Exhibit 10(o)
RECEIVABLES PURCHASE AGREEMENT
Dated as of December 31, 1996, as amended by Amendment Nos. 1-12 Thereto
Among
APR FUNDING CORPORATION
as Seller
and
UNIVERSAL PREMIUM ACCEPTANCE CORPORATION
individually and as Servicer,
and
AUTOBAHN FUNDING COMPANY LLC
as Purchaser
and
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK AG
as Agent
TABLE OF CONTENTS
ARTICLE I PURCHASES AND REINVESTMENTS ....................... 4
SECTION 1.01. Commitments to Purchase; Limits on Purchaser's
Obligations........................................... 5
SECTION 1.02. Purchase Procedures; Assignment of Purchaser's
Interests............................................. 5
SECTION 1.03. Reinvestments............................... 6
SECTION 1.04. Asset Interest; Purchaser's Share.......... 7
ARTICLE II COMPUTATIONAL RULES ............................. 9
SECTION 2.01. Selection of Asset Tranches................ 9
SECTION 2.02. Computation of Purchaser's Total Investment and
Purchaser's Tranche Investment....................... 9
SECTION 2.03. Computation of Earned Discount............. 10
ARTICLE III SETTLEMENTS .................................... 10
SECTION 3.01. Settlement Procedures for Collections of Principal
Receivables.......................................... 10
SECTION 3.02. Settlement Procedures for Collections of Finance Charge
Receivables.......................................... 11
SECTION 3.03. General Settlement Procedures.............. 13
SECTION 3.04. Deemed Collections; Reduction of Purchaser's Total
Investment, Etc...................................... 14
SECTION 3.05. Payments and Computations, Etc............. 16
SECTION 3.06. Treatment of Collections and Deemed Collections 16
SECTION 3.07. Repurchases................................ 17
SECTION 3.08. Custody Arrangement........................ 18
SECTION 3.09. Establishment of Collection Account; Investments by
Agent................................................ 18
ARTICLE IV FEES AND YIELD PROTECTION ....................... 20
SECTION 4.01. Fees....................................... 20
SECTION 4.02. Yield Protection........................... 21
SECTION 4.03. Funding Losses............................. 23
ARTICLE V CONDITIONS OF PURCHASES .......................... 23
SECTION 5.01. Conditions Precedent to Initial Purchase... 23
SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments
..................................................... 26
ARTICLE VI REPRESENTATIONS AND WARRANTIES .................. 26
SECTION 6.01. Representations and Warranties of Seller... 26
SECTION 6.02. Representations and Warranties of UPAC..... 31
SECTION 6.03. Reserved................................... 33
SECTION 6.04. Breach of Representations and Warranties... 34
ARTICLE VII GENERAL COVENANTS .............................. 34
SECTION 7.01. Affirmative Covenants of Seller............ 34
SECTION 7.02. Reporting Requirements of Seller........... 35
SECTION 7.03. Negative Covenants of Seller............... 37
SECTION 7.04. Affirmative Covenants of UPAC.............. 38
SECTION 7.05. Reporting Requirements of UPAC............. 40
SECTION 7.06. Negative Covenants of UPAC................. 41
SECTION 7.07. Reserved................................... 43
SECTION 7.08. Reserved................................... 43
SECTION 7.09. Reserved................................... 43
SECTION 7.10. Special Covenant of Seller and UPAC........ 43
ARTICLE VIII ADMINISTRATION AND COLLECTION ................. 45
SECTION 8.01. Designation of Servicer.................... 45
SECTION 8.02. Duties of Servicer......................... 46
SECTION 8.03. Rights of the Agent........................ 47
SECTION 8.04. Responsibilities of Seller................. 48
SECTION 8.05. Further Action Evidencing Purchases and Reinvestments.48
SECTION 8.06. Application of Collections................. 49
ARTICLE IX SECURITY INTEREST ............................... 49
SECTION 9.01. Grant of Security Interest................. 49
SECTION 9.02. Further Assurances......................... 50
SECTION 9.03. Remedies................................... 50
ARTICLE X LIQUIDATION EVENTS ............................... 50
SECTION 10.01. Liquidation Events........................ 50
SECTION 10.02. Remedies.................................. 54
ARTICLE XI THE AGENT ....................................... 54
SECTION 11.01. Authorization and Action.................. 54
SECTION 11.02. Agent's Reliance, Etc..................... 54
SECTION 11.03. DG Bank and Affiliates.................... 55
ARTICLE XII ASSIGNMENT OF PURCHASER'S INTEREST ............. 55
SECTION 12.01. Restrictions on Assignments............... 55
SECTION 12.02. Rights of Assignee........................ 56
SECTION 12.03. Evidence of Assignment.................... 56
ARTICLE XIII INDEMNIFICATION ............................... 56
SECTION 13.01. Indemnities by Seller..................... 56
ARTICLE XIV MISCELLANEOUS .................................. 58
SECTION 14.01. Amendments, Etc........................... 58
SECTION 14.02. Notices, Etc.............................. 59
SECTION 14.03. No Waiver; Remedies....................... 59
SECTION 14.04. Binding Effect; Survival.................. 59
SECTION 14.05. Costs, Expenses and Taxes................. 60
SECTION 14.06. No Proceedings............................ 60
SECTION 14.07. Confidentiality of Seller Information..... 60
SECTION 14.08. Confidentiality of Program Information.... 61
SECTION 14.09. Captions and Cross References............. 62
SECTION 14.10. Integration............................... 63
SECTION 14.11. Governing Law............................. 63
SECTION 14.12. Waiver Of Jury Trial...................... 63
SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities 63
SECTION 14.14. Execution in Counterparts................. 64
SECTION 14.15. No Recourse Against Other Parties......... 64
SECTION 14.16. Covenant to Cooperate..................... 64
SECTION 14.17. Advice From Independent Counsel........... 64
RECEIVABLES PURCHASE AGREEMENT
Dated as of December 31, 1996, as Amended by Amendment Nos. 1-12 Thereto
This RECEIVABLES PURCHASE AGREEMENT, among APR FUNDING CORPORATION, a
Delaware corporation ("Seller"), UNIVERSAL PREMIUM ACCEPTANCE CORPORATION, a
Missouri corporation, individually ("UPAC") and as Servicer (in such capacity,
the "Servicer"), AUTOBAHN FUNDING COMPANY LLC, a Delaware limited liability
company ("Purchaser"), and DG BANK GENOSSENSCHAFTSBANK AG (as "Agent" and in its
individual capacity, "DG Bank"). Unless otherwise indicated, capitalized terms
used in this Agreement are defined in Appendix A.
Background
1. Seller has, and expects to have and/or to purchase from the
"Originators" pursuant to the terms and subject to the conditions of the
Purchase and Sale Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time (the "Purchase
and Sale Agreement") among the Seller, UPAC and UPAC of California, Pool
Receivables originated in the ordinary course of the Originators' respective
premium finance loan businesses in which Seller intends to sell undivided
percentage ownership interests. Seller has requested Purchaser, and Purchaser
has agreed, subject to the terms and conditions contained in this Agreement, to
purchase such undivided percentage ownership interests (referred to herein
collectively as the "Asset Interest") from Seller from time to time during the
term of this Agreement.
2. Seller and Purchaser also desire that, subject to the terms and
conditions of this Agreement, certain of the daily Collections in respect of the
Asset Interest be reinvested in Pool Receivables, which reinvestments shall
constitute part of the Asset Interest.
3. Autobahn Funding Company LLC, as Purchaser, expects to fund its
acquisition and maintenance of the Asset Interest through the issuance of
Commercial Paper Notes. Commercial paper funding hereunder is available solely
from the Purchaser. The Purchaser has entered into a Liquidity Agreement which
generally provides for the purchase by the Liquidity Providers of portions of
the Asset Interests from the Purchaser to facilitate the purchase by the
Purchaser of percentage interests in the Asset Interest in the event the
Purchaser is unable or unwilling to fund its acquisition and/or maintenance of
any such Asset Interest with Commercial Paper Notes.
4. UPAC has been requested, and is willing, to act as initial
Servicer.
5. DG Bank has been requested, and is willing, to act as the Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
PURCHASES AND REINVESTMENTS
.1. Commitments to Purchase; Limits on Purchaser's Obligations. Upon
the terms and subject to the conditions of this Agreement (including, without
limitation, those contained in Article V), from time to time prior to the
Termination Date, Seller may request on or before the last Business Day of any
calendar week that Purchaser purchase on the last Business Day of the
immediately succeeding calendar week from Seller undivided percentage ownership
interests in Pool Receivables, all related Contracts, all Related Security,
Collections and all other proceeds, including books and records with respect to
such Pool Receivables (each being a "Purchase") and Purchaser shall make such
Purchase at such times and upon the terms and subject to the conditions set
forth herein; provided, that Purchaser shall make no Purchase if, after giving
effect thereto, the Purchaser's Total Investment would exceed the Purchase
Limit; provided; however, that each Purchase made pursuant to this Section 1.01
shall have a purchase price of at least $250,000.
.2. Purchase Procedures; Assignment of Purchaser's Interests.
(a) Notice of Purchase. Each Purchase from Seller by Purchaser shall
be made on notice from Seller to the Agent (substantially in the form of
Exhibit 1.02) received by the Agent not later than 12:00 noon (New York
City) time on the last Business Day of the calendar week preceding the date
of such proposed Purchase (which shall be the last Business Day of the
calendar week following the date of such notice). Each such notice of a
proposed Purchase shall specify the desired amount and date of such
Purchase and the requested Yield Periods, funding sources and allocations
thereto of the Purchaser's Total Investment associated with such Purchase;
it being understood and agreed, that the Purchaser shall have no obligation
or commitment to fund any Purchase or any Asset Tranche with Commercial
Paper Notes, but may agree to do so at its option. The Agent will notify
the Purchaser of the request for a Purchase and the terms thereof. The
Purchaser shall notify the Agent as to whether the proposed Yield Period,
funding sources and allocations of the amount of such Purchase to such
Yield Period are reasonably acceptable to it, and if not, what Yield
Periods and allocations are acceptable to it. If the Purchaser and the
Seller cannot agree on terms prior to the close of business on the date of
such notice, then the Purchaser shall allocate the Purchaser's Tranche
Investment relating to such Purchase to Asset Tranches accruing Earned
Discount at the Adjusted Eurodollar Rate or the CP Rate, as selected by the
Purchaser in its sole discretion, for Yield Periods of not more than 30
days (as selected by the Agent); it being understood and agreed, that if
the Purchaser is then able to issue Commercial Paper Notes in respect of
this transaction, the Agent shall allocate such amount to an Asset Tranche
accruing Earned Discount at the CP Rate.
(b) Funding of Purchase. On the date of each Purchase, Purchaser
shall, upon satisfaction of the applicable conditions set forth in Article
VI make available to the Agent at the Agent's Office the amount of its
Purchase in same day funds, and after receipt by the Agent of such funds,
the Agent will make such funds immediately available to Seller at such
office.
(c) Assignment of Asset Interests. Seller hereby sells, assigns and
transfers to Purchaser, effective on and as of the date of each Purchase
and Reinvestment by the Purchaser hereunder, the Asset Interest in the Pool
Receivables, the related Contracts, the Related Security and all
Collections in respect of, and other proceeds of, any of the foregoing.
.3. Reinvestments.
(a) On the close of business on each day prior to the Liquidation
Date during the period from the date hereof to the Termination Date,
Servicer will, on Purchaser's behalf, out of Purchaser's Share of
Collections, apply and pay over to Seller, Purchaser's Share on account of
Collections of Principal Receivables for the Purchase from Seller of
undivided percentage ownership interests in Pool Receivables, related
Contracts, Related Security, Collections and all other proceeds, including
books and records with respect to such Pool Receivables (each such purchase
being a "Reinvestment"); provided that if after giving effect to such
Reinvestment the Purchaser's Share with respect to Principal Receivables
would exceed 100%, then, Servicer shall not reinvest, but shall set aside
in the Collection Account and hold for the benefit of Purchaser pursuant to
Section 1.03(b) and shall pay over to the Agent on the next Settlement Date
for application in accordance with the terms hereof, a portion of such
Collections which, together with other Collections previously set aside and
then so held, shall equal the amount necessary to reduce the Purchaser's
Share with respect to Principal Receivables to 100%; and provided, further,
that if the conditions precedent to Reinvestment in clause (a), (b) or (d)
of Section 5.02 are not satisfied, then Servicer shall not reinvest any of
such remaining Collections. For purposes of determining whether
Collections on account of Principal Receivables may be reinvested pursuant
to this Section 1.03, the Net Pool Balance used in calculating Purchaser's
Share of Principal Receivables shall be calculated net of the principal
portion of Adverse Determination Receivables.
(b) Unreinvested Collections. Servicer shall set aside and hold in
trust and shall retain in the Collection Account for the benefit of
Purchaser all Collections which pursuant to Section 1.03(a), may not be
reinvested in the Pool Receivables and related property. If at any time
the amount of Collections so set aside may again be reinvested pursuant to
Section 1.03(a) and the conditions precedent to Reinvestment set forth in
clauses (a), (b) and (d) of Section 5.02 are satisfied, then the Servicer
shall withdraw such Collections from the Collection Account and apply such
Collections (or, if less, a portion of such Collections equal to the amount
of such excess) to the making of Reinvestments.
(c) Payment of Amounts Set Aside. Prior to the occurrence of the
Termination Date, Servicer, and thereafter the Agent shall pay all amounts
set aside in the Collection Account pursuant to Section 1.03(b) to the
Agent for the account of Purchaser on the Business Day preceding each
Settlement Date whereupon the Agent shall remit such amounts to the
Purchaser on such Settlement Date in reduction of the Purchaser's Total
Investment. Servicer shall pay over and deposit any amounts received by it
which otherwise would be required to be deposited in the Collection
Account, to the extent not previously deposited therein, to the Collection
Account within one Business Day of receipt thereof.
(d) Reduction of Purchaser's Total Investment. The Purchaser's Total
Investment shall not be reduced by the amount of Collections set aside
pursuant to this Section 1.03, whether or not on deposit in the Collection
Account, unless and until such Collections are actually delivered by the
Agent to the Purchaser pursuant to Section 1.03(c).
.4. Asset Interest; Purchaser's Share.
(a) Components of Asset Interest. For purposes of this Agreement,
"Asset Interest" means, at any time, Purchaser's combined undivided
percentage ownership interests at such time in (i) all then outstanding
Pool Receivables, (ii) all related Contracts, (iii) all Related Security
with respect to such Pool Receivables and such Contracts, and (iv) all
books and records with respect to such Pool Receivables and such Contracts,
and (v) all Collections with respect to, and other proceeds of, such Pool
Receivables, Contracts and Related Security. The amount of such Asset
Interest shall mean, with respect to Principal Receivables and Finance
Charge Receivables, the respective Purchaser's Shares determined pursuant
to Section 1.04(b).
(b) Purchaser's Share.
(i) Principal Receivables.
(A) "Purchaser's Share" shall mean, with respect to Principal
Receivables, the percentage calculated by dividing (x) the
sum of the Purchaser's Total Investment plus the Default
Reserve (as determined pursuant to Section 1.04(b)(i)(D)
below by (y) the Net Pool Balance; provided that, for
purposes of allocating Collections or Principal Receivables,
Purchaser's Share with respect to Principal Receivables
shall not exceed 100%; and provided, further, that after the
occurrence of the Liquidation Date, Purchaser's Share with
respect to Principal Receivables shall be deemed to be
Purchaser's Share with respect to Principal Receivables as
of the day immediately preceding such Liquidation Date.
(B) On each day "Purchaser's Share of Collections" on account of
Principal Receivables shall be equal to the product of (x)
the related Purchaser's Share with respect to Principal
Receivables on such day and (y) the amount of the
Collections on account of Principal Receivables on such day.
"Purchaser's Share of Defaulted Receivables" shall mean, on
any day, the product of (x) Purchaser's Share with respect
to Principal Receivables on such day and (y) the amount of
Receivables becoming Defaulted Receivables on such day.
(C) On each day after the occurrence of the Liquidation Date,
Seller's Share of Collections on account of Principal
Receivables shall not be paid to Seller, but shall be
retained in the Collection Account. If the amount of
Purchaser's Share of Collections on account of Principal
Receivables received or deemed received on or prior to the
date that each and every Pool Receivable is scheduled to
have amortized in accordance with the related Contract shall
be insufficient to reduce the Purchaser's Total Investment
to zero, then on such date the Agent shall withdraw (from
amounts actually retained in the Collection Account pursuant
to the two preceding sentences) and remit to the Purchaser
such funds from the Collection Account in the amount of the
lesser of (x) the amount of such deficiency attributable to
Purchaser's Share of Defaulted Receivables and (y) 100% of
the Collections on account of Seller's Share of Collections
then on deposit in the Collection Account. After the Final
Payout Date, all remaining amounts in the Collection Account
shall be paid to the Seller. Prior to the occurrence of the
Liquidation Date, Servicer shall pay to Seller on each day,
Seller's Share of Collections on account of Principal
Receivables received on such day.
(D) (x) The "Default Reserve" on any day means an amount equal
to ten percent (10%) of the Net Pool Balance.
(ii) Finance Charge Receivables.
(A) "Purchaser's Share" shall mean, on any day with respect to
Finance Charge Receivables, 100%; subject, however, to the
applications to Earned Discount, Program Fee, Non-Use Fee,
Servicer's Fee, Backup Servicer's Fee, Custodian' Fee,
Defaulted Receivables and Designated Obligations as provided
for in Section 3.02.
(B) On each day, "Purchaser's Share of Collections" on account
of Finance Charge Receivables shall be equal to the product
of (x) the related Purchaser's Share with respect to Finance
Charge Receivables and (y) the amount of the Collections on
account of Finance Charge Receivables received or deemed
received on such day.
(iii) Defeasance. With respect to the Asset Interest: (x) at
such time as the Purchaser's Total Investment equals zero, then the
related Purchaser's Share with respect to Principal Receivables shall
equal zero, and (ii) at such time as the related unpaid Earned
Discount equals zero, and no amounts are owing in respect of the
related Program Fee, Non-Use Fee, Servicer's Fee, Backup Servicer's
Fee, Custodian's Fee, Designated Obligations or other amounts under
this Agreement, then the related Purchaser's Share with respect to
Finance Charge Receivables shall also equal zero.
(c) Frequency of Computation. The respective Purchaser's Shares with
respect to the Asset Interest shall be initially computed as of the opening
of business of Servicer on the date of Purchase of the Asset Interest from
Seller. Thereafter until the Asset Interest shall be reduced to zero, such
Purchaser's Shares shall be recomputed (i) on the date of each Purchase
made hereunder which increases the Purchaser's Total Investment (as
calculated after giving effect to such Purchaser) (ii) on each Weekly
Report Date (as calculated as of the last Business Day of the calendar week
or Settlement Period preceding such Weekly Report Date) and (iii) as of the
close of business on the day immediately preceding the Termination Date,
and such Purchaser's Shares shall constitute the percentage ownership
interest in Pool Receivables on such date owned by Purchaser. Such
Purchaser's Shares shall remain constant from the time as of which any such
computation or recomputation is made or deemed to be made until the time as
of which the next such recomputation, if any, shall be made or deemed to be
made. In addition, the Agent may require Servicer to provide a report more
frequently than weekly for purposes of computing the Asset Interest as of
any other date, and the Servicer agrees to do so within two (2) Business
Days of its receipt of the Agent's request therefor, and such Asset
Interest would then be in effect until such time as such amount is again
recomputed or deemed recomputed. The Asset Interest shall remain constant
as calculated in clause (iii) above from and after the Termination Date.
ARTICLE II
COMPUTATIONAL RULES
.1. Selection of Asset Tranches. For purposes of computing Earned
Discount, the Seller and the Agent (subject to the limitations set forth herein)
shall, upon each Purchase and upon the expiration or termination of the Yield
Period applicable to such Asset Tranche, divide the Asset Interest into Asset
Tranches, and the applicable Earned Discount Rate may be different for each
Asset Tranche. Purchaser's Total Investment shall be allocated to each selected
Asset Tranche by the Agent to reflect the funding sources for the Asset
Interest, so that:
(a) there may be one or more Asset Tranches reflecting the portion of
the Asset Interest funded by Liquidity Purchases; and
(b) there may be one or more Asset Tranches reflecting the portion of
the Asset Interest funded by Commercial Paper Notes;
provided, that at all times the Purchaser's Total Investment shall be fully
allocated to one or more Asset Tranches; and provided, further, that, after the
occurrence of the Liquidation Date, all Asset Tranches will be selected by the
Agent and will be funded solely by Liquidity Purchases, and all then outstanding
Asset Tranches funded by Commercial Paper Notes shall be terminated and
reallocated to Asset Tranches funded by Liquidity Purchases.
.2. Computation of Purchaser's Total Investment and Purchaser's
Tranche Investment. In making any determination of Purchaser's Total Investment
and Purchaser's Tranche Investment, the following rules shall apply:
(a) Purchaser's Total Investment shall not be considered reduced by
any allocation, setting aside or distribution of any portion of Collections
unless such Collections shall have been actually delivered by the Agent to
the Purchaser pursuant hereto;
(b) Purchaser's Total Investment shall not be considered reduced by
any distribution of any portion of Collections if at any time such
distribution is rescinded or must otherwise be returned for any reason; and
(c) if there is any reduction in Purchaser's Total Investment, there
shall be a corresponding reduction in a Purchaser's Tranche Investment with
respect to one or more Asset Tranches selected by the Agent in its
discretion.
.3. Computation of Earned Discount. In making any determination of
Earned Discount, the following rules shall apply:
(a) the Agent shall determine the Earned Discount accruing with
respect to each Asset Tranche, and each Yield Period therefor, in
accordance with the definition of Earned Discount;
(b) no provision of this Agreement shall require the payment or
permit the collection of Earned Discount in excess of the maximum permitted
by applicable law; and
(c) Earned Discount for any Asset Tranche shall not be considered
paid by any distribution if at any time such distribution is rescinded or
must otherwise be returned for any reason.
ARTICLE III
SETTLEMENTS
.1. Settlement Procedures for Collections of Principal Receivables.
On each day, Servicer shall deem an amount equal to Purchaser's Share of
Collections on account of Principal Receivables received or deemed received on
such day to be received in respect of the Asset Interest; and
(a) prior to the occurrence of the Liquidation Date, except to the
extent otherwise set forth in Section 1.03, Servicer on behalf of the
Purchaser shall apply the full amount of Purchaser's Share of such
Collections to reduce the Purchaser's Total Investment and after such
reduction apply such amount to Reinvestments as provided in Section
1.03(a), in additional undivided percentage ownership interests in Pool
Receivables. Any such application shall automatically increase the
Purchaser's Total Investment (to the same amount as was outstanding
immediately prior to the application of such amounts to Purchaser's Total
Investment). The recomputed Purchaser's Share with respect to Principal
Receivables, after giving effect to the reduction and increase of
Purchaser's Total Investment shall constitute the percentage ownership
interest in Principal Receivables on such day owned by Purchaser with
regard to the Asset Interest; and
(b) after the occurrence of the Liquidation Date, on each Settlement
Date the Agent shall deliver to the Purchaser, and the Purchaser shall
apply, the full amount of Purchaser's Share of such Collections, plus other
such Collections to which the Purchaser is entitled pursuant to Section
1.04(b)(i)(C) above, to reduce Purchaser's Total Investment.
.2. Settlement Procedures for Collections of Finance Charge
Receivables.
(a) Daily Set Aside. On each day Servicer shall set aside and hold
in trust for Purchaser, Purchaser's Share of Collections on account of
Finance Charge Receivables in respect of the Asset Interest for such day.
(b) Delivery to the Agent.
(i) On each day, Servicer shall calculate the excess, if any, of
(x) the Collections on account of Finance Charge Receivables set aside
on and prior to such day pursuant to Section 3.02(a), over (y) the
aggregate unpaid amount of Earned Discount, Program Fee, Non-Use Fee,
Servicer's Fee, Backup Servicer's Fee, Custodian's Fee and any other
Designated Obligations (estimated based on the previous month) accrued
in respect of the Asset Interest; and (A) prior to the Liquidation
Date, such excess, if any, shall be paid to the Seller or (B) after
the occurrence of the Liquidation Date, such excess if any, shall be
retained in the Collection Account for application in accordance with
Sections 3.02(c) and (d). Until remitted in payment of amounts due
hereunder, Servicer shall hold in trust in the Collection Account the
amounts described in clause (y) above;
(ii) Prior to the occurrence of the Termination Date, the
Servicer, and thereafter the Agent, shall, on each Business Day
preceding an Earned Discount Payment Date for any Asset Tranche,
withdraw from the Collection Account and deliver to the Agent, from
the funds set aside pursuant to Section 3.02(a) (but only to the
extent that such amounts exceed from and after the Servicer Transfer
Event, accrued and unpaid fees and expenses due to the Servicer) and
not paid over to the Seller pursuant to Section 3.02(b)(i), an amount
equal to the accrued and unpaid Earned Discount on such Asset Tranche
for application as set forth in Section 3.02(c).
(iii) Prior to the occurrence of the Termination Date, on the
Business Day preceding each Settlement Date, Servicer shall withdraw
from the Collection Account and deliver to the Agent, from the funds
set aside pursuant to Section 3.02(a) and not paid over to the Seller
pursuant to Section 3.02(b)(i), an amount which shall equal the unpaid
Program Fee, Non-Use Fee, Servicer's Fee, Backup Servicer's Fee and
Custodian's Fee for such Settlement Period, plus any other Designated
Obligations required for application by the Agent pursuant to Sections
3.02(c) and (d) below; provided that no amounts shall be withdrawn
from the Collection Account for payments of amounts set forth in
clauses (iii)-(vii) of Section 3.02(c) to the extent there would then
be insufficient funds on deposit therein to pay all accrued but unpaid
Earned Discount at such time. After the occurrence of the Termination
Date, the Agent shall withdraw such amounts on such Settlement Date,
as applicable, from the Collection Account (to the extent on deposit
therein).
(c) Application of Funds to Earned Discount, Fees, etc. Subject to
receipt of funds set aside pursuant to Section 3.02(a) and withdrawn and
paid over pursuant to Section 3.02(b), the Agent shall (x) on each Earned
Discount Payment Date, distribute to the Purchaser the amount of any
accrued but unpaid Earned Discount due on such date, and (y) on each
Settlement Date, distribute them in the following order: (i) first, to the
Custodian, for the payment of the accrued and unpaid Custodian's Fee for
the related Settlement Period (including any accrued and unpaid fees from
any prior Settlement Period), (ii) second to Servicer, if not an Originator
or the Parent or any Affiliate of an Originator or the Parent, for the
payment of the accrued and unpaid Servicer's Fee for the related Settlement
Period (including any accrued and unpaid amounts from any Prior Settlement
Period), (iii) third, to Purchaser for the payment of the accrued and
unpaid Program Fee and Non-Use Fee for the related Settlement Period
(including any accrued and unpaid amounts from any prior Settlement
Period), (iv) fourth, to the Backup Servicer for the payment of the accrued
and unpaid Backup Servicer's Fee for the related Settlement Period
(including any accrued and unpaid amounts from any prior Settlement
Period), (v) fifth, to Purchaser, the Agent, any Liquidity Bank, or any
other Person (other than the Parent or any of its Subsidiaries or
Affiliates) hereunder, as the case may be, in payment of any Designated
Obligations, owing to such Person hereunder (including any accrued and
unpaid amounts from any prior Settlement Period), (vi) sixth, to the
Custodian, for the payment of the accrued and unpaid expenses due under the
Custody Agreement for the related Settlement Period (including any accrued
and unpaid amounts from any prior Settlement Period), (vii) seventh, if an
Originator, the Parent or any Affiliate of an Originator or the Parent is
Servicer, to Servicer for the payment of the accrued and unpaid Servicer's
Fee for the related Settlement Period (including any accrued and unpaid
amounts from any prior Settlement Period), and (viii) eighth, any remaining
amounts shall, prior to the occurrence of the Liquidation Date, be paid to
Seller and, after the occurrence of the Liquidation Date, be distributed in
accordance with Section 3.02(d). To the extent insufficient funds exist to
pay all of the foregoing amounts, such amounts shall be paid in the order
of priority set forth above and pro rata as among such amounts of equal
priority.
(d) Application to Defaulted Receivables during Liquidation Period.
After the occurrence of the Liquidation Date, the Agent shall, after giving
effect to the distributions pursuant to Sections 3.02(b) and (c),
distribute and apply any remaining Collections on account of Finance Charge
Receivables (to the extent in excess of any accrued but unpaid Earned
Discount at such time) as follows: (i) first, to Purchaser toward payment
of Purchaser's Share of Defaulted Receivables, which payment shall be
deemed a Collection on account of Principal Receivables, and (ii) second,
to the account of Seller; provided that, with regard to clause (ii) above,
if Purchaser's Total Investment shall not then have been reduced to zero,
such balance shall remain in the Collection Account to be applied on each
Settlement Date following thereafter in accordance with clause first above
until the date on which Purchaser's Total Investment and all other amounts
payable to the Purchaser, the Agent, or any Liquidity Banks shall have been
reduced to zero.
.3. General Settlement Procedures. The parties hereto will take the
following actions:
(a) Settlement Statement. On the fifth Business Day following the
Cut-Off Date for each Settlement Period, Servicer shall deliver to the
Agent a report (together, if requested by the Agent, with a computer
diskette containing such information) containing the information described
in Exhibit 3.03(a) (each, a "Settlement Statement"), including a listing of
all Contracts (by contract number, Direct Obligor and amount financed)
transferred by the Originators to the Seller during such Settlement Period.
(b) Weekly Report. On each Weekly Report Date, Servicer shall
deliver to the Agent a report (together, if requested by the Agent, with a
computer diskette containing such information) containing the information
described in Exhibit 3.03(b) (each a "Weekly Report"); provided, however,
that no Weekly Report shall be required to be delivered to the Agent in any
week to the extent that a Settlement Statement which is required to be
delivered during such week pursuant to Section 3.03(a) above is so
delivered to the Agent during such week.
(c) Notification of Earned Discount: Other Amounts Due. On the
Business Day immediately preceding any Earned Discount Payment Date, the
Agent shall notify Servicer of the approximate amount of Earned Discount
that will be payable on such Earned Discount Payment Date. In addition, on
the second Business Day following such Cut-Off Date, the Agent shall notify
Servicer of the amount of all fees (including the Program Fee, Non-Use Fee,
the Servicer's Fee, the Backup Servicer's Fee and the Custodian's Fee) and
Designated Obligations and other amounts accrued and payable by Seller
under this Agreement.
(d) Non-Distribution of Servicer's Fee. If the Agent consents (which
consent may be revoked at any time), the amounts (if any) set aside
pursuant to Section 3.02 in respect of Servicer's Fee may be retained by
Servicer, in which case no distribution shall be made in respect of
Servicer's Fee pursuant to Section 3.02 above.
(e) Allocations of Obligor's Payments. Except as provided for herein
or as otherwise required by law or the underlying Contract, all Collections
received from an Obligor of any Receivable shall be applied to Pool
Receivables then outstanding of such Obligor in the order of the age of
such Pool Receivables, starting with the oldest such Pool Receivable,
except if payment is designated by such Obligor for application to specific
Receivables or can be readily identified to specific Receivables, in which
case it shall be applied to such specified Receivables. For each
Settlement Period Collections will be allocated so that all Collections up
to the amount of Finance Charge Receivables billed in respect of the
immediately preceding Settlement Period will be deemed Collections of
Finance Charge Receivables and the remaining amount of such Collections
will be deemed Collections of Principal Receivables.
(f) Collection Account: Deposits and Withdrawals.
(i) Deposits to Collection Account. Each of Seller and Servicer
will, with respect to Collections in respect of Pool Receivables
received by them, and will cause each Lock-Box Bank, with respect to
Collections in respect of Pool Receivables received in any lock-box
to, deposit such Collections in the Collection Account immediately
upon identification thereof, but in no event later than one Business
Day after receipt thereof. Such amounts to be deposited in the
Collection Account by Seller, Servicer or the applicable Lock-Box
Banks shall include, but not be limited to, the following: (x) any and
all Collections and other payments in respect of Receivables (whether
on account of Principal Receivables, Finance Charge Receivables or
otherwise), related Contracts, and Related Security and any proceeds
thereof, (y) all amounts transferred from the Lock-Box Accounts, and
(z) all Indemnified Amounts paid by Seller or the Originators for
Receivables required to be repurchased pursuant to Section 3.07(b) or
on account of a breach of representation or warranty with respect
thereto or for any other reason. Servicer (or its designee or
successor) shall notify the Agent of the amount of funds deposited in
the Collection Account not received from Pool Receivables and the
Agent (if it shall agree with Servicer) shall remit (or cause the
Servicer to remit) such funds as soon as practicable after such
notification to such account as Servicer (or its designee or
successor) shall designate.
(ii) Withdrawals from Collection Account. Prior to the
Termination Date, the Agent shall permit the Servicer, to access the
Collection Account in connection with its duties as Servicer and, in
that connection the Servicer, may withdraw funds on deposit therein in
accordance with, and for the purposes permitted under, the provisions
of the Transaction Documents. Upon the occurrence of the Termination
Date, (x) the Servicer's right of access to the Collection Account
shall terminate immediately without any further action by any Person
being required (but the Servicer shall be permitted to make deposits
in each case with the consent of the Agent) and (y) the Agent or its
designee (which may be the Backup Servicer) shall thereafter make all
withdrawals in accordance with the terms hereof or may transfer funds
to the Liquidation Collection Account and shall make such withdrawals
from the Liquidation Collection Account as if it were the Collection
Account.
(g) Permitted Dividends. So long as no Liquidation Event or
Unmatured Liquidation Event then exists or would result therefrom, the
Seller may remit Permitted Dividends, if any, to UPAC on the Business Day
next following each Settlement Date. Unless specifically permitted
hereunder or under any other Transaction Document to pay for Receivables,
in payment of fees, etc., Seller shall make no other payments to UPAC or
any of the Originators or any of their Subsidiaries or any Affiliate.
.4. Deemed Collections; Reduction of Purchaser's Total Investment,
Etc.
(a) Deemed Collections. If on any day
(i) the Unpaid Balance of any Pool Receivable is
(A) reduced as a result of any dispute or complaint, any cash
discount, or any adjustment by Seller, the applicable
Originator or Servicer or any Affiliate of Seller, the
applicable Originator or Servicer, or
(B) reduced or canceled as a result of a setoff in respect of
any claim by the Obligor thereof against Seller, the
applicable Originator or any Affiliate of Seller or the
applicable Originator (whether such claim arises out of the
same or a related or an unrelated transaction), or
(C) reduced on account of the obligation of Seller or any
Affiliate of Seller or the applicable Originator to pay to
the related Obligor any rebate or refund, or
(D) less than the amount included in calculating the Net Pool
Balance for purposes of any Settlement Statement, or
(ii) any of the representations or warranties of Seller set forth
in Section 6.01(l) or (p) were not true when made with respect to any
Eligible Receivable that is a Pool Receivable or any Pool Receivable
represented to be an Eligible Receivable, or any of the
representations or warranties of Seller set forth in Section 6.01(l)
are no longer true with respect to any Eligible Receivable that is a
Pool Receivable,
then, on such day, Seller shall be deemed to have received a Collection
(such Collection, a "Deemed Collection") of such Pool Receivable
(A) in the case of clause (i) above, in the amount of such
reduction or cancellation or the difference between the
actual Unpaid Balance and the amount included in calculating
such Net Pool Balance, as applicable; and
(B) in the case of clause (ii) above, in the amount of the
Unpaid Balance of such Pool Receivable.
(b) Seller's Optional Reduction of Purchaser's Total Investment.
Seller may, subject to the obligations contained in that certain side
letter agreement dated as of May 26, 2000 among the Seller, the Servicer,
the Originators, the Agent and the Purchaser, at any time elect to reduce
the Purchaser's Total Investment as follows:
(i) Seller shall give the Agent at least three (3) Business
Days' prior written notice of such reduction (including the amount of
such proposed reduction and the proposed date on which such reduction
will commence),
(ii) on the proposed date of commencement of such reduction and
on each day thereafter, Servicer shall refrain from reinvesting
Collections on account of Principal Receivables pursuant to Section
1.03 until the amount thereof not so reinvested shall equal the
desired amount of reduction, and
(iii) Servicer shall hold such Collections in trust for
Purchaser on the next succeeding Settlement Date, pending payment to
the Agent (or if Collections are then being retained in the Collection
Account, such Collections shall be held therein), as provided in
Sections 1.03 and 3.01;
provided that,
(A) the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $100,000 in
excess of such amount, and the Purchaser's Total Investment
after giving effect to such reduction shall be not less than
$10,000,000 (unless Purchaser's Total Investment shall
thereby be reduced to zero),
(B) Seller shall use reasonable efforts to attempt to choose a
reduction amount, and the date of commencement thereof, so
that such reduction shall commence and conclude in the same
Settlement Period, and
(C) After giving effect to such reduction, Purchaser's Share on
account of Principal Receivables does not exceed 100%.
.5. PAYMENTS AND COMPUTATIONS, ETC.
(a) Payments. All amounts to be paid or deposited by Seller or
Servicer to the Agent or any other Person hereunder (other than amounts
payable under Section 4.02) shall be paid or deposited in accordance with
the terms hereof no later than 12:00 noon (New York time) on the day when
due in lawful money of the United States of America in same day funds to
the Agent's account at Bank of New York, Account No. 8900433876, ABA No.:
021-000-018; Credit: DG Bank, New York.
(b) Late Payments. Seller or Servicer, as applicable, shall, to the
extent permitted by law, pay to Purchaser interest on all amounts not paid
or deposited when due hereunder at 2% per annum above the Base Rate,
payable on demand, provided, however, that such interest rate shall not at
any time exceed the maximum rate permitted by applicable law.
(c) Method of Computation. All computations of interest, Earned
Discount any fees payable under Sections 4.01(b) and (c) and any other fees
payable by Seller to the Purchaser or the Agent hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day) elapsed.
.6. Treatment of Collections and Deemed Collections. Seller shall
forthwith deposit in the Collection Account all Collections deemed received by
Seller pursuant to Section 3.04 and such Collections shall be held or
distributed as Earned Discount, accrued Servicer's Fee, accrued Backup
Servicer's Fee, accrued Custodian's Fee, accrued Program Fees, accrued Non-Use
Fees, repayment of Purchaser's Total Investment, etc. to the same extent as if
such Collections had actually been received on the date of such deposit in the
Collection Account. So long as Seller shall hold any Collections or deemed
Collections required to be paid to Servicer, Purchaser or the Agent, it shall
hold such Collections in trust and shall clearly mark its records to reflect
such trust.
.7. REPURCHASES.
(a) If on any Settlement Date the Purchaser's Total Investment shall
equal or be less than 25% of the greatest amount of Purchaser's Total
Investment at any time prior to such Settlement Date, Seller shall, subject
to payment of the prepayment fee described in Section 4.01(d), be entitled
to repurchase the Asset Interest on such Settlement Date. Seller shall
give Purchaser at least five Business Days' prior written notice of such
repurchase and upon payment of the repurchase price therefor, as
hereinafter provided, Purchaser shall be obligated to reconvey its entire
interest in the Asset Interest to Seller pursuant to an assignment
acceptable to the parties, but without representation or warranty except
that the interest assigned is free of offset, liens and other encumbrances
created by the assignor. Seller shall pay such repurchase price in cash to
the Agent on behalf of Purchaser in an amount equal to the sum of (i) all
accrued and unpaid Earned Discount plus any Liquidation Fee owing with
respect thereto as a result of the early termination of any Yield Period,
(ii) the Purchaser's Total Investment therein, (iii) the aggregate of other
amounts then owed hereunder by Seller to Purchaser, any Liquidity Bank, the
Agent or the Custodian (including, without limitation, the accrued and
unpaid Custodian's Fee), (iv) the accrued and unpaid Servicer's Fee, and
(v) the accrued and unpaid Backup Servicer's Fee. Upon receipt of the
aforesaid repurchase price the Agent shall distribute it (i) to Purchaser
or the Agent, as applicable (a) in payment of the accrued and unpaid Earned
Discount and Liquidation Fee (if any), (b) in reduction of the Purchaser's
Total Investment and (c) in payment of any other amounts owed by Seller
hereunder to Purchaser, any Liquidity Bank or Agent, in each case until
reduced to zero, (ii) to Servicer in payment of the accrued and unpaid
Servicer's Fee, also until reduced to zero, (iii) to the Backup Servicer in
payment of the accrued and unpaid Backup Servicer's Fee, also until reduced
to zero, and (iv) to the Custodian in payment of the accrued and unpaid
Custodian's Fee.
(b) If at any time an Adverse Determination occurs Seller shall
within one Business Day of Seller's knowledge thereof notify Purchaser of
such Adverse Determination, and Seller shall, if Purchaser in its sole
discretion so demands, (i) within three Business Days after notice has been
given to the Purchaser or by the Purchaser to the Seller, repurchase
Purchaser's ownership interest in the Adverse Determination Receivables, or
(ii) at the end of the related applicable Yield Periods, repurchase
Purchaser's ownership interest in the Adverse Determination Receivables. In
the case of a repurchase under clause (i) or (ii) above, upon payment by
Seller of the repurchase price therefor, as hereinafter provided, Purchaser
shall be obligated to reconvey its entire interest in such Adverse
Determination Receivables to Seller pursuant to an assignment acceptable to
the parties, but without representation or warranty except as to the
assignor's good title, free of offset, liens and other encumbrances as to
the interest assigned. To the extent required above, Seller shall pay such
repurchase price in cash to the Agent on behalf of Purchaser in an amount
equal to the sum of (A) the product of (x) the Purchaser's Share on account
of Principal Receivables multiplied by (y) the then Unpaid Principal
Balance of such Adverse Determination Receivables plus (B) Purchaser's
Share on Account of Finance Charge Receivables received and not paid over
to Purchaser or the Agent in respect of such Adverse Determination
Receivables. Upon receipt of such repurchase price Purchaser shall apply
such repurchase price to reduce Purchaser's Total Investment and any
accrued and unpaid Earned Discount, Non-Use Fee, Program Fee, Servicer's
Fee, Backup Servicer's Fee, Custodian's Fee and Designated Obligations.
Upon such receipt, such Adverse Determination Receivables shall thereupon
be deemed removed from the Receivables Pool for all purposes hereunder. A
repurchase of Purchaser's ownership interest in Adverse Determination
Receivables shall not substitute for or limit the applicable
indemnification obligations under Article XIII. In the event that any
Indemnified Party shall incur or expects to incur any demonstrable loss or
expense as a result of the redeployment of amounts received pursuant to
clause (i) above, then, within three Business Days after written notice
from Purchaser to Seller, Seller shall pay to Purchaser such additional
amounts as will (in the reasonable determination of the Indemnified
Parties) reimburse the Indemnified Parties for such demonstrable loss or
expense. Such written notice shall, in the absence of demonstrable error,
be conclusive and binding on Seller. This Section 3.07(b) shall survive
the termination of this Agreement.
.8. Custody Arrangement. The Agent shall enter into the Custody
Agreement with the Custodian on or prior to the date hereof. On each Wednesday
of each calendar week Seller and Servicer shall, unless the Agent shall
otherwise agree in writing, deliver to the Custodian on behalf of Purchaser and
Seller in accordance with their respective interests each and every Contract
(not previously delivered to the Custodian) Purchased by the Seller under the
Purchase and Sale Agreement and/or subject to a Purchase or Reinvestment
hereunder prior to such Wednesday; provided that, with respect to any Contract
as to which adequate reproductions cannot be made for servicing purposes due to
the poor quality of the original thereof, Servicer may retain custody of such
Contract, but shall hold it in trust for the benefit of the Agent, the Purchaser
and Seller in accordance with their respective interests; provided, further,
that the number of Contracts so held by the Servicer in trust shall not exceed
1% of all Contracts then owned by Seller. A schedule identifying the Contracts
by contract number, Direct Obligor and amount financed thereunder shall be
delivered to the Agent and the Custodian on or before the delivery of such
Contracts on such Wednesday; all such schedules for each Settlement Period shall
be attached to the Settlement Statement for such Settlement Period along with a
certification by Seller and Servicer as to the accuracy of such schedules.
.9. Establishment of Collection Account; Investments by Agent.
(a) Collection Account. On or before the first Purchase, the Agent
shall establish, for the benefit of the Purchaser and the Seller, to the
extent of their respective interests therein, an account (the "Collection
Account"), which shall be a demand deposit account maintained by the
Originators, the exclusive dominion and control of which have been conveyed
by the Originators to the Seller and by the Seller to the Agent, for the
benefit of the Purchaser, pursuant to the Lock-Box Agreement. Subject to
the further provisions of this Section 3.09(a), the Agent shall, upon
receipt or upon transfer from another account, as the case may be, deposit
into the Collection Account all amounts received by it which are required
to be deposited therein in accordance with the provisions hereof. All such
amounts and all investments made with such amounts, including all income
and other gain from such investments, shall be held by the Agent in the
Collection Account or the Liquidation Collection Account as part of the
Receivables Pool as herein provided, subject to withdrawal for the purposes
specified in the provisions of, this Agreement. The Agent (other than for
the account of the Purchaser) shall not have any right of set-off with
respect to the Collection Account or the Liquidation Collection Account or
any investments therein, whether or not commingled. Notwithstanding any
other provision herein, it shall be understood that the Agent, after the
occurrence of the Termination Date, shall have the right to transfer any of
the amounts at any time on deposit (whether or not required to be held in
the Collection Account) in the Collection Account to a segregated trust
account maintained with and in the name of the Agent for the benefit of
Purchaser and Seller to the extent of their respective interests therein
(such account the "Liquidation Collection Account").
(b) Administration of Payments. Unless otherwise advised by Servicer
in writing, the Agent may assume that any amount remitted to it by
Servicer, the Seller or any Lock-Box Bank is to be deposited into the
Collection Account. The Agent may establish from time to time such
deadline or deadlines as it shall determine are reasonable or necessary in
the administration hereof after which all amounts received or collected by
the Agent on any day shall not be deemed to have been received or collected
until the next succeeding Business Day.
(c) Investments. Pursuant to one or more Seller Orders received from
Seller, all or a portion of the amounts in the Collection Account and the
Liquidation Collection Account shall be invested and reinvested by the
Agent in one or more Eligible Investments. Subject to the restrictions on
the maturity of investments set forth in Section 3.09(e), each such Seller
Order may authorize the Agent to make the specific Eligible Investments set
forth therein, to make Eligible Investments from time to time consistent
with the general instructions set forth therein, or to make specific
Eligible Investments pursuant to instructions received in writing or by
facsimile transmission from the employees or agents of Seller or the
Servicer, as the case may be, identified therein, in each case in such
amounts as such Seller Order shall specify. Seller agrees to report as
income for financial reporting and tax purposes (to the extent reportable)
all investment earnings on amounts in the Collection Account. Each of
Seller and Servicer agrees to give appropriate and timely investment
directions to the Agent so that there will not be more than two Business
Days in any one calendar year at the end of which funds in the Collection
Account or the Liquidation Collection Account are not invested, directly or
indirectly, pursuant to a Seller Order in Eligible Investments that mature
on or after the opening of business on the next Business Day.
(d) Investments in the Absence of a Seller Order. In the event that
(i) Seller shall have failed to give investment directions to the Agent by
9:30 A.M. on any Business Day on which there may be uninvested cash or (ii)
a Liquidation Event or Unmatured Liquidation Event shall have occurred and
be continuing, then the Agent shall invest such funds in Eligible
Investments as it deems appropriate in its sole discretion. All
investments made by the Agent shall mature no later than the maturity date
therefor permitted by Section 3.09(e).
(e) Maturity of Investments. No investment of any amount held in the
Collection Account or the Liquidation Collection Account shall mature later
than the Business Day immediately preceding the Earned Discount Payment
Date or Settlement Date which is scheduled to occur immediately following
the date of investment for application in accordance with the provisions of
this Agreement. All income or other gains from the investment of moneys
deposited in the Collection Account or the Liquidation Collection Account,
as applicable, shall be deposited by the Agent in the affected account
immediately upon receipt. Any net loss (determined on a month by month
basis) resulting from such investment of amounts in the Collection Account
or the Liquidation Collection Account, as applicable, shall be charged to
Seller, which, upon notice thereof by the Agent, shall reimburse the
Collection Account or the Liquidation Collection Account, as applicable,
for such loss.
(f) Form of Investment. Any investment of funds in the Collection
Account or the Liquidation Collection Account shall be made under the
following terms and conditions:
(i) each such investment shall be made in the name of the Agent
(in its capacity as such) or in the name of a nominee of the Agent, in
either case for the benefit of the Purchaser and the other Secured
Parties; and
(ii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Agent or its agent and
the Agent shall have sole possession of such instrument, and all
income on such investment.
(g) Agent Not Liable. The Agent shall not in any way be held liable
by reason of any insufficiency in the Collection Account or the Liquidation
Collection Account resulting from losses on investments made in accordance
with the provisions of this Section 3.09 (but the Agent shall at all times
remain liable for its own debt obligations, if any, constituting part of
such investments). The Agent shall not be liable for any investment made
by it in accordance with this Section 3.09 on the grounds that it could
have made a more favorable investment.
ARTICLE IV
FEES AND YIELD PROTECTION
.1. Fees.
(a) Structuring Fee. Seller shall pay to the Agent, for its own
account, a structuring fee ("Structuring Fee") in the amount set forth in
the Fee Letter payable on the date hereof.
(b) Program Fee. From the date hereof until the date, following the
Termination Date on which Purchaser's Total Investment shall be reduced to
zero, Seller shall pay to the Agent, a program fee ("Program Fee") equal to
the product of (x) the average daily amount of the Purchaser's Total
Investment during the period for which such fee is being calculated, times
(y) the Program Fee Rate. Such Program Fee shall be paid in arrears, on
the Settlement Date for each Settlement Period and on the Final Payout
Date, in the amount of such Program Fee that shall have accrued during such
Settlement Period (or portion thereof) or other period then ending and
which shall not have been previously paid.
(c) Non-Use Fee. From the date hereof until the Termination Date,
Seller shall pay to Agent a non-use fee (the "Non-Use Fee") equal to the
product of (x) the daily average amount of the difference between the
Purchase Limit and the average daily amount of the Purchaser's Total
Investment during the period for which such fee is being calculated, times
(y) the Non-Use Fee Rate. Such Non-Use Fee shall be paid in arrears, on
the Settlement Date for each Settlement Period and on the Termination Date,
in the amount of such Non-Use Fee that shall have accrued during such
Settlement Period (or portion thereof) or other period then ending and
which shall not have been previously paid.
(d) Prepayment Fee. In the event that the Termination Date occurs
prior to the Scheduled Termination Date other than solely as a result of
the termination of the Liquidity Banks' commitments under the Liquidity
Agreement, Seller shall pay to the Agent for the benefit of the Purchaser
and the Liquidity Banks on the Termination Date a nonrefundable prepayment
fee equal to the product of (x) the Purchase Limit, times (y) the Non-Use
Fee Rate during the period beginning on the day following the Termination
Date through and including the Scheduled Termination Date.
.2. Yield Protection.
(a) If (i) Regulation D or (ii) any Regulatory Change occurring after
the date hereof
(A) shall subject an Affected Party to any tax, duty or other
charge with respect to any Asset Interest owned by or funded
by it, or any obligations or right to make Purchases or
Reinvestments or to provide funding therefor, or shall
change the basis of taxation of payments to the Affected
Party of any Purchaser's Total Investments or Earned
Discount owned by, owed to or funded in whole or in part by
it or any other amounts due under this Agreement in respect
of the Asset Interest owned by or funded by it or its
obligations or rights, if any, to make Purchases or
Reinvestments or to provide funding there for (except for
changes in the rate of tax on the overall net income of such
Affected Party imposed by the United States of America or
any state thereof (unless, with respect to a state, other
than the state in which such Affected Party's chief
executive offices are located, resulting from, or arising
out of, the transactions contemplated under the Transaction
Documents) and, if such Affected Party's principal executive
office is not in the United States of America, by the
jurisdiction where such Affected Party's principal office in
the United States is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the
Federal Reserve Board, but excluding any reserve included in
the determination of Earned Discount), special deposit or
similar requirement against assets of any Affected Party,
deposits or obligations with or for the account of any
Affected Party or with or for the account of any affiliate
(or entity deemed by the Federal Reserve Board to be an
affiliate) of any Affected Party, or credit extended by any
Affected Party; or
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected
Party;
(D) shall impose any other condition affecting any Asset
Interest owned or funded in whole or in part by any Affected
Party, or its obligations or rights, if any, to make
Purchases or Reinvestments or to provide funding therefor;
or
(E) shall change the rate for, or the manner in which the
Federal Deposit Insurance Corporation (or a successor
thereto) assesses, deposit insurance premiums or similar
charges;
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of Regulation D
referred to above, to impose a cost on) (I) an Affected Party funding
or making or maintaining any Purchases or Reinvestments, any
purchases, reinvestments, or loans or other extensions of credit under
the Liquidity Agreement or any commitment of such Affected Party with
respect to any of the foregoing, or (II) the Agent for continuing its
or Seller's or the Originator's relationship with Purchaser (Seller
shall at no time, with regard to Regulation D, be required to pay an
increased cost hereunder in excess of the actual increased cost
imposed on the Affected Party),
(y) to reduce the amount of any sum received or receivable by an
Affected Party under this Agreement or under the Liquidity Agreement
with respect thereto, or
(z) in the sole determination of such Affected Party, to reduce
the rate of return on the capital of an Affected Party as a
consequence of its obligations hereunder or arising in connection
herewith to a level below that which such Affected Party could
otherwise have achieved,
then within thirty days after demand by such Affected Party (which
demand shall be accompanied by a statement setting forth the basis of
such demand), Seller shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party
for such additional or increased cost or such reduction.
(b) Each Affected Party will promptly notify Seller and the Agent of
any event of which it has knowledge which will entitle such Affected Party
to compensation pursuant to this Section 4.02; provided, however, no
failure to give or delay in giving such notification shall adversely affect
the rights of any Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this
Section 4.02, an Affected Party may use any reasonable averaging and
attribution methods that it (in its sole discretion) shall deem applicable.
Any Affected Party when making a claim under this Section 4.02 shall submit
to Seller a statement as to such increased cost or reduced return
(including calculation thereof in reasonable detail), which statement
shall, in the absence of demonstrable error, be conclusive and binding upon
Seller.
.3. Funding Losses. In the event that the Purchaser shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the Purchaser
to make any Purchase Advance) as a result of (i) any settlement with respect to
Purchaser's Tranche Investment of any Asset Tranche being made on any day other
than the scheduled last day of an applicable Yield Period or Settlement Date
with respect thereto, or (ii) any Purchase not being made in accordance with a
request therefore under Section 1.02, then, upon written notice from the Agent
to Seller and Servicer, Seller shall pay to Servicer, and Servicer shall pay to
the Agent for the Account of the Purchaser, the amount of such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding upon the
Seller and Servicer.
ARTICLE V
CONDITIONS OF PURCHASES
.1. Conditions Precedent to Initial Purchase. The initial Purchase
to be made on or after the date of execution and delivery of Amendment No. 12 to
this Agreement is subject to the condition precedent that the Agent shall have
received, on or before the date of such Purchase, the following, each (unless
otherwise indicated) dated such date and in form and substance satisfactory to
the Agent:
(a) A copy of the resolutions of the Board of Directors of each of
the Seller, UPAC and UPAC of California approving this Agreement, the
Purchase and Sale Agreement and the other Transaction Documents, as
applicable, to be delivered by them hereunder and the transactions
contemplated hereby and thereby, certified in each case by its respective
Secretary or Assistant Secretary;
(b) Good standing certificates (i) for each of Seller and Parent
issued by the Secretaries of State of Delaware and Kansas, as applicable,
(ii) for UPAC issued by the Secretaries of State of Missouri and Kansas,
(iii) for UPAC of California issued by the Secretaries of State of
California and Kansas, and for Oxford issued by the Secretary of State of
Illinois.
(c) A certificate of the Secretary or Assistant Secretary of each of
the Seller, UPAC and UPAC of California certifying the names and true
signatures of the officers authorized on their behalf to sign, as
applicable, this Agreement, the Purchase and Sale Agreement and the other
Transaction Documents to be delivered by them hereunder (on which
certificate the Agent and Purchaser may conclusively rely until such time
as the Agent shall receive from Seller, UPAC and/or UPAC of California, as
applicable, a revised certificate meeting the requirements of this
subsection (c));
(d) The Articles of Incorporation of Seller, UPAC, UPAC of California
and Oxford, duly certified by the Secretary of State of their respective
states of incorporation, as of a recent date acceptable to the Agent,
together with a copy of the By-laws of Seller, UPAC, UPAC of California and
Oxford, duly certified by the Secretary or an Assistant Secretary of
Seller, UPAC, UPAC of California and Oxford, respectively;
(e) Copies of acknowledgment copies of (i) proper amendments to
Financing Statements (Form UCC-2), naming Oxford, as Originator, as the
assignor of Receivables, Seller, as secured party/purchaser, and the Agent
as assignee of such Financing Statements, (ii) proper amendments to
Financing Statements (Form UCC-2), naming UPAC as the assignor of
Receivables, Seller as secured party/purchaser, and the Agent as assignee
of such Financing Statements, (iii) proper amendments to Financing
Statements (Form UCC-2), naming UPAC of California as the assignor of
Receivables, Seller as secured party/purchaser, and the Agent as assignee
of such Financing Statements, (iv) proper amendments to Financing
Statements (Form UCC-2), naming Seller as the assignor of Receivables or an
undivided interest therein and the Agent as assignee and (v) proper
terminations of Financing Statements (Form UCC-3), terminating any and all
Financing Statements which cover any Receivable or Contract other than
pursuant to this Agreement or the Purchase and Sale Agreement;
(f) Copies of search reports (including tax, UCC, ERISA and judgment
liens) provided in writing to the Agent, listing all effective financing
statements that name Seller, Oxford, UPAC or UPAC of California as debtor
and that are filed in or relate to the jurisdictions in which filings were
made pursuant to subsection (e) above, together with copies of such
financing statements (none of which shall cover any Receivables or
Contracts);
(g) Duly executed Lock-Box Agreements with the Lock-Box Banks;
(h) Duly executed amendments to the Purchase and Sale Agreement
satisfactory to the Agent;
(i) Duly executed Custody Agreement satisfactory to the Agent;
(j) Duly executed Backup Servicing Agreement satisfactory to the
Agent;
(k) Opinion of Kutak Rock, counsel to Seller and the Originators as
to perfection, authority and other matters in substantially the form
attached as Exhibit 5.01(k)-1;
(l) Opinion of Kutak Rock, counsel to Seller, as to "true sale" and
"non-substantive consolidation" in substantially the forms attached as
Exhibits 5.01(l)-1 and 5.01(l)-2;
(m) [Reserved];
(n) Such sublicenses as Purchaser or the Agent shall require with
regard to all programs leased by Seller, Oxford, UPAC or UPAC of California
and used in the servicing of the Receivables Pool;
(o) Such powers of attorney as Purchaser or the Agent shall
reasonably request to enable them to collect all amounts due under any and
all Pool Receivables;
(p) Evidence that each of the Originators and the Seller has marked
its master data processing records to reflect Purchaser's undivided
ownership interest in each Pool Receivable;
(q) An Assignment and Assumption Agreement among the Purchaser, the
Agent, the Custodian, EagleFunding Capital Corporation, Fleet National
Bank, the Seller, the Servicer and the Originators in form and substance
satisfactory to the Agent;
(r) An executed copy of the Tax Sharing Agreement among Parent and
its "affiliated group of companies" (including UPAC, UPAC of California and
Seller), a copy of which is attached as Exhibit 5.01(r);
(s) (i) A Settlement Statement, prepared in respect of the proposed
Purchase, assuming a Cut-Off Date of May 26, 2000, (ii) a Weekly Report
covering the week ended May 26, 2000, (iii) schedule of information for
Receivables included in such Purchase in an electronic format acceptable to
the Agent, and (iv) implementation of Settlement reporting procedures and
formats satisfactory to the Agent;
(t) [Reserved];
(u) Duly executed Liquidity Agreement;
(v) Duly executed Fee Letter;
(w) Certified copy of the Credit and Collection Policy of each of
UPAC, UPAC of California and Oxford;
(x) Satisfactory completion of due diligence (including the
collateral audit) by the Agent;
(y) Letters from the rating agencies then rating the Commercial Paper
Notes, confirming in effect that the existing ratings of the Commercial
Paper Notes will remain in effect after giving effect to the transactions
contemplated hereby;
(z) the Structuring Fee;
(aa) Letter Agreement among the Seller, the Originators, the Servicer
and the Agent regarding exclusivity.
(bb) Such other further documents, certificates, information and/or
approvals as Purchaser, the Agent or any Liquidity Bank shall reasonably
request.
.2. Conditions Precedent to All Purchases and Reinvestments. Each
Purchase (including the initial Purchase) and each Reinvestment hereunder shall
be subject to the further conditions precedent that on the date of such Purchase
or Reinvestment (i) in the case of a Purchase, the Seller shall have delivered
the Weekly Report or Settlement Statement required to be delivered during such
week pursuant to Section 3.03(b) or 3.03(a), respectively, covering the calendar
week or Settlement Period, as applicable, most recently ended, and (ii) the
following statements shall be true (and Seller by accepting the amount of such
Purchase or by receiving the proceeds of such Reinvestment shall be deemed to
have certified that):
(a) the representations and warranties contained in Sections 6.01 and
6.02 hereof and in the Purchase and Sale Agreement are correct on and as of
such day as though made on and as of such day and shall be deemed to have
been made on such day,
(b) no event has occurred and is continuing, or would result from
such Purchase or Reinvestment, that constitutes a Liquidation Event or
Unmatured Liquidation Event,
(c) except as provided in Section 3.08, for each Receivable included
in a Purchase or Reinvestment, a fully executed Contract shall have been
delivered to the Custodian (as Purchaser's designee), no later than the
Wednesday following such Purchase or Reinvestment,
(d) after giving effect to each proposed Purchase or Reinvestment,
(i) Purchaser's Total Investment will not exceed the Purchase Limit and
(ii) Purchaser's Share with respect to Principal Receivables will not
exceed 100%, and
(e) the Liquidation Date shall not have occurred;
provided, however, the absence of the occurrence and continuance of an Unmatured
Liquidation Event shall not be a condition precedent to any Reinvestment on any
day which does not cause the Purchaser's Total Investment, after giving effect
to such Reinvestment or Purchase, to exceed the Purchaser's Total Investment as
of the opening of business on such day.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
.1. Representations and Warranties of Seller. In order to induce the
Purchaser and the Agent to enter into this Agreement and the other Transaction
Documents, Seller represents and warrants to each of them as follows:
(a) Organization and Good Standing. Seller has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority to own its properties and
to conduct its business as such properties are presently owned and such
business is presently conducted, and had at all relevant times, and now
has, all necessary power, authority, and legal right to acquire, own,
dispose of, and otherwise deal with, the Pool Receivables.
(b) Due Qualification. Seller is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including, without limitation, such
business as a "premium finance company") requires such qualification or
approvals.
(c) Power and Authority: Due Authorization. Seller has (i) duly
authorized by all necessary action, and has all necessary power, authority
and legal right to (A) execute and deliver this Agreement, the Purchase and
Sale Agreement and the other Transaction Documents to which it is a party,
(B) carry out the terms of the Transaction Documents, and (C) sell and
assign the Asset Interest on the terms and conditions herein provided and
(ii) has duly authorized by all necessary corporate action the execution,
delivery and performance of this Agreement, the Purchase and Sale Agreement
and the other Transaction Documents and the sale and assignment of the
Asset Interest on the terms and conditions herein provided.
(d) Valid Sale: Binding Obligations. This Agreement constitutes a
valid sale, transfer, and assignment of the Asset Interest to Purchaser,
enforceable against creditors of, and purchasers from, Seller and each of
the Originators; and this Agreement constitutes, and each other Transaction
Document to be signed by Seller when duly executed and delivered will
constitute, a legal, valid and binding obligation of Seller enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement, the Purchase and Sale Agreement and the other
Transaction Documents and the fulfillment of the terms hereof will not
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of Seller, or any indenture, loan
agreement, mortgage, deed of trust, receivables purchase or other
securitization agreement or other agreement or instrument to which Seller
is a party or by which it is bound, or result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, loan agreement, mortgage, deed of trust, receivables purchase
agreement or other securitization agreement or other agreement or
instrument, other than this Agreement and the Purchase and Sale Agreement,
or violate any law or any order, rule, or regulation applicable to Seller
or (except for Adverse Determinations disclosed in writing to Purchaser as
assignee of Seller and except as described in Schedule 6.01(e)) of any
court or of any federal or state regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over Seller (or
Purchaser as assignee of Seller) or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or threatened, against Seller or its Affiliates, or any other
Person, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (A) asserting the invalidity of
this Agreement, the Purchase and Sale Agreement or any other Transaction
Document, (B) seeking to prevent the sale and assignment of the Asset
Interest or the consummation of any of the transactions contemplated by
this or any other Transaction Document, (C) seeking any determination or
ruling that might adversely affect (i) the performance by Seller, the
Servicer or any of the Originators of its respective obligations under this
Agreement or any of the other Transaction Documents, or (ii) the validity
or enforceability of this Agreement, the Purchase and Sale Agreement, any
other Transaction Document, the Receivables or the Contracts or (D) seeking
to adversely affect the federal income tax attributes of the Purchases and
Reinvestments hereunder.
(g) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(h) Government Approvals. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance
by Seller of this Agreement, the Purchase and Sale Agreement or any other
Transaction Document except for the filing of the UCC Financing Statements
referred to in Article V, all of which, at the time required in Article V,
shall have been duly made and shall be in full force and effect.
(i) Financial Condition. Since December 31, 1999 there has been no
material adverse change in the financial condition, business, business
prospects or operations of the Seller.
(j) Litigation. No injunction, decree or other decision has been
issued or made by any court, government or agency or instrumentality
thereof that has, and no threat by any person has been made to attempt to
obtain any such decision that would have, a material adverse effect on a
significant part of its business operations except as described in Schedule
6.01(j).
(k) Margin Regulations. The use of all funds acquired by Seller
under this Agreement will not conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of the
Federal Reserve system from time to time.
(l) Quality of Title. Each Pool Receivable is, together with the
related Contract and all other agreements related to such Pool Receivable
(other than the related insurance policy, with respect to which Seller has
a first priority and sole perfected security interest therein), owned by
Seller free and clear of any Lien (other than any Lien arising solely as
the result of any action taken by the Agent or the Purchaser (or any
assignee thereof)) except as provided herein; and when Purchaser makes a
Purchase it shall have acquired and shall continue to have maintained a
valid and perfected first priority undivided percentage ownership interest
to the extent of the Asset Interest in each Pool Receivable, each related
Contract and in the Related Security and Collections with respect thereto
free and clear of any Lien (other than any Lien arising solely as the
result of any action taken by the Agent or the Purchaser (or any assignee
thereof)); and no financing statement or other instrument similar in effect
covering any Pool Receivable, any interest therein, the related Contracts,
or the Related Security or Collections with respect thereto is on file in
any recording office except such as may be filed in favor of (i) the
Originators in accordance with the Contracts, (ii) in favor of Seller and
the Agent in accordance with the Purchase and Sale Agreement or (iii) in
favor of the Agent in accordance with this Agreement or in connection with
any Lien arising solely as the result of any action taken by the Agent or
the Purchaser (or any assignee thereof).
(m) Accurate Reports. No Settlement Statement (if prepared by Seller
or any Affiliate of Seller, or to the extent that information contained
therein was supplied by Seller or any Affiliate of Seller), information,
exhibit, financial statement, document, book, record or report furnished or
to be furnished by Seller to the Agent or Purchaser in connection with this
Agreement or any other Transaction Document was or will be inaccurate in
any material respect as of the date it was or will be dated or (except as
otherwise disclosed to the Agent and Purchaser, as the case may be, at such
time) as of the date so furnished, or contained or will contain any
material misstatement of fact or omitted or will omit to state a material
fact or any fact necessary to make the statements contained therein not
materially misleading.
(n) Offices. The chief place of business and chief executive office
of Seller are located at the address of Seller referred to in Section 14.02
and the offices where Seller keeps all its books, records and documents
evidencing Pool Receivables, the related Contracts and all purchase orders
and other agreements related to such Pool Receivables are located at the
addresses specified in Schedule 6.01(n) (or at such other locations,
notified to the Agent in accordance with Section 7.01(e), in jurisdictions
where all action required by Section 8.05 has been taken and completed).
(o) Lock-Box Accounts. The names and addresses of all the Lock-Box
Banks, together with the account numbers of the lock-box accounts of Seller
at such Lock-Box Banks, are specified in Schedule 6.01(o) (or have been
notified to Purchaser in accordance with Section 7.03(d)).
(p) Eligible Receivables. Each Receivable included in the Net Pool
Balance as an Eligible Receivable on the date of any Purchase or
Reinvestment shall in fact be an Eligible Receivable.
(q) Investment Company Act. Seller is not an investment company or a
company controlled by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
(r) Solvency. After giving effect to each Purchase and each
Reinvestment and immediately after giving effect to Seller's and each
Originator's obligations now or hereafter arising pursuant to any
Transaction Document and to each transaction contemplated thereby, (i) the
fair saleable value of the assets of Seller will exceed its liabilities,
and (ii) Seller will be solvent, will be able to pay its debts generally as
they mature, will own property with a fair saleable value greater than the
amount required to pay its debts, and will have capital sufficient to carry
on its business as then constituted.
(s) Servicing Programs No license or approval is required for the
Agent's or the Servicer's use of any program used by Servicer or any of the
Originators in the servicing of the Receivables, other than those which
have been obtained and are in full force and effect. The Seller hereby
unconditionally and irrevocably grants to the Agent, the Purchaser and the
Servicer a royalty free, non-exclusive license or sublicense to use all
programs and other computer software used by the Seller or any Originator
in the monitoring, servicing and/or collection of any Contracts or related
Receivables and upon such licensee's or sublicensee's request, the Seller
shall make available to such licensee or sublicensee a copy of such program
or software in machine-readable form and to the extent necessary or
convenient to operate such program or software, access during normal
business hours to any of the Seller's computer or computer hardware to
facilitate the use of such program or software.
(t) Direct Obligor. No funds have been advanced by Seller to or on
behalf of any Direct Obligor.
(u) Contractual Due Dates, Etc. No Contract has been extended or
otherwise modified, unless in manner, scope and content in accordance with
the provisions of this Agreement and the Credit and Collection Policy of
the Originator originating such Receivable.
(v) Licensing. Each Originator is properly licensed as a premium
finance loan company in each jurisdiction in which licensing is required
for it to own premium finance loans with a nexus to such jurisdiction.
(w) Transfers. No purchase of an interest in Receivables by
Purchaser from Seller or by Seller from any Originator constitutes a
fraudulent transfer or fraudulent conveyance or is otherwise void or
voidable under similar laws or principles, the doctrine of equitable
subordination or for any other reason.
(x) Purchase and Sale Agreement. Each of the representations and
warranties made by Seller and the Originators in the Purchase and Sale
Agreement is true and correct as of the date or dates made, and each such
agreement is in full force and effect.
(y) Use of Proceeds. Neither Seller nor any Originator will use the
proceeds of the Purchases hereunder to acquire a security in a transaction
subject to Section 13 or 14 of the Securities Exchange Act of 1934.
(z) Tax. Seller has filed each and every tax return required to be
filed by it in each jurisdiction in which it is required to do so and has
paid in each such jurisdiction all taxes required to be paid by it on a
consolidated basis.
(aa) No Liquidation Event. No event has occurred and is continuing
and no condition exists which constitutes a Liquidation Event or an
Unmatured Liquidation Event.
(bb) ERISA. The Seller is in compliance in all material respects with
ERISA and there exists no lien in favor of the Pension Benefit Guaranty
Corporation on any of the Receivables.
.2. Representations and Warranties of UPAC. UPAC (individually and
as Servicer hereunder), in order to induce the Purchaser and the Agent to enter
into this Agreement and the other Transaction Documents, represents and warrants
to each of them as follows:
(a) Organization and Good Standing. UPAC has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Missouri, with power and authority to own its properties and to
conduct its business as such properties are presently owned and such
business is presently conducted, and had at all relevant times, and now
has, all necessary power, authority, and legal right to acquire, own,
dispose of, and service the Pool Receivables.
(b) Due Qualification. UPAC is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including, without limitation, such
business as a "premium finance company") requires such qualification
approvals.
(c) Power and Authority: Due Authorization. UPAC has (i) duly
authorized by all necessary action, and has all necessary power, authority
and legal right to (A) execute and deliver this Agreement, the Purchase and
Sale Agreement and the other Transaction Documents to which it is a party,
(B) carry out the terms of the Transaction Documents, (C) sell and assign
the Receivables on the terms and conditions provided in the Purchase and
Sale Agreement and (D) service the Receivables on the terms and conditions
herein provided and (ii) has duly authorized by all necessary corporate
action the execution, delivery and performance of this Agreement, the
Purchase and Sale Agreement and the other Transaction Documents and the
sale and assignment of the Asset Interest on the terms and conditions
herein provided.
(d) Binding Obligations. This Agreement constitutes, and each other
Transaction Document to be signed by UPAC when duly executed and delivered
will constitute, a legal, valid and binding obligation of UPAC enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement, the Purchase and Sale Agreement and the other
Transaction Documents and the fulfillment of the terms hereof and thereof
will not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or by-laws of UPAC, or any
indenture, loan agreement, mortgage, deed of trust, receivables purchase or
other securitization agreement or other agreement or instrument to which
UPAC is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, loan agreement, mortgage, deed of trust, receivables
purchase agreement or other securitization agreement or other agreement or
instrument, other than this Agreement, the Security Agreement and the
Purchase and Sale Agreement, or violate any law or any order, rule, or
regulation applicable to UPAC or (except for Adverse Determinations
disclosed in writing to Seller, the Agent and Purchaser as assignees of
UPAC and except as described in Schedule 6.02(e)) of any court or of any
federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over UPAC (or Purchaser,
the Agent and Seller as assignees of UPAC) or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or threatened, against UPAC or its Affiliates, or any other
Person, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (A) asserting the invalidity of
this Agreement, the Purchase and Sale Agreement or any other Transaction
Document, (B) seeking to prevent the sale and assignment of the Asset
Interest or the consummation of any of the transactions contemplated by
this or any other Transaction Document, (C) seeking any determination or
ruling that might adversely affect (i) the performance by UPAC or Servicer
of its obligations under this Agreement, or (ii) the validity or
enforceability of this Agreement, the Purchase and Sale Agreement, any
other Transaction Document, the Receivables or the Contracts or (D) seeking
to adversely affect the federal income tax attributes of the Purchases and
Reinvestments hereunder.
(g) Government Approvals. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance
by UPAC of this Agreement, the Purchase and Sale Agreement or any other
Transaction Document except for the filing of the UCC Financing Statements
referred to in Article V, all of which, at the time required in Article V,
shall have been duly made and shall be in full force and effect.
(h) Financial Condition. (x) The consolidated balance sheet of UPAC,
UPAC of California, APR and their consolidated subsidiaries, if any, as at
December 31, 1999, and the related statements of income and cash flow of
UPAC, UPAC of California, APR and their consolidated subsidiaries, if any,
for the year then ended certified by their independent certified public
accounting firm, and the unaudited consolidated interim balance sheet of
UPAC, UPAC of California, APR and their consolidated subsidiaries as at
March 31, 2000, and the related interim statement of income, copies of each
of which have been furnished to the Agent and Purchaser, each fairly
present the consolidated financial position of UPAC, UPAC of California,
APR and their consolidated subsidiaries as at such date and the
consolidated results of the operations of UPAC, UPAC of California, APR and
their consolidated subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and (y) since March 31, 2000 there has been no material adverse
change in any such condition, business, business prospects or operations
except as described in Schedule 6.02(h).
(i) Litigation. No injunction, decree or other decision has been
issued or made by any court, government or agency or instrumentality
thereof that has, and no threat by any person has been made to attempt to
obtain any such decision that would have, a material adverse effect on a
significant part of its business operations except as described in Schedule
6.02(i).
(j) Accurate Reports. No Settlement Statement (if prepared by UPAC
or any Affiliate of UPAC, or to the extent that information contained
therein was supplied by UPAC or any Affiliate of UPAC), information,
exhibit, financial statement, document, book, record or report furnished or
to be furnished by UPAC to the Agent or Purchaser in connection with this
Agreement or any other Transaction Document was or will be inaccurate in
any material respect as of the date it was or will be dated or (except as
otherwise disclosed to the Agent and Purchaser, as the case may be, at such
time) as of the date so furnished, or contained or will contain any
material misstatement of fact or omitted or will omit to state a material
fact or any fact necessary to make the statements contained therein not
materially misleading.
(k) Offices. The chief place of business and chief executive office
of UPAC are located at the address of UPAC referred to in Section 14.02 and
the offices where UPAC keeps all its books, records and documents
evidencing Pool Receivables, the related Contracts and all purchase
orders and other agreements related to such Pool Receivables are located at
the addresses specified in Schedule 6.02(k) (or at such other locations,
notified to the Agent in accordance with Section 7.01(e), in jurisdictions
where all action required by Section 8.05 has been taken and completed).
(l) Servicing Programs. No license or approval is required for the
Agent's use of any program used by UPAC in the servicing of the
Receivables, other than those which have been obtained and are in full
force and effect.
(m) Contractual Due Dates, Etc. No Contract has been extended or
otherwise modified, unless in manner, scope and content in accordance with
the provisions of this Agreement and the Credit and Collection Policy of
the applicable Originator originating such Receivable.
(n) Licensing. UPAC is properly licensed as a premium finance loan
company in each jurisdiction in which licensing is required and in which it
is originating, enforcing and/or servicing Receivables pursuant to the
terms of the Transaction Documents.
(o) Confirmation. With respect to each Contract and related
Receivable serviced by it and included in the Receivables Pool, Servicer
has either obtained written confirmation of the existence, accuracy and
terms of the related insurance policy or has otherwise verified the
existence, accuracy and terms of the related insurance policy in accordance
with its policies and procedures.
.3. Reserved.
.4. Breach of Representations and Warranties.
(a) Breach of Representations and Warranties. Upon discovery by
UPAC, Servicer or Seller of a breach of any of the representations and
warranties set forth in this Article VI, the party discovering such breach
shall give written notice thereof to the Agent and the Purchaser within one
(1) Business Day of such discovery.
(b) Survival of Certain Representations and Warranties. The
representation and warranties provided in this Article VI shall survive the
purchase of the related Receivables under the Purchase and Sale Agreement
and of the Asset Interest therein by Purchaser, the delivery of the
Contracts to Purchaser or Purchaser's designee and the termination of this
Agreement or any other Transaction Document.
ARTICLE VII
GENERAL COVENANTS
.1. Affirmative Covenants of Seller. From the date hereof until the
Final Payout Date, Seller will, unless the Agent shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to (i) the
Pool Receivables and related Contracts and (ii) its business operations
except where noncompliance would not have a material adverse effect on such
business operations.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and
qualification would materially adversely affect (i) the interests of the
Agent and the Purchaser hereunder or (ii) the ability of the Seller or the
Servicer to perform their respective obligations hereunder.
(c) Audits. At any time and from time to time during regular
business hours, upon such notice, if any, as shall be reasonable under the
circumstances, permit the Agent (at Agent's expense), or its agents or
representatives, (i) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes
and disks) in the possession or under the control of Seller relating to
Pool Receivables, including, without limitation, the related Contracts and
other agreements, and (ii) to visit the offices and properties of Seller
for the purpose of examining such materials described in clause (i) next
above, and to discuss matters relating to Pool Receivables or Seller's
performance hereunder or under any other Transaction Document with any of
the officers or employees of Seller having knowledge of such matters; and
without limiting the foregoing, from time to time upon request of the
Agent, permit certified public accountants or other auditors acceptable to
them to conduct, at Seller's expense, a review of Seller's books and
records.
(d) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Pool Receivables and all other
agreements related to such Pool Receivables.
(e) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps its records concerning the
Pool Receivables, all related Contracts and all other agreements related to
such Pool Receivables (and all original documents relating thereto), at the
address(es) of Seller referred to in Section 6.01(n) or, upon 30 days'
prior written notice to the Agent, at such other locations in jurisdictions
where all action required by Section 8.05 shall have been taken and
completed.
(f) Credit and Collection Policies. Comply in all material respects
with the applicable Credit and Collection Policy in regard to each Pool
Receivable and the related Contract.
(g) Collections. Cause all Collections of Pool Receivables to be
deposited within one Business Day directly with a Lock-Box Bank.
(h) Reserved.
(i) Rights and Obligations under Purchase and Sale Agreement.
Exercise all of its rights and perform all of its obligations under or in
connection with the Purchase and Sale Agreement to the fullest extent
thereof except to the extent otherwise consented to in writing by the
Agent.
.2. Reporting Requirements of Seller. From the date hereof until the
Final Payout Date, Seller will, unless the Agent shall otherwise consent in
writing, furnish to the Agent.
(a) Financial Statements. As soon as available and (i) in any event
within 30 days after the end of each calendar month, copies of the
unaudited monthly consolidating financial statements of Seller, UPAC ,UPAC
of California and APR prepared in accordance with generally accepted
accounting principles consistently applied and (ii) in any event within 90
days after the end of each fiscal year of the Seller, (x) unaudited annual
consolidating financial statements of each of the Seller, UPAC, UPAC of
California and APR for the fiscal year then ended, prepared in accordance
with generally accepted accounting principles consistently applied and (y)
audited annual consolidated financial statement of the Parent and its
consolidated subsidiaries for the fiscal year then ended, prepared in
accordance with generally accepted accounting principles consistently
applied and certified by the Parent's accountants (which shall be a
nationally recognized independent certified public accounting firm) as
fairly presenting the financial condition and results of operations of the
Parent and its consolidated subsidiaries for the period covered thereby.
(b) ERISA. Promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which Seller or any ERISA Affiliate of Seller files
under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which Seller or any ERISA
Affiliate of Seller receives from the Pension Benefit Guaranty Corporation;
(c) Liquidation Events. As soon as possible and in any event within
one Business Day after the occurrence of each Liquidation Event and each
Unmatured Liquidation Event, a written statement of the chief financial
officer or chief accounting officer of Seller setting forth details of such
event and the action that Seller proposes to take or cause to be taken with
respect thereto, and the Purchaser shall promptly after its receipt thereof
forward a copy of such notice (or otherwise give notice of its receipt of
such notice) to each of the rating agencies then rating its Commercial
Paper Notes;
(d) Litigation and Other Proceedings. As soon as possible and in any
event within one Business Day of Seller's knowledge thereof, notice from
the Seller of (i) any litigation, investigation, inquiry or proceeding
which may exist at any time which could have a material adverse effect on
the business, operations, property or financial condition of Seller or any
Originator or impair the ability of Seller or any Originator to perform its
respective obligations under this Agreement or any other Transaction
Document or which could result in an Adverse Determination, (ii) any
material adverse development in any previously disclosed litigation,
investigation, inquiry or proceeding and (iii) any Adverse Determination,
and, in each case, the Purchaser shall promptly after its receipt thereof
forward a copy of such notice (or otherwise give notice of its receipt of
such notice) to each of the rating agencies then rating its Commercial
Paper Notes;
(e) Audit of Pool Receivables. Together with the annual financial
statements required to be delivered pursuant to Section 7.02(a)(y), a copy
of an audit report, prepared by Seller's accountants (which shall be a
nationally recognized independent certified public accounting firm), of the
Pool Receivables, as at the end of the fiscal year of Seller, verifying the
aggregate Unpaid Balance of the Pool Receivables and the Defaulted
Receivables.
(f) Change in Credit and Collection Policies. Immediately upon
becoming aware thereof, notice of any material change or proposed material
change in the character of any Originator's business or in any Originator's
Credit and Collection Policy, and the Purchaser shall promptly after its
receipt of any such notice forward a copy of such notice (or otherwise give
notice of its receipt of such notice) to each of the rating agencies then
rating its Commercial Paper Notes.
(g) Material Change. As soon as practicable but in no event later
than the first Business Day following the occurrence, notice of any
material adverse change in Seller's or any Originator's financial or
operating condition.
(h) Purchase and Sale Agreement. Promptly after receipt thereof,
copies of all documents and other information delivered by the Originators
to Seller pursuant to the Purchase and Sale Agreement.
(i) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the condition
or operations, financial or otherwise, of Seller or the Originators as the
Agent may from time to time reasonably request in order to protect the
interests of the Agent and/or the Purchaser under or as contemplated by
this Agreement.
(j) Notice. Within three Business Days of its acquisition,
generation or other origination of a Contract and/or its related
Receivable, provide notice (or otherwise cause notice to be provided) to
(x) the relevant Obligors of its ownership interest in such Receivable and
subsequent assignment thereof to the Purchaser (which notice may be set
forth in the form of Contract to be executed by such Obligor), (y) to the
relevant insurance carrier obligated to pay unearned premiums under any
relevant insurance policy of the assignment to the relevant Originator of
the right to payment of such unearned premiums and the subsequent
assignment thereof to the Seller and the Purchaser, it being agreed that,
notice in the form of Exhibit 7.02(j)-1 and Exhibit 7.02(j)-2 will be
sufficient for clauses (x) and (y), respectively, above. Any notice which
in accordance with applicable policies and procedures is to be given to the
relevant insurance agent of the assignment of the right to payment of
unearned premiums shall be substantially in the form of Exhibit 7.02(j)-3.
.3. Negative Covenants of Seller. From the date hereof until the
Final Payout Date, Seller will not, without the prior written consent of the
Agent:
(a) Sales, Liens, Etc. Except as otherwise provided herein and in
the Purchase and Sale Agreement, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Lien
upon or with respect to, any Pool Receivable or related Contract or Related
Security, or any interest (including Seller's retained interest hereunder)
therein, or any lock-box account to which any Collections of any Pool
Receivable are sent, or any right to receive income or proceeds from or in
respect of any of the foregoing.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 8.02, extend, amend or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of any
Contract related thereto.
(c) Change in Business. Make any change in the character of its
business.
(d) Change in Payment Instructions to Obligors Add or terminate any
bank as a Lock-Box Bank from those listed in Schedule 6.01(o), make or
permit any change in Servicer's instructions to Obligors regarding payments
to be made to Seller or Servicer or payments to be made to any Lock-Box
Bank, unless, in any case, the Agent shall have received notice of such
addition, termination or change and duly executed copies of Lock-Box
Agreements with each new Lock-Box Bank.
(e) Mergers, Acquisitions, Sales, etc. Be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of
the assets or any stock of any class of, or any partnership or joint
venture interest in, any other Person, or, except in the ordinary course of
its business, sell, transfer, convey or lease all or any substantial part
of its assets, or sell or assign with or without recourse any Receivables
or any interest therein (other than pursuant hereto).
(f) Restricted Payments. Purchase or redeem, or permit any
Subsidiary to purchase or redeem, any shares of the capital stock of
Seller, declare or pay any dividends thereon (other than Permitted
Dividends and stock dividends which may be paid no more frequently than
monthly), make any distribution to stockholders or set aside any funds for
any such purpose, or prepay, purchase or redeem, or permit any Subsidiary
to purchase, any subordinated indebtedness of Seller except as permitted
under the Tax Sharing Agreement and any agreement allocating overhead to
the extent such agreement has been approved by the Agent.
(g) Deposits to Special Accounts. Deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box Account or
the Collection Account cash or cash proceeds other than Collections of Pool
Receivables.
(h) Incurrence of Indebtedness. Incur or permit to exist any
indebtedness or liability on account of deposits or advances or for
borrowed money or for the deferred purchase price of any property or
services, other than (i) under the Subordinated Notes or (ii) any other
indebtedness approved by the Agent and listed in Schedule 7.03(h).
(i) Amendments to Purchase and Sale Agreement. Amend, supplement,
waive the application of any provision of, amend and restate or otherwise
modify the Purchase and Sale Agreement (including, adding any Originators
thereunder) except (x) in accordance with the terms thereof and (y) with
the prior written consent of the Agent.
(j) No Subsidiaries. Acquire any voting or economic interest in any
other Person.
.4. Affirmative Covenants of UPAC. From the date hereof until the
Final Payout Date, UPAC (individually and as Servicer) will, unless the Agent
shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to (i) the
Pool Receivables and related Contracts and (ii) its business operations
(particularly relating to origination and servicing) except where
noncompliance would not have a material adverse effect on such business
operations.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and
qualification would materially adversely affect (i) the interests of
Purchaser hereunder or (ii) the ability of UPAC or Seller to perform their
obligations hereunder or under the other Transaction Documents.
(c) Audits. At any time and from time to time during regular
business hours, upon such notice, if any, as shall be reasonable under the
circumstances, permit the Agent (at the expense of Agent), or its agents or
representatives, (i) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes
and disks) in the possession or under the control of UPAC relating to Pool
Receivables, including, without limitation, the related Contracts and other
agreements, and (ii) to visit the offices and properties of UPAC for the
purpose of examining such materials described in clause (i) immediately
above, and to discuss matters relating to Pool Receivables or UPAC's
performance hereunder or under any other Transaction Document with any of
the officers or employees of UPAC having knowledge of such matters; and
without limiting the foregoing, from time to time upon request of the
Agent, permit certified public accountants or other auditors acceptable to
them to conduct, at the reasonable expense of UPAC, a review of UPAC's
books and records.
(d) Keeping of Records and Books of Account. (i) Maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Pool Receivables in
the event of the destruction of the originals thereof) and keep and
maintain, all documents, books, records and other information, in each
case, reasonably necessary or advisable for the collection of all Pool
Receivables (including, without limitation, records adequate to permit the
daily identification of each new Pool Receivable and all Collections of and
adjustments to each existing Pool Receivable) and (ii) identify (and mark)
in each of its records and on each Contract (including computer records)
each Receivable included in the Receivables Pool as so included.
(e) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it
under the Contracts related to the Pool Receivables and all other
agreements related to such Pool Receivables.
(f) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps its records concerning the
Pool Receivables, all related Contracts and all other agreements related to
such Pool Receivables (and all original documents relating thereto), at the
address(es) of UPAC referred to in Section 6.01(n) or, upon 30 days' prior
written notice to the Agent, at such other locations in jurisdictions where
all action required by Section 8.05 shall have been taken and completed.
(g) Credit and Collection Policies. Comply in all material respects
with the applicable Credit and Collection Policy in regard to each Pool
Receivable and the related Contract.
(h) Collections. Cause all Collections of Pool Receivables to be
deposited within one Business Day directly with a Lock-Box Bank.
(i) Cancellation of Certain Insurance Policies. With regard to any
Pool Receivable, cancel the related insurance policy in accordance with the
applicable Credit and Collection Policy, unless non-cancellation thereof
will not materially and adversely impact the related Pool Receivable or the
Receivables Pool taken as a whole.
(j) Purchase and Sale Agreement. Comply with all of its obligations
under the Purchase and Sale Agreement.
.5. Reporting Requirements of UPAC. From the date hereof until the
Final Payout Date, UPAC will, unless the Agent shall otherwise consent in
writing, furnish to the Agent:
(a) Financial Statements. As soon as available and in any event
within 90 days after each fiscal year of UPAC, and within 30 days after
each fiscal month of UPAC, copies of the consolidated financial statements
of UPAC, UPAC of California, APR and their consolidated Subsidiaries
prepared on a consolidated basis and on a consolidating basis, in each case
in conformity with generally accepted accounting principles, duly certified
by the treasurer of UPAC; together with a monthly certificate from the
treasurer, in each case containing a computation (so long as UPAC is the
Servicer) of the Default Ratio, the Monthly Payment Rate, the Excess Yield
Ratio and the Cancellation Ratio and containing a computation of, and
showing compliance with, the financial restrictions contained in Section
7.06(f), 7.06(h), 10.01(h), 10.01(i), 10.01(j), 10.01(k) , 10.01(v),
10.01(w), and 10.01(x).
(b) ERISA. Promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which UPAC or any ERISA Affiliate of UPAC files under
ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which UPAC or any ERISA
Affiliate of UPAC receives from the Pension Benefit Guaranty Corporation:
(c) Liquidation Events. As soon as possible and in any event within
one Business Day after the occurrence of each Liquidation Event and each
Unmatured Liquidation Event, a written statement of the chief financial
officer or chief accounting officer of UPAC setting forth details of such
event and the action that UPAC proposes to take with respect thereto;
(d) Litigation and Other Proceedings. As soon as possible and in any
event within two Business Days of UPAC's knowledge thereof, notice of (i)
any litigation, investigation, inquiry or proceeding which may exist at any
time which could have a material adverse effect on the business,
operations, property or financial condition of UPAC or impair the ability
of UPAC or the Seller to perform its respective obligations under this
Agreement or the other Transaction Documents or which could result in an
Adverse Determination, (ii) any material adverse development in any
previously disclosed litigation, investigation, inquiry or proceeding,
(iii) any Adverse Determination, and (iv) any change in applicable laws or
regulations which change could reasonably be expected to result in an
Adverse Determination;
(e) Change in Credit and Collection Policy. Prior to its effective
date, notice of any material change in the character of UPAC's business or
in its Credit and Collection Policy.
(f) Material Change. As soon as practicable but in no event later
than the first Business Day following the occurrence, notification of any
material adverse change in UPAC's financial or operating condition.
(g) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the condition
or operations, financial or otherwise, of UPAC or, to the extent it is
Servicer, any other Originator or the Seller, as in any case the Agent may
from time to time reasonably request in order to protect the interests of
the Agent or Purchaser under or as contemplated by this Agreement.
.6. Negative Covenants of UPAC. From the date hereof until the Final
Payout Date, UPAC will not, without the prior written consent of the Agent:
(a) Sales, Liens, Etc. Except as otherwise provided herein sell,
assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Lien upon or with respect to, any Pool
Receivable or related Contract or Related Security, or any interest
(including Seller's retained interest) therein, or any lock-box account to
which any Collections of any Pool Receivable are sent, or any right to
receive income or proceeds from or in respect of any of the foregoing.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 8.02, extend, amend or otherwise modify the terms of
any Pool Receivable, or amend, modify or waive any term or condition of any
Contract related thereto.
(c) Change in Business or Credit and Collection Policy. Make any
material change in the character of its business or in its Credit and
Collection Policy.
(d) Change in Payment Instructions to Obligors. Add or terminate any
bank as a Lock-Box Bank from those listed in Schedule 6.01(o) or make any
change in its instructions to Obligors regarding payments to be made to
Seller or Servicer or payments to be made to any Lock-Box Bank, unless the
Agent shall have received notice of such addition, termination or change
and duly executed copies of Lock-Box Agreements with each new Lock-Box
Bank.
(e) Reserved.
(f) Mergers, Acquisitions, Sales, etc. Be a party to any merger or
consolidation, or convey, transfer, lease or otherwise dispose of (whether
in one transaction or in a series of transactions), all or substantially
all of its assets (whether now owned or hereafter acquired), or acquire all
or substantially all of the assets or capital stock or other ownership
interest of any Person; provided, however, that (i) UPAC may merge or
consolidate with, or acquire all or substantially all of the assets of any
other Originator and (ii) UPAC may merge or consolidate with, or acquire
all or substantially all of the assets or capital stock or other ownership
interest of any other Person so long as (1) no Liquidation Event or
Unmatured Liquidation Event is then outstanding or would result therefrom
and (2) immediately after giving effect to such merger, consolidation or
acquisition, as the case may be, UPAC shall be the surviving entity of such
merger, consolidation or acquisition and the net worth of UPAC on a
consolidated basis will equal or exceed that of UPAC immediately prior to
such merger, consolidation or acquisition; and provided, further, it is
expressly understood and agreed that, unless otherwise agreed to by the
Agent and the Purchaser, neither (x) the accounts receivable and other
similar assets of such other party to such merger, consolidation or
acquisition (whether such accounts receivable or other similar assets
existed prior to such merger, consolidation or acquisition or arise or are
created thereafter out of or in connection with what had been the
operations of such other party), nor (y) the accounts receivable and other
similar assets acquired by an Originator from a Person (other than another
Originator) in an acquisition of less than all or substantially all of such
Person's assets (by way of example and not limitation, the purchase by an
Originator of a single portfolio of Receivables from a third party), shall
be deemed in any event to be Eligible Receivables hereunder except to the
extent that:
(i) the aggregate Unpaid Principal Balance of all such
Receivables acquired through purchase, merger or consolidation and
which have not been previously designated by the Agent and the
Purchaser as being Eligible Receivables does not exceed, at any time,
5% of the Net Pool Balance at such time; and
(ii) the aggregate Unpaid Principal Balance of all such
Receivables acquired through any specific merger, consolidation or any
acquisition or purchase (or any related series of acquisitions or
purchases) and which have not previously been designated by the Agent
and the Purchaser as being Eligible Receivables does not exceed, at
any time, 2.5% of the Net Pool Balance at such time.
(g) Restricted Payments. Purchase or redeem, or permit any
Subsidiary to purchase or redeem, any shares of the capital stock of UPAC,
declare or pay any dividends thereon, make any distribution to stockholders
or set aside any funds for any such purpose, or prepay, purchase or redeem,
or permit any Subsidiary to prepay, purchase or redeem, any subordinated
indebtedness of UPAC, or purchase any debt owed by any Affiliate of UPAC or
make any loan to any Affiliate of UPAC, if in any such case, after giving
effect thereto, the Liquidation Event described in Section 10.01(w) would
occur.
(h) Incurrence of Indebtedness. Incur, guaranty or permit to exist
any indebtedness or liability on account of deposits or advances or for
borrowed money or for the deferred purchase price of any property or
services, except (i) indebtedness to other Subsidiaries not exceeding in
the aggregate $100,000 at any one time outstanding, (ii) current accounts
payable arising in the ordinary course of business, (iii) indebtedness of
the Seller to any Originators or Oxford under the Subordinated Notes for
the purchase price of Receivables purchased by the Seller from the
Originators or Oxford pursuant to the Purchase and Sale Agreement, (iv)
unsecured indebtedness of UPAC in respect of outstanding deposits made to
such Originator by referring agents in the ordinary course of its
respective business, not to exceed at any time of determination hereunder,
in the aggregate for UPAC and UPAC of California, the sum of $1,000,000
plus 10% of the excess (if any) of the consolidated tangible net worth of
UPAC and UPAC of California and their consolidated subsidiaries at such
time over $5,000,000, and (v) other indebtedness outstanding on the date
hereof and listed on Schedule 7.06(i); notwithstanding the foregoing, UPAC
may obtain subordinated loans from other Persons in an amount not to exceed
$5,000,000, in the aggregate, provided that each such Person enters into a
subordination agreement with the Agent on terms and conditions satisfactory
to the Agent.
(i) Deposits to Special Accounts. Deposit or otherwise credit, or
cause or permit to be so deposited or credited, to Lock-Boxes or the
Collection Account cash or cash proceeds other than Collections of Pool
Receivables.
.7. Reserved.
.8. Reserved.
.9. Reserved.
.10. Special Covenant of Seller and UPAC. From the date hereof until
the Final Payout Date, Seller and UPAC agree that Seller shall be operated in
such a manner that it will not be substantively consolidated in the bankruptcy
estate of any Affiliate such that the separate corporate existence of Seller
would be disregarded in the event of a bankruptcy or insolvency of any
Affiliate, and Seller is and shall be operated in such a manner that no
Affiliate shall be substantively consolidated in the bankruptcy estate of
Seller, such that, in the event that Seller were to be a debtor in a case under
the Bankruptcy Code, the separate existence of Seller or the separate corporate
existence of UPAC, or the separate existence of any other Affiliate or
Originator, would be disregarded so as to lead to substantive consolidation of
the assets and liabilities of UPAC, any other Originator, Parent or any other
Affiliate with the bankruptcy estate of Seller, and in that regard:
(a) Seller shall maintain separate corporate records and books of
account from that of any Affiliate, including, but not limited to, the
Originators and Parent, hold regular meetings and otherwise observe
corporate formalities and shall keep and maintain its place of business
separate and apart from the place of business of any Affiliate, including
the Originators and Parent, and Seller shall have a separately designated
address and phone listing for its business offices;
(b) the financial statements and books and records of Seller prepared
after the date hereof (which may be consolidated statements for certain
financial and tax reporting purposes) shall reflect the separate existence
of and separate financial condition of the Seller, each of the Originators
and Parent and any other Affiliate and shall disclose (i) the effects of
the transactions pursuant hereto and the Purchase and Sale Agreement in
accordance with generally accepted accounting principles and (ii) that the
assets of Seller will only be available to satisfy the claims of Seller's
creditors;
(c) Seller shall maintain its funds and other assets separately from
the funds and other assets of any Affiliate, including, but not limited to
the Originators and Parent (including through the maintenance of a separate
bank account); Seller's funds and other assets and records relating thereto
will be separately identifiable and shall not be commingled with those of
any Affiliate, including, but not limited to the Originators and Parent,
and the creditors of the Originators and Parent shall be entitled to be
satisfied out of their own assets prior to any value becoming available to
the shareholders of Seller;
(d) except to the limited extent permitted under Section 7.10(p) or
as expressly permitted under the Purchase and Sale Agreement, no Affiliate
of Seller shall guarantee Seller's obligations or advance funds to Seller
for the payment of expenses or otherwise;
(e) Seller will conduct its business solely in its own name so as not
to mislead others as to its identity, and will use its best efforts to
avoid the appearance of conducting business on behalf of the Originators
and Parent or that any of Seller's assets are available to pay the
creditors of any Originator or Parent or any other Affiliates, and, without
limiting the generality of the foregoing, all oral or written
communications shall be conducted by Seller in its own name and on its own
stationary;
(f) except in the limited instances set forth herein, Seller will not
act as an agent of Parent or any Originator or any Affiliate, but instead
Seller shall present itself to the public as a corporation separate from
any other Person, independently engaged in the business of purchasing
Receivables and related Contracts;
(g) Seller will act and conduct its business in such a way that it
would not be reasonable for a third party to rely on the assets of any
Originator or Parent to satisfy the obligations of Seller, or vice versa;
(h) Seller shall obtain proper authorization from its board of
directors for any material corporate action to be engaged in by Seller;
(i) Seller will maintain its own separate bank account and will pay
all of its own operating expenses and liabilities solely and exclusively
from its own funds;
(j) all resolutions, consents to action, agreements, and any other
instruments of Seller underlying the transactions described in this
Agreement and in the other Transaction Documents shall be continuously
maintained as official records by Seller, separately identified and held
apart from the records of the Originators, Parent and each of the
Affiliates thereof;
(k) Seller shall remain a limited purpose corporation whose
activities are restricted in accordance with its Certificate of
Incorporation;
(l) Seller shall hold no ownership or equity interests any Person;
(m) Seller shall not engage in any intercompany transactions with
any of the Originators or Parent or any other Affiliate except for the
transactions set forth or expressly contemplated in this Agreement (or
reasonably related thereto), the Purchase and Sale Agreement and the other
Transaction Documents;
(n) at least one of the directors of Seller shall be an independent
director, which independent director shall at no time be a member, partner,
director (other than as the independent director of Seller), officer or
employee of Seller, any Originator or Parent or any Affiliate of any of the
foregoing;
(o) although the organization expenses of Seller have been paid by
APR, operating expenses and liabilities of Seller shall be paid solely and
exclusively by Seller from its own funds (it being understood that UPAC may
from time to time make capital contributions to Seller); and
(p) Seller shall comply with all assumptions regarding the
maintenance of Seller's separate corporate existence set forth in the
opinions of counsel described in Section 5.01(l).
ARTICLE VIII
ADMINISTRATION AND COLLECTION
.1. Designation of Servicer.
(a) UPAC as Initial Servicer. The servicing, administering and
collection of the Pool Receivables shall be conducted by the Person
designated as Servicer hereunder ("Servicer") from time to time in
accordance with this Section 8.01. Until the Agent gives to UPAC a
Successor Notice (as defined in Section 8.01(b)), UPAC is hereby designated
as, and hereby agrees to perform the duties and obligations of, Servicer
pursuant to the terms hereof.
(b) Successor Notice; Servicer Transfer Events. Upon UPAC's receipt
of a notice from the Agent of the Agent's designation of the Backup
Servicer or any other Person acceptable to the Agent as Servicer (a
"Successor Notice"), UPAC agrees that it will terminate its activities as
Servicer hereunder in a manner that the Agent believes will facilitate the
transition of the performance of such activities to the new Servicer, and
such new Servicer shall assume each and all of UPAC's obligations to
service and administer such Receivables, on the terms and subject to the
conditions herein set forth, and UPAC shall use its best efforts to assist
the Agent (or its designee) in assuming such obligations. The Agent agrees
not to give UPAC a Successor Notice until after the occurrence of any
Liquidation Event (any such Liquidation Event being herein called a
"Servicer Transfer Event"), in which case such Successor Notice may be
given at any time in the Agent's discretion. If UPAC disputes the
occurrence of a Servicer Transfer Event, UPAC may take appropriate action
to resolve such dispute; provided that UPAC must terminate its activities
hereunder as Servicer and allow the newly designated Servicer to perform
such activities on the date provided by the Agent as described above,
notwithstanding the commencement or continuation of any proceeding to
resolve the aforementioned dispute. Each successor Servicer and the Backup
Servicer agree to be bound by the provisions of Section 2.1 of the Purchase
and Sale Agreement.
(c) Subcontracts. Servicer may, with the prior consent of the Agent,
subcontract with any other person for servicing, administering or
collecting the Pool Receivables, provided that Servicer shall remain liable
for the performance of the duties and obligations of Servicer pursuant to
the terms hereof; and provided, further that the Agent shall be deemed to
have consented to the Servicer's subcontracting with any Originator to
perform the servicing, administering and collecting of such Originator's
own Receivables until such time as a Successor Notice shall be delivered in
accordance with the immediately preceding Section 8.01(b).
.2. Duties of Servicer.
(a) Appointment; Duties in General. Each of Seller, Purchaser and
Agent hereby appoints as its agent Servicer, as from time to time
designated pursuant to Section 8.01, to enforce its rights and interests in
and under the Pool Receivables, the Related Security and the related
Contracts. Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Pool Receivable from time to
time, all in accordance with applicable laws, rules and regulations, with
such care and diligence as is customary in servicing insurance premium
finance contracts in the industry or, if higher, the servicing standards
it-applies to such contracts, and in accordance with the Credit and
Collection Policies; such duties to include, but not be limited to, the
following: (i) documentation, collection, enforcement and administration of
the Receivables, (ii) servicing in accordance with stated contract
processing, collections, and cash disbursement policies and procedures, and
all other procedures and standards set forth in the Credit and Collection
Policies, (iii) maintaining and documenting Purchaser's and Agent's first
priority perfected security interest in the Receivables Pool, including
those steps necessary to ensure a perfected security interest in the
unearned premiums, (iv) depositing and paying over of all amounts to such
Persons or accounts and as and when required by the terms of any
Transaction Document, (v) preparing and delivering reports and electronic
data to facilitate Settlements, Reinvestments, Purchases, periodic audits,
etc., (vi) delivering periodic data to the Backup Servicer as required
pursuant to the Backup Servicing Agreement and (vii) using its best efforts
to fully cooperate with any new Servicer at any time designated hereunder.
(b) Documents and Records. The Seller shall deliver to the Servicer,
and Servicer shall hold in trust for Seller, the Originators, the Agent and
Purchaser in accordance with their respective interests, all documents,
instruments and records (including, without limitation, computer tapes or
disks) that evidence or relate to Pool Receivables.
(c) Certain Duties to Seller. Servicer shall, as soon as practicable
following receipt, subject to Article III, turn over to Seller (i) that
portion of Collections of Pool Receivables representing its undivided
interest therein, less, in the event UPAC, the Parent, any other Originator
or any Affiliate of any of the foregoing is no longer Servicer, all
reasonable and appropriate out-of-pocket costs and expenses of Servicer of
servicing, collecting and administering the Pool Receivables to the extent
not covered by the Servicer's Fee received by it, and (ii) the Collections
of any Receivable which is not a Pool Receivable. Servicer, if other than
UPAC, the Parent, any other Originator or any Affiliate of any of the
foregoing, shall, as soon as practicable upon demand, deliver to Seller all
documents, instruments and records in its possession that evidence or
relate to Receivables of Seller other than Pool Receivables, and copies of
documents, instruments and records in its possession that evidence or
relate to Pool Receivables.
(d) Termination. Servicer's authorization under this Agreement shall
terminate upon the Final Payout Date.
(e) Power of Attorney. Seller hereby grants to Servicer an
irrevocable power of attorney, with full power of substitution, coupled
with an interest, to take in the name of Seller all steps which are
necessary or advisable to endorse, negotiate or otherwise realize on any
writing or other right of any kind held or transmitted by Seller or
transmitted or received by Purchaser (whether or not from Seller) in
connection with any Receivable.
.3. Rights of the Agent.
(a) Notice to Obligors. At any time the Agent may notify the
Obligors of Pool Receivables, or any of them, of the ownership of Asset
Interests by Purchaser.
(b) Notice to Lock-Box Banks. Seller hereby transfers to the Agent
exclusive dominion and control of all of its bank accounts and related
lock-boxes into which Collections are remitted, deposited or concentrated,
and hereby agrees to take any further action that the Agent may reasonably
request to effect such transfer. The Agent agrees to permit the Seller and
the Originators to continue to operate such accounts in accordance with
their customary business practices until such time following the earliest
to occur of (i) the occurrence of the Liquidation Date, (ii) the
commencement of the Liquidation Period, and (iii) the breach of the
warranty in Section 6.02(h)(y) as the Agent may elect to notify the Lock-
Box Banks to cease taking directions with respect to any such accounts or
lock-boxes from the Seller, the Servicer and/or the applicable Originator,
as the case may be.
(c) Rights on Servicer Transfer Event. At any time following the
designation of a Servicer other than UPAC, the Parent, any other Originator
or any Affiliate of any of the foregoing pursuant to Section 8.01:
(i) The Agent may direct the Obligors of Pool Receivables, or
any of them, to pay all amounts payable under any Pool Receivable
directly to the Agent.
(ii) Seller and UPAC shall, at the Agent's request and at
Seller's expense, give notice of such ownership to each said Obligor
and direct that payments be made directly to the Agent.
(iii) Seller and UPAC shall, and shall cause each of the
other Originators to, at the Agent's request, (A) assemble all of the
documents, instruments and other records (including, without
limitation, computer programs, tapes and disks) which evidence the
Pool Receivables, and the related Contracts and Related Security, or
which are otherwise necessary or desirable to collect such Pool
Receivables, and make the same available to the Agent at a place
selected by the Agent, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections
of Pool Receivables in a manner acceptable to the Agent and promptly
upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Agent.
(iv) Each of Seller and Purchaser hereby authorizes the Agent,
and grants to the Agent an irrevocable power of attorney, to take any
and all steps in Seller's name and on behalf of Seller and Purchaser
which are necessary or desirable, in the determination of the Agent,
to collect all amounts due under any and all Pool Receivables,
including, without limitation, endorsing Seller's and/or the
applicable Originator's name on checks and other instruments
representing Collections and enforcing such Pool Receivables and the
related Contracts; provided that the Agent shall not exercise their
rights under such Power of Attorney unless a Servicer Transfer Event
shall have occurred and be continuing.
.4. Responsibilities of Seller. Anything herein to the contrary
notwithstanding:
(a) Contracts. Seller and UPAC shall perform all of their respective
obligations under the Contracts related to the Pool Receivables and under
other agreements to the same extent as if the Asset Interest had not been
sold hereunder or under the Purchase and Sale Agreement and the exercise by
the Agent or its designees of their rights hereunder shall not relieve
Seller or UPAC from such obligations.
(b) Limitation of Liability. Neither the Agent nor the Purchaser
shall have any obligation or liability with respect to any Pool
Receivables, Contracts related thereto or any other related purchase orders
or other agreements, nor shall either of them be obligated to perform any
of the obligations of Seller, the applicable Originator or UPAC thereunder.
.5. Further Action Evidencing Purchases and Reinvestments.
(a) Further Assurances. Seller and UPAC agree that from time to
time, at the reasonable expense of the Seller, they will promptly execute
and deliver all further instruments and documents, and take all further
action that the Agent or its designees may reasonably request in order to
perfect, protect or more fully evidence the Purchases hereunder and the
resulting Asset Interest, or to enable Purchaser, the Agent or its
designees to exercise or enforce any of their respective rights hereunder
or under any Transaction Document. Without limiting the generality of the
foregoing, Seller and UPAC will, upon the request of the Agent or its
designee:
(i) execute and file such financing or continuation statements,
or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate;
(ii) mark conspicuously each Contract evidencing each Pool
Receivable with a legend, acceptable to the Agent, evidencing that the
Asset Interest has been sold in accordance with this Agreement; and
(iii) mark the master data processing records evidencing such
Pool Receivables and related Contracts with such legend.
(b) Additional Financing Statements; Performance by Agent. Seller
and UPAC hereby authorize the Agent or its designees to file one or more
financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Pool Receivables and the
Related Security now existing or hereafter arising in the name of Seller or
UPAC. If Seller or UPAC fails to perform any of its agreements or
obligations under this Agreement, the Agent or its designees may (but shall
not be required to) itself perform, or cause performance of, such agreement
or obligation, and the expenses of the Agent and its designees, as the case
may be, incurred in connection therewith shall be payable by Seller as
provided in Section 14.05.
(c) Continuation Statements; Opinion. Without limiting the
generality of subsection (a), Seller will not earlier than six (6) months
and not later than three (3) months prior to the fifth anniversary of the
date of filing of the financing statements referred to in Section 5.01(e)
or any other financing statement filed pursuant to this Agreement or the
Purchase and Sale Agreement or in connection with any Purchase hereunder,
unless the Termination Date shall have occurred and Purchaser's Total
Interest shall have been reduced to zero, execute and deliver and file or
cause to be filed an appropriate continuation statements with respect to
such financing statements.
.6. Application of Collections. Any payment by an Obligor in respect
of any indebtedness owed by it to Seller or an Originator shall, except as
otherwise specified by such Obligor, required by the underlying Contract or law
or unless the Agent instructs otherwise, be applied, first, as a Collection of
any Pool Receivable or Receivables then outstanding of such Obligor in the order
of the age of such Pool Receivables, starting with the oldest of such Pool
Receivable and, second, to any other indebtedness of such Obligor.
ARTICLE IX
SECURITY INTEREST
.1. Grant of Security Interest. To secure all obligations of Seller,
and Servicer (if UPAC, any Originator, the Parent or any Affiliate of any of the
foregoing) in its capacity as Servicer, arising in connection with this
Agreement and each other Transaction Document, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, all Indemnified Amounts, payments on account of
Collections received or deemed to be received and fees, in each case pro rata
according to the respective amounts thereof, Seller hereby assigns and grants to
the Agent, for the benefit of the Secured Parties, a security interest in all of
Seller's (i) right, title and interest (including specifically any undivided
interest retained by Seller hereunder) now or hereafter existing in, to and
under all the Receivables, the Related Security, the related Contracts and all
Collections with regard thereto and proceeds thereof and (ii) rights, remedies,
powers and privileges under and in respect of the Purchase and Sale Agreement,
the Lock-Box Agreements and related lock-box accounts.
.2. Further Assurances. The provisions of Section 8.05 shall apply
to the security interest granted under Section 9.01 as well as to the Purchases,
Reinvestments and all the Asset Interests hereunder.
.3. Remedies. Upon the occurrence of a Liquidation Event, Purchaser
and the Agent shall have, with respect to the collateral granted pursuant to
Section 9.01, and in addition to all other rights and remedies available to
Purchaser or the Agent under this Agreement or other applicable law, all the
rights and remedies of a secured party upon default under the UCC.
ARTICLE X
LIQUIDATION EVENTS
.1. Liquidation Events. The following events shall be "Liquidation
Events" hereunder:
(a) (i) Servicer (if UPAC, any Originator, the Parent or any
Affiliate of any of the foregoing) shall fail to perform or observe any
term, covenant or agreement that is an obligation of Servicer hereunder
(other than as referred to in clause (ii) next following) and such failure
shall remain unremedied for ten days after written notice thereof shall
have been given by the Agent to Servicer, or ten days after Servicer
obtained actual knowledge thereof or (ii) Servicer (if UPAC, any
Originator, the Parent or any Affiliate of any of the foregoing) shall fail
to make any payment or deposit to be made by it hereunder when due and such
failure shall continue unremedied for two days; or
(b) Any representation or warranty made or deemed to be made by
Seller, UPAC or any other Originator (or any of their officers) under or in
connection with this Agreement or any other Transaction Document or any
Settlement Statement or other information or report delivered pursuant
hereto shall prove to have been false or incorrect in any material respect
when made and within ten days after the earlier of Seller, UPAC or any
other Originator obtaining actual knowledge of such false or incorrect
representation or warranty or written notice thereof shall have been given
by the Agent to Seller, UPAC or any other Originator, as applicable, such
falseness or incorrectness is not cured or Seller has failed to repurchase
the Receivables affected by such false or incorrect representation or
warranty, which repurchase option may be exercised not more than three
times in any calendar year; or
(c) Seller, UPAC or any other Originator shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement
or any of the other Transaction Documents on their part to be performed or
observed and any such failure shall remain unremedied for ten days after
(i) written notice thereof shall have been given by the Agent to Seller,
UPAC or any such other Originator, as applicable, or (ii) either Seller or
UPAC obtained actual knowledge thereof; or
(d) (i) A default or a similar event, as the case may be, shall have
occurred and be continuing under any instrument or agreement evidencing,
securing or providing for (A) the issuance of indebtedness for borrowed
money aggregating for all such agreements in excess of $150,000 of, or
guaranteed by, any Originator or (B) pursuant to which any Originator shall
have sold interests in receivables to, or shall otherwise have financed
receivables with, any Person, where the purchaser's investment is in the
aggregate for all such transactions in excess of $150,000 in the case of
such Originator, which default or similar event, if unremedied, uncured, or
unwaived (with or without the passage of time or the giving of notice)
would permit acceleration of the maturity of such indebtedness or would
require the permanent reduction of such purchaser's investment and such
default or similar event shall have continued unremedied, uncured or
unwaived for a period long enough to permit such acceleration or reduction
and any notice of default or similar event required to permit acceleration
or reduction shall have been given; or
(e) Adverse Determinations shall have occurred in three or more
states or in states in which Direct or Insurance Obligors reside
representing the aggregate of 5% or more of the Receivables in the
Receivables Pool; or
(f) An Event of Bankruptcy shall have occurred and remain continuing
with respect to Seller, UPAC, any Originator or Parent or any Affiliate of
any thereof; or
(g) (i) Any material litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental proceedings
not disclosed in writing by Seller or any Originator to the Agent and
Purchaser prior to the date of execution and delivery of this Agreement is
pending against Seller or any Originator or any Affiliate of any thereof,
or (ii) any material development not so disclosed has occurred in any
litigation (including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings so disclosed, which, in the case of
clause (i) or (ii), in the opinion of the Agent, has a reasonable
likelihood of having a Material Adverse Effect; or
(h) The average Excess Yield Ratio at any Cut-Off Date calculated for
the three most recent Settlement Periods (calculated with pro forma
calculations of the Excess Yield Ratio for the number of calendar months
preceding the date hereof necessary to make the calculations required by
this paragraph (h)) is less than 4.00%; or
(i) The average Default Ratio at any Cut-Off Date calculated for the
three most recent Settlement Periods (calculated with pro forma
calculations of the Default Ratio for the number of calendar months
preceding the date hereof necessary to make the calculations required by
this paragraph (i)) exceeds 1.00%; or
(j) The average Cancellation Ratio at any Cut-Off Date calculated for
the three most recent Settlement Periods (calculated with pro forma
calculations of the Cancellation Ratio for the number of calendar months
preceding the date hereof necessary to make the calculations required by
this paragraph (j)) exceeds 5.00%; or
(k) Reserved; or
(l) There shall exist any event or occurrence that has a reasonable
possibility of causing a Material Adverse Effect; or
(m) The Purchaser's Share on account of Principal Receivables shall
at any time exceed 100% and such excess shall not have been eliminated
within 2 Business Days after the date of any Weekly Report, Settlement
Statement or other report disclosing such excess; or
(n) Any of Seller, Parent or any Originator is subject to a Change-
in-Control, unless the Agent shall have given prior written approval to any
such Change-in-Control; or
(o) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Internal Revenue Code with regard to any of the
assets of Seller, any Originator or any ERISA Affiliate of any of the
foregoing and such lien shall not have been released within five days, or
the Pension Benefit Guaranty Corporation shall, or shall indicate its
intention to, file notice of a lien pursuant to Section 4068 of the
Employee Retirement Income Security Act of 1974 with regard to any of the
assets of Seller, any such Originator, Parent or any such ERISA Affiliate;
or
(p) Failure to obtain a Liquidity Agreement in substitution for the
then existing Liquidity Agreement on or before 30-days prior to the
expiration of the commitments of the Liquidity Banks thereunder or the
Liquidity Agreement is otherwise terminated (unless immediately prior to
such termination, the Liquidity Agreement shall have been funded or
collateralized in such a manner that such failure to substitute or such
termination will not result in a reduction or withdrawal of the credit
rating applied to the Commercial Paper Notes by any of the rating agencies
then rating the Commercial Paper Notes); it being understood and agreed
that the Agent shall use reasonable efforts to obtain such a substitute
Liquidity Agreement, but neither the Agent nor DG Bank shall have any
liability for failing to do so nor shall they have any obligation to
provide such a facility themselves; or
(q) (i) A Downgrading Event with respect to a Liquidity Bank shall
have occurred and been continuing for not less than 45 days, (ii) the
Downgraded Liquidity Bank shall not have been replaced by a Qualifying
Liquidity Bank under the Liquidity Agreement, and (iii) the commitment of
such Downgraded Liquidity Bank under the Liquidity Agreement shall not have
been funded or collateralized in such a manner that such Downgrading Event
will not result in a reduction or withdrawal of the credit rating applied
to the Commercial Paper Notes by any of the rating agencies then rating the
Commercial Paper Notes; provided, that no Termination Event shall be deemed
to have occurred pursuant to this Section 10.01(q) if (x) the parties
hereto agree to permanently reduce the Purchase Limit by the commitment
amount of such Downgraded Liquidity Bank at the end of the 45 day period
referred to in clause (i) and (y) the Purchaser's Total Investment does not
exceed such revised Purchase Limit after such time; it being understood and
agreed that the Agent shall use reasonable efforts to replace any
Downgraded Liquidity Bank, but neither the Agent nor DG Bank shall have any
liability for failing to do so nor shall they have any obligation to assume
the commitment of such Downgraded Liquidity Bank themselves; or
(r) Any Liquidity Bank terminates, refuses to perform or defaults in
the performance of its Funding commitment under the Liquidity Agreements,
provided, that no Termination Event shall be deemed to have occurred
pursuant to this Section 10.01(r) if (x) the parties hereto agree to
permanently reduce the Purchase Limit by the unfunded commitment amount of
such terminating or defaulting Liquidity Bank and after giving effect
thereto to the Purchaser's Total Investment would not exceed such revised
Purchase Limit or (y) such terminating or defaulting Liquidity Bank is
replaced under the Liquidity Agreement by a Qualifying Liquidity Bank or
such default is cured, in either case, within one Business Day after the
Agent's receipt of actual knowledge of the termination or default by such
Liquidity Bank under the Liquidity Agreement ; it being understood and
agreed that the Agent shall use reasonable efforts to obtain a replacement
Liquidity Bank to substitute for such recalcitrant or defaulting Liquidity
Bank, but neither the Agent nor DG Bank shall have any liability for
failing to do so nor shall they have any obligation to assume the
commitment of such Liquidity Bank themselves; or
(s) A Purchase and Sale Termination Event shall have occurred; or
(t) Purchaser shall become an "investment company" within the meaning
of the Investment Company Act of 1940, as amended; or
(u) The Seller ceases to purchase Receivables under the Purchase and
Sale Agreement; or
(v) The average Monthly Payment Rate at any Cut-Off Date calculated
for the three most recent Settlement Periods (calculated with pro forma
calculations) of the Monthly Payment Rate for the number of calendar months
preceding the date hereof necessary to make the calculations required by
this paragraph (v)) is less than fifteen percent (15.0%); or
(w) At the end of any fiscal quarter of the Servicer, the
Consolidated Tangible Net Worth of the Servicer (if UPAC, any Originator,
the Parent or any Affiliate of any of the foregoing) becomes less than the
sum of (i) $10,000,000, (ii) the aggregate amount of equity investments
made in the Servicer by the Servicer's shareholders on and after May 26,
2000, and (iii) twenty-five percent (25.0%) of the Servicer's future net
income, such sum to be calculated in accordance with GAAP, exclusive of the
effect, however, of FASB Statement No. 125.
(x) At any time the the sum of (i) the amount of equity of the Seller
plus (ii) the outstanding principal balance of the Subordinated Notes, but
in no event to exceed the maximum amount thereof permitted under the
Purchase and Sale Agreement, becomes less than (i) the sum of the Unpaid
Principal Balance of Eligible Receivables having the four Insurance
Obligors with the largest concentrations of Insurance Obligors in the
Receivables Pool, (ii) the sum of the Unpaid Principal Balance of Eligible
Receivables having the four insurance agents with the largest
concentrations of all insurance agents in the Receivables Pool., or (iii)
$10,000,000.
(y) On August 15, 2000, this Agreement shall not have been amended
and restated as a loan and security agreement with the same substantive
terms as contained herein.
.2. Remedies.
(a) Optional Liquidation. Upon the occurrence of a Liquidation Event
(other than a Liquidation Event described in subsections (f),(p),(q) or r
of Section 10.01), the Agent shall, at the request, or may with the
consent, of Purchaser, by notice to Seller declare the Purchase Termination
Date to have occurred and the Liquidation Period to have commenced.
(b) Automatic Liquidation. Upon the occurrence of a Liquidation
Event described in subsections (f),(p),(q), or (r) of Section 10.01, the
Purchase Termination Date shall occur and the Liquidation Period shall
commence automatically.
(c) Additional Remedies. Upon any Purchase Termination Date pursuant
to this Section 10.02, no Purchases or Reinvestments thereafter will be
made, and the Agent and Purchaser shall have, in addition to all other
rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC and other laws of each applicable
jurisdiction and other applicable laws, which rights shall be cumulative.
ARTICLE XI
THE AGENT
.1. Authorization and Action. Purchaser has appointed and authorized
the Agent (or its respective designees) to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto.
.2. Agent's Reliance, Etc. The Agent and its directors, officers,
agents or employees shall not be liable for any action taken or omitted to be
taken by it or them under or in connection with the Transaction Documents
(including, without limitation, the servicing, administering or collecting Pool
Receivables as Servicer pursuant to Section 8.01), except for its or their own
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, the Agent: (a) may consult with legal counsel (including counsel for
Seller), independent certified public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (b) makes no warranty or representation to Purchaser or any other
holder of any interest in Pool Receivables and shall not be responsible to
Purchaser or any such other holder for any statements, warranties or
representations made in or in connection with any Transaction Document; (c)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any Transaction
Document on the part of Seller or any of the Originators or to inspect the
property (including the books and records) of Seller or any of the Originators,
(d) shall not be responsible to Purchaser or any other holder of any interest in
Pool Receivables for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Transaction Document; and (e) shall
incur no liability under or in respect of this Agreement by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by facsimile or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
.3. DG Bank and Affiliates. DG Bank and any of its respective
Affiliates may generally engage in any kind of business with Seller, any of the
Originators or Parent or any Obligor, any of their respective Affiliates and any
Person who may do business with or own securities of Seller, any of the
Originators or Parent or any Obligor or any of their respective Affiliates, all
as if DG Bank was not the Agent hereunder and without any duty to account there
for to Purchaser or any other holder of an interest in Pool Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
.1. Restrictions on Assignments.
(a) Neither Seller nor UPAC, may assign its rights, or delegate its
duties hereunder or any interest herein without the prior written consent
of the Agent. Purchaser may not assign its rights hereunder (although it
may delegate its duties hereunder as expressly indicated herein) or the
Asset Interest (or any portion thereof or interest therein) to any Person
without the prior written consent of Seller which consent shall not be
unreasonably withheld; provided, however, that, without the prior consent
of any Person:
(i) Purchaser may assign all or any part of its rights and
interests in the Transaction Documents, together with all or any
portion of its interest in the Asset Interest, to any "bankruptcy
remote" special purpose entity the business of which is administered
by DG Bank or any Affiliate; and
(ii) Purchaser may assign all or any part of its rights and
interests in the Transaction Documents, together with all or any
portion thereof of its rights and interest in the Asset Interest, to
the Liquidity Agent for the benefit of the Liquidity Banks pursuant to
the terms of the Liquidity Agreement.
(b) Seller agrees to advise the Agent within five Business Days after
notice to Seller of any proposed assignment by Purchaser of the Asset
Interest (or any portion thereof), not otherwise permitted under subsection
(a), of Seller's consent or non-consent to such assignment and if it does
not consent, the reasons therefor. If Seller does not consent to such
assignment, Purchaser may. immediately assign such Asset Interest (or
portion thereof) to DG Bank or any Affiliate of DG Bank. All of the
aforementioned assignments shall be upon such terms and conditions as
Purchaser and the assignee may mutually agree.
.2. Rights of Assignee. Upon the assignment by Purchaser in
accordance with this Article XII, the assignee receiving such assignment shall
have all of the rights of Purchaser with respect to the Transaction Documents
and the Asset Interest (or such portion thereof as has been assigned)
.3. Evidence of Assignment. Any assignment of the Asset Interest (or
any portion thereof) to any Person may be evidenced by such instrument(s) or
document(s) as may be satisfactory to Purchaser, the Agent and the assignee.
ARTICLE XIII
INDEMNIFICATION
.1. Indemnities by Seller.
(a) General Indemnity. Without limiting any other rights which any
such Person may have hereunder or under applicable law, Seller hereby
agrees to indemnify each of the Purchaser, the Liquidity Banks, the
Custodian, the Enhancement Providers, the Backup Servicer and the Agent,
each of the foregoing's respective Affiliates, and all successors,
transferees, participants and assigns and all officers, directors,
shareholders, controlling persons, employees and agents of any of the
foregoing (each an "Indemnified Party"), forthwith on demand, from and
against any and all damages, losses, claims, liabilities and related costs
and expenses, including reasonable attorneys' fees and disbursements (all
of the foregoing being collectively referred to as "Indemnified Amounts")
awarded against or incurred by any of them arising out of or relating to
the Transaction Documents or the ownership or funding of the Asset Interest
or in respect of any Receivable or any Contract, excluding, however,
(a) Indemnified Amounts to the extent determined by a court of competent
jurisdiction to have resulted from gross negligence or willful misconduct
on the part of such Indemnified Party, or (b) recourse (except as otherwise
specifically provided in this Agreement) for Defaulted Receivables.
Without limiting the foregoing, Seller hereby indemnifies each Indemnified
Party for Indemnified Amounts arising out of or relating to:
(i) the transfer by Seller of any interest in any Receivable
other than the transfer of an Asset Interest to Purchaser pursuant to
this Agreement and the grant of a security interest to Purchaser
pursuant to Section 9.01;
(ii) any representation or warranty made by Seller or UPAC
(individually or as Servicer) (or any of their officers or Affiliates)
under or in connection with any Transaction Document, any Settlement
Statement or any other information or report delivered by or on behalf
of Seller or UPAC (individually or as Servicer) pursuant hereto, which
shall have been false, incorrect or misleading in any material respect
when made or deemed made;
(iii) the failure by Seller or any applicable Originator to
comply with any applicable law, rule or regulation with respect to any
Pool Receivable or the related Contract, or the nonconformity of any
Pool Receivable or the related Contract with any such applicable law,
rule or regulation;
(iv) the failure to vest and maintain vested in Purchaser an
undivided percentage ownership interest, to the extent of the Asset
Interest, in the Receivables in, or purporting to be in, the
Receivables Pool, free and clear of any Lien, other than a Lien
arising solely as a result of an act of Purchaser or the Agent,
whether existing at the time of any Purchase or Reinvestment of such
Asset Interest or at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC or
similar laws of any applicable jurisdiction or other applicable laws
with respect to any Receivables in, or purporting to be in, the
Receivables Pool, whether at the time of any Purchase or Reinvestment
or at any time thereafter;
(vi) any dispute, claim, offset or defense (other than discharge
in bankruptcy) of any Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool (including, without
limitation, a defense based on such Receivable's or the related
Contract's not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any
other claim resulting from the making of loans or the sale or
provision of services related to such Receivable or the furnishing or
failure to furnish such loans or services;
(vii) any failure of Seller, Servicer (if UPAC or an
Affiliate of UPAC) or any Originator to perform their respective
duties or obligations in accordance with the provisions of this
Agreement, including, without limitation, Article VIII and Sections
4.02 and 3.07(b), or any of the other Transaction Documents;
(viii) any products liability claim arising out of or in
connection with loans, products or services that are the subject of
any Pool Receivable;
(ix) any tax or governmental fee or charge (but not including
taxes upon or measured by net income), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the purchase
or ownership of any Asset Interest, or any other interest in the Pool
Receivables or in any goods which secure any such Pool Receivables;
(x) the failure by Seller or UPAC to vest and maintain vested in
Purchaser a valid and first priority security interest in any and all
unearned premium related to each Pool Receivable;
(xi) (A) any proceeding, investigation or inquiry which does or
could result in an Adverse Determination, (B) any Adverse
Determination or (C) Seller's, any Originator's or the Purchaser's
failure to be qualified, licensed or to have obtained necessary
approvals as a premium finance company in any jurisdiction in which
such qualification, license or approvals are required;
(xii) the failure to cancel any insurance policy on which a
payment is more than 31 days (or, if earlier, the date specified in
the related Contract) past due; or
(xiii) the occurrence of a Liquidation Event or Unmatured
Liquidation Event under Section 10.01(e); or
(xiv) any insurance fraud relating to any Receivable.
(b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party
shall have notice of any attempt to impose or collect any tax or
governmental fee or charge for which indemnification will be sought from
Seller under Section 13.01(a)(ix), such Indemnified Party shall give prompt
and timely notice of such attempt to it and Seller shall have the right, at
their expense, to participate in any proceedings resisting or objecting to
the imposition or collection of any such tax, governmental fee or charge.
Indemnification hereunder shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to
the Indemnified Party of the payment of any of the aforesaid taxes and the
receipt of the indemnity provided hereunder or of any refund of any such
tax previously indemnified hereunder, including the effect of such tax or
refund on the amount of tax measured by net income or profits which is or
was payable by the Indemnified Party.
(c) Contribution. If for any reason the indemnification provided
above in this Section 13.01 is unavailable to an Indemnified Party or is
insufficient to hold an Indemnified Party harmless, then Seller shall
contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and Seller on the other hand but also the
relative fault of such Indemnified Party as well as any other relevant
equitable considerations.
ARTICLE XIV
MISCELLANEOUS
.1. Amendments, Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Seller or UPAC therefrom shall in any
event (unless otherwise provided herein) be effective unless the same shall be
in writing and signed by (a) Seller, UPAC, the Agent and Purchaser (with respect
to an amendment) or (b) the Agent and Purchaser (with respect to a waiver or
consent by them) or Seller or UPAC (with respect to a waiver or consent by
them), as the case may be, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. The
parties acknowledge that, before entering into such an amendment or granting
such a waiver or consent, Purchaser may also be required to obtain the approval
of some or all of the Liquidity Banks. In addition, the parties acknowledge
that prior to entering into any material amendment to this Agreement or any
amendment or modification to the definition hereunder of "Excess Concentration
Deduction" at any time that the Commercial Paper Notes are being rated, the
Purchaser shall be required to obtain written confirmation from each of the
rating agencies then rating the Commercial Paper Notes that such amendment,
waiver or consent will not result in a withdrawal or reduction of the ratings of
the Commercial Paper Notes. The parties hereto agree to cooperate in good faith
to amend and restate this Agreement as a loan and security agreement with the
same substantive terms on or prior to August 15, 2000. The Purchaser shall send
or cause to be sent to each such rating agency, copies of all amendments,
waivers or other modifications to this agreement prior to the execution thereof
by all of the parties thereto.
.2. Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth under
its name on the signature pages hereof or at such other address or facsimile
number as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, (a) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (b) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
.3. No Waiver; Remedies. No failure on the part of the Agent, any
Affected Party, any Indemnified Party, Purchaser, the Collateral Agent or any
other holder of the Asset Interest (or any portion thereof) to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law. Without limiting the foregoing, each of the Affected Parties and the
Indemnified Parties is hereby authorized by Seller or UPAC at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by any such Affected
Party or Indemnified Party to or for the credit or the account of Seller or
UPAC, now or hereafter existing under this Agreement, to any such Affected Party
or Indemnified Party, or their respective successors and assigns.
.4. Binding Effect; Survival. This Agreement shall be binding upon
and inure to the benefit of Seller, UPAC, the Agent, the Purchaser and their
respective successors and assigns, and the provisions of Sections 4.02 and 14.03
and Article XIII shall inure to the benefit of the Affected Parties and the
Indemnified Parties, respectively, and their respective successors and assigns;
provided, however, nothing in the foregoing shall be deemed to authorize any
assignment not permitted by Section 12.01. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until the Final Payout
Date. The rights and remedies with respect to any breach of any representation
and warranty made by Seller or UPAC pursuant to Article VI and the
indemnification and payment provisions of Article XIII and Sections 4.02, 14.05,
14.06, 14.07, 14.08 and 14.15 shall be continuing and shall survive any
termination of this Agreement.
.5. Costs, Expenses and Taxes. In addition to its obligations under
Article XIII, the Seller hereby agrees to jointly and severally pay on demand:
(a) all costs and expenses incurred by the Agent, the Custodian, the
Liquidity Banks, the Liquidity Agent and the Purchaser and their respective
Affiliates in connection with the negotiation, preparation (including,
without limitation, electronic data preparation), execution and delivery,
the administration (including periodic auditing) or the enforcement of, or
any actual or claimed breach of, this Agreement and the other Transaction
Documents, including, without limitation (i) the reasonable fees and
expenses of counsel to any of such Persons incurred in connection with any
of the foregoing or in advising such Persons as to their respective rights
and remedies under any of the Transaction Documents, and (ii) all
reasonable out-of-pocket expenses (including reasonable fees and expenses
of independent accountants), incurred in connection with any review of
Seller's, the Originators' and/or UPAC's books and records either prior to
the execution and delivery hereof or pursuant to Sections 7.01(c) and
7.04(c); and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of
this Agreement or the other Transaction Documents, and agrees to indemnify
each Indemnified Party against any liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.
.6. No Proceedings. Seller, UPAC, Servicer, each hereby agrees that
it will not, and will not permit any other Originator to, institute against
Purchaser, or join any other Person in instituting against Purchaser, any
insolvency proceeding (namely, any proceeding of the type referred to in the
definition of Event of Bankruptcy) so long as any Commercial Paper Notes issued
by Purchaser shall be outstanding or there shall not have elapsed one year plus
one day since the last day on which any such Commercial Paper Notes shall have
been outstanding. The foregoing shall not limit Seller's, UPAC's, Servicer's or
any other Originator's right to file any claim in or otherwise take any action
with respect to any insolvency proceeding that was instituted by any Person
other than Seller, UPAC, Servicer or any such other Originator.
.7. Confidentiality of Seller Information.
(a) Confidential Seller Information. Each party hereto (other than
Seller and its Affiliates) acknowledges that certain of the information
provided to such party by or on behalf of Seller, UPAC or any Originator in
connection with this Agreement and the transactions contemplated hereby is
or may be confidential, and each such party severally agrees that, unless
Seller shall otherwise agrees in writing, and except as provided in
subsection (b), such party will not disclose to any other person or entity:
(i) any information regarding, or copies of, any non-public financial
statements, reports and other information furnished by Seller, UPAC or any
Originator to Purchaser or the Agent and designated by them as being
confidential, or (ii) any other information regarding Seller, UPAC or any
Originator ("Seller Parties") which is designated by Seller to such party
in writing as confidential (collectively, "Seller Information"); provided,
however, "Seller Information" shall not include (A) any information which
is or becomes generally available on a nonconfidential basis from a source
other than any Seller Party, or which was known to such party on a
nonconfidential basis prior to its disclosure by any Seller Party, or (B)
information regarding the nature, scope and structure of this Agreement,
the other Transaction Documents and the basic terms hereof.
(b) Disclosure. Notwithstanding subsection (a), each party may
disclose any Seller Information:
(i) to any of such party's independent attorneys, consultants
and auditors, and to each Liquidity Bank, Enhancement Provider,
Liquidity Agent, any dealer or placement agent for Purchaser's
commercial paper, and any actual or potential assignees of, or
participants in, any of the rights or obligations of Purchaser, any
Liquidity Bank, the Enhancement Provider, or the Agent under or in
connection with this Agreement, who (A) in the good faith belief of
such party, have a need to know such Seller Information, (B) are
informed by such party of the confidential nature of the Seller
Information and the terms of this Section 14.07, and are subject to
confidentiality restrictions generally consistent with this Section
14.07,
(ii) to any rating agency that maintains a rating for Purchaser's
commercial paper or is considering the issuance of such a rating, for
the purposes of reviewing the credit of Purchaser in connection with
such rating,
(iii) to any other party to this Agreement or any agreement
relating to the Purchaser's receivables purchase program, for the
purposes contemplated hereby or relating hereto,
(iv) as may be required by any municipal, state, federal or other
regulatory body having or claiming to have jurisdiction over such
party, in order to comply with any law, order, regulation, regulatory
request or ruling applicable to such party,
(v) subject to subsection (c), in the event such party is
legally compelled (by interrogatories, requests for information or
copies, subpoena, civil investigative demand or similar process) to
disclose such Seller Information, or,
(vi) if it or any of its representatives is requested or becomes
legally compelled (by interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to
disclose any of the Seller Information.
(c) Survival. This Section 14.07 shall survive termination of this
Agreement.
.8. Confidentiality of Program Information.
(a) Confidential Information. Each party hereto acknowledges that DG
Bank and the Purchaser regard the structure of the transactions
contemplated by this Agreement to be proprietary, and each such party
severally agrees that:
(i) it will not disclose without the prior consent of DG Bank
(other than to the directors, employees, auditors, counsel or
affiliates (collectively, "representatives")) of such party, each of
whom shall be informed by such party of the confidential nature of the
Information (as defined below) and of the terms of this Section 14.08,
(A) any information regarding the pricing in, or copies of, this
Agreement or any transaction contemplated hereby, (B) any information
regarding the organization, business or operations of Purchaser or the
Liquidity Agreement or Enhancement Agreements generally or the
services performed by the Agent for Purchaser, or (C) any information
which is furnished by DG Bank, the Agent, the Purchaser, the Liquidity
Agent, the Liquidity Banks or the Enhancement Provider to such party
and which is designated by such disclosing party to such other party
in writing or otherwise as confidential or not otherwise available to
the general public (the information referred to in clauses (A), (B)
and (C) is collectively referred to as the "Program Information");
provided, however, that such party may disclose any such Program
Information (I) to any other party to this Agreement for the purposes
contemplated hereby, (II) as may be required by any municipal, state,
federal or other regulatory body having or claiming to have
jurisdiction over such party, (III) in order to comply with any law,
order, regulation, regulatory request or ruling applicable to such
party, or (IV) in the event such party is legally compelled (by
interrogatories, requests for information or copies, subpoena, civil
investigative demand or similar process) to disclose any such Program
Information (provided that such party provides DG Bank the opportunity
to contest such actions on behalf of such party);
(ii) it will use the Program Information solely for the purposes
of evaluating, administering and enforcing the transactions
contemplated by this Agreement and making any necessary business
judgments with respect thereto; and
(iii) it will, upon demand, return (and cause each of its
representatives to return) to DG Bank, all documents or other written
material received from any of the disclosing parties described
therein, in connection with (a)(i)(B) or (C) above, and all copies
thereof made by such party which contain the confidential Program
Information.
(b) Availability of Confidential Information. This Section 14.08
shall be inoperative as to such portions of the Program Information which
are or become generally available to the public or such party on a
nonconfidential basis from a source other than any of the persons described
in clause (a)(i)(C) above or were known to such party on a nonconfidential
basis prior to its disclosure by any of the persons described in clause
(a)(i)(C) above.
(c) Survival. This Section 14.08 shall survive termination of this
Agreement.
.9. Captions and Cross References. The various captions (including,
without limitation, the table of contents) in this Agreement are provided solely
for convenience of reference and shall not affect the meaning or interpretation
of any provision of this Agreement. Unless otherwise indicated, references in
this Agreement to any Section, Appendix, Schedule or Exhibit are to such Section
of or Appendix, Schedule or Exhibit to this Agreement, as the case may be, and
references in any Section, subsection, or clause to any subsection, clause or
subclause are to such subsection, clause or subclause of such Section,
subsection or clause.
.10. Integration. This Agreement, together with the Fee Letter and
that certain side letter agreement dated as of May 26, 2000 among the Agent, the
Seller, the Servicer and the Originators, contains a final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire understanding among the
parties hereto with respect to the subject matter hereof, superseding all prior
oral or written understandings.
.11. Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES
OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE INTERESTS OF PURCHASER IN THE RECEIVABLES IS GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
.12. Waiver Of Jury Trial. SELLER AND UPAC HEREBY EXPRESSLY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY
AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT A JURY.
.13. Consent To Jurisdiction; Waiver Of Immunities. EACH OF SELLER
AND UPAC HEREBY ACKNOWLEDGES AND AGREES THAT:
(A) IT IRREVOCABLY (I) SUBMITS TO THE JURISDICTION, FIRST, OF ANY
UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT
AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK,
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, (II) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR
FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (III) WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(B) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.
.14. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
.15. No Recourse Against Other Parties. No recourse under any
obligation, covenant or agreement of Purchaser contained in this Agreement shall
be had against any stockholder, employee, officer, director, or incorporator of
Purchaser, provided, however, that nothing in this Section 14.15 shall relieve
any of the foregoing Persons from any liability which such Person may otherwise
have for his/her or its gross negligence or willful misconduct.
.16. Covenant to Cooperate. Seller, Servicer, UPAC, the Agent and
Purchaser covenant to provide each other with all data and information required
to be provided by them hereunder at the times required hereunder, and
additionally covenant to reasonably cooperate with each other in providing any
additional information required by any of them in connection with their
respective duties hereunder.
.17. Advice From Independent Counsel. The parties hereto understand
that this Agreement is a legally binding agreement that may affect such party's
rights. Each party hereto represents to the other that it has received legal
advice from counsel of its choice regarding the meaning and legal significance
of this Agreement and that it is satisfied with its legal counsel and the advice
received from it.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
APR FUNDING CORPORATION,
as Seller
By:
Title:
8245 Nieman Road, Suite 123
Lenexa, Kansas 66214
Telephone No.: (913) 859-0055
Facsimile No.: (913) 859-0011
Attention: Kurt Huffman
UNIVERSAL PREMIUM ACCEPTANCE CORPORATION,
individually and as initial Servicer
By:
Title:
8245 Nieman Road, Suite 100
Lenexa, Kansas 66214
Telephone No.: (913) 894-6150
Facsimile No.: (913) 894-4988
Attention: Kurt Huffman
AUTOBAHN FUNDING COMPANY, LLC, as
Purchaser
By: DG Bank Deutsche
Genossenschaftsbank
AG, as its attorney-in-fact
By:
Title:
c/o Lord Securities Corporation
Two Wall Street, 19th Floor
New York, New York 10005
Telephone No. (212) 346-9008
Facsimile No.: (212) 346-9012
Attention: Frank Bilotta
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK AG,
as Agent
By:
Title:
609 Fifth Avenue, Suite 911
New York, New York 10017
Telephone No.: (212) 745-1665
Facsimile No.: (212) 745-1651
Attention: Patrick Preece
APPENDIX A
DEFINITIONS
This is Appendix A to the Receivables Purchase Agreement dated as of
December 31, 1996, as amended by Amendment Nos. 1-12 thereto, among APR Funding
Corporation, Universal Premium Acceptance Corporation, Autobahn Funding Company,
LLC and DG Bank Deutsche Genossenschaftsbank AG, as Agent (as amended,
supplemented or otherwise modified from time to time, this "Agreement"). Each
reference in this Appendix A to any Section, Appendix or Exhibit refers to such
Section of or Appendix or Exhibit to this Agreement.
(A) Defined Terms. As used in this Agreement, unless the context
requires a different meaning, the following terms have the meanings indicated
herein below:
"Adjusted Eurodollar Rate" means, with respect to any Yield Period for
any Asset Tranche, an interest rate per annum equal to the sum of:
(a) the LIBOR Spread; plus
(b) the quotient, stated as a percentage, of (i) the per annum rate
determined by Agent (rounded upwards if necessary to the next multiple of
1/16th of 1%) at which Dollar deposits in an amount equal to the
Purchaser's Tranche Investment allocated to such Asset Tranche for a period
approximating such Yield Period are offered by DG Bank based on information
presented on Telerate Page 3750 as of 11:00 a.m. London time on the second
Business Day prior to the first day of such Asset Tranche, divided by (ii)
a number equal to 1.00 minus the Eurodollar Reserve Percentage, if
applicable.
"Adverse Determination" means any formal act, conclusion, ruling,
determination, finding, opinion, law, regulation or formal pronouncement by or
of any Regulator having authority, the result of which is that (i) Purchaser
was, is or will be required to be regulated, licensed or qualified as a premium
finance company or its equivalent under any applicable law, order, rule or
regulation on account of Purchaser's purchase or holding of the Asset Interest
in any Pool Receivables, or (ii) any Person, other than the Purchaser and which
is not already licensed or qualified as an insurance premium finance company,
engaged in a transaction similar, in the reasonable judgment of Purchaser or the
Agent, to that under this Agreement whereby such Person purchases or holds an
ownership interest in receivables or undivided interests in receivables
evidenced by insurance premium finance contracts, such Person is, was or will be
required to be regulated, licensed or qualified as a premium finance company or
its equivalent under any applicable law, order, rule or regulation on account of
such Person's purchase or holding of such receivables or undivided interests in
such receivables.
"Adverse Determination Receivables" means those Pool Receivables that
create or support a nexus with a jurisdiction, as determined by the applicable
laws, orders, rules or regulations of that jurisdiction, the result of such
nexus being that Purchaser is directly subject to an Adverse Determination
pursuant to clause (i) of the definition of Adverse Determination, or could
eventually be directly subject to an Adverse Determination similar to any
Adverse Determination described in clause (ii) of the definition of Adverse
Determination.
"Affected Party" means each of the Agent, the Purchaser, the Liquidity
Agent, the Enhancement Providers, each Liquidity Bank, the Custodian and any
agent of any of the foregoing and all of the foregoing's successors, assigns
and/or participants.
"Affiliate" when used with respect to a Person means any other Person
controlling, controlled by, or under common control with, such Person.
"Agent" has the meaning set forth in the preamble.
"Agent's Office" means the office of the Agent at 609 Fifth Avenue,
New York, NY 10017, Attention: Asset Securitization Group, or such other
address as shall be designated by the Agent in writing to Seller and Purchaser.
"Allocated Expenses means the share of expenses reasonably determined
by Parent to be incurred by Parent as holding company for APR, UPAC, UPAC of
California, Oxford and each of their respective subsidiaries in such capacity as
such holding company and reasonably allocated to any of APR, UPAC, UPAC of
California, Oxford and such Person's respective subsidiaries.
"Alternate Base Rate" means, with respect to any Yield Period for any
Asset Tranche, an interest rate per annum equal to the Adjusted Eurodollar Rate
or the Base Rate as the Seller shall so select and the Agent shall approve in
accordance with the terms of this Agreement; provided, however, that the
"Alternate Base Rate" for such Purchaser Tranche Investment allocated to such
Yield Period shall be the Base Rate if (a) on or before the first day of such
Yield Period, a Liquidity Bank shall have notified the Agent that a Eurodollar
Disruption Event has occurred, (b) such Yield Period is a period of 1 to 29
days, or (c) the Purchaser Tranche Investment to be allocated to such Yield
Period is less than $1,000,000.
"APR" means Agency Premium Resource, Inc., a Kansas corporation.
"Asset Interest" has the meaning set forth in Section 1.04(a).
"Asset Tranche" means at any time a portion of the Asset Interest
selected by the Seller or the Agent, as applicable, pursuant to Section 2.01.
"Backup Servicer" means Input 1, LLC, as Backup Servicer pursuant to
the Backup Servicing Agreement.
"Back-Up Servicer Fee" means the fees payable by the Seller to the
Backup Servicer pursuant to the Backup Servicing Agreement.
"Backup Servicing Agreement" means that certain Backup Servicing
Agreement dated as of May 26, 2000, as amended, among the Backup Servicer, the
Agent, the Servicer and the Seller, as the same may be amended or otherwise
modified from time to time.
"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the higher of (a) the per annum rate of interest announced from
time to time by DG Bank by its head of office in New York, New York as its "base
rate" and (b) 0.50% per annum above the Federal Funds Rate. The Base Rate is
not necessarily intended to be the lowest rate of interest offered to its
customers.
"Best's Rating" means at any time the rating published in the then
most recent edition of Best's Insurance Reports, Property-Casualty for the
Insurance Obligor in question. If Best's Insurance Reports, Property-Casualty
ceases to be published at any time, Purchaser shall choose a reasonably
equivalent substitute rating criteria, and appropriate modifications to this
Agreement will be made to reflect such substitution.
"Book Net Worth" means, for any period, total assets less total
liabilities, as determined in accordance with GAAP.
"Business Day" means a day on which (a) the Agent at its principal
office in New York, New York is open for business, (b) commercial banks in New
York City are not authorized or required to be closed for business and (c) if
the term "Business Day" is used in connection with the Adjusted Eurodollar Rate,
dealings in Dollars are carried on in the London Interbank Market.
"Cancellation Ratio" means, as of the Cut-Off Date for any Settlement
Period, a fraction (expressed as a percentage) (a) the numerator of which is the
difference between (1) the average Unpaid Principal Balance of all Pool
Receivables the related insurance policies of which were cancelled during the
preceding Settlement Period on account of non-payment by the related Obligor and
(2) the average Unpaid Principal Balance of those Pool Receivables described in
clause (1) relating to any such canceled insurance policies to the extent that
such canceled insurance policies (and such related Pool Receivables) were
reinstated during the Settlement Period for which such ratio is being
calculated or, to the extent that the Direct Obligor of any such canceled
insurance policy is a resident of the Commonwealth of Massachusetts, a new Pool
Receivable in respect of an insurance policy issued in replacement of such
canceled Pool Receivable was created during such Settlement Period) and (b) the
denominator of which is the average aggregate Unpaid Principal Balance of all
Pool Receivables during such Settlement Period.
"Change in Control" means any of the following:
(a) the acquisition, by any Person or two or more Persons acting
on concert, of beneficial ownership (within the meaning of Sections 13(d)
and 14(d) (2) of the Exchange Act), of 50% or more of the issued and
outstanding shares of the capital stock (including all warrants, options,
conversion rights, and other rights to purchase or convert into such stock)
of Parent on a fully diluted basis, except for (i) acquisitions of newly
issued shares of the capital stock of Parent for fair market value, and
(ii) acquisitions of newly issued shares of the capital stock of Parent by
employee benefit plans sponsored by Parent or any of its Subsidiaries for
fair market value;
(b) the failure of Parent to own (directly or through wholly-
owned Subsidiaries, free and clear of all liens, 100% of the outstanding
voting stock of each of the Originators or the failure of UPAC to own
(directly or through wholly-owned Subsidiaries of UPAC), free and clear of
all liens, 100% of the outstanding voting stock of Seller; or
(c) the creation or imposition of any Lien on any shares of
capital stock of Seller.
"Collection Account" has the meaning set forth in Section 3.09.
"Collections" means, with respect to any Receivable, all funds (a)
received from or on behalf of the related Obligors in payment of any amounts
owed (including, without limitation, principal, finance charges, interest and
all other charges and fees) in respect of such Receivable, or applied to such
amounts owed by such Obligors (including, without limitation, payments under
guaranties, from state guaranty funds or other Related Security, refunds of
unearned insurance premiums upon termination of insurance policies, insurance
payments that Seller, any of the Originators or Servicer applies in the ordinary
course of its business to amounts owed in respect of such Receivables and net
proceeds of sale or other disposition of repossessed goods or other collateral
or property of the Obligor or any other party directly or indirectly liable for
payment of such Receivable and available to be applied thereon), and (b) deemed
to have been received by Seller, any of the Originators or any other party as a
Collection pursuant to Section 3.04.
"Commercial Paper Notes" means short-term promissory notes issued or
to be issued by Purchaser to fund its investments in accounts receivable or
other financial assets.
"Concentration Limit" means the amount by which (x) the Unpaid
Principal Balance of Eligible Receivables of an Obligor or relating to a
specified Person exceeds (y) the percentage specified under certain categories
in the definition of "Excess Concentration Deductions" of the Unpaid Principal
Balance of all Eligible Receivables.
"Consolidated Tangible Net Worth" means the consolidated Book Net
Worth of UPAC, UPAC of California, APR and their Subsidiaries after subtracting
therefrom the aggregate amount of any intangible assets of UPAC, UPAC of
California, APR and their Subsidiaries required to be subtracted in accordance
with GAAP.
"Contract" means any contract, instrument or other writing entered
into by Seller or an Originator in the ordinary course of its business in
connection with, or evidencing, loans made by Seller or such Originator to any
Obligor to finance such Obligor's payment of unearned insurance premiums in
respect of one or more insurance policies issued by one or more insurance
carriers, including, without limitation, any writing relating to the assignment
of all unearned premiums pertaining to the insurance policy or policies for
which premium payments are being financed, any designation of Seller or such
Originator as a loss payee thereunder, and any guaranty by the insurance agents
that sold the related insurance policy or policies.
"CP Disruption Event" means the inability of the Purchaser, at any
time, whether as a result of a prohibition, a contractual restriction or any
other event or circumstance whatsoever, to raise funds through the issuance of
its Commercial Paper Notes (whether or not constituting Commercial Paper Notes
issued to fund Purchases hereunder) in the United States commercial paper
market.
"CP Rate" means, with respect to any Yield Period for any Asset
Tranche, the rate equivalent to the rate (or if more than one rate, the weighted
average of the rates) at which Commercial Paper Notes of the Purchaser having a
term equal to such Yield Period and issued to fund the applicable Purchase or
maintenance of such Asset Tranche by the Purchaser may be sold by any placement
agent or commercial paper dealer selected by the Purchaser, as agreed between
each such agent or dealer and the Purchaser and notified by the Purchaser to the
Agent; provided, however, if the rate (or rates) as agreed between any such
agent or dealer and the Purchaser with regard to any Yield Period for the
applicable Asset Tranche is a discount rate (or rates), the "CP Rate" for such
Yield Period shall be the rate (or if more than one rate, the weighted average
of the rates) resulting from converting such discount rate (or rates) to an
interest-bearing equivalent rate per annum.
"Credit and Collection Policy" means, with respect to any Receivables
originated by an Originator, the credit and collection policies and practices of
such Originator relating to such Receivables and the contracts relating thereto,
copies of each of which shall have been provided to the Agent concurrently
herewith (or, in the case of any new Originator, prior to or concurrently with
such Person becoming an Originator), as the same may be modified from time to
time without violating Section 7.03(c).
"Custodian" means Iron Mountain Incorporated or any successor
custodian acceptable to the Agent and the Servicer.
"Custodian's Fee" means the fees payable to the Custodian pursuant to
the Custody Agreement.
"Custody Agreement" means the agreement between the Agent and the
Custodian providing for the transit and storage of Contracts at premises of the
Custodian, as amended, supplemented or otherwise modified from time to time or
any successor custody agreement acceptable to the Agent and reasonably
acceptable to the Servicer.
"Cut-Off Date" means the last day of each Settlement Period.
"Deemed Collection" has the meaning set forth in Section 3.04.
"Default Ratio" means, at any time, the fraction, expressed as a
percentage, computed as of the most recent Cut-Off Date (i) the numerator of
which is the Unpaid Principal Balance of Receivables that became Defaulted
Receivables (net of recoveries) during the preceding Settlement Period ending on
such Cut-Off Date and (ii) the denominator of which is the average aggregate
Unpaid Principal Balance of all Pool Receivables during such Settlement Period.
"Default Reserve" has the meaning set forth in Section 1.04(b)(i)(D).
"Defaulted Receivable" means a Receivable and related Contract: (i) as
to which any payment, or part thereof, remains unpaid for (x) 31 (or, to the
extent the Direct Obligor thereon is a resident of Massachusetts, 40) or more
days (or such earlier date as specified in the related Contract) from the
original due date for such payment without cancellation of all of the related
insurance policies or (y) 181 or more days after cancellation of all such
policies, (ii) as to which the Obligor thereof becomes the subject of an Event
of Bankruptcy or, if applicable, becomes subject to rehabilitation or similar
proceeding (it being understood that Direct Obligors wishing to enter into a new
Contract that are subject to bankruptcy proceedings and which have obtained a
court order permitting Servicer (without further notification to the Court) to
cancel the related Contract, the Receivables under which are or will be included
in the Receivables Pool shall not be subject to this clause (ii)) or is seized
by any governmental authority, (iii) as to which payments have, unless as a
result of any Endorsement, been extended, or the terms of payment thereof
rewritten, whether by amendment, modification or through a new contract without
Purchaser's consent, (iv) as to which 45 or more days have passed since receipt
of the related unearned premium or notification to Seller or Servicer that the
related unearned premium has been fully earned or (v) which is a charged-off
Receivable in accordance with the Credit and Collection Policy.
"Designated Obligations" means any amounts then owed under this
Agreement by Seller or UPAC, which amounts shall have been so designated by the
Agent to Seller and UPAC, whether owed to Purchaser, Agent, Custodian, any other
Affected Party or Servicer, other than Earned Discount, Program Fee and
Servicer's Fee.
"Designated Obligor" means, at any time, all Obligors of the
Originators except any such Obligor as to which the Agent has, at least three
Business Days prior to the date of determination, given notice to Seller that
such Obligor shall not be considered a Designated Obligor.
"Direct Obligor" means, with respect to any Receivable, the borrower
of the loan under any Contract.
"Dollars" means dollars in lawful money of the United States of
America.
"Downgraded Liquidity Bank" means a Liquidity Bank which has been the
subject of a Downgrading Event.
"Downgrading Event" with respect to any Person means the lowering of
the rating with regard to the short-term securities of such Person to below (i)
A-1 by S&P, (ii) P-1 by Moody's, or (iii) F-1 by Fitch IBCA Inc. or any
successor thereof.
"Earned Discount" means, for any Yield Period with respect to any
Asset Tranche,
PTI x ER x ED + LF
360
where:
PTI = the daily average (calculated at the close of
business each day) of the Purchaser's Tranche
Investment in such Asset Tranche during such Yield
Period,
ER = the Earned Discount Rate for such Yield Period,
ED = the actual number of days elapsed during such Yield
Period, and
LF = the Liquidation Fee, if any, during such Yield
Period.
"Earned Discount Payment Date" with respect to any Asset Tranche means
the last day of such Asset Tranche; provided, that with respect to any Asset
Tranche accruing Earned Discount at the Adjusted Eurodollar Rate and having an
initial Yield Period in excess of one month, the "Earned Discount Payment Date"
for such Asset Tranche shall be deemed to occur at the end of each 30-day period
that such Asset Tranche is outstanding and on the last day of such Asset
Tranche.
"Earned Discount Rate" means for any Yield Period with respect to any
Asset Tranche:
(a) in the case of an Asset Tranche funded by a Liquidity
Purchase, either the Adjusted LIBOR Rate or the Base Rate applicable
to such Asset Tranche for such Yield Period; and
(b) for any Asset Tranche funded by Commercial Paper Notes, the
CP Rate applicable to such Asset Tranche for the related Yield Period;
provided, however, that on any day when any Liquidation Event or Unmatured
Liquidation Event shall have occurred and be continuing the Earned Discount Rate
for each Asset Tranche shall mean a rate per annum equal to the Base Rate plus
2% per annum.
"Eligible Agent" means a licensed agent of an Eligible Insurance
Carrier approved by an Originator in accordance with its Credit and Collection
Policy.
"Eligible Contract" means a Contract substantially in one of the forms
set forth in Schedule 6.01(p)-1 or otherwise satisfying the criteria set forth
on Schedule 6.01(p)-3.
"Eligible Insurance Carrier" shall mean at any date any insurance
company that meets each of the following requirements: it is not the subject of
any Event of Bankruptcy, and is not otherwise being rehabilitated or supervised.
"Eligible Investments" means any one or more of the following
obligations or securities:
(a) direct non-callable obligations of, and non-callable
obligations fully guaranteed by, the United States of America, or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the
United States of America;
(b) demand and time deposits in, certificates of deposits of,
and bankers' acceptances issued by, any depository institution or
trust company (including an indenture trustee acting in its commercial
capacity) incorporated under the laws of the United States of America
or any state thereof, having a combined capital and surplus of at
least $500,000,000, and subject to supervision and examination by
federal and/or state banking authorities, so long as at the time of
such investment or contractual commitment providing for such
investment the commercial paper or other short-term debt obligations
of such depository institution or trust company (or, in the case of a
depository institution that is the principal subsidiary of a holding
company, the commercial paper or other short-term debt obligations of
such holding company) have one of the two highest short-term credit
rating available from Moody's and S&P;
(c) repurchase obligations with respect to and collateralized by
(i) any security described in clause (b) above or (ii) any other
security issued or guaranteed by an agency or instrumentality of the
United States of America, in each case entered into with a depository
institution or trust company (acting as principal) of the type
described in clause (b) above, provided that the Agent has taken
delivery of such security;
(d) commercial paper (including both non- interest-bearing
discount obligations and interest-bearing obligations, but excluding
Commercial Paper Notes) payable on demand or on a specified date not
more than one year after the date of issuance thereof having the
highest short-term credit rating from Moody's and S&P at the time of
such investment; and
(e) shares in a mutual fund investing solely in short term
securities of the United States government and/or securities described
in clause (c) above where the mutual fund custodian has taken delivery
of the collateralizing securities, provided that (i) such fund shall
have one of the two highest short-term credit rating available from
Moody's and S&P and (ii) such shares shall be freely transferable by
the holder on a daily basis.
"Eligible Receivable" means, at any time, a Receivable:
(a) the Obligor of which, if an Affiliate of the Seller or the
Servicer, is not the Obligor of Pool Receivables, the Unpaid Principal
Balance of which exceeds $950,000 in the aggregate;
(b) the loan giving rise thereto was (1) made (either directly
or by purchase of an existing loan) in the ordinary course of business
by Seller or an Originator to or on behalf of a Person that used all
of the proceeds of such loan to pay premiums on property, business
liability, workman's compensation, casualty insurance and other
similar types of insurance policies or personal auto insurance
policies issued by an Eligible Insurance Carrier and owned by such
Person, (2) subject to a draft written by the Eligible Agent to the
Eligible Insurance Carrier and drawn on the Seller, which draft has
been cashed, (3) evidenced by an Eligible Contract was fully disbursed
to such Eligible Insurance Carrier, its agent or such Person, and (4)
customary in the insurance premium finance business;
(c) which, (x) if the perfection of Purchaser's undivided
ownership interest therein is governed by the laws of a jurisdiction
where the Uniform Commercial Code - Secured Transactions is in force,
constitutes a general intangible as defined in the Uniform Commercial
Code as in effect in such jurisdiction, and (y) if the perfection of
Purchaser's undivided ownership interest therein is governed by the
law of any jurisdiction where the Uniform Commercial Code - Secured
Transactions is not in force, Seller has furnished to Purchaser such
opinions of counsel and other evidence as has reasonably been
requested, establishing to the reasonable satisfaction of Purchaser
that such Purchaser's undivided ownership interest and other rights
with respect thereto are not significantly less protected and
favorable than such rights under the Uniform Commercial Code;
(d) the Obligor of which is a United States resident and is not
a government or a governmental subdivision or agency unless (i) the
Seller and the Originators shall have complied with the Assignment of
Claims Act to the satisfaction of the Agent and (ii) the Unpaid
Principal Balance of such Receivable when combined with all other Pool
Receivables of which a government or governmental subdivision or
agency is the Obligor, would not exceed $500,000;
(e) the related originating insurance agent of which is an
Eligible Agent of an Eligible Insurance Carrier;
(f) the Obligor of which is not, solely at the time eligibility
is being determined, the Obligor of Receivables, ten percent (10.0 %)
or more of which (as determined based on the Principal Receivables)
are Defaulted Receivables;
(g) which is not a Defaulted Receivable;
(h) the related insurance policy of which is required to be
canceled if payment on such Receivable is not received within 30 days
of its due date (or, if earlier, the date required in the related
Contract);
(i) with regard to which the warranty of Seller in Section
6.01(l) is true and correct;
(j) (A) the sale of an undivided interest in which does not
contravene or conflict with any law, and (B) in the case of
Receivables generated by the Originator, the sale of which to Seller
does not contravene or conflict with any law;
(k) which is denominated and payable only in Dollars in the
United States;
(l) which arises under a Contract, substantially in the form of
Schedule 6.01(p)-1 hereto (or, if not in the form of Schedule 6.01(p)-
1, in such form as does not deviate in any material substantive manner
from Schedule 6.01(p)-1 or the requirements of Schedule 6.01(p)-3, in
either case, without the express written consent of the Agent), that
(1) is in the possession of the Custodian, (2) has been duly
authorized and that, together with such Receivable, is in full force
and effect and constitutes the legal, valid and binding obligation of
the Obligor of such Receivable enforceable against such Obligor in
accordance with its terms, (3) the terms of which (including payment
instructions to the Obligors thereon and the due date thereon) have
not been modified unless in accordance with the applicable Credit and
Collection Policy, (4) was stamped with an assignment to Seller and
further assignment of an ownership interest to Purchaser, (5) permits
the powers of attorneys granted by the Originators, the Seller and the
Servicer to the Agent, and (6) permits the unearned premium for the
insurance policy to which such Contract relates to be assigned to the
Seller;
(m) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to the
Contract related thereto is in violation of any such law, rule or
regulation in any material respect if such violation would impair the
collectibility of such Receivable;
(n) which is secured by a first priority perfected security
interest in and assignment of the right to cancel all of the insurance
policies financed in whole or in part with the proceeds of the related
loan upon the occurrence of a default under the related Contract and
the right to receive all payments of unearned premiums owed upon such
cancellation and, to the extent permitted by applicable law or
regulation, the designation of Seller as a loss payee under such
policies;
(o) which at the time of its designation as a Pool Receivable is
not an Adverse Determination Receivable; provided, that upon the
Seller becoming obligated to repurchase any such Pool Receivable
pursuant to Section 3.07(b), such Pool Receivable shall cease to be an
Eligible Receivable hereunder;
(p) which at the time of its designation as a Pool Receivable
does not create or support a nexus with a jurisdiction (x) conducting
a formal proceeding, investigation or inquiry that could in the
Agent's judgment result in an Adverse Determination or (y) that could
require Purchaser to be licensed as a premium finance loan company;
(q) if any Receivables to be included in a Purchase shall result
from a bulk or portfolio purchase, unless otherwise provided pursuant
to Section 7.06(f) of this Agreement or Section 5.3(e) of the Purchase
and Sale Agreement, the Agent shall have approved the inclusion of
such Receivables in writing after conducting a collateral audit of the
Receivables purchased by Seller or any applicable Originator in a bulk
or portfolio purchase;
(r) which (x) satisfies all applicable requirements of the
applicable Credit and Collection Policy and (y) complies with such
other criteria and requirements (other than those relating to the
collectibility of such Receivable) as the Agent may from time to time
specify to Seller following thirty days' notice;
(s) which at the time of its designation as a Pool Receivable
would not cause the Excess Yield Ratio, calculated in the manner
described in Section 10.01(h) to be less than 4.00%; and
(t) as to which the Agent has not notified Seller that the Agent
has determined, in its reasonable discretion, that such Receivable (or
class of Receivables) is not acceptable for purchase hereunder.
"Endorsement" means any increase or decrease to a Receivable
originated by an Originator that results solely from an increase or decrease to
the premium amount payable under the related insurance policy as a result of an
endorsement to such insurance policy reflecting a change in the coverage
thereof.
"Enhancement Provider" means any provider of any credit enhancement or
credit support to the Purchaser in connection with receivables purchase
facilities entered into by the Purchaser.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means, with respect to any Person, (i) any
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal Revenue Code, as in effect
from time to time (the "Code") as such Person; (ii) a trade or business (whether
or not incorporated) under common control (within the meaning of Section 414(c)
of the Code) with such Person, or (iii) a member of the same affiliated service
group (within the meaning of Section 414(m) of the Code) as such Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Disruption Event" means, with respect to all Asset
Tranches in respect of which Earned Discount for the applicable Yield Period is
accruing at the Adjusted Eurodollar Rate, any of the following: (a) a
determination by the Purchaser, any Liquidity Bank or the Liquidity Agent that
it would be contrary to law or to the directive of any central bank or other
governmental authority (whether or not having the force of law) to obtain United
States dollars in the London interbank market to make, fund or maintain any
Asset Tranche for such Yield Period, (b) the failure of DG Bank to furnish
timely information for purposes of determining the Adjusted Eurodollar Rate, (c)
a determination by a Liquidity Bank that the Adjusted Eurodollar Rate does not
accurately reflect the cost to such Liquidity Bank of making, funding or
maintaining any such Asset Tranche for such Yield Period or (d) the inability of
a Liquidity Bank to obtain United States dollars in the London interbank market
to make, fund or maintain such Asset Tranche for such Yield Period.
"Eurodollar Reserve Percentage" means, for any day with respect to an
Asset Tranche allocated to Yield Period in respect of which Earned Discount
accrues at the Adjusted Eurodollar Rate, means the maximum rate (expressed as a
decimal) at which any lender subject thereto would be required to maintain
reserves under Regulation D of the Board of Governors of the Federal Reserve
System (or any successor or similar regulations relating to such reserve
requirements) against Eurocurrency Liabilities, if such liabilities were
outstanding. The Eurodollar Reserve Percentage shall be adjusted automatically
on and as of the effective date of any change in the maximum rate described
above.
"Event of Bankruptcy" shall be deemed to have occurred with respect to
a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding
up, or composition or readjustment of debts of such person, the
appointment of a trustee, receiver, conservator, custodian,
liquidator, assignee, sequestrator or the like for such Person or all
or substantially all of its assets, or any similar action with respect
to such Person under any law relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, and
in the case of any Person other than an Insurance Obligor such case or
proceeding shall continue undismissed, or unstayed and in effect, for
a period of 60 consecutive days; or an order for relief in respect of
such Person shall be entered in an involuntary case under the federal
bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar law now
or hereafter in effect, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) for, such Person
or for any substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail to, or admit in
writing its inability to, pay its debts generally as they become due,
or, if a corporation or similar entity, its board of directors shall
vote to implement any of the foregoing. It shall be understood and
agreed that Parent's and American Freight System, Inc.' s 1988
insolvency shall not be deemed Events of Bankruptcy hereunder.
"Excess Concentration Deduction" means the aggregate of each of the
following categories:
(a) Four Largest Agents. The amount by which (x) the Unpaid
Principal Balance of Eligible Receivables having the four insurance agents
with the largest concentrations in the Receivables Pool exceeds (y)
$11,000,000.
(b) Four Largest Insurance Obligors. The amount by which (x)
the Unpaid Principal Balance of Eligible Receivables having the four
Insurance Obligors with the largest concentrations of all Insurance
Obligors in the Receivables Pool exceeds (y) $10,000,000.
(c) Individual Insurance Obligors.
(1) If the Insurance Obligor is rated by one of Moody's, S&P or A.M.
Best:
Lower of Moody's/S&P Rating/AM Concentration Limit
Best
Aaa/AAA/AA+ 15.0%
>Aa3/AA-/A+ and < Aaa/AAA/A++ 10.0%
>A3/A-/A and < Aa3/AA-/A+ 5.0%
>Baa3/BBB-/B++ and <A3/A-/A 3.0%
(2) If the unsecured long-term debt of the Insurance Obligor
is rated by none of Moody's, S&P or A.M. Best, the Concentration Limit shall be
0.50%
(d) Certain Insurance Obligors.
(1) With respect to Insurance Obligors the long-term debt of which
is rated below A2 by Moody's, below A by S&P, and below A by A.M. Best, the
amount by which the unpaid principal balance of Eligible Receivables having the
fifteen such Insurance Obligors with the largest concentrations of such
Insurance Obligors in the Receivables Pool exceeds $10,000,000.
(2) With respect to all Insurance Obligors the long-term debt of
which is rated below B- by A.M. Best, the Concentration Limit in the aggregate
shall be five percent (5.0%).
(e) Single Obligors. With respect to any single Obligor, the
Concentration Limit shall be two and one-half percent (2.50%).
(f) Auto Insurance. The amount by which (x) the Unpaid Principal
Balance of Eligible Receivables for personal automobile insurance policies
exceeds (y) ten percent (10.0%) of the Unpaid Principal Balance of all Eligible
Receivables.
(g) Policy Type. The amount by which (x) the Unpaid Principal
Balance of Eligible Receivables having a policy type of voluntary or involuntary
worker's compensation (non-monoline) or liquor liability exceeds (y) in the
aggregate fifteen percent (15.0%) of the Unpaid Principal Balance of all
Eligible Receivables.
(h) Loan Terms. The amount by which (x) the Unpaid Principal Balance
of Eligible Receivables arising from loans with payment terms of longer than
twelve months exceeds (y) ten percent (10.0%) of the Unpaid Balance of all
Eligible Receivables; provided, however, that with respect to such Eligible
Receivables the Insurance Obligors of which have an unsecured long-term debt
rating of B- or below by A. M. Best, the amount by which the unpaid principal
balance of such Receivables exceeds one percent (1.0%) of the Unpaid Principal
Balance of all Eligible Receivables.
(i) Down Payments. With respect to all Obligors which made down
payments on the loans giving rise to Eligible Receivables of less than twenty
percent (20.0%) of the original principal balances of the loans, the
Concentration Limit shall be twenty-five percent (25.0%).
"Excess Yield Ratio" means, at any time, the fraction, expressed as an
annualized percentage, computed as of the most recent Cut-Off Date (a) the
numerator of which is (i) the amount of, calculated for such Settlement Period
of Purchaser's Share of Finance Charge Receivables at such time less (ii) the
sum of (u) the Servicer's Fee for such Settlement Period plus (v) the
Custodian's Fee for such Settlement Period plus (w) the Backup Servicer's Fee
for such Settlement Period plus (x) the Program Fee for such Settlement Period
plus (y) the Earned Discount for such Settlement Period plus (z) the fee payable
to the Custodian for such Settlement Period for such Settlement Period, and (b)
the denominator of which is the average aggregate Unpaid Principal Balance of
all Pool Receivables during such Settlement Period.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal (for each day during such period) to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto or to the functions thereof.
"Fee Letter" means the Fee Letter dated as of May 26, 2000.
"Final Payout Date" means the date following the Termination Date on
which Purchaser's Total Investment shall have been reduced to zero and all other
amounts payable by Seller under the Transaction Documents shall have been paid
in full.
"Finance Charge Receivable" means the portion of any Pool Receivable
that is not the related Principal Receivable, including, without limitation, the
right to the payment of finance charges, interest payments, late payment
charges, collection fees, extension fees and other amounts actually accrued
thereon on a current basis.
"GAAP" means generally accepted accounting principals consistently
applied.
"Indemnified Amounts" has the meaning set forth in Section 13.01.
"Indemnified Party" has the meaning set forth in Section 13.01.
"Insurance Obligor" with respect to any Receivable, means any
insurance carrier that has issued and is carrying any of the insurance policies
for which premiums are financed in whole or in part with the proceeds of such
Receivable; and related Insurance Obligor means with respect to any such
Receivable, such insurance carrier.
"LIBOR Spread" means the per annum rate set forth in the Fee Letter.
"Lien" means a lien, security interest, charge, or encumbrance, or
other right or claim of any Person other than (i) a potential claim or right
(that has not yet been asserted) of a trustee appointed for an Obligor in
connection with any Event of Bankruptcy and (ii) an unfiled lien for taxes
accrued but not yet payable.
"Liquidation Collection Account" has the meaning set forth in Section
3.09(a).
"Liquidation Date" means the occurrence of any of the following: (i) a
Liquidation Event, (ii) the Termination Date and (iii) the first day of a
Liquidation Period; provided, however, that in the case of a Liquidation Date
occurring and existing solely as a result of the occurrence of a Liquidation
Event, then upon the waiver or cure of such Liquidation Event, such Liquidation
Date shall be deemed not to have occurred.
"Liquidation Event" has the meaning set forth in Section 10.01.
"Liquidation Fee" means, for each Asset Tranche (or portion thereof)
for each day in any Yield Period or Settlement Period (computed without regard
to clause (iii) of the proviso of the definition of "Yield Period") during the
Liquidation Period, the amount, if any, by which:
(a) the additional Earned Discount (calculated without taking
into account any Liquidation Fee) which would have accrued on the
reductions of the Purchaser's Tranche Investment with respect to such
Asset Tranche during such Yield Period or Settlement Period (as so
computed) if such reductions had not been made exceeds,
(b) the income, if any, received by Purchaser from investing the
proceeds of such reductions of the Purchaser's Tranche Investment.
"Liquidation Period" means the period commencing on the date on which
the conditions precedent to Purchases and Reinvestments set forth in Section
5.02 are not satisfied (or expressly waived by Purchaser) and the Agent shall
have notified Seller and the Servicer in writing that the Liquidation Period has
commenced, and ending on the Final Payout Date.
"Liquidity Agent" means DG Bank as agent for the Liquidity Banks under
the Liquidity Agreement, or any successor to DG Bank in such capacity.
"Liquidity Agreement" means that certain Liquidity Agreement dated as
of May 26, 2000 among Autobahn Funding Company LLC, DG Bank and certain other
Liquidity Banks and the Liquidity Agent, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Liquidity Bank" means any one of, and "Liquidity Banks" means all of,
the commercial lending institutions that are at any time parties to the
Liquidity Agreement as "Liquidity Providers."
"Liquidity Purchase" means a purchase of all or a portion of the Asset
Interest by the Liquidity Banks from the Purchaser under the Liquidity
Agreement.
"Lock-Box Agreement" means a letter agreement, in substantially the
form of Exhibit 5.01(g), among Seller, the Originator whose Receivables are the
subject of such letter agreement, and any Lock-Box Bank.
"Lock-Box Bank" means any of the banks holding one or more lock-box
accounts for receiving or concentrating Collections of Pool Receivables.
"Material Adverse Effect" with respect to any event or circumstance, a
material adverse effect on:
(i) the business, assets, financial condition, operations or
prospects of Seller or an Originator;
(ii) the ability of Seller or an Originator to perform its
obligations under this Agreement or any other Transaction Document;
(iii) the validity, enforceability or collectibility of this
Agreement, any other Transaction Document, the Receivables or the
related Contracts; or
(iv) the status, existence, perfection, priority or
enforceability of Purchaser's interest in the Pool Receivables.
"Monthly Payment Rate" means as of any Cut-Off Date, for any
Settlement Period, a fraction (expressed as a percentage) (a) the numerator of
which is the total cash Collections with respect to all Pool Receivables and (b)
the denominator of which is the average aggregate Unpaid Principal Balance of
all Pool Receivables during such Settlement Period.
"Moody's" means Moody's Investors Service, Inc., or any successor
thereof.
"Net Pool Balance" means at any time the Unpaid Principal Balance of
the Eligible Receivables in the Receivables Pool at such time reduced by the
aggregate Excess Concentration Deduction at such time.
"Non-Use Fee" has the meaning set forth in Section 4.01(b).
"Non-Use Fee Rate" has the meaning set forth in the Fee Letter.
"Obligor" means any Person directly or indirectly obligated to make
payments on or with respect to any Receivable. Such term shall include, without
limitation, any Direct Obligor and all Insurance Obligors pursuant to a
Contract.
"Originator" means UPAC, UPAC of California or any other wholly-owned
direct or indirect Subsidiary of Parent that becomes a party to the Purchase and
Sale Agreement as an "Originator" thereunder, and "Originators" means all such
Persons collectively.
"Oxford" means Oxford Premium Finance, Inc., an Illinois corporation.
"Parent" means Transfinancial Holdings, Inc., a Delaware corporation.
"Permitted Dividend" means any dividend that is to be paid by Seller
to UPAC prior to the Liquidation Date out of payments or distributions made by
Servicer to Seller under Sections 3.02(c) or (d) or out of Seller's Share of
Collections on account of Principal Receivables.
"Person" means an individual, partnership, limited liability company,
corporation (including a business trust), joint stock company, trust,
unincorporated association, joint venture, government or any agency or political
subdivision thereof or any other entity.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Principal Receivable" means the portion of any Pool Receivable that
is related to the unpaid principal of the related loan.
"Program Fee" has the meaning set forth in Section 4.01(b).
"Program Fee Rate" has the meaning set forth in the Fee Letter.
"Program Information" has the meaning set forth in Section 14.08.
"Purchase" has the meaning set forth in Section 1.01.
"Purchase and Sale Agreement" means that certain Purchase and Sale
Agreement dated as of December 31, 1996, among Seller, the Originators from time
to time parties thereto and the Servicer, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Purchase and Sale Termination Event" has the meaning set forth in the
Purchase and Sale Agreement.
"Purchase Limit" means $80,000,000, as such amount may be adjusted by
the Seller and Purchaser pursuant to a written agreement.
"Purchase Termination Date" means that day on which a Liquidation
Event has occurred and is continuing, and
(a) the Agent declares a Purchase Termination Date in a notice
to Seller in accordance with Section 10.02(a); or
(b) in accordance with Section 10.02(b), becomes the Purchase
Termination Date automatically.
"Purchaser" has the meaning set forth in the preamble.
"Purchaser's Share" had the meaning set forth in Section 1.04(b).
"Purchaser's Share of Collections" has the meaning set forth in
Section 1.04(b).
"Purchaser's Share of Defaulted Receivables" has the meaning set forth
in Section 1.04(b).
"Purchaser's Total Investment" means at any time with respect to the
Asset Interest an amount equal to (a) the aggregate of the amounts theretofore
paid to Seller for Purchases pursuant to Section 1.01, less (b) the aggregate
amount of Collections theretofore received and actually distributed to Purchaser
on account of such Purchaser's Total Investment pursuant to Section 1.03.
"Purchaser's Tranche Investment" means in relation to any Asset
Tranche the amount of the Purchaser's Total Investment allocated by the Agent to
an Asset Tranche pursuant to Section 2.01, provided, that at all times the
aggregate amounts allocated to all Asset Tranches shall equal the Purchaser's
Total Investment.
"Qualifying Liquidity Bank" means a Liquidity Bank with a rating of
its short-term securities equal to or higher than (i) A-1 by S&P and (ii) P-1 by
Moody's.
"Receivable" means the indebtedness of any Obligor (other than a
Virginia Obligor) under a Contract whether constituting an account, chattel
paper, an instrument, investment property, or a general intangible, and includes
(i) the right to payment of such indebtedness and any interest or finance or
late charges or penalties and other obligations of such Obligor with respect
thereto, (ii) all other rights under such Contract, including insurance policy
cancellation rights, (iii) all right, title and interest of Seller and the
applicable Originator in, to and under the insurance contract underlying such
Contract and any and all other direct or indirect guaranties or security
therefor, and (iv) all proceeds of the foregoing.
"Receivables Pool" means at any time all then outstanding Receivables
owned by Seller, other than (i) Receivables theretofore reconveyed to Seller
pursuant to Section 3.07 and (ii) the Receivables specifically excluded from the
Receivables Pool in a written certificate, executed and delivered by Purchaser
and Seller on or before the date of the initial Purchase hereunder.
"Regulation D" means Regulation D of the Federal Reserve Board, or any
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"Regulator" means any federal, state or local regulatory or
governmental body, agency or official.
"Regulatory Change" means, relative to any Affected Party
(a) any change in (or the adoption, implementation, change in
phase-in or commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to
such Affected Party of (A) any court, government authority
charged with the interpretation or administration of any law
referred to in clause (a)(i) or of (B) any fiscal, monetary or
other authority having jurisdiction over such Affected Party; or
(iii) generally accepted accounting principles or regulatory
accounting principles applicable to such Affected Party and
affecting the application to such Affected Party of any law,
regulation, interpretation, directive, requirement or request
referred to in clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement,
request or accounting principles referred to in clause (a)(i), (a)(ii)
or (a)(iii) above.
"Reinvestment" has the meaning set forth in Section 1.03.
"Related Security" means, with respect to any Pool Receivable (i) all
of Seller's right, title and interest in and to all Contracts or other
agreements that relate to such Pool Receivable, (ii) all of Seller's interest in
the insurance policies, if any, relating to such Pool Receivable including,
without limitation, the right to terminate such policies and to receive unearned
premiums payable upon such termination and, to the extent permitted by
applicable law or regulations, the designation of Seller as first priority loss
payee under such insurance policies, (iii) all other security interests or liens
and property subject thereto from time to time purporting to secure payment of
such Pool Receivable, whether pursuant to the Contract related to such Pool
Receivable or otherwise, (iv) the assignment to Purchaser of all UCC financing
statements and notices to insurance companies covering any collateral securing
payment of such Pool Receivable, (v) all of the Seller's rights and remedies in,
to and under the Purchase and Sale Agreement, and (vi) all guaranties and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Pool Receivable whether pursuant to the Contract
related to such Pool Receivable or otherwise. The interest of Purchaser in any
Related Security is only to the extent of its Asset Interest, as more fully
described in the definition of Asset Interest.
"Scheduled Termination Date" means May 25, 2005. The Scheduled
Termination Date may be extended for an additional period of one year by written
notice of request given by Seller to the Agent at least 60 days prior to the
then current Scheduled Termination Date, and written notice of acceptance given
by the Agent and the Purchaser not later than 45 days thereafter.
"Secured Parties" means Purchaser, the Agent, the Liquidity Banks, the
Indemnified Parties and the Affected Parties.
"Seller" has the meaning set forth in the preamble.
"Seller Information" has the meaning set forth in Section 14.07(a).
"Seller Party" has the meaning set forth in Section 14.07(a).
"Seller Order" means a direction letter, in such form as the Agent and
Seller may approve, specifying the Eligible Investments in which funds in the
Collection Account shall be invested pursuant to Section 3.09.
"Seller's Share" means, on any day, (a) with respect to Principal
Receivables, one (1) minus the Purchaser's Share with respect to Principal
Receivables on such day and (b) with respect to Finance Charge Receivables,
zero, subject, however, to the applications set forth in Section 3.2.
"Seller's Share of Collections" on account of Principal Receivables
means on any day an amount equal to the product of (x) the related Seller's
Share with respect to Principal Receivables on such day and (y) the amount of
Collections on account of Principal Receivables on such day. "Seller's Share of
Collections" on account of Finance Charge Receivables shall be calculated on
each Settlement Date and shall be equal to the amount payable to Seller pursuant
to Section 3.2(c) and (d).
"Servicer" has the meaning set forth in Section 8.01(a).
"Servicer Transfer Event" has the meaning set forth in Section 8.01(b)
"Servicer's Fee" accrued for any day means
(a) an amount equal to the product of (x) 1.00% per annum, times
(y) the amount of the Purchaser's Total Investment at the close of
business on such day, times (z) 1/360; or
(b) on and after the date the Backup Servicer shall be the
Servicer, an amount equal to (x) 1.00% per annum, times (y) the Net
Pool Balance, times (z) 1/360.
"Settlement" means the payments and other actions provided for on the
Cut-Off Date for each Settlement Period.
"Settlement Date" means the 10th Business Day of each calendar month,
and each day after the occurrence of the Termination Date that the Agent shall
so designate as such.
"Settlement Period" means
(a) the period from the date of the initial Purchase hereunder
to the close of business on the last day of the same calendar month;
and
(b) thereafter, each period from the opening of business on the
first day of each calendar month to and including the close of
business day on the last day of such calendar month;
provided, however, that
(i) any Settlement Period which would otherwise end on a
day which is not a Business Day shall be extended to the next
succeeding Business Day; and
(ii) the last Settlement Period shall end on the Final
Payout Date.
"Settlement Statement" has the meaning set forth in Section 3.03(a).
"S&P" means Standard and Poor's Corporation, or any successor thereof.
"Subordinated Line" means that certain subordinated credit line
available from the Parent for each of the Originators, collectively, in the form
and as to dollar amount approved by the Agent.
"Subordinated Note" means any of the Subordinated Intercompany
Revolving Notes executed by the Seller in favor of an Originator or Oxford under
and pursuant to the Purchase and Sale Agreement (as the same may be amended,
restated, substituted or otherwise modified from time to time), and
"Subordinated Notes" means all such notes collectively.
"Subsidiary" means a corporation of which Seller, APR, UPAC, UPAC of
California, any other Originator or Parent and/or its other Subsidiaries own,
directly or indirectly, such number of outstanding shares as have more than 50%
of the ordinary voting power for the election of directors.
"Successor Notice" has the meaning set forth in Section 8.01(b).
"Tax Sharing Agreement" means that certain Tax Sharing Agreement among
the Parent and its consolidated subsidiaries, a copy of which is attached as
Exhibit 5.01(r).
"Termination Date" means the earliest of
(a) the date of termination (whether by scheduled expiration,
termination on default or otherwise) of the Liquidity Banks'
commitments under the Liquidity Agreement;
(b) the Purchase Termination Date; and
(c) the Scheduled Termination Date.
"Transaction Documents" means this Agreement, the Purchase and Sale
Agreement, the Liquidity Agreement, the Custody Agreement, the Fee Letter, the
Backup Servicing Agreement, the Fee Letter, the Lock-Box Agreements, that
certain side letter among the Agent, the Seller and the Originators relating to
exclusivity and the other documents to be executed and delivered in connection
herewith and therewith.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction or jurisdictions.
"Unmatured Liquidation Event" means any event which, with the giving
of notice or lapse of time, or both, would become a Liquidation Event.
"UPAC" has the meaning set forth in the Preamble.
"UPAC of California" means UPAC of California, Inc., a California
corporation.
"Unpaid Balance" of any Receivable means at any time the Unpaid
Principal Balance thereof plus the unpaid amount thereof consisting of Finance
Charge Receivables.
"Unpaid Principal Balance" of any Receivable means at any time the
unpaid principal amount thereof.
"Virginia Obligor" means a Direct Obligor resident in the Commonwealth
of Virginia.
"Weekly Report" has the meaning set forth in Section 3.03(b);
provided, however, that for purposes of the Purchase and Sale Agreement, the
"Weekly Report" shall also be deemed to mean and include any Settlement
Statement delivered during any week in which it is due pursuant to Section
3.03(a).
"Weekly Report Date" means Tuesday of each calendar week, or, if such
day is not a Business Day, the immediately succeeding Business Day; provided,
however, that with respect to any week in which a Settlement Statement is
required to be delivered to the Agent pursuant to Section 3.03(a), the Weekly
Report Date for such week shall be the day of such week upon which such
Settlement Statement is so due.
"Yield Period" with respect to any Asset Tranche means:
(a) if Earned Discount is computed by reference to the CP Rate, a
period of 1 to and including 45 days;
(b) if Earned Discount in respect thereof is computed by reference to
the Adjusted Eurodollar Rate, a period of one, two or three months; and
(c) if Earned Discount in respect thereof is computed at the Base
Rate, a period of 1 to and including 29 days, in each case, as selected by
the Seller (subject to the approval of the Agent) in accordance with
Section 2.01; provided, however, that from and after the Liquidation Date,
the Agent shall have the right to allocate outstanding Purchaser's Total
Investment to Yield Periods of such duration as shall be selected by it;
and provided, further, that:
(i) any Yield Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day;
provided, however, that if Earned Discount in respect of such Yield Period
is computed by reference to the Adjusted Eurodollar Rate, and such next
succeeding Business Day is in the next calendar month, then such Yield
Period shall end on the next preceding Business Day;
(ii) whenever any Yield Period as to which Earned Discount accrues at
the Adjusted Eurodollar Rate commences on the last Business Day in a month
or on a day for which there is no numerically corresponding day in the
month in which such Yield Period ends, the last day of such Yield Period
shall occur on the last Business Day of the last complete month through
which such Yield Period was scheduled to remain in effect;
(iii) if a CP Disruption Event shall have occurred and be continuing,
the Purchaser, or the Agent on the Purchaser's behalf, may, upon notice to
the Seller, terminate any Asset Tranche then in effect and funded by
Commercial Paper Notes;
(iv) all Yield Periods which commence before the Liquidation Date and
would otherwise end on a date occurring after the Liquidation Date shall
end on the Liquidation Date;
(v) if the Purchaser or any Liquidity Bank shall notify the Agent that
a Eurodollar Disruption Event as described in clause (a) of the definition
of "Eurodollar Disruption Event" has occurred, the Agent shall in turn so
notify the Seller, whereupon all Asset Tranches in respect of which Earned
Discount accrues at the Adjusted Eurodollar Rate for the then current Yield
Period shall immediately be converted into Asset Tranches in respect of
which Earned Discount accrues at the Base Rate for the remainder of such
Yield Period; and
(vi) if the Purchaser and the Seller shall not have agreed as to the
reallocation and funding of any Asset Tranche in respect of which the Yield
Period is expiring by the close of business on the third Business Day
preceding the date of such expiration, then the Purchaser's Tranche
Investment allocated to such Asset Tranche shall be allocated to Asset
Tranches accruing Yield at either the Adjusted Eurodollar Rate or the CP
Rate, as selected by the Purchaser by notice thereof to the Agent, for a
Yield Period of 30 days.
The Purchaser shall, on the first day of each Yield Period, notify the Agent of
the Earned Discount Rate for the Purchaser Tranche Investment allocated to each
such Yield Period.
B. Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC in the State of New York and
not specifically defined herein) are used herein as defined in such Article 9.
C. Computation of Time Periods. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
SCHEDULES AND EXHIBITS
to Receivables Purchase Agreement
SCHEDULES
SCHEDULE 6.01(e) Certain Regulatory Issues
SCHEDULE 6.01(j) Description of Litigation of Seller
SCHEDULE 6.01(n) List of Offices of Seller where
Records Are Kept
SCHEDULE 6.01(o) List of Lock-Box Banks
SCHEDULE 6.01(p)-1 Forms of Contracts
SCHEDULE 6.01(p)-2 Description of Credit and Collection
Policy
SCHEDULE 6.01(p)-3 Contract Term Criteria
SCHEDULE 6.02(h) Description of Material Adverse
Changes of UPAC
SCHEDULE 6.02(e) Certain Regulatory Issues
SCHEDULE 6.02(i) Description of Litigation of UPAC
SCHEDULE 6.02(k) List of Offices of UPAC
SCHEDULE 7.03(h) Schedule of Indebtedness of Seller
SCHEDULE 7.06(i) Schedule of Indebtedness of UPAC
EXHIBITS
EXHIBIT 1.02 Form of Notice
EXHIBIT 3.03(a) Form of Settlement Statement
EXHIBIT 3.03(b) Form of Weekly Report
EXHIBIT 5.01(g) Form of Lock-Box Agreement
EXHIBIT 5.01(k)-1 Form of Opinion of Counsel for Seller
as to Authority, Perfection, Etc.
EXHIBIT 5.01(1)-1 Form of "True Sale" Opinion of Counsel
for Seller
EXHIBIT 5.01(l)-2 Form of "Non-Substantive
Consolidation" Opinion of Counsel for
Seller
EXHIBIT 5.01(r) Tax Sharing Agreement
EXHIBIT 7.02(j)-1 Notice to Obligors
EXHIBIT 7.02(j)-2 Notice to Insurance Carriers
EXHIBIT 7.02(j)-3 Notice to Insurance Agents
CHICAGO4 1115842v7
CHICAGO4 1115842v5 May 23, 2000 (05:05pm)
CHICAGO4 1115842v4 May 19, 2000 (01:59pm)
