PURCHASE AND SALE AGREEMENT
among
XXXXX & MINOR MEDICAL, INC.,
as an Originator and as Servicer,
the other Originators
that may become parties hereto
from time to time,
XXXXX & MINOR, INC.,
as Parent and Guarantor
and
O&M FUNDING CORP.,
as the Initial Purchaser
Dated as of December 28, 1995
TABLE OF CONTENTS
PAGE
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.1. Agreement to Purchase and Sell...................................... 2
SECTION 1.2. Timing of Purchases................................................. 2
SECTION 1.3. Calculation of Purchase Price....................................... 2
SECTION 1.4. Definitions and Calculations Related to
Purchase Discount................................................... 4
SECTION 1.5. Purchase Price Payments............................................. 6
SECTION 1.6. The Initial Purchaser Note.......................................... 7
SECTION 1.7. Initial Purchaser Agreement to Make
Demand Loans........................................................ 8
SECTION 1.8. Deemed Collections, Etc............................................. 8
SECTION 1.9. No Recourse......................................................... 9
SECTION 1.10. True Sales.......................................................... 9
SECTION 1.11. Payments and Computations, Etc...................................... 10
ARTICLE II
CONDITIONS TO PURCHASES; REPRESENTATIONS AND
WARRANTIES; COVENANTS; PURCHASE AND SALE TERMINATION EVENTS
SECTION 2.1. Conditions to Purchases............................................. 11
SECTION 2.2. Representations and Warranties; Covenants........................... 11
SECTION 2.3. Purchase and Sale Termination Events................................ 11
ARTICLE III
INDEMNIFICATION
SECTION 3.1. (a) Indemnities by the Originator................................... 12
SECTION 3.2. Contribution........................................................ 18
ARTICLE IV
ADMINISTRATION AND COLLECTIONS; ADDITIONAL RIGHTS
AND OBLIGATIONS IN RESPECT OF THE POOL RECEIVABLES
SECTION 4.1. Servicing of Pool Receivables and Related Assets.................... 18
SECTION 4.2. Rights of the Initial Purchaser; Enforcement Rights................. 19
SECTION 4.3. Responsibilities of the Originators................................. 20
SECTION 4.4. Further Action Evidencing Purchases................................. 21
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ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee...................................................... 22
SECTION 5.2. Representation and Warranty.................................... 24
SECTION 5.3. Subrogation.................................................... 24
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Additional Originators.............................................. 25
SECTION 6.2. Amendments, Etc..................................................... 25
SECTION 6.3. Notices, Etc........................................................ 25
SECTION 6.4. Acknowledgment and Consent.......................................... 26
SECTION 6.5. Binding Effect; Assignability....................................... 27
SECTION 6.6. Costs and Expenses.................................................. 27
SECTION 6.7. No Proceedings; Limitation on Payments.............................. 27
SECTION 6.8. GOVERNING LAW AND JURISDICTION...................................... 28
SECTION 6.9. Execution in Counterparts........................................... 28
SECTION 6.10. Survival of Termination............................................. 28
SECTION 6.11. WAIVER OF JURY TRIAL................................................ 28
SECTION 6.12. Entire Agreement.................................................... 29
SECTION 6.13. Headings............................................................ 29
EXHIBIT I CONDITIONS OF PURCHASES
EXHIBIT II REPRESENTATIONS AND WARRANTIES
EXHIBIT III COVENANTS
EXHIBIT IV PURCHASE AND SALE TERMINATION EVENTS
SCHEDULE I TRADE NAMES AND LOCATIONS
SCHEDULE II LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
ANNEX A FORM OF INITIAL PURCHASER NOTE
ANNEX B FORM OF ORIGINATOR NOTE
ANNEX C OPINION CERTIFICATE
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This PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as
of December 28, 1995 among XXXXX & MINOR MEDICAL, INC. ("O&M Medical"), a
Virginia corporation, as an Originator and as initial Servicer, the other
Originators which may from time to time become parties hereto pursuant to
Section 6.1 hereof (each individually an "Originator" and collectively the
"Originators"), XXXXX & MINOR, INC., as Parent and Guarantor (the "Parent") and
O&M FUNDING CORP., a Virginia corporation, as Initial Purchaser (the "Initial
Purchaser").
PRELIMINARY STATEMENTS
A. Unless otherwise defined herein or the context otherwise requires,
certain terms that are used throughout this Agreement (including the Exhibits
hereto) are defined in Exhibit I to the Receivables Purchase Agreement, dated of
even date herewith, among the Initial Purchaser, the Servicer, Receivables
Capital Corporation, as Issuer, and Bank of America National Trust and Savings
Association, as Administrator (as the same may be amended, modified or
supplemented from time to time, the "Receivables Purchase Agreement"). Any
reference to "this Agreement" or "the Purchase and Sale Agreement", including
any such reference in any Exhibit hereto, shall mean this Agreement in its
entirety, including the Exhibits and other attachments hereto, as amended,
modified or supplemented from time to time in accordance with the terms hereof.
B. The Originators wish to sell Pool Receivables that each now owns and
from time to time hereafter will own to the Initial Purchaser, and the Initial
Purchaser is willing, on the terms and subject to the conditions contained in
this Agreement, to purchase such Pool Receivables from each of the Originators
at such time.
C. The Initial Purchaser has entered into the Receivables Purchase
Agreement, pursuant to which, among other things, the Initial Purchaser may sell
to the Issuer undivided ownership interests in the Pool Receivables and Related
Assets.
D. It is a condition precedent for Issuer and the Originators to enter
into this Agreement that Parent guaranty the performance of each Originator
hereunder, and Parent is willing to guaranty such performance.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
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ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.1. Agreement to Purchase and Sell.
On the terms and conditions hereinafter set forth, each Originator agrees to
sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase from
each of the Originators, at the times set forth in Section 1.2, but prior to the
Purchase and Sale Termination Date, such Originator's right, title, and interest
in, to and under (a) all Pool Receivables of each of the Originators, (b) all
Related Security with respect to such Pool Receivables and (c) all Collections
with respect to, and other proceeds of, such Pool Receivables and Related
Security. The items listed in clauses (b) and (c) of the preceding sentence in
relation to any Pool Receivables are herein collectively called the "Related
Assets" or, with respect to any such Pool Receivable, the "Related Asset".
SECTION 1.2. Timing of Purchases.
(a) Initial Purchase. All of the Pool Receivables and the Related
Assets of each of the Originators that exist at the close of each of the
Originators' businesses on the date of the initial purchase (other than Pool
Receivables contributed by O&M Medical to the Initial Purchaser pursuant to the
Subscription Agreement) shall be deemed to have been sold to the Initial
Purchaser on the date of the initial purchase without any formal or other
instrument of assignment and without further action by any Person.
(b) Regular Purchases. After the date of the initial purchase hereunder
until the Purchase and Sale Termination Date, each Pool Receivable and Related
Asset of an Originator shall be deemed to have been sold to the Initial
Purchaser pursuant hereto immediately (and without any formal or other
instrument of assignment and without further action by any Person) upon the
creation of such Pool Receivable.
(c) Lock-Box Accounts. Each of the Originators hereby sells to the
Initial Purchaser, and the Initial Purchaser hereby purchases from each
Originator, all of such Originator's right, title and interest in (but not such
Originator's obligations with respect to) the Lock-Box Accounts, all amounts on
deposit therein, all certificates and instruments, if any, from time to time
evidencing such Lock-Box Accounts and amounts on deposit therein, and all
related agreements between any Originator and the Lock-Box Banks.
SECTION 1.3. Calculation of Purchase Price. On the tenth
day of each calendar month, or, if such day is not a Business
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Day, the next succeeding Business Day (a "Payment Date"), the Servicer shall
deliver to the Initial Purchaser, the Administrator and each of the Originators
a monthly Seller Report with respect to the Initial Purchaser's purchases of
Pool Receivables and Related Assets from each such Originator during the
Purchase Period immediately preceding such Reporting Date. "Purchase Period"
means, with respect to the Receivables, each calendar month. The Initial
Purchaser shall pay for the Pool Receivables and Related Assets purchased by it
during any Purchase Period on the Payment Date for such Purchase Period, or, in
the case of the initial purchase hereunder, on the date of such purchase by an
increase in the outstanding amount of each applicable Initial Purchaser Note, it
being understood that the Initial Purchaser will pay each such Initial Purchase
Note in respect of such initial purchase promptly after, and to the extent that,
cash is available to the Initial Purchaser for such purpose under the
Receivables Purchase Agreement. The "Purchase Price" to be paid to the
applicable Originator on each Payment Date (or other applicable date in the case
of the initial purchase) for the Pool Receivables and Related Assets sold by
such Originator pursuant to Section 1.2 during the Purchase Period immediately
preceding such Payment Date shall be set forth in the relevant Seller Report
(or, in the case of the initial purchase, in a calculation delivered by the
Servicer at the time of such initial purchase based on the November 30, 1995
Month End Date (or such other date agreed upon in the applicable Supplement) and
shall be determined in accordance with the following formula:
PP = AOB - PD
where:
PP = the Purchase Price to be paid to such Originator on
the relevant Payment Date (or other applicable date
in the case of the initial purchase);
AOB = the aggregate Outstanding Balance of the Pool
Receivables that were purchased from such Originator
during the Purchase Period immediately preceding such
Payment Date or on the date of the initial purchase.
(For purposes of this calculation, the Outstanding
Balance of a Pool Receivable shall be measured only
at the time of such Pool Receivable's creation and
sale (or in the case of the initial purchase, sale)
to the Initial Purchaser.)
PD = the Purchase Discount as measured on such Payment Date
pursuant to Section 1.4.
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For purposes of calculating the Purchase Price payable in connection
with the initial purchase hereunder from any Originator, the AOB shall be
estimated based on the aggregate Outstanding Balance of the Pool Receivables on
the November 30, 1995 Month End Date or such other date as is agreed upon in the
applicable Supplement. In connection with the delivery of the first Seller
Report, the actual aggregate Outstanding Balance of the Pool Receivables on the
November 30, 1995 Month End Date (or such other date agreed upon in the
applicable Supplement) will be calculated by the Servicer and appropriate
adjustments will be made to the Purchase Price payable on subsequent Payment
Dates and to the Initial Purchaser Notes, to reflect any excess or deficiency in
the Purchase Price paid on the date of the initial purchase.
SECTION 1.4. Definitions and Calculations Related to
Purchase Discount.
(a) Purchase Discount. "Purchase Discount" for the Pool Receivables and
Related Assets that were purchased from the applicable Originator during the
Purchase Period immediately preceding a Payment Date (or on the initial purchase
date for such Originator) shall be determined in accordance with the following
formula:
PD = AOB x (WALD + FD)
where:
PD = the Purchase Discount as measured on such Payment
Date (or the initial purchase date);
AOB, in respect of such Originator, has the meaning set
forth in Section 1.3;
WALD = the Weighted Average Loss Discount as measured on such
Payment Date (or the initial purchase date), as
determined pursuant to paragraph (b) below; and
FD = the Funding Discount as measured on such Payment Date
(or the initial purchase date), as determined pursuant to
paragraph (c) below.
(b) Weighted Average Loss Discount. "Weighted Average Loss Discount" as
measured on any Payment Date (or the initial purchase date) means the Weighted
Average Loss Discount over the last three Purchase Periods ending on the Month
End Date immediately preceding such Payment Date (or, if more recent, the
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initial purchase date for such Originator), calculated as the
quotient of
(i) the sum of (A) a rate equal to three times the
Loss-to-Liquidation Ratio for the most recent Purchase Period, plus (B)
a rate equal to two times the Loss-to-Liquidation Ratio for the second
most recent Purchase Period, plus (C) a rate equal to the actual
Loss-to-Liquidation Ratio for the third most recent Purchase Period,
divided by
(ii) six.
(c) Funding Discount. "Funding Discount" as measured on
any Payment Date (or the initial purchase date) means a
percentage determined in accordance with the following formula:
FD = (OTD/360) x FR
where:
FD = the Funding Discount as measured on such Payment
Date (or the initial purchase 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
Pool Receivables originated by such Originator
during the Purchase Period which occurs two months
prior to the month in which such Payment Date (or
the initial purchase date for such Originator)
occurs, divided by (ii) the aggregate amount of the
Collections received during the Purchase Period
ending on the Month End Date immediately preceding
such Payment Date (or initial purchase date for such
Originator) on Pool Receivables originated by such
Originator, multiplied by (y) the number of days in
the calendar month coinciding with such Purchase
Period; and
FR = the Funding Rate as measured on such Payment Date, as
determined pursuant to paragraph (d) below, or, in the
case of the initial purchase, a Funding Rate equal to
4.60% per annum (or such rate as is specified in the
Supplement for such Originator).
(d) Funding Rate. "Funding Rate" as measured on any
Payment Date means a per annum percentage rate determined in
accordance with the following formula:
FR = 0.02% + DRP + SFP + EXP
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where:
FR = the Funding Rate as measured on such Payment 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 or Alternate
Rate applicable to each Portion of Capital
outstanding as of the first day of the calendar month
ending immediately prior to such Payment Date, times
(B) the amount of the Portion of Capital to which
such CP Rate or Alternate Rate applied on such first
day, and (y) the denominator of which is the
aggregate outstanding amount of Capital on such first
day;
SFP = the "Servicer's Fee Percentage", which shall be equal to
the per annum percentage rate contemplated by the
definition of Servicing Fee; 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 the Initial Purchaser during the calendar
month preceding such Payment Date (and not accounted
for in the Discount Rate Percentage), including
without limitation reserve costs, tax payments and
indemnity obligations of the Initial Purchaser for
which the Initial Purchaser is not indemnified
pursuant to this Agreement and (y) the denominator of
which is the aggregate Outstanding Balance of the
Pool Receivables that were purchased from such
Originator during the Purchase Period immediately
preceding such Payment Date; provided, however, 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 the Initial Purchaser over
several Payment Dates at the Servicer's reasonable
discretion, subject to the requirement that such
allocation be reasonably calculated to allow the
Initial Purchaser to recover such costs and expenses
over a reasonable period of time.
SECTION 1.5. Purchase Price Payments. On the date of the initial
purchase, and on each Payment Date falling after the date of the initial
purchase pursuant to Section , on the terms and subject to the conditions of
this Agreement, the Initial Purchaser shall pay to each Originator the Purchase
Price for the Pool Receivables and Related Assets to be purchased from such
6
Originator during the immediately preceding Purchase Period as follows:
(i) First, by making a cash payment to or at the direction of
each Originator to the extent that the Initial Purchaser has cash
available to make such payment subject to the terms of clause m of
Exhibit V to the Receivables Purchase Agreement;
(ii) Second, in the case of O&M Medical, to the extent any
portion of the Purchase Price payable to O&M Medical remains unpaid,
the principal amount outstanding under the Originator Note of O&M
Medical automatically shall be reduced and deemed paid in an amount
equal to such remaining Purchase Price, until such outstanding
principal amount is reduced to zero; and
(iii) Third, in the case of each Originator, to the extent any
portion of the Purchase Price payable to such Originator remains
unpaid, the principal amount outstanding under the Initial Purchaser
Note issued to such Originator automatically shall be increased in an
amount equal to such remaining Purchase Price.
In the event that there is insufficient cash available to the Initial
Purchaser to pay all Originators in full the Purchase Prices payable to such
Originators on any Payment Date, the available cash will be allocated to the
Originators pursuant to clause First above pro rata according to the respective
aggregate Outstanding Balance of the Pool Receivables sold by such Originators
hereunder during the applicable Purchase Period.
SECTION 1.6. The Initial Purchaser Note.
(a) On or prior to the date hereof with respect to O&M Medical (or at
the time of execution and delivery of the Supplement applicable to any other
Originator), the Initial Purchaser shall deliver to such Originator a promissory
note in the form of Annex to this Agreement payable to the order of such
Originator (such promissory note, as it may be amended, supplemented, endorsed
or otherwise modified from time to time, together with any promissory notes
issued from time to time in substitution therefor or renewal thereof in
accordance with the Transaction Documents, being called an "Initial Purchaser
Note"), which Initial Purchaser Note shall, in accordance with its terms, be
subordinated to all interests in Pool Receivables and Related Assets and all
obligations of the Initial Purchaser, of any nature, whether now or hereafter
arising, under or in connection with the Receivables Purchase Agreement.
7
(b) The Servicer shall hold each Initial Purchaser Note for the benefit
of each of the Originators, and shall make all appropriate record-keeping
entries with respect to each of the Initial Purchaser Notes or otherwise to
reflect payments on and adjustments of each such Initial Purchaser Note. The
Servicer's books and records shall constitute rebuttable presumptive evidence of
the principal amount of and accrued interest on each Initial Purchaser Note at
any time. Each Originator hereby irrevocably authorizes the Servicer to xxxx its
Initial Purchaser Note "CANCELLED" and to return such Initial Purchaser Note to
the Initial Purchaser upon the full and final payment thereof after the Purchase
and Sale Termination Date.
SECTION 1.7. Initial Purchaser Agreement to Make Demand Loans. On the
terms and subject to the conditions set forth in this Agreement and in the
Receivables Purchase Agreement, the Initial Purchaser agrees to make demand
loans (each such loan being herein called an "Originator Loan") to O&M Medical
prior to the Purchase and Sale Termination Date in such amounts as O&M Medical
may request from time to time; provided, however, that: (a) the Originator Loans
made to O&M Medical shall be evidenced by a demand promissory note in the form
of Annex B to this Agreement issued by O&M Medical to the order of the Initial
Purchaser (such demand promissory note, as it may be amended, supplemented,
endorsed or otherwise modified from time to time in accordance with the
Transaction Documents, together with all promissory notes issued from time to
time in substitution therefor or renewal thereof in accordance with the
Transaction Documents, being called the "Originator Note");
(b) no Originator Loan shall be made to the extent that the making of
such Originator Loan would violate clause m of Exhibit V to the Receivables
Purchase Agreement.
SECTION 1.8. Deemed Collections, Etc.
(a) If on any day the Outstanding Balance or any portion of any Pool
Receivable is reduced or adjusted as a result of any Dilution Adjustment, the
applicable Originator shall deliver to the Servicer in same day funds an amount
equal to the portion of such Pool Receivable which constitutes such Dilution
Adjustment for application by the Servicer to the same extent as if Collections
of such amount of the Outstanding Balance of such Pool Receivable had actually
been received on such date;
(b) if on any day any of the representations or warranties in paragraph
(g) of Exhibit II hereto is not true with respect to any Pool Receivable, the
applicable Originator which sold such Pool Receivables hereunder shall deliver
to the Servicer in same day funds an amount equal to the Outstanding Balance of
such Pool Receivable for application by the Servicer to the same extent as
8
if Collections of such amount of the Outstanding Balance of such
Pool Receivable had actually been received on such date;
(c) except as provided in paragraph (a) or (b) of this Section, or as
otherwise required by applicable law or the relevant Contract, all Collections
received from an Obligor of any Receivables shall be applied to the Receivables
of such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates in writing or otherwise
clearly indicates its payment for application to specific Receivables; and
(d) if and to the extent the Initial Purchaser shall be required for
any reason to pay over to an Obligor (or any trustee, receiver, custodian or
similar official for an Obligor in any Insolvency Proceeding) any amount
received by it hereunder, such amount shall be deemed not to have been so
received and the Pool Receivable to which such amount has been applied shall be
reinstated.
SECTION 1.9. No Recourse. Except as specifically provided in this
Agreement, the purchase and sale of Pool Receivables and Related Assets under
this Agreement shall be without recourse to the applicable Originator; provided
that each Originator shall be liable to the Initial Purchaser for all
representations, warranties, covenants and indemnities made by such Originator
pursuant to the terms of this Agreement, it being understood that such
obligation of the Originators will not arise on account of the failure of the
Obligor for credit reasons to make any payment in respect of a Pool Receivable.
SECTION 1.10. True Sales.
(a) Each of the Originators and the Initial Purchaser intend the
transactions hereunder to constitute true sales (or where the Subscription
Agreement applies, conveyances in the form of capital contributions) of Pool
Receivables, Related Assets and the Lock-Box Accounts (and the other items
described in Section 1.2(c)) by each of the Originators to the Initial Purchaser
providing the Initial Purchaser with the full benefits of ownership thereof, and
no party hereto intends the transactions contemplated hereunder to be, or for
any purpose to be characterized as, a loan from the Initial Purchaser to any
Originator.
(b) In the event (but only to the extent) that the conveyance of Pool
Receivables and Related Assets hereunder is characterized by a court or other
Governmental Authority as a loan rather than a sale, each Originator shall be
deemed hereunder to have granted to the Initial Purchaser a security interest in
all of such Originator's right, title and interest
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in, to and under all of the following, whether now or hereafter owned, existing
or arising: (A) all Pool Receivables of such Originator, (B) all Related
Security with respect to each such Pool Receivable, (C) all Collections with
respect to each such Pool Receivable, (D) the Lock-Box Accounts, all amounts on
deposit therein, all certificates and instruments, if any, from time to time
evidencing such Lock-Box Accounts and amounts on deposit therein, and all
related agreements between such Originator and the Lock-Box Banks, and (E) all
proceeds of, and all amounts received or receivable under any or all of, the
foregoing. Such security interest shall secure all of such Originator's
obligations (monetary or otherwise) under this Agreement and the other
Transaction Documents to which it is a party, whether now or hereafter existing
or arising, due or to become due, direct or indirect, absolute or contingent.
The Initial Purchaser shall have, with respect to the property described in this
Section 1.10(b), and in addition to all the other rights and remedies available
to the Initial Purchaser under this Agreement and applicable law, all the rights
and remedies of a secured party under any applicable UCC, and this Agreement
shall constitute a security agreement under applicable law.
SECTION 1.11. Payments and Computations, Etc.
(a) All amounts to be paid or deposited by an Originator or the
Servicer hereunder shall be paid or deposited no later than 1:00 p.m. (New York
City time) on the day when due in same day funds. All amounts received after
1:00 p.m. (New York City time) will be deemed to have been received on the
immediately succeeding Business Day.
(b) Each Originator shall, to the extent permitted by law, pay interest
on any amount not paid or deposited by such Originator (whether as Servicer or
otherwise) when due hereunder, at an interest rate per annum equal to 2.0% per
annum above the Base Rate, payable on demand.
(c) All computations of interest under Section 1.11(b) and all
computations of the Purchase Price, fees, and other amounts hereunder shall be
computed on the following basis: (i) in respect of the Funding Rate pursuant to
Section 1.4(d), when such computation is based on the Base Rate, and the Base
Rate is determined by BofA's "reference rate", such computations shall be made
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed; and (ii) all other such computations shall be made on the basis of a
360-day year and actual days elapsed. Whenever any payment or deposit to be made
hereunder shall be due on a day other than a Business Day, such payment or
deposit shall be made on the next succeeding Business Day and
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such extension of time shall be included in the computation of
such payment or deposit.
ARTICLE II
CONDITIONS TO PURCHASES; REPRESENTATIONS AND
WARRANTIES; COVENANTS; PURCHASE AND SALE TERMINATION EVENTS
SECTION 2.1. Conditions to Purchases. The obligation of the Initial
Purchaser to make any purchase of Pool Receivables and Related Assets hereunder
is subject to satisfaction of the conditions to purchase set forth in Exhibit I
hereto.
SECTION 2.2. Representations and Warranties; Covenants. Each Originator
hereby makes the representations and warranties, and hereby agrees to perform
and observe the covenants, in each case, as applicable to such Originator as set
forth in Exhibits II and III, respectively, hereto.
SECTION 2.3. Purchase and Sale Termination Events. If any of the
Purchase and Sale Termination Events set forth in Exhibit IV hereto shall occur,
the Initial Purchaser may, with the prior written consent of the Administrator,
by notice to each of the Originators (with a copy to the Administrator), declare
the Purchase and Sale Termination Date to have occurred; provided that
automatically upon the occurrence of a Termination Event described in clause (f)
of Exhibit IV hereto, the Purchase and Sale Termination Date shall occur.
The agreement of the Originators to sell Pool Receivables and Related
Assets hereunder, and the agreement of the Initial Purchaser to purchase Pool
Receivables and Related Assets from the Originators hereunder, shall terminate
automatically on the earlier to occur of (i) the Purchase and Sale Termination
Date and (ii) the Facility Termination Date. Notwithstanding the occurrence of
the Purchase and Sale Termination Date, all obligations of each Originator under
the Transaction Documents that shall have arisen prior to the Purchase and Sale
Termination Date shall survive until each such obligation has been finally and
fully paid and performed by such Originator.
Upon the occurrence of a Purchase and Sale Termination Event, the
Initial Purchaser shall have, in addition to all other rights and remedies under
this Agreement or otherwise, all other rights and remedies provided under the
UCC of each applicable jurisdiction and other applicable laws, which rights
shall be cumulative. Without limiting the foregoing, the occurrence of a
Purchase and Sale Termination Event hereunder shall not deny to the Initial
Purchaser any remedy to which the Initial Purchaser
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may be otherwise appropriately entitled, whether by statute or applicable law,
at law or in equity.
ARTICLE III
INDEMNIFICATION
SECTION 3.1. (a) Indemnities by the Originators; Taxes. Without
limiting any other rights which the Initial Purchaser or any Securitization
Party may have hereunder or under applicable law, each Originator hereby agrees
to indemnify the Initial Purchaser and each Securitization Party from and
against any and all Damages actually incurred by them arising out of or
resulting from this Agreement (whether directly or indirectly) or the use of
proceeds of purchases or the ownership of any Pool Receivable or Related Asset,
excluding, however, (a) Damages to the extent resulting from gross negligence,
willful misconduct or violation of applicable law on the part of the Initial
Purchaser or such Securitization Party, as the case may be, seeking such
indemnity (b) recourse (except as otherwise specifically provided in this
Agreement) for uncollectible Receivables, or (c) any taxes imposed on such
Indemnified Party. Without limiting or being limited by the foregoing, but
subject to the exclusions set forth in the preceding sentence, each Originator
shall pay to the Initial Purchaser and each Securitization Party (within three
Business Days after written demand for such indemnification) any and all amounts
necessary to indemnify the Initial Purchaser and such Securitization Party from
and against any and all Damages actually incurred relating to or resulting from
any of the following:
(i) the failure of any information provided by such
Originator, as Servicer or otherwise, to the Initial Purchaser, the
Issuer, the Administrator or the Servicer with respect to Pool
Receivables or this Agreement to be true and correct;
(ii) the failure of any representation or warranty or
statement made or deemed made by such Originator (or any of its
officers), as Servicer or otherwise, under or in connection with this
Agreement to have been true and correct when made;
(iii) the failure by such Originator, as Servicer or
otherwise, to comply with any applicable law, rule or regulation with
respect to any Pool Receivable or any Related Asset; or the failure of
any Pool Receivable or Related Asset to conform to any such applicable
law, rule or regulation;
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(iv) the failure to vest in the Initial Purchaser a valid
and enforceable (A) perfected ownership interest in each Pool
Receivable at any time existing and the Related Assets and Collections
with respect thereto and (B) perfected ownership interest in the items
described in Section 1.10(b), in each case free and clear of any
Adverse Claim;
(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Pool Receivables and the Related Assets and Collections
in respect thereof, whether at the time of any purchase or at any
subsequent time;
(vi) any dispute, claim, offset or defense of an Obligor to
the payment of any Pool Receivable (including, without limitation, a
defense based on such Pool Receivable or the related Contract not being
a legal, valid and binding obligation of each Obligor enforceable
against it in accordance with its terms but excluding a defense based
on a discharge of such obligation in the bankruptcy of the applicable
Obligor), or any other claim resulting from the sale of goods or
services related to such Pool Receivable or the furnishing or failure
to furnish such goods or services or relating to collection activities
with respect to such Pool Receivable (if such collection activities
were performed by the Originator, or any of its Affiliates, acting as
Servicer or by any agent or independent contractor retained by the
Originator or any of its Affiliates);
(vii) any failure of such Originator, as Servicer or
otherwise, to perform its duties or obligations in accordance with the
provisions hereof or to perform its duties or obligations under the
Contracts;
(viii) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with
merchandise, services or other property or rights which are the subject
of any Contract;
(ix) the commingling of Collections of Pool
Receivables at any time with other funds;
(x) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of purchases or reinvestments or
the ownership of any Pool Receivable, Related Asset or Contract; or
13
(xi) any requirement that all or a portion of the
distributions made to the Initial Purchaser pursuant to this Agreement
shall be rescinded or otherwise must be returned to such Originator for
any reason.
(b) Taxes. (i) Any and all payments made hereunder to the Initial
Purchaser or an Affected Person 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)
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 the Initial
Purchaser or such Affected Person by the jurisdiction under the laws of which
the Initial Purchaser or such Affected Person is organized or has its applicable
lending office or any political subdivision of any thereof and (B) taxes that
would not have been imposed if the only connection between the Initial Purchaser
or such Affected Person and the jurisdiction imposing such taxes was the
activities of the Initial Purchaser or such Affected Person 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, 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 or Servicer shall be required to deduct any Taxes
from or in respect of any sum payable hereunder to the Initial Purchaser or any
Affected Person: (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
3.1(b)) the Initial Purchaser or such Affected Person shall receive an amount
equal to the sum it would have received had no such deductions been made, (B)
the Originator or Servicer shall make such deductions and (C) the Originator or
Servicer shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(ii) In addition, each Originator and Servicer 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 the Initial Purchaser or any Affected Person as a result of the
transactions contemplated by this Agreement or that arise from any
payment made hereunder or from the execution,
14
delivery, or registration of or otherwise similarly with respect to,
this Agreement ("Other Taxes").
(iii) Each Originator, Servicer and the Parent hereby jointly
and severally agree to indemnify the Initial Purchaser and each
Affected Person from and against the full amount of Taxes and Other
Taxes arising out of this Agreement or any other Transaction Document
(whether directly or indirectly) imposed upon or paid by such Person
and any liability (including penalties, interest, and expenses
(including Attorney Costs)) arising with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted by the
relevant Governmental Authority. A certificate as to the amount of such
amounts prepared by the Initial Purchaser or an Affected Person, absent
manifest error, shall be final, conclusive, and binding for all
purposes. Such indemnification shall be made within 30 days after the
date the Initial Purchaser or Affected Person 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 the Parent no later than
180 days after the earlier of (A) the date on which the Initial
Purchaser or such Affected Person as the case may be, making such
demand, 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 the Initial Purchaser or such Affected Person as the case may be,
making such demand, 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 the Servicer, the Parent or any Originator to a
Governmental Authority hereunder, such Person will deliver to the
Initial Purchaser or the relevant Affected Person 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 3.1(b) shall survive the termination of this Agreement.
(vi) Each Program Support Provider that is granted a
participating interest in the Purchased Interest and is organized under
the laws of a jurisdiction other than the United States, any State
thereof, or the District of
15
Columbia (each a "Non-U.S. Purchaser") shall deliver to the Initial
Purchaser or the Administrator: (A) two copies of either United States
Internal Revenue Service Form 1001 or Form 4224 (whichever is
applicable), or (B) in the case of a Non-U.S. Purchaser claiming an
exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a
Form W-8 (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
Seller 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 Purchased Interest, and before the date it receives its
first payment with respect to a Purchased 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
Landing 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
3.1(b)(vi), a Non-U.S. Purchaser shall not be required to deliver any
form pursuant to this Section 3.1(b)(vi) that such Non-U.S. Purchaser
is not legally able to deliver. Each Program Support Provider (other
than any exempt person as described in applicable Treasury Regulations)
that is granted a participating interest in the Purchased Interest and
is organized under the laws of the United States or any state thereof
or the District of Columbia shall deliver to the Initial Purchaser or
the Administrator an original copy of Internal Revenue Service Form W-9
(or applicable successor form) properly completed and duly executed by
such Program Support Provider.
(vii) The Originators, the Parent and the Servicer shall not
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 3.1(b) 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 was granted
a participating interest in the Purchased Interest or, with respect to
payments to a New Lending Office, the date such Non-U.S. Purchaser
designated such New Lending Office; provided, however, that this clause
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(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 Purchased Interest at the request of the Initial Purchaser 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 Purchased Interest by a Program Support Provider 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 Program Support Provider 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 a Purchased Interest or designated
a New Lending Office).
(viii) The Initial Purchaser or any Affected Person claiming
any indemnity payment or additional amounts payable pursuant to this
Section 3.1(b) shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document reasonable
requested in writing by an Originator, the Parent, or the Servicer 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 the
Initial Purchaser or such Affected Person, be otherwise disadvantageous
to the Initial Purchaser or such Affected Person.
(ix) Nothing contained in this Section 3.1(b) shall require
the Initial Purchaser or an Affected Person to make available any of
its tax returns (or any other information that it deems to be
confidential or proprietary).
(x) If the Initial Purchaser or any Affected Person receiving
an indemnification payment from any Originator, the Servicer, or the
Parent 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 Purchaser or Person shall promptly pay such refund to
such Originator, the Servicer, or the Parent.
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SECTION 3.2. Contribution. If for any reason the indemnification
provided above in this Article (and subject to the exceptions set forth therein)
is unavailable (other than by reason of a final adjudication by a court of
competent jurisdiction that a claim is not within the scope of such
indemnification) to the Initial Purchaser or a Securitization Party or is
insufficient to hold the Initial Purchaser or a Securitization Party harmless,
then the applicable Originator shall contribute to the maximum amount of Damages
payable or paid by the Initial Purchaser or such Securitization Party in such
proportion as is appropriate to reflect not only the relative benefits received
by the Initial Purchaser or such Securitization Party on the one hand and such
Originator on the other hand, but also the relative fault of such Securitization
Party (if any) and such Originator and any other relevant equitable
considerations. Upon the occurrence of the Final Payout Date, the applicable
Originator shall be subrogated, to the extent of such Originator's payments
pursuant to this Section 3.2, to the Initial Purchaser and a Securitization
Party's claims relating to the subject of such indemnification payment, but
neither the Initial Purchaser nor a Securitization Party shall have any duty
whatsoever to take any action to preserve such subrogated rights of any
Originator or refrain from taking any action which impairs or may impair such
subrogated rights of any Originator.
ARTICLE IV
ADMINISTRATION AND COLLECTIONS; ADDITIONAL RIGHTS
AND OBLIGATIONS IN RESPECT OF THE POOL RECEIVABLES
SECTION 4.1. Servicing of Pool Receivables and Related Assets.
Consistent with the Initial Purchaser's ownership of the Pool Receivables and
the Related Assets, the Initial Purchaser shall have the sole right to service,
administer and collect the Pool Receivables, to assign such right and to
delegate such right to others. In consideration of the Initial Purchaser's
purchase of the Pool Receivables and the Related Assets, each Originator agrees
to cooperate fully with the Initial Purchaser to facilitate the full and proper
performance of such duties and obligations for the benefit of the Initial
Purchaser, the Issuer and the Administrator. To the extent that the Initial
Purchaser, individually or through the Servicer, has granted or grants powers of
attorney to the Administrator under the Receivables Purchase Agreement, each
Originator hereby grants a corresponding power of attorney on the same terms to
the Initial Purchaser. Each Originator hereby acknowledges and agrees that the
Initial Purchaser, in all of its capacities, shall assign to the Administrator
for the benefit of the Issuer and the Administrator such powers of attorney and
other rights and interests granted by such Originator to the Initial Purchaser
hereunder, and agrees to
18
cooperate fully with the Administrator in the exercise of such rights. Until the
Administrator gives notice to the Seller and the Servicer of the designation of
a new Servicer, Xxxxx & Minor Medical, Inc. will perform the duties and
obligations of the Servicer.
SECTION 4.2. Rights of the Initial Purchaser;
Enforcement Rights.
(a) The Initial Purchaser shall have no obligation to account for, to
replace, to substitute or to return any Pool Receivable and Related Asset to any
Originator. The Initial Purchaser shall have no obligation to account for, or to
return to any Originator, Collections, or any interest or other finance charge
collected pursuant thereto, without regard to whether such Collections and
charges are in excess of the Purchase Price for such Pool Receivables and
Related Assets.
(b) The Initial Purchaser shall have the unrestricted right to further
assign, transfer, deliver, hypothecate, subdivide or otherwise deal with the
Pool Receivables and Related Assets, and all of the Initial Purchaser's right,
title and interest in, to and under this Agreement, on whatever terms the
Initial Purchaser shall determine, pursuant to the Receivables Purchase
Agreement or otherwise.
(c) The Initial Purchaser shall have the sole right to retain any gains
or profits created by buying, selling or holding the Pool Receivables and
Related Assets and shall have the sole risk of and responsibility for losses or
damages created by such buying, selling or holding.
(d) At any time following the designation of a Servicer (other than O&M
Medical or any of its Affiliates) pursuant to Section 4.1 of the Receivables
Purchase Agreement:
(i) the Administrator may direct the Obligors that
payment of all amounts payable under any Pool Receivable be
made directly to the Administrator or its designee;
(ii) the Administrator may instruct each Originator to give
notice of the Initial Purchaser's or the Issuer's interest in Pool
Receivables to each Obligor, which notice shall direct that payments be
made directly to the Administrator or its designee, and upon such
instruction from the Administrator each Originator shall give such
notice at its expense; provided, that if any Originator fails to so
notify each Obligor, the Administrator may so notify the Obligors; and
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(iii) the Administrator may request any or all of the
Originators to, and upon such request each applicable Originator shall,
(A) assemble all of the records necessary or desirable to collect the
Pool Receivables and the Related Assets, and transfer or license the
use of, to the new Servicer, all software necessary or desirable to
collect the Pool Receivables and the Related Assets, and make the same
available to the Administrator or its designee at a place selected by
the Administrator (provided that if any Originator is unable to
transfer or license the use of the appropriate software to the new
Servicer, such Originator shall pay to the new Servicer the amount
necessary for the new Servicer to purchase the use of such software),
and (B) segregate all cash, checks and other instruments received by it
from time to time constituting Collections with respect to the Pool
Receivables in a manner acceptable to the Administrator and, promptly
upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the
Administrator or its designee.
(e) Each Originator hereby authorizes the Initial Purchaser, and
irrevocably appoints the Initial Purchaser as its attorney-in-fact with full
power of substitution and with full authority in the place and stead of such
Originator, which appointment is coupled with an interest, to take any and all
steps in the name of such Originator and on behalf of such Originator necessary
or desirable, in the determination of the Initial Purchaser, to collect any and
all amounts or portions thereof due under any and all Pool Receivables or
Related Assets, including, without limitation, endorsing the name of such
Originator on checks and other instruments representing Collections and
enforcing such Pool Receivables and Related Assets. Notwithstanding anything to
the contrary contained in this subsection (e), none of the powers conferred upon
such attorney-in-fact pursuant to the immediately preceding sentence shall
subject such attorney-in-fact to any liability (except for its own gross
negligence or willful misconduct) if any action taken by it shall prove to be
inadequate or invalid, nor shall they confer any obligations upon such
attorney-in-fact in any manner whatsoever.
SECTION 4.3. Responsibilities of the Originators. Anything herein to
the contrary notwithstanding:
(a) Each Originator agrees to deliver directly to the Servicer
(for the Initial Purchaser's account), within two Business Days of
receipt thereof, any Collections that it receives, in the form so
received, and agrees that all such Collections shall be deemed to be
received in trust for the Initial Purchaser and shall be maintained and
segregated
20
separate and apart from all other funds and moneys of such
Originator until delivery of such Collections to the
Servicer; and
(b) Each Originator shall (i) perform all of its obligations
hereunder and under the Contracts related to the Pool Receivables and
Related Assets (and under its agreements with the Lock-Box Banks) to
the same extent as if the Receivables, Related Assets and Lock-Box
Accounts (and the other items described in Section 1.2(c)) had not been
sold hereunder, and the exercise by the Initial Purchaser or its
designee or assignee of the Initial Purchaser's rights hereunder or in
connection herewith shall not relieve any Originator from such
obligations and (ii) pay when due any taxes, including, without
limitation, any sales taxes payable in connection with the Pool
Receivables and their creation and satisfaction. Notwithstanding
anything to the contrary in this Agreement, the Initial Purchaser, the
Administrator and the Issuer shall not have any obligation or liability
with respect to any Pool Receivable, Related Asset, or Lock-Box Account
(or any other item described in Section 1.2(c)) nor shall any of them
be obligated to perform any of the obligations of any Originator under
any of the foregoing.
SECTION 4.4. Further Action Evidencing Purchases. Each Originator
agrees that from time to time, at its expense, it will promptly execute and
deliver all further instruments and documents, and take all further action, in
order to perfect, protect or more fully evidence the purchase of the Pool
Receivables and the Related Assets by the Initial Purchaser hereunder, or to
enable the Initial Purchaser to exercise or enforce any of its rights hereunder
or under any other Transaction Document. Each Originator further agrees from
time to time, at its expense, promptly to take all action that the Initial
Purchaser, the Servicer or the Administrator may reasonably request in order to
perfect, protect or more fully evidence such purchase of the Pool Receivables
and the Related Assets or to enable the Initial Purchaser or the Issuer (as the
assignee of the Initial Purchaser) or any Program Support Provider to exercise
or enforce any of its or their respective rights hereunder or under any other
Transaction Document or Program Support Agreement in respect of the Pool
Receivables and the Related Assets. Without limiting the generality of the
foregoing, upon the request of the Initial Purchaser, each Originator will:
(a) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof,
and such other instruments or notices, as the Initial
21
Purchaser or the Administrator may reasonably determine to
be necessary or appropriate; and
(b) xxxx the master data processing records evidencing the
Receivables and, if requested by the Initial Purchaser or the
Administrator, legend the related Contracts, to reflect the sale of the
Pool Receivables and Related Assets pursuant to this Agreement, the
Receivables Purchase Agreement and the Parallel Asset Purchase
Agreement.
Each Originator hereby authorizes the Initial Purchaser or its designee
or assignee to file one or more financing or continuation statements, and
amendments thereto and assignments thereof, relative to all or any of the Pool
Receivables and Related Assets of such Originator, in each case whether now
existing or hereafter generated. If any Originator fails to perform any of its
agreements or obligations under this Agreement, the Initial Purchaser or its
designee or assignee may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the reasonable expenses of the
Initial Purchaser or its designee or assignee incurred in connection therewith
shall be payable by such Originator under Section 6.6.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee. (a) Parent hereby unconditionally and
irrevocably covenants and agrees that it will cause each other Originator duly
and punctually to perform and observe all of the terms, conditions, covenants,
agreements (including, without limitation, agreements to make payments or deemed
Collections) and indemnities of each other Originator under this Agreement and
the other Transaction Documents strictly in accordance with the terms hereof and
thereof and that if for any reason whatsoever any other Originator shall fail to
so perform and observe such terms, conditions, covenants, agreements and
indemnities, Parent will duly and punctually perform and observe the same.
(b) The liabilities and obligations of Parent, in its capacity as a
guarantor under this Section 5.1, shall be absolute and unconditional under all
circumstances and shall be performed by Parent regardless of (i) whether the
Initial Purchaser, the Issuer (as assignee of the Initial Purchaser) or the
Administrator shall have taken any steps to collect from any Originator any of
the amounts payable by such Originator to the Initial Purchaser under this
Agreement or shall otherwise have exercised any of their rights or remedies
under this Agreement or
22
the other Transaction Documents against such Originator or against any Obligor
under any of the Pool Receivables, (ii) the validity, legality or enforceability
of this Agreement or any other Transaction Documents, or the disaffirmance of
any thereof in any event of bankruptcy relating to such Originator, (iii) any
law, regulation or decree now or hereafter in effect which might in any manner
affect any of the terms or provisions of this Agreement or any other Transaction
Document or any of the rights of Issuer (as assignee of the Initial Purchaser)
or the Administrator as against such Originator or as against any Obligor under
any of such Pool Receivables or which might cause or permit to be invoked any
alteration in time, amount, manner of payment or performance of any amount
payable by such Originator to the Initial Purchaser, Issuer (as assignee of the
Initial Purchaser) or the Administrator under this Agreement, (iv) the merger or
consolidation of such Originator into or with any corporation or any sale or
transfer by such Originator or all or any part of its property, (v) the
existence or assertion of any Adverse Claim with respect to any Pool Receivable,
or (vi) any other circumstance whatsoever (with or without notice to or
knowledge of Parent) which may or might in any manner or to any extent vary the
risk of Parent, or might otherwise constitute a legal or equitable discharge of
a surety or guarantor, it being the purpose and intent of Parent that the
liabilities and obligations of Parent under this Section 5.1 shall be absolute
and unconditional under any and all circumstances, and shall not be discharged
except by payment and performance as in this Agreement provided. The guaranty
set forth in this Section 5.1 is a guaranty of payment and performance and not
just of collection.
(c) Without in any way affecting or impairing the liabilities and
obligations of Parent, in its capacity as a guarantor under this Section 5.1,
the Initial Purchaser, Issuer (as assignee of the Initial Purchaser) or the
Administrator may at any time and from time to time in its discretion, without
the consent of, or notice to, Parent, and without releasing or affecting
Parent's liability hereunder (i) extend or change the time, manner, place or
terms of this Agreement or any other Transaction Document, (ii) settle or
compromise any of the amounts payable by any Originator to the Initial Purchaser
or Issuer (as assignee of the Initial Purchaser) under this Agreement or
subordinate the same to the claims of others, (iii) retain or obtain a lien upon
or security interest in any property to secure any of the obligations hereunder,
(iv) retain or obtain the primary or secondary obligation of any obligor or
obligors, in addition to Parent, with respect to any of the obligations due
hereunder, or (v) release or fail to perfect any lien upon or security interest
in, or impair, surrender, release or permit any substitution in exchange for,
all or any part of any property securing any of the obligations under this
Agreement, it being
23
understood that nothing contained in this Section 5.1(c) shall give the Initial
Purchaser, Issuer (as assignee of the Initial Purchaser) or the Administrator
the right to take any of the foregoing actions if not permitted by the other
provisions of this Agreement, by law or otherwise. Nothing in this Section
5.1(c) shall be deemed to waive any of the rights the Initial Purchaser may
otherwise have.
(d) The provisions of this Section 5.1 shall continue to be effective
or be reinstated, as the case may be, if at any time payment of any of the
amounts payable by any Originator, to the Initial Purchaser, Issuer (as assignee
of the Initial Purchaser) or the Administrator under this Agreement is rescinded
or must otherwise be restored or returned by any of such Persons, as the case
may be, upon any event of bankruptcy involving any Originator, or otherwise, all
as though such payment had not been made. Parent, in its capacity as a guarantor
under this Section 5.1, hereby waives (i) notices of the occurrence of any
default hereunder, (ii) any requirement of diligence or promptness on the part
of the Initial Purchaser, Issuer (as assignee of the Initial Purchaser) or the
Administrator in making demand, commencing suit or exercising any other right or
remedy under this Agreement, or otherwise, and (iii) any right to require the
Initial Purchaser, Issuer or the Administrator to exercise any right or remedy
against any Originator or the Pool Receivables prior to enforcing any of their
rights against Parent under this Section 5.1. Parent, in its capacity as a
guarantor under this Section 5.1, agrees that, in the event of an event of
bankruptcy with respect to any Originator (including Parent), and if such event
shall occur at a time when all of the indemnified amounts and other amounts due
from such Originator under this Agreement may not then be due and payable,
Parent will pay to Initial Purchaser or Issuer (as assignee of the Initial
Purchaser) forthwith the full amount which would be payable hereunder by Parent
if all such indemnified amounts and other obligations were then due and payable.
SECTION 5.2. Representation and Warranty. Parent, in its capacity as
a guarantor under this Section 5.2, represents and warrants that it now has, and
will continue to have, independent means of obtaining information concerning
each Originator's affairs, financial condition and business. Neither the
Initial Purchaser, Issuer nor the Administrator shall have any duty or
responsibility to provide Parent with any credit or other information concerning
any Originator's affairs, financial condition or business which may come into
the possession of the Initial Purchaser, Issuer or the Administrator.
SECTION 5.3. Subrogation. Parent will not exercise or assert any
rights which it may acquire by way of subrogation under this Agreement unless
and until all of the Obligations of
24
each Originator shall have been paid and performed in full. If any payment shall
be made to Parent on account of any subrogation rights at any time when all of
the Obligations of each Originator shall not have been paid and performed in
full, each and every amount so paid will be held in trust for the benefit of the
Initial Purchaser and Issuer (as assignee of the Initial Purchaser) and any
other applicable Person and forthwith be paid to the Administrator to be
credited and applied to the Obligations of the applicable Originator to the
extent then unsatisfied, in accordance with the terms of the Transaction
Documents or any document delivered in connection with the Transaction
Documents, as the case may be.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Additional Originators. The Parent and any Subsidiary of
the Parent may become an Originator by executing a Supplement. Upon such
execution of the Supplement and the satisfaction of any conditions set forth
therein, such executing party will become an Originator hereunder.
SECTION 6.2. Amendments, Etc. No amendment or waiver of any provision
of this Agreement or consent to any departure by any Originator therefrom shall
be effective unless in a writing (a) signed by the Administrator, and (b) in the
case of any amendment, signed by each Originator, the Initial Purchaser, the
Parent and the Administrator. Any such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Initial Purchaser or Administrator to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
SECTION 6.3. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and sent or delivered, to each party hereto, at
its address set forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written notice to the
other parties hereto. Notices and communications by facsimile shall be effective
when sent (and shall be followed by hard copy sent by first class mail), and
notices and communications sent by other means shall be effective when received.
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SECTION 6.4. Acknowledgment and Consent.
(a) Each Originator, O&M Medical, as an Originator and as initial
Servicer and the Parent, acknowledge that, contemporaneously herewith or at any
time hereafter, the Initial Purchaser (i) is assigning or will assign to the
Issuer, pursuant to the Receivables Purchase Agreement, one or more undivided
interests in all of the Initial Purchaser's rights, title and interest in, to
and under the Pool Receivables and Related Assets, and (ii) is assigning
pursuant to the Receivables Purchase Agreement all of the Initial Purchaser's
right, title and interest in, to and under this Agreement, except for the
Initial Purchaser's right, title and interest in, to and under the Originator
Note, it being understood that such assignment shall not relieve any party
hereto from (or require the Issuer to undertake) the performance of any term,
covenant or agreement on the part of any party hereto to be performed or
observed under or in connection with this Agreement. Each Originator, O&M
Medical, as an Originator and as initial Servicer and the Parent, hereby consent
to such assignments, including, without limitation, the assignment by the
Initial Purchaser to the Issuer of (i) the right of the Initial Purchaser, at
any time, to enforce this Agreement against any Originator and the obligations
of any Originator hereunder, (ii) the right to appoint a successor to the
Servicer as set forth therein, (iii) the right, at any time, to give or withhold
any and all consents, requests, notices, directions, approvals, demands,
extensions or waivers under or with respect to this Agreement, any other
Transaction Document or the obligations in respect of any Originator thereunder
to the same extent as the Initial Purchaser may do, and (iv) all of the Initial
Purchaser's rights, remedies, powers and privileges, and all claims of the
Initial Purchaser against any Originator, under or with respect to this
Agreement and the other Transaction Documents (whether arising pursuant to the
terms of this Agreement or otherwise available at law or in equity). Each of the
parties hereto acknowledges and agrees that the Issuer, the Administrator and
the other Affected Persons are third party beneficiaries of the rights of the
Initial Purchaser arising hereunder and under the other Transaction Documents to
which any Originator is a party.
(b) Each of the Originators and the Parent hereby agrees to execute all
agreements, instruments and documents, and to take all other action, that the
Initial Purchaser or the Administrator determines is necessary or reasonably
desirable to evidence its consent described in Section 5.3(a).
(c) Each of the Originators and the Parent hereby acknowledges that its
obligations to the Issuer, as assignee of the Initial Purchaser, are and shall
be, to the extent permitted by applicable law or not prohibited by any order of
any court or administrative or regulatory authority, absolute and uncondi-
26
tional under any and all circumstances and shall be unaffected by any claims,
offsets or other defenses any such Originator may have against the Initial
Purchaser (other than in respect of the Initial Purchaser Note), and each
Originator agrees that it shall not interpose any such claims, offsets or
defenses as a defense to its performance of its obligations under the
Transaction Documents to which it is a party.
SECTION 6.5. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither the Parent nor any Originator may
assign any of its rights or delegate its obligations hereunder or any interest
herein without the prior written consent of the Initial Purchaser and the
Administrator. Without limiting any other rights that may be available under
applicable law, the rights of the Initial Purchaser may be enforced through it
or by its agents.
SECTION 6.6. Costs and Expenses. In addition to the rights of
indemnification granted under Section 3.1 hereof, each of the Originators and
the Parent jointly and severally agree to pay on demand all reasonable costs and
expenses in connection with the preparation, execution, delivery and
administration (including audit fees and expenses generated by an internal or
external auditor appointed by the Administrative Agent for the periodic auditing
of Pool Receivables) of this Agreement, the Liquidity Asset Purchase Agreement,
the Parallel Asset Purchase Agreement, any asset purchase agreement,
reimbursement agreement, letter of credit or similar agreement relating to the
sale or transfer of interests in Purchased Interests and the other documents and
agreements to be delivered hereunder, including, without limitation, Attorney
Costs for the Administrator, the Issuer and their respective Affiliates and
agents with respect thereto and with respect to advising the Administrator, the
Issuer and their respective Affiliates and agents as to their rights and
remedies under this Agreement and the other Transaction Documents, and all costs
and expenses, if any (including Attorney Costs), of the Administrator, the
Issuer and their respective Affiliates and agents, in connection with the
enforcement of this Agreement and the other Transaction Documents.
SECTION 6.7. No Proceedings; Limitation on Payments.
(a) Each party hereto hereby agrees that it will not institute against,
or join any other Person in instituting against, the Initial Purchaser or the
Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, for one year and one day after the latest maturing Note is paid in full.
27
(b) Notwithstanding any provisions contained in this Agreement to the
contrary, the Initial Purchaser shall not, and shall not be obligated to, pay
any amount pursuant to this Agreement unless the Initial Purchaser has excess
cash flow from operations or has received funds with respect to such obligation
which may be used to make such payment.
SECTION 6.8. GOVERNING LAW AND JURISDICTION.
(A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION (OR THE
EFFECT OF PERFECTION OR NON-PERFECTION) OF THE INTERESTS OF THE INITIAL
PURCHASER IN THE POOL RECEIVABLES AND THE OTHER ITEMS DESCRIBED IN SECTION
1.10(B) IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW
YORK.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY TRANSACTION DOCUMENT. EACH PARTY HERETO WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.
SECTION 6.9. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.
SECTION 6.10. Survival of Termination. The provisions of Section 1.11,
Section 2.3, Article , Article V, Section 6.4, Section 6.6, Section 6.7, Section
6.8, Section 6.11, and of this Section 6.10, shall survive any termination of
this Agreement.
SECTION 6.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ITS
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH PARTY HERETO
28
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO
FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.
SECTION 6.12. Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof. The Exhibits,
Schedules and Annexes to this Agreement shall be deemed incorporated by
reference into this Agreement as if set forth herein.
SECTION 6.13. Headings. The captions and headings of this Agreement
and in any Exhibit hereto are for convenience of reference only and shall not
affect the interpretation hereof or thereof.
29
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
XXXXX & MINOR, INC., as Guarantor
XXXXX & MINOR MEDICAL, INC., as an
Originator and as Servicer
By:
Name:
Title:
0000 Xxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: 804/000-0000
Facsimile: 804/965-5403
XXXXX & MINOR, INC., as Guarantor
By:
Name:
Title:
0000 Xxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: 804/000-0000
Facsimile: 804/965-5403
O&M FUNDING CORP., as
Initial Purchaser
By:
Name:
Title:
0000 Xxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: 804/000-0000
Facsimile: 804/965-5403
EXHIBIT I
CONDITIONS OF PURCHASES
1. Conditions Precedent to Initial Purchase. The initial purchase under
the Purchase and Sale Agreement is subject to the condition precedent that the
Initial Purchaser shall have received each of the following (with copies to the
Administrator), on or before the date of such purchase, each in form and
substance (including the date thereof) satisfactory to the Initial Purchaser and
the Administrator:
(a) The Receivables Purchase Agreement, duly executed by the
parties thereto, together with evidence reasonably satisfactory to the
Initial Purchaser that all conditions precedent to the initial purchase
of an undivided interest thereunder (other than any condition relating
to the effectiveness of the purchase commitment under this Agreement)
shall have been met;
(b) Duly executed copies of the Parallel Asset
Purchase Agreement;
(c) A duly executed counterpart of a subscription and
stockholder agreement (the "Subscription Agreement"), together with
evidence that a capital contribution of Pool Receivables and Related
Assets in an aggregate amount of not less than $7,500,000 shall have
been made to the Initial Purchaser thereunder by O&M Medical in
exchange for common stock of the Initial Purchaser; and
(d) Certified copies of (i) the resolutions of the respective
Board of Directors of each of the Originators and the Parent
authorizing the execution, delivery and performance by such Persons of
the Purchase and Sale Agreement and the other Transaction Documents,
(ii) all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Purchase and Sale
Agreement and the other Transaction Documents and (iii) the articles of
incorporation and by-laws of each of the Originators and the Parent.
(e) A certificate of the Secretary or Assistant Secretary of
each of the Originators and the Parent certifying the names and true
signatures of the officers of such Persons authorized to sign the
Purchase and Sale Agreement and the other Transaction Documents. Until
the Administrator receives a subsequent incumbency certificate from an
Originator or the Parent in form and substance satisfactory to the
Administrator, the Administrator shall
be entitled to rely on the last such certificate delivered
to it by such Originator.
(f) Such other agreements, instruments, UCC financing
statements, certificates, opinions and other documents as the Initial
Purchaser or the Administrator may reasonably request.
2. Certification as to Representations and Warranties. Each Originator,
by accepting the Purchase Price paid to it for each purchase of Pool Receivables
and Related Assets on any day, shall be deemed to have certified that its
representations and warranties contained in Exhibit II to this Purchase and Sale
Agreement are true and correct on and as of such day, with the same effect as
though made on and as of such day (except for representations or warranties
expressly stated to have been made or given as of a specific date).
3. Automatic Transfer of Title on Creation of Pool Receivable. Upon the
creation of any Pool Receivable, such Pool Receivable and any Related Assets
shall be automatically sold and transferred to the Initial Purchaser without
further action, and title to such Pool Receivables and Related Assets shall vest
in the Initial Purchaser, whether or not the conditions precedent to such
purchase were in fact satisfied; provided that the Initial Purchaser shall not
be deemed to have waived any claim it may have under the Purchase and Sale
Agreement for the failure by any applicable Originator in fact to satisfy any
such condition precedent and no Originator shall be deemed to have waived any
claim it may have under the Purchase and Sale Agreement for payment of the
Purchase Price of any Pool Receivables.
4. Conditions Precedent to All Purchases. Each purchase under the
Purchase and Sale Agreement is subject to the condition precedent that the
agreement of the Originators to sell Pool Receivables and Related Assets, and
the agreement of the Initial Purchaser to purchase Pool Receivables and Related
Assets, shall not have terminated pursuant to Section 2.3 of the Purchase and
Sale Agreement.
I-2
EXHIBIT II
REPRESENTATIONS AND WARRANTIES
In order to induce the Initial Purchaser to enter into the Purchase and
Sale Agreement and to make purchases thereunder, each Originator, as to matters
relating to it or its Pool Receivables or other property, hereby represents and
warrants as follows and the Parent makes all of the following representations
and warranties except those set forth in clauses (g), (i), (j), (l), (n), (o)
and (r) herein:
(a) Organization and Good Standing. It is a corporation duly
incorporated, validly existing and in good standing under the laws of
the jurisdiction of its organization, and is duly qualified to do
business, and is in good standing, as a foreign corporation in every
jurisdiction where the nature of its business requires it to be so
qualified.
(b) Due Qualification; No Conflicts. The execution, delivery
and performance by it of this Agreement and the other Transaction
Documents to which it is a party, including, without limitation, its
use of the proceeds of purchases, (i) are within its corporate powers,
(ii) have been duly authorized by all necessary corporate action, (iii)
do not contravene or result in a default under or conflict with (1) its
articles of incorporation or by-laws, (2) any law, rule or regulation
applicable to it, (3) any contractual restriction binding on or
affecting it or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting it or its property and
(iv) do not result in or require the creation of any Adverse Claim upon
or with respect to any of its properties. The Purchase and Sale
Agreement and the other Transaction Documents to which it is a party
have been duly executed and delivered by it.
(c) Consents. No authorization or approval or other action by,
and no notice to or filing with, any Governmental Authority or any
other Person is required for the due execution, delivery and
performance by it of the Purchase and Sale Agreement or any other
Transaction Document to which it is a party other than (a) the filing
of financing statements against O&M Medical in the State Corporation
Commission of Virginia and (b) comparable filings with respect to all
other Originators in the jurisdiction provided in their respective
Supplement to perfect the Initial Purchaser's interest in the Pool
Receivables under the Receivables Purchase Agreement.
(d) Binding Obligations. Each of the Purchase and Sale
Agreement and any other Transaction Document to which it is a party
constitutes the legal, valid and binding obligation of it enforceable
against it in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditor's rights generally and by
general principles of equity regardless of whether such enforceability
is considered in a proceeding in equity or at law.
(e) Financial Statements.
(i) The consolidated and consolidating balance sheet
of the Parent and its Subsidiaries as of December 31, 1994,
and the related consolidated and consolidating statements of
income and retained earnings of the Parent and its
Subsidiaries for the fiscal year then ended, copies of which
have been furnished to the Administrator, fairly present the
financial condition of the Parent and its Subsidiaries as at
such date and the results of the operations of the Originators
and their Subsidiaries for the period ended on such date, all
in accordance with generally accepted accounting principles
consistently applied, and since December 31, 1994 there has
been no material adverse change in the business, operations,
property or financial or other condition or operations of the
Originators or the Parent or any of their Subsidiaries taken
as a whole (except as reflected in the unaudited financial
statements of Parent as of September 30, 1995), the ability of
any Originator or the Parent to perform its obligations under
the Purchase and Sale Agreement or the other Transaction
Documents or the collectibility of the Pool Receivables, or
which affects the legality, validity or enforceability of the
Purchase and Sale Agreement or the other Transaction
Documents.
(ii) The unaudited condensed balance sheet of the
Originators as of December 31, 1994, and the related condensed
statements of income of the Originators for the fiscal year
ended December 31, 1994, heretofore furnished to the
Administrator, are the financial statements of the Originators
routinely prepared for internal use.
(f) No Proceedings. There is no pending or threatened
action or proceeding affecting either (x) any Originator and
its Subsidiaries taken as a whole or (y) the Parent and its
Subsidiaries taken as a whole, which is before any Govern-
II-2
mental Authority or arbitrator and which would reasonably be expected
to materially adversely affect the business, operations, property,
financial or other condition or operations of either (x) any Originator
and its Subsidiaries taken as a whole or (y) the Parent and its
Subsidiaries taken as a whole, or their ability to perform their
obligations under the Purchase and Sale Agreement or the other
Transaction Documents or the collectibility of the Pool Receivables, or
which affects or purports to affect the legality, validity or
enforceability of the Purchase and Sale Agreement or the other
Transaction Documents.
(g) Quality of Title; Valid Sale; Etc. Upon its creation and
prior to its sale to the Initial Purchaser under this Agreement, it is
the legal and beneficial owner of each of the Pool Receivables and
Related Assets free and clear of any Adverse Claim; and upon each
purchase the Initial Purchaser shall acquire a valid and enforceable
ownership interest in each Pool Receivable then existing or thereafter
arising, in the Related Assets with respect thereto, and the items
described in Section 1.2(c) of the Purchase and Sale Agreement, free
and clear of any Adverse Claim, which interest has been duly perfected;
the Purchase and Sale Agreement creates a valid ownership interest in
favor of the Initial Purchaser in the items described in Section
1.10(b) of this Purchase and Sale Agreement, free and clear of any
Adverse Claims, which interest has, to the extent required, been duly
perfected. No effective financing statement or other instrument similar
in effect naming Initial Purchaser or any Originator as debtor and
covering any Pool Receivable or Related Asset with respect thereto or
any Lock-Box Account or any other item described in Section 1.10(b) of
this Purchase and Sale Agreement is on file in any recording office,
except those filed in favor of the Initial Purchaser pursuant to the
Purchase and Sale Agreement and in favor of the Issuer pursuant to the
Receivables Purchase Agreement.
(h) Accuracy of Information. Each report (if prepared by an
Originator or the Initial Purchaser or one of its Affiliates, or to the
extent that information contained therein is supplied by an Originator
or the Initial Purchaser or one of its Affiliates), information,
exhibit, financial statement, document, book or record furnished or to
be furnished at any time by or on behalf of it to the Initial
Purchaser, the Issuer or the Administrator in connection with this
Agreement is or will be accurate in all material respects as of its
date or (except as otherwise disclosed to the Administrator at such
time) as of the date so furnished, and no such item contains or will
contain any untrue statement of a material fact or omits or will omit
to
II-3
state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading.
(i) Principal Place of Business. The principal place of
business and chief executive office (as such terms are used in the UCC)
of each Originator and the office where each Originator keeps its
records concerning the Receivables are located at the addresses
referred to on Schedule I of this Purchase and Sale Agreement (or in
such Originator's Supplement) (or at such other addresses designated in
accordance with paragraph (b) of Exhibit III), and during the six years
prior to the initial purchase under the Purchase and Sale Agreement
such principal place of business, chief executive office and office
were located in the Commonwealth of Virginia.
(j) Lock-Box Banks, Accounts. The names and addresses of all
the Lock-Box Banks, together with the account numbers of the Lock-Box
Accounts of each Originator at such Lock-Box Banks, are specified in
Schedule II to the Purchase and Sale Agreement (except as permitted by
paragraph (i) of Exhibit III to the Purchase and Sale Agreement), and
all Lock-Box Accounts are subject to Lock-Box Agreements.
(k) No Violation. It is not in violation of any order of any
arbitrator or Governmental Authority which violation would reasonably
be expected to have a material adverse effect on its business,
operations, property or financial or other condition of the Originator.
(l) Proceeds. No proceeds of any purchase will be used for any
purpose that violates any applicable law, rule or regulation,
including, without limitation, Regulations G or U of the Federal
Reserve Board.
(m) No Purchase and Sale Termination Events. No event has
occurred and is continuing, or would result from a purchase, in respect
of the Pool Receivables or Related Assets or from the application of
the proceeds therefrom, which constitutes a Purchase and Sale
Termination Event.
(n) Maintenance of Books and Records. It has accounted for
each sale of Pool Receivables and Related Assets in its books and
financial statements as sales, consistent with Generally Accepted
Accounting Principles.
(o) Credit and Collection Policy. It has complied in
all material respects with the Credit and Collection Policy
with regard to each Pool Receivable.
II-4
(p) Solvency. It is Solvent; and at the time of (and
immediately after) each purchase pursuant to the Purchase and Sale
Agreement, such Originator shall have been Solvent.
(q) Compliance with Transaction Documents. It, as Servicer or
Originator or guarantor, has complied in all material aspects with all
of the terms, covenants and agreements contained in the Purchase and
Sale Agreement and the other Transaction Documents and applicable to
it.
(r) Corporate Name. Its complete corporate name is set forth
in the preamble to the Purchase and Sale Agreement, and it does not use
and has not during the last six years used any other corporate name,
trade name, doing business name or fictitious name, except for those
names set forth in Schedule I and except for names first used after the
date of the Purchase and Sale Agreement and set forth in a notice
delivered to the Administrator pursuant to clause (b) of Exhibit III to
the Purchase and Sale Agreement.
(s) No Labor Disputes. There are no strikes, lockouts or other
labor disputes against it or any of its subsidiaries, or, to the best
of its knowledge, threatened against or affecting it or any of its
subsidiaries, and no significant unfair labor practice complaint is
pending against it or any of its subsidiaries or, to the best knowledge
of it, threatened against any of them by or before any Governmental
Authority that would have a material adverse effect on its business,
operations, property or financial or other condition.
(t) Pension Plans. During the preceding twelve months, no
steps have been taken to terminate any Pension Plan which was not fully
funded, unless adequate reserves have been set aside for the funding
thereof, and no contribution failure has occurred with respect to any
Pension Plan sufficient to give rise to a lien under section 302(f) of
ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which could result in the incurrence by the
applicable Originator of any material liability, fine or penalty.
(u) Investment Company Act. It is not, and is not
controlled by, an "investment company" registered or
required to be registered under the Investment Company Act
of 1940, as amended.
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EXHIBIT III
COVENANTS
Until the later of the Purchase and Sale Termination Date and the Final
Payout Date and as to matters relating to it or its Pool Receivables or other
property, each Originator covenants as follows; and the Parent only covenants as
set forth in clauses (a), (l) and (m) herein:
(a) Compliance with Laws, Etc. It shall comply in all material
respects with all applicable laws, rules, regulations and orders, and
preserve and maintain its corporate existence, rights, franchises,
qualifications, and privileges except to the extent that the failure so
to comply with such laws, rules and regulations or the failure so to
preserve and maintain such existence, rights, franchises,
qualifications, and privileges would not materially adversely affect
the collectibility of the Pool Receivables or the enforceability of any
related Contract or the ability of the Originator to perform its
obligations under any related Contract or under the Agreement.
(b) Location of Offices, Records and Books of Account; Change
of Name, Mergers, etc.; Maintenance of Records, etc. Each Originator
(i) shall keep its principal place of business and chief executive
office (as such terms are used in the UCC) and the office where it
keeps its records concerning the Pool Receivables at the address of the
Initial Purchaser set forth on Schedule I attached hereto or, upon at
least 60 days' prior written notice of a proposed change to the
Administrator, at any other locations in jurisdictions where all
actions reasonably requested by the Administrator to protect and
perfect the interest of the Issuer in the Pool Receivables and related
items (including without limitation the items described in Section
1.10(b) of this Purchase and Sale Agreement) have been taken and
completed and (ii) shall provide the Administrator with at least 60
days' written notice prior to making any change in the Initial
Purchaser's name or making any other change in the Initial Purchaser's
identity or corporate structure (including a merger) which could render
any UCC financing statement filed in connection with this Agreement
"seriously misleading" as such term is used in the UCC; each notice to
the Administrator pursuant to this sentence shall set forth the
applicable change and the effective date thereof. The Initial Purchaser
also will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate
records evidencing Pool Receivables and related Contracts in the event
of the destruction of the originals thereof), and keep and maintain all
documents, books, records, computer tapes and disks and other
information reasonably necessary or advisable for the
collection of all Pool Receivables (including, without limitation,
records adequate to permit the daily identification of each Pool
Receivable and all Collections of and adjustments to each existing Pool
Receivable).
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. Each Originator shall, at its expense, timely and
fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Contracts
related to the Pool Receivables, and timely and fully comply in all
material respects with the Credit and Collection Policy with regard to
each Pool Receivable and the related Contract.
(d) Ownership Interest, Etc. Each Originator shall, at its
expense, take all action necessary or desirable to establish and
maintain a valid and enforceable perfected ownership interest in the
Pool Receivables, the Related Assets, and the items described in
Section 1.2(c) of the Purchase and Sale Agreement, and an ownership
interest in the items described in Section 1.10(b) of this Purchase and
Sale Agreement, in each case fully perfected and free and clear of any
Adverse Claim, in favor of the Initial Purchaser, including, without
limitation, taking such action to perfect, protect or more fully
evidence the interest of the Initial Purchaser under the Purchase and
Sale Agreement as the Administrator may request.
(e) Sales, Liens, Etc. Other than a sale to the Initial
Purchaser as contemplated by the Purchase and Sale Agreement, no
Originator shall sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim
upon or with respect to, any or all of its right, title or interest in,
to or under, (i) any item described in Section 1.10(b) of this Purchase
and Sale Agreement, (ii) any Originator Note or the Initial Purchaser
Note or (iii) any post office box to which any payments in respect of
any Receivable are sent, including, without limitation, any assignment
of any right to receive income in respect of items contemplated by
clause (i) or (ii) of this paragraph (e).
(f) Extension or Amendment of Pool Receivables. The
applicable Originator shall not (i) extend the maturity or adjust the
Outstanding Balance or otherwise modify the terms of any Pool
Receivable, or (ii) amend, modify or waive any term or condition of any
related Contract in a way which would adversely affect the
collectibility of any Receivable; provided that this clause (f) shall
not limit the ability of the Servicer to extend the maturity, adjust
the Outstanding Balance or otherwise modify the terms of any Pool
Receivable in accordance with Section 4.2(a) of the Receivables
Purchase Agreement.
III-2
(g) Change in Business or Credit and Collection Policy.
Without the written consent of the Administrator, no Originator shall
make (i) any material change in the character of its business or in the
Credit and Collection Policy, or (ii) any change at all in the Credit
and Collection Policy that would adversely affect the collectibility of
the Pool Receivables or the enforceability of any related Contract or
the ability of the Originator to perform its obligations under any
related Contract or under the Purchase and Sale Agreement.
(h) Audits. Each Originator shall, from time to time during
regular business hours as requested by the Administrator, permit the
Administrator, or its agents or representatives, (i) to examine and
make copies of and make abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the
possession or under the control of such Originator relating to Pool
Receivables and the Related Assets, provided that copies of the related
Contracts may only be made if the Servicer is not such Originator or if
a Termination Event has occurred 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 Pool Receivables and the Related Assets or such
Originator's performance hereunder or under the Contracts with any of
the officers, employees, agents or contractors of such Originator
having knowledge of such matters.
(i) Lock-Box Agreements; Change in Lock-Box Banks, Lock-Box
Accounts and Payment Instructions to Obligors.
(i) By January 31, 1996, the Initial Purchaser shall
have delivered to the Administrator copies of executed
Lock-Box Agreements with the Lock-Box Banks in form and
substance satisfactory to the Administrator.
(ii) No Originator shall add or terminate any bank as
a Lock-Box Bank or any account as a Lock-Box Account from
those listed in Schedule II to the Purchase and Sale
Agreement, or make any change in its instructions to Obligors
regarding payments to be made to an Originator or payments to
be made to any Lock-Box Account (or related post office box),
unless the Administrator shall have consented thereto in
writing and the Administrator shall have received copies of
all agreements and documents (including without limitation
Lock-Box Agreements) that it may request in connection
therewith.
(j) Deposits to Lock-Box Accounts. Each Originator shall (i)
instruct all Obligors (other than Obligors which customarily make
direct payment to such Originator for deposit in one of the Lock-Box
Accounts designated on
III-3
Schedule II as a "Deposit Account", provided that such Originator
complies with Clause (ii) of this subsection (j)) to make payments of
all Pool Receivables to one or more Lock-Box Accounts or to post office
boxes to which only Lock-Box Banks have access (and shall instruct the
Lock-Box Banks to cause all items and amounts relating to such Pool
Receivables received in such post office boxes to be removed and
deposited into a Lock-Box Account on a daily basis), and (ii) deposit,
or cause to be deposited, any Collections of Pool Receivables received
by it into Lock-Box Accounts not later than one Business Day after
receipt thereof. Each Lock-Box Account shall at all times be subject to
a Lock-Box Agreement. No Originator will deposit or otherwise credit,
or cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections of Pool
Receivables. Notwithstanding the foregoing, Columbia Receivables may be
co-mingled except that the Company will, at the Administrator's
request, establish a separate account and cause Columbia Receivables to
be paid by the Obligors into such separate account to avoid such
co-mingling.
(k) Marking of Records. At its expense, each Originator shall
xxxx its master data processing records relating to Pool Receivables
and related Contracts, including with a legend evidencing that the Pool
Receivables and related Contracts (and interests therein) have been
sold in accordance with the Purchase and Sale Agreement and the
Receivables Purchase Agreement.
(l) ERISA Matters. Each of the Originators and the Parent
shall notify the Administrator as soon as is practicable and in any
event not later than two Business Days after (i) the institution of any
steps by such Originator or the Parent or any other Person to terminate
any Pension Plan which is not fully funded, unless adequate reserves
have been set aside for the funding thereof, (ii) the failure to make a
required contribution to any Pension Plan if such failure is sufficient
to give rise to a lien under section 302(f) of ERISA, (iii) the taking
of any action with respect to a Pension Plan which could result in the
requirement that such Originator furnish a bond or other security to
the PBGC or such Pension Plan or (iv) the occurrence of any other event
concerning any Pension Plan which is reasonably likely to result in a
material adverse effect.
(m) Separate Corporate Existence of the Initial Purchaser.
Each of the Originators and the Parent hereby acknowledges that the
Initial Purchaser, the Issuer and the Administrator are entering into
the transactions contemplated by the Purchase and Sale Agreement and by
the Receivables Purchase Agreement in reliance upon the Initial
Purchaser's identity as a legal entity separate from its
III-4
Affiliates. Therefore, each of the Originators and the Parent shall
take all steps to continue the Initial Purchaser's identity as such a
separate legal entity and to make it apparent to third Persons that the
Initial Purchaser is an entity with assets and liabilities distinct
from those of its Affiliates and those of any other Person, and not a
division of any of its Affiliates or any other Person. Without limiting
the generality of the foregoing, each of the Originators and the Parent
will, and will cause its Affiliates to, take such actions as shall be
required in order that:
(i) The Initial Purchaser will be a limited purpose
corporation whose primary activities are restricted in its
articles of incorporation to purchasing Pool Receivables from
each Originator (or other Persons approved in writing by the
Administrator), entering into agreements for the servicing of
such Pool Receivables, selling undivided interests in the Pool
Receivables to the Issuer and conducting such other activities
as it deems necessary or appropriate to carry out its primary
activities;
(ii) At least one member of the Initial Purchaser's
Board of Directors shall be an individual who is not a direct,
indirect or beneficial stockholder, officer, director,
employee, affiliate, associate, customer or supplier of any of
its Affiliates;
(iii) No director or officer of the Initial
Purchaser shall at any time serve as a trustee in
bankruptcy for any of its Affiliates;
(iv) Any employee, consultant or agent of the Initial
Purchaser will be compensated from the Initial Purchaser's own
bank accounts for services provided to the Initial Purchaser
except as provided in the Receivables Purchase Agreement in
respect of the Servicing Fee. The Initial Purchaser will
engage no agents other than a Servicer for the Pool
Receivables, which Servicer (if an Affiliate) will be fully
compensated for its services to the Initial Purchaser by
payment of the Servicing Fee;
(v) The Initial Purchaser may incur indirect or
overhead expenses for items shared between the Initial
Purchaser and any of its Affiliates which are not reflected in
the Servicing Fee, such as legal, auditing and other
professional services, but such expenses will be allocated to
the extent practical on the basis of cost, it being understood
that each of the Originators and the Parent shall jointly and
severally pay all expenses relating to the preparation,
negotiation,
III-5
execution and delivery of the Transaction Documents,
including legal and other fees;
(vi) The Initial Purchaser's operating expenses
will not be paid by any of its Affiliates;
(vii) The Initial Purchaser will have its own
separate telephone number, stationery and bank checks signed
by it and in its own name and, if it uses premises leased,
owned or occupied by any of its Affiliates, its portion of
such premises will be defined and separately identified and it
will pay such other Affiliates reasonable compensation for the
use of such premises;
(viii) The books and records of the Initial
Purchaser will be maintained separately from those of
its Affiliates;
(ix) The assets of the Initial Purchaser will be
maintained in a manner that facilitates their identification
and segregation from those of its Affiliates; and the Initial
Purchaser will strictly observe corporate formalities in its
dealings with each of its Affiliates;
(x) The Initial Purchaser shall not maintain joint
bank accounts with any of its Affiliates or other depository
accounts to which any of its Affiliates (other than O&M
Medical (or any of its Affiliates) in its capacity as the
Servicer under the Purchase and Sale Agreement or under the
Receivables Purchase Agreement) has independent access;
(xi) The Initial Purchaser shall not, directly or
indirectly, be named and shall not enter into any agreement to
be named as a direct or contingent beneficiary or loss payee
on any insurance policy covering the property of any other O&M
Party or any Affiliate of any other O&M Party unless it pays a
proportional share of the premium relating to any such
insurance policy;
(xii) The Initial Purchaser will maintain arm's-
length relationships with each other O&M Party and each
Affiliate of such other O&M Party. Any of its Affiliates that
renders or otherwise furnishes services or merchandise to the
Initial Purchaser will be compensated by the Initial Purchaser
at market rates for such services or merchandise; and
(xiii) Neither the Initial Purchaser, on the one
hand, nor any other O&M Party or any of its Affiliates, on the
other hand, will be or will hold itself out to
III-6
be responsible for the debts of the other or the
decisions or actions in respect of the daily business
and affairs of the other.
(xiv) Every representation and warranty of each of
the O&M Parties contained in the Officer's Certificates (the
"Certificate") delivered in connection with the opinion of
Hunton & Xxxxxxxx pursuant to Section 1(j) of Exhibit II of
the Receivables Purchase Agreement, a true copy of which
Certificate is attached hereto as Annex C, is true and correct
in all material respects as of the date hereof; and each of
the O&M Parties shall comply with all of its respective
covenants and other obligations set forth in the Certificate.
III-7
EXHIBIT IV
PURCHASE AND SALE TERMINATION EVENTS
Each of the following events or occurrences described in this Exhibit
IV shall constitute a "Purchase and Sale Termination Event":
(a) (i) the Servicer (if O&M Medical or any of its Affiliates)
shall fail to perform or observe any term, covenant or agreement under
any Transaction Document to which it is a party and such failure shall
continue for two Business Days or (ii) any Person which is the Servicer
shall fail to make when due any payment or deposit to be made by it
under any Transaction Document to which it is a party and such failure
shall continue for two Business Days; or
(b) Any Originator shall fail to make any payment required
under any Transaction Document to which it is a party within two
Business Days after the date on which such payment is due; or
(c) Any representation or warranty made or deemed to be made
by any Originator (or any of its officers) under or in connection with
any Transaction Document to which it is a party or any other
information or report delivered by such Originator or the Servicer
pursuant to the Purchase and Sale Agreement shall prove to have been
incorrect or untrue in any material respect when made or deemed made or
delivered; or
(d) Any Originator shall fail to perform or observe any other
term, covenant or agreement contained in any Transaction Document to
which it is a party on its part to be performed or observed and such
failure shall remain unremedied for thirty (30) days after the earlier
of (A) the date when the chief financial officer, treasurer, assistant
treasurer or chief accounting officer of the applicable Originator (an
"Originator Financial Officer") of the applicable Originator shall have
knowledge thereof or (B) notice to the applicable Originator from the
Administrator; or
(e) The Purchase and Sale Agreement shall for any reason
(other than pursuant to the terms thereof) (i) cease to create in favor
of the Initial Purchaser a valid and enforceable perfected ownership
interest in each Pool Receivable, the Related Assets, and the items
described in Section 1.2(c) of the Purchase and Sale Agreement, or (ii)
cease to create, with respect to the items described in Section 1.10(b)
of this Purchase and Sale Agreement, a valid and enforceable ownership
interest in favor of the Initial
IV-1
Purchaser, in each case free and clear of any Adverse Claim;
or
(f) Parent 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; or any proceeding shall be
instituted by or against Parent or any of its Subsidiaries seeking to
adjudicate it a 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,
custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding
(including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its property)
shall occur; or Parent or any of its Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in
this clause (f); or
(g) As of the last day of any calendar month, either (i) the
Six Month Default Ratio shall exceed 4% or (ii) the Six Month Dilution
Ratio shall exceed 5% or (iii) the Six Month Loss-to-Liquidation Ratio
shall exceed 1.0% or (iv) the average of the Delinquency Ratios for the
six consecutive Month End Dates ending with such last day shall exceed
25%; or
(h) The Purchased Interest shall exceed 100%.
(i) Any O&M Party shall contract, create, incur, assume or
permit to exist any Lien with respect to any of its property of assets
of any kind (whether real or personal, tangible or intangible), whether
now owned or after acquired, except for Permitted Liens.
(j) The Tangible Net Worth of Initial Purchaser shall at any
time be less than $5,000,000.
(k) Any Change of Control shall occur.
(l) A Termination Event of the type described in Exhibit VI to
the Receivables Purchase Agreement shall have occurred.
IV-2
SCHEDULE I
TRADE NAMES AND LOCATIONS
IV-3
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Applicable Originator Lock-Box Bank Lock-Box Account
ANNEX A
FORM OF INITIAL PURCHASER NOTE
NON-NEGOTIABLE PROMISSORY NOTE
____________, 199_
FOR VALUE RECEIVED, the undersigned, O&M FUNDING CORP., a Virginia
corporation (the "Initial Purchaser"), promises to pay to [NAME OF ORIGINATOR],
a ____________ corporation (the "Originator"), on the terms and subject to the
conditions set forth herein and in the Purchase and Sale Agreement referred to
below, the aggregate unpaid Purchase Price of all Receivables and Related Assets
purchased and to be purchased by the Initial Purchaser pursuant to the Purchase
and Sale Agreement (subject to adjustment pursuant to Section 1.8 of such
Purchase and Sale Agreement). Such amount as shown in the records of the
Servicer will be rebuttable presumptive evidence of the principal amount owing
under this Note.
1. Purchase and Sale Agreement. This Note is an "Initial Purchaser
Note" described in, and is subject to the terms and conditions set forth in,
that certain Purchase and Sale Agreement, dated as of December 28, 1995 (as the
same may be amended, supplemented, or otherwise modified in accordance with its
terms, the "Purchase and Sale Agreement"), between the Originators, the
Servicer, and the Initial Purchaser. Reference is hereby made to the Purchase
and Sale Agreement for a statement of certain other rights and obligations of
the Initial Purchaser and the Originator. In the case of any conflict between
the terms of this Note and the terms of the Purchase and Sale Agreement, the
terms of the Purchase and Sale Agreement shall control.
2. Definitions. Capitalized terms used (but not defined)
herein have the meanings ascribed thereto in the Purchase and
Sale Agreement. In addition, as used herein, the following terms
have the following meanings:
"Final Maturity Date" means the date that falls ninety one
(91) days after the later of (x) the Purchase and Sale Termination Date
and (y) the Final Payout Date.
"Junior Liabilities" means all obligations of the Initial
Purchaser to the Originator under this Note.
"Senior Agent" means the Administrator.
"Senior Interests" means (a) the undivided percentage
ownership interests acquired by the Issuer pursuant to the Receivables
Purchase Agreement and (b) all obligations of the Initial Purchaser to
the Senior Interest Holders, howsoever created, arising or evidenced,
whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to
become due on or before the Final Maturity Date.
"Senior Interest Holders" means, collectively, the Issuer, the
Administrator, each Program Support Provider and their respective
successors and assigns.
"Subordination Provisions" means, collectively,
clauses (a) through (k) of Section 7 hereof.
3. Interest. Subject to the Subordination Provisions, the Initial
Purchaser promises to pay interest on the aggregate unpaid principal amount of
this Note outstanding on each day (a) prior to the final payment in full and in
cash of the Senior Interests, at a variable rate per annum equal to the Discount
Rate Percentage, determined as of the then most recent Payment Date, and (b)
after such final payment, at a variable rate per annum equal to the Base Rate,
as determined by the Servicer.
4. Interest Payment Dates. Subject to the Subordination Provisions, the
Initial Purchaser shall pay accrued interest on this Note on January 2 and July
1 of each calendar year and on the Final Maturity Date (or, if any such day is
not a Business Day, the next succeeding Business Day). The Initial Purchaser
also shall pay accrued interest on the principal amount of each prepayment
hereof on the date of each such prepayment.
5. Basis of Computation. Interest accrued hereunder
shall be computed for the actual number of days elapsed on
the basis of a 360-day year.
6. Principal Payment Dates. Subject to the Subordination Provisions,
any unpaid principal of this Note shall be paid on the Final Maturity Date (or,
if such date is not a Business Day, the next succeeding Business Day). Subject
to the Subordination Provisions, the principal amount of and accrued interest on
this Note may be prepaid on any Business Day without premium or penalty.
7. Subordination Provisions. The Initial Purchaser covenants and
agrees, and the Originator, by its acceptance of this Note, likewise covenants
and agrees, that the payment of all Junior Liabilities is hereby expressly
subordinated in right of payment to the payment and performance of the Senior
Interests to the extent and in the manner set forth in the following clauses of
this Section 7:
(a) No payment or other distribution of the Initial
Purchaser's assets of any kind or character, whether in cash,
securities, or other rights or property, shall be made on account of
this Note except
-2-
to the extent such payment or other distribution is made
pursuant to Sections 4 or 6 of this Note;
(b) (i) In the event of any Insolvency Proceeding, and (ii) on
and after the occurrence of the Purchase and Sale Termination Date, the
Senior Interests shall first be paid and performed in full and in cash
before the Originator shall be entitled to receive and to retain any
payment or distribution in respect of the Junior Liabilities. In order
to implement the foregoing: (x) all payments and distributions of any
kind or character in respect of the Junior Liabilities to which the
Originator would be entitled except for this subsection shall be made
directly to the Senior Agent (for the benefit of the Senior Interest
Holders); and (y) the Originator hereby irrevocably agrees that the
Issuer (or the Senior Agent acting on its behalf), in the name of the
Originator or otherwise, may demand, xxx for, collect, receive and
receipt for any and all such payments or distributions, and file, prove
and vote or consent in any such Insolvency Proceeding with respect to
any and all claims of the Originator relating to the Junior
Liabilities, in each case until the Senior Interests shall have been
paid and performed in full and in cash.
(c) In the event that the Originator receives any payment or
other distribution of any kind or character from the Initial Purchaser
or from any other source whatsoever, in respect of the Junior
Liabilities, other than as expressly permitted by the terms of this
Note, such payment or other distribution shall be received in trust for
the Senior Interest Holders and shall be turned over by the Originator
to the Senior Agent (for the benefit of the Senior Interest Holders)
forthwith. All payments and distributions received by the Senior Agent
in respect of this Note, to the extent received in or converted into
cash, may be applied by the Senior Agent (for the benefit of the Senior
Interest Holders) first to the payment of any and all reasonable
expenses (including, without limitation, reasonable attorneys' fees and
other legal expenses) paid or incurred by the Senior Agent or the
Senior Interest Holders in enforcing these Subordination Provisions, or
in endeavoring to collect or realize upon the Junior Liabilities, and
any balance thereof shall, solely as between the Originator and the
Senior Interest Holders, be applied by the Senior Agent toward the
payment of the Senior Interests in a manner determined by the Senior
Agent to be in accordance with the Receivables Purchase Agreement; but
as between the Initial Purchaser and its creditors, no such payments or
distributions of any kind or character shall be deemed to be payments
or distributions in respect of the Senior Interests.
-3-
(d) Upon the final payment in full and in cash of all Senior
Interests, the Originator shall be subrogated to the rights of the
Senior Interest Holders to receive payments or distributions from the
Initial Purchaser that are applicable to the Senior Interests until the
Junior Liabilities are paid in full.
(e) These Subordination Provisions are intended solely for the
purpose of defining the relative rights of the Originator, on the one
hand, and the Senior Interest Holders, on the other hand. Nothing
contained in the Subordination Provisions or elsewhere in this Note is
intended to or shall impair, as between the Initial Purchaser, its
creditors (other than the Senior Interest Holders) and the Originator,
the Initial Purchaser's obligation, which is unconditional and
absolute, to pay the Junior Liabilities as and when the same shall
become due and payable in accordance with the terms hereof and of the
Purchase and Sale Agreement or to affect the relative rights of the
Originator and creditors of the Initial Purchaser (other than the
Senior Interest Holders).
(f) The Originator shall not, until the Senior Interests have
been finally paid and performed in full and in cash, (i) cancel, waive,
forgive, transfer or assign, or commence legal proceedings to enforce
or collect, or subordinate to any obligation of the Initial Purchaser,
howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, or now or hereafter existing, or due or to
become due, other than the Senior Interests, the Junior Liabilities, or
any rights in respect thereof or (ii) convert the Junior Liabilities
into an equity interest in the Initial Purchaser, unless, in the case
of each of clauses (i) and (ii) above, the Originator shall have
received the prior written consent of the Administrator in each case.
(g) The Originator shall not, without the advance written
consent of the Administrator, commence, or join with any other Person
in commencing, any Insolvency Proceedings with respect to the Initial
Purchaser until at least one year and one day shall have passed since
the Senior Interests shall have been finally paid and performed in full
and in cash.
(h) If, at any time, any payment (in whole or in part) made
with respect to any Senior Interest is rescinded or must be restored or
returned by a Senior Interest Holder (whether in connection with any
Insolvency Proceedings or otherwise), these Subordination Provisions
shall continue to be effective
-4-
or shall be reinstated, as the case may be, as though
such payment had not been made.
(i) Each of the Senior Interest Holders may, from time to
time, at its sole discretion, without notice to the Originator, and
without waiving any of its rights under these Subordination Provisions,
take any or all of the following actions: (i) retain or obtain an
interest in any property to secure any of the Senior Interests; (ii)
retain or obtain the primary or secondary obligations of any other
obligor or obligors with respect to any of the Senior Interests; (iii)
extend or renew for one or more periods (whether or not longer than the
original period), alter or exchange any of the Senior Interests, or
release or compromise any obligation of any nature with respect to any
of the Senior Interests; (iv) amend, supplement, or otherwise modify
any Transaction Document; and (v) release its security interest in, or
surrender, release or permit any substitution or exchange for all or
any part of any rights or property securing any of the Senior
Interests, or extend or renew for one or more periods (whether or not
longer than the original period), or release, compromise, alter or
exchange any obligations of any nature of any obligor with respect to
any such rights or property.
(j) The Originator hereby waives: (i) notice of acceptance of
these Subordination Provisions by any of the Senior Interest Holders;
(ii) notice of the existence, creation, non-payment or non-performance
of all or any of the Senior Interests; and (iii) all diligence in
enforcement, collection or protection of, or realization upon the
Senior Interests, or any thereof, or any security therefor.
(k) These Subordination Provisions constitute a continuing
offer from the Initial Purchaser to all Persons who become the holders
of, or who continue to hold, Senior Interests; and these Subordination
Provisions are made for the benefit of the Senior Interest Holders, and
the Administrator may proceed to enforce such provisions on behalf of
each of such Persons.
8. Amendments, Etc. No failure or delay on the part of the Originator
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power or right preclude any
other or further exercise thereof or the exercise of any other power or right.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Note shall in any event be effective unless (a) the same shall
be in writing and signed and delivered by the Initial Purchaser and the
Originator, and (b) all consents required for such
-5-
actions under the Transaction Documents shall have been received by the
appropriate Persons.
9. Limitation on Interest. Notwithstanding anything in this Note to the
contrary, the Initial Purchaser shall never be required to pay unearned interest
on any amount outstanding hereunder, and shall never be required to pay interest
on the principal amount outstanding hereunder, at a rate in excess of the
maximum interest rate that may be contracted for, charged or received without
violating applicable federal or state law.
10. No Negotiation. This Note is not negotiable.
11. GOVERNING LAW. THIS NOTE SHALL GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF).
12. Captions. Paragraph captions used in this Note are
provided solely for convenience of reference only and shall
not affect the meaning or interpretation of any provision of
this Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be executed
by its officer thereunto duly authorized on the date first above written.
O&M FUNDING CORP., a Virginia
corporation
By:
Title:
-6-
ANNEX B
FORM OF ORIGINATOR NOTE
DEMAND NOTE
____________, 199_
The undersigned, [NAME OF ORIGINATOR], a ____________ corporation (the
"Originator"), for value received, promise to pay to the order of O&M FUNDING
CORP., a Virginia corporation (the "Initial Purchaser"), ON DEMAND, the
aggregate unpaid principal amount of all loans made by the Initial Purchaser to
the Originator (the "Originator Loans") together with accrued interest on such
amounts from time to time outstanding hereunder at the rate provided below. Such
amounts as shown in the records of the Servicer (as such term is defined in the
Purchase and Sale Agreement referred to below) will be rebuttable presumptive
evidence of the principal amount owing under this Demand Note.
The unpaid principal amount of each Originator Loan from time to time
outstanding shall bear interest (which also shall be payable ON DEMAND) from
(and including) the date on which such Originator Loan was made to (but
excluding) the date on which such Originator Loan is paid in full (a) prior to
the final payment in full and in cash of the Senior Interests (as such term is
defined in the Initial Purchaser Note), at a variable rate per annum equal to
the Discount Rate Percentage, determined as of the then most recent Payment
Date, and (b) after such final payment, at a variable rate per annum equal to
the Base Rate, as determined by the Servicer. Interest hereunder shall be
computed for the actual number of days elapsed on the basis of a year consisting
of 365 or, where appropriate, 366 days.
This Demand Note is an Originator Note described in, and is subject to
the terms and conditions set forth in, that certain Purchase and Sale Agreement,
dated as of December 28, 1995 (as the same may at any time be amended,
supplemented, or otherwise modified from time to time in accordance with its
terms, the "Purchase and Sale Agreement"), between the Originators, the
Servicer, and the Initial Purchaser. Reference is hereby made to the Purchase
and Sale Agreement for a statement of certain other rights and obligations of
the Initial Purchaser. All capitalized terms used but not otherwise defined
herein have the meanings assigned thereto in the Purchase and Sale Agreement.
All payments of principal and interest hereunder are to be made in
lawful money of the United States of America in same day funds to the account
designated from time to time by the Servicer to the Initial Purchaser.
In addition to and not in limitation of the foregoing, the Originator
further agrees, subject to any limitation imposed by applicable law, to pay all
expenses, including
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without limitation reasonable Attorney Costs, incurred by the holder of this
Demand Note in seeking to collect any amounts payable hereunder which are not
paid when due.
No failure or delay on the part of the Initial Purchaser or any other
holder of this Demand Note in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No notice to or demand on the Originator
shall entitle it to any notice or demand in similar or other circumstances. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Demand Note shall in any event be effective unless (i) the same shall be
in writing and signed and delivered by the holder hereof and (ii) all consents
required for such action under the Transaction Documents shall have been given
by the appropriate Persons.
Upon the occurrence of any Insolvency Proceeding with respect to the
Originator, the principal balance hereof and all interest accrued hereon shall
be immediately due and payable, without demand, presentment, protest or notice
of dishonor.
Notwithstanding anything in this Demand Note to the contrary, the
Originator shall never be required to pay unearned interest on any amount
outstanding hereunder, and shall never be required to pay interest on the
principal amount outstanding hereunder, at a rate in excess of the maximum
nonusurious interest rate that may be contracted for, charged or received under
applicable federal or state law.
THIS DEMAND NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAWS PRINCIPLES THEREOF).
[NAME OF ORIGINATOR]
By:
Title:
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ANNEX C
OPINION CERTIFICATE
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