Exhibit 10.22
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FORM OF
RECEIVABLES PURCHASE AGREEMENT
by and among
MEDCO HEALTH RECEIVABLES, LLC
as Seller
MEDCO HEALTH SOLUTIONS, INC.
as Servicer
The Persons Parties hereto as
Conduit Purchasers and Committed Purchasers
CITICORP NORTH AMERICA, INC.
and
BANK ONE, NA (MAIN OFFICE CHICAGO)
as Managing Agents
and
CITICORP NORTH AMERICA, INC.
as Administrative Agent
Dated as of August [__], 2003
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms............................................1
SECTION 1.02 Other Terms.....................................................31
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01 Purchase Facility...............................................32
SECTION 2.02 Making Incremental Purchases....................................32
SECTION 2.03 Receivable Interest Computation.................................34
SECTION 2.04 Application of Collections Prior to Termination Date............35
SECTION 2.05 Application of Collections After Termination Date...............37
SECTION 2.06 General Settlement Procedures...................................38
SECTION 2.07 Yield and Fees..................................................39
SECTION 2.08 Payments and Computations, Etc..................................39
SECTION 2.09 Dividing or Combining Receivable Interests......................40
SECTION 2.10 Breakage Costs..................................................40
SECTION 2.11 Illegality......................................................40
SECTION 2.12 Inability to Determine Eurodollar Rate..........................41
SECTION 2.13 Indemnity for Reserves and Expenses.............................41
SECTION 2.14 Indemnity for Taxes.............................................42
SECTION 2.15 Security Interest...............................................45
SECTION 2.16 Optional Liquidation............................................46
SECTION 2.17 Optional Repurchase.............................................46
SECTION 2.18 Termination of Purchaser Groups.................................46
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01 Conditions Precedent to Initial Purchase........................47
SECTION 3.02 Conditions Precedent to All Purchases...........................49
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Seller....................50
SECTION 4.02 Representations and Warranties of the Servicer..................53
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ARTICLE V
COVENANTS
SECTION 5.01 Covenants of the Seller.........................................55
SECTION 5.02 Audits..........................................................63
SECTION 5.03 Additional Covenants of the Servicer............................64
ARTICLE VI
ADMINISTRATION AND COLLECTION OF RECEIVABLES
SECTION 6.01 Designation of Servicer.........................................65
SECTION 6.02 Duties of Servicer..............................................66
SECTION 6.03 Reports.........................................................67
SECTION 6.04 Certain Rights of the Administrative Agent......................68
SECTION 6.05 Rights and Remedies.............................................69
SECTION 6.06 Indemnities by the Servicer.....................................70
SECTION 6.07 Administrative Agent Account....................................71
SECTION 6.08 Servicer Replacement Event......................................73
ARTICLE VII
TERMINATION EVENTS
SECTION 7.01 Termination Events..............................................73
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01 Authorization and Action........................................76
SECTION 8.02 Agent's Reliance, Etc...........................................76
SECTION 8.03 CNAI and Affiliates.............................................77
SECTION 8.04 Indemnification of Administrative Agent.........................77
SECTION 8.05 Delegation of Duties............................................77
SECTION 8.06 Action or Inaction by Administrative Agent......................77
SECTION 8.07 Notice of Events of Termination; Action by
Administrative Agent............................................78
SECTION 8.08 Non-Reliance on Administrative Agent and Other Parties..........78
SECTION 8.09 Successor Administrative Agent..................................78
ARTICLE IX
THE MANAGING AGENTS
SECTION 9.01 Authorization and Action........................................79
SECTION 9.02 Managing Agent's Reliance, Etc..................................79
SECTION 9.03 Managing Agent and Affiliates...................................80
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SECTION 9.04 Indemnification of Managing Agents..............................80
SECTION 9.05 Delegation of Duties............................................80
SECTION 9.06 Action or Inaction by Managing Agent............................80
SECTION 9.07 Notice of Events of Termination.................................81
SECTION 9.08 Non-Reliance on Managing Agent and Other Parties................81
SECTION 9.09 Successor Managing Agent........................................82
SECTION 9.10 Reliance on Managing Agent......................................82
ARTICLE X
INDEMNIFICATION
SECTION 10.01 Indemnities by the Seller.......................................82
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Amendments, Etc.................................................84
SECTION 11.02 Notices, Etc....................................................85
SECTION 11.03 Assignability...................................................86
SECTION 11.04 Costs and Expenses..............................................91
SECTION 11.05 No Proceedings..................................................91
SECTION 11.06 Confidentiality.................................................91
SECTION 11.07 Amendments to Financial Covenants...............................93
SECTION 11.08 GOVERNING LAW...................................................93
SECTION 11.09 Execution in Counterparts.......................................93
SECTION 11.10 Integration; Binding Effect; Survival of Termination............94
SECTION 11.11 Consent to Jurisdiction.........................................94
SECTION 11.12 WAIVER OF JURY TRIAL............................................94
SECTION 11.13 Right of Setoff.................................................94
SECTION 11.14 Ratable Payments................................................95
SECTION 11.15 Limitation of Liability.........................................95
SECTION 11.16 Intent of the Parties...........................................96
SCHEDULES
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SCHEDULE I - Purchaser Groups
SCHEDULE II - CP Rates
SCHEDULE III - Deposit Accounts and Deposit Account Banks
SCHEDULE IV - Credit and Collection Policy
SCHEDULE V - Financial Covenants
SCHEDULE VI - Reviewed Contracts
SCHEDULE VII Aggregate Accounts Payable Deduction Amount and Formulary
Rebate Deduction Amount
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ANNEXES
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ANNEX A-1 - Form of Monthly Report
ANNEX A-2 - Form of Weekly Report
ANNEX B-1 - Form of Control Agreement (Deposit Account)
ANNEX B-2 - Form of Control Agreement (Administrative Agent Account)
ANNEX C - Form of Assignment and Acceptance
ANNEX D - Form of Funds Transfer Letter
ANNEX E - Form of Joinder Agreement
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RECEIVABLES PURCHASE AGREEMENT
Dated as of August [__], 2003
RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or otherwise
modified and in effect from time to time, this "Agreement"), dated as of August
[__], 2003, by and among (i) MEDCO HEALTH RECEIVABLES, LLC, a Delaware limited
liability company, as Seller, (ii) MEDCO HEALTH SOLUTIONS, INC., a Delaware
corporation, as initial Servicer, (iii) the Conduit Purchasers from time to time
parties hereto, (iv) the Committed Purchasers from time to time parties hereto,
(v) CITICORP NORTH AMERICA, INC. and BANK ONE, NA (MAIN OFFICE CHICAGO), as
Managing Agents and (vi) CITICORP NORTH AMERICA, INC., as Administrative Agent.
PRELIMINARY STATEMENTS
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A. The Seller has acquired, and may continue to acquire, Receivables from
the Originator pursuant to the Originator Purchase Agreement by purchase or as a
contribution to the capital of the Seller.
B. The Seller may desire to convey, transfer and assign, from time to
time, undivided percentage interests in the Receivables (referred to herein as
"Receivable Interests") on the terms and conditions of this Agreement.
C. The Conduit Purchasers may, in their sole discretion, purchase the
Receivable Interests so offered for sale from time to time, and if a Conduit
Purchaser in any Purchaser Group elects not to make any such purchase, the
Committed Purchasers in such Purchaser Group have agreed that they shall make
such purchase, in each case subject to the terms and conditions of this
Agreement.
Accordingly, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accountants' Report" has the meaning specified in Section 5.02.
"Accrual" means Receivables accrued on the books of the Originator in
accordance with GAAP and, to the extent consistent with GAAP, in a manner
consistent with the practices of the Originator as in effect on the date hereof.
"Adjusted Eurodollar Rate" means, for any Fixed Period, an interest
rate per annum obtained by dividing (i) the Eurodollar Rate for such Fixed
Period by (ii) a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage for such Fixed Period.
"Administrative Agent" means CNAI, in its capacity as contractual
representative for the Conduit Purchasers and Committed Purchasers hereunder,
and any successor thereto in such capacity appointed pursuant to Article VIII.
"Administrative Agent Account" has the meaning specified in Section
6.07.
"Administrative Agent Fee Letter" has the meaning specified in Section
2.07(b).
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or other right or claim in, of or on any asset or property of a
Person in favor of another Person.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, a Person shall be deemed to
be "controlled by" a Person if such Person possesses, directly or indirectly,
power to direct or cause the direction of the management and policies of such
Person, whether through the ability to exercise voting power, by contract or
otherwise.
"Aggregate Accounts Payable Deduction Amount" has the meaning
specified on Schedule VII.
"Aggregate Commitment" means, at any time, the sum of the Commitments
then in effect. The initial Aggregate Commitment is $500,000,000.
"Alternate Base Rate" means, with respect to any Receivable Interest
of any Purchaser, a fluctuating interest rate per annum as shall be in effect
from time to time, which rate shall at all times be equal to the higher of:
(a) (i) in the case of a Purchaser for which CNAI acts as
Managing Agent, the rate of interest announced publicly by Citibank in
New York, New York, from time to time as Citibank's base rate and (ii)
in the case of any other Purchaser, the rate of interest announced
publicly by the applicable Managing Agent from time to time as its
prime or base rate; and
(b) the Federal Funds Rate plus 0.50%.
"Amortization Date" for any Receivable Interest means (i) in the case
of a Receivable Interest owned by a Conduit Purchaser, the earliest of (a) the
date on which a Conduit Purchaser's Termination Event occurs with respect to
such Conduit Purchaser, (b) the Scheduled Commitment Termination Date for such
Conduit Purchaser's Purchaser Group and (c) the Termination Date and (ii) in the
case of a Receivable Interest owned by a Committed Purchaser, the earlier of (a)
the Scheduled Commitment Termination Date for such Committed Purchaser's
Purchaser Group and (b) the Termination Date.
"Applicable Eurodollar Rate Margin" has the meaning specified in the
Purchaser Fee Letter.
"Asset Purchase Agreement" means, in the case of any Purchaser Group,
a secondary market agreement, asset purchase agreement or other liquidity
agreement entered into
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by the Committed Purchasers in such Purchaser Group or any of their respective
Affiliates for the benefit of one or more Conduit Purchasers in such Purchaser
Group, to the extent relating to the sale or transfer of interests in, or other
financing of, Receivable Interests.
"Assignee Rate" for any Fixed Period for any Receivable Interest means
an interest rate per annum equal to the sum of the Applicable Eurodollar Rate
Margin plus the Adjusted Eurodollar Rate for such Fixed Period; provided,
however, that in case of:
(i) any Fixed Period with respect to which the Adjusted
Eurodollar Rate is not available pursuant to Section 2.11 or 2.12,
(ii) any Fixed Period of less than one month,
(iii) any Fixed Period as to which the applicable Managing Agent
does not receive notice, by no later than 11:00 A.M. (New York City
time) on the second Business Day preceding the first day of such Fixed
Period, that the related Receivable Interest will not be funded by a
Conduit Purchaser through the issuance of Promissory Notes, or
(iv) any Fixed Period for a Receivable Interest the Capital of
which is less than $500,000,
the Assignee Rate for such Fixed Period shall be an interest rate per annum
equal to the Alternate Base Rate in effect from time to time during such Fixed
Period.
"Assignment and Acceptance" means an assignment and acceptance
agreement entered into by a Committed Purchaser, an Eligible Assignee and such
Committed Purchaser's Managing Agent, pursuant to which such Eligible Assignee
may become a party to this Agreement, in substantially the form of Annex C
hereto.
"Bad Debts Reserve" means the amount of the reserve established by the
Servicer (in accordance with GAAP and, to the extent consistent with GAAP, in a
manner consistent with the practices of the Originator as in effect on the date
hereof) in respect of (i) Receivables that are unpaid 61 days or more from the
original invoice date of such Receivables and (ii) unbilled Receivables that the
Servicer has determined to be a collection risk.
"Bank One" means Bank One, NA (Main Office Chicago), and any successor
thereto.
"Base Rate Receivable Interest" has the meaning specified in Section
2.11.
"Business Day" means any day on which (i) banks are not authorized or
required to close in New York City, New York and (ii) if this definition of
"Business Day" is utilized in connection with the determination of the
Eurodollar Rate or any notice related thereto, dealings are carried out in the
London interbank market.
"Calculation Period" means each period from and including the first
day of a calendar month to and including the last day of such calendar month.
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"Capital" means, with respect to any Receivable Interest, the original
amount paid to the Seller for such Receivable Interest pursuant to Article II,
as such amount may be divided or combined in accordance with Section 2.09, in
each case as reduced from time to time by Collections received by the applicable
Purchaser(s) holding such Receivable Interest from distributions made pursuant
to Section 2.04 or Section 2.05, as applicable, on account of the Capital of
such Receivable Interest; provided that if such Capital shall have been reduced
by any distribution and thereafter all or a portion of such distribution is
rescinded or must otherwise be returned for any reason, such Capital shall be
increased by the amount of such rescinded or returned distribution as though it
had not been received by such Purchaser(s).
"Capital Lease" means any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of the Originator and its Subsidiaries under GAAP.
"Capital Lease Obligations" means the obligations of the Originator or
its Subsidiaries to pay rent or other amounts under any Capital Lease, and the
amount of such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
"Change of Control" means (a) (i) at any time prior to consummation of
the Spin-Off, Merck failing to own, beneficially and of record, directly 100% of
the aggregate issued and outstanding Equity Interests of the Originator and (ii)
at any time following consummation of the Spin-Off, the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (each within the meaning of the Securities Exchange Act of 1934 and the
rules of the SEC thereunder as in effect on the date hereof) not an Affiliate of
the Originator or Merck of Equity Interests representing more than 30% of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Interests of the Originator, or (b) commencing after the date hereof, during any
period of up to 12 consecutive months, the occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Originator by Persons
who were neither nominated nor appointed by a vote of a majority or more of the
members of the Originator's board of directors who were either in office at the
beginning of such 12 month period or were so nominated or appointed.
"Citibank" means Citibank, N.A. and any successor thereto.
"Client" means any Person for whom the Originator or any of its
Affiliates provides PBM Services.
"Client Contract" means an agreement with one or more Clients pursuant
to which Medco and/or any of its Affiliates provides PBM Services.
"Closing Date" means August [__], 2003.
"CNAI" means Citicorp North America, Inc., and any successor thereto.
"Collection Account" means (i) at any time prior to the establishment
of the Administrative Agent Account pursuant to Section 6.07(a), the Deposit
Account specified as such on Schedule III and (ii) at any other time, the
Administrative Agent Account.
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"Collection Account Bank" means the bank at which the Collection
Account is maintained.
"Collections" means, with respect to any Receivable, all cash
collections and other cash Proceeds of such Receivable, including, without
limitation, (i) all cash Proceeds of Related Security with respect to such
Receivable, and (ii) any Deemed Collections of such Receivable.
"Commitment" of any Committed Purchaser means the dollar amount set
forth on Schedule I hereto opposite such Committed Purchaser's name or, in the
case of a Committed Purchaser that became a party to this Agreement pursuant to
an Assignment and Acceptance or Joinder Agreement, the amount set forth therein
as such Committed Purchaser's Commitment, in each case as such amount may be (i)
reduced or increased by any Assignment and Acceptance entered into by such
Committed Purchaser in accordance with the terms hereof and (ii) reduced
pursuant to Section 2.01(c) or Section 2.18.
"Committed Purchaser Participant" has the meaning specified in Section
11.03(g).
"Committed Purchasers" means, collectively, the Persons identified as
"Committed Purchasers" on Schedule I and their respective successors and
permitted assigns.
"Concentration Limit" means, at any time for any Obligor:
(a) if such Obligor has Debt Ratings of AA- or better from S&P and
Aa3 or better from Xxxxx'x, an amount equal to the product of (i) the Loss
Reserve Percentage Floor and (ii) the Net Receivables Pool Balance at such
time;
(b) if such Obligor has Debt Ratings of A- or better from S&P and A3
or better from Xxxxx'x (and clause (a) does not apply), an amount equal to
the product of (i) 50%, (ii) the Loss Reserve Percentage Floor and (iii)
the Net Receivables Pool Balance at such time; and
(c) in the case of any other Obligor, 5% of the Net Receivables Pool
Balance at such time (the "Normal Concentration Limit"); provided that if
at the time of determination a Rating Level 2 Period, Rating Level 3 Period
or Rating Level 4 Period is in effect, the Normal Concentration Limit shall
be 4% of the Net Receivables Pool Balance at such time;
provided, however, that, notwithstanding the foregoing, the Administrative Agent
(acting either on its own initiative or at the direction of any Managing Agent)
may at any time reduce the Concentration Limit of an Obligor described in
clauses (a) and (b) above to the Normal Concentration Limit upon not less than
three (3) Business Days' notice to the Servicer. In the case of an Obligor and
its Affiliates, the Concentration Limit shall be calculated as if such Obligor
and such Affiliates were a single Obligor.
"Conduit Assignee" means, with respect to any assignment by a Conduit
Purchaser, any Person that (i) issues commercial paper rated at least A-1 by S&P
or P-1 by Xxxxx'x, (ii) is managed by the Managing Agent for such assigning
Conduit Purchaser or any
5
Affiliate of such Managing Agent and (iii) is designated by such Managing Agent
to accept an assignment from such Conduit Purchaser of such Conduit Purchaser's
rights and obligations pursuant to Section 11.03(b).
"Conduit Participant" means any Person that shall have acquired a
participation in a Receivable Interest from a Conduit Purchaser (but excluding,
for purposes of the definition of "CP Rate", interests sold pursuant to an Asset
Purchase Agreement).
"Conduit Purchasers" means, collectively, the Persons identified as
"Conduit Purchasers" on Schedule I and their respective successors and permitted
assigns.
"Conduit Purchase Limit" of any Conduit Purchaser means the dollar
amount set forth on Schedule I hereto opposite such Conduit Purchaser's name, as
such amount may be reduced pursuant to Section 2.01(c) or Section 2.18.
"Conduit Purchaser's Termination Event" means, with respect to any
Conduit Purchaser, that the Managing Agent for such Conduit Purchaser shall have
notified the Administrative Agent and the Seller that no further Purchases shall
be made by such Conduit Purchaser hereunder.
"Contract" means an agreement pursuant to or under which a
pharmaceutical manufacturer shall be obligated to pay rebates, administrative
fees, data fees or other fees to the Originator, in each case as such agreement
may be amended, restated, supplemented, renewed or otherwise modified from time
to time and any replacement or substitute agreement; provided that the term
"Contract" shall not include any agreement with Merck or any of its Affiliates
so long as no payments under such agreement are remitted to a Deposit Account.
"Control Agreement" means (i) with respect to any Deposit Account, an
agreement among the Servicer, the Seller, the Administrative Agent and the
applicable Deposit Account Bank in substantially the form of Annex B-1 (or in
such other form as the Administrative Agent shall approve) and (ii) with respect
to any Administrative Agent Account established pursuant to Section 6.07, an
agreement among the Seller, the Administrative Agent and the bank at which the
Administrative Agent Account is maintained in substantially the form of Annex
B-2 (or in such other form as the Administrative Agent shall approve).
"CP Fixed Period Date" means the last day of each calendar month.
"CP Rate" when used in reference to any Conduit Purchaser shall have
the meaning specified on Schedule II or, in the case of a Conduit Purchaser that
becomes a party hereto pursuant to a Joinder Agreement, such other meaning (if
any) as may be specified in such Joinder Agreement.
"Credit and Collection Policy" means those standard operating
procedures of the Originator relating to the Contracts and Receivables in effect
on the date of this Agreement and summarized in Schedule IV hereto, as modified
in compliance with this Agreement.
"Current Calculation Period" means, with respect to any Monthly
Reporting Date, the Calculation Period then most recently ended.
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"Daily Report" means a report furnished by the Servicer pursuant to
Section 6.03(c). Each such report shall be (i) if a form of daily report is
delivered by the Administrative Agent to the Servicer, substantially in the form
so provided (which form shall be consistent with the form of Monthly Report,
with such changes as may be appropriate to reflect differences in the duration
of the periods being reported and such other changes as any Managing Agent may
reasonably request) or (ii) if a form of daily report is not so delivered by the
Administrative Agent to the Servicer, in a form prepared by the Servicer and
reasonably acceptable to the Managing Agents.
"Debt Rating" for any Person at any time, means the then-current
published rating by S&P or Xxxxx'x of such Person's long-term senior unsecured
non-credit-enhanced debt.
"Deemed Collections" means any Collections on any Receivable deemed to
have been received by the Seller pursuant to Section 2.06(b) of this Agreement
or by the Originator pursuant to Section 2.04 of the Originator Purchase
Agreement.
"Deemed Loss Ratio" means the ratio (expressed as a percentage)
computed as of each Monthly Reporting Date for the Current Calculation Period by
dividing (i) the sum of (a) the aggregate Outstanding Balance of all Receivables
as of the end of the Current Calculation Period that remained unpaid more than
60 days from their original due dates but less than 91 days from their original
due dates and (b) (without duplication) the aggregate Outstanding Balance of all
Receivables that were (or which, pursuant to the Credit and Collection Policy,
should have been) written-off during the Current Calculation Period for credit
reasons and which were less than 61 days from their original due dates at the
time such write-off occurred by (ii) the aggregate amount of Accruals that arose
during the ninth Calculation Period immediately prior to the Current Calculation
Period.
"Default Ratio" means the ratio (expressed as a percentage) computed
as of each Monthly Reporting Date for the immediately preceding Calculation
Period by dividing (i) the aggregate Outstanding Balance of all Receivables that
were Defaulted Receivables as of the last day of such Calculation Period
(excluding, for the avoidance of doubt, any Defaulted Receivables that were
written off as uncollectible prior to such last day in accordance with the
Credit and Collection Policy) by (ii) the aggregate Outstanding Balance of all
Receivables that have been billed as of the last day of such Calculation Period.
"Defaulted Receivable" means a Receivable: (i) which remains unpaid
for more than 60 days from the original due date for such Receivable; (ii) as to
which an Event of Bankruptcy has occurred and is continuing with respect to the
Obligor thereof; or (iii) which, in accordance with the Credit and Collection
Policy, has been or should be written off as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of each Monthly Reporting Date for the immediately preceding
Calculation Period by dividing (i) the aggregate Outstanding Balance of all
Delinquent Receivables as of the end of such Calculation Period by (ii)
aggregate Outstanding Balance of all Receivables that have been billed as of the
end of such Calculation Period.
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"Delinquent Receivable" means a Receivable (other than a Defaulted
Receivable) which (i) remains unpaid for more than 30 days but equal to or less
than 60 days from the original due date for such Receivable or (ii) pursuant to
the Credit and Collection Policy, has been or should be classified as
delinquent.
"Deposit Account" means an account maintained at a bank for the
purpose of receiving Collections.
"Deposit Account Bank" means any bank at which a Deposit Account is
maintained.
"Diluted Receivable" means that portion (and only that portion) of any
Receivable which is either (a) reduced or canceled as a result of (i) any
failure by any Transaction Party to perform any services or otherwise to perform
under any Contract or invoice or any dispute under any Contract or invoice, (ii)
any change in the terms of, or cancellation of, any Contract or invoice, (iii)
any administrative fee, discount, credit memo, refund, non-cash payment,
chargeback, allowance or other adjustment of any kind (including, without
limitation, any adjustment resulting from an erroneous estimate of the
Outstanding Balance of an Unbilled Receivable, but excluding any such adjustment
made by reason of such Receivable being uncollectible solely on account of the
insolvency, bankruptcy or financial inability to pay of the applicable Obligor)
or (iv) any set-off by an Obligor in respect of any claim by such Obligor
(whether such claim arises out of the same or a related transaction or an
unrelated transaction) or (b) subject to any specific offset, counterclaim or
defense whatsoever (except the discharge in bankruptcy of the Obligor thereof).
"Dilution Horizon" means, as of any Monthly Reporting Date and
continuing until (but not including) the next Monthly Reporting Date, a number
equal to a fraction, the numerator of which is the (i) the aggregate original
Outstanding Balance of all Accruals during the four most recent Calculation
Periods immediately preceding such earlier Monthly Reporting Date and (ii) the
denominator of which is the aggregate Outstanding Balance of all Receivables as
of the end of the Current Calculation Period minus the aggregate Outstanding
Balance of Defaulted Receivables as of the end of the Current Calculation
Period.
"Dilution Ratio" means the ratio (expressed as a percentage) computed
as of each Monthly Reporting Date for the immediately preceding Calculation
Period (the "current Calculation Period") by dividing (i) the sum (without
duplication) of (a) the aggregate amount of Receivables which became Diluted
Receivables during such Calculation Period and (b) the aggregate amount of
negative "true-ups" to the Accruals made during such Calculation Period, by (ii)
the aggregate original Outstanding Balance of all Receivables which arose during
the fourth Calculation Period immediately preceding the current Calculation
Period.
"Dilution Reserve" means, on any date, an amount equal to:
the greater of (i) DRP x NRPB and (ii) BDR x 2
where:
DRP = the Dilution Reserve Percentage on such date.
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NRPB = the Net Receivables Pool Balance at the close of business of
the Servicer on such date.
BDR = the Bad Debts Reserve as of the close of business of the
Servicer on such date.
"Dilution Reserve Percentage" means, as of any Monthly Reporting Date,
and continuing until (but not including) the next Monthly Reporting Date, the
higher of (i) the Dynamic Dilution Reserve Ratio and (ii) 5%.
"Dollars" and "$" each mean the lawful currency of the United States
of America.
"Dynamic Dilution Reserve Ratio" means, as of any Monthly Reporting
Date, and continuing until (but not including) the next Monthly Reporting Date,
an amount (expressed as a percentage) that is calculated as follows:
DDRR = [(SF x AD) + [(DS-AD) x (DS/AD)]] x DH
Where:
DDRR = Dynamic Dilution Reserve Ratio;
SF = the Stress Factor;
AD = the "Average Dilution", defined as the twelve-month rolling average of
the three-month rolling average Dilution Ratio that occurred during
the period of twelve consecutive Calculation Periods ending
immediately prior to such earlier Monthly Reporting Date;
DS = the "Dilution Spike", defined as the highest four-month rolling
average Dilution Ratio that occurred during the period of twelve
consecutive Calculation Periods ending immediately prior to such
earlier Monthly Reporting Date; and
DH = the Dilution Horizon.
"Dynamic Loss Reserve Ratio" means, as of any Monthly Reporting Date,
and continuing until (but not including) the next Monthly Reporting Date, an
amount (expressed as a percentage) calculated as follows:
DLRR = SF x DLR x LHR
Where:
9
DLRR = Dynamic Loss Reserve Ratio;
SF = the Stress Factor;
DLR = the highest three-month rolling average Deemed Loss Ratio that occurred
during the period of twelve consecutive Calculation Periods immediately
preceding such earlier Monthly Reporting Date; and
LHR = the Loss Horizon Ratio.
"Eligible Assignee" means, with respect to any Purchaser Group, (i)
any Person that is a Managing Agent, a Purchaser, Scotiabank or an Affiliate
thereof, (ii) any Person managed by a Managing Agent, a Purchaser, Scotiabank or
an Affiliate thereof and rated at least A-1 by S&P or P-1 by Xxxxx'x and (iii)
any other Person that has been approved by the Managing Agent for such Purchaser
Group and, so long as no Termination Event has occurred and is continuing, that
has been approved by the Seller (such approval not to be unreasonably withheld
or delayed).
"Eligible Contract" means a Contract (i) that is in full force and
effect and constitutes the legal, valid and binding obligation of the related
Obligor, enforceable against such Obligor in accordance with its terms, (ii)
with respect to which the Originator has performed in all material respects all
obligations required to be performed by it thereunder, (iii) except in the case
of the Contract with Pfizer, Inc., that requires the Obligor to pay all accrued
Receivables (including, without limitation, all Unbilled Receivables) upon
termination of such Contract (whether such termination results from a breach on
the part of the Originator or for any other reason), and (iv) that conforms in
all material respects to one of the forms of contract reviewed and approved by
the Administrative Agent or its counsel as listed on Schedule VI under the
heading "Reviewed Contracts."
"Eligible Obligor" means any Obligor (i) that is a United States
resident, (ii) that is not an Official Body or an Affiliate of any of the
Originator or the Seller, (iii) that is not the subject of an Event of
Bankruptcy, (iv) with respect to which not more than 10% of the aggregate
Outstanding Balance of such Obligor's Receivables are Defaulted Receivables and
(v) is not Merck or an Affiliate thereof.
"Eligible Receivable" means, at any time, any Receivable:
(a) which arises under an Eligible Contract;
(b) the Obligor of which is an Eligible Obligor;
(c) which is fully assignable to the Seller and the Purchasers;
(d) which constitutes the legal, valid and binding obligation of the
related Obligor to pay the Outstanding Balance thereof, enforceable against
such Obligor in accordance with the terms of the related Contract, subject
to bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and general principals of
equity;
10
(e) which has been fully earned by the Originator in accordance with
the terms of the related Contract and no further performance or other
action is required by the Originator in order for such Receivable to become
due and payable in full (except, in the case of an Unbilled Receivable, for
the presentation of an invoice therefor together with the relevant
supporting data required to be delivered under the terms of the related
Contract);
(f) which is an "account" or a "payment intangible" within the
meaning of Section 9-102 of the UCC of the applicable jurisdiction
governing the perfection of the Administrative Agent's security interest
therein;
(g) which is not subject to (i) any Adverse Claim (other than Adverse
Claims created under the Originator Purchase Agreement or this Agreement)
or (ii) any litigation, dispute, offset, set-off, counterclaim or other
defense, provided that only such portion of such Receivable subject to any
such dispute, offset, counterclaim or defense shall be deemed ineligible
under this criterion;
(h) which is denominated and payable only in United States dollars in
the United States;
(i) which was originated in the ordinary course of the Originator's
business in accordance with the terms of the related Contract and satisfies
in all material respects all applicable requirements of the Credit and
Collection Policy;
(j) which was not a Defaulted Receivable as of the date on which such
Receivable was acquired by the Seller under the Originator Purchase
Agreement;
(k) which has not been extended, compromised, adjusted or modified
from the original terms thereof (including by the granting of any
discounts, allowances or credits) except in accordance with the Credit and
Collection Policy, provided that only such portion of such Receivable that
has been so extended, compromised, adjusted or modified shall be deemed
ineligible pursuant to this criterion;
(l) which, according to the Contract related thereto, is required to
be paid in full within 90 days of the original billing date therefor;
(m) which either (i) has been billed within the time limits specified
in the related Contract or (ii) is an Eligible Unbilled Receivable;
(n) which, pursuant to the terms of the related Contract, is billable
no less frequently than once each calendar quarter;
(o) which, together with the Contract related thereto, does not
contravene in any material respect any Laws applicable thereto (including,
without limitation, Laws relating to truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection
practices, ERISA and privacy) and with respect to which no part of the
Contract related thereto is in violation of any such Law in any material
respect;
11
(p) which has been originated by the Originator and has been sold to
the Seller pursuant to (and in accordance with) the Originator Purchase
Agreement, with the result that the Seller has good and marketable title to
such Receivable (together with the Collections and Related Security related
thereto), free and clear of all Adverse Claims (except as created under
this Agreement); and
(q) which (together with the Collections and Related Security related
thereto) is subject to a first priority perfected security interest therein
in favor of the Administrative Agent, on behalf of the Purchasers.
"Eligible Unbilled Receivable" means an Unbilled Receivable (i) which
satisfies all criteria specified in the definition of "Eligible Receivable"
other than subclause (i) of clause (m) of such definition, (ii) has accrued in
accordance with the terms of the relevant Contract and would be required to be
paid in full by the Obligor thereof within 90 days following presentation of an
invoice therefor together with the relevant supporting data required to be
delivered under the terms of the related Contract, (iii) has been recognized as
a receivable in the Originator's accounting records in accordance with GAAP and,
to the extent consistent with GAAP, the accounting practices of the Originator
as in effect on the date of this Agreement and (iv) with respect to which the
time limit specified in the related Contract for the billing of such Receivable
has not yet expired.
"Equity Interests" means, with respect to any Person, shares of
capital stock, partnership interests, membership interests in a limited
liability company, beneficial interests in a trust or other equity ownership
interests issued by such Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Originator, is treated as a single
employer under Section 414(b) or (c) of the IRC or, solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, is treated as a single employer
under Section 414 of the IRC.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the IRC or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the IRC or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Originator or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Originator or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Originator or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Originator or any ERISA Affiliate of any notice, or the receipt
by any Multiemployer Plan from
12
the Originator or any ERISA Affiliate of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means for any Fixed Period, the rate appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page of
such service, or any successor to or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Fixed Period, as the rate for dollar
deposits with a maturity comparable to such Fixed Period. In the event that such
rate is not available at such time for any reason, then the "Eurodollar Rate"
shall be the rate at which dollar deposits of $5,000,000 and for a maturity
comparable to such Fixed Period are offered by the principal London office of
Citibank in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Fixed Period, as determined by the Administrative Agent.
"Eurodollar Rate Reserve Percentage" means for any Fixed Period in
respect of which Yield is computed by reference to the Eurodollar Rate the
reserve percentage applicable two Business Days before the first day of such
Fixed Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) (or if more than one
such percentage shall be applicable, the daily average of such percentages for
those days in such Fixed Period during which any such percentage shall be so
applicable) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that includes
deposits by reference to which the interest rate on Eurocurrency Liabilities is
determined) having a term equal to such Fixed Period.
"Eurodollar Receivable Interest" has the meaning specified in Section
2.11.
"Event of Bankruptcy" means, with respect to any Person, that:
(i) such Person (a) shall generally not pay its debts as such debts
become due or (b) shall admit in writing its inability to pay its debts
generally or (c) shall make a general assignment for the benefit of
creditors;
(ii) any proceeding shall be instituted by or against such Person
seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee or other
similar
13
official for it or any substantial part of its property, and, if instituted
against such Person, shall remain undischarged for a period of 60 days; or
(iii) such Person or any Subsidiary shall take any corporate or
similar action to authorize any of the actions set forth in the preceding
clauses (i) or (ii).
"Executive Officer" means the chief executive officer, the chief
financial officer, the general counsel or any other "officer" (as defined in
Rule 16a-1 of the Securities Exchange Act of 1934, as amended) of the
Originator.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to 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 New York, or, 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 the Administrative Agent from three Federal funds
brokers of recognized standing selected by it
"Fee Letters" means, collectively, the Administrative Agent Fee Letter
and the Purchaser Fee Letter.
"Fees" has the meaning specified in Section 2.07(b).
"Final Payout Date" means the date after the Termination Date on which
the Seller Obligations have been reduced to zero by payment in full in cash.
"Financial Covenant Default" has the meaning specified on Schedule V.
"Financial Officer" means, with respect to any Transaction Party, the
chief financial officer, the principal accounting officer, the treasurer, the
controller, the general counsel or any other "officer" (as defined in Rule 16a-1
of the Securities Exchange Act of 1934, as amended) of such Transaction Party.
"Fixed Period" means, with respect to any Receivable Interest:
(a) in the case of any Receivable Interest held by a Conduit
Purchaser and in respect of which Yield is computed by reference to the CP Rate,
(i) initially, the period commencing on (and including) the date of purchase of
such Receivable Interest and ending on (and including) the next succeeding CP
Fixed Period Date, and (ii) thereafter, each successive period commencing on
(but excluding) a CP Fixed Period Date and ending on (and including) the next
succeeding CP Fixed Period Date; and
(b) in the case of any Receivable Interest in respect of which Yield
is computed by reference to the Assignee Rate, each successive period of from
one to and including ten Business Days, or a period of one month, as the Seller
shall select on notice given by the Seller and received by the applicable
Managing Agent (including notice by telephone, confirmed in writing) not later
than 11:00 A.M. (New York City time) on the second Business Day before
14
the first day of such Fixed Period, each such Fixed Period for such Receivable
Interest to commence on the last day of the immediately preceding Fixed Period
for such Receivable Interest (or, if there is no such Fixed Period, on the date
of purchase of such Receivable Interest), except that if such Managing Agent
shall not have received such notice before 11:00 A.M. (New York City time) on
such second Business Day, such Fixed Period shall be one day;
provided, however, that:
(i) any Fixed Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be extended
to the next succeeding Business Day; provided, however, that if Yield
in respect of such Fixed Period is computed by reference to the
Eurodollar Rate, and such Fixed Period would otherwise end on a day
which is not a Business Day, and there is no subsequent Business Day
in the same calendar month as such day, such Fixed Period shall end on
the next preceding Business Day;
(ii) in the case of any Fixed Period of one day, (A) if such
Fixed Period is the initial Fixed Period for a Receivable Interest,
such Fixed Period shall be the day of the purchase of such Receivable
Interest; (B) any subsequently occurring Fixed Period which is one day
shall, if the immediately preceding Fixed Period is more than one day,
be the last day of such immediately preceding Fixed Period and, if the
immediately preceding Fixed Period is one day, be the day next
following such immediately preceding Fixed Period; and (C) if such
Fixed Period occurs on a day immediately preceding a day which is not
a Business Day, such Fixed Period shall be extended to the next
succeeding Business Day;
(iii) in the case of any Fixed Period for any Receivable Interest
which commences before the Amortization Date for such Receivable
Interest and would otherwise end on a date occurring after such
Amortization Date, such Fixed Period shall end on such Amortization
Date and the duration of each Fixed Period which commences on or after
the Amortization Date for such Receivable Interest shall be of such
duration (including, without limitation, one day) as shall be selected
by the applicable Managing Agent; and
(iv) at any time when the Alternate Base Rate shall have been in
effect for a Fixed Period of ten consecutive Business Days, and the
conditions set forth in clauses (i) and (iv) of the definition of
Assignee Rate do not exist, any Managing Agent may, on behalf of the
Committed Purchasers in its Purchaser Group, upon one Business Day's
notice to the Seller (with a copy to the Administrative Agent), select
as the next succeeding Fixed Period for such Receivable Interest (and
any subsequent Fixed Periods designated by such Managing Agent) a
period of one month during which Yield shall be computed by reference
to the Adjusted Eurodollar Rate; provided, however, that prior to such
selection the Seller may notify the applicable Managing Agent that, in
view of anticipated Collections and repayments, Yield should continue
to be computed by reference to the Alternate Base Rate.
15
"Formulary Rebate Conditions" has the meaning specified on Schedule
VII.
"Formulary Rebate Deduction Amount" has the meaning specified on
Schedule VII.
"Formulary Rebate Receivable" means any "base rebate", "formulary
rebate" or similar rebate payable by an Obligor under a Contract resulting from
the inclusion of such Obligor's products on a formulary.
"Funds Transfer Letter" means a letter in substantially the form of
Annex D hereto executed and delivered by the Seller to the Administrative Agent
and the Managing Agents, as the same may be amended or restated in accordance
with the terms thereof.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America from time to time, consistently applied.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing any
Indebtedness or other obligation of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation to
purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof, (b) to purchase or lease property, securities or services
primarily for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation or (d) as an account party in respect of any letter of credit or
letter of guarantee issued to support such Indebtedness or other obligation;
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.
"Incipient Termination Event" means an event that but for notice or
lapse of time or both would constitute a Termination Event.
"Incremental Purchase" has the meaning specified in Section 2.01(a).
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are being paid (but excluding obligations that are
trade payables), (d) all obligations of such Person under conditional sale or
other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable and accrued expenses
incurred in the ordinary course of business), (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Adverse Claim on property owned
or acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g)
16
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of the face amount of letters of
credit and letters of guarantee, (j) all obligations, contingent or otherwise,
of such Person in respect of the face amount of bankers' acceptances and (k)
Off-Balance Sheet Liabilities; provided that Indebtedness shall not include
deferred tax liabilities, employee and retiree benefit obligations or
endorsements for collection or deposit in the ordinary course of business. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Amounts" has the meaning specified in Section 10.01.
"Indemnified Party" has the meaning specified in Section 10.01.
"Involuntary Bankruptcy Event" means the occurrence of an event that,
but for notice or lapse of time or both, would constitute any Event of
Bankruptcy with respect to any Transaction Party.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Joinder Agreement" means an agreement substantially in the form of
Annex E pursuant to which a new Purchaser Group is established hereunder
pursuant to Section 11.03(i).
"Law" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any Official Body.
"Liquidating Receivable Interest" has the meaning specified in Section
2.04.
"Liquidation Day" means for any Receivable Interest, (i) each day
during a Fixed Period for such Receivable Interest on which the conditions set
forth in Section 3.02 are not satisfied, (ii) each day on which Reinvestment
Purchases have been suspended by the Seller pursuant to Section 2.16 and (iii)
each day which occurs on or after the Amortization Date for such Receivable
Interest.
"Liquidation Fee" means for (i) any Fixed Period for which Yield is
computed by reference to the CP Rate and a reduction of Capital is made for any
reason or (ii) any Fixed Period for which Yield is computed by reference to the
Eurodollar Rate and a reduction of Capital is made for any reason on any day
other than the last day of such Fixed Period, the amount, if any, by which (A)
the additional Yield (calculated without taking into account any Liquidation Fee
or any shortened duration of such Fixed Period pursuant to clause (iii) of the
definition thereof) which would have accrued during such Fixed Period (or, in
the case of clause (i) above, during the period until the maturity of the
underlying Promissory Note tranches) on the reductions of Capital of the
Receivable Interest relating to such Fixed Period had such reductions not
occurred, exceeds (B) the income, if any, received by the Purchaser which holds
such Receivable Interest from the investment of the proceeds of such reductions
of Capital. A
17
certificate as to the amount of any Liquidation Fee (including the computation
of such amount) shall be submitted by the affected Purchaser to the Seller and
shall be conclusive and binding for all purposes, absent manifest error.
"Loss Horizon Ratio" means, as of any Monthly Reporting Date and
continuing until (but not including) the next Monthly Reporting Date, the amount
obtained by dividing (i) the aggregate Accruals which arose during the nine
Calculation Periods immediately preceding such earlier Monthly Reporting Date by
(ii) the aggregate Outstanding Balance of Receivables as of the end of the
Current Calculation Period minus the aggregate Outstanding Balance of Defaulted
Receivables as of the end of the Current Calculation Period.
"Loss Reserve" means, on any date, an amount equal to:
LRP x NRPB
where:
LRP = the Loss Reserve Percentage on such date.
NRPB = the Net Receivables Pool Balance at the close of
business of the Servicer on such date.
"Loss Reserve Percentage" means, on any date, the greatest of (i) the
Dynamic Loss Reserve Ratio, (ii) four times the Normal Concentration Limit
during a Rating Level 1 Period and, during any other period, five times the
Normal Concentration Limit and (iii) the Loss Reserve Percentage Floor.
"Loss Reserve Percentage Floor" means 22%.
"Loss-to-Liquidation Ratio" means the ratio (expressed as a
percentage) computed as of each Monthly Reporting Date for the immediately
preceding Calculation Period by dividing (i) the aggregate Outstanding Balance
of all Receivables written-off by the Originator, the Servicer or the Seller, or
which should have been written-off by the Originator, the Servicer or the Seller
in accordance with the Credit and Collection Policy, during such Calculation
Period by (ii) the aggregate amount of Collections of Receivables actually
received during such Calculation Period.
"Majority Committed Purchasers" means Committed Purchasers
representing more than 50% of the Aggregate Commitment (determined without
giving effect to any termination of the Commitments hereunder).
"Majority Managing Agents" shall mean Managing Agents for Committed
Purchasers representing more than 50% of the Aggregate Commitment (determined
without giving effect to any termination of the Commitments hereunder);
provided, however, that so long as there are only two Managing Agents, the term
"Majority Managing Agents" shall mean each such Managing Agent.
18
"Manager" means a "manager" of the Seller under (and as defined in)
the limited liability company agreement of the Seller.
"Managing Agent" means, with respect to any Purchaser Group, the
Person identified as the "Managing Agent" for such Purchaser Group on Schedule
I, together with (i) any successor thereto designated pursuant to Article IX and
(ii) any Person that becomes a Managing Agent for a new Purchaser Group pursuant
to Section 11.03(i).
"Material Adverse Effect" means a material adverse effect on (i) the
ability of any Transaction Party to perform its obligations under any
Transaction Document, subject to applicable cure and grace periods, (ii) the
legality, validity or enforceability of this Agreement or any other Transaction
Document, (iii) any Purchaser's or the Administrative Agent's interest in the
Receivables generally or in any material portion of the Receivables, the Related
Security or the Collections with respect thereto, (iv) the collectibility of the
Receivables generally or of any material portion of the Receivables or the
legality, validity or enforceability of the Contracts generally or of any
material portion of the Contracts or (v) the business, operations, properties,
assets, liabilities or condition (financial or otherwise) of either (A) the
Originator and its Subsidiaries, taken as a whole or (B) the Seller.
"Material Indebtedness" means Indebtedness, or net termination payment
obligations in respect of one or more Swap Agreements, of any one or more of (i)
the Originator and its Subsidiaries in an aggregate principal amount exceeding
$25,000,000 or (ii) the Seller in an aggregate principal amount exceeding
$25,000. For purposes of determining Material Indebtedness, the "principal
amount" of the obligations of the Originator or any Subsidiary or of the Seller
in respect of any Swap Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Originator or such
Subsidiary or the Seller would be required to pay if such Swap Agreement were
terminated at such time. As used herein, the term "Swap Agreement" means any
agreement with respect to any swap, forward, future or derivative transaction or
option or similar agreement involving, or settled by reference to, one or more
rates, currencies, commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided, however, that no phantom stock or similar plan providing
for payments only on account of services provided by current or former
directors, officers, employees or consultants of the Originator or its
Subsidiaries shall be a Swap Agreement.
"Maximum Receivable Interest Percentage" means (i) during any period
that the Servicer is delivering Daily Reports hereunder, 100% and (ii) during
any other period, 99%.
"Medco" means Medco Health Solutions, Inc., a Delaware corporation,
and any successor thereto.
"Merck" means Merck & Co., Inc., a New Jersey corporation.
"Monthly Report" means a report in substantially the form of, and
containing the information described in, Annex A-1, and such additional
information as any Managing Agent may reasonably request from time to time, duly
completed and furnished by the Servicer to each
19
Managing Agent pursuant to Section 6.03(a), as such form may be amended by the
Administrative Agent from time to time subject to the prior consent of the
Servicer (such consent not to be unreasonably withheld); provided, however, that
if the Servicer fails to object within 10 days following receipt of any material
change to the form of Monthly Report, the Servicer will be deemed to have
consented to such amendment.
"Monthly Reporting Date" means the [15]th day of each calendar month,
or if that day is not a Business Day, the next following Business Day.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Receivables Pool Balance" means at any time the aggregate
Outstanding Balance of Pool Receivables reduced by the sum (without duplication)
of:
(i) the aggregate Outstanding Balance of Pool Receivables that are
not Eligible Receivables,
(ii) the aggregate Outstanding Balance of all Eligible Receivables
that are Defaulted Receivables,
(iii) the aggregate amount by which the Outstanding Balance of
Eligible Receivables of each Obligor (treating each Obligor and its
Affiliates as if they were a single Obligor) exceeds the Concentration
Limit for such Obligor,
(iv) the aggregate amount of Collections that have been received,
which Collections have not yet been applied to reduce the Outstanding
Balance of any Receivables,
(v) the aggregate amount by which the Outstanding Balances of
Receivables which are to be reduced or cancelled pursuant to any credit
memos or other events or circumstances described in the definition of
"Diluted Receivable," to the extent such reduction or cancellation has not
yet occurred,
(vi) the Aggregate Accounts Payable Deduction Amount,
(vii) the excess, if any, of (A) the aggregate Outstanding Balance of
Eligible Unbilled Receivables that remain unbilled as of the end of the
third (3rd) calendar month after the first date (the "Billing Cut-off
Date") on which such Unbilled Receivables could have been billed under the
terms of the related Contract (excluding any such Receivables included in
clauses (viii) and (ix) below) over (B) 20% of the aggregate Outstanding
Balance of such Unbilled Receivables as of their respective Billing Cut-off
Dates,
(viii) the excess, if any, of (A) the aggregate Outstanding Balance of
Eligible Unbilled Receivables that remain unbilled as of the end of the
fourth (4th) calendar month after their respective Billing Cut-off Dates
(excluding any such Receivables
20
included in clause (ix) below) over (B) 5% of the aggregate Outstanding
Balance of such Unbilled Receivables as of their respective Billing Cut-off
Dates,
(ix) the aggregate Outstanding Balance of Eligible Unbilled
Receivables that remain unbilled as of the end of the fifth (5th) calendar
month after their respective Billing Cut-off Dates;
(x) the product of (a) the aggregate Specific Reserve for all
Obligors of Eligible Receivables (excluding any portion thereof allocable
to Defaulted Receivables included in clause (ii)) multiplied by (b) 1.2,
(xi) the Formulary Rebate Deduction Amount, and
(xii) the Pfizer Deduction Amount;
provided, however, that no deduction will be made pursuant to clauses (vii),
(viii) and (ix) until the Monthly Reporting Date for the Calculation Period
ending October 31, 2003.
"Non-U.S. Person" has the meaning specified in Section 2.14(d).
"Normal Concentration Limit" has the meaning specified in the
definition of "Concentration Limit."
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Off-Balance Sheet Liability" of a Person shall mean (i) any liability
under any Sale and Leaseback or any lease leaseback transaction which is not a
Capital Lease Obligation and (ii) any liability under any so called "synthetic
lease" transaction entered into by such Person.
"Official Body" shall mean any government or political subdivision or
any agency, authority, bureau, central bank, commission, department or
instrumentality of any such government or political subdivision, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign or domestic.
"Originator" means Medco.
"Originator Purchase Agreement" means the Receivables Purchase and
Contribution Agreement of even date herewith between the Seller and Medco, as
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.
"Other Medco Companies" means, collectively, the Originator and all of
its Subsidiaries and Affiliates except the Seller.
"Outstanding Balance" means, with respect to any Receivable at any
time, the then outstanding principal amount thereof, excluding any finance
charges related thereto. In the case of an Unbilled Receivable, the Outstanding
Balance thereof shall be determined by the
21
Servicer in accordance with GAAP and, to the extent consistent with GAAP, in a
manner consistent with the practices of the Originator as in effect on the date
hereof.
"Participant" means a Conduit Participant or a Committed Purchaser
Participant.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"PBM Services" means any drug benefit management services, including,
without limitation, management of retail pharmacy networks, payment of claims to
pharmacies for prescription drugs, drug utilization review and formulary
management services.
"Percentage" means, at any time with respect to any Committed
Purchaser, a fraction (expressed as a percentage), the numerator of which is
equal to its Commitment at such time, and the denominator of which is equal to
the Aggregate Commitment.
"Permitted Investments" means any of the following investments
denominated and payable solely in Dollars: (a) readily marketable debt
securities issued by, or the full and timely payment of which is guaranteed by
the full faith and credit of, the federal government of the United States of
America, (b) insured demand deposits, time deposits and certificates of deposit
of any commercial bank rated at least A-1+ by S&P and P-1 by Moody's, (c) no
load money market funds rated in the highest ratings category by each of Moody's
and S&P (without the "r" symbol attached to any such rating by S&P), (d)
commercial paper of any corporation incorporated under the laws of the United
States or any political subdivision thereof, provided that such commercial paper
is rated at least A-1+ (and without any "r" symbol attached to any such rating)
by S&P and at least Prime-1 by Moody's and (e) any other securities or
investments of a passive nature approved in writing by each Managing Agent.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Pfizer Deduction Amount" means, on any date, the aggregate
Outstanding Balance of the Eligible Receivables owing by Pfizer, Inc. or any of
its Affiliates (other than Pharmacia Corporation); provided that if (i) such
date occurs prior to the first date on which the Formulary Rebate Conditions are
satisfied and (ii) the Originator has Debt Ratings of at least BBB- by S&P and
Ba2 by Moody's, then the Pfizer Deduction Amount shall be zero.
"Pharmaceutical Plan" means any third-party payor plan, agreement or
arrangement through which Persons are entitled to receive pharmaceutical
products.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the IRC or Section 302 of ERISA, and in respect of which the Originator
or any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
22
"Pool Receivable" means any Receivable which has been sold or
contributed to the Seller from the Originator pursuant to the Originator
Purchase Agreement.
"Portfolio Turnover Rate" means, as of any Monthly Reporting Date and
continuing until (but not including) the next Monthly Reporting Date, a
fraction, the numerator of which is equal to the aggregate Outstanding Balance
of the Receivables as of the last day of the immediately preceding Calculation
Period and the denominator of which is equal to the aggregate amount of Accruals
which arose during such Calculation Period.
"Proceeds" means "proceeds" as defined in Section 9-102 of the UCC as
in effect on the date hereof in the State of New York.
"Program Support Provider" means, with respect to any Conduit
Purchaser, (i) each Committed Purchaser with respect to such Conduit Purchaser
and (ii) any other Person now or hereafter (A) extending credit, or having a
commitment to extend credit to or for the account of, or to make purchases from,
such Conduit Purchaser or (B) issuing a letter of credit, surety bond or other
instrument to support any obligations arising under or in connection with such
Conduit Purchaser's securitization program.
"Promissory Notes" means, collectively, (i) commercial paper and other
promissory notes issued by a Conduit Purchaser and (ii) solely in the case of a
Conduit Purchaser for which CNAI acts as Managing Agent, participations sold by
such Conduit Purchaser to a Participant; provided that the term "Promissory
Note" shall not include any interest sold by a Conduit Purchaser pursuant to any
Asset Purchase Agreement.
"Purchase" means an Incremental Purchase or a Reinvestment Purchase.
"Purchase Limit" shall mean, at any time, the Aggregate Commitment
then in effect; provided, however, that from and after the Termination Date, the
Purchase Limit shall at all times equal the aggregate outstanding Capital of all
Receivable Interests; and provided further that the Purchase Limit may be
reduced in connection with the termination of a Purchaser Group as provided in
Section 2.18. The initial Purchase Limit shall be $500,000,000.
"Purchase Price" has the meaning specified in Section 2.02(a).
"Purchaser Fee Letter" has the meaning specified in Section 2.07(b).
"Purchaser Group" means a group consisting of one or more Conduit
Purchasers, one or more Committed Purchasers and a Managing Agent for such
Purchasers, as specified on Schedule I or in the Joinder Agreement pursuant to
which such Purchaser Group is established pursuant to Section 11.03(i).
"Purchaser Group Account" means, with respect to any Purchaser Group,
the account specified on Schedule I for such Purchaser Group or such other
account as the relevant Managing Agent may designate in writing from time to
time to the Seller and the Servicer.
"Purchaser Group Limit" means, with respect to any Purchaser Group,
the aggregate Conduit Purchase Limit(s) of the Conduit Purchaser(s) in such
Purchaser Group.
23
"Purchasers" means, collectively, the Committed Purchasers and the
Conduit Purchasers.
"Rating Agencies" shall mean, on any date of determination, the rating
agencies then rating Promissory Notes at the request of any Conduit Purchaser.
"Rating Level 1 Period" means any period during which the Originator
has a Debt Rating of BBB- or higher by S&P or Baa3 or higher by Moody's;
provided that a Rating Level 1 Period shall not be in effect at any time that
the Originator (i) has a Debt Rating below BB+ by S&P or below Ba1 by Moody's,
(ii) does not have a Debt Rating from S&P or (iii) does not have a Debt Rating
from Xxxxx'x.
"Rating Level 2 Period" means any period during which the Originator
has a Debt Rating of BB or higher by S&P and Ba2 or higher by Moody's (and a
Rating Level 1 Period is not then in effect).
"Rating Level 3 Period" means any period during which the Originator
has a Debt Rating of BB- or higher by S&P and Ba3 or higher by Moody's (and
neither a Rating Level 1 Period nor a Rating Level 2 Period is then in effect).
"Rating Level 4 Period" means any period during which the Originator
(i) has a Debt Rating of B+ or lower by S&P or B1 or lower by Moody's, (ii) does
not have a Debt Rating from S&P or (iii) does not have a Debt Rating from
Moody's.
"Receivable" means all indebtedness and other obligations (in each
case whether present or future, due or to become due, billed or unbilled) of any
Obligor arising under or pursuant to a Contract, including, without limitation,
the right to payment of any rebates, administrative fees, data fees, interest or
finance charges, late payment charges, delinquency charges, extension or
collection fees and all other obligations of such Obligor with respect thereto.
"Receivable Interest" means, at any time, an undivided percentage
ownership interest in (i) all Pool Receivables then existing or thereafter
arising, (ii) all Related Security with respect to such Pool Receivables, and
(iii) all Collections with respect to, and other Proceeds of, such Pool
Receivables. Such undivided percentage ownership interest at any time shall be
equal to the product of (A) the Receivable Interest Percentage at such time and
(B) a fraction, (1) the numerator of which is equal to the Capital of such
Receivable Interest at such time and (2) the denominator of which is the total
Capital of all Receivable Interests at such time.
"Receivable Interest Percentage" means a fraction (expressed as a
percentage) computed on any date of determination as follows:
AC + TR
-------
NRPB
Where:
24
AC = the aggregate Capital of all Receivable Interests on the
date of such computation; provided that if the
Administrative Agent Account has been established pursuant
to Section 6.07 then, solely for purposes of computing the
Receivable Interest Percentage, the aggregate Capital on any
day shall be deemed to be reduced by an amount equal to the
excess, if any, of (i) the aggregate amount of funds then
held in the Administrative Agent Account over (ii) the
aggregate accrued and unpaid Yield, Fees and Servicing Fees.
TR = The Total Reserves on the date of such computation.
NRPB = the Net Receivables Pool Balance on the date of such
computation.
Notwithstanding the foregoing, (i) from and after the date of the Termination
Date until the Final Payout Date, the aggregate Receivable Interests of the
Purchasers shall equal 100% and (ii) from and after the Final Payout Date, the
Receivable Interest Percentage shall be reduced to zero as provided in Section
2.03(c).
"Reduction Amount" has the meaning specified in Section 2.16.
"Register" has the meaning specified in Section 11.03(d).
"Reinvestment Purchase" has the meaning specified in Section 2.01(b).
"Related Security" means with respect to any Receivable:
(i) all security interests or liens and property subject
thereto from time to time purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements
authorized by an Obligor describing any collateral securing such
Receivable;
(ii) all guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting or
securing payment of such Receivable whether pursuant to the Contract
related to such Receivable or otherwise;
(iii) all other books, records and other information (including,
without limitation, computer programs, tapes, discs, punch cards, data
processing software and related property and rights) relating to such
Receivable and the related Obligor;
(iv) all of the Seller's and the Originator's right, title and
interest in and to all Contracts or other agreements or documents that
evidence, secure or otherwise relate to such Receivable;
(v) all of the Seller's right, title and interest in, to and
under the Originator Purchase Agreement including, without limitation,
(i) all rights of the
25
Seller to receive moneys due or to become due under or pursuant to the
Originator Purchase Agreement, (ii) all security interests and
property subject thereto from time to time purporting to secure
payment of monies due or to become due under or pursuant to the
Originator Purchase Agreement, (iii) all rights of the Seller to
receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Originator Purchase Agreement, (iv) claims of the
Seller for damages arising out of or for breach of or default under
the Originator Purchase Agreement, and (v) the right of the Seller to
compel performance and otherwise exercise all remedies thereunder; and
(vi) all Proceeds, products and profits of the foregoing.
"Restricted Payments" has the meaning specified in Section 5.01(o).
"Revolving Credit Agreement" means the credit agreement, dated as of
August [___], 2003, among Medco, the lenders and issuing bank party thereto,
JPMorgan Chase Bank, as administrative agent, and the co-syndication agents and
co-documentation agents party thereto, as amended, restated, supplemented or
otherwise modified from time to time, and any substitute for or replacement of
such credit agreement.
"Sale and Leaseback" means any lease of any property (whether real,
personal or mixed), whether now owned or hereafter acquired, to which the
Originator or any of its Subsidiaries, directly or indirectly, becomes or
remains liable as lessee or as a guarantor or other surety and which the
Originator has sold or transferred or is to sell or to transfer to any other
Person (other than any of its Subsidiaries).
"S&P" means Standard & Poor's Rating Services, a division of
XxXxxx-Xxxx Companies, Inc.
"Scheduled Commitment Termination Date" means, with respect to any
Purchaser Group, August [__], 2004, unless, prior to such date (or the date so
extended pursuant to this definition), upon the Seller's request, made not more
than 60 nor less than 45 days prior to the then Scheduled Commitment Termination
Date, each Committed Purchaser in such Purchaser Group shall in its sole
discretion consent, which consent shall be given not more than 30 days prior to
the then current Scheduled Commitment Termination Date for such Purchaser Group,
to the extension of the Scheduled Commitment Termination Date to a date
occurring up to 364 days after the then current Scheduled Commitment Termination
Date. Each Committed Purchaser hereby agrees to respond to any such request from
the Seller within 30 days of its receipt thereof; provided, however, that any
failure of any Committed Purchaser to respond to the Seller's request for such
extension shall be deemed a denial of such request by such Committed Purchaser.
Notwithstanding the foregoing, the Seller may declare the Scheduled Commitment
Termination Date to have occurred for any Purchaser Group for the reasons, and
in accordance with the procedures, specified in Section 2.18.
"Scotiabank" means The Bank of Nova Scotia, and any successor thereto.
"SEC" means the Securities and Exchange Commission.
26
"Seller" means Medco Health Receivables, LLC, a Delaware limited
liability company, and any successor thereto.
"Seller Obligations" means all present and future indebtedness and
other liabilities and obligations (howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, or due or to become due) of
the Seller to any Purchaser, any Managing Agent, the Administrative Agent and/or
any other Indemnified Party, arising under or in connection with this Agreement
or any other Transaction Document or the transactions contemplated hereby or
thereby, and shall include, without limitation, all Capital, Yield, Fees and
Servicing Fees and all other amounts due or to become due under the Transaction
Documents (whether in respect of fees, expenses, indemnifications or otherwise),
including, without limitation, interest, fees and other obligations that accrue
after the commencement of any bankruptcy, insolvency or similar proceeding with
respect to any Transaction Party (in each case whether or not allowed as a claim
in such proceeding).
"Servicer" means at any time the Person then authorized pursuant to
Section 6.01 to administer and collect Receivables.
"Servicer Replacement Event" has the meaning specified in Section
6.08.
"Servicer Report" means any Monthly Report, Weekly Report or Daily
Report.
"Servicing Fee" has the meaning specified in Section 2.07(a).
"Servicing Fee Payment Date" means the third day of each calendar
month (or, if such day is not a Business Day, the next succeeding Business Day).
"Servicing Fee Rate" has the meaning specified in Section 2.07(a).
"Servicing Fee Reserve" means, on any date, an amount equal to
(OBR x SFRR) + AUSF
where:
OBR = the aggregate Outstanding Balance of all Pool
Receivables as of the end of the Current Calculation
Period.
SFRR = the Servicing Fee Reserve Ratio on such date.
AUSF = the accrued and unpaid Servicing Fee as of such date.
"Servicing Fee Reserve Ratio" means, as of any Monthly Reporting Date
and continuing until (but not including) the next succeeding Monthly Reporting
Date, an amount equal to the product of (i) the Servicing Fee Rate and (ii) a
fraction having as the numerator the
27
Portfolio Turnover Rate as of such earlier Monthly Reporting Date times 30 times
1.25, and as the denominator, 360.
"Settlement Date" for any Receivable Interest means (i) the last day
of each Fixed Period for such Receivable Interest and (ii) following the
occurrence of the Termination Date, each other Business Day specified by the
Administrative Agent (at the direction of any Managing Agent) in a written
notice to the Servicer and each Managing Agent; provided, however, that, in the
case of a Receivable Interest held by a Conduit Purchaser, if Yield with respect
to such Receivable Interest is computed by reference to the CP Rate and no
Liquidation Day exists on the last day of a Fixed Period for such Receivable
Interest, the Settlement Date for such Receivable Interest for such Fixed Period
shall be the third day after the last day of such Fixed Period (or, if such day
is not a Business Day, the next succeeding Business Day).
"Significant Subsidiary" means a Subsidiary that satisfies the
definition of "significant subsidiary", as such term is defined in Regulation
S-X of the SEC, as amended from time to time; provided, however, that for
purposes of the determining whether such Subsidiary is a "significant
subsidiary" under Regulation S-X, the relevant threshold percentage to be used
in determining a "significant subsidiary" shall be 5% (and not as otherwise
specified in Regulation S-X).
"Solvent" means, with respect to any Person, that as of the date of
determination (a) the sum of such Person's debt (including contingent
liabilities) does not exceed all of its property, at a present fair valuation on
a going concern basis; (b) the fair saleable value of the property on a going
concern basis of such Person is not less than the amount that will be required
to pay the probable liabilities on such Person's then existing debts as they
become absolute and matured; (c) such Person's capital is not unreasonably small
in relation to its business or any contemplated or undertaken transaction; and
(d) such Person does not intend to incur, or believe (nor should it reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all of
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability
(irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standard No. 5).
"Special Indemnified Amounts" has the meaning specified in Section
6.06.
"Specified Bankruptcy Opinion Provisions" means the factual
assumptions (including those contained in the factual certificate referred to
therein) and the actions to be taken by the Originator or the Seller, in each
case as specified in the legal opinion of Arent Fox Xxxxxxx Xxxxxxx & Xxxx, PLLC
relating to certain bankruptcy matters delivered on the Closing Date.
"Specific Reserve" means the reserve established by the Servicer (in
accordance with GAAP and, to the extent consistent with GAAP, in a manner
consistent with the practices of the Originator as in effect on the date hereof)
in respect of the Receivables of any specific Obligor that the Servicer has
determined to be a collection risk.
28
"Spin-Off" means the distribution of all the common stock of the
Originator to stockholders of Merck as described in the General Form for
Registration of Securities (Form 10) filed by the Originator with the Securities
and Exchange Commission on May 28, 2003 (registration statement number 1-31312),
as amended.
"Stress Factor" means: (i) during a Rating Level 1 Period, 2.0 and
(ii) at any other time, 2.25.
"Subordinated Note" has the meaning specified in the Originator
Purchase Agreement.
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the ordinary voting power or, in the case of a partnership, more than 50%
of the general partnership interests are, as of such date, owned, controlled or
held. Unless the context otherwise requires, all references to "Subsidiary"
shall mean a Subsidiary of the Originator.
"Tangible Net Worth" means at any time (a) the Outstanding Balance of
all Receivables other than Defaulted Receivables, plus (b) cash and cash
equivalents owned by the Seller, minus (c) the aggregate outstanding Capital
hereunder, minus (d) the outstanding principal balance of the Subordinated Note.
"Taxes" has the meaning specified in Section 2.14.
"Termination Date" means the earliest of (a) the latest occurring
Scheduled Commitment Termination Date for any Purchaser Group, (b) the date
determined pursuant to Section 7.01, (c) the date specified by the Seller on not
less than five (5) Business Days' notice to each Managing Agent and (d) August
[___], 2006.
"Termination Event" has the meaning specified in Section 7.01.
"Total Reserve" means, at any time, an amount equal to the sum of (i)
the Loss Reserve, plus (ii) the Dilution Reserve, plus (iii) the Yield and Fee
Reserve.
"Transaction Documents" means this Agreement, the Originator Purchase
Agreement, the Control Agreements, the Fee Letters, the Asset Purchase
Agreements, the limited liability company agreement of the Seller and all other
instruments, documents and agreements executed and/or delivered in connection
therewith.
"Transaction Party" means any of the Seller, the Originator or (so
long as it is Medco or an Affiliate thereof) the Servicer.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
29
"Unbilled Receivable" means any Receivable that has not been billed to
the Obligor by either the Originator or the Servicer.
"Weekly Report" means a report in substantially the form of, and
containing the information described in, Annex A-2, and such additional
information as any Managing Agent may reasonably request from time to time, duly
completed and furnished by the Servicer to each Managing Agent pursuant to
Section 6.03(b).
"Yield" means, for any Receivable Interest and any Fixed Period, the
sum for each day during such Fixed Period of the following:
YR x C + LF
------
Y
where:
YR = the Yield Rate for such Receivable Interest for such day
C = the Capital of such Receivable Interest on such day
Y = (a) in the case of a Receivable Interest, the Yield
Rate for which is based on the Alternate Base Rate, 365
or 366 as applicable and (b) in the case of any other
Receivable Interest, 360
LF = the Liquidation Fee, if any, for such Receivable
Interest for such Fixed Period;
provided, however, that no provision of this Agreement shall require the payment
or permit the collection of Yield in excess of the maximum permitted by
applicable law; provided, further, that Yield for any Receivable Interest shall
not be considered paid by any distribution to the extent that at any time all or
a portion of such distribution is rescinded or must otherwise be returned for
any reason.
"Yield and Fee Reserve" means, on any date, an amount equal to
[(AC x YFRR) + AUYF] + SFR
where:
AC = the aggregate Capital of all Receivable Interests
at the close of business of the Servicer on such
date.
YFRR = the Yield and Fee Reserve Ratio on such date.
AUYF = accrued and unpaid Yield and Fees on such date.
30
SFR = the Servicing Fee Reserve on such date.
"Yield and Fee Reserve Ratio" means, on any Monthly Reporting Date and
continuing until (but not including) the next Monthly Reporting Date, an amount,
expressed as a percentage, equal to:
YFRR = [(ER x 1.5) + (AEM + PFR)] x (PTR x 30 x 1.25)/360
where:
ER = the one-month Eurodollar Rate as of the end of the Current
Calculation Period
AEM = the Applicable Eurodollar Margin as of the end of the
Current Calculation Period
PFR = the Program Fee Rate (as defined in the Purchaser Fee
Letter) as of the end of the Current Calculation Period
PTR = Portfolio Turnover Rate as of the end of the Current
Calculation Period
"Yield Rate" means, with respect to any Receivable Interest for any
day (i) to the extent such Receivable Interest is funded on such day by a
Conduit Purchaser through the issuance of Promissory Notes, the CP Rate and (ii)
otherwise, the Assignee Rate; provided, however, that at all times following the
occurrence and during the continuation of a Termination Event the Yield Rate for
all Receivable Interests shall be a rate per annum equal to the Alternate Base
Rate in effect from time to time plus 2.00%.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02 Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, as in effect on the date hereof
and not specifically defined herein, are used herein as defined in such Article
9. Unless otherwise expressly indicated, all references herein to "Article,"
"Section," "Schedule" or "Annex" means articles and sections of, and schedules
and annexes to, this Agreement. Headings are for purposes of reference only and
shall not otherwise affect the meaning or interpretation of any provision
hereof. Any reference to any Law shall be deemed to be a reference to such Law
as the same may be amended or re-enacted from time to time. Any reference to any
Person appearing in any of the Transaction Documents shall include its
successors and permitted assigns.
31
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01 Purchase Facility. (a) The Seller may, at its option
from time to time prior to the Termination Date, offer to sell and assign
Receivable Interests to the Purchasers in each Purchaser Group at the applicable
Purchase Price specified pursuant to Section 2.02 (each such sale and
assignment, an "Incremental Purchase"). On the terms and conditions set forth
herein, (i) the Conduit Purchasers, ratably, in accordance with their respective
Conduit Purchase Limits, may, in their sole discretion, purchase the Receivable
Interests so offered for sale by the Seller and (ii) if a Conduit Purchaser in
any Purchaser Group declines to purchase any such Receivable Interest, or if a
Conduit Purchaser's Termination Event has occurred and is continuing with
respect to such Conduit Purchaser, the Committed Purchasers in such Purchaser
Group shall, ratably in accordance with their respective Commitments, severally
and not jointly, purchase such Receivable Interest. Each Incremental Purchase
shall be made among the Purchaser Groups ratably in accordance with their
respective Purchaser Group Limits, except as provided in Section 2.02(b). Under
no circumstances shall an Incremental Purchase be made hereunder if, after
giving effect thereto, (i) the aggregate outstanding Capital would exceed the
Purchase Limit or (ii) the Receivable Interest Percentage would exceed the
Maximum Receivable Interest Percentage, as determined by reference to the
information set forth in the most recent Servicer Report delivered hereunder.
(b) Until the Amortization Date for a Receivable Interest, the
Collections attributable to such Receivable Interest shall be automatically
reinvested in the Pool Receivables and Related Security and Collections with
respect thereto pursuant to (and subject to the priority of payments set forth
in) Section 2.04 (each a "Reinvestment Purchase").
(c) Upon five (5) Business Days' written notice to the
Administrative Agent and each Managing Agent, the Seller may reduce the
Commitments of the Committed Purchasers by an amount equal to $10,000,000 or by
a whole multiple of $1,000,000 in excess thereof; provided that no such
termination or reduction shall be permitted if, after giving effect thereto, the
aggregate Capital would exceed the Aggregate Commitment. Upon any such
reduction, the Commitment of each Committed Purchaser and the Conduit Purchase
Limit of each Conduit Purchaser shall be reduced in an amount equal to such
Committed Purchaser's or Conduit Purchaser's ratable share of the amount of such
reduction. Once reduced, the Commitments shall not be subsequently reinstated
without the consent of each Committed Purchaser.
SECTION 2.02 Making Incremental Purchases. (a) Each Incremental
Purchase hereunder shall be made on notice delivered by the Seller to each
Managing Agent not later than 11:00 A.M. (New York City time) on the second
Business Day prior to the date of such Incremental Purchase. Each such notice
shall specify:
(i) the aggregate amount (which shall not be less than
$5,000,000 and integral multiples of $100,000 in excess thereof)
requested to be paid to the Seller for the Receivable Interests which
are the subject of such Incremental Purchase (the "Purchase Price");
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(ii) the allocation of such Purchase Price among the Purchaser
Groups (which shall be proportional to the respective Conduit Purchase
Limits of the Conduit Purchaser(s) in each Purchaser Group, unless
such purchase is to be made by the Committed Purchasers in a
particular Purchaser Group and the proceeds of such purchase are to be
used solely to repay the Capital of the Receivable Interest of a
Conduit Purchaser pursuant to Section 2.02(b));
(iii) the date of such Incremental Purchase (which shall be a
Business Day); and
(iv) if the Assignee Rate is to apply to any such Receivable
Interest, the requested duration of the initial Fixed Period for such
Receivable Interest.
No more than two Incremental Purchases may be requested by the Seller
during any single calendar month.
Each Conduit Purchaser shall promptly notify its Managing Agent
whether it has determined to make the requested Incremental Purchase on the
terms specified by the Seller. If any Conduit Purchaser has determined not to
fund all or any portion of its share of the Purchase Price for an Incremental
Purchase, the Managing Agent for such Conduit Purchaser shall promptly send
notice of the proposed Incremental Purchase to the Committed Purchasers in such
Conduit Purchaser's Purchaser Group concurrently by telecopier specifying the
date of such Incremental Purchase, the aggregate amount of Capital of the
Receivable Interest being purchased by such Committed Purchasers (which amount
shall be equal to the portion of the Purchase Price that would otherwise have
been funded by the applicable Conduit Purchaser), each such Committed
Purchaser's portion thereof (determined ratably in accordance with their
respective Commitments), whether the Yield for the initial Fixed Period for such
Receivable Interest is calculated based on the Adjusted Eurodollar Rate (which
may be selected only if such notice is given at not later than 11:00 A.M. (New
York City time) on the second Business Day prior to the purchase date) or the
Alternate Base Rate, and the duration of the Fixed Period for such Receivable
Interest (which shall be one day if the Seller has not selected another period
in accordance with the provisions set forth in the definition of "Fixed
Period").
(b) On the date of each such Incremental Purchase, the applicable
Conduit Purchasers and/or Committed Purchasers shall, upon satisfaction of the
applicable conditions set forth in Article III, make available to the Seller in
same day funds an aggregate amount equal to the Purchase Price for the
Receivable Interests which are the subject of such Incremental Purchase, at the
account set forth in the Funds Transfer Letter; provided, however, if such
Incremental Purchase is being made by the Committed Purchasers in a Purchaser
Group following the Amortization Date for a Receivable Interest owned by a
Conduit Purchaser pursuant to clause (i)(a) of the definition of Amortization
Date and any Capital of such Receivable Interest is outstanding on such date of
purchase, the Seller hereby directs such Committed Purchasers to pay the
Purchase Price for such Incremental Purchase (to the extent of such outstanding
Capital) to the applicable Purchaser Group Account, for application to the
reduction of the outstanding Capital of such Receivable Interest.
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(c) Effective on the date of each Purchase, the Seller hereby
sells and assigns to the Purchaser(s) participating in such Purchase, an
undivided percentage ownership interest, to the extent of the Receivable
Interests then being purchased or in respect of which the reinvestment is being
made, in each Pool Receivable then existing or thereafter arising and in the
Related Security and Collections with respect thereto.
(d) No Conduit Purchaser shall participate in an Incremental
Purchase under this Agreement at any time in an amount which would exceed such
Conduit Purchaser's Conduit Purchase Limit less an amount equal to the aggregate
outstanding Capital held by such Conduit Purchaser.
(e) Notwithstanding anything herein to the contrary, a Committed
Purchaser shall not be obligated to participate in an Incremental Purchase if,
after giving effect thereto and the application of the proceeds thereof, the
aggregate Capital held by such Committed Purchaser would exceed an amount equal
to (i) such Committed Purchaser's Commitment less (ii) such Committed
Purchaser's ratable share of the aggregate outstanding Capital held by the
Conduit Purchaser(s) in such Committed Purchaser's Purchaser Group (whether or
not any portion thereof has been assigned by such Conduit Purchaser(s) under an
Asset Purchase Agreement). Each Committed Purchaser's obligation shall be
several, such that the failure of any Committed Purchaser to make available to
the Seller any funds in connection with any Incremental Purchase shall not
relieve any other Committed Purchaser of its obligation, if any, hereunder to
make funds available on the date of such Incremental Purchase, but no Committed
Purchaser shall be responsible for the failure of any other Committed Purchaser
to make funds available in connection with any Incremental Purchase.
SECTION 2.03 Receivable Interest Computation. (a) Upon the payment of
the Purchase Price for any Incremental Purchase hereunder, (i) each Conduit
Purchaser participating in such Purchase shall acquire a Receivable Interest the
initial Capital of which is equal to the portion of the Purchase Price paid by
such Conduit Purchaser and (ii) to the extent the Committed Purchasers in any
Purchaser Group participate in such Purchase, such Committed Purchasers shall
acquire (ratably in accordance with their respective Commitments) a Receivable
Interest the initial Capital of which is equal to the portion of the Purchase
Price paid by such Committed Purchasers.
(b) Each Receivable Interest shall be initially computed on its
date of Purchase. Thereafter until the Amortization Date for such Receivable
Interest, such Receivable Interest shall be automatically recomputed (or deemed
to be recomputed) on each day other than a Liquidation Day. Any Receivable
Interest, as computed (or deemed recomputed) as of the day immediately preceding
the Amortization Date for such Receivable Interest, shall thereafter remain
constant until the Termination Date occurs. From and after the Termination Date
until the Final Payout Date, each Receivable Interest shall be equal to a
fraction (expressed as a percentage) the numerator of which is equal to the
Capital of such Receivable Interest as of the Termination Date and the
denominator of which is equal to the aggregate Capital of all Receivable
Interests as of the Termination Date.
(c) Each Purchase shall constitute a purchase of undivided
percentage ownership interests in each and every Pool Receivable, together with
all Related Security and
34
Collections with respect thereto, then existing, as well as in each and every
Pool Receivable, together with all Related Security and Collections with respect
thereto, which arises at any time after the date of such Purchase. From and
after the Termination Date, the aggregate Receivable Interests of the Purchasers
shall equal 100%. On the Final Payout Date, the Administrative Agent, on behalf
of the Conduit Purchasers and the Committed Purchasers, shall be deemed to have
reconveyed to the Seller all of the Conduit Purchasers' and the Committed
Purchasers' respective right, title and interest in, to and under the Pool
Receivables and Related Security and Collections with respect thereto, and the
Receivable Interests shall accordingly be reduced to zero. Following the Final
Payout Date, the Administrative Agent, on behalf of the Conduit Purchasers and
the Committed Purchasers, shall execute and deliver to the Seller, at the
Seller's expense, such documents or instruments as the Seller may reasonably
request to terminate the Conduit Purchasers' and the Committed Purchasers'
respective interests in the Receivables and Related Security and Collections
with respect thereto. Any such documents shall be prepared by and at the expense
of the Seller.
SECTION 2.04 Application of Collections Prior to Termination Date.
(a) On each Business Day prior to the Termination Date, the Servicer
shall, out of the Collections received prior to such Business Day and not
previously applied pursuant to this Section 2.04 (including, if applicable, any
investment earnings received with respect to funds on deposit in the Collection
Account), apply such Collections in the following order and priority:
(i) set aside on its books and hold in trust for the
Purchasers, the Managing Agents and the Administrative Agent an amount
equal to the aggregate Yield, Fees and Servicing Fees accrued through
such day and not previously set aside, such amount to be allocated
among the Purchasers, the Managing Agents, the Administrative Agent
and the Servicer ratably in accordance with the proportion of such
amounts owing to each such Person;
(ii) if the Servicer Report with the most recent data delivered
hereunder indicates that the Receivable Interest Percentage exceeds
the Maximum Receivable Interest Percentage, either (A) pay to the
Purchasers (ratably in accordance with the outstanding Capital of
their respective Receivable Interests) the amount necessary to cause
the Receivable Interest Percentage to be less than or equal to the
Maximum Receivable Interest Percentage or (B) if the Administrative
Agent Account has been established pursuant to Section 6.07, deposit
to the Administrative Agent Account the amount necessary to cause the
Receivable Interest Percentage to be less than or equal to the Maximum
Receivable Interest Percentage;
(iii) if such day is a Liquidation Day for one or more
Receivable Interests (each a "Liquidating Receivable Interest"), set
aside and hold in trust for the relevant Purchasers an amount equal to
the excess, if any, of (1) the portion of the Capital allocable to
such Liquidating Receivable Interests over (2) the Collections
previously so set aside and allocable to such Capital pursuant to this
Section 2.04(a) and not yet distributed to the applicable Purchasers
hereunder, such amount to be allocated to such Liquidating Receivable
Interests ratably in
35
proportion to the Capital of each; provided, however, that if such day
is a Liquidation Day by reason of the suspension of Reinvestment
Purchases pursuant to Section 2.16, then the amount required to be set
aside pursuant to this clause (iii) shall not exceed the applicable
Reduction Amount;
(iv) if any Seller Obligations (other than Yield, Fees,
Servicing Fees and Capital) are then due and payable by the Seller to
any Indemnified Party, pay to each such Indemnified Party (ratably in
accordance with the amounts owing to each) the Seller Obligations so
due and payable; and
(v) remit any remaining Collections to the Seller as a
Reinvestment Purchase, for the benefit of the Purchasers then holding
Receivable Interests, pursuant to Section 2.01(b).
(b) On each Settlement Date for a Receivable Interest, the Servicer
shall pay to the relevant Purchaser(s) all Yield payable to such Purchaser(s)
pursuant to Section 2.07 out of Collections allocated or set aside for such
purpose pursuant to Section 2.04(a). On each date on which any Fees are payable
pursuant to the Fee Letters, the Servicer shall pay such Fees to the Persons
entitled thereto pursuant to the Fee Letters out of Collections allocated or set
aside for such purpose pursuant to Section 2.04(a). On each Servicing Fee
Payment Date, the Servicer shall pay to itself the accrued and unpaid Servicing
Fee out of Collections allocated or set aside for such purpose pursuant to
Section 2.04(a).
(c) In the event any deposit is made to the Administrative Agent
Account pursuant to Section 2.04(a)(ii)(B), the amount of such deposit shall be
allocated among the Purchaser Groups ratably in proportion to the outstanding
Capital of their respective Receivable Interests. If the amount on deposit in
the Administrative Agent Account exceeds $25,000,000, then on the next
Settlement Date applicable to any Receivable Interest (or such earlier date as
the Servicer may specify upon not less than three Business Days notice to each
Managing Agent), the Servicer shall distribute to each Purchaser then holding a
Receivable Interest such Purchaser's allocable share of such deposit for
application to the reduction of the Capital of such Receivable Interest.
Notwithstanding the foregoing, if on any Business Day after such deposit is made
and prior to the distribution of all or any portion of such deposit pursuant to
this Section 2.04(c), the Servicer delivers a Servicer Report evidencing that
the Receivable Interest Percentage is less than the Maximum Receivable Interest
Percentage, the Servicer may withdraw the Collections so deposited for
application in accordance with Section 2.04(a) to the extent that, after giving
effect to such withdrawal and application, the Receivable Interest Percentage
would not exceed the Maximum Receivable Interest Percentage.
(d) In the event any Collections are set aside in respect of any
Liquidating Receivable Interest pursuant to Section 2.04(a)(iii), the Servicer
shall distribute such Collections to the relevant Purchaser(s) on or prior to
the first Settlement Date for any such Receivable Interest; provided, however,
that if at any time prior to such distribution, such Receivable Interest ceases
to be a Liquidating Receivable Interest, the Servicer need not distribute such
Collections pursuant to this Section 2.04(d) but instead may apply such
Collections in accordance with the provisions of Section 2.04(a).
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(e) Following the occurrence and during the continuation of any
Termination Event or any Involuntary Bankruptcy Event, and at all times during
any Rating Level 3 Period or any Rating Level 4 Period, the Servicer shall (i)
transfer to the Collection Account all Collections set aside or required to be
set aside pursuant to this Section 2.04 by the Business Day following the
Servicer's receipt of such Collections, (ii) make all distributions of such
Collections pursuant to this Section 2.04 by withdrawing such Collections from
the Collection Account on the date such distribution is to be made and (iii) not
permit any withdrawals of such Collections from the Collection Account except
for the purpose of distributing such Collections in accordance with this Section
2.04. Except as provided herein, the Servicer shall not be required to segregate
any amounts set aside by it pursuant to this Section 2.04 from its other funds.
SECTION 2.05 Application of Collections After Termination Date. (a)
On the Termination Date, the Servicer shall deposit to the Collection Account
all Collections held by it on such date (including amounts previously set aside
pursuant to Section 2.04(a)). On each Business Day thereafter until the Final
Payout Date, the Servicer shall deposit to the Collection Account all
Collections received prior to such Business Day that have not previously been
deposited to the Collection Account. The Servicer shall not make any withdrawals
from the Collection Account during such period except for the purpose of
distributing such Collections in accordance with this Section 2.05.
(b) From and after the Termination Date, the Servicer shall apply all
funds on deposit in the Collection Account on any Business Day that have not
been previously applied hereunder (including, without limitation, any investment
earnings received with respect to such funds) in the following order of
priority:
(i) first, pay to the Administrative Agent an amount equal to the
Seller Obligations owing to the Administrative Agent in respect of costs
and expenses incurred in connection with the enforcement of any Transaction
Document or the collection of any amounts due thereunder;
(ii) second, set aside and hold in trust for the Purchasers, the
Managing Agents and the Administrative Agent an amount equal to the
aggregate Yield and Fees and, if the Servicer is a Person other than Medco
or an Affiliate thereof, Servicing Fees accrued through such day and not
previously set aside, such amount to be allocated among the Purchasers, the
Managing Agents, the Administrative Agent and (if applicable) the Servicer
ratably in accordance with the proportion of such amounts owing to each
such Person;
(iii) third, set aside in the Collection Account an amount equal to
the aggregate Capital for all outstanding Receivable Interests (to the
extent not previously set aside), such amount to be allocated among the
Receivable Interests ratably in proportion to the Capital of each;
(iv) fourth, if any Seller Obligations (other than Yield, Fees,
Servicing Fees and Capital) are then due and payable by the Seller to any
Indemnified Party, pay to each
37
such Indemnified Party (ratably in accordance with the amounts owing to
each) the Seller Obligations so due and payable;
(v) sixth, if the Servicer is Medco or an Affiliate thereof, set
aside in the Collection Account the accrued and unpaid Servicing Fee not
previously set aside; and
(vi) seventh, on the Final Payout Date, pay to the Seller any
remaining funds.
(c) On each Settlement Date for a Receivable Interest from and after
the Termination Date, the Servicer shall withdraw from the Collection Account
and pay to the relevant Purchaser all amounts set aside in the Collection
Account in respect of the accrued Yield and the Capital of such Receivable
Interest. On each date on which any Fees are payable pursuant to the Fee
Letters, the Servicer shall pay such Fees to the Persons entitled thereto
pursuant to the Fee Letters out of Collections set aside for such purpose
pursuant to Section 2.05.
(d) On each Servicing Fee Payment Date from and after the Termination
Date, the Servicer shall pay to the Servicer the accrued Servicing Fee out of
Collections set aside for such purpose pursuant to this Section 2.05.
SECTION 2.06 General Settlement Procedures.
(a) Except as otherwise required by applicable law or the relevant
Contract, any payment received from an Obligor of any Receivables shall be
applied as a Collection of the Pool Receivables of such Obligor in the order of
the age of such Receivables, starting with the oldest such Receivable.
(b) If on any day any Pool Receivable (or portion thereof) becomes a
Diluted Receivable, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in the amount of such Diluted Receivable.
(c) If and to the extent the Administrative Agent, any Managing Agent
or any Purchaser shall be required for any reason to pay over to an Obligor any
amount received on its behalf hereunder, such amount shall be deemed not to have
been so received but rather to have been retained by the Seller and,
accordingly, the Administrative Agent, such Managing Agent or such Purchaser, as
the case may be, shall have a claim against the Seller for such amount, payable
when and only to the extent that any distribution from or on behalf of such
Obligor is made in respect thereof.
(d) Within one Business Day after the end of each Fixed Period in
respect of which Yield is computed by reference to the CP Rate, the relevant
Managing Agent shall furnish the Seller with an invoice setting forth the amount
of the accrued and unpaid Yield and Fees for such Fixed Period with respect to
the Receivable Interests held by the Conduit Purchaser(s) in such Managing
Agent's Purchaser Group.
(e) All payments required to be made hereunder to any Purchaser shall
be made by paying such amount to the applicable Purchaser Group Account in
accordance with Section 2.08. Upon receipt of funds, such Managing Agent shall
pay such funds to the related Purchaser(s) owed such funds in accordance with
the records maintained by such Managing
38
Agent. If a Managing Agent shall have paid to any Purchaser any funds that (i)
must be returned for any reason (including any Event of Bankruptcy) or (ii)
exceeds that which such Purchaser was entitled to receive, such amount shall be
promptly repaid to such Managing Agent by such Purchaser.
SECTION 2.07 Yield and Fees. (a) The Servicer shall be entitled to
receive a fee (the "Servicing Fee") of 0.25% per annum (the "Servicing Fee
Rate") on the average daily Outstanding Balance of the Pool Receivables, payable
in arrears on each Servicing Fee Payment Date. Upon three Business Days' notice
to the Managing Agents, the Servicer (if not an Originator, the Seller or its
designee or an Affiliate of the Seller) may, with the prior written consent of
each Managing Agent, elect to be paid, as such fee, another percentage per annum
on the average daily Outstanding Balance of the Pool Receivables; provided,
however, that in no event shall the new Servicing Fee exceed 110% of the actual
costs and expenses of such Servicer. Notwithstanding anything herein to the
contrary, the Servicing Fee shall be payable only from Collections pursuant to,
and subject to the priority of payments set forth in, Sections 2.04 and 2.05. To
the extent such Collections are not sufficient to pay the Servicing Fee in full,
none of the Seller, the Administrative Agent, the Managing Agents or the
Purchasers shall have any liability for the deficiency.
(b) The Seller shall pay to the Administrative Agent and each
Managing Agent certain fees (collectively, the "Fees") in the amounts and on the
dates set forth in (i) the fee letter agreement of even date herewith between
the Seller and the Administrative Agent (as the same may be amended or restated
from time to time, the "Administrative Agent Fee Letter") and (ii) the fee
letter agreement of even date among the Seller, the Administrative Agent and the
Managing Agents (as the same may be amended or restated from time to time, the
"Purchaser Fee Letter").
(c) On each Settlement Date for a Receivable Interest, the Seller
shall pay to the relevant Managing Agent all accrued and unpaid Yield with
respect to such Receivable Interest.
SECTION 2.08 Payments and Computations, Etc. (a) All amounts to be
paid by the Seller or the Servicer to the Administrative Agent, any Managing
Agent or any Purchaser hereunder shall be paid no later than 12:00 noon (New
York City time) on the day when due in same day funds to the applicable
Purchaser Group Account. All amounts to be deposited by the Seller or the
Servicer into the Collection Account, any Purchaser Group Account or any other
account shall be deposited no later than 12:00 noon (New York City time) on the
date when due.
(b) Each of the Seller and the Servicer shall, to the extent
permitted by law, pay interest on any amount not paid or deposited by it when
due hereunder, at an interest rate per annum equal to 2.00% per annum above the
Alternate Base Rate, payable on demand.
(c) All computations of Yield, Fees, and other amounts hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed, except that
computations of interest and Yield based on the Alternate Base Rate shall be
made on the basis of a year of 365 days (or 366, as applicable).
39
Whenever any payment or deposit to be made hereunder shall be due on a day other
than a Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of such payment or deposit. Any computations by the Administrative
Agent or the applicable Managing Agent of amounts payable by the Seller
hereunder shall be binding upon the Seller absent manifest error.
SECTION 2.09 Dividing or Combining Receivable Interests. Either the
Seller or (following a Termination Event or an Incipient Termination Event) the
Administrative Agent may, upon notice to the other party received at least three
Business Days prior to the last day of any Fixed Period in the case of the
Seller giving notice, or up to the last day of such Fixed Period in the case of
the Administrative Agent giving notice, either (i) divide any Receivable
Interest into two or more Receivable Interests having an aggregate Capital equal
to the Capital of such divided Receivable Interest, or (ii) combine any two or
more Receivable Interests originating on such last day or having Fixed Periods
ending on such last day into a single Receivable Interest having a Capital equal
to the aggregate of the Capital of such Receivable Interests; provided, however,
that no Receivable Interest owned by any Conduit Purchaser may be combined with
a Receivable Interest owned by any other Purchaser, and a Receivable Interest
held by the Committed Purchasers in any Purchaser Group may not be combined with
any Receivable Interest held by Purchasers in any other Purchaser Group.
SECTION 2.10 Breakage Costs.
(a) The Seller shall indemnify the Purchasers against any loss or
expense incurred by the Purchasers, either directly or indirectly, as a result
of the failure of any Incremental Purchase to be made for any reason on the date
specified by the Seller pursuant to Section 2.02, including any loss or expense
incurred by the Purchasers by reason of the liquidation or reemployment of funds
acquired by the Purchasers (including funds obtained by issuing Promissory
Notes, obtaining deposits as loans from third parties and reemployment of funds)
to fund such Incremental Purchase.
(b) The Seller further agrees to pay all Liquidation Fees associated
with a reduction of the Capital at any time.
(c) A certificate as to any loss, expense or Liquidation Fees payable
pursuant to this Section 2.10 submitted by any Purchaser, through its Managing
Agent, to the Seller shall be conclusive in the absence of manifest error.
SECTION 2.11 Illegality. Notwithstanding any other provision of this
Agreement, if the adoption of or any change in any Law or in the interpretation
or application thereof by any relevant Official Body shall make it unlawful for
any Purchaser to make or maintain Receivable Interests for which Yield is
calculated by reference to the Adjusted Eurodollar Rate (each a "Eurodollar
Receivable Interest") as contemplated by this Agreement or to obtain in the
interbank eurodollar market the funds with which to make or maintain any such
Eurodollar Receivable Interest, (a) such Purchaser shall promptly notify the
Administrative Agent, its Purchaser Managing Agent and the Seller thereof, (b)
the obligation of such Purchaser to fund or maintain Eurodollar Receivable
Interests or continue Eurodollar Receivable Interests as such shall forthwith be
cancelled and (c) such Purchaser's Receivable Interests then
40
outstanding as Eurodollar Receivable Interests, if any, shall be converted on
the last day of the Fixed Period for such Receivable Interests or within such
earlier period as required by Law into Receivable Interest that accrue Yield
based on the Alternate Base Rate (each a "Base Rate Receivable Interest").
SECTION 2.12 Inability to Determine Eurodollar Rate. Notwithstanding
any other provision of this Agreement, if (i) the Administrative Agent
reasonably determines that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining a rate for
Eurodollar Receivable Interests as provided in the definition of Adjusted
Eurodollar Rate for any Fixed Period or (ii) Committed Purchasers representing
at least a majority of the Aggregate Commitment shall determine (which
determination shall be conclusive) that the rates for the purpose of computing
the Adjusted Eurodollar Rate do not adequately and fairly reflect the cost to
such Committed Purchasers of funding a Eurodollar Receivable Interests that the
Seller has requested be outstanding as a Eurodollar Receivable Interest during
such Fixed Period, the Administrative Agent shall forthwith give telephone
notice of such determination, confirmed in writing, to the Seller and each
Managing Agent at least two Business Days prior to the first day of such Fixed
Period. Unless the Seller shall have notified the applicable Managing Agent upon
receipt of such telephone notice that it wishes to rescind or modify its request
regarding such Eurodollar Receivable Interest, any Receivable Interests that
were requested to be funded as Eurodollar Receivable Interests shall be Base
Rate Receivable Interests and any Receivable Interests that were requested to be
converted into or continued as Eurodollar Receivable Interests shall be
converted into Base Rate Receivable Interests. Until any such notice has been
withdrawn by the Administrative Agent, no further Receivable Interests shall be
funded as, continued as, or converted into, Eurodollar Receivable Interests.
SECTION 2.13 Indemnity for Reserves and Expenses. (a) If the adoption
of or any change in any Law or in the interpretation or application thereof or
compliance by any Indemnified Party with any request or directive (whether or
not having the force of law) from any central bank or other Official Body made
subsequent to the date hereof (other than any such change that relates to Taxes,
which are governed by Section 2.14):
(i) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans or purchases by, or other credit
extended by, or any other acquisition of funds by, any office of such
Indemnified Party which are not otherwise covered by the adjustment to
the Eurodollar Rate for the Eurodollar Rate Reserve Percentage as
contemplated by the definition of "Adjusted Eurodollar Rate"; or
(ii) does or shall impose on such Indemnified Party any other
condition affecting this Agreement or any Receivable Interest or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Indemnified Party of making or maintaining Receivable Interests (or of
maintaining its obligation to make any such Receivable Interest) or to reduce
any amount sum received or receivable by such Indemnified Party hereunder, then,
in any such case, the Seller shall promptly pay such Indemnified Party,
41
upon demand from such Indemnified Party, any additional amounts necessary to
compensate such Indemnified Party for such additional costs or reduction
suffered which such Indemnified Party reasonably deems to be material as
determined by such Indemnified Party with respect to its Receivable Interests. A
certificate as to any additional amounts payable pursuant to this subsection
submitted by such Indemnified Party, through its Managing Agent, to the Seller
setting forth, in reasonable detail, the basis for and the calculation thereof,
shall be conclusive in the absence of manifest error.
(b) If any Indemnified Party shall have determined that the adoption
of any applicable Law or bank regulatory guideline regarding capital adequacy or
any change therein, or any change in the interpretation or administration
thereof by any Official Body, or any request or directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not having
the force of law) of any such Official Body, has or would have the effect of
reducing the rate of return on capital of such Indemnified Party (or its parent)
as a consequence of such Indemnified Party's obligations hereunder or with
respect hereto or otherwise as a consequence of the transactions contemplated
hereby to a level below that which such Indemnified Party (or its parent) could
have achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Indemnified Party to be material, then from time to time, within fifteen
days after demand by such Indemnified Party through its Managing Agent, the
Seller shall pay to such Managing Agent, for the benefit of such Indemnified
Party, such additional amount or amounts as will compensate such Indemnified
Party (or its parent) for such reduction. A certificate as to any additional
amounts payable pursuant to this subsection submitted by such Indemnified Party,
through its Managing Agent, to the Seller setting forth, in reasonable detail,
the basis for and the calculation thereof, shall be conclusive in the absence of
manifest error.
(c) Failure or delay on the part of any Indemnified Party to demand
compensation pursuant to this Section 2.13 shall not constitute a waiver of such
Indemnified Party's right to demand such compensation; provided, however, that
the Seller shall not be required to compensate an Indemnified Party pursuant to
this Section 2.13 for any increased costs or reductions incurred more than 180
days prior to the date that such Indemnified Party notifies the Seller of the
change, event or circumstance giving rise to such increased costs or reductions
and of such Lender's or the Issuing Bank's intention to claim compensation
therefor; provided, further, that, if the change giving rise to such increased
costs or reductions is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.
(d) Upon the occurrence of an Accounting Based Consolidation Event
(as defined the Purchaser Fee Letter) in relation to any Conduit Purchaser, the
Seller shall be obligated to pay the Accounting Based Consolidation Event Fee
(as defined therein) in accordance with the terms thereof.
SECTION 2.14 Indemnity for Taxes. (a) Any and all payments and
deposits required to be made hereunder or under any other Transaction Document
by the Servicer or the Seller shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding net
income, profits or branch profits taxes that are imposed by the
42
United States and franchise, profits, branch profits and net income taxes that
are imposed on an Indemnified Party by the state or foreign jurisdiction under
the laws of which such Indemnified Party is organized or in which it is a
citizen, resident or domiciliary, or the jurisdiction in which any office making
or participating in a purchase hereunder is located, or in each case any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Seller or the Servicer shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to any Indemnified
Party, (i) the Seller shall make an additional payment to such Indemnified
Party, in an amount sufficient so that, after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.14), such Indemnified Party receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Seller or the Servicer, as
the case may be, shall make such deductions and (iii) the Seller or the
Servicer, as the case may be, shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, the Seller agrees to pay any present or future stamp
or other documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any other
Transaction Document or from the execution, delivery or registration of this
Agreement or any other Transaction Document (hereinafter referred to as "Other
Taxes").
(c) The Seller will indemnify each Indemnified Party for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.14) paid by such Indemnified Party and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty days from the date the Indemnified
Party makes written demand therefor (and a copy of such demand shall be
delivered to the Administrative Agent and the Managing Agent for such
Indemnified Party's Group). A certificate as to the amount of such
indemnification submitted to the Seller, the Administrative Agent and the
Managing Agent for such Indemnified Party's Group by such Indemnified Party,
setting forth, in reasonable detail, the basis for and the calculation thereof,
shall be conclusive and binding for all purposes absent manifest error.
(d) Each Purchaser or Participant who is organized outside the United
States (each, a "Non-U.S. Person") shall, prior to the date hereof (or, in the
case of any Person who becomes a Purchaser or a Participant after the date
hereof, prior to the date on which it so becomes a Purchaser or a Participant),
(x) deliver to the Seller and the Administrative Agent such properly completed
and duly executed certificates, documents or other evidence, as required by the
IRC or Treasury regulations issued pursuant thereto, including Internal Revenue
Service Form W-8BEN or Form W-8ECI and any other certificate or statement of
exemption required to establish that such payment is (i) not subject to
withholding under the IRC because such payment is effectively connected with the
conduct by such Indemnified Party of a trade or business in the United States or
(ii) totally exempt from United States tax under a provision of an applicable
tax treaty and (y) upon request of the Seller or the Administrative Agent, and
to the extent it may do so under applicable law, furnish any other government
forms which are necessary or required under an applicable tax treaty or
otherwise by law to reduce or eliminate any withholding tax;
43
provided, however, that in the event that a Non-U.S. Person is classified as
other than a corporation for U.S. federal income tax purposes, such Non-U.S.
Person agrees to provide any other form certificate or statement of exemption
necessary to fully establish such Non-U.S. Person's (and, if applicable, such
Non-U.S. Person's beneficial owners') entitlement to a complete exemption from
withholding of U.S. taxes on all amounts to be received by such Non-U.S. Person
(or, if applicable, such Non-U.S. Person's beneficial owners') pursuant to this
Agreement and the other Transaction Documents. Each such Purchaser that changes
its funding office shall promptly notify the Seller and the Administrative Agent
of such change and, upon written request from the Seller or the Administrative
Agent, shall deliver any new certificates, documents or other evidence required
pursuant to the preceding sentence prior to the immediately following due date
of any payment by the Seller hereunder. Unless the Seller and the Administrative
Agent have received forms or other documents satisfactory to them indicating
that payments hereunder are not subject to United States withholding tax,
notwithstanding paragraph (a), the Seller or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the case
of payments to or for any Indemnified Party organized under the laws of a
jurisdiction outside the United States, and the applicable provisions of
paragraph (g) below shall apply to such Purchaser.
(e) Further, each Non-U.S. Person agrees (i) to deliver to the Seller
and the Administrative Agent, and if applicable, the assigning Purchaser (or, in
the case of a Participant, to the Purchaser from which the related participation
shall have been transferred) two further duly completed and signed copies of any
forms required to be delivered pursuant to Section 2.14(d), or successor and
related applicable forms, on or before the date that any such form expires or
becomes obsolete and promptly after the occurrence of any event requiring a
change from the most recent form(s) previously delivered by it to the Seller and
Administrative Agent, and, if applicable, the assigning Purchaser (or, in the
case of a Participant, to the Purchaser from which the related participation
shall have been transferred) in accordance with applicable U.S. laws and
regulations and (ii) to notify promptly the Seller and the Administrative Agent,
and, if applicable, the assigning Purchaser (or, in the case of a Participant,
the Purchaser from which the related participation shall have been transferred)
if it is no longer able to deliver, or if it is required to withdraw or cancel,
any form or statement previously delivered by it.
(f) Each Purchaser or Participant that is not a Non-U.S. Person shall
deliver to the Seller and the Administrative Agent and, if applicable, the
assigning Purchaser (or, in the case of a Participant, to the Purchaser from
which the related participation shall have been transferred) two duly completed
copies of United States Internal Revenue Service Form W-9 (or applicable
successor form) unless it establishes to the reasonable satisfaction of the
Seller that it is otherwise eligible for an exemption from backup withholding
tax or other applicable withholding tax. Each such Purchaser or Participant
shall deliver to the Seller and the Administrative Agent and, if applicable, the
assigning Purchaser (or, in the case of a Participant, to the Purchaser from
which the related participation shall have been transferred) two further
properly completed and duly executed forms and statements (or applicable
successor forms) at or before the time any such form or statement becomes
obsolete.
(g) The Seller shall not be required to pay any amounts to any
Purchaser in respect of Taxes and Other Taxes pursuant to paragraphs (a), (b)
and (c) above if the obligation to pay such amounts would not have arisen but
for a failure by such Purchaser to comply with
44
the provisions of paragraphs (d) and (f) above unless such Purchaser is unable
to comply with paragraphs (d) and (f) because of (i) a change in applicable law,
regulation or official interpretation thereof or (ii) an amendment, modification
or revocation of any applicable tax treaty or a change in official position
regarding the application or interpretation thereof, in each case after the date
hereof (or, in the case of any Person who became a Purchaser after the date
hereof, after the date on which it so became a Purchaser).
(h) If the Administrative Agent or any Purchaser or Participant
determines, in its sole discretion, that it has received a refund in respect of
taxes paid or indemnified by the Seller, it shall promptly pay such refund to
the Seller, but only to the extent of amounts paid or indemnified by the Seller
with respect to Taxes, provided, however, that the Seller agrees to promptly
return such refund to the Administrative Agent or the applicable Purchaser or
Participant, as the case may be, if it receives notice from the applicable
Purchaser or Participant that such person is required to repay such refund, plus
any penalties, interest or other charges imposed by the relevant governmental
authority. This Section shall not be construed to require the Administrative
Agent or any Purchaser or Participant to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Seller or any other Person.
SECTION 2.15 Security Interest. As security for the performance by
the Seller of all the terms, covenants and agreements on the part of the Seller
(whether as Seller or otherwise) to be performed under this Agreement or any
other Transaction Document, including the punctual payment when due of all
Seller Obligations, the Seller hereby assigns to the Administrative Agent for
its benefit and the ratable benefit of the other Indemnified Parties, and hereby
grants to the Administrative Agent for its benefit and the ratable benefit of
the other Indemnified Parties, a security interest in, all of the Seller's
right, title and interest in and to:
(a) all Receivables, whether now owned and existing or hereafter
acquired or arising, together with all Related Security and Collections
with respect thereto;
(b) all Contracts, whether now owned or existing or hereafter
acquired or arising, together with all Related Security and Collections
with respect thereto;
(c) the Deposit Accounts and the Collection Account, including,
without limitation, (i) all funds and other evidences of payment held
therein and all certificates and instruments, if any, from time to time
representing or evidencing any of such accounts or any funds and other
evidences of payment held therein, (ii) all investment property and other
financial assets held in, or acquired with funds from, such accounts and
all certificates and instruments from time to time representing or
evidencing such investment property and financial assets, (iii) all notes,
certificates of deposit and other instruments from time to time hereafter
delivered or transferred to, or otherwise possessed by, the Administrative
Agent in substitution for any of the then existing accounts and (iv) all
interest, dividends, cash, instruments, financial assets, investment
property and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any and all of such
accounts;
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(d) all other assets of the Seller, whether now owned and existing or
hereafter acquired or arising, including, without limitation, all accounts,
chattel paper, goods, instruments, investment property, deposit accounts
and general intangibles (as those terms are defined in the UCC as in effect
on the date hereof in the State of New York), in which the Seller has any
interest; and
(e) to the extent not included in the foregoing, all Proceeds of any
and all of the foregoing.
SECTION 2.16 Optional Liquidation. The Seller may at any time direct
that Reinvestment Purchases cease for the Receivable Interests of all
Purchasers. Any such direction shall be made by giving the Administrative Agent
and the Servicer at least two Business Days' prior written (including telecopy
or other facsimile communication) notice (each a "Reduction Notice") specifying
the date on which such Reinvestment Purchases shall cease and, if desired, when
such Reinvestment Purchases shall re-commence, identified as when the aggregate
outstanding Capital is reduced by a specified amount (the "Reduction Amount").
If the Seller does not so specify the date on which Reinvestment Purchases shall
re-commence, it may cause Reinvestment Purchases to re-commence at any time
before the Termination Date, subject to the terms and conditions set forth
herein, by notifying the Administrative Agent and the Servicer in writing
(including by telecopy or other facsimile communication) at least one Business
Day before the date on which it desires such Reinvestment Purchases to
re-commence.
SECTION 2.17 Optional Repurchase. The Seller may at any time at its
option elect to repurchase all or any portion of the Receivable Interests, such
repurchase to be made ratably among the Purchasers then holding Receivable
Interests in proportion to the Capital of each. Any such repurchase shall be
made on not less than three (3) Business Days' prior written notice (each a
"Repurchase Notice") specifying the date on which such repurchase shall occur
(the "Repurchase Date") and the aggregate Capital of the Receivable Interest to
be repurchased (the "Repurchase Amount"). On the Repurchase Date, the Seller
shall pay the Repurchase Amount to the Purchasers ratably in accordance with the
outstanding Capital of their respective Receivable Interests.
SECTION 2.18 Termination of Purchaser Groups. If any Indemnified
Party in a Purchaser Group makes a claim for payment pursuant to Section 2.13,
or if any Indemnified Party in a Purchaser Group requests payment of the
Accounting Based Consolidation Event Fee pursuant to (and as such term is
defined in) the Purchaser Fee Letter, then the Seller may, at its option, take
either of the actions specified below.
(i) The Seller may remove such Purchaser Group and terminate
the Commitments of the Committed Purchasers in such Purchaser Group by
paying to the Managing Agent for such Purchaser Group an amount (the
"Payout Amount") equal to the sum of (i) the aggregate Capital held by
the Purchasers in such Purchaser Group, (ii) all Yield accrued and to
accrue thereon through the last day of the applicable Fixed Period(s)
to which such Capital has been allocated, (iii) all accrued and unpaid
Fees owing to the members of such Purchaser Group and (iv) all other
Seller Obligations owing to the members of such Purchaser Group under
the Transaction Documents accrued through the date of such payment.
Any such
46
removal and termination shall be made upon not less than five (5)
Business Days notice delivered by the Seller to the applicable
Managing Agent and the Administrative Agent. The Payout Amount for any
Purchaser Group shall be calculated by the relevant Managing Agent and
notified to the Seller, which calculation shall be conclusive and
binding absent manifest error. Upon such removal and termination, (x)
the members of such Purchaser Group shall cease to be parties to this
Agreement and the Commitments and Conduit Purchase Limits of the
Purchasers in such Purchaser Group shall be reduced to zero and (y)
the Purchase Limit will be reduced by an amount equal to the
Commitments (determined immediately prior to such termination) of the
Committed Purchasers in such Purchaser Group.
(ii) The Seller may declare the Scheduled Commitment Termination
Date to have occurred for all Purchasers in such Purchaser Group. Any
such declaration shall be made upon not less than five (5) Business
Days notice delivered by the Seller to the applicable Managing Agent
and the Administrative Agent. Upon the effectiveness of such
declaration, (w) the Conduit Purchase Limit(s) and Purchaser Group
Limit of such Purchaser Group shall be deemed to have been reduced to
zero and Purchasers in such Purchaser Group shall have no further
right or obligation to make any Purchases hereunder, (x) Amortization
Date shall be deemed to have occurred for all Receivable Interests
held by the Purchasers in such Purchaser Group, (y) the Capital
allocable to such Receivable Interests shall be reduced out of
Collections available for such purpose pursuant to Section 2.04 or
2.05, as applicable and (z) on each date on which such Capital is so
reduced the Purchase Limit shall be deemed to be reduced by a
corresponding amount. Once the Capital of such Receivable Interests
has been reduced to zero and the members of such Purchaser Group shall
have received payment in full of all accrued Yield, Fees and other
Seller Obligations owing to them, the members of such Purchaser Group
shall cease to be parties to this Agreement.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01 Conditions Precedent to Initial Purchase. The initial
Incremental Purchase under this Agreement by each applicable Purchaser is
subject to the conditions precedent that (i) all Fees required to have been paid
on or prior to the Closing Date pursuant to the Fee Letters shall have been paid
in full and (ii) the Administrative Agent and each Managing Agent shall have
received on or before the date of such Incremental Purchase the following, each
(unless otherwise indicated) dated such date, in form and substance satisfactory
to the Administrative Agent and each Managing Agent:
(a) Certified copies of the resolutions of the Board of Directors or
Managers, as the case may be, of each Transaction Party approving each
Transaction Document to which it is a party and certified copies of all
documents evidencing other necessary corporate or limited
47
liability company action and governmental approvals, if any, with respect to
this Agreement and the other Transaction Documents.
(b) A certificate of the Secretary or Assistant Secretary of each
Transaction Party certifying the names and true signatures of the officers of
such Transaction Party authorized to sign the Transaction Documents to which it
is a party.
(c) Acknowledgment copies or time stamped receipt copies (or other
evidence of filing) of proper financing statements, duly filed on or before the
date of such initial purchase under the UCC of all jurisdictions that the
Administrative Agent or any Managing Agent may deem necessary or desirable in
order to perfect the ownership and security interests contemplated by this
Agreement and the Originator Purchase Agreement.
(d) Acknowledgment copies or time stamped receipt copies of proper
financing statements necessary to release all security interests and other
rights of any Person in the Receivables, Contracts or Related Security
previously granted by any Transaction Party or any of their respective
Affiliates.
(e) Completed requests for information, dated on or before the date
of such initial Incremental Purchase, listing all effective financing statements
filed in the jurisdictions referred to in subsection (c) above that name the
Seller or the Originator as debtor, together with copies of such financing
statements (none of which shall cover any Receivables, Contracts, Related
Security or the collateral referred to in Section 2.15 except to the extent the
Administrative Agent shall have received executed termination statements
therefor pursuant to subsection (d) above or is otherwise released).
(f) An opinion of Arent Fox Xxxxxxx Xxxxxxx & Xxxx PLLC, counsel to
the Seller and the Originator, addressed to the Administrative Agent, the
Conduit Purchasers, the Committed Purchasers, the Managing Agents and the Rating
Agencies, regarding substantive consolidation in the event of a bankruptcy of
the Originator and true sale between the Originator and the Seller.
(g) An opinion of Arent Fox Xxxxxxx Xxxxxxx & Xxxx PLLC, special
counsel to the Transaction Parties addressed to the Administrative Agent, the
Conduit Purchasers, the Committed Purchasers, the Managing Agents and the Rating
Agencies, regarding priority of the security interests arising under this
Agreement and the Originator Purchase Agreement and such other matters as any
Managing Agent may reasonably request.
(h) An opinion of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel
to the Transaction Parties, addressed to the Administrative Agent, the Conduit
Purchasers, the Committed Purchasers, the Managing Agents and the Rating
Agencies, regarding the enforceability of the Transaction Documents, certain
corporate matters, perfection of the security interests arising under this
Agreement and the Originator Purchase Agreement and such other matters as any
Managing Agent may reasonably request.
(i) An opinion of general counsel of Medco, addressed to the
Administrative Agent, the Conduit Purchasers, the Committed Purchasers, the
Managing Agents and the Rating
48
Agencies, regarding certain corporate matters and such other matters as any
Managing Agent may reasonably request.
(j) Executed copies of the Fee Letters.
(k) An executed copy of the Funds Transfer Letter.
(l) An executed copy of the Originator Purchase Agreement.
(m) A copy of the limited liability company agreement of the Seller
and the by-laws of Medco, certified by the Secretary or Assistant Secretary of
the applicable Transaction Party.
(n) A copy of the certificate of incorporation or certificate of
formation (as applicable) of each Transaction Party, certified as of a recent
date by the Secretary of State or other appropriate official of the State of
incorporation or formation (as applicable) of such Transaction Party.
(o) A certificate as to the good standing of each Transaction Party
from the Secretary of State or other appropriate official of the State of
incorporation or formation (as applicable) of such Transaction Party, dated as
of a recent date.
(p) The opening pro forma balance sheet of the Seller referred to in
Section 4.01(e).
(q) A completed Monthly Report for the Calculation Period ended June
30, 2003.
(r) Copies of the documentation relating to the Spin-Off and the
related financing transactions;
(s) A certificate from the chief financial officer of the Originator
to the effect that, both as of the Closing Date and immediately after giving
effect to the Incremental Purchase to be made on the Closing Date, the Spin-Off,
the payment of the contemplated dividend to Merck and all related financing
transactions, the Originator and each Significant Subsidiary is and will be
Solvent;
(t) Confirmation that the final ratings of the Revolving Credit
Agreement from each of S&P and Xxxxx'x are not less than the minimum long-term
debt ratings required in order to satisfy the conditions precedent set forth in
the Revolving Credit Agreement; and
(u) Such other documents, instruments, certificates and opinions as
the Administrative Agent or any Managing Agent shall reasonably request.
SECTION 3.02 Conditions Precedent to All Purchases. Each Purchase
(including the initial Incremental Purchase and each Reinvestment Purchase)
hereunder shall be subject to the further conditions precedent that (a) the
Servicer shall have delivered to the Administrative Agent and each Managing
Agent all Servicer Reports required to be delivered
49
hereunder, each duly completed and containing information covering the most
recently ended reporting period for which information is required pursuant to
Section 6.03 and (b) on the date of such Purchase the following statements shall
be true (and acceptance of the proceeds of such Purchase shall be deemed a
representation and warranty by the Seller and the Servicer (each as to itself)
that such statements are then true):
(i) The representations and warranties contained in Sections
4.01 and 4.02 of this Agreement and Section 4.01 of the Originator
Purchase Agreement are true and correct in all material respects
(except that, to the extent any such representation or warranty is
qualified by materiality or Material Adverse Effect, such
representation or warranty must be true and correct in all respects,
subject only to the materiality or Material Adverse Effect
qualification set forth therein) on and as of the date of such
Purchase as though made on and as of such date, and
(ii) No event has occurred and is continuing, or would result
from such Purchase, that constitutes a Termination Event or an
Incipient Termination Event, and
(iii) In the case of any Purchase by a Conduit Purchaser, the
applicable Managing Agent shall not have given the Seller notice (with
a copy to the Administrative Agent) that such Conduit Purchaser has
terminated the Reinvestment Purchases hereunder (unless such notice
has been revoked by such Managing Agent), and
(iv) Medco shall have sold or contributed to the Seller,
pursuant to the Originator Purchase Agreement, all outstanding
Receivables as of such date; and
(c) The Administrative Agent and each Managing Agent shall have
received such other approvals, opinions or documents as it may reasonably
request for purposes of confirming compliance with the foregoing conditions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Seller. The Seller
hereby represents and warrants as follows as of the date hereof and as of the
date of each Purchase hereunder:
(a) The Seller is a limited liability company duly formed, validly
existing and in good standing under the laws of Delaware. The Seller is duly
qualified to do business, and is in good standing, in every other jurisdiction
where the nature of its business requires it to be so qualified, unless the
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect.
(b) The execution, delivery and performance by the Seller of the
Transaction Documents, including the Seller's use of the proceeds of Purchases,
(i) are within the Seller's limited liability company powers, (ii) have been
duly authorized by all necessary limited liability
50
company action, (iii) do not contravene (1) the Seller's certificate of
formation or limited liability company agreement, (2) any law, rule or
regulation applicable to the Seller, (3) any contractual restriction binding on
or affecting the Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property, and
(iv) do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties (except as created pursuant to this Agreement).
Each of the Transaction Documents has been duly executed and delivered by the
Seller.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Official Body is required for the due execution, delivery
and performance by the Seller of the Transaction Documents to which it is a
party or any other document to be delivered thereunder, except for the filing of
UCC financing statements referred to in Section 3.01.
(d) Each of the Transaction Documents to which the Seller is a party
constitutes the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except as such 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) The opening pro forma balance sheet of the Seller as of June 30,
2003, giving effect to the initial Incremental Purchase to be made under this
Agreement, a copy of which has been furnished to the Administrative Agent and
each Managing Agent, fairly presents the financial condition of the Seller as of
such date, in accordance with GAAP. Since its formation no change, occurrence or
development has occurred (including, without limitation, with respect to any
commenced or threatened material litigation or proceeding) that has had or could
reasonably be expected to have a Material Adverse Effect.
(f) There is no pending or (to the best knowledge of the Seller)
threatened action or proceeding affecting the Seller before any Official Body.
The Seller is not in default in any material respect of any order of any
Official Body.
(g) No proceeds of any Purchase will be used for a purpose that
violates or would be inconsistent with, Regulation T, U or X promulgated by the
Board of Governors of the Federal Reserve System from time to time.
(h) Each Receivable treated as or represented to be a Pool Receivable
is owned by the Seller free and clear of any Adverse Claim (other than Adverse
Claims created hereunder). The Purchasers have acquired a valid and perfected
first priority security interest in each Pool Receivable now existing or
hereafter arising and in the Related Security and Collections with respect
thereto, in each case free and clear of any Adverse Claim (other than Adverse
Claims created hereunder). No effective financing statement or other instrument
similar in effect is filed in any recording office listing the Seller as debtor,
covering any asset of the Seller except such as may be filed in favor of the
Administrative Agent in accordance with this Agreement. No effective financing
statement or other instrument similar in effect, is filed in any recording
office listing the Originator as debtor, covering any Receivable, Related
Security or Collections except such as may be filed in favor of the Seller and
assigned to the Administrative
51
Agent in accordance with this Agreement. Prior to giving effect to any transfer
under the Originator Purchase Agreement, all Receivables were payable to the
Originator as principal for its own account. The Originator has no obligation
(whether pursuant to any contract, any requirement of Law or otherwise) to remit
any Collections on the Receivables to any Pharmaceutical Plan or to any other
Person, other than to the Sellers and the Purchasers as provided in the
Originator Purchase Agreement and this Agreement.
(i) Each Servicer Report (if prepared by any Transaction Party or one
of their respective Affiliates, or to the extent that information contained
therein is supplied by any Transaction Party or an Affiliate), information,
exhibit, financial statement, document, book, record or report furnished or to
be furnished in writing at any time (whether before, on or after the date of
this Agreement) by or on behalf of any Transaction Party to the Administrative
Agent, any Managing Agent or any Purchaser in connection with this Agreement is
or will be accurate in all material respects as of its date or (except as
otherwise disclosed to the Administrative Agent, such Managing Agent or such
Purchaser, as the case may be, at such time) as of the date so furnished, and no
such Servicer Report, information, exhibit, financial statement, document, book,
record or report contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to make
the statements contained therein, in the light of the circumstances under which
they were made, not misleading.
(j) The principal place of business and chief executive office of the
Seller and the office where the Seller keeps its records concerning the
Receivables are located at the address or addresses referred to in Section
5.01(b).
(k) The names and addresses of all the Deposit Account Banks together
with the account numbers of the Deposit Accounts at such Deposit Account Banks
are as specified in Schedule III hereto, as such Schedule III may be updated
from time to time pursuant to Section 5.01(g).
(l) Since the date of its formation, the Seller has not used any
company name, tradename or doing-business-as name other than the name in which
it has executed this Agreement. The Seller's Federal Employer Identification
Number is 83-08665.
(m) The Seller was formed on July 10, 2003 and the Seller did not
engage in any business activities prior to the date of this Agreement. The
Seller has no Subsidiaries. Medco directly owns 100% of the membership interests
of the Seller, free and clear of any Adverse Claims.
(n) The Seller is not, and is not controlled by, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or is exempt from all provisions of such Act.
(o) The Seller is Solvent.
(p) With respect to each Receivable treated as or represented to be a
Pool Receivable, the Seller (i) received such Receivable as a contribution to
the capital of the Seller by the Originator or (ii) purchased such Receivable
from the Originator in exchange for payment
52
(made by the Seller to the Originator in accordance with the provisions of the
Originator Purchase Agreement) of cash, an addition to the principal amount of
the Subordinated Note, or a combination thereof in an amount which constitutes
fair consideration and reasonably equivalent value. No such sale or contribution
was made for or on account of an antecedent debt owed by the Originator to the
Seller and no such sale or capital contribution is or may be voidable or subject
to avoidance under any section of the United States Bankruptcy Code.
(q) Each Receivable included in the calculation of the Net
Receivables Pool Balance on any date shall be an Eligible Receivable as of such
date.
(r) The Receivable Interest Percentage does not exceed the Maximum
Receivable Interest Percentage.
(s) No event has occurred and is continuing and no condition exists
which constitutes a Termination Event or Incipient Termination Event.
SECTION 4.02 Representations and Warranties of the Servicer. Medco,
in its capacity as Servicer, hereby represents and warrants as follows as of the
date hereof and as of the date of each Purchase hereunder:
(a) The Servicer is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware, and is duly qualified to do
business, and is in good standing, in every jurisdiction where the nature of its
business requires it to be so qualified, unless the failure to so qualify would
not reasonably be expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Servicer of this
Agreement and any other documents to be delivered by it hereunder (i) are within
the Servicer's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene (1) the Servicer's certificate of
incorporation or by-laws, (2) any Law applicable to the Servicer, (3) any
material contractual restriction binding on or affecting the Servicer or its
property or (4) any order, writ, judgment, award, injunction or decree binding
on or affecting the Servicer or its property, except, in the case of each of
sub-clauses (2) through (4) of this clause (iii), to the extent that such
contravention would not be reasonably expected to have a Material Adverse
Effect, and (iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. This Agreement has been duly
executed and delivered by the Servicer.
(c) 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 the Servicer of this Agreement or
any other Transaction Document to which it is a party.
(d) This Agreement constitutes the legal, valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its terms.
(e) (i) The Servicer has heretofore furnished to the Purchasers its
consolidated balance sheet and statements of income, stockholders'
equity and
53
cash flows (i) for the fiscal years ending, and at, December 29, 2001
and December 28, 2002, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended March 29, 2003. The financial
statements described in clause (i) of this Section 4.02(e) were
reported on by PricewaterhouseCoopers LLP for such fiscal years
ending, and at, December 29, 2001 and December 28 2002, and in clause
(ii) of this Section 4.02(e) were certified by the Servicer's chief
financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations
and cash flows of the Servicer and its consolidated Subsidiaries as of
such dates and for such periods in conformity with GAAP, subject to
year-end audit adjustments and the absence of footnotes in the case of
the statements referred to in clause (ii) above of this Section
4.02(e). The Servicer has heretofore also furnished to the Purchasers
its unaudited pro forma condensed consolidated statement of income,
for its fiscal year ended December 28, 2002, and for its fiscal
quarter ended March 29, 2003 and its unaudited pro forma condensed
consolidated balance sheet at March 29, 2003. Such pro forma financial
statements comply, in all material respects, with the requirements of
Article XI of Regulation S-X of the SEC.
(ii) Since December 28, 2002, there has been no change,
occurrence or development that has had or could reasonably be expected
to have a Material Adverse Effect.
(f) There are no actions, suits or proceedings by or before any
Official Body pending against or, to the knowledge of the Executive Officers,
threatened against or affecting the Servicer or any of its Subsidiaries that (i)
would reasonably be expected to be adversely determined, and (ii) if so
determined either (x) would reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (y) seek to enjoin, unwind
or otherwise materially and adversely affect the transactions contemplated by
the Transaction Documents.
(g) All Obligors have been instructed to remit all their payments in
respect of Receivables directly to a Deposit Account with respect to which a
duly executed Control Agreement is in full force and effect or will be in full
force and effect within 30 days of the Closing Date.
(h) On the date of each Purchase hereunder (and after giving effect
thereto) the Receivable Interest Percentage does not exceed the Maximum
Receivable Interest Percentage.
(i) No event has occurred and is continuing and no condition exists
which constitutes a Termination Event or Incipient Termination Event.
(j) All of the representations and warranties of Medco made pursuant
to the Originator Purchase Agreement are true and correct.
54
ARTICLE V
COVENANTS
SECTION 5.01 Covenants of the Seller. Until the Final Payout Date:
(a) Compliance with Laws, Etc. The Seller will comply in all respects
with all applicable Laws and preserve and maintain its limited liability company
existence, rights, franchises, qualifications, and privileges except to the
extent that the failure so to comply with such Laws or the failure so to
preserve and maintain such rights, franchises, qualifications, and privileges
would not reasonably be expected to have a Material Adverse Effect.
(b) Offices, Records and Books of Account. The Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Receivables at (i) the address of the Seller
specified in Section 11.02 as of the date of this Agreement or (ii) upon 30
days' prior written notice to each Managing Agent, at any other locations in
jurisdictions where all actions reasonably requested by any Managing Agent to
protect and perfect the interests of the Administrative Agent and the Purchasers
in the Receivables and the other assets referred to in Section 2.15 have been
taken and completed. The Seller also will maintain and implement administrative
and operating procedures (including, without limitation, an ability to recreate
records evidencing Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation, records adequate
to permit the daily identification of each Receivable and all Collections of and
adjustments to each existing Receivable).
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. The Seller will, at its expense, (i) timely and fully perform
and comply in all material respects with all provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Receivables and (ii) timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related
Contracts.
(d) Sales, Liens, Etc. The Seller will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim (except for Adverse Claims created hereunder) upon or with respect
to, any Receivable, Related Security, or Collections, or upon or with respect to
any Deposit Account, the Collection Account or any other asset of the Seller, or
assign any right to receive income in respect thereof.
(e) Extension or Amendment of Receivables and Contracts. Except as
provided in Section 6.02(c), the Seller will not, and will not permit the
Originator to, extend, amend or otherwise modify the terms of any Receivable.
(f) Change in Business or Credit and Collection Policy. The Seller
will not make any change in the character of its business or in the Credit and
Collection Policy, except for any such change in a Credit and Collection Policy
that would not (i) impair the collectibility of any Receivables in any material
respect or (ii) otherwise be reasonably likely to have a Material Adverse
Effect.
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(g) Change in Payment Instructions to Obligors. The Seller will not
add or terminate any Deposit Account from those listed in Schedule III to this
Agreement, or make any change in its instructions to Obligors regarding payments
to be made in respect of the Receivables or payments to be made to any Deposit
Account, unless the Administrative Agent shall have received notice of such
addition, termination or change (including an updated Schedule III) and a fully
executed Control Agreement with respect to each new Deposit Account. Each
Deposit Account shall be maintained at all times in the name of the Seller.
(h) Deposits to Deposit Accounts. The Seller will cause all Obligors
to be instructed to remit all their payments in respect of Receivables to
Deposit Accounts directly by wire transfer or electronic funds transfer to the
relevant Deposit Account Bank. If the Seller or the Servicer shall receive any
Collections directly, the Seller shall promptly (and in any event within one
Business Day) cause such Collections to be deposited into a Deposit Account. The
Seller will not permit funds which do not constitute Collections of Receivables
from being deposited into any Deposit Account.
(i) Further Assurances; Change in Name or Jurisdiction of
Organization, etc.
(A) The Seller agrees from time to time, at its expense,
promptly to execute and deliver all further instruments and documents,
and to take all further actions, that may be necessary or desirable,
or that the Administrative Agent or any Managing Agent may reasonably
request, to perfect, protect or more fully evidence the Receivable
Interests purchased under this Agreement and/or security interest
granted pursuant to this Agreement, or to enable the Conduit
Purchasers, the Committed Purchasers, the Managing Agents or the
Administrative Agent to exercise and enforce their respective rights
and remedies under this Agreement. Without limiting the foregoing, the
Seller will, upon the request of the Administrative Agent or any
Managing Agent, execute and file such financing or continuation
statements, or amendments thereto, and such other instruments and
documents, that may be necessary or desirable, or that the
Administrative Agent or any Managing Agent may reasonably request, to
perfect, protect or evidence such Receivable Interests and/or such
security interest.
(B) The Seller authorizes the Administrative Agent to file
financing or continuation statements, and amendments thereto and
assignments thereof, relating to the Receivables and the Related
Security, the related Contracts and the Collections with respect
thereto and the other collateral described in Section 2.15 without the
signature of the Seller. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted
by law.
(C) The Seller shall at all times be organized under the laws of
the State of Delaware and shall not take any action to change its
jurisdiction of organization.
(D) The Seller will not change its name, identity, limited
liability company structure or tax identification number unless (1)
the Administrative Agent shall have received at least thirty (30) days
advance written notice of such
56
change and (2) all actions by the Seller necessary or appropriate to
perfect or maintain the perfection of the Receivable Interests and the
security interest of the Administrative Agent granted pursuant to
Section 2.15 (including, without limitation, the filing of all
financing statements and the taking of such other actions as the
Administrative Agent may request in connection with such change) shall
have been duly taken.
(j) Reporting Requirements. The Seller will cause to be provided to
each Managing Agent the following:
(i) not later than the earlier of (i) 100 days after the
end of each fiscal year of the Originator and (ii) 5 Business
Days after the filing thereof with the SEC, (A) the audited
consolidated balance sheet of the Originator and related
statements of operations, stockholders' equity and cash flows as
of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
reported on by PricewaterhouseCoopers LLP or other independent
public accountants of recognized national standing (without a
"going concern" or like qualification or exception and without
any qualification or exception as to the scope of such audit) to
the effect that such consolidated financial statements present
fairly in all material respects the financial condition and
results of operations of the Originator and its consolidated
Subsidiaries on a consolidated basis, as of such dates and for
such periods, in conformity with GAAP and (B) the consolidated
balance sheet of the Seller and related statements of operations,
stockholders' equity and cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures
for the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects
the financial condition and results of operations of the Seller
as of such dates and for such periods, in conformity with GAAP;
provided that delivery within the time frame specified above of
copies of the Originator's Annual Report on Form 10-K filed with
the SEC shall satisfy the requirements for the delivery of the
Originator's financial statements set forth in this clause (i);
(ii) not later than the earlier of (i) 55 days after the
end of each of the first three fiscal quarters of each fiscal
year of the Originator and (ii) 5 Business Days after the filing
thereof with the SEC, the unaudited consolidated balance sheet of
the Originator and related statements of operations,
stockholders' equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly
in all material respects the financial condition and results of
operations of the Originator and its consolidated Subsidiaries,
on a consolidated basis, as of such dates and for such periods,
in conformity with GAAP, subject to normal year-end audit
adjustments and the absence
57
of footnotes; provided, however, that delivery within the time
frame specified above of copies of Originator's Quarterly Report
on Form 10-Q filed with the SEC shall satisfy the requirements
for the delivery of the Originator's financial statements set
forth in this clause (ii);
(iii) at the time of the delivery of the financial
statements provided for in clause (i) or clause (ii) of this
Section 5.01(j), a certificate of a Financial Officer of the
Originator or the Seller, as applicable, to the effect that, to
the best of such officer's knowledge, no Termination Event or
Incipient Termination Event has occurred and is continuing or, if
any Termination Event or Incipient Termination Event has occurred
and is continuing, specifying the nature and extent thereof;
(iv) as soon as possible and in any event within one
Business Day after obtaining knowledge of the occurrence of each
Termination Event or Incipient Termination Event, a statement of
a Financial Officer of the Seller setting forth details of such
Termination Event or Incipient Termination Event and the action
that the Seller has taken and proposes to take with respect
thereto;
(v) promptly upon a Financial Officer becoming aware
thereof, notice of the occurrence of any ERISA Event that, alone
or together with any other ERISA Events that have occurred and
are then outstanding, would reasonably be expected to result in
liability of the Originator and its Subsidiaries in an aggregate
amount exceeding $5,000,000;
(vi) at least thirty (30) days prior to any change in the
name, jurisdiction of organization, corporate structure or tax
identification number of any Transaction Party, a notice setting
forth the new name, jurisdiction of organization, corporate
structure or tax identification number, as applicable, and the
effective date thereof;
(vii) as soon as possible and in any event no later than
the day of occurrence thereof, notice that the Originator has
stopped selling or contributing to the Seller, pursuant to the
Originator Purchase Agreement, all newly arising Receivables;
(viii) promptly after receipt thereof, copies of all
notices received by the Seller from the Originator under or in
connection with the Originator Purchase Agreement;
(ix) promptly upon learning thereof, notice of any
downgrade in the Debt Rating (or the withdrawal by either S&P or
Xxxxx'x of a Debt Rating) of Medco, setting forth the
Indebtedness affected and the nature of such change (or
withdrawal);
58
(x) promptly after the occurrence thereof any pending or
threatened litigation or other event or condition that has had,
or could reasonably be expected to have, a Material Adverse
Effect;
(xi) promptly upon learning thereof, and in any event no
later than the effective date thereof, notice of any amendment,
waiver, termination or other modification to, or replacement or
substitution for, the Revolving Credit Agreement;
(xii) as soon as possible and in any event within one
Business Day after obtaining knowledge of any event or
circumstance described in any of clauses (ii), (iii) or (iv) of
the definition of "Formulary Rebate Conditions," a statement of
an Executive Officer of the Originator setting forth in
reasonable detail the nature of such event or circumstance;
(xiii) promptly upon the occurrence thereof, notice of any
amendment to the Credit and Collection Policy; and
(xiv) such other information respecting the Receivables or
the condition or operations, financial or otherwise, of any
Transaction Party (including, without limitation, information
regarding any pending or threatened litigation) as the
Administrative Agent or any Managing Agent may from time to time
reasonably request.
(k) Separateness. (i) The Seller shall at all times maintain at least
one independent Manager who (w) is not currently and has not been during the
five years preceding the date of this Agreement an officer, director, manager or
employee of, or a major vendor or supplier of services to, an Affiliate of the
Seller or any Other Medco Company, (x) is not a current or former officer or
employee of the Seller, (y) is not a stockholder or equity owner of any Other
Medco Company or any of their respective Affiliates (except through a mutual
fund or similar pooled investment vehicle) and (z) who (A) has prior experience
as an independent director for a corporation and/or independent manager of a
limited liability company whose charter documents required the unanimous consent
of all independent directors or independent managers, as the case may be,
thereof before such corporation could consent to the institution of bankruptcy
or insolvency proceedings against it or could file a petition seeking relief
under any applicable federal or state law relating to bankruptcy and (B) has at
least three years of employment experience with one or more entities that
provide, in the ordinary course of their respective businesses, or has otherwise
been engaged for at least three years in the business of providing, advisory,
management or placement services to issuers of securitization or structured
finance instruments, agreements or securities.
(ii) The Seller shall not direct or participate in the
management of any other Person's operations.
(iii) The Seller shall conduct its business from an office
separate from that of the Other Medco Companies (but which may be
located in the same facility as one or more of the Other Medco
Companies). The Seller shall have
59
stationery and other business forms separate from that of the Other
Medco Companies.
(iv) The Seller shall at all times be adequately capitalized
in light of its contemplated business.
(v) The Seller shall at all times provide for its own
operating expenses and liabilities from its own funds except that (A)
common overhead expenses may be shared by the Seller and the Other
Medco Companies on a basis reasonably related to use and (B) the
Servicer may pay operating expenses on the Seller's behalf so long as
the Seller promptly reimburses the Servicer for such expenses out of
the Seller's own funds.
(vi) The Seller shall maintain its assets and transactions
separately from those of any other Person, and the Seller shall
reflect such assets and transactions in financial statements separate
and distinct from those of the Other Medco Companies and evidence such
assets and transactions by appropriate entries in books and records
separate and distinct from those of any other Person. The Seller shall
hold itself out to the public under the Seller's own name as a legal
entity separate and distinct from any other Person. The Seller shall
not hold itself out as having agreed to pay, or as being liable,
primarily or secondarily, for, any obligations of any other Person.
(vii) The Seller shall not maintain any joint account with any
Other Medco Company or become liable as a guarantor or otherwise with
respect to any Indebtedness or contractual obligation of any Other
Medco Company. The membership interests of the Seller and any
Indebtedness (whether or not represented by promissory notes) of or
issued by the Seller to the Originator or any of its Subsidiaries may
not be pledged to secure Indebtedness of the Originator or any Other
Medco Company.
(viii) The Seller shall not make any payment or distribution of
assets with respect to any obligation of any other Person or grant an
Adverse Claim on any of its assets to secure any obligation of any
Other Person.
(ix) The Seller shall not make loans, advances or otherwise
extend credit to any other Person except as expressly contemplated by
the Originator Purchase Agreement.
(x) The Seller shall hold regular duly noticed meetings (or
authorize actions by unanimous written consent) of its Board of
Managers, make and retain minutes of such meetings and otherwise
observe all limited liability company formalities.
(xi) The Seller shall have bills of sale (or similar
instruments of assignment) with respect to all assets (other than
Receivables or interests therein acquired under the Originator
Purchase Agreement) purchased from any of the
60
Other Medco Companies, in each case to the extent such bills of sale
would be customarily prepared in transactions with non-Affiliates.
(xii) The Seller shall not engage in any transaction with any
other Person, except as contemplated by this Agreement and the
Originator Purchase Agreement.
(xiii) The Seller shall prepare its financial statements
separately from those of any of the Other Medco Companies and shall
insure that any consolidated financial statements of any Other Medco
Company that are filed with the Securities and Exchange Commission or
any other Official Body or are furnished to any creditors of any Other
Medco Company have notes clearly stating that (A) the Seller is the
owner of the Pool Receivables and is a separate entity and (B) the
Seller's assets will be available first and foremost to satisfy the
claims of the creditors of the Seller.
(xiv) The Seller shall take, or refrain from taking, as the
case may be, all other actions that are necessary to be taken or not
to be taken in order to (x) ensure that the assumptions and factual
recitations set forth in the Specified Bankruptcy Opinion Provisions
remain true and correct with respect to the Seller and (y) comply with
those procedures described in such provisions which are applicable to
the Seller.
(xv) The Seller will not commingle its funds or assets with
those of any other Person or entity. The Seller will provide
separately for its expenses and liabilities from its own funds (except
as provided in paragraph (v) above), and will fairly and reasonably
allocate any expenses associated with services provided by common
employees, office space, or other overhead and administrative expenses
with any affiliate.
(xvi) The Seller will not identify itself as a division of any
other person or entity, and will hold itself out to creditors and the
public as a legal entity separate and distinct from any other entity
and will correct any known misunderstanding regarding its separate
identity.
(xvii) The Seller will transact all business with Affiliates on
an arms' length basis and pursuant to commercially reasonable
agreements.
(xviii) After entering into the transactions contemplated by this
Agreement and the Originator Purchase Agreement, the Seller will not
transfer any of its assets to the Originator other than (i) transfers
for fair or reasonably equivalent consideration and without the intent
to hinder, delay or defraud the Seller's creditors, and (ii)
distributions that are not fraudulent or in violation of applicable
entity law. If, after entering into the transactions contemplated by
this Agreement and the Originator Purchase Agreement, the Originator
transfers any of its assets to the Seller, the Seller will properly
account for such transfers as
61
capital contributions or sales made in accordance with the Originator
Purchase Agreement and its limited liability company agreement, as
applicable.
(l) Transaction Documents. The Seller will not terminate, amend,
waive or modify, or consent to any termination, amendment, waiver or
modification of, any provision of any Transaction Document or grant any other
consent or other indulgence under any Transaction Document, in each case without
the prior written consent of each Managing Agent. The Seller will perform all of
its obligations under the Originator Purchase Agreement and will enforce the
Originator Purchase Agreement in accordance with its terms. The Seller will take
all actions to perfect and enforce its rights and interests (and the rights and
interests of the Administrative Agent and the Purchasers as assignees of Seller)
under the Originator Purchase Agreement as the Administrative Agent may from
time to time reasonably request, including, without limitation, making claims to
which it may be entitled under any indemnity, reimbursement or similar provision
contained in the Originator Purchase Agreement.
(m) Nature of Business. The Seller will not engage in any business or
engage in any transactions other than the purchase of Receivables, Related
Security and Collections from the Originator and the transactions contemplated
by this Agreement and the Originator Purchase Agreement. The Seller will not
create or form any Subsidiary.
(n) Mergers, Etc. The Seller will not merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, other than as contemplated by this Agreement and the
Originator Purchase Agreement.
(o) Distributions, Etc. The Seller will not (A) declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any membership interests or other equity
interests in the Seller, or return any capital to its members or other equity
holders as such, or purchase, retire, defease, redeem or otherwise acquire for
value or make any payment in respect of any membership interests or other equity
of the Seller or any warrants, rights or options to acquire any membership
interests or other equity of the Seller, now or hereafter outstanding, (B)
prepay, purchase or redeem any Indebtedness (other than Indebtedness hereunder),
(C) lend or advance any funds or (D) repay any loans or advances to, for or from
any of its Affiliates (the amounts described in clauses (A) through (D) being
referred to as "Restricted Payments"); provided, however, that, prior to the
Termination Date, the Seller may declare and pay cash dividends to its sole
member, and may make payments in respect of the Subordinated Note, in each case
out of Collections available for such purpose pursuant to Section 2.04 so long
as (i) no Termination Event or Incipient Termination Event shall then exist or
would occur as a result thereof and (ii) any such dividends are in compliance
with all applicable law including the Delaware Limited Liability Company Act,
and have been approved by all necessary and appropriate limited liability
company action of the Seller and its Board of Managers.
(p) Indebtedness. The Seller shall not create, incur, guarantee,
assume or suffer to exist any Indebtedness or other liabilities, whether direct
or contingent, other than (i) as
62
a result of the endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business, (ii) the incurrence
of obligations under this Agreement, (iii) the incurrence of other obligations
pursuant to, and, as expressly contemplated in, the Originator Purchase
Agreement, and (iv) the incurrence of operating expenses in the ordinary course
of business.
(q) Limited Liability Company Agreement. The Seller will not amend,
modify or delete (or permit any amendment, modification or deletion of) (i) the
definition of "Independent Manager" in its limited liability company agreement
as in effect on the date hereof or (ii) any other provision of its limited
liability company agreement as in effect on the date hereof if, pursuant to the
terms thereof, such amendment, modification or deletion requires the consent of
the Independent Manager thereunder.
(r) Tangible Net Worth. The Seller will maintain Tangible Net Worth
at all times equal to at least 3% of the Outstanding Balance of the Pool
Receivables at such time.
(s) Taxes. The Seller will file all material tax returns and reports
required by law to be filed by it and will promptly pay all taxes and
governmental charges at any time owing, except such as are being contested in
good faith by appropriate proceedings and for which appropriate reserves have
been established. The Seller will pay when due any taxes payable in connection
with the Receivables, exclusive of taxes on or measured by income or gross
receipts of the Administrative Agent, the Managing Agents, the Conduit
Purchasers or the Committed Purchasers.
(t) Treatment as Sales. The Seller shall not account for or treat
(whether in financial statements or otherwise) the transactions contemplated by
the Originator Purchase Agreement in any manner other than as the sale and/or
absolute conveyance of Receivables by Medco to the Seller.
(u) Investments. The Seller shall not make any loans to, advances to,
investments in or otherwise acquire any capital stock or equity security of, or
any equity interest in, any other Person.
(v) Control Agreements. Within 30 days of the Closing Date, the
Seller shall cause all Deposit Accounts and the Collection Account to be subject
at all times to a Control Agreement duly executed by the Servicer, the Seller,
the Administrative Agent and the applicable bank at which such account is
maintained.
SECTION 5.02 Audits. Until the Final Payout Date, each of the Seller
and the Servicer will, at their respective expense, from time to time during
regular business hours as requested by the Administrative Agent or any Managing
Agent upon reasonable prior notice, permit the Administrative Agent, any
Managing Agent, or their respective agents or representatives (including
independent public accountants, which may be the Seller's or the Servicer's
independent public accountants), (i) to conduct periodic audits of the
Receivables, the Related Security and the related Contracts, books and records
and collections systems of the Seller or the Servicer, as the case may be, (ii)
to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the
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possession or under the control of the Seller or the Servicer, as the case may
be, relating to Receivables and the Related Security, including, without
limitation, the Contracts, and (iii) to visit the offices and properties of the
Seller or the Servicer, as the case may be, for the purpose of examining such
materials described in clause (ii) above, and to discuss matters relating to
Receivables and the Related Security or the Seller's or the Servicer's
performance under the Transaction Documents or under the Contracts with any of
the officers or employees of the Seller or the Servicer, as the case may be,
having knowledge of such matters. In addition, upon the Administrative Agent's
request (acting either on its own initiative or at the request of any Managing
Agent), the Servicer will, at its expense, appoint independent public
accountants acceptable to the Administrative Agent, or utilize any Managing
Agent's representatives or auditors, to prepare and deliver to the
Administrative Agent and each Managing Agent a written report (each an
"Accountants' Report") with respect to the Receivables and the Servicer Reports
(including, in each case, the systems, procedures and records relating thereto)
on a scope and in a form reasonably requested by the Administrative Agent and
the Managing Agents; provided, however, that, so long as no Termination Event or
Incipient Termination Event has occurred and is continuing, the Administrative
Agent may only request such a report at the Servicer's expense once per calendar
year; and provided, further, that any follow-up audit resulting from a material
discrepancy disclosed in such report shall also be at the Servicer's expense.
SECTION 5.03 Additional Covenants of the Servicer.
(a) Compliance with Laws, Etc. The Servicer will comply in all
respects with all applicable Laws and preserve and maintain its corporate
existence, rights, franchises, qualifications, and privileges except to the
extent that the failure so to comply with such Laws or the failure so to
preserve and maintain such rights, franchises, qualifications, and privileges
would not reasonably be expected to have a Material Adverse Effect.
(b) Records and Books of Account. The Servicer will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables and related
Contracts in the event of the destruction of the originals thereof), and keep
and maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the daily identification of each
Receivable and all Collections of and adjustments to each existing Receivable).
(c) Compliance with Contracts and the Credit and Collection Policy.
The Servicer will (i) timely and fully perform and comply in all material
respects with all provisions, covenants and other promises required to be
observed by it under the Contracts related to the Receivables and (ii) timely
and fully comply in all material respects with the Credit and Collection Policy
in regard to each Receivable and the Contracts.
(d) Extension or Amendment of Receivables and Contracts. Except as
provided in Section 6.02(c), the Servicer will not extend, amend or otherwise
modify the terms of any Receivable.
(e) Change in Credit and Collection Policy. The Servicer will not
make any change in the Credit and Collection Policy, except for any such change
that would not (i) impair
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the collectibility of any Receivables in any material respect or (ii) otherwise
be reasonably likely to have a Material Adverse Effect. In the event that the
Servicer makes any material change to the Credit and Collection Policy, it
shall, promptly following such change, provide the Administrative Agent and each
Managing Agent with an updated Credit and Collection Policy and a summary of all
material changes.
(f) Change in Payment Instructions to Obligors. The Servicer will not
add or terminate any Deposit Account from those listed in Schedule III to this
Agreement, or make any change in its instructions to Obligors regarding payments
to be made in respect of the Receivables or payments to be made to any Deposit
Account, unless the Administrative Agent shall have received notice of such
addition, termination or change (including an updated Schedule III) and a fully
executed Control Agreement with respect to each new Deposit Account. Each
Deposit Account shall be maintained at all times in the name of the Seller.
(g) Deposits to Deposit Accounts. The Servicer will instruct all
Obligors to remit all their payments in respect of Receivables to Deposit
Accounts directly by wire transfer or electronic funds transfer to the relevant
Deposit Account Bank. If the Servicer shall receive any Collections directly,
the Servicer shall promptly (and in any event within one Business Day) cause
such Collections to be either (i) deposited into a Deposit Account or (ii) in
the case of checks received by the Servicer, mailed to a Deposit Account Bank
for deposit into a Deposit Account. The Servicer will not permit funds which do
not constitute Collections of Receivables from being deposited into any Deposit
Account.
(h) Control Agreements. Within 30 days of the Closing Date, the
Servicer shall cause all Deposit Accounts and the Collection Account to be
subject at all times to a Control Agreement duly executed by the Servicer, the
Seller, the Administrative Agent and the applicable bank.
(i) Billing of Receivables. The Servicer shall xxxx all Unbilled
Receivables as soon as practicable under the terms of the relevant Contract, and
shall furnish to the applicable Obligor all supporting data and other
information required to be furnished under the terms of such Contract in order
to cause such Receivable to become due and payable.
(j) Other Covenants. Medco (both individually and in its capacity as
Servicer) shall perform and comply with all covenants required to be performed
or observed by it pursuant to the Originator Purchase Agreement and each other
Transaction Document to which it is a party.
ARTICLE VI
ADMINISTRATION AND COLLECTION
OF RECEIVABLES
SECTION 6.01 Designation of Servicer. The servicing, billing,
administration and collection of the Pool Receivables shall be conducted by the
Servicer so designated hereunder from time to time. Until the Administrative
Agent (with the consent or at the direction of the Majority Managing Agents)
gives notice to the Seller of the designation of a
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new Servicer (which notice may be given at any time following the occurrence and
during the continuation of a Servicer Replacement Event), Medco is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof. Medco may not resign from the obligations
and liabilities hereby imposed on it, unless required to do so by law as
evidenced by an opinion of counsel in form and substance satisfactory to each
Managing Agent. The Administrative Agent (with the consent or at the direction
of the Majority Managing Agents), at any time after the occurrence and during
the continuation of a Servicer Replacement Event, may designate as Servicer any
Person (including itself) to succeed Medco or any successor Servicer, on such
terms and conditions as the Administrative Agent and such successor Servicer
shall agree. The Servicer may, with the prior consent of the Administrative
Agent, subcontract with any other Person for the servicing, administration or
collection of the Receivables. Any such subcontract shall not affect the
Servicer's liability for performance of its duties and obligations pursuant to
the terms hereof. Without limiting the generality of the foregoing, any action
taken or omitted to be taken by any Person that has entered into a subcontract
with the Servicer shall be deemed to be an action or omission by the Servicer
(including, without limitation, for purposes of determining whether any
Receivable is a Diluted Receivable and for purposes of Sections 6.06 and 10.01).
SECTION 6.02 Duties of Servicer. (a) The Servicer shall take or cause
to be taken all such actions as may be necessary or advisable to xxxx and
collect each Pool Receivable from time to time, all in accordance in all
material respects with applicable Laws, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy and the terms of the
Contracts. The Seller, each Purchaser and the Administrative Agent hereby
appoint the Servicer, from time to time designated pursuant to Section 6.01, as
their agent to enforce their respective rights and interests in the Pool
Receivables, the Related Security and the related Contracts. In performing its
duties as Servicer, the Servicer shall exercise the same care and apply the same
policies as it would exercise and apply if it owned such Receivables and shall
act in such manner as it reasonably deems to be in the best interests of the
Purchasers and the Administrative Agent. Following the occurrence and during the
continuation of a Servicer Replacement Event the Administrative Agent (with the
consent or at the direction of the Majority Managing Agents) shall have the sole
right to direct the Servicer to commence or settle any legal action to enforce
collection of any Pool Receivable or any Related Security with respect thereto.
(b) The Servicer shall administer the Collections in accordance with
Article II.
(c) If no Termination Event shall have occurred and be continuing,
the Servicer, may, in accordance with the Credit and Collection Policy, extend
the maturity or adjust the Outstanding Balance of any Pool Receivable as the
Servicer deems appropriate to maximize Collections thereof; provided, however,
that the classification of any such Receivable as a Delinquent Receivable or
Defaulted Receivable shall not be affected by any such extension; provided,
further, that if such Receivable is an Eligible Receivable, the Servicer shall
not amend or modify such Receivable or any term or condition of any Contract
related thereto in a manner that would cause such Receivable to cease to be an
Eligible Receivable; provided, further, that the Servicer shall not, nor permit
the Originator to, amend, modify or waive any term or condition of any term or
condition of any Receivable or any Contract related thereto, unless such
amendment, modification or waiver (i) is made in accordance with the Credit and
Collection
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Policy and (ii) could not reasonably be expected to cause any existing
Receivable to cease to be an Eligible Receivable or otherwise have a Material
Adverse Effect. The Servicer shall notify each Managing Agent of any such
extension or adjustment that affects Pool Receivables having an aggregate
Outstanding Balance of $50,000,000 or more. Following the occurrence and during
the continuation of a Termination Event, the Servicer may grant such extensions
or adjustments only with the prior written consent of the Administrative Agent
(acting with the consent or at the direction of the Majority Managing Agents).
In no event shall the Servicer be entitled to make any Purchaser, any Managing
Agent or the Administrative Agent a party to any litigation involving the
Transaction Documents or the Receivables without such Purchaser's, such Managing
Agent's or the Administrative Agent's prior written consent.
(d) The Servicer shall hold in trust for the Seller, the
Administrative Agent, the Managing Agents and each Purchaser, in accordance with
their respective interests, all documents, instruments and records (including,
without limitation, computer tapes or disks) which evidence or relate to Pool
Receivables or Related Security. The Servicer shall xxxx the Seller's and the
Originator's master data processing records evidencing the Pool Receivables with
a legend, reasonably acceptable to the Administrative Agent, evidencing that
Receivable Interests therein have been sold. At the request of the
Administrative Agent following a Termination Event or Involuntary Bankruptcy
Event, the Servicer shall xxxx each Contract and each invoice which evidence or
relate to Pool Receivables with a legend, reasonably acceptable to the
Administrative Agent, evidencing that Receivable Interests therein have been
sold and shall deliver to the Administrative Agent a copy (which may be in
electronic form) of each invoice evidencing each Receivable.
(e) The Servicer shall, as soon as practicable following receipt and
identification thereof, and in any event within one Business Day, turn over to
the Seller or such other Person as may be entitled thereto any cash collections
or other cash proceeds received in the Deposit Accounts and not constituting
Collections of Receivables.
SECTION 6.03 Reports. (a) Monthly Report. No later than 4:00 p.m.,
New York City time, on each Monthly Reporting Date, the Servicer shall deliver
to each Managing Agent and the Seller a monthly report, substantially in the
form of Annex A-1, containing the information listed in Annex A-1 with respect
to the immediately preceding Calculation Period and such other information as
the Administrative Agent or any Managing Agent may reasonably request.
(b) Weekly Reports. During any Rating Level 2 Period, the Servicer
shall deliver to each Managing Agent and the Seller, no later than 11:00 a.m.,
New York City time, on the second Business Day of each calendar week, a Weekly
Report containing the information listed in Annex A-2 with respect to the
immediately preceding calendar week, and such other information as the
Administrative Agent or any Managing Agent may reasonably request.
(c) Daily Reports. During any Rating Level 3 Period or Rating Level 4
Period, the Servicer shall deliver to each Managing Agent and the Seller, no
later than 11:00 a.m., New York City time, on each Business Day, a Daily Report
setting forth total Collections received and Receivables originated during the
immediately preceding Business Day, the Net
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Receivables Pool Balance at the end of the immediately preceding Business Day,
and such other information as the Administrative Agent or any Managing Agent may
reasonably request.
(d) Reports following Termination Event. On each Business Day after
the occurrence of a Termination Event, to the extent the Servicer is not
otherwise required to deliver Daily Reports pursuant to this Section 6.03, the
Servicer shall deliver to each Managing Agent a daily report setting forth
Collections received on the previous Business Day and the Outstanding Balance of
Eligible Receivables as of the close of business on the previous Business Day,
and such other information as the Administrative Agent or any Managing Agent may
reasonably request.
(e) Transmission of Servicer Reports. The Servicer shall transmit
each Servicer Report to each Managing Agent by electronic mail. In addition, the
Servicer shall transmit a copy of each such Servicer Report to the Managing
Agents by facsimile (certified by a Financial Officer of the Servicer or such
other employee of the Servicer as shall have primary responsibility for the
preparation of such report and shall have been authorized to certify Servicer
Reports hereunder by a Financial Officer).
(f) Notice of Termination Events. The Servicer shall provide to each
Managing Agent, promptly, and in any event within one Business Day after the
Servicer obtains knowledge thereof, notice of any Termination Event or Incipient
Termination Event.
(g) Notice of Downgrades. Promptly upon learning thereof, the
Servicer shall provide to each Managing Agent notice of any downgrade in the
Debt Rating (or the withdrawal by either S&P or Xxxxx'x of a Debt Rating) of the
Originator, setting forth the Indebtedness affected and the nature of such
change (or withdrawal).
(h) Other Information. The Servicer shall provide to each Managing
Agent, promptly upon request, such other information respecting the Receivables
or the condition or operations, financial or otherwise, of the Servicer
(including, without limitation, information regarding any pending or threatened
litigation) as the Administrative Agent or any Managing Agent may from time to
time reasonably request.
SECTION 6.04 Certain Rights of the Administrative Agent. (a) At any
time following the occurrence and during the continuation of (i) a Termination
Event, (ii) an Involuntary Bankruptcy Event, (iii) Rating Level 3 Period or (iv)
Rating Level 4 Period, the Administrative Agent may have each Deposit Account
transferred into the name of the Administrative Agent and/or assume exclusive
control of the Deposit Accounts, and may take such actions to effect such
transfer or assumption as it may determine to be necessary or appropriate
(including, without limitation, delivering the notices attached to the Control
Agreements).
(b) At any time following the occurrence and during the continuation
of a Termination Event or a Rating Level 4 Period:
(i) At the Administrative Agent's request (acting on its own
initiative or at the direction of the Majority Managing Agents) and at
the Seller's expense, the Servicer shall (and if the Servicer shall
fail to do so within three Business
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Days, the Administrative Agent may) notify each Obligor of Receivables
of the ownership of Receivable Interests under this Agreement and
direct that payments be made directly to the Administrative Agent or
its designee.
(ii) At the Administrative Agent's request (acting on its own
initiative or at the direction of the Majority Managing Agents) and at
the Seller's or the Servicer's expense, the Seller and the Servicer
shall (A) assemble all of the documents, instruments and other records
(including, without limitation, computer tapes and disks) that
evidence or relate to the Receivables and the related Contracts and
Related Security, or that are otherwise necessary or desirable to
collect the Receivables, and shall make the same available to the
Administrative Agent at a place selected by the Administrative Agent
or its designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections
of Receivables in a manner acceptable to the Administrative Agent and,
promptly upon receipt, remit all such cash, checks and instruments,
duly indorsed or with duly executed instruments of transfer, to the
Administrative Agent or its designee.
(c) Each of the Seller and the Servicer authorizes the Administrative
Agent, and hereby irrevocably appoints the Administrative Agent as its
attorney-in-fact coupled with an interest, with full power of substitution and
with full authority in place of the Seller or the Servicer, following the
occurrence and during the continuation of a Termination Event or any Rating
Level 4 Period, to take any and all steps in the Seller's or the Servicer's name
and on behalf of the Seller or the Servicer that are necessary or desirable, in
the determination of the Administrative Agent, to collect amounts due under the
Receivables, including, without limitation, endorsing the Seller's, the
Servicer's or the Originator's name on checks and other instruments representing
Collections of Receivables and enforcing the Receivables and the Related
Security and related Contracts.
SECTION 6.05 Rights and Remedies. (a) If the Servicer or the Seller
fails to perform any of its obligations under this Agreement, the Administrative
Agent may (but shall not be required to) itself perform, or cause performance
of, such obligation; and the Administrative Agent's costs and expenses
reasonably incurred in connection therewith shall be payable by the Servicer or
the Seller, as applicable.
(b) The Seller and the Originator shall perform their respective
obligations under the Contracts related to the Receivables to the same extent as
if Receivable Interests had not been sold and the exercise by the Administrative
Agent on behalf of the Conduit Purchasers, the Managing Agents and the Committed
Purchasers of their rights under this Agreement shall not release the Originator
or the Seller from any of their duties or obligations with respect to any
Receivables or related Contracts. None of the Administrative Agent, the Conduit
Purchasers, the Managing Agents or the Committed Purchasers shall have any
obligation or liability with respect to any Receivables or related Contracts,
nor shall any of them be obligated to perform the obligations of the Seller or
the Originator thereunder.
(c) The Administrative Agent's rights and powers under this Article
VI shall not subject the Administrative Agent to any liability if any action
taken by it proves to be
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inadequate or invalid, nor shall such powers confer any obligation whatsoever
upon the Administrative Agent.
SECTION 6.06 Indemnities by the Servicer. Without limiting any other
rights that the Indemnified Parties may have hereunder or under applicable law,
and in consideration of its appointment as Servicer, the Servicer hereby agrees
to indemnify each Indemnified Party from and against any and all damages,
losses, claims, liabilities, deficiencies, costs, disbursements and expenses,
including, without limitation, interest, penalties, amounts paid in settlement
and reasonable attorneys' fees (all of the foregoing being collectively referred
to as "Special Indemnified Amounts") arising out of or resulting from any of the
following (excluding, however, (a) Special Indemnified Amounts to the extent a
final non-appealable judgment of a court of competent jurisdiction finds that
such Special Indemnified Amounts resulted from gross negligence or willful
misconduct on the part of such Indemnified Party and (b) any income taxes or any
other tax or fee measured by income incurred by such Indemnified Party arising
out of or as a result of this Agreement or the ownership of Receivable Interests
or in respect of any Receivable or any Contract):
(i) any representation, warranty, certification, report or
other statement made or deemed made by the Servicer under or in
connection with this Agreement or any other Transaction Document which
shall have been incorrect in any respect when made or deemed made;
(ii) the failure by the Servicer to comply with any applicable
Law with respect to any Receivable or Contract;
(iii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables, the Contracts and the Related Security and
Collections in respect thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;
(iv) any failure of the Servicer to perform its duties or
obligations in accordance with the provisions of this Agreement or any
other Transaction Document;
(v) the commingling of Collections of Receivables at any time
by the Servicer or any of its Affiliates (other than the Seller) with
other funds;
(vi) any action by the Servicer (other than an action required
by the Transaction Documents) reducing or impairing the rights of the
Administrative Agent, the Conduit Purchasers or the Committed
Purchasers with respect to any Receivable or the value of any
Receivable;
(vii) any Servicing Fees or other costs and expenses payable to
any replacement Servicer, to the extent in excess of the Servicing
Fees payable to Medco in its capacity as Servicer hereunder;
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(viii) any claim brought by any Person other than an Indemnified
Party arising from any activity by the Servicer or its Affiliates in
servicing, administering, billing or collecting any Receivable; or
(ix) any change in the Credit and Collection Policy which
impairs the collectibility of any Receivable or the ability of the
Servicer to perform its obligations under this Agreement.
Notwithstanding anything to the contrary in this Agreement, solely for
purposes of the Servicer's indemnification obligations in clauses (i) and (iv)
of this Section 6.06, any representation, warranty or covenant qualified by the
occurrence or non-occurrence of a Material Adverse Effect or similar concepts of
materiality shall be deemed to be not so qualified. It is expressly agreed and
understood by the parties hereto (x) that the foregoing indemnification is not
intended to, and shall not, constitute a guarantee of collectibility or payment
of the Receivables and (y) that nothing in this Section 6.06 shall require the
Servicer to indemnify any Person for Receivables that are not collected, not
paid or uncollectible solely on account of the insolvency, bankruptcy, or
financial inability to pay of the applicable Obligor except to the extent of any
Indemnified Amounts arising from the improper characterization of any such
Receivables as Eligible Receivables.
SECTION 6.07 Administrative Agent Account. (a) At the request of the
Administrative Agent, upon the earliest to occur of (i) 30 days after the
commencement of a Ratings Xxxxx 0 Xxxxxx, (xx) two Business Days after the
commencement of a Ratings Xxxxx 0 Xxxxxx xx Xxxxxxx Xxxxx 0 Xxxxxx, (xxx) the
Termination Date or (iv) the occurrence and continuance of any Termination Event
or any Involuntary Bankruptcy Event, the Servicer shall (and if the Servicer
fails to do so, the Administrative Agent may) cause to be established with
Citibank (or another bank satisfactory to each Managing Agent) in the name of
the Administrative Agent, a segregated account (the "Administrative Agent
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Purchasers. Upon the establishment of
such account, such account shall constitute the "Collection Account" for all
purposes hereunder. The Servicer shall deliver, or cause to be delivered to the
Administrative Agent, as soon as practicable and in any event no later than two
Business Days after such Administrative Agent Account is required to be
established as provided above, a Control Agreement with respect to such account
in substantially the form attached as Annex B-2 or in such other form as the
Administrative Agent may approve, duly executed by the Seller, the Servicer and
the bank at which such account is maintained.
(b) Each of the Seller and the Servicer agrees that the
Administrative Agent shall have exclusive dominion and control over the
Administrative Agent Account and all monies, instruments and other property from
time to time deposited in or credited to the Administrative Agent Account;
provided, however, that, until notified to the contrary by the Administrative
Agent, the Servicer shall have the right to withdraw funds from the
Administrative Agent Account for application in accordance with Sections 2.04 or
2.05, as applicable. The Servicer shall cause the Administrative Agent Account
to be subject at all times to a Control Agreement, duly executed by the Seller,
the Servicer, the Administrative Agent and the bank at which the Administrative
Agent Account is maintained.
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(c) The Servicer may invest funds on deposit in the Administrative
Agent Account, reinvest proceeds of any such investments which may mature or be
sold, and invest interest or other income received from any such investments, in
each case in such Permitted Investments as the Servicer may select; provided,
however, that each such Permitted Investment shall have a maturity date no later
than the next succeeding Settlement Date. Such proceeds, interest or income
which are not so invested or reinvested in Permitted Investments shall, except
as otherwise provided in this Agreement, be deposited and held in the
Administrative Agent Account. Neither the Administrative Agent nor any of its
Affiliates shall be liable to the Seller, the Servicer or any other Person for,
or with respect to, any decline in value of amounts on deposit in the
Administrative Agent Account. Permitted Investments from time to time purchased
and held pursuant to this Section 6.07 shall be referred to as "Collateral
Securities" and shall, for purposes of this Agreement, constitute part of the
funds held in the Administrative Agent Account in amounts equal to their
respective outstanding principal amounts. Each such Permitted Investment shall
be made in the name of the Administrative Agent or its designee.
(d) Following the occurrence of any Termination Event, the
Administrative Agent may, at any time or from time to time after funds are
either deposited in the Administrative Agent Account or invested in Collateral
Securities, and after selling, if necessary, any Collateral Securities, withdraw
funds then held in the Administrative Agent Account and remit the same to the
respective Purchaser Group Account for each Purchaser Group (ratably in
proportion to the Capital held by the Purchasers in each such Purchaser Group
or, to the extent no such Capital remains outstanding, in proportion to the
remaining Seller Obligations then owing to the members of each such Purchaser
Group). The Seller agrees that Permitted Investments are of a type customarily
sold on a recognized market and, accordingly, no notice of sale of any Permitted
Investments shall be required. To the extent notice of sale of any Collateral
Securities shall be required by law, at least ten days' notice to the Seller of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Administrative Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(e) Except as expressly provided herein, the Administrative Agent
shall have the sole right of withdrawal with respect to the Administrative Agent
Account. None of the Seller, the Servicer or any Person claiming on behalf of or
through the Seller or the Servicer shall have any right to withdraw any of the
funds held in the Administrative Agent Account except, in the case of the
Servicer, for withdrawals made in accordance with Section 2.04 or 2.05, as
applicable. The Administrative Agent may at any time terminate the Servicer's
right to make withdrawals from the Administrative Agent Account. In such event,
the Administrative Agent shall make all withdrawals and distributions from the
Administrative Agent Account required to be made pursuant to Section 2.04 or
2.05, as applicable, that would otherwise be made by the Servicer.
(f) The Administrative Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Administrative Agent Account
and shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Administrative Agent
accords its own property, it being understood that the
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Administrative Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any such funds.
(g) The Servicer shall cause the bank at which the Administrative
Agent Account is maintained to deliver a duplicate copy of all statements
relating to the Administrative Agent Account directly to the Administrative
Agent.
(h) On the Final Payout Date, any funds remaining on deposit in the
Administrative Agent Account shall be paid to the Seller.
SECTION 6.08 Servicer Replacement Event. At any time following the
occurrence and during the continuation of (i) any Termination Event or (ii) a
Rating Level 4 Period (each, a "Servicer Replacement Event"), the Administrative
Agent may (with the consent or at the direction of the Majority Managing Agents)
designate another Person to succeed Medco as the Servicer. If replaced as
Servicer, Medco agrees that it will (i) terminate, and cause each existing
sub-servicer to terminate, its collection activities in a manner and to the
extent requested by the Administrative Agent to facilitate the transition to a
new Servicer and (ii) transfer to the Administrative Agent (or its designee), or
(to the extent permitted by applicable Law and contract) license to the
Administrative Agent (or its designee) the use of, all software used in
connection with the billing and collection of the Receivables. To the extent any
such transfer or license would require the payment of any license fee or other
amount the Servicer agrees to pay such fee or other amount out of its own funds
promptly upon demand by the Administrative Agent. The Servicer shall cooperate
with and assist any successor Servicer in the performance of its
responsibilities as Servicer (including, without limitation, providing access
to, and transferring, to such successor Servicer all records related to the
Receivables and allowing (to the extent permitted by applicable law and
contract) the successor Servicer to use all licenses, hardware or software
necessary or desirable to collect or obtain or store information regarding the
Receivables). Notwithstanding its removal as Servicer, Medco irrevocably agrees
(to the extent requested to do so by the Administrative Agent) (i) to continue
to xxxx the Receivables and to provide all supporting data required to be
delivered to, or requested by, the Obligors pursuant to the Contracts and (ii)
to act as the data-processing agent for any successor Servicer, in each case in
substantially the same manner as Medco conducted such functions while it acted
as the Servicer.
ARTICLE VII
TERMINATION EVENTS
SECTION 7.01 Termination Events. If any of the following events (each
a "Termination Event") shall occur and be continuing:
(a) any Transaction Party shall fail to make any payment or deposit
required to be made by it hereunder in respect of Capital when due; or any
Transaction Party shall fail to make any other payment or deposit required to be
made by it hereunder or under any of the Transaction Documents when due
hereunder or thereunder and such failure shall remain unremedied for one
Business Day; or
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(b) any representation, warranty, certification or statement made by
any Transaction Party in this Agreement, any other Transaction Document to which
it is a party or in any other document delivered pursuant hereto or thereto
shall prove to have been incorrect in any material respect (or, to the extent
any such representation or warranty is qualified by materiality or Material
Adverse Effect, such representation or warranty shall prove to have been
incorrect in any respect subject only to the materiality or Material Adverse
Effect qualification set forth therein) when made or deemed made; or
(c) any Transaction Party shall fail to perform or observe (A) any
term, covenant or agreement contained in Section 5.01(a) (as to maintenance of
existence only), 5.01(d), 5.01(j)(iv), 5.01(n) or 5.01(v) of this Agreement or
Section 5.01(a) (as to maintenance of existence only), 5.01(d) or 5.01(l)(iv) of
the Originator Purchase Agreement or (B) any other term, covenant or agreement
contained in this Agreement or any other Transaction Document on its part to be
performed or observed and, solely in the case of this clause (B), such failure
shall remain unremedied for ten (10) days after such Transaction Party has
knowledge or receives notice thereof; or
(d) (i) any Transaction Party shall fail to make any payment (whether
of principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable; or (ii) any
event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity, other than at the election of the Originator or
any Subsidiary, or that, subject to any applicable grace period, enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided, however, that this clause (d)(ii) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness;
(e) any Event of Bankruptcy shall occur with respect to any
Transaction Party; or
(f) the Administrative Agent, on behalf of the Purchasers, shall, for
any reason, fail or cease to have a valid and perfected first priority security
interest in the Receivables and Related Security and Collections with respect
thereto or there shall exist any Adverse Claims (except as created in favor of
the Seller pursuant to the Originator Purchase Agreement or in favor of the
Administrative Agent and the Purchasers pursuant to this Agreement) on the
Receivables or the Related Security or Collections with respect thereto; or
(g) any Change of Control shall occur or the Originator shall cease
to own directly 100% of the issued and outstanding Equity Interests of the
Seller; or
(h) there shall have occurred since the Closing Date any event or
condition which has had or could reasonably be expected to have a material
adverse effect on (A) the ability of any Transaction Party to perform its
obligations under the Transaction Documents or (B) the collectibility of the
Receivables; or
74
(i) the Receivable Interest Percentage exceeds the Maximum Receivable
Interest Percentage unless, within two Business Days of obtaining notice or
knowledge thereof, the Seller reduces the Capital from previously received
Collections or other funds available to the Seller so as to reduce the
Receivable Interest Percentage to less than or equal to the Maximum Receivable
Interest Percentage; or
(j) the average of the Dilution Ratios for any three consecutive
Calculation Periods exceeds 4.50%; or
(k) the average of the Default Ratios for any three consecutive
Calculation Periods exceeds 4.50%; or
(l) the average of the Delinquency Ratios for any three consecutive
Calculation Periods exceeds 5.25%; or
(m) the average of the Loss-to-Liquidation Ratios for any twelve
consecutive Calculation Periods exceeds 1.00%; or
(n) the average of the Portfolio Turnover Rates for any three
consecutive Calculation Periods exceeds 8; or
(o) any Transaction Party receives notice or becomes aware that (i) a
notice of federal tax lien has been filed against any Transaction Party or (ii)
a notice of lien has been filed against any Transaction Party under Section
412(n) of the IRC or Section 302(f) of ERISA for a failure to make a required
installment or other payment to a plan to which Section 412(n) of the IRC or
Section 302(f) of ERISA applies; or
(p) a "Termination Event" shall occur under (and as defined in) the
Originator Purchase Agreement; or
(q) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 or, in the case of the Seller, in an aggregate
amount in excess of $25,000 (except in each case to the extent covered by
insurance or other right of reimbursement or indemnification), or which have or
would reasonably be expected to have a Material Adverse Effect, shall be
rendered against the Originator, the Seller, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 60 consecutive
days during which execution shall not be effectively stayed or bonded pending
appeal;
(r) any of this Agreement or the Originator Purchase Agreement shall
cease, for any reason, to be in full force and effect, or any Transaction Party
shall so assert in writing or any Transaction Party shall otherwise seek to
terminate or disaffirm its obligations under any such Transaction Document; or
(s) any Financial Covenant Default shall occur; or
(t) an ERISA Event shall have occurred and shall be outstanding that,
when taken together with all other ERISA Events that have occurred and are then
outstanding, would
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reasonably be expected to result in liability of the Originator and its
Subsidiaries in an aggregate amount exceeding $25,000,000, individually or in
the aggregate;
then, and in any such event, the Administrative Agent may, in its discretion,
and shall, at the direction of any Managing Agent or the Majority Committed
Purchasers, declare the Termination Date to have occurred upon notice to the
Seller (in which case the Termination Date shall be deemed to have occurred);
provided, however, that the Termination Date shall occur automatically upon the
occurrence of any Event of Bankruptcy with respect to any Transaction Party
without any requirement for the giving of notice. Upon any such declaration or
upon such automatic occurrence, the Purchasers, the Managing Agents and the
Administrative Agent shall have, in addition to the rights and remedies which
they may have under this Agreement, all other rights and remedies provided after
default under the UCC and under other applicable law, which rights and remedies
shall be cumulative.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01 Authorization and Action. Each Purchaser hereby appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. The Administrative Agent shall not have any
duties other than those expressly set forth in the Transaction Documents, and no
implied obligations or liabilities shall be read into any Transaction Document,
or otherwise exist, against the Administrative Agent. The Administrative Agent
does not assume, nor shall it be deemed to have assumed, any obligation to, or
relationship of trust or agency with, any Transaction Party, the Conduit
Purchasers, the Committed Purchasers or the Managing Agents. Notwithstanding any
provision of this Agreement or any other Transaction Document, in no event shall
the Administrative Agent ever be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to any provision
of any Transaction Document or applicable law.
SECTION 8.02 Agent's Reliance, Etc. Neither the Administrative Agent
nor any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Administrative Agent under
or in connection with this Agreement (including, without limitation, the
Administrative Agent's servicing, administering or collecting Receivables as
Servicer), in the absence of its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Administrative
Agent: (a) may consult with legal counsel (including counsel for a Managing
Agent, the Seller or the Servicer), 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 any
Managing Agent, Conduit Purchaser or Committed Purchaser (whether written or
oral) and shall not be responsible to any Managing Agent, Conduit Purchaser or
Committed Purchaser for any statements, warranties or representations (whether
written or oral) made in or in connection with this Agreement or any other
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
this
76
Agreement or any other Transaction Document on the part of any Transaction Party
or to inspect the property (including the books and records) of any Transaction
Party; (d) shall not be responsible to any Managing Agent, Conduit Purchaser or
Committed Purchaser for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other 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 telecopier) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 8.03 CNAI and Affiliates. The obligation of Citibank to
purchase Receivable Interests under this Agreement may be satisfied by CNAI or
any of its Affiliates. With respect to any Receivable Interest or interest
therein owned by it, CNAI and its Affiliates shall have the same rights and
powers under this Agreement as any Committed Purchaser and may exercise the same
as though it were not the Administrative Agent. CNAI and any of its Affiliates
may generally engage in any kind of business with the Transaction Parties or any
Obligor, any of their respective Affiliates and any Person who may do business
with or own securities of the Transaction Parties or any Obligor or any of their
respective Affiliates, all as if CNAI were not the Administrative Agent and
without any duty to account therefor to the Managing Agents, the Conduit
Purchasers or the Committed Purchasers.
SECTION 8.04 Indemnification of Administrative Agent. Each Committed
Purchaser agrees to indemnify the Administrative Agent (to the extent not
reimbursed by the Transaction Parties), ratably according to the respective
Percentage of such Committed Purchaser, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any other Transaction Document
or any action taken or omitted by the Administrative Agent under this Agreement
or any other Transaction Document, provided that no Committed Purchaser shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct.
SECTION 8.05 Delegation of Duties. The Administrative Agent may
execute any of its duties through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 8.06 Action or Inaction by Administrative Agent. The
Administrative Agent shall in all cases be fully justified in failing or
refusing to take action under any Transaction Document unless it shall first
receive such advice or concurrence of the Majority Managing Agents, and
assurance of its indemnification by the Committed Purchasers, as it deems
appropriate. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or at the direction of the
Majority Managing Agents, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all Conduit Purchasers,
Committed Purchasers and the Managing Agents. The Purchasers, the Managing
77
Agents, and the Administrative Agent agree that unless any action to be taken by
the Administrative Agent under a Transaction Document (i) specifically requires
the advice or concurrence of all the Managing Agents or all the Purchasers or
(ii) may be taken by the Administrative Agent alone or without any advice or
concurrence of any Managing Agent or any Purchaser, then the Administrative
Agent may take action based upon the advice or concurrence of the Majority
Managing Agents.
SECTION 8.07 Notice of Events of Termination; Action by
Administrative Agent. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Incipient Termination Event or of
any Termination Event unless the Administrative Agent has received notice from
any Managing Agent, Purchaser or the Seller stating that an Incipient
Termination Event or Termination Event has occurred hereunder and describing
such Incipient Termination Event or Termination Event. If the Administrative
Agent receives such a notice, it shall promptly give notice thereof to each
Managing Agent whereupon each Managing Agent shall promptly give notice thereof
to the Purchasers in its Purchaser Group. The Administrative Agent shall take
such action concerning an Incipient Termination Event or a Termination Event or
any other matter hereunder as may be directed by the Majority Managing Agents
(subject to the other provisions of this Article VIII), but until the
Administrative Agent receives such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
as the Administrative Agent deems advisable and in the best interests of the
Purchasers.
SECTION 8.08 Non-Reliance on Administrative Agent and Other Parties.
Each Managing Agent and Purchaser expressly acknowledges (i) that neither the
Administrative Agent nor any of its directors, officers, agents or employees has
made any representations or warranties to it and (ii) that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Transaction Parties, shall be deemed to constitute any representation or
warranty by the Administrative Agent. Each Purchaser represents and warrants to
the Administrative Agent that, independently and without reliance upon the
Administrative Agent, any Managing Agent or any other Purchaser and based on
such documents and information as it has deemed appropriate, it has made and
will continue to make its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of each Transaction Party and the Receivables and Contracts and
its own decision to enter into this Agreement and to take, or omit, action under
any Transaction Document. Except for items expressly required to be delivered
under any Transaction Document by the Administrative Agent to any Managing Agent
or Purchaser, the Administrative Agent shall not have any duty or responsibility
to provide any Managing Agent or Purchaser with any information concerning the
Transaction Parties or any of their Affiliates that comes into the possession of
the Administrative Agent or any of its directors, officers, agents, employees,
attorneys-in-fact or Affiliates.
SECTION 8.09 Successor Administrative Agent. The Administrative Agent
may, upon at least thirty (30) days notice to the Seller, the Servicer and each
Managing Agent, resign as Administrative Agent. Except as provided below, such
resignation shall not become effective until a successor Administrative Agent is
appointed by the Majority Managing Agents and has accepted such appointment. If
no successor Administrative Agent shall have been so appointed by the Majority
Managing Agents within 30 days after the departing
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Administrative Agent's giving of notice of resignation, the departing
Administrative Agent may, on behalf of the Majority Managing Agents, appoint a
successor Administrative Agent, which successor Administrative Agent shall have
short-term debt ratings of at least A-1 from S&P and P-1 from Xxxxx'x and shall
be either a commercial bank having a combined capital and surplus of at least
$250,000,000 or an Affiliate of such an institution. If no successor
Administrative Agent shall have been so appointed by the Majority Managing
Agents within 60 days after the departing Administrative Agent's giving of
notice of resignation, the departing Administrative Agent may, on behalf of the
Majority Managing Agents, petition a court of competent jurisdiction to appoint
a successor Administrative Agent, which successor Administrative Agent shall
have short-term debt ratings of at least A-1 from S&P and P-1 from Xxxxx'x, and
shall be either a commercial bank having a combined capital and surplus of at
least $250,000,000 or an Affiliate of such an institution. Upon such acceptance
of its appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations under the Transaction Documents. After any retiring
Administrative Agent's resignation hereunder, the provisions of Section 6.06,
Article X and this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Administrative Agent.
ARTICLE IX
THE MANAGING AGENTS
SECTION 9.01 Authorization and Action. Each Conduit Purchaser and
each Committed Purchaser which belongs to the same Purchaser Group hereby
appoints and authorizes the Managing Agent for such Purchaser Group to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to such Managing Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. No Managing Agent shall have any
duties other than those expressly set forth in the Transaction Documents, and no
implied obligations or liabilities shall be read into any Transaction Document,
or otherwise exist, against any Managing Agent. No Managing Agent assumes, nor
shall it be deemed to have assumed, any obligation to, or relationship of trust
or agency with any Transaction Party, Conduit Purchaser or Committed Purchaser.
Notwithstanding any provision of this Agreement or any other Transaction
Document, in no event shall any Managing Agent ever be required to take any
action which exposes such Managing Agent to personal liability or which is
contrary to any provision of any Transaction Document or applicable law.
SECTION 9.02 Managing Agent's Reliance, Etc. No Managing Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as a Managing Agent under or
in connection with this Agreement or the other Transaction Documents in the
absence of its or their own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, a Managing Agent: (a) may consult with
legal counsel (including counsel for the Administrative Agent, the Seller or the
Servicer), 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 any Conduit Purchaser or
Committed Purchaser (whether written or oral) and shall not be responsible to
any
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Conduit Purchaser or Committed Purchaser for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement or any other 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 this Agreement or any other Transaction Document on
the part of any Transaction Party or any other Person or to inspect the property
(including the books and records) of any Transaction Party; (d) shall not be
responsible to any Conduit Purchaser or any Committed Purchaser for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Transaction Documents or any other instrument or
document furnished pursuant hereto; and (e) shall incur no liability under or in
respect of this Agreement or any other Transaction Document by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by telecopier) believed by it to be genuine and signed
or sent by the proper party or parties.
SECTION 9.03 Managing Agent and Affiliates. With respect to any
Receivable Interest or interests therein owned by it, each Managing Agent shall
have the same rights and powers under this Agreement as any Committed Purchaser
and may exercise the same as though it were not a Managing Agent. A Managing
Agent and any of its Affiliates may generally engage in any kind of business
with any Transaction Party or any Obligor, any of their respective Affiliates
and any Person who may do business with or own securities of any Transaction
Party or any Obligor or any of their respective Affiliates, all as if such
Managing Agent were not a Managing Agent and without any duty to account
therefor to any Conduit Purchasers or Committed Purchasers.
SECTION 9.04 Indemnification of Managing Agents. Each Committed
Purchaser in any Purchaser Group agrees to indemnify the Managing Agent for such
Purchaser Group (to the extent not reimbursed by the Transaction Parties),
ratably according to the proportion of the Percentage of such Committed
Purchaser to the aggregate Percentages of all Committed Purchasers in such
Purchaser Group, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against such Managing Agent in any way relating to or arising out of
this Agreement or any other Transaction Document or any action taken or omitted
by such Managing Agent under this Agreement or any other Transaction Document,
provided that no Committed Purchaser shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Managing Agent's gross
negligence or willful misconduct.
SECTION 9.05 Delegation of Duties. Each Managing Agent may execute
any of its duties through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. No Managing
Agent shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 9.06 Action or Inaction by Managing Agent. Each Managing
Agent shall in all cases be fully justified in failing or refusing to take
action under any Transaction Document unless it shall first receive such advice
or concurrence of the Conduit Purchasers and Committed Purchasers in its
Purchaser Group and assurance of its
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indemnification by the Committed Purchasers in its Purchaser Group, as it deems
appropriate. Each Managing Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or at the direction of the
Committed Purchasers in its Purchaser Group representing a majority of the
Commitments in such Purchaser Group, and such request or direction and any
action taken or failure to act pursuant thereto shall be binding upon all
Conduit Purchasers and Committed Purchasers in its Purchaser Group.
SECTION 9.07 Notice of Events of Termination. No Managing Agent shall
be deemed to have knowledge or notice of the occurrence of any Incipient
Termination Event or of any Termination Event unless such Managing Agent has
received notice from the Administrative Agent, any other Managing Agent, any
Conduit Purchaser or Committed Purchaser or the Seller stating that an Incipient
Termination Event or Termination Event has occurred hereunder and describing
such Incipient Termination Event or Termination Event. If a Managing Agent
receives such a notice, it shall promptly give notice thereof to the Conduit
Purchasers and Committed Purchasers in its Purchaser Group and to the
Administrative Agent (but only if such notice received by such Managing Agent
was not sent by the Administrative Agent). The Managing Agent may take such
action concerning an Incipient Termination Event or a Termination Event as may
be directed by Committed Purchasers in its Purchaser Group representing a
majority of the Commitments in such Purchaser Group (subject to the other
provisions of this Article IX), but until such Managing Agent receives such
directions, such Managing Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, as such Managing Agent deems
advisable and in the best interests of the Conduit Purchasers and Committed
Purchasers in its Purchaser Group.
SECTION 9.08 Non-Reliance on Managing Agent and Other Parties. Except
to the extent otherwise agreed to in writing between a Conduit Purchaser and its
Managing Agent, each Conduit Purchaser and Committed Purchaser in the same
Purchaser Group expressly acknowledges that neither the Managing Agent for its
Purchaser Group nor any of such Managing Agent's directors, officers, agents or
employees has made any representations or warranties to it and that no act by
such Managing Agent hereafter taken, including any review of the affairs of the
Transaction Parties, shall be deemed to constitute any representation or
warranty by such Managing Agent. Each Conduit Purchaser and Committed Purchaser
in the same Purchaser Group represents and warrants to the Managing Agent for
such Purchaser Group that, independently and without reliance upon such Managing
Agent, any other Managing Agent, the Administrative Agent or any other Conduit
Purchaser or Committed Purchaser and based on such documents and information as
it has deemed appropriate, it has made and will continue to make its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the
Transaction Parties and the Receivables and Contracts and its own decision to
enter into this Agreement and to take, or omit, action under any Transaction
Document. Except for items expressly required to be delivered under any
Transaction Document by a Managing Agent to any Conduit Purchaser or Committed
Purchaser in its Purchaser Group, no Managing Agent shall have any duty or
responsibility to provide any Conduit Purchaser or Committed Purchaser in its
Purchaser Group with any information concerning the Transaction Parties or any
of their Affiliates that comes into the possession of such Managing Agent or any
of its directors, officers, agents, employees, attorneys-in-fact or Affiliates.
81
SECTION 9.09 Successor Managing Agent. Any Managing Agent may, upon
at least thirty (30) days' notice to the Administrative Agent, the Seller, the
Servicer and the Conduit Purchasers and Committed Purchasers in its Purchaser
Group, resign as Managing Agent for its Purchaser Group. Such resignation shall
not become effective until a successor Managi ng Agent is appointed in the
manner prescribed by the relevant Asset Purchase Agreement or, in the absence of
any provisions in such Asset Purchase Agreement providing for the appointment of
a successor Managing Agent, until a successor Managing Agent is appointed by the
Conduit Purchaser(s) in such Purchaser Group (with the consent of Committed
Purchasers representing a majority of the Commitments in such Purchaser Group)
and has accepted such appointment. If no successor Managing Agent shall have
been so appointed within 30 days after the departing Managing Agent's giving of
notice of resignation, then the departing Managing Agent may, on behalf of the
Purchasers in its Purchaser Group, appoint a successor Managing Agent for such
Purchaser Group, which successor Managing Agent shall have short-term debt
ratings of at least A-1 from S&P and P-1 from Xxxxx'x and shall be either a
commercial bank having a combined capital and surplus of at least $250,000,000
or an Affiliate of such an institution. Upon such acceptance of its appointment
as Managing Agent for such Purchaser Group hereunder by a successor Managing
Agent, such successor Managing Agent shall succeed to and become vested with all
the rights and duties of the retiring Managing Agent, and the retiring Managing
Agent shall be discharged from its duties and obligations under the Transaction
Documents. After any retiring Managing Agent's resignation hereunder, the
provisions of Section 6.06, Article X and this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was a
Managing Agent.
SECTION 9.10 Reliance on Managing Agent. Unless otherwise advised in
writing by a Managing Agent or by any Conduit Purchaser or Committed Purchaser
in such Managing Agent's Purchaser Group, each party to this Agreement may
assume that (i) such Managing Agent is acting for the benefit and on behalf of
each of the Conduit Purchasers and Committed Purchasers in its Purchaser Group,
as well as for the benefit of each assignee or other transferee from any such
Person, and (ii) each action taken by such Managing Agent has been duly
authorized and approved by all necessary action on the part of the Conduit
Purchasers and Committed Purchasers in its Purchaser Group.
ARTICLE X
INDEMNIFICATION
SECTION 10.01 Indemnities by the Seller. Without limiting any other
rights that the Administrative Agent, the Managing Agents, the Conduit
Purchasers, the Committed Purchasers, the Program Support Providers or any of
their respective Affiliates (each, an "Indemnified Party") may have hereunder or
under applicable law, the Seller hereby agrees to indemnify each Indemnified
Party from and against any and all damages, losses, claims, liabilities,
deficiencies, costs, disbursements and expenses, including, without limitation,
interest, penalties, amounts paid in settlement and reasonable attorneys' fees
(all of the foregoing being collectively referred to as "Indemnified Amounts")
arising out of or resulting from this Agreement or any other Transaction
Document or the use of proceeds of purchases or reinvestments or the ownership
of Receivable Interests or in respect of any Receivable or any Contract,
excluding, however, (a) Indemnified Amounts to the extent a final non-appealable
82
judgment of a court of competent jurisdiction finds that such Indemnified
Amounts resulted from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement) for Receivables that are uncollectible solely on account of the
insolvency, bankruptcy or financial inability of the Obligor to pay or (c) any
income, franchise, profits, branch profits or similar taxes incurred by such
Indemnified Party arising out of or as a result of this Agreement or the
ownership of Receivable Interests or in respect of any Receivable or any
Contract. Without limiting or being limited by the foregoing, the Seller shall
pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following (including, without
limitation, Indemnified Amounts arising on account of uncollectible Receivables,
but excluding Indemnified Amounts and taxes described in clauses (a) and (c)
above):
(i) any Receivable which the Seller or the Servicer includes
as part of the Net Receivables Pool Balance but which is not an
Eligible Receivable as of the date it was transferred to the Seller by
the Originator or which thereafter ceases to be an Eligible
Receivable;
(ii) any representation, warranty, certification, report or
other statement made or deemed made by any Transaction Party (or any
of their respective officers) under or in connection with this
Agreement or any of the other Transaction Documents which shall have
been incorrect in any respect when made;
(iii) the failure by any Transaction Party to comply with any
applicable Law with respect to any Receivable or the related Contract;
or the failure of any Receivable or the related Contract to conform to
any such applicable Law;
(iv) the failure to vest (a) in the Purchasers a first priority
perfected undivided percentage ownership interest, to the extent of
each Receivable Interest, in the Receivables and the Related Security
and Collections in respect thereof, or (b) in the Administrative Agent
a first priority perfected security interest in all of the property
described in Section 2.15, in each case free and clear of any Adverse
Claim;
(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables and the Related Security and Collections in
respect thereof, whether at the time of any purchase or reinvestment
or at any subsequent time;
(vi) any dispute, claim or defense (other than discharge in
bankruptcy) of an Obligor to the payment of any Receivable (including,
without limitation, a defense based on such Receivable or the related
Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any
other claim relating to any Contract or relating to billing or
collection activities with respect to any such Contract or any
Receivable (if such
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billing or collection activities were performed by the Seller or any
of its Affiliates acting as Servicer) or relating to any Contract
related thereto;
(vii) any failure of any Transaction Party to perform its duties
or obligations in accordance with the provisions hereof and each other
Transaction Document or to perform its duties or obligations under the
Contracts or to timely and fully comply in all respects with the
Credit and Collection Policy in regard to each Receivable and the
related Contract;
(viii) any products liability, environmental or other claim
arising out of or in connection with merchandise, goods or services
which are the subject of any Contract or the sale of which gave rise
to any Receivable;
(ix) the commingling of Collections of Receivables at any time
with other funds;
(x) any investigation, litigation or proceeding (actual or
threatened) related to this Agreement or any other Transaction
Document or the use of proceeds of Purchases or the ownership of
Receivable Interests or in respect of any Receivable or Related
Security or Contract;
(xi) any Receivable becoming a Diluted Receivable or any other
setoff with respect to any Receivable;
(xii) any claim brought by any Person other than an Indemnified
Party arising from any activity by the Seller or any Affiliate of the
Seller in servicing, administering or collecting any Receivable; or
(xiii) the failure by any Transaction Party to pay when due any
taxes, including, without limitation, sales, excise or personal
property taxes.
Notwithstanding anything to the contrary in this Agreement, solely for
purposes of the Seller's indemnification obligations in clauses (ii) and (vii)
of this Article X, any representation, warranty or covenant qualified by the
occurrence or non-occurrence of a Material Adverse Effect or similar concepts of
materiality shall be deemed to be not so qualified.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Amendments, Etc. No failure on the part of the Managing
Agents, the Purchasers or the Administrative Agent 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. No amendment or waiver of
any provision of this Agreement or consent to any departure by any Transaction
Party therefrom shall be effective unless in a writing signed by the
Administrative Agent, each Managing Agent and the Majority Committed Purchasers
(and, in the case of any amendment, also signed by the Seller and the Servicer),
and then such amendment, waiver or
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consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that the consent of the Seller shall
not be required for any amendment which modifies the representations,
warranties, covenants or responsibilities of the Servicer at any time when the
Servicer is not the Originator or any Affiliate of the Originator; provided,
further, that no amendment, waiver or consent shall, unless in writing and
signed by each Purchaser (or, in the case of clauses (c) and (d) below, each
Purchaser having its fees reduced or delayed or its Scheduled Commitment
Termination Date extended, as applicable) in addition to the Administrative
Agent:
(a) amend the definitions of Eligible Receivable, Delinquent
Receivable, Defaulted Receivable, Net Receivables Pool Balance, Loss
Reserve, Dilution Reserve, Yield and Fee Reserve or Total Reserve
contained in this Agreement, or change the calculation of the
Receivable Interests as set forth in such definition;
(b) reduce the amount of Capital or Yield that is payable on
account of any Receivable Interest or delay any scheduled date for
payment thereof;
(c) reduce fees payable by the Seller to the Managing Agents,
the Conduit Purchasers or the Committed Purchasers or delay the dates
on which such fees are payable;
(d) extend the Scheduled Commitment Termination Date for such
Purchaser (except as set forth in the definition thereof); or
(f) change any of the provisions of this Section or the
definition of "Majority Committed Purchasers";
and provided, further, that no amendment, waiver or consent shall increase the
Commitment of any Committed Purchaser or the Conduit Purchase Limit of any
Conduit Purchaser unless in writing and signed by such Committed Purchaser or
such Conduit Purchaser, as the case may be, and the relevant Managing Agent.
SECTION 11.02 Notices, Etc. Except as provided below, all
communications and notices provided for hereunder shall be in writing (including
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other party at its address or telecopy number specified below or at
such other address or telecopy number as such party may hereafter specify for
the purposes of notice to such party. Each such notice or other communication
shall be effective (i) if given by telecopy, when such telecopy is transmitted
to the telecopy number specified in this Section 11.02 and confirmation is
received, (ii) if given by mail three (3) Business Days following such posting,
postage prepaid, U.S. certified or registered, (iii) if given by overnight
courier, one (1) Business Day after deposit thereof with a national overnight
courier service, or (iv) if given by any other means, when received at the
address specified in this Section 11.02. However, anything in this Section 11.02
to the contrary notwithstanding, the Seller hereby authorizes the Administrative
Agent and each Managing Agent to effect Purchases and Fixed Period and Yield
Rate selections based on telephonic notices made by any Person which the
Administrative Agent or such Managing Agent in good
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faith believes to be acting on behalf of the Seller. The Seller agrees to
deliver promptly to the Administrative Agent and each Managing Agent a written
confirmation of each telephonic notice signed by an authorized officer of
Seller. However, the absence of such confirmation shall not affect the validity
of such notice. If the written confirmation differs in any material respect from
the action taken by the Administrative Agent or such Managing Agent, the records
of the Administrative Agent or such Managing Agent shall govern absent manifest
error.
If to a Committed Purchaser, to its address set forth on Schedule I.
If to a Conduit Purchaser, to its address set forth on Schedule I.
If to a Managing Agent, to its address set forth on Schedule I.
If to the Seller:
Medco Health Receivables, LLC
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: [_____]
Telephone: [_____]
Telecopy: [_____]
If to the Servicer:
000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxx, XX 00000
Attention: [_____]
Telephone: [_____]
Telecopy: [_____]
If to the Administrative Agent:
Citicorp North America, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, X.X. 00000
Attention: Global Securitization
Facsimile No. 000-000-0000
SECTION 11.03 Assignability. (a) This Agreement and each Purchasers'
rights and obligations hereunder (including ownership of each Receivable
Interest) shall be assignable by such Purchaser and its successors and permitted
assigns to any Eligible Assignee. Each assignor of a Receivable Interest or any
interest therein shall notify the Administrative Agent and the Seller of any
such assignment. Each assignor of a Receivable Interest or any interest therein
may, in connection with the assignment or participation, disclose to the
assignee or participant any information relating to the Transaction Parties,
including the Receivables, furnished to such assignor by or on behalf of any
Transaction Party or by the Administrative Agent; provided, however, that, prior
to any such disclosure, the assignee or participant agrees to preserve the
confidentiality of any confidential information relating to the Transaction
Parties
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received by it from any of the foregoing entities in a manner consistent with
Section 11.06(b). The Servicer and the Seller agree to assist each Committed
Purchaser, upon its reasonable request, in syndicating their respective
Commitments hereunder, including making management and representatives of the
Servicer and the Seller reasonably available to participate in information
meetings with potential assignees.
(b) Assignments by Conduit Purchasers. Each Conduit Purchaser may
assign, grant security interests in or otherwise transfer all or any portion of
the Receivable Interests to any Eligible Assignee or Program Support Provider
with respect to such Conduit Purchaser without prior notice to or consent from
any other party or any other condition or restriction of any kind. Without
limiting the generality of the foregoing, each Conduit Purchaser may, from time
to time with prior or concurrent notice to the Seller and each Managing Agent,
assign all or any portion of its interest in the Receivable Interest and its
rights and obligations under this Agreement and any other Transaction Documents
to which it is a party to a Conduit Assignee with respect to such Conduit
Purchaser. Upon such assignment by a Conduit Purchaser to a Conduit Assignee,
(A) unless a new Purchaser Group is being established pursuant to Section
11.03(i) below, the Managing Agent for the assigning Conduit Purchaser will act
as the Managing Agent for the Conduit Assignee hereunder, (B) such Conduit
Assignee and its liquidity support provider(s) and credit support provider(s)
and other related parties shall have the benefit of all the rights and
protections provided to such Conduit Purchaser and its related Committed
Purchasers herein and in the other Transaction Documents (including, without
limitation, any limitation on recourse against such Conduit Assignee), (C) such
Conduit Assignee shall assume all of such Conduit Purchaser's obligations
hereunder or under any other Transaction Document (whenever created, whether
before or after such assignment) with respect to the assigned portion of the
Receivable Interests held by such Conduit Purchaser and such Conduit Purchaser
shall be released from all such obligations, (D) all distributions to such
Conduit Purchaser hereunder with respect to the assigned portion of the
Receivable Interest shall be made to such Conduit Assignee, (E) the definition
of the term "CP Rate" shall be determined on the basis of the interest rate or
discount applicable to Promissory Notes issued by such Conduit Assignee (rather
than such assigning Conduit Purchaser), (F) the defined terms and other terms
and provisions of this Agreement and the other Transaction Documents shall be
interpreted in accordance with the foregoing, and (G) if requested by the
Administrative Agent or Managing Agent with respect to the Conduit Assignee, the
parties will execute and deliver such further agreements and documents
(including amendments to this Agreement) and take such other actions as the
Administrative Agent or such Managing Agent may reasonably request to evidence
and give effect to the foregoing.
(c) Assignment by Committed Purchasers. Each Committed Purchaser may
assign to any Eligible Assignee or to any other Committed Purchaser all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and any Receivable Interests or
interests therein owned by it); provided, however that
(i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this
Agreement,
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(ii) the amount being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than the lesser
of (x) $10,000,000 and (y) all of the assigning Committed Purchaser's
Commitment,
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register (as defined below), an Assignment and Acceptance, and
(iv) concurrently with such assignment, it shall assign to such
assignee Committed Purchaser or other Eligible Assignee an equal
percentage of its rights and obligations under the Asset Purchase
Agreement to which such assignor Committed Purchaser is a party.
Upon such execution, delivery, acceptance and recording from and after
the effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party to this Agreement and, to the extent that rights and
obligations under this Agreement have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Committed
Purchaser thereunder and (y) the assigning Committed Purchaser shall, to the
extent that rights and obligations have been assigned by it pursuant to such
Assignment and Acceptance, relinquish such rights and be released from such
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Committed
Purchaser's rights and obligations under this Agreement, such Committed
Purchaser shall cease to be a party hereto). In addition, any Committed
Purchaser or any of its Affiliates may assign any of its rights (including,
without limitation, rights to payment of Capital and Yield) under this Agreement
to any Federal Reserve Bank without notice to or consent of any Transaction
Party, any other Committed Purchaser or Conduit Purchaser, any Managing Agent or
the Administrative Agent.
(d) Register. The Administrative Agent shall maintain at its address
referred to on the signature page of this Agreement (or such other address of
the Administrative Agent notified by the Administrative Agent to the other
parties hereto) a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Committed Purchasers and the Conduit Purchasers, the Commitment of each
Committed Purchaser and the aggregate outstanding Capital of the Receivable
Interest or interests therein owned by each Conduit Purchaser and Committed
Purchaser from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Seller, the Servicer, the Administrative Agent, the Managing Agents, the Conduit
Purchasers and the Committed Purchasers may treat each Person whose name is
recorded in the Register as a Committed Purchaser or Conduit Purchaser, as the
case may be, under this Agreement for all purposes of this Agreement. The
Register shall be available for inspection by the Seller, any Managing Agent,
any Conduit Purchaser or any Committed Purchaser at any reasonable time and from
time to time upon reasonable prior notice.
(e) Procedure. Upon its receipt of an Assignment and Acceptance
executed by an assigning Committed Purchaser and an Eligible Assignee or
assignee Committed Purchaser, the Administrative Agent shall, if such Assignment
and Acceptance has been duly
88
completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Seller.
(f) Participations by Conduit Purchasers. Each Conduit Purchaser may,
without the consent of the Seller or any other Person, sell participations to
one or more banks or other entities in all or a portion of its rights and
obligations hereunder (including the outstanding Receivable Interests);
provided, however, that
(i) such Conduit Purchaser's obligations under this Agreement
shall remain unchanged,
(ii) such Conduit Purchaser shall remain solely responsible to
the other parties to this Agreement for the performance of such
obligations, and
(iii) the Administrative Agent, the Managing Agents, the Conduit
Purchasers, the other Purchasers, the Seller and the Servicer shall
have the right to continue to deal solely and directly with such
Conduit Purchaser in connection with such Conduit Purchaser's rights
and obligations under this Agreement.
Any agreement or instrument pursuant to which a Conduit Purchaser
sells such a participation shall provide that the Participant shall not have any
right to direct the enforcement of this Agreement or other Transaction Documents
or to approve any amendment, modification or waiver of any provision of this
Agreement or the other Transaction Documents; provided, however, that such
agreement or instrument may provide that such Conduit Purchaser will not,
without the consent of the Participant, agree to any amendment, modification or
waiver of a type that would require the consent of each Purchaser affected
thereby pursuant to Section 11.01. Seller acknowledges and agrees that a Conduit
Purchaser's source of funds may derive in part from its Participants.
Accordingly, references in Sections 2.10, 2.13, 2.14, 6.06, 10.01 and 11.04 and
the other terms and provisions of this Agreement and the other Transaction
Documents to determinations, reserve and capital adequacy requirements,
expenses, increased costs, reduced receipts, Indemnified Amounts and the like as
they pertain to such Conduit Purchaser shall be deemed also to include those of
its Participants.
(g) Participations by Committed Purchasers. Each Committed Purchaser
may sell participations to one or more banks or other entities (each a
"Committed Purchaser Participant") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the interests in the Receivable Interests owned by
it); provided, however, that
(i) such Committed Purchaser's obligations under this Agreement
(including, without limitation, its Commitment to the Seller
hereunder) shall remain unchanged,
(ii) such Committed Purchaser shall remain solely responsible to
the other parties to this Agreement for the performance of such
obligations,
(iii) concurrently with the sale of such participation, the
selling Committed Purchaser shall sell to such bank or other entity a
participation in an
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equal percentage of its rights and obligations under the Asset
Purchase Agreement to which such Committed Purchaser is a party, and
(iv) the Administrative Agent, the Managing Agents, the Conduit
Purchasers, the other Committed Purchasers, the Seller and the
Servicer shall have the right to continue to deal solely and directly
with such Committed Purchaser in connection with such Committed
Purchaser's rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Committed Purchaser
sells such a participation shall provide that the Participant shall not have any
right to direct the enforcement of this Agreement or other Transaction Documents
or to approve any amendment, modification or waiver of any provision of this
Agreement or the other Transaction Documents; provided, however, that such
agreement or instrument may provide that such Committed Purchaser will not,
without the consent of the Participant, agree to any amendment, modification or
waiver of a type that would require the consent of each Purchaser affected
thereby pursuant to Section 11.01. Seller acknowledges and agrees that a
Committed Purchaser's source of funds may derive in part from its Participants.
Accordingly, references in Sections 2.10, 2.13, 2.14, 6.06, 10.01 and 11.04 and
the other terms and provisions of this Agreement and the other Program Documents
to determinations, reserve and capital adequacy requirements, expenses,
increased costs, reduced receipts, Indemnified Amounts and the like as they
pertain to such Committed Purchaser shall be deemed also to include those of its
Participants.
(h) Assignments by Seller and Servicer. Neither the Seller nor the
Servicer may assign any of its rights or obligations hereunder or any interest
herein without the prior written consent of each Managing Agent.
(i) Additional Purchaser Groups. In connection with any assignment by
a Conduit Purchaser of all or any portion of its Conduit Purchase Limit to a
Conduit Assignee, such Conduit Assignee may elect to establish a new Purchaser
Group hereunder by the execution and delivery of a Joinder Agreement by such
Conduit Assignee, the Committed Purchasers which are to be in its Purchaser
Group and the Person which is to be the Managing Agent for such Purchaser Group,
in each case without the consent of any other party. Upon the effective date of
such Joinder Agreement, (a) the Person specified therein as a "New Managing
Agent" shall become a party hereto and a party to the Purchaser Fee Letter as a
Managing Agent, entitled to the rights and subject to the obligations of a
Managing Agent hereunder, (b) each Person specified therein as a "New Conduit
Purchaser" shall become a party hereto as a Conduit Purchaser, entitled to the
rights and subject to the obligations of a Conduit Purchaser hereunder, (c) each
Person specified therein as a "New Committed Purchaser" shall become a party
hereto as a Committed Purchaser, entitled to the rights and subject to the
obligations of a Committed Purchaser hereunder and (d) Schedule I shall be
deemed to have been amended as appropriate to incorporate the information set
forth in such Joinder Agreement.
(j) Participants. No Participant shall receive any amount pursuant to
Sections 2.10, 2.13, 2.14, 6.06, 10.01 or 11.04 of this Agreement greater than
the amount the Purchaser, from whom such participation was made, would have been
entitled to receive under such Sections of this Agreement had no such
participation occurred.
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SECTION 11.04 Costs and Expenses. (a) In addition to the rights of
indemnification granted under Section 10.01 hereof, the Seller agrees to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration of this Agreement, any Asset Purchase
Agreement and the Transaction Documents, including, without limitation, (i) the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent, the Conduit Purchasers, the Managing Agents, the Committed Purchasers and
their respective Affiliates with respect thereto and with respect to advising
the Administrative Agent, the Managing Agents, the Conduit Purchasers, the
Committed Purchasers and their respective Affiliates as to their rights and
remedies under this Agreement, (ii) all rating agency fees, (iii) all reasonable
fees and expenses associated with any audits and other due diligence conducted
prior to or after the Closing Date and (iv) any amendments, waivers or consents
under the Transaction Documents. In addition, the Seller agrees to pay on demand
all costs and expenses (including reasonable counsel fees and expenses) of the
Administrative Agent, the Managing Agents, the Conduit Purchasers, the Committed
Purchasers and their respective Affiliates incurred in connection with the
enforcement of, or any dispute, work-out, litigation or preparation for
litigation involving, this Agreement or any other Transaction Document.
(b) In addition, the Seller shall pay on demand each of the following
to the extent not included in the CP Rate for the applicable Conduit Purchaser:
(i) any and all commissions of placement agents and Promissory Notes dealers in
respect of Promissory Notes issued to fund the Receivable Interests, (ii) any
and all reasonable costs and expenses of any issuing and paying agent or other
Person responsible for the administration of any Conduit Purchaser's Promissory
Notes program in connection with the preparation, completion, issuance, delivery
of payment of Promissory Notes issued to fund the Promissory Notes up to a
maximum amount of $20,000 per calendar year per Conduit Purchaser and (iii) the
applicable pro-rata costs and expenses of any Rating Agency rating any Conduit
Purchaser's Promissory Notes (to the extent not paid pursuant to Section
11.04(a) above); provided, however, that if any Conduit Purchaser enters into
agreements for the purchase of interests in receivables from one or more Persons
(each an "Other Seller"), such Conduit Purchaser shall equitably allocate such
expenses to the Seller and each Other Seller; and provided, further, that if
such expenses are attributable solely to the Seller, the Seller shall be solely
liable for such expenses, and if such expenses are attributable solely to Other
Sellers, such Other Sellers shall be solely liable for such expenses.
SECTION 11.05 No Proceedings. Each of the Seller, the Administrative
Agent, the Servicer, each Managing Agent, each Conduit Purchaser, each Committed
Purchaser, each assignee of a Receivable Interest or any interest therein and
each Person which enters into a commitment to purchase Receivable Interests or
interests therein hereby agrees that it will not institute against any Conduit
Purchaser any proceeding of the type referred to in the definition of "Event of
Bankruptcy" so long as any Promissory Notes or other senior indebtedness issued
by such Conduit Purchaser shall be outstanding or there shall not have elapsed
one year plus one day since the last day on which any such Promissory Notes or
other senior indebtedness shall have been outstanding.
SECTION 11.06 Confidentiality. (a) Each of the parties hereto hereby
agrees that, from the commencement of discussions with respect to the
transactions contemplated by the Transaction Documents (the "Transaction"), each
of the parties hereto (and each of their
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respective, and their respective affiliates, employees, officers, directors,
advisors, representatives and agents) are permitted to disclose to any and all
Persons, without limitation of any kind, the structure and tax aspects (as such
terms are used in Internal Revenue Code Sections 6011, 6111 and 6112 and the
regulations promulgated thereunder) of the Transaction, and all materials of any
kind (including opinions or other tax analyses) that are provided to any party
related to such structure and tax aspects. In this regard, the parties hereto
acknowledge and agree that the disclosure of the structure or tax aspects of the
Transaction is not limited in any way by an express or implied understanding or
agreement, oral or written (whether or not such understanding or agreement is
legally binding). Furthermore, each of the parties hereto acknowledges and
agrees that it does not know or have reason to know that its use or disclosure
of information relating to the structure or tax aspects of the Transaction is
limited in any other manner (such as where the Transaction is claimed to be
proprietary or exclusive) for the benefit of any other Person.
(b) Subject to Section 11.06(a), the Transaction Documents, the terms
thereof (including, without limitation, any specific pricing information
contained therein), the structure of the Transaction, any related structures
developed by the Administrative Agent or any Managing Agent for the Seller or
any of its Affiliates, any related analyses, computer models, information or
documents, any written or oral reports from Administrative Agent or any Managing
Agent to the Seller or any of its Affiliates or any related written information
(collectively, "Product Information") is confidential. Each of the Seller and
the Servicer agrees:
(i) to keep all Product Information confidential and to disclose
Product Information only to those of its officers, employees, agents,
accountants, legal counsel and other representatives (collectively
"Representatives") who have a need to know such Product Information for the
purpose of assisting in the Transaction;
(ii) to use the Product Information only in connection with the
Transaction and not for any other purpose; and
(iii) to cause its Representatives to comply with these provisions and
to be responsible for any failure of any Representative to so comply.
The provisions of this Section shall not apply to Product Information
that is or hereafter becomes (through a source other than the Seller, the
Servicer or any of their respective Affiliates or Representatives) a matter of
general public knowledge. The provisions of this Section shall not prohibit the
Seller or the Servicer from (i) filing with any governmental or regulatory
agency any information or other documents with respect to the Transaction as may
be required by applicable Law or (ii) making any other disclosure to the extent
required by applicable law, Subpoena or other legal process. The parties hereto
acknowledge that the Originator will file this Agreement and the Originator
Purchase Agreement, and any other material agreements related thereto (other
than the Fee Letters) as the Originator may determine in its sole discretion,
with the SEC.
(c) Each Purchaser, each Managing Agent, and the Administrative Agent
agrees to maintain the confidentiality of all non-public information with
respect to the Seller, the Originator, the Contracts or the Receivables
furnished or delivered to it pursuant to this
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Agreement; provided, however, that such information may be disclosed (i) to such
party's officers, employees, agents, accountants, legal counsel and other
representatives (collectively "Purchaser Representatives") who have a need to
know such information for the purpose of assisting in the negotiation,
completion and administration of the facility contemplated hereby, (ii) to such
party's assignees and participants and potential assignees and participants to
the extent such disclosure is made pursuant to a written agreement of
confidentiality substantially similar to this Section 11.06(c), (iii) to the
Rating Agencies, (iv) to the Program Support Providers for each Conduit
Purchaser and the dealers and investors in respect of the Promissory Notes of
any Conduit Purchaser, in each case in accordance with the customary practices
of such Conduit Purchaser for disclosures to Program Support Providers, dealers
or investors, as the case may be (it being understood and agreed that any
disclosures to dealers or investors will not identify the Originator or its
Affiliates by name) and (v) to the extent required by applicable Law, Subpoena
or other legal process or by any Official Body.
The provisions of Section 11.06(b) shall not apply to information that
is or hereafter becomes (through a source other than the applicable Purchaser,
Managing Agent or the Administrative Agent or any Purchaser Representative
associated with such party) a matter of general public knowledge. The provisions
of this Section shall not prohibit any Purchaser, Managing Agent or the
Administrative Agent from filing with or making available to any Official Body
any information or other documents with respect to the Transaction as may be
required by applicable Law or requested by such Official Body .
SECTION 11.07 Amendments to Financial Covenants. If the Revolving
Credit Agreement is amended, restated, supplemented or otherwise modified, or is
substituted or replaced with a new credit facility (each a "Modification"), and
such Modification includes one or more financial covenants which are different
from the financial covenants set forth on Schedule V (including, without
limitation, by reasons of a difference in levels), then the parties hereto
agree, promptly upon request of each Managing Agent, to amend this Agreement as
appropriate to modify the financial covenants set forth in Schedule V to
incorporate the financial covenant or covenants contained in such Modification
(which amendment shall include conforming amendments to the definitions
contained in Schedule V).
SECTION 11.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK BUT
OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) EXCEPT TO THE EXTENT
THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE
INTERESTS OF THE ADMINISTRATIVE AGENT, THE CONDUIT PURCHASERS AND THE COMMITTED
PURCHASERS IN THE RECEIVABLES AND ANY OTHER COLLATERAL DESCRIBED IN SECTION 2.15
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 11.09 Execution in Counterparts. This Agreement may be
executed in any number of 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.
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Delivery of an executed counterpart of a signature page to this Agreement by
facsimile shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 11.10 Integration; Binding Effect; Survival of Termination.
This Agreement and the other Transaction Documents executed by the parties
hereto on the date hereof contain the final and complete integration of all
prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof superseding all prior oral or written
understandings. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). Any provisions of this Agreement which
are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. 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; provided, however, that the provisions of Sections 2.10,
2.13, 2.14, 6.06, 10.01, 11.04, 11.05 and 11.06 shall survive any termination of
this Agreement.
SECTION 11.11 Consent to Jurisdiction. (a) Each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in New York City in any action or proceeding arising out
of or relating to this Agreement, and each party hereto hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. The parties hereto hereby irrevocably waive, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each of the Seller and the Servicer consents to the service of
any and all process in any such action or proceeding by the mailing of copies of
such process to it at its address specified in Section 11.02. Nothing in this
Section 11.11 shall affect the right of any Conduit Purchaser, any Committed
Purchaser, any Managing Agent or the Administrative Agent to serve legal process
in any other manner permitted by law.
SECTION 11.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
SECTION 11.13 Right of Setoff. Each of the Purchasers is hereby
authorized (in addition to any other rights it may have) at any time after the
occurrence of the Termination Date due to the occurrence of a Termination Event,
or during the continuation of an
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Incipient Termination Event, to set off, appropriate and apply (without
presentment, demand, protest or other notice which are hereby expressly waived)
any deposits and any other indebtedness held or owing by such Purchaser to, or
for the account of, the Seller against the amount of the Seller Obligations
owing by the Seller to such Person.
SECTION 11.14 Ratable Payments. If any Committed Purchaser, whether by
setoff or otherwise, has a payment made to it with respect to any Seller
Obligations in a greater proportion than that received by any other Committed
Purchaser entitled to receive a ratable share of such Seller Obligations, such
Committed Purchaser agrees, promptly upon demand, to purchase for cash without
recourse or warranty a portion of such Seller Obligations held by the other
Committed Purchasers so that after such purchase each Committed Purchaser will
hold its ratable proportion of such Seller Obligations; provided that if all or
any portion of such excess amount is thereafter recovered from such Committed
Purchaser, such purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest.
SECTION 11.15 Limitation of Liability. (a) No claim may be made by any
Transaction Party or any other Person against any Purchaser, any Managing Agent,
the Administrative Agent or their respective Affiliates, directors, officers,
employees, attorneys or agents (each a "Purchaser Party") for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Transaction Document,
or any act, omission or event occurring in connection herewith or therewith,
except with respect to any claim arising out of the willful misconduct or gross
negligence of such Purchaser Party; and each of the Seller and the Servicer
hereby waives, releases, and agrees not to xxx upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
(b) Notwithstanding anything to the contrary contained herein, the
obligations of the respective Conduit Purchasers under this Agreement are solely
the corporate obligations of each such Conduit Purchaser and shall be payable
only at such time as funds are actually received by, or are available to, such
Conduit Purchaser in excess of funds necessary to pay in full all outstanding
Promissory Notes issued by such Conduit Purchaser and, to the extent funds are
not available to pay such obligations, the claims relating thereto shall not
constitute a claim against such Conduit Purchaser. Each party hereto agrees that
the payment of any claim (as defined in Section 101 of Title 11 of the
Bankruptcy Code) of any such party shall be subordinated to the payment in full
of all Promissory Notes.
(c) No recourse under any obligation, covenant or agreement of any
Conduit Purchaser contained in this Agreement shall be had against any
incorporator, stockholder, officer, director, member, manager, employee or agent
of such Conduit Purchaser, the Managing Agent with respect to such Conduit
Purchaser or any of their Affiliates (solely by virtue of such capacity) by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue
of any statute or otherwise; it being expressly agreed and understood that this
Agreement is solely a corporate obligation of such Conduit Purchaser, and that
no personal liability whatever shall attach to or be incurred by any
incorporator, stockholder, officer, director, member, manager, employee or agent
of any Conduit Purchaser, any Managing Agent or any of their Affiliates (solely
by virtue of such capacity) or any of them under or by reason of any of the
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obligations, covenants or agreements of such Conduit Purchaser contained in this
Agreement, or implied therefrom, and that any and all personal liability for
breaches by any Conduit Purchaser of any of such obligations, covenants or
agreements, either at common law or at equity, or by statute, rule or
regulation, of every such incorporator, stockholder, officer, director, member,
manager, employee or agent is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement; provided, however, that the
foregoing shall not relieve any such Person from any liability it might
otherwise have as a result of fraudulent actions taken or fraudulent omissions
made by them.
SECTION 11.16 Intent of the Parties. (a) It is the intention of the
parties hereto that each purchase of Receivable Interests shall convey to the
Administrative Agent for the benefit of the applicable Purchasers, to the extent
of such Receivable Interests, an undivided interest in the Receivables and the
Related Security and Collections in respect thereof and that such transaction
shall constitute a purchase and sale and not a secured loan for all purposes
other than for United States federal, state and local income tax purposes.
However, if a determination is made that such purchase shall not be so treated,
the transactions effected hereby shall be deemed to constitute a secured
financing under applicable law.
(b) The Seller has structured the Transaction Documents with the
intention that the Receivable Interests and the obligations of the Seller
hereunder will be treated under United States federal, and applicable state,
local and foreign tax law as debt (the "Intended Tax Treatment"). The Seller,
Medco, the Administrative Agent, the Conduit Purchasers and the Committed
Purchasers agree to file no tax return, or take any action, inconsistent with
the Intended Tax Treatment. Each assignee and each participant acquiring an
interest in a Receivable Interest, by its acceptance of such assignment or
participation, agrees to comply with the immediately preceding sentence.
[Remainder of page intentionally left blank]
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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.
SELLER: MEDCO HEALTH RECEIVABLES, LLC
By:
------------------------------------
Name:
Title:
CONDUIT PURCHASERS: CAFCO, LLC
By: Citicorp North America, Inc.,
as Attorney-in-Fact
By:
------------------------------------
Name:
Title:
FALCON ASSET SECURITIZATION CORPORATION
By:
------------------------------------
Name:
Title:
ADMINISTRATIVE AGENT: CITICORP NORTH AMERICA, INC.,
as Administrative Agent
By:
------------------------------------
Name:
Title:
MANAGING AGENTS: CITICORP NORTH AMERICA, INC.,
as Managing Agent
By:
------------------------------------
Name:
Title:
BANK ONE, NA (MAIN OFFICE CHICAGO),
as Managing Agent
By:
------------------------------------
Name:
Title:
COMMITTED PURCHASERS: CITIBANK, N.A.
By:
------------------------------------
Attorney-in-Fact
BANK ONE, NA (MAIN OFFICE CHICAGO)
By:
------------------------------------
Name:
Title:
SERVICER: MEDCO HEALTH SOLUTIONS, INC.
By:
-----------------------------------
Name:
Title:
