EXHIBIT 10.1
RECEIVABLE, ACQUISITION AND UNDERWRITING AGREEMENT
(MM&S/WULA)
Agreement made this 1st day of April, 1998, by and between WESTERN
UNITED LIFE ASSURANCE COMPANY (hereinafter "WESTERN"), a Washington corporation
with principal offices at 000 X. Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, and
METROPOLITAN MORTGAGE & SECURITIES CO., INC. (hereinafter "METROPOLITAN"), a
Washington corporation with its principal offices at 000 X. Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxx 00000-0000, (hereinafter referred to jointly as the
"Parties") ("Agreement").
WITNESSETH
WHEREAS, METROPOLITAN engages in the business of purchasing and selling
mortgage loans, lotteries, annuities and other cash flows (hereinafter
"Receivables") and maintains subsidiaries, internal staff and operations to
support such activities;
WHEREAS, WESTERN is a company licensed to transact the business of
insurance in the State of Washington and which, for investment purposes in
relation to its conduct of the business of insurance, engages in investing in
and selling Receivables, but WESTERN does not maintain internal staff or
operations to support such activities;
WHEREAS, METROPOLITAN has the personnel, systems and expertise to
provide to WESTERN Receivable acquisition, underwriting and sales services; and
WHEREAS, WESTERN desires to obtain from METROPOLITAN Receivable
acquisition and underwriting services.
NOW, THEREFORE, far the foregoing reasons and in consideration of the
mutual promises, covenants and agreements set forth herein, the Parties promise,
covenant and agree as follows:
I. REPRESENTATIONS AND WARRANTIES OF METROPOLITAN
METROPOLITAN represents and warrants to WESTERN that:
A. METROPOLITAN is a corporation duly organized, validly existing and
in good standing under the laws of the State of Washington.
B. METROPOLITAN is licensed or qualified and in good standing in each
of the states where the laws require licensing or qualification in
order to conduct METROPOLITAN'S Receivable acquisition, or METROPOLITAN
is exempt under applicable law from such licensing or qualification.
C. The consummation of the transactions contemplated herein have been
validly authorized, and all requisite corporate action has been taken
by METROPOLITAN to make this Agreement binding upon METROPOLITAN, in
accordance with its terms.
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D. The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of METROPOLITAN.
E. The execution and delivery of this Agreement, the acquisition and
underwriting of Receivables by METROPOLITAN, the performance of the
other services and transactions contemplated hereby and the fulfillment
of and compliance with the terms and conditions of this Agreement will
not conflict with or result in a breach of any of the terms of
METROPOLITAN'S articles of incorporation, bylaws or any other
agreement, instrument, law, regulation, rule, order or judgment to
which METROPOLITAN is now a party or by which it is bound. METROPOLITAN
is not subject to any agreement, instrument, law, regulation, rule,
order or judgment which would impair the ability of WESTERN to enforce
any acquired Receivable according to its terms, or which could impair
the value of any Receivable acquisition by WESTERN pursuant to this
Agreement.
F. METROPOLITAN does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in
this Agreement.
G. There is no action, suit, proceeding or investigation pealing or
threatened against METROPOLITAN which, either in any one instance or in
the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of
METROPOLITAN or in any material impairment of the right or ability of
METROPOLITAN to carry on its business substantially as now conducted or
which would draw into question the validity of this Agreement or of any
action taken or to be taken in connection with the obligations of
METROPOLITAN contemplated herein or which would be likely to impair
materially the ability of METROPOLITAN to perform under the terms of
this Agreement.
H. No consent, approval, authorization or order of any court or
governmental agency or body is required for METROPOLITAN'S execution,
delivery and performance of or compliance with this Agreement.
I. The services provided by METROPOLITAN hereunder shall be conducted
in accordance with generally accepted business practices in all
respects, as applicable to each respective activity.
II. REPRESENTATIONS AND WARRANTIES OF WESTERN
WESTERN represents and warrants to METROPOLITAN THAT:
A. WESTERN is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington.
B. WESTERN is licensed or qualified and in good standing in each of the
states where the laws require licensing or qualification in order to
hold and enforce the terms of its Receivables and conduct its business,
or WESTERN is exempt under applicable law from such licensing or
qualification.
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C. The consummation of the transactions contemplated herein have been
validly authorized, and all requisite corporate action has been taken
by WESTERN to make this Agreement binding upon WESTERN, in accordance
with its terms.
D. The consummation of the transactions contemplated by this Agreement
are in the ordinary course of business of WESTERN.
E. The execution and delivery of this Agreement, the fulfillment of and
compliance with the terms and conditions of this Agreement, will not
conflict with or result in a breach of any of the terms of WESTERN'S
articles of incorporation, bylaws or any other agreement, instrument,
law, regulation, rule, order or judgment to which WESTERN is now a
party, by which it is bound or its property is subject, which would
impair the ability of METROPOLITAN to underwrite and acquire the
Receivables in accordance with the terms of this Agreement.
F. WESTERN does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in
this Agreement.
G. There is no action, suit, proceeding or investigation pending or
threatened against WESTERN which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of WESTERN or in
any material impairment of the right or ability of WESTERN to carry on
its business substantially as now conducted or which would draw into
question the validity of this Agreement or of any action taken or to be
taken in connection with the obligation of WESTERN contemplated herein
or which would be likely to impair materially the ability of WESTERN to
perform under the terms of this Agreement.
H. No consent, approval, authorization or order of any court or
government agency or body is required for WESTERN'S execution, delivery
and performance of or compliance with this Agreement except as follows:
pursuant to RCW 48.31B.030(1)(b), prior notice of this Agreement is
required to be provided to the office of the Washington State Insurance
Commissioner at least sixty (60) days (or such shorter period as the
Commissioner may permit) before the transaction is entered into, and
the Commissioner must declare such notice to be sufficient and not
disapprove the transaction within that time period. Also pursuant to
RCW 48.31B.030(1)(b) and subject to the same requirements as outlined
above, all modifications hereto are required to be filed with the
Office of the Washington State Insurance Commissioner.
III. RECEIVABLE ACQUISITION AND SALES SERVICES
A. GENERAL DUTIES AND AUTHORITY
METROPOLITAN shall provide Receivable underwriting, acquisition and
sales services to WESTERN which shall be performed substantially in compliance
with the following:
1. METROPOLITAN shall secure opportunities for WESTERN to purchase
and sell Receivables through the use of METROPOLITAN'S acquisition
system, industry contacts and the other methods developed by
METROPOLITAN for its own Receivable purchases.
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2. In reviewing the Receivables offered for purchase to, or for sale
from, WESTERN, METROPOLITAN shall review, among other things, the
Receivable loan-to-value security value, security condition, payment
record, payor's credit, security title reports and legal documents.
3. METROPOLITAN or its agent shall close the Receivable acquisition
or sale in a manner and using practices which are consistent with
industry standards for the type of Receivable and the location where
the Receivable acquisition or sale is closed.
4. Loans resulting from financing that may be provided by
METROPOLITAN or its affiliates as a means to induce the purchase of
property (e.g., for the financing of repossession resales or other
seller financing) may be placed in WESTERN'S Receivable portfolio if
such Receivables are consistent with WESTERN'S investment
guidelines.
5. METROPOLITAN shall prepare and maintain such books, records,
computer systems and procedures as shall be required and necessary
to maintain control over the day-to-day activities regarding offers
to purchase and closing of Receivable purchases and for offers to
sell and closing of Receivable Sales.
6. METROPOLITAN shall furnish to WESTERN such periodic, special or
other reports or information as requested by WESTERN, including
reports of total Receivables purchased and sold, closing periods and
closing costs. All such reports, documents or information shall be
provided by and in accordance with all reasonable instructions and
directions which WESTERN may give.
7. METROPOLITAN may engage in any other activity or procedure which
METROPOLITAN deems necessary or appropriate and in the best interest
of WESTERN in connection with the acquisition, sale and closing of
Receivable transactions for WESTERN.
B. PURCHASE AND SALE PRICE AND ORIGINATION COSTS
1. WESTERN shall pay METROPOLITAN for the Receivables acquired
pursuant to this Agreement in an amount no greater than
METROPOLITAN'S cost, consisting of METROPOLITAN'S purchase price and
related acquisition costs. Such costs, if charged, may be audited
periodically at WESTERN'S request and shall be adjusted as
appropriate to reflect actual audited results.
2. METROPOLITAN shall assist WESTERN in the sale of Receivables,
whether to affiliates or to third parties. Such sales shall be at a
market price which is fair and reasonable and acceptable to Western.
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C. INVESTMENT GUIDELINES AND MINIMUM YIELD REQUIREMENTS
1. METROPOLITAN shall acquire Receivables for WESTERN which are
consistent with WESTERN'S then current investment and yield
requirements. WESTERN'S current investment guidelines and yield
requirements are set forth in Addendum I hereto. WESTERN may change its
investment guidelines and yield requirements at any time by written
notice to METROPOLITAN. Such changes will apply prospectively for all
acquisitions subsequent to METROPOLITAN'S receipt of notice of change.
2. METROPOLITAN may acquire Receivables for WESTERN which do not on an
individual or pooled basis satisfy WESTERN'S then current investment
guidelines or yield requirements, if METROPOLITAN believes such
investment to be in WESTERN'S best interest and by mutual agreement of
the parties. Such investments are subject to WESTERN'S right to reject
pursuant to Section C.1 herein below. Notwithstanding the foregoing,
METROPOLITAN shall not acquire any Receivables for WESTERN which do not
comply with applicable statutes and regulations regarding WESTERN'S
investments.
D. RIGHT TO REJECT
1. WESTERN shall have the right at anytime to review any Receivable
acquired pursuant to this Agreement and to reject and void any
Receivable acquisition ab initio, if the Receivable in WESTERN'S
opinion is not consistent with its investment guidelines, as such
guidelines existed at the time of the acquisition or is otherwise
objected to by Western. Any Receivable not rejected within three months
of acquisition is deemed accepted. Any Receivable which is rejected
shall be purchased by METROPOLITAN at WESTERN'S purchase price, and
WESTERN shall pay METROPOLITAN all payments, fees or other income
received to date on account of such Receivable. In turn, METROPOLITAN
shall pay to WESTERN an amount of interest, based on the average prime
interest rate during the period WESTERN held such Receivable to
compensate WESTERN for the use of its funds for such period of time.
2. By execution of this Agreement, WESTERN is not obligated to sell any
Receivables proposed by METROPOLITAN for sale, and WESTERN shall have
the right to review and approve or reject any proposed sales of
Receivables prior to entering into any Agreement to sell any
Receivables.
E. RECEIVABLE ACQUISITION/NO RIGHT OF FIRST REFUSAL
WESTERN acknowledges that METROPOLITAN provides Receivable
acquisition services to itself and to others. WESTERN acknowledges that
it has no priority or right of first refusal to acquire any
Receivable(s) from METROPOLITAN, and METROPOLITAN may determine, in its
sole discretion, subject to WESTERN'S underwriting guidelines and yield
requirements, which Receivables, if any, to provide to WESTERN for
acquisition.
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IV. GENERAL
A. NON-EXCLUSIVITY OF AGREEMENT
This Agreement is non-exclusive. WESTERN reserves the right and
privilege to employ and engage, from time to time, any other entity or person to
perform any of the services which are the subject of this Agreement or may
itself perform any such services. Such actions by WESTERN shall not be construed
as an event of termination of this Agreement.
B. DELEGATION
METROPOLITAN may utilize, delegate to or subcontract with any of its
subsidiaries, divisions, affiliates or third parties in connection with its
performance of the terms of this Agreement in full or in part, as deemed
appropriate, at METROPOLITAN'S discretion.
C. RIGHT TO EXAMINE METROPOLITAN'S RECORDS
WESTERN shall have the right to examine and audit any and all of the
books, records or other information of METROPOLITAN, with respect concerning
this Agreement or the receivables acquired under the terms of this Agreement,
during business hours or at such other times as may be reasonable under
applicable circumstances.
D. EVENT OF DEFAULT
The following shall be construed as an event of default:
1. The failure by WESTERN to deliver any sums required to be paid to
METROPOLITAN pursuant to the terms of this Agreement.
2. The failure of either Party to perform in accordance with the terms
and conditions of this Agreement, to the extent that such failure to
perform shall consistute a material breach of a term or condition of
this Agreement.
3. In the event that METROPOLITAN shall file bankruptcy, or otherwise
be determined to be insolvent, this Agreement may be terminated by
WESTERN.
E. TERMINATION
1. Either Party may terminate this Agreement by providing written
notice of termination to the other Party, in which event this Agreement
shall terminate immediately upon receipt of such notice or at such
later date as provided in said notice.
2. In the event of a default as defined in Section D.2. hereinabove,
the non-defaulting Party may, in lieu of immediately terminating this
Agreement, provide written notice of default to the defaulting Party,
which notice shall set forth the time period for cure, which shall be
no less than ten (10) days from receipt of the notice by the defaulting
Party. If the breaching Party does not cure
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the default within the time period set forth in this notice, this
Agreement shall terminate upon expiration of said time period.
F. NOTICE
Notice under this Agreement shall be in writing and delivered by hand,
receipt acknowledged, or delivered by registered certified United States mail,
return receipt requested, and if refused, by regular United States mail,
addressed to the Parties as stated below:
ATTN: PRESIDENT
METROPOLITAN MORTGAGE & SECURITIES CO., INC.
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
ATTN: PRESIDENT
WESTERN UNITED LIFE ASSURANCE COMPANY
000 X. Xxxxx Xxxxxx
Xxxxxxx, XX 00000
G. BINDING EFFECT
This Agreement sets forth the entire Agreement between the Parties and
shall be binding upon all successors and assigns of both of the Parties hereto
and shall be construed under the laws of the State of Washington.
H. PRIOR AGREEMENT
This Agreement replaces and supersedes each and every prior agreement
executed by the Parties related to the Receivable Acquisition and Underwriting
services provided by METROPOLITAN to WESTERN, except with respect to any
continuing liability of METROPOLITAN as to yield guarantees and loss reserves
for Receivables acquired prior to April 1, 1998.
[SIGNATURE PAGE FOLLOWS]
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This Agreement is executed the date, month and year first above written
by the duly authorized officers of each Party.
METROPOLITAN MORTGAGE & WESTERN UNITED LIFE ASSURANCE
SECURITIES CO., INC COMPANY
By /s/ C. Xxxx Xxxxxxxx, Xx. By /s/ Xxxx Xxx Xxxxxxx
------------------------------------ --------------------------------
C. Xxxx Xxxxxxxx, Xx. Xxxx Xxx Xxxxxxx,
Chief Executive Officer President
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ADDENDUM 1
WESTERN UNITED LIFE ASSURANCE COMPANY
INVESTMENT YIELD AND UNDERWRITING REQUIREMENTS
ACQUISITION MINIMUM APPRAISAL
INVESTMENT YIELD REQUIREMENTS LOAN-TO-VALUE REQUIRED? OTHER
---------- ------------------- ------------- --------- -----
Real estate xxxxx, No lower than Metropolitan's current yield 80% maximum first liens, Yes, at time of
individual loan requirements for its own acquisitions. residential 75% non residential acquisition
acquisitions
Alternative Cash No lower than Metropolitan's Negotiated each N/A
Flows (lotteries, current yield requirements for its transaction
annuities, etc.) own acquisitions.
Real estate loans, bulk No lower than Metropolitan's current yield 80% maximum first liens, Yes, at time of
purchases requirements for its own acquisitions. residential 75% non residential acquisition
