to
Secured Party regardless of the breach by Guarantor of any warranty or
representation made therein, shall not be subject to co-insurance, and shall
provide for thirty (30) days written notice to Secured
27
Party of the cancellation or material modification thereof. Guarantor hereby
appoints Secured Party as its attorney in fact to make proof of loss, claim for
insurance and adjustments with insurers, and to execute or endorse all
documents, checks or drafts in connection with payments made as a result of any
such insurance policies. Proceeds of insurance shall be applied, at the option
of Secured Party, to repair or replace the Collateral or to reduce any of the
Indebtedness secured hereby.
5. REPORTS:
(a) Guarantor shall promptly notify Secured Party in the event of (i) any
change in the name of Guarantor or the type of organization of Guarantor, (ii)
any relocation of its chief executive offices, (iii) any relocation of any of
the Collateral, (iv) any of the Collateral being lost, stolen, missing,
destroyed, materially damaged or worn out, or (v) any lien, claim or
encumbrance attaching or being made against any of the Collateral (other than
liens in favor of Secured Party). (b) Guarantor agrees to comply with Section
4(b) of the Guaranty. Secured Party may at any reasonable time examine the
books and records of Guarantor and make copies thereof.
6. FURTHER ASSURANCES:
(a) Guarantor shall, upon request of Secured Party, furnish to Secured Party
such further information, execute and deliver to Secured Party such documents
and instruments (including, without limitation, Uniform Commercial Code
financing statements) and do such other acts and things, as Secured Party may at
any time reasonably request relating to the perfection or protection of the
security interest created by this Agreement or for the purpose of carrying out
the intent of this Agreement, whether pursuant to the Uniform Commercial Code,
the U.S. Copyright Act, the U.S. patent and trademark laws or otherwise.
Without limiting the foregoing, Guarantor shall cooperate and do all acts deemed
necessary or advisable by Secured Party to continue in Secured Party a perfected
first security interest in the Collateral, and shall obtain and furnish to
Secured Party any subordinations, reGuarantys, landlord, lessor, or mortgagee
waivers, and similar documents as may be from time to time requested by, and
which are in form and substance reasonably satisfactory to, Secured Party. (b)
Guarantor hereby grants to Secured Party the power to sign Guarantor's name and
generally to act on behalf of Guarantor to execute and file applications for
title, transfers of title, financing statements, notices of lien and other
documents pertaining to any or all of the Collateral. Guarantor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain such certificate showing the lien hereof with respect to the Collateral
and promptly deliver same to Secured Party. (c) Guarantor shall indemnify and
defend the Secured Party, the Participants and their respective successors and
assigns, and their respective directors, officers and employees, from and
against any and all claims, actions and suits (including, without limitation,
related attorneys' fees) of any kind, nature or description whatsoever arising,
directly or indirectly, in connection with any of the Collateral. (d) Guarantor
hereby authorizes Secured Party to file a financing statement and amendments
thereto describing the Collateral and adding any other collateral described
therein and containing any other information required by the applicable Uniform
Commercial Code, U.S. Copyright Act or U.S. patent and trademark laws.
7. EVENTS OF DEFAULT:
Guarantor shall be in default under this Agreement and each of the other
Transaction Documents upon the occurrence of any of the following "EVENT(S) OF
DEFAULT": (a) Guarantor fails to pay any amount due or coming due under any of
the Transaction Documents within ten (10) days after its due date; (b) any
attempt by Guarantor, without the prior written consent of Secured Party, to
sell, rent, mortgage, grant a security interest in, or otherwise transfer or
encumber (except for liens in favor of Secured Party) any of the Collateral;
(c) Guarantor fails to procure, or maintain in effect at all times, any of the
insurance on the Collateral in accordance with Section 4 of this Agreement; (d)
Guarantor breaches any of its other obligations under any of the Transaction
Documents and fails to cure the same within thirty (30) days after written
notice thereof; (e) any warranty, representation or statement made by Guarantor
in any of the Transaction Documents or otherwise in connection with any of the
Indebtedness shall be false or misleading in any material respect; (f) any of
the Collateral being subjected to, or being threatened with, attachment,
execution, levy, seizure or confiscation in any legal proceeding or otherwise;
(g) any default by Guarantor or 21st Century Insurance Company ("CUSTOMER")
under the Guaranty or any other Transaction Documents.
8. REMEDIES ON DEFAULT:
28
(a) Upon the occurrence of an Event of Default under this Agreement, the Secured
Party, at its option, may declare any or all of the Indebtedness (including,
without limitation, the Guaranty) to be immediately due and payable, without
demand or notice to Customer or Guarantor. The obligations and liabilities
accelerated thereby shall bear interest (both before and after any judgment)
until paid in full at the lower of eighteen percent (18%) per annum or the
maximum rate not prohibited by applicable law. (b) Upon such declaration of
default, Secured Party shall have all of the rights and remedies of a Secured
Party under the Uniform Commercial Code, and under any other applicable law.
Without limiting the foregoing, Secured Party shall have the right to (i)
notify Guarantor, Customer or any obligor on any instrument which constitutes
part of the Collateral to make payment to the Secured Party, (ii) with or
without legal process, enter any premises where the Collateral may be and take
possession and/or remove said Collateral from said premises, (iii) sell the
Collateral at public or private sale, in whole or in part, and have the right to
bid and purchase at said sale, and/or (iv) lease or otherwise dispose of all or
part of the Collateral, applying proceeds therefrom to the obligations then in
default. If requested by Secured Party, Guarantor shall promptly assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties. Secured Party may
also render any or all of the Collateral unusable at the Guarantor's premises
and may dispose of such Collateral on such premises without liability for rent
or costs. Any notice which Secured Party is required to give to Guarantor under
the Uniform Commercial Code of the time and place of any public sale or the time
after which any private sale or other intended disposition of the Collateral is
to be made shall be deemed to constitute reasonable notice if such notice is
given to the last known address of Guarantor at least five (5) days prior to
such action. In addition to the foregoing rights after a default hereunder or a
default or a termination under any software license agreement relating to any
Collateral consisting of software that is licensed by Guarantor (a "SOFTWARE
LICENSE AGREEMENT"), Guarantor shall, at its own expense, (i) upon the request
of Secured Party, immediately disable any or all of the Equipment consisting of
software ("SOFTWARE") and deliver to Secured Party all media containing the
Software and all related manuals (Guarantor agrees that Secured Party may enter
Guarantor's premises to confirm that Guarantor has complied with the foregoing
request), (ii) upon the request of Secured Party revoking Guarantor's right to
use the Software, shall immediately cease using the Software (Guarantor agrees
that Secured Party may enter Guarantor's premises to confirm that Guarantor has
complied with the foregoing demand), (iii) upon the request of Secured Party,
cause the licensor or the original software consulting firm of any Software to
deinstall the Software in a commercially reasonable manner in accordance with
the vendor's recommendations and reengineer the Software for use in a third
party's system and provide consulting services to Secured Party and such third
party regarding the installation, engineering and use of the Software, and (iv)
use its best efforts, subject to the applicable licensor's consent, to promptly
take all actions and execute and deliver and cause to be executed and delivered
all documents reasonably requested by Secured Party to assign to Secured Party
all of Guarantor's rights as licensee or otherwise under the applicable Software
License Agreement. Upon such assignment, Guarantor's rights with respect to
such Software shall cease, and Guarantor shall use its best efforts to cause the
licensor of the Software to consent to such assignment and to consent to a
sublicense of the related Software to a third party, in which case Guarantor's
rights with respect to such Software shall cease, provided: (i) Secured Party
notifies the licensor in writing and (ii) such third party agrees, in a written
statement delivered to the licensor, that all Software shall remain the property
of the licensor or its supplier, as applicable, and that such third party's use
of the Software shall be subject to, and that such third party shall abide by,
all relevant license or other provisions applicable to the Software contained in
the Software License Agreement. (c) Proceeds from any sale or lease or other
disposition shall be applied: first, to all costs of repossession, storage, and
disposition including without limitation attorneys', appraisers', and
auctioneers' fees; second, to discharge the obligations then in default; third,
to discharge any other Indebtedness of Guarantor to Secured Party, whether as
obligor, endorser, guarantor, surety or indemnitor; fourth, to expenses incurred
in paying or settling liens and claims against the Collateral; and lastly, to
Guarantor, if there exists any surplus. Guarantor shall remain fully liable for
any deficiency. (d) In the event that any of the Transaction Documents are
placed in the hands of an attorney for collection of money due or to become due
or to obtain performance of any provision hereof, Guarantor agrees to pay all
reasonable attorneys' fees incurred by Secured Party, and further agrees that
payment of such fees is secured hereunder. Guarantor and Secured Party agree
that such fees to the extent not in excess of twenty percent (20%) of subject
amount owing after default (if permitted by law, or such lesser sum as may
otherwise be permitted by law) shall be deemed reasonable. (e) Secured Party's
rights and remedies hereunder or otherwise arising are cumulative and may be
exercised singularly or concurrently. Neither the failure nor any delay on the
part of the Secured Party to exercise any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. Secured Party shall not be
deemed to have waived any of its rights hereunder or under any other agreement,
instrument or paper signed by Guarantor unless such waiver be in writing and
signed by Secured Party. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. (f)
GUARANTOR HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
AGREEMENT, ANY OF THE OTHER TRANSACTION
29
DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS BETWEEN
GUARANTOR AND SECURED PARTY RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION
OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED
BETWEEN GUARANTOR AND SECURED PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
(INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.) THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
9. MISCELLANEOUS:
(b) This Agreement, the Guaranty and/or any of the other Transaction Documents
may be assigned, in whole or in part, by Secured Party without notice to
Guarantor, and Guarantor hereby waives any defense, counterclaim or
cross-complaint by Guarantor against any assignee, agreeing that Secured
Party shall be solely responsible therefor. (b) All notices to be given in
connection with this Agreement shall be in writing, shall be addressed to
the parties at their respective addresses set forth hereinabove (unless and
until a different address may be specified in a written notice to the other
party), and shall be deemed given (i) on the date of receipt if delivered
in hand or by facsimile transmission, (ii) on the next business day after
being sent by express mail, and (iii) on the fourth business day after
being sent by regular, registered or certified mail. As used herein, the
term "business day" shall mean and include any day other than Saturdays,
Sundays, or other days on which commercial banks in New York, New York are
required or authorized to be closed. (c) Secured Party may correct patent
errors herein and fill in all blanks herein or in the Collateral Schedule
consistent with the agreement of the parties. (d) Time is of the essence
hereof. This Agreement shall be binding, jointly and severally, upon all
parties described as the "GUARANTOR" and their respective heirs, executors,
representatives, successors and assigns, and shall inure to the benefit of
Secured Party, its successors and assigns. (e) This Agreement and its
Collateral Schedule constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior
understandings (whether written, verbal or implied) with respect thereto.
This Agreement and its Collateral Schedule shall not be changed or
terminated orally or by course of conduct, but only by a writing signed by
both parties hereto. Section headings contained in this Agreement have been
included for convenience only, and shall not affect the construction or
interpretation hereof. (f) This Agreement shall continue in full force and
effect until all of the Indebtedness has been indefeasibly paid in full to
Secured Party. This Agreement shall automatically be reinstated in the
event that Secured Party is ever required to return or restore the payment
of all or any portion of the Indebtedness (all as though such payment had
never been made). (g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK. (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE
LOCATION OF THE COLLATERAL.
30
IN WITNESS WHEREOF, Guarantor and Secured Party, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.
SECURED PARTY: GUARANTOR:
GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF 21ST CENTURY INSURANCE GROUP
AND AS AGENT FOR CERTAIN PARTICIPANTS
By:__________________________________ By:__________________________
Name:________________________________ Name:________________________
Title:_______________________________ Title:_______________________
31
COLLATERAL SCHEDULE
THIS COLLATERAL SCHEDULE is annexed to and made a part of that certain
Security Agreement dated as of December 31, 2002, between GENERAL ELECTRIC
CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS, together
with its successors and assigns, if any, as Secured Party and 21ST CENTURY
INSURANCE GROUP, as Guarantor and describes collateral in which Guarantor has
granted Secured Party a security interest in connection with the Indebtedness
(as defined in the Security Agreement) including without limitation that certain
Corporate Guaranty dated December 31, 2002 entered into by Guarantor in favor of
Secured Party.
DESCRIPTION OF COLLATERAL:
All software now and hereafter owned or licensed by Guarantor, including but not
limited to the COGEN software system, Guarantor's rights under any Software
License Agreement relating to any of the Collateral that consists of software,
any upgrades of the Collateral and any rights to indemnification, warranty or
guaranty payable to Guarantor from time to time with respect to the foregoing,
and in and against any and all additions, attachments, accessories and
accessions thereto, any and all substitutions, replacements or exchanges
therefor, and any and all insurance and/or other proceeds thereof.
SECURED PARTY: GUARANTOR:
GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF 21ST CENTURY INSURANCE GROUP
AND AS AGENT FOR CERTAIN PARTICIPANTS
By:_____________________________________________ By:__________________________
Name:___________________________________________ Name:________________________
Title:__________________________________________ Title:_______________________
Date:___________________________________________ Date:________________________
32
CORPORATE GUARANTY
Date: December 31, 2002
General Electric Capital Corporation, for itself and as agent for certain
participants
0 Xxxxx Xxxx Xxxxx Xxxxx 000
Xxxx Xxxxxx, XX 00000
To induce you to enter into, purchase or otherwise acquire, now or at any
time hereafter, any promissory notes, security agreements, chattel mortgages,
pledge agreements, conditional sale contracts, lease agreements, and/or any
other documents or instruments evidencing, or relating to, any lease, loan,
extension of credit or other financial accommodation (collectively "ACCOUNT
DOCUMENTS" and each an "ACCOUNT DOCUMENT") to 21ST CENTURY INSURANCE COMPANY, a
corporation organized and existing under the laws of the State of California
("CUSTOMER"), but without in any way binding you to do so, the undersigned, for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, does hereby guarantee to you, your successors and assigns, the due
regular and punctual payment of any sum or sums of money which the Customer may
owe to you now or at any time hereafter, whether evidenced by an Account
Document, on open account or otherwise, and whether it represents principal,
interest, rent, late charges, indemnities, an original balance, an accelerated
balance, liquidated damages, a balance reduced by partial payment, a deficiency
after sale or other disposition of any leased equipment, collateral or security,
or any other type of sum of any kind whatsoever that the Customer may owe to you
now or at any time hereafter, and does hereby further guarantee to you, your
successors and assigns, the due, regular and punctual performance of any other
duty or obligation of any kind or character whatsoever that the Customer may owe
to you now or at any time hereafter (all such payment and performance
obligations being collectively referred to as "OBLIGATIONS"). Undersigned does
hereby further guarantee to pay upon demand all losses, costs, attorneys' fees
and expenses which may be suffered by you by reason of Customer's default or
default of the undersigned.
This Guaranty is a guaranty of prompt payment and performance (and not
merely a guaranty of collection). Nothing herein shall require you to first
seek or exhaust any remedy against the Customer, its successors and assigns, or
any other person obligated with respect to the Obligations, or to first
foreclose, exhaust or otherwise proceed against any leased equipment, collateral
or security which may be given in connection with the Obligations. It is agreed
that you may, upon any breach or default of the Customer, or at any time
thereafter, make demand upon the undersigned and receive payment and performance
of the Obligations, with or without notice or demand for payment or performance
by the Customer, its successors or assigns, or any other person. Suit may be
brought and maintained against the undersigned, at your election, without
joinder of the
33
Customer or any other person as parties thereto. The obligations of each
signatory to this Guaranty shall be joint and several.
The undersigned agrees that its obligations under this Guaranty shall be
primary, absolute, continuing and unconditional, irrespective of and unaffected
by any of the following actions or circumstances (regardless of any notice to or
consent of the undersigned): (a) the genuineness, validity, regularity and
enforceability of the Account Documents or any other document; (b) any
extension, renewal, amendment, change, waiver or other modification of the
Account Documents or any other document; (c) the absence of, or delay in, any
action to enforce the Account Documents, this Guaranty or any other document;
(d) your failure or delay in obtaining any other guaranty of the Obligations
(including, without limitation, your failure to obtain the signature of any
other guarantor hereunder); (e) the release of, extension of time for payment or
performance by, or any other indulgence granted to the Customer or any other
person with respect to the Obligations by operation of law or otherwise; (f) the
existence, value, condition, loss, subordination or release (with or without
substitution) of, or failure to have title to or perfect and maintain a security
interest in, or the time, place and manner of any sale or other disposition of
any leased equipment, collateral or security given in connection with the
Obligations, or any other impairment (whether intentional or negligent, by
operation of law or otherwise) of the rights of the undersigned; (g) the
Customer's voluntary or involuntary bankruptcy, assignment for the benefit of
creditors, reorganization, or similar proceedings affecting the Customer or any
of its assets; or (h) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
This Guaranty, the Account Documents and the Obligations may be assigned by
you, without the consent of the Undersigned. The Undersigned agrees that if it
receives written notice of an assignment from you, the Undersigned will pay all
amounts due hereunder to such assignee or as instructed by you. The Undersigned
also agrees to confirm in writing receipt of the notice of assignment as may be
reasonably requested by assignee. The Undersigned hereby waives and agrees not
to assert against any such assignee any of the defenses set forth in the
immediate preceding paragraph.
This Guaranty may be terminated upon delivery to you (at your address shown
above) of a written termination notice from the undersigned. However, as to all
Obligations (whether matured, unmatured, absolute, contingent or otherwise)
incurred by the Customer prior to your receipt of such written termination
notice (and regardless of any subsequent amendment, extension or other
modification which may be made with respect to such Obligations), this Guaranty
shall nevertheless continue and remain undischarged until all such Obligations
are indefeasibly paid and performed in full.
The undersigned agrees that this Guaranty shall remain in full force and
effect or be reinstated (as the case may be) if at any time payment or
performance of any of the Obligations (or any part thereof) is rescinded,
reduced or must otherwise be restored or returned by you, all as though such
payment or performance had not been made. If, by reason of any bankruptcy,
insolvency or similar laws effecting the rights of creditors, you
34
shall be prohibited from exercising any of your rights or remedies against the
Customer or any other person or against any property, then, as between you and
the undersigned, such prohibition shall be of no force and effect, and you shall
have the right to make demand upon, and receive payment from, the undersigned of
all amounts and other sums that would be due to you upon a default with respect
to the Obligations.
The undersigned covenants and agrees that: (a) it will provide to you:
(1) within ninety (90) days after the end of each of its fiscal years, its
balance sheet and related statement of income and statement of cash flows of
Guarantor, prepared in accordance with generally accepted accounting principles
consistently applied ("GAAP"), all in reasonable detail and certified by
independent certified public accountants of recognized standing selected by the
undersigned; (2) within sixty (60) days after the end of each quarter of its
fiscal year, its balance sheet and related statement of income and statement of
cash flows for such quarter, internally prepared in accordance with GAAP and
certified by its chief financial officer; and (3) within thirty (30) days after
the date on which they are filed, all regular periodic reports, forms and other
filings required to be made by the undersigned to the Securities and Exchange
Commission, including (without limitation) Forms 8Q, 10K and 10Q; and (b) it
will promptly execute and deliver to you such further documents, instruments and
assurances and take such further action as you from time to time reasonably may
request in order to carry out the intent and purpose of this Guaranty and to
establish and protect the rights and remedies created or intended to be created
in your favor hereunder.
Notice of acceptance of this Guaranty and of any default by the Customer or
any other person is hereby waived. Presentment, protest demand, and notice of
protest, demand and dishonor of any of the Obligations, and the exercise of
possessory, collection or other remedies for the Obligations, are hereby waived.
The undersigned warrants that it has adequate means to obtain from the Customer
on a continuing basis financial data and other information regarding the
Customer and is not relying upon you to provide any such data or other
information. Without limiting the foregoing, notice of adverse change in the
Customer's financial condition or of any other fact which might materially
increase the risk of the undersigned is also waived. All settlements,
compromises, accounts stated and agreed balances made in good faith between the
Customer, its successors or assigns, and you shall be binding upon and shall not
affect the liability of the undersigned.
Payment of all amounts now or hereafter owed to the undersigned by the
Customer or any other obligor for any of the Obligations is hereby subordinated
in right of payment to the indefeasible payment in full to you of all
Obligations and is hereby assigned to you as a security therefor. The
undersigned hereby irrevocably and unconditionally waives and relinquishes all
statutory, contractual, common law, equitable and all other claims against the
Customer, any other obligor for any of the Obligations, any collateral therefor,
or any other assets of the Customer or any such other obligor, for subrogation,
reimbursement, exoneration, contribution, indemnification, setoff or other
recourse in respect of sums paid or payable to you by the undersigned hereunder,
and the undersigned hereby further irrevocably and unconditionally waives and
relinquishes any and all other benefits which it might otherwise directly or
indirectly receive or be entitled
35
to receive by reason of any amounts paid by, or collected or due from, it, the
Customer or any other obligor for any of the Obligations, or realized from any
of their respective assets.
THE UNDERSIGNED HEREBY UNCONDITIONALLY WAIVES ITS RIGHT TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS GUARANTY, THE OBLIGATIONS GUARANTEED HEREBY, ANY OF THE RELATED
DOCUMENTS, ANY DEALINGS BETWEEN US RELATING TO THE SUBJECT MATTER HEREOF OR
THEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN US. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE OBLIGATIONS GUARANTEED
HEREBY, OR ANY RELATED DOCUMENTS. IN THE EVENT OF LITIGATION, THIS GUARANTY MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
As used in this Guaranty, the word "person" shall include any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, or any government or any political
subdivision thereof.
This Guaranty is intended by the parties as a final expression of the
guaranty of the undersigned and is also intended as a complete and exclusive
statement of the terms thereof. No course of dealing, course of performance or
trade usage, nor any paid evidence of any kind, shall be used to supplement or
modify any of the terms hereof. Nor are there any conditions to the full
effectiveness of this Guaranty. This Guaranty and each of its provisions may
only be waived, modified, varied, released, terminated or surrendered, in whole
or in part, by a duly authorized written instrument signed by you. No failure
by you to exercise your rights hereunder shall give rise to any estoppel against
you, or excuse the undersigned from performing hereunder. Your waiver of any
right to demand performance hereunder shall not be a waiver of any subsequent or
other right to demand performance hereunder.
This Guaranty shall bind the undersigned's successors and assigns and the
benefits thereof shall extend to and include your successors and assigns. In
the event of default hereunder, you may at any time inspect undersigned's
records, or at your option, undersigned shall furnish you with a current
independent audit report.
If any provisions of this Guaranty are in conflict with any applicable
statute, rule or law, then such provisions shall be deemed null and void to the
extent that they may conflict therewith, but without invalidating any other
provisions hereof.
36
EACH SIGNATORY ON BEHALF OF A CORPORATE GUARANTOR WARRANTS THAT HE HAD
AUTHORITY TO SIGN ON BEHALF OF SUCH CORPORATION AND BY SO SIGNING, TO BIND SAID
GUARANTOR CORPORATION HEREUNDER.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
IN ALL RESPECTS BE GOVERENED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
OF SUCH STATE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
REGARDLESS OF THE LOCATION OF ANY COLLATERAL OR THE CUSTOMER OR GUARANTOR.
IN WITNESS WHEREOF, this Guaranty is executed the day and year above
written.
21ST CENTURY INSURANCE GROUP
By: ___________________________________
(Signature)
Title: ___________________________________
(Officer's Title)
ATTEST: ___________________________________
Secretary/Assistant Secretary
37
CERTIFIED RESOLUTION
The undersigned hereby certifies that he is Secretary of 21ST CENTURY
INSURANCE GROUP, that the following resolution was passed at a meeting of the
Board of Directors of said corporation held on _________________________, 2002
duly called, a quorum being present, that said resolution has not since been
revoked or amended, and that the form of guaranty referred to therein is the
form shown attached hereto:
"RESOLVED that it is to the benefit of this corporation that (a) it execute
(i) a guaranty of the obligations of 21ST CENTURY INSURANCE GROUP ("CUSTOMER")
to GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS (collectively, "GE CAPITAL"), and (ii) a security agreement, in
favor of GE Capital, securing such guaranty (collectively, the "GUARANTY
DOCUMENTS"), (b) the benefit to be received by this corporation from such
Guaranty Documents, is reasonably worth the obligations thereby guaranteed and
secured, and (c) such Guaranty Documents shall be substantially in the forms
annexed to these minutes, and further that the _________________________ and
_________________________ (Title of Officers) of this corporation are authorized
to execute such Guaranty Documents on the behalf of this corporation."
WITNESS my hand and the seal of this corporation on this ___________ day of
December, 2002.
___________________________________
[Seal] Secretary
38
CERTIFICATION AND REPRESENTATION BY SIGNING OFFICERS
We, the undersigned, _________________________ and
_________________________ being the _________________________ and
_________________________ of 21ST CENTURY INSURANCE GROUP, the corporation which
executed each of the guaranty and security agreement attached hereto
(collectively, the "GUARANTY DOCUMENTS"), hereby jointly and severally certify
and represent to GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT
FOR CERTAIN PARTICIPANTS, that each of the undersigned executed the Guaranty
Documents for and on behalf of said corporation and that in so executing the
Guaranty Documents the undersigned were duly authorized to do so in their named
capacity as officers and by so executing to hereby bind said guarantor
corporation to the terms of the Guaranty Documents as therein set forth.
______________________________ (L.S.) ______________________________ (L.S.)
Date: _______________________ Date:________________________________
39
PLEDGE OF SECURITIES
This Pledge of Securities ("AGREEMENT") is entered into as of 12:00:01 am
PST this 1st day of January, 2003, by and between General Electric Capital
Corporation ("GE CAPITAL") and 21st Century Insurance Company ("CUSTOMER").
WHEREAS, Customer and GE Capital have entered into or contemporaneously
will enter into a lease agreement, security agreement, promissory note, and/or
certain schedules and related documents and agreements dated as of December 31,
2002 (such instruments together with all other documents and instruments
executed in connection therewith, including but not limited to this Agreement,
are hereinafter referred to collectively as the "TRANSACTION DOCUMENTS");
WHEREAS, GE Capital requires that Customer provide, or cause to be provided
to GE Capital, additional collateral to secure the performance of Customer under
the Transaction Documents;
WHEREAS, to satisfy the foregoing requirement, Customer proposes pledging
to GE Capital, and granting GE Capital a security interest in, certain
collateral; and
NOW THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the parties agree as follow:
As additional security for Customer's performance under the Transaction
Documents, Customer hereby pledges to GE Capital and grants GE Capital a
security interest in all of the right, title and interest of Customer in and to
those certain bonds described on Exhibit B, attached hereto and incorporated
---------
herein by this reference, whether certificated or uncertificated, together with
all interest, dividends, and distributions thereon, additions thereto, and
replacements or substitutions therefor, other Financial Assets relating thereto,
and all proceeds from the liquidation, exchange or other disposition thereof,
and all other proceeds of the foregoing (all of the foregoing being hereinafter
referred to collectively as the "ACCOUNT ASSETS"), held by BNY Western Trust
Company ("AGENT") in the name of Customer, in account number 000366440.
(Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in Article 8 of the Uniform Commercial Code).
The security interest granted herein shall attach upon the execution of this
Agreement by Customer as of the time and date first mentioned above;
notwithstanding anything to the contrary hereinafter, the security interest
granted herein and this Agreement shall, provided there exists no Default (as
defined below), terminate in accordance with Section B. 6 of the Amendment to
Schedule No. 1, dated as of December 31, 2002, between Customer and GE Capital.
In connection with any such termination, provided there exists no Default (as
40
defined below), GE Capital shall deliver to Customer and Agent a written release
of GE Capital's security interest in the remaining Account Assets as provided in
Section 5 below.
THE INTERESTS OF THE PARTIES HERETO IN THE ACCOUNT ASSETS ARE AND SHALL BE
SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
1. Customer shall execute and cause Agent to execute and deliver directly to
GE Capital a letter agreement in the form of Exhibit A hereto (the "CONTROL
---------
AGREEMENT"). At any time after a breach or default by Customer of its
obligations to GE Capital under the Transaction Documents (a "DEFAULT"), GE
Capital may instruct Agent to liquidate, at the then-prevailing market price,
any or all of the Account Assets and pay the proceeds of such liquidation along
with all other Account Assets to GE Capital or its order. Such instruction
shall be in writing and signed by an authorized manager of GE Capital.
2. Customer agrees that GE Capital shall have no liability of any kind or
nature whatsoever with respect to any liquidation of the Account Assets other
than to account to Customer for any surplus pursuant to Section 6 below.
Customer agrees that any liquidation of the Account Assets pursuant to, and in
accordance with the terms of, Section 1 above, in bulk or in parcels, shall
constitute a commercially reasonable sale. After Default, upon the request of
GE Capital, Customer shall take such further action and execute such further
documents as GE Capital shall deem necessary to effect a liquidation of the
Account Assets and the payment of the proceeds thereof to GE Capital.
3. CUSTOMER SHALL HAVE THE RIGHT TO RECEIVE ALL INTEREST AND DIVIDENDS PAID
BY THE ISSUER(S) OF ANY ACCOUNT ASSETS UNTIL SUCH TIME AS AGENT RECEIVES GE
CAPITAL'S INSTRUCTIONS TO LIQUIDATE THE ACCOUNT ASSETS AS PROVIDED HEREIN. ANY
INTEREST AND DIVIDENDS RECEIVED BY AGENT AFTER AGENT RECEIVES GE CAPITAL'S
INSTRUCTION TO LIQUIDATE BUT BEFORE THE ACCOUNT ASSETS ARE LIQUIDATED SHALL BE
PAID TO GE CAPITAL. IF DURING THE TERM OF THIS AGREEMENT, ANY STOCK SPLIT IS
DECLARED BY THE ISSUER OF ANY OF THE ACCOUNT ASSETS, ALL STOCK SUBJECT TO SUCH
SPLIT AND/OR ISSUED IN CONNECTION THEREWITH SHALL BE DEEMED TO BE ACCOUNT ASSETS
PLEDGED BY CUSTOMER TO GE CAPITAL UNDER THIS AGREEMENT AND SHALL BE SUBJECT TO
ALL TERMS AND CONDITIONS OF THIS AGREEMENT.
4. [Intentionally omitted]
5. If GE Capital has not previously instructed Agent to sell the Account
Assets, then within ten (10) business days after Customer has fully and
completely performed its obligations to GE Capital under the Transaction
Documents, GE Capital shall deliver to Customer and Agent a written release of
GE Capital's security interest in the remaining Account Assets, which shall be
41
signed by an authorized manager of GE Capital, after which the terms of this
Agreement shall be deemed to have been satisfied.
6. GE Capital shall apply any proceeds of the liquidation pursuant to this
Agreement of the Account Assets, first to GE Capital's reasonable costs and
expenses incurred as a result of a Default, then to Customer's unpaid
obligations due under the Transaction Documents. Any surplus from such
liquidation of the Account Assets remaining after all of Customer's obligations
to GE Capital under the Transaction Documents are satisfied in full shall be
paid to Customer. Any deficiency shall be paid by Customer within ten business
days after receipt of notice from GE Capital to Customer of the existence of
such deficiency.
7. WAIVERS AND ACKNOWLEDGMENTS. WITH RESPECT TO THIS AGREEMENT, CUSTOMER
HEREBY WAIVES PRESENTMENT, DEMAND, PROTEST AND NOTICE OF PRESENTMENT, DEMAND,
PROTEST AND DEFAULT. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS REQUIRING
GE CAPITAL FIRST TO SEEK OR PURSUE ANY OTHER REMEDY AGAINST ANY GUARANTOR,
CUSTOMER OR ANY OTHER PARTY OR FIRST TO FORECLOSE, EXHAUST OR OTHERWISE PROCEED
AGAINST ANY EQUIPMENT, OTHER COLLATERAL OR SECURITY WHICH MAY BE GIVEN IN
CONNECTION WITH THE TRANSACTION DOCUMENTS OR OTHERWISE. GE CAPITAL MAY, UPON
ANY DEFAULT, OR AT ANY TIME THEREAFTER, EXERCISE ITS RIGHTS AND REMEDIES WITH
RESPECT TO THE ACCOUNT ASSETS AND THIS AGREEMENT, WITH OR WITHOUT ANY NOTICE TO
OR DEMAND UPON CUSTOMER, ANY GUARANTOR OR ANY OTHER PERSON.
8. REPRESENTATIONS AND WARRANTIES OF CUSTOMER. Customer represents,
warrants and covenants to GE Capital that:
(a) Customer is the legal and beneficial owner of the Account Assets, and
except for the security interest granted to GE Capital herein Customer has,
and will at all times during the term of this Agreement have, good and
marketable title to the Account Assets, free and clear of any security
interest, lien, pledge, encumbrance, option, claim or conditional sale
contract, lease or other title retention agreement, and except as may be
otherwise expressly permitted by this Agreement or required by applicable
law or court order, Customer shall not pledge, borrow against or otherwise
impair or diminish the value of the Account Assets or take or consent to
any action which would impair, diminish or dilute the value of the Account
Assets or attempt to take any such action and any attempt to do so shall
constitute a material default under this Agreement and the Transaction
Documents.
(b) Upon execution of this Agreement by the parties hereto, the Agreement
shall be a legal, valid and binding obligation of Customer enforceable
against Customer according to its terms (subject only to the relief
generally available to creditors under the United States Bankruptcy Code
and other similar state legislation.
42
(c) Upon the execution and delivery of this Agreement by Customer and
execution of the Control Agreement by Customer, GE Capital and Agent, and
delivery of the same to GE Capital, GE Capital's security interest in the
Account Assets conferred hereby will be a valid, perfected, first priority
security interest for the term of this Agreement.
(d) The execution, delivery and performance by Customer of this Agreement
will not violate any provision of law, any order of any court or other
agency of government, or any indenture agreement or other instrument to
which Customer is a party or by which Customer, or any of Customer's
property is bound, or be in conflict with, result in a breach of or
constitute (with due notice or lapse of time, or both) a default under any
such indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon
the Account Assets or upon any of Customer's property or assets, except as
contemplated by the provisions of this Agreement. No consent, approval,
authorization, order, registration, or qualification of or with any court
or regulatory authority or other governmental body having jurisdiction over
Customer, or of or with any issuer of any of the Account Assets, the
absence of which would adversely affect the legal and valid execution,
delivery and performance by Customer of Customer's obligations under this
Agreement, is required. There is no litigation, investigation or proceeding
of or before any arbitrator or governmental authority pending or, to
Customer's knowledge, threatened by or against Customer which, if adversely
determined, would have a material adverse effect on the property of
Customer, or the financial or other condition of Customer.
(e) Customer shall cooperate with GE Capital and shall execute and deliver,
or cause to be executed and delivered, to GE Capital all stock powers,
proxies, assignments, financing statement, instruments, and other
documents, and shall take all further action (all at no cost or expense to
GE Capital) from time to time reasonably requested by GE Capital, in order
to maintain a continuing, first-priority, perfected security interest in
the Account Assets in favor of GE Capital, and to enable GE Capital to
exercise and enforce its rights and remedies hereunder with respect to the
Account Assets.
(f) Customer has the right to pledge and grant a security interest in or
otherwise transfer the Account Assets to GE Capital free of any encumbrance
or right of third parties.
(g) As of the date of this Agreement, the Account Assets consist of those
described on Exhibit B hereto.
----------
(h) The Account Assets have not been redeemed in whole or in part by the
issuer thereof.
(i) There is no pending redemption of the Account Assets.
43
(j) The redemption value of the Account Assets as of the maturity date
indicated therefor on the attached Exhibit B, is as described on the face
of the Account Assets and the Account Assets represent a valid and
enforceable obligation of the applicable issuer thereof.
9. A breach or default by Customer of any of its representations,
warranties, covenants or agreements under this Agreement shall be deemed a
Default. Without limiting the foregoing, GE Capital's receipt of notice from
Agent that Agent is terminating the Control Agreement shall constitute a
Default. In addition to any other rights described herein, upon any Default, GE
Capital may in its sole discretion, without notice to or demand on Customer,
sell or redeem any of the Account Assets pledged hereunder, at such asset's
applicable maturity date, or sooner if same is permitted by the Account Asset or
by agreement with the applicable issuer, and may (a) hold such Account Assets as
cash security without obligation for interest thereon (and may commingle same
with its other funds) for performance of obligations of Customer to GE Capital
under the Transaction Documents; or (b) apply such Accounts Assets to the
balance owed under the Transaction Documents in any manner permitted by such
documents or instruments and applicable law. The enforcement by GE Capital of
any rights and remedies hereunder shall not be deemed exclusive and shall be in
addition to and not in lieu of any other remedies available to GE Capital at
law, in equity or pursuant to the Transaction Documents or any other contract
between GE Capital and Customer.
10. Notices, demands, written communications and payments required or
permitted to be given hereunder shall be conclusively deemed to be properly
given at time of delivery if delivered (i) personally, (ii) via commercial
delivery service capable of providing documentary evidence of delivery or (iii)
via United States certified mail, return receipt requested, properly addressed
and postage prepaid, to the following addresses:
If to GE Capital: If to Customer:
GENERAL ELECTRIC CAPITAL CORPORATION 21st Century Insurance Company
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000 0000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxxx Xxxxx, XX 00000
Attention: General Counsel
11. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED ACCORDING TO THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS.
12. The terms of this Agreement may not be changed, amended or waived except
by a writing signed by the GE Capital, Customer and, if such change affects the
rights or obligations of Agent, by the Agent. This Agreement, the
44
Transaction Documents and the Control Agreement contain the entire agreement
among the parties relating to the subject matter thereof, and no prior
agreements, understandings or offers shall be of any force or effect whatsoever.
13. CUSTOMER AND GE CAPITAL EACH HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF,
DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY OF THE RELATED DOCUMENTS, ANY
DEALINGS BETWEEN CUSTOMER AND GE CAPITAL OR RELATING TO THE SUBJECT MATTER OF
THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS
BEING ESTABLISHED BETWEEN CUSTOMER AND GE CAPITAL. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS
IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND
THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT, ANY RELATED DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
CUSTOMER: GE CAPITAL
21st Century Insurance Company
General Electric Capital Corporation
By:_____________________________________
By:_____________________________________
Title:__________________________________
Title:__________________________________
45
EXHIBIT A TO PLEDGE OF ACCOUNT
-------------------------------
[ATTACH COPY OF BNY COLLATERAL AGREEMENT]
-----------------------------------------
46
EXHIBIT B TO PLEDGE AGREEMENT
-----------------------------
[Description of Account Assets]
47
COLLATERAL AGREEMENT
AGREEMENT, entered into as of 12:00:01 am PST this 1st day of January,
2003, among 21st Century Insurance Company ("Pledgor"), General Electric Capital
Corporation ("Secured Party) and BNY Western Trust Company ("Custodian").
WHEREAS, Secured Party and Pledgor have entered into a Pledge of Securities
("Pledge Agreement") pursuant to which Pledgor has agreed to pledge Securities
(as defined below) to Secured Party to secure Pledgor's obligations pursuant to
the Pledge Agreement; and
WHEREAS, Secured Party and Pledgor have requested Custodian to hold
Securities and to perform certain other functions as more fully described
herein; and
WHEREAS, Custodian has agreed to act on behalf of Secured Party and Pledgor
as custodian of Securities delivered to Custodian by Pledgor for the benefit of
the Secured Party;
NOW THEREFORE, in consideration of the mutual promises set forth hereafter,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the meanings set
forth below:
1. "ACCOUNT" shall mean a custodial account established and maintained
pursuant to this Agreement in which Securities shall be deposited by Pledgor and
pledged to Secured Party and any demand deposit account established and
maintained in connection therewith.
2. "AUTHORIZED PERSON" shall be any person, whether or not an officer or
employee of Secured Party or Pledgor, duly authorized by Secured Party or
Pledgor, respectively, to give Written Instructions on behalf of Secured Party
or Pledgor, respectively, such persons to be designated in a Certificate of
Authorized Persons which contains a specimen signature of such person.
3. "BOOK-ENTRY SYSTEM" shall mean the Treasury/Reserve Automated Debt
Entry System maintained at The Federal Reserve Bank of New York ("FRBNY") for
receiving and delivering securities, its successors and nominees.
4. "BNY AFFILIATE" shall mean any office, branch or subsidiary of The
Bank of New York Company, Inc.
5. "CERTIFICATE" shall mean any notice, instruction, schedule or other
instrument in writing, authorized or required by this Agreement to be given to
Custodian, which is actually received by Custodian and signed by an Authorized
Person or a person reasonably believed by Custodian to be an Authorized Person.
6. "DEPOSITORY" shall mean the Depository Trust Company and any other
clearing corporation within the meaning of Section 8-102 of the UCC or otherwise
authorized to act as a securities depository or clearing agency.
7. "ORAL INSTRUCTIONS" shall mean instructions received verbally by
Custodian.
8. "SECURITIES" shall mean those certain securities described on Annex A
hereto, incorporated herein, whether held in the Book-Entry System or at a
Depository, common stock and other equity securities, bonds, debentures and
other debt securities, notes, mortgages or other obligations, and any
instruments representing rights to receive, purchase, or subscribe for the same,
or representing any other rights or interests therein.
9. "UCC" shall mean the Uniform Commercial Code of the State of New York.
10. "WRITTEN INSTRUCTIONS" shall mean written communications actually
received by Custodian by S.W.I.F.T., tested telex, letter, facsimile
transmission, or other method or system specified by Custodian as available for
use in connection with the services hereunder.
ARTICLE II
-2-
APPOINTMENT OF CUSTODIAN;
SECURITY INTEREST
1. Secured Party and Pledgor hereby appoint Custodian as Custodian of all
Securities and cash at any time delivered to Custodian during the term of this
Agreement, and authorize Custodian to hold Securities in registered form in its
name or the name of its nominees. Custodian hereby accepts such appointment and
agrees to establish and maintain the Account and appropriate records identifying
the Securities in the Account as pledged by Pledgor to Secured Party.
2. Secured Party and Pledgor agree that it is intended that Custodian act
as a "securities intermediary" as such term is defined in the UCC with respect
to Securities pledged hereunder. In addition, the parties intend that all
Securities in the Account shall be treated as "financial assets" as such term is
defined in the UCC.
3. Custodian shall have no duty at any time to determine the market value
of any Securities in the Account or whether such Securities constitute
collateral acceptable to Secured Party under the Pledge Agreement.
ARTICLE III CUSTODY OF SECURITIES
1. Secured Party and Pledgor hereby authorize Custodian to utilize the
Book-Entry System and Depositories to the extent possible in connection with its
performance hereunder. Where Securities eligible for deposit in the Book-Entry
System or Depositories are transferred to the Account, Custodian shall identify
on its records as belonging to Pledgor and pledged to Secured Party a quantity
of Securities in a fungible bulk of securities shown on Custodian's account at
the Book-Entry System or the appropriate Depository. Securities and cash
deposited in the Book-Entry System or a Depository will be represented in
accounts which include only assets held by Custodian for its customers.
2. The parties hereto acknowledge and agree that Pledgor shall have no
authority to substitute other Securities for any Securities which are held in
the Account.
3. Pledgor hereby authorizes Custodian to comply with all entitlement
orders (as defined in the UCC) originated by Secured Party with respect to the
Securities in the Account without further consent or direction from Pledgor or
any other party. Custodian will not comply with any entitlement order of Pledgor
concerning the Securities without Secured Party's prior written consent.
4. Custodian shall furnish Secured Party and Pledgor with a monthly
summary of all transactions with respect to the Securities in the Account.
Secured Party and Pledgor may each elect to receive advices, confirmations or
statements electronically through the Internet to an email address specified by
it for such purpose. By electing to use the Internet for this purpose, Secured
Party and Pledgor each acknowledges that such transmissions are not encrypted
and therefore are insecure. Secured Party and Pledgor each further
acknowledges that there are other risks inherent in communicating through the
Internet such as the possibility of virus contamination and disruptions in
service, and agrees that Custodian shall not be responsible for any loss, damage
or expense suffered or incurred by Secured Party or Pledgor, respectively, or
any person claiming by or through Secured Party or Pledgor, respectively, as a
result of the use of such methods.
5. With respect to all Securities held in the Account, Custodian shall,
unless otherwise instructed to the contrary:
(a) Receive all income and other distributions on the Securities and
advise Pledgor as promptly as practicable of any such amounts due but not paid.
Until such time that Custodian shall receive a Certificate from Secured Party
certifying that Pledgor has defaulted in its obligations to Secured Party
pursuant to the Pledge Agreement, Custodian shall credit to Pledgor the income
and payments other than principal payments received by Custodian. After receipt
of such Certificate from Secured Party, Custodian shall credit to the Account
the income and all payments received by Custodian;
(b) Present for payment and receive the amount paid upon all Securities
which may mature and credit such amounts to the Account and advise Pledgor as
promptly as practicable of any such amounts due but not paid;
(c) Forward to Pledgor copies of all information or documents that it may
receive from an issuer of Securities which, in the opinion of Custodian, are
intended for the beneficial owner of Securities;
(d) Execute, as agent, any certificates of ownership, affidavits,
declarations or other certificates under any tax laws now or hereafter in effect
in connection with the collection of bond and note coupons;
-3-
(e) Hold directly, or through the Book-Entry System or a Depository, all
rights and similar Securities issued with respect to any Securities held by
Custodian hereunder; and
(f) Endorse for collection checks, drafts or other negotiable instruments.
6. Upon receipt of Written Instructions from the Secured Party, Custodian
will exchange Securities held hereunder for other Securities and/or cash in
connection with any conversion privilege, reorganization, recapitalization,
redemption in kind, consolidation, tender offer or exchange offer, or any
exercise or subscription, purchase or other similar rights represented by
Securities.
7. Custodian is not at any time under any duty to supervise the
investment of, or to advise or make any recommendation for the purchase, sale,
retention or disposition of Securities.
8. In the event that Custodian receives a Certificate from Secured Party
certifying that Pledgor has defaulted in its obligations to Secured Party
pursuant to the Pledge Agreement, Custodian shall be authorized, without further
inquiry, to act upon Written Instructions from Secured Party with respect to the
disposition of all or any part of the Securities.
9. Custodian hereby represents that as of the effective date of this
Agreement, Custodian has received no other notice indicating that a security
interest has been granted in the Securities (or any part thereof) to any other
party, and that Custodian will use reasonable efforts to notify Secured Party of
Custodian's receipt of such notice as soon as practicable.
10. Custodian hereby represents that the security interest granted to
Secured Party in the Securities shall be superior to any security interest,
lien, right of set-off, or other interest which Custodian now has or may
hereafter have in such Securities.
11. Custodian hereby confirms that Custodian will not extend credit to or
make any margin or other loans to Pledgor secured by the Securities, or any
portion thereof.
ARTICLE IV
CONCERNING CUSTODIAN
1. (a) Except as otherwise expressly provided herein, Custodian shall
not be liable for any costs, expenses, damages, liabilities or claims, including
attorneys' and accountants' fees (collectively, "Losses") incurred by or
asserted against Pledgor or Secured Party, except those Losses arising out of
the negligence or willful misconduct of Custodian. Custodian shall have no
liability whatsoever for the action or inaction of the Book-Entry System or any
Depository. In no event shall Custodian be liable for special, indirect or
consequential damages, or lost profits or loss of business, arising in
connection with this Agreement.
(b) Custodian may enter into subcontracts, agreements and understandings
with any BNY Affiliate whenever and on such terms and conditions as it deems
necessary or appropriate to perform its services hereunder. No such subcontract,
agreement or understanding shall discharge Custodian from its obligations
hereunder.
(c) Secured Party and Pledgor agree, jointly and severally, to indemnify
Custodian and hold Custodian harmless from and against any and all Losses
sustained or incurred by or asserted against Custodian by reason of or as a
result of any action or inaction, or arising out of Custodian's performance
hereunder, including reasonable fees and expenses of counsel incurred by
Custodian in a successful defense of claims by Pledgor or Secured Party;
provided, that Pledgor and Secured Party shall not indemnify Custodian for those
Losses arising out of Custodian's negligence or willful misconduct. This
indemnity shall be a continuing obligation of Pledgor and Secured Party, their
respective successors and assigns, notwithstanding the termination of this
Agreement.
2. Without limiting the generality of the foregoing, Custodian shall be
under no obligation to inquire into, and shall not be liable for, any Losses
incurred by Pledgor, Secured Party or any other person as a result of the
receipt or acceptance of fraudulent, forged or invalid Securities, or Securities
which are otherwise not freely transferable or deliverable without encumbrance
in any relevant market,
3. Custodian may, with respect to questions of law, obtain the advice of
counsel, at the expense of Pledgor, and shall be fully protected with respect to
anything done or omitted by it in good faith in conformity with such advice.
-4-
4. Custodian shall be under no obligation to take action to collect any
amount payable on Securities in default, or if payment is refused after due
demand and presentment.
5. Pledgor agrees to pay to Custodian the fees set forth in Schedule I
attached hereto or as may be agreed upon from time to time. Pledgor shall
reimburse Custodian for all costs associated with the conversion of Securities
hereunder and the transfer of Securities and records kept in connection with
this Agreement. Pledgor shall also reimburse Custodian for out-of-pocket
expenses which are a normal incident of the services provided hereunder.
6. Custodian shall be entitled to rely upon any Certificate or Written
Instruction actually received by Custodian and reasonably believed by Custodian
to be duly authorized and delivered.
7. Upon reasonable request and provided Custodian shall suffer no
significant disruption of its normal activities, Secured Party or Pledgor shall
have access to Custodian's books and records relating to the Account during
Custodian's normal business hours. Upon reasonable request, copies of any such
books and records shall be provided to Secured Party or Pledgor at its expense.
8. It is understood that Custodian is authorized to supply any
information regarding the Account which is required by any law or governmental
regulation now or hereafter in effect.
9. Custodian shall not be responsible or liable for any failure or delay
in the performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; epidemics; riots; interruptions, loss
or malfunctions of utilities, computer (hardware or software) or communications
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; inability to obtain labor, material, equipment or
transportation.
10. Custodian shall have no duties or responsibilities whatsoever except
such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied against Custodian in
connection with this Agreement.
ARTICLE V
DISTRIBUTION; TERMINATION
1. Except as otherwise provided herein, including, without limitation,
the provisions of Article III, Paragraphs 3 and 8, Custodian shall transfer from
the Account and distribute the Securities and cash held in the Account only upon
receipt of Written Instructions to that effect from each of Secured Party and
Pledgor. Such Written Instructions shall specify the Securities and cash to be
distributed and the delivery instructions in connection therewith.
2. Either Custodian or Secured Party may terminate this Agreement by
giving to the other parties a notice in writing specifying the date of such
termination, which shall b not I-,-, than ninety (90) days after the date of
giving of such notice. Such notice shall not affect or terminate Secured
Party's security interest in the Securities. Upon termination hereof, Pledgor
shall pay to Custodian such compensation as may be due to Custodian as of the
date of such termination and Custodian shall follow such reasonable Written
Instructions of Secured Party concerning the transfer of custody of Securities,
cash, records and other items. Upon the date set forth in a termination notice
this Agreement shall terminate and except as otherwise provided herein all
obligations of the parties to each other hereunder shall cease.
ARTICLE VI
MISCELLANEOUS
1. Secured Party and Pledgor agree to furnish to Custodian a new
Certificate of Authorized Persons in the event of any change in the then present
Authorized Persons. Until such new Certificate is received, Custodian shall be
fully protected in acting upon Written Instructions of such present Authorized
Persons.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to Custodian, shall be sufficiently given if
addressed to Custodian and received by it at its offices at: Los Angeles Office:
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000; San
Francisco Office: 000 Xxxxxx Xx., Xxxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000;
Seattle Office: Two Union Square, 000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000-0000, or at such other place as Custodian may from time to time
designate in writing.
-5-
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to Secured Party shall be sufficiently given if
addressed to Secured Party and received by it at its offices at
________________________________________________________________________, or at
such other place as Secured Party may from time to tune designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to Pledgor shall be sufficiently given if addressed
to Pledgor and received by it at its offices at
________________________________________________________________________, or at
such other place as Pledgor may from time to time designate in writing.
5. Each and every right granted to Custodian hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of Custodian to exercise, and no delay in exercising, any right will
operate as a waiver thereof, nor will any single or partial exercise by
Custodian of any right preclude any other or future exercise thereof or the
exercise of any other right.
6. 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 shall not in any way be affected
thereby. This Agreement may not be amended or modified in any manner except by
a written agreement executed by the parties hereto. This Agreement shall
extend to and shall be binding upon the parties hereto, and their respective
successors and assigns; provided, however, that this Agreement shall not be
assignable by any party without the written consent of the other parties.
7. This Agreement shall be construed in accordance with the substantive
laws of the State of California, without regard to conflicts of laws principles
thereof. Pledgor, Secured Party and Custodian hereby consent to the
jurisdiction of a state or federal court situated in California in connection
with any dispute arising hereunder. Pledgor, Secured Party and Custodian each
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any objection which it may now or hereafter have to the laying of venue of any
such proceeding brought in such a court and any claim that such proceeding
brought in such a court has been brought in an inconvenient forum. Pledgor,
Secured Party and Custodian each hereby irrevocably waives any and all rights to
trial by jury in any legal proceeding arising out of or relating to this
Agreement.
8. In performing hereunder, Custodian is acting solely on behalf of
Secured Party and Pledgor and no contractual or service relationship shall be
deemed to be established hereby between Custodian and any other person.
9. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
-6-
IN WITNESS WHEREOF, Secured Party, Pledgor and Custodian have caused this
Agreement to be executed by their respective officers, thereunto duly
authorized, as of the day and year first above written.
21ST CENTURY INSURANCE COMPANY
By:
---------------------------------------
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxxx
---------------------------------------
Title:
BNY WESTERN TRUST COMPANY
By:
---------------------------------------
Title:
Nominal Paydown
Interest Rate Maturity Date Market Value - Base Cost - Base Quantity Quantity
5.0000% 1-Dec-14 1,072,570.00 1,026,540.00 1,000,000.00 1,000,000.00
5.2500% 1-Dec-17 2,136,440.00 2,087,830.00 2,000.000.00 2,000,000.00
5.4500% 1-Jan-03 1,020,600.00 1,018,180.00 1,000,000.00 1,000,000.00
5.0000% 1-Aug-13 1,089,850.00 1,096,620.00 1,000,000.00 1,000,000.00
5.5000% 1-Oct-16 1,088,870.00 1,089,900.00 1,000,000.00 1,000,000.00
5.3750% 1-Mar-15 1,090,900.00 1,049,530.00 1,000.000.00 1,000,000.00
5.0000% 1-Nov-17 2,089,980.00 1,999,612.00 2,000,000.00 2,000,000.00
5.2500% 1-Jul-16 1,113,850.00 1,068,680.00 1,000,000.00 1,000,000.00
5.5000% 15-Jun-17 1,091,330.00 1,049,420.00 1,000.000.00 1,000,000.00
5.6250% 1-Dec-16 1,102,000.00 1,112,090.00 1,000,000.00 1,000,000.00
5.6250% 1-Dec-15 1,099,760.00 1.061,1 30.00 1,000,000.00 1,000,000.00
5.0000% 1-Aug-17 1,047,110.00 1,024,860.00 1,000,000.00 1,000,000.00
5.3750% 1-Oct-18 1,082,570.00 1,030,440.00 1,000,000.00 1,000,000.00
5.0000% 1-Deo-15 1,045,780.00 1,018,526.66 1,000,000.00 1,000,000.00
5.2500% 15-May-16 1,082,090.00 1,019,530.00 1,000,000.00 1,000,000.00
5.0000% 1-Jul-17 1,052,130.00 1,026,310.00 1,000.000.00 1,000,000.00
5.0000% 1-Jun-17 1,051,400.00 1,002,195.00 1,000.000.00 1.000.000.00
5.0000% 1-Jun-18 1,044,180.00 1,010,960.00 1,000,000.00 1,000,000.00
5.0000% 1-Aug-17 2,100,080.00 2.003,750.00 2,000,000.00 2,000,000.00
5.3750% 1-May-17 2,166,720.00 2,162,190.00 2,000,000.00 2,000,000.00
5.3500% 1-Mar-13 1,088,160.00 1,000,000.00 1,000,000.00 1,000,000.00
5.4000% 1-Mar-14 1,085,550.00 999,750.00 1,000.000.00 1,000,000.00
5.2500% 1-Dec-IO 1,116,070.00 1,071,640.00 1,000,000.00 1,000,000.00
5.2500% 1-Mar-08 1,108,960.00 1,057,370.00 1,000,000.00 1,000,000.00
5.1250% 15-May-12 1,097,790.00 1,051,800.00 1,000.000.00 1,000,000.00
5.3750% 1-Jul-15 1,129.920.00 1,114,860.00 1,000,000.00 1,000,000,00
5.0000% 1-Oct-16 1,054,580.00 997,250.00 1,000,000.00 1,000,000.00
5.2500% 1-May-15 1,087,240.00 1,039,030.00 1,000,000.00 1,000,000.00
5.1250% 1-Oct-15 2,145,500.00 2,067,760.00 2,000,000.00 2,000,000.00
5.1250% 1-Oct-16 2,133,360.00 2,057,280.00 2,000,000,00 2,000,000.00
5.2500% 1-Feb-17 2,187,840.00 2,109,960.00 2,000,000,00 2,000,000.00
5.0000% 1-Nov-18 1,047,860.00 1,000,770.00 1,000,000.00 1,000,000.00
5.5000% 1-Dec-13 1,048,660.00 1,032,360.00 1,000,000.00 1,000,000.00
Nominal Paydown
Interest Rate Maturity Date Market Value - Base Cost - Base Quantity Quantity
5.0000% 1-Jul-07 1,104,380.00 1,052,650.00 1,000,000.00 1,000,000.00
5.2500% 1-Jun-13 1,076,720.00 1,006,490.00 1,000,000.00 1,000,000.00
5.2500% 15-Jul-15 2,205,520.00 1,104,740.00 2,000,000.00 2,000,000.00
5.1250% 1-Dec-16 1,590,015.00 1,544,250.00 1,500,000.00 1,500,000.00
5.0000% 1-Feb-17 1,053,260.00 1,027,960.00 1,000,000.00 1,000,000.00
5.2500% 1-May-15 4,223,800.00 4,116,760.00 4,000,000.00 4,000,000.00
5.1250% 15-May-14 1,056,050.00 1,023,850.00 1,000,000.00 1,000,000.00
5.0000% 1-May-16 1,048,550.00 1,022,520.00 1,000,000.00 1,000,000.00
5.1250% 1-May-16 2,110,940.00 2,048,640.00 2,000,000.00 2,000,000.00
5.2500% 1-Sep-11 1,125,200.00 1,046,680.00 1,000,000.00 1,000,000.00
5.0000% 1-Jul-11 1,068,200.00 1,020,010.00 1,000,000.00 1,000,000.00
5.0000% 15-Jun-18 2,079,620.00 2,026,500.00 2,000,000.00 2,000,000.00
7.1000% 1-Mar-04 1,067,190.00 1,078,670.00 1,000,000.00 1,000,000.00
5.1250% 1-Oct-13 1,103,040.00 1,067,340.00 1,000,000.00 1,000,000.00
5.0000% 1-Oct-15 2,094,340.00 2,018,980.00 2,000,000.00 2,000,000.00
5.0000% 1-Oct-14 2,108,820.00 2,029,860.00 2,000,000.00 2,000,000.00
5.2000% 1-Dec-15 1,051,020.00 1,014,050.00 1,000,000.00 1,000,000.00
Nominal
Interest Rate Asset Long Description - 1 CUSIP
5.0000% PITTSBURGH PA WTR & SWR AUTH WTR & SWR 000000XX0
5.2500% PENNSYLVANIA ST TPK COMMN OIL FRANCHISE 000000XX0
5.4500% SEATTLE WASH MUNICIPALITY MET SEATTLE 000000X00
5.0000% LIVERMORE-XXXXXX XX WTR MGMT AGY CALIF 000000XX0
5.5000% SOUTH CAROLINA TRANSN INFRASTRUCTURE BK 000000XX0
5.3750% WESTERN CAROLINA REGL SWR AUTH S C SEW 000000XX0
5.0000% CALLEGUAS-LAS VIRGENES CALIF PUB FING 000000XX0
5.2500% PIMA CNTY ARIZ MET DOMESTIC WTR IMPT 00000XXX0
5.5000% WASHINGTON CNTY ORE SCH DIST NO 015 000000XX0
5.6250% XXXXXX CNTY WASH SCH DIST NO 403 BETHEL 000000XX0
5.6250% XXXXXX CNTY WASH SCH DIST NO 403 BETHEL 000000XX0
5.0000% KENTUCKY ST PPTY & BLDGS COMMN REVS 00000XXX0
5.3750% HILLSBOROUGH CNTY FLA SCH DIST SALES TAX 000000XX0
5.0000% WHATCOM CNTY WASH SCH DIST NO 501 000000XX0
5.2500% SANTA XXXXX CNTY CALIF FING AUTH LEASE 000000XX0
5.0000% MARICOPA CNTY ARIZ SCH DIST NO 006 000000XX0
5.0000% SANTA XXXXX VY CALIF TRANSN AUTH SALES 00000XXX0
5.0000% SANTA XXXXX VY CALIF TRANSN AUTH SALES 00000XXX0
5.0000% SAN JOSE CALIF XXX XXX XXXX XXXXX XXXXX 000000XX0
5.3750% CALIFORNIA ST DEPT WTR RES PWR SUPPLY 00000XXX0
5.3500% XXXXX XXXX 000000XX0
5.4000% XXXXX XXXX 000000XX0
5.2500% YAKIMA CNTY WASH SCH XXXX XX 0 XXXXXX 000000XX0
5.2500% XXXXX XXXX 000000XX0
5.1250% SAN DIEGO CALIF PUB FAGS FINQ AUTH SWR 00000XXX0
5.3750% ELSINORE VALLEY CALIF MUN WTR DIST CTFS 000000XX0
5.0000% UNIVERSITY ALA UNIV REVS 000000XX0
5.2500% XXXXXXXXX XX 000000X00
0.0000% XXXXXXXXXX XXXX ORE CLEAN WTR SVCS SEW 000000XX0
5.1250% WASHINGTON CNTY ORE CLEAN WTR SVCS SEW 000000XX0
5.2500% CENTRAL PUGET SOUND WASH REGL TRAN AUTH 000000XX0
5.0000% XXXXX XXXXXX XXXXXXXXX XXXXX XXX XXX 000000XX0
5.5000% XXXX XXXXX XXXX XXX 000000XX0
Nominal
Interest Rate Asset Long Description - 1 CUSIP
5.0000% UTAH ST 000000XX0
5.2500% XXXXXXX XXXX XXXX XXX XXXX 000000XX0
5.2500% XXXXXXXX XX 00000XXX0
5.1250% CALIFORNIA ST DEPT WTR RES CENT VY PROJ 00000XXX0
5.0000% XXXXXXXXXX XXXX X X XXX XXXX 000000XX0
5.2500% CALIFRONIA ST DEPT WTR RES PWR SUPPLY 00000XXX0
5.1250% XXXXXXXX XX XXXXX XXX XXXXXX XXXXXXXX 000000XX0
5.0000% SAN DIEGO CNTY CALIF WTR AUTH WTR REV 000000XX0
5.1250% SAN DIEGO CNTY CALIF WTR AUTH WTR REV 000000XX0
5.2500% MILWAUKEE WIS 000000X00
5.0000% MARICOPA XXXX XXXX XXX XXX XXXX XX 000 000000XX0
5.0000% NAPA CNTY CALIF FLOOD PROTN & WATERSHED 00000XXX0
7.1000% XXXXXX CNTY TEX 00000XXX0
5.1250% XXXXXX XXXXXXX XXXX XX 00000XX0
5.0000% DALLAS TEX WTRWKS & SWR SYS REV 000000XX0
5.0000% DALLAS TEX WTRWKS & SWR SYS REV 000000XX0
5.2000% KING CNTY WASH 000000X00
EXHIBIT A TO COLLATERAL SCHEDULE
EQUIPMENT DESCRIPTION
(AS FURTHER DESCRIBED IN ANNEX 1) APPRAISED VALUE
---------------------------------------- ---------------
LEGACY SOFTWARE GROUPS
Xxxxxxxx and Claims System Software
(BUCS) $ 9,900,000.00
Auto Marketing Software System
(CARS) $11,800,000.00
Underwriting $21,200,000.00
Claims $35,400,000.00
Commissions $ 600,000.00
Vendor $ 3,800,000.00
Bank Reconciliation $ 2,700,000.00
--------------
$85,400,000.00
CUSTOMER RELATIONSHIP
MANAGEMENT SOFTWARE PROJECTS
(CRM)
Legacy Replacement System $ 292,967.00
--------------
$ 292,967.00
--------------
Total appraised items $85,692,967.00
Leasehold Improvements, at net book
Value, equal to agreed fair value $ 2,566,360.00
Grand Total $88,259,327.00
==============
ASSETS LOCATED AT: 0000 XXXXXXXXXX XXXXXX, XXXXXXXX XXXXX, XXX XXXXXXX XXXXXX,
XX 00000
Annex 1 to Exhibit A to Collateral Schedule No. 1
SOFTWARE SYSTEM DESCRIPTIONS
BILLING AND CLAIMS (BUCS)
BUCS is a legacy system handling all aspects of customer billing for California
and Arizona. The billing functions include the processing of: Statements of
Account, Billing Notices, Cancellation Letters, Return Premium Checks, and
Installment Notices. The main billing file contains all the billing information
history for that policy/module (1 term). The Coverage History file contains
information that can be combined with data from the master policy to display the
written premium amounts for each vehicle by coverage, create date, and
transaction type. Other key features of this system include: 1) acceptance of
both automatic and manual premium payments for all CA and AZ policies, 2)
ability for user to enter premium adjustments and money transfers between
policies, 3) establishment of policies for future installments, notices and
non-pay cancels, 4) the update and control of both notice history and
installment history, 5) the printing of installment notices, pre cancel notices
and all cancel letters, 6) the creation and archiving of coverage history detail
for each policy transaction, 7) the addition / reversal of fees for late
payments, insured cancels and bounced checks, and 8) the reconstruction of
billing schedules depending on amount of payment made on any installments.
Recent significant system enhancements include Arizona State billing rules, Year
2000 changes, and adding new fees to the California book of business. The
system's 341,000 lines of code are written in COBOL. BUCS was 100% developed
in-house by a team of ten software developers over the course of one year and
initially released for use in 1993. A team of two to three developers did
maintenance and enhancement of the BUCS system over the software system's life.
The With Cash / Suspense Assignment (WC/SA) is a subsystem to BUCS that: 1)
provides a repository to store information on payments made with a policy
application and 2) Holds the amount paid to be credited to the policy of the
Insured when the application becomes a New Business Policy. With Cash is for the
regular Auto policies in both CA and AZ. Suspense Assignment is for the Assigned
Risk policies. Both function the same way but are separate systems for
accounting purposes. The major features of the WC/SA subsystem are: 1) the
acceptance of both automatic and manual application payments for Auto and
Assigned Risk (CA and AZ policies), 2) enable users to enter cash adjustments,
3) verifies application for refund due and prints refund checks when application
is rejected, 4) the transfers of money from application to policy when the New
Business policy is created, 5) the reporting of receivables to General Ledger at
month end. The WC component of WC/SA was completely developed in-house over the
course of six months by three developers and was initially released for use in
1994 while the SA module was released in 1997. A team of one to two developers
performs maintenance on the WC/SA subsystem. The major enhancements to the WC/SA
system are the addition of Arizona State processing and Y2K changes.
E-BUCS provides California and Arizona customers with account status information
such as payment history, current amount due, future installments and payoff
amount on the Internet utilizing jacada to retrieve information from the BUCS
billing system. The reason behind this project was to reduce the amount of
billing related calls to the call center and provide more convenience to
customers. E-BUCS went live in October 2000.
Page 1 of 9
AUTO MARKETING SYSTEM (CARS)
Developed in 1990, CARS is a system that generates on-line customer quotes,
printed quotations, statistical reports and letters. Marketing representatives
collect necessary information from customers on-line to produce quotes. Quotes
can be mailed to prospective customers to provide them with coverage options.
Additionally, at the customer's request, CARS can fax a potential customer a
quote. This system interfaces with the Underwriting Paperless System (UPS). The
Auto Marketing department is the primary user of CARS.
There are a number of batch production cycles for CARS. On a daily basis,
information collected through the on-line screens and from telemarketing vendors
is processed, quotes and letters are created and printed, statistics are
calculated and updated, and reports are printed. On a weekly basis, re-quotes
are processed and printed, statistics are calculated, updated, and reported, and
files are purged of old data. On a monthly basis, customers that are selected
for future re-quotes are cycled, statistics are calculated, updated, and
reported, and statistical files are re-initialized. On a quarterly basis, system
files are sorted, merged and purged. On an annual basis, the Activity file is
processed to accurately reflect all applications accepted to become a policy.
This annual activity feeds into the Community Service reporting for Department
of Insurance.
CARS also supports direct mail marketing campaigns. As part of this effort, CARS
keeps track of people who do not wish to receive marketing.
The on-line functions available in CARS allow the user to perform Entry,
Display, and Update operations for all vital information necessary to prepare,
review, or update quote information for the customer. This includes general
applicant information, specific driver information, specific vehicle
information, and rating coverage information. The system also has capabilities
to generate faxed and remotely printed quotes.
The system also has user maintenance capabilities such as Table Maintenance and
Message Updates. There is also activity tracking through Production Activity
Inquiry capabilities.
CARS was originally developed in 1990 and the current code size is 350,000
lines. From the total code amount, about 30% is new when initially created and
70% is comprised of maintenance, which includes the increase in application
functionality.
UNDERWRITING
Underwriting is supported by three sub-module applications: Underwriting
Paperless System (UPS); Underwriter Information System (UWIN); and Policy Input
Processing (PIP). UPS is an on-line system that processes auto applications from
initial entry to final approval. It provides the capability to order MVR's
(Motor Vehicle Records via third party software from each U.S. State DMV and
Canada DMV), follow up on missing information, and determine status and review
for approval. This system also provides on-line document handling and
productivity/performance statistics. This system supports New Business Auto
Underwriting and Data Entry.
Underwriting Paperless System (UPS) Batch production consists of daily, weekly
and monthly cycles. On a daily basis, information collected through the on-line
screens and received from CLUE (Comprehensive Loss Underwriting Exchange) and
MVR is processed to generate productivity/performance statistics reports,
application closed/bypass reports, MVR reports, queue balancing and aging
reports, worksheets, postcards and letters. In a weekly processing new business
aging, weekly application decline, call type, balancing reports are printed, rep
statistics files are initialized. On monthly basis the system produces approval
status activity reports and rep statistics monthly files are initialized.
Page 2 of 9
UWIN is a claim summary system that provides for on-line inquiry of losses for a
given policy and allows for updating of accident information including driver,
vehicle, and accident coding. The UWIN / Cash Out system allows the user to
follow up on claim payments made to the Insured, and Proof of Repair requests.
Total Loss provides update and closure capabilities for automobiles being
salvaged or totaled. In addition, Management Reporting and Table Maintenance are
covered under this umbrella. They include Rep tracking and evaluation, and table
update and logging.
The batch portion of the system is for Cash Out and Total Loss only. The Cash
Out portion processes reversals, loss updates, duplicate removal, and exception
reporting. Total Loss processes salvage extracts, updates, duplicates, letters,
and vehicle removal. The Claim Summary batch portion is broken into UWIN / UW
Review and UWIN / Surcharge.
UWIN also has screens and reports that support Underwriting and Premium
Accounting to reinstate Cancelled Policies.
For in-force policy review, UWIN determines which policies require review. On a
weekly basis, policies expiring in one and one half month are processed. The
Underwriter Review system produces reports listing policies that fall within
Underwriter Review criteria. The criteria consist of examining claims for a
policy that meet specific conditions.
PIP is a bridge between CARS, UPS, and PMS. Its main function is to maintain
in-force policy files. Data is retrieved from the respective file and written to
the Entry Pending Files (EPF) for further processing. On-line edits eliminate
error at the point of entry. It is also used for rewrites such as split policies
or changes in term dates. Data entry is the sole user of this system.
In aggregate, the three sub-modules that comprise Underwriting consist of
650,000 lines of code written in COBOL.
CLAIMS
The Claims system is a large set of subsystems that handle all claims management
at 21st Century Insurance. The major sub-systems include: Claims Administrative
System (CAD); Loss Reporting; File Handling; Vehicle Inspection; Salvage
Tracking; Communication; and Claims Vendor. Claims Financials System (CFS),
Claims Summary, Comprehensive Loss Underwriting Exchange (CLUE), Catastrophe
Reporting System, Forms & Letters (FLS), Reserve History, Loss Master Reporting,
and Suit Tracking System are other subsystems that operate under Claims. The
system has 1,100,000 lines of code written in COBOL.
The CAD system is part of the menu driven Claim Management System (CMS or TCIC),
which was developed, in the early 1990's. There are three main areas in the CAD
system. The first component of the CAD system handles Menu Driver file
maintenance. A generic menu driver program uses these files to provide flexible,
table-driven control of menu displays and screen-to-screen navigation throughout
CMS environment. CAD also provides centralized user registration and
security/access checking via RACF.
The second area of the CAD system is used for Claims table maintenance, which
records and maintains various information files needed by other Claim
subsystems.
Page 3 of 9
The data includes Catastrophe Code, Claims Facilities, Facility Directions,
Claims Organization Structure, Miscellaneous Codes, and Claim Territories by zip
code.
The third part of the CAD system is the print subsystem. This subsystem allows
Loss Reports, Vehicle Inspection system and Salvage Tracking system documents,
File Handling diaries and other standard documents used in claim handling to be
printed on demand via PC-connected laser printers at remote Claim offices.
Status of completed jobs is communicated back to the initiating application.
The Loss Reporting System forms the basis for documenting claim information
taken from an insured or claimant. The Loss Report is used by the Office
Adjuster or Examiner to develop an investigative plan and to contact all parties
involved in the incident. It may also be used to update, display, or print the
Loss Report information, or to create a new version of the Loss Report.
The File Handling System provides the tools for handling the claim from creation
to closure. It provides claim-level administrative functions, diary facilities,
assignment and classification capabilities, as well as overviews of relevant
coverages and financial details. As the system, which integrates all components
of the Claims Management System, File Handling provides links to the Loss
Reporting, Policy Management System, Claims Summary, Vehicle Inspection, and
Calendaring and Suspense systems. Both Loss Reporting and File Handling are
capable of handling Auto, Motorcycle and Homeowner/Condominium losses.
The Vehicle Inspection System (VIS) is a part of the CMS. This system is used to
schedule all types of vehicle inspections and maintain a history of canceled,
rescheduled, and reassigned inspections. Inspections may be made at a Drive-in
(DRI), Direct Repair Program (DRP) facility, Vehicle Inspection Center (VIC),
Stereo Direct Repair vendor (STR), Glass Inspection (GLS) facility, or through a
Field Inspection (FLD). Inspections can also be Waved (WAV) or assigned to an
Independent Adjuster (IND). CARCO inspections, mandatory auto inspections that
are a result of the California Automobile Pre-Inspection Law, are also
scheduled.
CCC Information Services, Inc. (CCC), a Chicago based company is used for repair
estimates. Through the mainframe, data are sent to CCC regarding a particular
vehicle and the adjuster who is to do the estimate. CCC then sends the
assignment to the adjuster's mailbox and using laptops connected to CCC do the
estimate of repairs and sends it back to CCC. After processing, CCC sends the
estimate results back to the 21st Century Insurance mainframe.
VIS is also responsible for the maintenance and activation of Drive-in Locations
to include their daily time of operations. Using the PMS vendors, Claims
maintain a list of authorized vendors used for repairs.
Page 4 of 9
Salvage Tracking is an on-line sub-application that keeps track of salvage
records. It tracks vehicles belonging to 21st Century Insurance, for either
theft or total loss cases. Total loss or salvage tracking is established right
from the stage of "request for pickup of salvage" through" sale of salvage at
auction". It helps adjusters maintain salvage pools, track daily cost for
vehicles stored at various locations etc. The sub-system also generates a unique
sequence-id for each salvage record for which there is a claim. Salvage Tracking
extracts the claim number as its input. Salvage Tracking was initially released
in October, 1991.
Claim Communication System (CCS) - The Claims Department has always been posed
with a challenge for a way to deliver timely and on-demand reports that will
serve the needs of its staff that are mostly working in different locations far
from the Home Office. In 1992, upon the Menu Driver platform, the Claim
Communication System was developed.
The Claim Communication System is also referred to as the Remote Printing
System. It is useful in providing reports submitted by the different application
programs using the Menu Driver as well as process jobs that have been submitted
by batch programs.
The printed output from CCS ranges from formatted reports such as Loss Reports,
letters sent by claims adjusters to forms such as the Property Insurance Loss
register. Even though most of the application systems may have different printed
output, the procedure in using the CCS is still standard across these different
application systems.
Besides the on-demand and immediate access feature of documents printed using
CCS, the end product printed using a personal computer is with merits. These
documents may be designed using different fonts, style and formatting which
simulate forms or letters that used to be individually hand or typewritten
within the Claims department.
The Claims Vendor System (CVS) is a part of the CMS. This system is used to
create vendors that will be used by the claims department. Vendors must first be
accredited PMS vendors before they can make claims vendors. There are several
types of vendors from A01 to A52 and H01 to H05. This system is just concerned
with types A01 to A06, which are being used by the Vehicle Inspection System.
When VIS needs a vehicle to be inspected and assigned to a Direct Repair Program
(DRP), a list is provided to select the vendor to be used. CVS is responsible
for the maintenance of the list of authorized vendors used for repairs,
activation to include their status of being active or inactive and removal.
Claims Financials is the claims portion of the PMS purchased in 1979 from Policy
Management System Corp. CFS provides for data entry and verification of
transactions for opening and closing reserves, producing payment checks, and
recording cash receipts. The software was initially released in 1979 and has
been maintained by a staff of twenty people.
Page 5 of 9
The primary function of the Claim Summary system is to capture and summarize
loss data. This data is then used by the Underwriting department during policy
renewal review processing. Additionally, this data may be used by claims
whenever there is a need to access summarized claims data. There is a daily and
a weekly batch production cycle. The daily batch processing applies daily losses
to the Claim Summary file. Source of data applied to the Claim Summary file is
from Policy Management System, specifically from daily PMS020 file. This file
contains all policy modules updated during the daily PMS cycle. The weekly batch
processing reorganizes the Claim Summary file. Additionally, there are G103
audit reports generated for Claims management. These reports notify Claims
Management as to disposition of G103 "At Fault" letter processing. The on-line
functions consist of a series of screen designed to allow the user to browse
summarized loss data and assorted Policy In-force (PIF) segments. There is the
capability for an Underwriter to add a comment, which is stored into the Claim
Summary File. There is also capability to add and update Total Loss data via
on-line screens. Claims Summary was initially released in 1980 and is maintained
by a team of twenty-five developers.
The CLUE service is used to exchange loss information with Choicepoint. On a
monthly basis, loss related data for policyholders is sent to them via tape. It
stores a five-year history and is used by the Underwriting Claims Departments.
The initial date of release of CLUE was 1990.
The Catastrophe Reporting System is a batch system designed to report homeowner
and auto policy information for a specified catastrophe code. Reserve and
payment data is extracted off the monthly loss master file, the weekly loss
master file, and the daily PMS019 file and merged to create the daily reports.
There are a series of three sets of reports created. This system was first
utilized in 1994.
The FLS is a Vendor Software Package that allows Claims users to view and select
from On-line screens a list of letters. The users are able to build and edit the
letters that they choose. The variable data is pulled from a Claims database
behind the scenes. There are no Batch processing jobs involved in generating the
letters. There are a few batch procedures that are used to back-up the data.
This system was released in 1997.
RESERVE HISTORY/CASELOAD tracks and reports reserve level changes, claim
assignments and reassignments at the division and unit level. The system
provides an audit trail of changes to reserve, claims assignments and
reassignments.
The LOSS MASTER REPORTING system is a batch system that captures claims losses
from the Policy Management System. This system was developed by 21st Insurance
as a vehicle to report claims losses in a variety of views as well as to
maintain data for use by the Statistical and Insurance Office Service reporting
systems. A small portion of the Loss Master System passes data to the General
Ledger system. There are also many one time statistical runs against the Loss
Master files for reporting
Page 6 of 9
views that are not offered in the regular Loss Master reports. The Loss Master
system reports losses exclusively or in various combinations by the following
categories: coverage, accident date, company, policy type, loss type (reserves,
payments, expenses, salvage, subrogation), examiner, adjuster, division,
transaction date, reinsurance company, claim status (open, closed with pay,
closed no pay).
Suit Tracking System allows Users to access and view individual Suit records
online. It tracks three types of lawsuits for 21st Century Insurance: 1) Third
party suits - An outside party sues 21st Century Insurance insured for bodily
injury and/or property damage liability, 2) First party suits - An insured sues
21st Century Insurance for damages under the Uninsured Motorist coverage on his
policy, 3) Subrogation suits - 21st Century Insurance sues another party to
recover damages paid by Company under any coverage.
An accident can give rise to one or more suits. Each suit can have one or more
claimants. If several suits are filed, they often are consolidated after filing.
Assignment information could be different on suit associated with the same
claims file, because different legal counsel must be assigned to avoid conflict
of interest. The reserve remains open on claims lines in suit until final
judgment. If 21st Century Insurance wins the case, the insured or claimant is
awarded, 21st must pay the amount awarded plus allowable costs. A final payment
will be issued, which closes the reserve.
COMMISSIONS
The Commissions custom system is an operational legacy system that is
responsible for the processing for all agent commissions related to the 21st
Century Casualty Company assigned risk policies. Daily, the PMS system sets up
new business policies, renewals, and policy changes, and the Commission System
calculates commissions according to the rules contained in Section 2462 of the
California Insurance Plan. The commissions are then captured into the Commission
master file. New vendors are added to the Vendor file as needed and an
assignment record is created on the Assignment file to relate the PMS policy
number to the vendor number.
At midmonth the commission checks and offset statements are printed and the
Commission master file is updated with the checks, minimum earned commission
transactions, and offsets. The closeout and balancing are not done until month
end. The midmonth cycle was added in July 1996, to satisfy the state requirement
that insurance companies pay commissions to the agent within 30 days of receipt
of the application. The Commission system is not designed to do closeout and
balancing other than at month end because it does its calculations based on full
months. In addition, Accounting wants the closeout and balancing done only once
a month, at month end.
At month end the closeout and balancing are done. The checks and all statements
are printed and the Commission master file is updated with the checks, minimum
earned
Page 7 of 9
views that are not offered in the regular Loss Master reports. The Loss Master
system reports losses exclusively or in various combinations by the following
categories: coverage, accident date, company, policy type, loss type (reserves,
payments, expenses, salvage, subrogation), examiner, adjuster, division,
transaction date, reinsurance company, claim status (open, closed with pay,
closed no pay).
Suit Tracking System allows Users to access and view individual Suit records
online. It tracks three types of lawsuits for 21st Century Insurance: 1) Third
party suits - An outside party sues 21st Century Insurance insured for bodily
injury and/or property damage liability, 2) First party suits - An insured sues
21st Century Insurance for damages under the Uninsured Motorist coverage on his
policy, 3) Subrogation suits - 21st Century Insurance sues another party to
recover damages paid by Company under any coverage.
An accident can give rise to one or more suits. Each suit can have one or more
claimants. If several suits are filed, they often are consolidated after filing.
Assignment information could be different on suit associated with the same
claims file, because different legal counsel must be assigned to avoid conflict
of interest. The reserve remains open on claims lines in suit until final
judgment. If 21st Century Insurance wins the case, the insured or claimant is
awarded, 21st must pay the amount awarded plus allowable costs. A final payment
will be issued, which closes the reserve.
COMMISSIONS
The Commissions custom system is an operational legacy system that is
responsible for the processing for all agent commissions related to the 21st
Century Casualty Company assigned risk policies. Daily, the PMS system sets up
new business policies, renewals, and policy changes, and the Commission System
calculates commissions according to the rules contained in Section 2462 of the
California Insurance Plan. The commissions are then captured into the Commission
master file. New vendors are added to the Vendor file as needed and an
assignment record is created on the Assignment file to relate the PMS policy
number to the vendor number.
At midmonth the commission checks and offset statements are printed and the
Commission master file is updated with the checks, minimum earned commission
transactions, and offsets. The closeout and balancing are not done until month
end. The midmonth cycle was added in July 1996, to satisfy the state requirement
that insurance companies pay commissions to the agent within 30 days of receipt
of the application. The Commission system is not designed to do closeout and
balancing other than at month end because it does its calculations based on full
months. In addition, Accounting wants the closeout and balancing done only once
a month, at month end.
At month end the closeout and balancing are done. The checks and all statements
are printed and the Commission master file is updated with the checks, minimum
earned commission transactions, offsets, and charge offs. The system's 20,000
lines of code are written in COBOL.
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VENDOR
The IRS requires 21st Century Insurance to report payments to vendors. The
Vendor custom system is a legacy system for handling 1099 processing for all
company vendors. The Internal Revenue Service requires 21 Century Insurance to
report payments to vendors. The Vendor system is used to keep track of the
payments made to vendors and is also used to create the 1099's. There are two
main files. One is the Vendor Master file, which contains information such as
name and address for each vendor, and the other is the Vendor accounting file
that contains all the payments made to each vendor.
New vendors are added to the master vendor file as needed. If a CDS vendor is
created, modified or deleted, and ABC table accounting vendor record is created
and processed by the ABC accounting system. This way the master vendor file and
the ABC vendor accounting file contain the same vendor information.
A PMS assignment record is created for new PMS policies, relating the PMS policy
number to the vendor number. A CDS assignment record is created for new CDS
accounting vendors, relating the CDS vendor number to the vendor number. CDS
keeps its own set of vendor numbers. Daily the Vendor system extracts claims
vendor payments from the PMS system and adds them to the Vendor Accounting file.
Weekly the vendor system extracts vendor payments from the CDS accounting system
and adds them to the Vendor accounting file. Weekly the Vendor system extracts
commission payments from the Commission System and adds them to the Vendor
accounting file. Monthly the Vendor system extracts commission and CDS
accounting data that was not picked up by the weekly cycles (for the last few
days of the month) and adds the data to the Vendor Accounting file. The
Corporate Accounting department can make adjustments to the Vendor Accounting
file by adding and offsetting data. Annually, vendor payments are reported to
the IRS in accordance with the Department of Treasury Internal Revenue Service
Publication 1220.
The system's 146,000 lines of code are written in COBOL.
BANK RECONCILIATION
This is a bank accounting system that handles cash, premium refunds, claims,
commissions, and proposition 103 checks. Each banking day, processed check
status is sent via ftp transmission and updates the Check Master File on the
mainframe and Peoplesoft. Claims stop pays are collected daily and sent through
Bank of America's BAMTRAC system. PMS and Accounting systems are balanced
against each other daily. Escheat processing is done annually at October month
end. The system's 85,000 lines of code are written in COBOL.
The Legacy Replacement initiative is the fifth among the CRM projects. Legacy
Replacement refers to the migration to the Enterprise Billing system, which acts
as a single billing, accounts receivable and payable system. This system is
designed to support the future growth of 21st Century Insurance in terms of
additional states and lines of business. This system is flexible to provide
multi-channel billing/payment options and is designed using up-to-date system
architecture. This system will replace BUCS and COGEN.
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