EXHIBIT 4.16
AMENDED AND RESTATED LOAN PURCHASE AND SERVICING AGREEMENT
dated as of
December 7, 2001
between
GROCERS CAPITAL COMPANY
as Seller and Servicer
and
NATIONAL CONSUMER COOPERATIVE BANK
as Buyer
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS......................................................... 1
SECTION 1.01 Defined Terms............................................... 1
SECTION 1.02 General Principles Applicable to Definitions................ 14
SECTION 1.03 Accounting Terms............................................ 14
ARTICLE II THE COMMITMENT..................................................... 15
SECTION 2.01 Loans Sold and Purchased as of the Effectiveness Date;
Origination of Loans........................................ 15
SECTION 2.02 Agreement to Purchase and Sell Loans........................ 15
SECTION 2.03 Incremental Purchase........................................ 17
SECTION 2.04 Commitment Termination Date................................. 18
ARTICLE III CLOSING PROCEDURE; CONDITIONS TO PURCHASE......................... 19
SECTION 3.01 Payment..................................................... 19
SECTION 3.02 Effective Date.............................................. 19
SECTION 3.03 Buyer's Conditions Precedent to Acceptance.................. 19
SECTION 3.04 Additional Delivery Requirements for Effectiveness Date..... 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................... 23
SECTION 4.01 Seller's Corporate Representations and Warranties........... 23
SECTION 4.02 Seller's Incremental Purchase Date Representations and
Warranties with respect to Loans............................ 25
SECTION 4.03 Buyer's Representations and Warranties...................... 30
SECTION 4.04 Repurchase Upon Breach of Certain Representations and
Warranties.................................................. 30
SECTION 4.05 Survival of Representations................................. 31
ARTICLE V SERVICING AND COLLECTION............................................ 32
SECTION 5.01 Servicing; Delegation of Authority to Buyer and Servicer.... 32
SECTION 5.02 Maintenance of System; Collection and Maintenance of
Information................................................. 32
SECTION 5.03 Maintenance of Lien Priority................................ 33
SECTION 5.04 Obligor Inquiries; Credit and Collection Policies........... 33
SECTION 5.05 Obligor Defaults............................................ 34
SECTION 5.06 Servicer Reports; Annual Audit.............................. 35
SECTION 5.07 Loan and Other Payments..................................... 35
SECTION 5.08 Computation and Payment of Periodic Payments, Servicing Fees
and Guaranty Fees; Servicer's Expenses...................... 37
SECTION 5.09 Applicable Rate............................................. 38
SECTION 5.10 Concerning Insurance on Collateral.......................... 38
SECTION 5.11 Access to Certain Documentation and Certain Information
Regarding the Loans......................................... 39
SECTION 5.12 Servicer Representations and Warranties..................... 39
SECTION 5.13 Servicer's Resignation.................................... 40
ARTICLE VI SELLER'S AND SERVICER'S COVENANTS................................ 41
SECTION 6.01 Covenants................................................. 41
ARTICLE VII SELLER OBLIGATIONS AND REPURCHASE OPTIONS....................... 47
SECTION 7.01 Repurchase of Loans....................................... 47
SECTION 7.02 Minimal Balances.......................................... 47
SECTION 7.03 Repurchase of Expansion Loans............................. 47
SECTION 7.04 Repurchase of Loans on the Seventh Anniversary of the
Commitment Termination Date............................... 48
ARTICLE VIII SERVICER DEFAULT............................................... 49
SECTION 8.01 Servicer Defaults......................................... 49
SECTION 8.02 Buyer to Act; Appointment of Successor.................... 50
SECTION 8.03 Effects of Servicing Transfer............................. 51
ARTICLE IX TERMINATION EVENTS............................................... 52
SECTION 9.01 Termination Events........................................ 52
SECTION 9.02 Consequences of Termination Event......................... 53
SECTION 9.03 Remedies of a Secured Party............................... 53
ARTICLE X MISCELLANEOUS..................................................... 55
SECTION 10.01 Further Assurances....................................... 55
SECTION 10.02 Indemnities.............................................. 55
SECTION 10.03 No Waiver: Remedies Cumulative........................... 55
SECTION 10.04 Governing Law............................................ 56
SECTION 10.05 Consent to Jurisdiction; Waiver of Immunities............ 56
SECTION 10.06 Notices.................................................. 56
SECTION 10.07 Assignment............................................... 56
SECTION 10.08 Capital Markets Funding.................................. 56
SECTION 10.09 Severability............................................. 56
SECTION 10.10 Attorney's Fees.......................................... 57
SECTION 10.11 Setoff................................................... 57
SECTION 10.12 Limitation on Third Party Beneficiaries.................. 57
SECTION 10.13 Term of Agreement........................................ 57
SECTION 10.14 Entire Agreement; Amendment.............................. 57
SECTION 10.15 Headings................................................. 57
SECTION 10.16 Counterparts............................................. 57
AMENDED AND RESTATED
LOAN PURCHASE AND SERVICING AGREEMENT
This AMENDED AND RESTATED LOAN PURCHASE AND SERVICING AGREEMENT (this
"Agreement") is executed as of December 7, 2001, by and between GROCERS CAPITAL
COMPANY, a California corporation ("GCC"), as Seller (in such capacity, the
"Seller") and as Servicer (in such capacity, the "Servicer"), and NATIONAL
CONSUMER COOPERATIVE BANK, a financial institution organized under the laws of
the United States (the "Buyer").
RECITALS
WHEREAS GCC and Buyer entered into that certain Loan Purchase and Servicing
Agreement dated as of August 29, 1996 (as amended, the "Original Loan Purchase
and Servicing Agreement");
WHEREAS GCC and Buyer desire (i) to amend and restate the Original Loan
Purchase and Servicing Agreement as set forth in this Agreement and (ii) in
connection therewith, amend and restate the Original Guaranty Agreement as set
forth in the Amended and Restated Guaranty Agreement; and
WHEREAS the Loans outstanding under the Original Loan Purchase and
Servicing Agreement (each an "Original Loan" and, collectively, the "Original
Loans"), shall remain outstanding as Loans under, and subject to, the terms of
this Agreement.
NOW THEREFORE, for full and fair consideration, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms. The following terms, as used herein, have the
following meanings:
"Affiliate" shall mean, with respect to a Person, any other Person (or
group of related Persons) which (i) directly or indirectly controls, is
controlled by or is under common control with, such Person, or (ii) directly or
indirectly owns more than 10% of such Person's voting stock. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
that the mere fact that a representative of a Unified Patron serves and acts as
a director of Unified or Seller shall not cause such Unified Patron to be an
Affiliate of Unified or Seller.
"Agent" shall mean NCB, in its capacity as Agent under the Portfolio Credit
Facility.
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"Applicable Rate" shall mean, for each Loan, the rate determined pursuant
to Section 5.09.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement and General Release dated as of October 2, 2000 by and
among URI, Unified, GCC and NCB.
"Bank Act" shall mean the National Consumer Cooperative Bank Act, 12
U.S.C.(S)(S) 3001-3051, and any regulations and policies adopted thereunder.
"Business Day" shall mean any day other than Saturday, Sunday and a day on
which commercial banks in Washington, D.C., and Los Angeles, California, are
authorized to close.
"Buyer" shall mean NCB, as buyer hereunder.
"Cash Flow Ratio" means, with respect to any Obligor of any Loan as of any
date of determination, a fraction expressed as a ratio where the numerator is
equal to the sum of: (i) profits before taxes for such Obligor, (ii) interest
expense for such Obligor, (iii) depreciation for such Obligor, (iv) amortization
for such Obligor and (v) employee stock ownership plan (ESOP)
contribution/compensation expense for such Obligor, if a leveraged transaction
(each of the foregoing being determined in accordance with GAAP consistently
applied for the most recently ended period of 12 fiscal months of such Obligor),
and where the denominator is equal to the aggregate scheduled principal and
interest payments in respect of indebtedness of such Obligor due during the
ensuing period of 12 consecutive months.
"Cash Interest Expense" shall mean, for any period, gross interest expense
for such period determined in accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean all or any portion of any collateral, whether real
or personal, tangible or intangible, or otherwise, pledged by any Obligor or
Loan Guarantor to secure repayment of its Loan and the related Note (other than
Cooperative Assets).
"Collateral Coverage Ratio" means, with respect to any Loan, a fraction
expressed as a ratio where the numerator is equal to the sum of: (i) the net
book value of inventory, and other assets other than furniture, fixtures,
equipment and real estate of the Obligor of such Loan, (ii) the greater of (a)
the net book value of furniture, fixtures and equipment of the Obligor and (b)
the product of 3.5 multiplied by average weekly sales of such Obligor up to a
maximum of the gross book value of such furniture, fixtures and equipment and
(iii) the appraised value of real estate of the Obligor which complies in all
respects with the Credit and Collection Policy, and where the denominator is the
aggregate outstanding principal balance of all loans secured in whole or in part
by any of the above described assets.
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"Collections" shall mean any and all amounts received from or on behalf of
the Obligors in respect of Loans and related Notes or Related Documents during
any applicable Due Period regardless of how received and including, without
limitation, receipt of Scheduled Payments, payments from Loan Guarantors,
Liquidation Proceeds and Insurance Proceeds.
"Commitment Termination Date" shall have the meaning set forth in Section
2.04.
"Consolidated Net Worth" shall mean, with respect to any Person, as of any
date, the aggregate shareholders' equity of such Person and its Subsidiaries
that would be shown on a consolidated balance sheet as of such date.
"Consolidated Tangible Net Worth" shall mean, with respect to any Person,
at any date, Consolidated Net Worth less (i) all assets which should be
classified as intangible assets (such as goodwill, patents, trademarks,
copyrights, franchises and covenants not to compete) and (ii) to the extent not
already deducted from total assets, all reserves including those for deferred
income taxes, depreciation, obsolescence or amortization of properties and (iii)
all capital stock or other investments in any direct or indirect subsidiary
other than in (x) any offshore investment subsidiary, or (y) a subsidiary having
all or substantially all of its operations in the United States.
"Controlled Group" shall mean, with respect to any Person, all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which (1) together with such Person are
treated as a single employer under Section 414(b) or 414(c) of the Code or (2)
solely for purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the Code, described in Section 414(m) or (n) of the
Code, includes such Person as a member.
"Cooperative Assets" shall mean the assets (including cash) owned or earned
by an Obligor relating to its membership in Unified, including Unified's capital
stock and patronage dividends.
"CPLTD" shall mean, with respect to any Person, as of any date, that
portion of such Person's long-term Debt (that is, Debt with a term of greater
than one year) which matures and is due and payable within one year.
"Credit Agreement" shall mean the Secured Revolving Credit Agreement, dated
as of September 29, 1999, by and among Unified, the lenders named therein and
Cooperatieve Centrale Raiffeisen - Boerenleenbank B.A., "Rabobank Nederland",
New York Branch, as Agent, as the same may be modified, amended, supplemented or
replaced from time to time.
"Credit and Collection Policy" shall mean, with respect to GCC, the credit,
collection, enforcement and other policies and practices of GCC relating to
Loans, related Notes and Related Documents existing on the Effectiveness Date
and as set forth in Exhibit A hereto, as the same may be modified from time to
time with the consent of the Buyer, which consent will not be unreasonably
withheld.
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"Cross Collateral" shall mean, with respect to any Loan, all or any portion
of the Primary Collateral pledged to secure (i) on a parity basis, any other
Obligor Group Loan or Loans previously purchased by the Buyer, and/or (ii) on a
subordinated basis, any other notes or indebtedness of the Obligor or any member
of its Obligor Group, which Primary Collateral, in either case, also secures
such Loan.
"Debt" of any Person shall mean at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments or
agreements (including obligations of the parties under this Agreement or the
Guaranty Agreement), (iii) all obligations of such Person to pay the deferred
purchase price of property or services other than trade payables and open
accounts arising in the ordinary course, (iv) all obligations of such Person as
lessee which are capitalized in accordance with generally accepted accounting
principles, (v) all Debt secured by a lien on any asset owned of such Person,
whether or not such Debt is otherwise an obligation of such Person which Debt,
if Non-Recourse Debt to such Person, shall be deemed to be in an amount equal to
the lesser of the principal amount of such obligations or the aggregate fair
market value of such assets, and (vi) all Guaranteed Debt (including, in the
case of the Guarantor, the Guarantor's obligations under the Guaranty
Agreement).
"Defaulted Loan" shall mean, as of any date, a Loan with respect to which
any of the following has occurred: (a) there has occurred an Obligor Default
with respect to such Loan and such Obligor Default has been continuing for a
period of 45 days, or (b) the Obligor under such Loan has sought protection
under the United States Bankruptcy Code or is the subject of an involuntary
bankruptcy.
"Determination Date" shall mean the Business Day before each Payment Date.
"Due Date" shall mean the day on which the Scheduled Payment is due from
the Obligor on a Loan.
"Due Period" shall mean, with respect to any Payment Date, the calendar
month preceding the month in which such Payment Date occurs.
"EBITDA" shall mean, for any Person, for any period, the consolidated net
income (or net loss) of such Person for such period, plus (a) the sum of (i)
depreciation expense, (ii) amortization expense, (iii) Cash Interest Expense,
(iv) total income tax expense, and (v) extraordinary or unusual losses (and
other after-tax losses on sales of assets outside of the ordinary course of
business and not otherwise included in extraordinary or unusual losses), less
(b) the sum of (i) extraordinary or unusual gains (and other after tax gains on
sales of assets outside of the ordinary course of business and not otherwise
included in extraordinary or unusual gains) of the Person for such period and
(ii) the net income (or loss) of any Person that is accounted for by the equity
method of accounting, except to the extent of the amount of dividends or
distributions paid to such Person.
"Effectiveness Date" shall mean the date when all of the conditions set
forth in Section 3.04 have been satisfied.
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"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Existing Loan Representation" shall mean a representation or warranty made
by Seller with respect to an Original Loan under the Original Loan Purchase and
Servicing Agreement.
"Expansion Loan" shall mean any Loan (other than an Original Loan) (A) the
proceeds of which shall be used by the related Obligor to finance capital or
leasehold improvements, inventory or to expand or renovate a grocery store, (B)
which, on the applicable Incremental Purchase Date, satisfies all of the terms
and conditions of this Agreement (including, without limitation, Section
3.03(m)), and (C) with respect to which (i) the Collateral Coverage Ratio is
less than 1:1, (ii) the Cash Flow Ratio for the related Obligor is less than
1.1:1 and/or (iii) the related Obligor does not have a positive net worth.
"Expansion Loan Projections" shall have the meaning set forth in Section
3.03(m).
"Expansion Loan Repurchase Date" shall mean, with respect to any Expansion
Loan, the date which is twelve months following the Incremental Purchase Date on
which the Seller sold such Expansion Loan to the Buyer.
"GAAP" has the meaning specified in Section 1.03.
"GCC" shall mean Grocers Capital Company, a California corporation, and its
Successors and assigns.
"Government Approval" shall mean an approval, permit, license,
authorization, certificate or consent of any Governmental Authority.
"Governmental Authority" shall mean the government of the United States or
any State or any foreign country or any political subdivision of any thereof or
any branch, department, agency, instrumentality, court, tribunal or regulatory
authority which constitutes a part or exercises any sovereign power of any of
the foregoing.
"Guaranteed Debt" shall mean, as applied to any debt, for any Person (i) a
guarantee by such Person (other than by endorsement for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such debt or (ii) a similar agreement, direct or indirect, contingent or
otherwise, providing for the payment or performance (or payment of damages in
the event of non-performance) of such Person of any part or all of such debt.
The amount of any Guaranteed Debt of such Person shall be deemed to be the
maximum amount of the debt guaranteed for which the guarantor could be held
liable under such Guaranteed Debt.
"Guarantor" shall mean GCC and its Successors and assigns.
"Guarantor Default" shall have the meaning given in Section 5.01 of the
Guaranty Agreement.
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"Guaranty" shall have the meaning given in the Guaranty Agreement.
"Guaranty Agreement" means the Amended and Restated Guaranty Agreement,
dated as of the date hereof, by and between Buyer and Guarantor, as the same may
be amended and supplemented from time to time.
"Guaranty Amount" shall have the meaning given in the Guaranty Agreement.
"Guaranty Fee" shall have the meaning given in Section 2.02 of the Guaranty
Agreement.
"Guaranty Payments" shall mean the amounts paid by Guarantor to the
Servicer, for the benefit of the Buyer, pursuant to the Guaranty.
"Incremental Purchase" shall have the meaning ascribed to such term in
Section 2.03 hereof.
"Incremental Purchase Date" shall mean the date (which shall be the first
Business Day of a month, or such other day as the Buyer shall agree) of each
Incremental Purchase.
"Insurance Proceeds" shall mean proceeds paid by any insurer pursuant to
any insurance policy covering a Loan or Collateral, including but not limited
to, title, hazard, life, health and/or accident insurance policies.
"Interest Accrual Period" shall mean, with respect to each Payment Date,
the period commencing on the first day of the month preceding such Payment Date
and ending on the last day of the month preceding such Payment Date.
"Investment Agreement" shall mean the Third Amended and Restated Investment
Agreement dated as of October 2, 2000, by and among GCC and Unified.
"LIBOR" shall mean, for any LIBOR Period (and each Interest Accrual Period
during such LIBOR Period), the quotient of (i) the rate for deposits in U.S.
dollars for a period of ninety (90) days which appears on the screen designated
as page "LIBOR" on the appropriate display on the Bloomberg Financial Markets
System (or such other screen as may replace same on such service) at 11:00 A.M.
(London time) on the related LIBOR Determination Date divided by (ii) the number
equal to 100% minus the daily average of the stated maximum rate (rounded upward
to the nearest 1/100 of 1% (0.01%)), as determined by Buyer in accordance with
its usual procedures (which determination shall be conclusive in the absence of
manifest error), at which reserves are required to be maintained during such
LIBOR Period (including supplemental, marginal, and emergency reserves) under
Regulation D of the Board of Governors of the Federal Reserve System by Buyer
against "Eurocurrency liabilities" (as such term is defined in Regulation D),
but without benefit or credit of proration, exemptions, or offsets that might
otherwise be available to Buyer from time to time under Regulation D. Without
limiting the generality of clause (ii) of the preceding sentence, such clause
(ii) shall include any other reserves required by law to be maintained by Buyer
against (x) any category of liabilities that includes deposits by reference to
which LIBOR is
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being determined and (y) any category of extension of credit or other assets
that includes the Loans. If the rate described in clause (i) of the first
sentence of this definition does not appear as contemplated therein, then the
rate in such clause (i) for such LIBOR Period will be the rate described in such
clause (i) as determined on the immediately preceding LIBOR Determination Date.
Each determination of LIBOR by Buyer including, but not limited to, any
determination as to the applicability or allocability of reserves to
eurocurrency liabilities or as to the amount of such reserves, shall be
conclusive and final in the absence of manifest error.
"LIBOR Business Day" shall mean any Business Day on which commercial banks
are open for dealings in Dollar deposits in London.
"LIBOR Determination Date" shall mean the second LIBOR Business Day prior
to the commencement of each LIBOR Period.
"LIBOR Period" shall mean (i) for the initial LIBOR Period, the period
commencing on the Effectiveness Date and ending on March 31, 2002, and (ii) for
each LIBOR Period thereafter, the period commencing on the first day of the
applicable calendar quarter (October 1, January 1, April 1 or July 1, as the
case may be) and ending on the last day of such calendar quarter (December 31,
March 31, June 30 or September 30, as the case may be).
"Liquidated Loan" shall mean any Defaulted Loan as to which the Servicer
has determined that all amounts which it reasonably and in good faith expects to
recover have been recovered from or on account of such Loan; provided, however,
that a Loan which has not been determined to have become a Liquidated Loan
within two months after becoming a Defaulted Loan shall be deemed a Liquidated
Loan on the two month anniversary date of such Loan becoming a Defaulted Loan. A
Loan which is deemed a Liquidated Loan shall be due and payable on the date so
deemed.
"Liquidation Losses" shall mean, with respect to any Liquidated Loan, on
any date, the amount by which (A) the sum of (i) the Principal Balance of such
Loan, and (ii) accrued and unpaid interest thereon at the Applicable Rate,
exceeds (B) the Net Liquidation Proceeds and Insurance Proceeds thereon, if any.
"Liquidation Proceeds" shall mean cash (other than Insurance Proceeds) and
any other amounts received in connection with the liquidation of Defaulted Loans
and from Loans with respect to which an Obligor Event has occurred and, in each
case, related Collateral, whether through trustee's sale, foreclosure sale or
otherwise.
"Loan" shall mean each loan, including each Non-Conforming Loan and
Expansion Loan, in each case whether existing on the date hereof or hereafter
arising, originated by Seller in the ordinary course of its business and sold
and transferred from time to time to the Buyer pursuant to this Agreement,
together with the Property related thereto, the Loans subject to this Agreement
being identified on the Loan Schedules.
"Loan File" or "Loan Files" shall have the meaning set forth in Section
2.02(b).
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"Loan Guarantor" shall mean any Person who (i) guarantees an Obligor's
payment and/or other obligations under any Loan, (ii) co-signs, or is a co-maker
on, the related Note, or (iii) otherwise supports, either in a primary or
secondary position, an Obligor's obligations with respect to a Loan, the related
Note or other Related Documents.
"Loan Interest Rate" shall mean, with respect to any date, the
then-applicable annual rate of interest borne by a Loan, pursuant to its terms,
which, as of the Effectiveness Date (in the case of the Original Loans) or the
applicable Incremental Purchase Date (in the case of all other Loans), is shown
on the applicable Loan Schedule.
"Loan Schedule" shall mean, with respect to the Original Loans, the
schedules of Original Loans delivered to Buyer prior to the Effectiveness Date
pursuant to the Original Loan Purchase and Servicing Agreement, and, with
respect to each of the Loans that is not an Original Loan, the schedule of Loans
delivered to the Buyer on or before each Incremental Purchase Date, such
schedule identifying each Loan to be purchased pursuant to such Incremental
Purchase by the name and address of the Obligor (and, if different from such
address, the location of the grocery store to which such Loan relates) and the
following information with respect to each such Loan: (i) the Principal Balance
as of the close of business on the day preceding the applicable Incremental
Purchase Date, (ii) the account number on Seller's records, (iii) the original
principal amount of the Loan, (iv) the date the Loan was made and original
number of months to maturity and original amortization period, in months, (v)
the Loan Interest Rate as of the applicable Incremental Purchase Date and
whether such Loan Interest Rate is fixed or variable, (vi) the dates on which
Scheduled Payments are due and when the first Scheduled Payment was due, (vii)
the schedule of Scheduled Payments applicable to such Loan, (viii) amortization
method and period, (ix) the remaining number of months in the amortization
period as of the applicable Incremental Purchase Date, (x) if the Loan has a
variable Loan Interest Rate, the margin which is added to the Prime Rate to
determine the Loan Interest Rate, the maximum and minimum Loan Interest Rates,
if applicable, the Loan Interest Rate adjustment frequency and the Loan payment
adjustment frequency, (xi) whether such Loan is an Original Loan, (xii) the
remaining term to maturity as of the applicable Incremental Purchase Date,
(xiii) for Loans other than Expansion Loans, the Cash Flow Ratio and the
Collateral Coverage Ratio as of such Incremental Purchase Date (including the
work product by which such ratios were determined and the Loans taken into
account in determining the Collateral Coverage Ratio), (xiv) the aggregate
Principal Balance of the related Obligor Group Loans (including such Loan) as of
the close of business on the Incremental Purchase Date for such Loan, (xv)
whether such Loan has Cross Collateral, (xvi) whether such Loan is secured by
real estate Collateral and (xvii) whether such Loan is an Expansion Loan and, if
so, the related Expansion Loan Repurchase Date.
"Margin" shall mean (a) for each Loan which is an Original Loan, 150 basis
points and (b) for each Loan which is not an Original Loan, 200 basis points.
"Maximum Purchase Amount" shall mean $70,000,000 in aggregate Principal
Balance outstanding at any time less the aggregate Principal Balance of
"Assigned Loans" as defined in the Assignment and Assumption Agreement.
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"Minimum Documentation" shall mean, with respect to a Loan secured by any
real estate Collateral, (i) a statement or estimation by Seller as to the
assessed value of the related mortgaged property, and (ii) copies of any title
search or report which may have been prepared by an attorney or title company
relating to the mortgaged property.
"Modification Losses" shall mean, with respect to any Restructured Loan, as
to any date, the amount, on such date, by which (A) the present value of all
payments which would have been scheduled to be made on such Loan if such Loan
had not become a Restructured Loan, exceeds (B) the present value of all
payments scheduled to be made on such Restructured Loan.
"Monthly Interest Amount" shall have the meaning given in Section 5.08.
"Monthly Report" shall mean the monthly report prepared by the Servicer
substantially in the form of Exhibit B hereto.
"Multiemployer Plan" shall mean, for any Person, a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding five years contributed to by such
Person or any member of a Controlled Group on behalf of its employees and which
is covered by Title V of ERISA.
"NCB" shall mean National Consumer Cooperative Bank, a financial
institution organized under the laws of the United States, and its Successors
and assigns.
"Net Liquidation Proceeds" shall mean Liquidation Proceeds net of the sum
of (i) amounts required to be released to the related Obligor pursuant to
applicable law, and (ii) unreimbursed reasonable fees and expenses incurred by
NCB or the Servicer in servicing the liquidation of a Defaulted Loan or Loan
with respect to which an Obligor Event has occurred, as the case may be.
"Non-Conforming Loan" shall have the meaning given in Section 2.01 hereof.
"Non-Recourse Debt" shall mean debt or that portion of debt of any Person
or a Subsidiary of such Person as to which (a) the holders of such debt agree
that they will look solely to the property securing such debt for payment on or
in respect of such debt and (b) no default with respect to such debt would
permit (after notice or passage of time or both) according to the terms thereof,
any holder of any debt for money borrowed by such Person or a Subsidiary of such
Person to declare a default on such debt or cause the payment thereof to be
accelerated or payable prior to stated maturity.
"Note" shall mean the promissory note (or notes) in substantially the
form(s) included in Exhibit C hereto evidencing the indebtedness of an Obligor
under a Loan.
"Obligor" shall mean the Person or Persons primarily obligated to repay a
Loan and the indebtedness evidenced by the related Note including, without
limitation, all Persons executing such Note.
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"Obligor Default" shall mean (a) the failure by an Obligor to pay when due
(whether a Scheduled Payment, at maturity, upon required prepayment,
acceleration, demand or otherwise) the Loan and the indebtedness evidenced by
the related Note or any Related Document, or any interest or premium thereon,
which failure continues after the applicable grace period, if any, specified in
such Note or Related Document relating to such Loan; or (b) the failure by an
Obligor to perform any term or covenant on its part to be performed under any
Loan, related Note or Related Document which failure continues after the
applicable grace period, if any, specified in the Note or Related Document, if
the effect of such failure to perform is to accelerate or to permit the
acceleration of the maturity of the indebtedness evidenced by such Note or
Related Document; or (c) the occurrence of an event or condition whereby the
indebtedness related to the Loan of any Obligor shall be declared to be due and
payable or required to be prepaid (other than by regularly scheduled required
prepayment) prior to the stated maturity thereof.
"Obligor Event" shall mean, with respect to a Loan, (a) the failure by an
Obligor to pay when due (whether a Scheduled Payment, at maturity, upon required
prepayment, acceleration, demand or otherwise) the Loan and the indebtedness
evidenced by the related Note or any Related Document, or any interest or
premium thereon, which failure continues after the applicable grace period, if
any, specified in such Note or Related Document relating to such Loan; or (b)
any representation or warranty made or given hereunder with respect to such Loan
shall have been false or incorrect when made or given; or (c) the making by an
Obligor of a prepayment of the Loan (whether such prepayment is optional or
required, or pursuant to the acceleration thereof, or otherwise).
"Obligor Financial Statements" shall mean the balance sheets and related
statements of income prepared in good faith by or for the Obligor and in
accordance with the requirements, if any, of the Related Documents. For purposes
of determining the Cash Flow Ratio and Collateral Coverage Ratio, the financial
statements reflecting the most recently-available fiscal year's results will be
used, provided that if such financial statements reflect a period ended more
than nine months earlier, an interim statement covering at least two quarters'
results shall be used.
"Obligor Group" shall include an Obligor and any of its Affiliates and
Subsidiaries.
"Obligor Group Loans" shall mean all Loans purchased by the Buyer with
respect to any member of an Obligor Group.
"Operating Agreement" shall mean the Third Amended and Restated Operating
Agreement dated as of October 2, 2000, by and among GCC and Unified.
"Original Guaranty Agreement" shall have the meaning set forth
in the recitals to this Agreement.
"Original Loan" and "Original Loans" shall have the meanings set forth in
the recitals to this Agreement.
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"Original Loan Purchase and Servicing Agreement" shall have the
meaning set forth in the recitals to this Agreement.
"Payaheads" shall mean, with respect to a Due Period, any amounts
received on a Loan in excess of the Scheduled Payment due on the Due Date
relating to such Due Period which does not constitute either a Principal
Prepayment or payment with respect to an overdue amount. Payaheads are payments
of principal for purposes of this Agreement.
"Payment Date" shall mean the 5th Business Day of each calendar
month, commencing January 8, 2002.
"Periodic Payment" shall have the meaning given in Section 5.08.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, a corporation, a partnership,
an association, a trust or other entity or organization, including a government
or political subdivision or any agency or instrumentality thereof.
"Plan" shall mean, for any Person, at any time, an employee
pension benefit plan, other than a Multiemployer Plan, which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code and is either (i) maintained by such Person or any member of a Controlled
Group for employees of such Person or any member of such Controlled Group or
(ii) maintained pursuant to collective bargaining agreement or other arrangement
under which more than one employer makes contributions and to which such Person
or any member of a Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five (5) plan years made
contributions.
"Portfolio Credit Facility" shall mean any loan agreement or other
credit facility by and between NCB and GCC.
"Primary Collateral" shall mean that portion of the Collateral in
which Seller had, prior to the sale and assignment hereunder, first priority
perfected security interests; provided that real estate Collateral shall not be
considered Primary Collateral.
"Prime Rate" shall mean the "Prime Rate" from time to time
announced by Union Bank of California, San Francisco, California; provided,
however, that if such rate is not announced, the Prime Rate shall be a
substantially comparable index selected by the Seller and approved by the Buyer.
"Principal Balance" shall mean, with respect to any Loan, at any
date, (i) the principal balance of the Loan outstanding as of the Effectiveness
Date (in the case of Original Loans) or the Incremental Purchase Date (in the
case of all other Loans) on which such Loan, as the case may be, was purchased
(without giving effect to any payment due or received on such date), minus (ii)
the sum of (a) the principal portion of the Scheduled Payments received during
each Due Period ending prior to the most recent Payment Date, which were
distributed
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to the Buyer, and to the Servicer and the Guarantor, as the case may be,
pursuant to Section 5.08 on any previous Payment Date, (b) all Principal
Prepayments and Payaheads, and (c) all Insurance Proceeds, Net Liquidation
Proceeds, Guaranty Payments and Repurchase Proceeds to the extent applied as
recoveries of principal in accordance with the provisions hereof, which were
distributed to the Buyer, and to the Servicer and the Guarantor, as the case may
be, pursuant to Section 5.08 on any previous Payment Date.
"Principal Prepayment" shall mean any payment or other recovery of
principal on a Loan equal to the Principal Balance thereof, received in advance
of the final scheduled Due Date which is intended to satisfy a Loan in full.
"Property" shall mean the Loans, the related Notes, Related
Documents, Collateral pledged to secure the Loans, and, as more fully set forth
in Section 2.02(a), all of the other rights, title and interest of the Seller
conveyed and sold pursuant to Sections 2.01 and 2.02(a).
"Purchase Price" shall have the meaning given in Section 3.01.
"Rating Agency" shall mean Standard & Poor's, ▇▇▇▇▇'▇ Investors
Service, Inc., or any Successor of either, or any other nationally-recognized
rating agency.
"Related Documents" shall mean with respect to each Loan and
related Note, the security agreement, assignment and guarantees substantially in
the forms included in Exhibit C hereto, and any other loan agreement, mortgage,
assignment of lease and other document, instrument or assignment reasonably
acceptable to the Buyer, including all amendments or modifications of any of the
foregoing (other than the Supply Agreement between such Obligor and Unified)
executed by the Obligor or other Person on Obligor's behalf in respect of such
Loan and related Note.
"Repurchase Amount" shall mean the amount set forth as such in
Section 2.02(d).
"Repurchased Loans" shall mean all Loans purchased by the
Seller through a payment of Repurchase Proceeds pursuant to Sections 2.02(d),
4.04(a), 7.01, 7.02 and 9.02.
"Repurchase Proceeds" shall mean the amounts received from Seller
with respect to a Repurchased Loan.
"Responsible Officer" shall mean, when used with respect to the
Buyer, Servicer, Guarantor or Seller, any vice chairman of the executive
committee, the president, any vice president (whether or not designated by
numbers or words added before or after the title "vice president"), the
secretary or the treasurer.
"Restructured Loan" shall mean any Defaulted Loan the terms of
which are modified in accordance with Section 5.05.
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"Scheduled Payment" shall mean the regularly scheduled payment of
principal and/or interest required to be made by an Obligor on a Loan pursuant
to the terms of the related Note.
"Seller" shall mean GCC.
"Separate Account" shall have the meaning given in Section 5.07
hereof.
"Servicer" shall mean GCC or its successor (including a Successor
Servicer) under Section 5.05 or 5.13.
"Servicer Default" shall mean any act or occurrence described as a
Servicer Default under Section 8.01 hereof.
"Servicing Account" shall mean the Servicing Account established
pursuant to Section 5.07 of this Agreement, which may be a Separate Account as
required pursuant to Section 5.07, 5.13 or 8.02.
"Servicing Fee" shall have the meaning given in Section 5.08(c)
hereof.
"Servicing Officer" shall mean any officer of the Servicer, or
any agent of the Servicer involved in, or responsible for, the administration or
servicing of the Loans whose names appear on the list of servicing officers
furnished to the Buyer by the Servicer in the certificate pursuant to Section
5.01(d), as such list may from time to time be amended.
"Subsidiary" shall mean, with respect to 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.
"Successor" shall mean, for any corporation or banking
association, any successor by merger or consolidation, or by acquisition of
substantially all of the assets of the predecessor.
"Successor Servicer" shall mean any successor Servicer appointed
pursuant to Section 5.13 or Section 8.02(a) of this Agreement.
"Supply Agreement" shall mean, either individually or
collectively, all agreements between an Obligor and Unified, with respect to the
supply of goods and services by Unified to such Obligor.
"Termination Date" shall mean the first date on which each Loan
shall have been (i) paid in full, or (ii) repurchased by Seller pursuant to
Section 2.02(d), 4.04, 7.01, 7.02 or 9.02 hereof.
"Termination Event" shall have the meaning given in Section 9.01.
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"Transfer Letter" shall mean the transfer letter relating to the
Servicing Account described in Section 3.04(i) hereof.
"Unfunded Vested Liability" shall mean, with respect to any Person
and any Plan, at any time, the amount (if any) by which (a) the present value of
all vested nonforfeitable benefits under such Plan exceeds (b) the fair market
value of all Plan assets allocable to such benefits, all determined as of the
then most recent evaluation date for such Plan, but only to the extent that such
excess represents a potential liability of such Person or any member of the
Controlled Group to the PBGC of the Plan under Title IV of ERISA.
"Unified" shall mean Unified Western Grocers, Inc., a California
corporation, and the direct and indirect owner of 100% of the outstanding
capital stock of Seller.
"Unified Patron" shall mean a member-patron of Unified.
"URI" shall mean United Resources, Inc., an Oregon corporation.
SECTION 1.02 General Principles Applicable to Definitions.
Definitions given in Section 1.01 shall be equally applicable to both singular
and plural forms of the terms therein defined and references herein to "he" or
"it" shall be applicable to Persons whether masculine, feminine or neuter.
References herein to any document including, without limitation, this Agreement,
a Loan, a Note and a Related Document shall be deemed a reference to such
document as it now exists, and as, from time to time hereafter, the same may be
amended.
SECTION 1.03 Accounting Terms. Except as otherwise provided
herein, accounting terms not specifically defined shall be construed, and all
accounting procedures shall be performed, in accordance with generally accepted
United States accounting principles ("GAAP") consistently applied.
[End of Article I]
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ARTICLE II
THE COMMITMENT
SECTION 2.01 Loans Sold and Purchased as of the Effectiveness
Date; Origination of Loans. The parties hereto acknowledge that Seller has
assigned, sold, transferred and otherwise conveyed each of the Original Loans to
Buyer pursuant to the Original Loan Purchase and Servicing Agreement. Upon the
Effectiveness Date, each of the Original Loans shall, for all purposes hereof,
be deemed to be "Loans" hereunder. In addition, during the term of this
Agreement, GCC agrees to originate loans with the view to selling such loans to
the Buyer hereunder, provided that nothing herein is intended to prevent Seller
from making loans not expected to be sold and/or not sold to Buyer pursuant to
this Agreement. In determining whether to approve any potential loan with a view
to selling such loan to the Buyer pursuant to this Agreement, the Seller shall
apply the eligible loan, credit and underwriting standards set forth in this
Agreement, as well as information known to the Seller from, among other things,
its current and previous business dealings with a potential Obligor. The Seller
shall only originate and sell, and the Buyer shall only be obligated to
purchase, Loans and Property related thereto satisfying the eligibility, credit,
underwriting and other criteria set forth in this Agreement, to the extent such
Loans are offered for sale and purchased hereunder; provided, that the Buyer
may, but shall be under no obligation to, purchase Loans not meeting such
criteria (each Loan so purchased, a "Non-Conforming Loan") so long as the
criteria not met by each Non-Conforming Loan are set forth in a certificate of a
Responsible Officer of Seller delivered to Buyer on or prior to the date of
Buyer's purchase of each Non-Conforming Loan.
SECTION 2.02 Agreement to Purchase and Sell Loans.
(a) On each Incremental Purchase Date, Seller does hereby
irrevocably assign, sell, set-over, transfer and otherwise convey to the Buyer,
without recourse (but subject to Seller's covenants, representations, warranties
and indemnities specifically provided herein), the following (collectively the
"Property"): all of Seller's right, title and interest (whether now existing or
hereafter acquired) in, to and under (i) each Loan purchased on such date and
any and all moneys of whatsoever nature payable pursuant to each such Loan on
and after such date, including all payments thereon and in respect of the
related Note, all Insurance Proceeds, any Net Liquidation Proceeds, other
Collections, and any other amounts payable in connection with the termination of
such Loan, in each case, whether or not paid or received (ii) all rights,
powers, and remedies of Seller under or in connection with each such Loan,
whether arising under the terms of such Loan, by statute, at law or in equity,
or otherwise arising out of any default by the Obligor under such Loan,
including all rights to exercise any election or option or to make any decision
or determination or to give or receive any notice, consent, approval or waiver
thereunder, (iii) all security interests and lien rights of Seller in each item
of Collateral pledged to secure any such Loan, all additions, alterations,
accessions or modifications thereto or replacement of any part thereof, and all
intangibles and other rights associated with the Collateral, (iv) all rights of
Seller under each Related Document, in each case as the same may be modified,
amended, supplemented or restated from time to time, (v) all documents of title,
books and records concerning the foregoing property (including all computer
programs, tapes, disks and related items containing any such
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information), and (vi) all proceeds, products, rents or profits of the foregoing
of any nature whatsoever, including all Insurance Proceeds and Net Liquidation
Proceeds. The foregoing transfer, sale, assignment and conveyance does not
constitute and is not intended to result in the creation, or an assumption by
the Buyer, of any obligation of Seller or any other Person in connection with
any Loan, the related Note, Related Documents or Collateral or under any
agreement or instrument relating thereto, including any obligation to any
Obligor.
(b) In connection with each transfer, sale and assignment of
Loans hereunder, the Seller hereby agrees to deliver to the Buyer or its agent
on or before the applicable Incremental Purchase Date, all loan files, documents
and instruments with respect to each Loan transferred and sold on such
Incremental Purchase Date, which Loan Files shall include, but not be limited
to, the following (collectively, the "Loan Files")
(i) the original Note related to such Loan, endorsed
by Seller as follows: "Pay to the order of National Consumer
Cooperative Bank, without recourse" and signed by a Responsible
Officer of Seller, with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to
Seller, if Seller was not the originator;
(ii) the executed original counterparts of the Related
Documents, together with executed originals of all modifications
or amendments thereof;
(iii) an irrevocable power of attorney of Seller to the
Buyer to execute, deliver, file, record or otherwise deal with
the Collateral for such Loan in accordance with this Agreement.
Certain rights under the power of attorney will be delegated by
the Buyer to the Servicer to permit the Servicer, on Buyer's
behalf, to prepare, execute and file of record UCC financing
statements and other notices;
(iv) all documents evidencing or related to any
insurance policies; and
(v) with respect to Loans secured by mortgages on
real property, (A) either: (i) the original mortgage, with
evidence of recording thereon, (ii) a copy of the mortgage
certified as a true copy by a Responsible Officer of Seller where
the original has been transmitted for recording until such time
as the original is returned by the public recording officer or
duly licensed title or escrow officer or (iii) a copy of the
mortgage in those instances where the original recorded mortgage
has been lost; and (B) either: (i) originals of all intervening
assignments, if any, showing a complete chain of title from the
originator to Seller, including warehousing assignments, with
evidence of recording thereon if such assignments were recorded,
(ii) copies of any assignments certified as true copies by a
Responsible Officer of Seller where the originals have been
submitted for recording until such time as the originals are
returned by the public recording officer, or (iii) copies of any
assignments in any instances where the original recorded
assignments have
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been lost; and (C) any available Minimum Documentation and any
other documentation in Seller's possession in respect of such
real property.
(c) It is the intention of the parties to this Agreement that
each conveyance of Seller's right, title and interest in and to the Property
pursuant to this Agreement shall constitute a purchase and sale and not a loan.
If, notwithstanding the foregoing, the conveyance of the Property to the Buyer
hereunder is characterized by any third party as a pledge, the parties intend
that Seller shall be deemed hereunder to have granted to the Buyer a first
priority perfected security interest in all of Seller's right, title and
interest in, to and under the Loans, the Notes, the related Collateral and
Related Documents, and all monies due or to become due with respect thereto
after the applicable Incremental Purchase Date, and that this Agreement shall
constitute a security agreement under applicable law. The Seller shall take all
steps necessary and desirable, or as otherwise may be requested by Buyer, to
reflect the Buyer's security interest in and to and lien on the Loans and
Property.
(d) If the Buyer determines that any documents or documents
constituting a part of a Loan File are missing (other than the Original Note or
original security agreement) or defective (that is, mutilated, damaged, defaced,
incomplete, improperly dated, clearly forged or otherwise physically altered)
with respect to any Loan in any respect which materially and adversely affects
the interests of the Buyer, then the Buyer shall within 10 Business Days notify
Seller, whereupon Seller shall have a period of 30 days within which to correct
or cure any such defect. If any such material defect (other than a defect, with
respect to a Non-Conforming Loan, which has been disclosed to Buyer in
accordance with Section 2.01 hereof) has not been corrected or cured in all
material respects, notwithstanding any other provision of this Agreement, Seller
shall repurchase the related Loan from the Buyer at a price equal to the sum of
(i) the Principal Balance of such Loan as of the first day of the Due Period
during which such repurchase occurs and (ii) an amount equal to interest accrued
at the applicable Loan Interest Rate on such Repurchased Loan to, but not
including, the day on which such repurchase occurs (the "Repurchase Amount").
The Repurchase Amount shall be paid by Seller to the Buyer in immediately
available funds within ten (10) days of the day after which such repurchase
obligation arises and, upon receipt by the Buyer of such amount, the Buyer shall
release or cause to be released to the Seller the related Loan Files and shall
execute and deliver or cause to be executed and delivered such instruments of
transfer or assignment of such Loan, the security interest in the related
Property, in each case without recourse, representation or warranty, as Seller
shall reasonably request (as shall be prepared by and at the expense of Seller).
It is understood and agreed that the obligation of Seller to repurchase any Loan
as to which a material defect in a constituent document exists and to make the
related payments as described in this Section 2.02(d), together with the
indemnification rights contained in Section 10.02 and the right of Buyer to be
reimbursed for reasonable fees and expenses incurred in effecting this
repurchase, shall, constitute the sole remedies against Seller available to the
Buyer with respect to each such defective Loan.
SECTION 2.03 Incremental Purchase.(a) Each of the parties
hereby agrees that, subject to Section 2.01 and to the other terms and
conditions hereof, until the Commitment Termination Date, the Seller may from
time to time on the first Business Day of any month after the Effectiveness
Date, elect to offer to sell to the Buyer and Buyer shall
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purchase certain identified loans out of GCC's portfolio and the Property
related thereto, all on the terms and conditions set forth in this Agreement
(each, an "Incremental Purchase"). Notwithstanding the foregoing, the Buyer
shall not be obligated to make an Incremental Purchase for a principal amount of
less than $2,500,000 (or such other lesser amount as is approved by Buyer) other
than the final Incremental Purchase which may be in such lesser amount as
remains of the Maximum Purchase Amount. In addition the Buyer shall not be
obligated to make an Incremental Purchase (or any portion thereof) to the extent
the aggregate Principal Balance of all Loans (after giving effect to the Loans
to be purchased on such Incremental Purchase Date) purchased hereunder would
exceed the Maximum Purchase Amount.
(b) Subject to satisfaction of all of the applicable terms and
conditions hereof (including, without limitation, Section 3.03(m)), until the
Commitment Termination Date, the Buyer shall from time to time make Incremental
Purchases of Expansion Loans and the Property related thereto, all on the terms
and conditions set forth in this Agreement. Notwithstanding the foregoing, the
Buyer shall not be obligated to make an Incremental Purchase of any Expansion
Loan for a principal amount of less than $250,000 (or such lesser amount as is
approved by the Buyer) other than the final Incremental Purchase of any
Expansion Loan which may be in an amount equal to $5,000,000 minus the aggregate
Principal Balance of all Expansion Loans. In addition, the Buyer shall not be
obligated to make an Incremental Purchase of Expansion Loans to the extent the
aggregate Principal Balance of (i) all Expansion Loans (after giving effect to
the Expansion Loans to be purchased on such Incremental Purchase Date) would
exceed $5,000,000 or (ii) all Loans (after giving effect to all Loans (including
Expansion Loans) to be purchased on such Incremental Purchase Date) would exceed
the Maximum Purchase Amount.
(c) The Seller shall provide the Buyer with written notice of
its intention to request an Incremental Purchase in the form of Exhibit D hereto
no later than five (5) Business Days (or such shorter period as may be
acceptable to Buyer) before each Incremental Purchase. Upon satisfaction of all
terms and conditions contained herein, including under Section 2.02, Buyer shall
pay to the Seller the Purchase Price of each Incremental Purchase on the
applicable Incremental Purchase Date.
SECTION 2.04 Commitment Termination Date. Unless earlier
terminated in accordance with Section 10.13, the initial "Commitment Termination
Date" is October 31, 2004, and the Commitment Termination Date may be extended
by mutual agreement of the parties. The Seller and the Buyer may agree at any
time to set an earlier Commitment Termination Date.
[End of Article II]
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ARTICLE III
CLOSING PROCEDURE; CONDITIONS TO PURCHASE
SECTION 3.01 Payment. Subject to Sections 3.03 and 3.04, the
Buyer shall pay in immediately available funds to Seller, on or before 12:00
noon Washington, D.C. time, on each Incremental Purchase Date, the sum of 100%
of the Principal Balance of each Loan (calculated as of such date, without
giving effect to any payment due or received on such date) sold by the Seller to
Buyer on such Incremental Purchase Date (each such sum, collectively, the
"Purchase Price").
SECTION 3.02 Effective Date. Each sale made pursuant to the
Original Loan Purchase and Servicing Agreement was effective in accordance with
its respective terms, and all right, title and interest in the Original Loans
and the related Property passed to Buyer thereunder. Each sale made pursuant to
Sections 2.01 and 2.03 shall be effective, and all right, title and interest in
the Loans (other than the Original Loans) and the related Property so sold shall
pass to the Buyer, at such time as Buyer shall pay the Purchase Price in respect
thereof.
SECTION 3.03 Buyer's Conditions Precedent to Acceptance. The
obligation of Buyer to pay the Purchase Price on each Incremental Purchase Date
is subject to the fulfillment on or before such Incremental Purchase Date of
each of the following conditions (each relating only to the Loans and related
Property purchased on such date):
(a) Buyer shall have received the original Notes and such Notes
shall have been duly endorsed by Seller without recourse or warranty except as
provided herein, and of the Related Documents;
(b) Buyer shall have received the original executed counterpart
of each Related Document and all other Property with respect to each Loan (or,
to the extent more than one original counterpart exists, all original executed
counterparts of such agreements and Related Documents that are in the possession
of the Seller or any of its Affiliates), and each such Related Document shall be
in a form reasonably satisfactory to Buyer;
(c) With respect to Loans secured by mortgages on real property,
Buyer shall have received (A) either: (i) the original mortgage, with evidence
of recording thereon, (ii) a copy of the mortgage certified as a true copy by a
Responsible Officer of Seller where the original has been transmitted for
recording until such time as the original is returned by the public recording
officer or duly licensed title or escrow officer or (iii) a copy of the mortgage
in those instances where the original recorded mortgage has been lost, as so
certified by the Seller; and (B) either: (i) originals of all intervening
assignments, if any, showing a complete chain of title from the originator to
Seller, including warehousing assignments, with evidence of recording thereon if
such assignments were recorded, (ii) copies of any assignments certified as true
copies by a Responsible Officer of Seller where the originals have been
submitted for recording until such time as the originals are returned by the
public recording officer, or (iii) copies of any assignments in any instances
where the
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original recorded assignments have been lost, as so certified by the Seller; and
(C) all available Minimum Documentation and all other documentation with respect
to each Loan;
(d) The Buyer shall have received Uniform Commercial Code
financing statements on Form UCC-3 (or such other UCC form as required by
applicable law) duly executed by Seller: (i) as "Assignor" evidencing the
assignment to the Buyer by Seller of all security interests in personal property
arising in favor of Seller under the Related Documents, and on the Collateral
relating to the Loans (other than security interests in Cooperative Assets); and
(ii) as "Borrower/Debtor" and executed by all secured parties and assignees (if
any) evidencing the release of the lien of the Agent as "Lender/Secured Party"
under any loan or credit agreement among GCC, as borrower, lenders party
thereto, and NCB as agent and/or lender; and (iii) as "Borrower/Debtor" and
executed by all secured parties and assignees (if any) evidencing the release
and discharge of each and every lien, charge, mortgage, encumbrance and right of
any other Person or with respect to the Collateral; in each case, in form and
content sufficient for filing with the applicable location for central filing in
each state where a related form UCC-1 (or such other UCC form as required by
applicable law) is filed and in each state in which any secured party or other
Person having any such lien, charge, mortgage or right is located;
(e) The Buyer shall have received evidence satisfactory to Buyer
in its sole discretion that the security interests arising in its favor under
this Agreement in the Loans, related Notes, related Collateral (other than
Collateral which is not governed by the Uniform Commercial Code unless Buyer, in
its sole discretion, requires otherwise), the Related Documents and the proceeds
thereof has been duly perfected by the filing of all such Uniform Commercial
Code financing statements and the taking of all such other or additional acts as
may be necessary to create a valid and perfected lien of first priority
enforceable against all third parties (other than (i) prior lien holders in the
case of Collateral which is not Primary Collateral (but only to the extent such
lien holders' liens arise with respect to obligations of an Obligor) and (ii) in
Collateral which is not governed by the Uniform Commercial Code) in all
jurisdictions to secure all of Seller's obligations to Buyer;
(f) No Termination Event, and no event which with the giving of
notice or passage of time or both would constitute a Termination Event shall
have occurred and be continuing, and a Responsible Officer of Seller shall have
so certified to Buyer in writing;
(g) Each applicable representation and warranty of the Seller set
forth in Section 4.01 or 4.02 shall be true and correct in all material
respects, and a duly Responsible Officer of Seller shall have so certified to
Buyer in writing in substantially the form of Exhibit E hereto;
(h) Each representation and warranty of Guarantor set forth in
Article 3.01 of the Guaranty Agreement hereof shall be true and correct in all
material respects, and a duly Responsible Officer of Guarantor shall have so
certified to Buyer in writing in substantially the form of Exhibit F hereto;
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(i) Each representation and warranty of Servicer set forth in
Section 5.12 shall be true and correct in all material respects, and a duly
Responsible Officer of Servicer shall have so certified to Buyer in writing in
substantially the form of Exhibit G hereto;
(j) Buyer shall have received the Loan Schedule relating to the
Loans purchased on the applicable Incremental Purchase Date required by this
Agreement;
(k) Buyer shall have received personal credit reports relating to
each Obligor for each Loan purchased on the applicable Incremental Purchase
Date;
(l) With respect to any Loan other than an Expansion Loan, Buyer
shall have received on such Incremental Purchase Date from Seller financial and
other documentation (including, if permitted by the Buyer, projections)
supporting the Seller's calculation of Cash Flow Ratio and Collateral Coverage
Ratio;
(m) With respect to any Expansion Loan, Buyer shall have received
on such Incremental Purchase Date projections, in form and substance reasonably
satisfactory to Buyer, prepared by the applicable Seller (together with such
back up and other work product as the Buyer may reasonably request)
demonstrating that, on the Expansion Loan Repurchase Date, the Cash Flow Ratio
for the related Obligor will be at least 1.1:1, the Collateral Coverage Ratio
for such Expansion Loan will be at least 1:1 and the related Obligor will have a
positive net worth (with respect to each Expansion Loan, the "Expansion Loan
Projections"); and
(n) No "Event of Default" under (and as defined in) the Credit
Agreement shall have occurred and be continuing.
SECTION 3.04 Additional Delivery Requirements for Effectiveness
Date. The obligation of the Buyer to perform any of its obligations under this
Agreement shall be subject to satisfaction of each of the following delivery
requirements on or before the Effectiveness Date (or on or before the other date
specified below) to the reasonable satisfaction of Buyer:
(a) Buyer shall have received the following agreements, each duly
executed by the parties (other than Buyer) thereto:
(i) the Guaranty Agreement;
(ii) this Agreement;
(iii) Assignment and Assumption Agreement; and
(iv) such other agreements and instruments as the
Buyer shall reasonably require.
(b) The Buyer shall have received a Uniform Commercial Code
financing statement on Form UCC-l naming Buyer as "Secured Party" and executed
by Seller as "Debtor" covering the Loans(including the Original Loans) sold and
to be sold hereunder, "Debtor" covering the Loans (including the Original Loans)
sold and to be sold hereunder,
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related Notes, related Collateral, the Related Documents and the proceeds
thereof, in form and content sufficient for filing in the appropriate offices in
the States of California and other appropriate jurisdictions;
(c) Buyer shall have received an opinion of counsel for GCC dated
such date and in a form reasonably acceptable to Buyer, including an opinion to
the effect that this Agreement and the Guaranty Agreement are legal, valid and
binding obligations of GCC, enforceable against GCC under the laws of the State
of California (provided that such opinion need not express an opinion as to the
characterization of the transactions contemplated hereby);
(d) Buyer shall have received in form and substance reasonably
satisfactory to it a certified copy of a resolution adopted by the Board of
Directors of GCC, authorizing the execution, delivery and performance of this
Agreement and the Guaranty Agreement and the endorsement and sale of the Notes
hereunder, together with evidence of the authority and specimen signatures of
the persons who have signed this Agreement and the Guaranty Agreement and
endorse the Notes on behalf of GCC and such other evidence of corporate
authority as Buyer may reasonably require;
(e) Buyer shall have received an officers' certificate from GCC
in a form reasonably acceptable to Buyer.
(f) Buyer shall have received certified copies of request for
information or copies (Form UCC-11 or such other UCC form as required by
applicable law) (or a similar search report certified by parties acceptable to
the Buyer) dated a date reasonably near the date hereof listing all effective
financing statements which name GCC (under its present name or any previous or
"doing business" name) as transferor or debtor and which are filed in
jurisdictions in which the filings were made pursuant to item (b) above together
with copies of such financing statements.
(g) Buyer shall have received evidence of the establishment of
the Servicing Account and the creation of a first priority perfected security
interest therein in favor of Buyer;
(h) Buyer shall have received a duly certified copy of the
executed Operating Agreement (including a duly executed amendment to Section 8
thereof increasing to $15,000,000 the minimum tangible net worth of GCC required
to be maintained by Unified) and the Investment Agreement
(i) A signed and undated transfer letter relating to the
Servicing Account, directing the bank which holds the Servicing Account to
transfer all rights in such Account to the Buyer upon receipt of notice of the
occurrence of a Servicer Default (the "Transfer Letter"); and
(j) Seller shall have satisfied the conditions set forth in
Sections 3.03(a) through (f) and (j).
[End of Article III]
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Seller's Corporate Representations and Warranties.
Seller represents and warrants to Buyer as of the Effectiveness Date, as of each
Incremental Purchase Date and as of the date of execution of this Agreement as
follows:
(a) Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of California, is doing
business only under the name "Grocers Capital Company", and is qualified to do
business in each other jurisdiction where the conduct of its business or the
ownership of its properties requires such qualification, and has full corporate
power, authority and legal right to carry on its business as presently
conducted, to own and operate its properties and assets, to execute, deliver and
perform this Agreement and to sell the Loans and related Property.
(b) The execution, delivery and performance by the Seller of this
Agreement and any assignment, any endorsement of the Notes and the sale of any
Loans, related Notes and Related Documents and the security interest in the
related Collateral hereunder have been duly authorized by all necessary
corporate action of Seller, do not require any shareholder approval or the
approval or consent of any trustee or the holders of any Debt of Seller, except
such as have been obtained (certified copies thereof having been delivered to
Buyer), do not contravene any law, regulation, rule or order binding on it or
its Articles of Incorporation or Bylaws and do not contravene the provisions of
or constitute a default under any indenture, mortgage, contract or other
agreement or instrument to which Seller is a party or by which Seller or any of
the Loans, related Notes or Related Documents may be bound or affected.
(c) No Government Approval or filing or registration with any
Governmental Authority is required for the making and performance by Seller of
this Agreement or any assignment or the endorsement of the Notes or in
connection with the sale of the Loans and related Property contemplated hereby,
except such as have been heretofore obtained and are in full force and effect
(certified copies thereof having been delivered to Buyer).
(d) This Agreement has been duly executed and delivered by Seller
and constitutes, and any assignment and any endorsement of a Note when duly
executed and delivered will constitute, the legal, valid and binding obligation
of the Seller enforceable against Seller in accordance with its terms, except
only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law)
(e) There are no actions, proceedings, investigations, or claims
against or affecting Seller now pending before any court, arbitrator or other
Governmental Authority (nor to the knowledge of Seller has any thereof been
threatened nor does any basis exist therefor) which if determined adversely to
the Seller would be likely to have a material
-23-
adverse effect on the financial condition or operations of Seller or on
Seller's ability to perform its obligations under this Agreement.
(f) The consolidated balance sheet of each of Unified and its
Subsidiaries and of the Seller and its Subsidiaries at June 30, 2001, and the
related statements of income and retained earnings of each of Unified and its
Subsidiaries and of Seller and its Subsidiaries for their respective fiscal
periods then ended, copies of which have been furnished to Buyer, fairly present
the financial condition of each of Unified and its Subsidiaries and of Seller
and its Subsidiaries as at such date and the results of operations of each of
Unified and its Subsidiaries and of Seller and its Subsidiaries for their
respective fiscal periods then ended, all in accordance with GAAP consistently
applied. Since that date, there has been no material adverse change in the
financial condition or operations of either of Unified or its Subsidiaries or of
Seller or any of its Subsidiaries.
(g) Seller has good and marketable title to each of the
properties and assets reflected in its balance sheet referred to in Section
4.01(f) except such as have been since sold or otherwise disposed of in the
ordinary course of business.
(h) Neither Seller nor any of its Subsidiaries is in material
breach of or default under any agreement or agreements to which it is a party or
which are binding on it or any of its assets and which provide for the payment
of monies, the delivery of goods or the provision of services in amounts or with
values in the aggregate in excess of Five Hundred Thousand Dollars ($500,000).
(i) The present value of all benefits vested under all Plans did
not, as of the most recent valuation date of such Plans, exceed the value of the
assets of the Plans allocable to such vested benefits by an amount which would
represent a potential material liability of Seller and its Subsidiaries or
affect materially the ability of the Seller to perform this Agreement; no Plan
or trust created thereunder, or any trustee or administrator thereof, has
engaged in a "prohibited transaction" (as such term is defined in Section 406 or
Section 2003(a) of ERISA) which could subject such Plan or any other Plan, any
trust created thereunder, or any trustee or administrator thereof, or any party
dealing with any Plan or any such trust to any material tax or penalty on
prohibited transactions imposed by Section 502 or Section 2003(a) of ERISA; no
Plan or trust created thereunder has been terminated, and there have been no
"reportable events" (as that term is defined in Section 4043 of ERISA) since the
effective date of ERISA; no Plan or trust created thereunder has incurred any
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA) whether or not waived, since the effective date of ERISA; and the
required allocations and contributions to Plans will not violate Section 415 of
the Code.
(j) Uniform Commercial Code financing statements have been duly
filed in all places where filing is necessary and all other or additional acts
have been taken as are necessary to perfect the Buyer's interests arising
hereunder and under the assignments in and to the Loans and related Property and
the lien created hereby constitutes a valid and perfected lien of first priority
in and to all of the Loans and related Property (other than in Collateral which
is not Primary Collateral or is not governed by the Uniform Commercial Code, in
which case the Buyer has only such interest as the Seller had and disclosed to
the Buyer on
-24-
the applicable Incremental Purchase Date and other than Seller's security
interest in Cooperative Assets) and is enforceable against all third parties
(other than third parties whose interests in Collateral which is not Primary
Collateral are prior to Seller's interests therein on the applicable Incremental
Purchase Date) in all jurisdictions as security for all obligations of the
Seller to the Buyer under this Agreement.
(k) Seller's chief executive offices and the offices where such
Seller keeps records concerning the Loans and related Property are located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other location to which
such offices are moved pursuant to Section 6.01(m) hereof.
(l) This Agreement, the financial statements referred to in
Section 4.01(f) and all other instruments, documents, certificates and
statements furnished to the Buyer by the Seller, taken as a whole, do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained herein or therein not
misleading.
(m) The Operating Agreement and the Investment Agreement are in
full force and effect.
(n) No "Event of Default" under (and as defined in) the Credit
Agreement shall have occurred and be continuing.
SECTION 4.02 Seller's Incremental Purchase Date Representations
and Warranties with respect to Loans. Seller represents and warrants to Buyer as
of each Incremental Purchase Date with respect to Loans transferred and sold on
such Incremental Purchase Date as follows:
(a) The information with respect to each Loan set forth in the
applicable Loan Schedule, together with any documentation supporting such
information, is true and correct in all material respects;
(b) With respect to each Loan, there exists only one original
Note. Such original Note and all of the other original or certified
documentation set forth in Sections 2.02 and 3.03 (including the Loan Files and
all material documents related thereto) have been, or shall have been on the
applicable Incremental Purchase Date, delivered to the Buyer;
(c) Each Loan was originated in the United States and Scheduled
Payments on such Loan are payable in U.S. Dollars by an Obligor domiciled in the
United States;
(d) Each Note has a Loan Interest Rate that is (i) a variable
rate based on the Prime Rate adjusted at least annually after a change in the
Prime Rate, with a minimum Loan Interest Rate equal to the Prime Rate minus 100
basis points or (ii) a fixed rate that, as of the date on which such Loan was
originated, was not less than the Prime Rate minus 100 basis points.
(e) Immediately prior to and as of each sale, transfer and
assignment to the Buyer herein contemplated, the Seller held good and
indefeasible title to, and was the sole
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owner of, each Loan conveyed by Seller, subject to no liens, charges, mortgages,
encumbrances or rights of others or other liens (including any lien released
simultaneously with such transfer and assignment, in favor of the Agent) of any
kind whatsoever and immediately upon the transfer and assignment herein
contemplated, the Buyer will hold good and indefeasible title, to, and be the
sole owner of, each Loan subject to no liens, charges, mortgages, encumbrances
or rights of others of any kind whatsoever;
(f) No Loan is delinquent (after giving effect to any applicable
grace period) in payment, and no Loan shall have been delinquent during the
six-month period immediately preceding such Incremental Purchase Date (after
giving effect to any applicable grace period) for a period in excess of 45 days
or shall have ever demonstrated a pattern of repeated delinquencies;
(g) There is no other default, breach, violation or event of
acceleration existing under the Loan, related Note or Related Document and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration, and the Seller has not waived any such default, breach, violation
or event of acceleration that would otherwise exist;
(h) No Loan is subordinate by its terms to any Debt of the
related Obligor; and no Loan is subordinate to any Debt of the related Obligor
except as to such Debt that is secured by collateral with a value equal to or
greater than the amount of such Debt, which collateral is entirely separate and
distinct from the Collateral securing such Loan; and each Loan is not subject to
any right of rescission, set-off, counterclaim or defense, including the defense
of usury, nor will the operation of any of the terms of the related Note,
Related Document or any related Collateral, or the exercise of any right
thereunder, render either the related Note, Related Document or any related
Collateral unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(i) Each Loan (other than an Expansion Loan) at the time it was
made complied and, as of the applicable Incremental Purchase Date, complied in
all material respects with the Seller's Credit and Collection Policy, and each
Loan complied in all material respects with applicable state and federal laws
and regulations, including, without limitation, usury, equal credit opportunity,
disclosure and recording laws;
(j) The Obligor with respect to each Loan (i) is not an Affiliate
of the Seller, (ii) is a Unified Patron in good standing and (iii) to the best
of Seller's knowledge, shall have provided to Seller complete and accurate
information, including a personal credit report, relating to Obligor's financial
condition, and (iv) shall have suffered no material adverse changes in its
financial condition or otherwise since the date the Loan was originated;
(k) Each Loan had an original term to maturity of no greater than
seven (7) years;
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(l) The Note related to each Loan provides that the principal be
amortized no less frequently than quarterly over the term of such Note with an
amortization period of no greater than 10 years. The Note related to each Loan
may require the payment of interest only for a period of up to 12 months from
the date of origination of the related Loan and may provide for a balloon
payment of up to three years of principal on the maturity date of the related
Loan;
(m) Each Loan, related Note, related Collateral and Related
Documents pursuant to which Collateral is pledged to Seller is the legal, valid
and binding obligation of the Obligor thereof and is enforceable in accordance
with its terms, except only as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law), and all
parties to each Loan had full legal capacity to execute all Related Documents
and convey the property therein purported to be conveyed;
(n) The terms of the Loan, related Note and each Related
Document pursuant to which Collateral was pledged have not been impaired,
altered or modified, except by written instrument which has been recorded, if
necessary, to protect the interest of the Buyer and which has been delivered to
the Buyer;
(o) The proceeds of each Loan were fully disbursed before the
applicable Incremental Purchase Date, and there is no obligation on the part of
the Seller to make future advances thereunder. Any and all requirements as to
disbursements of any escrow funds therefor have been complied with. All costs,
fees and expenses incurred in making or closing or recording the Loans were
paid;
(p) The Obligor with respect to each Loan (other than an
Expansion Loan) has provided information to Seller (which has been delivered to
Buyer on or before such Incremental Purchase Date) evidencing that such Obligor
has a positive net worth or, in the case of an Expansion Loan, the Seller has
prepared and delivered to the Buyer the related Expansion Loan Projections
evidencing that the Obligor with respect to such Expansion Loan will have a
positive net worth on the related Expansion Loan Repurchase Date. To the best of
Seller's knowledge, each Obligor is not the subject of any bankruptcy
proceeding, and has no present intention to seek relief under the federal
bankruptcy laws;
(q) The Obligor and/or the Loan Guarantor with respect to each
Loan and related Property is personally liable for the payment and performance
of its obligations under such Loan, and such personal liability has been either
(i) in the case of a married Obligor or Loan Guarantor who is a married
individual, acknowledged or guaranteed by the spouse of such Obligor or Loan
Guarantor or (ii) in the case of a corporate Obligor or Loan Guarantor, approved
by a majority of the stockholders of such corporate Obligor or Loan Guarantor.
Pursuant to the terms of each Loan, each of the Obligor and the Loan Guarantor
thereunder is absolutely required to make all payments and perform all
obligations due pursuant to such Loan without abatement, deferment or defense of
any kind or for any reason (except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
-27-
of general application relating to or affecting creditors rights and by general
principles of equity);
(r) The Collateral covered by or securing the obligations under
each Loan is insured by an insurance company rated at least "B-" by Best & Co.
against loss by fire and such other hazards as are customary for personal
property of the same or similar type, such insurance being in an amount not less
than the Principal Balance of such Loan as of the applicable Incremental
Purchase Date subject to customary deductibles and the Seller and/or the Buyer
is designated as loss payee under such policies;
(s) Each Loan requires each of the Obligor and Loan Guarantor
thereunder at its own costs and expense to maintain the Collateral pledged to
secure the related Loan in good repair, condition and working order, and to the
knowledge of the Seller, each Obligor and Loan Guarantor under a Loan is
currently in compliance with this requirement;
(t) Each Loan (other than an Expansion Loan) has a Collateral
Coverage Ratio of at least 1:1 and the related Obligor has a Cash Flow Ratio of
at least 1.1:1 or, in the case of an Expansion Loan, the related Expansion Loan
Projections evidence that such Expansion Loan will have a Collateral Coverage
Ratio of at least 1:1 on the Expansion Loan Repurchase Date and the related
Obligor will have a Cash Flow Ratio of at least 1.1:1 on the Expansion Loan
Repurchase Date;
(u) All Collateral securing any Loan is located in the United
States. Collateral shall be valued in accordance with the provisions set forth
in the definition of "Collateral Coverage Ratio";
(v) Seller has, or on the applicable Incremental Purchase Date
will have, (i) a first priority perfected security interest in each item of
Primary Collateral, free from any lien, security interest, encumbrance or other
right, title or interest of any Person, and (ii) a perfected security interest
in each other item of Collateral, subject to the prior liens, security interests
and encumbrances existing on, and identified to and approved by the Buyer on the
applicable Incremental Purchase Date. Seller shall, on the applicable
Incremental Purchase Date, transfer its security interest in the Primary
Collateral and such other Collateral as is governed by the Uniform Commercial
Code or as is required by Buyer, subject however to the rights of the holder of
title in and to such Collateral and of the Obligors in such Collateral pledged
under the Related Documents (and, in the case of Collateral which is not Primary
Collateral, holders of prior liens), and Seller, as agent for the Buyer, shall
defend the Buyer's security interest in and to Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to that of the Obligors or the Buyer;
(w) The Notes and Related Documents delivered to Buyer on the
applicable Incremental Purchase Date are true, correct, and complete original
counterparts of all instruments and documents evidencing or in any way relating
to the Loan and related indebtedness referred to therein; except as approved by
the Buyer, such Notes and Related Documents are in substantially the form of the
documents attached hereto as Exhibit C; except as included with the instruments
and documents so delivered, such Notes and such Related Documents have not been
amended; and each such Note and Related Document to
-28-
which Obligor or Loan Guarantor is a party bears the original signature of such
Obligor and Loan Guarantor;
(x) Uniform Commercial Code financing statements have been duly
filed in all places where filing is necessary, and all other or additional acts
have been taken as are necessary to perfect Seller's security interests arising
pursuant to the Related Documents in the Primary Collateral and such other
Collateral as is governed by the Uniform Commercial Code;
(y) Seller has heretofore caused all copies of the Loans, related
Notes and Related Documents in its possession to be separately identified and
distinguished from Seller's other loans, and on the applicable Incremental
Purchase Date, the Seller will cause each copy of each Note, related Collateral
and Related Document in its possession to be identified with an appropriate
legend clearly disclosing the fact that such Loan, the related Notes, Related
Documents and the Seller's security interest in the related Collateral have been
sold and assigned to the Buyer and the Buyer is the owner thereof, and any
original copies of any Note, related Collateral or Related Document coming into
the possession of the Seller will be delivered to the Buyer;
(z) (i) The Obligor shall not have been delinquent on its payment
obligation on an open account for a period in excess of 45 days, and (ii)
neither the Obligor nor any member of its Obligor Group shall have defaulted on
any recourse obligation to Seller, any Subsidiary of Seller or Unified;
(aa) With respect to each Loan, either (i) the related Obligor has
owned grocery stores which have operated as such for at least 1 year or (ii) the
grocery store to which such Loan relates has operated as such for at least 1
year;
(bb) The proceeds of the Loan are not being used to satisfy the
related Obligor's personal needs and the purpose for which the Loan was made was
to finance or refinance capital or leasehold improvements, equipment, inventory
and other term working capital, and acquisitions, expansions or renovations for
a new or existing store, including the cost of land, construction and real
estate;
(cc) With respect to each Loan which is secured by a mortgage on
the lease on the related grocery store, such lease (with any options) must be at
least coterminous with such Loan;
(dd) Either (i) the Obligor and Loan Guarantor has, under the
terms of each Loan, consented to a sale and assignment of the Loan, the related
Note and Related Documents and the sale or grant of a security interest in and
to the Loan and the Collateral relating thereto, including any subsequent resale
and reassignment, or (ii) none of the Loan, the related Note or any Related
Documents requires the consent of approval of notice to the Obligor or Loan
Guarantor with respect to the assignment and transfer by Seller of Seller's
right, title and interest in and to the Loan, the related Note, any Related
Document and Collateral; and
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(ee) With respect to an Expansion Loan, the Expansion Loan
Projections for such Expansion Loan delivered pursuant to Section 3.03(m) have
been prepared by Seller on a basis consistent with the preparation of its
historical financial statements (except as described in such projections) and
are based on good faith estimates and assumptions of management of Seller, and
Seller has no reason to believe that such estimates and assumptions are not
reasonable.
(ff) Seller has used best efforts to obtain, with respect to each
Loan secured by Collateral that includes inventory or equipment located at a
store location leased or subleased by the Obligor, a collateral assignment of
the lease or sublease with all necessary consents of lessors or sublessors, as
applicable.
SECTION 4.03 Buyer's Representations and Warranties. Buyer
represents and warrants to Seller as follows:
(a) Buyer is a financial institution duly organized, validly
existing and in good standing under the laws of the United States of America,
and has full corporate power, authority and legal right to execute, deliver and
perform this Agreement and to purchase the Loans and related Property.
(b) Execution, delivery and performance by Buyer of this
Agreement and the purchase of the Loans and related Property hereunder have been
duly authorized by all necessary corporate action of Buyer, do not require any
shareholder approval or the approval or consent of any trustee or the holders of
any Debt of Buyer, do not contravene the Bank Act or any other law, regulation,
rule or order binding on it or its Charter or Bylaws and do not contravene the
provisions of or constitute a default under any indenture, mortgage, contract or
other agreement or instrument to which Buyer is a party or by which Buyer or any
of its properties may be bound or affected.
(c) No Government Approval or filing or registration with any
Governmental Authority is required for the making and performance by Buyer of
this Agreement or in connection with any of the transactions contemplated
hereby.
(d) This Agreement has been duly executed and delivered by Buyer
and constitutes the legal, valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms.
SECTION 4.04 Repurchase Upon Breach of Certain Representations
and Warranties. (a) The applicable representations and warranties and agreements
of the Seller set forth in Sections 4.01 and 4.02 (as excepted from with respect
to any Non-Conforming Loan as set forth in Section 2.01) with respect to the
Seller and each Loan and related Property shall continue so long as such Loan
remains outstanding. Upon discovery by Seller, Servicer or Buyer that any of
such representations or warranties was incorrect as of the time made, the party
making such discovery shall give prompt notice to the other parties. In the
event any defect, misrepresentation or omission materially and adversely affects
the interest of the Buyer, the Seller shall eliminate or cure the circumstance
or condition causing the defect within 30 days of the discovery thereof (except
with respect to breaches of any of the
-30-
representations or warranties in Sections 4.02(a), (b), (c), (1), (n), (s), (u),
(v), (w) and (x), as to which the cure period shall be 10 days, and with respect
to breaches of any representations or warranties in Sections 4.02(e) and (v)
with respect to the Original Loans, as to which there shall be no cure period).
(b) The Seller shall repurchase an affected Loan or group of Loans
and the related Property if the Seller cannot or does not effect a cure of any
defect, misrepresentation or omission in any representation or warranty in
Sections 4.01 and 4.02 within the time period specified therefor in Section
4.04(a).
(c) Any such repurchase of a Loan and the related Property by Seller
pursuant to Section 4.04(b) shall be accomplished in the manner set forth in
Section 2.02(d) and at a price equal to the Repurchase Amount.
SECTION 4.05 Survival of Representations. Each of the representations
and warranties of GCC, in whatever capacity made or given, made or given in or
under this Agreement shall survive the execution and delivery hereof and of the
document, instrument or agreement executed and/or delivered hereunder in which
so made or given.
[End of Article IV]
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ARTICLE V
SERVICING AND COLLECTION
Subject to the provisions of Section 8.03, at all times prior to the
later of (a) the Termination Date or (b) the date on which all obligations of
the Seller under this Agreement have been performed in full, the following terms
and provisions of this Article V shall apply.
SECTION 5.01 Servicing; Delegation of Authority to Buyer and Servicer.
(a) The Buyer appoints the Servicer to act as the Buyer's exclusive agent for
performing all of the servicing and administrative functions with respect to the
Loans, the related Notes, the Related Documents and the related Collateral not
specifically reserved to the Buyer pursuant to subsection (b) of this Section
5.01. The Servicer hereby accepts such appointment and agrees to perform such
Loan servicing and administrative duties as are specifically enumerated herein
as well as those not reserved to the Buyer pursuant to subsection (b).
(b) The Buyer reserves the right to perform, and the Servicer shall
have no obligation to perform, the following servicing and administrative
functions with respect to the Loans and this Agreement: (i) determining the
amount to be claimed on the Guaranty from time to time and the Guaranty Amount
from time to time; and (ii) calculating monthly, in connection with each Payment
Date, the Applicable Rate.
(c) The Servicer shall use the same diligence and practices in
servicing the Loans, the related Collateral and the Related Documents as it uses
in servicing and collecting indebtedness evidenced by notes and related
documents held for its own account and, in any event, shall endeavor to collect
or cause to be collected from each Obligor the amounts as and when due and owing
under such Obligor's Note and Related Documents. In performing its duties
hereunder, and subject to the specific limitations set forth herein, Servicer
shall act in accordance with its Credit and Collection Policy and shall take
such actions with respect to the Loans, Notes and Related Documents as, in its
reasonable business judgment, it may deem advisable to maintain or enhance
receipt of timely Collections thereunder. Promptly upon the request of Servicer,
Buyer agrees to execute and deliver such documents and take such further acts
(at Servicer's expense) as Servicer may reasonably request to confirm and
evidence the agency granted to Servicer pursuant to this Section 5.01.
(d) Promptly after the execution and delivery of this Agreement, the
Servicer shall deliver to the Buyer a list certified by its secretary or one of
its assistant secretaries of the Servicing Officers and employees of the
Servicer involved in or responsible for, the administration and servicing of the
Loans, which list shall from time to time be updated by the Servicer and which
may be relied upon until so updated; provided that if the Servicer has
previously provided such a list to the Buyer and such list does not require
updating, the Servicer shall confirm the accuracy of the previously-delivered
list.
SECTION 5.02 Maintenance of System; Collection and Maintenance of
Information. (a) Servicer shall arrange and maintain with respect to the Loans,
related Notes and Related Documents, data processing, accounting and related
services adequate for the effective and timely performance of its servicing
obligations hereunder in accordance with
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good business practices and in compliance with all applicable federal, state and
local laws and regulations.
(b) Servicer shall collect the following information with respect to
each Obligor Group obligated on one or more Loans which, either individually or
in the aggregate, have a Principal Balance greater than:
(i) $250,000.00, within 120 days of the end of each fiscal year of
such Obligor Group, the Obligor Financial Statements, together with, upon the
Buyer's request therefor, a certificate of an authorized officer of such Obligor
Group, to the effect that the accompanying financial statements are true and
correct in all material respects;
(ii) $500,000.00 but less than $1,000,000, in addition to the annual
financial statements set forth in clause (i) above, within 50 days of the end of
the second fiscal quarter of such Obligor Group, interim Obligor Financial
Statements for such Obligor Group's first and second fiscal quarters, together
with, upon the Buyer's request therefor, a certificate of an authorized officer
of such Obligor Group, to the effect that the accompanying interim financial
statements are true and correct in all material respects; and
(iii) $1,000,000.00, in addition to the annual financial statements
set forth in clause (i) above, within 50 days of the end of each fiscal quarter
of such Obligor Group, interim Obligor Financial Statements, together with, upon
the Buyer's request therefor, a certificate of an authorized officer of such
Obligor Group, to the effect that the accompanying interim financial statements
are true and correct in all material respects.
In addition, Servicer shall collect evidence of adequate insurance with respect
to the Collateral securing the Loans. Servicer shall maintain the foregoing
information and shall make the same available to the Buyer or its nominees or
agents upon reasonable request.
SECTION 5.03 Maintenance of Lien Priority. So long as Servicer is
required to act as Buyer's exclusive agent for performing certain servicing
obligations with respect to the Loans, Servicer agrees to take all actions,
including lien searches and continuation statement filings, necessary or
desirable to ensure that the liens arising pursuant to the Related Documents and
securing repayment of any Obligor's indebtedness evidenced by a related Note
will be maintained as continuously perfected first priority (except in the case
of Collateral which is not Primary Collateral, in which event the Servicer shall
take all actions to maintain the priority sold and assigned hereunder) security
interests (except as otherwise approved by Buyer) in all applicable
jurisdictions.
SECTION 5.04 Obligor Inquiries; Credit and Collection Policies. (a)
Servicer agrees to accept primary responsibility for telephonic and face-to-face
communications with Obligors concerning the Loans, related Notes and related
Collateral. In the event Obligor inquiries require consideration by the Buyer,
the Servicer agrees to coordinate with the Buyer and the Obligors so as to
provide prompt and appropriate responses to Obligors' inquiries or concerns.
(b) Servicer agrees to follow, maintain and apply the credit,
extension and collection policies identified in the Credit and Collection Policy
in all material respects unless
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any order of any court, arbitrator or other Governmental Authority or any
determination of or change in any applicable federal, state or local law or
regulation should require otherwise or unless Buyer shall otherwise consent in
writing, which consent will not be unreasonably withheld. Notwithstanding any
other provision herein to the contrary, Servicer is not authorized to and agrees
that it shall not, without the Buyer's prior written consent (which consent
shall not be unreasonably withheld), (i) amend, extend, release, modify, or
waive the terms or conditions of any Loan, related Note or of any Related
Document; (ii) release any Collateral pledged in support of any Obligor's
obligations under a Note or Related Document (other than Cooperative Assets); or
(iii) grant or permit to be granted any rebate, refund, credit or other
adjustment in respect of an Obligor's obligation under any Note or any Related
Document.
SECTION 5.05 Obligor Defaults. Servicer agrees to promptly give any
notice to an Obligor required to commence the running of any applicable cure
period following a default in the performance by Obligor of its obligations
under the Loan, the related Note and Related Documents. If an Obligor Default
shall occur and be continuing or if a Loan shall otherwise become a Defaulted
Loan, Servicer shall promptly undertake the collection of such Obligor's
indebtedness in accordance with the Credit and Collection Policy and shall
develop, if necessary, after consultation with the Buyer, a strategy for
liquidating the Collateral with respect to such Loan; provided, however, that
the Servicer may modify the terms of a Defaulted Loan with the prior written
consent of the Buyer, which consent shall not be unreasonably withheld. Servicer
shall commence liquidation of the Collateral pledged to secure such Obligor's
obligations under its Defaulted Loan within 90 days after the occurrence of such
Obligor's default or upon a Loan becoming a Defaulted Loan, unless (a) Servicer,
with the consent of Buyer, has determined to modify the terms of a Defaulted
Loan or (b) Buyer directs the Servicer to do otherwise or (c) Servicer receives
notice from the Seller of its repurchase of such Loan pursuant to Section 7.01
of this Agreement. Buyer shall promptly notify Servicer of any payment default
by an Obligor under a Note of which it obtains knowledge and Servicer shall
promptly notify Buyer, Seller and Guarantor of the occurrence of any payment or
other Obligor Default or of a Loan becoming a Defaulted Loan. In its efforts to
collect the indebtedness evidenced by any Note, Servicer shall in all events
proceed in good faith and in a commercially reasonable manner, and, when seeking
to realize on Collateral pledged by any Obligor, shall proceed in such a fashion
as to preserve to Buyer its rights to seek collection of a deficiency against
such Obligor if the sale of the Collateral is insufficient to pay such Obligor's
obligations in full, unless (i) Buyer has consented to proceeding in a manner
that does not result in preserving the right to collect a deficiency or (ii)
such right is of minor practical value.
Notwithstanding any other provision in this Agreement to the contrary,
Buyer shall have the right, at its sole discretion, to assume the servicing
obligations of the Servicer hereunder in connection with the liquidation of a
Defaulted Loan and related Property and Servicer shall cooperate with Buyer in
effecting such transfer of obligations and liquidation of Collateral. If Buyer
assumes the servicing obligations with respect to the liquidation of a Defaulted
Loan, Buyer shall proceed as a prudent and experienced servicer would under the
circumstances and shall be entitled to reimbursement for its reasonable fees and
expenses in performing such obligations in accordance with Section 5.08 hereof,
and Servicer shall have no further responsibilities hereunder with respect to
the servicing of such Loan.
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SECTION 5.06 Servicer Reports; Annual Audit. (a) On the second
Business Day preceding each Payment Date, Servicer shall deliver to Buyer a
Monthly Report relating to the Loans and the preceding Due Period. The Servicer
shall include in the Monthly Report (i) a statement as to any event occurring
during the preceding Due Period of which Servicer has actual knowledge which
materially impairs or might reasonably be expected materially to impair any
Obligor's ability to repay the Debt relating to any Loan and evidenced by a Note
or to perform its obligations under any Related Document or which has or might
reasonably be expected to substantially reduce the value of the Collateral or to
impair the Buyer's lien thereon. Together with the Monthly Report delivered in
each of April, July, October and January, each Servicer shall deliver to Buyer a
certification to the effect that a review of the activities of such Servicer
during the immediately preceding calendar quarter and of its performance under
this Agreement during such period has been made under the supervision of the
officers executing such certificate with a view to determining whether during
such period the Servicer had performed and observed all of its obligations under
this Agreement, and either (A) stating that based on such review no Servicer
Default under this Agreement has occurred, or (B) if a Servicer Default has
occurred, specifying such Servicer Default and the nature and status thereof. In
addition to the foregoing, from time to time upon request of Buyer, the Servicer
will deliver to Buyer such other statements, lists, reports and other
information as the Buyer may reasonably request, and, to the extent any such
information must be obtained by Servicer from a third party, as the Servicer may
reasonably be expected to obtain.
(b) The Servicer shall promptly notify the Buyer if any of the
following events occurs: (i) a Defaulted Loan becomes or is deemed to be a
Liquidated Loan and the amount of Liquidation Loss thereon, (ii) the Seller
fails to pay any Repurchase Amount when due, (iii) the Guarantor fails to pay on
the Guaranty when due.
(c) Buyer shall have the right during Servicer's regular business
hours and upon reasonable prior notice to Servicer to conduct an audit (not more
frequently than once in any twelve-month period unless a Servicer Default then
exists) of the Loans, Related Documents and all other documents and files
relating thereto. Servicer agrees to reimburse Buyer for the cost of such audit
up to $5,000 per audit plus all reasonable out-of-pocket expenses actually
incurred by or on behalf of Buyer in connection with each such audit.
SECTION 5.07 Loan and Other Payments. (a) Unless otherwise notified by
Buyer, Servicer shall receive directly all payments with respect to the Loans,
and such payments, which shall be held by Servicer, as agent for the Buyer,
shall include:
(i) all Scheduled Payments and Payaheads received from
the Obligors;
(ii) all Principal Prepayments;
(iii) all Insurance Proceeds and all Liquidation Proceeds;
and
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(iv) all payments made by the Seller or the Servicer
under this Agreement or the Guarantor under the Guaranty Agreement to
be paid to Servicer, including Guaranty Payments and Repurchase
Amounts.
(b) The Servicer shall establish and maintain an account in a bank
acceptable to the Buyer for the purpose of holding all payments received with
respect to the Loans and of remitting the amounts described in Section 5.08 (the
"Servicing Account"). The Servicing Account shall be maintained in the name of
GCC, as Servicer, for the benefit of the Buyer and subject to a first priority
perfected security interest in favor of Buyer. Moneys received with respect to
the Loans shall be deposited into the Servicing Account on a daily basis within
24 hours of receipt thereof. The parties hereby acknowledge that the Servicer
shall have no obligation to restrict amounts on deposit therein to amounts
constituting Property, but may deposit amounts and proceeds in respect of loans
and other property not constituting Loans; provided, however, that such right of
the Servicer shall be subject to the continued existence and maintenance of a
first priority perfected security interest of Buyer in and to such Servicing
Account. If (i) Buyer at any time ceases to have a first priority perfected
security interest in and to the Servicing Account, or (ii) upon the occurrence
of a Servicer Default, the Buyer may deliver notice to the Servicer to establish
a Separate Account as the Servicing Account, and upon receipt of such notice the
Servicer shall establish such a Servicing Account, for the purpose of holding
all payments, as described in Section 5.07(a) or otherwise received in respect
of the Loans and related Property, segregated and separate from all of the
Servicer's other accounts and other funds (such account, a "Separate Account").
The Servicer may also, at any time, establish a Separate Account to serve as the
Servicing Account. If the Servicing Account is a Separate Account, in the event
there shall have been deposited in such Servicing Account any amount not
required to be deposited therein and so identified to the Buyer, including (i)
any payments received from any source other than payments made in respect of the
Loans, the related Notes, Related Documents and related Collateral, (ii)
payments with respect to the Loans, related Notes, Related Documents and related
Collateral due before the applicable Incremental Purchase Date, and (iii)
payments received in respect of the Loans following the repurchase thereof by
Seller pursuant to this Agreement, such amounts shall be withdrawn from the
Servicing Account and paid to the Seller. Moneys in the Servicing Account may be
invested in any combination of investment-grade securities, money market funds,
bank deposits and certificates of deposits, in each case that are scheduled to
mature no later than the Business Day on which such amounts are required to be
paid to Buyer, and any net income from such investments may be retained by the
Servicer as an additional servicing fee.
(c) [Intentionally Omitted.]
(d) Upon the occurrence of a Servicer Default, Buyer may forward the
Transfer Letter to the bank holding the Servicing Account and obtain control of
the Servicing Account. The Buyer, upon obtaining control of the Servicing
Account, may, in its sole discretion, either (i) maintain the Servicing Account,
or (ii) if such Servicing Account is not a Separate Account, establish a
Separate Account and transfer all amounts in the Servicing Account received with
respect, or otherwise related to, the Loans and related Property.
Notwithstanding any action it takes under this Section 5.07(d), the Buyer shall
have no liability to any Person, including, without limitation, GCC (in any
capacity), entitled to or
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having any ownership or security interest in or to any Servicing Account or any
amounts or funds on deposit therein, and the Buyer shall have no responsibility
with respect to such other amounts and funds in a Servicing Account except,
after its distribution on each Payment Date of the amounts as set forth in
Section 5.08, to remit to GCC any amounts or funds then on deposit in such
account that GCC can identify (to the Buyer's sole satisfaction) as not
constituting payments in respect of Loans or any Property, and not otherwise
constituting Property, or proceeds of Loans or Collateral. The Servicer shall
cooperate fully with the Buyer in respect of its control of the Servicing
Account, and in respect of its establishment and control of a Separate Account
as the Servicing Account.
SECTION 5.08 Computation and Payment of Periodic Payments, Servicing
Fees and Guaranty Fees; Servicer's Expenses.
(a) On each Determination Date and with respect to the related
Payment Date, Servicer shall determine (i) the Periodic Payment (including the
Monthly Interest Amount) to be paid to Buyer, (ii) the Servicing Fee to be paid
to Servicer, and (iii) the Guaranty Fee to be paid to Guarantor, and shall
notify the Servicer in writing of such amounts. Buyer shall have the right at
any time to object to or question the Periodic Payment, the Servicing Fee and
the Guaranty Fee as determined by Servicer. Servicer agrees to cooperate fully
with Buyer to resolve promptly any such objection or question and, if any such
resolution involves the payment of additional amounts to Buyer, to pay promptly
such amounts.
(b) No later than 12:00 noon, Washington, D.C. time on each Payment
Date, the Servicer shall remit to the Buyer the Periodic Payment by payment in
immediately available funds to PNC BANK, in Philadelphia, Pennsylvania, ABA#
▇▇▇▇▇▇▇▇▇, Account Number ▇▇▇▇▇▇▇▇▇▇, Account Name: NCB Mortgage Corp. Clearing,
Ref: GCC Loan Purchase Program.
(c) Unless and until a Servicer Default or Guarantor Default shall
have occurred, on each Payment Date, the Servicer shall also remit as directed
by Buyer pursuant to (a) above, (i) to Servicer the Servicing Fee and (ii) to
Guarantor, the Guaranty Fee. The monthly "Servicing Fee" shall be an amount
equal to the sum of, for each Loan, the product of (i) .50%, times (ii) the
outstanding Principal Balance of such Loan as of the first day of the related
Due Period (or, in the case of a Loan purchased during such Due Period, as of
the Incremental Purchase Date of such Loan), times (iii) a fraction, the
denominator of which is 360 and the numerator of which is the actual number of
days in the related Due Period (the "Servicing Fee"). The Guaranty and Servicing
Fees shall be calculated in a manner consistent with the interest accrual method
applicable to each individual Loan. Notwithstanding the foregoing, upon the
occurrence of a Servicer Default, Servicer shall no longer be entitled to the
Servicing Fee and upon the occurrence of a Guarantor Default, the Guarantor
shall no longer be entitled to the Guaranty Fee, and in each such event, Buyer
shall be entitled to retain the Servicing Fee or Guaranty Fee, as the case may
be.
(d) Buyer shall determine the Periodic Payment for each Payment Date
using the following methodology.
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(1) As used herein and in the Guaranty Agreement, "Periodic Payment"
means for any Payment Date the sum of, for each Loan, (a) the principal
portion (including any balloon payment) of the Scheduled Payment actually
received during the related Due Period; (b) any Principal Prepayment,
Payahead, and the principal portion of Insurance Proceeds and Net
Liquidation Proceeds, to the extent any of the foregoing are actually
received during the related Due Period; (c) the principal portion of any
Guaranty Payment or Repurchase Proceeds with respect to the related Due
Period and (d) the Monthly Interest Amount for the related Interest Accrual
Period.
(2) As used herein and in the Guaranty Agreement, "Monthly Interest
Amount" on any Payment Date shall mean an amount equal to the sum of, for
each Loan, the product of (i) the outstanding Principal Balance of such
Loan as of the first day of the related Due Period (or, in the case of a
Loan purchased during such Due Period, as of the Incremental Purchase Date
of such Loan), times (ii) the Applicable Rate times (iii) a fraction, the
denominator of which is three hundred sixty (360), and the numerator of
which is the actual number of days in the related Interest Accrual Period.
SECTION 5.09 Applicable Rate. As used in this Agreement and in the
Guaranty Agreement, the "Applicable Rate" for each Loan shall be determined as
follows: For each Interest Accrual Period, the Applicable Rate for each Loan
shall mean an interest rate per annum equal to the sum of (a) the Margin and (b)
LIBOR in effect on the applicable LIBOR Determination Date. The Applicable Rate
for each Loan shall be established as of each LIBOR Determination Date and shall
be applicable for each of the Interest Accrual Periods within the next
succeeding LIBOR Period without regard to changes thereafter occurring during
such LIBOR Period in the principal amounts outstanding under the Notes, in the
Principal Balance of Loans purchased, or in LIBOR.
SECTION 5.10 Concerning Insurance on Collateral.
(a) The Servicer shall cause to be maintained, with respect to the
Collateral, one or more insurance policies (which may be, collectively, the
individual policies of insurance required to be maintained by each Obligor,
together with one or more blanket fire and extended coverage insurance policies
covering the Collateral and other equipment of the Servicer similar to the
Collateral) which provide at least the same coverage as a fire and extended
coverage insurance policy and naming the Seller or the Buyer or assigns as the
loss payee. The Servicer shall take whatever actions are necessary to cause each
insurer to recognize the Buyer or such other Person to whom an interest in the
Loans has been sold or assigned as assignee under the related insurance policy.
Each such insurance policy shall be maintained in an amount which is at least
equal to the lesser of (i) the Principal Balance as of the applicable
Incremental Purchase Date of the related Loan and (ii) the maximum insurable
value, subject, in either case, to customary deductions. If amounts are received
by the Servicer under any such insurance policies with respect to the
Collateral, the Servicer shall promptly deposit such amounts into the Servicing
Account.
(b) If an insurer under an insurance policy shall deny coverage (in
any such case prior to termination thereof as a result of the payment by such
insurer of an aggregate
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amount equal to its maximum liability under such insurance policy), or shall
refuse to honor a claim under any such insurance policy with respect to the
Collateral on a Loan which becomes a Defaulted Loan for reasons relating to such
claim, and, if adjudicated, if such denial or refusal is determined by a court
of competent jurisdiction to have resulted from the Servicer's failure to comply
with the requirements of such insurance policy, then the amount of any resulting
unpaid claim shall be deemed to be collected as a recovery on the Loan with
respect to which such denial or refusal arose, on or before the last day of the
Due Period during which such denial or refusal occurs, and Servicer shall be
obligated to deposit such "deemed Collection" into the Servicing Account.
(c) On the Incremental Purchase Date with respect to each Loan, the
insurance policies with respect to the Collateral for such Loan are required to
be provided by insurance companies rated at least "B-" by Best & Co. If (i) the
Buyer or the Servicer shall determine that an insurer's rating has dropped below
"B-" or that the financial condition of any insurer might jeopardize recoveries
under such an insurance policy or (ii) any such insurance policy is cancelled or
terminated for any reason other than the exhaustion of total coverage issued by
an insurance company with the requisite rating and financial soundness and shall
be, then, in each such case, the Servicer shall use its best efforts to obtain
from another insurer a replacement policy for each such insurance policy, which
replacement policy shall be issued by an insurance company with the requisite
rating and financial soundness and shall be substantially similar to the
insurance policy being replaced with coverage equal to the then existing
coverage of such insurance policy.
(d) The Servicer shall promptly notify the Buyer of the occurrence of
any event described in subsection 5.10(b) or (c).
(e) In the Monthly Report, Servicer shall certify that except as to
Loans identified therein (together with a status report on effort to obtain
insurance thereon), the Collateral related to each Loan is covered under an
insurance policy or policies satisfying the requirements set forth in subsection
5.10(a).
SECTION 5.11 Access to Certain Documentation and Certain Information
Regarding the Loans. The Servicer will provide to the Buyer and its nominees and
agents access to the documentation in its possession regarding the Loans, such
access being afforded without charge but only during normal business hours at
the offices of the Servicer or its designee or agent, as designated by the
Servicer.
SECTION 5.12 Servicer Representations and Warranties. The Servicer
hereby represents and warrants to, and agrees as of the date of execution of
this Agreement as follows:
(a) The Servicer is duly organized and is validly existing and in
good standing as a California corporation, with corporate power and authority to
own its properties and to transact the business in which it is now engaged, and
the Servicer is duly qualified to do business and is in good standing in each
State of the United States where the nature of its business requires it to be so
qualified.
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(b) The execution, delivery and performance of the Servicer's
obligations under this Agreement, and the consummation of the transactions
herein contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the property or
assets of the Servicer or any of its Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement or other agreement (other
than this Agreement) or instrument to which it or any of its Subsidiaries is a
party or by which it or any of its Subsidiaries is bound or to which any of its
property or assets is subject, nor will such action result in any violation of
the provisions of its Articles of Incorporation or By-Laws or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over it or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any court or any
such regulatory authority or other governmental agency or body is required for
the consummation of the other transactions contemplated by this Agreement.
(c) This Agreement has been duly authorized, executed and delivered
by the Servicer and this Agreement is the valid and legally binding obligation
of the Servicer, enforceable against the Servicer in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or affecting creditors' rights
and to general principles of equity.
(d) No event with respect to the Servicer has occurred and is
continuing which would constitute a Servicer Default under Section 8.01 or an
event that with notice or lapse of time or both would become a Servicer Default
under this Agreement.
SECTION 5.13 Servicer's Resignation. (a) The Servicer may resign from
the duties and obligations hereby imposed with the consent of the Buyer;
provided, that if the then-existing Servicing Account is not a Separate Account,
the Servicer shall establish a Separate Account as the Servicing Account and
transfer all amounts constituting Property to such Separate Account from
then-existing Servicing Account.
(b) The Servicer may not assign this Agreement or any of its rights,
powers, duties or obligations hereunder, provided that the Servicer may, subject
to the proviso in Section 5.13(a), assign this Agreement in connection with a
consolidation, merger, conveyance, transfer or lease made in compliance with
Section 6.01(i).
(c) Except as provided in Sections 5.13(a), 8.01 and 10.02, the
duties and obligations of the Servicer under this Agreement shall continue until
the Termination Date, and shall survive the exercise of any right or remedy
under this Agreement by the Seller or Buyer of any provision of this Agreement,
and notwithstanding the provisions of Sections 5.13(a), 8.01 and 10.02, prior to
the Termination Date, the Servicer shall continue to serve as Servicer hereunder
until the Buyer accepts the duties of Servicer or a Successor Servicer shall be
appointed and assume the duties of Servicer hereunder.
[End of Article V]
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ARTICLE VI
SELLER'S AND SERVICER'S COVENANTS
SECTION 6.01 Covenants. At all times prior to the later of (i) the
Termination Date or (ii) the date on which all obligations of the Seller under
this Agreement and of the Guarantor under the Guaranty Agreement have been
performed in full, Seller and Servicer agree to do all of the following unless
the Buyer shall otherwise consent in writing:
(a) Preservation of Corporate Existence, Etc. To preserve and
maintain its corporate existence (whether in the form of a cooperative or
otherwise), rights, and privileges in the jurisdiction of its incorporation and
will qualify and remain qualified as a foreign corporation in each jurisdiction
where such qualification is necessary or advisable in view of the business and
operations of Seller or Servicer, as the case may be, or the ownership of its
properties.
(b) Compliance with Laws. To comply in all material respects with all
laws, regulations, rules and orders of Governmental Authorities applicable to
Seller or Servicer, as the case may be, or to its operations or property, except
any thereof whose validity is being contested in good faith by appropriate
proceedings upon stay of execution of the enforcement thereof.
(c) Other Obligations. To pay and discharge before the same shall
become delinquent (after giving effect to all applicable grace periods) all
Debt, taxes and other obligations which, if unpaid, might become by law a lien
upon the assets of Seller or Servicer, as the case may be, except any thereof
whose validity or amount is being contested in good faith by the Seller or
Servicer, as the case may be, in appropriate proceedings, and except other Debt,
taxes and other obligations which, in the aggregate do not exceed Five Hundred
Thousand Dollars ($500,000); provided, however, the covenant included in this
Section 6.01(c) shall not extend to any obligation of Seller or Servicer, as the
case may be, identified in Section 6.01(k), 8.01(f) or 9.01(f).
(d) Visitation; Records; Files. At any reasonable time and from time
to time, to permit Buyer and its agents to (i) examine and make copies of
Seller's or Servicer's records, as the case may be, and books of accounts
relating to the Loans, the related Notes and Related Documents, (ii) visit the
properties of the Seller or Servicer, as the case may be, and (iii) discuss the
affairs, finances and accounts of the Seller or Servicer, as the case may be, as
they relate to the transactions contemplated by this Agreement with any of its
officers. The Seller or Servicer will keep adequate records and books of
accounts in which complete entries will be made, in accordance with GAAP,
reflecting all financial transactions of the Seller or Servicer, as the case may
be, as they relate to the transactions contemplated by this Agreement. Without
limiting the foregoing, the Seller and Servicer shall establish and maintain
manual or computer records reflecting all receipts or disbursements made or
received in respect of the Loans, the related Notes which records will be
maintained separate from Seller's or Servicer's records, as the case may be,
relating to Loans, the related Notes which are not Loans and will be clearly
marked with a legend to the effect that such records
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pertain to Loans sold to Buyer. All Loan files maintained by the Seller or
Servicer will be clearly marked to indicate that such Loans have been sold to
Buyer.
(e) Financial Information. To deliver to Buyer (i) as soon as
available and in any event within 120 days of the end of the fiscal year of GCC,
a consolidated balance sheet of GCC and its Subsidiaries as of the end of such
fiscal year, and the related consolidated statements of income, shareholders'
equity and cash flows of GCC and its Subsidiaries for such fiscal year, prepared
in accordance with GAAP consistently applied, all in reasonable detail and
setting forth in comparative form the figures for the previous fiscal year, and
accompanied by a report thereon of independent certified public accountants of
recognized national standing acceptable to Buyer, which report shall be
unqualified as to scope of audit or the status of GCC and its Subsidiaries as a
going concern, and shall state that such consolidated financial statements
present fairly the financial condition of GCC as at the dates indicated and the
results of operations and changes in cash flows for the periods then ended in
conformity with GAAP applied on a basis consistent with the previous years
(except as otherwise stated therein) together with a certificate of such
independent public accountants stating that (1) their audit examination of GCC
and its Subsidiaries has included a review of the terms of this Agreement as
they relate to accounting matters; (2) in the course of such audit examination,
which audit was conducted by such accountants in accordance with generally
accepted auditing standards, such accountants have obtained no knowledge that
any Default has occurred and is continuing, or, if such Default has occurred and
is continuing, indicating the nature thereof; provided that such accountants
shall not be liable by reason of any failure to obtain knowledge of any Default
that would not be disclosed in the course of their audit examination; (ii)
within 120 days after the end of Unified's fiscal year, the Annual Report on
Form 10-K for such year filed by Unified and the Annual Shareholders Report for
Unified; (iii) within 120 days after the end of GCC's fiscal year, a certificate
signed by the chief financial officer of GCC, stating that as of the close of
such fiscal year, no Termination Event or Servicer Default shall have occurred
and be continuing; (iv) as soon as available and in any event within 45 days
after the end of each quarter, a consolidated balance sheet of GCC and its
Subsidiaries as of the end of such quarter, and the related consolidated and
consolidating statement of income of GCC and its Subsidiaries for such quarter
and the portion of the fiscal year through such quarter, prepared in accordance
with GAAP consistently applied, all in reasonable detail and setting forth in
comparative form (A) the figures for the corresponding period in the preceding
fiscal year and (B) the projected figures for the corresponding period contained
in the forecast for the current fiscal year delivered to Buyer hereunder,
together with a certificate of the chief financial officer of GCC stating that
such financial statements fairly present the financial position of GCC and its
Subsidiaries as at such date and the results of operations of GCC and its
Subsidiaries for the period ended on such date and have been prepared in
accordance with GAAP (except for the absence of footnote disclosure)
consistently applied, subject to changes for normal, year-end adjustments; (v)
within 60 days after the end of Unified's fiscal quarter, the Quarterly Report
on Form 10-Q for such quarter filed by Unified; (vi) within 60 days after the
end of each fiscal quarter of GCC, a certificate signed by GCC's chief financial
officer, to the effect that as of the end of such fiscal quarter, GCC, as Seller
and Servicer hereunder an as Guarantor under the Guaranty Agreement, has
remained in compliance with its obligations hereunder and under the Guaranty
Agreement; (vii) prompt notice of any material borrowings or material adverse
changes in GCC's financial condition; and (viii) such other statements,
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reports and other information as Buyer may reasonably request concerning the
financial condition and the servicing and collection operations of GCC.
(f) Notification. (1) Promptly after learning thereof, to notify
Buyer of (i) the details of any action, proceeding, investigation or claim
against or affecting the Seller or Servicer, as the case may be, instituted
before any court, arbitrator or Governmental Authority or, to the Seller's or
Servicer's knowledge, as the case may be, threatened to be instituted, which,
after taking into account the likelihood of success, might reasonably result in
a judgment or order against the Seller or Servicer, as the case may be (in
excess of insurance coverage and when combined with all other pending or
threatened claims), of more than Five Hundred Thousand Dollars ($500,000); (ii)
if the Seller or Servicer, as the case may be, or any member of the Controlled
Group gives or is required to give notice to the PBGC of any "reportable event"
(as defined in subsections (b) (1) (2) (5) (6) of Section 403 of ERISA) with
respect to any Plan (or the Internal Revenue Service gives notice to the PBGC of
any "Reportable Event" as defined in subsection (c) (2) of Section 4043 of ERISA
and the Seller or Servicer, as the case may be, attains knowledge thereof) which
might constitute grounds for termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (iii) any
representation or warranty set forth in Section 4.01 or 4.02 (with respect to
Seller and Loans) and Section 5.12 (with respect to Servicer) which proves to
have been incorrect in any material respect when made; (iv) Seller's or
Servicer's material breach of its obligations under this Agreement; (v) any
Obligor Default; (vi) any Loan that has become a Defaulted Loan; (vii) any
circumstance or event of which Seller or Servicer has actual knowledge which
materially impairs or might reasonably be expected to impair an Obligor's
ability to repay or perform its obligations under, the related Loan (including,
without limitation, (A) Obligor's ceasing to be a Unified Patron in good
standing, becoming 30 days or more past due on its open account with Unified, or
being required to pay cash on delivery for negative credit reasons or (B)
default by Obligor or any Affiliate on a "recourse" obligation to GCC); (viii)
the occurrence of any Servicer Default or Termination Event or other event
which, with notice or lapse of time or both, would constitute a Servicer Default
or Termination Event; and (ix) the occurrence of any circumstance or event which
leads such Seller or Servicer to believe that an Expansion Loan (or the related
Obligor) is not likely to meet the Expansion Loan Projections and, in any event,
the occurrence from time to time of such Seller's obligation to repurchase any
Expansion Loan pursuant to Section 7.03.
(2) Credit Agreement Information. To the extent not otherwise
required to be delivered hereunder, at the same time as delivered (or given)
under the Credit Agreement, to deliver to Buyer copies of all written material,
notices, certificates and other information and data delivered (or given) under
Section 6.1 of the Credit Agreement including, without limitation, all financial
statements, certifications, compliance certificates, borrowing base
certificates, reports and filings made with the Securities and Exchange
Commission or other Governmental Authorities, projections, management letters,
and certificates delivered pursuant to Section 6.1(h) of the Credit Agreement.
(g) Additional Payments; Additional Acts. From time to time, to (i)
pay or reimburse the Buyer on request for all taxes imposed on this Agreement or
the sale of any
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Loans hereunder (other than taxes based on Buyer's net income, items of tax
preference, or gross receipts); and (ii) obtain and promptly furnish to Buyer
evidence of all such Government Approvals as may be required to enable the
Seller or Servicer, as the case may be, to comply with its obligations under
this Agreement.
(h) Liens. Not to create, assume or suffer to exist any lien,
security interest or other encumbrance except (A) liens on the Seller's or
Servicer's properties, as the case may be, securing mortgage indebtedness
relating to such properties, and any extensions, refinancing or renewals thereof
in an amount not exceeding the amount of such indebtedness prior to such
extension, refinancing or renewal; (B) capital lease obligations; (C) liens to
secure indebtedness for the deferred price of property acquired after the date
hereof, but only if such liens are limited to such property and its proceeds;
(D) liens imposed by law (such as mechanic's liens) incurred in good faith in
the ordinary course of business which are not delinquent or which remain payable
without penalty or the validity or amount of which are being contested in good
faith by appropriate proceeding upon stay of execution of the enforcement
thereof; (E) deposits or pledges under workmen's compensation, unemployment
insurance, social security or similar laws or made to secure the performance of
bids, tenders, contracts (except for the repayment of borrowed money) or leases,
or to secure statutory obligations or surety or appeal bonds or to secure
indemnity, performance or other similar bonds given in the ordinary course of
business; or (F) liens arising under the Portfolio Credit Facility.
(i) Liquidation, Merger, Sale of Assets, Etc. To not liquidate,
dissolve or enter into any merger, consolidation, joint venture, partnership or
other combination nor sell, lease, dispose of such portion of its business or
assets as constitutes a substantial portion thereof (excepting (i) sales of
goods in the ordinary course of business, (ii) sales of assets made with notice
to and the consent of the Buyer (provided, that the Buyer's consent shall not be
required if such sale does not result in GCC's Tangible Net Worth (as defined in
the Operating Agreement) becoming less than $15,000,000 and (iii) sales of the
Loans to the Buyer or Fleet Capital Corporation, successor in interest to Sanwa
Business Credit Corporation, or their assignees or successors in interest);
provided, however, so long as no Servicer Default or Termination Event or event
which with the passage of time or the giving of notice or both would constitute
a Servicer Default or Termination Event shall have occurred and be continuing or
will occur as a result of such merger or consolidation, Seller or Servicer, as
the case may be, may merge or consolidate with any Person or sell all or
substantially all of its business or assets to any other Person so long as (A)
(i) the Seller or Servicer, as the case may be, shall be the surviving or
continuing corporation or (a), if the Seller or Servicer, as the case may be,
shall not be the surviving or continuing corporation or shall sell all or
substantially all of its assets to a Person such surviving, continuing or
purchasing Person shall be incorporated under the laws of the United States or
any jurisdiction thereof, shall assume in writing all obligations of the Seller
or Servicer, as the case may be, under this Agreement, shall be eligible to
borrow from NCB pursuant to the provisions of the Bank Act and shall have a
Consolidated Tangible Net Worth not less than the Seller or Servicer, as the
case may be, prior to the merger or consolidation, and (B) at the time of such
consolidation, merger or sale and after giving effect thereto no Servicer
Default or Termination Event shall have occurred and be continuing.
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(j) Transactions with Affiliates. To not directly or indirectly enter
into or permit to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property) with any of Seller's or
Servicer's Affiliates, as the case may be, on terms that are less favorable to
Seller or Servicer, as the case may be, than those which might be obtained at
the time from Persons who are not Affiliates.
(k) ERISA Compliance. To not and not allow any member of its
Controlled Groups or any Plan of any of them to: (i) engage in any "prohibited
transaction" as such term is defined in Section 2003(a) of ERISA; (ii) incur any
"accumulated funding deficiencies" (as such term is defined in Section 3.02 of
ERISA) in an amount which would represent a potential material liability of
Seller and its Subsidiaries or affect materially the ability of Seller to
perform this Agreement; (iii) terminate any Plan in a manner which could result
in the imposition of a lien on any property of the Seller or Servicer, as the
case may be, or any member of their respective Controlled Groups pursuant to
Section 4068 of ERISA; or (iv) violate state or federal securities laws
applicable to any Plan.
(l) No Name Change, Etc. To not change its name, identity or
corporate structure in any manner which could make any financing or continuation
statement filed hereunder seriously misleading within the meaning of Section
9-506 of any applicable enactment of the Uniform Commercial Code without giving
Buyer at last 60 days prior written notice thereof and unless prior thereto it
shall have caused such financing statement or continuation statement to be
amended or a new financing statement to be filed such that such financing
statement or continuation statement would not be seriously misleading.
(m) Relocation of Offices. To give Buyer at least 60 days prior
written notice of any relocation of its chief executive offices or the offices
where records concerning the Loans and related Property are kept. (n) Limitation
on Transfers, Etc. To not transfer or attempt to transfer in any manner
whatsoever to any Person other than the Buyer pursuant to the terms of this
Agreement, and except in favor of the Buyer hereunder shall not create, cause to
be created or permit any lien, pledge, charge, security interest, ownership
interest, participation interest or any other interest of any nature whatever in
respect of the Loans and related Property.
(o) No Changes. To make no change in the Credit and Collection
Policy, which change would impair the collectibility of any material amount of
the Loans; make no material change in the Credit and Collection Policy or in its
current payment terms with respect to Loans without prior written consent of the
Buyer (which consent shall not be unreasonably withheld).
(p) Security Interest. To defend Buyer's security interest in and to
the Collateral related to any Loan against all claims and demands of all Persons
at any time claiming the same or any interest therein (i) adverse to that of
Obligors or Buyer or (ii) prior to that of Buyer. Further, to take all actions
to transfer to Buyer, at Buyer's request, a security interest in all or any
specified portion of that Collateral securing any Loan which was not transferred
to Buyer on the applicable Incremental
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Purchase Date (transferring to the Buyer the same interest as the Seller had and
disclosed to the Buyer on the applicable Incremental Purchase Date) and to
provide evidence reasonably satisfactory to Buyer that all actions as are
necessary or appropriate to perfect Buyer's security interest in such Collateral
have been taken.
(q) Bank Act Eligibility. To use its best efforts to remain
"eligible" to borrow from NCB pursuant to the provisions of the Bank Act.
(r) Operating and Investment Agreements. To use its best efforts to
maintain the Operating Agreement and the Investment Agreement in full force and
effect.
(s) Concentration Limit. To not permit the aggregate Principal
Balance of all Loans to an Obligor Group to exceed $4,000,000 at any time,
unless Seller discloses such excess in writing to Buyer at or prior to the time
any such Loan is purchased by Buyer, provided, that nothing herein shall
obligate Seller to purchase any such Loan.
[End of Article VI]
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ARTICLE VII
SELLER OBLIGATIONS AND REPURCHASE OPTIONS
SECTION 7.01 Repurchase of Loans. In addition to the repurchase
rights and obligations contained in Sections 2.02(d), 4.04(b), 7.02 and 9.02 of
this Agreement, Buyer has the option to cause Seller to repurchase any Loan sold
by Seller to Buyer if (i) the payments with respect to such Loan are past due at
least 90 days, or (ii) an Obligor Default has occurred with respect to such Loan
and has at the time of Buyer's exercise of such right been continuing for at
least 60 days, or (iii) such Loan is a Restructured Loan that results in or with
respect to which there are Modification Losses. Such Loan shall be repurchased
by Seller from Buyer by the last day of the Due Period during which Seller
receives notice of any such Defaulted Loan or notice of adverse event, or during
which the Obligor Default occurs, as the case may be. Any repurchase pursuant to
this Section 7.01 shall be accomplished on the same terms as set forth in the
third and fourth sentences of Section 2.02(d) and at the Repurchase Amount.
SECTION 7.02 Minimal Balances. On any Payment Date, Seller may elect
to repurchase all of the Loans then owned by the Buyer for their aggregate
Principal Balance, if as of such Payment Date the aggregate Principal Balance of
all such Loans is less than ten percent (10%) of the aggregate total of all of
the Principal Balances of each of the Loans, as calculated, in each case, on the
Effectiveness Date or on the Incremental Purchase Date applicable to such Loan,
as the case may be. If Seller elects to repurchase all of the Loans pursuant to
this Section 7.02, Seller shall provide Buyer and Servicer with thirty (30) days
prior written notice. The Repurchase Amount shall be paid by Seller to Servicer
in immediately available funds prior to 12:00 noon, Washington, D.C. time.
Immediately upon the payment of the required Repurchase Amount, all right, title
and interest in the Loans being repurchased shall pass to Seller and such Loans
shall cease to be "Loans" for all purposes of this Agreement. Any resale of a
Loan and related Property pursuant to the terms of this Section 7.02 shall
constitute the simultaneous resale by Buyer and repurchase by Seller of all
Loans and related Property. Any resale of a Loan and related Property pursuant
to this Section 7.02 shall be without recourse or warranty of any kind except
that Buyer shall be deemed to have warranted that such Loans and related
Property are free and clear of all liens or claims resulting from or arising out
of its acts or omissions (other than acts of Buyer resulting from Seller's or
Servicer's failure to perform as required by this Agreement) or claims of
Buyer's creditors.
SECTION 7.03 Repurchase of Expansion Loans. In addition to the
repurchase rights and obligations contained in Sections 2.02(d), 4.04(b), 7.01,
7.02, 7.04 and 9.02 of this Agreement, Buyer has the option to cause the Seller
to repurchase any Expansion Loan sold by Seller to Buyer if, on the Expansion
Loan Repurchase Date for such Expansion Loan (i) the Cash Flow Ratio for the
related Obligor is less than 1.1:1, (ii) the Collateral Coverage Ratio for such
Expansion Loan is less than 1:1 or (iii) the related Obligor does not have a
positive net worth. Such Expansion Loan shall be repurchased by the Seller from
Buyer by the last day of the Due Period in which such Expansion Loan Repurchase
Date occurs. Any repurchase pursuant to this Section 7.03 shall be accomplished
on the same
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terms as set forth in the third and fourth sentences of Section 2.02(d) and at
the Repurchase Amount therefor.
SECTION 7.04 Repurchase of Loans on the Seventh Anniversary of the
Commitment Termination Date. In addition to the repurchase rights and
obligations contained in Sections 2.02(d), 4.04(b), 7.01, 7.02, 7.03 and 9.02,
Buyer has the option to cause Seller to repurchase each Loan sold by Seller to
Buyer if such Loan has not been paid in full by the seventh anniversary of the
Commitment Termination Date (or, if earlier, the seventh anniversary of the date
on which the parties hereto agree to terminate this Agreement, provided that at
such time of termination no Termination Event (or circumstance or event which
with notice and/or the passage of time would become a Termination Event) has
then occurred). Any repurchase pursuant to this Section 7.04 shall be
accomplished on the same terms as set forth in the third and fourth sentences of
Section 2.02(d) and at the aggregate Repurchase Amount for such Loans.
[End of Article VII]
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ARTICLE VIII
SERVICER DEFAULT
SECTION 8.01 Servicer Defaults. Any of the following acts or
occurrences shall constitute "Servicer Defaults" under this Agreement.
(a) Payment Default. Any failure by the Servicer to make any required
payment, transfer, withdrawal or deposit or to give instructions or notice to
the Buyer or by Seller to make any required payment, transfer, withdrawal or
deposit on or before the date occurring three (3) Business Days after the date
such payment, transfer, deposit or withdrawal or such notice or instruction is
required to be made or given, as the case may be, under the terms of this
Agreement;
(b) Performance Default. Failure on the part of the Servicer or
Seller duly to observe or perform in any material respect any of the other
covenants or agreements, including the providing of accurate and timely reports
as required in Article V hereof and elsewhere in this Agreement and the
establishment of a Separate Account when required by the terms hereof, to be
performed under this Agreement which failure continues unremedied for a period
of 30 days after the date on which written notice of such failure requiring the
same to be remedied, shall have been given to the Servicer by the Buyer.
(c) Involuntary Bankruptcy, Etc. The entry of a decree or order for
relief by a court having jurisdiction in respect of the Servicer or any
Subsidiary thereof in an involuntary case under the federal bankruptcy laws, as
now or hereafter in effect, or any other present or future federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Servicer or any Subsidiary thereof or of any substantial part of the property of
the Servicer or any Subsidiary thereof, or ordering the winding up or
liquidation of the affairs of the Servicer or any Subsidiary thereof and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; or
(d) Voluntary Bankruptcy, Etc. The commencement by the Servicer or
any Subsidiary thereof of a voluntary case under the federal bankruptcy laws, as
now or hereafter in effect, or any other present or future federal or state
bankruptcy, insolvency or similar law, or the consent by the Servicer or any
Subsidiary thereof, as the case may be, to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Servicer or any Subsidiary thereof or of any
substantial part of the property of the Servicer or any Subsidiary thereof or
the making by the Servicer or any Subsidiary thereof of an assignment for the
benefit of creditors or the failure by the Servicer or any Subsidiary thereof,
as the case may be, generally to pay its debts as such debts become due or the
taking of corporate action by the Servicer or any Subsidiary thereof, as the
case may be, in furtherance of any of the foregoing; or
(e) Insolvency, Etc. Servicer or any Subsidiary thereof shall (i)
make a general assignment for the benefit of its creditors or (ii) consent to
the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, or custodian of all or a
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substantial part of the property of Servicer or any Subsidiary thereof, or (iii)
admit its insolvency or liability to pay its debts generally as they become due,
or (iv) fail generally to pay its debts as they become due, or (v) take any
action (or suffer any action to be taken by its directors or shareholders)
looking to the dissolution or liquidation of Servicer or any Subsidiary thereof;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, the Buyer may, by notice given to the Servicer,
terminate all of the rights and powers of the Servicer under this Agreement,
including without limitation all rights of the Servicer to receive the Servicing
Fee. In addition, upon the occurrence of a Servicer Default specified in (c),
(d) or (e) of this Section 8.01, subject to the provisions of Section 10.13,
this Agreement shall automatically and immediately terminate. Upon the giving of
such notice, all rights and powers of the Servicer under this Agreement shall
vest in the Buyer, and the Buyer is hereby authorized and empowered to execute
and deliver on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments (including any notices to Obligors deemed
necessary or advisable by the Buyer), and to do or accomplish all other acts or
things necessary or appropriate to effect such vesting, and the Servicer agrees
to cooperate with the Buyer in effecting the termination of the Servicer's
rights and responsibilities hereunder and shall promptly provide to the
successor servicer appointed under Section 8.02 (the "Successor Servicer") all
documents and records (electronic and otherwise) reasonably requested to enable
it to assume the servicing functions hereunder.
SECTION 8.02 Buyer to Act; Appointment of Successor.
(a) From and after the time the Servicer receives a notice of
termination pursuant to Section 8.01 or in the event of a resignation of the
Servicer pursuant to Section 5.13, the Buyer shall be the successor in all
respects to the Servicer in its capacity as Servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof, provided, however, that
notwithstanding the foregoing the Buyer shall have no obligation whatsoever in
respect of any liability incurred by the Servicer at or prior to the time of
receipt by the Servicer of said notice. As compensation therefor the Buyer shall
be entitled to receive any and all funds, including the Servicing Fee, which the
Servicer would have been entitled to receive if the Servicer had continued to
act hereunder. However, if the Buyer is unable or unwilling to act as successor
to the Servicer hereunder, the Buyer may appoint any Person with a net worth of
at least $10,000,000 and whose regular business includes the servicing of loans
similar to the Loans as Successor Servicer. In connection with such appointment
and assumption, the Buyer may make such arrangements for the compensation of
such Successor Servicer from payments on the Loans and related Property as the
Buyer and such Successor Servicer shall agree; provided, that no such
compensation shall be in excess of that permitted the Servicer hereunder or such
amount as is commercially reasonable at the time in question. The Buyer and such
Successor Servicer shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
(b) Either the Buyer, as successor to the Servicer in its capacity as
Servicer hereunder, or any Successor Servicer may establish a Separate Account
to serve as the
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Servicing Account, and neither the Buyer nor any such Successor Servicer shall
have any liability to any Person other than the Buyer with any ownership or
security interest in or to any amounts or funds on deposit in a Servicing
Account which is not a Separate Account that are not and are not deemed to be
Property or payments received or amount otherwise held in respect of a Loan or
any Property.
SECTION 8.03 Effects of Servicing Transfer.
(a) Upon any termination of the rights and powers of the Servicer
pursuant to either Section 5.13 or Section 8.01 and the Buyer's succeeding to
the rights and obligations of the Servicer hereunder, the Buyer may unilaterally
terminate this Agreement.
(b) Upon any termination of the rights and powers of the Servicer
pursuant to either Section 5.13 or Section 8.01 and the vesting in either the
Buyer or a Successor Servicer of the rights and obligations of the Servicer as
described in Section 8.01 and 8.02, the Servicer shall have no additional
obligations or liabilities for acts or omissions of the Successor Servicer or
otherwise relating to its performance of its obligations under this Agreement
after the date of such termination.
(c) Upon the occurrence and continuation of a Servicer Default, the
Servicer shall remit the Servicing Fee to the Buyer. Further, upon the
occurrence and continuation of any Servicer Default (other than a Servicer
Default under Section 8.01(b)) or Guarantor Default, the Servicer shall remit
the Guaranty Fee to the Buyer.
[End of Article VIII]
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ARTICLE IX
TERMINATION EVENTS
SECTION 9.01 Termination Events. The occurrence of any of the
following events shall constitute a "Termination Event" hereunder.
(a) Breach of Covenant. Seller shall fail to perform or observe any
covenant, obligation or term of Articles VI or X or of Section 2.02(d) or 4.04
of this Agreement and, except in the case of a breach of Section 6.01(c) or of
Section 6.01(f)(iii), (iv) or (v), such failure shall remain unremedied for 30
days after written notice thereof shall have been given to Seller by the Buyer;
or
(b) Guarantor Defaults. A Guarantor Default shall have occurred and
be continuing; or
(c) Involuntary Bankruptcy, Etc. The entry of a decree or order for
relief by a court having jurisdiction in respect of the Seller, Unified or any
Subsidiary thereof in an involuntary case under the federal bankruptcy laws, as
now or hereafter in effect, or any other present or future federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Seller, Unified or any Subsidiary thereof or of any substantial part of the
property of the Seller, Unified or any Subsidiary thereof, or ordering the
winding up or liquidation of the affairs of the Seller, Unified or any
Subsidiary thereof and the continuance of any such decree or order unstayed and
in effect for a period of 60 consecutive days; or
(d) Voluntary Bankruptcy, Etc. The commencement by the Seller,
Unified or any Subsidiary thereof of a voluntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future
federal or state bankruptcy, insolvency or similar law, or the consent by the
Seller, Unified or any Subsidiary thereof, as the case may be, to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Seller,
Unified or any Subsidiary thereof or of any substantial part of the property of
the Seller, Unified or any Subsidiary thereof or the making by the Seller,
Unified or any Subsidiary thereof of an assignment for the benefit of creditors
or the failure by the Seller, Unified or any Subsidiary thereof, as the case may
be, generally to pay its debts as such debts become due or the taking of
corporate action by the Seller, Unified or any Subsidiary thereof, as the case
may be, in furtherance of any of the foregoing; or
(e) Insolvency, Etc. Seller, Unified or any Subsidiary thereof shall
(i) make a general assignment for the benefit of its creditors or (ii) consent
to the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, or custodian of all or a substantial part of the property of Seller,
Unified or any Subsidiary thereof, or (iii) admit its insolvency or liability to
pay its debts generally as they become due, or (iv) fail generally to pay its
debts as they become due, or (v) take any action (or suffer any action to be
taken by its directors or shareholders) looking to the dissolution or
liquidation of Seller, Unified or any Subsidiary thereof; or
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(f) ERISA. GCC or any member of the Controlled Group shall fail to
pay when due an amount amounts aggregating in excess of Five Hundred Thousand
Dollars ($500,000) which it shall have become liable to pay to the PBGC or to a
Plan under Section 515 of ERISA or Title IV of ERISA; or notice of intent to
terminate a Plan or Plans (other than a Multiemployer Plan), having aggregate
Unfunded Vested Liabilities in excess of Five Hundred Thousand Dollars
($500,000) shall be filed under Title IV of ERISA by GCC, any member of the
Controlled Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate any
such Plan or Plans.
(g) Servicer Default. A Servicer Default shall have occurred and be
continuing and Buyer, in its sole discretion, shall deem it to be a Termination
Event.
(h) Breach of Representation or Warranty. Buyer shall have knowledge
of any representation or warranty (including any Existing Loan Representation)
which shall have been incorrect when made and shall not have been cured as
provided in Section 4.04(a) and Buyer shall determine, in its sole discretion,
that its interests hereunder cannot be protected by requiring the Seller,
pursuant to Section 4.04(b), to repurchase the Loan or Loans as to which such
breach exists.
(i) Operating and Investment Agreement. The Operating Agreement or
the Investment Agreement shall cease to be in full force and effect.
(j) Bank Act Eligibility. Seller ceases to be an "eligible borrower"
pursuant to the provisions of the Bank Act.
SECTION 9.02 Consequences of Termination Event. Upon the occurrence
of any Termination Event specified in (c), (d), or (e) of Section 9.01 or a
Termination Event arising out of GCC's insolvency or involvement in a voluntary
or involuntary bankruptcy proceeding, subject to the provisions of Section
10.13, this Agreement shall automatically and immediately terminate. If any
Termination Event shall occur and be continuing, then in any such case and at
any time thereafter so long as any such Termination Event shall be continuing,
the Buyer may, at its option, immediately terminate the Buyer's commitment to
make any Incremental Purchases hereunder. Thereafter, and before exercising any
other remedies provided herein or by applicable law, Buyer may, at its option,
require Seller to, and Seller shall, repurchase all Loans and related Property
for the Repurchase Amount within ten (10) Business Days after receipt of notice
from the Buyer of its election to cause such repurchase of all Loans. In
addition, Buyer may pursue all other rights and remedies available herein and by
applicable law including, without limitation, its rights to pursue collection
from the Seller in an amount equal to the Repurchase Amount.
SECTION 9.03 Remedies of a Secured Party. Following the occurrence of
a Termination Event, and in addition to its rights under Section 9.02, the Buyer
shall have all remedies provided by law and without limiting the generality of
the foregoing shall have the following remedies: (a) the remedies of a secured
party under the Uniform Commercial Code; (b) the right to make notification and
pursue collection or, at Buyer's option, to sell or cause Servicer, as agent for
the Buyer, to sell all or any part of the Loans and related Property;
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(c) the right to exercise all of owner's or secured party's rights under the
Loans and related Property; and (d) to the extent that notice shall be required
by law to be given, Seller agrees that a period of twenty (20) days from the
time the notice is sent shall be a reasonable period of notification of a sale
or other, disposition of the Loans and related Property.
[End of Article IX]
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ARTICLE X
MISCELLANEOUS
SECTION 10.01 Further Assurances. Each party hereto agrees to execute
and deliver to the other party and to perform all such other acts as the other
party may reasonably request to carry out the transactions contemplated by this
Agreement. Without limiting the foregoing, Buyer agrees to endorse without
recourse the Note related to any Loan being resold to Seller pursuant to
Articles II, IV, VII or IX, and to execute assignments and related Uniform
Commercial Code financing statements to evidence the assignment of the Related
Documents to Seller.
SECTION 10.02 Indemnities. (a) Seller and Servicer will defend and
hereby indemnify Buyer and its successors, assigns, servants and agents
(hereinafter "Indemnitees") against and agree to protect, save and keep harmless
and make whole each thereof, from any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs (including any net increase in
the tax liability of an Indemnitee resulting from its receipt of indemnity
payments made under this Section 10.02), expenses and disbursements, including
reasonable attorneys' fees, of whatsoever kind and nature imposed on, incurred
by or asserted against any Indemnitee in any way relating to or arising out of
(i) any breach or alleged breach of any covenant, agreement or other obligation
by the Seller or Servicer under this Agreement or the Guarantor under the
Guaranty Agreement, (ii) any representation or warranty made by the Seller or
Servicer under this Agreement or the Guarantor under the Guaranty Agreement
which was untrue or alleged by a Person other than Buyer to be untrue when made
or delivered, (iii) any environmental claim or liability relating to any real
property securing any Loans, or (iv) Buyer's control of the Servicing Account or
establishment of a Separate Account or transfer of any amount to a Separate
Account; provided that no Indemnitee shall be entitled to indemnification for
any claim or liability arising as a result of such Indemnitee's gross negligence
or willful misfeasance in acting or failing to act under this Agreement. Any
indemnity payments required under this Section 10.02 shall be paid within thirty
(30) days following notice thereof from the Indemnitee to Seller or Servicer, as
the case may be (which notice shall describe in reasonable detail the matter
with respect to which indemnification is required and shall set forth the
computation used in determining the amount of the indemnity payment). All of the
rights and privileges of each Indemnitee under this Section 10.02, and the
rights, privileges and obligations of Seller and Servicer hereunder, shall
survive the expiration or other termination of this Agreement.
(a) The foregoing indemnities with regard to any particular
Indemnitee shall not extend to any liability, obligation, loss, damage, penalty,
claim, suit, expense or disbursement that results from the willful misconduct or
gross negligence of such Indemnitee.
SECTION 10.03 No Waiver: Remedies Cumulative. No failure by the
Seller, Servicer or Buyer to exercise, and no delay in exercising, any right,
power or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or remedy under this
Agreement preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy. The rights and remedies provided herein are
cumulative and not exclusive of any right or remedy provided by law.
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SECTION 10.04 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
SECTION 10.05 Consent to Jurisdiction; Waiver of Immunities. The
Buyer, Servicer and Seller hereby irrevocably submit to the jurisdiction of any
state or federal court sitting in the District of Columbia or the State of
California in any action or proceeding brought to enforce or otherwise arising
out of or relating to this Agreement and irrevocably waive to the fullest extent
permitted by law any objection which they may now or hereafter have to the
laying of venue in any such action or proceeding in such forum, and hereby
further irrevocably waive any claim that any such forum is an inconvenient
forum. The parties agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in any other jurisdiction by suit on the
judgment or in any other manner provided by law.
SECTION 10.06 Notices. All notices and other communications provided
for in this Agreement shall be in writing or (unless otherwise specified) by
telex, telegram, cable or facsimile and shall be sent for next Business Day
delivery to each party at the address set forth under its name on the signature
page hereof, or at such other address as shall be designated by such party in a
written notice to each other party. Except as otherwise specified, all such
notices and communications if duly given or made shall be effective upon
receipt.
SECTION 10.07 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective Successors and assigns.
Notwithstanding the foregoing, neither the Seller nor the Servicer may assign or
otherwise transfer all or any part of its rights or obligations hereunder
without the prior written consent of the Buyer, and any such assignment or
transfer purported to be made without such consent shall be ineffective. Buyer
may at any time sell, assign or transfer the Loans and related Property or
participations therein without the consent of the Seller, the Servicer or the
Guarantor.
SECTION 10.08 Capital Markets Funding. Seller and Servicer hereby
agree to cooperate with Buyer in making such reasonable modifications to this
Agreement and the Related Documents, in executing such other documents and
certificates, in causing to be prepared and delivered such opinions,
certificates, financial reports and letters, and in taking such other actions,
including permitting the Rating Agencies, credit enhancers and institutional
investors to review records and other information relating to the Loans and to
visit, on reasonable notice, the premises of the Seller and the Servicer, as are
reasonably necessary to achieve capital markets funding of the Loans and the
related Property or to improve the execution of such funding; provided, however,
that (a) any expenses of Seller in connection with such modifications shall be
for the account of Buyer and be reimbursed promptly following request therefor,
(b) no such modification shall be materially adverse to the interests of Seller
and (c) no such modification shall require any change in the accounting
treatment of the transaction contemplated by this Agreement under GAAP. In
addition, Seller and Servicer agree to use their best efforts to cause Obligors
to agree to and execute any changes to the Related Documents.
SECTION 10.09 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be
ineffective to
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the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent permitted by applicable law,
the parties waive any provision of law which renders any provision hereof
prohibited or unenforceable in any respect.
SECTION 10.10 Attorney's Fees. In the event it is necessary for any
party hereto or its Successors or assigns to institute suit in connection with
this Agreement or the breach thereof, the prevailing party in such suit shall be
entitled to reimbursement for its reasonable costs, expenses and attorney's fees
incurred including fees incurred on any appeal.
SECTION 10.11 Setoff. In addition to any rights now or hereafter
granted under applicable law, upon the occurrence of any Termination Event or
Servicer Default, Buyer is hereby authorized by Seller and Servicer at any time,
without notice to Seller or Servicer, to set off and to appropriate and to apply
to the amounts then owed by Seller or Servicer hereunder, or by Guarantor under
the Guaranty Agreement, as the case may be, to Buyer, any and all deposits
(general or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other indebtedness at any time held or owing by Buyer to
Seller or Servicer.
SECTION 10.12 Limitation on Third Party Beneficiaries. No provision,
warranty, representation, or agreement herein, whether express or implied, is
intended to or shall be construed as conferring upon any Person not a party
hereto (including, without limitation, any Obligor) any rights or remedies
whatsoever.
SECTION 10.13 Term of Agreement. This Agreement shall terminate upon
the earlier to occur of (i) the reduction of the aggregate Principal Balance of
the Loans (including Liquidated Loans as to which there remain unpaid
Liquidation Losses) to zero and (ii) the date on which this Agreement is
automatically terminated following the occurrence of any of the Termination
Events specified in Section 9.02; provided, however, that (a) the rights accrued
to the Buyer prior to such termination, (b) the obligations of the Guarantor
under the Guaranty Agreement and (c) the indemnification provisions set forth in
Section 10.02, shall be continuing and shall survive any termination of this
Agreement.
SECTION 10.14 Entire Agreement; Amendment. This Agreement comprises
the entire agreement of the parties and may not be amended or modified except by
written agreement of the parties hereto. No provision of this Agreement may be
waived except in writing and then only in the specific instance and for the
specific purpose for which given.
SECTION 10.15 Headings. The headings of the various provisions of
this Agreement are for convenience of reference only, do not constitute a part
hereof, and shall not affect the meaning or construction of any provision
hereof.
SECTION 10.16 Counterparts. This Agreement may be executed in any
number of identical counterparts, any set of which signed by all parties hereto
shall be deemed to constitute a complete, executed original for all purposes.
[End of Article X]
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Loan Purchase and Servicing Agreement to be executed by their
respective officers or agents thereunto duly authorized as of the date first
above written.
GROCERS CAPITAL COMPANY,
as Seller and Servicer
By: _____________________________________
Its: ________________________________
Notice Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
NATIONAL CONSUMER COOPERATIVE BANK,
as Buyer
By: _____________________________________
Its: ________________________________
Notice Address:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
ACKNOWLEDGEMENTS:
GROCERS CAPITAL COMPANY,
as Guarantor
By: ____________________
Its: _______________