EXECUTION COPY
LOAN PURCHASE AND SERVICING AGREEMENT
dated as of
August 29, 1996
between
GROCERS CAPITAL COMPANY
as Seller and Servicer
and
NATIONAL CONSUMER COOPERATIVE BANK
as Buyer
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02 General Principles Applicable to Definitions. . . . . 15
SECTION 1.03 Accounting Terms. . . . . . . . . . . . . . . . . . . 15
ARTICLE II
THE COMMITMENT
SECTION 2.01 Portfolio Sales; Origination of Loans . . . . . . . . 16
SECTION 2.02 Agreement to Purchase and Sell Loans. . . . . . . . . 16
SECTION 2.03 Incremental Purchase. . . . . . . . . . . . . . . . . 19
SECTION 2.04 Commitment Termination Date . . . . . . . . . . . . . 19
ARTICLE III
CLOSING PROCEDURE; CONDITIONS TO PURCHASE
SECTION 3.01 Payment . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.02 Effective Date. . . . . . . . . . . . . . . . . . . . 21
SECTION 3.03 Buyer's Conditions Precedent to Acceptance. . . . . . 21
SECTION 3.04 Delivery Requirements for Initial Purchase Date . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Seller's Corporate Representations and Warranties . . 26
SECTION 4.02 Seller's Incremental Purchase Date Representations
and Warranties with respect to Loans. . . . . . . . . 28
SECTION 4.03 Buyer's Representations and Warranties. . . . . . . . 33
SECTION 4.04 Repurchase Upon Breach of Certain Representations and
Warranties. . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.05 Survival of Representations . . . . . . . . . . . . . 35
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ARTICLE V
SERVICING AND COLLECTION
SECTION 5.01 Servicing; Delegation of Authority
to Buyer and Servicer . . . . . . . . . . . . . . . . 36
SECTION 5.02 Maintenance of System; Collection and Maintenance
of Information. . . . . . . . . . . . . . . . . . . . 37
SECTION 5.03 Maintenance of Lien Priority. . . . . . . . . . . . . 37
SECTION 5.04 Obligor Inquiries; Credit and Collection Policies . . 37
SECTION 5.05 Obligor Defaults. . . . . . . . . . . . . . . . . . . 38
SECTION 5.06 Servicer Reports; Annual Audit. . . . . . . . . . . . 39
SECTION 5.07 Loan and Other Payments . . . . . . . . . . . . . . . 40
SECTION 5.08 Computation and Payment of Periodic Payments,
Servicing Fees and Guaranty Fees; Servicer's
Expenses. . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.09 Applicable Rate . . . . . . . . . . . . . . . . . . . 43
SECTION 5.10 Concerning Insurance on Collateral . . . . . . . . . 44
SECTION 5.11 Access to Certain Documentation and Certain
Information Regarding the Loans . . . . . . . . . . . 45
SECTION 5.12 Servicer Representations and Warranties. . . . . . . 45
SECTION 5.13 Servicer's Resignation . . . . . . . . . . . . . . . 46
ARTICLE VI
SELLER'S AND SERVICER'S COVENANTS
SECTION 6.01 Covenants . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VII
SELLER OBLIGATIONS AND REPURCHASE OPTIONS
SECTION 7.01 Repurchase of Loans. . . . . . . . . . . . . . . . . 53
SECTION 7.02 Minimal Balances. . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
SERVICER DEFAULT
SECTION 8.01 Servicer Defaults. . . . . . . . . . . . . . . . . . 55
SECTION 8.02 Buyer to Act; Appointment of Successor . . . . . . . 57
SECTION 8.03 Effects of Servicing Transfer . . . . . . . . . . . 57
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ARTICLE IX
TERMINATION EVENTS
SECTION 9.01 Termination Events . . . . . . . . . . . . . . . . . 59
SECTION 9.02 Consequences of Termination Event. . . . . . . . . . 60
SECTION 9.03 Remedies of a Secured Party. . . . . . . . . . . . . 61
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Further Assurances . . . . . . . . . . . . . . . . . 62
SECTION 10.02 Indemnities. . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.03 No Waiver: Remedies Cumulative. . . . . . . . . . . 63
SECTION 10.04 Governing Law. . . . . . . . . . . . . . . . . . . . 63
SECTION 10.05 Consent to Jurisdiction; Waiver of Immunities. . . . 63
SECTION 10.06 Notices. . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.07 Assignment . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.08 Capital Markets Funding. . . . . . . . . . . . . . . 63
SECTION 10.09 Severability . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.10 Attorney's Fees. . . . . . . . . . . . . . . . . . . 64
SECTION 10.11 Setoff . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 10.12 Limitation on Third Party Beneficiaries. . . . . . . 64
SECTION 10.13 Term of Agreement. . . . . . . . . . . . . . . . . . 65
SECTION 10.14 Entire Agreement; Amendment. . . . . . . . . . . . . 65
SECTION 10.15 Headings . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.16 Counterparts . . . . . . . . . . . . . . . . . . . . 65
Exhibit A - Loan Schedule (Initial Loans)
Exhibit B - Credit and Collection Policy
Exhibit C - Form of Notice of Incremental Purchase
Exhibit D - Forms of Note and Related Documents
Exhibit E - Form of Officer's Certificate of Seller (Incremental Purchase)
Exhibit F - Form of Officer's Certificate of Guarantor (Incremental Purchase)
Exhibit G - Form of Officer's Certificate of Servicer (Incremental Purchase)
Exhibit H - Form of Monthly Report
LOAN PURCHASE AND SERVICING AGREEMENT
This LOAN PURCHASE AND SERVICING AGREEMENT (this "Agreement") is
executed as of August 29, 1996, by and between GROCERS CAPITAL COMPANY, a
California corporation, 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").
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 Certified Patron serves and acts
as a director of Certified or Seller shall not cause such Certified Patron to be
an Affiliate of Certified or Seller.
"AGENT" means NCB, in its capacity as Agent under the Portfolio Credit
Facility.
"APPLICABLE RATE" shall mean, for each Loan, the rate determined
pursuant to Section 5.09.
"AVAILABLE FUNDS" shall mean Collections, Guaranty Payments and
Repurchase Proceeds.
"BANK ACT" shall mean the National Consumer Cooperative Bank Act, 12
U.S.C. Sections 3001-3051, and any regulations and policies adopted thereunder.
"BUSINESS DAY" shall mean any day other than Saturday, Sunday and a
day on which banks in Washington, D.C. are authorized to close.
"BUYER" shall mean NCB, as buyer hereunder.
"CAPITAL MAINTENANCE AGREEMENT" shall mean the Second Amended and
Restated Operating Agreement dated April 22, 1994, by and among GCC, Certified
and Grocers Equipment Company.
"CASH FLOW RATIO" shall mean, with respect to an Obligor, at any date
and for the period reflected in the related Obligor Financial Statements, the
consolidated ratio (expressed as a number taken to 2 decimal places) of
(a) EBITDA to (b) Cash Interest Expense plus CPLTD; provided that if such
Obligor has taken on new debt which is not reflected on the Obligor Financial
Statements, or if a new loan has been approved but not yet funded, the
denominator of the ratio will be adjusted to account for the CPLTD of the new
debt or loan and related interest expense.
"CASH INTEREST EXPENSE" shall mean, for any period, gross interest
expense for such period determined in accordance with U.S. GAAP.
"CERTIFIED" shall mean Certified Grocers of California, Ltd., a
California corporation, and the direct and indirect owner of 100% of the
outstanding capital stock of Seller.
"CERTIFIED PATRON" shall mean a member-patron of Certified.
"CODE" means 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" shall mean, with respect to any Loan, as
of any date, the ratio (expressed as a number taken to 2 decimal places) of
(a) the value of all Primary Collateral which secures such Loan, to (b) the
aggregate Principal Balance of such Loan; PROVIDED that if such Loan (1) either
(A) is being purchased simultaneously with any other Obligor Group Loan or Loans
or (B) is the second or later Loan to be purchased with respect to the related
Obligor Group, and (2) shares Cross Collateral with such simultaneously- or
previously-purchased Obligor Group Loans, the Collateral Coverage Ratio with
respect to such Loan shall mean the consolidated ratio (expressed as a number
taken to 2 decimal places) of (a) the value of all Primary Collateral (which
includes Cross Collateral) (which secures such Loan) to (b) the aggregate
Principal Balance of such Loan and the other Obligor Group Loans which share
such Cross Collateral. The value of different types of Collateral shall be
determined as follows: (i) furniture, fixtures and equipment of a retail
grocery store shall be valued at 3.5 times the respective store's average weekly
sales net of any prior liens, but in no event less than the net book value of
such furniture, fixtures and equipment or more than the gross book value of such
furniture, fixtures or equipment, in each case as evidenced on the related
Obligor Financial Statements; (ii) inventory shall be valued at net book value
as reflected on the related Obligor Financial Statements or a more recent
physical inventory valuation by Seller; (iii) accounts receivable aged less than
30 days shall be valued at 100% of such accounts; (iv) accounts receivable aged
30 days or more, but less than 60 days shall be valued at 50% of such accounts;
(v) accounts receivable aged 60 days or more, but less than 90 days shall be
valued at 25% of such accounts; and (vi) accounts receivable aged 90 days or
more shall be valued at 0% of such accounts.
"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" means, 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" means, 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 Certified, including
Certified'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 AND COLLECTION POLICY" means, 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 Initial Purchase Date
and as set forth in Exhibit B hereto, as the same may be modified from time to
time with the consent of the Buyer, which consent will not be unreasonably
withheld.
"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 means 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 receivables 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" means, 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.
"ELIGIBLE LOAN" shall mean (i) an Initial Loan which satisfies the
Initial Loan Eligibility Criteria on the Initial Purchase Date, or (ii) a Loan
(other than an Initial Loan) as to which each applicable representation and
warranty in Section 4.02 is true and accurate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"GCC" shall mean Grocers Capital Company, a California corporation,
and its Successors and assigns.
"GOVERNMENT APPROVAL" means an approval, permit, license,
authorization, certificate or consent of any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means 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.
"GUARANTY" shall have the meaning given in the Guaranty Agreement.
"GUARANTY AGREEMENT" means the Guaranty Agreement, dated as of August
29, 1996, 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.
"INITIAL PURCHASE DATE" shall mean the date on which the Buyer
purchases the Initial Loans.
"INITIAL LOAN" shall mean any Loan identified to and approved by the
Buyer as part of the group of Loans having an aggregate Principal Balance not to
exceed $35,000,000 sold hereunder on the Initial Purchase Date, as to which Loan
the Purchaser hereby represents and warrants that each of the Initial Loan
Eligibility Criteria is true and accurate on the Initial
Purchase Date. The Initial Loans shall be shown on the Loan Schedule delivered
to the Buyer on the Initial Purchase Date.
"INITIAL LOAN ELIGIBILITY CRITERIA" shall mean the representations and
warranties set forth in Section 4.02 with the following modifications to each of
the following specified clauses of Section 4.02: (1) at the end of clause (e),
the following proviso shall be deemed added: "PROVIDED, HOWEVER, that in the
case of the Initial Loans, any lien on any Initial Loan has been released by not
later than 12:01 a.m. (Eastern Daylight Time) on September 17, 1996"; (2) in
clause (j), it is not required that Seller shall have obtained a personal credit
report of the Obligor for each Initial Loan; (3) in clause (k), the word
"original" therein shall read "remaining"; (4) clause (n) shall not apply; (5)
the portion of clause (p) that requires that Obligor have a positive net worth
shall not apply; (6) in clause (r), the insurance company is not required to
have a Best & Co. rating of at least "B-", but only to be a company acceptable
to Seller; (7) clause (t) shall not apply; (8) clause (u) shall not apply;
(9) with respect to clause (v), Buyer acknowledges that Seller's interest in
every item of Collateral is not necessarily first priority; (10) in clause (w),
the Notes must be originals, but the other Related Documents need only be true,
correct and complete counterparts and the forms of the foregoing must be
acceptable to NCB; and (11) clause (aa) shall not apply.
"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, except
that, with respect to the first Payment Date, the initial Interest Accrual
Period shall commence on the Initial Purchase Date.
"LIBOR" shall mean, for any LIBOR Period and Interest Accrual Period
during such LIBOR Period, the reserve-adjusted London interbank offered rates by
major banks for three-month Euro-Dollar deposits determined by the Buyer in
accordance with the provisions of Section 5.09.
"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 Initial Purchase Date and ending on September 30, 1996 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 30, June 30 or September 30, as the case may be).
"LIQUIDATED LOAN" shall mean (i) with respect to Loans purchased by
Buyer hereunder on or after January 1, 1997, any Defaulted Loan, or (ii) with
respect to Loans purchased by Buyer hereunder prior to January 1, 1997, any Loan
with respect to which an Obligor Event shall have occurred, in each case 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 three months after becoming a Defaulted Loan, or
after such Obligor Event shall have occurred, as the case may be, shall be
deemed a Liquidated Loan on the third month anniversary date of such Loan
becoming a Defaulted Loan or of the occurrence of such Obligor Event, as the
case may be. 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 Rates,
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, 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).
"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 applicable Incremental Purchase Date, is shown on the
applicable Loan Schedule.
"LOAN SCHEDULE" shall mean, with respect to the Initial loans, the
schedule attached hereto as Exhibit A, and, with respect to each of the Loans
that is not an Initial 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 Initial Loan, (xii) the remaining term to maturity as of the applicable
Incremental Purchase Date, (xiii) 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, and (xvi) whether such Loan is secured by real estate
Collateral.
"LOCKBOX ACCOUNT" shall mean the account, if any, established pursuant
to Section 5.07, for the receipt of payments related to the Loans.
"MAI" shall mean Member of the American Institute of Real Estate
Appraisers.
"MARGIN" shall mean for each Loan, 150 basis points.
"MAXIMUM PURCHASE AMOUNT" shall mean $50,000,000.
"MINIMUM DOCUMENTATION" means, 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 H 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" means 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" means 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 in substantially the form
included in Exhibit D 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.
"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 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 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.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"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 October 7, 1996.
"PERIODIC PAYMENT" shall have the meaning given in Section 5.08.
"PERSON" means 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 Incremental Purchase
Date on which such Loan 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 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 D 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 Certified) 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.
"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" means 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" means, 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 of this Agreement.
"SUPPLY AGREEMENT" shall mean, either individually or collectively,
all agreements between an Obligor and Certified, with respect to the supply of
goods and services by Certified to such Obligor.
"TERMINATION AND RELEASE AGREEMENT" means that certain Agreement,
dated as of August 28, 1996, between GCC and BT Commercial Corporation, a
Delaware corporation.
"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.
"TRANSFER LETTER" shall mean the transfer letter 27
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.
"U.S. GAAP" has the meaning specified in Section 1.03.
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 ("U.S. GAAP") consistently applied.
[End of Article I]
ARTICLE II
THE COMMITMENT
SECTION 2.01 PORTFOLIO SALES; ORIGINATION OF LOANS. On the Initial
Purchase Date, the Seller hereby irrevocably sells, transfers, conveys, sets
over and assigns to Buyer, and Buyer hereby purchases, accepts and receives from
Seller, all of the Seller's right, title and interest in, to and under the
Initial Loans and all Property related thereto. 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.
(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 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 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 (except with respect to the Initial Loans, as to which
such cure shall be effected on or before September 9, 1996). 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 (but only with respect to Loans purchased by Buyer
hereunder on or after January 1, 1997) 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.
(f) 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, elect to
offer to sell to the Buyer and Buyer shall 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.
(g) The Seller shall provide the Buyer with written notice of its
intention to request an Incremental Purchase in the form of Exhibit C 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
August 29, 2001, and the Commitment Termination Date may be extended by mutual
agreement of the Parties for an additional one year on each anniversary date of
the Initial Purchase Date. The Seller and the Buyer may agree at any time to
set an earlier Commitment Termination Date.
[End of Article II]
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 the Initial Purchase Date and 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 the Initial Purchase Date or on such
Incremental Purchase Date, as the case may be (each such sum, collectively, the
"Purchase Price").
SECTION 3.02 EFFECTIVE DATE. Each sale made pursuant to Sections
2.01 and 2.03 shall be effective, and all right, title and interest in the 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):
(h) 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;
(i) 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 Document shall be in a
form reasonably satisfactory to Buyer;
(j) 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 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;
(k) 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;
(l) 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;
(m) 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;
(n) 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;
(o) 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;
(p) 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;
(q) Buyer shall have received the Loan Schedule relating to the
Loans purchased on the applicable Incremental Purchase Date required by this
Agreement;
(r) Buyer shall have received personal credit reports relating to
each Obligor for each Loan purchased on the applicable Incremental Purchase
Date; and
(s) 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.
SECTION 3.04 DELIVERY REQUIREMENTS FOR INITIAL PURCHASE 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 Initial Purchase Date (or on or before the other date specified
below) to the reasonable satisfaction of Buyer:
(t) Buyer shall have received the following agreements, each duly
executed by the parties (other than Buyer) thereto:
(i) the Guaranty Agreement;
(ii) the Termination and Release Agreement; and
(iii) such other agreements and instruments as the
Buyer shall reasonably require.
(u) 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 sold and to be sold hereunder, 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;
(v) 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);
(w) 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;
(x) Buyer shall have received an officers' certificate from GCC in
a form reasonably acceptable to Buyer.
(y) 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.
(z) Evidence of the establishment of the Servicing Account;
(aa) A duly certified copy of the executed Capital Maintenance
Agreement;
(bb) 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");
(cc) Seller shall have satisfied the conditions set forth in
Sections 3.03(a) through (f) and (j); and
(dd) Buyer shall have received a release on form UCC-3 (or such
other form as required by applicable law), naming Seller as "Borrower/Debtor"
and executed by BT Commercial Corporation ("BT") as "Lender/Secured Party", and
evidence of the taking of all other actions necessary to release the security
interest in and to the Loans, the Property and any Collateral, held by BT, as
Agent, under that certain Credit Agreement, dated as of April 25, 1994, among
GCC, as borrower, the lenders party thereto, BT, as agent and as a lender, and
NCB, as co-agent and as a lender.
[End of Article III]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 SELLER'S CORPORATE REPRESENTATIONS AND WARRANTIES.
Seller represents and warrants to Buyer as of the Initial Purchase Date, as of
each Incremental Purchase Date and as of the date of execution of this Agreement
as follows:
(ee) 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.
(ff) The execution, delivery and performance by the Seller of this
Agreement and any assignment, the endorsement 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.
(gg) 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).
(hh) 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).
(ii) 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 adverse effect on the financial
condition or operations of Seller or on Seller's ability to perform its
obligations under this Agreement.
(jj) The consolidated balance sheet of each of Certified and its
Subsidiaries and of the Seller and its Subsidiaries at June 1, 1996, and the
related statements of income and retained earnings of each of Certified 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 Certified and its Subsidiaries and of Seller
and its Subsidiaries as at such date and the results of operations of each of
Certified and its Subsidiaries and of Seller and its Subsidiaries for their
respective fiscal periods then ended, all in accordance with U.S. GAAP
consistently applied. Since that date, there has been no material adverse
change in the financial condition or operations of either of Certified or its
Subsidiaries or of Seller or any of its Subsidiaries.
(kk) 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.
(ll) None of Seller, any of its Subsidiaries nor Certified 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).
(mm) 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.
(nn) 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 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.
(oo) 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.
(pp) 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.
(qq) The Capital Maintenance Agreement is in full force and effect.
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:
(ss) 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;
(tt) 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;
(uu) 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;
(vv) Each Note has a Loan Interest Rate that is (i) a variable rate
based on the Prime Rate adjusted at least annually, 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.
(ww) 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 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;
(xx) 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;
(yy) 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;
(zz) 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;
(aaa) Each 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 with applicable state and federal laws
and regulations, including, without limitation, usury, equal credit opportunity,
disclosure and recording laws;
(ccc) The Obligor with respect to each Loan (i) is not an
Affiliate of the Seller, (ii) is a Certified 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;
(ddd) Each Loan had an original term to maturity of no greater
than seven (7) years;
(eee) 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;
(fff) 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;
(ggg) 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;
(hhh) 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;
(jjj) The Obligor with respect to each 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. 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;
(kkk) 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 of general application
relating to or affecting creditors rights and by general principles of equity);
(lll) 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;
(mmm) 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;
(nnn) Each Loan has a Collateral Coverage Ratio of at least
1.1:1 and the related Obligor has a Cash Flow Ratio of at least 1:1 and a
leverage ratio (total liabilities to Consolidated Tangible Net Worth as shown on
the related Obligor Financial Statements) of not more than 4:1;
(ooo) 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";
(ppp) 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;
(qqq) 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 D; 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 which Obligor or Loan Guarantor is a party
bears the original signature of such Obligor and Loan Guarantor;
(rrr) 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;
(sss) 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;
(ttt) (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
Certified;
(uuu) 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; and
(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, 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.
SECTION 4.03 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer
represents and warrants to Seller as follows:
(vvv) 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.
(www) 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.
(xxx) 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.
(yyy) 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.
(aaaa) 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 representations or warranties in Sections
4.02(a), (b), (c), (l), (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 Initial Loans, as to
which there shall be no cure period).
(bbbb) The Seller shall repurchase an affected Loan or group of
Loans and the related Property (i) if, with respect to Loans purchased by Buyer
hereunder prior to January 1, 1997, any of the representations or warranties in
Sections 4.01 and 4.02 was false or incorrect when made and, in the case of the
Initial Loans, as of September 17, 1996; and (ii) if, with respect to Loans
purchased by Buyer hereunder on or after January 1, 1997, 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).
(cccc) 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 made by the Company and by each Seller, 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]
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.
(eeee) 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).
(ffff) 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; (ii) calculating monthly, in connection with each Payment
Date, the Periodic Payment, the Monthly Interest Amount, the Applicable Rate,
the Servicing Fee and the Guaranty Fee, and (iii) maintaining the Lockbox
Account, if one is established.
(gggg) 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.
(hhhh) 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.
(jjjj) 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 good business practices and in compliance with all
applicable federal, state and local laws and regulations.
(kkkk) With respect to each Loan and related Obligor, Servicer
shall collect the following information: (i) within 120 days of the end of each
fiscal year of such Obligor, annual financial statements, together with a
certificate of an authorized officer of such Obligor, to the effect that the
accompanying financial statements are true and correct in all material respects;
(ii) within 50 days of the end of each fiscal quarter of such Obligor, interim
financial statements, together with a certificate of an authorized officer of
such Obligor, to the effect that the accompanying interim financial statements
are true and correct in all material respects; and (iii) evidence of adequate
insurance with respect to related Collateral. 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.
(mmmm) 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.
(nnnn) 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 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 a Obligor's obligation under any Note
or any Related Document.
SECTION 5.05 OBLIGOR DEFAULTS. Servicer agrees to promptly give any
notice to 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.
(pppp) 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 and (ii) a certification to
the effect that a review of the activities of the Servicer during the monthly
period as that covered by the Monthly Report, 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.
(qqqq) 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.
(rrrr) 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.
(tttt) 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
in the Lockbox Account or otherwise;
(ii) all Principal Prepayments;
(iii) all Insurance Proceeds and all Liquidation Proceeds; and
(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.
(uuuu) 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.
(vvvv) Buyer may require, at any time and in its sole discretion,
that a Lockbox Account be established and that Servicer direct all Obligors to
send Loan payments to such Lockbox Account.
(wwww) 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 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.
(xxxx) On each Determination Date and with respect to the related
Payment Date, Buyer 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.
(yyyy) 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 SIGNET BANK VIRGINIA, in Richmond,
Virginia, ABA# ▇▇▇▇▇▇▇▇▇,
Account Number ▇▇▇▇▇▇▇▇▇▇, Account Name: NCB Mortgage Corp. Clearing.
(zzzz) 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.
(aaaaa) Buyer shall determine the Periodic Payment for each Payment
Date using the following methodology.
(i) 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.
(ii) 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.
For purposes hereof, the Buyer will determine LIBOR by 12:00 noon,
Eastern Standard Time, on each LIBOR Determination Date on the basis of
quotations provided by four Reference Banks as of 11:00 A.M. (London time) on
such LIBOR Determination Date as such quotations appear on the display
designated as page "LIBOR" on the appropriate display on the Bloomberg Financial
Markets System (or such other page as may replace the LIBOR page on that service
for the purpose of displaying London interbank offered rates of major banks).
LIBOR as determined by Buyer is the arithmetic mean of such quotations (rounded,
if necessary, to the nearest whole multiple of 0.0625% per annum). If on any
LIBOR Determination Date at least two but fewer than all of the Reference Banks
provide quotations, LIBOR will be determined in accordance with the provisions
set forth above on the basis of the offered quotations of those Reference Banks
providing such quotations. If on the LIBOR Determination Date only one or none
of the Reference Banks provides such offered quotations, LIBOR will be: (i) the
rate per annum (rounded, as aforesaid) that the Buyer determines to be either
(x) the arithmetic mean of the offered quotations that leading banks in the City
of New York selected by Buyer are quoting at or about 11:00 A.M. London time on
the relevant LIBOR Determination Date for three-month Dollar deposits to the
principal London office of each of the Reference Banks or those of them (being
at least two in number) to which such offered quotations are, in the opinion of
Buyer, being so quoted or (y) in the event that Buyer can determine no such
arithmetic mean, the arithmetic mean of the offered quotations that leading
banks in the City of New York selected by Buyer are quoting at or about 11:00
A.M. London time on such LIBOR Determination Date to leading European banks for
one month Dollar deposits; or (ii) if the banks selected as aforesaid by Buyer
are not quoting as described in clause (i) above, LIBOR for such Interest
Accrual Period will be LIBOR as determined on the previous LIBOR Determination
Date. "Reference Banks" shall mean four major banks in the London interbank
market selected by Buyer. Buyer shall, after the determination of LIBOR on each
LIBOR Determination Date, notify Seller, Servicer and Guarantor of the
applicable LIBOR; PROVIDED, HOWEVER, that any failure of Buyer to give such
notice shall not affect Seller's, Servicer's
or Guarantor's obligations hereunder or under the Guaranty Agreement.
(bbbbb) 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.
(ccccc) 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 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.
(ddddd) 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.
(eeeee) The Servicer shall promptly notify the Buyer of the
occurrence of any event described in subsection 5.10(b) or (c).
(fffff) 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:
(ggggg) 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.
(hhhhh) 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 Certificate 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.
(iiiii) 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.
(jjjjj) 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.
(lllll) 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.
(mmmmm) 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).
(nnnnn) 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]
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:
(ooooo) 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.
(ppppp) 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.
(qqqqq) 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).
(rrrrr) 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 U.S. 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 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.
(sssss) 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,
the consolidated financial statements of GCC and its subsidiaries, including the
balance sheet and income statements of GCC on a consolidated basis, as of the
end of such fiscal year accompanied by the audit report thereon by independent
certified public accountants and a certificate of the chief financial officer of
GCC to the effect that the consolidated financial statements have been prepared
in accordance with U.S. GAAP and present fairly the consolidated principal
condition and the results of operation of GCC as of the end of and for such
fiscal year; (ii) within 120 days after the end of Certified's fiscal year, the
Annual Report on Form 10-K for such year filed by Certified and the Annual
Shareholders Report for Certified; (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 60 days after the end of each fiscal quarter of GCC, the
unaudited balance sheet and statement of income and retained earnings (including
a comparison to such quarter in the prior fiscal year) of GCC as of the end of
such fiscal quarter (including the fiscal year to the end of such fiscal
quarter), accompanied by a certificate of the chief financial officer of GCC,
that such unaudited balance sheet and statement of income and retained earnings
have been prepared in accordance with U.S. GAAP and present fairly the financial
position and the results of operations of GCC as of the end of and for such
fiscal quarter; (v) within 60 days after the end of Certified's fiscal quarter,
the Quarterly Report on Form 10-Q for such quarter filed by Certified;
(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, reports and other information as Buyer may reasonably request
concerning the financial condition and the servicing and collection operations
of GCC.
(ttttt) NOTIFICATION. 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 Certified Patron in good
standing, becoming 30 days or more past due on its open account with Certified,
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); or
(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.
(uuuuu) 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 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.
(vvvvv) LIENS. (i) To remove, no later than 12:01 a.m. (Eastern
Daylight Time) on September 17, 1996, all liens, charges, mortgages,
encumbrances, and rights of others (other than those in favor of NCB, as Buyer
hereunder, in, on and to each of the Initial Loans; and (ii) 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.
(wwwww) 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 (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 could not
result in GCC's Tangible Net Worth (as defined in the Capital Maintenance
Agreement) becoming less than $12,500,000, and (iii) sales of the Loans to the
Buyer) as constitutes a substantial portion thereof; 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.
(xxxxx) 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.
(yyyyy) 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 4.06 or 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.
(zzzzz) 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
9-402(7) 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.
(aaaaaa) 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.
(bbbbbb) 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.
(cccccc) 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).
(dddddd) 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 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.
(eeeeee) BANK ACT ELIGIBILITY. To use its best efforts to remain
"eligible" to borrow from NCB pursuant to the provisions of the Bank Act.
(ffffff) CAPITAL MAINTENANCE AGREEMENT. To use its best efforts to
maintain the Capital Maintenance Agreement in full force and effect.
[End of Article VI]
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) with
respect to a Loan purchased by Buyer hereunder prior to January 1, 1997, an
Obligor Event of the type described in clause (b) of the definition thereof, has
occurred and (except for any such Obligor Event occurring with respect to any of
the Initial Loans) has at the time of Buyer's exercise of such right been
continuing for at least 60 days, or (iii) with respect to a Loan purchased by
Buyer hereunder on or after January 1, 1997, an Obligor Default has occurred and
has at the time of Buyer's exercise of such right been continuing for at least
60 days, or (iv) such Loan was purchased by Buyer hereunder on or after January
1, 1997, and 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 on or after
January 1, 1997, 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 Initial Purchase 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.
[End of Article VII]
ARTICLE VIII
SERVICER DEFAULT
SECTION 8.01 SERVICER DEFAULTS. Any of the following acts or
occurrences shall constitute "Servicer Defaults" under this Agreement.
(gggggg) 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;
(hhhhhh) 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.
(iiiiii) 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
(jjjjjj) 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
(kkkkkk) 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 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; or
(llllll) ERISA. Servicer or any member of the Controlled Group
shall fail to pay when due an amount or 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 the Servicer, 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;
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 the successor to the Servicer
hereunder in the assumption of all or part of the servicing functions hereunder
(such Person, a "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 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.
(nnnnnn) 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.
(oooooo) 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.
(pppppp) 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]
ARTICLE IX
TERMINATION EVENTS
SECTION 9.01 TERMINATION EVENTS. The occurrence of any of the
following events shall constitute a "Termination Event" hereunder.
(qqqqqq) 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) or of Section 6.01(h)(i), such
failure shall remain unremedied for 30 days after written notice thereof shall
have been given to Seller by the Buyer; or
(rrrrrr) GUARANTOR DEFAULTS. A Guarantor Default shall have
occurred and be continuing; or
(ssssss) INVOLUNTARY BANKRUPTCY, ETC. The entry of a decree or
order for relief by a court having jurisdiction in respect of the Seller,
Certified 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, Certified or any Subsidiary thereof or of any
substantial part of the property of the Seller, Certified or any Subsidiary
thereof, or ordering the winding up or liquidation of the affairs of the Seller,
Certified 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
(tttttt) VOLUNTARY BANKRUPTCY, ETC. The commencement by the
Seller, Certified 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, Certified 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,
Certified or any Subsidiary thereof or of any substantial part of the property
of the Seller, Certified or any Subsidiary thereof or the making by the Seller,
Certified or any Subsidiary thereof of an assignment for the benefit of
creditors or the failure by the Seller, Certified 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, Certified or any Subsidiary thereof,
as the case may be, in furtherance of any of the foregoing; or
(uuuuuu) INSOLVENCY, ETC. Seller, Certified 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, Certified 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, Certified or any Subsidiary thereof; or
(vvvvvv) 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.
(wwwwww) 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.
(xxxxxx) BREACH OF REPRESENTATION OR WARRANTY. Buyer shall have
knowledge of any representation or warranty 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.
(yyyyyy) CAPITAL MAINTENANCE. The Capital Maintenance Agreement
shall cease to be in full force and effect.
(zzzzzz) BANK ACT ELIGIBILITY. Seller ceases to be an "eligible
borrower" pursuant to the provisions of the Bank Act.
(k) INITIAL LOAN LIENS. Seller shall fail to remove, discharge or
cause to be removed or discharged, all of the liens, charges, mortgages,
encumbrances and rights of any other Person with respect to any Initial Loan or
related Property, or shall fail to cause the Buyer to have good and indefeasible
title to and sole ownership of each Initial Loan, subject to no liens, charges,
mortgages, encumbrances or rights of others.
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. If any Termination Event under
Section 9.01(k) shall occur, then at any time thereafter the Buyer shall have
the right, exercisable in its sole discretion, immediately to terminate this
Agreement. Thereafter, and before exercising any other remedies provided herein
or by applicable law, Buyer may, with respect to Loans purchased by Buyer
hereunder on or after January 1, 1997, 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; (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]
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.
(bbbbbbb) 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.
(ccccccc) 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.
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 fora, 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 or cable 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 U.S. 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 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]
IN WITNESS WHEREOF, the parties hereto have caused this 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 _____________________
By ___________________________
Its _____________________
Notice Address:
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NATIONAL CONSUMER COOPERATIVE BANK,
as Buyer
By ___________________________
Its _____________________
Notice Address:
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ACKNOWLEDGEMENTS:
GROCERS CAPITAL COMPANY,
as Guarantor
By ___________________________
Its _____________________
By ___________________________
Its _____________________