-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DZ3N3FtMfXl+cshPGMDnwc4fa6gO+nBYTTXfQ/qGngzadcbcxjLkkMOHANO9ZaCr FXf2aLVEsFKkREVp//HC1g== 0000719271-95-000031.txt : 19951118 0000719271-95-000031.hdr.sgml : 19951118 ACCESSION NUMBER: 0000719271-95-000031 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951109 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANUHCO INC CENTRAL INDEX KEY: 0000719271 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 460278762 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12070 FILM NUMBER: 95588719 BUSINESS ADDRESS: STREET 1: 9393 W 110TH ST STREET 2: STE 100 CITY: OVERLAND PARK STATE: KS ZIP: 66210 BUSINESS PHONE: 9134512800 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CARRIERS INC DATE OF NAME CHANGE: 19910812 10-Q 1 Form 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 [x] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 1995 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number - 0-12321 ANUHCO, INC. State of Incorporation - Delaware IRS Employer Identification No. - 46-0278762 9393 West 110th Street, Suite 100 Overland Park, Kansas 66210 Telephone Number - (913) 451-2800 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x . No. . Indicate the number of shares outstanding of each of the issuer's classes of common stock. Anuhco, Inc. Common Stock, $0.01 par value 7,139,970 shares outstanding as of November 8, 1995 Form 10-Q Contains 15 pages PART I - FINANCIAL INFORMATION Item 1. Financial Statements ANUHCO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the Periods Ended September 30 (In Thousands, Except Per Share Data)
Third Quarter Nine Months 1995 1994 1995 1994 Operating Revenue................ $24,651 $24,913 $73,851 $71,271 Operating Expenses............... 23,967 23,472 71,716 67,251 Operating Income................. 684 1,441 2,135 4,020 Nonoperating Income (Expense) Interest income................ 497 76 1,655 188 Interest expense............... ( 6) ( 23) ( 72) (102) Gain on sale of property and equipment, net............... 9 29 52 43 Other, net..................... -- -- -- 1 Total nonoperating income (expense) 500 82 1,635 130 Income from Continuing Operations before Income Taxes............ 1,184 1,523 3,770 4,150 Income Tax Provision (Note 2).... 237 -- 754 -- Income from Continuing Operations 947 1,523 3,016 4,150 Income from Discontinued Operations (Note 6)....................... -- -- -- 1,250 Net Income....................... $ 947 $ 1,523 $ 3,016 $ 5,400 Average Common Shares Outstand- ing (Note 5)................... 7,392 7,544 7,500 7,543 Net Income Per Share from Continu- ing Operations................. $0.13 $0.20 $0.40 $0.55 Net Income Per Share from Discon- tinued Operations.............. $0.00 $0.00 $0.00 $0.16 Net Income Per Share............. $0.13 $0.20 $0.40 $0.71
The accompanying notes to consolidated financial statements are an integral part of these statements. ANUHCO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
Sept 30 Dec. 31 1995 1994 ASSETS (In Thousands) Current Assets Cash and temporary cash investments....... $ 5,224 $11,365 Short term investments.................. 28,027 26,893 Freight accounts receivable, less allowance for doubtful accounts of $486 and $389, respectively................ 9,263 8,675 Finance accounts receivable, less allowance for doubtful accounts of $84 8,499 -- Other current assets.................... 796 983 AFS Net Assets (Note 6)................. 14,341 21,095 Total current assets.................... 66,150 69,011 Operating Property, at Cost Revenue equipment....................... 18,868 15,939 Land.................................... 2,826 2,761 Structures and improvements............. 7,468 6,859 Other operating property................ 4,609 4,097 33,771 29,656 Less accumulated depreciation........... (17,154) (15,239) Net operating property................ 16,617 14,417 Long-Term Obligation Receivable........... -- 1,270 Intangibles and Other Assets (Note 7)..... 3,316 74 $86,083 $84,772
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable........................ $ 1,507 $ 906 Accrued payroll and fringes............. 5,455 5,775 Claims and insurance accruals........... 541 247 Accrued and current deferred income taxes 587 -- Other accrued expenses.................. 1,083 425 Total current liabilities............... 9,173 7,353 Shareholders' Equity (Note 5) Preferred stock with $0.01 par value, authorized 1,000,000 shares, none outstanding............................. -- -- Common stock with $0.01 par value, authorized 13,000,000 shares, outstanding 7,139,970 and7,552,920 shares,respectively 76 76 Paid-in capital......................... 5,357 5,339 Retained earnings....................... 75,020 72,004 Treasury stock, 417,100 shares, at cost. ( 3,543) -- Total shareholders' equity.............. 76,910 77,419 $86,083 $84,772
The accompanying notes to consolidated financial statements are an integral part of these statements. ANUHCO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the First Nine Months Ended September 30
1995 1994 (In Thousands) Cash Flows From Operating Activities - Net income................................... $ 3,016 $ 5,400 Adjustments to reconcile net income to net cash provided by operating activities - Gain on sale of assets..................... ( 50) ( 43) Depreciation and amortization.............. 2,107 1,727 Provision for doubtful accounts receivable. 250 -- Net increase (decrease) from change in other working capital items affecting operating activities.................... 411 ( 366) Income from discontinued operations (Note 6)..................... -- (1,250) Net Cash Provided(Used) by operating activities 5,734 5,468 Cash Flows from Investing Activities - Proceeds from discontinued operations (Note 6)................................... 6,754 1,250 Purchase of finance subsidiary and related software/service agreement................. (11,216) -- Purchase of operating property............... ( 4,008) (5,334) Short-term investments, net.................. ( 1,134) (4,350) ( 9,604) (8,434) Cash Flows from Financing Activities - Payments to acquire treasury stock........... ( 3,543) -- Repayment of debt............................ -- (1,390) Collection of long-term obligation receivable 1,270 -- Other........................................ 2 -- ( 2,271) (1,390) Net Increase (Decrease) In Cash and Temporary Cash Investments................... ( 6,141) (4,356) Cash and Temporary Cash Investments at beginning of period.......................... 11,365 4,708 Cash and Temporary Cash Investments at end of period............................. $ 5,224 $ 352 Cash Paid During the Period for: Interest..................................... $ -- $ 107 Income Taxes................................. 1,153 47
The accompanying notes to consolidated financial statements are an integral part of these statements. ANUHCO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Periods Ended September 30
Third Quarter Nine Months 1995 1994 1995 1994 (In Thousands) Common Stock - Balance at beginning and end of period........................... $ 76 $ 75 $ 76 $ 75 Paid-in Capital - Balance at beginning of period..... $ 5,357 $ 5,322 $ 5,339 $ 5,319 Issuance of common shares under the Incentive Stock Plan............. -- 7 18 10 Balance at end of period........... $ 5,357 $ 5,329 $ 5,357 $ 5,329 Retained Earnings - Balance at beginning of period..... $74,073 $15,541 $72,004 $11,664 Net Income......................... 947 1,523 3,016 5,400 Balance at end of period........... $75,020 $17,064 $75,020 $17,064 Treasury Stock - Balance at beginning of period..... $ -- $ -- $ -- $ -- Purchase of 417,100 shares of Common Stock..................... (3,543) -- (3,543) -- Balance at end of period........... $(3,543)$ -- $(3,543) $ --
The accompanying notes to consolidated financial statements are an integral part of these statements. ANUHCO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Principles of Consolidation The consolidated financial statements include Anuhco and all of its subsidiary companies ("the Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and have not been examined or reviewed by independent public accountants. In the opinion of management, all adjustments necessary to present fairly the results of operations have been made. Pursuant to SEC rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from these statements unless significant changes have taken place since the end of the most recent fiscal year. Anuhco believes that the disclosures contained herein, when read in conjunction with the financial statements and notes included, or incorporated by reference, in Anuhco's Form 10-K, filed with the SEC on March 10, 1995, are adequate to make the information presented not misleading. It is suggested, therefore, that these statements be read in conjunction with the statements and notes included, or incorporated by reference, in the aforementioned report on Form 10-K. 2. Income Taxes The Company accounts for income taxes in accordance with the liability method as required in the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". The impact of significant temporary differences and carryforwards representing deferred tax assets and liabilities is determined utilizing the enacted tax rates expected to be in effect when such differences reverse. At December 31, 1994 the Company had utilized substantially all of its net operating loss and tax credit carryforwards, but anticipated the generation of additional tax attributes during 1995 from the continued winddown of its subsidiary, American Freight System, Inc. ("AFS") - See Note 6. The provision for income taxes during the third quarter and first nine months represents the estimated tax provision, net of any such additional tax attributes to be generated by AFS. 3. Profit Sharing In September 1988, the employees of Crouse Cartage Company ("Crouse Cartage"); a wholly owned subsidiary of Anuhco, approved the establishment of a profit sharing plan ("the Plan"). The Plan is structured to allow all employees (union and non-union) to ratably share 50% of Crouse Cartage's income before income taxes (excluding extraordinary items and gains or losses on the sale of assets) in return for a 15% reduction in their wages. Plan distributions are made on a quarterly basis. The Plan was recertified in 1991 and 1994, and shall continue in effect at least through March 31, 1998, or until a replacement of the Collective Bargaining Agreement is reached between the parties, whichever is later. The accompanying consolidated balance sheet for the period ended September 30, 1995 includes an accrual for profit sharing costs of $731,559. The accompanying consolidated statements of income include profit sharing costs of $731,559 and $2,918,250 for the third quarter and nine months of 1995, respectively. 4. Revolving Credit Agreement In September 1988, Crouse Cartage entered into a multi-year credit agreement with a commercial bank which provided for maximum borrowings equaling the lesser of $2,500,000 or the borrowing base, as defined in such agreement. In September, 1995 the term of this agreement was extended to June 30, 1997. There was no outstanding balance on this revolving line of credit at September 30, 1995. 5. Shareholders' Equity Income per share is based on the average number of common shares outstanding during each period. The average number of common shares so computed was 7,392,253 and 7,499,773 for the quarter and year to date periods ending September 30, 1995, respectively, and 7,543,631 and 7,543,217 for the quarter and year to date periods ending September 30, 1994, respectively. On June 26, 1995, the Company adopted a program to repurchase up to 10% of its outstanding shares of common stock. During the third quarter of 1995, the Company repurchased 417,100 shares of common stock, which represented 5.5% of outstanding shares before initiating the program, at a cost of $3,543,000. 6. AFS Net Assets Under the provisions of a Joint Plan of Reorganization ("the Joint Plan"), AFS is responsible for the administration of pre-July 12, 1991 creditor claims and conversion of assets owned before that date. As claims are allowed and cash is available, distributions to the creditors occur. The Joint Plan also provides for distributions to Anuhco as unsecured creditor distributions occur in excess of 50% of allowed claims. Anuhco also receives the full benefit of any remaining assets of AFS through its ownership of AFS stock, if unsecured creditors receive distributions, including interest, equivalent to 130% of their claims. AFS has made full payment of all its resolved claims and liabilities. In June 1995, AFS paid an additional dividend of $6.8 million to Anuhco. The remaining AFS net assets are estimated to have net realizable value of $14.3 million. The primary assets include approximately $14 million in cash and deposits and $3 million of receivables. Gross unresolved claims, primarily related to workers' compensation insurance coverage, are approximately $9 million. AFS is in the process of resolving these claims, however until this process is completed the amount of liabilities cannot be ascertained. The ultimate resolution of the amounts, validity and priority of recorded liabilities and other claims is uncertain at this time. Accordingly, AFS net assets reflect estimated amounts due on such liabilities and claims. 7. Acquisition of Premium Finance Subsidiary On May 31, 1995, Anuhco completed the acquisition of all of the issued and outstanding stock of Agency Premium Resource, Inc. and Subsidiary ("APR"). The purchase price, together with payments for certain services to be rendered by the sellers after closing, was approximately $11.5 million. In addition to the Stock Purchase Agreement by which Anuhco acquired all of the APR stock, Anuhco entered into a consulting agreement with Seafield Capital Corporation ("Seafield"), the former majority shareholder of APR, and an employment agreement with C. Ted McCarter, APR's president and chief executive officer. Under the former, Anuhco is entitled to consult with Seafield regarding APR for three years. Under the latter, APR is entitled to the continuation of Mr. McCarter's services as president and chief executive officer for five years. This transaction was accounted for as a purchase. Anuhco utilized a portion of its available cash to consummate the purchase. The terms of the acquisition and the purchase price resulted from negotiations between Anuhco and the APR shareholders, Seafield and APR's Chief Executive Officer, C. Ted McCarter. APR offers premium financing and related services through approved insurance agencies, primarily throughout the midwestern United States. Its wholly owned subsidiary, Agency Services, Inc., provides motor vehicle report services throughout the same geographic area. In connection with the purchase of APR, Anuhco recorded goodwill of $2.3 million, which will be amortized on the straight-line basis over 15 years, and a software and service agreement of $1.0 million, which will be amortized over 5 years. APR has an agreement with a financial institution whereby it can sell undivided interests in a designated pool of accounts receivable, up to a maximum of $30 million, on an ongoing basis. Anuhco has assumed certain guarantees of the securitized receivables, $19 million as of September 30, 1995. The securitized receivables are reflected as sold and therefore not included in the accompanying consolidated balance sheet. On October 20, 1995, APR entered into a new three year agreement with a new receivable purchaser to sell an undivided interest in a designated pool of receivables. The maximum allowable receivables to be sold under this new agreement is $30 million. Proceeds from the initial funding of this agreement were utilized to eliminate all outstanding balances under the prior agreement. Anuhco serves as guarantor in certain limited circumstances under this agreement. The following reflects the operating results of Anuhco for the third quarter and nine months ended September 30, 1995 and 1994, assuming the acquisition occurred as of the beginning of each of the respective periods: Pro Forma Operating Results (Unaudited) (in thousands, except per share data)
Third Quarter Nine Months 1995 1994 1995 1994 (as re- ported) Operating Revenue....... $24,651 $25,750 $75,436 $74,024 Income from Continuing Operations............ 947 1,402 3,156 4,164 Income from Discontinued Operations............ -- -- -- 1,250 Net Income.............. $ 947 $ 1,402 $ 3,156 $ 5,414 Net Income Per Share: Continuing Operations.. $0.13 $0.19 $0.42 $0.55 Discontinued Operations 0.00 0.00 0.00 0.16 Total................. $0.13 $0.19 $0.42 $0.71
The pro forma results of operations are not necessarily indicative of the actual results that would have been obtained had the acquisition been made at the beginning of the respective periods, or of results which may occur in the future. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Third quarter and nine months ended September 30, 1995 compared to the third quarter and nine months ended September 30, 1994. With the acquisition of APR on May 31, 1995, Anuhco now operates in two distinct industries; transportation, through its subsidiary, Crouse Cartage; and insurance premium finance, through its subsidiary, APR. Transportation - A comparative summary of transportation operating expenses as a percent of transportation operating revenue follows:
Percent of Operating Revenue Third Quarter Nine Months 1995 1994 1995 1994 Salaries, wages and employee benefits.......... 55.8% 53.9% 55.5% 53.8% Operating supplies and expenses............... 11.2 11.0 11.4 11.0 Operating taxes and licenses............... 2.5 2.5 2.7 2.7 Insurance and claims........ 2.3 2.1 2.2 2.2 Depreciation................ 2.9 2.5 2.7 2.4 Purchased transportation.... 22.5 21.6 21.8 21.8 Total operating expenses.... 97.2% 93.6% 96.3% 93.9%
Operating Revenue - The changes in transportation operating revenue are summarized in the following table (in thousands):
Qtr 3 1995 Nine Months 1995 vs. vs. Qtr 3 1994 Nine Months 1994 Increase (decrease) from: Less-than-truckload shipments $ (820) $ 786 Less-than-truckload revenue per shipment............... (333) 205 Truckload revenues........... (124) 244 Net increase (decrease).... $(1,277) $1,235
Less-than-truckload ("LTL") operating revenues fell by 5.9% in the third quarter of 1995 as compared to the same period of 1994. This decline for the current quarter is in comparison to the strong quarter achieved by Crouse Cartage in the same period of 1994 following the teamsters union strike against certain competitors and the closing of a regional competitor. During the second quarter of 1994, Crouse Cartage's freight volumes rose over 30%, compared to the same period of 1993, with minimal rate discounting due to the shortage of capacity within the industry. While Crouse Cartage has maintained a substantial portion of the additional freight volumes, LTL tonnage fell 3.7% in the third quarter of 1995. The trucking industry, including Crouse Cartage, was adversely impacted by the softening of the economy and competitive market pressures on freight rates during the third quarter of 1995. LTL operating revenues rose 1.8% in the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994. This was the net result of the continuation of the post-strike impacts during the first quarter of 1995 in comparison to the pre- strike first quarter of 1994 and the relative decline in second and third quarter 1995 revenues discussed above. Total LTL tonnage was 3.0% higher for the nine months of 1995. Truckload operating revenue fell 2.3% in the third quarter as the net result of a 7.6% decline in the number of shipments hauled and a 5.7% increase in revenue per shipment. Truckload revenues were up 1.6% for the first nine months of 1995 primarily due to an increase in revenue per shipment. The increases in revenue per shipment were the result of growth in the average miles per shipment, net of declines in revenue per mile. Operating Expenses - Crouse Cartage's operating expenses as a percentage of operating revenue, or operating ratio, rose from 93.6% to 97.2%, for the third quarter, and from 93.9% to 96.3%, for the nine months of 1994 and 1995, respectively. These increases are primarily the result of higher salaries, wages and employee benefits costs caused by; (1) a contractual increase in wages effective April 1, 1995, and (2) contractual increase as a percentage of union scale for those additional employees hired to handle the increased freight volumes during and after the April, 1994 teamsters strike. Purchased transportation also increased as a percentage of operating revenue for the third quarter of 1995 as compared to the same period of 1994, primarily due to a contractual increase in costs of approximately 5% effective July 1, 1995. Premium Finance - The operating results of APR since June 1, 1995 are included in the third quarter and nine months 1995 operating results. Since June 1, 1995, APR financed $21 million in insurance premiums. APR generated operating revenue of $1 million and $1.3 million and operating income of $156,000 and $205,000 for the third quarter and nine months ended September 30, 1995, respectively. In connection with the acquisition of APR, Anuhco recorded one-time expenses of approximately $300,000 in the second quarter of 1995. Other - As a result of its strong cash position, Anuhco recorded substantial increases in interest income for the third quarter and nine months ended September 30, 1995, from the corresponding periods of 1994. Anuhco's effective tax rate for the third quarter and nine months of 1995 was 20%. No provision was recorded during those periods of 1994 due to the company's utilization of certain tax net operating loss attributes. FINANCIAL CONDITION The Company's financial condition remained strong at September 30, 1995 with no debt and over $33 million in cash and investments at the Anuhco level, as well as approximately $14 million in cash and investments included in the net assets of AFS. In June 1995, AFS paid a dividend of $6.8 million to Anuhco. During the second quarter of 1995 Anuhco completed the acquisition of APR and related software and services using $11.5 million in available funds. In addition, during the first nine months of 1995, Crouse Cartage has purchased $4.1 million of operating property and equipment, without incurring any long term indebtedness. Crouse Cartage has a commitment to purchase new tractors at a cost of approximately $1 million. These units will be delivered in the first quarter of 1996 and will be purchased using available funds. In connection with the acquisition of APR, the Company became the guarantor of an agreement under which APR sells undivided interests in a designated pool of accounts receivable on an ongoing basis. The maximum allowable receivables to be sold under this agreement is $30 million and a total of $19 million of such receivables had been securitized as of September 30, 1995. This agreement was extended by amendments to November 30, 1995. The Company had pledged $23.1 million of short-term investments to provide additional security to the receivable purchaser until a replacement financing arrangement was obtained. On October 20, 1995 APR entered into a new three year agreement with a new receivable purchaser to sell an undivided interest in a designated pool of receivables. The maximum allowable receivables to be sold under this new agreement is $30 million. Proceeds from the initial funding of this agreement were utilized to eliminate all outstanding balances under the prior agreement. Anuhco serves as guarantor in certain limited circumstances under this agreement. On June 26, 1995, the Company adopted a program to repurchase up to 10% of its outstanding shares of common stock. During the third quarter of 1995, the Company repurchased 417,100 shares of common stock, which represented 5.5% of outstanding shares before initiating the program, at a cost of $3,543,000. This program is being funded from available cash and investments. PART II - OTHER INFORMATION Item 1. Legal Proceedings Reference is made to Item 3 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information Changes in Registrant's Certifying Accountant - Effective November 2, 1995, Arthur Andersen LLP resigned as independent public accountants for the Company. Arthur Andersen LLP's report on the financial statements of the Company for the past two years did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles. During the two most recent fiscal years and any subsequent interim period there are and have been no disagreements or reportable events on any matters of accounting principles or practices, financial statement disclosures or auditing scopes or procedures. None of the reportable events listed in Item 304(a)(1)(v) of Regulation S-K occurred with respect to the Company and Arthur Andersen LLP. Pursuant to Item 304(a)(3) of Regulation S-K, the Company has provided Arthur Andersen LLP with a copy of this Form 10-Q and has requested Arthur Andersen LLP to furnish the Company with a response addressed to the Securities and Exchange Commission as to whether Arthur Andersen LLP concurs with the statements made in this Item 5 with respect to Arthur Andersen LLP. A copy of such letter is attached as Exhibit 16. On November 3, 1995, the Company selected Coopers & Lybrand L.L.P. as independent public accountants for the 1995 fiscal year. During the two years ended December 31, 1994 and 1993, and the interim period of 1995, the Company has not consulted Coopers & Lybrand L.L.P. regarding the application of accounting principles or the type of opinion that might be rendered on the Company's financial statements. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10(a) Receivables Purchase Agreement by and among Agency Premium Resource, Inc., APR Funding Corporation, Anuhco, Inc., Clipper Receivables Corporation, State Street Boston Capital Corporation and Norwest Bank Minnesota, N.A., dated October 20, 1995. 16 Letter re: Change in Certifying Accountant. 19(a) Report to Shareholders for the Third Quarter, 1995, dated November 7, 1995. 27 Financial Data Schedule (b) Reports on Form 8-K None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Anuhco, Inc. Registrant By: /s/ Timothy P. O'Neil Timothy P. O'Neil, President and Chief Financial Officer Date: November 8, 1995 EXHIBIT INDEX Assigned Exhibit Number Description of Exhibit 10(a) Receivables Purchase Agreement by and among Agency Premium Resource, Inc., APR Funding Corporation, Anuhco, Inc., Clipper Receivables Corporation, State Street Boston Capital Corporation and Norwest Bank Minnesota, N.A., dated October 20, 1995. 16 Letter re: Change in Certifying Accountant. 19(a) Report to Shareholders for the Third Quarter, 1995, dated November 7, 1995. 27 Financial Data Schedule. EX-10 2 RECEIVABLES PURCHASE AGREEMENT Dated as of October 20, 1995 Among APR FUNDING CORPORATION as Seller and AGENCY PREMIUM RESOURCE, INC. as Servicer ANUHCO, INC. as Parent and CLIPPER RECEIVABLES CORPORATION as Purchaser and STATE STREET BOSTON CAPITAL CORPORATION as Administrator and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as Relationship Bank TABLE OF CONTENTS ARTICLE I PURCHASES AND REINVESTMENTS SECTION 1.01. Commitments to Purchase; Limits on Purchaser's Obligations SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests SECTION 1.03. Reinvestments SECTION 1.04. Asset Interest; Purchaser's Share ARTICLE II COMPUTATIONAL RULES SECTION 2.01. Selection of Asset Tranches SECTION 2.02. Computation of Purchaser's Total Investment and Purchaser's Tranche Investment SECTION 2.03. Computation of Earned Discount ARTICLE III SETTLEMENTS SECTION 3.01. Settlement Procedures for Collections of Principal Receivables SECTION 3.02. Settlement Procedures for Collections of Finance Charge Receivables SECTION 3.03. General Settlement Procedures SECTION 3.04. Deemed Collections; Reduction of Purchaser's Total Investment, Etc SECTION 3.05. Payments and Computations, Etc SECTION 3.06. Treatment of Collections and Deemed Collection SECTION 3.07. Repurchases SECTION 3.08. Custody Arrangement SECTION 3.09. Establishment of Collection Account; Investments by Relationship Bank ARTICLE IV FEES AND YIELD PROTECTION SECTION 4.01. Fees SECTION 4.02. Yield Protection SECTION 4.03. Funding Losses ARTICLE V CONDITIONS OF PURCHASES SECTION 5.01. Conditions Precedent to Initial Purchase SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments ARTICLE VI REPRESENTATIONS AND WARRANTIES SECTION 6.01. Representations and Warranties of Seller SECTION 6.02. Representations and Warranties of APR SECTION 6.03. Representations and Warranties of Parent Section 6.04. Breach of Representations and Warranties ARTICLE VII GENERAL COVENANTS SECTION 7.01. Affirmative Covenants of Seller SECTION 7.02. Reporting Requirements of Seller SECTION 7.03. Negative Covenants of Seller SECTION 7.04. Affirmative Covenants of APR SECTION 7.05. Reporting Requirements of APR SECTION 7.06. Negative Covenants of APR SECTION 7.07. Affirmative Covenants of Parent SECTION 7.08. Reporting Requirements of Parent SECTION 7.09. Negative Covenant of Parent SECTION 7.10. Special Covenant of Seller, APR and Parent ARTICLE VIII ADMINISTRATION AND COLLECTION SECTION 8.01. Designation of Servicer SECTION 8.02. Duties of Servicer SECTION 8.03. Rights of the Administrator SECTION 8.04. Responsibilities of Seller SECTION 8.05. Further Action Evidencing Purchases and Reinvestments SECTION 8.06. Application of Collections ARTICLE IX SECURITY INTEREST SECTION 9.01. Grant of Security Intrest SECTION 9.02. Further Assurances SECTION 9.03. Remedies ARTICLE X LIQUIDATION EVENTS SECTION 10.01. Liquidation Events SECTION 10.02. Remedies ARTICLE XI THE ADMINISTRATOR; RELATIONSHIP BANK SECTION 11.01. Authorization and Action SECTION 11.02. Administrator's and Relationship Bank's Reliance, Etc SECTION 11.03. State Street Capital and Norwest and Affiliate ARTICLE XII ASSIGNMENT OF PURCHASER'S INTEREST; TRANSFER DATE SECTION 12.01. Restrictions on Assignments SECTION 12.02. Rights of Assignee SECTION 12.03. Evidence of Assignment SECTION 12.04. Rights of the Banks, Collateral Agent and Collection Agent SECTION 12.05. Transfer Date ARTICLE XIII INDEMNIFICATION SECTION 13.01. Indemnities by Seller, APR and Parent ARTICLE XIV MISCELLANEOUS SECTION 14.01. Amendments, Etc SECTION 14.02. Notices, Etc. SECTION 14.03. No Waiver; Remedies SECTION 14.04. Binding Effect; Survival SECTION 14.05. Costs, Expenses and Taxes SECTION 14.06. No Proceedings SECTION 14.07. Confidentiality of Seller Information SECTION 14.08. Confidentiality of Program Information SECTION 14.09. Captions and Cross References SECTION 14.10. Integration SECTION 14.11. Governing Law SECTION 14.12. Waiver Of Jury Trial SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities SECTION 14.14. Execution in Counterparts SECTION 14.15. No Recourse Against Other Parties SECTION 14.16. Covenant to Cooperate SECTION 14.17. Advice From Independent Counsel APPENDICES APPENDIX A Definitions SCHEDULES SCHEDULE 6.01(i) Description of Material Adverse Changes of Seller SCHEDULE 6.01(j) Description of Litigation of Seller SCHEDULE 6.01(n) List of Offices of Seller where Records Are Kept SCHEDULE 6.01(o) List of Lock-Box Banks SCHEDULE 6.01(p)-1 Forms of Contracts SCHEDULE 6.01(p)-2 Description of Credit and Collection Policy SCHEDULE 6.02(h) Description of Material Adverse Changes of APR SCHEDULE 6.02(i) Description of Litigation of APR SCHEDULE 6.02(k) List of Offices of APR SCHEDULE 6.03(h) Description of Material Adverse Changes of Parent SCHEDULE 6.03(i) Description of Litigation of Parent SCHEDULE 7.03(h) Schedule of Indebtedness of Seller SCHEDULE 7.06(i) Schedule of Indebtedness of APR EXHIBITS EXHIBIT 1.02 Form of Notice EXHIBIT 3.03 Settlement Statement to be Provided as of Cut- Off Date EXHIBIT 5.01(g) Form of Lock-Box Agreement EXHIBIT 5.01(k)-1 Form of Opinion of Counsel for Seller as to Authority, Perfection, Etc. EXHIBIT 5.01(k)-2 Form of Opinion of Counsel to Parent as to Authority, Etc. EXHIBIT 5.01(l)-1 Form of "True Sale" Opinion of Counsel for Seller EXHIBIT 5.01(l)-2 Form of "Non-Substantive Consolidation" Opinion of Counsel for Seller EXHIBIT 5.01(m) Form of Survey of Counsel for Seller EXHIBIT 5.01(p) Form of Accountant's Letter EXHIBIT 5.01(q) Form of Pay-Off Letter EXHIBIT A Form of Tax Sharing Agreement RECEIVABLES PURCHASE AGREEMENT Dated as of October 20, 1995 THIS IS A RECEIVABLES PURCHASE AGREEMENT, among APR FUNDING CORPORATION, a Delaware corporation ("Seller"), AGENCY PREMIUM RESOURCE, INC. ("APR"), a Kansas corporation ("Servicer"), ANUHCO, INC., a Delaware corporation ("Parent"), CLIPPER RECEIVABLES CORPORATION ("Clipper"), a Delaware corporation ("Purchaser"), STATE STREET BOSTON CAPITAL CORPORATION, a Massachusetts corporation ("State Street Capital"), as administrator for Purchaser under the Program Administration Agreement (in such capacity, the "Administrator") and Norwest Bank Minnesota, National Association, a national banking association, as a referral agent for Purchaser under the Relationship Bank Agreement (in such capacity, together with any successors thereto in such capacity, the "Relationship Bank" and in its individual capacity, "Norwest"). Unless otherwise indicated, capitalized terms used in this Agreement are defined in Appendix A. Background 1. Seller has, and expects to have and/or to purchase from APR (APR in such capacity the "Originator") pursuant to the terms and subject to the conditions of the Purchase and Sale Agreement (the "Purchase and Sale Agreement") dated as of October 20, 1995 between Seller and APR, Pool Receivables originated in the ordinary course of the Originator's premium finance loan business in which Seller intends to sell undivided percentage ownership interests. Seller has requested Purchaser, and Purchaser has agreed, subject to the terms and conditions contained in this Agreement, to purchase such undivided percentage ownership interests (referred to herein collectively as the "Asset Interest") from Seller from time to time during the term of this Agreement. 2. Seller and Purchaser also desire that, subject to the terms and conditions of this Agreement, certain of the daily Collections in respect of the Asset Interest be reinvested in Pool Receivables, which reinvestments shall constitute part of the Asset Interest. 3. Clipper, as Purchaser, expects to fund its acquisition and maintenance of the Asset Interest through the issuance of Commercial Paper Notes. Commercial paper funding hereunder is available solely from Clipper. Clipper has entered into a Liquidity Agreement which generally provides for the purchase by the Liquidity Providers of percentage interests in the Asset Interest in the event Clipper is unable to fund such Asset is required to fund the Asset Interest in accordance with, and under the terms of, the Liquidity Agreement. Clipper has also entered into a Credit Agreement with the Credit Bank providing for the issuance of a letter of credit to provide credit support for Clipper, including support for the payment of Commercial Paper Notes under circumstances when funding is not available under the Liquidity Agreement prior to the Transfer Date (as defined herein). As provided in the Liquidity Agreement, Clipper may transfer the Asset Interest to the Backup Purchaser after the Transfer Date. The Backup Purchaser will upon such transfer assume the rights, and certain of the duties and obligations of Clipper as Purchaser under this Agreement and the other Transaction Documents (as hereinafter provided), including the Asset Interest, and will thereafter be the Purchaser hereunder. 4. In order to induce the Purchaser to enter into this Agreement and to purchase the Asset Interest hereunder, Parent has agreed to provide to Purchaser certain limited indemnification, as further described herein. 5. APR has been requested, and is willing, to act as initial Servicer. 6. State Street Capital has been requested, and is willing, to act as the Administrator. 7. Norwest has been requested, and is willing, to act as the Relationship Bank. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I PURCHASES AND REINVESTMENTS SECTION 1.01. Commitments to Purchase; Limits on Purchaser's Obligations. Upon the terms and subject to the conditions of this Agreement (including, without limitation, those contained in Article V), from time to time prior to the Termination Date, Seller may request on or before the third Business Day preceding each Settlement Date that Purchaser purchase on the next succeeding Settlement Date from Seller undivided percentage ownership interests in Pool Receivables, all related Contracts, all Related Security, Collections and all other proceeds, including books and records with respect to such Pool Receivables (each being a "Purchase") and Purchaser shall make such Purchase at such times and upon the terms and subject to the conditions set forth herein; provided, that Purchaser shall make no Purchase if, after giving effect thereto, the Purchaser's Total Investment would exceed $30,000,000 (the "Purchase Limit"); and provided further that each Purchase made pursuant to this Section 1.01 shall have a purchase price of at least $500,000. SECTION 1.02. Purchase Procedures; Assignment of Purchaser's Interests. (a) Notice of Purchase. Each Purchase from Seller by Purchaser shall be made on notice from Seller to the Administrator and the Relationship Bank (substantially in the form of Exhibit 1.02) received by them not later than 12:00 noon (New York City time) on the third Business Day preceding the date of such proposed Purchase. Each such notice of a proposed Purchase shall specify the desired amount and date of such Purchase. (b) Funding of Purchase. On the date of each Purchase, Purchaser shall, upon satisfaction of the applicable conditions set forth in Article V, make available to the Administrator at the Administrator's Office the amount of its Purchase in same day funds, and after receipt by the Administrator of such funds, the Administrator will make such funds immediately available to Seller at such office. (c) Assignment of Asset Interests. Seller hereby sells, assigns and transfers to Purchaser, effective on and as of the date of each Purchase by the Purchaser hereunder, the Asset Interest in the Pool Receivables, the related Contracts, the Related Security and all Collections in respect of, and other proceeds of, any of the foregoing. SECTION 1.03. Reinvestments. (a) On the close of business on each day prior to the Liquidation Date during the period from the date hereof to the Termination Date, Servicer will, on Purchaser's behalf, out of Purchaser's Share of Collections, apply and pay over to Seller, Purchaser's Share on account of Principal Collections for the Purchase from Seller of undivided percentage ownership interests in Pool Receivables, related Contracts, Related Security, Collections and all other proceeds, including books and records with respect to such Pool Receivables (each such purchase being a "Reinvestment"); provided that if after giving effect to such Reinvestment the Purchaser's Share with respect to Principal Receivables would exceed 100%, then, Servicer shall not reinvest, but shall set aside in the Collection Account and hold for the benefit of Purchaser pursuant to Section 1.03(b) and shall pay over to the Administrator on the next Settlement Date for application in accordance with the terms hereof, a portion of such Collections which, together with other Collections previously set aside and then so held, shall equal the amount necessary to reduce the Purchaser's Share with respect to Principal Receivables to 100%; and provided, further, that if the conditions precedent to Reinvestment in clause (a), (b) or (d) of Section 5.02 are not satisfied, then Servicer shall not reinvest any of such remaining Collections. For purposes of determining whether Collections on account of Principal Receivables may be reinvested pursuant to this Section 1.03, the Net Pool Balance used in calculating Purchaser's Share of Principal Receivables shall be calculated net of the principal portion of Adverse Determination Receivables. (b) Unreinvested Collections. Servicer shall set aside and hold in trust and shall retain in the Collection Account for the benefit of Purchaser all Collections which pursuant to Section 1.03(a), may not be reinvested in the Pool Receivables and related property. If at any time the amount of Collections so set aside may again be reinvested pursuant to Section 1.03(a) and the conditions precedent to Reinvestment set forth in clauses (a), (b) and (d) of Section 5.02 are satisfied, then the Servicer shall withdraw such Collections from the Collection Account and apply such Collections (or, if less, a portion of such Collections equal to the amount of such excess) to the making of Reinvestments. (c) Payment of Amounts Set Aside. Prior to the occurrence of the Liquidation Date, Servicer and thereafter the Relationship Bank shall pay all amounts set aside in the Collection Account pursuant to Section 1.03(b) to the Administrator for the account of Purchaser on the Business Day preceding each Settlement Date. Servicer shall pay over and deposit any amounts received by it which otherwise would be required to be deposited in the Collection Account, to the extent not previously deposited therein, to the Collection Account within one Business Day of receipt thereof. (d) Reduction of Purchaser's Total Investment. The Purchaser's Total Investment shall not be reduced by the amount of Collections set aside pursuant to this Section 1.03, whether or not on deposit in the Collection Account, unless and until such Collections are actually delivered to the Administrator pursuant hereto. SECTION 1.04 Asset Interest; Purchaser's Share. (a) Components of Asset Interest. For purposes of this Agreement, "Asset Interest" means, at any time, Purchaser's combined undivided percentage ownership interests at such time in (i) all then outstanding Pool Receivables, (ii) all related Contracts, (iii) all Related Security with respect to such Pool Receivables and such Contracts, and (iv) all books and records with respect to such Pool Receivables and such Contracts, and (v) all Collections with respect to, and other proceeds of, such Pool Receivables, Contracts and Related Security. The amount of such Asset Interest shall mean, with respect to Principal Receivables and Finance Charge Receivables, the respective Purchaser's Shares determined pursuant to Section 1.04(b). (b) Purchaser's Share. (i) Principal Receivables. (A) "Purchaser's Share" shall mean, with respect to Principal Receivables, the percentage calculated by dividing (x) the sum of the Purchaser's Total Investment plus the Default Reserve (as determined pursuant to Section 1.04(b)(i)(D) below) by (y) the Net Pool Balance; provided that, Purchaser's Share with respect to Principal Receivables shall not exceed 100%; and provided, further, that after the occurrence of the Liquidation Date, Purchaser's Share with respect to Principal Receivables shall be deemed to be Purchaser's Share with respect to Principal Receivables as of the day immediately preceding such Liquidation Date. (B) On each day "Purchaser's Share of Collections" on account of Principal Receivables shall be equal to the product of (x) the related Purchaser's Share with respect to Principal Receivables on such day and (y) the amount of the Collections on account of Principal Receivables on such day. "Purchaser's Share of Defaulted Receivables" shall mean, on any day, the product of (x) Purchaser's Share with respect to Principal Receivables on such day and (y) the amount of Receivables becoming Defaulted Receivables on such day. (C) On each day after the occurrence of the Liquidation Date, Seller's Share of Collections on account of Principal Receivables shall not be paid to Seller, but shall be retained in the Collection Account. Notwithstanding the foregoing, on each day after the Transfer Date, if on any such day there shall be an unreimbursed amount under the Servicer LOC, Seller's Share of Collections shall not be retained in the Collection Account, but shall be paid to Norwest on the next following Settlement Date in an amount equal to the lesser of (i) such unreimbursed amount and (ii) the amount of Seller's Share of Collections that would be required to be retained in the Collection Account. If the amount of Purchaser's Share of Collections on account of Principal Receivables received or deemed received on or prior to the date that each and every Pool Receivable is scheduled to have amortized in accordance with the related Contract shall be insufficient to reduce the Purchaser's Total Investment plus any unreimbursed amounts under the Servicer LOC to zero, then on such date Purchaser shall withdraw (from amounts actually retained in the Collection Account pursuant to the two preceding sentences) such funds from the Collection Account in the amount of the lesser of (x) the amount of such deficiency attributable to Purchaser's Share of Defaulted Receivables and (y) 100% of the Collections on account of Seller's Share of Collections then on deposit in the Collection Account. Prior to the occurrence of the Liquidation Date, Servicer shall pay to Seller on each day, Seller's Share of Collections on account of Principal Receivables received on such day. (D) (x) The "Default Reserve" on any day means an amount as follows: DR = (( 1 divided by 1-RP ) - 1) x PI where: DR = the Default Reserve on such day; RP = the Reserve Percentage at the close of business of Purchaser on such day, as determined pursuant to Section 1.04(b)(i)(D)(y); PI = the related Purchaser's Total Investment at the opening of business of Purchaser on such day; and (y) "Reserve Percentage" means, with respect to any Settlement Date the greater of (1) 10.71% and (2) the product of 1.35 times the highest annualized three month average Default Ratio for any of the three Settlement Periods preceding such Settlement Date (calculated for use with respect to the first two Settlement Dates on a pro forma basis for such number of calendar months preceding the date hereof as necessary to make such calculation; each such calendar month shall be deemed to be a Settlement Period for purposes of this clause (y)). (ii) Finance Charge Receivables. (A) "Purchaser's Share" shall mean, on any day with respect to Finance Charge Receivables, 100%; subject, however, to the applications to Earned Discount, Program Fee, Servicer's Fee, Defaulted Receivables and Designated Obligations as provided for in Section 3.02. (B) On each day, "Purchaser's Share of Collections" on account of Finance Charge Receivables shall be equal to the product of (x) the related Purchaser's Share with respect to Finance Charge Receivables and (y) the amount of the Collections on account of Finance Charge Receivables received or deemed received on such day. (iii) Defeasance. With respect to the Asset Interest: (x) at such time as the Purchaser's Total Investment equals zero, then the related Purchaser's Share with respect to Principal Receivables shall equal zero, and (ii) at such time as the related unpaid Earned Discount equals zero, and no amounts are owing in respect of the related Program Fee, Servicer's Fee, Designated Obligations or other amounts under this Agreement, then the related Purchaser's Share with respect to Finance Charge Receivables shall also equal zero. (c) Frequency of Computation. The respective Purchaser's Shares with respect to the Asset Interest shall be initially computed as of the opening of business of Servicer on the date of Purchase of the Asset Interest from Seller. Thereafter until the Asset Interest shall be reduced to zero, such Purchaser's Shares shall be deemed to be automatically recomputed as of the close of business of Servicer on the Cut-Off Date for each Settlement Period, and such Purchaser's Shares shall constitute the percentage ownership interest in Pool Receivables on such date owned by Purchaser. Such Purchaser's Shares shall remain constant from the time as of which any such computation or recomputation is made or deemed to be made until the time as of which the next such recomputation, if any, shall be made or deemed to be made. In addition, the Administrator or the Relationship Bank may require Servicer to provide a Settlement Statement for purposes of computing the Asset Interest as of any other date, and the Servicer agrees to do so within two (2) Business Days of its receipt of the Administrator's or the Relationship Bank's request. ARTICLE II COMPUTATIONAL RULES SECTION 2.01. Selection of Asset Tranches. The Administrator shall, from time to time for purposes of computing Earned Discount, divide the Asset Interest into Asset Tranches, and the applicable Earned Discount Rate may be different for each Asset Tranche. Purchaser's Total Investment shall be allocated to each Asset Tranche by the Administrator to reflect the funding sources for the Asset Interest, so that: (a) there will be one or more Asset Tranches, selected by the Administrator, reflecting the portion of the Asset Interest funded by Liquidity Purchases; (b) there will be one or more Asset Tranches, selected by the Administrator, reflecting the portion of the Asset Interest funded by Credit Draws; and (c) there will be an Asset Tranche equal to the excess of Purchaser's Total Investment over the aggregate amounts allocated at such time pursuant to clauses (a) and (b) above, which Asset Tranche shall reflect the portion of the Asset Interest funded by Commercial Paper Notes; provided, that, after the occurrence of the Transfer Date, all Asset Tranches will be selected by the Liquidity Agent and will be funded solely by Liquidity Purchases. SECTION 2.02. Computation of Purchaser's Total Investment and Purchaser's Tranche Investment. In making any determination of Purchaser's Total Investment and Purchaser's Tranche Investment, the following rules shall apply: (a) Purchaser's Total Investment shall not be considered reduced by any allocation, setting aside or distribution of any portion of Collections unless such Collections shall have been actually delivered to the Administrator pursuant hereto; (b) Purchaser's Total Investment shall not be considered reduced by any distribution of any portion of Collections if at any time such distribution is rescinded or must otherwise be returned for any reason; and (c) if there is any reduction in Purchaser's Total Investment, there shall be a corresponding reduction in a Purchaser's Tranche Investment with respect to one or more Asset Tranches selected by the Administrator in its discretion. SECTION 2.03. Computation of Earned Discount. In making any determination of Earned Discount, the following rules shall apply: (a) the Administrator shall determine the Earned Discount accruing with respect to each Asset Tranche, and each Yield Period therefor (or, in the case of the Asset Tranche funded by Commercial Paper Notes, each Settlement Period), in accordance with the definition of Earned Discount; (b) no provision of this Agreement shall require the payment or permit the collection of Earned Discount in excess of the maximum permitted by applicable law; and (c) Earned Discount for any Asset Tranche shall not be considered paid by any distribution if at any time such distribution is rescinded or must otherwise be returned for any reason. ARTICLE III SETTLEMENTS SECTION 3.01 Settlement Procedures for Collections of Principal Receivables. On each day, Servicer shall deem an amount equal to Purchaser's Share of Collections on account of Principal Receivables received or deemed received on such day to be received in respect of the Asset Interest; and (a) prior to the occurrence of the Liquidation Date, except to the extent otherwise set forth in Section 1.03, Servicer on behalf of the Purchaser shall apply the full amount of Purchaser's Share of such Collections to reduce the Purchaser's Total Investment and after such reduction apply such amount to Reinvestments as provided in Section 1.03(a), in additional undivided percentage ownership interests in Pool Receivables. Any such application shall automatically increase the Purchaser's Total Investment. The recomputed Purchaser's Share with respect to Principal Receivables, after giving effect to the reduction and increase of Purchaser's Total Investment shall constitute the percentage ownership interest in Principal Receivables on such day owned by Purchaser with regard to the Asset Interest; and (b) after the occurrence of the Liquidation Date, on each Settlement Date the Administrator on behalf of Purchaser shall apply the full amount of Purchaser's Share of such Collections to reduce Purchaser's Total Investment. SECTION 3.02 Settlement Procedures for Collections of Finance Charge Receivables. (a) Daily Set Aside. On each day Servicer shall set aside and hold in trust for Purchaser Purchaser's Share of Collections on account of Finance Charge Receivables in respect of the Asset Interest for such day. (b) Delivery to the Administrator. (i) On each day, Servicer shall calculate the excess, if any, of (x) the Collections on account of Finance Charge Receivables set aside on and prior to such day pursuant to Section 3.02(a), over (y) the aggregate unpaid amount of Earned Discount, Program Fee, Servicer's Fee and any other Designated Obligations, accrued in respect of the Asset Interest (estimated based on the previous month); and (A) prior to the Liquidation Date, such excess, if any, shall be paid to the Seller or (B) after the occurrence of the Liquidation Date, such excess if any, shall be retained in the Collection Account for application in accordance with Sections 3.02(c) and (d). During the related Settlement Period, Servicer shall hold in trust in the Collection Account the amounts described in clause (y) above. (ii) Prior to the occurrence of the Liquidation Date, on the Business Day preceding each Settlement Date, Servicer shall withdraw from the Collection Account and deliver to the Administrator, from the funds set aside pursuant to Section 3.02(a) and not paid over to the Seller pursuant to Section 3.02(b)(i), an amount which shall equal the unpaid Earned Discount, Program Fee and Servicer's Fee for such Settlement Period, plus any other Designated Obligations required for application by the Administrator pursuant to Sections 3.02(c) and (d) below. After the occurrence of the Liquidation Date, the Relationship Bank on behalf of the Administrator shall withdraw such amounts on such Settlement Date from the Collection Account (to the extent on deposit therein). (c) Application of Funds to Earned Discount, etc. Subject to receipt of funds set aside pursuant to Section 3.02(a) and withdrawn and paid over pursuant to Section 3.02(b), the Administrator shall, on each Settlement Date, distribute them in the following order: (i) first, to the Custodian, for the payment of the accrued and unpaid fees and expenses due under the Custody Agreement for the related Settlement Period (including any accrued and unpaid amounts from any prior Settlement Period), (ii) second to Servicer, if not APR or an Affiliate of APR, for the payment of the accrued and unpaid Servicer's Fee (provided that, if the Backup Servicer shall be the Servicer, only the Senior Portion of such Servicer's Fee shall be payable pursuant to this clause second) for the related Settlement Period (including any accrued and unpaid amounts from any Prior Settlement Period), (iii) third, to Purchaser for the payment of the accrued and unpaid Earned Discount for the related Settlement Period (including any accrued and unpaid amounts from any prior Settlement Period), (iv) fourth, to Purchaser for the payment of the accrued and unpaid Program Fee for the related Settlement Period (including any accrued and unpaid amounts from any prior Settlement Period), (v) fifth, to Purchaser, the Administrator, the Relationship Bank, the Custodian or any other Person (not APR or an Affiliate of APR) hereunder, as the case may be, in payment of any Designated Obligations, owing to such Person hereunder (including any accrued and unpaid amounts from any prior Settlement Period), (vi) sixth, to Servicer, if the Backup Servicer, for the payment of the accrued and unpaid Subordinated Portion of the Servicer's Fee for the related Settlement Period (including any accrued and unpaid amounts from any prior Settlement Period), (vii) seventh, to Norwest, if any reimbursement obligation shall then exist under the Servicer LOC, the amount of such unreimbursed obligation, (viii) eighth, if APR or any Affiliate of APR is Servicer, to Servicer for the payment of the accrued and unpaid Servicer's Fee for the related Settlement Period (including any accrued and unpaid amounts from any prior Settlement Period), and (ix) ninth, any remaining amounts shall, prior to the occurrence of the Liquidation Date, be paid to Seller and, after the occurrence of the Liquidation Date, be distributed in accordance with Section 3.02(d). (d) Application to Defaulted Receivables and Delinquent Receivables during Liquidation Period. After the occurrence of the Liquidation Date, the Administrator shall, after giving effect to the distributions pursuant to Sections 3.02(b) and (c), distribute and apply any remaining Collections on account of Finance Charge Receivables as follows: (i) first, to Purchaser toward payment of Purchaser's Share of Defaulted Receivables, which payment shall be deemed a Collection on account of Principal Receivables, and (ii) second, to the account of Seller; provided that, with regard to clause (ii) above, if Purchaser's Total Investment shall not then have been reduced to zero, such balance shall remain in the Collection Account to be applied on each Settlement Date following thereafter in accordance with clause first above until the date on which Purchaser's Total Investment and all other amounts payable to the Purchaser, the Administrator and the Relationship Bank shall have been reduced to zero. SECTION 3.03 General Settlement Procedures. The parties hereto will take the following actions with respect to each Settlement Period: (a) Settlement Statement. On the fifth Business Day following the Cut-Off Date for such Settlement Period, Servicer shall deliver to the Relationship Bank and the Administrator a hard copy and a computer diskette (or such information via modem) containing the information described in Exhibit 3.03 (each, a "Settlement Statement"), including a listing of all Contracts (by contract number, Direct Obligor and amount financed) transferred by the Originator to the Seller in the preceding Monthly Period. (b) Notification of Earned Discount; Other Amounts Due. On the second Business Day following such Cut-Off Date, the Administrator or the Relationship Bank shall notify Servicer and the Relationship Bank of (i) the amount of Earned Discount accrued during such Settlement Period, and (ii) all fees (including the Program Fee and the Servicer's Fee) and Designated Obligations and other amounts accrued and payable by Seller under this Agreement. (c) Non-Distribution of Servicer's Fee. If the Administrator consents (which consent may be revoked at any time), the amounts (if any) set aside pursuant to Section 3.02 in respect of Servicer's Fee may be retained by Servicer, in which case no distribution shall be made in respect of Servicer's Fee pursuant to Section 3.02 above. (d) Allocations of Obligor's Payments. Except as provided for herein or as otherwise required by law or the underlying Contract, all Collections received from an Obligor of any Receivable shall be applied to Receivables then outstanding of such Obligor in the order of the age of such Receivables, starting with the oldest such Receivable, except if payment is designated by such Obligor for application to specific Receivables or can be readily identified to specific Receivables, in which case it shall be applied to such specified Receivables. For each Settlement Period Collections will be allocated so that all Collections up to the amount of Finance Charge Receivables billed in respect of the immediately preceding Settlement Period will be deemed Collections of Finance Charge Receivables and the remaining amount of such Collections will be deemed Collections of Principal Receivables. (e) Collection Account: Deposits and Withdrawals. (i) Deposits to Collection Account. Each of Seller and Servicer will, with respect to Collections in respect of Pool Receivables received by them, and will cause each Lock-Box Bank, with respect to Collections in respect of Pool Receivables received in any lock- box to, deposit such Collections in the Collection Account immediately upon identification thereof, but in no event later than one Business Days after receipt thereof. Such amounts to be deposited in the Collection Account by Seller, Servicer or the Relationship Bank shall include, but not be limited to, the following: (x) any and all Collections and other payments in respect of Receivables (whether on account of Principal Receivables, Finance Charge Receivables or otherwise), related Contracts, and Related Security and any proceeds thereof, (y) all amounts transferred from the Lock-Box Accounts, and (z) all Indemnified Amounts paid by Seller, APR or Parent for Receivables required to be repurchased pursuant to Section 3.07(b) or on account of a breach of representation or warranty with respect thereto or for any other reason. Servicer (or its designee or successor) shall notify the Administrator and the Relationship Bank of the amount of funds deposited in the Collection Account not received from Pool Receivables and the Administrator (if it shall agree with Servicer) shall remit such funds as soon as practicable after such notification to such account as Servicer (or its designee or successor) shall designate. In addition, the Administrator shall deposit all drawings on the Servicer LOC in the Collection Account. (ii) Withdrawals from Collection Account. Prior to the Liquidation Date, the Relationship Bank shall permit APR, as Servicer, to access the Collection Account in connection with its duties as Servicer and, in that connection APR, as such Servicer, may withdraw funds on deposit therein in accordance with, and for the purposes permitted under, the provisions of the Transaction Documents. Upon the occurrence of the Liquidation Date, (x) APR's right of access to the Collection Account shall terminate immediately without any further action by any Person being required (but APR shall be permitted to make deposits in each case with the consent of the Relationship Bank) and (y) the Relationship Bank or its designee shall thereafter make all withdrawals in accordance with the terms hereof or may transfer funds to the Liquidation Collection Account and shall make such withdrawals from the Liquidation Collection Account as if it were the Collection Account. (f) Permitted Dividends. Seller may remit to APR Permitted Dividends, if any, on the Business Day next following each Settlement Date. Unless specifically permitted hereunder or under any other Transaction Document to pay for Receivables, in payment of fees, etc., Seller shall make no other payments to APR or any Affiliate of APR. (g) Servicer LOC. If, with respect to any Settlement Date following the Liquidation Date and prior to the Transfer Date, the Servicer LOC Funding Conditions shall have occurred, the Administrator shall, on the second Business Day preceding such Settlement Date, make a drawing under the Servicer LOC in an amount not to exceed the Servicer LOC Available Amount. The Administrator shall deposit the proceeds of such drawing in the Collection Account for distribution on the related Settlement Date in accordance with the terms hereof. If at any time Northland Insurance Company's Concentration Limit (as determined in the definition of Excess Concentration Deduction) is reduced to 2% the Servicer LOC shall automatically terminate on the later of (x) 120 days thereafter and (y) such time thereafter as Purchaser's Share shall be equal to or less than 100%. SECTION 3.04. Deemed Collections; Reduction of Purchaser's Total Investment, Etc. (a) Deemed Collections. If on any day (i) the Unpaid Balance of any Pool Receivable is (A) reduced as a result of any dispute or complaint, any cash discount, or any adjustment by Seller, APR or Servicer or any Affiliate of Seller, APR or Servicer, (B) reduced or cancelled as a result of a setoff in respect of any claim by the Obligor thereof against Seller, APR or any Affiliate of Seller, APR (whether such claim arises out of the same or a related or an unrelated transaction), or (C) reduced on account of the obligation of Seller or APR or any Affiliate thereof to pay to the related Obligor any rebate or refund, or (D) less than the amount included in calculating the Net Pool Balance for purposes of any Settlement Statement, or (ii) any of the representations or warranties of Seller set forth in Section 6.01(l) or (p) were not true when made with respect to any Eligible Receivable that is a Pool Receivable or any Pool Receivable represented to be an Eligible Receivable, or any of the representations or warranties of Seller set forth in Section 6.01(l) are no longer true with respect to any Eligible Receivable that is a Pool Receivable, then, on such day, Seller shall be deemed to have received a Collection (such Collection, a "Deemed Collection") of such Pool Receivable; (I) in the case of clause (i) above, in the amount of such reduction or cancellation or the difference between the actual Unpaid Balance and the amount included in calculating such Net Pool Balance, as applicable; and (II) in the case of clause (ii) above, in the amount of the Unpaid Balance of such Pool Receivable. (b) Seller's Optional Reduction of Purchaser's Total Investment. Seller may at any time elect to reduce the Purchaser's Total Investment as follows: (i) Seller shall give the Administrator and the Relationship Bank at least three (3) Business Days' prior written notice of such reduction (including the amount of such proposed reduction and the proposed date on which such reduction will commence), (ii) on the proposed date of commencement of such reduction and on each day thereafter, Servicer shall refrain from reinvesting Collections on account of Principal Receivables pursuant to Section 1.03 until the amount thereof not so reinvested shall equal the desired amount of reduction, and (iii) Servicer shall hold such Collections in trust for Purchaser on the next succeeding Settlement Date, pending payment to the Administrator (or if Collections are then being retained in the Collection Account, such Collections shall be held therein), as provided in Sections 1.03 and 3.01; provided that, (A) the amount of any such reduction shall be not less than $1,000,000 and shall be an integral multiple of $100,000, and the Purchaser's Total Investment after giving effect to such reduction shall be not less than $10,000,000 (unless Purchaser's Total Investment shall thereby be reduced to zero), (B) Seller shall use reasonable efforts to attempt to choose a reduction amount, and the date of commencement thereof, so that such reduction shall commence and conclude in the same Settlement Period, and (C) After giving effect to such reduction, Purchaser's Share on account of Principal Receivables does not exceed 100%. SECTION 3.05. Payments and Computations, Etc. (a) Payments. All amounts to be paid or deposited by Seller or Servicer to the Administrator or any other Person hereunder (other than amounts payable under Section 4.02) shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York time) on the day when due in lawful money of the United States of America in same day funds (i) in the case of amounts to be paid or deposited in respect of accrued and unpaid Earned Discount or in reduction of Purchaser's Total Investment, to the Collateral Agent at The First National Bank of Chicago, ABA no. 071000013, clearing account no. 4811-5377, for further credit to account no. 21-201949- 7, ref. Clipper Receivables Corporation, att. Melissa Weisman, and (ii) in the case of all fees, expenses and other amounts (other than amounts payable under Section 4.02), to the Administrator at State Street Bank and Trust Company, ABA no. 011000028, account no. 13585872/Clipper Receivables Corporation, att. Ken Whittmore, ext 4-3844, ref. Route Code 5, Function 5. (b) Late Payments. Seller or Servicer, as applicable, shall, to the extent permitted by law, pay to Purchaser interest on all amounts not paid or deposited when due hereunder at 2% per annum above the Alternate Base Rate, payable on demand, provided, however, that such interest rate shall not at any time exceed the maximum rate permitted by applicable law. (c) Method of Computation. All computations of interest, Earned Discount, any fees payable under Sections 4.01(b) and (c) and any other fees payable by Seller to Purchaser, the Administrator or the Relationship Bank in connection with Purchases hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) elapsed. SECTION 3.06. Treatment of Collections and Deemed Collections. Seller shall forthwith deposit in the Collection Account, all Collections deemed received by Seller pursuant to Section 3.04 and such Collections shall be held or distributed as Earned Discount, accrued Servicer's Fee, repayment of Purchaser's Total Investment, etc. to the same extent as if such Collections had actually been received on the date of such deposit in the Collection Account. Parent hereby agrees to make such deposits of such Collections in Seller's stead to the extent Seller does not make such deposits as and when required; provided that, Parent shall not be required to make such deposits in an aggregate amount in excess of $3,000,000 if the Deemed Collections pursuant to Section 3.04 are the result of insurance agent fraud. So long as Seller shall hold any Collections or deemed Collections required to be paid to Servicer, Purchaser, Relationship Bank, the Administrator or Collateral Agent, it shall hold such Collections in trust and shall clearly mark its records to reflect such trust. SECTION 3.07 Repurchases. (a) If on any Settlement Date the Purchaser's Total Investment shall equal or be less than 5% of the greatest amount of Purchaser's Total Investment at any time prior to such Settlement Date, Seller shall be entitled to repurchase the Asset Interest on such Settlement Date. Seller shall give Purchaser at least five Business Days' prior written notice of such repurchase and upon payment of the repurchase price therefor, as hereinafter provided, Purchaser shall be obligated to reconvey its entire interest in the Asset Interest to Seller pursuant to an assignment acceptable to the parties, but without representation or warranty except that the interest assigned is free of offset, liens and other encumbrances created by the assignor. Seller shall pay such repurchase price in cash to the Administrator on behalf of Purchaser (including any holder of any Asset Tranche) in an amount equal to the sum of (i) all accrued and unpaid Earned Discount in respect of the Asset Interest, (ii) the Purchaser's Total Investment therein, (iii) the aggregate of other amounts then owed hereunder by Seller to Purchaser, Relationship Bank or Administrator and (iv) the accrued and unpaid Servicer's Fee. Upon receipt of the aforesaid repurchase price the Administrator shall distribute it (i) to Purchaser (including the holder of any Asset Tranche) (a) in payment of the accrued and unpaid Earned Discount, (b) in reduction of the Purchaser's Total Investment and (c) in payment of any other amounts owed by Seller hereunder to Purchaser (including the holder of any Asset Tranche), Relationship Bank or Administrator, in each case until reduced to zero, and (ii) to Servicer in payment of the accrued and unpaid Servicer's Fee, also until reduced to zero. (b) If at any time an Adverse Determination occurs Seller shall within three Business Days of Seller's knowledge thereof notify Purchaser of such Adverse Determination, and Seller shall, if Purchaser in its sole discretion so demands, (i) within five Business Days after notice has been given to the Purchaser or by the Purchaser to the Seller, repurchase Purchaser's ownership interest in the Adverse Determination Receivables, or (ii) at the end of the related applicable Yield Periods, repurchase Purchaser's ownership interest in the Adverse Determination Receivables. In the case of a repurchase under clause (i) or (ii) above, upon payment by Seller of the repurchase price therefor, as hereinafter provided, Purchaser shall be obligated to reconvey its entire interest in such Adverse Determination Receivables to Seller pursuant to an assignment acceptable to the parties, but without representation or warranty except as to the assignor's good title, free of offset, liens and other encumbrances as to the interest assigned. To the extent required above, Seller shall pay such repurchase price in cash to the Administrator on behalf of Purchaser in an amount equal to the sum of (A) the product of (x) the Purchaser's Share on account of Principal Receivables multiplied by (y) the then Unpaid Principal Balance of such Adverse Determination Receivables plus (B) Purchaser's Share on Account of Finance Charge Receivables received and not paid over to Purchaser or the Administrator in respect of such Adverse Determination Receivables. Upon receipt of such repurchase price Purchaser shall apply such repurchase price to reduce Purchaser's Total Investment and any accrued and unpaid Earned Discount, Program Fee, Servicer's Fee and Designated Obligations. Upon such receipt, such Adverse Determination Receivables shall thereupon be deemed removed from the Receivables Pool for all purposes hereunder. A repurchase of Purchaser's ownership interest in Adverse Determination Receivables shall not substitute for or limit the applicable indemnification obligations under Article XIII. In the event that any Indemnified Party shall incur or expects to incur any demonstrable loss or expense as a result of the redeployment of amounts received pursuant to clause (i) above, then, within five Business Days after written notice from Purchaser to Seller, Seller shall pay to Purchaser such additional amounts as will (in the reasonable determination of the Indemnified Parties) reimburse the Indemnified Parties for such demonstrable loss or expense. Such written notice shall, in the absence of demonstrable error, be conclusive and binding on Seller. This Section 3.07(b) shall survive the termination of this Agreement. SECTION 3.08. Custody Arrangement. Seller and Servicer shall enter into the Custody Agreement with the Custodian, the Administrator and the Relationship Bank on or prior to the date hereof. On each Wednesday of each calendar week Seller and Servicer shall, unless the Administrator and the Relationship Bank shall otherwise agree in writing, deliver to the Custodian on behalf of Purchaser and Seller in accordance with their respective interests each and every Contract (not previously delivered to the Custodian) subject to an APR Purchase under the Purchase and Sale Agreement and/or subject to a Purchase or Reinvestment hereunder prior to such Wednesday; provided that, with respect to any Contract as to which adequate reproductions cannot be made for servicing purposes due to the poor quality of the original thereof, Servicer may retain custody of such Contract, but shall hold it in trust for the benefit of Purchaser and Seller in accordance with their respective interests; provided, further, that the number of Contracts so held in trust shall not exceed 1% of all Contracts then owned by Seller. A schedule identifying the Contracts by contract number, Direct Obligor and amount financed shall be delivered to the Custodian on or before the delivery of such Contracts on such Wednesday; all such schedules for each Settlement Period shall be attached to the Settlement Statement for such Settlement Period along with a certification by Seller and Servicer as to the accuracy of such schedules. SECTION 3.09. Establishment of Collection Account; Investments by Relationship Bank. (a) Collection Account. On or before the first Purchase, the Relationship Bank shall establish, for the benefit of the Purchaser and the Seller, to the extent of their respective interests therein, an account (the "Collection Account"), which shall be a demand deposit account maintained in the name of the Relationship Bank for the benefit of the Purchaser and the other Secured Parties initially with Mercantile Bank of Kansas City or with any other financial institution acceptable to the Relationship Bank and the Administrator. Subject to the further provisions of this Section 3.09(a), the Relationship Bank shall, upon receipt or upon transfer from another account, as the case may be, deposit into the Collection Account all amounts received by it which are required to be deposited therein in accordance with the provisions hereof including all proceeds of drawings under the Servicer LOC. All such amounts and all investments made with such amounts, including all income and other gain from such investments, shall be held by the Relationship Bank in the Collection Account or the Liquidation Collection Account as part of the Receivables Pool as herein provided, subject to withdrawal by, or at the direction of, it or the Administrator in accordance with, and for the purposes specified in the provisions of, this Agreement. Neither the Administrator nor the Relationship Bank shall have any right of set-off with respect to the Collection Account or the Liquidation Collection Account or any investment therein, whether or not commingled. Notwithstanding any other provision herein, it shall be understood that after the occurrence of the Liquidation Date, the Relationship Bank may, or upon request of the Administrator, shall transfer all amounts at any time on deposit (whether or not required to be held in the Collection Account) in the Collection Account to a segregated trust account maintained with and in the name of the Relationship Bank for the benefit of Purchaser and Seller to the extent of their respective interests therein (such account the "Liquidation Collection Account"). (b) Administration of Payments. Unless otherwise advised by Servicer in writing, the Relationship Bank may assume that any amount remitted to it by Servicer or any Lock-Box Bank is to be deposited into the Collection Account. The Relationship Bank may establish from time to time such deadline or deadlines as it shall determine are reasonable or necessary in the administration hereof after which all amounts received or collected by the Relationship Bank on any day shall not be deemed to have been received or collected until the next succeeding Business Day. (c) Investments. Pursuant to one or more Seller Orders received from Seller, all or a portion of the amounts in the Collection Account and the Liquidation Collection Account shall be invested and reinvested by the Relationship Bank in one or more Eligible Investments. Subject to the restrictions on the maturity of investments set forth in Section 3.09(e), each such Seller Order may authorize the Relationship Bank to make the specific Eligible Investments set forth therein, to make Eligible Investments from time to time consistent with the general instructions set forth therein, or to make specific Eligible Investments pursuant to instructions received in writing or by facsimile transmission from the employees or agents of Seller or the Servicer, as the case may be, identified therein, in each case in such amounts as such Seller Order shall specify. Seller agrees to report as income for financial reporting and tax purposes (to the extent reportable) all investment earnings on amounts in the Collection Account. Each of Seller and Servicer agrees to give appropriate and timely investment directions to the Relationship Bank so that there will not be more than two Business Days in any one calendar year at the end of which funds in the Collection Account or the Liquidation Collection Account are not invested, directly or indirectly, pursuant to a Seller Order in Eligible Investments that mature on or after the opening of business on the next Business Day. (d) Investments in the Absence of a Seller Order. In the event that (i) Seller shall have failed to give investment directions to the Relationship Bank by 9:30 A.M. Minneapolis, Minnesota, time on any Business Day on which there may be uninvested cash or (ii) a Liquidation Event or Unmatured Liquidation Event shall have occurred and be continuing, then the Relationship Bank shall invest such funds in Eligible Investments as directed by it or the Administrator or, if no such directions are given, in Eligible Investments described in clause (e) of the definition thereof. All investments made by the Relationship Bank shall mature no later than the maturity date therefor permitted by Section 3.09(e). (e) Maturity of Investments. No investment of any amount held in the Collection Account or the Liquidation Collection Account shall mature later than the Business Day immediately preceding the Settlement Date which is scheduled to occur immediately following the date of investment for application in accordance with the provisions of this Agreement. All income or other gains from the investment of moneys deposited in the Collection Account or the Liquidation Collection Account, as applicable, shall be deposited by the Relationship Bank in the affected account immediately upon receipt. Any net loss (determined on a month by month basis) resulting from such investment of amounts in the Collection Account or the Liquidation Collection Account, as applicable, shall be charged to Seller, which, upon notice thereof by the Relationship Bank, shall reimburse the Collection Account or the Liquidation Collection Account, as applicable, for such loss. (f) Form of Investment. Any investment of funds in the Collection Account or the Liquidation Collection Account shall be made under the following terms and conditions: (i) each such investment shall be made in the name of the Relationship Bank (in its capacity as such) or in the name of a nominee of the Relationship Bank, in either case for the benefit of the Purchaser and the other Secured Parties; and (ii) any certificate or other instrument evidencing such investment shall be delivered directly to the Relationship Bank or its agent and the Relationship Bank shall have sole possession of such instrument, and all income on such investment. (g) Relationship Bank Not Liable. The Relationship Bank shall not in any way be held liable by reason of any insufficiency in the Collection Account or the Liquidation Collection Account resulting from losses on investments made in accordance with the provisions of this Section 3.09 (but the Relationship Bank shall at all times remain liable for its own debt obligations, if any, constituting part of such investments). The Relationship Bank shall not be liable for any investment made by it in accordance with this Section 3.09 on the grounds that it could have made a more favorable investment. ARTICLE IV FEES AND YIELD PROTECTION SECTION 4.01. Fees. (a) Arrangement Fee. Seller shall pay to the Administrator, for the account of Purchaser and the Relationship Bank, an arrangement fee ("Arrangement Fee") in the Arrangement Fee Amount payable on the date hereof. (b) Program Fee. From the date hereof until the date, following the Termination Date on which Purchaser's Total Investment shall be reduced to zero, Seller shall pay to Purchaser a program fee ("Program Fee") for each day in such period equal to the sum of (i) the product of (x) the Purchaser's Tranche Investment in respect of the Asset Tranche funded by Commercial Paper Notes on such day, times (y) the Program Fee Rate, times (z) 1/360; provided, however, the rate set forth in clause (y) shall be increased to the Liquidation Program Fee Rate after the occurrence of a Liquidation Event plus (ii), prior to the occurrence of the Termination Date, the product of (x) the Non-Use Rate times (y) the Purchase Limit less Purchaser's Total Investment on such day. Such Program Fee shall be paid in arrears, on the Settlement Date for each Settlement Period and on the Final Payout Date, in the amount of such Program Fee that shall have accrued during such Settlement Period (or portion thereof) or other period then ending and which shall not have been previously paid. SECTION 4.02. Yield Protection. (a) If (i) Regulation D or (ii) any Regulatory Change occurring after the date hereof (A) shall subject an Affected Party to any tax, duty or other charge with respect to any Asset Interest owned by or funded by it, or any obligations or right to make Purchases or Reinvestments or to provide funding therefor, or shall change the basis of taxation of payments to the Affected Party of any Purchaser's Total Investments or Earned Discount owned by, owed to or funded in whole or in part by it or any other amounts due under this Agreement in respect of the Asset Interest owned by or funded by it or its obligations or rights, if any, to make Purchases or Reinvestments or to provide funding therefor (except for changes in the rate of tax on the overall net income of such Affected Party imposed by the United States of America or any state thereof (unless, with respect to a state, other than the state in which such Affected Party's chief executive offices are located, resulting from, or arising out of, the transactions contemplated under the Transaction Documents) and, if such Affected Party's principal executive office is not in the United States of America, by the jurisdiction where such Affected Party's principal office in the United States is located); or (B) shall impose, modify or deem applicable any reserve (including, without limitation, any reserve imposed by the Federal Reserve Board, but excluding any reserve included in the determination of Earned Discount), special deposit or similar requirement against assets of any Affected Party, deposits or obligations with or for the account of any Affected Party or with or for the account of any affiliate (or entity deemed by the Federal Reserve Board to be an affiliate) of any Affected Party, or credit extended by any Affected Party; or (C) shall change the amount of capital maintained or required or requested or directed to be maintained by any Affected Party; (D) shall impose any other condition affecting any Asset Interest owned or funded in whole or in part by any Affected Party, or its obligations or rights, if any, to make Purchases or Reinvestments or to provide funding therefor; or (E) shall change the rate for, or the manner in which the Federal Deposit Insurance Corporation (or a successor thereto) assesses, deposit insurance premiums or similar charges; and the result of any of the foregoing is or would be (x) to increase the cost to (or in the case of Regulation D referred to above, to impose a cost on) (I) an Affected Party funding or making or maintaining any Purchases or Reinvestments, any purchases, reinvestments, or loans or other extensions of credit under the Liquidity Agreement, or any Credit Draw, or any commitment of such Affected Party with respect to any of the foregoing, or (II) the Administrator or the Relationship Bank for continuing its or Seller's or APR's relationship with Purchaser (Seller shall at no time, with regard to Regulation D, be required to pay an increased cost hereunder in excess of the actual increased cost imposed on the Affected Party), (y) to reduce the amount of any sum received or receivable by an Affected Party under this Agreement, or under the Liquidity Agreement or the Credit Agreement with respect thereto, or (z) in the sole determination of such Affected Party, to reduce the rate of return on the capital of an Affected Party as a consequence of its obligations hereunder or arising in connection herewith to a level below that which such Affected Party could otherwise have achieved, then within thirty days after demand by such Affected Party (which demand shall be accompanied by a statement setting forth the basis of such demand), Seller shall pay directly to such Affected Party such additional amount or amounts as will compensate such Affected Party for such additional or increased cost or such reduction. (b) Each Affected Party will promptly notify Seller and the Administrator of any event of which it has knowledge which will entitle such Affected Party to compensation pursuant to this Section 4.02; provided, however, no failure to give or delay in giving such notification shall adversely affect the rights of any Affected Party to such compensation. (c) In determining any amount provided for or referred to in this Section 4.02, an Affected Party may use any reasonable averaging and attribution methods that it (in its sole discretion) shall deem applicable. Any Affected Party when making a claim under this Section 4.02 shall submit to Seller a statement as to such increased cost or reduced return (including calculation thereof in reasonable detail), which statement shall, in the absence of demonstrable error, be conclusive and binding upon Seller. SECTION 4.03. Funding Losses. In the event that any Liquidity Bank shall incur any loss or expense (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Liquidity Bank to make any Liquidity Purchase or maintain any Liquidity Purchase) as a result of (i) any settlement with respect to Purchaser's Tranche Investment of any Asset Tranche funded by a Liquidity Purchase being made on any day other than the scheduled last day of an applicable Yield Period with respect thereto, or (ii) any Purchase not being made in accordance with a request therefore under Section 1.02, then, upon written notice from the Administrator to Seller and Servicer, Seller shall pay to Servicer, and Servicer shall pay to the Administrator for the Account of such Liquidity Bank, the amount of such loss or expense. Such written notice (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be conclusive and binding upon the Seller and Servicer. ARTICLE V CONDITIONS OF PURCHASES SECTION 5.01. Conditions Precedent to Initial Purchase. The initial Purchase hereunder is subject to the condition precedent that the Administrator shall have received, on or before the date of such Purchase, the following, each (unless otherwise indicated) dated such date and in form and substance satisfactory to the Administrator: (a) A copy of the resolutions of the Board of Directors of Seller, APR and Parent approving this Agreement, the Purchase and Sale Agreement and the other Transaction Documents, as applicable, to be delivered by them hereunder and the transactions contemplated hereby and thereby, certified in each case by its Secretary or Assistant Secretary; (b) Good standing certificates (i) for Seller, APR and Parent issued by the Secretaries of State of Delaware and Kansas, as applicable. (c) A certificate of the Secretary or Assistant Secretary of Seller, APR and Parent certifying the names and true signatures of the officers authorized on their behalf to sign, as applicable, this Agreement, the Sale and Purchase Agreement and the other Transaction Documents to be delivered by them hereunder (on which certificate the Administrator, the Relationship Bank and Purchaser may conclusively rely until such time as Purchaser shall receive from Seller, APR and/or Parent, as applicable, a revised certificate meeting the requirements of this subsection (c)); (d) The Articles of Incorporation of Seller, APR and Parent, duly certified by the Secretary of State of their respective states of incorporation, as of a recent date acceptable to the Administrator and the Relationship Bank, together with a copy of the By-laws of Seller, APR and Parent, duly certified by the Secretary or an Assistant Secretary of Seller, APR or Parent, respectively; (e) Copies of acknowledgment copies of (i) proper Financing Statements (Form UCC-1), naming APR, as Originator, as the assignor of Receivables and Seller, as Initial Purchaser, as assignee, and Purchaser as assignee of such Financing Statement, (ii) proper Financing Statements (Form UCC-1), naming Seller as the assignor of Receivables or an undivided interest therein and Purchaser as assignee, (iii) proper Financing Statements (Form UCC-1), naming Seller assignor of Receivables or an undivided interest therein and Backup Purchaser as assignee and (iv) proper terminations of Financing Statements (Form UCC-3), terminating any and all Financing Statements which cover any Receivable or Contract; (f) A search report (including tax, ERISA and judgment liens) provided in writing to the Administrator and the Relationship Bank by Polsinelli, White, Vardeman & Shalton, listing all effective financing statements that name Seller or APR as debtor and that are filed in the jurisdictions in which filings were made pursuant to subsection (e) above, together with copies of such financing statements (none of which shall cover any Receivables or Contracts); (g) Duly executed Lock-Box Agreements with the Lock-Box Banks; (h) Duly executed Purchase and Sale Agreement; (i) Duly executed Custody Agreement; (j) Duly executed Backup Servicing Agreement; (k) (A) Opinion of Polsinelli, White, Vardeman & Shalton, counsel to Seller as to perfection, authority and other matters and (B) Opinion of Hillix, Brewer, Hoffhaus, Whittaker & Wright, L.L.C., counsel to Parent, as to authority and other matters, in substantially the forms and attached as Exhibit 5.01(k)-1 and 5.01(k)-2; (l) Opinions of Polsinelli, White, Vardeman & Shalton, counsel to Seller, as to "true sale" and "non-substantive consolidation" in substantially the forms attached as Exhibits 5.01(l)-1 and 5.01(l)- 2; (m) Legal Survey of Polsinelli, White, Vardeman Shalton, counsel to Seller, as to "perfection in unearned premiums" in substantially the form of Exhibit 5.01(m); (n) Such sublicenses as Purchaser, the Administrator or the Relationship Bank shall require with regard to all programs leased by Seller or APR and used in the servicing of the Receivables Pool; (o) Such powers of attorney as Purchaser, the Administrator or the Relationship Bank shall reasonably request to enable them to collect all amounts due under any and all Pool Receivables; (p) Evidence that Servicer has marked its master data processing records to reflect Purchaser's undivided ownership interest in each Pool Receivable; (q) A Pay-Off Letter executed by Bank of America National Trust & Savings Association, substantially in the form of Exhibit 5.01(q); (r) An executed copy of the Tax Sharing Agreement among Parent and its "affiliated group of companies" (including APR and Seller); (s) (i) A pro forma Settlement Statement, prepared in respect of the proposed initial Purchase, assuming a Cut-Off Date of Thursday, October 19, 1995, (ii) schedule of information for Receivables included in the initial Purchase in an electronic format acceptable to the Relationship Bank, and (iii) implementation of Settlement reporting procedures and formats satisfactory to the Administrator and the Relationship Bank; (t) A report in form and substance satisfactory to the Administrator from the Relationship Bank as to a pre-closing due diligence audit of the Receivables and the Servicer and its procedures by the Relationship Bank; (u) Duly executed Liquidity Agreement; (v) Written approval by the Credit Bank of this Agreement; (w) Certified copy of the Credit and Collection Policy of APR and Seller; (x) Satisfactory completion of due diligence (including the collateral audit by Norwest) by Administrator and Norwest; (y) Letters from the rating agencies then rating the Commercial Paper Notes, confirming in effect that the existing ratings of the Commercial Paper Notes will remain in effect after giving effect to the transactions contemplated hereby; and (z) Such other further documents and information as Purchaser, the Administrator or the Relationship Bank shall reasonably request. SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments. Each Purchase (including the initial Purchase) and each Reinvestment hereunder shall be subject to the further conditions precedent that on the date of such Purchase or Reinvestment the following statements shall be true (and Seller by accepting the amount of such Purchase or by receiving the proceeds of such Reinvestment shall be deemed to have certified that): (a) the representations and warranties contained in Sections 6.01, 6.02 and 6.03 hereof and in the Purchase and Sale Agreement are correct on and as of such day as though made on and as of such day and shall be deemed to have been made on such day, (b) no event has occurred and is continuing, or would result from such Purchase or Reinvestment, that constitutes a Liquidation Event or Unmatured Liquidation Event, (c) except as provided in Section 3.08, for each Receivable included in a Purchase or Reinvestment, a fully executed Contract shall have been delivered to the Custodian (as Purchaser's designee), no later than the Wednesday following such Purchase or Reinvestment, (d) after giving effect to each proposed Purchase or Reinvestment, (i) Purchaser's Total Investment will not exceed the Purchase Limit and (ii) Purchaser's Share with respect to Principal Receivables will not exceed 100%, and (e) the Liquidation Date shall not have occurred; provided, however, the absence of the occurrence and continuance of an Unmatured Liquidation Event shall not be a condition precedent to any Reinvestment on any day which does not cause the Purchaser's Total Investment, after giving effect to such Reinvestment or Purchase, to exceed the Purchaser's Total Investment as of the opening of business on such day. ARTICLE VI REPRESENTATIONS AND WARRANTIES SECTION 6.01 Representations and Warranties of Seller. In order to induce the Purchaser, the Administrator and Relationship Bank to enter into this Agreement and the other Transaction Documents, Seller represents and warrants to each of them as follows: (a) Organization and Good Standing. Seller has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted, and had at all relevant times, and now has, all necessary power, authority, and legal right to acquire, own, dispose of, and otherwise deal with, the Pool Receivables. (b) Due Qualification. Seller is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including, without limitation, such business as a "premium finance company") requires such qualification or approvals. (c) Power and Authority: Due Authorization. Seller has (i) duly authorized by all necessary action, and has all necessary power, authority and legal right to (A) execute and deliver this Agreement, the Purchase and Sale Agreement and the other Transaction Documents to which it is a party, (B) carry out the terms of the Transaction Documents, and (C) sell and assign the Asset Interest on the terms and conditions herein provided and (ii) has duly authorized by all necessary corporate action the execution, delivery and performance of this Agreement, the Purchase and Sale Agreement and the other Transaction Documents and the sale and assignment of the Asset Interest on the terms and conditions herein provided. (d) Valid Sale: Binding Obligations. This Agreement constitutes a valid sale, transfer, and assignment of the Asset Interest to Purchaser, enforceable against creditors of, and purchasers from, Seller and APR; and this Agreement constitutes, and each other Transaction Document to be signed by Seller when duly executed and delivered will constitute, a legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. (e) No Violation. The consummation of the transactions contemplated by this Agreement, the Purchase and Sale Agreement and the other Transaction Documents and the fulfillment of the terms hereof will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or by-laws of Seller, or any indenture, loan agreement, mortgage, deed of trust, receivables purchase or other securitization agreement or other agreement or instrument to which Seller is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, loan agreement, mortgage, deed of trust, receivables purchase agreement or other securitization agreement or other agreement or instrument, other than this Agreement, or violate any law or any order, rule, or regulation applicable to Seller or (except for Adverse Determinations disclosed in writing to Purchaser as assignee of Seller) of any court or of any federal or state regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over Seller (or Purchaser as assignee of Seller) or any of its properties. (f) No Proceedings. There are no proceedings or investigations pending, or threatened, against Seller or its Affiliates, or any other Person, before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality (A) asserting the invalidity of this Agreement, the Purchase and Sale Agreement or any other Transaction Document, (B) seeking to prevent the sale and assignment of the Asset Interest or the consummation of any of the transactions contemplated by this or any other Transaction Document, (C) seeking any determination or ruling that might adversely affect (i) the performance by Seller or APR of its obligations under this Agreement, or (ii) the validity or enforceability of this Agreement, the Purchase and Sale Agreement, any other Transaction Document, the Receivables or the Contracts or (D) seeking to adversely affect the federal income tax attributes of the Purchases and Reinvestments hereunder. (g) Bulk Sales Act. No transaction contemplated hereby requires compliance with any bulk sales act or similar law. (h) Government Approvals. 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 Seller of this Agreement, the Purchase and Sale Agreement or any other Transaction Document except for the filing of the UCC Financing Statements referred to in Article V, all of which, at the time required in Article V, shall have been duly made and shall be in full force and effect. (i) [reserved]. (j) Litigation. No injunction, decree or other decision has been issued or made by any court, government or agency or instrumentality thereof that has, and no threat by any person has been made to attempt to obtain any such decision that would have, a material adverse effect on a significant part of its business operations except as described in Schedule 6.01(j). (k) Margin Regulations. The use of all funds acquired by Seller under this Agreement will not conflict with or contravene any of Regulations G, T, U and X promulgated by the Board of Governors of the Federal Reserve system from time to time. (l) Quality of Title. Each Pool Receivable is, together with the related Contract and all other agreements related to such Pool Receivable, owned by Seller free and clear of any Lien (other than any Lien arising solely as the result of any action taken by Purchaser (or any assignee thereof) or by the Administrator or the Relationship Bank) except as provided herein; and when Purchaser makes a Purchase it shall have acquired and shall continue to have maintained a valid and perfected first priority undivided percentage ownership interest to the extent of the Asset Interest in each Pool Receivable, each related Contract and in the Related Security and Collections with respect thereto free and clear of any Lien (other than any Lien arising solely as the result of any action taken by Purchaser (or any assignee thereof) or by the Administrator or the Relationship Bank); and no financing statement or other instrument similar in effect covering any Pool Receivable, any interest therein, the related Contracts, or the Related Security or Collections with respect thereto is on file in any recording office except such as may be filed in favor of (i) APR in accordance with the Contracts, (ii) in favor of Seller in accordance with the Purchase and Sale Agreement, (iii) in favor of Purchaser in accordance with this Agreement or in connection with any Lien arising solely as the result of any action taken by Purchaser (or any assignee thereof) or by the Administrator or the Relationship Bank or (iv) in favor of the Collateral Agent. (m) Accurate Reports. No Settlement Statement (if prepared by Seller or any Affiliate of Seller, or to the extent that information contained therein was supplied by Seller or any Affiliate of Seller), information, exhibit, financial statement, document, book, record or report furnished or to be furnished by Seller to the Administrator, the Relationship Bank or Purchaser in connection with this Agreement or any other Transaction Document was or will be inaccurate in any material respect as of the date it was or will be dated or (except as otherwise disclosed to the Administrator, the Relationship Bank and Purchaser, as the case may be, at such time) as of the date so furnished, or contained or will contain any material misstatement of fact or omitted or will omit to state a material fact or any fact necessary to make the statements contained therein not materially misleading. (n) Offices. The chief place of business and chief executive office of Seller are located at the address of Seller referred to in Section 14.02 and the offices where Seller keeps all its books, records and documents evidencing Pool Receivables, the related Contracts and all purchase orders and other agreements related to such Pool Receivables are located at the addresses specified in Schedule 6.01(n) (or at such other locations, notified to the Administrator and the Relationship Bank in accordance with Section 7.01(e), in jurisdictions where all action required by Section 8.05 has been taken and completed). (o) Lock-Box Accounts. The names and addresses of all the Lock- Box Banks, together with the account numbers of the lock-box accounts of Seller at such Lock-Box Banks, are specified in Schedule 6.01(o) (or have been notified to Purchaser in accordance with Section 7.03(d)). (p) Eligible Receivables. Each Receivable included in the Net Pool Balance as an Eligible Receivable on the date of any Purchase or Reinvestment shall in fact be an Eligible Receivable. (q) Investment Company Act. Seller is not an investment company or a company controlled by an investment company within the meaning of the Investment Company Act of 1940, as amended. (r) Solvency. After giving effect to each Purchase and each Reinvestment and immediately after giving effect to Seller's and the Originator's obligations now or hereafter arising pursuant to any Transaction Document and to each transaction contemplated thereby, (i) the fair saleable value of the assets of Seller will exceed its liabilities, and (ii) Seller will be solvent, will be able to pay its debts generally as they mature, will own property with a fair saleable value greater than the amount required to pay its debts, and will have capital sufficient to carry on its business as then constituted. (s) Servicing Programs. No license or approval is required for the Administrator's or the Relationship Bank's use of any program used by Servicer in the servicing of the Receivables, other than those which have been obtained and are in full force and effect. (t) Direct Obligor. No funds have been advanced by Seller to or on behalf of any Direct Obligor. (u) Contractual Due Dates, Etc. No Contract has been extended or otherwise modified, unless in manner, scope and content in accordance with the provisions of this Agreement and the Credit and Collection Policy. (v) Licensing. Seller is properly licensed as a premium finance loan company in each jurisdiction in which licensing is required for it to own premium finance loans with a nexus to such jurisdiction. (w) Transfers. No purchase of an interest in Receivables by Purchaser from Seller or by Seller from Originator constitutes a fraudulent transfer or fraudulent conveyance or is otherwise void or voidable under similar laws or principles, the doctrine of equitable subordination or for any other reason. (x) Purchase and Sale Agreement. Each of the representations and warranties made by Seller and the Originator in the Purchase and Sale Agreement is true and correct as of the date or dates made. (y) Use of Proceeds. Neither Seller nor any Originator will use the proceeds of the Purchases hereunder to acquire a security in a transaction subject to Section 13 or 14 of the Securities Exchange Act of 1934. (z) Tax. Seller has filed each and every tax return required to be filed by it in each jurisdiction in which it is required to do so and has paid in each such jurisdiction all taxes required to be paid by it on a consolidated basis. (aa) No Liquidation Event. No event has occurred and is continuing and no condition exists which constitutes a Liquidation Event or an Unmatured Liquidation Event. (bb) ERISA. The Seller is in compliance in all material respects with ERISA and there exists no lien in favor of the Pension Benefit Guaranty Corporation on any of the Receivables. SECTION 6.02 Representations and Warranties of APR. APR In order to induce the Purchaser, the Administrator and Relationship Bank to enter into this Agreement and the other Transaction Documents, represents and warrants to each of them as follows: (a) Organization and Good Standing. APR has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Kansas, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted, and had at all relevant times, and now has, all necessary power, authority, and legal right to acquire, own, dispose of, and service the Pool Receivables. (b) Due Qualification. APR is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including, without limitation, such business as a "premium finance company") requires such qualification approvals. (c) Power and Authority: Due Authorization. APR has (i) duly authorized by all necessary action, and has all necessary power, authority and legal right to (A) execute and deliver this Agreement, the Purchase and Sale Agreement and the other Transaction Documents to which it is a party, (B) carry out the terms of the Transaction Documents, (C) sell and assign the Receivables on the terms and conditions provided in the Purchase and Sale Agreement and (D) service the Receivables on the terms and conditions herein provided and (ii) has duly authorized by all necessary corporate action the execution, delivery and performance of this Agreement, the Purchase and Sale Agreement and the other Transaction Documents and the sale and assignment of the Asset Interest on the terms and conditions herein provided. (d) Binding Obligations. This Agreement constitutes, and each other Transaction Document to be signed by APR when duly executed and delivered will constitute, a legal, valid and binding obligation of APR enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. (e) No Violation. The consummation of the transactions contemplated by this Agreement, the Purchase and Sale Agreement and the other Transaction Documents and the fulfillment of the terms hereof and thereof will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or by-laws of APR, or any indenture, loan agreement, mortgage, deed of trust, receivables purchase or other securitization agreement or other agreement or instrument to which APR is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, loan agreement, mortgage, deed of trust, receivables purchase agreement or other securitization agreement or other agreement or instrument, other than this Agreement, or violate any law or any order, rule, or regulation applicable to APR or (except for Adverse Determinations disclosed in writing to Seller and Purchaser as assignees of APR) of any court or of any federal or state regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over APR (or Purchaser and Seller as assignees of APR) or any of its properties. (f) No Proceedings. There are no proceedings or investigations pending, or threatened, against APR or its Affiliates, or any other Person, before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality (A) asserting the invalidity of this Agreement, the Purchase and Sale Agreement or any other Transaction Document, (B) seeking to prevent the sale and assignment of the Asset Interest or the consummation of any of the transactions contemplated by this or any other Transaction Document, (C) seeking any determination or ruling that might adversely affect (i) the performance by APR or Servicer of its obligations under this Agreement, or (ii) the validity or enforceability of this Agreement, the Purchase and Sale Agreement, any other Transaction Document, the Receivables or the Contracts or (D) seeking to adversely affect the federal income tax attributes of the Purchases and Reinvestments hereunder. (g) Government Approvals. 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 APR of this Agreement, the Purchase and Sale Agreement or any other Transaction Document except for the filing of the UCC Financing Statements referred to in Article V, all of which, at the time required in Article V, shall have been duly made and shall be in full force and effect. (h) Financial Condition. (x) The consolidated balance sheet of APR and its consolidated subsidiaries, if any, as at December 31, 1994, and the related statements of income and cash flow of APR and its consolidated subsidiaries, if any, for the year then ended certified by KPMG Peat Marwick, independent accountants, and the unaudited consolidated interim balance sheet of APR and its consolidated subsidiaries as at September 30, 1995, and the related interim statement of income, copies of each of which have been furnished to Purchaser, each fairly present the consolidated financial position of APR and its consolidated subsidiaries as at such date and the consolidated results of the operations of APR and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied, and (y) since September 30, 1995 there has been no material adverse change in any such condition, business, business prospects or operations except as described in Schedule 6.02(h). (i) Litigation. No injunction, decree or other decision has been issued or made by any court, government or agency or instrumentality thereof that has, and no threat by any person has been made to attempt to obtain any such decision that would have, a material adverse effect on a significant part of its business operations except as described in Schedule 6.02(i). (j) Accurate Reports. No Settlement Statement (if prepared by APR or any Affiliate of APR, or to the extent that information contained therein was supplied by APR or any Affiliate of APR), information, exhibit, financial statement, document, book, record or report furnished or to be furnished by APR to the Administrator, the Relationship Bank or Purchaser in connection with this Agreement or any other Transaction Document was or will be inaccurate in any material respect as of the date it was or will be dated or (except as otherwise disclosed to the Administrator, the Relationship Bank and Purchaser, as the case may be, at such time) as of the date so furnished, or contained or will contain any material misstatement of fact or omitted or will omit to state a material fact or any fact necessary to make the statements contained therein not materially misleading. (k) Offices. The chief place of business and chief executive office of APR are located at the address of APR referred to in Section 14.02 and the offices where APR keeps all its books, records and documents evidencing Pool Receivables, the related Contracts and all purchase orders and other agreements related to such Pool Receivables are located at the addresses specified in Schedule 6.02(k) (or at such other locations, notified to the Administrator and the Relationship Bank in accordance with Section 7.01(e), in jurisdictions where all action required by Section 8.05 has been taken and completed). (l) Servicing Programs. No license or approval is required by the Administrator's or the Relationship Bank's use of any program used by APR in the servicing of the Receivables, other than those which have been obtained and are in full force and effect. (m) Contractual Due Dates, Etc. No Contract has been extended or otherwise modified, unless in manner, scope and content in accordance with the provisions of this Agreement and the Credit and Collection Policy. (n) Licensing. APR is properly licensed as a premium finance loan company in each jurisdiction in which licensing is required and in which it is originating, enforcing and/or servicing Receivables pursuant to the terms of the Transaction Documents (provided, that it shall be understood that APR is in discussions with the State of Florida relating to its recent acquisition by Parent). (o) Confirmation. With respect to each Contract and related Receivable serviced by it and included in the Receivables Pool, Servicer has obtained written confirmation of the existence, accuracy and terms of the related insurance policy. SECTION 6.03 Representations and Warranties of Parent. In order to induce the Purchaser, the Administrator and Relationship Bank to enter into this Agreement and the other Transaction Documents, Parent represents and warrants to each of them as follows: (a) Organization and Good Standing. Parent has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties are presently owned and such business is presently conducted. (b) Due Qualification. Parent is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualification, licenses or approvals and where the failure to be so qualified or to obtain such licenses or approvals would have a material adverse effect upon Parent's financial condition, results of operations, business or prospects. (c) Power and Authority: Due Authorization. Parent has duly authorized by all necessary action, and has all necessary power, authority and legal right to (A) execute and deliver the Transaction Documents to be executed and delivered by it and (B) carry out the terms of the Transaction Documents. (d) Binding Obligations. This Agreement constitutes, and each other Transaction Document to be signed by Parent when duly executed and delivered will constitute, a legal, valid and binding obligation of Parent enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. (e) No Violation. The consummation of the transactions contemplated by this Agreement and the other Transaction Documents and the fulfillment of the terms hereof and thereof will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the articles of incorporation or by-laws of Parent, or any indenture, loan agreement, mortgage, deed of trust, receivables purchase agreement or other securitization agreement or other agreement or instrument to which Parent is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, loan agreement, mortgage, deed of trust, receivables purchase agreement or other securitization agreement or other agreement or instrument, other than this Agreement, or violate any law or any order, rule, or regulation applicable to Parent of any court or of any federal or state regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over Parent or any of its properties. (f) No Proceedings. There are no proceedings or investigations pending, or threatened, against Parent or its Affiliates, or any other Person, before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality (A) asserting the invalidity of this Agreement or any other Agreement Document, (B) seeking to prevent the sale of the Asset Interest hereunder or the consummation of any of the transactions contemplated by this or any other Agreement Document, or (C) seeking any determination or ruling that might adversely affect (i) the performance by Parent, Seller or Servicer of its obligations under this Agreement, or (ii) the validity or enforceability of this Agreement, any other Agreement Document, the Receivables or the Contracts. (g) Government Approvals. 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 Parent of this Agreement or any other Transaction Document to be executed by Parent. (h) Financial Condition. (x) The consolidated balance sheet of Parent and its consolidated subsidiaries as at December 31, 1994, and the related statements of income and cash flow of Parent and its consolidated subsidiaries for the year then ended certified by Arthur Anderson & Co., L.L.C., independent accountants, and the unaudited consolidated interim balance sheet of Parent and its consolidated subsidiaries as at June 30, 1995, and the related interim statement of income, copies of each of which have been furnished to Purchaser, each fairly present the consolidated financial position of Parent and its consolidated subsidiaries as at such date and the consolidated results of the operations of Parent and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles (subject, in the case of any interim financial statements, to normal and non-material year-end adjustments) consistently applied, and (y) since June 30, 1995 there has been no material adverse change in any such condition, business, business prospects or operations except as described in Schedule 6.03(h). (i) Litigation. No injunction, decree or other decision has been issued or made by any court, government or agency or instrumentality thereof that has, and no threat by any person has been made to attempt to obtain any such decision that would have, a material adverse effect on a significant part of its business operations except as described in Schedule 6.03(i). (j) Offices. The chief place of business and chief executive office of Parent are located at the address of Parent referred to in the signature pages hereto. Section 6.04 Breach of Representations and Warranties. (a) Breach of Representations and Warranties. Upon discovery by APR, Parent, Servicer or Seller of a breach of any of the representations and warranties set forth in this Article VI, the party discovering such breach shall give written notice to the Administrator, the Relationship Bank and the Purchaser within three (3) Business Days of such discovery. (b) Survival of Certain Representations and Warranties. The representations and warranties provided in the Article VI shall survive the purchase of the related Receivables under the Purchase and Sale Agreement and of the Asset Interest therein by Purchaser, the delivery of the Contracts to Purchaser or Purchaser's designee and the termination of this Agreement or any other Transaction Document. ARTICLE VII GENERAL COVENANTS SECTION 7.01. Affirmative Covenants of Seller. From the date hereof until the Final Payout Date, Seller will, unless the Administrator and the Relationship Bank shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply in all material respects with all applicable laws, rules, regulations and orders with respect to (i) the Pool Receivables and related Contracts and (ii) its business operations except where non-compliance would not have a material adverse effect on such business operations. (b) Preservation of Corporate Existence. Preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification would materially adversely affect (i) the interests of Purchaser hereunder or (ii) the ability of Seller or Servicer to perform their respective obligations hereunder. (c) Audits. At any time and from time to time during regular business hours, upon such notice, if any, as shall be reasonable under the circumstances, permit the Administrator and/or the Relationship Bank (at Seller's expense), or their respective agents or representatives, (i) to examine and make copies of and abstracts from all books, records and documents (including, without limitation, computer tapes and disks) in the possession or under the control of Seller relating to Pool Receivables, including, without limitation, the related Contracts and other agreements, and (ii) to visit the offices and properties of Seller for the purpose of examining such materials described in clause (i) next above, and to discuss matters relating to Pool Receivables or Seller's performance hereunder or under any other Transaction Document with any of the officers or employees of Seller having knowledge of such matters; and without limiting the foregoing, from time to time upon request of the Administrator and/or the Relationship Bank, permit certified public accountants or other auditors acceptable to them to conduct, at Seller's expense, a review of Seller's books and records. (d) Performance and Compliance with Receivables and Contracts. At its expense timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Pool Receivables and all other agreements related to such Pool Receivables. (e) Location of Records. Keep its chief place of business and chief executive office, and the offices where it keeps its records concerning the Pool Receivables, all related Contracts and all other agreements related to such Pool Receivables (and all original documents relating thereto), at the address(es) of Seller referred to in Section 6.01(n) or, upon 30 days' prior written notice to the Administrator and the Relationship Bank, at such other locations in jurisdictions where all action required by Section 8.05 shall have been taken and completed. (f) Credit and Collection Policies. Comply in all material respects with Servicer's Credit and Collection Policy in regard to each Pool Receivable and the related Contract. (g) Collections. Cause all Collections of Pool Receivables to be deposited within one Business Day directly with a Lock-Box Bank. (h) Semi-Annual Procedures. Use its best efforts to fully cooperate with the Relationship Bank's semi-annual collateral audit. (i) Rights under Purchase and Sale Agreement. Exercise all of its rights under or in connection with the Purchase and Sale Agreement to the fullest extent thereof except to the extent otherwise consented to in writing by the Relationship Bank and the Administrator. (j) Licensing. File applications to obtain licenses as a premium finance company in Texas, Illinois, Missouri, Tennessee and Kansas on or before December 31, 1995 and thereafter, unless the Relationship Bank and the Administrator shall otherwise consent, file such applications to obtain such licenses within 60 days after the date on which the aggregate amount of Principal Receivables originated in a state in which Seller has no license but that has a premium finance statute equals or exceeds 1% of the Net Pool Balance. SECTION 7.02. Reporting Requirements of Seller. From the date hereof until the Final Payout Date, Seller will, unless the Administrator and the Relationship Bank shall otherwise consent in writing, furnish to the Administrator and the Relationship Bank: (a) Monthly Financial Statements. As soon as available and in any event on or before the thirtieth day following each calendar month, copies of the unaudited monthly financial statements of Seller prepared in accordance with generally accepted accounting principles. (b) ERISA. Promptly after the filing or receiving thereof, copies of all reports and notices with respect to any Reportable Event defined in Article IV of ERISA which Seller files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or which Seller receives from the Pension Benefit Guaranty Corporation; (c) Liquidation Events. As soon as possible and in any event within two Business Days after the occurrence of each Liquidation Event and each Unmatured Liquidation Event, a written statement of the chief financial officer or chief accounting officer of Seller setting forth details of such event and the action that Seller proposes to take with respect thereto; (d) Litigation and Other Proceedings. As soon as possible and in any event within three Business Days of Seller's knowledge thereof, notice of (i) any litigation, investigation, inquiry or proceeding which may exist at any time which could have a material adverse effect on the business, operations, property or financial condition of Seller or impair the ability of Seller to perform its obligations under this Agreement or which could result in an Adverse Determination, (ii) any material adverse development in any previously disclosed litigation, investigation, inquiry or proceeding and (iii) any Adverse Determination; and (e) Audit of Pool Receivables. As soon as available and in any event within 90 days after the end of each fiscal year of Seller, a copy of an audit report, prepared by nationally recognized independent certified public accountants, of the Pool Receivables, as at the end of the fiscal year of Seller, verifying the aggregate Unpaid Balance of the Pool Receivables, the Delinquent Receivables and the Defaulted Receivables. (f) Change in Credit and Collection Policy. Prior to its effective date, notice of any change in the character of Seller's business or in Servicer's Credit and Collection Policy. (g) Material Change. As soon as practicable but in no event later than the second Business Day following the occurrence, notification of any material adverse change in Seller's financial or operating condition. (h) Purchase and Sale Agreement. Promptly after receipt thereof, copies of all documents and other information delivered by Originator to Seller pursuant to the Purchase and Sale Agreement. (i) Other. Promptly, from time to time, such other information, documents, records or reports respecting the Receivables or the condition or operations, financial or otherwise, of Seller as the Administrator or the Relationship Bank may from time to time reasonably request in order to protect the interests of the Administrator or Purchaser under or as contemplated by this Agreement. SECTION 7.03. Negative Covenants of Seller. From the date hereof until the Final Payout Date, Seller will not, without the prior written consent of the Administrator and the Relationship Bank: (a) Sales, Liens, Etc. Except as otherwise provided herein, sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien upon or with respect to, any Pool Receivable or related Contract or Related Security, or any interest (including Seller's retained interest hereunder) therein, or any lock-box account to which any Collections of any Pool Receivable are sent, or any right to receive income or proceeds from or in respect of any of the foregoing. (b) Extension or Amendment of Receivables. Except as otherwise permitted in Section 8.02, extend, amend or otherwise modify the terms of any Pool Receivable, or amend, modify or waive any term or condition of any Contract related thereto. (c) Change in Business. Make any change in the character of its business. (d) Change in Payment Instructions to Obligors. Add or terminate any bank as a Lock-Box Bank from those listed in Schedule 6.01(o) or make or permit any change in Servicer's instructions to Obligors regarding payments to be made to Seller or Servicer or payments to be made to any Lock-Box Bank, unless the Administrator and the Relationship Bank shall have received notice of such addition, termination or change and duly executed copies of Lock-Box Agreements with each new Lock-Box Bank. (e) Mergers, Acquisitions, Sales, etc. Be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, or, except in the ordinary course of its business, sell, transfer, convey or lease all or any substantial part of its assets, or sell or assign with or without recourse any Receivables or any interest therein (other than pursuant hereto). (f) Restricted Payments. Purchase or redeem, or permit any Subsidiary to purchase or redeem, any shares of the capital stock of Seller, declare or pay any dividends thereon (other than Permitted Dividends and stock dividends which may be paid no more frequently than quarterly), make any distribution to stockholders or set aside any funds for any such purpose, or prepay, purchase or redeem, or permit any Subsidiary to purchase, any subordinated indebtedness of Seller except as permitted under the Tax Allocation Agreement and any agreement allocating overhead to the extent such agreement has been approved by the Administrator and the Relationship Bank. (g) Deposits to Special Accounts. Deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-Box Account or the Collection Account cash or cash proceeds other than Collections of Pool Receivables. (h) Incurrence of Indebtedness. Incur or permit to exist any indebtedness or liability on account of deposits or advances or for borrowed money or for the deferred purchase price of any property or services, except indebtedness approved by the Administrator and the Relationship Bank and listed in Schedule 7.03(h). (i) Amendments to Purchase and Sale Agreement. Amend, supplement, waive the application of any provision of, amend and restate or otherwise modify the Purchase and Sale Agreement except in each case (i) in accordance with the terms thereof and (ii) with the prior written consent of the Administrator and the Relationship Bank. (j) No Subsidiaries. Acquire any voting or economic interest in any other Person. SECTION 7.04. Affirmative Covenants of APR. From the date hereof until the Final Payout Date, APR will, unless the Administrator or the Relationship Bank shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply in all material respects with all applicable laws, rules, regulations and orders with respect to (i) the Pool Receivables and related Contracts and (ii) its business operations (particularly relating to origination and servicing) except where non-compliance would not have a material adverse effect on such business operations. (b) Preservation of Corporate Existence. Preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification would materially adversely affect (i) the interests of Purchaser hereunder or (ii) the ability of APR or Seller to perform their obligations hereunder or under the other Transaction Documents. (c) Audits. At any time and from time to time during regular business hours, upon such notice, if any, as shall be reasonable under the circumstances, permit the Administrator and/or the Relationship Bank (at APR's expense), or their respective agents or representatives, (i) to examine and make copies of and abstracts from all books, records and documents (including, without limitation, computer tapes and disks) in the possession or under the control of APR relating to Pool Receivables, including, without limitation, the related Contracts and other agreements, and (ii) to visit the offices and properties of APR for the purpose of examining such materials described in clause (i) next above, and to discuss matters relating to Pool Receivables or APR's performance hereunder or under any other Transaction Document with any of the officers or employees of APR having knowledge of such matters; and without limiting the foregoing, from time to time upon request of the Administrator and/or the Relationship Bank, permit certified public accountants or other auditors acceptable to them to conduct, at APR's expense, a review of APR's books and records. (d) Keeping of Records and Books of Account. (i) Maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Pool Receivables in the event of the destruction of the originals thereof), (ii) keep and maintain, all documents, books, records and other information reasonably necessary or advisable for the collection of all Pool Receivables (including, without limitation, records adequate to permit the daily identification of each new Pool Receivable and all Collections of and adjustments to each existing Pool Receivable) and (iii) identify (and mark) in each of its records (including computer records) each Receivable included in the Receivables Pool as so included. (e) Performance and Compliance with Receivables and Contracts. At its expense timely and fully perform and comply with all material provisions, covenants and other promises required to be observed by it under the Contracts related to the Pool Receivables and all other agreements related to such Pool Receivables. (f) Location of Records. Keep its chief place of business and chief executive office, and the offices where it keeps its records concerning the Pool Receivables, all related Contracts and all other agreements related to such Pool Receivables (and all original documents relating thereto), at the address(es) of APR referred to in Section 6.01(n) or, upon 30 days' prior written notice to the Administrator and the Relationship Bank, at such other locations in jurisdictions where all action required by Section 8.05 shall have been taken and completed. (g) Credit and Collection Policies. Comply in all material respects with its Credit and Collection Policy in regard to each Pool Receivable and the related Contract. (h) Collections. Cause all Collections of Pool Receivables to be deposited within one Business Day directly with a Lock-Box Bank. (i) Cancellation of Certain Insurance Policies. With regard to any Pool Receivable, cancel the related insurance policy in accordance with the Credit and Collection Policy, unless non- cancellation thereof will not materially and adversely impact the related Pool Receivable or the Receivables Pool taken as a whole. (j) Semi-Annual Procedures. Use its best efforts to fully cooperate with the Relationship Bank's semi-annual collateral audit. (k) Purchase and Sale Agreement. Comply with all of its obligations under the Purchase and Sale Agreement. SECTION 7.05. Reporting Requirements of APR. From the date hereof until the Final Payout Date, APR will, unless the Administrator and the Relationship Bank shall otherwise consent in writing, furnish to the Administrator and the Relationship Bank: (a) Financial Statements. As soon as available and in any event within 90 days after each fiscal year of APR, and within 30 days after each fiscal month of APR, copies of the financial statements of APR and its Subsidiaries prepared on a consolidated basis and on a consolidating basis, in each case in conformity with generally accepted accounting principles, duly certified by the treasurer of APR or, in the case of the annual consolidated financial statements, by KPMG Peat Marwick or other independent certified public accountants of recognized standing selected by APR and acceptable to the Administrator and the Relationship Bank; together with a monthly certificate from the treasurer, in each case containing a computation of the Default Ratio, the Delinquency Ratio, the Excess Yield Ratio and the Cancellation Ratio and containing a computation of, and showing compliance with, the financial restrictions contained in Section 7.06(e), 7.06(f), 7.06(h), 10.01(h), 10.01(i), 10.01(j) and 10.01(k). (b) ERISA. Promptly after the filing or receiving thereof, copies of all reports and notices with respect to any Reportable Event defined in Article IV of ERISA which APR files under ERISA with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or which APR receives from the Pension Benefit Guaranty Corporation: (c) Liquidation Events. As soon as possible and in any event within two Business Days after the occurrence of each Liquidation Event and each Unmatured Liquidation Event, a written statement of the chief financial officer or chief accounting officer of APR setting forth details of such event and the action that APR proposes to take with respect thereto; (d) Litigation and Other Proceedings. As soon as possible and in any event within three Business Days of APR's knowledge thereof, notice of (i) any litigation, investigation, inquiry or proceeding which may exist at any time which could have a material adverse effect on the business, operations, property or financial condition of APR or impair the ability of APR to perform its obligations under this Agreement or which could result in an Adverse Determination, (ii) any material adverse development in any previously disclosed litigation, investigation, inquiry or proceeding and (iii) any Adverse Determination; (e) Change in Credit and Collection Policy. Prior to its effective date, notice of any change in the character of APR's business or in the Credit and Collection Policy. (f) Material Change. As soon as practicable but in no event later than the second Business Day following the occurrence, notification of any material adverse change in APR's financial or operating condition. (g) Other. Promptly, from time to time, such other information, documents, records or reports respecting the Receivables or the condition or operations, financial or otherwise, of APR as the Administrator or the Relationship Bank may from time to time reasonably request in order to protect the interests of the Administrator or Purchaser under or as contemplated by this Agreement. SECTION 7.06. Negative Covenants of APR. From the date hereof until the Final Payout Date, APR will not, without the prior written consent of the Administrator and the Relationship Bank: (a) Sales, Liens, Etc. Except as otherwise provided herein, sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien upon or with respect to, any Pool Receivable or related Contract or Related Security, or any interest (including Seller's retained interest) therein, or any lock-box account to which any Collections of any Pool Receivable are sent, or any right to receive income or proceeds from or in respect of any of the foregoing. (b) Extension or Amendment of Receivables. Except as otherwise permitted in Section 8.02, extend, amend or otherwise modify the terms of any Pool Receivable, or amend, modify or waive any term or condition of any Contract related thereto. (c) Change in Business or Credit and Collection Policy. Make any change in the character of its business or in the Credit and Collection Policy. (d) Change in Payment Instructions to Obligors. Add or terminate any bank as a Lock-Box Bank from those listed in Schedule 6.01(o) or make any change in its instructions to Obligors regarding payments to be made to Seller or Servicer or payments to be made to any Lock-Box Bank, unless the Administrator and the Relationship Bank shall have received notice of such addition, termination or change and duly executed copies of Lock-Box Agreements with each new Lock-Box Bank. (e) Minimum Net Worth. Permit APR's consolidated tangible net worth to be less than $8,000,000 plus 50% of APR's earnings (if positive) on a cumulative basis thereafter as calculated from December 31, 1994. (Consolidated tangible net worth shall mean the consolidated net worth of APR and the Subsidiaries after subtracting therefrom the aggregate amount of any intangible assets of APR and its Subsidiaries, including, without limitation, goodwill, software systems, franchises, licenses, patents, trademarks, trade names, copyrights, service marks and brand names and APR's earnings shall mean APR's after tax net income.) (f) Mergers, Acquisitions, Sales, etc. Be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, or, except in the ordinary course of its business, sell, transfer, convey or lease all or any substantial part of its assets, or sell or assign with or without recourse any receivables (other than pursuant hereto). (g) Restricted Payments. Purchase or redeem, or permit any Subsidiary to purchase or redeem, any shares of the capital stock of APR, declare or pay any dividends (unless expressly permitted by the Administrator and the Relationship Bank) thereon, make any distribution to stockholders (including, without limitation, of operating or other funds to Parent) or set aside any funds for any such purpose, or prepay, purchase or redeem, or permit any Subsidiary to prepay, purchase or redeem, any subordinated indebtedness of APR, or purchase any debt owed by any Affiliate of APR or make any loan to any Affiliate of APR except that APR may make permitted payments (i) under the Tax Sharing Agreement in accordance with the terms thereof, (provided that in no case shall such amount exceed Seller's pro rata allocation), (ii) under the Subordinated Line not in excess of the amount permitted thereafter and (iii) in respect of Allocated Expenses. (h) Incurrence of Indebtedness. Incur or permit to exist, or permit any Subsidiary to incur or permit to exist, any indebtedness or liability on account of deposits or advances or for borrowed money or for the deferred purchase price of any property or services, except (i) indebtedness of Subsidiaries to APR and to other Subsidiaries not exceeding in the aggregate $100,000 at any one time outstanding, (ii) current accounts payable arising in the ordinary course of business and (iii) other indebtedness outstanding on the date hereof and listed on Schedule 7.06(i); notwithstanding the foregoing, APR may maintain a Subordinated Line with Parent in an amount not to exceed $5,000,000. (i) Deposits to Special Accounts. Deposit or otherwise credit, or cause or permit to be so deposited or credited, to any Lock-Box Account cash or cash proceeds other than Collections of Pool Receivables. SECTION 7.07 Affirmative Covenants of Parent. From the date hereof until the Final Payout Date, Parent will, unless the Administrator and the Relationship Bank shall otherwise consent in writing: (a) Compliance with Laws, Etc. Comply in all material respects with all applicable laws, rules, regulations and orders with respect to its business operations except where non-compliance would not have a material adverse effect on such business operations. (b) Preservation of Corporate Existence. Preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where the failure to preserve and maintain such existence, rights, franchises, privileges and qualification would materially adversely affect the ability of Parent or APR to perform their respective obligations hereunder. (c) Purchase and Sale Agreement. Cause APR to comply with each of the terms and provisions of the Purchase and Sale Agreement. SECTION 7.08 Reporting Requirements of Parent. From the date hereof until the Final Payout Date, Parent will, unless the Administrator and the Relationship Bank shall otherwise consent in writing, furnish to the Administrator and the Relationship Bank: (a) Quarterly Financial Statements. As soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of Parent, copies of Parent's quarterly financial reports, on Form 10-Q, as filed with the Securities and Exchange Commission (or if Parent is no longer required to file such Form 10-Q, Parent shall furnish such financial reports containing the information typically found on Form 10-Q), certified by the chief financial officer or chief accounting officer of Parent; (b) Annual Financial Statements. As soon as available and in any event within 90 days after the end of each fiscal year of Parent, a copy of Parent's Annual Report, on Form 10-K, as filed with the Securities and Exchange Commission (or if Parent is no longer required to file such Form 10-K, Parent shall furnish such financial reports containing information typically found on Form 10-K) and as reported on by nationally recognized independent certified public accountants; (c) Reports to Holders and Exchanges. In addition to the reports required by subsections (a) and (b) next above, promptly upon the Relationship Bank's request, copies of any reports which Parent sends to any of its securityholders, and any reports or registration statements that Parent files with the Securities and Exchange Commission; (d) ERISA. Promptly after the filing or receiving thereof, copies of all reports and notices with respect to any Reportable Event defined in Article IV of ERISA which Parent files under ERISA with the Internal Revenue Service or the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or which Parent receives from such Corporation; (e) Litigation and Other Proceedings. As soon as possible and in any event within three Business Days of Parent's knowledge thereof, notice of (i) any litigation, investigation, inquiry or proceeding which may exist at any time which could have a material adverse effect on the business, operations, property or financial condition of Parent or impair the ability of Parent to perform its obligations under this Agreement and (ii) any material adverse development in any previously disclosed litigation, investigation, inquiry or proceeding; and (f) Other. Promptly, from time to time, such other information, documents, records or reports respecting the Receivables or the conditions or operations, financial or otherwise, of Parent as Purchaser may from time to time reasonably request in order to protect the interests of Purchaser. SECTION 7.09 Negative Covenant of Parent. From the date hereof until the Final Payout Date, Parent will not, without the prior written consent of the Administrator and the Relationship Bank, permit its consolidated tangible net worth (as such term is defined in Section 7.06(e)) to be less than $50 million. SECTION 7.10 Special Covenant of Seller, APR and Parent. From the date hereof until the Final Payout Date, Seller, APR and Parent agree that Seller shall be operated in such a manner that it will not be substantively consolidated in the bankruptcy estate of any Affiliate such that the separate corporate existence of Seller would be disregarded in the event of a bankruptcy or insolvency of any Affiliate, and Seller is and shall be operated in such a manner that no Affiliate shall be substantively consolidated in the bankruptcy estate of Seller, such that, in the event that Seller were to be a debtor in a case under the Bankruptcy Code, the separate existence of Seller or the separate corporate existence of APR, or the separate existence of any other Affiliate, would be disregarded so as to lead to substantive consolidation of the assets and liabilities of APR, Parent or any other Affiliate with the bankruptcy estate of Seller, and in that regard; (a) Seller shall maintain separate corporate records and books of account from that of any Affiliate, including, but not limited to, APR and Parent, hold regular meetings and otherwise observe corporate formalities and shall keep and maintain its place of business separate and apart from the place of business of any Affiliate, including APR and Parent, and Seller shall have a separately designated address and phone listing for its business offices; (b) the financial statements and books and records of Seller, APR and Parent and any Affiliate prepared after the date hereof (which may be consolidated statements for certain financial and tax reporting purposes) shall reflect the separate existence of and separate financial condition of the Seller, APR and Parent and any other Affiliate; (c) Seller shall maintain its funds and other assets separately from the funds and other assets of any Affiliate, including, but not limited to APR and Parent (including through the maintenance of a separate bank account); Seller's funds and other assets and records relating thereto will be separately identifiable and shall not be commingled with those of any Affiliate, including, but not limited to APR and Parent, and the creditors of APR and Parent shall be entitled to be satisfied out of their own assets prior to any value becoming available to the shareholders of Seller; (d) except to the limited extent permitted under Section 7.10(p), no Affiliate of Seller shall guarantee Seller's obligations or advance funds to Seller for the payment of expenses or otherwise; (e) Seller, APR and Parent will conduct their respective businesses solely in their own name so as not to mislead others as to their identity, and particularly APR and Parent on the one hand and Seller on the other hand will use their best respective efforts to avoid the appearance of conducting business on behalf of Seller on the one hand and APR and Parent on the other hand or that any of Seller's assets are available to pay the creditors of APR or Parent or any other Affiliates, and, without limiting the generality of the foregoing, all oral or written communications shall be conducted by Seller in its own name and on its own stationary; (f) except in the limited instances set forth herein, Seller will not act as an agent of Parent or APR or any Affiliate, and no Affiliate (including APR and Parent) will act as an agent of Seller, but instead Seller shall present itself to the public as a corporation separate from any other Person, independently engaged in the business of purchasing Receivables and related Contracts; (g) Seller, APR and Parent will act and conduct their respective businesses in such a way that it would not be reasonable for a third party to rely on the assets of one to satisfy the obligations of the others; (h) Seller shall obtain proper authorization from its board of directors for any material corporate action to be engaged in by Seller; (i) Seller will maintain its own separate bank account and will pay all of its own operating expenses and liabilities solely and exclusively from its own funds; (j) the annual financial statements of Seller, APR and Parent shall disclose the effects of their transactions in accordance with generally accepted accounting principles and shall disclose that the assets of Seller will only be available to satisfy the claims of Seller's creditors; (k) all resolutions, consents to action, agreements, and any other instruments of Seller underlying the transactions described in this Agreement and in the other Transaction Documents shall be continuously maintained as official records by Seller, separately identified and held apart from the records of the APR, Parent and each of the Affiliates thereof; (l) Seller shall remain a limited purpose corporation whose activities are restricted in accordance with its Certificate of Incorporation; (m) Seller shall hold no ownership or equity interests in any Person; (n) neither APR nor Parent nor any other Affiliate shall engage in any intercompany transactions with Seller except for the transactions set forth in this Agreement (or reasonably related thereto), the Purchase and Sale Agreement and the other Transaction Documents; (o) at least one of the directors of Seller shall be an independent director, which independent director shall at no time be a member, partner, director (other than as the independent director of Seller), officer or employee of Seller, APR or Parent or any Affiliate thereof; and (p) although the organization expenses of Seller have been paid by APR, operating expenses and liabilities of Seller shall be paid solely and exclusively by Seller from its own funds (it being understood that APR may make capital contributions to Seller). ARTICLE VIII ADMINISTRATION AND COLLECTION SECTION 8.01. Designation of Servicer. (a) APR as Initial Servicer. The servicing, administering and collection of the Pool Receivables shall be conducted by the Person designated as Servicer hereunder ("Servicer") from time to time in accordance with this Section 8.01. Until the Administrator or the Relationship Bank gives to APR a Successor Notice (as defined in Section 8.01(b) APR is hereby designated as, and hereby agrees to perform the duties and obligations of, Servicer pursuant to the terms hereof. (b) Successor Notice; Servicer Transfer Events. Upon APR's receipt of a notice from the Administrator or Relationship Bank of the Administrator's or Relationship Bank's designation of the Backup Servicer as the Servicer or any other Person acceptable to the Administrator and the Relationship Bank (a "Successor Notice"), APR agrees that it will terminate its activities as Servicer hereunder in a manner that the Administrator and the Relationship Bank believes will facilitate the transition of the performance of such activities to the new Servicer, and such new Servicer shall assume each and all of APR's obligations to service and administer such Receivables, on the terms and subject to the conditions herein set forth, and APR shall use its best efforts to assist the Administrator and the Relationship Bank (or their designee) in assuming such obligations. The Administrator and Relationship Bank agree not to give APR a Successor Notice until after the occurrence of any Liquidation Event (any such Liquidation Event being herein called a "Servicer Transfer Event"), in which case such Successor Notice may be given at any time in the Administrator's or the Relationship Bank's discretion. If APR disputes the occurrence of a Servicer Transfer Event, APR may take appropriate action to resolve such dispute; provided that APR must terminate its activities hereunder as Servicer and allow the newly designated Servicer to perform such activities on the date provided by the Administrator or Relationship Bank as described above, notwithstanding the commencement or continuation of any proceeding to resolve the aforementioned dispute. (c) Subcontracts. Servicer may, with the prior consent of the Administrator, subcontract with any other person for servicing, administering or collecting the Pool Receivables, provided that Servicer shall remain liable for the performance of the duties and obligations of Servicer pursuant to the terms hereof. SECTION 8.02. Duties of Servicer. (a) Appointment; Duties in General. Each of Seller, Purchaser, Relationship Bank and the Administrator hereby appoints as its agent Servicer, as from time to time designated pursuant to Section 8.01, to enforce its rights and interests in and under the Pool Receivables, the Related Security and the related Contracts. Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Pool Receivable from time to time, all in accordance with applicable laws, rules and regulations, with such care and diligence as is customary in servicing insurance premium finance contracts in the industry or, if higher, the servicing standards it applies to such contracts, and in accordance with the Credit and Collection Policy; such duties to include, but not be limited to, the following: (i) documentation, collection, enforcement and administration of the Receivables, (ii) servicing in accordance with stated contract processing, collections, and cash disbursement policies and procedures, and all other procedures and standards set forth in the Credit and Collection Policy, (iii) maintaining and documenting Purchaser's first priority perfected security interest in the Receivables Pool, including those steps necessary to ensure a perfected security interest in the unearned premiums, (iv) depositing and paying over of all amounts to such Persons or accounts and as and when required by the terms of any Transaction Document, (v) preparing and delivering reports and electronic data to facilitate Settlements, Reinvestments, Purchases, periodic audits, etc., (vi) delivering periodic data to the Backup Servicer as required pursuant to the Backup Servicing Agreement and (vii) using its best efforts to fully cooperate with any new Servicer at any time designated hereunder. (b) Documents and Records. Seller shall, and shall require the Originator to, deliver to Servicer, and Servicer shall hold in trust for Seller, Originator and Purchaser in accordance with their respective interests, all documents, instruments and records (including, without limitation, computer tapes or disks) that evidence or relate to Pool Receivables. (c) Certain Duties to Seller. Servicer shall, as soon as practicable following receipt, subject to Article III, turn over to Seller (i) that portion of Collections of Pool Receivables representing its undivided interest therein, less, in the event APR is no longer Servicer, all reasonable and appropriate out-of-pocket costs and expenses of Servicer of servicing, collecting and administering the Pool Receivables to the extent not covered by the Servicer's Fee received by it, and (ii) the Collections of any Receivable which is not a Pool Receivable. Servicer, if other than APR, shall, as soon as practicable upon demand, deliver to Seller all documents, instruments and records in its possession that evidence or relate to Receivables of Seller other than Pool Receivables, and copies of documents, instruments and records in its possession that evidence or relate to Pool Receivables. (d) Termination. Servicer's authorization under this Agreement shall terminate upon the Final Payout Date. (e) Power of Attorney. Seller hereby grants to Servicer an irrevocable power of attorney, with full power of substitution, coupled with an interest, to take in the name of Seller all steps which are necessary or advisable to endorse, negotiate or otherwise realize on any writing or other right of any kind held or transmitted by Seller or transmitted or received by Purchaser (whether or not from Seller) in connection with any Receivable. SECTION 8.03. Rights of the Administrator and the Relationship Bank. (a) Notice to Obligors. At any time the Administrator or the Relationship Bank may notify the Obligors of Pool Receivables, or any of them, of the ownership of Asset Interests by Purchaser. (b) Notice to Lock-Box Banks. At any time following the earliest to occur of (i) the occurrence of the Liquidation Date, (ii) the commencement of the Liquidation Period, and (iii) the warranty in Section 6.02(h)(y) shall no longer be true, the Administrator and the Relationship Bank are hereby authorized to give notice to the Lock-Box Banks, as provided in the Lock-Box Agreements, of the transfer to the Relationship Bank of dominion and control over the lock-boxes and related accounts to which the Obligors of Pool Receivables make payments. Seller hereby transfers to the Relationship Bank, effective when the Administrator or the Relationship Bank shall give notice to the Lock-Box Banks as provided in the Lock-Box Agreements, the exclusive dominion and control over such lock-boxes and accounts, and shall take any further action that the Administrator or the Relationship Bank may reasonably request to effect such transfer. (c) Rights on Servicer Transfer Event. At any time following the designation of a Servicer other than APR pursuant to Section 8.01: (i) The Administrator and/or the Relationship Bank may direct the Obligors of Pool Receivables, or any of them, to pay all amounts payable under any Pool Receivable directly to the Collateral Agent. (ii) Seller and APR shall, at the Administrator's or Relationship Bank's request and at Seller's expense, give notice of such ownership to each said Obligor and direct that payments be made directly to the Collateral Agent. (iii) Seller and APR shall, at the Administrator's or Relationship Bank's request, (A) assemble all of the documents, instruments and other records (including, without limitation, computer programs, tapes and disks) which evidence the Pool Receivables, and the related Contracts and Related Security, or which are otherwise necessary or desirable to collect such Pool Receivables, and make the same available to the Administrator at a place selected by the Administrator or the Relationship Bank, and (B) segregate all cash, checks and other instruments received by it from time to time constituting Collections of Pool Receivables in a manner acceptable to the Administrator and promptly upon receipt, remit all such cash, checks and instruments, duly endorsed or with duly executed instruments of transfer, to the Collateral Agent. (iv) Each of Seller and Purchaser hereby authorizes each of the Administrator and the Relationship Bank, and grants to the Administrator and the Relationship Bank an irrevocable power of attorney, to take any and all steps in Seller's name and on behalf of Seller and Purchaser which are necessary or desirable, in the determination of the Administrator or the Relationship Bank, to collect all amounts due under any and all Pool Receivables, including, without limitation, endorsing Seller's name on checks and other instruments representing Collections and enforcing such Pool Receivables and the related Contracts; provided that the Administrator and the Relationship Bank shall not exercise their rights under such Power of Attorney unless a Servicer Transfer Event shall have occurred and be continuing. SECTION 8.04. Responsibilities of Seller. Anything herein to the contrary notwithstanding: (a) Contracts. Seller and APR shall perform all of their respective obligations under the Contracts related to the Pool Receivables and under other agreements to the same extent as if the Asset Interest had not been sold hereunder and the exercise by the Administrator or the Relationship Bank or their designees of their rights hereunder shall not relieve Seller and APR from such obligations. (b) Limitation of Liability. The Administrator, the Relationship Bank and Purchaser shall not have any obligation or liability with respect to any Pool Receivables, Contracts related thereto or any other related purchase orders or other agreements, nor shall any of them be obligated to perform any of the obligations of Seller, Originator or APR thereunder. SECTION 8.05. Further Action Evidencing Purchases and Reinvestments. (a) Further Assurances. Seller and APR agree that from time to time, at Seller's expense, they will promptly execute and deliver all further instruments and documents, and take all further action that the Administrator or the Relationship Bank or their designees may reasonably request in order to perfect, protect or more fully evidence the Purchases hereunder and the resulting Asset Interest, or to enable Purchaser, the Relationship Bank or the Administrator or their designees to exercise or enforce any of their respective rights hereunder or under any Transaction Document. Without limiting the generality of the foregoing, Seller and APR will upon the request of the Administrator or the Relationship Bank or its designee: (i) execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate; (ii) mark conspicuously each Contract evidencing each Pool Receivable with a legend, acceptable to the Administrator, evidencing that the Asset Interest has been sold in accordance with this Agreement; and (iii) mark the master data processing records evidencing such Pool Receivables and related Contracts with such legend. (b) Additional Financing Statements; Performance by Administrator. Seller hereby authorizes the Administrator or the Relationship Bank or their designees to file one or more financing or continuation statements, and amendments thereto and assignments thereof, relative to all or any of the Pool Receivables and the Related Security now existing or hereafter arising in the name of Seller or APR. If Seller fails to perform any of its agreements or obligations under this Agreement, the Administrator or the Relationship Bank or their designees may (but shall not be required to) itself perform, or cause performance of, such agreement or obligation, and the expenses of the Administrator, the Relationship Bank and their designees, as the case may be, incurred in connection therewith shall be payable by Seller as provided in Section 14.05. (c) Continuation Statements; Opinion. Without limiting the generality of subsection (a), Seller will, not earlier than six (6) months and not later than three (3) months prior to the fifth anniversary of the date of filing of the financing statement referred to in Section 5.01(e) or any other financing statement filed pursuant to this Agreement or in connection with any Purchase hereunder, unless the Termination Date shall have occurred and Purchaser's Total Interest shall have been reduced to zero, execute and deliver and file or cause to be filed an appropriate continuation statement with respect to such financing statement. SECTION 8.06. Application of Collections. Any payment by an Obligor in respect of any indebtedness owed by it to Seller or APR shall, except as otherwise specified by such Obligor, required by the underlying Contract or law or unless the Administrator instructs otherwise, be applied, first, as a Collection of any Pool Receivable or Receivables then outstanding of such Obligor in the order of the age of such Pool Receivables, starting with the oldest of such Pool Receivable and, second, to any other indebtedness of such Obligor. ARTICLE IX SECURITY INTEREST SECTION 9.01. Grant of Security Interest. To secure all obligations of Seller, and Servicer (if APR) in its capacity as Servicer, arising in connection with this Agreement and each other Transaction Document, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, including, without limitation, all Indemnified Amounts, payments on account of Collections received or deemed to be received and fees, in each case pro rata according to the respective amounts thereof, Seller hereby assigns and grants to Purchaser, for the benefit of the Secured Parties, a security interest in all of Seller's (i) right, title and interest (including specifically any undivided interest retained by Seller hereunder) now or hereafter existing in, to and under all the Receivables, the Related Security, the related Contracts and all Collections with regard thereto and proceeds thereof and (ii) rights, remedies, powers and privileges under and in respect of the Purchase and Sale Agreement, the Lock- Box Agreement and related lock-box account. SECTION 9.02. Further Assurances. The provisions of Section 8.05 shall apply to the security interest granted under Section 9.01 as well as to the Purchases, Reinvestments and all the Asset Interests hereunder. SECTION 9.03. Remedies. Upon the occurrence of a Liquidation Event, Purchaser and the Relationship Bank shall have, with respect to the collateral granted pursuant to Section 9.01, and in addition to all other rights and remedies available to Purchaser or the Administrator under this Agreement or other applicable law, all the rights and remedies of a secured party upon default under the UCC. ARTICLE X LIQUIDATION EVENTS SECTION 10.01. Liquidation Events. The following events shall be "Liquidation Events" hereunder: (a) (i) Servicer (if APR or any Affiliate of APR) shall fail to perform or observe any term, covenant or agreement that is an obligation of Servicer hereunder (other than as referred to in clause (ii) next following) and such failure shall remain unremedied for three Business Days or (ii) Servicer (if APR or any Affiliate of APR) shall fail to make any payment or deposit to be made by it hereunder when due; or (b) Any representation or warranty made or deemed to be made by Seller, APR or Parent (or any of their officers) under or in connection with this Agreement or any other Transaction Document or any Settlement Statement or other information or report delivered pursuant hereto shall prove to have been false or incorrect in any material respect when made; or (c) Seller, APR or Parent shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or any of the other Transaction Documents on their part to be performed or observed and any such failure shall remain unremedied for five Business Days after (i) written notice thereof shall have been given by the Administrator or the Relationship Bank to Seller, APR or Parent, as applicable, or (ii) either Seller or APR has actual knowledge thereof; or (d)(i) A default or a similar event, as the case may be, shall have occurred and be continuing under any instrument or agreement evidencing, securing or providing for (A) the issuance of indebtedness for borrowed money aggregating for all such agreements in excess of $150,000 of, or guaranteed by, APR, or $5,000,000 of, or guaranteed by, Parent or (B) pursuant to which APR or Parent shall have sold interests in receivables to, or shall otherwise have financed receivables with, any Person, where the purchaser's investment is in the aggregate for all such transactions in excess of $150,000 in the case of APR or $5,000,000 in the case of Parent, which default or similar event, if unremedied, uncured, or unwaived (with or without the passage of time or the giving of notice) would permit acceleration of the maturity of such indebtedness or would require the permanent reduction of such purchaser's investment and such default or similar event shall have continued unremedied, uncured or unwaived for a period long enough to permit such acceleration or reduction and any notice of default or similar event required to permit acceleration or reduction shall have been given; or (e) Adverse Determinations shall have occurred in three or more states or in states in which Direct or Insurance Obligors reside representing the aggregate of 5% or more of the Receivables in the Receivables Pool; or (f) An Event of Bankruptcy shall have occurred and remain continuing with respect to Seller, APR or Parent or any Affiliate of any thereof; or (g) (i) Any material litigation (including, without limitation, derivative actions), arbitration proceedings or governmental proceedings not disclosed in writing by Seller to the Administrator, the Relationship Bank and Purchaser prior to the date of execution and delivery of this Agreement is pending against Seller, APR or Parent or any Affiliate of any thereof, or (ii) any material development not so disclosed has occurred in any litigation (including, without limitation, derivative actions), arbitration proceedings or governmental proceedings so disclosed, which, in the case of clause (i) or (ii), in the opinion of the Administrator or the Relationship Bank, has a reasonable likelihood of having a Material Adverse Effect; or (h) The average Excess Yield Ratio at any Cut-Off Date calculated for the three most recent Settlement Periods (calculated with pro forma calculations of the Excess Yield Ratio for the number of calendar months preceding the date hereof necessary to make the calculations required by this paragraph (h)) is less than 3.00%; or (i) The average Default Ratio at any Cut-Off Date calculated for the three most recent Settlement Periods (calculated with pro forma calculations of the Default Ratio for the number of calendar months preceding the date hereof necessary to make the calculations required by this paragraph (i)) exceeds 1.00%; or (j) The average Cancellation Ratio at any Cut-Off Date calculated for the three most recent Settlement Periods (calculated with pro forma calculations of the Cancellation Ratio for the number of calendar months preceding the date hereof necessary to make the calculations required by this paragraph (j)) exceeds 4.00%; or (k) The Delinquency Ratio at any Cut-Off Date exceeds 3.00%; or (l) There shall exist any event or occurrence that has a reasonable possibility of causing a Material Adverse Effect; or (m) The Purchaser's Share on account of Principal Receivables shall at any time exceed 100%; or (n) Any of Seller, Parent or APR is subject to a Change-in- Control; or (o) The Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Internal Revenue Code with regard to any of the assets of Seller, APR or Parent and such lien shall not have been released within five days, or the Pension Benefit Guaranty Corporation shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of the Employee Retirement Income Security Act of 1974 with regard to any of the assets of Seller, APR or Parent or any of their Affiliates; or (p) Failure to obtain a Liquidity Agreement in substitution for the then existing Liquidity Agreement on or before 30-days prior to the expiration of the commitments of the Liquidity Banks thereunder; or (q) prior to the Transfer Date, (i) A Downgrading Event with respect to a Liquidity Bank shall have occurred and been continuing for not less than 45 days, (ii) the Downgraded Liquidity Bank shall not have been replaced by a Qualifying Liquidity Bank pursuant to a Liquidity Agreement in form and substance acceptable to Purchaser and the Administrator, and (iii) the commitment of such Downgraded Liquidity Bank under the Liquidity Agreement shall not have been funded or collateralized in such a manner that such Downgrading Event will not result in a reduction or withdrawal of the credit rating applied to the Commercial Paper Notes by any of the rating agencies then rating the Commercial Paper Notes; provided, that no Termination Event shall be deemed to have occurred pursuant to this Section 10.01(q) if (x) the parties hereto agree to permanently reduce the Purchase Limit by the commitment amount of such Downgraded Liquidity Bank at the end of the 45 day period referred to in clause (i) and (y) the Purchaser's Total Investment does not exceed such revised Purchase Limit after such time; or (r) a Purchase and Sale Termination Event shall have occurred; or (s) Purchaser shall become an "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 10.02. Remedies. (a) Optional Liquidation. Upon the occurrence of a Liquidation Event (other than a Liquidation Event described in subsection (f) of Section 10.01), the Administrator and the Relationship Bank shall, at the request, or may with the consent, of Purchaser, by notice to Seller declare the Purchase Termination Date to have occurred and the Liquidation Period to have commenced. (b) Automatic Liquidation. Upon the occurrence of a Liquidation Event described in subsection (f) of Section 10.01, the Purchase Termination Date shall occur and the Liquidation Period shall commence automatically. (c) Additional Remedies. Upon any Purchase Termination Date pursuant to this Section 10.02, no Purchases or Reinvestments thereafter will be made, and the Administrator, Purchaser and the Relationship Bank shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC and other laws of each applicable jurisdiction and other applicable laws, which rights shall be cumulative. ARTICLE XI THE ADMINISTRATOR; RELATIONSHIP BANK SECTION 11.01. Authorization and Action. Pursuant to the Program Administration Agreement and the Relationship Bank Agreement, Purchaser has appointed and authorized the Administrator and the Relationship Bank (or their respective designees) to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrator or the Relationship Bank by the terms hereof, together with such powers as are reasonably incidental thereto. SECTION 11.02. Administrator's and Relationship Bank's Reliance, Etc. The Administrator, the Relationship Bank and their directors, officers, agents or employees shall not be liable for any action taken or omitted to be taken by it or them under or in connection with the Transaction Documents (including, without limitation, the servicing, administering or collecting Pool Receivables as Servicer pursuant to Section 8.01), except for its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, each of the Administrator and the Relationship Bank: (a) may consult with legal counsel (including counsel for Seller), independent certified public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or representation to Purchaser or any other holder of any interest in Pool Receivables and shall not be responsible to Purchaser or any such other holder for any statements, warranties or representations made in or in connection with any Transaction Document; (c) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any Transaction Document on the part of Seller, APR or Parent or to inspect the property (including the books and records) of Seller, APR or Parent; (d) shall not be responsible to Purchaser or any other holder of any interest in Pool Receivables for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Transaction Document; and (e) shall incur no liability under or in respect of this Agreement by acting upon any notice (including notice by telephone), consent, certificate or other instrument or writing (which may be by facsimile or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 11.03. State Street Capital and Norwest and Affiliates. State Street Capital and Norwest and any of their respective Affiliates may generally engage in any kind of business with Seller, APR or Parent or any Obligor, any of their respective Affiliates and any Person who may do business with or own securities of Seller, APR or Parent or any Obligor or any of their respective Affiliates, all as if State Street Capital and Norwest were not the Administrator and the Relationship Bank, respectively, and without any duty to account therefor to Purchaser or any other holder of an interest in Pool Receivables. ARTICLE XII ASSIGNMENT OF PURCHASER'S INTEREST; TRANSFER DATE SECTION 12.01. Restrictions on Assignments. (a) Except as set forth in Section 12.05, neither Seller, APR, Parent, nor Norwest, individually or as the Relationship Bank (except as otherwise provided in the Relationship Bank Agreement) nor the Administrator, may assign its rights, or delegate its duties hereunder or any interest herein without the prior written consent of the Administrator and the Relationship Bank. Purchaser may not assign its rights hereunder (although it may delegate its duties hereunder as expressly indicated herein) or the Asset Interest (or any portion thereof or interest therein) to any Person without the prior written consent of Seller which consent shall not be unreasonably withheld; provided, however, that, without the prior consent of any Person: (i) Purchaser may assign all or any part of its rights and interests in the Transaction Documents, together with all or any portion of its interest in the Asset Interest, to the Backup Purchaser, any Liquidity Bank, the Liquidity Agent, State Street Capital or Norwest, or any of them, or any Affiliate of any of them, or to any "bankruptcy remote" special purpose entity the business of which is administered by State Street Capital or any Affiliate of State Street Capital or Norwest or any Affiliate of Norwest; and (ii) Purchaser may assign and grant a security interest in all of its rights in the Transaction Documents, together with all of its rights and interest in the Asset Interest, to the Collateral Agent and the Liquidity Agent, to secure Purchaser's obligations under or in connection with the Commercial Paper Notes, the Liquidity Agreement, the Credit Agreement and any letter of credit issued thereunder, and certain other obligations of Purchaser incurred in connection with the funding of the Purchases and Reinvestments hereunder, which assignment and grant of a security interest (and any subsequent assignment by the Collateral Agent and/or the Liquidity Agent) shall not be considered an "assignment" for purposes of Section 12.01 or, prior to the enforcement of such security interest, for purposes of any other provision of this Agreement. (b) Seller agrees to advise the Administrator within five Business Days after notice to Seller of any proposed assignment by Purchaser of the Asset Interest (or any portion thereof), not otherwise permitted under subsection (a), of Seller's consent or non-consent to such assignment and if it does not consent, the reasons therefor. If Seller does not consent to such assignment, Purchaser may immediately assign such Asset Interest (or portion thereof) to State Street Capital, Norwest or any Affiliate of State Street Capital or Norwest. All of the aforementioned assignments shall be upon such terms and conditions as Purchaser and the assignee may mutually agree. SECTION 12.02. Rights of Assignee. Upon the assignment by Purchaser in accordance with this Article XII, the assignee receiving such assignment shall have all of the rights of Purchaser with respect to the Transaction Documents and the Asset Interest (or such portion thereof as has been assigned). SECTION 12.03. Evidence of Assignment. Any assignment of the Asset Interest (or any portion thereof) to any Person may be evidenced by such instrument(s) or document(s) as may be satisfactory to Purchaser, the Relationship Bank, the Administrator and the assignee. SECTION 12.04. Rights of the Banks, Collateral Agent and Collection Agent. Seller hereby agrees that, upon notice to Seller, the Collateral Agent and/or the Collection Agent may exercise all the rights of the Administrator and the Purchaser hereunder, with respect to the Asset Interest (or any portions thereof), and Collections with respect thereto, which are owned by Purchaser, and all other rights and interests of Purchaser in, to or under this Agreement or any other Transaction Document. Without limiting the foregoing, upon such notice Collateral Agent and/or the Collection Agent may request Servicer to segregate Purchaser's Share of Collections from Seller's Share, require Collections to be retained in the Collection Account, may give a Successor Notice pursuant to Section 8.01(a), may give or require the Administrator or Relationship Bank to give notice to the Lock-Box Banks as referred to in Section 8.03(b) and may direct the Obligors of Pool Receivables to make payments in respect thereof directly to an account designated by them, in each case, to the same extent as the Administrator or the Purchaser might have done. SECTION 12.05. Transfer Date. (a) Effect of Transfer Date. Upon the occurrence of the Transfer Date under the Liquidity Agreement, the Purchaser will sell, transfer and assign and the Backup Purchaser will purchase and accept, all of Purchaser's right, title and interest in the Asset Interest, this Agreement and each other Transaction Document. Except to the limited extent set forth herein and in the Liquidity Agreement, from and after the Transfer Date, the Backup Purchaser shall automatically and without any further action required by any Person, assume all rights, interests and duties of the Purchaser hereunder and under each other Transaction Document. Additionally, from and after the Transfer Date, the Relationship Bank shall automatically and without any further action required by any Person, assume, except as specifically set forth in any Transaction Document, all rights, interests and duties of the Administrator, the Collateral Agent and the Collection Agent hereunder and under each other Transaction Document. (b) Certain Terminations. After the Transfer Date, the outgoing Purchaser's, the Administrator's, the Collateral Agent's and the Collection Agent's rights and obligations under this Agreement and each other Transaction Document shall terminate automatically and shall be of no further force or effect, except, in the case of rights, with respect to Indemnified Amounts and other amounts (including pursuant to Section 4.02) due them and to the extent specifically set forth herein; and with respect to obligations and liabilities, as set forth in paragraph (c) below. In addition, all provisions of this Agreement requiring the consent of any Rating Agency shall from and after the Transfer Date be of no further force or effect as to such required consent. (c) Obligations and Liabilities. It shall be understood and agreed that neither the Backup Purchaser nor the Liquidity Agent shall hereunder, or under any other Transaction Document, assume, or be deemed to have assumed, other than as specifically provided in the Liquidity Agreement or hereunder any obligation or liability of the outgoing Purchaser, the Administrator, the Collateral Agent, the Collection Agent or any other Person; and the assumption of any such obligation or liability is hereby expressly disclaimed. (d) Purchaser After Transfer Date. Subject to Sections 12.05(b) and (c) above, from and after the Transfer Date the Backup Purchaser shall be the Purchaser for all purposes hereunder; and Seller, Servicer and Parent shall no longer deal with the outgoing Purchaser in connection with the Transaction Documents except to the extent of matters relating to events occurring prior to the Transfer Date. (e) Permitted Assignment. The assignments by Purchaser contemplated pursuant to this Section 12.05 shall be permitted assignments pursuant to Section 12.01(a)(i) and shall, except as specifically set forth in this Section 12.05, be implemented hereunder as if made pursuant to such Section 12.01(a)(i). ARTICLE XIII INDEMNIFICATION SECTION 13.01. Indemnities by Seller, APR and Parent. (a) General Indemnity. Without limiting any other rights which any such Person may have hereunder or under applicable law, Seller, APR and Parent hereby agree to jointly and severally indemnify each of the Administrator, Purchaser, the Liquidity Banks, the Credit Bank, the Relationship Bank, the Backup Purchaser, the Liquidity Agent, each of their respective Affiliates, and all successors, transferees, participants and assigns and all officers, directors, shareholders, controlling persons, employees and agents of any of the foregoing (each an "Indemnified Party"), forthwith on demand, from and against any and all damages, losses, claims, liabilities and related costs and expenses, including reasonable attorneys' fees 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 relating to the Transaction Documents or the ownership or funding of the Asset Interest or in respect of any Receivable or any Contract, excluding, however, (a) Indemnified Amounts to the extent determined by a court of competent jurisdiction to have resulted from gross negligence or willful misconduct on the part of such Indemnified Party and (b) recourse (except as otherwise specifically provided in this Agreement) for Defaulted Receivables. Without limiting the foregoing, Seller, APR and Parent shall jointly and severally indemnify each Indemnified Party for Indemnified Amounts arising out of or relating to: (i) the transfer by Seller of any interest in any Receivable other than the transfer of an Asset Interest to Purchaser pursuant to this Agreement and the grant of a security interest to Purchaser pursuant to Section 9.01; (ii) any representation, warranty or covenant made by Seller, APR or Parent (or any of their officers or Affiliates) under or in connection with any Transaction Document, any Settlement Statement or any other information or report delivered by or on behalf of Seller, APR or Parent pursuant hereto, which shall have been false, incorrect or misleading in any material respect when made or deemed made; (iii) the failure by Seller or APR to comply with any applicable law, rule or regulation with respect to any Pool Receivable or the related Contract, or the nonconformity of any Pool Receivable or the related Contract with any such applicable law, rule or regulation; (iv) the failure to vest and maintain vested in Purchaser an undivided percentage ownership interest, to the extent of the Asset Interest, in the Receivables in, or purporting to be in, the Receivables Pool, free and clear of any Lien, other than a Lien arising solely as a result of an act of Purchaser, the Administrator or the Relationship Bank, whether existing at the time of any Purchase or Reinvestment of such Asset Interest or at any time thereafter; (v) the failure to file, or any delay in filing, financing statements or other similar instruments or documents under the UCC or similar laws of any applicable jurisdiction or other applicable laws with respect to any Receivables in, or purporting to be in, the Receivables Pool, whether at the time of any Purchase or Reinvestment or at any time thereafter; (vi) any dispute, claim, offset or defense (other than discharge in bankruptcy) of any Obligor to the payment of any Receivable in, or purporting to be in, the Receivables Pool (including, without limitation, a defense based on such Receivable's or the related Contract's not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the making of loans or the sale or provision of services related to such Receivable or the furnishing or failure to furnish such loans or services; (vii) any failure of Seller, Parent or APR to perform their respective duties or obligations in accordance with the provisions of this Agreement, including, without limitation, Article VIII and Sections 4.02 and 3.07(b); (viii) any products liability claim arising out of or in connection with loans, products or services that are the subject of any Pool Receivable; (ix) any tax or governmental fee or charge (but not including taxes upon or measured by net income), all interest and penalties thereon or with respect thereto, and all out-of-pocket costs and expenses, including the reasonable fees and expenses of counsel in defending against the same, which may arise by reason of the purchase or ownership of any Asset Interest, or any other interest in the Pool Receivables or in any goods which secure any such Pool Receivables; (x) the failure by Seller or APR to vest and maintain vested in Purchaser a valid and first priority security interest in any and all unearned premium related to each Pool Receivable; (xi) (A) any proceeding, investigation or inquiry which does or could result in an Adverse Determination, (B) any Adverse Determination or (C) Seller's failure to be qualified, licensed or to have obtained necessary approvals as a premium finance company in any jurisdiction in which such qualification, license or approvals are required; (xii) the failure to cancel any insurance policy on which a payment is more than 31 days (or, if earlier, the date specified in the related Contract) past due. (xiii) the occurrence of a Liquidation Event or Unmatured Liquidation Event under Section 10.01(e). Notwithstanding the foregoing, Parent shall not be liable for any Indemnified Amount in excess of $3,000,000 arising solely out of insurance agent fraud. (b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party shall have notice of any attempt to impose or collect any tax or governmental fee or charge for which indemnification will be sought from Seller, APR or Parent under Section 13.01(a)(ix), such Indemnified Party shall give prompt and timely notice of such attempt to them and Seller, APR or Parent shall have the right, at their expense, to participate in any proceedings resisting or objecting to the imposition or collection of any such tax, governmental fee or charge. Indemnification hereunder shall be in an amount necessary to make the Indemnified Party whole after taking into account any tax consequences to the Indemnified Party of the payment of any of the aforesaid taxes and the receipt of the indemnity provided hereunder or of any refund of any such tax previously indemnified hereunder, including the effect of such tax or refund on the amount of tax measured by net income or profits which is or was payable by the Indemnified Party. (c) Contribution. If for any reason the indemnification provided above in this Section 13.01 is unavailable to an Indemnified Party or is insufficient to hold an Indemnified Party harmless, then Seller, APR or Parent shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by such Indemnified Party on the one hand and Seller, APR or Parent on the other hand but also the relative fault of such Indemnified Party as well as any other relevant equitable considerations. Notwithstanding the foregoing, Parent shall not be liable for any Indemnified Amount in excess of $3,000,000 arising solely out of such insurance agent fraud. ARTICLE XIV MISCELLANEOUS SECTION 14.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by Seller, APR or Parent therefrom shall in any event be effective unless the same shall be in writing and signed by (a) Seller, APR or Parent, the Administrator, the Relationship Bank and Purchaser (with respect to an amendment) or (b) the Administrator and Purchaser (with respect to a waiver or consent by them) or Seller, APR or Parent (with respect to a waiver or consent by them), as the case may be, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. The parties acknowledge that, before entering into such an amendment or granting such a waiver or consent, Purchaser may also be required to obtain the approval of some or all of the Liquidity Banks and/or the Credit Bank or to obtain confirmation from certain rating agencies that such amendment, waiver or consent will not result in a withdrawal or reduction of the ratings of the Commercial Paper Notes. SECTION 14.02. Notices, Etc. All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including facsimile communication) and shall be personally delivered or sent by express mail or courier or by certified mail, postage prepaid, or by facsimile, to the intended party at the address or facsimile number of such party set forth under its name on the signature pages hereof or at such other address or facsimile number as shall be designated by such party in a written notice to the other parties hereto. All such notices and communications shall be effective, (a) if personally delivered or sent by express mail or courier or if sent by certified mail, when received, and (b) if transmitted by facsimile, when sent, receipt confirmed by telephone or electronic means. SECTION 14.03. No Waiver; Remedies. No failure on the part of the Administrator, the Relationship Bank, any Affected Party, any Indemnified Party, Purchaser or any other holder of the Asset Interest (or any portion thereof) to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Without limiting the foregoing, each of State Street Capital, individually and as Administrator, Norwest, individually and as Relationship Bank, the Collateral Agent, the Credit Bank and each Liquidity Bank is hereby authorized by Seller, APR or Parent at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by State Street Capital, the Collateral Agent and such Liquidity Bank to or for the credit or the account of Seller, APR or Parent, now or hereafter existing under this Agreement, to the Administrator, any Affected Party, any Indemnified Party or Purchaser, or their respective successors and assigns. SECTION 14.04. Binding Effect; Survival. This Agreement shall be binding upon and inure to the benefit of Seller, APR, Parent, the Administrator, the Relationship Bank, Purchaser and their respective successors and assigns, and the provisions of Section 4.02 and Article XIII shall inure to the benefit of the Affected Parties and the Indemnified Parties, respectively, and their respective successors and assigns; provided, however, nothing in the foregoing shall be deemed to authorize any assignment not permitted by Section 12.01. This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until the Final Payout Date. The rights and remedies with respect to any breach of any representation and warranty made by Seller, APR or Parent pursuant to Article VI and the indemnification and payment provisions of Article XIII and Sections 4.02, 14.05, 14.06, 14.07, 14.09 and 14.15 shall be continuing and shall survive any termination of this Agreement. SECTION 14.05. Costs, Expenses and Taxes. In addition to its obligations under Article XIII, Seller, APR and Parent agree to jointly and severally pay on demand: (a) all costs and expenses incurred by the Administrator, the Relationship Bank, the Credit Bank, the Collateral Agent and the Purchaser and their respective Affiliates in connection with the negotiation, preparation (including, without limitation, electronic data preparation), execution and delivery, the administration (including periodic auditing) or the enforcement of, or any actual or claimed breach of, this Agreement and the other Transaction Documents, including, without limitation (i) the reasonable fees and expenses of counsel to any of such Persons incurred in connection with any of the foregoing or in advising such Persons as to their respective rights and remedies under any of the Transaction Documents, and (ii) all reasonable out-of-pocket expenses (including reasonable fees and expenses of independent accountants), incurred in connection with any review of Seller's and/or APR's books and records either prior to the execution and delivery hereof or pursuant to Sections 7.01(c) and 7.04(c); and (b) all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or the other Transaction Documents, and agrees to indemnify each Indemnified Party against any liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. SECTION 14.06. No Proceedings. Seller, APR, Parent, Servicer, State Street Capital (individually and as Administrator) and Norwest (individually and as Relationship Bank) each hereby agrees that it will not institute against Purchaser, or join any other Person in instituting against Purchaser, any insolvency proceeding (namely, any proceeding of the type referred to in the definition of Event of Bankruptcy) so long as any Commercial Paper Notes issued by Purchaser shall be outstanding or there shall not have elapsed one year plus one day since the last day on which any such Commercial Paper Notes shall have been outstanding. The foregoing shall not limit Seller's, APR's or Parents's right to file any claim in or otherwise take any action with respect to any insolvency proceeding that was instituted by any Person other than Seller, APR or Parent. SECTION 14.07. Confidentiality of Seller Information. (a) Confidential Seller Information. Each party hereto (other than Seller) acknowledges that certain of the information provided to such party by or on behalf of Seller, APR or Parent in connection with this Agreement and the transactions contemplated hereby is or may be confidential, and each such party severally agrees that, unless Seller shall otherwise agrees in writing, and except as provided in subsection (b), such party will not disclose to any other person or entity: (i) any information regarding, or copies of, any non-public financial statements, reports and other information furnished by Seller, APR or Parent to Purchaser or the Administrator and designated by them as such, or (ii) any other information regarding Seller, APR or Parent ("Seller Parties") which is designated by Seller to such party in writing as confidential (collectively, "Seller Information"); provided, however, "Seller Information" shall not include (A) any information which is or becomes generally available on a nonconfidential basis from a source other than Seller Party, or which was known to such party on a nonconfidential basis prior to its disclosure by Seller Party, or (B) information regarding the nature, scope and structure of this Agreement and the basic terms hereof. (b) Disclosure. Notwithstanding subsection (a), each party may disclose any Seller Information: (i) to any of such party's independent attorneys, consultants and auditors, and to each Liquidity Bank, the Credit Bank, any dealer or placement agent for Purchaser's commercial paper, and any actual or potential assignees of, or participants in, any of the rights or obligations of Purchaser, any Liquidity Bank, the Credit Bank, the Administrator or the Relationship Bank under or in connection with this Agreement, who (A) in the good faith belief of such party, have a need to know such Seller Information, (B) are informed by such party of the confidential nature of the Seller Information and the terms of this Section 14.07, and (C) are subject to confidentiality restrictions generally consistent with this Section 14.07, (ii) to any rating agency that maintains a rating for Purchaser's commercial paper or is considering the issuance of such a rating, for the purposes of reviewing the credit of Purchaser in connection with such rating, (iii) to any other party to this Agreement, for the purposes contemplated hereby, (iv) as may be required by any municipal, state, federal or other regulatory body having or claiming to have jurisdiction over such party, in order to comply with any law, order, regulation, regulatory request or ruling applicable to such party, (v) subject to subsection (c), in the event such party is legally compelled (by interrogatories, requests for information or copies, subpoena, civil investigative demand or similar process) to disclose such Seller Information, or. (vi) if it or any of its representatives is requested or becomes legally compelled (by interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any of the Seller Information. (c) Survival. This Section 14.07 shall survive termination of this Agreement. SECTION 14.08. Confidentiality of Program Information. (a) Confidential Information. Each party hereto acknowledges that State Street Capital and Norwest regard the structure of the transactions contemplated by this Agreement to be proprietary, and each such party severally agrees that: (i) it will not disclose without the prior consent of State Street Capital and Norwest (other than to the directors, employees, auditors, counsel or affiliates (collectively, "representatives")) of such party, each of whom shall be informed by such party of the confidential nature of the Information (as defined below) and of the terms of this Section 14.08, (A) any information regarding the pricing in, or copies of, this Agreement or any transaction contemplated hereby, (B) any information regarding the organization, business or operations of Purchaser generally or the services performed by the Administrator or the Relationship Bank for Purchaser, or (C) any information which is furnished by State Street Capital or Norwest to such party and which is designated by State Street Capital or Norwest to such party in writing or otherwise as confidential or not otherwise available to the general public (the information referred to in clauses (A), (B) and (C) is collectively referred to as the "Program Information"); provided, however, that such party may disclose any such Program Information (I) to any other party to this Agreement for the purposes contemplated hereby, (II) as may be required by any municipal, state, federal or other regulatory body having or claiming to have jurisdiction over such party, (III) in order to comply with any law, order, regulation, regulatory request or ruling applicable to such party, or (IV) in the event such party is legally compelled (by interrogatories, requests for information or copies, subpoena, civil investigative demand or similar process) to disclose any such Program Information (provided that such party provides State Street Capital and Norwest the opportunity to contest such actions on behalf of such party); (ii) it will use the Program Information solely for the purposes of evaluating, administering and enforcing the transactions contemplated by this Agreement and making any necessary business judgments with respect thereto; and (iii) it will, upon demand, return (and cause each of its representatives to return) to State Street Capital and/or Norwest, all documents or other written material received from State Street Capital and/or Norwest, as the case may be, in connection with (a)(i)(B) or (C) above and all copies thereof made by such party which contain the Information. (b) Availability of Confidential Information. This Section 14.08 shall be inoperative as to such portions of the Program Information which are or become generally available to the public or such party on a nonconfidential basis from a source other than State Street Capital or Norwest or were known to such party on a nonconfidential basis prior to its disclosure by State Street Capital or Norwest. (c) Survival. This Section 14.08 shall survive termination of this Agreement. SECTION 14.09. Captions and Cross References. The various captions (including, without limitation, the table of contents) in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement. Unless otherwise indicated, references in this Agreement to any Section, Appendix, Schedule or Exhibit are to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the case may be, and references in any Section, subsection, or clause to any subsection, clause or subclause are to such subsection, clause or subclause of such Section, subsection or clause. SECTION 14.10. Integration. This Agreement, together with Fee Letter, contains a final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire understanding among the parties hereto with respect to the subject matter hereof, superseding all prior oral or written understandings. SECTION 14.11. Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF PURCHASER IN THE RECEIVABLES IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. SECTION 14.12. Waiver Of Jury Trial. SELLER, APR AND PARENT HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY. SECTION 14.13. Consent To Jurisdiction; Waiver Of Immunities. EACH OF SELLER, APR AND PARENT HEREBY ACKNOWLEDGES AND AGREES THAT: (a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. (b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT. SECTION 14.14. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by the 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. SECTION 14.15. No Recourse Against Other Parties. No recourse under any obligation, covenant or agreement of Purchaser contained in this Agreement shall be had against any stockholder, employee, officer, director, or incorporator of Purchaser, provided, however, that nothing in thisSection 14.15 shall relieve any of the foregoing Persons from any liability which such Person may otherwise have for his/her or its gross negligence or willful misconduct. SECTION 14.16 Covenant to Cooperate. Seller, Servicer and Purchaser covenant to provide each other with all data and information required to be provided by them hereunder at the times required hereunder, and additionally covenant to reasonably cooperate with each other in providing any additional information required by any of them in connection with their respective duties hereunder. SECTION 14.17 Advice From Independent Counsel. The parties hereto understand that this Agreement is a legally binding agreement that may affect such party's rights. Each party hereto represents to the other that it has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE TO FOLLOW] IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. APR FUNDING CORPORATION, as Seller By /s/ C. Ted McCarter Title President 9393 West 110th Street, Suite 100 Overland Park, Kansas 66210 Facsimile No.: (913) 451-8062 Attention: Patrick F. Healy AGENCY PREMIUM RESOURCE, INC., as initial Servicer By /s/ C. Ted McCarter Title President 6310 Lamar Avenue, Suite 210 Overland Park, Kansas 66202 Facsimile No.: (913) 677-5775 Attention: C. Ted McCarter ANUHCO, INC., as Parent By /s/ Timothy P. O'Neil Title: President 9393 West 110th Street, Suite 100 Overland Park, Kansas 66210 Facsimile No.: (913) 451-8062 Attention: Timothy P. O'Neil CLIPPER RECEIVABLES CORPORATION, as Purchaser By /s/ Jeffrey R. Gray Title Vice President P.O. Box 4024 Boston, Massachusetts 02101 Facsimile No.: (617) 951-7050 Attention: Jeffrey R. Gray STATE STREET BOSTON CAPITAL CORPORATION, as Administrator By /s/ S. Sean Chen Title 225 Franklin Street Boston, Massachusetts 02110 Facsimile No.: (617) 350-4020 Attention: Clipper Funds NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Relationship Bank By /s/ Jerome W. Fons, III. Title Vice President Norwest Center Sixth and Marquette Minneapolis, Minnesota 55479-0089 Facsimile No.: (612) 667-7266 Attention: Structured Finance APPENDIX A DEFINITIONS This is Appendix A to the Receivables Purchase Agreement dated as of October 20, 1995 among APR Funding Corporation, Agency Premium Resource, Inc., Anuhco, Inc., Clipper Receivables Corporation, State Street Boston Capital Corporation, as Administrator and Norwest Bank Minnesota, National Association, as Relationship Bank (as amended, supplemented or otherwise modified from time to time, this "Agreement"). Each reference in this Appendix A to any Section, Appendix or Exhibit refers to such Section of or Appendix or Exhibit to this Agreement. A. Defined Terms. As used in this Agreement, unless the context requires a different meaning, the following terms have the meanings indicated herein below: "Administrator" has the meaning set forth in the preamble. "Administrator's Office" means the office of the Administrator at 225 Franklin Street, Boston, Massachusetts 02110, Attention: Clipper Funds, or such other address as shall be designated by the Administrator in writing to Seller and Purchaser. "Adverse Determination" means an act, conclusion, ruling determination, finding or opinion, formal or informal, by any Regulator, the result of which is that (i) Purchaser or Backup Purchaser was, is or will be required to be regulated, licensed or qualified as a premium finance company or its equivalent under any applicable law, order, rule or regulation on account of Purchaser's or Backup Purchaser's purchase or holding of the Asset Interest in any Pool Receivables, or (ii) for any Person, not Purchaser or Backup Purchaser and not already licensed or qualified as an insurance premium finance company, engaged in a transaction similar, in the reasonable judgment of Purchaser the Administrator or the Relationship Bank, to that under this Agreement whereby such Person purchases or holds an ownership interest in receivables or undivided interests in receivables evidenced by insurance premium finance contracts, such Person is, was or will be required to be regulated, licensed or qualified as a premium finance company or its equivalent under any applicable law, order, rule or regulation on account of such Person's purchase or holding of such receivables or undivided interests in such receivables. "Adverse Determination Receivables" means those Pool Receivables that create or support a nexus with a jurisdiction, as determined by the applicable laws, orders, rules or regulations of that jurisdiction, the result of such nexus being that Purchaser or Backup Purchaser is directly subject to an Adverse Determination pursuant to clause (i) of the definition of Adverse Determination, or could eventually be directly subject to an Adverse Determination similar to any Adverse Determination described in clause (ii) of the definition of Adverse Determination. "Affected Party" means each of Purchaser, each Liquidity Bank, any assignee or participant of Purchaser or any Liquidity Bank, the Credit Bank, any assignee or participant of the Credit Bank, State Street Capital, any successor to State Street Capital as Administrator, Norwest, any successor to Norwest as Relationship Bank or Backup Purchaser, any sub-agent of the Administrator, the Collateral Agent, any successor of First Chicago as Collateral Agent, any co-agent or sub-agent of the Collateral Agent and any holding company of the Administrator or Norwest. "Affiliate" when used with respect to a Person means any other Person controlling, controlled by, or under common control with, such Person. "Allocated Expenses" means the share of expenses reasonably determined by Parent to be incurred by Parent as holding company for APR and its subsidiaries in such capacity as such holding company and reasonably allocated to APR and its subsidiaries. "Alternate Base Rate" means, on any date, a fluctuating rate of interest per annum equal to the higher of (a) the rate of interest most recently announced by the Liquidity Agent in Minneapolis, Minnesota, as its base rate; and (b) the Federal Funds Rate (as defined below) most recently determined by the Liquidity Agent plus 3.0% per annum. The Alternate Base Rate is not necessarily intended to be the lowest rate of interest determined by the Liquidity Agent in connection with extensions of credit. "APR" has the meaning set forth in the preamble. "Arrangement Fee" has the meaning set forth in Section 4.01(a). "Arrangement Fee Amount" has the meaning set forth in the Fee Letter. "Asset Interest" has the meaning set forth in Section 1.04(a). "Asset Tranche" means at any time a portion of the Asset Interest selected by the Administrator pursuant to Section 2.01. "Backup Purchaser" means Norwest and its successors and assigns as Backup Purchaser pursuant to the Liquidity Agreement. "Backup Servicer" means Norwest Financial Coast, Inc., as Backup Servicer pursuant to the Backup Servicing Agreement. "Backup Servicing Agreement" means that certain Backup Servicing Agreement dated as of October 20, 1995 among the Backup Servicer, the Administrator, the Relationship Bank, APR and Seller, as the same may be amended or otherwise modified from time to time. "Best's Rating" means at any time the rating published in the then most recent edition of Best's Insurance Reports, Property-Casualty for the Insurance Obligor in question; provided however that if pursuant to clause (a), or clause (c) of the last paragraph of the definition of the term "Excess Concentration Deduction," a single rating is to be determined for a group of Insurance Obligors that are Affiliates, the "Best's Rating" of such group and of each Insurance Obligor in such group shall be the "Pooled Rating" thereof (as defined therein), or, if no Pooled Rating has been assigned to such group, the lowest Best's Rating of any of the individual Insurance Obligors in such group. If Best's Insurance Reports, Property-Casualty ceases to be published at any time, Purchaser shall choose a reasonably equivalent substitute rating criteria, and appropriate modifications to this Agreement will be made to reflect such substitution. "Business Day" means a day on which both (a) the Administrator at its principal office in Boston, Massachusetts is open for business and (b) commercial banks in New York City and Minneapolis, Minnesota are not authorized or required to be closed for business. "Cancellation Ratio" means, as of the Cut-Off Date for any Settlement Period, a fraction (expressed as a percentage) (a) the numerator of which is the average Unpaid Principal Balance of all Pool Receivables the related insurance policies of which were cancelled during the preceding Settlement Period on account of non- payment by the related Obligor and (b) the denominator of which is the average aggregate Unpaid Principal Balance of all Pool Receivables during such Settlement Period. "Change in Control" means any of the following: (a) the acquisition, by any Person or two or more Persons acting on concert, of beneficial ownership (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), of 50% or more of the issued and outstanding shares of the capital stock (including all warrants, options, conversion rights, and other rights to purchase or convert into such stock) of Parent on a fully diluted basis, except for (i) acquisitions of newly issued shares of the capital stock of Parent for fair market value, and (ii) acquisitions of newly issued shares of the capital stock of Parent by employee benefit plans sponsored by Parent or any of its Subsidiaries for fair market value; (b) the failure of Parent to own (directly or through wholly-owned Subsidiaries, free and clear of all liens, 100% of the outstanding voting stock of APR or the failure of APR to own (directly or through wholly-owned Subsidiaries of APR), free and clear of all liens, 100% of the outstanding voting stock of Seller; (c) the creation or imposition of any Lien on any shares of capital stock of Seller; or (d) the failure of C. Ted McCarter to remain and function as President and Chief Operating Officer of APR. "Clipper" has the meaning set forth in the recitals. "Collateral Agent" means First Chicago in its capacity as collateral agent, together with any successors thereto, under the Security Agreement. "Collection Account" has the meaning set forth in Section 3.09. "Collection Agent" means First Chicago as the Collection Agent under the Program Supplement, and any successor Collection Agent appointed for purposes of the transactions contemplated in the Transaction Documents pursuant to the Program Supplement. "Collections" means, with respect to any Receivable, all funds (a) received by Seller, APR or Servicer from or on behalf of the related Obligors in payment of any amounts owed (including, without limitation, principal, finance charges, interest and all other charges and fees) in respect of such Receivable, or applied to such amounts owed by such Obligors (including, without limitation, payments under guaranties, from state guaranty funds or other Related Security, refunds of unearned insurance premiums upon termination of insurance policies, insurance payments that Seller, APR or Servicer applies in the ordinary course of its business to amounts owed in respect of such Receivables and net proceeds of sale or other disposition of repossessed goods or other collateral or property of the Obligor or any other party directly or indirectly liable for payment of such Receivable and available to be applied thereon), and (b) deemed to have been received by Seller, APR or any other party as a Collection pursuant to Section 3.04. "Commercial Paper Holders" means the holders from time to time of the Commercial Paper Notes. "Commercial Paper Notes" means short-term promissory notes issued or to be issued by Purchaser to fund its investments in accounts receivable or other financial assets. "Contract" means any contract, instrument or other writing entered into by Seller or APR in the ordinary course of its business in connection with, or evidencing, loans made by Seller or APR to any Obligor to finance such Obligor's payment of unearned insurance premiums in respect of one or more insurance policies issued by one or more insurance carriers, including, without limitation, any writing relating to the assignment of all unearned premiums pertaining to the insurance policy or policies for which premium payments are being financed, any designation of Seller as a loss payee thereunder, and any guaranty by the insurance agents that sold the related insurance policy or policies. "CP Rate" for any period means a rate per annum calculated by the Administrator equal to the sum of (i) the rate or, if more than one rate, the weighted average of the rates, determined by converting to an interest-bearing equivalent rate per annum the discount rate (or rates) at which Commercial Paper Notes on each day during such period have been sold by the commercial paper placement agents selected by the Administrator, plus (ii) the commissions and charges charged by such commercial paper placement agents with respect to such Commercial Paper Notes, expressed as a percentage of such face amount and converted to an interest-bearing equivalent rate per annum. "Credit Agreement" means and includes (a) the Credit Agreement, dated as of September 24, 1992 between Purchaser and the Credit Bank and (b) any other agreement (other than the Liquidity Agreement) hereafter entered into by Purchaser providing for the issuance of one or more letters of credit for the account of Purchaser, the making of loans to Purchaser or any other extensions of credit to or for the account of Purchaser to support all or any part of Purchaser's payment obligations under its Commercial Paper Notes or to provide an alternate means of funding Purchaser's investments in accounts receivable or other financial assets, in each case as amended, supplemented or otherwise modified from time to time. "Credit and Collection Policy" means those credit and collection policies and practices relating to Contracts and Receivables described in Schedule 6.01(p)-2, as modified without violating Section 7.03(c). "Credit Bank" means and includes State Street Bank, as lender to Purchaser and as issuer of a letter of credit for Purchaser's account under the Credit Agreement, and any other or additional bank or other financial institution now or hereafter extending credit or having a commitment to extend credit to or for the account of Purchaser under the Credit Agreement. "Credit Draw" means a loan in respect of, or a purchase of a percentage interest in, the Asset Interest made by the Credit Bank pursuant to the Credit Agreement or a disbursement made by the Credit Bank under a letter of credit issued pursuant to the Credit Agreement. "Custodian" means Norwest or any successor custodian acceptable to the Administrator and the Relationship Bank. "Custody Agreement" means the Custody Agreement dated as of October 20, 1995 among Seller, Servicer, Custodian, Relationship Bank, the Administrator and Purchaser, as amended, supplemented or otherwise modified from time to time or any successor custody agreement acceptable to the Administrator and Norwest. "Cut-Off Date" means the last day of each Settlement Period. "Deemed Collection" has the meaning set forth in Section 3.04. "Default Ratio" means, at any time, the fraction, expressed as a percentage, computed as of the most recent Cut-Off Date (i) the numerator of which is the Unpaid Principal Balance of Receivables that became Defaulted Receivables (net of recoveries) during the preceding Settlement Period ending on such Cut-Off Date and (ii) the denominator of which is the Net Pool Balance during such Settlement Period. "Default Reserve" has the meaning set forth in Section 1.04(b)(i)(D). "Defaulted Receivable" means a Receivable and related Contract: (i) as to which any payment, or part thereof, remains unpaid for (x) 30 or more days (or such earlier date as specified in the related Contract) from the original due date for such payment without cancellation of all of the related insurance policies or (y) 181 or more days after cancellation of all such policies, (ii) as to which the Obligor thereof becomes the subject of an Event of Bankruptcy or, if applicable, becomes subject to rehabilitation or similar proceeding (it being understood that Direct Obligors wishing to enter into a new Contract that are subject to bankruptcy proceedings and which have obtained a court order permitting Servicer to cancel the related (without further notification to the Court) Contract the Receivables of which are or will be included in the Receivables Pool shall not be subject to this clause (ii)), (iii) as to which payments have been extended, or the terms of payment thereof rewritten, whether by amendment, modification or through a new contract without Purchaser's consent, (iv) as to which 45 or more days have passed since receipt of the related unearned premium or notification to Seller or Servicer that the related unearned premium has been fully earned or (v) which is a charged-off Receivable. "Delinquency Ratio" means, at any time, the fraction, expressed as a percentage, computed as of the most recent Cut-Off Date (i) the numerator of which is the Unpaid Principal Balance of Delinquent Receivables at such time and (ii) the denominator of which is the Unpaid Principal Balance of all Receivables in the Receivables Pool at such time. "Delinquent Receivable" means a Receivable that is not a Defaulted Receivable and (i) as to which any payment, or part thereof, remains unpaid for 91 days or more since cancellation. "Designated Obligations" means any amounts then owed under this Agreement by Seller or APR, which amounts shall have been so designated by the Administrator or the Relationship Bank to Seller and APR, whether owed to Purchaser, Administrator, Relationship Bank or Servicer, other than Earned Discount, Program Fee and Servicer's Fee. "Designated Obligor" means, at any time, all Obligors of Seller except any such Obligor as to which the Administrator has, at least three Business Days prior to the date of determination, given notice to Seller that such Obligor shall not be considered a Designated Obligor. "Direct Obligor" means, with respect to any Receivable, the borrower of the loan under any Contract. "Dollars" means dollars in lawful money of the United States of America. "Downgraded Liquidity Bank" means a Liquidity Bank which has been the subject of a Downgrading Event. "Downgrading Event" with respect to any Person means the lowering of the rating with regard to the short-term securities of such Person to below (i) A-1 by Standard & Poor's Corporation, or (ii) P-1 by Moody's Investors Service, Inc. "Earned Discount" means, for any Yield Period with respect to any Asset Tranche, or, in the case of the Asset Tranche funded by commercial Paper Notes, for any Settlement Period: PTI x ER x ED + LF 360 where: PTI =the daily average (calculated at the close of business each day) of the Purchaser's Tranche Investment in such Asset Tranche during such Yield Period or Settlement Period, as applicable, ER =the Earned Discount Rate for such Yield Period or Settlement Period, ED =the actual number of days elapsed during such Yield Period or Settlement Period, and LF =the Liquidation Fee, if any, during such Yield Period or Settlement Period. "Earned Discount Rate" means for any Yield Period with respect to any Asset Tranche, or, in the case of the Asset Tranche funded by commercial Paper Notes, for any Settlement Period: (a) in the case of an Asset Tranche funded by a Liquidity Purchase, the Alternate Base Rate for such Asset Tranche and such Yield Period; (b) in the case of an Asset Tranche funded by a Credit Draw, a rate per annum equal for each day during the Settlement Period to the Alternate Base Rate in effect on such day plus 2% per annum; and (c) for the Asset Tranche funded by Commercial Paper Notes, the CP Rate for the related Yield Period or for such Settlement Period, as applicable; provided, however, that on any day when any Liquidation Event or Unmatured Liquidation Event shall have occurred and be continuing the Earned Discount Rate for each Asset Tranche shall mean a rate per annum equal to the Alternate Base Rate plus 2% per annum. "Eligible Agent" means a licensed agent of an Eligible Insurance Carrier approved by APR in accordance with its Credit and Collection Policy. "Eligible Contract" means a Contract in one of the forms set forth in Schedule 6.01(p)-1 or otherwise approved by the Administrator. "Eligible Insurance Carrier" shall mean at any date any insurance company that meets each of the following requirements: (a) it is not the subject of any Event of Bankruptcy, and is not otherwise being rehabilitated or supervised and (b) it has a Best's Rating of B- or better or is one of the following: National Council on Compensation Insurance, Inc. or Underwriters at Lloyds, London. "Eligible Investments" means any one or more of the following obligations or securities: (a) direct non-callable obligations of, and non-callable obligations fully guaranteed by, the United States of America, or any agency or instrumentality of the United States of America the obligations of which are backed by the full faith and credit of the United States of America; (b) demand and time deposits in, certificates of deposits of, and bankers' acceptances issued by, any depository institution or trust company (including the indenture trustee acting in its commercial capacity) incorporated under the laws of the United States of America or any state thereof, having a combined capital and surplus of at least $500,000,000, and subject to supervision and examination by federal and/or state banking authorities, so long as at the time of such investment or contractual commitment providing for such investment the commercial paper or other short-term debt obligations of such depository institution or trust company (or, in the case of a depository institution that is the principal subsidiary of a holding company, the commercial paper or other short-term debt obligations of such holding company) have one of the two highest short-term credit rating available from Moody's Investors Service, Inc. and Standard & Poor's Corporation; (c) repurchase obligations with respect to and collateralized by (i) any security described in clause (b) above or (ii) any other security issued or guaranteed by an agency or instrumentality of the United States of America, in each case entered into with a depository institution or trust company (acting as principal) of the type described in clause (b) above, provided that the Relationship Bank has taken delivery of such security; (d) commercial paper (including both non-interest-bearing discount obligations and interest-bearing obligations, but excluding Commercial Paper Notes) payable on demand or on a specified date not more than one year after the date of issuance thereof having the highest short-term credit rating from Moody's and Standard & Poor's corporation at the time of such investment; and (e) shares in a mutual fund investing solely in short term securities of the United States government and/or securities described in clause (c) above where the mutual fund custodian has taken delivery of the collateralizing securities, provided that (i) such fund shall have one of the two highest short-term credit rating available from Moody's and Standard & Poor's Corporation and (ii) such shares shall be freely transferable by the holder on a daily basis. "Eligible Receivable" means, at any time, a Receivable: (i) (A) which arose from a fixed rate, fully amortizing loan (x) with a maturity of nine months or less, and (y) for which the minimum down payment is at least 20% (or, if greater, the amount required such that the related loan is fully collateralized by unearned premium and unearned commission at the time the related policy is required to be cancelled for non-payment) and which down payment exceeds the related agent's commission, or (B) which arose from a fixed rate, fully amortizing loan (x) with a maturity of between ten and thirty months, (y) the downpayment of which is the greater of 10% or the amount which is required for the unearned premium to fully collateralize the loan and which down payment exceeds the related agent's commission and (z) which is a policy type that is not auditable by the related Insurance Obligor (for purposes of this clause (i), down payment percent shall be computed by rounding to the nearest full 1%); (ii) the related loan of which was (1) made by Seller or APR to or on behalf of a Person that used all of the proceeds of such loan to pay premiums on property, business liability, workman's compensation, casualty insurance and other similar types of insurance policies or personal auto insurance policies issued by an Eligible Insurance Carrier and owned by such Person and (2) was fully disbursed to such Eligible Insurance Carrier, its agent or such Person (provided that if such loan was partially disbursed the amount so disbursed shall be eligible hereunder); (iii) which, (x) if the perfection of Purchaser's undivided ownership interest therein is governed by the laws of a jurisdiction where the Uniform Commercial Code -- Secured Transactions is in force, constitutes a general intangible as defined in the Uniform Commercial Code as in effect in such jurisdiction, and (y) if the perfection of Purchaser's undivided ownership interest therein is governed by the law of any jurisdiction where the Uniform Commercial Code -- Secured Transactions is not in force, Seller has furnished to Purchaser such opinions of counsel and other evidence as has reasonably been requested, establishing to the reasonable satisfaction of Purchaser that such Purchaser's undivided ownership interest and other rights with respect thereto are not significantly less protected and favorable than such rights under the Uniform Commercial Code; (iv) the Obligor of which is a United States resident, is not an Affiliate of any of the parties hereto, and is not a government or a governmental subdivision or agency; (v) the related originating insurance agent of which is an Eligible Agent of an Eligible Insurance Carrier and makes no guarantees (and permits no other agent to make guarantees) in respect of such Receivable (provided that, the portion of such Receivable, if any, that is not so guaranteed shall be deemed to be an "Eligible Receivable" unless it is excluded under any other subsection of this definition). (vi) the Direct Obligor of which is not the Direct Obligor of any Receivable for which a related insurance policy was cancelled by Seller or Servicer for non-payment; (vii) which is not (A) a Delinquent Receivable on the date of its inclusion in the Net Pool Balance or (B) a Defaulted Receivable; (viii) the related insurance policy of which is required to be canceled if payment on such Receivable is not received within 30 days of its due date (or, if earlier, the date required in the related Contract); (ix) with regard to which the warranty of Seller in Section 6.01(l) is true and correct; (x) (A) the sale of an undivided interest in which does not contravene or conflict with any law, and (B) in the case of Receivables generated by the Originator, the sale of which to Seller does not contravene or conflict with any law; (xi) which is denominated and payable only in Dollars in the United States; (xii) which arises under a Contract, substantially in the form of Schedule 6.01(p)-1 hereto (or, if not in the form of Schedule 6.01(p)-1, in such form as does not deviate in any material substantive manner from Schedule 6.01(p)-1 without the express written consent of the Administrator or the Relationship Bank), that (w) is in the possession of Servicer, (ii) has been duly authorized and that, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the Obligor of such Receivable enforceable against such Obligor in accordance with its terms, (y) was stamped with an assignment to Seller and further assignment of an ownership interest to Purchaser and (z) the terms of which (including payment instructions to the Obligors thereon and the due date thereon) have not been modified unless in accordance with the Credit and Collection Policy; (xiii) which, together with the Contract related thereto, does not contravene in any material respect any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no party to the Contract related thereto is in violation of any such law, rule or regulation in any material respect if such violation would impair the collectibility of such Receivable; (xiv) which is secured by a first priority perfected security interest in and assignment of the right to cancel all of the insurance policies financed in whole or in part with the proceeds of the related loan upon the occurrence of a default under the related Contract and the right to receive all payments of unearned premiums owed upon such cancellation and, to the extent permitted by applicable law or regulation, the designation of Seller as a loss payee under such policies; (xv) which at the time of its designation as a Pool Receivable is not an Adverse Determination Receivable; (xvi) which at the time of its designation as a Pool Receivable does not create or support a nexus with a jurisdiction (x) conducting, formally or informally, a proceeding, investigation or inquiry that could in the Administrator's or the Relationship Bank's judgment result in an Adverse Determination or (y) that could require Purchaser to be licensed as a premium finance loan company; (xvii) if any Receivables to be included in a Purchase shall result from a bulk or portfolio purchase, the Relationship Bank shall have approved the inclusion of such Receivables in writing after conducting a collateral audit of the Receivables purchased by Seller or APR in a bulk or portfolio purchase; (xviii) which (x) satisfies all applicable requirements of the Credit and Collection Policy and (y) complies with such other criteria and requirements (other than those relating to the collectibility of such Receivable) as the Administrator or the Relationship Bank may from time to time specify to Seller following thirty days' notice; (xiv) as to which neither the Administrator nor the Relationship Bank has notified Seller that the Administrator or the Relationship Bank has determined, in its sole discretion, that such Receivable (or class of Receivables) is not acceptable for purchase hereunder; and (xv) the related Net Excess Contract Yield of which is greater than zero. "ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as amended from time to time. "Event of Bankruptcy" shall be deemed to have occurred with respect to a Person if either: (a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such person, the appointment of a trustee, receiver, conservator custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and in the case of any Person other than an Insurance Obligor such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or (b) such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for, such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing. It shall be understood and agreed that Parent's and American Freight System, Inc.'s 1988 insolvency shall not be deemed Events of Bankruptcy hereunder. "Excess Concentration Deduction" means the aggregate of each of the following categories: (A) Insurance Obligors and NCCI. The amount by which (x) the unpaid principal balance of Eligible Receivables having the same Insurance Obligor exceeds (y) the percentage (as shown below) of the unpaid principal balance of all Eligible Receivables (the "Concentration Limits"). Solely for the purpose of this definition, all the Insurance Obligors (i) which operate under a common Pooling Arrangement, (ii) which reinsure all their net business through an Affiliate in a Pooling Arrangement, or (ii) which are otherwise rated by S&P or Moody's with reference to common ownership or management, shall be deemed a single Insurance Obligor. 1. If the Insurance Obligor is rated by one of Moody's or S&P: Lower of Moody's/S&P Rating Concentration Limit Aa3/AA- to Aaa/AAA 7.5% A3/A- to A1/A+ 5.0% Baa3/BBB- to Baa1/BBB+ 3.0% Ba1/BB+ and lower 2.0% 2. If the Insurance Obligor is not rated by Moody's or S&P but is rated by A.M. Best: Best's Rating Concentration Limit B to A++ 2.0% B- 0.5% 3. If the Insurance Obligor is one of the following: Insurance Obligor Concentration Limit Northland Insurance Company 3.0% (provided that Northland at the time of computation carries an A.M. Best's Rating of "A" or better; if Northland is downgraded below "A" by A.M. Best, or if Norwest is downgraded by S&P's or Moody's below "A-1/P-1", the Concentration Limit shall thereafter be automatically be deemed permanently reduced to 2.0%) Lloyd's" 2.0% (provided that no further significant deterioration, in the opinion of the Administrator and the Relationship Bank occurs with respect to Lloyd's claim paying ability). NCCI Worker's Compensation Pool 4.0% "Pooling Arrangement" shall mean a business arrangement under which Affiliates pool 100% of their net business. "Affiliate" shall mean, with respect to an insurance carrier, any other insurance carrier operating under common management or ownership. (B) Direct Obligors. The amount by which (x) the unpaid principal balance of Eligible Receivables having the same Direct Obligor exceeds (y) the percentage (as shown below) of the unpaid principal balance of all Eligible Receivables (the "Concentration Limits") Concentration Limit 1. Any three (3) Direct Obligors 2.0% each 2. All other Direct Obligors 1.0% each (C) Agents. The amount by which (x) the unpaid principal balance of Eligible Receivables having the same Agent exceeds (y) the percentage (as shown below) of the unpaid principal balance of all Eligible Receivables (the "Concentration Limits") Concentration Limit 1. The Lockton Companies 10.0% 2. All other Agents 5.0% (D) Auto Insurance. The amount by which (x) the unpaid principal balance of Eligible Receivables for personal automobile insurance policies exceeds (y) the percentage (as shown below) of the unpaid principal balance of all Eligible Receivables (the "Concentration Limits") Concentration Limit 1. Personal Auto 5.0% (E) Policy Type. The amount by which (x) the unpaid principal balance of Eligible Receivables having a policy type of voluntary or involuntary worker's compensation exceeds (y) the percentage (as shown below) of the unpaid principal balance of all Eligible Receivables (the "Concentration Limits") Concentration Limit 1. Workers compensation policies 40.0% (F) Loan Terms. The amount by which (x) the unpaid principal balance of Eligible Receivables for policies that have been originated under Loan Term "B" exceeds (y) the percentage (as shown below) of the unpaid principal balance of all Eligible Receivables (the "Concentration Limits") Concentration Limit 1. Loan Term "B" 5.0% (G) Direct Obligors as debtors in possession. The amount by which (x) the unpaid principal balance of Eligible Receivables for policies originated with Direct Obligors wishing to enter into new Contracts (and not previously the Direct Obligor on any Contract with Seller or APR) already operating under bankruptcy court protection that have received court approval for Servicer to be able to cancel the related insurance policy exceeds (y) the percentage (as shown below) of the unpaid principal balance of all Eligible Receivables (the "Concentration Limits"). Concentration Limit 1. Direct Obligors as debtors in possession 0.5% it being understood that, for the purposes of the determination of the percentages set forth above: (i) solely for the purposes of subsection (A), if a Receivable is secured by insurance policies issued by more than one Insurance Obligor, the Unpaid Principal Balance of such Receivable shall be allocated among such insurance policies on a reasonable basis and the portion of such Receivable allocated to the insurance policies issued by any single Insurance Obligor shall be deemed to be a separate Receivable, (ii) to the extent that the Unpaid Principal Balance of any Receivable constitutes a portion of any "excess" calculated pursuant to any of subsections (A) to (C), such portion of such Unpaid Principal Balance of such Receivable shall not be counted under clause (x) or clause (y) of any other of such subsections that would otherwise be applicable thereto, and (iii) no Receivable shall be counted under clause (x) or clause (y) of such subsections unless it is both a Pool Receivable and an Eligible Receivable. In addition, the sum of the following shall also be included in the calculation of the Excess Concentration Deduction: (i) the amount by which on any Settlement Date the Unpaid Principal Balance of Eligible Receivables originated in a state in which Seller is required to be licensed as a premium finance company pursuant to Section 7.01(j), and has not applied for such license in accordance with Section 7.01(j), exceeds one percent (1%) of the Net Pool Balance on such Settlement Date; and (ii) the amount by which on any Settlement Date the Unpaid Principal Balance of Eligible Receivables with respect to which all or any part of unearned premium has been received from the related Insurance Obligor exceeds one percent (1%) of the Net Pool Balance on such Settlement Date. "Excess Yield Ratio" means, at any time, the fraction, expressed as an annualized percentage, computed as of the most recent Cut-Off Date (a) the numerator of which is (i) the sum of, calculated for such Settlement Period, (x) Purchaser's Share of Finance Charge Receivables at such time plus (y) recoveries in respect of Defaulted Receivables received during the Settlement Period for such Cut-Off Date less (ii) the sum of (w) the Servicer's Fee for such Settlement Period plus (x) the Program Fee for such Settlement Period plus (y) the Earned Discount for such Settlement Period plus (z) Defaulted Receivables for such Settlement Period and (b) the denominator of which is the Unpaid Principal Balance of all Receivables in the Receivables Pool for the preceding Settlement Period. "Exchange Act" means the Securities and Exchange Act of 1934, as amended. "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal (for each day during such period) 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 next preceding Business Day) by the Federal Reserve Bank of Chicago; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by State Street Bank from three federal funds brokers of recognized standing selected by it. "Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any successor thereto or to the functions thereof. "Fee Letter" means the Fee Letter dated as of October 20, 1995. "Finance Charge Receivable" means the portion of any Pool Receivable that is not the related Principal Receivable, including, without limitation, the right to the payment of finance charges, interest payments, late payment charges, collection fees, extension fees and other amounts actually accrued thereon on a current basis. "Final Payout Date" means the date following the Termination Date on which Purchaser's Total Investment shall have been reduced to zero and all other amounts payable by Seller under the Transaction Documents shall have been paid in full. "First Chicago" means The First National Bank of Chicago, a national banking association. "Indemnified Amounts" has the meaning set forth in Section 13.01. "Indemnified Party" has the meaning set forth in Section 13.01. "Insurance Obligor" with respect to any Receivable, means any insurance carrier and its Affiliates that has issued and is carrying any of the insurance policies for which premiums are financed in whole or in part with the proceeds of such Receivable; and related Insurance Obligor means with respect to any such Receivable, such insurance carrier. "Lien" means a lien, security interest, charge, or encumbrance, or other right or claim of any Person other than (i) a potential claim or right (that has not yet been asserted) of a trustee appointed for an Obligor in connection with any Event of Bankruptcy and (ii) an unfiled lien for taxes accrued but not yet payable. "Liquidation Collection Account" has the meaning set forth in Section 3.09(a). "Liquidation Date" means the occurrence of any of the following: (i) a Liquidation Event, (ii) the Termination Date and (iii) the first day of a Liquidation Period. "Liquidation Event" has the meaning set forth in Section 10.01. "Liquidation Fee" means, for each Asset Tranche (or portion thereof) for each day in any Yield Period or Settlement Period (computed without regard to clause (iii) of the proviso of the definition of "Yield Period") during the Liquidation Period, the amount, if any, by which: (a) the additional Earned Discount (calculated without taking into account any Liquidation Fee) which would have accrued on the reductions of the Purchaser's Tranche Investment with respect to such Asset Tranche during such Yield Period or Settlement Period (as so computed) if such reductions had not been made exceeds, (b) the income, if any, received by Purchaser from investing the proceeds of such reductions of the Purchaser's Tranche Investment. "Liquidation Period" means the period commencing on the date on which the conditions precedent to Purchases and Reinvestments set forth in Section 5.02 are not satisfied (or expressly waived by Purchaser) and the Administrator shall have notified Seller, Servicer and the Relationship Bank in writing that the Liquidation period has commenced, and ending on the Final Payout Date. "Liquidation Program Fee Rate" has the meaning set forth in the Fee Letter. "Liquidity Agent" means Norwest as agent for the Liquidity Banks under the Liquidity Agreement, or any successor to Norwest in such capacity. "Liquidity Agreement" means and includes (a) the Liquidity Asset Purchase Agreement dated as of October 20, 1995 among Purchaser, as seller, State Street Capital, as Program Administrator, Norwest as Liquidity Agent, and certain other financial institutions, as purchasers, and (b) any other agreement hereafter entered into by Purchaser providing for the making of purchases, loans or other extensions of credit to Purchaser secured by a direct or indirect security interest in the Asset Interest (or any portion thereof), to support all or part of Purchaser's payment obligations under the Commercial Paper Notes or to provide an alternate means of funding Purchaser's investments in accounts receivable or other financial assets, and under which the amount available from such extensions of credit is limited to an amount calculated by reference to the value or eligible unpaid balance of such -- accounts receivable or other financial assets or any portion thereof or the level of deal- specific credit enhancement available with respect thereto, as such Liquidity Agreement or other agreement may be amended, supplemented or otherwise modified from time to time. "Liquidity Bank" means any one of, and "Liquidity Banks" means all of the commercial lending institutions that are at any time parties to the Liquidity Agreement. "Liquidity Purchase" means a purchaser of a percentage interest in the Asset Interest loan made by one or more Liquidity Banks (or simultaneous loans made by the Liquidity Banks) pursuant to the Liquidity Agreement. "Lock-Box Agreement" means a letter agreement, in substantially the form of Exhibit 5.01(a), between Seller and any Lock-Box Bank. "Lock-Box Bank" means any of the banks holding one or more lock-box accounts for receiving Collections from Pool Receivables. "Material Adverse Effect" with respect to any event or circumstance, a material adverse effect on: (i) the business, assets, financial condition, operations or prospects of Seller, APR or Parent; (ii) the ability of Seller, APR or Parent to perform its obligations under this Agreement or any other Transaction Document; (iii) the validity, enforceability or collectibility of this Agreement, any other Transaction Document, the Receivables or the related Contracts; or (iv) the status, existence, perfection, priority or enforceability of Purchaser's interest in the Pool Receivables. "Moody's" means Moody's Investors Service, Inc., or any successor thereof. "Net Excess Contract Yield" means, with respect to any Receivable on the date of the Purchase or Reinvestment with respect thereto, the interest rate on the related Contract minus carrying costs minus net defaults; where "carrying costs" means the sum of the then applicable Earned Discount Rate plus the then applicable Program Fee Rate plus the then applicable Servicer Fee Rate; and where "net defaults" means a fraction (expressed as a percentage) the numerator of which was the amount of Receivables that became Defaulted Receivables (net of recoveries) during the preceding Settlement Period (or calendar month) and the denominator of which is the Net Pool Balance as of the beginning of such Settlement Period (or calendar month). "Net Pool Balance" means at any time the Unpaid Principal Balance of the Eligible Receivables in the Receivables Pool at such time reduced by the aggregate Excess Concentration Deduction at such time. "Non-Use Rate" has the meaning set forth in the Fee Letter. "Obligor" means any Person directly or indirectly obligated to make payments on or with respect to any Receivable. Such term shall include, without limitation, any Direct Obligor and all Insurance Obligors pursuant to a Contract. "Originator" means APR in its capacity as the Originator under the Purchase and Sale Agreement. "Permitted Dividend" means any dividend that is to paid by Seller to APR prior to the Liquidation Date out of payments or distributions made by Servicer to Seller under Sections 3.2(c) or (d) or out of Seller's Share of Collections on account of Principal Receivables. "Person" means an individual, partnership, limited liability company, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, government or any agency or political subdivision thereof or any other entity. "Pool Receivable" means a Receivable in the Receivables Pool. "Principal Receivable" means the portion of any Pool Receivable that is related to the unpaid principal of the related loan. "Program Administration Agreement" means the Program Administration Agreement dated as of September 24, 1992 between Purchaser and State Street Capital, as Program Administrator, as the same may be amended, supplemented or otherwise modified from time to time. "Program Documents" means the documents relating to the Purchaser's commercial paper program, including the Program Administration Agreement, the Security Agreement and the Program Supplement. "Program Fee" has the meaning set forth in Section 4.01(b). "Program Fee Rate" has the meaning set forth in the Fee Letter. "Program Information" has the meaning set forth in Section 14.08. "Program Supplement" means the supplement to the Program Documents, dated as of June 28, 1995, among the Purchaser, the Administrator and certain other parties, as the same may be amended, supplemented or otherwise modified from time to time. "Purchase" has the meaning set forth in Section 1.01. "Purchase and Sale Agreement" means that certain Purchase and Sale Agreement dated as of October 20, 1995 between Seller and APR as the same may be amended or otherwise supplemented from time to time. "Purchase and Sale Termination Event" has the meaning set forth in the Purchase and Sale Agreement. "Purchase Limit" has the meaning set forth in Section 1.01. "Purchase Termination Date" means that day on which a Liquidation Event has occurred and is continuing, and (a) the Administrator declares a Purchase Termination Date in a notice to Seller in accordance with Section 10.02(a); or (b) in accordance with Section 10.02(b), becomes the Purchase Termination Date automatically. "Purchaser" has the meaning set forth in the preamble. "Purchaser's Share" had the meaning set forth in Section 1.04(b). "Purchaser's Share of Collections" has the meaning set forth in Section 1.04(b). "Purchaser's Share of Defaulted Receivables" has the meaning set forth in Section 1.04(b). "Purchaser's Total Investment" means at any time with respect to the Asset Interest an amount equal to (a) the aggregate of the amounts theretofore paid to Seller for Purchases pursuant to Section 1.01, less (b) the aggregate amount of Collections theretofore received and actually distributed to Purchaser on account of such Purchaser's Total Investment pursuant to Section 1.03. "Purchaser's Tranche Investment" means in relation to any Asset Tranche the amount of the Purchaser's Total Investment allocated by the Administrator to an Asset Tranche pursuant to Section 2.01, provided, that at all times the aggregate amounts allocated to all Asset Tranches shall equal the Purchaser's Total Investment. "Qualifying Liquidity Bank" means a Liquidity Bank with a rating of its short-term securities equal to or higher than (i) A-1 by Standard & Poor's Corporation and (ii) P-1 by Moody's Investors Service, Inc. "Receivable" means the indebtedness of any Obligor under a Contract whether constituting an account, chattel paper, an instrument or a general intangible, and includes (i) the right to payment of such indebtedness and any interest or finance charges and other obligations of such Obligor with respect thereto, (ii) all other rights under such Contract, including insurance policy cancellation rights, (iii) all right, title and interest of Seller and Originator in, to and under the insurance contract underlying such Contract and any and all other direct or indirect guaranties or security therefor, and (iv) all proceeds of the foregoing. "Receivables Pool" means at any time all then outstanding Receivables owned by Seller, other than (i) Receivables theretofore reconveyed to Seller pursuant to Section 3.07 and (ii) the Receivables specifically excluded from the Receivables Pool in a written certificate, executed and delivered by Purchaser and Seller on or before the date of the initial Purchase hereunder. "Regulation D" means Regulation D of the Federal Reserve Board, or any other regulation of the Federal Reserve Board that prescribes reserve requirements applicable to nonpersonal time deposits or "Eurocurrency Liabilities" as presently defined in Regulation D, as in effect from time to time. "Regulator" means any federal, state or local regulatory or governmental body, agency or official. "Regulatory Change" means, relative to any Affected Party (a) any change in (or the adoption, implementation, change in phase-in or commencement of effectiveness of) any (i) United States federal or state law or foreign law applicable to such Affected Party; (ii) regulation, interpretation, directive, requirement or request (whether or not having the force of law) applicable to such Affected Party of (A) any court, government authority charged with the interpretation or administration of any law referred to in clause (a)(i) or of (B) any fiscal, monetary or other authority having jurisdiction over such Affected Party; or (iii) generally accepted accounting principles or regulatory accounting principles applicable to such Affected Party and affecting the application to such Affected Party of any law, regulation, interpretation, directive, requirement or request referred to in clause (a)(i) or (a)(ii) above; or (b) any change in the application to such Affected Party of any existing law, regulation, interpretation, directive, requirement, request or accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above. "Reinvestment" has the meaning set forth in Section 1.03. "Related Security" means, with respect to any Pool Receivable (i) all of Seller's right, title and interest in and to all Contracts or other agreements that relate to such Pool Receivable, (ii) all of Seller's interest in the insurance policies, if any, relating to such Pool Receivable including, without limitation, the right to terminate such policies and to receive unearned premiums payable upon such termination and, to the extent permitted by applicable law or regulations, the designation of Seller as first priority loss payee under such insurance policies, (iii) all other security interests or liens and property subject thereto from time to time purporting to secure payment of such Pool Receivable, whether pursuant to the Contract related to such Pool Receivable or otherwise, (iv) the assignment to Purchaser of all UCC financing statements and notices to insurance companies covering any collateral securing payment of such Pool Receivable, and (v) all guaranties and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Pool Receivable whether pursuant to the Contract related to such Pool Receivable or otherwise. The interest of Purchaser in any Related Security is only to the extent of its Asset Interest, as more fully described in the definition of Asset Interest. The interest of Purchaser in any Related Security is only to the extent of Purchaser's undivided interest, as more fully described in the definition of Asset Interest. "Relationship Bank" has the meaning set forth in the preamble. "Relationship Bank Agreement" means the Relationship Bank Agreement, dated as of September 24, 1992, among Purchaser, the Administrator and the Relationship Bank, as such agreement may be amended, supplemented or otherwise modified from time to time. "Reserve Percentage" has the meaning set forth in Section 1.04(b)(i)(D). "Scheduled Termination Date" means October 20, 1998. The Scheduled Termination Date may be extended for an additional period of one year on each October 20, beginning October 20, 1997 by written notice of request given by Seller to the Administrator and the Relationship Bank at least 60 days prior to such October 20, and written notice of acceptance given by the Administrator and the Relationship Bank not later than 45 days thereafter. "Secured Parties" means Purchaser, the Backup Purchaser, the Administrator, the Relationship Bank, the Indemnified Parties and the Affected Parties. "Security Agreement" means the Security Agreement dated as of September 24, 1992, between Purchaser, as grantor, and the Collateral Agent, as secured party, as the same may be amended, supplemented or otherwise modified from time to time. "Seller" has the meaning set forth in the preamble. "Seller Information" has the meaning set forth in Section 14.07(a). "Seller Party" has the meaning set forth in Section 14.07(a). "Seller Order" means a direction letter, in such form as the Relationship Bank and Seller may approve, specifying the Eligible Investments in which funds in the Collection Account shall be invested pursuant to Section 3.09. "Seller's Share" means, on any day, (a) with respect to Principal Receivables, one (1) minus the Purchaser's Share with respect to Principal Receivables on such day and (b) with respect to Finance Charge Receivables, zero, subject, however, to the applications set forth in Section 3.2. "Seller's Share of Collections" on account of Principal Receivables means on any day an amount equal to the product of (x) the related Seller's Share with respect to Principal Receivables on such day and (y) the amount of Collections on account of Principal Receivables on such day. "Seller's Share of Collections" on account of Finance Charge Receivables shall be calculated on each Settlement Date and shall be equal to the amount payable to Seller pursuant to Section 3.2(c) and (d). "Senior Portion" has the meaning set forth in the definition of Servicer's Fee. "Servicer" has the meaning set forth in Section 8.01(a). "Servicer LOC" means that certain letter of credit dated as of October 20, 1995, issued by Norwest to Administrator on behalf of Purchaser, as the same may be amended, supplemented or otherwise modified from time to time. "Servicer LOC Available Amount" means, on any day, the least of (i) the amount by which Eligible Receivables with respect to which Northland Insurance Company is the Insurance Obligor exceed 2% of the Net Pool Balance as reported on the most recent Settlement Statement, (ii) $300,000 less the amount previously drawn by the Administrator under the Servicer LOC and (iii) 1% of the Net Pool Balance as reported on the most recent Settlement Statement. "Servicer LOC Funding Conditions" means, as determined on each Settlement Date, the occurrence of each of the following: (a) Eligible Receivables, other than those with respect to which Northland Insurance Company is the Insurance Obligor, that are Defaulted Receivables on such day equal or exceed 5.95% of the Net Pool Balance on such Settlement Date; and (b) Eligible Receivables with respect to which Northland Insurance Company is the Insurance Obligor that are Defaulted Receivables on such day and arise out of the occurrence of an Event of Bankruptcy with respect to Northland Insurance Company equal or exceed 2.00% of the Net Pool Balance on such Settlement Date. "Servicer Transfer Event" has the meaning set forth in Section 8.01(b). "Servicer's Fee" accrued for any day means (a) an amount equal to the product of (x) .50% per annum, times (y) the amount of the Purchaser's Total Investment at the close of business on such day, times (z) 1/360; or (b) on and after the date the Backup Servicer shall be the Servicer, an amount equal to (x) 1.00% per annum, times (y) the Net Pool Balance, times (z) 1/360 (it being understood that the first 50% of the amount so calculated shall be the "Senior Portion" and the next 50% shall be the "Subordinated Portion" of such Servicing Fee). "Settlement" means the payments and other actions provided for on the Cut-Off Date for each Settlement Period. "Settlement Date" means the 10th Business Day of each calendar month, and each day after the occurrence of the Termination Date that the Administrator or the Relationship Bank shall so designate. "Settlement Period" means (a) the period from the date of the initial Purchase hereunder to the close of business on the last day of the same calendar month; and (b) thereafter, each period from the opening of business on the first day of each calendar month to and including the close of business day on the last day of such calendar month; provided, however, that (i) any Settlement Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day; and (ii) the last Settlement Period shall end on the date on which the Asset Interest has been reduced to zero and all other fees and expenses owed by Seller or APR hereunder shall have been paid in full. "Settlement Statement" has the meaning set forth in Section 3.03(a). "S&P" means Standard and Poor's Corporation, or any successor thereof. "State Street Bank" means State Street Bank & Trust Company, a bank organized under the laws of the Commonwealth of Massachusetts. "State Street Capital" has the meaning set forth in the preamble. "Subsidiary" means a corporation of which Seller, APR or Parent and/or its other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than 50% of the ordinary voting power for the election of directors. "Subordinated Line" means that certain subordinated credit agreement between Parent and APR in the form and as to dollar amount approved by the Administrator and the Relationship Bank as _______________. "Subordinated Portion" has the meaning set forth in the definition of Servicer's Fee. "Successor Notice" has the meaning set forth in Section 8.01(b). "Tax Sharing Agreement" means that certain Tax Sharing Agreement in the form approved by the Administrator and the Relationship Bank as Exhibit B. "Termination Date" means the earliest of (a) the date of termination (whether by scheduled expiration, termination on default or otherwise) of either the Liquidity Banks' commitments under the Liquidity Agreement or the Credit Bank's commitment under the Credit Agreement; (b) the Purchase Termination Date; and (c) the Scheduled Termination Date. "Transaction Documents" means this Agreement, the Purchase and Sale Agreement, the Liquidity Agreement, the Custody Agreement, the Backup Servicing Agreement, the Lock-Box Agreements and the other documents to be executed and delivered in connection herewith and therewith. "Transfer Date" means the date on which the initial Purchaser hereunder will transfer the Asset Interest to the Backup Purchaser pursuant to the Liquidity Agreement. "UCC" means the Uniform Commercial Code as from time to time in effect in the applicable jurisdiction or jurisdictions. "Unmatured Liquidation Event" means any event which, with the giving of notice or lapse of time, or both, would become a Liquidation Event. "Unpaid Balance" of any Receivable means at any time the Unpaid Principal Balance thereof plus the unpaid amount thereof consisting of Finance Charge Receivables. "Unpaid Principal Balance" of any Receivable means at any time the unpaid principal amount thereof. "Yield Period" with respect to any Asset Tranche funded by a Liquidity Purchase or Credit Draw means (a) the period commencing on the date of the initial Purchase of the Asset Interest, the making of such Liquidity Purchase or Credit Draw or the creation of such Asset Tranche pursuant to Section 2.01 (whichever is latest) and ending such number of days thereafter as the Administrator shall select; and (b) each period commencing on the last day of the immediately preceding Yield Period for the related Asset Tranche and ending such number of days thereafter as the Administrator shall select; provided, however, that (i) any such Yield Period (other than a Yield Period consisting of one day) which would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day, in which case if such succeeding Business Day is in a different calendar month, such Yield Period shall instead be shortened to the next preceding Business Day); (ii) in the case of Yield Periods of one day for any Asset Tranche, (A) the initial Yield Period shall be the date such Yield Period commences as described in clause (a) above; and (B) any subsequently occurring Yield Period which is one day shall, if the immediately preceding Yield Period is more than one day, be the last day of such immediately preceding Yield Period is one day, shall be the next day following such immediately preceding Yield Period; and (iii) any Yield Period for any Asset Tranche which commences before the Termination Date and would otherwise end on a date occurring after such Termination Date, such Yield Period shall end on such Termination Date and the duration of each such Yield Period which commences on or after the Termination Date for such Asset Tranche shall be of such duration as shall be selected by the Administrator. B. Other Terms. 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 New York and not specifically defined herein, are used herein as defined in such Article 9. C. Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". SCHEDULES AND EXHIBITS to Receivables Purchase Agreement SCHEDULES SCHEDULE 6.01(i) Description of Material Adverse Changes of Seller SCHEDULE 6.01(j) Description of Litigation of Seller SCHEDULE 6.01(n) List of Offices of Seller where Records Are Kept SCHEDULE 6.01(o) List of Lock-Box Banks SCHEDULE 6.01(p)-1 Forms of Contracts SCHEDULE 6.01(p)-2 Description of Credit and Collection Policy SCHEDULE 6.02(h) Description of Material Adverse Changes of APR SCHEDULE 6.02(i) Description of Litigation of APR SCHEDULE 6.02(k) List of Offices of APR SCHEDULE 6.03(h) Description of Material Adverse Changes of Parent SCHEDULE 6.03(i) Description of Litigation of Parent SCHEDULE 7.03(h) Schedule of Indebtedness of Seller SCHEDULE 7.06(i) Schedule of Indebtedness of APR EXHIBITS EXHIBIT 1.02 Form of Notice EXHIBIT 3.03 Settlement Statement to be Provided as of Cut- Off Date EXHIBIT 5.01(g) Form of Lock-Box Agreement EXHIBIT 5.01(k)-1 Form of Opinion of Counsel for Seller as to Authority, Perfection, Etc. EXHIBIT 5.01(k)-2 Form of Opinion of Counsel for Parent as to Authority, Etc. EXHIBIT 5.01(l)-1 Form of "True Sale" Opinion of Counsel for Seller EXHIBIT 5.01(l)-2 Form of "Non-Substantive Consolidation" Opinion of Counsel for Seller EXHIBIT 5.01(m) Form of Survey of Counsel for Seller EXHIBIT 5.01(q) Form of Pay-Off Letter EXHIBIT A Form of Tax Sharing Agreement SCHEDULE 6.01(i) Description of Material Adverse Changes of Seller None SCHEDULE 6.01(j) Description of Litigation of Seller None SCHEDULE 6.01(n) List of Offices of Seller where Records are Kept 9393 West 110th Street, Suite 100 Overland Park, Kansas 66210 SCHEDULE 6.01(o) List of Lock-Box Banks 1. Mercantile Bank of Kansas City, N.A. SCHEDULE 6.01(p)-1 Forms of Contracts SCHEDULE 6.01(p)-2 Description of Credit and Collection Policy SCHEDULE 6.02(h) Description of Material Adverse Changes of APR None SCHEDULE 6.02(i) Description of Litigation of APR 1. AGENCY PREMIUM RESOURCE, INC. VS C. K. PATRICK, INC. et al, UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CASE #92- Z-1707 2. DEBORAH MANN D/B/A CHRISTIAN COMMUNITY PRESCHOOL VS JACOMO INSURARNCE SERVICES, AGENCY PREMIUM RESOURCE, INC. AND GUARANTEE NATIONAL INSURANCE COMPANY CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT KANSAS CITY CASE #CV95-13145 3. AGENCY PREMIUM RESOURCE, INC. VS FRAME CONTRACTORS, INC. AND PAUL INGEWERSON, individually CIRCUIT COURT OF GREEN COUNTY, MISSOURI CASE #193CC3158 4. COLLECTION CASES IN ORDINARY COURSE OF BUSINESS SCHEDULE 6.02(k) List of Offices of APR where Records are Kept 6310 Lamar Avenue, Suite 210 Overland Park, Kansas 66202 SCHEDULE 6.03(h) Description of Material Adverse Changes of Parent None SCHEDULE 6.03(i) Description of Litigation of Parent 1. On January 12, 1994 a complaint was filed in the District Court of Johnson county, Kansas, against Parent, American Freight System, Inc. ("AFS") and certain employees of those companies by a former employee of AFS. Such complaint alleges breach of contract, promissory estoppel, tortious interference, and misrepresentation and fraud, as it relates to an alleged incentive compensation arrangement between the former employee and AFS. The suit claims, from Parent and others, actual damages in excess of $2 million and punitive damages of $5 million. 2 Other immaterial litigation incidental to the ordinary course of Parent's business. SCHEDULE 7.03(h) Schedule of Indebtedness of Seller $1,000.00 owed to Anuhco, Inc. SCHEDULE 7.06(i) Schedule of Indebtedness of APR Creditor Indebtedness Anuhco, Inc. $ 73,975 American Freight System, Inc. $ 1,223 Agency Services, Inc. ("ASI") $ 15,833* Capital Lease Obligation $ 16,061 * $3,155,285 account payable to ASI offset by $3,139,452 account receivable from ASI; Net indebtedness to ASI is $15,833. EXHIBIT 1.02 - Form of Notice EXHIBIT 3.01(a) - Form of Information Package EXHIBIT 3.03 - Settlement Statement EXHIBIT 5.01(g) - Form of Collateral Account and Lock-Box Agreement EXHIBIT 5.01(k)-1 - Form of Opinion of Counsel to Seller - Authority, Perfection, Etc. EXHIBIT 5.01(k)-2 - Form of Opinion of Counsel to Parent - Authority, Etc. EXHIBIT 5.01(l)-1 - Form of "True Sale" Opinion of Counsel EXHIBIT 5.01(l)-2 - Form of "Non-Substantive" Opinion of Counsel EXHIBIT 5.01(m) - Form of Survey Counsel EXHIBIT 5.01(q) - Form of Pay-Off Letter EXHIBIT A - Form of Tax Sharing Agreement EX-16 3 Exhibit 16 ARTHUR ANDERSEN ARTHUR ANDERSEN & CO, SC November 9, 1995 Arthur Andersen LLP Office of the Chief Accountant PO Box 13406 Securities and Exchange Commission 1500 Commerce Tower SECPs Letter File Kansas City, MO 64199-3406 Mail Stop 9-5 816 221 4200 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sir: This is to confirm that we have read Item 5 of Form 10Q for the quarter ended September 30, 1995 of Anuhco, Inc. and we are in full agreement of the statements therein. Very truly yours, ARTHUR ANDERSEN LLP by Rodney L. Nussbaum LAJ Copy to: Mr. Timothy P. O'Neil, Anuhco Sent by fax: (202) 942-9656 and by regular mail EX-19 4 ANUHCO, INC. REPORT TO SHAREHOLDERS THIRD QUARTER 1995 Third quarter 1995 consolidated net income from continuing operations was $947,000 or $0.13 per share on revenue of $24.7 million, as compared with third quarter 1994 consolidated net income from continuing operations of $1,523,000 or $0.20 per share on revenue of $24.9 million. As we reported to you in prior quarters, 1995 has been a difficult year for the trucking industry and for Crouse Cartage Company, Anuhco's general commodities motor carrier. Crouse Cartage had third quarter operating income of $675,000 on revenue of $23.6 million; compared to 1994 operating income of $1.7 million on revenue of $24.9 million. The decline in third quarter 1995 operating income is primarily due to Crouse Cartage's strong results achieved following the teamsters union strike against certain competitors in April 1994, when the company's freight volumes increased nearly 30% with minimal discount pressure due to a lack of capacity within the industry at the time. While Crouse Cartage has maintained much of the additional freight volumes after the strike, a softening economy and competitive market pressures on freight rates, as well as a contractual increase in labor costs, effective April 1, 1995, adversely impacted third quarter 1995 operating results. Anuhco completed the acquisition of Agency Premium Resource, Inc. ("APR"), an insurance premium finance company headquartered in Overland Park, Kansas on May 31, 1995. The operations of APR were included in consolidated results beginning June 1, 1995. In the third quarter of 1995, APR generated operating income of $156,000 on revenues of $1 million. In addition to this operational change, Anuhco recorded a significant increase in interest income in the third quarter 1995 on the company's strong cash and investment position of approximately $33 million at September 30, 1995. Such additional income was partially offset by a 20% provision for income taxes. No provision for taxes was required in 1994. In other news, on August 29, 1995, Harold C. Hill and Timothy P. O'Neil, President of Anuhco, were added to the Board of Directors. Harold is a former partner with Arthur Andersen LLP, having retired from the firm in 1993 after more than 35 years of providing audit and financial consulting services to transportation and financial services companies. Harold was the partner in charge of the Kansas City office's transportation, financial services and government practices. Harold also served as National Technical Coordinator for the firm's trucking industry practice group. Harold most recently served as President of the American Waterskiing Association which is a member of the U. S. Olympic Committee. During the third quarter, the Company's stock buyback program has been active, with a total of 417,100 shares, 5.5% of total outstanding, acquired and held in treasury at a total cost of approximately $3.5 million. Anuhco continues to consider potential acquisitions which would complement it's operations. /s/ Timothy P. O'Neil /s/ Roy R. Laborde Timothy P. O'Neil, Roy R. Laborde, President Chairman November 8, 1995 UNAUDITED SUMMARY FINANCIAL STATEMENTS (in thousands, except per share data) CONSOLIDATED STATEMENTS OF INCOME Third Quarter and Nine Months Ended September 30
Third Quarter Nine Months 1995 1994 1995 1994 Operating Revenue............. $24,651 $24,913 $73,851 $71,271 Operating Expenses............ 23,967 23,472 71,716 67,251 Operating Income.............. 684 1,441 2,135 4,020 Non-Operating Income.......... 500 82 1,635 130 Income Before Income Taxes.... 1,184 1,523 3,770 4,150 Income Tax Provision.......... 237 -0- 754 -0- Income from Continuing Operations.................. 947 1,523 3,016 4,150 Income from Discontinued Operations.................. -0- -0- -0- 1,250 Net Income.................... $ 947 $ 1,523 $ 3,016 $ 5,400 Income Per Share- Continuing Operations....... $0.13 $0.20 $0.40 $0.55 Discontinued Operations..... 0.00 0.00 0.00 0.16 Total.................... $0.13 $0.20 $0.40 $ 0.71 Average Common Shares Outstanding................. 7,392 7,544 7,500 7,543
CONSOLIDATED BALANCE SHEETS
09/30/95 12/31/94 ASSETS Current Assets................. $ 66,150 $ 69,011 Operating Property (net)....... 16,617 14,417 Intangibles and Other Assets... 3,316 1,344 $ 86,083 $ 84,772 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities........... $ 9,173 $ 7,353 Shareholders' Equity.......... 76,910 77,419 $ 86,083 $ 84,772 Book Value Per Share.......... $ 10.77 $ 10.25
9393 West 110th Street Suite 100 Overland Park, KS 66210 (913)-451-2800 EX-27 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ANUHCO, INC. CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000719271 ANUHCO, INC. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 5,224 28,027 18,332 570 0 66,150 33,771 17,154 86,083 9,173 0 76 0 0 76,834 86,083 0 73,851 0 71,716 0 0 72 3,770 754 3,016 0 0 0 3,016 .40 .40
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