Exhibit 10.1
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RECEIVABLES PURCHASE AGREEMENT
dated as of December 31, 1997
among
HAMPSHIRE FUNDING, INC.
(as Seller and Servicer)
THE INVESTORS,
PREFERRED RECEIVABLES FUNDING CORPORATION
and
THE FIRST NATIONAL BANK OF CHICAGO
(as Agent)
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TABLE OF CONTENTS
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1 Purchase Facility..................................... 1
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Section 1.2 Making Purchases...................................... 2
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Section 1.3 Selection of Discount Rates........................... 2
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Section 1.4 [Intentionally Omitted]............................... 3
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Section 1.5 [Intentionally Omitted]............................... 3
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Section 1.6 Reinvestment Purchases................................ 4
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Section 1.7 Liquidation Settlement Procedures..................... 4
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Section 1.8 Deemed Collections.................................... 5
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Section 1.9 Discount; Payments, Computations
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and Default Rate, Etc................................ 5
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Section 1.10 Purchaser Interest.................................... 6
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Section 1.11 Extension of Liquidity Termination Date............... 6
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ARTICLE II
LIQUIDITY FACILITY
Section 2.1 Transfer to Investors.................................. 6
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Section 2.2 Transfer Price Reduction Discount...................... 7
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Section 2.3 Payments to PREFCO...................................... 7
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Section 2.4 Limitation on Commitment
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to Purchase from PREFCO............................... 7
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Section 2.5 Defaulting Investors................................... 8
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Seller and Servicer Representations and Warranties....... 8
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Section 3.2 Investor Representations and Warranties................ 10
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ARTICLE IV
CONDITIONS OF PURCHASES
Section 4.1 Conditions Precedent to Initial Purchase............... 11
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Section 4.2 Conditions Precedent to All
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Purchases and Reinvestments........................... 12
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ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of Seller and Servicer........... 13
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Section 5.2 Negative Covenants of Seller and the Servicer.......... 16
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ARTICLE VI
SERVICER
Section 6.1 Designation of Servicer................................. 17
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Section 6.2 Duties of Servicer...................................... 18
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Section 6.3 Collection Notice....................................... 19
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Section 6.4 Responsibilities of the Seller.......................... 19
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Section 6.5 Reports................................................. 19
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Section 6.6 Servicer Advances....................................... 19
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ARTICLE VII
EVENTS OF DEFAULTS
Section 7.1 Events of Default...................................
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Section 7.2 Remedies............................................
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ARTICLE VIII
INDEMNIFICATION
Section 8.1 Indemnities by the Seller........................... 21
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Section 8.2. Increased Cost and Reduced Return................... 23
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Section 8.3 Other Costs and Expenses............................ 24
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Section 8.4 Allocations......................................... 24
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ARTICLE IX
THE AGENT
Section 9.1 Authorization and Action............................. 25
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Section 9.2 Delegation of Duties................................ 25
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Section 9.3 Exculpatory Provisions.............................. 25
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Section 9.4 Reliance by Agent................................... 26
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Section 9.5 Non-Reliance on Agent and Other Purchasers.......... 26
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Section 9.6 Reimbursement and Indemnification................... 27
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Section 9.7 Agent in its Individual Capacity.................... 27
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Section 9.8 Successor Agent..................................... 27
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ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1 Assignments........................................ 27
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Section 10.2 Participations..................................... 29
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Waivers and Amendments.......................... 29
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Section 11.2 Notices......................................... 30
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Section 11.3 Ratable Payments................................ 30
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Section 11.4 Protection of Ownership Interests
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of the Purchasers.............................. 31
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Section 11.5 Confidentiality................................. 31
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Section 11.6 Bankruptcy Petition............................. 32
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Section 11.7 Limitation of Liability......................... 32
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Section 11.8 CHOICE OF LAW................................... 32
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Section 11.9 CONSENT TO JURISDICTION......................... 32
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Section 11.10 WAIVER OF JURY TRIAL............................ 33
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Section 11.11 Integration; Survival of Terms.................. 33
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Section 11.12 Counterparts; Severability...................... 33
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Section 11.13 First Chicago Roles............................. 33
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Section 11.14 Characterization................................ 34
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EXHIBITS AND SCHEDULES
EXHIBIT I DEFINITIONS
EXHIBIT II FORM OF PURCHASE NOTICE
EXHIBIT III PRINCIPAL PLACE OF BUSINESS OF THE SELLER AND SERVICER;
LOCATION(S) OF RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS
EXHIBIT IV COLLECTION BANK AND COLLECTION ACCOUNT
EXHIBIT V FORM OF COLLECTION ACCOUNT AGREEMENT
EXHIBIT VI FORM OF COMPLIANCE CERTIFICATE
EXHIBIT VII FORM OF CONTRACT
EXHIBIT VIII MONITORING AND COLLECTION PROCEDURES
EXHIBIT IX [RESERVED]
EXHIBIT X PROSPECTUS
EXHIBIT XI FORM OF LEGAL OPINIONS OF SELLER, SERVICER AND PERFORMANCE
GUARANTOR
SCHEDULE A LIST OF DOCUMENTS TO BE DELIVERED TO THE AGENT PRIOR TO THE
INITIAL PURCHASE
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HAMPSHIRE FUNDING, INC.
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement dated as of December 31, 1997 is
among Hampshire Funding, Inc., a New Hampshire corporation (the "Seller"), the
Investors, Preferred Receivables Funding Corporation ("PREFCO") and The First
National Bank of Chicago, as Agent (the "Agent"). Unless defined elsewhere
herein, capitalized terms used in this Agreement shall have the meanings
assigned to such terms in Exhibit I hereto.
PRELIMINARY STATEMENTS
The Seller desires to transfer and assign Receivable Interests to the
Purchasers from time to time.
PREFCO may, in its absolute and sole discretion, purchase Receivable
Interests from the Seller from time to time.
The Investors shall, at the request of the Seller, purchase Receivable
Interests from time to time. In addition, the Investors have agreed to provide
a liquidity facility to PREFCO.
The First National Bank of Chicago has been requested and is willing
to act as Agent on behalf of PREFCO and the Investors in accordance with the
terms hereof.
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section I.1 Purchase Facility. (a) Upon the terms and subject to the
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conditions hereof, the Seller may, at its option, sell and assign Receivable
Interests to the Agent for the benefit of the Purchasers. PREFCO may, at its
option, instruct the Agent to purchase on behalf of PREFCO, or if PREFCO shall
decline to purchase, the Agent shall purchase on behalf of the Investors,
Receivable Interests from time to time during the period from the date hereof to
but not including the Liquidity Termination Date. The Seller hereby assigns,
transfers and conveys to the Agent for the benefit of the relevant Purchaser or
Purchasers, and the Agent hereby acquires all of the Seller's right, title and
interest in and to the Receivable Interests.
(b) The Seller may, upon at least five days' notice to the
Agent, terminate in whole or reduce in part ratably among the Investors the
unused portion of the Purchase Limit; provided that each partial reduction of
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the Purchase Limit shall be in an amount equal to $5,000,000 or an integral
multiple thereof.
Section I.2 Making Purchases. The Seller shall provide the Agent with
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a purchase notice, in substantially the form of Exhibit II hereto (each a
"Purchase Notice"), at least three Business Days prior to each purchase provided
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that the three Business Days notice requirement shall not apply to the initial
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purchase hereunder which shall occur on the date hereof. Each Purchase Notice
shall, except as set forth below, be irrevocable and shall specify the requested
Purchase Price (which shall not be less than $100,000) and date of purchase
(which date shall be a Settlement Date), together with the initial Discount Rate
related thereto. Following receipt of a Purchase Notice, the Agent will
determine whether PREFCO agrees to make the purchase. If PREFCO declines to make
a proposed purchase, the Seller may cancel the Purchase Notice or the purchase
of the Receivable Interests will be made by the Investors. On the date of each
purchase, upon satisfaction of the applicable conditions precedent set forth in
Article IV, PREFCO or each Investor, as applicable, shall wire transfer
immediately available funds to Account No. ▇▇▇▇▇▇▇▇, at Citibank, ABA No.
▇▇▇▇▇▇▇▇▇ (or such other account as the Seller may specify in the Purchase
Notice) no later than 12:00 noon (Chicago time), which wire transfer shall be in
an amount equal to (i) in the case of PREFCO, the aggregate Purchase Price of
each Receivable Interests PREFCO is then purchasing or (ii) in the case of an
Investor, such Investor's Pro Rata Share of the aggregate Purchase Price of each
of the Receivable Interests the Investors are purchasing.
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Section I.3 Selection of Discount Rates. (a) Each Receivable Interest
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shall at all times have an associated amount of Capital and a Discount Rate. The
Seller shall request Discount Rates for the Receivable Interests of the
Purchasers. The Seller may select the CP Rate or the Base Rate, in either case
with the concurrence of the Agent, for the Receivable Interests of PREFCO and
the LIBO Rate or the Base Rate for the Receivable Interests of the Investors.
The Seller shall by 9:00 a.m. (Chicago time), (i) at least three Business Days
prior to the next Settlement Date with respect to which the LIBO Rate is being
requested as a new Discount Rate, (ii) at least two Business Days prior to the
next Settlement Date with respect to which the CP Rate is being requested as a
new Discount Rate and (iii) at least one Business Day prior to the next
Settlement Date with respect to which the Base Rate is being requested as a new
Discount Rate, give the Agent irrevocable notice of the new Discount Rate for
the Receivable Interest applicable until the next Settlement Date. Until the
Seller gives notice to the Agent of another Discount Rate, the initial Discount
Rate for any Receivable Interest transferred to the Investors pursuant to
Section 2.1 shall be the Base Rate. In the absence of any notice from the
Seller, on each Settlement Date, the Agent shall determine the Discount Rate
applicable to the next Settlement Date.
(b) If any Investor notifies the Agent that it has determined
that funding its Pro Rata Share of the Receivable Interests of the Investors at
a LIBO Rate would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or that (i) deposits of a type and
maturity appropriate to match fund its Receivable Interests at such LIBO Rate
are not available or (ii) such LIBO Rate does not accurately reflect the cost of
acquiring or maintaining a Receivable Interest at such LIBO Rate, then the Agent
shall suspend the availability of such LIBO Rate and require the Seller to
select a new Discount Rate for any Receivable Interest accruing Discount at such
LIBO Rate.
Section I.4 [INTENTIONALLY OMITTED]
Section I.5 [INTENTIONALLY OMITTED]
Section I.6 Revolving Period Settlement Procedures.
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(a) At any time that any Collections (including Deemed
Collections) are received by the Servicer or Servicer Advances are made by the
Servicer, in each case, after the initial purchase of a Receivable Interest
hereunder and on or prior to the Termination Date of such Receivable Interest,
each of the Seller and the Purchasers hereby instruct the Servicer to hold such
Collections and Servicer Advances in trust for the Purchasers hereunder, in
accordance with this Article I and Article VI hereof, until the immediately
succeeding Settlement Date, and on such Settlement Date, apply such Collections
and Servicer Advances as follows:
first, in reimbursement of any Servicer Advance made by the Servicer
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pursuant to Section 6.6 hereof which Servicer Advance has not been repaid
as of such Settlement Date;
second, to the Purchasers, in payment of all their respective pro rata
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share of accrued Discount for each Receivable Interest held by such
Purchasers;
third, to the Purchasers pro rata, in payment of any due but unpaid
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Early Collection Fees;
fourth, to the Purchasers pro rata, in payment of any due but unpaid
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Purchaser Fee;
fifth, to the Servicer in payment of any accrued Servicing Fee then
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due with respect to such Receivable Interest;
sixth, to the Purchasers pro rata, in payment of their respective
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shares of Capital in respect of any Receivable Interest allocated to any
Receivable Loss;
seventh, towards the pro rata payment of the Purchase Price owed by
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each respective Purchaser to the Seller on such Settlement Date pursuant to
Section 1.2 hereof (each such payment of Purchase Price from Collections
and Servicer Advances on each Settlement Date, a "Reinvestment");
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eighth, to the Agent and the Purchasers pro rata, in payment of any
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other amounts, if any, then due and owing hereunder to the Agent or the
Purchasers (other than in respect of Capital); and
ninth, to the Purchasers in reduction of the Capital of the Receivable
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Interest on a pro rata basis based upon such Purchasers' interest in such
Receivable Interest.
(b) Collections allocated to the Receivable Interests of the
Purchasers shall be shared ratably by the Purchasers in accordance with their
Pro Rata Shares. Collections applied to the payment of fees, expenses, Discount
and all other amounts payable by the Seller to the Agent and the Purchasers
hereunder shall be allocated ratably among the Agent and the Purchasers in
accordance with such amounts owing to each of them.
Section I.7 Liquidation Settlement Procedures.
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(a) At any time that any Collections (including Deemed Collections)
are received by the Servicer or Servicer Advances are made by the Servicer, in
each case, on or after the Termination Date of a Receivable Interest, each of
the Seller and the Purchasers hereby instruct the Servicer to hold such
Collections in trust for the Purchasers hereunder, in accordance with this
Article I and Article VI hereof, until the immediately succeeding Settlement
Date (or more frequently as required by Article VI hereof), and on such
Settlement Date (or such earlier date as required by Article VI hereof), apply
such Collections and Servicer Advances as follows:
first, to reimbursement of the Agent's costs of collection and
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enforcement of this Agreement;
second, in reimbursement of any Servicer Advance made by the Servicer
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pursuant to Section 6.6 hereof which Servicer Advance has not been repaid
as of such Settlement Date;
third, to the Purchasers in payment of all their respective pro rata
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shares of accrued Discount for such Receivable Interest held by such
Purchasers;
fourth, to the Purchasers pro rata, in payment of any due but unpaid
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Early Collection Fees;
fifth, to the Purchasers pro rata, in payment of any due but unpaid
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Purchaser Fee;
sixth, to the Purchasers in reduction of the Capital of the Receivable
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Interest on a pro rata basis based upon such Purchasers' interest in such
Receivable Interest;
seventh, to the Purchasers and the Agent pro rata, in payment of any
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other amounts, if any, then due and owing hereunder to the Agent or the
Purchasers; and
eighth, to the Servicer in payment of any accrued Servicing Fee.
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(b) Collections allocated to the Receivable Interests of the
Investors shall be shared ratably by the Investors in accordance with their Pro
Rata Shares. Collections applied to the payment of fees, expenses, Discount and
all other amounts payable by the Seller to the Agent and the Purchasers
hereunder shall be allocated ratably among the Agent and the Purchasers in
accordance with such amounts owing to each of them. Following the date on which
the Aggregate Unpaids are reduced to zero, the Servicer shall pay to Seller any
remaining Collections set aside and held by the Servicer pursuant to this
Section 1.7.
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Section I.8 Deemed Collections. If on any day the Outstanding Balance
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of a Receivable is either (x) reduced as a result of any cash discount or any
adjustment by the Seller, or (y) reduced or cancelled as a result of a setoff in
respect of any claim by any Person including any claim of any issuer of Mutual
Fund Shares for a back-end load, sales charge fee or other expense associated
with the sale of Mutual Fund Shares (whether such claim arises out of the same
or a related transaction or an unrelated transaction), the Seller shall be
deemed to have received on such day a Collection of such Receivable in the
amount of such reduction or cancellation. If on any day any of the
representations or warranties in Article III are no longer true with respect to
a Receivable, the Seller shall be deemed to have received on such day a
Collection of such Receivable in full. If the Seller receives any
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Collections or is deemed to receive Collections pursuant to this Section 1.8 or
otherwise, the Seller shall immediately pay such Collections or Deemed
Collections to the Servicer and, at all times prior to such payment, such
Collections shall be held in trust by the Seller for the exclusive benefit of
the Purchasers and the Agent.
Section I.9 Discount; Payments, Computations and Default Rate, Etc.
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(a) Discount shall accrue for each Receivable Interest for each
calendar day and on each Settlement Date the Seller shall pay to the Agent an
amount equal to the accrued and unpaid Discount from the prior Settlement Date
in accordance with Sections 1.6 and 1.7 hereof.
(b) Notwithstanding any limitation on recourse contained in this
Agreement, the Seller or the Servicer, as applicable, shall pay to the Agent,
(i) for the account of the relevant Purchasers, the Purchaser Fee, all amounts
payable as Discount, all amounts payable pursuant to Article VIII, if any, and
on demand therefor, any Early Collection Fee, and (ii) for the account of
PREFCO, all dealer commissions, fees and other similar expenses in connection
with the issuance of Commercial Paper, in each case, on the next Settlement Date
in accordance with Sections 1.6 and 1.7 hereof.
(c) Notwithstanding any other provision contained herein, on and
after the occurrence of any Event of Default hereunder, the Discount Rate
hereunder shall be the Default Rate for the period from the date of the
occurrence of such Event of Default to, but not including, the date such Event
of Default is cured or waived in accordance with the terms and provisions
hereof. Any amount which is not paid when due hereunder (whether in respect of
principal, any fee payment, indemnification payment or other amount payable
hereunder) shall accrue interest at the Default Rate from the date of such non-
payment to, but not including, the date such overdue amount is repaid.
(d) All amounts to be paid or deposited by any Person hereunder shall
be paid or deposited in accordance with the terms hereof no later than 12:00
noon (Chicago time) on the day when due in immediately available funds; if such
amounts are payable to a Purchaser they shall be paid to the Agent, for the
account of such Purchaser, at Account No. ▇▇▇▇▇▇▇ at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ABA No. ▇▇▇▇▇▇▇▇▇, until otherwise notified by the
Agent. All computations of Discount and Purchaser Fee hereunder shall be made
on the basis of a year of 360 days for the actual number of days elapsed
(including the first but excluding the last day). All per annum fees shall be
payable monthly in arrears on each Settlement Date in accordance with Sections
1.6 and 1.7 hereof. If any amount hereunder shall be payable on a day which is
not a Business Day, such amount shall be payable on the next succeeding Business
Day.
Section I.10 Purchaser Interest. To perfect the Purchasers' ownership
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or security interest, as the case may be, in the Receivables, Related Security,
Collections, and all proceeds thereof, the Seller hereby grants to the Agent for
the ratable benefit of the Purchasers a valid and perfected ownership interest
or a valid and perfected security interest in all of its interest in the
Receivables, Related Security, Collections and all proceeds thereof to ensure
payment of the Aggregate Unpaids and its indemnity obligations under Article
VIII and all other obligations owed hereunder to the Purchasers, provided
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however, notwithstanding the foregoing, the Purchasers hereby acknowledge and
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agree that such Purchasers' security interest in Related Security consisting of
Mutual Fund Shares shall not be perfected to the extent that the parties hereto
do not comply with the provisions of Article 8 of the Uniform Commercial Code of
New Hampshire.
Section I.11 Extension of the Liquidity Termination Date. The Seller
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may from time to time request, in a written notice to the Agent, that the
Liquidity Termination Date be extended (any such request being an "Extension
Notice"). An Extension Notice may be issued by the Seller no more frequently
than once during any six month period. No Purchaser shall have a commitment or
obligation to extend the Liquidity Termination Date. If the Purchasers agree, in
their sole discretion, to accept any request on the part of the Seller to extend
the Liquidity Termination Date, they shall so advise the Seller in writing by
not later than the date that occurs forty-five days following the issuance of
the applicable Extension Notice. In the event any Purchaser shall fail to advise
the Seller in response to any Extension Notice, such request for extension shall
be deemed to have been declined. Upon acceptance in writing by all Purchasers
and the Agent of any request set forth in an Extension Notice, the "Liquidity
Termination Date" shall thereupon become the date which is 364 days following
the date of such acceptance. As of no date during the term of this Agreement
shall the period from such date to the Liquidity Termination Date then in effect
exceed a period of 364 days.
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ARTICLE II
LIQUIDITY FACILITY
Section II.1 Transfer to Investors. Each Investor hereby agrees,
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subject to Section 2.4, that immediately upon written notice from PREFCO
delivered on or prior to the Liquidity Termination Date, it shall acquire by
assignment from PREFCO, without recourse or warranty, its Pro Rata Share of one
or more of the Receivable Interests of PREFCO as specified by PREFCO. Each
Investor shall promptly pay to the Agent at an account designated by the Agent,
for the benefit of PREFCO, its Acquisition Amount. Unless an Investor has
notified the Agent that it does not intend to pay its Acquisition Amount, the
Agent may assume that such payment has been made and may, but shall not be
obligated to, make the amount of such payment available to PREFCO in reliance
upon such assumption. PREFCO hereby sells and assigns to the Agent for the
ratable benefit of the Investors, and the Agent hereby purchases and assumes
from PREFCO, effective upon the receipt by PREFCO of the PREFCO Transfer Price,
the Receivable Interests of PREFCO which are the subject of any transfer
pursuant to this Article II.
Section II.2 Transfer Price Reduction Discount. If the Adjusted
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Liquidity Price is included in the calculation of the PREFCO Transfer Price for
any Receivable Interest, each Investor agrees that the Agent shall pay to PREFCO
the Reduction Percentage of any Discount received by the Agent with respect to
such Receivable Interest.
Section II.3 Payments to PREFCO. In consideration for the reduction of
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the PREFCO Transfer Prices by the PREFCO Transfer Price Reductions, effective
only at such time as the aggregate amount of the Capital of the Receivable
Interests of the Investors equals the PREFCO Residual, each Investor hereby
agrees that the Agent shall not distribute to the Investors and shall
immediately remit to PREFCO any Discount, Collections or other payments received
by it to be applied pursuant to the terms hereof or otherwise to reduce the
Capital of the Receivable Interests of the Investors.
Section II.4 Limitation on Commitment to Purchase from PREFCO.
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Notwithstanding anything to the contrary in any Transaction Document, no
Investor shall have any obligation to purchase any Receivable Interest from
PREFCO, pursuant to Section 2.1 or otherwise, if:
(a) PREFCO shall have voluntarily commenced any proceeding or filed
any petition under any bankruptcy, insolvency or similar law seeking the
dissolution, liquidation or reorganization of PREFCO or taken any corporate
action for the purpose of effectuating any of the foregoing; or
(b) involuntary proceedings or an involuntary petition shall have
been commenced or filed against PREFCO by any Person under any bankruptcy,
insolvency or similar law seeking the dissolution, liquidation or reorganization
of PREFCO and such proceeding or petition shall have not been dismissed.
Section II.5 Defaulting Investors. If one or more Investors defaults
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in its obligation to pay its Acquisition Amount pursuant to Section 2.1 (each
such Investor shall be called a "Defaulting Investor" and the aggregate amount
of such defaulted obligations being herein called the "PREFCO Transfer Price
Deficit"), then upon notice from the Agent, each Investor other than the
Defaulting Investors (a "Non-Defaulting Investor") shall promptly pay to the
Agent, in immediately available funds, an amount equal to the lesser of (x) such
Non-Defaulting Investor's proportionate share (based upon the relative
Commitments of the Non-Defaulting Investors) of the PREFCO Transfer Price
Deficit and (y) the unused portion of such Non-Defaulting Investor's Commitment.
A Defaulting Investor shall forthwith upon demand pay to the Agent for the
account of the Non-Defaulting Investors all amounts paid by each Non-Defaulting
Investor on behalf of such Defaulting Investor, together with interest thereon,
for each day from the date a payment was made by a Non-Defaulting Investor until
the date such Non-Defaulting Investor has been paid such amounts in full, at a
rate per annum equal to the Federal Funds Effective Rate plus 2%. In addition,
without prejudice to any other rights that PREFCO may have under applicable law,
each Defaulting Investor shall pay to PREFCO forthwith upon demand, the
difference between such Defaulting Investor's unpaid Acquisition Amount and the
amount paid with respect thereto by the Non-Defaulting Investors, together with
interest thereon, for each day from the date of the Agent's request for such
Defaulting Investor's Acquisition Amount pursuant to Section 2.1 until the date
the requisite amount is paid to PREFCO in full, at a rate per annum equal to the
Federal Funds Effective Rate plus 2%.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section III.1 Seller and Servicer Representations and Warranties.
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Each of the Seller and the Servicer hereby represents and warrants
to the Purchasers that:
(a) Corporate Existence and Power. Each of the Seller and the
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Servicer is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, and has all corporate power and
all governmental licenses, authorizations, consents and approvals required to
carry on its business in each jurisdiction in which its business is conducted.
(b) No Conflict. The execution, delivery and performance by each
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of the Seller and the Servicer of this Agreement and each other Transaction
Document, and the Seller's use of the proceeds of purchases made hereunder, are
within its corporate powers, have been duly authorized by all necessary
corporate action, do not contravene or violate (i) its certificate or articles
of incorporation or by-laws, (ii) any law, rule or regulation applicable to it,
(iii) any restrictions under any agreement, contract or instrument to which it
is a party or by which it or any of its property is bound, or (iv) any order,
writ, judgment, award, injunction or decree binding on or affecting it or its
property, and do not result in the creation or imposition of any Adverse Claim
on assets of the Seller or its Subsidiaries or the Servicer (except created
hereunder); and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law. This Agreement and each other Transaction
Document has been duly authorized, executed and delivered by each of the Seller
and the Servicer.
(c) Governmental Authorization. Other than (i) the filing of the
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financing statements required hereunder, or (ii) any notice to the Securities
and Exchange Commission or the Participants regarding the termination of the
SunTrust Bank Financing or the sale of the Receivables hereunder, no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body (including, without limitation,
the Securities and Exchange Commission or any state, federal or local insurance
regulatory, governmental or administrative body,) is required for the due
execution, delivery and performance by each of the Seller and the Servicer of
the Transaction Documents.
(d) Binding Effect. The Transaction Documents to which each of the
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Seller and the Servicer are a Party constitute the legal, valid and binding
obligations of the Seller enforceable against the Seller and the Servicer in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally.
(e) Accuracy of Information. All information heretofore furnished
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by the Seller or the Servicer to the Agent or the Purchasers for purposes of or
in connection with this Agreement or any transaction contemplated hereby is, and
all such information hereafter furnished by the Seller or the Servicer to the
Purchasers will be, true and accurate in every material respect, on the date
such information is stated or certified and does not and will not contain any
material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(f) Use of Proceeds. No proceeds of any purchase hereunder will be
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used (i) for a purpose which violates, or would be inconsistent with, Regulation
G, T, U, X or Z promulgated by the Board of Governors of the Federal Reserve
System from time to time or (ii) to acquire any security in any transaction
which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended. Proceeds from the initial purchase hereunder shall be applied to repay
all of the obligations of the Seller under the SunTrust Bank Financing.
(g) Good Title; Perfection. Immediately prior to each purchase
----------------------
hereunder, the Seller shall be the legal and beneficial owner of the Receivables
free and clear of any Adverse Claim, except as created by the Transaction
Documents and the Seller shall have the legal right to sell and encumber such
Receivables and its Collections. This Agreement is effective to, and shall, upon
each purchase hereunder, transfer to the relevant Purchaser or Purchasers (and
such Purchaser or Purchasers shall acquire from the Seller) a valid and
perfected first priority undivided percentage ownership interest in each
Receivable existing or hereafter arising and in the Collections with respect
thereto, free and clear of any Adverse Claim, except as created by the
Transaction Documents. The Servicer has sole dominion and control over all
Mutual Fund Shares (by means of being the "Security Entitlement Holder" (as
defined in Article 8 of the Uniform Commercial code of the State of New
Hampshire) and any other Related Security pledged by a Participant to secure
such Participant's Receivable which Mutual Fund shares and Related Security are
held by the Servicer free and clear of any Adverse Claim, except as created by
the Transaction Documents and the Servicer has the legal right to sell and
encumber such Mutual Fund Shares and Related Security, respectively.
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(h) Places of Business. The principal place of business and chief
------------------
executive office of each of the Seller and the Servicer and the office where
each of the Seller and Servicer keeps all its Records are located at the
address(es) listed on Exhibit III or such other locations notified to the Agent
in accordance with Section 5.2(a) in jurisdictions where all action required by
Section 5.2(a) has been taken and completed. The Seller's and the Servicer's
Federal Employer Identification Number is correctly set forth on Exhibit III.
(i) Collection Bank; etc. All proceeds of any Receivable are
--------------------
deposited, within three Business Days after receipt thereof by the Servicer or
the Seller, as applicable, into the Collection Account at the Collection Bank
and the name and address of the Collection Bank, together with the account
number of the Collection Account of the Seller at the Collection Bank, are
listed on Exhibit IV. The Seller has not granted any Person, other than the
Agent as contemplated by this Agreement, dominion and control of the Collection
Account, or the right to take dominion and control of the Collection Account at
a future time or upon the occurrence of a future event.
(j) Material Adverse Effect. Since September 30, 1997 no event has
-----------------------
occurred which would have a Material Adverse Effect.
(k) Names. In the past five years, the Seller has not used any
-----
corporate names, trade names or assumed names other than those listed on Exhibit
III.
(l) Net Receivables Balance. Immediately prior to each purchase
-----------------------
hereunder, the Net Receivables Balance is not less than an amount equal to (i)
105% multiplied by (ii) the aggregate Capital of all the Receivable Interests.
(m) Eligible Receivables. On the date of purchase or Reinvestment of
--------------------
any Receivables hereunder, all such Receivables are Eligible Receivables.
Section III.2 Investor Representations and Warranties. Each Investor
---------------------------------------
hereby represents and warrants to the Agent and PREFCO that:
(a) Existence and Power. Such Investor is a corporation or a banking
-------------------
association duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization, and has all corporate
power to perform its obligations hereunder.
(b) No Conflict. The execution, delivery and performance by such
-----------
Investor of this Agreement are within its corporate powers, have been duly
authorized by all necessary corporate action, do not contravene or violate (i)
its certificate or articles of incorporation or association or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or any of its property
is bound, or (iv) any order, writ, judgment, award, injunction or decree binding
on or affecting it or its property, and do not result in the creation or
imposition of any Adverse Claim on its assets. This Agreement has been duly
authorized, executed and delivered by such Investor.
(c) Governmental Authorization. No authorization or approval or
--------------------------
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
such Investor of this Agreement.
(d) Binding Effect. This Agreement constitutes the legal, valid and
--------------
binding obligation of such Investor enforceable against such Investor in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally.
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ARTICLE IV
CONDITIONS OF PURCHASES
Section IV.1 Conditions Precedent to Initial Purchase. The initial
----------------------------------------
purchase is subject to the conditions precedent that the Agent shall have
received on or before the date of such purchase those documents listed on
Schedule A hereto.
Section IV.2 Conditions Precedent to All Purchases and Reinvestments.
-------------------------------------------------------
Each purchase of a Receivable Interest (other than pursuant to Section 2.1) and
each Reinvestment shall be subject to the further conditions precedent that:
(a) in the case of each such purchase, the Servicer shall have
delivered to the Agent on or prior to the date of such purchase, in form and
substance satisfactory to the Agent, all Monthly Reports as and when due under
Section 6.5;
(b) on the date of each such purchase or Reinvestment, the following
statements shall be true (and acceptance of the proceeds of such purchase or
Reinvestment shall be deemed a representation and warranty by the Seller and the
Servicer that such statements are then true):
(i) the representations and warranties set forth in Section 3.1
are correct on and as of the date of such purchase or Reinvestment as
though made on and as of such date;
(ii) no event has occurred, or would result from such purchase
or Reinvestment, that will constitute an Event of Default, and no event has
occurred and is continuing, or would result from such purchase or
Reinvestment, that would constitute a Potential Event of Default; and
(iii) the Liquidity Termination Date shall not have occurred and
the aggregate Capital of all Receivable Interests does not exceed the
Purchase Limit.
(c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
ARTICLE V
COVENANTS
Section V.1 Affirmative Covenants of Seller and the Servicer.
------------------------------------------------
Until the date on which the Aggregate Unpaids have been indefeasibly paid in
full, the Seller or the Servicer, as the case may be, hereby covenants that:
(a) Financial Reporting. The Seller will maintain, for itself and
-------------------
each of its Subsidiaries, a system of accounting established and administered in
accordance with generally accepted accounting principles, and furnish to the
Agent:
(i) Annual Reporting. Within 90 days after the close of each of
---------------
its fiscal years, audited consolidated financial statements for the
Performance Guarantor (together with the financial statements of the
Seller) for such fiscal year, with such consolidated financial statements
certified in a manner acceptable to the Agent by independent public
accountants acceptable to the Agent; provided, however, the Seller shall
-------- -------
not be obligated to provide annual financial statements certified by
independent accounts to the extent that it no longer files a Form 10-K
under the Securities Exchange Act of 1934, but the Seller will provide
unaudited annual financial statements certified by its chief financial
officer or treasurer.
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(ii) Quarterly Reporting. Within 45 days after the close of the
-------------------
first three quarterly periods of each of its fiscal years, unaudited
balance sheets as of the close of each such period and unaudited statements
of income and retained earnings and unaudited statements of cash flows, in
each case for each of the Performance Guarantor and the Seller for the
period from the beginning of such fiscal year to the end of such quarter,
all certified by their respective chief financial officers or treasurer.
(iii) Compliance Certificate. Together with the financial
----------------------
statements required hereunder, a compliance certificate in substantially
the form of Exhibit VI signed by the Seller's corporate comptroller, chief
financial officer or treasurer and dated the date of such annual financial
statement or such quarterly financial statement, as the case may be.
(iv) Change in Monitoring and Collection Procedures. At least
----------------------------------------------
30 days prior to the effectiveness of any material change in or amendment
to the Monitoring and Collection Procedures, a copy of the Monitoring and
Collection Procedures then in effect and a notice indicating such change or
amendment (provided that no such change shall be made to such Monitoring
-------- ----
and Collection Procedures except in conformity with Section 5.2(c) hereof).
(b) Notices. The Seller and the Servicer will notify the Agent in
-------
writing of any of the following immediately upon learning of the occurrence
thereof, describing the same and, if applicable, the steps being taken with
respect thereto:
(i) Event of Defaults or Potential Event of Defaults. The
------------------------------------------------
occurrence of each Event of Default or each Potential Event of Default, by
a statement of the corporate comptroller, senior financial officer or
treasurer of the Seller.
(ii) Judgment and Proceedings. The entry of any judgment or
------------------------
decree against the Seller or any of its Subsidiaries if the aggregate
amount of all judgments and decrees then outstanding against the Seller and
its Subsidiaries exceeds $500,000 or the institution of any material
lawsuit or other proceeding against the Seller.
(iii) Material Adverse Effect. The occurrence of any event or
-----------------------
condition which has, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Concentration of Receivables. The Outstanding Balance of
----------------------------
all Receivables of any Participant shall exceed 75 basis points of the
Gross Receivables Balance.
(v) Changes in State Law. Within 30 days after the Seller
--------------------
becomes aware or should have become aware of any changes (after the date
hereof) in any federal or state law (A) which would require any amendment
or supplement to any Prospectus distributed in any state, or (B) which has
any adverse impact on the Receivables purchased hereunder (whether in
respect the amount of Mutual Fund Shares pledged by a Participant, the
liquidation procedures applicable to Mutual Fund Shares relating to a
Collateral Deficient Receivable, an Under Collateralized Receivable, or a
Terminated Receivable, or otherwise) or (C) the ability of the Servicer or
the Seller to implement the procedures set forth in the Monitoring and
Collection Procedures.
(c) Compliance with Laws. Each of the Seller and the Servicer will
--------------------
comply in all respects with all applicable laws, rules, regulations, orders,
writs, judgments, injunctions, decrees or awards to which it may be subject,
except where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.
(d) Audits. The Seller and the Servicer will furnish to the Agent
-------
from time to time such information with respect to it and the Receivables as the
Agent may reasonably request. Each of the Seller and the Servicer shall, from
time to time during regular business hours as requested by the Agent upon
reasonable notice, permit the Agent, or its agents or representatives, (i) to
examine and make copies of and abstracts from all Records in the possession or
under the control of the Seller or the Servicer relating to Receivables and the
Related Security, including, without limitation, the related Contracts, and (ii)
to visit the offices and properties of the Seller and the Servicer for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to the Seller's, the Servicer's or the Performance
Guarantor's financial condition or the Receivables and the Related Security or
the Seller's or the Servicer's performance hereunder or under the Contracts with
any of the officers or management of the Seller having knowledge of such
matters.
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(e) Keeping and Marking of Records and Books.
----------------------------------------
(i) Each of the Seller and the Servicer (as the case may
be) will maintain and implement administrative and operating procedures
(including, without limitation, (A) an ability to recreate records
evidencing Receivables in the event of the destruction of the originals
thereof, (B) an ability to consistently monitor the daily net asset value
of all Mutual Fund Shares pledged to secure a Participant's obligation
under its Contract (C) an ability to assess on a daily basis the net asset
value of such Mutual Fund Shares against the indebtedness evidenced by such
Participant's Contract, (D) an early warning trigger system to notify the
Servicer to the extent the aggregate net asset value of the Mutual Fund
Shares of a Participant falls below 150% of the Receivables of such
Participant and a mechanism to immediately implement the Low Ratio
Procedures, and (E) an ability to liquidate such Mutual Fund Shares in
accordance with the Termination Procedures), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the immediate identification of each
new Receivable and all Collections of and adjustments to each existing
Receivable). The Seller or the Servicer (as applicable) will give the Agent
notice of any material change in the administrative and operating
procedures referred to in the previous sentence in accordance with Section
5.1(a)(iv) hereof.
(ii) Seller will (a) on or prior to the date hereof,
either ▇▇▇▇ its master data processing records and other books and records
relating to the Receivable Interests or the file cabinets where such
records and books are kept, in each case with a legend, acceptable to the
Agent, describing the Receivable Interests, (b) either ▇▇▇▇ each Contract
or the file cabinets where such Contracts are kept, in each case with a
legend describing the Receivable Interests and (c) prior to June 30, 1998,
ensure that all issuers of Mutual Fund Shares pledged to secure the
Receivable of each Participant have reregistered or registered, as the case
may be, the interest of the Seller on their respective books and records in
a manner reasonably acceptable to the Agent.
(f) Compliance with Contracts and Monitoring and Collection
-------------------------------------------------------
Procedures. The Seller and the Servicer will timely and fully (i) perform and
----------
comply with all provisions, covenants and other promises required to be observed
by it under the Contracts related to the Receivables, and (ii) comply in all
material respects with the Monitoring and Collection Procedures in regard to
each Receivable and the related Contract. The Seller and the Servicer will pay
when due any taxes payable in connection with the Receivables, exclusive of
taxes on or measured by income of PREFCO, the Agent, or any Purchaser.
(g) Ownership Interest. Each of the Seller and the Servicer shall
------------------
take all necessary action to establish and maintain (i) a valid and perfected
first priority security interest in favor of the Servicer in the Mutual Fund
Shares of each Participant, and (ii) a valid and perfected first priority
security interest in the Receivables, the Collections with respect thereto and
the Related Security (other than the Mutual Fund Shares), to the full extent
contemplated herein, in favor of the Purchasers, including, without limitation,
in each case, taking such action to perfect, protect or more fully evidence the
interest of the Agent and the Purchasers hereunder as the Agent may reasonably
request.
(h) Collection Bank; etc. The Seller shall cause the Servicer to
--------------------
deposit all proceeds of any Receivable, within three Business Days after receipt
thereof by the Servicer, into a Collection Account listed on Exhibit IV. The
Seller shall or shall cause the Servicer to (other than as contemplated by this
Agreement with respect to the rights of the Agent) maintain dominion and control
over the Collection Account.
(i) Relationship with Mutual Funds. Each of the Seller and the
------------------------------
Servicer will undertake all necessary and desirable actions to preserve their
existing relationships with the issuers of the Mutual Fund Shares.
(j) Collection Account Agreement. No later than January 23, 1998, the
----------------------------
Seller, the Agent and the Collection Bank shall have entered into the Collection
Account Agreement.
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(k) Interest Rate Rise Management. The Seller shall enter into a
-----------------------------
Hedge Contract at any time the Program Yield is less than 0.75%.
Section V.2 Negative Covenants of Seller and Servicer. Until the date
-----------------------------------------
on which the Aggregate Unpaids have been indefeasibly paid in full, the Seller
or the Servicer, as the case may be, hereby covenants that:
(a) Name Change, Offices, Records and Books of Accounts. The Seller
----------------------------------------------------
will not change its name, identity or corporate structure (within the meaning of
Section 9-402(7) of any applicable enactment of the UCC) or relocate its chief
executive office or any office where Records are kept unless it shall have: (i)
given the Agent at least 45 days prior notice thereof and (ii) delivered to the
Agent all financing statements, instruments and other documents requested by the
Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Participants. The Seller will
----------------------------------------------
not add or terminate any bank as a Collection Bank from those listed in Exhibit
IV unless the Agent shall have received, at least 45 days before the proposed
effective date therefor, (i) written notice of such addition, termination or
change and (ii) with respect to the addition of a Collection Bank or a
Collection Account, an executed Collection Account Agreement with respect to
such Collection Account.
(c) Modifications to Contracts, Monitoring and Collection Procedures
----------------------------------------------------------------
and Prospectus. Neither the Seller nor the Servicer will make any change to the
--------------
Monitoring and Collection Procedures or any Contract (including, without
limitation, the Prospectus) without the prior written consent of the Agent,
PREFCO and the Required Investors, provided, however, that the Seller or the
-------- -------
Servicer shall be permitted to make any changes to the Prospectus as are
required by applicable state or federal securities laws so long as the Seller or
the Servicer notifies the Agent and the Purchasers of the required amendment and
a description thereof and provides the Agent and the Purchasers with a copy of
such amendment contemporaneously with distribution to the applicable
Participants. In addition, the Seller will not, and will not permit the
Servicer to, waive compliance by any Participant of the terms of the Contract
related to such Participant and will not release the security interest of the
Servicer in the Mutual Fund Shares pledged by such Participant to secure its
obligations under its Contract except any such release which occurs in strict
compliance with such Contract.
(d) Sales Liens. The Seller shall not sell, assign (by operation
-----------
of law or otherwise) or otherwise dispose of, or grant agree that such
Purchasers' security any option with respect to, or create or suffer to exist
any Adverse Claim upon (including, without limitation, the filing of any
financing statement) or with respect to, any Receivable, Related Security or
Collections, or upon or with respect to any Contract under which any Receivable
arises, or any Collection Account, or assign any right to receive income with
respect thereto (other than, in each case, the creation of the interests therein
in favor of the Agent and the Purchasers provided for herein), and the Seller
shall defend the right, title and interest of the Agent and the Purchasers in,
to and under any of the foregoing property, against all claims of third parties
claiming through or under the Seller or the Servicer.
(e) Limitation on Indebtedness. Without the prior written consent of
--------------------------
the Agent and Required Investors, the Seller shall not incur any Indebtedness
other than inter-company Indebtedness to an Affiliate of the Seller which
Indebtedness is expressly subordinate to the obligations of the Seller
hereunder.
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section VI.1 Designation of Servicer. The Seller hereby agrees that it
-----------------------
currently acts as, and shall continue to act as, Servicer hereunder (the
"Servicer") and the Servicer hereby agrees to perform the duties and obligations
of, the Servicer pursuant to the terms of this Agreement. The Agent may at any
time following the occurrence of any Event of Default directly instruct the
Servicer regarding the performance of its obligations and the Servicer shall
effectuate such instructions. The Seller may from time to time designate any
Affiliate of the Seller to act as sub-servicer hereunder, provided however, (i)
-------- -------
the Servicer shall remain primarily liable for the obligations of the Servicer
hereunder, and (ii) such designation shall not affect the obligations of the
Performance Guarantor under the Performance Guaranty.
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Section VI.2 Duties of Servicer. (a) The Servicer shall take or cause
------------------
to be taken all such actions as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and perform all of its
obligations to maximize the collection of such Receivables pursuant to the
Contract related to such Receivable and the Monitoring and Collection
Procedures.
(b) The Servicer shall administer the Collections in accordance with
the procedures described herein and in Article I. The Servicer shall set aside
and hold in trust for the account of the Seller and the Purchasers their
respective shares of the Collections of Receivables in accordance with Sections
1.6 and 1.7. The Servicer shall, upon the request of the Agent after the
occurrence of an Event of Default, segregate, in a manner acceptable to the
Agent, all cash, checks and other instruments received by it from time to time
constituting Collections from the general funds of the Servicer or the Seller
prior to the remittance thereof in accordance with Sections 1.6 and 1.7. If the
Servicer shall be required to segregate Collections pursuant to the preceding
sentence, the Servicer shall segregate and deposit with a bank designated by the
Agent such allocable share of Collections of Receivables set aside for the
Purchasers on the first Business Day following receipt by the Servicer of such
Collections, duly endorsed or with duly executed instruments of transfer.
(c) The Servicer shall hold in trust for the Seller and the
Purchasers, in accordance with their respective Receivable Interests, the
originals of all Contracts, Related Security and Records that evidence or relate
to the Receivables and originals of all instruments, agreements or documents
that are otherwise necessary or desirable to collect the Receivables and shall,
as soon as practicable upon demand of the Agent, make available to the Agent all
such original Records and original Contracts, and, upon the request of the Agent
after the occurrence of any Event of Default, deliver to the Agent all such
original Records and original Contracts at a place selected by the Agent,
provided that, the Purchasers agree that the Servicer shall be entitled to make
-------- ----
and hold (at its own expense) copies of such Contracts and Records so long as
such copies are clearly marked as copies. The Servicer shall on each Reporting
Date (and more frequently, if requested by the Purchasers, furnish to the
Purchasers (promptly after any such request) a Monthly Report which includes a
calculation of the amounts set aside for the Purchasers pursuant to Sections 1.6
and 1.7.
(d) Any payment by a Participant in respect of any indebtedness owed
by it to the Seller shall, except as otherwise specified by such Participant or
otherwise required by contract or law and unless otherwise instructed by the
Agent, be applied as a Collection of any Receivable of such Participant to the
extent of any amounts then due and payable thereunder before being applied to
any other receivable or other obligation of such Participant.
Section VI.3 Collection Notice. The Agent is authorized at any time
-----------------
subsequent to the occurrence of an Event of Default to date and to deliver to
the Collection Bank, the Collection Notice attached to the Collection Account
Agreement. The Seller hereby transfers to the Agent for the benefit of the
Purchasers, effective when the Agent delivers such notice, the exclusive
ownership and control of the Collection Account.
Section VI.4 Responsibilities of the Seller. Anything herein to the
------------------------------
contrary notwithstanding, the exercise by the Agent and the Purchasers of their
rights hereunder shall not release the Servicer or the Seller from any of their
duties or obligations with respect to any Receivables or under the related
Contracts. The Purchasers shall have no obligation or liability with respect to
any Receivables or related Contracts, nor shall any of them be obligated to
perform the obligations of the Seller.
Section VI.5 Reports. On the 5th day of each month (each a "Reporting
-------
Date"), commencing with February 5, 1998, and at such times as the Agent shall
request, the Servicer shall prepare and forward to the Agent a Monthly Report.
At any time upon the request of the Agent, the Servicer shall also prepare and
forward to the Agent, a listing by Participant of all Receivables together with
the net asset value of the Mutual Fund Shares securing such Receivables.
Section VI.6 Servicer Advances. At any time there are insufficient
----------------
Collection to satisfy the amounts required pursuant to clauses second through
------
sixth of Section 1.6(a Collections to satisfy the amounts required pursuant to
-----
clauses second ) hereof (other than clause fifth) or clauses first through fifth
-----
(other than clause second) of Section 1.7(a) hereof, the Servicer may, at its
option, deem itself to have received the amount of Collections required to
satisfy the amounts required pursuant to the foregoing clauses of Sections 1.6
and 1.7 and apply such deemed Collections in accordance with the terms and
provisions hereof (including Sections 1.6 and 1.7).
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ARTICLE VII
EVENTS OF DEFAULTS
Section VII.1 Events of Default. The occurrence of any one or more of
-----------------
the following events shall constitute an Event of Default:
(a) The Servicer or the Seller shall (i) fail to make any payment or
deposit required hereunder or (ii) fail to perform or observe in any material
respect any term, covenant or agreement hereunder (a "Non-Payment Default") and
such Non-Payment Default shall remain unremedied for ten Business Days after
Seller has actual knowledge thereof or through the exercise of reasonable
business diligence, should have known of, such failure to observe or perform.
(b) Any representation, warranty, certification or statement made by
the Seller, the Servicer or the Performance Guarantor in any Transaction
Document or in any other document delivered pursuant thereto shall prove to have
been incorrect in any material respect when made or deemed made.
(c) Failure of the Seller or the Servicer or any of their respective
Subsidiaries to pay, beyond the grace period applicable thereto, any
Indebtedness in excess of $500,000; or the default by the Seller, the Servicer,
any of their respective Subsidiaries in the performance of any term, provision
or condition contained in any agreement under which any such Indebtedness was
created or is governed, the effect of which is to cause, or to permit the holder
or holders of such Indebtedness to cause, such Indebtedness to become due prior
to its stated maturity, or to cause the facility under which such Indebtedness
was incurred to be liquidated or terminated; or any such Indebtedness of the
Seller, the Servicer, any of their respective Subsidiaries shall be declared to
be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the date of maturity thereof.
(d) (i) The Seller or any of its Subsidiaries, the Performance
Guarantor or any of its Subsidiaries or the Servicer shall generally not pay its
debts as such debts become due or shall admit in writing its inability to pay
its debts generally or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Seller or any
of its Subsidiaries or by or against the Performance Guarantor or any of its
Subsidiaries or the Servicer seeking to adjudicate it bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or any substantial part of its property which order is
not dismissed within sixty days of entry or (ii) the Seller or any of its
Subsidiaries or the Performance Guarantor or any of its Subsidiaries or the
Servicer shall take any corporate action to authorize any of the actions set
forth in clause (i) above in this subsection (d).
(e) any Indebtedness of the Performance Guarantor in excess of
$50,000,000 shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the date of maturity
thereof.
(f) the Performance Guarantor shall fail to perform any of its
obligations under the Performance Guaranty.
(g) A Change of Control shall occur.
(h) For a period of seven consecutive Business Days the
Collateral Deficient Receivables Percentage exceeds 5%.
(i) For a period of two Business Days the Under Collateralized
Receivables Percentage exceeds 1%.
(j) The Terminated Program Percentage shall fall below 0.75% for
three consecutive months.
(k) For any three consecutive month period, Program Yield shall
be less than 0%.
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(l) (x) any senior unsecured debt of the Performance Guarantor shall
at any time be rated lower than BBB+ by Standard and Poor's Ratings Services or
such rating shall be withdrawn; or (y) any short-term debt of the Performance
Guarantor shall at any time be rated lower than A-1 by Standard & Poor's Ratings
Services or such rating shall be withdrawn.
(m) the Net Receivables Balance shall at any time be less than any
amount equal to (i) 105% multiplied by (ii) the aggregate Capital of all of the
---------- --
Receivables Interests.
(n) the occurrence of a Material Adverse Effect of the type set forth
in clauses (iv), (v) or (vi) of the definition thereof.
(n) any payment default under any Hedge Contract.
Section VII.2 Remedies. Upon the occurance of an Event of Default,
--------
the Agent may, in its role sole and absolute discretion, and in addition to all
other rights and remedies available to the Agent under any of the Transaction
Documents or applicable law:
(a) declare the Termination Date to have occurred, whereupon the
Termination Date shall forthwith occur, without demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Seller and
the Servicer (provided, however, that upon the occurrence of an Event of Default
described in Section 7.1(d) above or of an actual or deemed entry of an order
--------------
for relief with respect to the Seller, the Servicer or the Performance Guarantor
under the Federal Bankruptcy Code, the Termination Date shall automatically
occur, without demand, protest or any notice of any kind, all of which are
hereby expressly waived by each of the Seller and the Servicer);
(b) direct the Servicer to terminate each Receivable and the Contract
related thereto in accordance with the terms of such Contract (including,
without limitation, the terms set forth in the Prospectus), and liquidate the
Mutual Fund Shares securing the performance of such Contract and direct the
Servicer to apply the Collections and proceeds thereof in satisfaction of any
amounts owed or owing to the Agent or the Purchasers hereunder;
(c) exercise all rights and remedies, at law or in equity, to receive
from the Servicer or the Seller, as the case may be, and otherwise collect from
the Receivables, the Collections and the Related Security all amounts owed or
(d) enforce any and all of the rights and remedies of a secured party
upon default under the UCC or other applicable law, which rights and remedies
shall be cumulative; and
(e) deliver the Collection Notice to the Collection Bank.
Each of the Seller and the Servicer hereby expressly waives, to the
fullest extent permitted by applicable law, any and all notices, advertisements,
hearings or processes of law in connection with the exercise by the Agent of any
of its rights and remedies after a Event of Default occurs.
ARTICLE VIII
INDEMNIFICATION
Section VIII.1 Indemnities by the Seller. (a) Without limiting any
-------------------------
other rights which the Agent or any Purchaser may have hereunder or under
applicable law, the Seller hereby agrees to indemnify the Agent and each
Purchaser and their respective officers, directors, agents and employees (each
an "Indemnified Party") from and against any and all damages, losses, claims,
taxes, liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of the Agent or
such Purchaser) and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of any Transaction Document or the acquisition,
either directly or indirectly, by a Purchaser of an interest in the Receivables,
excluding, however:
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(i) Indemnified Amounts to the extent final judgment of a court
of competent jurisdiction holds such Indemnified Amounts resulted from
gross negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes losses
in respect of Receivables which are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related
Participant or the lack of value of the Mutual Fund Shares securing such
Receivables; or
(iii) taxes imposed by the jurisdiction in which such
Indemnified Party's principal executive office is located, on or measured
by the overall net income of such Indemnified Party to the extent that the
computation of such taxes is consistent with the Intended Characterization;
provided, however, that nothing contained in this sentence shall limit the
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liability of the Seller or the Servicer or limit the recourse of the Purchasers
to the Seller or Servicer for amounts otherwise specifically provided to be paid
by the Seller or the Servicer under the terms of this Agreement. Without
limiting the generality of the foregoing indemnification, the Seller shall
indemnify the Agent and the Purchasers for Indemnified Amounts (including,
without limitation, losses in respect of uncollectible receivables, regardless
of whether reimbursement therefor would constitute recourse to the Seller or the
Servicer) to the extent relating to or resulting from:
(ii) any representation or warranty made by the Seller or the
Servicer (or any officers of the Seller or the Servicer) under or in
connection with this Agreement, any Monthly Report or any other written
information or report delivered by the Seller or the Servicer pursuant
hereto, which shall have been false or incorrect when made or deemed made;
(iii) the failure by the Seller or the Servicer to comply with
any applicable law, rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or
Contract included therein with any such applicable law, rule or regulation;
(iv) any failure to comply with any other applicable law, rule
or regulation (including, without limitation any federal or state
securities laws or any laws, rules and regulations applicable to the sale
of insurance);
(v) any failure of the Seller or the Servicer to perform its
duties or obligations in accordance with the provisions of any Transaction
Document;
(vi) any failure of the Seller or the Servicer to maintain (A) a
valid and perfected first priority security interest in favor of the
Servicer in the Mutual Fund Shares of each Participant, and (B) a valid and
perfected first priority security interest in the Receivables, the
Collections with respect thereto and the Related Security (other than the
Mutual Fund Shares), to the full extent contemplated herein, in favor of
the Purchasers,
(vii) any claim arising out of or in connection with insurance
or services which are the subject of any Contract;
(viii) any dispute, claim, offset or defense (other than on
account of the insolvency, bankruptcy or lack of creditworthiness of the
related Participant) of the Participant to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such
Participant enforceable against it in accordance with its terms), or any
other claim resulting from the sale of any services (including life
insurance) related to such Receivable or the furnishing or failure to
furnish such merchandise or services;
(ix) the commingling of Collections of Receivables at any time
with other funds;
(x) any investigation, litigation or proceeding related to or
arising from any Transaction Document, the transactions contemplated
thereby, the use of the proceeds of a
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purchase, the ownership of the Receivable Interests or any other
investigation, litigation or proceeding relating to the Seller in which any
Indemnified Party becomes involved as a result of any of the transactions
contemplated hereby;
(xi) any inability to litigate any claim against any Participant
in respect of any Receivable as a result of such Participant being immune
from civil and commercial law and suit on the grounds of sovereignty or
otherwise from any legal action, suit or proceeding; and
(xii) any Event of Default described in paragraph (d) of Section
7.1.
(b) Without limiting the foregoing, Seller hereby further agrees to
indemnify and save each Indemnified Party harmless from any losses, costs,
damages, penalties, forfeitures, claims or expenses related to or arising from
the Contracts including, without limitation, those arising or resulting from:
(i) Any failure of any Contract or the Receivable covered
thereby to comply with any applicable laws or regulations;
(ii) Any failure on the Seller's or the Servicer's part to keep
or perform any of its obligations, express or implied, with respect to any
Contract;
(iii) Any sale or liquidation of Mutual Fund Shares (either by
the Servicer, the Seller, the issuer of such Mutual Fund Shares or any
other "security entitlement holder" (as defined in Article 8 of the Uniform
Commercial Code in the State of New Hampshire) in violation or in
contravention of any express or implied terms of the provisions of the
Contract pursuant to which such Mutual Fund Shares were pledged or the
security arrangement contemplated by such Contract; and
(iv) Any court costs and attorneys' fees, but excluding any
losses, costs, damages, penalties, forfeitures, claims or expenses solely
related to or arising from (A) the lack of credit worthiness of any
Participant or the value of the Mutual Fund Shares pledged by such
Participant or (B) the default by any Participant in the payment due under
a Contract except to the extent such default in payment occurs solely as a
result of any matter or matters described in clauses i or ii of this
Section 8.1(b).
Section VIII.2 Increased Cost and Reduced Return. If after the date
---------------------------------
hereof, any Funding Source shall be charged any fee, expense or increased cost
on account of the adoption of any applicable law, rule or regulation (including
any applicable law, rule or regulation regarding capital adequacy) or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency (a "Regulatory Change"): (i) which subjects
any Funding Source to any charge or withholding on or with respect to any
Funding Agreement or a Funding Source's obligations under a Funding Agreement,
or on or with respect to the Receivables, or changes the basis of taxation of
payments to any Funding Source of any amounts payable under any Funding
Agreement (except for changes in the rate of tax on the overall net income of a
Funding Source) or (ii) which imposes, modifies or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of a Funding Source, or credit
extended by a Funding Source pursuant to a Funding Agreement or (iii) which
imposes any other condition the result of which is to increase the cost to a
Funding Source of performing its obligations under a Funding Agreement, or to
reduce the rate of return on a Funding Source's capital as a consequence of its
obligations under a Funding Agreement, or to reduce the amount of any sum
received or receivable by a Funding Source under a Funding Agreement or to
require any payment calculated by reference to the amount of interests or loans
held or interest received by it, then, upon demand by the Agent, the Seller
shall pay to the Agent, for the benefit of the relevant Funding Source, such
amounts charged to such Funding Source or compensate such Funding Source for
such reduction.
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Section VIII.3 Other Costs and Expenses. The Seller shall pay to the
------------------------
Agent and PREFCO on demand all costs and out-of-pocket expenses in connection
with the preparation, execution, delivery and administration of this Agreement,
the transactions contemplated hereby and the other documents to be delivered
hereunder, including without limitation, the cost of PREFCO's auditors auditing
the books, records and procedures of the Seller and the Servicer, reasonable
fees and out-of-pocket expenses of legal counsel for PREFCO and the Agent (which
such counsel may be employees of PREFCO or the Agent) with respect thereto and
with respect to advising PREFCO and the Agent as to their respective rights and
remedies under this Agreement. The Seller shall pay to the Agent on demand any
and all costs and expenses of the Agent and the Purchasers, if any, including
reasonable counsel fees and expenses in connection with the enforcement of any
Transaction Document and the other documents delivered thereunder and in
connection with any restructuring or workout of any Transaction Document, or the
administration of this Agreement following an Event of Default. The Seller shall
reimburse PREFCO on demand for all other costs and expenses incurred by PREFCO
or any shareholder of PREFCO ("Other Costs"), including, without limitation, the
cost of auditing PREFCO's books by certified public accountants, the cost of
rating the Commercial Paper by independent financial rating agencies, and the
reasonable fees and out-of-pocket expenses of counsel for PREFCO with respect to
advising PREFCO as to matters relating to PREFCO's operations, provided however,
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the amount of such Other Costs payable by the Seller hereunder in any calendar
shall not exceed an amount equal to 1.5 basis points of the Purchase Limit.
Section VIII.4 Allocations. PREFCO shall allocate the liability for
-----------
Other Costs among the Seller and other Persons with whom PREFCO has entered into
agreements to purchase interests in receivables ("Other Sellers"). If any Other
Costs are attributable to the Seller and not attributable to any Other Seller,
the Seller shall be solely liable for such Other Costs. However, if Other Costs
are attributable to Other Sellers and not attributable to the Seller, such Other
Sellers shall be solely liable for such Other Costs. All allocations to be made
pursuant to the foregoing provisions of this Article VIII shall be made by
PREFCO in its sole discretion and shall be binding on the Seller and the
Servicer absent proof of manifest error by PREFCO as to such allocations.
ARTICLE IX
THE AGENT
Section IX.1 Authorization and Action. Each Purchaser hereby
------------------------
designates and appoints First Chicago to act as its agent hereunder and under
each other Transaction Document, and authorizes the Agent to take such actions
as agent on its behalf and to exercise such powers as are delegated to the Agent
by the terms of this Agreement and the other Transaction Documents together with
such powers as are reasonably incidental thereto. The Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in any
other Transaction Document, or any fiduciary relationship with any Purchaser,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for the Seller or any of its successors or assigns. The Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement, any other Transaction Document or
applicable law. The appointment and authority of the Agent hereunder shall
terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each
Purchaser hereby authorizes the Agent to execute each of the Uniform Commercial
Code financing statements on behalf of such Purchaser (the terms of which shall
be binding on such Purchaser).
Section IX.2 Delegation of Duties. The Agent may execute any of its
--------------------
duties under this Agreement and each other Transaction Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.
Section IX.3 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Purchasers for any recitals, statements, representations or
warranties made by the Seller or the Servicer contained in this Agreement, any
other Transaction Document or any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement, or any other Transaction Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, or any other Transaction Document or any other document furnished in
connection herewith or therewith, or for any failure of each of the Seller or
the Servicer to perform its obligations hereunder or thereunder, or for the
satisfaction of any condition specified in Article IV, or for the perfection,
priority, condition, value or sufficiency or any collateral pledged in
connection
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herewith. The Agent shall not be under any obligation to any Purchaser to
ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement or any
other Transaction Document, or to inspect the properties, books or records of
the Seller or the Servicer. The Agent shall not be deemed to have knowledge of
any Event of Default or Potential Event of Default unless the Agent has received
notice from the Seller or a Purchaser.
Section IX.4 Reliance by Agent. The Agent shall in all cases be
-----------------
entitled to rely, and shall be fully protected in relying, upon any document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Seller, the
Servicer or the Performance Guarantor), independent accountants and other
experts selected by the Agent. The Agent shall in all cases be fully justified
in failing or refusing to take any action under this Agreement or any other
Transaction Document unless it shall first receive such advice or concurrence of
PREFCO or the Required Investors or all of the Purchasers, as applicable, as it
deems appropriate and it shall first be indemnified to its satisfaction by the
Purchasers, provided that unless and until the Agent shall have received
--------
such advice, the Agent may take or refrain from taking any action, as the Agent
shall deem advisable and in the best interests of the Purchasers. The Agent
shall in all cases be fully protected in acting, or in refraining from acting,
in accordance with a request of PREFCO or the Required Investors or all of the
Purchasers, as applicable, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Purchasers.
Section IX.5 Non-Reliance on Agent and Other Purchasers. Each
------------------------------------------
Purchaser expressly acknowledges that neither the Agent, nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller,
the Servicer or the Performance Guarantor, shall be deemed to constitute any
representation or warranty by the Agent. Each Purchaser represents and warrants
to the Agent that it has and will, independently and without reliance upon the
Agent or any other Purchaser and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, prospects, financial and other conditions and
creditworthiness of the Seller, the Servicer or the Performance Guarantor and
made its own decision to enter into this Agreement, the other Transaction
Documents and all other documents related hereto or thereto.
Section IX.6 Reimbursement and Indemnification. The Investors agree to
---------------------------------
reimburse and indemnify the Agent and its officers, directors, employees,
representatives and agents ratably according to their Pro Rata Shares, to the
extent not paid or reimbursed by the applicable party (i) for any amounts for
which the Agent, acting in its capacity as Agent, is entitled to reimbursement
by the applicable party hereunder and (ii) for any other expenses incurred by
the Agent, in its capacity as Agent and acting on behalf of the Purchasers, in
connection with the administration and enforcement of this Agreement and the
other Transaction Documents.
Section IX.7 Agent in its Individual Capacity. The Agent and its
--------------------------------
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Seller, the Servicer or the Performance Guarantor or
any Affiliate of any of the foregoing as though the Agent were not the Agent
hereunder. With respect to the acquisition of Receivable Interests pursuant to
this Agreement, the Agent shall have the same rights and powers under this
Agreement as any Purchaser and may exercise the same as though it were not the
Agent, and the terms "Investor," "Purchaser," "Investors" and "Purchasers" shall
include the Agent in its individual capacity.
Section IX.8 Successor Agent. The Agent may, upon five days' notice to
---------------
the Seller and the Purchasers, and the Agent will, upon the direction of all of
the Purchasers (other than the Agent, in its individual capacity) resign as
Agent. If the Agent shall resign, then the Required Investors during such five-
day period shall appoint from among the Purchasers a successor agent. If for any
reason no successor Agent is appointed by the Required Investors during such
five-day period, then effective upon the termination of such five day period,
the Purchasers shall perform all of the duties of the Agent hereunder and under
the other Transaction Documents and the Seller shall make all payments in
respect of the Aggregate Unpaids directly to the applicable Purchasers and for
all purposes shall deal directly with the Purchasers. After the effectiveness of
any retiring Agent's resignation hereunder as Agent, the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other
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Transaction Documents and the provisions of this Article IX and Article VIII
shall continue in effect for its benefit with respect to any actions taken or
omitted to be taken by it while it was Agent under this Agreement and under the
other Transaction Documents.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section X.1 Assignments. (a) Each of the Seller, the Servicer and each
-----------
Investor hereby agree and consent to the complete or partial assignment by
PREFCO of all of its rights under, interest in, title to and obligations under
this Agreement to the Investors pursuant to Section 2.1 or to any other Person,
and upon such assignment, PREFCO shall be released from its obligations so
assigned. Further, the Seller and each Investor hereby agree that any assignee
of PREFCO of this Agreement or all or any of the Receivable Interests of PREFCO
shall have all of the rights and benefits under this Agreement as if the term
"PREFCO" explicitly referred to such party, and no such assignment shall in any
way impair the rights and benefits of PREFCO hereunder. Prior to the occurrence
of an Event of Default, the Seller shall not bear any of the costs and expenses
of any assignment pursuant to this Section 10.1 but shall bear such costs and
expenses after the occurrence of an Event of Default. Neither the Seller nor the
Servicer shall have the right to assign its rights or obligations under this
Agreement.
(b) Any Investor may at any time and from time to time following
notice to Seller of such assignment, assign to one or more Persons ("Purchasing
Investors") all or any part of its rights and obligations under this Agreement
pursuant to an assignment agreement, in a form and substance satisfactory to the
Agent (the "Assignment Agreement",) executed by such Purchasing Investor and
such selling Investor.
The consent of PREFCO shall be required prior to the effectiveness of any such
assignment. Each assignee of an Investor must have a short-term debt rating of
A-1 or better by Standard & Poor's Ratings Group and P-1 by ▇▇▇▇▇'▇ Investors
Service, Inc. and must agree to deliver to the Agent, promptly following any
request therefor by the Agent or PREFCO, an enforceability opinion in form and
substance satisfactory to the Agent and PREFCO. Upon delivery of the executed
Assignment Agreement to the Agent, such selling Investor shall be released from
its obligations hereunder to the extent of such assignment. Thereafter the
Purchasing Investor shall for all purposes be an Investor party to this
Agreement and shall have all the rights and obligations of an Investor under
this Agreement to the same extent as if it were an original party hereto and no
further consent or action by the Seller, the Servicer, the Purchasers or the
Agent shall be required.
(c) Each of the Investors agrees that in the event that it shall
cease to have a short-term debt rating of A-1 or better by Standard & Poor's
Ratings Group and P-1 or better by ▇▇▇▇▇'▇ Investors Service, Inc. (an "Affected
Investor"), such Affected Investor shall be obliged, at the request of PREFCO or
the Agent, to assign all of its rights and obligations hereunder to (x) another
Investor or (y) another financial institution nominated by the Agent and
acceptable to PREFCO, and willing to participate in this Agreement through the
Liquidity Termination Date in the place of such Affected Investor; provided that
--------
the Affected Investor receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such Investor's Pro Rata Share of the Capital
and Discount owing to the Investors and all accruing but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of the Receivable
Interests.
Section X.2 Participations. Any Investor may, in the ordinary
--------------
course of its business at any time sell to one or more Persons (each a
"Participant") participating interests in its Pro Rata Share of the Receivable
Interests of the Investors, its obligation to pay PREFCO its Acquisition Amounts
or any other interest of such Investor hereunder. Notwithstanding any such sale
by an Investor of a participating interest to a Participant, such Investor's
rights and obligations under this Agreement shall remain unchanged, such
Investor shall remain solely responsible for the performance of its obligations
hereunder, and the Seller, the Servicer, PREFCO and the Agent shall continue to
deal solely and directly with such Investor in connection with such Investor's
rights and obligations under this Agreement. Each Investor agrees that any
agreement between such Investor and any such Participant in respect of such
participating interest shall not restrict such Investor's right to agree to any
amendment, supplement, waiver or modification to this Agreement, except for any
amendment, supplement, waiver or modification described in clause (i) of Section
11.1(b). Prior to the occurrence of an Event of Default, the Seller shall not
bear any of the costs and expenses of any participation pursuant to this Section
10.2 but shall bear such costs and expenses after the occurrence of an Event of
Default.
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ARTICLE XI
MISCELLANEOUS
Section XI.1 Waivers and Amendments. (a) No failure or delay on the
----------------------
part of the Agent or any Purchaser in exercising any power, right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy. The rights
and remedies herein provided shall be cumulative and nonexclusive of any rights
or remedies provided by law. Any waiver of this Agreement shall be effective
only in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing in accordance with the provisions of this
Section 11.1(b). PREFCO, the Seller, the Servicer and the Agent, at the
direction of the Required Investors, may enter into written modifications or
waivers of any provisions of this Agreement, provided, however, that no such
-------- -------
modification or waiver shall:
(i) without the consent of each affected Purchaser, (A) extend
the Liquidity Termination Date or the date of any payment or deposit of
Collections by the Seller or the Servicer, (B) reduce the rate or extend
the time of payment of Discount (or any component thereof), (C) reduce any
fee payable to the Agent for the benefit of the Purchasers, (D) except
pursuant to Article X hereof, change the amount of the Capital of any
Purchaser, an Investor's Pro Rata Share or an Investor's Commitment, (E)
amend, modify or waive any provision of the definition of Required
Investors or this Section 11.1(b), (F) consent to or permit the assignment
or transfer by the Seller or the Servicer of any of its rights and
obligations under this Agreement, (G) change the definition of "Eligible
Receivable," or "Loss Percentage" or (H) amend or modify any defined term
(or any defined term used directly or indirectly in such defined term) used
in clauses (A) through (G) above in a manner which would circumvent the
intention of the restrictions set forth in such clauses; or
(ii) without the written consent of the then Agent, amend,
modify or waive any provision of this Agreement if the effect thereof is to
affect the rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Investors, the
Agent may, with the consent of the Seller, amend this Agreement solely to add
additional Persons as Investors hereunder and (ii) without the consent of the
Seller, the Servicer, the Agent, the Required Investors and PREFCO may enter
into amendments to modify any of the terms or provisions of Article II, Article
IX, Article X, Section 11.13 or any other provision of this Agreement, provided
--------
that such amendment has no negative impact upon the Seller. Any modification or
waiver made in accordance with this Section 11.1 shall apply to each of the
Purchasers equally and shall be binding upon the Seller, the Servicer, the
Purchasers and the Agent.
Section XI.2 Notices. Except as provided below, all communications and
-------
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof. The Seller hereby authorizes
the Agent to effect purchases and Discount Rate selections based on telephonic
notices made by any Person whom the Agent in good faith believes to be acting on
behalf of the Seller. The Seller agrees to deliver promptly to the Agent a
written confirmation of each telephonic notice signed by an authorized officer
of the Seller. However, the absence of such confirmation shall not affect the
validity of such notice. If the written confirmation differs from the action
taken by the Agent, the records of the Agent shall govern absent manifest error.
Section XI.3 Ratable Payments. If any Purchaser, whether by setoff or
----------------
otherwise, has payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
Section 8.2 or 8.3) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of the Aggregate Unpaids held by the other Purchasers so that
after such
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purchase each Purchaser will hold its ratable proportion of the Aggregate
Unpaids; provided that if all or any portion of such excess amount is thereafter
--------
recovered from such Purchaser, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
Section XI.4 Protection of Ownership Interests of the Purchasers. (a)
---------------------------------------------------
The Seller agrees that from time to time, at its expense, it will, or to the
extent applicable, direct the Servicer to, promptly execute and deliver all
instruments and documents, and take all actions, that may be necessary or
desirable, or that the Agent may reasonably request, to perfect, protect or more
fully evidence the Receivable Interests, or to enable the Agent or the
Purchasers to exercise and enforce their rights and remedies hereunder. Upon the
occurrence of an Event of Default, but solely to the extent that such Event of
Default continues after the Agent or any Purchaser has requested the Performance
Guarantor to cure such Event of Default under the Performance Guaranty, the
Agent may, or the Agent may direct the Seller or the Servicer to, notify the
Participants and/or the issuers of any of the Mutual Fund Shares, at the
Seller's or the Servicer's expense, of the ownership interests or security
interests of the Purchasers under this Agreement and may also direct that
payments of all amounts due or that become due under any or all Receivables be
made directly to the Agent or its designee. The Seller or the Servicer, as
applicable, shall, at any Purchaser's request, withhold the identity of such
Purchaser in any such notification.
(b) If the Seller or the Servicer fails to perform any of its
obligations hereunder, the Agent or any Purchaser may (but shall not be required
to) perform, or cause performance of, such obligation; and the Agent's or such
Purchaser's costs and expenses incurred in connection therewith shall be payable
by the Seller or the Servicer, as applicable, as provided in Section 8.3, as
applicable. Without limiting the foregoing, if the Seller or the Servicer fails
to perform any of its obligations hereunder with respect to the filing of
financing statements or other actions necessary or desirable to perfect the
security interest in the Receivables and Collections hereunder, the Seller and
the Servicer each irrevocably authorizes the Agent, in the sole discretion of
the Agent, and appoints the Agent as its attorney-in-fact, to act on behalf of
the Seller and the Servicer (i) to execute on behalf of the Seller as debtor and
to file financing statements necessary or desirable in the Agent's sole
discretion to perfect and to maintain the perfection and priority of the
interest of the Purchasers in the Receivables and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement
with respect to the Receivables as a financing statement in such offices as the
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the interests of the Purchasers in the
Receivables. This appointment is coupled with an interest and is irrevocable.
Section XI.5 Confidentiality.
---------------
(a) Each of the Seller and the Servicer shall maintain and shall cause
each of its employees and officers to maintain the confidentiality of this
Agreement and the other confidential proprietary information with respect to the
Agent and PREFCO and their respective businesses obtained by it or them in
connection with the structuring, negotiating and execution of the transactions
contemplated herein, except that each of the Seller and the Servicer and its
officers and employees may disclose such information to their respective
external accountants and attorneys and to any other party (including the
Securities and Exchange Commission, any state securities regulatory body, and
the Participants) as required by any applicable law or order of any judicial or
administrative proceeding, provided that, with respect to the Participants the
-------- ----
may only disclose the existence of the Transaction Documents and provide a brief
summary of the provisions thereof but may not provide such Participants copies
of any of the Transaction Documents.
(b) Subject to the provisions of subsection 11.5(c) below, each of
the Agent and the Purchasers shall maintain and shall cause each of its
employees and officers to maintain the confidentiality of this Agreement and the
other confidential proprietary information with respect to the Seller and the
Servicer and their respective businesses obtained by it or them in connection
with the negotiating and execution of the transactions contemplated herein.
(c) Anything herein to the contrary notwithstanding, each of the
Seller and the Servicer hereby consents to the disclosure of any nonpublic
information with respect to it (i) to the Agent, the Investors or PREFCO by each
other, (ii) by the Agent or the Purchasers to any prospective or actual
assignee or participant of any of them, (iii) by the Agent to any rating agency,
Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to PREFCO or any entity organized for the purpose of purchasing, or
making loans secured by, financial assets for which First Chicago acts as the
administrative agent and to any officers, directors, employees, outside
accountants and attorneys of any of the foregoing, (iv) to any of the respective
officers and employees of the Agent and any Purchasers or their respective
external accountants and attorneys, and (v) to any other party as required by
any law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority, body or proceedings (whether or not
having the force or effect of law).
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Section XI.6 Bankruptcy Petition. Each of the Seller, the Servicer,
-------------------
the Agent and each Investor hereby covenants and agrees that, prior to the date
which is one year and one day after the payment in full of all outstanding
senior Indebtedness of PREFCO, it will not institute against, or join any other
Person in instituting against, PREFCO any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.
Section XI.7 Limitation of Liability. Except with respect to any claim
-----------------------
arising out of the willful misconduct or gross negligence of PREFCO, the Agent
or any Investor, no claim may be made by the Seller, the Servicer or any other
Person against PREFCO, the Agent or any Investor or their respective Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement.
Section XI.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS.
Section XI.9 CONSENT TO JURISDICTION. EACH OF THE PARTIES HEREBY
-----------------------
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY PARTY
PURSUANT TO THIS AGREEMENT. EACH OF THE PARTIES HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
Section XI.10 WAIVER OF JURY TRIAL. THE AGENT, THE SELLER, THE
--------------------
SERVICER AND EACH PURCHASER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY THE SELLER OR THE SERVICER
PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR
THEREUNDER.
Section XI.11 Integration; Survival of Terms.
------------------------------
(a) This Agreement, the Performance Guaranty and the Collection
Account Agreement contain the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, superseding all prior oral or written understandings.
(b) The provisions of Article VIII and Section 11.6 and the
Performance Guaranty shall survive any termination of this Agreement.
Section XI.12 Counterparts; Severability. This Agreement may be
--------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are 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, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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Section XI.13 First Chicago Roles. Each of the Investors acknowledges
-------------------
that First Chicago acts, or may in the future act, (i) as administrative agent
for PREFCO, (ii) as issuing and paying agent for the Commercial Paper, (iii) to
provide credit or liquidity enhancement for the timely payment for the
Commercial Paper and (iv) to provide other services from time to time for PREFCO
(collectively, the "First Chicago Roles"). Without limiting the generality of
this Section 11.13, each Investor hereby acknowledges and consents to any and
all First Chicago Roles and agrees that in connection with any First Chicago
Role, First Chicago may take, or refrain from taking, any action which it, in
its discretion, deems appropriate, including, without limitation, in its role as
administrative agent for PREFCO, whether in respect of the giving of notice to
the Agent of a mandatory purchase pursuant to Section 2.1 or any other action
that First Chicago may take.
Section XI.14 Characterization. The parties hereto hereby agree that
----------------
they intend the transactions contemplated by this Agreement to be a sale of
Receivables Interests. Nonetheless, if the conveyance by the Seller to the
Purchasers of interests in Receivables hereunder shall be characterized as a
secured loan and not a sale, it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under applicable law, and that
the Seller shall be deemed to have granted to the Agent, for the ratable benefit
of the Purchasers, a duly perfected security interest in all of the Seller's
right, title and interest in, to and under the Receivables, the Collections,
each Collection Account, all Related Security, all payments on or with respect
to the Receivables, all other rights relating to and payments made in respect of
the Receivables, and all proceeds of any thereof prior to all other liens on and
security interests therein, in each case to secure the payment of the Aggregate
Unpaids and any and all other payment obligations of the Seller (including,
---------
without limitation, the indemnity obligations of the Seller under Article VIII
------- -----------
hereof) owed under any Transaction Document. After an Event of Default, the
Agent and the Purchasers shall have, in addition to the rights and remedies
which they may have under this Agreement, all other rights and remedies after
default under the UCC and other applicable law, which rights and remedies shall
be cumulative.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their respective duly authorized officers as of the date
hereof.
HAMPSHIRE FUNDING, INC.
By:
--------------------------------------
Title:
----------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone:
Fax:
PREFERRED RECEIVABLES FUNDING CORPORATION
By:
--------------------------------------
Authorized Signatory
c/o The First National Bank of
Chicago, as Agent
Suite 0079, ▇-▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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INVESTORS:
Commitment
----------
$60,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
as an Investor and as Agent
By:
---------------------------------
Authorized Agent
▇/▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇-▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
55 of 84
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Acquisition Amount" means, on the date of any purchase from PREFCO of
------------------
Receivable Interests pursuant to Section 2.1, (i) with respect to each Investor
other than First Chicago, the lesser of (a) such Investor's Pro Rata Share of
the PREFCO Transfer Price and (b) such Investor's unused Commitment and (ii)
with respect to First Chicago, the difference between (a) the PREFCO Transfer
Price and (b) the aggregate amount payable by all other Investors on such date
pursuant to clause (i) above.
"Adjusted Liquidity Price" means, in determining the PREFCO Transfer Price for
------------------------
any Receivable Interest, an amount equal to:
| OPB |
(i) DC + (ii) RI |---------------|
| 1 + (.50 x LP)|
where:
RI = the undivided percentage interest evidenced by such
Receivable Interest.
DC = the Deemed Collections.
OPB = the Outstanding Principal Balance of all Receivables.
LP = Loss Percentage.
Each of the foregoing shall be determined from the most recent Monthly Report
received from the Servicer.
"Adverse Claim" means a lien, security interest, charge or encumbrance, or other
-------------
right or claim in, of or on any Person's assets or properties in favor of any
other Person other than the rights of a Participant created by a Contract.
"Affiliate" means any Person directly or indirectly controlling, controlled by,
---------
or under direct or indirect common control with, another Person or any
Subsidiary of such other Person. A Person shall be deemed to control another
Person if the controlling Person owns 51% or more of any class of voting
securities of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of stock, by contract or otherwise.
"Agent" means First Chicago in its capacity as agent for the Purchasers pursuant
-----
to Article IX, and not in its individual capacity as an Investor, and any
successor Agent appointed pursuant to Article IX.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of all
-----------------
accrued and unpaid Discount, Purchaser Fee, Capital and all other amounts owed
(whether due or accrued) hereunder or under the Performance Guaranty to the
Agent and the Purchasers at such time.
"Approved Insurer" means any Affiliate of the Performance Guarantor authorized
----------------
to sell insurance in the applicable jurisdiction.
"Base Rate" means, a rate per annum equal to the corporate base rate, prime rate
---------
or base rate of interest, as applicable, announced by First Chicago from time to
time, changing when and as such rate changes.
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"Business Day" means any day on which banks are not authorized or required to
------------
close in New York, New York or Chicago, Illinois and The Depository Trust
Company of New York and the commercial paper markets are open for business, and,
if the applicable Business Day relates to any computation or payment to be made
with respect to the LIBO Rate, any day on which dealings in dollar deposits are
carried on in the London interbank market.
"Capital" of any Receivable Interest means, at any time, the Purchase Price of
-------
such Receivable Interest, minus the sum of the aggregate amount of Collections
and other payments received by the Agent which in each case are applied to
reduce such Capital; provided that such Capital shall be restored in the amount
--------
of any Collections or payments so received and applied if at any time and to the
extent that the distribution of such Collections or payments are rescinded or
must otherwise be returned for any reason.
"Change of Control" means an event or circumstance in connection with which the
-----------------
Performance Guarantor ceases to own, directly or indirectly (through one or more
wholly-owned entities), free and clear of any Adverse Claim or other
encumbrances, 100% of the outstanding shares of voting stock of the Seller or
the Servicer on a fully diluted basis.
"Collateral Deficient Receivable" means at any time, a Receivable for which the
-------------------------------
net asset value of the Mutual Fund Shares pledged to secure such Receivable is
less than 150% of the then Outstanding Balance of such Receivable but is greater
than or equal to 130% of the then Outstanding Balance of such Receivable.
"Collateral Deficient Receivables Percentage" means, at any time, a percentage
-------------------------------------------
equal to (i) the aggregate Outstanding Balance of all Collateral Deficient
Receivables at such time, divided by (ii) Gross Receivables Balance.
------- --
"Collection Account" means the sub-account in which any Collections are
------------------
collected or deposited.
"Collection Account Agreement" means that certain tri-party agreement
----------------------------
substantially in the form of Exhibit V hereto between the Seller, the Agent and
the Collection Bank.
"Collection Bank" means, at any time, the bank or other financial institution
---------------
which holds the Collection Account.
"Collection Notice" means a notice substantially in the form of Exhibit A to the
-----------------
Collection Account Agreement.
"Collections" means, with respect to any Receivable, all cash collections and
-----------
other cash proceeds in respect of such Receivable, including, without
limitation, all fees, interest and cash proceeds of Related Security with
respect to such Receivable and all amounts payable to the Purchasers by the
Seller pursuant to Section 1.8.
"Commercial Paper" means promissory notes of PREFCO issued by PREFCO in the
----------------
commercial paper market.
"Commitment" means, for each Investor, the commitment of such Investor to
----------
purchase its Pro Rata Share of Receivable Interests from (i) the Seller and (ii)
PREFCO, such Pro Rata Share not to exceed, in the aggregate, the amount set
forth opposite such Investor's name on the signature pages of this Agreement, as
such amount may be modified in accordance with the terms hereof.
"Contingent Obligation" of a Person means any agreement, undertaking or
---------------------
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
"Contract" means, with respect to any Receivable, any and all instruments,
--------
agreements, invoices or other writings pursuant to which such Receivable arises
or which evidences such Receivable and including the Agency Agreement and
Limited Power of Attorney attached hereto as Exhibit VII hereto and the
Prospectus delivered to the Participant in connection with the execution by the
Participant of such Contract.
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"Conversion Rate" means the interest-bearing equivalent rate per annum of a
---------------
discount CP Rate, which equivalent rate shall be an amount equal to the quotient
of:
360 x D
-----------
360 (D x T)
where:
D = the CP Rate expressed on a discount basis (expressed in decimals)
and
T = the time to maturity (in days).
"CP Rate" means, requested by the Seller and agreed to by PREFCO, equivalent to
-------
the rate (or if more than one rate, the weighted average of the rates) at which
Commercial Paper may be sold by any placement agent or commercial paper dealer
reasonably selected by PREFCO, as agreed between each such dealer or agent and
PREFCO, together with all dealer commissions, fees and other similar expenses in
connection with the issuance of Commercial Paper; provided, however, that if the
-------- -------
rate (or rates) as agreed between any such agent or dealer and PREFCO is a
discount rate (or rates), the "CP Rate" shall be the rate (or if more than one
rate, the weighted average of the rates) resulting from PREFCO's converting such
discount rate (or rates) to the Conversion Rate.
"Deemed Collections" means the aggregate of all amounts owing to PREFCO
------------------
pursuant to Sections 1.8 and Article VIII.
"Default Rate" means, a rate per annum equal to the corporate base rate, prime
------------
rate or base rate of interest, as applicable, announced by First Chicago from
time to time, changing when and as such rate changes, plus 2% per annum.
"Discount" means for each Receivable Interest an amount equal to the product of:
--------
AD
DR x C x ---
360
where:
DR = the weighted average Discount Rate for such Receivable
Interest;
C = the weighted average Capital of such Receivable Interest; and
AD = the actual number of days elapsed since the prior Settlement
Date;
provided that no provision of this Agreement shall require the payment or permit
--------
the collection of Discount in excess of the maximum permitted by applicable law;
and provided, further, that Discount shall not be considered paid by any
-------- -------
distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
"Discount Rate" means the LIBO Rate, the CP Rate or the Base Rate, as
-------------
applicable.
"Early Collection Fee" means, for any Receivable Interest which at any time has
--------------------
its Capital reduced prior to the date on which it was originally scheduled to
mature, the excess, if any, of (i) the Discount that would have accrued
subsequent to the date of such reduction or termination on the Capital of such
Receivable Interest if such reduction or termination had not occurred, over (ii)
the sum of (a) to the extent all or a portion of such Capital is allocated to
another Receivable Interest, the Discount actually accrued during such period on
such Capital for the new Receivable Interest, and (b) to the extent such Capital
is not allocated to another Receivable Interest, the income, if any, actually
received during such period by the holder of such Receivable Interest from
investing the portion of
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such Capital not so allocated. In the event that the amount referred to in
clause (ii) exceeds the amount referred to in clause (i), the relevant Purchaser
or Purchasers agree to pay to the Seller the amount of such excess.
"Eligible Receivable" means, at any time, a Receivable:
-------------------
(a) the Participant of which (i) if a natural person, is a resident
of the United States or, if a corporation or other business organization, is
organized under the laws of the United States or any political subdivision
thereof and has its chief executive office in the United States; (ii) is not an
Affiliate of any of the parties hereto; and (iii) is not a government or a
governmental subdivision or agency,
(b) which is an "account", "chattel paper", or "general intangible"
within the meaning of Section 9-105 and Section 9-106, respectively, of the UCC
of all applicable jurisdictions,
(c) which is denominated and payable only in United States
dollars in the United States,
(d) which arises under a Contract in substantially the form of the
form of contract set forth on Exhibit VII hereto or otherwise approved by the
Agent in writing, which, together with such Receivable, is duly authorized and
is in full force and effect and constitutes the legal, valid and binding
obligation of the related Participant enforceable against such Participant in
accordance with its terms subject to no offset, counterclaim or other defense,
(e) which arises under a Contract which (A) does not require the
Participant under such Contract to consent to the transfer, sale or assignment
of the rights and benefits to be transferred hereunder and (B) does not contain
a confidentiality provision that purports to restrict the ability of any
Purchaser to exercise its rights under this Agreement, including, without
limitation, its right to review the Contract,
(f) which arises under a Contract that contains an obligation for a
specified sum of money, and has an outside maturity date of no later than June
30, 2008 (unless earlier terminated in accordance with the terms of such
Contract),
(g) which, together with the Contract related thereto, does not
contravene any law, rule or regulation applicable thereto (including, without
limitation, any law, rule and regulation relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to which no part of the
Contract related thereto is in violation of any such law, rule or regulation,
(h) which was generated in the ordinary course of the Seller's
business and pursuant to the distribution of a Prospectus by a registered
broker-dealer which Prospectus and sales procedures comply with all applicable
laws, rules and regulations (including, without limitation, all federal and
state securities laws),
(i) which is an account receivable or obligation representing all or
part of the sales price of insurance and services within the meaning of Section
3(c)(5) of the Investment Company Act of 1940, as amended;
(j) the Contract with respect to which (i) accrues minimum Finance
Charges of at least 6% per annum and (ii) permits the Seller to alter, at any
time, the amount of Finance Charges payable thereunder up to, subject to
applicable law, a maximum of 3 percentage points above the prime or base rate as
quoted in The Wall Street Journal;
(k) the Contract with respect to which has not been modified in any
manner and does not have the "Modification of Agreement" box checked at the top
of such Contract;
(l) which was generated in connection with the financing of life
insurance premiums payable in connection with a life insurance policy issued by
an Approved Insurer;
(m) the payment of which is secured by Mutual Fund Shares that (A)
were purchased and held for the minimum period required under applicable state
and federal securities laws before such Mutual Fund Shares were pledged to
secure payment of such Receivable, (B) satisfy the requirements set forth in the
Prospectus, and (C) have an offering price of at least 250% of the Outstanding
Principal Balance of such Receivable as of the date of creation of such
Receivable;
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(n) which is not a Terminated Receivable; and
(o) pursuant to which no lump sum administration fee payment was
made at the date of inception of such Receivable.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
-----
from time to time.
"Event of Default" has the meaning specified in Article VII.
----------------
"Federal Funds Effective Rate" means, for any period, a fluctuating interest
----------------------------
rate per annum equal for each day during such period equal to (a) the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the preceding Business Day) by
the Federal Reserve Bank of New York in the Composite Closing Quotations for
U.S. Governments Securities; or (b) if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10:30
a.m. (Chicago time) for such day on such transactions received by First Chicago
from three federal funds brokers of recognized standing selected by it.
"Finance Charges" means, with respect to a Contract, any fees, finance charges,
---------------
interest, late payment charges or similar charges owing pursuant to such
Contract provided, however "Finance Charges" shall not include any Transaction
Fees paid in cash directly by a Participant. For the purposes of this
definition, "Transaction Fees" means any "Placement Fee," "Program Fee,"
"Special Service Fee," "Termination Fee," or "Liquidation Fee," each as defined
in the "Summary of Charges" section of the Prospectus.
"First Chicago" means The First National Bank of Chicago in its individual
-------------
capacity and its successors.
"First Chicago Roles" has the meaning set forth in Section 11.13.
-------------------
"Funding Agreement" means this Agreement and any agreement or instrument
-----------------
executed by any Funding Source with or for the benefit of PREFCO.
"Funding Source" means (i) any Investor or (ii) any insurance company, bank or
--------------
other financial institution providing liquidity, credit enhancement or back-up
purchase support or facilities to PREFCO.
"Gross Receivables Balance" means, at any time, the aggregate Outstanding
-------------------------
Balance of all Eligible Receivables at such time.
"Hedge Contract" means, any interest rate cap agreement purchased by the Seller
--------------
in accordance with Section 5.1(k) which provides for periodic cap payments for a
notional amount and at a strike rate from a counter-party approved by the Agent.
Each Hedge Contract shall provide that if the payor shall be downgraded below AA
- by Standard and Poor's Ratings Services or Aa3 by ▇▇▇▇▇'▇ Investors Service,
Inc., the Seller shall be responsible for finding a replacement payor that
fulfills the ratings requirement above.
"Indebtedness" of a Person means such Person's (i) obligations for borrowed
------------
money, (ii) obligations representing the deferred purchase price of property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by liens or payable out of the proceeds or
production from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments, (v)
capitalized lease obligations, (vi) net liabilities under interest rate swap,
exchange or cap agreements, (vii) Contingent Obligations and (viii) liabilities
in respect of unfunded vested benefits under plans covered by Title IV of ERISA.
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"Intended Characterization" means, for income tax purposes, the characterization
-------------------------
of the acquisition by the Purchasers of Receivable Interests as a loan or loans
by the Purchasers to the Seller secured by the Receivables, the Related Security
and the Collections.
"Investors" means the financial institutions listed on the signature pages of
---------
this Agreement under the heading "Investors" and their respective successors and
assigns.
"LIBO Rate" means the rate per annum equal to the sum of (i) (a) the rate at
---------
which deposits in U.S. Dollars are offered by First Chicago to first-class banks
in the London interbank market at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of the relevant period, such deposits being
in the approximate amount of the Capital of the Receivable Interest to be funded
or maintained, divided by (b) one minus the Reserve Requirement (expressed as a
decimal) applicable to such period plus (ii) 1.0% per annum. The LIBO Rate
shall be rounded, if necessary, to the next higher 1/16 of 1%.
"Liquidity Termination Date" means June 30, 1998.
--------------------------
"Loss Percentage" means 5%.
---------------
"Low Ratio Procedures" shall mean the Servicer's procedures relating to
--------------------
Collateral Deficient Receivables as included as a part of the Monitoring and
Collection Procedures attached hereto as VIII.
"Material Adverse Effect" means a material adverse effect on (i) the financial
-----------------------
condition or operations of the Seller, the Servicer, their respective
Subsidiaries or the Performance Guarantor, (ii) the ability of the Seller, the
Servicer or the Performance Guarantor to perform its obligations under the
Transaction Documents to which it is a party, (iii) the legality, validity or
enforceability of this Agreement, the Performance Guaranty or the Collection
Account Agreement, (iv) any Purchaser's interest in the Receivables generally or
in any significant portion of the Receivables, the Related Security or the
Collections with respect thereto, (v) the collectibility or enforceability of
the Receivables generally or of any material portion of the Receivables, or (vi)
the Servicer's first priority perfected security interest in such Mutual Fund
Shares.
"Monitoring and Collection Procedures" means the Servicer's monitoring
------------------------------------
procedures and collection practices and procedures relating to Contracts and
Receivables existing on the date hereof, including, without limitation the
Servicer's Low Ratio Procedures and Termination Procedures, in each case, all as
attached as Exhibit VIII hereto, as the same be modified from time to time in
accordance with this Agreement.
"Monthly Report" means a report, in a form to be agreed upon between the Seller,
--------------
the Servicer and the Agent, furnished by the Servicer to the Agent pursuant to
Section 6.5.
"Mutual Fund Shares" means all mutual fund shares, securities and instruments,
------------------
in each case, whether certificated or uncertificated, pledged by a Participant
to secure its obligations under its Contract.
"Net Receivables Balance" means, at any time, the aggregate Outstanding
-----------------------
Principal Balance of all Eligible Receivables at such time.
"Non-Defaulting Investors" shall have the meaning set forth in Section 2.5
------------------------
hereof.
"Other Costs" has the meaning set forth in Section 8.3 hereof.
-----------
"Outstanding Balance" of any Receivable at any time means the then outstanding
-------------------
principal balance of such Receivable (including any capitalized Finance Charges)
plus any accrued and unpaid Finance Charges which have not yet been capitalized.
----
"Outstanding Principal Balance" of any Receivable at any time means the then
-----------------------------
outstanding principal balance of such Receivable (including any capitalized
Finance Charges).
"Participant" means a Person which entered into a Contract and pledged Mutual
-----------
Fund Shares to secure the non-recourse loans made to such Person in connection
with the financing of insurance premiums and related fees and interest.
"Performance Guarantor" means Jefferson-Pilot Corporation, a North Carolina
---------------------
corporation, and the direct or indirect parent company of the Seller and the
Servicer.
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"Performance Guaranty" means that certain Performance Guaranty of even date
--------------------
herewith executed by the Performance Guarantor in favor of the Agent on behalf
of the Purchasers.
"Person" means an individual, partnership, corporation (including a business
------
trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity, or a government or any
political subdivision or agency thereof.
"Potential Event of Default" means an event which, with the passage of time or
--------------------------
the giving of notice, or both, would constitute an Event of Default.
"PREFCO Residual" means the sum of the PREFCO Transfer Price Reductions.
---------------
"PREFCO Transfer Price" means, with respect to the assignment by PREFCO of one
---------------------
or more Receivable Interests to the Agent for the benefit of the Investors
pursuant to Section 2.1, the sum of (i) the lesser of (a) the Capital of each
Receivable Interest and (b) the Adjusted Liquidity Price of each Receivable
Interest and (ii) all accrued and unpaid Discount for such Receivable Interests.
"PREFCO Transfer Price Deficit" shall have the meaning set forth in Section 2.5
-----------------------------
hereof.
"PREFCO Transfer Price Reduction" means in connection with the assignment of a
-------------------------------
Receivable Interest by PREFCO to the Agent for the benefit of the Investors, the
positive difference between (i) the Capital of such Receivable Interest and (ii)
the Adjusted Liquidity Price for such Receivable Interest.
"Program Yield" means, as of any Settlement Date, an amount equal to the
-------------
remainder of (A) the interest rate applicable pursuant to the Contract to the
Receivables as of such Settlement Date, minus (B) the sum of (i) the weighted
-----
average Discount Rate for such Settlement Date, plus (ii) 0.225% plus (iii)
---- ----
2.00%.
"Pro Rata Share" means, for each Investor, the Commitment of such Investor
--------------
divided by the Purchase Limit, adjusted as necessary to give affect to the
application of the terms of Section 2.5.
"Prospectus" means the prospectus entitled "Program for Coordinating the
----------
Acquisition of Mutual Fund Shares" together with any and all amendments and
supplements thereto, all as set forth on Exhibit X hereto.
"Purchase Limit" means the aggregate of the Commitments of the Investors
--------------
hereunder.
"Purchase Price" means, with respect to any purchase of a Receivable Interest,
--------------
an amount equal to 95% of the Outstanding Principal Balance of the Receivables
included in such Receivables Interest.
"Purchaser" means PREFCO or an Investor, as applicable.
---------
"Purchaser Fee" means, with respect to any Settlement Date, a fee payable to the
-------------
Purchasers in an amount equal to 22.5 basis points per annum on the weighted
average of Capital outstanding since the preceding Settlement Date (or in the
case of the first Settlement Date, since the date of this Agreement), payable
monthly in arrears on each Settlement Date pursuant to Sections 1.6 and 1.7
hereof.
"Receivable" means the non-recourse indebtedness and other obligations owed to
----------
the Seller (without giving effect to any transfer or conveyance hereunder)
whether constituting an account, chattel paper, instrument or general
intangible, arising in connection with the financing of premium payments
relating to sale of insurance pursuant to an agreement in the form of Exhibit
VII hereto, and includes, without limitation, the obligation to pay any Finance
Charges with respect thereto, provided however, the term "Receivable" shall not
-------- -------
include the rights or obligations of the Seller or the Servicer to service such
Receivable.
"Receivable Interest" means, at any time, an undivided percentage ownership
-------------------
interest in (i) all Receivables, (ii) all Related Security with respect to such
Receivables, and (iii) all Collections with respect to, and other proceeds of,
such Receivables. Such undivided percentage interest shall equal an amount
equal to the quotient of:
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C + R
-----
NRB
where:
C = the Capital of such Receivable Interest.
R = an amount equal to the Loss Percentage multiplied by the
Capital of such Receivable Interest.
NRB = the Net Receivables Balance.
"Receivable Loss" means, with respect to any Receivable, an amount equal to any
---------------
loss in connection with the collection of such Receivable for an amount less
than the Outstanding Balance thereof.
"Records" means, with respect to any Receivable, all Contracts and other
-------
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to such Receivable, any Related Security
therefor and the related Participant.
"Reduction Percentage" means, for any Receivable Interest acquired by the
--------------------
Investors from PREFCO for less than the Capital of such Receivable Interest, a
percentage equal to a fraction the numerator of which is the PREFCO Transfer
Price Reduction for such Receivable Interest and the denominator of which is the
Capital of such Receivable Interest.
"Reinvestment" shall have the meaning set forth in Section 1.6 hereof.
------------
"Related Security" means, with respect to any Receivable:
----------------
(b) all Mutual Fund Shares purchased by the Participant and
pledged to secure the payment of such Receivable,
(c) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements and security agreements
describing any collateral securing such Receivable,
(d) all guaranties and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise,
(e) any Hedge Contract,
(f) all Records related to such Receivables, and
(g) all proceeds of any of the foregoing.
"Reporting Date" shall have the meaning set forth in Section 6.5 hereof.
--------------
"Required Investors" means, at any time, Investors with Commitments in excess of
------------------
66-2/3% of the Purchase Limit.
"Reserve Requirement" means the maximum aggregate reserve requirement (including
-------------------
all basic, supplemental, marginal and other reserves) which is imposed against
First Chicago in respect of Eurocurrency liabilities, as defined in Regulation D
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"Section" means a numbered section of this Agreement, unless another document is
-------
specifically referenced.
"Servicer" shall have the meaning set forth in Section 6.1 hereof.
--------
"Servicer Advance" means any advance made by the Servicer pursuant to Section
----------------
6.6 hereof.
"Servicing Fee" means with respect to any Settlement Date, a fee equal to the
-------------
product of (x) the weighted average of Capital outstanding since the preceding
Settlement Date (or in the case of the first Settlement Date, since the date of
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this Agreement), times (y) 2.00% times (z) 1/12, which fee shall be paid monthly
----- -----
in arrears on each Settlement Date pursuant to Sections 1.6 and 1.7 hereof.
"Settlement Date" means the 10th day of each month, with the initial Settlement
---------------
Date hereunder to occur on February 10, 1998.
"Settlement Period" means the period from the first day of each calendar month
-----------------
to and including the last day of each calendar month.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
----------
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, limited liability company, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Seller.
"SunTrust Bank Financing" means that certain Revolving Credit Agreement between
-----------------------
the Seller and SunTrust Bank as more fully described in the "Risk Factors"
section of the Prospectus.
"Termination Date" means for any Receivable Interest, the earliest to occur of
----------------
(i) the Liquidity Termination Date, (ii) the Business Day immediately prior to
the occurrence of an Event of Default set forth in paragraph (d) of Article VII,
(iii) that Business Day designated by the Required Investors after the
occurrence of an Event of Default other than an Event of Default set forth in
paragraph (d) of Article VII, and (iv) 30 Business Days after written notice
from the Seller.
"Termination Procedures" means the Servicer's procedures for the termination of
----------------------
Receivables and related Contracts as set forth on Exhibit VIII hereto.
"Terminated Program Percentage" means as of the last day of any calendar month,
-----------------------------
a percentage equal to (i) the aggregate Outstanding Balance of Terminated
Receivables during such month divided by (ii) the Gross Receivables Balance.
------- --
"Terminated Receivable" means any Receivable which, in accordance with the
---------------------
Contract related thereto, has been terminated, whether upon its maturity date,
as a result of becoming an Under Collateralized Receivable, or otherwise.
"Transaction Documents" means, collectively, this Agreement, the Contracts, the
---------------------
Collection Account Agreement, the Performance Guaranty, and all other
instruments, documents and agreements executed and delivered by the Seller in
connection herewith.
"UCC" means the Uniform Commercial Code as from time to time in effect in the
---
specified jurisdiction.
"Under Collateralized Receivable" means at any time, a Receivable for which the
-------------------------------
net asset value of the Mutual Fund Shares pledged to secure such Receivable is
less than 130% of the then Outstanding Balance of such Receivable.
"Under Collateralized Receivables Percentage" means, at any time, a percentage
-------------------------------------------
equal to (i) the aggregate Outstanding Balance of all Under Collateralized
Receivables at such time, divided by (ii) Gross Receivables Balance.
------- --
All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles. All terms used in
Article 9 of the UCC in the State of Illinois, and not specifically defined
herein, are used herein as defined in such Article 9.
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EXHIBIT III
PLACES OF BUSINESS OF THE SELLER AND THE SERVICER; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)
SELLER
------
Hampshire Funding, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SERVICER
--------
Hampshire Funding, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Federal Employer Identification Number of Seller: ▇▇-▇▇▇▇▇▇▇
Federal Employer Identification Number of Servicer: ▇▇-▇▇▇▇▇▇▇
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EXHIBIT IV
COLLECTION BANK AND COLLECTION ACCOUNT;
Citibank, N.A.
Account No.: ▇▇▇▇▇▇▇▇ (initially) with a sub-account to be established on
or prior to January 23, 1998.
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EXHIBIT V
FORM OF COLLECTION ACCOUNT AGREEMENT
[ATTACHED]
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EXHIBIT VI
FORM OF COMPLIANCE CERTIFICATE
To: The First National Bank of Chicago, as Agent
This Compliance Certificate is furnished pursuant to that certain Receivables
Purchase Agreement dated as of December 31, 1997, among Hampshire Funding, Inc.
(as "Seller" and "Servicer"), the Purchasers party thereto and The First
National Bank of Chicago, as agent for such Purchasers (the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) I am the duly elected _____________________ of the Seller;
(2) I have reviewed the terms of the Agreement and I have made, or have caused
to be made under my supervision, a detailed review of the transactions and
conditions of the Seller and its Subsidiaries during the accounting period
covered by the attached financial statements;
(3) The examinations described in paragraph 2 did not disclose, and I have no
knowledge of, the existence of any condition or event which constitutes an
Event of Default or Potential Event of Default, as each such term is
defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Seller has taken, is taking, or proposes to
take with respect to each such condition or event:
The foregoing certifications, and the financial statements delivered in
connection herewith, are made and delivered this
____ day of ______________,19___.
---------------------------
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EXHIBIT VII
FORM OF CONTRACT
[ATTACHED]
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EXHIBIT VIII
MONITORING AND COLLECTION PROCEDURES;
LOW RATIO PROCEDURES
TERMINATION PROCEDURES
[ATTACHED]
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EXHIBIT IX
[RESERVED]
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EXHIBIT X
PROSPECTUS
[ATTACHED]
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EXHIBIT XI
FORM OF LEGAL OPINIONS OF SELLER,
SERVICER AND PERFORMANCE GUARANTOR
[ATTACHED]
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SCHEDULE A
DOCUMENTS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
(1) Copy of the Resolutions of the Board of Directors of the Seller certified
by its Secretary authorizing the Seller's execution, delivery and
performance of the Agreement and the other documents to be delivered by it
thereunder.
(2) Copy of the Resolutions of the Board of Directors of the Performance
Guarantor certified by its Secretary authorizing the Performance
Guarantor's execution, delivery and performance of the Performance
Guaranty.
(3) Articles or Certificate of Incorporation of each of the Seller and the
Performance Guarantor certified by the Secretary of State of the
jurisdiction of incorporation of the Seller, the Servicer and the
Performance Guarantor on or within thirty (30) days prior to the initial
purchase.
(4) Good Standing Certificate for each of the Seller and the Performance
Guarantor issued by the Secretaries of State of each jurisdiction where it
has material operations.
(5) A certificate of the Secretary of the Seller certifying (i) the names and
signatures of the officers authorized on its behalf to execute the
Agreement and any other documents to be delivered by it thereunder and (ii)
a copy of the Seller's By-Laws.
(6) A certificate of the Secretary of the Performance Guarantor certifying (i)
the names and signatures of the officers authorized on its behalf to
execute the Performance Guaranty and (ii) a copy of the Performance
Guarantor's By-Laws.
(7) Time stamped receipt copies of proper financing statements, duly filed
under the UCC on or before the date of such initial purchase in all
jurisdictions as may be necessary or, in the opinion of the Agent,
desirable, under the UCC of all appropriate jurisdictions or any comparable
law in order to perfect the ownership interests contemplated by the
Agreement.
(8) Time stamped receipt copies of proper UCC termination statements, if any,
necessary to release all security interests and other rights of any Person
in the Receivables, Contracts or Related Security previously granted by the
Seller.
(9) Certified copies of request for information or copies (Form UCC-11) (or a
similar search report certified by parties acceptable to the Agent) dated a
date reasonably near the date of the initial purchase listing all effective
financing statements which name the Seller (under its present name and any
previous name) as transferor or debtor and which are filed in jurisdictions
in which the filings were made pursuant to item 6 above together with
copies of such financing statements.
(10) A favorable opinion of legal counsel for the Seller, the Servicer and the
Performance Guarantor reasonably acceptable to the Agent in the form of
Exhibit XI hereto.
(11) A favorable opinion of legal counsel for each Investor, reasonably
acceptable to the Agent which addresses the following matters:
(a) The Agreement has been duly authorized by all necessary corporate
action of the Investor.
(b) The Agreement has been duly executed and delivered by the Investor
and, assuming due authorization, execution and delivery by each of the
other parties thereto, constitutes a legal, valid and binding
obligation of the Investor, enforceable against the Investor in
accordance with its terms.
(12) The Seller shall have paid an up-front fee of $200,000.
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(13) Executed copies of (i) all consents from and authorizations by any Persons
and (ii) all waivers and amendments to existing credit facilities, that are
necessary in connection with the Agreement.
(14) For each Purchaser that is not incorporated under the laws of the United
States of America, or a state thereof, two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Purchaser is entitled to receive payments under the
Agreement without deduction or withholding of any United States federal
income taxes.
(15) An executed copy of the Performance Guaranty.
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