RECEIVABLES SALE AGREEMENT
DATED AS OF JULY 14, 2000
AMONG
KOLEY'S MEDICAL SUPPLY, INC.
XXXXX & MINOR MEDICAL, INC.,
XXXXX & MINOR WEST, INC.
STUART MEDICAL, INC.,
and
XXXXX & MINOR, INC.
as Originators,
and
O&M FUNDING CORP.,
as Buyer
TABLE OF CONTENTS
Page
ARTICLE I
AMOUNTS AND TERMS......................................................... 2
Section 1.1 Purchase of Receivables.................................... 2
Section 1.2 Payment for the Purchase................................... 3
Section 1.3 Purchase Price Credit Adjustments.......................... 5
Section 1.4 Payments and Computations, Etc............................. 6
Section 1.5 Transfer of Records........................................ 6
Section 1.6 Characterization........................................... 7
Section 1.7 Addition of Originators.................................... 7
Section 1.8 Termination of Status as an Originator..................... 8
Section 1.9 Facility Fee............................................... 9
Section 1.10 Limited Role of Parent..................................... 11
ARTICLE II
REPRESENTATIONS AND WARRANTIES............................................ 11
Section 2.1 Representations and Warranties of Originators.............. 11
ARTICLE III
CONDITIONS OF PURCHASE.................................................... 15
Section 3.1 Conditions Precedent to Purchase........................... 15
Section 3.2 Conditions Precedent to Subsequent Payments................ 15
ARTICLE IV
COVENANTS................................................................. 16
Section 4.1 Affirmative Covenants of Originators....................... 16
Section 4.2 Negative Covenants of Originators.......................... 20
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TABLE OF CONTENTS
(continued)
Page
ARTICLE V
AMORTIZATION EVENTS....................................................... 22
Section 5.1 Amortization Events........................................ 22
Section 5.2 Remedies................................................... 23
ARTICLE VI
INDEMNIFICATION........................................................... 24
Section 6.1 Indemnities by Originators................................. 24
Section 6.2 Other Costs and Expenses................................... 29
ARTICLE VII
MISCELLANEOUS............................................................. 30
Section 7.1 Waivers and Amendments..................................... 30
Section 7.2 Notices.................................................... 30
Section 7.3 Protection of Ownership Interests of Buyer................. 30
Section 7.4 Confidentiality............................................ 31
Section 7.5 Limitation of Liability.................................... 32
Section 7.6 No Recourse................................................ 32
Section 7.7 Bankruptcy Petition........................................ 32
Section 7.8 CHOICE OF LAW.............................................. 32
Section 7.9 CONSENT TO JURISDICTION.................................... 33
Section 7.10 WAIVER OF JURY TRIAL....................................... 33
Section 7.11 Integration; Binding Effect; Survival of Terms............. 33
Section 7.12 Counterparts; Severability; Section References............. 34
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Exhibits and Schedules
EXHIBIT I -- Definitions
EXHIBIT II -- Principal Place of Business; Location(s) of Records; Federal
Employer Identification Number; Other Names
EXHIBIT III -- Lock-Boxes; Collection Accounts; Collection Banks
EXHIBIT IV -- Form of Compliance Certificate
EXHIBIT V -- Credit and Collection Policy
EXHIBIT VI -- Form of Subordinated Note
EXHIBIT VII -- Form of Originator Note
SCHEDULE A -- List of Documents to Be Delivered to Buyer Prior to the
Purchase
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RECEIVABLES SALE AGREEMENT
THIS RECEIVABLES SALE AGREEMENT, dated as of July 14, 2000, is by and
among KOLEY'S MEDICAL SUPPLY, INC., a Nebraska corporation ("Koley's"), XXXXX &
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MINOR MEDICAL, INC., a Virginia corporation ("O&M Medical"), XXXXX & MINOR WEST,
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INC., a California corporation ("O&M West"), STUART MEDICAL, INC., a
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Pennsylvania corporation ("Stuart"), XXXXX & MINOR, INC., a Virginia corporation
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(the "Parent", and together with Koley's, O&M Medical, O&M Xxxx, Xxxxxx and each
------
other Person which may from time to time become a party hereto as an Originator
pursuant to Section 1.7 hereof, each an "Originator" and collectively, the
----------- ----------
"Originators"), and O&M FUNDING CORP. a Virginia corporation ("Buyer"). Unless
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defined elsewhere herein, capitalized terms used in this Agreement shall have
the meanings assigned to such terms in Exhibit I.
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PRELIMINARY STATEMENTS
The Originators now own, and from time to time hereafter will own,
Receivables. The Originators wish to sell and assign to Buyer, and Buyer wishes
to purchase from the Originators, all the Originators' right, title and interest
in and to such Receivables, together with the Related Security and Collections
with respect thereto.
The Originators and Buyer intend the transactions contemplated hereby
to be true sales of the Receivables from the Originators to Buyer, providing
Buyer with the full benefits of ownership of the Receivables, and the
Originators and Buyer do not intend these transactions to be, or for any purpose
to be characterized as, loans from Buyer to the Originators.
Following the purchase of Receivables from the Originators, Buyer will
sell undivided interests therein and in the associated Related Security and
Collections pursuant to that certain Receivables Purchase Agreement dated as of
July 14, 2000 (as the same may from time to time hereafter be amended,
supplemented, restated or otherwise modified, the "Purchase Agreement") among
------------------
Buyer, Xxxxx & Minor Inc., a Virginia corporation (the "Parent"), O&M Medical,
------
as Servicer, the funding entities from time to time party thereto (the
"Financial Institutions"), Falcon Asset Securitization Corporation ("Falcon"),
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Receivables Capital Corporation ("RCC"), and Liberty Street Funding Corp.
---
("Liberty Funding", Falcon, RCC, Liberty Funding and any party added as a
-----------------
Conduit pursuant to Section 12.3 of the Purchase Agreement being referred to
collectively as the "Conduits", and together with the Financial Institutions,
--------
the "Purchasers"), Bank One, NA, Bank of America, National Association and The
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Bank of Nova Scotia (each, a "Managing Agent" and collectively, the "Managing
--------------- --------
Agents") and
------
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Bank One, NA, as collateral agent for the Purchasers (together with its
successors and assigns thereunder, the "Collateral Agent").
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ARTICLE I
AMOUNTS AND TERMS
Section 1.1 Purchase of Receivables.
-----------------------
(a) Effective on the date hereof, in consideration for the Purchase
Price and upon the terms and subject to the conditions set forth herein, each
Originator does hereby sell, assign, transfer, set-over and otherwise convey to
Buyer, without recourse (except to the extent expressly provided herein), and
Buyer does hereby purchase from each Originator, all of such Originator's right,
title and interest in and to all Receivables existing as of the close of
business on the Business Day immediately prior to the date hereof and all
Receivables thereafter arising through and including the Amortization Date,
together, in each case, with all Related Security, Lock-Boxes and Collection
Accounts relating thereto and all Collections thereof. In accordance with the
preceding sentence, on the date hereof Buyer shall acquire all of each such
Originator's right, title and interest in and to all Receivables existing as of
the close of business on the Business Day immediately prior to the date hereof
and thereafter arising through and including the Amortization Date, together
with all Related Security relating thereto and all Collections thereof;
provided, that, Buyer shall be obligated to pay the Purchase Price therefor in
--------
accordance with Section 1.2. In connection with the payment of the Purchase
-----------
Price for any Receivables purchased hereunder, Buyer may request that each
Originator deliver, and each Originator shall deliver, such approvals, opinions,
information, reports or documents as Buyer may reasonably request.
(b) It is the intention of the parties hereto that the Purchase of
Receivables made hereunder shall constitute a "sale of accounts" (as such term
is used in Article 9 of the UCC), which sale is absolute and irrevocable and
provides Buyer with the full benefits of ownership of the Receivables. Except
for the Purchase Price Credits owed pursuant to Section 1.3, the sale of
-----------
Receivables hereunder is made without recourse to the Originators; provided,
--------
however, that (i) each Originator shall be liable to Buyer for all
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representations, warranties and covenants made by such Originator pursuant to
the terms of the Transaction Documents to which such Originator is a party, and
(ii) such sale does not constitute and is not intended to result in an
assumption by Buyer or any assignee thereof of any obligation of any Originator
or any other Person arising in connection with the Receivables, the related
Contracts and/or other Related Security or any other obligations of any
Originator. In view of the intention of the parties hereto that the Purchase of
Receivables made hereunder shall constitute a sale of such Receivables rather
than loans secured thereby, each Originator agrees that it will, on or prior to
the date hereof and in accordance with Section 4.1(e)(ii), xxxx its master data
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processing records relating to the Receivables with a legend acceptable to Buyer
(and the Collateral Agent and each
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Managing Agent, as Buyer's assignees), evidencing that Buyer has purchased such
Receivables as provided in this Agreement and to note in its financial
statements that its Receivables have been sold to Buyer. Upon the request of
Buyer (or the Collateral Agent or any Managing Agent, as Buyer's assignee), each
Originator will, at such Originator's expense, execute and file such financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate to perfect
and maintain the perfection of Buyer's ownership interest in the Receivables and
the Related Security and Collections with respect thereto, or as Buyer (or the
Collateral Agent or any Managing Agent, as Buyer's assignee) may reasonably
request.
Section 1.2 Payment for the Purchase.
------------------------
(a) The Purchase Price for the Purchase of Receivables in existence
on the close of business on the Business Day immediately preceding the date
hereof (the "Initial Cutoff Date") shall be payable in full by Buyer to each
-------------------
Originator on the date hereof, and shall be paid to each Originator in the
following manner:
(i) by delivery of immediately available funds, to the extent of
funds made available to Buyer in connection with its subsequent sale
of an interest in such Receivables to the Purchasers under the
Purchase Agreement, such funds to be allocated among the Originators
as determined by Buyer in its sole discretion; and
(ii) in the case of O&M Medical, to the extent any portion of the
Purchase Price payable to O&M Medical remains unpaid, by the reduction
in the principal amount outstanding under the Originator Note of O&M
Medical in an amount equal to such remaining Purchase Price, until
such outstanding principal amount is reduced to zero; and
(iii) the balance, by delivery of the proceeds of a subordinated
revolving loan from such Originator to Buyer (a "Subordinated Loan")
-----------------
in an amount not to exceed the least of (i) the remaining unpaid
portion of such Purchase Price, (ii) the maximum Subordinated Loan
that could be borrowed without rendering Buyer's Tangible Net Worth
less than $10,000,000 and (iii) the maximum Subordinated Loan that
could be borrowed without rendering the Net Value less than the
aggregate outstanding principal balance of the Subordinated Loans
(including the Subordinated Loan proposed to be made on such date).
Each Originator is hereby authorized by Buyer to endorse on the
schedule attached to its Subordinated Note an appropriate notation
evidencing the date and amount of each advance thereunder, as well as
the date of each payment with respect thereto, provided that the
failure to make such notation shall not affect any obligation of Buyer
thereunder.
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The Purchase Price for each Receivable coming into existence after the Initial
Cutoff Date shall be due and owing in full by Buyer to each Originator or its
designee on the date each such Receivable came into existence (except that Buyer
may, with respect to any such Purchase Price, offset against such Purchase Price
any amounts owed by such Originator to Buyer hereunder and which have become due
but remain unpaid) and shall be paid to each Originator in the manner provided
in the following paragraphs (b), (c) and (d).
-------------- --- ---
(b) With respect to any Receivables coming into existence after the
date hereof, on each Settlement Date, Buyer shall pay the Purchase Price
therefor in accordance with Section 1.2(d) and in the following manner:
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first, by delivery of immediately available funds, to the extent
-----
of funds available to Buyer from its subsequent sale of an interest in the
Receivables to each Managing Agent for the benefit of the Purchasers under
the Purchase Agreement or other cash on hand, such funds to be allocated
among the Originators as determined by Buyer in its sole discretion; and
second, in the case of O&M Medical, to the extent any portion of
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the Purchase Price payable to O&M Medical remains unpaid, by the reduction
in the principal amount outstanding under the Originator Note of O&M
Medical in an amount equal to such remaining Purchase Price, until such
outstanding principal amount is reduced to zero; and
third, to the extent any portion of the Purchase Price remains
-----
unpaid, by delivery of the proceeds of a Subordinated Loan, provided that
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the making of any such Subordinated Loan shall be subject to the provisions
set forth in Section 1.2(a)(iii).
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Subject to the limitations set forth in Section 1.2(a)(iii), each Originator
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irrevocably agrees to advance each Subordinated Loan requested by Buyer on or
prior to the Amortization Date. The Subordinated Loans shall be evidenced by,
and shall be payable in accordance with the terms and provisions of the
Subordinated Notes and shall be payable solely from funds which Buyer is not
required under the Purchase Agreement to set aside for the benefit of, or
otherwise pay over to, the Purchasers, the Collateral Agent, the Managing Agents
or any other Person then entitled to any amounts as specified in the Purchase
Agreement.
(c) On the terms and subject to the conditions set forth in this
Agreement, Buyer agrees to make demand loans ("Originator Loans") to O&M Medical
----------------
prior to the Amortization Date in such amounts as O&M Medical may request from
time to time; provided, however, that (i) each such Originator Loan may be made
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solely from funds which Buyer is not required under the Purchase Agreement to
set aside for the benefit of, or otherwise pay over to, the Purchasers, the
Collateral Agent, the Managing Agents or any other Person then entitled to
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any amounts as specified in the Purchase Agreement, (ii) no Originator Loan
shall be made to the extent that any amounts are outstanding under any
Subordinated Note, (iii) no Originator Loan shall be made if, at such time and
or after giving effect thereto, an Amortization Event or a Potential
Amortization Event is outstanding, and (iv) no Originator Loan shall be made if,
after giving effect thereto, the aggregate principal amount of all Originator
Loans would exceed the amount of the Tangible Net Worth of Buyer. The Originator
Loans made to O&M Medical shall be evidenced by a demand promissory note in the
form of Exhibit VII to this Agreement. Originator Loans may be repaid by O&M
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Medical, in whole or in part, at any time. Any amount so repaid may, subject to
the terms and conditions hereof, be reborrowed hereunder. If, at any time that
Originator Loans are outstanding, Buyer has insufficient funds to satisfy its
obligations under the Purchase Agreement, Buyer shall be deemed to have made
demand upon O&M Medical for the amount of such shortfall, up to the aggregate
principal amount of all Originator Loans then outstanding.
(d) From and after the Amortization Date, no Originator shall be
obligated to (but may, at its option) sell Receivables to Buyer unless such
Originator reasonably determines that the Purchase Price therefor will be
satisfied with funds available to Buyer from sales of interests in the
Receivables pursuant to the Purchase Agreement, Collections, proceeds of
Subordinated Loans or otherwise.
(e) Although the Purchase Price for each Receivable coming into
existence after the date hereof shall be due and payable in full by Buyer to
each Originator on the date such Receivable comes into existence, settlement of
the Purchase Price between Buyer and each Originator shall be effected on a
monthly basis on Settlement Dates with respect to all Receivables coming into
existence during the same Accrual Period and based on the information contained
in the Monthly Report delivered by the Servicer pursuant to Article VIII of the
------------
Purchase Agreement for the Accrual Period then most recently ended. Although
settlement shall be effected on Settlement Dates, increases or decreases in the
amount owing under the Originator Note and the Subordinated Notes made pursuant
to Section 1.2(b) shall be deemed to have occurred and shall be effective as of
--------------
the last Business Day of the Accrual Period to which such settlement relates.
Section 1.3 Purchase Price Credit Adjustments. If on any day:
---------------------------------
(a) the Outstanding Balance of a Receivable is:
(i) reduced as a result of any defective, rejected or non-conforming
goods or services, any discount or any adjustment or otherwise by an
Originator (other than cash Collections on account of the
Receivables),
5
(ii) reduced or canceled as a result of a setoff in respect of any
claim by any Person (whether such claim arises out of the same or a
related transaction or an unrelated transaction), or
(b) any of the representations and warranties set forth in Article II
----------
are no longer true with respect to any Receivable,
then, in such event, Buyer shall be entitled to a credit (each, a "Purchase
--------
Price Credit") against the Purchase Price otherwise payable hereunder equal to
------------
the Outstanding Balance of such Receivable. If such Purchase Price Credit
exceeds the Original Balance of the Receivables coming into existence on any
day, then the applicable Originator shall pay the remaining amount of such
Purchase Price Credit either (i) in cash within five (5) Business Days
thereafter, or (ii) by deducting the remaining amount of such Purchase Price
Credit from any indebtedness owed to such Originator under its Subordinated
Note; provided, however, that so long as an Amortization Event or a Potential
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Amortization Event has occurred and is continuing, such Purchase Price Credit
shall be paid by such Originator, to Buyer, in cash, by deposit of immediately
available funds to the relevant Collection Account for application by the
Servicer to the same extent as if Collections on the applicable Receivable in
such amount had been received on such date. In the event that an Originator has
paid in full the Purchase Price Credit of any Receivable pursuant to this
Section 1.3, Buyer shall reconvey such Receivable to such Originator, without
-----------
representation or warranty, but free and clear of all liens created by Buyer.
Section 1.4 Payments and Computations, Etc. All amounts to be paid
------------------------------
or deposited by Buyer hereunder shall be paid or deposited in accordance with
the terms hereof on the day when due in immediately available funds to the
account of the applicable Originator designated from time to time by such
Originator or as otherwise directed by such Originator. In the event that any
payment owed by any Person hereunder becomes due on a day that is not a Business
Day, then such payment shall be made on the next succeeding Business Day. If
any Originator fails to pay any amount hereunder when due, such Originator
agrees to pay, on demand, the Default Fee in respect thereof until paid in full;
provided, however, that such Default Fee shall not at any time exceed the
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maximum rate permitted by applicable law. All computations of interest payable
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.
Section 1.5 Transfer of Records.
-------------------
(a) In connection with the Purchase of Receivables hereunder, each
Originator hereby sells, transfers, assigns and otherwise conveys to Buyer all
of such Originator's right and title to and interest in the Records relating to
all Receivables sold hereunder, without the need for any further documentation
in connection with the Purchase. In connection with such transfer, each
Originator hereby grants to each of Buyer, the Collateral Agent and the Servicer
an
6
irrevocable, non-exclusive license to use, without royalty or payment of any
kind, all software used by such Originator to account for the Receivables, to
the extent necessary to administer the Receivables, whether such software is
owned by such Originator or is owned by others and used by such Originator under
license agreements with respect thereto, provided that should the consent of any
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licensor of such Originator to such grant of the license described herein be
required, such Originator hereby agrees that upon the request of Buyer (or the
Collateral Agent or any Managing Agent, as Buyer's assignees), such Originator
will use its reasonable efforts to obtain the consent of such third-party
licensor. The license granted hereby shall be irrevocable, and shall terminate
on the date this Agreement terminates in accordance with its terms and all
amounts payable hereunder in respect of any Receivables or otherwise have been
paid in full.
(b) Each Originator (i) shall take such action requested by Buyer (or
the Collateral Agent or any Managing Agent, as Buyer's assignee), from time to
time hereafter, that may be necessary or appropriate to ensure that Buyer and
its assigns under the Purchase Agreement have an enforceable ownership interest
in the Records relating to the Receivables purchased from such Originator
hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the
Collateral Agent and the Servicer each has an enforceable right (whether by
license or sublicense or otherwise) to use all of the computer software used to
account for the Receivables and/or to recreate such Records.
Section 1.6 Characterization. If, notwithstanding the intention of
----------------
the parties expressed in Section 1.1(b), any sale or contribution by any
--------------
Originator to Buyer of Receivables hereunder shall be characterized as a secured
loan and not a sale or such sale shall for any reason be ineffective or
unenforceable, then this Agreement shall be deemed to constitute a security
agreement under the UCC and other applicable law. For this purpose and without
being in derogation of the parties' intention that the sale of Receivables
hereunder shall constitute a true sale thereof, each Originator hereby grants to
Buyer a duly perfected security interest in all of such Originator's right,
title and interest in, to and under all Receivables now existing and hereafter
arising, all Collections, Related Security and Records with respect thereto,
each Lock-Box and Collection Account and all proceeds of the foregoing, which
security interest shall be prior to all other Adverse Claims thereto. After the
occurrence of an Amortization Event, Buyer (and the Collateral Agent and each
Managing Agent, as Buyer's assignees) shall have, in addition to the rights and
remedies which they may have under this Agreement, all other rights and remedies
provided to a secured creditor after default under the UCC and other applicable
law, which rights and remedies shall be cumulative.
Section 1.7 Addition of Originators. Any Subsidiary of the Parent
-----------------------
may become an Originator hereunder with the prior written consent of Buyer (and
the Collateral Agent and each Managing Agent, as Buyer's assignees). Each
Subsidiary of the Parent that is proposed to be added as an Originator shall
give to Buyer (and the Collateral Agent and each Managing Agent, as Buyer's
assignees) prior written notice of its desire to be added as an Originator.
Once
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the notice has been given, any addition of a Subsidiary of the Parent as an
Originator pursuant to this section shall become effective on the first Business
Day following the date on which (i) such Subsidiary and the parties hereto shall
have executed and delivered the agreements, instruments and other documents
(including, without limitation, opinions of counsel, financing statements and
collection account agreements) and the amendments or other modifications to the
Transaction Documents, in form and substance satisfactory to Buyer (and to the
Collateral Agent and each Managing Agent, as Buyer's assignees), that Buyer (or
the Collateral Agent or any Managing Agent, as Buyer's assignee) determines are
necessary or appropriate to effect the addition, (ii) the Parent confirms in
writing that the guaranty under Article XIV of the Purchase Agreement covers the
obligations of such new Originator as an Originator and (iii) Buyer (and the
Collateral Agent and each Managing Agent, as Buyer's assignees) shall have
consented, in writing, to the addition of such new Originator. Upon such
effectiveness, any reference to "Originator" in this Agreement shall refer to
each existing Originator and each Subsidiary of the Parent added as an
Originator pursuant to this Section.
Section 1.8 Termination of Status as an Originator. At any time
--------------------------------------
when more than one Person is an Originator, an Originator may terminate its
obligations as an Originator hereunder if:
(i) the Originator (a "Terminating Originator") shall have given
----------------------
Buyer (and the Collateral Agent and each Managing Agent, as Buyer's
assignees) not less than ninety (90) days' prior written notice of its
intention to terminate; provided, however, that the Originator shall not be
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required to give more than thirty (30) days' notice in the case of a
termination resulting from a merger permitted by Section 4.2(g),
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(ii) an Authorized Officer of the Parent shall have certified that
the termination by the Terminating Originator of its status as an
Originator will not have a Material Adverse Effect on the business,
financial condition or operations or assets of Buyer,
(iii) both immediately before and after giving effect to the
termination by the Terminating Originator, no Amortization Event or
Potential Amortization Event shall have occurred and be continuing or shall
reasonably be expected to occur as a result of such termination,
(iv) both immediately before and after giving effect to the
termination by the Terminating Originator, the Aggregate Capital shall not
exceed the Purchase Limit, and
(v) Buyer (and the Collateral Agent and each Managing Agent, as
Buyer's assignees) shall have consented (which such consent shall not be
unreasonably withheld), in writing, to the termination of the obligations
of such Terminating Originator.
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Any termination by an Originator shall become effective on the first Business
Day that follows the day on which the requirements of clauses (i) through (v)
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shall have been satisfied (or such later date specified in the notice or
certificate referred to in the clauses). Any termination by an Originator shall
terminate its rights and obligations hereunder; provided, however, that the
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termination shall not relieve the Terminating Originator of obligations which
relate to Transferred Receivables owned by or obligations of the Terminating
Originator arising prior to the effective date of the termination.
Section 1.9 Facility Fee.
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(a) In consideration for the agreement by Buyer to provide the
receivables purchase facility hereunder and to purchase Receivables from the
Originators pursuant to this Agreement, each Originator agrees to pay Buyer a
facility fee (the "Facility Fee") as set forth in this Section 1.9. The
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Facility Fee shall accrue from the date of the initial purchase from such
Originator hereunder, in each case to the Amortization Date, and shall be
payable in arrears by such Originator on each Settlement Date and the
Amortization Date.
(b) The Facility Fee payable by each Originator on any Settlement
Date and on the Amortization Date shall be calculated in accordance with the
following formula :
FF = FFOB x FFP
where:
FF = the Facility Fee payable by such Originator on such date.
FFOB = the aggregate Outstanding Balance of the Receivables that
were purchased from such Originator during the Accrual Period
immediately preceding such Settlement Date. (For purposes of
this calculation, the Outstanding Balance of a Receivable
shall be measured only at the time of such Receivable's
creation and sale (or in the case of the initial purchase
from any Originator, sale) to Buyer.)
FFP = the Facility Fee Percentage as measured on such Settlement
Date as determined pursuant to paragraph (c) below.
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(c) "Facility Fee Percentage" as measured on any Settlement Date
-----------------------
(or the Amortization Date) means for each Originator a percentage determined in
accordance with the following formula:
FFP = (OTD/360) x FR
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where:
FFP = the Facility Fee Percentage as measured on such Settlement Date
(or the Amortization Date);
OTD = the "Originator Turnover Days" for such Originator, which shall
------------------------
be equal to the product of (x) the quotient of (i) the aggregate
Outstanding Balance of Receivables originated by such Originator
during the Accrual Period which occurs two months prior to the
month in which such Settlement Date (or the Amortization Date)
occurs, divided by (ii) the aggregate amount of the Collections
received during the Accrual Period immediately preceding such
Settlement Date (or the Amortization Date) on Receivables
originated by such Originator, multiplied by (y) the number of
days in the calendar month coinciding with such Accrual Period;
and
FR = the Funding Rate as measured on such Settlement Date (or the
Amortization Date), as determined pursuant to paragraph (d)
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below.
(d) "Funding Rate" as measured on any Settlement Date (or the
------------
Amortization Date) means a per annum percentage rate determined in accordance
with the following formula:
FR = 0.02% + DRP + SFP + EXP
where:
FR = the Funding Rate as measured on such Settlement Date (or the
Amortization Date);
DRP = the "Discount Rate Percentage", which shall be equal to a
------------------------
fraction (expressed as a percentage) (x) the numerator of which
is the sum of the products obtained by multiplying (A) each CP
Rate, Base Rate or LIBO Rate applicable to Capital outstanding as
of the first day of the Accrual Period ending immediately prior
to such Settlement Date (or the Amortization Date), times (B) the
amount of Capital to which such CP Rate, Base Rate or LIBO Rate
applied on such first day, and (y) the denominator of which is
the aggregate outstanding amount of Capital on such first day;
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SFP = the "Servicer's Fee Percentage", which shall be equal to the per
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annum percentage rate set forth in Section 8.6 of the Purchase
------------
Agreement; and
EXP = the amount, which shall be equal to a fraction (expressed as a
percentage), (x) the numerator of which is the sum of any fees,
costs and expenses incurred by Buyer during the Accrual Period
preceding such Settlement Date or Amortization Date (and not
accounted for in the Adjustment Factor), including, without
limitation, reserve costs, tax payments and indemnity obligations
of Buyer for which Buyer is not indemnified pursuant to this
Agreement and (y) the denominator of which is the aggregate
Outstanding Balance of the Receivables that were purchased from
such Originator during the Accrual Period immediately preceding
such Settlement Date or Amortization Date; provided, however,
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that, for purposes of minimizing fluctuations in the rate
calculated as the Funding Rate, the Servicer may allocate and
spread any unscheduled or unaccruable costs and expenses of Buyer
over several Settlement Dates and the Amortization Date at the
Servicer's reasonable discretion, subject to the requirement that
such allocation be reasonably calculated to allow Buyer to
recover such costs and expenses over a reasonable period of time.
Section 1.10 Limited Role of the Parent. Although certain of the
--------------------------
Originators may do business under the name "Xxxxx & Minor", legal and beneficial
ownership of the Receivables (without giving effect to the transactions
contemplated hereunder) remains in the name of the Originator that generated
such Receivables. The Parent is an Originator for the sole purpose of
transferring any right, title or interest, if any, it may have in the
Receivables.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of Originators. Each
---------------------------------------------
Originator hereby represents and warrants to Buyer and each Purchaser, as
assignee of Buyer, that:
(a) Corporate Existence and Power. Such Originator is a corporation
----------------------------
duly organized, validly existing and in good standing under the laws of its
state of incorporation, and is duly qualified to do business and is in good
standing as a foreign corporation, and has and holds all corporate power and all
governmental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which failure to qualify would have a
Material Adverse Effect.
(b) Power and Authority; Due Authorization Execution and Delivery.
-------------------------------------------------------------
The
11
execution and delivery by such Originator of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, such Originator's use of the proceeds
of the Purchase made hereunder, are within its corporate powers and authority
and have been duly authorized by all necessary corporate action on its part.
This Agreement and each other Transaction Document to which such Originator is a
party has been duly executed and delivered by such Originator.
(c) No Conflict. The execution and delivery by such Originator of
-----------
this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate or articles of incorporation or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by which it or any
of its property is bound, or (iv) any order, writ, judgment, award, injunction
or decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on assets of such Originator or its
Subsidiaries (except as created hereunder); and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the
--------------------------
financing statements required hereunder, 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 and delivery by such
Originator of this Agreement and each other Transaction Document to which it is
a party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings
--------------
pending, or to the best of such Originator's knowledge, threatened, against or
affecting such Originator, or any of its properties, in or before any court,
arbitrator or other body, that could reasonably be expected to have a Material
Adverse Effect. Such Originator is not in default with respect to any order of
any court, arbitrator or governmental body.
(f) Binding Effect. This Agreement and each other Transaction
--------------
Document to which such Originator is a party constitute the legal, valid and
binding obligations of such Originator enforceable against such Originator in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). Each sale made by such Originator pursuant to
this Agreement shall constitute a valid sale, transfer and assignment of
Receivables to Buyer, enforceable against creditors of, and purchasers from,
such Originator.
(g) Accuracy of Information. All information heretofore furnished by
-----------------------
such Originator or any of its Affiliates to Buyer (or to the Collateral Agent or
any Managing Agent, as
12
Buyer's assignees) for purposes of or in connection with this Agreement, any of
the other Transaction Documents or any transaction contemplated hereby or
thereby is, and all such information hereafter furnished by such Originator or
any of its Affiliates to Buyer (or to the Collateral Agent or any Managing
Agent, as Buyer's assignees) will be, true and accurate in every material
respect on the date such information is stated or certified (or, if such
information specifies another date, such other date) and does not and will not
contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not materially
misleading.
(h) Use of Proceeds. No proceeds of the Purchase hereunder will be
---------------
used (i) 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 or (ii) to acquire any "margin stock" as such term is defined
in Regulation U promulgated by the Board of Governors of the Federal Reserve
System from time to time.
(i) Good Title. Immediately prior to the time each Receivable is
----------
transferred to Buyer hereunder, such Originator shall be the legal and
beneficial owner of each such Receivable and Related Security with respect
thereto, free and clear of any Adverse Claim, except as created by the
Transaction Documents. There have been duly filed all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect such Originator's
ownership interest in each Receivable, its Collections and the Related Security.
(j) Perfection. This Agreement, together with the filing of the
----------
financing statements contemplated hereby, is effective to transfer to Buyer (and
Buyer shall acquire from such Originator) legal and equitable title to, with the
right to sell and encumber each Receivable existing and hereafter arising,
together with the Related Security and Collections with respect thereto, free
and clear of any Adverse Claim, except as created by the Transactions Documents.
There have been duly filed all financing statements or other similar instruments
or documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect Buyer's ownership or security interest in the
Receivables, the Related Security and the Collections.
(k) Places of Business. The principal places of business and chief
------------------
executive office of such Originator and the offices where it keeps all of its
Records are located at the address(es) listed on Exhibit II or such other
----------
locations of which Buyer has been notified in accordance with Section 4.2(a) in
--------------
jurisdictions where all action required by Section 4.2(a) has been taken and
--------------
completed. Such Originator's Federal Employer Identification Number is
correctly set forth on Exhibit II.
----------
(l) Collections. The conditions and requirements set forth in
-----------
Section 4.1(j)
--------------
13
have at all times been satisfied and duly performed. The names and addresses of
all Collection Banks, together with the account numbers of the Collection
Accounts of such Originator at each Collection Bank and the post office box
number of each Lock-Box, are listed on Exhibit III.
-----------
(m) Material Adverse Effect. Since December 31, 1999, no event has
-----------------------
occurred that would have a Material Adverse Effect.
(n) Names. In the past five (5) years, such Originator has not used
-----
any corporate names, trade names or assumed names other than as listed on
Exhibit II.
----------
(o) [Reserved].
--------
(p) Not a Holding Company or an Investment Company. Such Originator
----------------------------------------------
is not a "holding company" or a "subsidiary holding company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or any successor statute. Such Originator is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or any successor statute.
(q) Compliance with Law. Such Originator has complied in all
-------------------
respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject which if violated
would have a Material Adverse Effect. Each Receivable, together with the
Contract related thereto, does not contravene any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and regulations
--------- ------------------
relating to truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy), and no part of
such Contract is in violation of any such law, rule or regulation.
(r) Compliance with Credit and Collection Policy. Such Originator
--------------------------------------------
has complied in all material respects with its Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any change
to such Credit and Collection Policy, except such material change as to which
Buyer has been notified in accordance with Section 4.1(a)(iii).
-------------------
(s) Payments to Originator. With respect to each Receivable
----------------------
transferred to Buyer hereunder, the Purchase Price received by such Originator
constitutes reasonably equivalent value in consideration therefor and such
transfer was not made for or on account of an antecedent debt. No transfer by
such Originator of any Receivable hereunder is or may be voidable under any
section of the Federal Bankruptcy Code.
(t) Enforceability of Contracts. Each Contract with respect to each
---------------------------
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any
14
accrued interest thereon, enforceable against the Obligor in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or limiting
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable purchased by Buyer from
--------------------
such Originator hereunder and included in the Net Receivables Balance was an
Eligible Receivable on the date of such Purchase.
(v) [Reserved].
----------
(w) Accounting. Such Originator accounts for the transactions
----------
contemplated by this Agreement on its books and records and, for purposes of
generally accepted accounting principles, as sales.
(x) Compliance with Representations. On and as of the date of the
-------------------------------
Purchase and on and as of each subsequent date each Receivable came into
existence, each Originator hereby represents and warrants that all of the other
representations and warranties set forth in this Article II are true and correct
----------
on and as of each such date (and after giving effect to all Receivables in
existence on each such date) as though made on and as of each such date (except
where such representation or warranty relates to an earlier date, in which case
as of such earlier date).
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1 Conditions Precedent to Purchase. The Purchase under
--------------------------------
this Agreement is subject to the conditions precedent that (a) Buyer shall have
received on or before the date of such purchase those documents listed on
Schedule A and (b) all of the conditions to the initial purchase under the
----------
Purchase Agreement shall have been satisfied or waived in accordance with the
terms thereof.
Section 3.2 Conditions Precedent to Subsequent Payments. Buyer's
-------------------------------------------
obligation to pay for Receivables coming into existence after the date hereof
shall be subject to the further conditions precedent that (a) the Facility
Termination Date shall not have occurred; and (b) Buyer (and the Collateral
Agent and each Managing Agent, as Buyer's assignees) shall have received such
other approvals, opinions or documents as it may reasonably request. Each
Originator represents and warrants that the representations and warranties set
forth in Article II are true and correct on and as of the date each Receivable
----------
came into existence as though made on and as of such date.
15
ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants of Originators. Until the date
------------------------------------
on which this Agreement terminates in accordance with its terms and all
obligations of such Originator have been paid in full, each Originator hereby
covenants to Buyer and the Purchasers, as assignees of Buyer, as to itself, as
set forth below:
(a) Financial Reporting. Each Originator will maintain, for itself
-------------------
and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish to Buyer (and to the
Collateral Agent and each Managing Agent, as Buyer's assignees):
(i) Compliance Certificate. Within ninety (90) days after the close
----------------------
of each of its respective fiscal years, and within forty-five (45)
days after the close of the first three (3) quarterly periods of each
of its respective fiscal years, a compliance certificate in
substantially the form of Exhibit IV signed by such Originator's
----------
Authorized Officer.
(ii) Copies of Notices. Promptly upon its receipt of any notice,
-----------------
request for consent, financial statements, certification, report or
other communication under or in connection with any Transaction
Document from any Person other than Buyer, the Managing Agents, the
Collateral Agent or the Purchasers, copies of the same.
(iii) Change in Credit and Collection Policy. Prior to the
--------------------------------------
effectiveness of any material change in or amendment to the Credit and
Collection Policy, a copy of the Credit and Collection Policy then in
effect and a notice indicating such change or amendment.
(iv) Other Information. Promptly, from time to time, such other
-----------------
information, documents, records or reports relating to the Receivables
or the condition or operations, financial or otherwise, of such
Originator as Buyer (or the Collateral Agent or any Managing Agent, as
Buyer's assignees) may from time to time reasonably request in order
to protect the interests of Buyer (and the Collateral Agent and each
Managing Agent, as Buyer's assignees) under or as contemplated by this
Agreement.
(b) Notices. Each Originator will notify Buyer (and the Collateral
-------
Agent and each Managing Agent, as Buyer's assignees) in writing of any of the
following promptly upon learning of the occurrence thereof, describing the same
and, if applicable, the steps being taken
16
with respect thereto:
(i) Amortization Events or Potential Amortization Events. The
----------------------------------------------------
occurrence of each Amortization Event and each Potential Amortization
Event, by a statement of an Authorized Officer of such Originator.
(ii) Judgment and Proceedings. (1) The entry of any judgment or
------------------------
decree against any Originator or any of its Subsidiaries if the amount
of any such judgment or decree against such Originator or one of such
Subsidiaries exceeds $500,000 or more in the aggregate (to the extent
not paid or fully covered by insurance provided by a carrier who has
acknowledged coverage) or (2) the institution of any litigation,
arbitration proceeding or governmental proceeding against any such
Originator or its Subsidiaries, if such litigation or proceeding could
reasonably be expected to have a Material Adverse Effect, or seeks to
enjoin performance of or otherwise relates to the Transaction
Documents.
(iii) Material Adverse Effect. The occurrence of any event or
-----------------------
condition that has, or could reasonably be expected to have, a
Material Adverse Effect.
(iv) Defaults Under Other Agreements. The occurrence of a default or
-------------------------------
an event of default under any other financing arrangements pursuant to
which any Originator is a debtor or an obligor if the outstanding
Indebtedness for all such financing arrangements where there has been
a default or event of default exceeds $10,000,000 in the aggregate.
(c) Compliance with Laws and Preservation of Corporate Existence.
------------------------------------------------------------
Each Originator will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject which, if violated, would have a Material Adverse Effect.
Each Originator will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each
jurisdiction where failure to do so would have a Material Adverse Effect;
provided, however, that the merger of any Originator as permitted by Section
-------- ------- -------
4.2(g) shall not be prohibited by the second sentence of this Section 4.1(c).
------ --------------
(d) Audits. Each Originator will furnish to Buyer (and to the
------
Collateral Agent and each Managing Agent, as Buyer's assignees) from time to
time such information with respect to it and the Receivables as Buyer (or the
Collateral Agent or any Managing Agent, as Buyer's assignees) may reasonably
request. Each Originator will, from time to time during regular business hours
as requested by Buyer (or the Collateral Agent or any Managing Agent, as Buyer's
assignees), upon reasonable notice, permit Buyer (and/or the Collateral Agent
and each
17
Managing Agent, as Buyer's assignees) or their respective agents or
representatives, (i) to examine and make copies of and abstracts from all
Records in the possession or under the control of such Originator relating to
the Receivables and the Related Security, including, without limitation, the
related Contracts; provided, however, that Buyer (and the Collateral Agent and
-------- -------
each Managing Agent, as Buyer's assignees) may not make and retain copies of any
Contract, and (ii) to visit the offices and properties of such Originator for
the purpose of examining such materials described in clause (i) above, and to
----------
discuss matters relating to such Originator's financial condition or the
Receivables and the Related Security or such Originator's performance under any
of the Transaction Documents or such Originator's performance under the
Contracts (subject to confidentiality restrictions in the relevant Contracts)
and, in each case, with any of the officers or employees of such Originator
having knowledge of such matters. The Originator shall be solely responsible
for the reasonable costs of each such examination; provided, that so long as no
--------
Amortization Event under the Purchase Agreement is outstanding, such Originator
shall not be liable for the cost of more than one (1) such examination during
any calendar year.
(e) Keeping and Marking of Records and Books.
----------------------------------------
(i) Each Originator will maintain and implement administrative and
operating procedures (including, without limitation, an ability to
recreate records evidencing Receivables 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 immediate identification of
each new Receivable and all Collections of and adjustments to each
existing Receivable); provided, however, that nothing in this sentence
-------- -------
shall require any Originator to retain records for a period longer
than seven (7) years after creation. Each Originator will give Buyer
(and the Collateral Agent and each Managing Agent, as Buyer's
assignees) notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(ii) Each Originator will (A) on or prior to the date hereof, xxxx its
master data processing records and other books and records relating to
the Receivables with a legend, acceptable to Buyer (and to the
Collateral Agent and each Managing Agent, as Buyer's assignees),
describing Buyer's ownership interests in the Receivables and further
describing the Purchaser Interests under the Purchase Agreement and
(B) upon the request of Buyer (or the Collateral Agent or any Managing
Agent, as Buyer's assignee), (x) xxxx each Contract with a legend
describing Buyer's ownership interests in the Receivables and further
describing the Purchaser Interests of the Managing Agents (on behalf
of the Purchasers) and (y) deliver to Buyer (or the Collateral Agent,
as Buyer's assignee) all Contracts
18
(including, without limitation, all multiple originals of any such
Contract) relating to the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Each
----------------------------------------------------------
Originator will timely and fully (i) perform and comply with all provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables, and (ii) comply in all respects with its Credit and
Collection Policy in regard to each Receivable and the related Contract.
(g) [Reserved].
--------
(h) Ownership. Each Originator will, at its expense, take all
---------
necessary action to establish and maintain, irrevocably in Buyer, legal and
equitable title to the Receivables, the Related Security and the Collections,
free and clear of any Adverse Claims other than Adverse Claims in favor of Buyer
(and the Collateral Agent and each Managing Agent, as Buyer's assignees)
(including, without limitation, the filing of all financing statements or other
---------- ------------------
similar instruments or documents necessary under the UCC (or any comparable law)
of all appropriate jurisdictions to perfect Buyer's interest in such
Receivables, Related Security and Collections and such other action to perfect,
protect or more fully evidence the interest of Buyer (and the Collateral Agent
and each Managing Agent, as Buyer's assignees) as Buyer (or the Collateral Agent
or any Managing Agent, as Buyer's assignee) may reasonably request).
(i) Purchasers' Reliance. Each Originator acknowledges that the
--------------------
Purchasers are entering into the transactions contemplated by the Purchase
Agreement in reliance upon Buyer's identity as a legal entity that is separate
from each Originator and any Affiliates thereof. Therefore, from and after the
date of execution and delivery of this Agreement, each Originator will take all
reasonable steps including, without limitation, all steps that Buyer (or the
Collateral Agent or any Managing Agent, as Buyer's assignee) may from time to
time reasonably request, to maintain Buyer's identity as a separate legal entity
and to make it manifest to third parties that Buyer is an entity with assets and
liabilities distinct from those of any Originator and any Affiliates thereof and
not just a division of any Originator. Without limiting the generality of the
foregoing and in addition to the other covenants set forth herein, each
Originator (i) will not hold itself out to third parties as liable for the debts
of Buyer nor purport to own the Receivables and other assets acquired by Buyer,
(ii) will take all other actions necessary on its part to ensure that Buyer is
at all times in compliance with the covenants set forth in Section 7.1(i) of the
--------------
Purchase Agreement and (iii) will cause all tax liabilities arising in
connection with the transactions contemplated herein or otherwise to be
allocated between such Originator and Buyer on an arm's-length basis and in a
manner consistent with the procedures set forth in U.S. Treasury Regulations
(S)(S)1.1502-33(d) and 1.1552-1.
(j) Collections. Each Originator will cause (1) all proceeds from
-----------
all Lock-
19
Boxes to be directly deposited by a Collection Bank into a Collection Account
and (2) each Lock-Box and Collection Account to be subject at all times to a
Collection Account Agreement that is in full force and effect; provided,
--------
however, that with respect to each Collection Account existing on the date of
-------
this Agreement and not subject to an Existing Collection Account Agreement, such
Collection Account need not be subject to a Collection Account Agreement until
the date 90 days after the date of this Agreement; and, provided further, that
-------- -------
with respect to each Existing Collection Account Agreement, such agreement shall
have been assigned to the Collateral Agent on or prior to the date hereof (in
the case of each Existing Collection Account Agreement with Bank of America,
National Association or Bank One, NA), or shall be replaced by a new Collection
Account Agreement on or prior to the date thirty (30) days after the date of
this Agreement, and in the case of each Collection Account Agreement assigned to
the Collateral Agent on or before the date of this Agreement, shall be replaced
by a new Collection Account Agreement on or prior to the date 90 days after the
date of this Agreement. In the event any payments relating to Receivables are
remitted directly to an Originator or any Affiliate of an Originator, such
Originator will remit (or will cause all such payments to be remitted by any
such Affiliate) directly to a Collection Bank for deposit into a Collection
Account within two (2) Business Days following receipt thereof and, at all times
prior to such remittance, such Originator will itself hold or, if applicable,
will cause such payments to be held by any such Affiliate, in trust for the
exclusive benefit of Buyer (and the Collateral Agent and each Managing Agent, as
Buyer's assignees, for the benefit of the Purchasers). Each Originator will
transfer exclusive ownership, dominion and control of its respective Lock-Box
and Collection Account to Buyer and, will not grant the right to take dominion
and control of any Lock-Box or Collection Account at a future time or upon the
occurrence of a future event to any Person, except to Buyer (or the Collateral
Agent or any Managing Agent, as Buyer's assignee) as contemplated by this
Agreement and the Purchase Agreement. Only Collections of Receivables shall be
deposited into the Collection Accounts.
(k) Taxes. Each Originator will file all tax returns and reports
-----
required by law to be filed by it and promptly pay all material taxes and
governmental charges (including any governmental charges the nonpayment of which
could result in a Lien on the Receivables or the Related Security) at any time
owing; provided, however, that no Originator shall be required to pay any such
-------- -------
taxes or governmental charges which are not yet delinquent or are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its books
unless the failure to make any such payment (1) shall give rise to an immediate
right to foreclose on an Adverse Claim securing such amounts, (2) shall result
in the attachment of an Adverse Claim securing such amounts in excess of
$1,000,000 in the aggregate, or (3) could reasonably be expected to have a
Material Adverse Effect.
Section 4.2 Negative Covenants of Originators. Until the date on
---------------------------------
which this Agreement terminates in accordance with its terms and all obligations
or such Originator
20
hereunder have been paid in full, each Originator hereby covenants to Buyer and
the Purchasers, as assignees of Buyer, as to itself, that:
(a) Name Change, Offices and Records. Such Originator will not
--------------------------------
change its name, identity or corporate structure (within the meaning of Section
-------
9-402(7) of any applicable enactment of the UCC) or relocate its chief executive
--------
office or any office where corporate credit management is administered unless it
shall have: (i) given Buyer (and the Collateral Agent and each Managing Agent,
as Buyer's assignees) at least forty-five (45) days' prior written notice
thereof and (ii) delivered to Buyer (and to the Collateral Agent and each
Managing Agent, as Buyer's assignees) all financing statements, instruments and
other documents requested by Buyer (or the Collateral Agent or any Managing
Agent, as Buyer's assignee) in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. Such Originator will
------------------------------------------
not add or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless Buyer (and the Collateral Agent and each Managing
Agent, as Buyer's assignees) shall have received, at least ten (10) days before
the proposed effective date therefor, (i) written notice of such addition,
termination or change and (ii) with respect to the addition of a Collection Bank
or a Collection Account or Lock-Box, an executed Collection Account Agreement
with respect to the new Collection Account or Lock-Box; provided, however, that
-------- -------
an Originator may make changes in instructions to Obligors regarding payments if
such new instructions require such Obligor to make payments to another existing
Collection Account.
(c) Modifications to Contracts and Credit and Collection Policy.
-----------------------------------------------------------
Such Originator will not make any change to its Credit and Collection Policy
that could materially and adversely affect the collectibility of the Receivables
or decrease the credit quality of any newly created Receivables, without the
prior written consent of Buyer (and the Collateral Agent and each Managing
Agent, as Buyer's assignees). Except as otherwise permitted in its capacity as
Servicer pursuant to Article VIII of the Purchase Agreement, O&M Medical will
------------
not extend, amend or otherwise modify the terms of any Receivable or any
Contract related thereto other than in accordance with the related Originator's
Credit and Collection Policy.
(d) Sales, Liens. Such Originator will not sell, assign (by
------------
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, or create or suffer to exist any Adverse Claim upon (including,
without limitation, the filing of any financing statement) or with respect to,
any Receivable, Related Security or Collections, or upon or with respect to any
Contract under which any Receivable arises, or any Lock-Box or Collection
Account, or assign any right to receive income with respect thereto (other than,
in each case, (1) the creation of the interests therein in favor of Buyer
provided for herein or (2) an Adverse Claim resulting from the nonpayment of
taxes which is permitted to exist under Section 4.1(k)), and such Originator
--------------
shall
21
defend the right, title and interest of Buyer (and the Collateral Agent and each
Managing Agent, as Buyer's assignees) in, to and under any of the foregoing
property, against all claims of third parties claiming through or under such
Originator. Such Originator shall not create or suffer to exist any mortgage,
pledge, security interest, encumbrance, lien, charge or other similar
arrangement on any inventory the sale or lease of which would give rise to a
Receivable.
(e) [Reserved].
(f) Accounting for Purchase. Such Originator will not, and will not
-----------------------
permit any Affiliate to, account for or treat (whether in financial statements
or otherwise) the transactions contemplated hereby in any manner other than the
sale of the Receivables and the Related Security by such Originator to Buyer or
in any other respect account for or treat the transactions contemplated hereby
in any manner other than as a sale of the Receivables and the Related Security
by such Originator to Buyer except to the extent that such transactions are not
recognized on account of consolidated financial reporting in accordance with
generally accepted accounting principles.
(g) Merger. No Originator shall merge or consolidate with or into,
------
or convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions, and except as otherwise contemplated herein) all
or any material part of its assets (whether now owned or hereafter acquired) to,
or acquire all or any material part of the assets of, any Person; provided,
--------
however, that any Originator may merge with or into (i) any other Originator or
-------
(ii) any direct or indirect wholly-owned subsidiary of the Parent (other than
Buyer), so long as the surviving entity of such merger expressly assumes the
obligations of such Originator hereunder and the Parent confirms that the
guaranty under Article XIV of the Purchase Agreement covers the obligations of
such surviving entity as Originator.
ARTICLE V
AMORTIZATION EVENTS
Section 5.1 Amortization Events. The occurrence of any one or more
-------------------
of the following events shall constitute an Amortization Event:
(a) Any Originator shall fail (i) to make any payment or deposit
required hereunder when due and such failure continues for two (2) Business
Days, or (ii) to perform or observe any term, covenant or agreement hereunder
(other than as referred to in clause (i) of this paragraph (a)) or any other
----------
Transaction Document to which it is a party and such failure shall continue for
five (5) consecutive Business Days.
(b) Any representation, warranty, certification or statement made by
any Originator in this Agreement, any other Transaction Document or in any other
document
22
delivered pursuant hereto or thereto shall prove to have been incorrect
in any material respect when made or deemed made.
(c) Failure of any Originator to make any payment or payments when
due (after giving effect to any applicable grace period) with respect to
Indebtedness with an aggregate principal amount in excess of $10,000,000 for all
Originators; or the default by any Originator in the performance of any term,
provision or condition contained in any agreement under which any Indebtedness
with an aggregate principal amount in excess of $10,000,000 for all Originators
was created or is governed, the effect of which is to cause, or to permit the
holder or holders of such Indebtedness to cause, such Indebtedness to become due
prior to its stated maturity; or any such Indebtedness of any Originator shall
be declared to be due and payable or required to be prepaid (other than by a
regularly scheduled payment) prior to the date of maturity thereof.
(d) (i) Any Originator or any of its Subsidiaries shall generally not
pay its debts as such debts become due or shall admit in writing its inability
to pay its debts generally or shall make a general assignment for the benefit of
creditors; (ii) any proceeding shall be instituted by or against any Originator
or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or any substantial part of its property which
proceeding, if not instituted by such Originator, shall remain undismissed or
unstayed for a period of thirty (30) days; or (iii) any Originator or any of its
Subsidiaries shall take any corporate action to authorize any of the actions set
forth in the foregoing clauses (i) or (ii) of this subsection (d).
----------- ---- --------------
(e) A Change of Control shall occur.
(f) One or more final judgments for the payment of money (in excess
of $10,000,000 in the aggregate for all such judgments) shall be entered against
any Originator on claims not covered by insurance or as to which the insurance
carrier has denied its responsibility, and such judgment shall continue
unsatisfied and in effect for thirty (30) consecutive days without a stay of
execution.
Section 5.2 Remedies. Upon the occurrence and during the
--------
continuation of an Amortization Event, Buyer may take any of the following
actions: (i) declare the Amortization Date to have occurred, whereupon the
Amortization Date shall forthwith occur, without demand, protest or further
notice of any kind, all of which are hereby expressly waived by each Originator;
provided, however, that upon the occurrence of Amortization Event described in
-------- -------
Section 5.1(d), or of an actual or deemed entry of an order for relief with
--------------
respect to an Originator
23
under the Federal Bankruptcy Code, the Amortization Date shall automatically
occur, without demand, protest or any notice of any kind, all of which are
hereby expressly waived by each Originator and (ii) to the fullest extent
permitted by applicable law, declare that the Default Fee shall accrue with
respect to any amounts then due and owing by Buyer to such Originator. The
aforementioned rights and remedies shall be in addition to all other rights and
remedies of Buyer and its assigns available under this Agreement, by operation
of law, at equity or otherwise, all of which are hereby expressly preserved,
including, without limitation, all rights and remedies provided under the UCC,
all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities by Originators. (a) Without limiting any
--------------------------
other rights that Buyer may have hereunder or under applicable law, each
Originator, jointly and severally, hereby agrees to indemnify Buyer, the
Collateral Agent, each Managing Agent and each Purchaser, as Buyer's assignees,
and their respective assigns, officers, directors, agents and employees (each an
"Indemnified Party") from and against any and all damages, losses, claims,
-----------------
taxes, liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of Buyer) and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out of
--------------------
or as a result of this Agreement or the acquisition, either directly or
indirectly, by Buyer of an interest in the Receivables, excluding, however:
(i) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted
from gross negligence or willful misconduct on the part of the
Indemnified Party seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes losses in
respect of Receivables that are uncollectible on account of the
insolvency, bankruptcy or lack of creditworthiness of the related
Obligor; or
(iii) any Excluded Taxes;
provided, however, that nothing contained in this sentence shall limit the
--------- --------
liability of any Originator or limit the recourse of Buyer to any Originator for
amounts otherwise specifically provided to be paid by such Originator under the
terms of this Agreement.
Without limiting the generality of the foregoing indemnification, each
Originator shall, jointly and severally, indemnify Buyer for Indemnified Amounts
(including, without
24
limitation, losses in respect of uncollectible receivables, regardless of
whether reimbursement therefor would constitute recourse to such Originator)
relating to or resulting from:
(i) any representation or warranty made by such Originator (or any
officers of such Originator) under or in connection with this
Agreement, any other Transaction Document or any other information or
report delivered by such Originator pursuant hereto or thereto, which
shall have been false or incorrect when made or deemed made;
(ii) the failure by such Originator, to comply with any applicable
law, rule or regulation with respect to any Receivable or Contract
related thereto, or the nonconformity of any Receivable or Contract
included therein with any such applicable law, rule or regulation or
any failure of such Originator to keep or perform any of its
obligations, express or implied, with respect to any Contract;
(iii) any failure of such Originator to perform its duties, covenants
or other obligations in accordance with the provisions of this
Agreement or any other Transaction Document;
(iv) any products liability or similar claim arising out of or in
connection with merchandise, insurance or services that are the
subject of any Contract;
(v) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the 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 resulting from the sale
of the merchandise or service related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any time with
other funds;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby, the use of the proceeds of the
Purchase, the ownership of the Receivables or any other investigation,
litigation or proceeding relating to such Originator in which any
Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune
from civil and commercial
25
law and suit on the grounds of sovereignty or otherwise from any legal
action, suit or proceeding;
(ix) any Amortization Event described in Section 5.1(d);
--------------
(x) [Reserved];
(xi) any failure to vest and maintain vested in Buyer, or to
transfer to Buyer, legal and equitable title to, and ownership of, the
Receivables, the Related Security and the Collections, free and clear
of any Adverse Claim;
(xii) 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 Receivable, the Related Security and Collections with respect
thereto, and the proceeds of any thereof, whether at the time of the
Purchase or at any subsequent time;
(xiii) any action or omission by such Originator which reduces or
impairs the rights of Buyer with respect to any Receivable or the
value of any such Receivable; and
(xiv) any attempt by any Person (other than a Purchaser) to void the
Purchase hereunder under statutory provisions or common law or
equitable action.
(b) Notwithstanding anything to the contrary in this Agreement,
solely for the purposes of determining Indemnified Amounts owing under this
Section 6.1, any representation, warranty or covenant qualified by materiality
-----------
or the occurrence of a Material Adverse Effect shall not be so qualified.
(c) Taxes. (i) Any and all payments made hereunder to an
Indemnified Party shall be made free and clear of and without deduction for any
and all current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto excluding: (A) franchise
---------
taxes, excise taxes and taxes imposed on or measured by all or part of the gross
or net income (but not including any such tax in the nature of a withholding
tax) of such Indemnified Party, in each case, by the jurisdiction under the laws
of which such Indemnified Party is organized or has its applicable lending
office or any political subdivision of any thereof, to the extent that the
imposition of such taxes is consistent with the Intended Characterization of the
Purchaser Interests for income tax purposes, and (B) taxes that would not have
been imposed if the only connection between such Indemnified Party and the
jurisdiction imposing such taxes was the activities of such Indemnified Party
pursuant to or in respect of this Agreement (including entering into, lending
money or extending credit pursuant to, receiving payments under, or enforcing
this Agreement) (all such excluded taxes, levies, imposts,
26
deductions, changes, withholding and liabilities collectively or individually
referred to herein as Excluded Taxes" and all such nonexcluded taxes, levies,
--------------
imposts, deductions, charges, withholdings, and liabilities collectively or
individually referred to herein as "Taxes"). If any Originator shall be required
-----
to deduct any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Indemnified Party: (A) the sum payable shall be increased by
the amount (an "additional amount") necessary so that after making all required
-----------------
deductions (including deductions applicable to additional sums payable under
this Section 6.1(c)) such Indemnified Party shall receive an amount equal to
--------------
the sum it would have received had no such deductions been made, (B) such
Originator shall make such deductions and (C) such Originator shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.
(ii) In addition, each Originator agrees to pay to the relevant
Governmental Authority in accordance with applicable law all taxes, levies,
imposts, deductions, charges, assessments or fees of any kind (including but not
limited to any current or future stamp or documentary taxes or any other excise
or property taxes, charges, or similar levies, but excluding any Excluded Taxes)
imposed upon any Indemnified Party as a result of the transactions contemplated
by this Agreement or that arise from any payment made hereunder or from the
execution, delivery, or registration of or otherwise similarly with respect to,
this Agreement ("Other Taxes").
-----------
(iii) Each Originator agrees to indemnify each Indemnified Party from
and against the full amount of Taxes and Other Taxes arising out of this
Agreement (whether directly or indirectly) imposed upon or paid by such Person
and any liability (including penalties, interest, and expenses (including
attorneys' fees and expenses)) arising with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted by the relevant
Governmental Authority (including any Taxes or Other Taxes imposed upon such
Person on account of the Intended Characterization not being respected by a
relevant Government Authority). A certificate as to the amounts prepared by an
Indemnified Party, absent manifest error, shall be final, conclusive, and
binding for all purposes. Such indemnification shall be made within 30 days
after the date the Indemnified Party makes a timely written demand therefor or
the time at which such amount is payable after a timely written demand therefor
has been made, whichever is earlier. A written demand will be considered
"timely" for purposes of the preceding sentence only if it is received by such
Originator no later than 180 days after the earlier of (A) the date on which
such Indemnified Party makes such payment of Taxes or Other Taxes or liability
arising therefrom or with respect thereto and (B) the date on which the relevant
Governmental Authority or other party makes written demand upon such Indemnified
Party for payment of such Taxes or Other Taxes or liability arising therefrom or
with respect thereto.
(iv) As soon as practicable after the date of any payment of Taxes or
Other Taxes by an Originator to a Governmental Authority hereunder, such
Originator will deliver to
27
the relevant Indemnified Party the original or a certified copy of a receipt
issued by such Governmental Authority evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section
-------
6.1(c) shall survive the termination of this Agreement.
------
(vi) Each Purchaser and each Participant that is granted a
participating interest in the Purchaser Interests and that is organized under
the laws of a jurisdiction other than the United States, any State thereof, or
the District of Columbia (each a "Non-U.S. Purchaser") shall deliver to Buyer or
------------------
the Collateral Agent: (A) two copies of either United States Internal Revenue
Service Form W-8BEN or Form W-8ECI (whichever is applicable and including any
successor forms thereto), or (B) in the case of a Non-U.S. Purchaser claiming an
exemption from U.S. federal withholding tax under Section 871(b) or 881(c) of
the Code with respect to payments of "portfolio interest," a form W-8BEN (or any
subsequent versions thereof or successors thereto) and a certificate
representing that such Non-U.S. Purchaser is not a bank for purposes of Section
881(c) of the Code, in either case properly completed and duly executed by such
Non-U.S. Purchaser claiming complete exemption from U.S. federal withholding tax
on payments by the Originators under this Agreement. Such forms shall be
delivered by each Non-U.S. Purchaser before the date it receives its first
payment with respect to a Purchaser Interest, and before the date it receives
its first payment with respect to a Purchaser Interest occurring after the date,
if any, that such Non-U.S. Purchaser changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
------------------
each Non-U.S. Purchaser shall deliver such forms promptly after (or, if
reasonably practicable, prior to) the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Purchaser. Notwithstanding any other
provision of this Section 6.1(c)(vi), a Non-U.S. Purchaser shall not be required
------------------
to deliver any form pursuant to this Section 6.1(c)(vi) that such Non-U.S.
------------------
Purchaser is not legally able to deliver. Each Purchaser or Participant (other
than any exempt person as described in applicable Treasury Regulations) that is
organized under the laws of the United States or any state thereof or the
District of Columbia shall deliver to Buyer an original copy of Internal Revenue
Service Form W-9 (or applicable successor form) properly completed and duly
executed by such Purchaser or Participant.
(vii) No Originator shall be required to indemnify any Non-U.S.
Purchaser, or to pay any additional amounts to any Non-U.S. Purchaser, in
respect of United States Federal withholding tax (or any withholding tax imposed
by a state that applies only when such United States federal withholding tax is
imposed) pursuant to this Section 6.1(c) to the extent that: (A) the obligation
--------------
to withhold amounts with respect to United States federal withholding tax
existed on the date such Non-U.S. Purchaser became a party to the Purchase
Agreement or was granted a participating interest in the Purchaser Interests, as
applicable, or, with respect to payments to a New Lending Office, the date such
Non-U.S. Purchaser designated such New Lending Office;
28
provided, however, that this clause (A) shall not apply to any Non-U.S.
-------- -------
Purchaser or New Lending Office that is granted, assigned, or transferred a
participating interest in the Purchaser Interests at the request of Buyer and
provided further, however, that this clause (A) shall not apply to any Non-U.S.
Purchaser or New Lending Office that is assigned an interest in the Purchaser
Interests by a Purchaser to the extent that the indemnity payment or additional
amounts such Non-U.S. Purchaser or New Lending Office would be entitled to
receive (without regard to this clause (A)) do not exceed the indemnity payment
or additional amounts that the Purchaser making the assignment to such Non-U.S.
Purchaser or New Lending Office would have been entitled to receive in the
absence of such assignment; or (B) the obligation to make such indemnification
or to pay such additional amounts would not have arisen but for a failure by
such Non-U.S. Purchaser to comply with the provisions of paragraph (vi) above
(it being understood that the Non-U.S. Purchaser shall not have failed to comply
with the provisions of paragraph (vi) above if it is legally unable to deliver
the forms described therein on any date after it is granted a participation
interest in Purchaser Interests or designated a New Lending Office).
(viii) Any Indemnified Party claiming any indemnity payment or
additional amounts payable pursuant to this Section 6.1(c) shall use reasonable
--------------
efforts (consistent with legal and regulatory restrictions) to file any
certificate or document reasonably requested in writing by an Originator or to
change the jurisdiction of its applicable lending office if the making of such a
filing or change would avoid the need for or reduce the amount of any such
indemnity payment or additional amounts that may thereafter accrue and would
not, in the good faith determination of such Indemnified Party, be otherwise
disadvantageous to such Indemnified Party.
(ix) Nothing contained in this Section 6.1(c) shall require an
--------------
Indemnified Party to make available any of its tax returns (or any other
information that it deems to be confidential or proprietary).
(x) If any Indemnified Party receiving an indemnification payment
hereunder with respect to Taxes or Other Taxes or liabilities arising therefrom
shall subsequently receive a refund from any taxing authority which is
specifically attributable to such indemnification payment, such Person shall
promptly pay such refund to the applicable Originator.
Section 6.2 Other Costs and Expenses. The Originators shall pay to
------------------------
Buyer on demand all costs and out-of-pocket expenses in connection with the
preparation, execution, delivery and administration of this Agreement, the
transactions contemplated hereby and the other documents to be delivered
hereunder. The Originators shall pay to Buyer on demand any and all costs and
expenses of Buyer, if any, including reasonable counsel fees and expenses in
connection with the enforcement of this Agreement and the other documents
delivered hereunder and in connection with any amendment, restructuring or
workout of this Agreement or such documents, or the administration of this
Agreement following an Amortization Event.
29
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments. (a) No failure or delay on
----------------------
the part of Buyer (or the Collateral Agent or any Managing Agent, as Buyer's
assignee) in exercising any power, right or remedy under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other further exercise thereof or the
exercise of any other power, right or remedy. The rights and remedies herein
provided shall be cumulative and nonexclusive of any rights or remedies provided
by law. Any waiver of this Agreement shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing signed by each Originator and Buyer and, to
the extent required under the Purchase Agreement, the Managing Agents, the
Collateral Agent and the Financial Institutions or the Required Financial
Institutions.
Section 7.2 Notices. Except as provided below, all communications
-------
and notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof or at such other address or
telecopy number as such Person may hereafter specify for the purpose of notice
to each of the other parties hereto. Each such notice or other communication
shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if
given by mail, three (3) Business Days after the time such communication is
deposited in the mail with first class postage prepaid or (iii) if given by any
other means, when received at the address specified in this Section 7.2.
-----------
Section 7.3 Protection of Ownership Interests of Buyer. (a) Each
------------------------------------------
Originator agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents, and take all actions, that
may be necessary or desirable, or that Buyer (or the Collateral Agent or any
Managing Agent, as Buyer's assignee) may request, to perfect, protect or more
fully evidence the Purchaser Interests, or to enable Buyer (or the Collateral
Agent or any Managing Agent, as Buyer's assignee) to exercise and enforce their
rights and remedies hereunder. At any time, Buyer (or the Collateral Agent or
any Managing Agent, as Buyer's assignee) may, at each Originator's sole cost and
expense, direct such Originator to notify the Obligors of Receivables of the
ownership interests of Buyer and its assigns under this Agreement and the other
Transaction Documents and may also direct that payments of all amounts due or
that become due under any or all Receivables be made directly to Buyer or its
designee (or the Collateral Agent or any Managing Agent, as Buyer's assignee,
for the benefit of the Purchasers).
30
(b) If any Originator fails to perform any of its obligations
hereunder, Buyer (or the Collateral Agent or any Managing Agent, as Buyer's
assignee) may (but shall not be required to) perform, or cause performance of,
such obligation, and the costs and expenses incurred by Buyer (or the Collateral
Agent or any Managing Agent, as Buyer's assignee) in connection therewith shall
be payable by such Originator as provided in Section 6.2. Each Originator
-----------
irrevocably authorizes Buyer (or the Collateral Agent or any Managing Agent, as
Buyer's assignee) at any time and from time to time in the sole discretion of
Buyer (or the Collateral Agent or any Managing Agent, as Buyer's assignee), and
appoints Buyer (and the Collateral Agent and each Managing Agent, as Buyer's
assignees) as its attorney(s)-in-fact, to act on behalf of such Originator (i)
to execute on behalf of such Originator as debtor and to file financing
statements necessary or desirable in the sole discretion of Buyer (or the
Collateral Agent or any Managing Agent, as Buyer's assignee) to perfect and to
maintain the perfection and priority of the interest of Buyer in the Receivables
and (ii) to file a carbon, photographic or other reproduction of this Agreement
or any financing statement with respect to the Receivables as a financing
statement in such offices as Buyer (or the Collateral Agent or any Managing
Agent, as Buyer's assignee) in its sole discretion deems necessary or desirable
to perfect and to maintain the perfection and priority of Buyer's interests in
the Receivables. This appointment is coupled with an interest and is
irrevocable.
Section 7.4 Confidentiality. (a) Each Originator shall maintain
---------------
and shall cause each of its employees and officers to maintain the
confidentiality of this Agreement, the other Transaction Documents and the other
confidential proprietary information with respect to the Managing Agents, the
Collateral Agent and the Conduits and their respective businesses obtained by it
or them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that such Originator and its officers
and employees may disclose such information to such Originator's external
accountants, attorneys and any rating agency, and as required by any applicable
law or order of any judicial or administrative proceeding, and to the Parent
Credit Agreement Banks.
(b) Anything herein to the contrary notwithstanding, each Originator
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to Buyer, the Managing Agents, the Collateral Agent, the Financial
Institutions, the Conduits by each other, (ii) by Buyer, the Managing Agents,
the Collateral Agent or the Purchasers to any prospective or actual assignee or
participant of any of them or (iii) by the Collateral Agent or Managing Agents
to any rating agency, Commercial Paper dealer or provider of a surety, guaranty
or credit or liquidity enhancement to the Conduits or any entity organized for
the purpose of purchasing, or making loans secured by, financial assets for
which any of the Managing Agents acts as the administrative agent or collateral
agent and to any officers, directors, employees, outside accountants and
attorneys of any of the foregoing, provided each such Person is informed of the
--------
confidential nature of such information. In addition, the Purchasers, the
Managing Agents and the Collateral Agent may disclose any such nonpublic
information pursuant to any law, rule,
31
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
Section 7.5 Limitation of Liability. No claim may be made by any
-----------------------
Originator, Buyer or any other Person against any Conduit, the Collateral Agent,
any Managing Agent, or any Financial Institution or their respective Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event occurring in
connection therewith; and each Originator and Buyer 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; provided, however,
-------- -------
that this Section shall not bar Buyer from making a claim against a Conduit,
Managing Agent or Financial Institution with respect to liability arising out of
such party's gross negligence or willful misconduct.
Section 7.6 No Recourse. Notwithstanding anything in this
-----------
Agreement or any other Transaction Document to the contrary, the obligations of
each Conduit under the Transaction Documents are solely the corporate
obligations of such Conduit. No recourse shall be had for any obligation or
claim arising out of or based upon any Transaction Document against any
stockholder, employee, officer, director or incorporator of such Conduit. The
agreements in this section shall survive the termination of this Agreement and
the other Transaction Documents.
Section 7.7 Bankruptcy Petition.
-------------------
(a) Each Originator and Buyer hereby covenants and agrees that, prior
to the date that is one year and one day after the payment in full of all
outstanding senior Indebtedness of a Conduit, it will not institute against, or
join any other Person in instituting against such Conduit any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
(b) Each Originator hereby covenants and agrees that, prior to the
date that is one year and one day after the payment in full of all outstanding
obligations of Buyer under the Purchase Agreement, it will not institute
against, or join any other Person in instituting against Buyer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
Section 7.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING, BUT NOT LIMITED TO, NY GENERAL OBLIGATION LAWS (S) 5-1401 ET SEQ.,
-- ---
BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAW
32
PROVISIONS) EXCEPT TO THE EXTENT THAT THE PERFECTION OF BUYER'S SECURITY
INTEREST IN THE RECEIVABLES IS GOVERNED BY THE LAW OF ANOTHER STATE, AS REQUIRED
BY THE LAWS OF THE STATE OF NEW YORK.
Section 7.9 CONSENT TO JURISDICTION. EACH ORIGINATOR HEREBY
-----------------------
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY STATE COURT
SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH ORIGINATOR PURSUANT
TO THIS AGREEMENT AND EACH ORIGINATOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
BUYER (OR THE COLLATERAL AGENT OR ANY MANAGING AGENT, AS BUYER'S ASSIGNEE) TO
BRING PROCEEDINGS AGAINST ANY ORIGINATOR IN THE COURTS OF ANY OTHER JURISDICTION
TO THE EXTENT NECESSARY TO REALIZE ON THE INTERESTS OF BUYER (OR THE COLLATERAL
AGENT OR ANY MANAGING AGENT, AS BUYER'S ASSIGNEE) IN ANY RECEIVABLES, RELATED
SECURITY OR PROCEEDS THEREOF. ANY JUDICIAL PROCEEDING BY ANY ORIGINATOR AGAINST
BUYER (OR THE COLLATERAL AGENT OR ANY MANAGING AGENT, AS BUYER'S ASSIGNEE) OR
ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT
EXECUTED BY SUCH ORIGINATOR PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN
THE FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY XXXXX
XXXXX XXXXXXX XX XXX XXXX, XXX XXXX.
Section 7.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES
--------------------
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY
ORIGINATOR PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER
OR THEREUNDER.
Section 7.11 Integration; Binding Effect; Survival of Terms.
----------------------------------------------
(a) This Agreement, the Originator Note, the Subordinated Notes, the
33
Purchase Agreement and each other document or instrument executed or delivered
in connection therewith and each Collection Account Agreement contain the final
and complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof superseding
all prior oral or written understandings.
(b) 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). 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 terminated in
accordance with its terms; provided, however, that the rights and remedies with
-------- -------
respect to (i) any breach of any representation and warranty made by any
Originator pursuant to Article II, (ii) the indemnification and payment
----------
provisions of Article VI, and Section 7.5 shall be continuing and shall survive
---------- -----------
any termination of this Agreement.
Section 7.12 Counterparts; Severability; Section References. This
----------------------------------------------
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
hereof.
KOLEY'S MEDICAL SUPPLY, INC.
By:__________________________________
Name:
Title:
Address: 0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000
XXXXX & MINOR MEDICAL, INC.
By:__________________________________
Name:
Title:
Address: 0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000
S-1
XXXXX & MINOR WEST, INC.
By:__________________________________
Name:
Title:
Address: 0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000
STUART MEDICAL, INC.
By:__________________________________
Name:
Title:
Address: 0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000
O&M FUNDING CORP.
By:__________________________________
Name:
Title:
Address: 0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000
S-2
XXXXX & MINOR, INC.
By:__________________________________
Name:
Title:
Address: 0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Telephone: (000) 000-0000
Fax: (000) 000-0000
S-3
Exhibit I
---------
Definitions
-----------
This is Exhibit I to the Agreement (as hereinafter defined). As used
in the Agreement and the Exhibits, Schedules and Annexes thereto, capitalized
terms have the meanings set forth in this Exhibit I (such meanings to be equally
applicable to the singular and plural forms thereof). If a capitalized term is
used in the Agreement, or any Exhibit, Schedule or Annex thereto, and not
otherwise defined therein or in this Exhibit I, such term shall have the meaning
assigned thereto in Exhibit I to the Purchase Agreement.
"Accrual Period" means each calendar month or portion thereof which
--------------
elapses during the term of the Agreement. The first Accrual Period shall
commence on the date of the Purchase of Receivables hereunder and the final
Accrual Period shall terminate on the Amortization Date.
"Adjustment Factor" means a percentage calculated to provide Buyer
-----------------
with a reasonable return on its investment in the Receivables after taking
account of the risk of nonpayment by the Obligors. Each Originator and Buyer
may agree from time to time to change the Adjustment Factor based on changes in
one or more of the items affecting the calculation thereof, provided that any
--------
change to the Adjustment Factor shall take effect as of the commencement of an
Accrual Period, shall apply only prospectively and shall not affect the Purchase
Price payment in respect of Purchase which occurred during any Accrual Period
ending prior to the Accrual Period during which such Originator and Buyer agree
to make such change.
"Agreement" means the Receivables Sale Agreement, dated as of July 14,
---------
2000, between the Originators and Buyer, as the same may be amended, restated or
otherwise modified.
"Amortization Date" means the earliest to occur of (i) the Facility
-----------------
Termination Date, (ii) the Business Day immediately prior to the occurrence of
an Amortization Event set forth in Section 5.1(d), (iii) the Business Day
--------------
specified in a written notice from Buyer to the Originators following the
occurrence of any other Amortization Event, and (iv) the date which is fifteen
(15) Business Days after Buyer's receipt of written notice from each of the
Originators that they wish to terminate the facility evidenced by this
Agreement.
"Amortization Event" has the meaning set forth in Section 5.1 of the
------------------ -----------
Agreement.
"Authorized Officer" means, with respect to an Originator, its
------------------
respective corporate controller, treasurer, assistant treasurer, vice president-
finance or chief financial officer.
"Base Rate" means a rate per annum equal to the corporate base rate,
---------
prime rate or base rate of interest, as applicable, announced by the Reference
Bank from time to time, changing when and as such rate changes.
"Business Day" means any day on which banks are not authorized or
------------
required to close in New York, New York, Richmond, Virginia, Charlotte, North
Carolina or Chicago, Illinois and The Depository Trust Company of New York is
open for business.
"Buyer" has the meaning set forth in the preamble to the Agreement.
-----
"Change of Control" means with respect to any Originator or Buyer, the
-----------------
Parent's failure to own, directly or indirectly, 100% of the issued and
outstanding capital stock of such Person.
"Collateral Agent" has the meaning set forth in the Preliminary
----------------
Statements to the Agreement.
"Conduit" has the meaning set forth in the Preliminary Statements to
-------
the Agreement.
"Credit and Collection Policy" means, with respect to each Originator,
----------------------------
such Originator's credit and collection policies and practices relating to
Contracts and Receivables existing on the date hereof and summarized in Exhibit
-------
V, as modified from time to time in accordance with the Agreement.
-
"Default Fee" means with respect to any amount due and payable by any
-----------
party hereunder, an amount equal to interest on any such unpaid amount at a rate
per annum equal to 2% above the Base Rate.
"Dilutions" means, at any time, the aggregate amount of reductions or
---------
cancellations described in Section 1.3(a) of the Agreement.
"Excluded Receivables" means any indebtedness or obligations owed to
--------------------
any Originator that (i) was originated pursuant to a revolving charge agreement,
whereby such Originator (on behalf of itself or a financial institution) has
established a credit facility for the purchase of goods on an installment basis
by a buyer, or (ii) constitutes a financing of a buyer by such Originator
evidenced by a promissory note.
"Facility Fee" has the meaning set forth in Section 1.9.
------------ -----------
"Federal Bankruptcy Code" means Title 11 of the United States Code
-----------------------
entitled "Bankruptcy", as amended and any successor statute thereto.
I-2
"Intended Characterization" means, for income tax purposes, the
-------------------------
characterization of the acquisition by the Purchasers of Purchaser Interests
under the Purchase Agreement as a loan or loans by the Purchasers to Buyer
secured by the Receivables, the Related Security and the Collections.
"Managing Agents" has the meaning set forth in the Preliminary
---------------
Statements to the Agreement.
"Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
financial condition or operations of the Originators and their Subsidiaries,
taken as a whole, or Buyer, as applicable (except as otherwise disclosed to or
discussed with Buyer (and the Collateral Agent and each Managing Agent, as
Buyer's assignees) prior to the date hereof), (ii) the ability of any
Originator, or Buyer, as applicable, to perform its obligations under the
Agreement or any other Transaction Document, (iii) the legality, validity or
enforceability of the Agreement or any other Transaction Document, (iv) any
Originator's, Buyer's, the Managing Agents', the Collateral Agent's or any
Purchaser's interest in the Receivables generally or in any significant portion
of the Receivables, the Related Security or Collections with respect thereto, or
(v) the collectibility of the Receivables generally or of any material portion
of the Receivables.
"Net Value" means, as of any date of determination, an amount equal to
---------
the sum of (i) the aggregate Outstanding Balance of the Receivables at such
time, minus (ii) the sum of (A) the aggregate Capital outstanding at such time,
-----
plus (B) the Aggregate Reserves.
----
"Original Balance" means, with respect to any Receivable, the
----------------
Outstanding Balance of such Receivable on the date it was purchased by Buyer.
"Originator Loan" has the meaning set forth in Section 1.2(c) of the
--------------- --------------
Agreement.
"Originator Note" means the promissory note in substantially the form
---------------
of Exhibit VII hereto as more fully described in Section 1.2 of the Agreement,
----------- -----------
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"Originators" has the meaning set forth in the preamble to the
-----------
Agreement.
"Parent Credit Agreement" means that certain Credit Agreement dated as
-----------------------
of April 24, 2000 among the Parent, certain of its Subsidiaries identified
therein, First Union National Bank and SunTrust Bank, as Syndication Agents,
Bank One, as Managing Agent, The Bank of Nova Scotia, as Co-Agent, Bank of
America, as Administrative Agent, and the other financial institutions parties
thereto (as amended, restated, supplemented or otherwise modified from time to
time), or any successor facility.
I-3
"Parent Credit Agreement Banks" means the financial institutions party
-----------------------------
to the Parent Credit Agreement.
"Potential Amortization Event" means an event which, with the passage
----------------------------
of time or the giving of notice, or both, would constitute an Amortization
Event.
"Purchase" means the purchase under the Agreement by Buyer from an
--------
Originator of the Receivables, the Related Security and the Collections related
thereto, together with all related rights in connection therewith.
"Purchase Agreement" has the meaning set forth in the Preliminary
------------------
Statements to the Agreement.
"Purchase Price" means, with respect to any Purchase on any date, the
--------------
aggregate price to be paid by Buyer to an Originator for such Purchase in
accordance with Section 1.2 of the Agreement for the Receivables, Collections
-----------
and Related Security being sold to Buyer on such date, which price shall equal
(i) the product of (x) the Original Balance of such Receivables, multiplied by
---------- --
(y) one minus the Adjustment Factor then in effect, minus (ii) any Purchase
Price Credits to be credited against the Purchase Price otherwise payable in
accordance with Section 1.3 of the Agreement.
-----------
"Purchase Price Credit" has the meaning set forth in Section 1.3 of
--------------------- -----------
the Agreement.
"Purchasers" has the meaning set forth in the Preliminary Statements
----------
to the Agreement.
"Receivable" means the indebtedness and other obligations, other than
----------
the indebtedness and other obligations constituting Excluded Receivables, owed
to an Originator (without giving effect to any transfer or conveyance under the
Agreement) or Buyer (after giving effect to the transfers under the Agreement)
whether constituting an account, chattel paper, instrument or general
intangible, arising in connection with the sale of products and related services
by such Originator and includes, without limitation, the obligation to pay any
Finance Charges with respect thereto. Indebtedness and other rights and
obligations arising from any one transaction, including, without limitation,
indebtedness and other rights and obligations represented by an individual
invoice, shall constitute a Receivable separate from a Receivable consisting of
the indebtedness and other rights and obligations arising from any other
transaction; provided, that any indebtedness, rights or obligations referred to
--------
in the immediately preceding sentence shall be a Receivable regardless of
whether the account debtor or applicable Originator treats such indebtedness,
rights or obligations as a separate payment obligation.
"Related Security" means, with respect to any Receivable:
----------------
I-4
(i) all of the applicable Originator's interest in the inventory and
goods (including returned or repossessed inventory or goods), if any,
the sale of which by such Originator gave rise to such Receivable, and
all insurance contracts with respect thereto,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of
such Receivable, whether pursuant to the Contract related to such
Receivable or otherwise, together with all financing statements and
security agreements describing any collateral securing such
Receivable,
(iii) 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,
(iv) all service contracts and other contracts and agreements
associated with such Receivable,
(v) all Records related to such Receivable, and
(vi) all proceeds of any of the foregoing.
"Settlement Date" means the twentieth (20/th/) day of each calendar
---------------
month.
"Subordinated Loan" has the meaning set forth in Section 1.2(a) of the
----------------- --------------
Agreement.
"Subordinated Notes" means the promissory notes in substantially the
------------------
form of Exhibit VI hereto as more fully described in Section 1.2 of the
---------- -----------
Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Subsidiary" of a Person means (i) any corporation more than 50% of
----------
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, limited liability company, joint venture
or similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
"Tangible Net Worth" means total stockholders' equity minus goodwill,
------------------
patents, trade names, trade marks, copyrights, franchises, organizational
expense, deferred assets other than prepaid insurance and prepaid taxes and such
other assets as are properly classified as
I-5
"intangible assets", for any corporation as determined in accordance with
generally accepted accounting principles.
"Transaction Documents" means, collectively, this Agreement, each
---------------------
Collection Account Agreement, the Originator Note, the Subordinated Notes and
all other instruments, documents and agreements executed and delivered in
connection herewith.
All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
I-6
Exhibit II
----------
Places of Business; Locations of Records;
-----------------------------------------
Federal Employer Identification Number(s); Other Names
------------------------------------------------------
Places of Business:
Locations of Records:
Federal Employer Identification Number:
Corporate, Partnership Trade and Assumed Names:
Exhibit III
-----------
Lock-boxes; Collection Accounts; Collection Banks
-------------------------------------------------
Exhibit IV
----------
Form of Compliance Certificate
------------------------------
This Compliance Certificate is furnished pursuant to that certain
Receivables Sale Agreement dated as of July 14, 2000, between [Originator Name]
("Originator") the other parties thereto and O&M Funding Corp. (the
----------
"Agreement"). Capitalized terms used and not otherwise defined herein are used
---------
with the meanings attributed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ______________ of Originator.
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of Originator and its Subsidiaries during the accounting period
covered by this Certificate.
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
an Amortization Event or a Potential Amortization Event, as each such term is
defined under the Agreement, as of the date of this Certificate, except as set
forth below.
4. Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Originator has taken, is taking, or
proposes to take with respect to each such condition or event:
The foregoing certifications are made and delivered this _____ day of
_______, 20__.
_______________________
[Name]
I-2
Exhibit V
---------
Credit and Collection Policy
----------------------------
Exhibit VI
----------
Form of Subordinated Note
-------------------------
SUBORDINATED NOTE
July 14, 2000
1. Note. FOR VALUE RECEIVED, the undersigned, O&M FUNDING CORP., a
----
Virginia corporation ("SPV"), hereby unconditionally promises to pay to the
---
order of [ORIGINATOR NAME], a(n) __________ corporation ("Originator"), in
----------
lawful money of the United States of America and in immediately available funds,
on the date following the Amortization Date which is one year and one day after
the date on which (i) the Outstanding Balance of all Receivables sold under the
"Sale Agreement" referred to below has been reduced to zero and (ii) Originator
has paid to Buyer all indemnities, adjustments and other amounts which may be
owed thereunder in connection with the Purchases (the "Collection Date"), the
---------------
aggregate unpaid principal sum outstanding of all "Subordinated Loans" made from
time to time by Originator to SPV pursuant to and in accordance with the terms
of that certain Receivables Sale Agreement dated as of July 14, 2000 between
Originator and SPV (as amended, restated, supplemented or otherwise modified
from time to time, the "Sale Agreement"). Reference to Section 1.2 of the Sale
-------------- -----------
Agreement is hereby made for a statement of the terms and conditions under which
the loans evidenced hereby have been and will be made. All terms which are
capitalized and used herein and which are not otherwise specifically defined
herein shall have the meanings ascribed to such terms in the Sale Agreement.
2. Interest. SPV further promises to pay interest on the
--------
outstanding unpaid principal amount hereof from the date hereof until payment in
full hereof at a rate equal to the Base Rate; provided, however, that if SPV
-------- -------
shall default in the payment of any principal hereof, SPV promises to pay, on
demand, interest at the rate of the Base Rate plus 2.00% per annum on any such
unpaid amounts, from the date such payment is due to the date of actual payment.
Interest shall be payable on the first Business Day of each month in arrears;
provided, however, that SPV may elect on the date any interest payment is due
-------- -------
hereunder to defer such payment and upon such election the amount of interest
due but unpaid on such date shall constitute principal under this Subordinated
Note. The outstanding principal of any loan made under this Subordinated Note
shall be due and payable on the Collection Date and may be repaid or prepaid at
any time without premium or penalty.
3. Principal Payments. Originator is authorized and directed by SPV
------------------
to enter on the grid attached hereto, or, at its option, in its books and
records, the date and amount of each loan made by it which is evidenced by this
Subordinated Note and the amount of each payment of principal made by SPV, and
absent manifest error, such entries shall constitute prima facie
VI-1
evidence of the accuracy of the information so entered; provided that neither
--------
the failure of Originator to make any such entry or any error therein shall
expand, limit or affect the obligations of SPV hereunder.
4. Subordination. The indebtedness evidenced by this Subordinated
-------------
Note is subordinated to the prior payment in full of all of SPV's recourse
obligations under that certain Receivables Purchase Agreement dated as of July
14, 2000 (as the same may from time to time hereafter be amended, supplemented,
restated or otherwise modified, the "Purchase Agreement") among SPV, Xxxxx &
------------------
Minor Inc., a Virginia corporation (the "Parent"), O&M Medical, as Servicer, the
------
funding entities from time to time party thereto (the "Financial Institutions"),
----------------------
Falcon Asset Securitization Corporation ("Falcon"), Receivables Capital
------
Corporation ("RCC"), and Liberty Street Funding Corp. ("Liberty Funding",
--- ---------------
Falcon, RCC, Liberty Funding and any party added as a Conduit pursuant to
Section 12.3 of the Purchase Agreement being referred to collectively as the
"Conduits", and together with the Financial Institutions, the "Purchasers"),
-------- ----------
Bank One, NA, Bank of America, National Association and The Bank of Nova Scotia
(each, a "Managing Agent" and collectively, the "Managing Agents") and Bank One,
-------------- ---------------
NA, as collateral agent for the Purchasers (together with its successors and
assigns thereunder, the "Collateral Agent"). The subordination provisions
----------------
contained herein are for the direct benefit of, and may be enforced by, the
Managing Agents, the Collateral Agent and the Purchasers and/or any of their
respective assignees (collectively, the "Senior Claimants") under the Purchase
----------------
Agreement. Until the date on which all "Capital" outstanding under the Purchase
Agreement has been repaid in full and all other obligations of SPV and/or the
Servicer thereunder and under the "Fee Letters" referenced therein (all such
obligations, collectively, the "Senior Claim") have been indefeasibly paid and
------------
satisfied in full, Originator shall not demand, accelerate, xxx for, take,
receive or accept from SPV, directly or indirectly, in cash or other property or
by set-off or any other manner (including, without limitation, from or by way of
collateral) any payment or security of all or any of the indebtedness under this
Subordinated Note or exercise any remedies or take any action or proceeding to
enforce the same; provided, however, that (i) Originator hereby agrees that it
-------- -------
will not institute against SPV any proceeding of the type described in Section
-------
5.1(d) of the Sale Agreement unless and until the Collection Date has occurred
------
and the Senior Claim has been indefeasibly paid and satisfied in full and (ii)
nothing in this paragraph shall restrict SPV from paying, or Originator from
requesting, any payments under this Subordinated Note so long as SPV is not
required under the Purchase Agreement to set aside for the benefit of, or
otherwise pay over to, the funds used for such payments to any of the Senior
Claimants and further provided that the making of such payment would not
otherwise violate the terms and provisions of the Purchase Agreement. Should any
payment, distribution or security or proceeds thereof be received by Originator
in violation of the immediately preceding sentence, Originator agrees that such
payment shall be segregated, received and held in trust for the benefit of, and
deemed to be the property of, and shall be immediately paid over and delivered
to the Collateral Agents for the benefit of the Senior Claimants.
VI-2
5. Bankruptcy; Insolvency. Upon the occurrence of any proceeding of
----------------------
the type described in Section 5.1(d) of the Sale Agreement involving SPV as
--------------
debtor, then and in any such event the Senior Claimants shall receive payment in
full of all amounts due or to become due on or in respect of Capital and the
Senior Claim (including "Yield" as defined and as accruing under the Purchase
Agreement after the commencement of any such proceeding, whether or not any or
all of such Yield is an allowable claim in any such proceeding) before
Originator is entitled to receive payment on account of this Subordinated Note,
and to that end, any payment or distribution of assets of SPV of any kind or
character, whether in cash, securities or other property, in any applicable
insolvency proceeding, which would otherwise be payable to or deliverable upon
or with respect to any or all indebtedness under this Subordinated Note, is
hereby assigned to and shall be paid or delivered by the Person making such
payment or delivery (whether a trustee in bankruptcy, a receiver, custodian or
liquidating trustee or otherwise) directly to the Collateral Agents for
application to, or as collateral for the payment of, the Senior Claim until such
Senior Claim shall have been paid in full and satisfied.
6. Amendments. This Subordinated Note shall not be amended or
----------
modified except in accordance with Section 7.1 of the Sale Agreement. The terms
-----------
of this Subordinated Note may not be amended or otherwise modified without the
prior written consent of the Collateral Agent and the Managing Agents for the
benefit of the Purchasers.
7. GOVERNING LAW. THIS SUBORDINATED NOTE SHALL BE INTERPRETED AND
-------------
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH
THE LAWS AND DECISIONS OF THE STATE OF NEW YORK. WHEREVER POSSIBLE EACH
PROVISION OF THIS SUBORDINATED NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE
EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS
SUBORDINATED NOTE SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH
PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY,
WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS
OF THIS SUBORDINATED NOTE.
8. Waivers. All parties hereto, whether as makers, endorsers, or
-------
otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor. Originator additionally expressly waives all notice of the
acceptance by any Senior Claimant of the subordination and other provisions of
this Subordinated Note and expressly waives reliance by any Senior Claimant upon
the subordination and other provisions herein provided.
9. Assignment. This Subordinated Note may not be assigned, pledged
----------
or otherwise transferred to any party other than Originator without the prior
written consent of the Managing Agents, and any such attempted transfer shall be
void.
VI-3
O&M FUNDING CORP.
By:_________________________
Title:
VI-4
Schedule
to
SUBORDINATED NOTE
SUBORDINATED LOANS AND PAYMENTS OF PRINCIPAL
Amount of Amount of Unpaid
Subordinated Principal Principal Notation made
Date Loan Paid Balance by
--------------- -------------------- --------------- ------------- -----------------
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
_______________ ____________________ _______________ _____________ _________________
VI-5
Exhibit VII
-----------
Form of Originator Note
-----------------------
ORIGINATOR NOTE
July 14, 2000
1. Note. FOR VALUE RECEIVED, the undersigned, XXXXX & MINOR MEDICAL,
----
INC., a Virginia corporation ("Originator"), hereby unconditionally promises to
----------
pay to the order of O&M FUNDING CORP., a Virginia corporation ("SPV"), in lawful
---
money of the United States of America and in immediately available funds, ON
DEMAND, the aggregate unpaid principal sum outstanding of all loans made from
time to time by SPV to Originator pursuant to and in accordance with the terms
of that certain Receivables Sale Agreement dated as of July 14, 2000 between SPV
and Originator (as amended, restated, supplemented or otherwise modified from
time to time, the "Sale Agreement"). Reference to Section 1.2 of the Sale
-------------- -----------
Agreement is hereby made for a statement of the terms and conditions under which
the loans evidenced hereby have been and will be made. All terms which are
capitalized and used herein and which are not otherwise specifically defined
herein shall have the meanings ascribed to such terms in the Sale Agreement.
2. Interest. Originator further promises to pay interest on the
--------
outstanding unpaid principal amount hereof from the date hereof until payment in
full hereof at a rate equal to the Base Rate; provided, however, that if
-------- -------
Originator shall default in the payment of any principal hereof, Originator
promises to pay, on demand, interest at the rate of the Base Rate plus 2.00% per
annum on any such unpaid amounts, from the date such payment is due to the date
of actual payment. Interest shall be payable on the first Business Day of each
month, in arrears, in lawful money of the United States of America in
immediately available funds.
3. Principal Payments. SPV is authorized and directed by Originator
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to enter on the grid attached hereto, or, at its option, in its books and
records, the date and amount of each loan made by it which is evidenced by this
Originator Note and the amount of each payment of principal made by Originator,
and absent manifest error, such entries shall constitute prima facie evidence of
the accuracy of the information so entered; provided that neither the failure of
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SPV to make any such entry or any error therein shall expand, limit or affect
the obligations of Originator hereunder.
4. Bankruptcy; Insolvency. Upon the occurrence of any proceeding of
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the type described in Section 5.1(d) of the Sale Agreement involving Originator
--------------
as debtor, then and in any such event the principal balance hereof and all
interest accrued hereon shall be immediately due and payable, without demand,
presentment, protest or notice of dishonor.
6. Amendments. This Originator Note shall not be amended or modified
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except in accordance with Section 7.1 of the Sale Agreement. The terms of this
-----------
Originator Note may not be amended or otherwise modified without the prior
written consent of the Collateral Agent and each Managing Agent.
7. GOVERNING LAW. THIS ORIGINATOR NOTE SHALL BE INTERPRETED AND THE
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RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS AND DECISIONS OF THE STATE OF NEW YORK. WHEREVER POSSIBLE EACH PROVISION
OF THIS ORIGINATOR NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE
AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS ORIGINATOR NOTE
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
ORIGINATOR NOTE.
8. Waivers. All parties hereto, whether as makers, endorsers, or
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otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor.
9. Assignment. This Subordinated Note may not be assigned, pledged
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or otherwise transferred to any party other than SPV without the prior written
consent of the Collateral Agent and each Managing Agent, and any such attempted
transfer shall be void.
XXXXX & MINOR MEDICAL, INC.
By:___________________________
Title:
VI-2
Schedule
to
ORIGINATOR NOTE
LOANS AND PAYMENTS OF PRINCIPAL
Amount of Unpaid
Amount of Principal Principal Notation made
Date Loan Paid Balance by
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VI-3
Schedule A
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DOCUMENTS TO BE DELIVERED TO BUYER
ON OR PRIOR TO THE PURCHASE
[attached]
