EXHIBIT 10 (m)
$30,000,000
THIRD AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF NOVEMBER 1, 1995
BETWEEN
DESIGN BENEFIT PLANS, INC.,
AS SELLER
AND
NATIONAL FUNDING CORPORATION,
AS BUYER
TABLE OF CONTENTS
Page
ARTICLE I
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . 18
ARTICLE II
Agreement to Purchase and Sell . . . . . . . . . . . . . . . . . . . . 18
2.1 Agreement to Purchase and Sell . . . . . . . . . . . . . . . . . 18
2.2 Purchase and Sale Procedure . . . . . . . . . . . . . . . . . . . 19
2.3 Payment of Purchase Price; Purchase Fee . . . . . . . . . . . . . 20
2.4 Reassignment . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.5 Interest on Overdue Payments . . . . . . . . . . . . . . . . . . 22
2.6 Fee and Interest Calculations . . . . . . . . . . . . . . . . . . 22
2.7 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . 22
2.8 Distribution of Collections and Other Payments . . . . . . . . . 22
2.9 Netting of Payments . . . . . . . . . . . . . . . . . . . . . . . 22
2.10 Grant of Security Interest . . . . . . . . . . . . . . . . . . . 23
ARTICLE III
Collections; Maintenance of Records . . . . . . . . . . . . . . . . . 23
3.1 Collections and Applications . . . . . . . . . . . . . . . . . . 23
3.2 Collections by the Seller . . . . . . . . . . . . . . . . . . . . 26
3.3 Maintenance of Records . . . . . . . . . . . . . . . . . . . . . 28
3.4 Rebates, Adjustments and Reductions; Modifications; Additions;
Repurchase of DBP Lead Receivables . . . . . . . . . . . . . . . 28
ARTICLE IV
Settlements; Termination . . . . . . . . . . . . . . . . . . . . . . . 30
4.1 Settlement Statements . . . . . . . . . . . . . . . . . . . . . . 30
4.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
Covenants, Representations and Warranties . . . . . . . . . . . . . . 31
5.1 Representations and Warranties of the Seller . . . . . . . . . . 31
5.2 Covenants of the Seller. . . . . . . . . . . . . . . . . . . . . 34
5.3 Effect of Breach by the Seller. . . . . . . . . . . . . . . . . . 39
ARTICLE VI
Conditions to Effectiveness; Purchases . . . . . . . . . . . . . . . . 39
6.1 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.2 Condition to each Purchase . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII
Events of Termination . . . . . . . . . . . . . . . . . . . . . . . . 42
7.1 Events of Termination . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 45
8.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . 46
8.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.5 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 47
8.6 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 47
8.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.11 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . 48
8.12 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 48
8.13 Entire Agreement; Amendment and Restatement . . . . . . . . . . . 48
Schedules
SCHEDULE I Chief Executive Office, Corporate Names and Subsidiaries of the
Seller
SCHEDULE II Accounts for Receiving Collections on the Receivables
SCHEDULE III Description of Chargeback Procedures
SCHEDULE IV Insurance Agency Agreements (Related to the Program)
Exhibits
Exhibit A-1 Form of Seller Assignment
Exhibit A-2 Form of ▇▇▇▇▇▇▇ Assignment
Exhibit A-3 Form of CNL Assignment
Exhibit B-1 Form of Seller Agent Contract
Exhibit B-2 Form of CNL Agent Contract
Exhibit B-3 Form of ▇▇▇▇▇▇▇ Agent Contract
Exhibit C-1 Form of Opinion of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, counsel to the
Seller
Exhibit C-2 Form of Opinion of Assistant General Counsel of the Seller
Exhibit C-3 Form of Opinion of Assistant General Counsel of Financial
Services
Exhibit D Form of Certificate
Exhibit E CNL Qualifying Insurance Policies
Exhibit F Form of Report of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
Exhibit G-1 Form of Acknowledgement of Assignment (for each Insurance
Company which is not an Eligible Fronting Company)
Exhibit G-2 Form of Acknowledgement of Assignment (for each Eligible
Fronting Company)
Exhibit H Form of Settlement Statement
Exhibit I Form of Managing General Agent Agreement
THIRD AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
This Third Amended and Restated Receivables Purchase Agreement is dated as
of November 1, 1995, and is between DESIGN BENEFIT PLANS, INC., an Illinois
corporation (the "Seller"), and NATIONAL FUNDING CORPORATION, a Delaware
corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Seller in the ordinary course of its business generates
Receivables (as hereinafter defined);
WHEREAS, the Seller desires to sell to the Buyer, and, subject to the terms
and conditions hereof, the Buyer is agreeable to purchasing, a percentage
Undivided Interest (as hereinafter defined) in all of the Seller's right, title
and interest in, to and under Eligible Receivables (as hereinafter defined) and
in the rights of the Seller in, to and under all guarantees thereof and all
collateral security therefor; and
WHEREAS, the Seller and the Buyer entered into a Second Amended and
Restated Receivables Purchase Agreement, dated as of October 1, 1994 (the
"Second Amended Purchase Agreement"), and Seller has requested that the Second
Amended Purchase Agreement be amended and restated as provided herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
A. CERTAIN DEFINED TERMS. As used in this Agreement the following
capitalized terms shall have the following meanings and, unless the context
indicates otherwise, shall include the plural as well as the singular:
"Acknowledgment of Assignment" shall mean, with respect to each Insurance
Company, the Acknowledgment of Assignment in the form of Exhibit G-1 (for each
Insurance Company which is not an Eligible Fronting Company) or Exhibit G-2 (for
each Eligible Fronting Company) executed and delivered by such Insurance Company
to L/C Bank.
"Addition" shall mean on a Closing Date, an increase in the Buyer's
Undivided Interest equal to the difference between (a) the Undivided Interest of
the Buyer as determined as of the Date of Sale immediately preceding such
Closing Date and assuming the remittance to the Buyer of all Principal
Collections attributable to its Undivided Interest which are held by the Seller
on such Closing Date on account of the Settlement Period preceding such Closing
Date and (b) the Undivided Interest of the Buyer in the Portfolio of Eligible
Receivables after giving effect to the purchase and sale on such Closing Date.
"Affiliate" shall mean any Person which, directly or indirectly, controls,
is controlled by, or is under common control with, another Person. For purposes
of this definition, a Person shall be deemed to be "controlled by" another
Person if the other Person possesses, directly or indirectly, power either to
(i) vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (ii) direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
"Agent Contract" shall mean (i) each financing agreement and note in the
form of Exhibit B-1 (with such modifications as shall be approved by the Buyer
and L/C Bank) by which an Agent Obligor is bound to make payments to the Seller
to repay funds lent by the Seller to such Agent Obligor and to pay interest
and/or other finance charges to Seller by such Agent Obligor, and pursuant to
which such Agent Obligor has assigned his, her or its Assigned Commissions as
collateral, (ii) each promissory note and security agreement in the form of
Exhibit B-2 (with such modifications as shall be approved by the Buyer and L/C
Bank) by which a CNL Agent Obligor is bound to make payments to CNL to repay
funds lent by CNL to such CNL Agent Obligor and to pay interest and/or finance
charges to CNL by such CNL Agent Obligor and pursuant to which such CNL Agent
Obligor has assigned his, her or its Assigned Commissions as collateral, and
(iii) each financing agreement - note - security agreement in the form of
Exhibit B-3 (with such modifications as shall be approved by Buyer and L/C Bank)
by which a ▇▇▇▇▇▇▇ Agent Obligor is bound to make payments to Pioneer Life to
repay funds lent by Pioneer Life to such ▇▇▇▇▇▇▇ Agent Obligor and to pay
interest and/or other finance charges to Pioneer Life by such ▇▇▇▇▇▇▇ Agent
Obligor, and pursuant to which such ▇▇▇▇▇▇▇ Agent Obligor has assigned his, her
or its Assigned Commissions as collateral.
"Agent Obligor" shall mean any agent of the Seller who is obligated to make
payments to the Seller on an Agent Receivable.
"Agent Receivable" shall mean the obligation of a Person to repay the
principal amount of and interest and other finance charges on a loan made by the
Seller to such Person, in the ordinary course of its business, and which loan is
secured by amounts due or to become due to such Person as commissions on
insurance policies sold by such Person (or Persons within such Person's
supervisory control) as an agent of the Seller; provided, however, that "Agent
Receivable" shall not include any such obligation of any Person, unless the
Seller designates such Person as a Person whose obligations are to be "Agent
Receivables" in a written notice to the Buyer as provided herein.
"Agreement" shall mean this Third Amended and Restated Receivables Purchase
Agreement, as the same may from time to time be amended, supplemented or
otherwise modified as provided for herein.
"ANB" shall mean American National Bank and Trust Company of Chicago, a
national banking association.
"Application Account" shall mean the account of the Buyer held and
maintained at the offices of ANB located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and in the name of the Buyer and over which the Buyer shall have
sole dominion and control, entitled:
Name of Account Account No.
"National Funding Corporation, 4236114
Proceeds of Design Benefit Plans,
Inc. Receivables - Application
Account".
"Assigned Commissions" shall mean the aggregate first-year and renewal-year
commissions due or to become due to Agent Obligors, CNL Agent Obligors, ▇▇▇▇▇▇▇
Agent Obligors, any CNL Managing General Agent or ▇▇▇▇▇▇▇ with respect to
insurance policies issued by Insurance Companies and sold by such Agent
Obligors, CNL Agent Obligors or ▇▇▇▇▇▇▇ Agent Obligors or any CNL Managing
General Agent or ▇▇▇▇▇▇▇, which commissions have been assigned (i) by such Agent
Obligors to the Seller, (ii) by such CNL Agent Obligors or such CNL Managing
General Agent to CNL and (iii) by such ▇▇▇▇▇▇▇ Agent Obligors or ▇▇▇▇▇▇▇ to
Pioneer Life, in each case as collateral to secure the payment of the
Receivables owing by such Agent Obligors, CNL Agent Obligors or ▇▇▇▇▇▇▇ Agent
Obligors or any CNL Managing General Agent or ▇▇▇▇▇▇▇, as the case may be.
"Assignment" shall mean each instrument of assignment, substantially in the
form of Exhibits ▇-▇, ▇-▇ or A-3 attached hereto, delivered pursuant to
Section 2.2.
"Authorized Control Level RBC" shall have the same meaning as the term
"Authorized Control Level RBC" as defined in the NAIC Risk-Based Capital (RBC)
for Life and/or Health Insurers Model Act, as such term may be amended by the
NAIC from time to time.
"Bankers Multiple Line" shall mean Bankers Multiple Line Insurance Company,
a New York insurance corporation.
"Bankers Security Life" shall mean Bankers Security Life Insurance Society,
a New York insurance corporation.
"Business Day" shall mean any day of the week other than a Saturday, Sunday
or a day on which commercial banks located in Chicago, Illinois, Milwaukee,
Wisconsin or any city in which the principal office of the Trustee or the
Remarketing Agent is located are authorized or required by law to close.
"Business Day Received" shall have the meaning assigned in subsection
3.1(d).
"Buyer" shall have the meaning assigned in the recitals hereto.
"Buyer Security Agreement" shall mean the Pledge and Security Agreement,
dated as of October 1, 1994, made by the Buyer to ANB, as the same may from time
to time be amended, supplemented or otherwise modified as provided herein.
"Capital and Surplus" shall mean, with respect to an Insurance Company,
such Insurance Company's capital and surplus as reported on such Insurance
Company's annual or quarterly accounting statements prepared in accordance with
Statutory Accounting Principles most recently filed with the department of
insurance of such Insurance Company's state of incorporation.
"Closing Date" shall have the meaning assigned in subsection 2.2(a).
"CNL" shall mean Connecticut National Life Insurance Company, an Illinois
corporation.
"CNL Agent Obligor" shall mean any agent of CNL who is obligated to make
payments to CNL on a CNL Agent Receivable.
"CNL Agent Receivable" shall mean the obligation of a Person to repay the
principal amount of and interest and other finance charges on a loan made by CNL
to such Person, in the ordinary course of its business, and which loan is
secured by amounts due or to become due to such Person from CNL as commissions
on CNL Qualifying Insurance Policies sold by such Person (or Persons within such
Person's supervisory control) as an agent of the CNL Managing General Agent;
provided, however, that "CNL Agent Receivable" shall not include any such
obligation of any Person, unless the Seller designates such Person as a Person
whose obligations are to be "CNL Agent Receivables" in a written notice to Buyer
as provided herein.
"CNL Managing General Agent" shall mean an entity which is a party to a
Managing General Agent Agreement with CNL.
"CNL Managing General Agent Contract" shall mean the Managing General Agent
Secured Promissory Note and the Managing General Agent Security Agreement in the
form of Exhibit B-2 (with such modifications as shall be approved by the Buyer
and L/C Bank) by which one or more CNL Managing General Agents is bound to make
payments to CNL to repay funds lent by CNL to any CNL Managing General Agent,
and to pay interest and finance charges to CNL by any CNL Managing General
Agent, and pursuant to which any CNL Managing General Agent, has assigned its
Assigned Commissions as collateral.
"CNL Managing General Agent Receivable" shall mean the obligation of one or
more CNL Managing General Agents, to repay the principal amount of and interest
and other finance charges on a loan made by CNL to any CNL Managing General
Agent, in the ordinary course of its business, and which loan is secured by
amounts due or to become due to any CNL Managing General Agent, from CNL as
commissions on CNL Qualifying Insurance Policies sold by agents of any CNL
Managing General Agent.
"CNL Qualifying Insurance Policies" shall mean insurance policies issued by
CNL of the type described on Exhibit E attached hereto.
"CNL Receivables" shall mean, collectively, CNL Agent Receivables and CNL
Managing General Agent Receivables.
"Collateral Account" shall have the meaning assigned in the Buyer Security
Agreement.
"collections" shall mean the collective reference to all principal
collections and all finance charge collections.
"Collections" shall mean the collective reference to all Principal
Collections and all Finance Charge Collections.
"Complete Servicing Transfer" shall have the meaning assigned in subsection
3.2(d).
"Consent and Agreement" shall mean the Consent and Agreement, dated as of
the date hereof, among the Seller, the Buyer, Financial Services and L/C Bank,
as the same may from time to time be amended, supplemented or otherwise
modified.
"Contract" shall mean any Agent Contract, in the case of the Agent
Receivables, CNL Agent Receivables or ▇▇▇▇▇▇▇ Agent Receivables, a CNL Managing
General Agent Contract, in the case of CNL Managing General Agent Receivables,
the ▇▇▇▇▇▇▇ Contract, in the case of ▇▇▇▇▇▇▇ Marketing Manager Receivables, or
an Insurance Agency Agreement in the case of the DBP Lead Receivables.
"Date of Sale" shall have the meaning assigned in subsection 2.2(b).
"DBP Lead Commissions" shall mean the aggregate first-year and renewal
commissions payable by an Insurance Company to the Seller pursuant to the
Insurance Agency Agreement between such Insurance Company and the Seller with
respect to an Insurance Policy, other than Assigned Commissions.
"DBP Lead Obligor" shall mean, with respect to each DBP Lead Receivable,
the Insurance Company which is obligated to pay DBP Lead Commissions with
respect thereto.
"DBP Lead Receivable" shall mean, with respect to each Insurance Policy, an
amount equal to 75% of the aggregate first-year DBP Lead Commissions payable by
such Insurance Company to the Seller in respect of such Insurance Policy;
provided, however, that "DBP Lead Receivable" shall not include any such DBP
Lead Commissions payable by an Insurance Company unless the Seller designates
such Insurance Company as an Insurance Company whose first year DBP Lead
Commissions are to be "DBP Lead Receivables" in a written notice to the Buyer as
provided herein.
"Default Rate" as of the last day of any Settlement Period shall mean the
product of (i) four times (ii) the ratio (expressed as a percentage), with
respect to any quarterly period (consisting of such Settlement Period and the
preceding two Settlement Periods), of the aggregate principal amount of
Defaulted Receivables arising (or written off) during such quarterly period to
the Gross Amount Due on the Portfolio of Eligible Receivables as of the last day
of such period.
"Defaulted Receivable" shall mean a Receivable as to which any amount
thereon remains unpaid for more than 60 days after the original due date
thereof.
"Dollars" and "$" shall mean lawful money of the United States of America.
"Eligible Fronting Company" shall mean the collective reference to
Philadelphia Life Insurance Company, a Pennsylvania stock life insurance
corporation, Foundation Health, a California Health Plan, Mutual of Omaha
Insurance Company, United World Life Insurance Company, Foundation Health, a
Texas Health Plan, Manhattan National Life Insurance Company, Blue Cross and
Blue Shield of New Jersey, Inc., Provident Life and Accident Insurance Company,
Continental Life & Accident Company, Time Insurance Company, and United Health
and Life Insurance Company of Illinois, upon their execution of an
Acknowledgement of Assignment in the form of Exhibit G-2 and each insurance
company or other corporation legally authorized to issue insurance contracts as
shall be proposed by the Seller and approved by the Buyer and which shall first
execute an Acknowledgement of Assignment in the form of Exhibit G-2.
"EFC Receivable" shall mean any Receivable with respect to which any of the
Assigned Commissions securing such Receivable, or any DBP Lead Commissions
giving rise to such Receivable, arise out of policies issued by Eligible
Fronting Companies.
"Eligible Receivable" shall mean a Receivable:
a. which is owned by the Seller free and clear of all security
interests, liens, charges and encumbrances, except for liens granted in the
Assigned Commissions securing such Receivable or the DBP Lead Commissions
underlying such Receivable to Insurance Companies and agents of the Seller
in the ordinary course of business and consistent with past practice, all
of which liens are subordinate in right to the liens granted to the Buyer
hereunder pursuant to subordination agreements in form and substance
satisfactory to L/C Bank;
b. which has arisen in the ordinary course of the Seller's
business, or in the case of CNL Agent Receivables, CNL Managing General
Agent Receivables, ▇▇▇▇▇▇▇ Agent Receivables and ▇▇▇▇▇▇▇ Marketing Manager
Receivables have been sold and assigned to Seller as contemplated by this
Agreement;
c. which represents, the genuine, legal, valid and binding payment
obligation in writing of the Obligor thereon, enforceable by the Seller in
accordance with its terms, and is freely assignable by the Seller to the
Buyer and, upon such assignment, will be enforceable by the Buyer in
accordance with its terms;
d. which complies with all legal requirements of the federal,
state and local jurisdictions where it originated;
e. which is payable in Dollars in the United States of America by
a Person who is an Obligor and who is not, at such time, the Obligor on any
Defaulted Receivable;
f. which is evidenced by a Contract (which, in the case of the
Agent Contracts, shall conform in all material respects to Exhibit ▇-▇, ▇-▇
or B-3, as the case may be) which shall have been delivered to the Buyer at
or before the time of the initial creation of an interest in such
Receivable hereunder;
g. which is not payable by an Obligor which is located or
incorporated in any jurisdiction outside of the United States of America;
h. which, in any case where the provisions of subsection 3.1(b)
shall have become operative, is payable by an Obligor which shall have been
directed to make all payments thereon in accordance with subsection 3.1(b)
to an account over which the Buyer has sole right, title and interest and
dominion and control;
i. which in the case of an Agent Receivable is secured by a valid
assignment and grant of a security interest by the related Agent Obligor to
the Seller of and in all of such Agent Obligor's rights to receive any
commissions, service fees and bonuses payable to such Agent Obligor by the
Seller or any applicable Insurance Company, which security interest in the
case of an Agent Receivable shall, if required pursuant to subsection
5.2(s) of this Agreement, be perfected by the filing of a financing
statement under applicable state law (and such financing statement shall
not have expired or been terminated);
j. which in the case of a ▇▇▇▇▇▇▇ Agent Receivable is secured by a
valid assignment and grant of a security interest by the related ▇▇▇▇▇▇▇
Agent Obligor to Pioneer Life of and in all of such ▇▇▇▇▇▇▇ Agent Obligor's
rights to receive any commissions, service fees and bonuses payable to such
▇▇▇▇▇▇▇ Agent Obligor by Pioneer Life, which security interest in the case
of a ▇▇▇▇▇▇▇ Agent Receivable shall, if required pursuant to subsection
5.2(s) of this Agreement, be perfected by the filing of a financing
statement under applicable state law (and such financing statement shall
not have expired or been terminated) and which ▇▇▇▇▇▇▇ Agent Receivable and
all collateral therefor has been sold and assigned to Seller by Pioneer
Life pursuant to an Assignment in the form of Exhibit A-2 attached hereto;
k. which in the case of a CNL Agent Receivable is secured by a
valid assignment and grant of a security interest by the related CNL Agent
Obligor to CNL of and in all of such CNL Agent Obligor's rights to receive
any commissions, service fees and bonuses payable to such CNL Agent Obligor
by CNL, which security interest in the case of a CNL Agent Receivable
shall, if required pursuant to subsection 5.2(s) of this Agreement, be
perfected by the filing of a financing statement under applicable state law
(and such financing statement shall not have expired or been terminated)
and which CNL Agent Receivable and all collateral therefor has been sold
and assigned to Seller by CNL pursuant to an Assignment in the form of
Exhibit A-3 attached hereto;
l. which in the case of a ▇▇▇▇▇▇▇ Marketing Manager Receivable is
secured by a valid assignment and grant of a security interest by ▇▇▇▇▇▇▇
to Pioneer Life of and in all of ▇▇▇▇▇▇▇'▇ rights to receive any
commissions, service fees and bonuses payable to ▇▇▇▇▇▇▇ by Pioneer Life,
which security interest in the case of a ▇▇▇▇▇▇▇ Marketing Manager
Receivable shall, if required pursuant to subsection 5.2(s) of this
Agreement, be perfected by the filing of a financing statement under
applicable state law (and such financing statement shall not have expired
or been terminated) and which ▇▇▇▇▇▇▇ Marketing Manager Receivable and all
collateral therefor has been sold and assigned to Seller by Pioneer Life
pursuant to an Assignment in the form of Exhibit A-2 attached hereto;
m. which in the case of an CNL Managing General Agent Receivable
is secured by a valid assignment and grant of a security interest by the
applicable CNL Managing General Agent to CNL of and in all of such CNL
Managing General Agent's rights to receive any commissions, service fees
and bonuses payable to such CNL Managing General Agent by CNL, which
security interest in the case of a CNL Managing General Agent Receivable
shall, if required pursuant to subsection 5.2(s) of this Agreement, be
perfected by the filing of a financing statement under applicable state law
(and such financing statement shall not have expired or been terminated)
and which CNL Managing General Agent Receivable and all collateral therefor
has been sold and assigned to Seller by CNL pursuant to an Assignment in
the form of Exhibit A-3 attached hereto;
n. which in the case of an Agent Receivable, a ▇▇▇▇▇▇▇ Agent
Receivable, a ▇▇▇▇▇▇▇ Marketing Manager Receivable bears interest at a rate
greater than the interest rate then prevailing on the Notes;
o. which is not, at the time of the initial creation of an
interest in such Receivable hereunder, subject to any defense, dispute,
offset or counterclaim, whether arising out of the transactions represented
by such Receivable or independently thereof and whether arising out of any
assertion by any Obligor that its obligations in respect of such Receivable
are, or may be, payable to a third party, instead of the owner of such
Receivable, or otherwise;
p. which is not an EFC Receivable, unless, in each case, such
Eligible Fronting Company shall have in full force and effect with the
Seller an Insurance Agency Agreement which shall not have been terminated;
q. which at the time of the initial creation of an interest in
such Receivable hereunder is not a Defaulted Receivable;
r. which has not been designated by the Seller in writing as
ineligible for purchase by the Buyer under this Agreement; provided, that
the Seller shall not be permitted to designate as ineligible any Receivable
subsequent to the sale to the Buyer hereunder of such Receivable (or any
interest on such Receivable); and provided, further, that notwithstanding
any such designation by the Seller, the Buyer shall continue to have a
security interest in all such designated Receivables pursuant to Section
2.10; and
s. which is not at the time of sale hereunder payable by an
Obligor (i) which is subject to any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking arrangement,
adjustment or other relief with respect to it or its debts, (B) seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets, or such Obligor shall
make a general assignment for the benefit of its creditors or (C) seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 90 days from
the entry thereof, or (ii) which shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they
become due.
"Finance Charge Account" shall mean the account of the Buyer held and
maintained at the office of ANB located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and in the name of the Buyer and over which the Buyer shall have
sole dominion and control, entitled:
Name of Account Account
"National Funding Corporation, 4236076
Proceeds of Design Benefit Plans,
Inc. Receivables - Finance
Charge Account."
"finance charge collections" shall mean, with respect to the Agent
Receivables, CNL Agent Receivables, ▇▇▇▇▇▇▇ Agent Receivables, CNL Managing
General Agent Receivables or ▇▇▇▇▇▇▇ Marketing Manager Receivables, all cash
payments and collections made or received on account of the finance charges, if
any, owing on such Receivables including, without limitation, any payments or
collections realized upon the sale of property of any Obligor securing in whole
or in part the payment by such Obligor of a Receivable, any payments or
collections realized under guarantees of payment of such Receivable (including,
without limitation under regional manager agreements, if any) and proceeds of
such Receivable.
"Finance Charge Collections" shall mean, with respect to the Seller's
Portfolio of Eligible Receivables, all cash payments and collections made or
received on account of the Finance Charges, if any, owing on the Eligible
Receivables in which the Buyer has purchased an Undivided Interest, including,
without limitation, any payments or collections realized upon the sale of
property, if any, of any Obligor securing in whole or in part the payment by
such Obligor of an Eligible Receivable, any payments or collections realized
under guarantees, if any, of payment of such Eligible Receivable and proceeds of
such Eligible Receivable.
"Finance Charges" shall mean, with respect to any Agent Receivable, CNL
Agent Receivable, ▇▇▇▇▇▇▇ Agent Receivable, CNL Managing General Agent
Receivable or ▇▇▇▇▇▇▇ Marketing Manager Receivable, the interest and other
finance charges, if any, charged by the Seller, CNL or Pioneer Life, as the case
may be, on such Receivable.
"Financial Services" shall mean Pioneer Financial Services, Inc., a
Delaware corporation.
"Financial Services Credit Agreement" shall mean the Credit Agreement dated
as of December 22, 1993, among Financial Services, ANB, Firstar Bank Milwaukee,
N.A. and Bank One, Rockford N.A., as such agreement may from time to time be
amended, supplemented or otherwise modified in accordance with the terms
thereof.
"Financing Documents" shall mean the collective reference to this
Agreement, the Reimbursement Agreement, the Buyer Security Agreement, the
Consent and Agreement, the Acknowledgements of Assignment, the Tender Pledge
Agreement and the Note Agreements.
"GAAP" shall mean generally accepted accounting principles as in effect
from time to time in the United States.
"Gross Amount Due" shall mean (i) with respect to any Receivable, the
principal amount (net of any write-offs) due and to become due on such
Receivable, (ii) with respect to any DBP Lead Receivable, the initial amount of
such DBP Lead Receivable minus all Collections on such DBP Lead Receivable (net
of any writeoffs, but in no event less than zero) and (iii) with respect to the
Portfolio of Eligible Receivables, the aggregate of the amounts specified in the
preceding clauses (i) and (ii) with respect to the Receivables comprising such
Portfolio of Eligible Receivables.
"Holdback Account" shall mean the account of the Buyer held and maintained
at the office of ANB located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, and in the name of the Buyer and over which the Buyer shall have sole
dominion and control (provided that amounts held therein shall be applied
strictly in accordance with the terms of this Agreement), entitled:
Name of Account Account No.
National Funding Corporation- ▇▇▇▇▇▇▇
"Holdback Account."
"Indemnified Liability" shall have the meaning assigned in Section 8.3.
"Indenture" shall mean the Trust Indenture dated as of October 1, 1994
between the Buyer and PNC Bank, Ohio, National Association, as trustee, as the
same may from time to time be amended, supplemented or otherwise modified.
"Insurance Agency Agreements" shall mean the collective reference to the
insurance agency agreements listed on Schedule IV attached hereto, as each is in
effect on the date hereof or as each such agreement may be amended, supplemented
or otherwise modified in accordance with the terms hereof and such other
insurance agency agreements between Seller and companies which become Insurance
Companies or Eligible Fronting Companies after the date hereof.
"Insurance Companies" shall mean the collective reference to National Group
Life Insurance Company, an Illinois insurance corporation, Pioneer Life
Insurance Company of Illinois, an Illinois insurance corporation, Manhattan
National Life Insurance Company, an Illinois insurance corporation, Connecticut
National Life Insurance Company, a Connecticut corporation, each Eligible
Fronting Company (but only if any EFC Receivables relating to such Eligible
Fronting Company constitute Eligible Receivables hereunder), and each other
insurance company as shall be proposed by the Seller and approved by the Buyer.
"Insurance Policies" shall mean the insurance policies issued by the
Insurance Companies and sold by Agent Obligors, CNL Agent Obligors or ▇▇▇▇▇▇▇
Agent Obligors, under which any commissions that are due or become due to Agent
Obligors, CNL Agent Obligors or ▇▇▇▇▇▇▇ Agent Obligors constitute Assigned
Commissions.
"Investment Grade Obligations" shall mean investments having an NAIC
investment rating of 1 and 2; or a Standard & Poor's rating within the range of
ratings from AAA to BBB-; or a ▇▇▇▇▇'▇ rating within the range of ratings from
Aaa to Baa3.
"L/C Bank" shall mean ANB and its successors and assigns. Upon the
issuance and effectiveness of any letter of credit delivered in substitution or
replacement of a Letter of Credit, "L/C Bank" shall mean the issuer of such
replacement or substitute Letter of Credit and its successors and assigns.
"Letter of Credit" shall mean the Letter of Credit as defined in the
Reimbursement Agreement.
"Liquidation Period" shall mean the period commencing on the earlier of the
(i) Purchase Termination Date and (ii) the date on which the conditions
precedent set forth in Section 6.2 (except for subsection 6.2(f)) are not
satisfied (unless such conditions are subsequently waived by the Buyer or cured
by the Seller with the express written consent of the Buyer) and ending upon the
termination of this Agreement pursuant to Section 4.2.
"Losses" shall mean, during the Liquidation Period, the outstanding
principal amount of each Sold Receivable (or portion thereof) which, in
accordance with GAAP, is written off of the books of the Seller as
uncollectible.
"M&R Report" shall mean the report prepared by ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇, or
other actuary reasonably acceptable to the Buyer (with the related certificate
of the Seller attached thereto), substantially in the form of Exhibit F.
"Managing General Agent Agreement" shall mean a Managing General Agent
Agreement attached hereto as Exhibit I.
"Marketing Agreement" shall mean the Marketing Agreement, dated as of May
1, 1995, between Pioneer Life and ▇▇▇▇▇▇▇, as the same may from time to time be
amended, supplemented or otherwise modified as permitted herein.
"▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇ International, L.L.C., a Delaware limited
liability company.
"▇▇▇▇▇▇▇ Advance and Pledge Agreement" shall mean the Advance and Pledge
Agreement, dated as of May 1, 1995, by and between Pioneer Life and ▇▇▇▇▇▇▇.
"▇▇▇▇▇▇▇ Agent Obligor" shall mean any agent of Pioneer Life assigned to
▇▇▇▇▇▇▇ as contemplated by the Marketing Agreement who is obligated to make
payments to Pioneer Life on a ▇▇▇▇▇▇▇ Agent Receivable.
"▇▇▇▇▇▇▇ Agent Receivable" shall mean the obligation of a Person to repay
the principal amount of and interest and other finance charges on a loan made by
Pioneer Life to such Person in the ordinary course of its business, and which
loan is secured by amounts due or to become due to such Person as commissions on
insurance policies sold by such Person (or Persons within such Person's
supervision) as an agent of Pioneer Life assigned to ▇▇▇▇▇▇▇ as contemplated by
the Marketing Agreement; provided, however, that "▇▇▇▇▇▇▇ Agent Receivable"
shall not include any such obligation of any Person, unless the Seller
designates such Person as a Person whose obligations are to be "▇▇▇▇▇▇▇ Agent
Receivables" in a written notice to the Buyer as provided herein.
"▇▇▇▇▇▇▇ Contract" shall mean the Agent Promissory Note and the Advance and
Pledge Agreement in the form of Exhibit B-3 (with such modifications as shall be
approved by the Buyer and L/C Bank) by which ▇▇▇▇▇▇▇ is bound to make payments
to Pioneer Life to repay funds lent by Pioneer Life to ▇▇▇▇▇▇▇ and to pay
interest and finance charges to Pioneer Life by ▇▇▇▇▇▇▇ and pursuant to which
▇▇▇▇▇▇▇ has assigned its rights to Assigned Commissions as collateral.
"▇▇▇▇▇▇▇ Marketing Manager Receivable" shall mean the obligation of ▇▇▇▇▇▇▇
to repay the principal amount of and interest and other finance charges on a
loan made by Pioneer Life to ▇▇▇▇▇▇▇ in the ordinary course of business and
pursuant to the ▇▇▇▇▇▇▇ Advance and Pledge Agreement, and which loan is secured
by amounts due or to become due to ▇▇▇▇▇▇▇ as commissions on insurance policies
sold by ▇▇▇▇▇▇▇ as an agent of Pioneer Life.
"Maximum Purchase Amount" shall mean $7,600,000, as such amount may be
(i) increased on any Settlement Date upon the written request of the Seller
pursuant to the related Settlement Statement, provided that any such increase
shall be in an amount equal to $100,000 or an integral multiple thereof and
provided, further, that, with respect to Receivables, other than CNL
Receivables, the Seller shall have no right to request any such increase if,
after giving effect thereto, the Maximum Purchase Amount with respect thereto
would exceed the product of 0.90 times the Gross Amount Due upon the Portfolio
of Eligible Receivables, excluding therefrom CNL Receivables (determined as of
the last day of the preceding Settlement Period), and provided, further, that,
with respect to CNL Receivables, the Seller shall have no right to request any
such increase if, after giving effect thereto, the Maximum Purchase Amount with
respect thereto would exceed the product of 0.80 times the Gross Amount Due upon
the portion of the Portfolio of Eligible Receivables comprised of CNL
Receivables (determined as of the last day of the preceding Settlement Period)
or (ii) reduced upon five Business Days' written notice from the Seller to the
Buyer, provided that any such reduction shall be in an amount equal to $100,000
or an integral multiple thereof, and provided, further, that if (A) at any time
the Maximum Purchase Amount shall exceed the outstanding principal amount of the
Notes, such Maximum Purchase Amount shall be automatically reduced to an amount
not to exceed such outstanding principal amount or (B) at any time either the
Maximum Purchase Amount, with respect to Receivables, other than CNL
Receivables, shall exceed the product of 0.90 times the Gross Amount Due upon
the Portfolio of Eligible Receivables, excluding therefrom CNL Receivables
(determined as of the last day of the preceding Settlement Period) or the
Maximum Purchase Amount with respect to CNL Receivables shall exceed the product
of 0.80 times the Gross Amount Due upon the portion of the Portfolio of Eligible
Receivables comprised of CNL Receivables (determined as of the last day of the
preceding Settlement Period), such Maximum Purchase Amount shall be
automatically reduced to an amount equal to the largest integral multiple of
$100,000 which does not exceed such product.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgages" shall mean, as of any date, the amount of mortgage loans on
real estate calculated in accordance with Statutory Accounting Principles.
"NAIC" shall mean the National Association of Insurance Commissioners.
"Net Purchase Outstanding" shall mean, at any time, the positive remainder,
if any, of (a) the aggregate Purchase Price paid by the Buyer for its Undivided
Interest minus (b) the sum of (i) aggregate Principal Collections attributable
to the Buyer's Undivided Interest remitted by the Seller to the Buyer (whether
or not used by the Buyer to purchase an Addition to its Undivided Interest) on
each Settlement Date pursuant to this Agreement or otherwise and (ii) the
aggregate principal collections remitted to the Buyer pursuant to the proviso in
Section 3.1(f).
"Non-Investment Grade Obligations" shall mean any fixed maturity debt
instrument investment that is not an Investment Grade Obligation.
"Note Agreements" shall mean the Indenture, the Notes, the Placement
Agreement and the Remarketing Agreement.
"Notes" shall mean the Floating Rate Option Notes, Series 1994-A, of the
Buyer, issued pursuant to the Indenture.
"Obligor" shall mean any Agent Obligor, CNL Agent Obligor, ▇▇▇▇▇▇▇ Agent
Obligor or CNL Managing General Agent, ▇▇▇▇▇▇▇ or DBP Lead Obligor.
"Person" shall mean an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Pioneer Life" shall mean Pioneer Life Insurance Company of Illinois, an
Illinois corporation.
"Placement Agent" shall mean Banc One Capital Corporation, as placement
agent for the Notes.
"Placement Agreement" shall mean the Placement Agreement dated October 4,
1994 among the Seller, the Buyer and the Placement Agent.
"Policy Lapse Rate" shall mean the termination rate for each month
calculated by the Seller and, at the end of each fiscal quarter, by ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ or other actuary acceptable to the Buyer, with respect to Insurance
Policies which are outstanding on the last day of the immediately preceding
month, provided that with respect to any calculation made for a month other than
a month immediately following the end of a quarterly fiscal period, Insurance
Policies underwritten after the end of the quarterly fiscal period immediately
preceding such month shall be excluded from such calculation.
"Portfolio of Eligible Receivables" of the Seller shall mean, as of any
date of determination, all of the Seller's Eligible Receivables as of the last
day of the Settlement Period immediately preceding such date of determination.
"Present Value of Assigned Commissions" shall mean, as of each monthly date
of determination, the amount determined in the M&R Report to be the present
value of all Assigned Commissions and DBP Lead Commissions scheduled to be paid
for the two-year period from such date computed by using as the discount factor
a percentage not less than the greater of (a) twelve percent (12%) per annum and
(b) the Prime Rate plus 3%, provided, however, that the actuary preparing the
M&R Report shall (i) exclude Assigned Commissions and DBP Lead Commissions
relating to Receivables which are not Eligible Receivables, (ii) exclude
Assigned Commissions and DBP Lead Commissions relating to Defaulted Receivables,
(iii) exclude Assigned Commissions, relating to renewal commissions on Insurance
Policies, that are assigned by Agent Obligors to National Group Marketing
Training Corporation, and (iv) net against the Assigned Commissions and DBP Lead
Commissions the amount of any chargebacks.
"Prime Rate" shall mean the rate as designated by L/C Bank from time to
time as its prime rate in the United States of America, such rate to change as
and when such designated rate changes. The prime rate is not intended to be the
lowest rate of interest charged by L/C Bank in connection with extensions of
credit to debtors.
"principal collections" shall mean, with respect to the Receivables, all
cash payments and collections made or received on account of the Receivables
exclusive of finance charges attributable thereto, but including, without
limitation, any payments or collections realized upon the sale of property of
any Obligor securing in whole or in part the payment by such Obligor of a
Receivable, any payments or collections realized under any guarantees of payment
of such Receivable and proceeds of such Receivable.
"Principal Collections" shall mean, with respect to the Seller's Portfolio
of Eligible Receivables, all cash payments and collections made or received on
account of the Eligible Receivables in which the Buyer has purchased an
Undivided Interest, exclusive of Finance Charges attributable thereto, but
including, without limitation, any payments or collections realized upon the
sale of property of any Obligor securing in whole or in part the payment by such
Obligor of an Eligible Receivable, any payments or collections realized under
any guarantees of payment of such Eligible Receivable and proceeds of such
Eligible Receivable.
"Prior Purchase Agreement" shall have the meaning assigned in Section 8.13.
"Purchase Fee" shall have the meaning assigned in subsection 2.3(c).
"Purchase Price" shall have the meaning assigned in subsection 2.3(a).
"Purchase Termination Date" shall mean the earlier of (i) December 31, 1997
or such later date as shall be agreed in accordance with subsection 4.2(b) and
(ii) the date of termination of the commitment of the Buyer hereunder pursuant
to Section 7.1.
"Real Estate Concentration Ratio" means, as of any date, the ratio of (a)
the sum of (i) Real Estate Investments plus (ii) Mortgages to (b) Capital and
Surplus.
"Real Estate Investments" shall mean, as of any date, the sum of (a) the
book value of properties acquired in satisfaction of debt calculated in
accordance with Statutory Accounting Principles plus (b) the investment in
investment real estate calculated in accordance with Statutory Accounting
Principles; provided, that the properties occupied by Pioneer Financial Services
or any Subsidiary shall be excluded from the calculation of Real Estate
Investments for purposes of this Agreement.
"Receivable" shall mean each Agent Receivable, CNL Agent Receivable, CNL
Managing General Agent Receivable, ▇▇▇▇▇▇▇ Agent Receivable, ▇▇▇▇▇▇▇ Marketing
Manager Receivable and each DBP Lead Receivable. An obligation arising from any
one advance, loan or transaction shall constitute a Receivable separate from a
Receivable consisting of the obligation arising from any other advance, loan or
other transaction.
"Reimbursement Agreement" shall mean the Reimbursement Agreement, dated as
of October 1, 1994, between the Buyer and L/C Bank, as the same may from time to
time be amended, supplemented or otherwise modified.
"Remarketing Agent" shall mean Banc One Capital Corporation, as remarketing
agent for the Notes.
"Remarketing Agreement" shall mean the Remarketing Agreement between the
Buyer and the Remarketing Agent, dated as of October 1, 1994.
"Reserve Account" shall mean the account of the Seller held and maintained
at the office of ANB located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, entitled:
Name of Account Account
Design Benefit Plans, Inc. #4248082
Receivables - Agent Reserve Account
"S&P" shall mean Standard & Poor's Ratings Group.
"Seller" shall have the meaning assigned in the preamble hereto.
"Settlement Date" shall mean (i) October 27, 1994, and thereafter (ii) the
20th calendar day of each succeeding month or, if such 20th day is not a
Business Day, the next succeeding Business Day.
"Settlement Period" shall mean, with respect to any Settlement Date, the
calendar month first preceding the calendar month in which such Settlement Date
occurs.
"Settlement Statement" shall mean the Settlement Statement, substantially
in the form of Exhibit H, to be delivered by the Seller to the Buyer pursuant to
Section 4.1.
"Sold Receivable" shall mean each Eligible Receivable in the Portfolio of
Eligible Receivables in which an Undivided Interest has been purchased by the
Buyer hereunder.
"Statutory Accounting Principles" shall mean statutory reporting practices
prescribed or permitted by the State of Illinois Department of Insurance or by a
regulatory body of another state, as applicable to an Insurance Company, for the
preparation of financial statements and other reports by insurance companies of
the same type as the Insurance Companies in Illinois applied on a basis
consistent with the most recent financial statements of the Insurance Companies
in Illinois delivered to the Buyer prior to the date of this Agreement.
"Subsidiary" shall mean, in the case of any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"Subsidiary Insurance Company" shall mean an Insurance Company which is a
Subsidiary of Financial Services.
"Taxes" shall mean any present or future sales, gross receipts, general
corporation, personal property, income, franchise, privilege, license, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any govern-
mental authority, excluding, in the case of L/C Bank net income and franchise
taxes based upon net income imposed on L/C Bank by the jurisdiction under the
laws of which it is organized or in which is located any office from or at which
L/C Bank is making or maintaining its loans or advances, or any political
subdivision or taxing authority thereof or therein.
"Tender Pledge Agreement" shall mean the Tender Pledge and Security
Agreement, dated as of October 1, 1994, made by the Buyer to L/C Bank pursuant
to Section 2.9 of the Reimbursement Agreement.
"Termination Event" shall have the meaning assigned in Section 7.1.
"Time of Full Payout" shall mean the date on which the Net Purchase
Outstanding shall have been reduced to zero at the close of business on such
date.
"Total Adjusted Capital" shall have the same meaning as the term "Total
Adjusted Capital" as defined in the NAIC Risk-Based Capital (RBC) for Life
and/or Health Insurers Model Act, as such term may be amended by the NAIC from
time to time.
"Total Invested Assets" shall mean, as of any date, as to each Insurance
Company (other than Eligible Fronting Companies), the amount of such Insurance
Company's cash and invested assets calculated in accordance with Statutory
Accounting Principles.
"Transfer Notice" shall have the meaning assigned in subsection 3.2(d).
"Trustee" shall mean PNC Bank, Ohio, National Association, as trustee under
the Indenture or any successor trustee appointed pursuant to the terms contained
therein.
"Undivided Interest" of the Buyer in the Seller's Portfolio of Eligible
Receivables shall mean an undivided participating ownership interest in the
Portfolio of Eligible Receivables equal, at any time, to the percentage
equivalent of a fraction the numerator of which is the Net Purchase Outstanding
of the Buyer in the Portfolio of Eligible Receivables at such time and the
denominator of which is the Gross Amount Due upon the Portfolio of Eligible
Receivables at such time; provided, however, that such percentage equivalent, as
computed as of the day immediately preceding the first day of the Liquidation
Period, shall remain constant at all times during the Liquidation Period until
it shall be reduced to zero at such time as the Net Purchase Outstanding shall
have been reduced to zero and all other amounts owing to the Buyer hereunder
shall have been paid in full.
B. OTHER DEFINITIONAL PROVISIONS.
1. The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
2. As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting terms relating to the Seller or its
Affiliates or its Subsidiaries, unless otherwise defined herein or therein,
shall have the respective meanings given to them under GAAP.
ARTICLE II.
AGREEMENT TO PURCHASE AND SELL
A. AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions
of this Agreement, the Seller may at its option sell to the Buyer without
recourse (except as expressly provided for herein), and the Buyer agrees (to the
extent the Buyer has funds available to it) to purchase from the Seller, from
the effective date of this Agreement to but not including the Purchase
Termination Date, an Undivided Interest (and Additions thereto) in all right,
title and interest of the Seller in, to and under the Seller's Portfolio of
Eligible Receivables, including, without limitation, all monies due and to
become due thereunder and all guarantees thereof and collateral security
therefor and all proceeds thereof.
B. PURCHASE AND SALE PROCEDURE.
1. Sales of Undivided Interests and Additions thereto hereunder may
take place on any Settlement Date occurring on or after the effective date
of this Agreement and prior to the Purchase Termination Date (each date on
which a sale of an Undivided Interest or an Addition thereto occurs
hereunder being herein referred to as the "Closing Date" applicable to such
sale), provided that the Seller shall have given the Buyer at least three
Business Days' prior written, telegraphic, telex, facsimile or telephonic
notice (effective upon receipt) of its intention to sell an Undivided
Interest or an Addition thereto hereunder on such date. Also, not less
than three Business Days prior to each Closing Date hereunder, the Seller
shall deliver to the Buyer the Settlement Statement referred to in Section
4.1 hereof.
2. Each sale hereunder of an Undivided Interest or an Addition
thereto shall be as of the close of business on the last Business Day of
the calendar month immediately preceding the related Closing Date (each
said "as of" date being herein called the "Date of Sale") and shall take
place at the office of the Buyer or such other place as may be agreed upon.
No later than 11:00 a.m. (Chicago time) on each Closing Date hereunder the
Seller shall deliver to the Buyer (i) a certificate in substantially the
form of Exhibit D, duly executed by an authorized officer of the Seller,
dated such Closing Date, certifying as to (w) the Net Purchase Outstanding
before giving effect to the purchase and sale to be effected on such
Closing Date and assuming the remittance to the Buyer on such Closing Date
of any Principal Collections attributable to the Undivided Interest of the
Buyer in the Portfolio of Eligible Receivables and then held by the Seller
on account of the Settlement Period ending on such Closing Date, (x) the
total Collections so held and a breakdown of Finance Charge Collections and
Principal Collections and the portion of each attributable to the Buyer's
Undivided Interest, (y) the Purchase Price for any amount of the Undivided
Interest or Addition thereto being sold on such Closing Date and (z) that
Section 2.2(c) will not be violated by the purchase of such Undivided
Interest or Addition, and (ii) an Assignment, dated the related Date of
Sale, assigning and transferring to the Buyer an Undivided Interest or
Addition thereto in all right, title and interest of the Seller in and to
the Seller's Portfolio of Eligible Receivables on such Date of Sale, all
monies to become due thereunder, and in and to any and all guarantees
thereof and collateral security therefor and all proceeds thereof.
3. The Buyer shall have no obligation to purchase an Undivided
Interest or Addition thereto on any Closing Date hereunder to the extent
that (i) the sum of (x) the Net Purchase Outstanding (as calculated and set
forth in the certificate delivered above) plus (y) the proposed Purchase
Price payable by the Buyer on such Closing Date would exceed the Maximum
Purchase Amount or (ii) the sum of (x) the Net Purchase Outstanding (as
calculated and set forth in the certificate delivered above) with respect
to CNL Receivables plus (y) the proposed Purchase Price payable by the
Buyer on such Closing Date with respect to CNL Receivables would exceed
Five Million Dollars ($5,000,000), or (iii) the Buyer does not have
available funds in the Collateral Account which may, consistent with
Section 6.3(a) of the Buyer Security Agreement, be used to pay any portion
of the Purchase Price still owing after application of funds as provided in
clause first of the first sentence of Section 2.3(b) of this Agreement.
4. The Seller agrees that the Purchase Price it specifies to the
Buyer pursuant to this Section 2.2 shall not exceed the amount the Seller
would be permitted to request if any Undivided Interest or Addition did not
include any DBP Lead Receivables and the Buyer shall not be obligated to
pay to the Seller a Purchase Price in excess of such amount.
C. PAYMENT OF PURCHASE PRICE; PURCHASE FEE.
1. The purchase price for the Undivided Interest or any Addition
thereto sold to the Buyer on any Closing Date pursuant to Section 2.2
shall, subject to the limitation in Section 2.2(c), be the amount specified
by the Seller (the "Purchase Price").
2. The Purchase Price with respect to the Undivided Interest or the
Addition thereto being purchased from the Seller on a Closing Date shall be
paid: first, by applying all, but not less than all (except as provided in
the next succeeding sentence), of the Principal Collections attributable to
the Buyer's Undivided Interest received, by or on behalf of the Seller
during the Settlement Period immediately preceding such Closing Date and to
be delivered to the Buyer on such Closing Date under subsection 3.1(a), and
second, to the extent necessary, the Buyer shall pay any remaining portion
of the Purchase Price. In the event that the Purchase Price with respect
to the Undivided Interest or the Addition thereto being purchased on a
Closing Date is less than the Principal Collections attributable to the
Buyer's Undivided Interest received by or on behalf of the Seller during
the Settlement Period immediately preceding such Closing Date, such
Principal Collections shall be applied first to the payment of such
Purchase Price and second any remainder thereof shall be distributed to the
Buyer.
3. As consideration for the Buyer's purchase of an Undivided
Interest or an Addition thereto and in lieu of purchasing such Undivided
Interest or an Addition thereto at any initial discount, the Seller shall,
on each Settlement Date (and as provided below, upon the request of the
Buyer), pay to the Buyer a purchase fee (the "Purchase Fee") equal in the
aggregate to the Buyer's fees, costs and expenses incurred since the
preceding Settlement Date (or in the case of the first Settlement Date,
since the effective date of this Agreement) in connection with the
transactions contemplated by this Agreement and the Financing Documents and
the issuance by the Buyer of the Notes, including (i) all fees, expenses
and costs payable by the Buyer or L/C Bank under the Reimbursement
Agreement, the Buyer Security Agreement, and the Note Agreement,
(ii) without duplication of any amounts payable under clause (iii) below,
interest accrued and to accrue on the Notes (together with any amounts due
in respect of "grossing-up" for withholding or other Taxes), but not the
principal amount of the Notes, (iii) interest accrued and to accrue under
the Reimbursement Agreement and amounts in respect of interest paid by L/C
Bank to the Trustee or the holders of the Notes, which amounts are payable
by the Buyer to L/C Bank under the Reimbursement Agreement (together with
any amounts due under Section 2.8 of the Reimbursement Agreement in respect
of "grossing-up" for withholding or other Taxes), but not amounts
constituting principal owing under the Reimbursement Agreement or amounts
in respect of the principal amount of the Notes, (iv) indemnities incurred
or owing by the Buyer under or in connection with the Reimbursement Agree-
ment, the Buyer Security Agreement or the Note Agreements and (v) the costs
of preparing income and other tax returns, the cost of maintaining a
registered agent and a place of business in the State of Delaware and
federal, state and local income and other taxes (if any); provided, that,
so long as no Termination Event shall have occurred and be continuing, the
Seller shall be entitled to a credit against the Purchase Fee payable under
this subsection 2.3(c) on such Settlement Date (but not against any
Purchase Fee payable upon the request of the Buyer as provided below) equal
to the sum of (x) the amount of the Finance Charge Collections attributable
to the Buyer's Undivided Interest paid by the Seller to the Buyer on the
preceding Settlement Date plus (y) all interest and other amounts earned on
the deposited funds in the Collateral Account, the Application Account and
the Finance Charge Account from and including the preceding Settlement Date
(or, in the case of the first Settlement Date, the effective date of this
Agreement) to but not including such Settlement Date (and, to the extent
the sum of (x) and (y) exceed such Purchase Fee payable on such Settlement
Date, the Seller shall be entitled to a rebate of such excess). Without in
any way limiting the Seller's obligations under this subsection 2.3(c) on
any Settlement Date, if the Buyer notifies the Seller at or prior to 5:00
p.m. (Chicago time) on any Business Day that it wishes the Seller to pay on
the immediately succeeding Business Day any amount under this subsection
2.3(c) which is or will be accrued as of such succeeding Business Day, then
the Seller shall pay to the Buyer such amount as provided in Section 8.2 at
or prior to 11:00 a.m. (Chicago time) on such immediately succeeding
Business Day; provided, that any amounts so paid by the Seller shall not be
considered owing on the next succeeding Settlement Date. Each reference to
each of the Financing Documents in this subsection 2.3(c) shall be to such
agreements as in effect on the date hereof or as the same may be amended,
supplemented or otherwise modified in accordance with the terms thereof and
with the consent of the Seller. All calculations made by the Buyer
pursuant to this subsection 2.3(c) shall be conclusive, absent manifest
error.
4. As further consideration for the Buyer's purchase of an
Undivided Interest or an Addition thereto, the Seller agrees to pay to the
Buyer in advance (i) a nonrefundable annual fee of $10,000 on October 31,
1994 and on each October 31 thereafter until the Time of Full Payout and
(ii) a nonrefundable semiannual fee of $5,324 on the last Business Day of
June and December commencing December 1994 until Buyer's Preferred Stock is
redeemed in full, at which time the Seller agrees to pay to the Buyer a
final nonrefundable fee in an amount equal to the product of $5,324
multiplied by a fraction the numerator of which is equal to the number of
days between the last semiannual payment date and such redemption date and
the denominator of which is 180.
D. REASSIGNMENT.
1. If the Net Purchase Outstanding shall at any time exceed the
Maximum Purchase Amount, the Buyer shall reassign to the Seller, free of
liens created by the Buyer but otherwise without recourse, representation
or warranty, such portion of the Undivided Interest as is necessary so
that, after giving effect to such reassignment, the Net Purchase
Outstanding would not exceed such Maximum Purchase Amount.
2. Each such reassignment shall be made for a purchase price
(payable by the Seller upon request in immediately available funds) equal
to the amount of the Undivided Interest so reassigned multiplied by the
Gross Amount Due upon the Portfolio of Eligible Receivables as of the last
day of the Settlement Period immediately preceding the date of such
reassignment.
E. INTEREST ON OVERDUE PAYMENTS. If any amount payable by the Seller to
the Buyer, whether on account of fees or expenses or on account of amounts
collected by the Seller or otherwise, is not paid on the relevant Settlement
Date or other relevant date, such amount shall bear interest for each day from
such Settlement Date or other relevant date, as the case may be, until such
amount is paid in full at a rate per annum equal to 3% above the Prime Rate in
effect on each such day.
F. FEE AND INTEREST CALCULATIONS. Calculations of per annum rates under
this Agreement shall be made on the basis of a 360-day year for actual days
elapsed.
G. INDEMNIFICATION BY SELLER. The Seller hereby agrees to pay, and to
indemnify and hold harmless the Buyer and the Buyer's officers, directors,
employees, agents and shareholders from (a) any Taxes which may at any time be
imposed in respect of this Agreement, the Financing Documents or the subject
matter hereof or thereof or as a result of the issuance by the Buyer of the
Notes or by the transactions contemplated hereby or thereby, and (b) reasonable
costs, expenses and counsel fees in defending against the same, whether arising
by reason of the acts to be performed by the Seller hereunder or imposed against
the Buyer, the Seller, the property involved or otherwise.
H. DISTRIBUTION OF COLLECTIONS AND OTHER PAYMENTS. All amounts in
respect of Collections attributable to the Buyer's Undivided Interest shall be
remitted by the Seller without set-off or counterclaim, to the Buyer on each
Settlement Date and all amounts in respect of other payments owing by the Seller
pursuant to this Agreement shall be remitted to the Buyer as promptly as
practicable without set-off or counterclaim.
I. NETTING OF PAYMENTS. Anything contained in this Agreement to the
contrary notwithstanding, the Buyer may, in its complete discretion, net any
amounts the Buyer is required to make available to the Seller on any Settlement
Date pursuant to this Agreement against any amounts the Seller is required to
make available to the Buyer on such Settlement Date pursuant to this Agreement.
▇. ▇▇▇▇▇ OF SECURITY INTEREST. The parties hereto agree that this
Agreement is intended to constitute the sale of an Undivided Interest (and any
Additions thereto) in all right, title and interest of the Seller in, to and
under the Portfolio of Eligible Receivables. In addition, the parties hereto
agree that (a) this Agreement constitutes a grant by the Seller to the Buyer of
a perfected first priority security interest in all of the Seller's right, title
and interest in, to and under each Receivable (whether or not an Eligible
Receivable), all guarantees thereof, all collateral security therefor
(including, without limitation, all Contracts and Assigned Commissions) and all
of the DBP Lead Commissions, all monies due or to become due thereon in each
case and all amounts received with respect thereto in each case and all
"proceeds" (as defined in Section 9-306 of the Uniform Commercial Code as in
effect in the applicable jurisdiction) thereof in each case, whether now
existing or hereafter arising, (b) such security interest is intended to secure,
without limitation, all now and hereafter outstanding obligations of the Seller
to the Buyer and (c) this Agreement shall constitute a security agreement under
applicable law.
ARTICLE III.
COLLECTIONS; MAINTENANCE OF RECORDS
A. COLLECTIONS AND APPLICATIONS.
1. The Seller hereby agrees that on or before the initial Date of
Sale on which an Undivided Interest shall be sold hereunder, the Seller
will have established a cash management system whereby the Seller can
identify from all cash received all Collections which are attributable to
the Portfolio of Eligible Receivables and the Buyer's Undivided Interest
therein (and the portion thereof constituting Principal Collections and the
portion thereof constituting Finance Charge Collections) and all
collections attributable to Receivables (and the portion thereof
constituting principal collections and the portion thereof constituting
finance charge collections). The Seller shall, during each Settlement
Period, identify those Collections which are on account of the Buyer's
Undivided Interest in the Portfolio of Eligible Receivables and shall
(i) with respect to such Collections constituting Principal Collections,
subject to the provisions of subsection 2.3(b), not later than 12:00 noon
(Chicago time) on the Settlement Date immediately succeeding such
Settlement Period, cause all such Principal Collections to be deposited in
the Application Account and (ii) with respect to such Collections
constituting Finance Charge Collections, not later than 12:00 noon (Chicago
time) on each such Settlement Date, cause all such Finance Charge
Collections to be deposited in the Finance Charge Account; provided,
however, that during the Liquidation Period, the Seller shall deliver all
principal collections and finance charge collections which are attributable
to the Receivables (including collections which are not attributable to the
Buyer's Undivided Interest, which collections shall be applied in the
manner specified in subsections 3.1(f) and (g) below) to the Buyer on each
Settlement Date in the manner specified in clauses (i) and (ii) above; and
provided, further, however, that at any time after the occurrence and
during the continuance of a Termination Event and upon two Business Days'
prior written request of the Buyer, determined in the Buyer's sole
discretion, the Seller shall transfer or cause to be transferred on a daily
basis in immediately available funds (x) to the Application Account an
amount not less than the aggregate amount of all identified principal
collections (including all principal collections which are not attributable
to the Buyer's Undivided Interest, which collections shall be applied in
the manner specified in subsections 3.1(f) and (g) below) received prior to
the time of such transfer and not previously transferred and (y) to the
Finance Charge Account an amount not less than the aggregate amount of all
identified finance charge collections (including all finance charge
collections which are not attributable to the Buyer's Undivided Interest,
which collections shall be applied in the manner specified in subsection
3.1(f) and (g) below) received prior to the time of such transfer and not
previously transferred.
2. The Seller agrees that, upon (i) the occurrence and during the
continuance of any Termination Event or any event which, with the giving of
notice or the lapse of time or both, would constitute a Termination Event,
and (ii) the written request of the Buyer, the Seller shall transfer to the
Buyer all of the Seller's right, title and interest in, to and under each
and every bank account to which the Obligors (or applicable Insurance
Companies) shall previously have been directed to remit payments (or
Assigned Commissions or DBP Lead Commissions in the case of Insurance
Companies) on account of or with respect to Receivables or which are used
by the Seller to concentrate such payments. Each such transfer shall be
effected pursuant to such agreements, documents and instruments as the
Buyer shall, in its sole discretion, require. The Seller shall, from time
to time, execute and deliver such other documentation in form and substance
satisfactory to the Buyer as may be reasonably requested by the Buyer to
obtain sole dominion and control over each such bank account. Each such
bank account shall, after any transfer effected pursuant to this paragraph
(b), be maintained in accordance with the terms and conditions of such
documentation. Commencing upon any transfer of bank accounts described in
this paragraph (b), all collections then on deposit or thereafter deposited
in, and all credits in, such bank accounts shall be transferred to the
Application Account (in the case of principal collections) and the Finance
Charge Account (in the case of finance charge collections). In the event
the Seller has not established such a system of bank accounts, it will
promptly establish and maintain such a system of bank accounts in form
satisfactory to the Buyer.
3. The Buyer agrees that, in any case where the provisions of
subsection 3.1(b) shall become applicable, as soon as practicable but in
any event not later than the Business Day following the date of
establishment to its satisfaction by the Seller that any of the collected
funds received by the Buyer in any of the Buyer's bank accounts referred to
in subsection 3.1(b) do not constitute collections on account of Agent
Receivables, CNL Receivables, ▇▇▇▇▇▇▇ Agent Receivables, ▇▇▇▇▇▇▇ Marketing
Manager Receivables or DBP Lead Commissions, the Buyer shall remit to the
Seller such moneys which do not constitute such collections (provided that
amounts which constitute collections but which are not attributable to the
Buyer's Undivided Interest shall be applied in the manner specified in
subsection 3.1(f) and (g) below). The Buyer agrees that, upon the request
of the Seller, it will furnish to the Seller such information regarding
moneys received on such bank accounts as may be reasonably necessary to
permit the Seller to identify such moneys which do not constitute such
collections.
4. The Buyer shall treat all immediately available funds received by
it or deposited in the Application Account as "Principal Collections"
attributable to its Undivided Interest for purposes of this Agreement and
shall treat all immediately available funds received by it or deposited in
the Finance Charge Account as "Finance Charge Collections" and all such
funds shall be treated as having been received as of the Business Day
Received (as defined in the immediately succeeding sentence). As used
herein, the term "Business Day Received" shall mean (i) if funds are
deposited in such Application Account or Finance Charge Account by 12:00
noon (Chicago time), such day of deposit and (ii) if funds are deposited in
such Application Account or Finance Charge Account after 12:00 noon
(Chicago time), the Business Day next following such day of deposit.
5. Neither the Seller nor any other Person claiming by, through or
under the Seller shall have any right, title or interest in, or any control
over the use of, or any right to withdraw moneys from, the Application
Account, the Finance Charge Account or the Holdback Account.
6. During the Liquidation Period, all collections which are not
attributable to the Buyer's Undivided Interest which are deposited in the
Application Account and the Finance Charge Account shall be segregated by
the Buyer, shall be deposited in the Holdback Account and shall be applied
by the Buyer in accordance with the provisions of subsections 3.1(g) and
(h); provided, however, that during the Liquidation Period, a percentage
(equal to the percentage equivalent representing the Buyer's Undivided
Interest in all Sold Receivables) of all collections attributable to the
Receivables which are not attributable to the Buyer's Undivided Interest
shall be paid to the Buyer until such time as the Net Purchase Outstanding
shall equal zero.
7. On each Settlement Date occurring during the Liquidation Period,
the Buyer shall deduct from the Holdback Account (to the extent of the
funds therein) and pay to the Application Account an amount equal to the
sum of (i) all Losses occurring during the preceding Settlement Period plus
(ii) all Losses occurring during any prior Settlement Period and not
previously so reimbursed to the Buyer.
8. At the end of the Liquidation Period, all funds on deposit in the
Holdback Account, to the extent not used to offset Losses as set forth in
subsection 3.1(g) above, shall be returned to the Seller.
B. COLLECTIONS BY THE SELLER.
1. The Seller will, at the Seller's cost and expense and as agent
for the Buyer (but subject, at any time after the occurrence of a
Termination Event, to the right of the Buyer to direct and control),
endeavor to collect, consistent with its past practices (as to the
Receivables owned by it) as and when the same becomes due, the amount owing
on each Receivable. The Seller will not make any material changes in its
administrative servicing and collection systems without the prior approval
of the Buyer, such approval not to be unreasonably withheld. In the event
of default under any Sold Receivable, the Seller shall have the power and
authority, on behalf of the Buyer, to take such action in respect of such
Sold Receivable, as the Seller, in the absence of contrary instructions
from the Buyer, may deem advisable. In the enforcement or collection of
any Sold Receivable, the Seller shall be entitled to ▇▇▇ thereon in its own
name, if possible, or, if, but only if, the Buyer consents in writing, as
agent of the Buyer. In no event shall the Seller make the Buyer a party to
any litigation without the Buyer's express prior written consent. The
Buyer may, as set forth in subsection 3.2(d), (i) by notice in writing
terminate the authority of the Seller to act as agent for and on behalf of
the Buyer and/or (ii) notify any Obligor of the assignment to the Buyer of
an Undivided Interest in any Sold Receivable hereunder and/or (iii) direct
any Obligor to make all payments in respect of Sold Receivables in the name
of the Buyer.
2. The Seller hereby agrees to defend and indemnify the Buyer
against all costs, expenses, claims and liabilities in respect of any
action taken by the Seller relative to any Receivable, or arising out of
any failure of compliance of any Receivable hereunder with the provisions
of any law or regulation, whether Federal, state or local, applicable
thereto (including, without limitation, any usury law, the Federal Truth in
Lending Act or Regulation Z of the Board of Governors of the Federal
Reserve System). The Buyer shall have no obligation to, and unless and
until the occurrence of an event described in clauses (i) and (ii) of the
first sentence of subsection 3.1(b), the Buyer shall not, take any action
or commence any proceedings to realize upon any Receivable (including,
without limitation, any Defaulted Receivable) or to enforce any of its
rights or remedies with respect thereto.
3. The Seller hereby irrevocably grants to the Buyer an irrevocable
power of attorney, with full power of substitution, coupled with an
interest, to take in the name of the Seller or in its own name all steps
necessary or advisable to endorse, negotiate or otherwise realize on any
writing or other right of any kind held or owned by the Seller or
transmitted to or received by the Buyer as payment on account or otherwise
in respect of any Receivable. In addition, in order to effect the purposes
of this Agreement and the sale of Undivided Interests and Additions thereto
and to evidence the ownership interest of the Buyer in the Sold Receivables
and the security interest of the Buyer in all other Receivables, the Seller
hereby irrevocably grants to the Buyer an irrevocable power of attorney,
with full power of substitution, coupled with an interest, to take in the
name of the Seller or in its own name all actions in respect of the
preparation, execution and filing of any and all notices and instruments
necessary or advisable under the Uniform Commercial Code.
4. The Buyer may at any time, after the occurrence of a Termination
Event, by notice in writing to the Seller (a "Transfer Notice") terminate
the Seller's functions as to all of the administrative, servicing and
collection functions provided for in this Article III (the termination of
such functions being referred to as a "Complete Servicing Transfer"). Upon
the occurrence of a Complete Servicing Transfer, (i) the Buyer or its
designee shall administer the administrative, servicing and collection
functions, including, but not limited to, the issuance of demands for
payment under the Receivables, in any manner it deems fit, provided that
the Buyer will furnish or cause to be furnished to the Seller such
information as the Seller needs to perform its obligations under Section
4.1, (ii) the Buyer shall, at any time thereafter, be entitled to notify
the Obligors on any Receivables to make payment of amounts due thereunder
in the name of and directly to the Buyer and to notify the applicable
Insurance Companies to make payments of all Assigned Commissions or DBP
Lead Commissions in the name of and directly to the Buyer and (iii) the
Seller shall, at its own expense, (x) if so requested by the Buyer, endorse
each instrument, if any, evidencing any Receivable to the Buyer in such
manner as the Buyer shall direct and (y) perform any and all acts and
execute any and all documents as may be reasonably requested by the Buyer
in order to effect the purposes of this Agreement and the sale of Undivided
Interests and Additions thereto and to evidence the ownership interest of
the Buyer in the Sold Receivables and the security interest of the Buyer in
the other Receivables.
5. The Seller shall execute and deliver such additional documents,
shall take such further action as the Buyer may reasonably request to
effect or evidence the transfer of an Undivided Interest in the Portfolio
of Eligible Receivables and a security interest in the Receivables and
shall execute and deliver to the Buyer such powers of attorney (in addition
to the power of attorney provided for in subsection 3.2(c)) as may be
necessary or appropriate to enable the Buyer to endorse for payment any
check, draft or other instrument delivered in payment of any amount under
or in respect of any Receivable. If, at any time, when the provisions of
subsection 3.1(b) shall have become operative, the Seller receives any cash
or checks, drafts or other instruments for the payment of money on account
or otherwise in respect of Receivables, the Seller shall segregate such
cash and other items, hold such cash and other items in trust for the
benefit of the Buyer and cause such cash and other items (properly
endorsed, where required, so that such items may be collected by the Buyer)
to be transmitted or delivered to the Buyer within one Business Day after
the date any such cash or other item shall have been identified and
segregated by the Seller as being on account of a Receivable.
6. All collections on account of the Receivables of each Obligor
shall be applied in the order of maturity thereof unless specifically
identified otherwise in writing by such Obligor.
7. In the event of any Complete Servicing Transfer the Seller shall
be liable for all costs, fees, expenses and reimbursements payable to the
Buyer or its designee who shall have undertaken the administration,
servicing and collection functions provided for herein in respect of the
Receivables.
C. MAINTENANCE OF RECORDS. The Seller will or will cause one or more of
the Insurance Companies to hold in trust for the Buyer at the office of the
Seller books of account and other records as will enable the Buyer or its
designee to determine at any time the status of the Eligible Receivables and the
Receivables and all collections and payments in respect thereof. The Seller
will or will cause one or more of the Insurance Companies to permit the Buyer,
at any time and from time to time during the Seller's or such Insurance
Companies' regular business hours, to inspect, audit, check and make abstracts
from the Seller's or such Insurance Companies' books, accounts, records, or
other papers pertaining to such Receivables. From time to time upon the written
request of the Buyer, the Seller, at its own expense, will deliver or will cause
one or more Insurance Companies to deliver to the Buyer (a) a schedule of the
Receivables, identifying separately the Sold Receivables sold by Seller and the
Eligible Receivables, indicating as to each such Receivable information as to
the Obligor thereon, the unpaid balance thereof, and such other information as
the Buyer may reasonably deem appropriate and (b) copies of any such records and
invoices pertaining thereto and evidence thereof as the Buyer may deem necessary
to enable it to enforce its rights thereunder. Following a Complete Servicing
Transfer, upon the written request of the Buyer, the Seller will deliver all
such records and invoices pertaining thereto and other evidence thereof to the
Buyer or any agent selected by the Buyer. Each computer record relating to the
Eligible Receivables or the Receivables will be marked to indicate the interest
of the Buyer therein. Upon request of the Buyer, the Seller will or will cause
one or more of the Insurance Companies to segregate from all other receivables
then owned or being serviced by the Seller or such Insurance Companies all
records, invoices and other documents relating to a Receivable and will, or will
cause such Insurance Companies to, hold in trust and safely keep such records,
invoices and other documents in such place or places as shall be designated by
the Buyer.
D. REBATES, ADJUSTMENTS AND REDUCTIONS; MODIFICATIONS; ADDITIONS;
REPURCHASE OF DBP LEAD RECEIVABLES.
(a) With respect to the Sold Receivables, the amount of any rebate,
discount, refund, adjustment, chargeback or similar item (including,
without limitation, as a result of the application of any special or other
discounts or any reconciliations) of any Sold Receivable, the amount owing
for any cancellations or the amount of any other reduction of any payment
under any Sold Receivable shall be treated as a collection thereon by the
Seller for purposes of this Agreement and shall be paid to the Buyer on the
next Settlement Date. The Seller may be reimbursed for chargebacks relating
to policies written by an Agent Obligor, a CNL Agent Obligor, or a ▇▇▇▇▇▇▇
Agent Obligor, or CNL Managing General Agent or ▇▇▇▇▇▇▇ out of amounts
deposited in the Reserve Account with respect to such Agent Obligor, CNL
Agent Obligor, ▇▇▇▇▇▇▇ Agent Obligor, CNL Managing General Agent or ▇▇▇▇▇▇▇
or, to the extent such amounts are insufficient, out of Assigned
Commissions payable to such Agent Obligor, CNL Agent Obligor, ▇▇▇▇▇▇▇ Agent
Obligor, CNL Managing General Agent or ▇▇▇▇▇▇▇, as the case may be;
provided that the Seller may be reimbursed out of Assigned Commissions of
an Agent Obligor, a CNL Agent Obligor, or a ▇▇▇▇▇▇▇ Agent Obligor, or CNL
Managing General Agent or ▇▇▇▇▇▇▇ only to the extent that such Assigned
Commissions exceed the aggregate amount payable with respect to the
outstanding Agent Receivables of such Agent Obligor, CNL Agent Obligor,
▇▇▇▇▇▇▇ Agent Obligor, CNL Managing General Agent or ▇▇▇▇▇▇▇, as the case
may be.
(b) During the Liquidation Period with respect to the Receivables,
the amount of any rebate, discount, refund, adjustment, chargeback or
similar item (including, without limitation, as a result of the application
of any special or other discounts or any reconciliations) of any
Receivable, the amount owing for any cancellations or the amount of any
other reduction of any payment under any Receivable shall be treated as a
collection thereon by the Seller for purposes of this Agreement and shall
be paid to the Buyer on the next Settlement Date. The Seller may be
reimbursed for chargebacks relating to policies written by an Agent
Obligor, a CNL Agent Obligor, or a ▇▇▇▇▇▇▇ Agent Obligor, or CNL Managing
General Agent or ▇▇▇▇▇▇▇ out of amounts deposited in the Reserve Account
with respect to such Agent Obligor, CNL Agent Obligor, ▇▇▇▇▇▇▇ Agent
Obligor, CNL Managing General Agent or ▇▇▇▇▇▇▇ or, to the extent such
amounts are insufficient, out of Assigned Commissions payable to such Agent
Obligor, CNL Agent Obligor, ▇▇▇▇▇▇▇ Agent Obligor, CNL Managing General
Agent or ▇▇▇▇▇▇▇; provided that the Seller may be reimbursed out of
Assigned Commissions of an Agent Obligor, a CNL Agent Obligor, or a ▇▇▇▇▇▇▇
Agent Obligor, or CNL Managing General Agent or ▇▇▇▇▇▇▇ only to the extent
that such Assigned Commissions exceed the aggregate amount payable with
respect to the outstanding Agent Receivables of such Agent Obligor, CNL
Agent Obligor, ▇▇▇▇▇▇▇ Agent Obligor, CNL Managing General Agent or
▇▇▇▇▇▇▇.
(c) Without limiting the generality of the foregoing provisions of
this Section 3.4, in the event that any Insurance Company fails to make any
DBP Lead Commission payment within 30 days after such payment is due
(whether because of the lapse or cancellation of the underlying Insurance
Policy or for any other reason) and such DBP Lead Commissions were payable
with respect to a DBP Lead Receivable in which an Undivided Interest was
sold hereunder (a "Defaulted Lead Receivable") then the Seller shall
repurchase from Buyer on the next Settlement Date, Buyer's Undivided
Interest in such Defaulted Lead Receivable for an amount equal to the
product of (i) the Undivided Interest times (ii) the Gross Amount Due
(without deduction for any write-offs) upon such Defaulted Lead Receivable.
(d) Notwithstanding any other provision in this Agreement (or any
exhibit or schedule hereto) the Seller may at any time charge back to an
agent's account any unearned advances, whether the result of a lapsed
policy or a policy not taken out, subject, however, to the limitations on
such chargebacks contained in this Agreement regarding matters other than
time.
ARTICLE IV.
SETTLEMENTS; TERMINATION
A. SETTLEMENT STATEMENTS. Not later than three Business Days prior to
each Settlement Date until the Undivided Interest of the Buyer in the Portfolio
of Eligible Receivables has been reduced to zero, the Seller shall submit to the
Buyer a Settlement Statement, substantially in the form of Exhibit H, setting
forth the items listed on such Exhibit H and such other information as the Buyer
may reasonably consider appropriate for the purpose of effecting an accounting
and settlement hereunder. The Seller agrees to notify the Buyer promptly after
any collections manager or supervisor thereof, any member of the legal
department or any vice president or other executive officer of the Seller
obtains actual knowledge of any event with respect to any Obligor or Insurance
Company of the type described in subsection 7.1(e).
B. TERMINATION.
1. This Agreement will terminate at such time on or after the
Purchase Termination Date, or on or after such earlier date as to which the
Seller shall have given the Buyer 30 days notice, when the Net Purchase
Outstanding has been reduced to zero and all other amounts owing to the
Buyer hereunder shall have been paid in full; provided, however, that the
indemnities of the Seller to the Buyer set forth in this Agreement shall
survive such termination. Upon the termination of the commitment of the
Buyer to purchase Eligible Receivables hereunder in its entirety, whether
pursuant to this Article IV, Article VII or otherwise, and the collection,
repurchase or other final resolution of all Eligible Receivables, the
Buyer, shall, at the expense of the Seller, execute such Uniform Commercial
Code termination statements and such other documents as the Seller may
reasonably request to evidence the termination of the ownership interest or
security interest of the Buyer in Receivables. Prior to the collection,
repurchase or other final resolution of all Receivables, however, the
termination of the commitment of the Buyer to purchase Eligible Receivables
hereunder shall not affect the Seller's responsibilities pursuant to
Article III hereof, except in accordance with the provisions of such
Article III.
2. The Seller may request an extension of the Purchase Termination
Date then in effect for an additional one-year period by submitting such
request in writing to the Buyer at least 180 days prior to the then
effective Purchase Termination Date, so long as no Termination Event shall
have occurred and be continuing. If the Buyer shall approve such extension
in writing, the Purchase Termination Date shall automatically and without
further action be extended for such one-year period. There shall be no
limit on the number of such one-year extensions which the Seller may
request. However, in no event shall Buyer have any obligation to approve
such a request for extension nor shall Buyer have any liability whatsoever
for failing or refusing to approve such a request for extension.
(c) When all amounts payable with respect to all Receivables of a
particular Agent Obligor, CNL Agent Obligor or ▇▇▇▇▇▇▇ Agent Obligor or CNL
Managing General Agent or ▇▇▇▇▇▇▇ have been paid in full and neither the
Seller nor such Agent Obligor, CNL Agent Obligor or ▇▇▇▇▇▇▇ Agent Obligor
or CNL Managing General Agent or ▇▇▇▇▇▇▇, as the case may be, intend to
create any additional Receivables with respect to such Obligor (herein
referred to as an "Earned Basis Agent"), the Seller may (at the request of
such Earned Basis Agent or on the Seller's own accord) deliver to the Buyer
(with a copy to L/C Bank) a request to terminate the UCC financing
statement of such Earned Basis Agent, if any, accompanied by a certificate
executed by a duly authorized officer of the Seller and certifying the date
on which all amounts payable with respect to all Receivables of such Earned
Basis Agent were paid in full (the "Payment Date"). Upon the later of (i)
the Buyer's receipt of the certificate referred to in the previous sentence
and (ii) one calendar year plus one day following the Payment Date, the
Seller may execute a UCC termination statement with respect to such Earned
Basis Agent, and the Buyer and L/C Bank shall promptly deliver to the
Seller the original Contract relating to such Earned Basis Agent and shall
execute and deliver any necessary UCC termination statements prepared by
the Seller with respect to such Earned Basis Agent (all at the Sellers'
sole cost and expense).
ARTICLE V.
COVENANTS, REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller hereby
represents and warrants to the Buyer that, on the effective date of this
Agreement and on each Closing Date:
1. Closing Conditions. Each of the conditions set forth in clauses
(i) and (ii) of subsection 2.2(b) have been satisfied (after giving effect
to the proposed purchase and sale on such Closing Date).
2. Eligible Receivables. Each Receivable in which an Undivided
Interest, or Addition thereto, is then being sold to the Buyer is an
Eligible Receivable.
3. Gross Amount Due. The principal amount of the indebtedness due
and to become due on the Portfolio of Eligible Receivables in which an
Undivided Interest, or Addition thereto, is being sold to the Buyer will be
the amount set forth as the Gross Amount Due on account of the Portfolio of
Eligible Receivables in the Settlement Statement to be furnished pursuant
to Section 4.1.
4. Buyer's Ownership Interest. Each Assignment, when executed and
delivered pursuant hereto, (i) will vest in the Buyer an undivided,
participating ownership interest in all of the right, title and interest of
the Seller in, to and under each Eligible Receivable described therein and
the unpaid indebtedness evidenced thereby and in and to any and all
guarantees thereof, all collateral security therefor, all monies due or to
become due thereon and all amounts received with respect thereto and all
"proceeds" (as defined in Section 9-306 of the Uniform Commercial Code as
in effect under applicable law) thereof, whether now existing or hereafter
arising, and (ii) will constitute a valid assignment of such undivided,
participating ownership interest in such Eligible Receivables and such
guarantees and collateral security enforceable against all creditors of and
purchasers from the Seller.
5. Compliance with Laws. All the requirements of all laws and
regulations, whether Federal, state or local (including, without
limitation, usury laws, the Federal Truth in Lending Act and Regulation Z
of the Board of Governors of the Federal Reserve System), have been duly
complied with in all material respects with respect to the Seller, its
business, all Receivables and all related Contracts.
6. Organization; Good Standing; Authority. The Seller is duly
organized, validly existing and in good standing under the laws of the
state of its incorporation and has the corporate power and authority and
the legal right to enter into and perform, and has taken all necessary
corporate action to authorize the execution, delivery and performance of,
this Agreement, the Consent and Agreement, each Assignment and any other
Financing Documents to which it is a party to be delivered by it, all of
which will constitute legal, valid and binding obligations of the Seller,
enforceable in accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles.
7. No Violations of Laws; Litigation; Material Adverse Effect.
(i) None of this Agreement, the Consent and Agreement nor the Assignments
to be delivered by the Seller nor the performance by the Seller of its
obligations hereunder or thereunder will violate any provision of law or of
any agreement, indenture, note or other instrument binding upon the Seller
(including, without limitation, the Contract out of which such Receivable
arose or any arrangement between the Seller and any Insurance Company) or
any judgment, order or decree of any court or its articles of incorporation
or by-laws or give cause for acceleration of any indebtedness of the
Seller; (ii) no litigation, investigation or proceeding of or before any
court, governmental body, commission, agency or arbitrator is pending or,
to the knowledge of the Seller, threatened by or against the Seller or
against any of its properties or revenues with respect to this Agreement,
the Consent and Agreement or the Assignments or any of the transactions
contemplated hereby or thereby; and (iii) no material impairment exists in
the ability of the Seller to perform its obligations hereunder, under the
Consent and Agreement or under the Assignments or in connection with any of
the transactions contemplated hereby or thereby.
8. Approvals and Consents. No consent or authorization of, filing
with, or other act by or in respect of any court, governmental body,
commission, agency, arbitrator or any other Person (including any
shareholder, creditor or other Affiliate of the Seller) is required in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement, the Consent and Agreement or the
Assignments.
9. Qualification and Enforceability. The Seller and each Insurance
Company is duly qualified and in good standing in each jurisdiction in
which failure to qualify would render any Receivable unenforceable by the
Seller or the Buyer.
10. U.C.C. Filings. (i) The chief executive office of the Seller is
listed on Schedule I, which office is the place where the Seller is
"located" for the purposes of Section 9-103 of the Uniform Commercial Code
of the State of Illinois, and the offices of the Seller where the Seller
keeps its records concerning the Receivables are also listed on said
Schedule; (ii) Schedule I also sets forth all corporate names, tradenames
and fictitious names utilized by Seller; and (iii) all filings and other
acts necessary or advisable (including but not limited to all filings and
other acts necessary or advisable under the Uniform Commercial Code of each
relevant jurisdiction) have been made or performed in order to grant the
Buyer an ownership interest in respect of all Sold Receivables and a
security interest in all Receivables, free and clear of any security
interest, lien, claim, charge or encumbrance of any other Person except for
liens granted in the Assigned Commissions securing the Receivables and in
the DBP Lead Commissions to Insurance Companies and agents of the Seller in
the ordinary course of business and consistent with past practice, which
liens in each case are subordinate in right to the liens granted to Buyer
hereunder.
11. Financial Statements. The balance sheets of Seller, as at
December 31, 1994 and June 30, 1995 and the related statements of income
and retained earnings and changes in cash flow for the fiscal year and six
months ended on such dates, respectively, previously delivered to the Buyer
pursuant to subsection 6.1(e), are complete and correct and present fairly
the financial condition of Seller, as at such dates, and the results of its
operations and changes in financial position for the periods then ended.
Seller did not have, as of the dates of such financial statements, any
material (i) obligation, (ii) contingent liability or liability for taxes
or (iii) long-term lease which is not reflected in such financial
statements. There has not been as of the date of this Agreement and there
will not be as of the date of any purchase of Receivables hereunder any
material adverse change in the business, operations, property or other
financial condition of Seller or any of its Subsidiaries from the business,
operations, property or other financial condition of Seller or any such
Subsidiary as of June 30, 1995.
12. Termination Events. No Termination Event or event which, with
the giving of notice or lapse of time or both, would constitute a
Termination Event has occurred and is continuing.
13. Chargebacks. The description, attached hereto as Schedule III,
of the procedures used with respect to chargebacks on the Insurance
Policies is a true, correct and complete summary of such procedures.
14. Transfers of the Receivables. The Seller has not sold, pledged,
assigned or transferred, or granted any security interest in any of the
Receivables (except for liens granted in the Assigned Commissions and the
DBP Lead Commissions securing such Receivables to Insurance Companies and
agents of the Seller in the ordinary course of business, which liens are
subordinate in right to the liens granted to Buyer hereunder) or any
guarantee or proceeds thereof or collateral security therefor.
B. COVENANTS OF THE SELLER. The Seller hereby covenants to the Buyer
that:
1. Transfers of the Receivables. The Seller will not sell, pledge,
assign or transfer, or grant any security interest in, any of the
Receivables (except for liens granted in the Assigned Commissions and DBP
Lead Receivables securing such Receivables to Insurance Companies, agents
of the Seller, agents of CNL and agents of Pioneer Life in the ordinary
course of business, which liens are subordinate in right to the liens
granted to Buyer hereunder), any of the DBP Lead Commissions or any
guarantee or proceeds thereof or collateral security therefor, or any
interest therein, to any other Person.
2. Compliance with Laws. All the requirements of all laws and
regulations, whether Federal, state or local (including, without
limitation, usury laws, the Federal Truth in Lending Act and Regulation Z
of the Board of Governors of the Federal Reserve System), will be duly
complied with in all material respects with respect to the Seller, its
business, all Receivables and all related Contracts.
3. Compliance with Past Business Practices. The Seller will
continue to comply in all material respects with its past business
practices in generating, servicing and maintaining the Receivables.
4. Fulfillment of Obligations. The Seller will duly fulfill all
material obligations on its part to be fulfilled under or in connection
with each Receivable (including, without limitation, all of its obligations
in the Insurance Agency Agreements) and will do nothing to impair the
rights of the Buyer to such Receivables.
5. Accounting for the Transaction. The Seller will not (except with
respect to the DBP Lead Receivables) prepare any financial statements which
shall account for the transactions contemplated hereby in a manner which
is, nor will it in any other respect account for the transactions
contemplated hereby in a manner which is, inconsistent with the Buyer's
undivided participating ownership interest in the Sold Receivables.
6. Advance Rate. The Seller will not increase its advance rate with
respect to Receivables (i) to an amount in excess of 75% of the annualized
first-year commissions at the point of sale, less a holdback of 15% for
chargebacks, for Persons engaged by Seller's Advance Benefit Concepts
division, (ii) to an amount in excess of 75% of the annualized first-year
commissions at the point of policy issuance with respect to ▇▇▇▇▇▇▇ and any
agent of Pioneer Life assigned to ▇▇▇▇▇▇▇, (iii) to an amount in excess of
80% of the annualized first-year commissions at the point of policy
issuance with respect to any CNL Managing General Agent or any agent of any
CNL Managing General Agent, or (iv) to an amount in excess of 100% of the
annualized first-year commissions at the point of policy issuance for
Persons other than those referred to in clauses (i), (ii) and (iii) of this
subsection and the Seller will not make any advances against renewal
commissions without the consent of the Buyer. The Seller will not make any
advances with respect to Receivables prior to the point of submission of
policy application or the point of policy issuance, as applicable and as
set forth in this subsection 5.2(f).
7. Conduct of Business; Good Standing. The Seller will continue to
engage in business of the same general type as now conducted by it and
preserve, renew 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 it does business and take all reasonable action to
maintain all other rights, privileges and franchises necessary or desirable
in the normal conduct of its business except where the failure to preserve
and maintain such existence, rights, franchises, privileges and
qualification would not materially adversely affect the interests of the
Buyer hereunder or in the Receivables or the ability of the Seller to
perform its obligations hereunder.
8. Communications with Buyer. The Seller will at any time and from
time to time during regular business hours upon prior notice, permit the
Buyer, or its agents or representatives, (i) to examine and make copies of
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of the Seller relating to Receivables, and
(ii) to visit the offices and properties of the Seller for the purpose of
examining such materials described in clause (i) above, and to discuss
matters relating to Receivables or the Seller's performance hereunder with
any of the officers or employees of the Seller having knowledge of such
matters.
9. Principal Executive Office. The Seller will not change the
location of its principal executive office or of any of the offices where
it keeps its records with respect to the Receivables without prior notice
being given to the Buyer and all necessary or advisable filings under the
Uniform Commercial Code being made.
10. Information to be Provided by Seller. The Seller will furnish to
the Buyer:
(i) Annual Financial Information. As soon as available, but in
any event no later than 90 days after the end of each fiscal year of
Financial Services, copies of (a) the audited consolidated balance
sheet of Financial Services, as at the end of such fiscal year and the
related audited statements of income, retained earnings and changes in
cash flows for such fiscal year, setting forth in comparative form the
corresponding figures for the previous fiscal year, such audited
statement to be certified without qualifications or exception by
independent certified public accounts of national standing acceptable
to the Buyer, and (b) the annual unaudited consolidating balance
sheets and related annual unaudited consolidating statements of
operations for National Benefit Plans, Inc. and the Seller which
support and form the basis for the corresponding annual audited
financial statements of Financial Services;
(ii) Quarterly Financial Information. As soon as available, but
in any event no later than 45 days after the end of each fiscal
quarter of Seller, copies of the consolidated and consolidating
balance sheet of Seller as at the end of such quarter and the related
consolidated statements of income and retained earnings of Seller for
such quarter and for the portion of the fiscal year then ended,
setting forth in comparative form the corresponding figures for the
corresponding periods in the previous fiscal year, certified by the
appropriate financial officer of the Seller (subject to normal year-
end audit adjustments), all such financial statements delivered
pursuant to this subsection 5.2(j) to be complete and correct in all
material respects and to be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods
reflected therein (except as approved by the accountants and as
disclosed therein);
(iii) M&R Report. On the effective date of this Agreement,
on December 31, 1995 and on each June 30 and December 31 thereafter
occurring during the term of this Agreement, the M&R Report which
shall be prepared in a manner and using a methodology consistent with
that in preparation of the M&R Report dated June 30, 1995 delivered to
the Seller on the effective date of this Agreement;
(iv) Material Adverse Changes; Termination Events. Prompt notice
of (1) a material adverse change in the business, operations, property
or financial or other condition of the Seller and (2) the occurrence
of any Termination Event or event which, with the giving of notice or
lapse of time or both, would constitute a Termination Event;
(v) Certification of Covenants. The Seller will furnish to the
Buyer (A) within 45 days after the end of each quarterly fiscal period
a statement (certified by the appropriate financial officer of the
Seller) setting forth whether the covenants referred to in subsection
7.1(t) hereof were satisfied, and with respect to the financial
covenants referred to therein, the Seller shall also furnish all
information reasonably requested by the Buyer to allow the Buyer to
determine independently whether such financial covenants were
satisfied; (B) concurrently with the delivery by the Seller of the
statement referred to in (A) above, a certificate of the President,
Chief Executive Officer, Chief Financial Officer, any Vice President
or General Counsel of the Seller stating that, to the best of such
officer's knowledge after diligent inquiry, the Seller has observed
and performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement, the Consent and
Agreement and each Financing Document to which the Seller is a party
to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Termination Event or if any such
Termination Event exists, specifying the nature thereof, the period of
existence thereof and the action the Seller proposes to take with
respect thereto; and (C) concurrently with the information to be
provided by the Seller pursuant to subsection 5.2(j)(i), a certificate
of the independent public accountants of the Seller certifying that
nothing has come to their attention which would constitute a
Termination Event or any event which with notice or lapse of time or
both would constitute such a Termination Event has occurred or if such
a Termination Event or event has occurred or been discovered,
specifying the nature and extent thereof; and
(vi) Designated Agents and Insurance Companies. The Seller will
furnish to Buyer on the initial Closing Date and, not less often than
monthly thereafter commencing January, 1995, a list designating (a)
those Persons whose obligations are to be Agent Receivables, CNL Agent
Receivable, ▇▇▇▇▇▇▇ Agent Receivable, CNL Managing General Agent
Receivables or ▇▇▇▇▇▇▇ Marketing Manager Receivables, and (b) those
Insurance Companies whose first year DBP Lead Commissions are to be
DBP Lead Receivables, who, in each case, had not theretofore been so
designated by the Seller to Buyer.
11. [RESERVED]
12. Receipt of Collection. The Seller shall use only the accounts
listed on Schedule II for receiving Collections on the Receivables.
13. Delivery of Contracts. On each Closing Date the Seller will
deliver the originally executed copy of each Agent Contract, CNL Managing
General Agent Contract and ▇▇▇▇▇▇▇ Contract (or any other contract, note,
financing agreement or other document, in lieu of an Agent Contract,
evidencing an Agent Receivable, CNL Agent Receivable, ▇▇▇▇▇▇▇ Agent
Receivable or interest therein) with respect to an Agent Receivable, CNL
Managing General Agent Receivable or ▇▇▇▇▇▇▇ Marketing Manager Receivable
executed since the immediately preceding Closing Date.
14. Amendments and Modifications. The Seller shall not amend or
modify any Insurance Agency Agreement or Contract or CNL Managing General
Agent Contract, or ▇▇▇▇▇▇▇ Contract or Managing General Agent Agreement or
Marketing Agreement without the prior consent of the Buyer, which shall not
be unreasonably withheld, and the Seller shall promptly notify the Buyer
upon its receipt from any Insurance Company of a notice of termination
pursuant to the Insurance Agency Agreement between the Seller and such
Insurance Company; provided, however, that the Seller shall be permitted to
amend or modify any such Insurance Agency Agreement or Contract without the
consent of the Buyer so long as such amendment or modification does not
materially adversely affect the Buyer's interest in or the collectibility
of the Receivables.
15. Termination of Insurance Agency Agreements. The Seller shall not
terminate an Insurance Agency Agreement to which National Group Life
Insurance Company or Pioneer Life Insurance Company of Illinois is a party,
except in accordance with the terms of such agreements as in effect on the
date hereof.
16. Indebtedness. The Seller shall not incur any indebtedness to any
Insurance Company except for (i) indebtedness constituting chargebacks and
other similar items incurred in the ordinary course of business and
consistent with past practice; (ii) those insurance agency agreements
identified on Schedule IV hereto, complete and accurate copies of which
have been supplied to the Buyer and L/C Bank; and (iii) intercompany loans
provided that such loans are not secured by or related to the Receivables.
17. Changes to the Program Documents. The Seller shall not make any
material adverse change to the documents relating to the Receivables or DBP
Lead Commissions identified in and delivered along with the certificate of
the Chief Financial Officer of the Seller without the express written
consent of the Buyer and L/C Bank.
18. [RESERVED]
19. L/C Bank U.C.C. Filings. The Seller shall file UCC financing
statements with respect to each Person who is an Agent Obligor, CNL Agent
Obligor or ▇▇▇▇▇▇▇ Agent Obligor on the date hereof and with respect to
each CNL Managing General Agent, and with respect to ▇▇▇▇▇▇▇ showing such
Agent Obligor, CNL Agent Obligor, ▇▇▇▇▇▇▇ Agent Obligor, each CNL Managing
General Agent and ▇▇▇▇▇▇▇, as the case may be, as Debtor with respect to
the Receivables of such Obligor and, prior to entering into any Agent
Contract with a Person who shall become an Agent Obligor of the Seller or a
CNL Agent Obligor or ▇▇▇▇▇▇▇ Agent Obligor after November 22, 1995, shall
file UCC financing statements showing each such Person as Debtor with
respect to advances or loans to each such Person by the Seller or by CNL or
Pioneer Life which are assigned to the Seller hereunder. All such
financing statements to be filed pursuant to this subsection 5.2(s) shall
name the Seller as secured party and the Buyer and L/C Bank as assignees
and such financing statements shall be acceptable to the Buyer and L/C
Bank. In lieu of filing any UCC financing statements, the Seller may
maintain with L/C Bank an L/C Bank certificate of deposit in the aggregate
amount of $200,000, which certificate of deposit shall be pledged to L/C
Bank on terms and conditions reasonably satisfactory to it.
(t) The Seller shall cause each Insurance Company (other than
Eligible Fronting Companies) on an individual basis (A) to maintain at all
times Total Adjusted Capital equal to or greater than 270% of Authorized
Control Level RBC, (B) to maintain at all times a Real Estate Concentration
Ratio of less than 50%, and (C) to maintain at all times a ratio of (x)
Non-Investment Grade Obligations to (y) Total Invested Assets of less than
15%.
C. EFFECT OF BREACH BY THE SELLER. If any of the representations,
warranties or covenants contained in Sections 5.1 and 5.2 in respect of any Sold
Receivable shall be or have been materially incorrect or shall have been
materially breached at any applicable Closing Date, and such incorrectness or
breach shall not be corrected prior to the next Settlement Date which occurs
after such incorrectness or breach became known to the Seller or the Buyer, then
on such Settlement Date the Seller shall, at the option of the Buyer as
requested in writing, pay the Buyer an amount equal to the unpaid balance of
such Sold Receivable. Any amount paid by the Seller under this provision shall
be treated as a Principal Collection on account of the Buyer's Undivided
Interest for purposes of this Agreement. Upon receipt of such payment and all
other amounts then due under this Agreement in respect of any so affected Sold
Receivable, the Buyer shall reassign its interest in such affected Sold
Receivable to the Seller, subject to no liens created by Buyer, without
recourse, representation or warranty.
The obligations of the Seller to the Buyer under this Agreement shall not
be affected by reason of any invalidity, illegality or irregularity of any
Receivable or any sale of a Receivable.
ARTICLE VI.
CONDITIONS TO EFFECTIVENESS; PURCHASES
A. EFFECTIVE DATE. This Agreement shall become effective on the date
(the "effective date of this Agreement") on which:
1. The Seller shall have delivered to the Buyer copies of
resolutions of the Board of Directors of the Seller (and Financial
Services) authorizing the sales provided for herein and the execution,
delivery and performance of this Agreement, the Consent and Agreement, the
Assignment, and the other documents contemplated hereby certified by the
Secretary or an Assistant Secretary of the Seller on the effective date of
this Agreement, together with a certificate of such Secretary or Assistant
Secretary as to the incumbency of each officer of the Seller (or Financial
Services, as the case may be) authorized to execute this Agreement, the
Consent and Agreement, the Assignments and the other documents contemplated
hereby and thereby, and the Seller shall have delivered to the Buyer true
and correct copies of the Insurance Agency Agreements (together with the
amendments thereto regarding notice for termination) certified as to
authenticity by a duly authorized officer of the Seller;
2. There shall have been delivered to the Buyer the favorable
written opinion of (i) ▇▇▇▇▇▇▇▇▇, Will and ▇▇▇▇▇, counsel to the Seller,
and (ii) A. ▇▇▇▇▇ ▇▇▇▇ III, Assistant General Counsel of the Seller and
Financial Services, in each case addressed to the Buyer and L/C Bank and
dated the effective date of this Agreement, such opinions to be
substantially in the form of Exhibits C-1, C-2 and C-3, respectively;
3. There shall have been delivered to the Buyer a certificate
executed by a duly authorized officer of the Seller, dated the effective
date of this Agreement, to the effect that appropriate financing statements
(naming the Buyer as the Secured Party and L/C Bank as Assignee) relating
to the Receivables of the Seller have been filed in each appropriate filing
office in each appropriate jurisdiction in which the Seller maintains an
office (which certificate shall also have annexed thereto a schedule
setting forth each office in which such financing statements have been
filed and the acknowledgement copies of such financing statements, showing
the recording data), and such certificate shall also state that such
offices are the only offices in which filing is required in order to
perfect the interest of the Buyer in such Receivables against all creditors
of and purchasers from the Seller;
4. The Buyer shall have received search reports satisfactory to it
dated a date reasonably near to the effective date of this Agreement,
listing all effective financing statements which name the Seller as debtor
and which are filed in the jurisdictions in which filings were made
pursuant to paragraph (c) above, together with copies of such other
financing statements none of which shall cover any Receivables, unless
UCC-3 termination statements with respect to such financing statements
shall be filed in the appropriate offices on or before the effective date
of this Agreement, (photostatic copies of which shall have been delivered
to the Buyer);
5. There shall have been delivered to the Buyer financial statements
of the Seller as of June 30, 1995 for the fiscal period ended on such date,
certified by the appropriate financial officer of the Seller, which
financial statements shall be satisfactory in form and substance to the
Buyer;
6. There shall have been delivered to the Buyer (i) a counterpart of
a reaffirmation of the Consent and Agreement, duly executed on behalf of
the Seller and Financial Services and (ii) an Acknowledgment of Assignment
of each Insurance Company, duly executed on behalf of such Insurance
Company; and
7. There shall have been delivered to the Buyer a copy of the
Articles of Incorporation of the Seller, certified by the Secretary of
State of Illinois.
B. CONDITION TO EACH PURCHASE. The obligation of the Buyer to make each
purchase of an Undivided Interest or Addition thereto hereunder from the Seller
(including its initial purchase) on any Closing Date hereunder is subject to the
conditions that:
1. No Termination Event, or event which, with the lapse of time or
the giving of notice or both, would constitute a Termination Event, shall
have occurred and then be continuing, and no such Termination Event or
event shall occur as a result of the proposed purchase on such Closing
Date;
2. The representations and warranties of the Seller set forth in
Article V shall be true and correct in all material respects on and as of
such Closing Date hereunder;
3. The Buyer shall be satisfied that the requirements of subsection
3.1(a) shall have been fulfilled with respect to such Receivables, and that
the documentation pursuant to which the applicable bank accounts are
required by subsection 3.1(b) to be maintained remains in full force and
effect;
4. The Gross Amount Due upon all EFC Receivables constituting
Eligible Receivables (i) shall constitute no more than $5,000,000, (ii) of
Foundation Health, a California Health Plan ("FHCHP"), shall constitute no
more than $2,500,000, and (iii) of any one Eligible Fronting Company (other
than FHCHP) shall constitute no more than $1,000,000;
(e) Each Eligible Fronting Company with EFC Receivables constituting
Eligible Receivables in excess of $250,000 shall have a Best rating of A-
or higher or, with respect to Foundation Health, a California Health Plan
and Foundation Health, a Texas Health Plan, and each other HMO or other
managed care company, shall have a S&P rating of BBB- or higher;
(f) The Seller's Insurance Agency Agreements with National Group Life
Insurance Company, Pioneer Life Insurance Company of Illinois and Manhattan
National Life Insurance Company shall be in full force and effect and no
notice of termination with respect to either of such agreements shall have
been given by any party; and
(g) All legal matters incident to the execution and delivery of this
Agreement and to the purchases by the Buyer of such Receivables shall be
reasonably satisfactory to counsel for the Buyer and counsel for L/C Bank.
Each sale of an Undivided Interest or Addition thereto on any Closing Date by
the Seller shall constitute a representation and warranty by the Seller that the
conditions to the purchase thereof on such Closing Date have been satisfied.
ARTICLE VII.
EVENTS OF TERMINATION
A. EVENTS OF TERMINATION. If any of the following events (herein called
"Termination Events") shall have occurred and be continuing:
1. The Seller shall fail, on any Settlement Date, to make any
payment reflected in the related Settlement Statement as being required to
be made by the Seller hereunder, or required to be made by the Seller
pursuant to subsection 3.4(c), on such Settlement Date;
2. The Seller shall fail to pay any other amount required to be paid
by the Seller hereunder within three Business Days after the date on which
such amount shall have become due and payable;
3. The Seller shall fail to observe or perform in any material
respect any covenant applicable to it contained (i) in subsection 5.2(f),
5.2(i), 5.2(j)(iv), 5.2(k), 5.2(l), 5.2(m), 5.2(n), 5.2(o), 5.2(p), 5.2(q)
, 5.2(s) or 5.2(t) and such failure shall continue for five days from the
date thereof or (ii) in any other provision of this Agreement and such
failure shall continue for five days from the date the Seller receives
notice thereof or an executive officer of Seller otherwise obtains actual
knowledge thereof;
4. Any representation, warranty, certification or statement made by
the Seller in this Agreement or in the Consent and Agreement or in any
certificate, financial statement or other document delivered pursuant to
this Agreement or the Consent and Agreement shall prove to have been
incorrect in any material respect when made; provided that no such breach
with respect to any Sold Receivable or Sold Receivables shall constitute a
Termination Event under this subsection 7.1(d) unless (i) the Buyer has
requested, pursuant to subsection 5.3 that the Seller repurchase such Sold
Receivable or Sold Receivables and (ii) the Seller has failed to pay
pursuant to subsection 5.3 to the Buyer an amount equal to the unpaid
balance of such Sold Receivable or Sold Receivables;
5. (i) The Seller, Financial Services or any Insurance Company
(other than an Eligible Fronting Company with respect to which (i) not more
than $250,000 of Receivables in the Portfolio of Eligible Receivables are
Receivables of such Eligible Fronting Company, and (ii) the Seller has
repurchased all of the Sold Receivables of such Eligible Fronting Company
within three (3) Business Days after receipt of a written request therefor
from the Buyer) shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets,
or the Seller, Financial Services or any such Insurance Company shall make
a general assignment for the benefit of its creditors; or (ii) there shall
be commenced against the Seller, Financial Services or any such Insurance
Company any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or
any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 90 days; or (iii) there shall be
commenced against the Seller, Financial Services or any Insurance Company
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 90 such days from the entry thereof; or
(iv) the Seller, Financial Services or any such Insurance Company shall
take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Seller, Financial Services or any such Insurance
Company shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due;
6. [RESERVED]
7. The Seller, Financial Services or any Insurance Company (except
any Insurance Company which is an Eligible Fronting Company) shall fail to
make any payment of principal, when required (after giving effect to any
grace periods) in respect of indebtedness for borrowed money with a value
in excess of $5,000,000, or there shall have occurred and be continuing an
event of default under any other agreement, contract or instrument relating
to indebtedness of the Seller, Financial Services or any such Insurance
Company with a value in excess of $5,000,000 which permits the holder of
such indebtedness to accelerate such indebtedness;
8. One or more judicial orders or decrees (not paid by or fully
covered by insurance) for the payment of money in excess, in the aggregate,
of more than $5,000,000 or its equivalent shall be rendered against the
Seller, Financial Services or any Insurance Company (except any Insurance
Company which is an Eligible Fronting Company), and such judgment or order,
or execution thereon, shall not have been paid, vacated, discharged, stayed
or bonded, if necessary, pending appeal or other appropriate proceeding or
motion within 90 days from the entry thereof;
9. On any Settlement Date, the Default Rate shall exceed 5.0% for
the period consisting of the fiscal quarter of the Seller preceding such
date;
10. Financial Services shall cease to own, directly or indirectly, at
least 51% (or such higher percentage as may be necessary to maintain voting
control) of the shares of the outstanding capital stock of the Seller;
11. The Consent and Agreement shall cease, for any reason, to be in
full force and effect, or any party thereto shall so assert in writing;
12. An Event of Default (as defined in the Reimbursement Agreement)
shall occur and be continuing;
13. On any Settlement Date (after giving effect to any purchases and
sales on such date and after giving effect to any reassignment required
pursuant to subsection 2.4 on such date), the Undivided Interest of the
Buyer (as of the last day of the related Settlement Period) in the Seller's
Portfolio of Eligible Receivables (expressed as a percentage) shall exceed
90%;
14. the Best rating (to the extent it has one) for any Insurance
Company (except any Insurance Company which is an Eligible Fronting Company
or Pioneer Life Insurance Company of Illinois) shall fall below B+ or the
Best rating for Pioneer Life Insurance Company of Illinois shall fall below
B-;
15. the Policy Lapse Rates for any quarterly fiscal period shall
exceed 7.5% for major medical or long term disability, 5.0% for Medicare
supplement or 3.0% for life annuity business;
16. the Present Value of Assigned Commissions, as set forth in any
M&R Report, shall be less than 300% of the Net Purchase Outstanding at such
time, provided that, notwithstanding any other provision in this Agreement
(or any exhibit or schedule hereto) the parties hereto confirm that when
computing compliance with this Section 7.1(p), the Seller shall include DBP
Lead Commissions when calculating the Present Value of Assigned
Commissions;
17. [RESERVED]
18. any Insurance Company (other than an Eligible Fronting Company)
(i) with a Best's rating on the date hereof shall fail to have a Best's
rating after such date or (ii) which obtains a Best's rating on a date
after the date hereof shall fail to have a Best's rating after such date;
19. any covenant contained in the Financial Services Credit Agreement
is breached (and the parties hereto agree such a breach shall constitute a
Termination Event hereunder regardless of whether such breach constitutes
an "Event of Default" under the Financial Services Credit Agreement) or any
note delivered in connection with such agreement shall be declared due and
payable in either event as the result of the occurrence of an "Event of
Default" under such agreement;
20. Financial Services shall fail to observe or perform in any
material respect any covenant applicable to it in the Consent and Agreement
and such failure shall continue for five days from the date thereof;
21. Financial Services shall fail (i) for any two consecutive
quarterly fiscal periods or (ii) for any fiscal year to earn profits on a
consolidated basis as calculated in accordance with GAAP; provided, however
that this condition shall not be breached as a result of a writeoff of
deferred policy acquisition costs ("DPAC"), in excess of normal recurring
DPAC amortization determined in accordance with past practice, based on a
recoverability analysis of policies of insurance conducted by M&R, written
evidence of which analysis shall be provided to the Buyer at its request;
or
22. any Subsidiary Insurance Company shall fail for any quarterly
fiscal period to earn profits as calculated in accordance with Statutory
Accounting Practices required or permitted by the applicable insurance
regulatory authority; provided, however, that this condition shall not be
breached unless at such time such Subsidiary Insurance Company shall have
failed to earn profits for the prior twelve month period (including such
quarterly fiscal period).
then, (A) if such event is a Termination Event described in paragraph (e) above
affecting or in any way relating to the Seller, automatically the commitment of
the Buyer to purchase Eligible Receivables hereunder shall thereupon terminate
without notice of any kind, which is hereby waived by the Seller and (B) if such
event is any other Termination Event, the Buyer may, by notice to the Seller
terminate the Buyer's commitment to purchase Undivided Interests and Additions
hereunder; provided, however, if the Buyer is prevented from giving such notice
by any applicable law or court order, such termination of the Buyer's commitment
hereunder shall be automatic as provided in clause (A) above.
ARTICLE VIII.
MISCELLANEOUS
A. FURTHER ASSURANCES. The Seller agrees, from time to time, to do and
perform any and all acts and to execute any and all further instruments required
or reasonably requested by the Buyer more fully to effect the purposes of this
Agreement and the sales of the Eligible Receivables hereunder, including,
without limitation, the execution of any financing statements or continuation
statements relating to Receivables for filing under the provisions of the
Uniform Commercial Code of any applicable jurisdiction.
B. PAYMENTS. Each payment to be made by either the Buyer or the Seller
hereunder shall be made on the required payment date in lawful money of the
United States and in immediately available funds and, in the case of payments by
the Seller, at the office of ANB located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
C. COSTS AND EXPENSES. The Seller agrees to pay all reasonable out-of-
pocket costs and expenses of the Buyer (including any expenses incurred in
connection with computer monitoring and related services and fees and
disbursements of the Buyer's counsel) in connection with (a) the preparation,
execution, delivery and administration of this Agreement, the Consent and
Agreement, any Financing Document and any other agreements contemplated hereby
or thereby, (b) the sale of Undivided Interests hereunder, (c) the perfection as
against all third parties whatsoever of the Buyer's right, title and interest
in, to and under the Receivables, (d) the enforcement by the Buyer of the
obligations and liabilities of the Seller under this Agreement, the Consent and
Agreement or any Financing Document and (e) the maintenance by the Buyer of, and
the obligations of the Buyer in connection with, any bank accounts referred to
in subsection 3.1(b) and the Seller agrees to pay all out-of-pocket costs and
expenses of the Buyer (including, without limitation, the fees and disbursements
of the Buyer's counsel) in connection with the enforcement by the Buyer of its
rights against the Seller under this Agreement, the Consent and Agreement and
any Financing Document. In addition, the Seller agrees to indemnify the Buyer
and the Buyer's officers, directors, employees, agents and shareholders
(collectively, the "Indemnified Parties") from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever (i) which may
at any time be imposed on, incurred by or asserted against the Indemnified
Parties in any way relating to or arising out of this Agreement or the
transactions contemplated hereby or by the Financing Documents or by the
issuance of the Notes by the Buyer or any action taken or omitted by the
Indemnified Parties under or in connection with any of the foregoing (all such
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements being herein called "Indemnified
Liabilities") and (ii) which would not have been imposed on, incurred by or
asserted against the Indemnified Parties but for its having entered into this
Agreement, provided, however, that the Seller shall in no event be liable to the
Indemnified Parties for any Indemnified Liabilities resulting from the gross
negligence or willful misconduct of the Indemnified Parties or Indemnified
Liabilities relating to or resulting from an employee benefit plan of the
Indemnified Parties covered by the Employee Retirement Income Security Act of
1974, as amended, provided, further, that nothing in this Section 8.3 shall be
deemed to constitute a guarantee of collection of the Receivables. The
agreements in the two preceding sentences shall survive the termination of this
Agreement.
D. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF ILLINOIS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
E. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Buyer, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
F. AMENDMENTS. This Agreement may not be modified, amended, waived,
supplemented or, except as provided in Sections 4.2 or 7.1, terminated except
pursuant to a written instrument executed by the Seller and the Buyer.
G. SEVERABILITY. If any provision hereof is void or unenforceable in any
jurisdiction, such voiding or unenforceability shall not affect the validity or
enforceability of (i) such provision in any other jurisdiction or (ii) any other
provision hereof in such or any other jurisdiction.
H. NOTICES. All notices and other communications provided for hereunder
shall be in writing and, if to the Buyer, mailed, delivered, faxed or
transmitted to it at National Funding Corporation, Box 8841, Second Floor, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (with a copy to Banc One Capital
Corporation, ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and to American National Bank and Trust Company of Chicago, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
to each "Participant" (as such term is defined in the Reimbursement Agreement)
at the addresses provided for in Schedule I to the Reimbursement Agreement); or
if to the Seller, mailed, delivered, faxed or transmitted to it at Design
Benefit Plans, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: General Counsel; or as to such party at such other address or fax
number as shall be designated by such party in a written notice to the other
parties hereto. Unless otherwise expressly provided herein, each such notice
shall be deemed to have been given or made when delivered by hand, or three days
after depositing in the mail, first class postage prepaid, or, in the case of
telecopy notice, upon confirmation by the sender of receipt, or in the case of
overnight courier delivery, one day following deposit with reputable overnight
courier for next business morning delivery, or in the case of telegraphic
notice, when delivered to the telegraph company, or, in the case of telex
notice, when sent answerback received. Any communication with respect to a
change of address shall be deemed to be given or made when received by the party
to whom such communication was sent.
I. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Seller and the Buyer and their respective successors
and assigns, except that the Seller may not assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of the
Buyer and the Buyer may not assign or transfer any of its rights or obligations
under this Agreement except as contemplated by the Buyer Security Agreement.
J. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
K. SUBMISSION TO JURISDICTION. The Buyer and the Seller hereby
irrevocably consent and agree that any legal action, suit or proceeding arising
out of or in any way connected with this Agreement may be instituted or brought
by the Buyer or the Seller in the courts of the State of Illinois or ▇▇▇▇
County, Illinois, or in the United States Courts for the Northern District of
Illinois, as the Buyer or the Seller may elect, and by execution and delivery of
this Agreement, the Buyer and the Seller hereby irrevocably accept and submit
to, for themselves and in respect of their property, generally and
unconditionally, the non-exclusive jurisdiction of any such court, and to all
proceedings in such courts. The Buyer and the Seller irrevocably consent to
service of any summons and/or legal process by registered or certified United
States air mail, postage prepaid, to the Buyer or the Seller at the addresses
set forth below, such method of service to constitute, in every respect,
sufficient and effective service of process in any legal action or proceeding.
Nothing in this Agreement shall affect the right to service of process in any
other manner permitted by law or limit the right of the Buyer or the Seller to
bring actions, suits or proceedings in the court of any other jurisdiction. The
Buyer and the Seller further agree that final judgment against either one of
them in any such legal action, suit or proceeding shall be conclusive and may be
enforced in any other jurisdiction, within or outside the United States of
America, by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and the amount of the liability.
L. WAIVER OF JURY TRIAL. The Seller and the Buyer each waive all right
to trial by jury in any action or proceeding arising out of or relating to any
of the transactions contemplated by this Agreement.
M. ENTIRE AGREEMENT; AMENDMENT AND RESTATEMENT. This Agreement, and the
Related Agreements and the agreements, documents and instruments executed in
connection herewith and therewith, constitute the entire agreement between the
Seller and the Buyer with respect to the subject matter herein. This Agreement
amends, supersedes, and restates in its entirety the Second Amended and Restated
Receivables Purchase Agreement, dated as of October 1, 1994, by and between the
Seller and the Buyer, as amended (the "Prior Purchase Agreement"); provided that
(i) the Buyer shall retain all of its right, title and interest in and to the
Undivided Interest (as defined in the Prior Purchase Agreement) outstanding on
the date hereof and (ii) all of the Seller's liabilities and obligations under
the Prior Purchase Agreement shall remain outstanding and be enforceable under
the terms of this Agreement and the Related Agreements until satisfied in full.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of the
day and year first above written.
DESIGN BENEFIT PLANS, INC.,
as Seller
By:
Title: Executive Vice President
NATIONAL FUNDING CORPORATION, as Buyer
By:
Title: Vice President
