EXHIBIT 10.4
RECEIVABLES PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of December 10, 2001
by and among
ADVANCEPCS HEALTH L.P.
as Originator,
AFC RECEIVABLES HOLDING CORPORATION
as Buyer,
ADVP MANAGEMENT, L.P.
as Servicer
and
ADVANCEPCS
as Parent
TABLE OF CONTENTS
Page
----
Article I Definitions and Interpretation..........................................................................1
SECTION 1.1 DEFINITIONS.................................................................................2
SECTION 1.2 RULES OF CONSTRUCTION.......................................................................2
Article II Transfers of Receivables...............................................................................2
SECTION 2.1 AGREEMENT TO TRANSFER.......................................................................2
SECTION 2.2 GRANT OF SECURITY INTEREST..................................................................4
Article III Conditions Precedent..................................................................................5
SECTION 3.1 CONDITIONS TO INITIAL TRANSFER..............................................................5
SECTION 3.2 CONDITIONS TO ALL TRANSFERS.................................................................5
Article IV Representations, Warranties and Covenants..............................................................6
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE ORIGINATOR.............................6
SECTION 4.2 AFFIRMATIVE COVENANTS OF THE PARENT AND THE ORIGINATOR.....................................13
SECTION 4.3 NEGATIVE COVENANTS OF THE PARENT AND THE ORIGINATOR........................................19
SECTION 4.4 BREACH OF REPRESENTATIONS, WARRANTIES OR COVENANTS.........................................21
Article V Indemnification........................................................................................22
SECTION 5.1 INDEMNIFICATION............................................................................22
Article VI [Reserved]............................................................................................24
Article VII Collateral Security..................................................................................24
SECTION 7.1 SECURITY INTEREST..........................................................................24
SECTION 7.2 OTHER COLLATERAL; RIGHTS IN RECEIVABLES....................................................25
SECTION 7.3 ORIGINATOR REMAINS LIABLE..................................................................25
Article VIII Miscellaneous.......................................................................................25
SECTION 8.1 NOTICES....................................................................................25
SECTION 8.2 NO WAIVER; REMEDIES........................................................................27
SECTION 8.3 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES..........................................27
SECTION 8.4 TERMINATION; SURVIVAL OF OBLIGATIONS.......................................................28
SECTION 8.5 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT..............................................28
SECTION 8.6 AMENDMENTS AND WAIVERS.....................................................................28
SECTION 8.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL...............................28
SECTION 8.8 COUNTERPARTS...............................................................................30
SECTION 8.9 SEVERABILITY...............................................................................30
SECTION 8.10 SECTION TITLES.............................................................................30
SECTION 8.11 NO SETOFF..................................................................................30
SECTION 8.12 CONFIDENTIALITY............................................................................30
SECTION 8.13 FURTHER ASSURANCES.........................................................................31
SECTION 8.14 FEES AND EXPENSES..........................................................................32
iii
Exhibits
Exhibit 2.1(a) Form of Receivables Assignment
Exhibit 2.1(c) Form of Subordinated Originator Note
Schedules
Schedule 4.1(b) Formation Jurisdiction; Executive Offices; Collateral
Locations; Corporate Names
Schedule 4.1(d) Litigation
Schedule 4.1(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 4.1(i) Tax Matters
Schedule 4.1(j) Intellectual Property
Schedule 4.1(m) ERISA
Schedule 4.1(t) Deposit and Disbursement Accounts
Schedule 4.2(g) Trade Names
Schedule 4.3(a) Existing Liens
Annexes
Annex X Definitions
Annex Y Schedule of Documents
iii
THIS
RECEIVABLES PURCHASE AND CONTRIBUTION AGREEMENT (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement") is entered into as of December 10, 2001, by and among
ADVANCEPCS, a
Delaware corporation (the "Parent"),
ADVANCEPCS HEALTH L.P., Delaware limited
partnership (the "Originator"), ADVP MANAGEMENT, L.P., A Delaware limited
partnership (the "Servicer") and AFC RECEIVABLES HOLDING CORPORATION, a Delaware
corporation (the "Buyer").
RECITALS
A. The Parent indirectly owns all of the outstanding Stock of the
Originator and the Originator, directly or indirectly, owns all of the
outstanding Stock of the Buyer.
B. The Buyer has been formed for the sole purpose of purchasing, or
otherwise acquiring by capital contribution all Receivables originated by the
Originator, and selling, contributing or otherwise transferring to the
Receivables Purchaser, all Receivables owed by certain Obligors.
C. The Originator intends to sell, and Buyer intends to purchase, such
Receivables, from time to time, as described herein.
D. In addition, the Originator may, from time to time, contribute
capital to Buyer in the form of Originator Contributed Receivables or cash.
E. The Servicer agrees to service, administer and collect the
Receivables on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS.
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in Annex X.
SECTION 1.2 RULES OF CONSTRUCTION.
For purposes of this Agreement, the rules of construction set forth in
Annex X shall govern. All Appendices hereto, or expressly identified to this
Agreement, are incorporated herein by reference and, taken together with this
Agreement, shall constitute but a single agreement.
ARTICLE II
TRANSFERS OF RECEIVABLES
SECTION 2.1 AGREEMENT TO TRANSFER.
(a) Receivables Transfers. Subject to the terms and conditions hereof,
the Originator agrees to sell (without recourse except to the extent
specifically provided herein) or contribute to Buyer on the Closing Date and on
each Business Day thereafter (each such date, an "Originator Transfer Date") all
Receivables owned by it on each such Originator Transfer Date and Buyer agrees
to purchase or acquire as a capital contribution all such Receivables on each
such Originator Transfer Date; provided, that on the initial Originator Transfer
Date, the Originator agrees to contribute to Buyer all Receivables owned by it
on the initial Originator Transfer Date and Buyer agrees to acquire as a capital
contribution all such Receivables on the initial Originator Transfer Date. All
such Originator Transfers shall be evidenced by a certificate of assignment
substantially in the form of Exhibit 2.1(a) (the "Receivables Assignment"), and
the Originator and Buyer shall execute and deliver the Receivables Assignment on
or before the Closing Date.
(b) Determination of Sold Receivables. On and as of each Originator
Transfer Date (except for the initial Originator Transfer Date), all Receivables
owned by the Originator and not previously acquired by Buyer shall be identified
for sale to Buyer such that the Originator Sale Price to be paid by Buyer
therefor does not exceed the sum of (i) the amount of cash available to Buyer
for the payment thereof and (ii) the proceeds of a Subordinated Originator Loan
(as defined below) (each such Receivable identified for sale, individually, an
"Originator Sold Receivable" and, collectively, the "Originator Sold
Receivables").
(c) Payment of Purchase Price. In consideration for each Originator
Sale of Originator Sold Receivables hereunder, Buyer shall pay to the Originator
on the Originator Transfer Date therefor the Originator Sale Price therefor in
the following manner:
(i) by delivery in Dollars in immediately available funds, to
the extent of the amount of cash available to Buyer, and
(ii) the balance, by delivery of the proceeds of a
subordinated revolving loan from the Originator to Buyer (each, a
"Subordinated Originator Loan" and collectively, the "Subordinated
Originator Loans") in an amount not to exceed the least of (A) the
remaining unpaid portion of the Originator Sale Price, (B) the maximum
Subordinated Originator Loan that could be borrowed without rendering
the Buyer's Net Worth Percentage to be less than 15% and (C) fifteen
percent (15%) of the maximum then Outstanding Balance of Receivables.
On the date hereof, the Buyer shall issue to the
2
Originator, a subordinated note (the "Subordinated Originator Note")
substantially in the form of Exhibit 2.1(c) hereto. The Originator is
hereby authorized by Buyer to endorse on the schedule attached to the
Subordinated Originator Note an appropriate notation evidencing the
date and amount of each advance thereunder, as well as the date of each
payment with respect thereto, provided that the failure to make such
notation shall not affect any obligation of Buyer thereunder.
Subject to the limitations set forth in this Section 2.1(c), the
Originator irrevocably agrees to advance each Subordinated Originator Loan
requested by Buyer on each applicable Originator Transfer Date occurring on or
prior to the Facility Termination Date. The Subordinated Originator Loans shall
be evidenced by, and shall be payable in accordance with, the terms and
provisions of the Subordinated Originator Note and shall be payable solely from
funds which Buyer is not required under the Sale Agreement to set aside for the
benefit of, or otherwise pay over to, the Receivables Purchaser.
(d) Determination of Contributed Receivables. On the initial Originator
Transfer Date, the Originator shall contribute all Receivables owned by it on
such date to Buyer as a capital contribution. On each day after the initial
Originator Transfer Date, to the extent that, on and as of any Originator
Transfer Date, Receivables owned by the Originator do not constitute Originator
Sold Receivables pursuant to Section 2.1(b) then the Originator shall, unless it
has delivered a Notice of Election (as defined below) to Buyer, contribute such
Receivables to Buyer as a capital contribution (each such contributed
Receivable, individually, an "Originator Contributed Receivable," and
collectively, the "Originator Contributed Receivables"). If the Originator
elects not to contribute Receivables to Buyer on any Originator Transfer Date,
or if any Receivables eligible for sale and owned by the Originator are not sold
on any Originator Transfer Date, the Originator shall deliver to Buyer not later
than 5:00 p.m. (
New York time) on the Business Day immediately preceding such
Originator Transfer Date a notice of election thereof (each such notice, a
"Notice of Election").
(e) Ownership of Sold and Contributed Receivables. On and after each
Originator Transfer Date and after giving effect to the Originator Transfers to
be made on each such date, Buyer shall own the Originator Sold Receivables and
Originator Contributed Receivables and the Originator shall not take any action
inconsistent with such ownership nor shall the Originator claim any ownership
interest in such Originator Sold Receivables and Originator Contributed
Receivables. The Originator Sold Receivables and the Originator Contributed
Receivables will be identified by reference to the General Trial Balance of the
Originator.
(f) Reconstruction of General Trial Balance. If at any time the
Originator fails to generate its General Trial Balance, Buyer shall have the
right to cause the Originator to reconstruct or to reconstruct directly such
General Trial Balance so that a determination of the Originator Sold Receivables
and the Originator Contributed Receivables can be made pursuant to Section
2.1(e). The Originator agrees to cooperate with such reconstruction, including
by delivery to Buyer, upon Buyer's request, of copies of all Contracts and
Records.
(g) Servicing of Receivables. So long as no Servicer Termination Event
shall have occurred and be continuing and no Successor Servicer has assumed the
responsibilities and obligations of the Servicer pursuant to Section 9.2 of the
Purchase Agreement, the Servicer shall
3
(i) conduct the servicing, administration and collection of all Receivables
(including the Transferred Receivables) and shall take, or cause to be taken,
all such actions as may be necessary or advisable to service, administer and
collect the Receivables (including the Transferred Receivables), all in
accordance with (A) the terms of the Purchase Agreement, (B) the Servicing
Agreement, (C) customary and prudent servicing procedures for trade receivables
of a similar type and (D) all applicable laws, rules and regulations, and (ii)
hold all Contracts and other documents and incidents relating to the Receivables
(including the Transferred Receivables) in trust for the benefit of Buyer, as
the owner thereof, and for the sole purpose of facilitating the servicing of the
Receivables (including the Transferred Receivables) in accordance with the terms
of the Purchase Agreement.
(h) Non-Transferred Receivables Servicing Fee. As compensation for its
servicing activities with respect to Receivables that do not constitute
Transferred Receivables and as reimbursement for its reasonable expenses in
connection therewith, the Servicer shall be entitled to receive the
Non-Transferred Receivables Servicing Fee. The Non-Transferred Receivables
Servicing Fee for each Business Day shall be paid by the Buyer daily in arrears
on each Business Day. The Buyer agrees that it shall pay to the Servicer on each
Business Day, the applicable Non-Transferred Receivables Servicing Fee, to the
extent of funds available to the Buyer on such day. The Buyer agrees that it
will pay the Non-Transferred Receivables Servicing Fee to the Servicer prior to
using any funds available to it on such Business Day for any other purpose,
including, without limitation, the purchase of additional Receivables. If the
Buyer does not have sufficient available funds to pay, in full, the
Non-Transferred Receivables Servicing Fee on any Business Day, the shortfall
shall be payable on the next Business Day on which the Buyer has available
funds, but only to the extent of such available funds after paying such Business
Day's Non-Transferred Receivables Servicing Fee. The Servicer waives any right
it has or may at any time have to demand payment and/or take any action to or in
furtherance of payment of any shortfall in the payment of the Non-Transferred
Receivables Servicing Fee and agrees that it shall not have a "claim" under
Section 101(5) of the Bankruptcy Code for the payment of any such shortfall,
except for, and only to the extent of, any excess available funds, as described
above. The Servicer shall be required to pay for all expenses incurred by it in
connection with its servicing activities (including any payments to accountants,
counsel or any other Person) and shall not be entitled to any payment therefor
other than the Non-Transferred Receivables Servicing Fee.
SECTION 2.2 GRANT OF SECURITY INTEREST.
The parties hereto intend that each Originator Transfer shall
constitute a purchase and sale or capital contribution, as applicable, and not a
loan. Notwithstanding the foregoing, in addition to and not in derogation of any
rights now or hereafter acquired by Buyer under Section 2.1 hereof, the parties
hereto intend that this Agreement shall constitute a security agreement under
applicable law and that the Originator shall be deemed to have granted, and the
Originator does hereby grant, to the Buyer a continuing security interest in all
of the Originator's right, title and interest in, to and under the Receivables
whether now owned or hereafter acquired by the Originator (whether constituting
Originator Sold Receivables, Originator Contributed Receivables or otherwise) to
secure the obligations of the Originator to the Buyer hereunder (including, if
and to the extent that any Originator Transfer is recharacterized as a transfer
for security, the repayment of a loan deemed to have been made by the Buyer in
the amount of the
4
Originator Sale Price with respect thereto and which secures the Buyer's right
to receive all Collections of the Receivables as otherwise contemplated under
this Agreement).
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS TO INITIAL TRANSFER.
The initial Originator Transfer hereunder shall be subject to
satisfaction of each of the following conditions precedent (any one or more of
which may be waived in writing by each of Buyer and the Administrative Agent):
(a) Contribution Agreement; Other Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to, the
Parent, the Servicer, the Originator and Buyer, and Buyer shall have received
such documents, instruments, agreements and legal opinions as Buyer shall
request in connection with the transactions contemplated by this Agreement,
including those identified in the Schedule of Documents attached hereto as Annex
Y, each in form and substance satisfactory to Buyer.
(b) Governmental Approvals. Buyer shall have received (i) satisfactory
evidence that the Originator has obtained all required consents and approvals of
all Persons, including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Related Documents and
the consummation of the transactions contemplated hereby and thereby or (ii) an
Officer's Certificate from the Originator in form and substance satisfactory to
Buyer affirming that no such consents or approvals are required.
(c) Compliance with Laws. The Originator shall be in compliance with
all applicable foreign, federal, state and local laws and regulations, including
those specifically referenced in Section 4.2(f).
(d) Purchase Agreement Conditions. Each of the conditions precedent set
forth in Sections 3.1 and 3.2 of the Purchase Agreement shall have been
satisfied or waived in writing as provided therein.
(e) Sale Agreement Conditions. Each of the conditions precedent set
forth in Sections 3.1 and 3.2 of the Sale Agreement shall have been satisfied or
waived in writing as provided therein.
SECTION 3.2 CONDITIONS TO ALL TRANSFERS.
Each Originator Transfer hereunder (including the initial Originator
Transfer) shall be subject to satisfaction of the following further conditions
precedent as of the Originator Transfer Date therefor:
(a) the representations and warranties of the Originator contained
herein or in any other Related Document shall be true and correct as of such
Originator Transfer Date, both before and after giving effect to such Originator
Transfer and to the application of the Originator
5
Sale Price therefor, except to the extent that any such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted by this Agreement;
(b) no Incipient Termination Event or Termination Event shall have
occurred and be continuing or would result after giving effect to such
Originator Transfer or the application of the Originator Sale Price therefor;
(c) the Originator shall be in compliance with each of its covenants
and other agreements set forth herein;
(d) the Originator shall have taken such other action, including
delivery of approvals, consents, opinions, documents and instruments to Buyer as
Buyer may request;
(e) no event or circumstance having a Material Adverse Effect shall
have occurred since the date of this Agreement as determined by either the Buyer
or the Administrative Agent;
(f) the Servicer shall have provided a certificate to the
Administrative Agent confirming that the Non-Transferred Receivables Servicing
Fee for the immediately preceding Settlement Period has been paid by the Buyer
and the same has been received by the Servicer;
(g) each of the conditions precedent set forth in Sections 3.1 and 3.2
of the Purchase Agreement shall have been satisfied or waived in writing as
provided therein;
(h) each of the conditions precedent set forth in Sections 3.1 and 3.2
of the Sale Agreement shall have been satisfied or waived in writing as provided
therein.
The acceptance by the Originator of the Originator Sale Price for any
Originator Sold Receivables on any Originator Transfer Date shall be deemed to
constitute, as of any such Originator Transfer Date, a representation and
warranty by the Originator that the conditions in this Section 3.2 have been
satisfied. Upon any such acceptance, title to the Originator Sold Receivables
and the Originator Contributed Receivables sold or contributed on such
Originator Transfer Date shall be vested absolutely in Buyer, whether or not
such conditions were in fact so satisfied.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE
ORIGINATOR.
To induce Buyer to purchase the Originator Sold Receivables and to
acquire the Originator Contributed Receivables, each of the Parent and the
Originator makes the following representations and warranties to Buyer, each and
all of which shall survive the execution and delivery of this Agreement.
(a) Corporate Existence; Compliance with Law. Each of the Parent and
the Originator (i) is a corporation and limited partnership, respectively duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation; (ii) is duly qualified to conduct
6
business and is in good standing in each other jurisdiction where its ownership
or lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified is not reasonably likely to result
in a Material Adverse Effect; (iii) has the requisite corporate and limited
partnership power, as applicable, and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease, and to conduct its business, in each case, as
now, heretofore and proposed to be conducted; (iv) has all licenses, permits,
consents or approvals from or by, and has made all filings with, and has given
all notices to, all Governmental Authorities having jurisdiction, to the extent
required for such ownership, operation and conduct, except where the failure to
obtain such licenses, permits, consents or approvals is not reasonably likely to
result in a Material Adverse Effect; (v) is in compliance with its charter, and
bylaws and partnership agreement, as applicable; and (vi) subject to specific
representations set forth herein regarding ERISA, Environmental Laws, tax laws
and other laws, is in compliance with all applicable provisions of law, except
where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(b) Jurisdiction of Formation; Executive Offices; Collateral Locations;
Corporate or Other Names; FEIN. Each of the Parent's and the Originator's
Formation Jurisdiction is set forth in Schedule 4.1(b) and each of the Parent
and the Originator is a "registered organization" (as defined in the UCC) in
such Formation Jurisdiction. As of the Closing Date, the current location of the
Originator's chief executive office, jurisdiction of formation, principal place
of business, other offices, the warehouses and premises within which any
Originator Collateral is stored or located, and the locations of all records
concerning the Originator Collateral are set forth in Schedule 4.1(b) and none
of such locations have changed within the past 12 months. During the prior five
(5) years, except as set forth in Schedule 4.1(b), the Originator has not been
known as or used any corporate, fictitious or trade name. In addition, Schedule
4.1(b) lists the federal employer identification number of the Originator.
(c) Corporate and Limited Partnership Power, Authorization, Enforceable
Obligations. The execution, delivery and performance by each of the Parent and
the Originator of this Agreement and the execution, delivery and performance by
each such Person of any other Related Documents to which it is a party and the
creation and perfection of all Originator Transfers and Liens provided for
herein and therein: (i) are within such Person's corporate or limited
partnership power; (ii) have been duly authorized by all necessary or proper
corporate, shareholder or partner action; (iii) do not contravene any provision
of such Person's charter, bylaws or partnership agreement; (iv) do not violate
any law or regulation, or any order or decree of any court or Governmental
Authority; (v) do not conflict with or result in the breach or termination of,
constitute a default under or accelerate or permit the acceleration of any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which such Person is a party or by which such
Person or any of its property is bound; (vi) do not result in the creation or
imposition of any Adverse Claim upon any of the property of such Person; and
(vii) do not require the consent or approval of any Governmental Authority or
any other Person, except those which will have been duly obtained, made or
complied with prior to the Closing Date as provided in Section 3.1(b). The
exercise by Buyer of any of its rights and remedies under any Related Document
to which it is a party, does not require the consent or approval of any
Governmental Authority or any other Person (other than consents or approvals
solely relating to or required to be obtained by the Buyer, and subject to the
Bankruptcy Code), except those
7
which will have been duly obtained, made or complied with prior to the Closing
Date as provided in Section 3.1(b). Each of the Related Documents to which the
Parent or the Originator is a party has been duly executed and delivered by such
Person and each such Related Document constitutes a legal, valid and binding
obligation of such Person enforceable against it in accordance with its terms.
(d) No Litigation. No Litigation is now pending or, to the knowledge of
the Originator, threatened against any member of the Parent Group that (i)
challenges the Parent's, the Originator's or any of their Affiliates' right or
power to enter into or perform any of its obligations under the Related
Documents to which it is a party, or the validity or enforceability of any
Related Document or any action taken thereunder, (ii) seeks to prevent the
Originator Transfer, Purchase, contribution or pledge of any Receivable or the
consummation of any of the transactions contemplated under this Agreement or the
other Related Documents or (iii) has a reasonable risk of being determined
adversely to such Parent Group member and that, if so determined, could
reasonably be expected to have a Material Adverse Effect. Except as set forth on
Schedule 4.1(d), as of the Closing Date there is no Litigation pending or
threatened that seeks damages in excess of $2,500,000 or injunctive relief
against, or alleges criminal misconduct by, any member of the Parent Group.
(e) Solvency. Both before and after giving effect to (i) the
transactions contemplated by this Agreement and the other Related Documents and
(ii) the payment and accrual of all transaction costs in connection with the
foregoing, each of the members of the Parent Group is and will be Solvent.
(f) Material Adverse Effect. Between December 31, 2000, and the Closing
Date, (i) no member of the Parent Group has incurred any obligations, contingent
or non-contingent liabilities, liabilities for charges, long-term leases or
unusual forward or long-term commitments that, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (ii) no contract,
lease or other agreement or instrument has been entered into by any member of
the Parent Group or has become binding upon any such Person's assets and no law
or regulation applicable to any member of the Parent Group has been adopted that
has had or could reasonably be expected to have a Material Adverse Effect; and
(iii) no member of the Parent Group is in default and no third party is in
default under any material contract, lease or other agreement or instrument to
which any member of the Parent Group is a party that alone or in the aggregate
could reasonably be expected to have a Material Adverse Effect. Between December
31, 2000, and the Closing Date, no event has occurred that alone or together
with other events could reasonably be expected to have a Material Adverse
Effect.
(g) Ownership of Receivables; Liens. The Originator owns each
Receivable originated by it free and clear of any Adverse Claim and, from and
after each Originator Transfer Date, Buyer will acquire valid and properly
perfected title to and the sole record and beneficial ownership interest in each
Originator Sold Receivable and Originator Contributed Receivable purchased by
it, contributed to it or otherwise acquired by it on such date, free and clear
of any Adverse Claim or restrictions on transferability. None of the properties
and assets of the Originator are subject to any Adverse Claims other than
Permitted Encumbrances, and there are no facts, circumstances or conditions
known to the Originator that may result in any Adverse Claims (including Adverse
Claims arising under Environmental Laws) other than Permitted
8
Encumbrances. The Originator has received all assignments, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect the Originator's right, title and
interest in and to the Receivables originated by it and its other properties and
assets. The Liens granted to Buyer pursuant to Section 7.1 will at all times be
fully perfected first priority Liens in and to the Originator Collateral.
(h) Ventures, Subsidiaries and Affiliates; Outstanding Stock. Schedule
4.1(h) sets forth the organizational chart of the Parent and its Subsidiaries.
Except for those Persons set forth in Schedule 4.1(h), the Parent is not engaged
in any joint venture or partnership with any other Person, and is not an
Affiliate of any other Person. All of the issued and outstanding Stock of the
Buyer is owned by each of the Stockholders in the amounts set forth on Schedule
4.1(h) and all of the issued and outstanding partnership interests of the
Originator are owned by each of the partners in the amounts set forth on
Schedule 4.1(h). There are no outstanding rights to purchase, options, warrants
or similar rights or agreements pursuant to which the Originator or the Buyer
may be required to issue, sell, repurchase or redeem any of its Stock or other
equity securities or any Stock or other equity securities, or interests in, of
its Subsidiaries.
(i) Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by the
Originator and each of its Affiliates included in the Parent Group have been
filed with the appropriate Governmental Authority and all charges have been paid
prior to the date on which any fine, penalty, interest or late charge may be
added thereto for nonpayment thereof (or any such fine, penalty, interest, late
charge or loss has been paid), excluding charges or other amounts being
contested in accordance with Section 4.2(l). Proper and accurate amounts have
been withheld by each member of the Parent Group from its respective employees
for all periods in full and complete compliance with all applicable federal,
state, local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities. Schedule 4.1(i) sets forth as of the
Closing Date (i) those taxable years for which any member of the Parent Group's
tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and (ii) any assessments or threatened assessments in
connection with such audit or otherwise currently outstanding. Except as
described on Schedule 4.1(i), neither the Originator nor any other member of the
Parent Group has executed or filed with the IRS or any other Governmental
Authority any agreement or other document extending, or having the effect of
extending, the period for assessment or collection of any charges. The
Originator and the other members of the Parent Group are not liable for any
charges: (A) under any agreement (including any tax sharing agreements) or (B)
to the best of the Originator's knowledge, as a transferee. As of the Closing
Date, neither the Originator nor any other member of the Parent Group has agreed
or been requested to make any adjustment under IRC Section 481(a), by reason of
a change in accounting method or otherwise, that would have a Material Adverse
Effect.
(j) Intellectual Property. Each of the Originator, the Parent and the
Buyer owns or has rights to use all intellectual property necessary to continue
to conduct its business as now or heretofore conducted by it or proposed to be
conducted by it. Each of the Originator, the Parent and the Buyer conducts its
business and affairs without infringement of or interference with any
intellectual property of any other Person. Except as set forth in Schedule
4.1(j), none of the Originator, the Parent or the Buyer is aware of any
infringement or claim of infringement by others on any its intellectual
property.
9
(k) Full Disclosure. All information contained in this Agreement, any
of the other Related Documents, or any written statement furnished by or on
behalf of the Originator or any other member of the Parent Group to Buyer, AFC,
any Purchaser or the Administrative Agent pursuant to the terms of this
Agreement or any of the other Related Documents is true and accurate in every
material respect, and none of this Agreement, any of the other Related
Documents, or any written statement furnished by or on behalf of the Originator
or any other member of the Parent Group to Buyer, AFC, any Purchaser or the
Administrative Agent pursuant to the terms of this Agreement or any of the other
Related Documents (including any such statement furnished by the Originator in
its capacity as Servicer), is misleading as a result of the failure to include
therein a material fact.
(l) Notices to Obligors. The Originator has directed all Obligors of
Transferred Receivables originated by it to remit all payments with respect to
such Transferred Receivables for deposit in a Lockbox or Lockbox Account.
(m) ERISA.
(i) Schedule 4.1(m) lists all Plans and separately identifies
all Pension Plans, including all Title IV Plans, Multiemployer Plans,
ESOPs and Welfare Plans, including all Retiree Welfare Plans. Each
Qualified Plan has been determined by the IRS to qualify under Section
401 of the IRC, the trusts created thereunder have been determined to
be exempt from tax under the provisions of Section 501 of the IRC, and
nothing has occurred that would cause the loss of such qualification or
tax-exempt status. Except as otherwise provided in Schedule 4.1(m), (A)
each Plan is in compliance with the applicable provisions of ERISA and
the IRC, including the timely filing of all reports required under the
IRC or ERISA, (B) neither the Originator nor any ERISA Affiliate has
failed to make any contribution or pay any amount due as required by
either Section 412 of the IRC or Section 302 of ERISA or the terms of
any such Plan and (C) neither the Originator nor any ERISA Affiliate
has engaged in a "prohibited transaction," as defined in Section 4975
of the IRC, in connection with any Plan that would subject the
Originator to a material tax on prohibited transactions imposed by
Section 4975 of the IRC.
(ii) Except as set forth in Schedule 4.1(m): (A) no Title IV
Plan has any Unfunded Pension Liability; (B) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan
has occurred or is reasonably expected to occur; (C) there are no
pending or, to the knowledge of the Originator, threatened claims
(other than claims for benefits in the normal course), sanctions,
actions or lawsuits, asserted or instituted against any Plan or any
Person as fiduciary or sponsor of any Plan; (D) neither the Originator
nor any ERISA Affiliate has incurred or reasonably expects to incur any
liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (E) within the last five (5) years no Title IV Plan
with Unfunded Pension Liabilities has been transferred outside of the
"controlled group" (within the meaning of Section 4001(a)(14) of ERISA)
of the Originator or ERISA Affiliate; (F) Stock of the Originator and
its ERISA Affiliates makes up, in the aggregate, no more than 10% of
the assets of any Plan, measured on the basis of fair market value as
of the last valuation date of any Plan; and (G) no liability under any
Title IV Plan has been satisfied with the purchase of a contract
10
from an insurance company that is not rated AAA by S&P or an equivalent
rating by another nationally recognized rating agency.
(n) Brokers. No broker or finder acting on behalf of the Originator or
any other member of the Parent Group was employed or utilized in connection with
this Agreement or the other Related Documents or the transactions contemplated
hereby or thereby and neither the Originator nor any other member of the Parent
Group has any obligation to any Person in respect of any finder's or brokerage
fees in connection therewith.
(o) Margin Regulations. The Originator is not engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as "Margin Stock"). The Originator owns no Margin Stock, and no
portion of the proceeds of the Originator Sale Price for any Originator Sale
hereunder will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any Debt that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any portion of such proceeds to be considered a
"purpose credit" within the meaning of Regulations T, U or X of the Federal
Reserve Board. The Originator will not take or permit to be taken any action
that might cause any Related Document to violate any regulation of the Federal
Reserve Board.
(p) Nonapplicability of Bulk Sales Laws. No transaction contemplated by
this Agreement or any of the other Related Documents requires compliance with
any bulk sales act or similar law.
(q) Securities Act and Investment Company Act Exemptions. Each purchase
and contribution of Receivables under this Agreement constitutes (i) a "current
transaction" within the meaning of Section 3(a)(3) of the Securities Act and
(ii) a purchase or other acquisition of notes, drafts, acceptances, open
accounts receivable or other obligations representing part or all of the sales
price of merchandise, insurance or services within the meaning of Section
3(c)(5) of the Investment Company Act.
(r) Government Regulation. No member of the Parent Group is an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act. No member of the Parent Group is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, or
any other federal or state statute that restricts or limits its ability to incur
Debt or to perform its obligations hereunder or under the other Related
Documents. The purchase or acquisition of the Originator Sold Receivables and
the Originator Contributed Receivables by Buyer hereunder, the application of
the Originator Sale Price for the foregoing and the consummation of the
transactions contemplated by this Agreement and the other Related Documents will
not violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission.
(s) Books and Records; Minutes. Each of the Originator's and the
Parent's limited partnership agreement or the certificate or articles of
formation, as applicable, require it to
11
maintain (i) its own books and records of account and (ii) minutes of the
meetings and other proceedings of its members, or Stockholders and board of
directors.
(t) Deposit and Disbursement Accounts. Schedule 4.1(t) lists all banks
and other financial institutions at which the Originator maintains any deposit
accounts established for the receipt of collections on Receivables as of the
Closing Date, including any Lockbox Accounts, and such schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor, in each case as of the Closing Date.
(u) Representations and Warranties in Other Related Documents. Each of
the representations and warranties of the Parent or the Originator contained in
the Related Documents (other than this Agreement) is true and correct in all
material respects and each of the Parent and the Originator hereby makes each
such representation and warranty to, and for the benefit of, the Purchasers and
the Administrative Agent as if the same were set forth in full herein.
(v) Receivables. With respect to each Originator Sold Receivable and
Originator Contributed Receivable designated as an Eligible Receivable in any
Investment Base Certificate delivered on or after the Originator Transfer Date
of such Originator Sold Receivable or Originator Contributed Receivable:
(i) such Receivable satisfies each of the criteria for an
Eligible Receivable;
(ii) prior to its Originator Transfer to Buyer such Receivable
was owned by the Originator thereof free and clear of any Adverse
Claim, and the Originator had the full right, power and authority to
sell, contribute, assign, transfer and pledge its interest therein as
contemplated under this Agreement and the other Related Documents and,
upon such Originator Transfer, Buyer will acquire valid and properly
perfected title to and the sole record and beneficial ownership
interest in such Receivable, free and clear of any Adverse Claim and,
following such Originator Transfer, such Receivable will not be subject
to any Adverse Claim as a result of any action or inaction on the part
of the Originator;
(iii) the Originator Transfer of each such Receivable pursuant
to this Agreement and the Receivables Assignment executed by the
Originator constitutes, as applicable, a valid sale, contribution,
transfer, assignment, set over and conveyance to Buyer of all right,
title and interest of the Originator in and to such Receivable; and
(iv) The Originator has no knowledge of any fact (including
any defaults by the Obligor thereunder on any other Receivable) that
would cause it or should have caused it to expect that any payments on
such Receivable will not be paid in full when due or to expect any
other Material Adverse Effect.
(w) Ownership of
AdvancePCS Puerto Rico, Inc. The Originator is the
sole and direct owner of
AdvancePCS Puerto Rico, Inc.
12
The representations and warranties described in this Section 4.1 shall
survive the Originator Transfer of the Originator Sold Receivables and the
Originator Contributed Receivables to Buyer, any subsequent assignment of the
Transferred Receivables by Buyer, and the termination of this Agreement and the
other Related Documents and shall continue until the indefeasible payment in
full of all Receivables.
SECTION 4.2 AFFIRMATIVE COVENANTS OF THE PARENT AND THE ORIGINATOR.
Each of the Parent and the Originator covenants and agrees that, unless
otherwise consented to by Buyer and the Administrative Agent, from and after the
Closing Date and until the Termination Date:
(a) Offices and Records. The Originator shall maintain its principal
place of business, jurisdiction of formation and chief executive office and the
office at which it keeps its Records at the respective locations specified in
Schedule 4.1(b) or, upon thirty (30) days' prior written notice to Buyer and the
Administrative Agent, at such other location in a jurisdiction where all action
requested by Buyer, any Purchaser or the Administrative Agent pursuant to
Section 8.13 shall have been taken with respect to the Originator Sold
Receivables and the Originator Contributed Receivables. The Originator shall at
its own cost and expense, for not less than three (3) years from the date on
which each Originator Sold Receivable and Originator Contributed Receivable was
originated, or for such longer period as may be required by law, maintain
adequate Records with respect to such Originator Sold Receivable and Originator
Contributed Receivable, including records of all payments received, credits
granted and merchandise returned with respect thereto.
(b) Access. Each member of the Parent Group shall during normal
business hours, from time to time upon not less than five (5) Business Day's
prior notice and as frequently as Buyer, the Servicer, the Receivables Purchaser
or the Administrative Agent determines to be appropriate: (i) provide Buyer, the
Servicer, the Receivables Purchaser or the Administrative Agent and any of their
respective officers, employees and agents access to its properties (including
properties utilized in connection with the collection, processing or servicing
of the Originator Sold Receivables and the Originator Contributed Receivables),
facilities, advisors and employees (including officers) and to the Originator
Collateral, (ii) permit Buyer, the Servicer or the Administrative Agent and any
of their respective officers, employees and agents, to inspect, audit and make
extracts from its books and records, including all Records, (iii) permit Buyer,
the Servicer or the Administrative Agent and their respective officers,
employees and agents, to inspect, review and evaluate the Originator Sold
Receivables and the Originator Contributed Receivables and other Originator
Collateral and (iv) permit Buyer, the Servicer or the Administrative Agent and
their respective officers, employees and agents to discuss matters relating to
the Originator Sold Receivables and the Originator Contributed Receivables or
the Originator's performance under this Agreement or the affairs, finances and
accounts of the Originator with any of the Originator's respective officers,
directors, employees, representatives or agents (in each case, with those
Persons having knowledge of such matters) and with its independent certified
public accountants. If an Incipient Termination Event or a Termination Event
shall have occurred and be continuing, or the Administrative Agent, in good
faith, believes that an Incipient Termination Event or a Termination Event is
imminent or deems any Purchaser's rights or interests in the Transferred
Receivables or the Seller Collateral insecure, each member of the Parent Group
shall
13
provide such access at all times and without advance notice and shall provide
Buyer, the Servicer or the Administrative Agent with access to its customers
upon notice by the Administrative Agent or Buyer to the Originator. Each member
of the Parent Group shall make available to Buyer, the Servicer or the
Administrative Agent and their respective counsel, as quickly as is possible
under the circumstances, originals or copies of all books and records, including
Records, that Buyer, the Servicer or the Administrative Agent may reasonably
request. The Originator shall deliver any document or instrument necessary for
Buyer, the Servicer or the Administrative Agent, as they may from time to time
reasonably request, to obtain records from any service bureau or other Person
that maintains records for the Originator, and shall maintain duplicate records
or supporting documentation on media, including computer tapes and discs owned
by the Originator.
(c) Communication with Accountants. Each of the Parent and the
Originator authorizes Buyer, the Receivables Purchaser, the Servicer and the
Administrative Agent to communicate directly with its independent certified
public accountants, and authorizes and shall instruct those accountants and
advisors to disclose and make available to Buyer, the Receivables Purchaser, the
Servicer and the Administrative Agent any and all financial statements and other
supporting financial documents, schedules and information relating to the Parent
Group (including copies of any issued management letters) with respect to the
business, financial condition and other affairs of the Parent Group; provided,
that the Administrative Agent shall provide the Parent or the Originator as
applicable, with notice and a general description of its intended communication
with the independent certified public accounts. Each of the Parent and the
Originator agrees to render to Buyer, the Receivables Purchaser, the Servicer
and the Administrative Agent at the Parent's and the Originator's cost and
expense, such clerical and other assistance as may be reasonably requested with
regard to the foregoing. If any Termination Event shall have occurred and be
continuing, the Parent and the Originator shall, promptly upon request therefor,
assist Buyer in delivering to the Administrative Agent Records reflecting
activity through the close of business on the Business Day immediately preceding
the date of such request.
(d) Compliance With Credit and Collection Policies. The Originator
shall comply in all material respects with the Credit and Collection Policies
applicable to each Originator Sold Receivable, Originator Contributed Receivable
and the Contracts therefor and with the terms of such Receivables and Contracts.
(e) Assignment. The Parent and the Originator agree that, to the extent
permitted under the Purchase Agreement and the Sale Agreement, Buyer may assign
all of its right, title and interest in, to and under the Originator Sold
Receivables and the Originator Contributed Receivables and this Agreement,
including its right to exercise the remedies set forth in Section 4.4. The
Parent and the Originator agree that, upon any such assignment, the assignee
thereof may enforce directly, without joinder of Buyer, all of the obligations
of the Parent or the Originator hereunder, including any obligations of the
Parent or the Originator set forth in Sections 4.2(o), 4.4, 5.1 and 8.14.
(f) Compliance with Agreements and Applicable Laws. Each member of the
Parent Group shall perform each of its obligations under this Agreement and the
other Related Documents and comply with all federal, state and local laws and
regulations applicable to it and
14
the Receivables, including those relating to truth in lending, retail
installment sales, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices, privacy, licensing, taxation, ERISA
and labor matters and Environmental Laws and Environmental Permits, except to
the extent that the failure to so comply, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(g) Maintenance of Existence and Conduct of Business. The Originator
shall: (i) do or cause to be done all things necessary to preserve and keep in
full force and effect its limited partnership existence and its rights and
franchises; (ii) continue to conduct its business substantially as now conducted
or as otherwise permitted hereunder and in accordance with the terms of its
certificate of formation and limited partnership agreement; (iii) at all times
maintain, preserve and protect all of its assets and properties used or useful
in the conduct of its business, including all licenses, permits, charters and
registrations, and keep the same in good repair, working order and condition in
all material respects (taking into consideration ordinary wear and tear) and
from time to time make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry
practices; and (iv) transact business only in such limited partnership and trade
names as are set forth in Schedule 4.2(g) or, upon thirty (30) days' prior
written notice to Buyer, the Administrative Agent and each Rating Agency, in
such other limited partnership or trade names with respect to which all action
requested by Buyer, any Purchaser or the Administrative Agent pursuant to
Section 8.13 shall have been taken with respect to the Originator Sold
Receivables and the Originator Contributed Receivables. The Originator shall not
change its Formation Jurisdiction except upon thirty (30) days' prior written
notice to Buyer and the Administrative Agent, and with respect to which
jurisdiction all action requested by Buyer, Receivables Purchaser, any Purchaser
or the Administrative Agent pursuant to Section 8.13 shall have been taken with
respect to the Originator Sold Receivables and the Originator Contributed
Receivables.
(h) Notice of Material Event. The Parent or the Originator shall
promptly inform Buyer in writing of the occurrence of any of the following, in
each case setting forth the details thereof and what action, if any, the Parent
or the Originator proposes to take with respect thereto:
(i) any Litigation commenced or threatened against any member
of the Parent Group or with respect to or in connection with all or any
portion of the Receivables that (A) seeks damages or penalties in an
uninsured amount in excess of $2,500,000 in any one instance or
$2,500,000 in the aggregate, (B) seeks injunctive relief, (C) is
asserted or instituted against any Plan, its fiduciaries or its assets
or against the Originator or ERISA Affiliate in connection with any
Plan, (D) alleges criminal misconduct by any member of the Parent Group
or (E) would, if determined adversely, have a Material Adverse Effect;
(ii) the commencement of a case or proceeding by or against
any member of the Parent Group seeking a decree or order in respect of
any member of the Parent Group (A) under the Bankruptcy Code or any
other applicable federal, state or foreign bankruptcy or other similar
law, (B) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for any member of the
Parent Group or for any substantial part of such Person's assets, or
(C) ordering the winding-up or liquidation of the affairs of any member
of the Parent Group;
15
(iii) the receipt of notice that (A) any member of the Parent
Group is being placed under regulatory supervision, (B) any material
license, permit, charter, registration or approval necessary for the
conduct of the business of any member of the Parent Group is to be, or
may be, suspended or revoked, or (C) any member of the Parent Group is
to cease and desist any practice, procedure or policy employed by such
Person in the conduct of its business if such cessation may have a
Material Adverse Effect;
(iv) (A) any Adverse Claim made or asserted against any of the
Receivables of which it becomes aware or (B) any determination that a
Receivable designated as an Eligible Receivable in an Investment Base
Certificate or otherwise was not an Eligible Receivable at the time of
such designation;
(v) any other event, circumstance or condition that has had or
could reasonably be expected to have a Material Adverse Effect; or
(vi) any Termination Event or Incipient Termination Event
under Section 9.1(v) of the Purchase Agreement.
(i) Use of Proceeds. The Originator shall utilize the proceeds of the
Originator Sale Price obtained by it for each Originator Sale made by it
hereunder solely for general corporate purposes (including the retirement or
repayment of third-party debt and loans made to Affiliates) and to pay any
related expenses payable by the Originator under this Agreement and the other
Related Documents in connection with the transactions contemplated hereby and
thereby and for no other purpose.
(j) Separate Identity.
(i) The Parent and the Originator shall, and shall cause each
other member of the Parent Group to, maintain corporate and partnership
records, as applicable, and books of account separate from those of
each of Buyer and the Receivables Purchaser.
(ii) The financial statements of the Parent and its
consolidated Subsidiaries shall disclose the effects of the
Originator's transactions under the Related Documents in accordance
with GAAP and, in addition, disclose that (A) Buyer's sole business
consists of the purchase or acceptance through capital contribution of
the Receivables from the Originator and the subsequent resale of
Transferred Receivables to the Receivables Purchaser, (B) Buyer is a
separate corporate entity with its own separate creditors who will be
entitled, upon its liquidation, to be satisfied out of Buyer's assets
prior to any value in Buyer becoming available to Buyer's equity
holders, (C) the assets of Buyer are not available to pay creditors of
the Parent or any other Affiliate of the Parent, (D) Receivables
Purchaser's sole business consists of the purchase or acceptance
through capital contribution of the Transferred Receivables from the
Buyer and the subsequent transfer of interests in the Transferred
Receivables to the Purchasers, (E) Receivables Purchaser is a separate
corporate entity with its own separate creditors who will be entitled,
upon its liquidation, to be satisfied out of Receivables Purchaser's
assets prior to any value in Receivables Purchaser becoming available
to Receivables Purchaser's equity holders,
16
(F) the assets of Receivables Purchaser are not available to pay
creditors of the Parent or any other Affiliate of the Parent.
(iii) The resolutions, agreements and other instruments
underlying the transactions described in this Agreement shall be
continuously maintained by the Parent and the Originator as official
records.
(iv) The Parent and the Originator shall, and shall cause each
other member of the Parent Group to, maintain an arm's-length
relationship with Buyer and Receivables Purchaser and shall not hold
itself out as being liable for the Debts of Buyer or Receivables
Purchaser.
(v) The Parent and the Originator shall, and shall cause each
other member of the Parent Group to, keep its assets and its
liabilities wholly separate from those of Buyer and Receivables
Purchaser.
(vi) The Parent and the Originator shall, and shall cause each
other member of the Parent Group to, conduct its business solely in its
own name through its duly Authorized Officers or agents and in a manner
designed not to mislead third parties as to the separate identity of
the Buyer or Receivables Purchaser.
(vii) The Parent and the Originator shall not, and shall cause
each other member of the Parent Group not to, mislead third parties by
conducting or appearing to conduct business on behalf of Buyer or
Receivables Purchaser or expressly or impliedly representing or
suggesting that the Parent, the Originator or such other member of the
Parent Group is liable or responsible for the Debts of Buyer or
Receivables Purchaser or that the assets of the Parent, the Originator
or such other member of the Parent Group are available to pay the
creditors of Buyer or Receivables Purchaser.
(viii) The Parent and the Originator shall cause (A) all
operating expenses and liabilities of Buyer to be paid from Buyer's own
funds and (B) all operating expenses and liabilities of Receivables
Purchaser to be paid from Receivables Purchaser's own funds.
(ix) The Parent and the Originator shall at all times have,
and cause each other member of the Parent Group at all times to have,
stationery and other business forms and a mailing address and telephone
number separate from those of Buyer and Receivables Purchaser.
(x) The Parent and the Originator shall, and shall cause each
other member of the Parent Group to, at all times limit its
transactions with Buyer and Receivables Purchaser only to those
expressly permitted hereunder or under any other Related Document.
(xi) The Parent and the Originator shall, and cause each other
member of the Parent Group to, comply with (and cause to be true and
correct) each of the facts and assumptions contained in the opinions of
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P. delivered pursuant to the
Schedule of Documents.
17
(k) ERISA. The Parent or the Originator shall give Buyer and the
Administrative Agent prompt written notice of any event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA.
(l) Payment, Performance and Discharge of Obligations.
(i) Subject to Section 4.2(l)(ii), each member of the Parent
Group shall pay, perform and discharge or cause to be paid, performed
and discharged all of its obligations and liabilities, including all
taxes, assessments and governmental charges upon its income and
properties and all lawful claims for labor, materials, supplies and
services, promptly when due.
(ii) Any member of the Parent Group may in good faith contest,
by appropriate proceedings, the validity or amount of any charges or
claims described in Section 4.2(l)(i); provided, that (A) adequate
reserves with respect to such contest are maintained on the books of
such Person, in accordance with GAAP, (B) such contest is maintained
and prosecuted continuously and with diligence, (C) none of the
Originator Collateral may become subject to forfeiture or loss as a
result of such contest, (D) no Lien may be imposed to secure payment of
such charges or claims other than inchoate tax liens and (E) Buyer has
affirmatively advised the Parent or the Originator in writing that
Buyer reasonably believes that nonpayment or nondischarge thereof could
not reasonably be expected to have or result in a Material Adverse
Effect.
(m) Deposit of Collections. The Originator shall deposit or cause to be
deposited promptly into a Lockbox Account, and in any event no later than one
(1) Business Day after receipt thereof, all Collections it may receive in
respect of the Originator Sold Receivables and the Originator Contributed
Receivables that constitute Transferred Receivables.
(n) Accounting Changes. If any Accounting Changes occur and such
changes result in a change in the standards or terms used herein, then the
parties hereto agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating the financial condition of such Persons
and their Subsidiaries shall be the same after such Accounting Changes as if
such Accounting Changes had not been made. If the parties hereto agree upon the
required amendments to this Agreement, then after appropriate amendments have
been executed and the underlying Accounting Change with respect thereto has been
implemented, any reference to GAAP contained herein shall, only to the extent of
such Accounting Change, refer to GAAP consistently applied after giving effect
to the implementation of such Accounting Change. If such parties cannot agree
upon the required amendments within thirty (30) days following the date of
implementation of any Accounting Change, then all financial statements delivered
and all standards and terms used herein shall be prepared, delivered and used
without regard to the underlying Accounting Change.
(o) Adjustments to Sale Price. If on any day the Billed Amount of any
Transferred Receivable is reduced as a result of any Dilution Factors, and the
amount of such reduction exceeds the amount, if any, of Dilution Factors taken
into account in the calculation of the Originator Sale Price for such
Transferred Receivable, the Originator shall make a cash payment
18
to Buyer in the amount of such excess by remitting such amount to the Collection
Account in accordance with the terms of the Purchase Agreement.
(p) Keeping of Records and Books of Account. The Originator will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Receivables in the
event of the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Receivable and
all Collections of and adjustments to each existing Receivable). The Originator
will give the Administrative Agent notice of any material change in the
administrative and operating procedures of the Originator referred to in the
previous sentence.
(q) Ownership of
AdvancePCS Puerto Rico, Inc. The Originator shall at
all times be the sole and direct owner of
AdvancePCS Puerto Rico, Inc.
SECTION 4.3 NEGATIVE COVENANTS OF THE PARENT AND THE ORIGINATOR.
Each of the Parent and the Originator covenants and agrees that,
without the prior written consent of Buyer and the Administrative Agent, from
and after the Closing Date and until the Termination Date:
(a) Liens. The Originator shall not create, incur, assume or permit to
exist any Adverse Claim on or with respect to its Receivables or any other
Originator Collateral (whether now owned or hereafter acquired) except for the
Liens set forth in Schedule 4.3(a). In addition, the Originator shall not become
a party to any agreement, note, indenture or instrument (other than the Senior
Credit Facility) or take any other action that would prohibit the creation of a
Lien on any of its properties or other assets in favor of Buyer as additional
collateral for the recourse and indemnity obligations of the Originator to Buyer
hereunder, including those obligations set forth in Sections 4.2(o), 4.4 and
5.1, except as otherwise expressly permitted by this Agreement or any of the
other Related Documents.
(b) Modifications of Receivables or Contracts. The Originator shall not
extend, amend, forgive, discharge, compromise, cancel or otherwise modify the
terms of any Originator Sold Receivable or any Originator Contributed
Receivable, or amend, modify or waive any term or condition of any Contract
therefore without the prior written consent of the Administrative Agent.
(c) Sale Characterization. No member of the Parent Group shall make any
statements or disclosures or prepare any financial statements for any purpose,
including for federal income tax, reporting or accounting purposes, that shall
account for the transactions contemplated by this Agreement in any manner other
than (i) with respect to the sale of each Originator Sold Receivable originated
by it, as a true sale or absolute assignment of its full right, title and
ownership interest in such Originator Sold Receivable and (ii) with respect to
the contribution of each Originator Contributed Receivable under this Agreement,
as a contribution to the capital of Buyer.
(d) Capital Structure and Business. The members of the Parent Group
shall not (i) make any changes in any of its business objectives, purposes or
operations that could have or
19
result in a Material Adverse Effect or (ii) make any change in its capital
structure of the Originator, Holding and AFC, including the issuance of any
shares of Stock, warrants or other securities convertible into Stock or any
revision of the terms of its outstanding Stock or (iii) amend, supplement or
otherwise modify its certificate or articles of incorporation or formation,
bylaws or partnership agreement, as applicable, in a manner that could have or
result in a Material Adverse Effect. The Originator shall not change its
jurisdiction of formation except as permitted by Section 4.2(g). The members of
the Parent Group shall not engage in any business other than the businesses
currently engaged in by them.
(e) Actions Affecting Rights. The members of the Parent Group shall not
(i) take any action, or fail to take any action, if such action or failure to
take action may interfere with the enforcement of any rights hereunder or under
the other Related Documents, including rights with respect to the Originator
Sold Receivables and the Originator Contributed Receivables; (ii) waive or alter
any rights with respect to the Originator Sold Receivables and the Originator
Contributed Receivables (or any agreement or instrument relating thereto); or
(iii) fail to pay any tax, assessment, charge, fee or other obligation with
respect to the Originator Sold Receivables and the Originator Contributed
Receivables, or fail to defend any action, if such failure to pay or defend may
adversely affect the priority or enforceability of the perfected title of Buyer
to and the sole record and beneficial ownership interest of Buyer in the
Originator Sold Receivables and the Originator Contributed Receivables or, prior
to their Originator Transfer hereunder, the Originator's right, title or
interest therein.
(f) ERISA. The Parent and the Originator shall not, nor shall cause or
permit any ERISA Affiliate to, cause or permit to occur an event that could
result in the imposition of a Lien under Section 412 of the IRC or Section 302
or 4068 of ERISA.
(g) Change to Credit and Collection Policies. The Originator shall
comply with the Credit and Collection Policies with respect to the Originator
Sold Receivables and the Originator Contributed Receivables, and no change shall
be made to the Credit and Collection Policies with respect to the Originator
Sold Receivables and the Originator Contributed Receivables without the prior
written consent of Buyer and the Administrative Agent.
(h) Adverse Tax Consequences. The Parent and the Originator shall not
take or permit to be taken any action (other than with respect to actions taken
or to be taken solely by a Governmental Authority), or fail or neglect to
perform, keep or observe any of its obligations hereunder or under the other
Related Documents, that would have the effect, directly or indirectly, of
subjecting any payment to Buyer, any Purchaser or holders of the Commercial
Paper who are residents of the United States of America to withholding taxation.
(i) No Proceedings. From and after the Closing Date and until the date
one year plus one day following the date on which the Commercial Paper with the
latest maturity has been indefeasibly paid in full in cash, neither the Parent
nor any member of the Parent Group shall, directly or indirectly, institute or
cause to be instituted against Buyer, Receivables Purchaser or Conduit Purchaser
any proceeding of the type referred to in Sections 9.1(c) and 9.1(d) of the
Purchase Agreement.
20
(j) Commingling. The Originator shall not deposit or permit the deposit
of any funds that do not constitute Collections of Transferred Receivables into
any Lockbox Account. If such funds are nonetheless deposited into a Lockbox
Account and the Originator so notifies the Administrative Agent, then the
Administrative Agent shall promptly remit any such amounts as directed by the
Originator or in accordance with the Intercreditor Agreement. The Originator
shall not commingle and shall not permit the commingling of Receivables with
other assets of the Originator or the assets of any other Person.
(k) Debt. The members of the Parent Group shall not create, incur,
assume or suffer to exist any Debt, except as permitted under the Senior Credit
Facility.
(l) Mergers, Etc. The members of the Parent Group shall not merge into
or consolidate with any Person or permit any Person to merge into it, except as
permitted under the Senior Credit Facility.
(m) Sales, Etc., of Assets. The members of the Parent Group shall not
sell, lease, transfer or otherwise dispose of any assets, except as permitted
under the Senior Credit Facility.
(n) Investments in Other Persons. The members of the Parent Group shall
not make any Investment in any Person, except as permitted under the Senior
Credit Facility.
(o) Transfers of Stock of Buyer. The Originator shall not transfer any
Stock issued by the Buyer to any Person; provided, however, that Originator may
transfer some or all of Class B Shares and some but not all of the Class A Stock
issued by the Buyer to
AdvancePCS Puerto Rico, Inc.; provided, further, that
AdvancePCS Puerto Rico, Inc. agrees in writing, for the benefit of the Buyer and
the Administrative Agent that it shall not transfer any Stock of Buyer to any
Person.
SECTION 4.4 BREACH OF REPRESENTATIONS, WARRANTIES OR COVENANTS.
Upon discovery by the Parent, the Originator or Buyer of any breach of
any representation, warranty or covenant described in Sections 4.1, 4.2 or 4.3
(other than a representation, warranty or covenant relating to the absence of
Dilution Factors), which breach is reasonably likely to have a material adverse
effect on the value of a Transferred Receivable or the interests of Buyer
therein, the party discovering the same shall give prompt written notice thereof
to the other parties hereto. The Originator may, at any time on any Business
Day, or shall, if requested by notice from Buyer, on the first (1st) Business
Day following receipt of such notice, either (a) repurchase such Transferred
Receivable from Buyer for cash or through a decrease in the amounts outstanding
under the Subordinated Originator Note, (b) transfer ownership of a new Eligible
Receivable or new Eligible Receivables to Buyer on such Business Day, or (c)
make a capital contribution in cash to Buyer by remitting the amount (the
"Originator Rejected Amount") of such capital contribution to the Collection
Account in accordance with the terms of the Purchase Agreement, in each case in
an amount equal to the Billed Amount of such Transferred Receivable minus the
sum of (i) Collections received in respect thereof and (ii) the amount of any
Dilution Factors taken into account in the calculation of the Originator Sale
Price therefor. Notwithstanding the foregoing, if any Receivable is not paid in
full on account of any Dilution Factors, the Originator's repurchase obligation
under this Section 4.4 with respect to
21
such Receivable shall be reduced by the amount of any such Dilution Factors
taken into account in the calculation of the Originator Sale Price therefor. The
Originator shall ensure that no Collections or other proceeds with respect to a
Transferred Receivable so reconveyed to it are paid or deposited into any
Lockbox Account.
ARTICLE V
INDEMNIFICATION
SECTION 5.1 INDEMNIFICATION.
Without limiting any other rights that Buyer or any of its
Stockholders, officers, directors, employees, attorneys, agents or
representatives (each, an "Buyer Indemnified Person") may have hereunder or
under applicable law, the Originator hereby agrees to indemnify and hold
harmless each Buyer Indemnified Person from and against any and all Indemnified
Amounts that may be claimed or asserted against or incurred by any such Buyer
Indemnified Person in connection with or arising out of the transactions
contemplated under this Agreement or under any other Related Document, any
actions or failures to act in connection therewith, including any and all legal
costs and expenses arising out of or incurred in connection with disputes
between or among any parties to any of the Related Documents, or in respect of
any Originator Sold Receivable, Originator Contributed Receivable or any
Contract therefor or the use by the Originator of the Originator Sale Price
therefor; provided, that the Originator shall not be liable for any
indemnification to a Buyer Indemnified Person to the extent that any such
Indemnified Amounts result from (a) such Buyer Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction, (b) recourse for uncollectible or uncollected Originator Sold
Receivables or Originator Contributed Receivables due to the lack of
creditworthiness of the Obligor or the occurrence of any event of bankruptcy
with respect to such Obligor, or (c) any income tax or franchise tax incurred by
any Buyer Indemnified Person, except to the extent that the incurrence of any
such tax results from a breach of or default under this Agreement or any other
Related Document. Subject to the exceptions set forth in clauses (a), (b) and
(c) of the immediately preceding sentence but otherwise without limiting the
generality of the foregoing, the Originator shall pay on demand to each Buyer
Indemnified Person any and all Indemnified Amounts relating to or resulting
from:
(i) reliance on any representation or warranty made or deemed
made by the Originator (or any of its officers) under or in connection
with this Agreement or any other Related Document or on any other
information delivered by the Originator pursuant hereto or thereto that
shall have been incorrect in any material respect when made or deemed
made or delivered;
(ii) the failure by the Originator to comply with any term,
provision or covenant contained in this Agreement, any other Related
Document or any agreement executed in connection herewith or therewith,
any applicable law, rule or regulation with respect to any Originator
Sold Receivable, Originator Contributed Receivable or Contract
therefor, or the nonconformity of any Originator Sold Receivable,
Originator Contributed Receivable or the Contract therefor with any
such applicable law, rule or regulation;
22
(iii) the failure to vest and maintain vested in Buyer, or to
transfer to Buyer, valid and properly perfected title to and sole
record and beneficial ownership of the Originator Sold Receivables and
the Originator Contributed Receivables, together with all Collections
in respect thereof, free and clear of any Adverse Claim;
(iv) any dispute, claim, offset or defense of any Obligor
(other than its discharge in bankruptcy) to the payment of any
Receivable that is the subject of an Originator Transfer hereunder
(including a defense based on such Receivable or the Contract therefor
not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the merchandise or services giving
rise to such Receivable or the furnishing or failure to furnish such
merchandise or services or relating to collection activities with
respect to such Receivable (if such collection activities were
performed by the Originator or any Affiliate acting as the Servicer),
except to the extent that such dispute, claim, offset or defense
results solely from any action or inaction on the part of Buyer;
(v) any products liability claim or other claim arising out of
or in connection with merchandise, insurance or services that is the
subject of any Contract;
(vi) the commingling of Collections with respect to the
Originator Sold Receivables and the Originator Contributed Receivables
by the Originator at any time with its other funds or the funds of any
other Person, or the commingling of any of the Originator Sold
Receivables or Originator Contributed Receivables with its other assets
or the assets of any other Person;
(vii) any failure by the Originator to cause the filing of, or
any delay in filing, financing statements or other similar instruments
or documents under the UCC of any applicable jurisdiction or any other
applicable laws with respect to any Receivable that is the subject of
an Originator Transfer hereunder, whether at the time of any such
Originator Transfer or at any subsequent time;
(viii) any failure by the Originator or the Servicer to
perform, keep or observe any of their respective duties or obligations
hereunder, under any other Related Document or under any Contract
related to an Originator Sold Receivable or an Originator Contributed
Receivable;
(ix) any investigation, Litigation or proceeding related to
this Agreement or the use of the Originator Sale Price obtained in
connection with any Originator Sale or the ownership of Receivables or
Collections with respect thereto or in respect of any Receivable or
Contract, except to the extent any such investigation, Litigation or
proceeding relates to a matter involving a Buyer Indemnified Person for
which neither the Originator nor any of its Affiliates is at fault, as
finally determined by a court of competent jurisdiction; or
(x) any claim brought by any Person other than a Buyer
Indemnified Person arising from any activity by the Originator or any
of its Affiliates in servicing,
23
administering or collecting any Originator Sold Receivables or any
Originator Contributed Receivables.
NO BUYER INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO
THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF ANY TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER.
ARTICLE VI
[RESERVED]
ARTICLE VII
COLLATERAL SECURITY
SECTION 7.1 SECURITY INTEREST.
To secure the prompt and complete payment, performance and observance
of any and all recourse and indemnity obligations of the Originator to Buyer,
including those set forth in Sections 4.2(o), 4.4, 5.1 and 8.14, and to induce
Buyer to enter into this Agreement in accordance with the terms and conditions
hereof, the Originator hereby grants, assigns, conveys, pledges, hypothecates
and transfers to Buyer a Lien upon all of the Originator's right, title and
interest in, to and under the following property, whether now owned by or owing
to, or hereafter acquired by or arising in favor of, the Originator (including
under any trade names, styles or derivations of the Originator), and whether
owned by or consigned by or to, or leased from or to, the Originator, and
regardless of where located (all of which being hereinafter collectively
referred to as the "Originator Collateral"):
(a) all Receivables, all Contracts relating thereto and all Collections
thereon;
(b) all books and Records (including customer lists, credit files,
computer programs, tapes, disks, data processing software and other related
property and rights) pertaining to the foregoing;
(c) all monies, securities and other property now or hereafter in the
possession or custody of, or in transit to, Buyer, for any purpose (including
safekeeping, collection or pledge), from or for the Originator, or as to which
the Originator may have any right or power, and all of Buyer's credits and
balances with the Originator existing at any time;
(d) all rights, but none of the duties or obligations of the Originator
under the Subordinated Originator Note; and
(e) to the extent not otherwise included, all proceeds and products of
the foregoing and all accessions to, and substitutions and replacements for,
each of the foregoing.
24
SECTION 7.2 OTHER COLLATERAL; RIGHTS IN RECEIVABLES.
Nothing contained in this Article VII shall limit the rights of Buyer
in and to any other collateral that may have been or may hereafter be granted to
Buyer by the Originator or any third party pursuant to any other agreement or
the rights of Buyer under any of the Originator Sold Receivables or the
Originator Contributed Receivables.
SECTION 7.3 ORIGINATOR REMAINS LIABLE.
It is expressly agreed by the Originator that, anything herein to the
contrary notwithstanding, the Originator shall remain liable under any and all
of the Receivables originated by it, the Contracts therefor and all other
Originator Collateral to observe and perform all the conditions and obligations
to be observed and performed by it thereunder. The Buyer shall not have any
obligation or liability under any such Receivables, Contracts or Originator
Collateral by reason of or arising out of this Agreement or the granting herein
of a Lien thereon or the receipt by the Buyer of any payment relating thereto
pursuant hereto. The exercise by the Buyer of any of its respective rights under
this Agreement shall not release the Originator from any of its respective
duties or obligations under any such Receivables, Contracts or Originator
Collateral. The Buyer shall not be required or obligated in any manner to
perform or fulfill any of the obligations of the Originator under or pursuant to
any such Receivable, Contract or Originator Collateral, or to make any payment,
or to make any inquiry as to the nature or the sufficiency of any payment
received by it or the sufficiency of any performance by any party under any such
Receivable, Contract or Originator Collateral, or to present or file any claims,
or to take any action to collect or enforce any performance or the payment of
any amounts that may have been assigned to it or to which it may be entitled at
any time or times.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NOTICES.
Except as otherwise provided herein, whenever it is provided herein
that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt and three (3) Business Days
after deposit in the United States Mail, registered or certified mail, return
receipt requested, with proper postage prepaid, (b) upon transmission, when sent
by telecopy or other similar facsimile transmission (with such telecopy or
facsimile promptly confirmed by delivery of a copy by personal delivery or
United States Mail as otherwise provided in this Section 8.1), (c) one (1)
Business Day after deposit with a reputable overnight courier with all charges
prepaid or (d) when delivered, if hand-delivered by messenger, all of which
shall be addressed to the party to be notified and sent to the address or
facsimile number set forth below in this Section 8.1 or to such other address
(or facsimile number) as may be substituted by notice given as herein provided:
25
Parent: ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior-Vice President, Corporate Affairs
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Originator: ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior-Vice President, Corporate Affairs
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Buyer: AFC Receivables Holding Corporation
c/o Entity Services
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior-Vice President, Corporate Affairs
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Servicer ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior-Vice President, Corporate Affairs
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
provided, that each such declaration or other communication shall be deemed to
have been validly delivered to the Administrative Agent under this Agreement
upon delivery to the Administrative Agent in accordance with the terms of the
Purchase Agreement. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than Buyer) designated in any
written communication provided hereunder to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication. Notwithstanding the foregoing,
whenever it is provided herein that a notice is to be given to any other party
hereto by a specific time, such notice shall only be effective if
26
actually received by such party prior to such time, and if such notice is
received after such time or on a day other than a Business Day, such notice
shall only be effective on the immediately succeeding Business Day.
SECTION 8.2 NO WAIVER; REMEDIES.
Buyer's failure, at any time or times, to require strict performance by
the Originator of any provision of this Agreement or any Receivables Assignment
shall not waive, affect or diminish any right of Buyer thereafter to demand
strict compliance and performance herewith or therewith. Any suspension or
waiver of any breach or default hereunder shall not suspend, waive or affect any
other breach or default whether the same is prior or subsequent thereto and
whether the same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of the Originator contained in this
Agreement or any Receivables Assignment, and no breach or default by the
Originator hereunder or thereunder, shall be deemed to have been suspended or
waived by Buyer unless such waiver or suspension is by an instrument in writing
signed by an officer of or other duly authorized signatory of Buyer and directed
to the Originator specifying such suspension or waiver. Buyer's rights and
remedies under this Agreement shall be cumulative and nonexclusive of any other
rights and remedies that Buyer may have under any other agreement, including the
other Related Documents, by operation of law or otherwise. Recourse to the
Originator Collateral shall not be required.
SECTION 8.3 SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon and shall inure to the benefit of
the Originator and Buyer and their respective successors and permitted assigns,
except as otherwise provided herein. The Originator may not assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder without the prior express written consent of Buyer, the Purchasers and
the Administrative Agent and unless the Rating Agency Condition shall have been
satisfied with respect to any such assignment. Any such purported assignment,
transfer, hypothecation or other conveyance by the Originator without the prior
express written consent of Buyer, the Purchasers and the Administrative Agent
shall be void. The Originator acknowledges that, to the extent permitted under
the Purchase Agreement and the Sale Agreement, Buyer may assign its rights
granted hereunder, including the benefit of any indemnities under Article V and
any of its rights in the Originator Collateral granted under Article VII, and
upon such assignment, such assignee shall have, to the extent of such
assignment, all rights of Buyer hereunder and, to the extent permitted under the
Purchase Agreement, may in turn assign such rights. The Originator agrees that,
upon any such assignment, such assignee may enforce directly, without joinder of
Buyer, the rights set forth in this Agreement. All such assignees, including
parties to the Purchase Agreement in the case of any assignment to such parties,
shall be third party beneficiaries of, and shall be entitled to enforce Buyer's
rights and remedies under, this Agreement to the same extent as if they were
parties hereto. Without limiting the generality of the foregoing, all notices to
be provided to the Buyer hereunder shall be delivered to both the Buyer and the
Administrative Agent under the Purchase Agreement, and shall be effective only
upon such delivery to the Administrative Agent. The terms and provisions of this
Agreement are for the purpose of defining the relative rights and obligations of
the Originator and Buyer with respect to the transactions contemplated hereby
and, except for the Purchasers and the
27
Administrative Agent, no Person shall be a third party beneficiary of any of the
terms and provisions of this Agreement.
SECTION 8.4 TERMINATION; SURVIVAL OF OBLIGATIONS.
(a) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Termination Date.
(b) Except as otherwise expressly provided herein or in any other
Related Document, no termination or cancellation (regardless of cause or
procedure) of any commitment made by Buyer under this Agreement shall in any way
affect or impair the obligations, duties and liabilities of the Originator or
the rights of Buyer relating to any unpaid portion of any and all recourse and
indemnity obligations of the Originator to Buyer, including those set forth in
Sections 4.2(o), 4.4, 5.1 and 8.14, due or not due, liquidated, contingent or
unliquidated or any transaction or event occurring prior to such termination, or
any transaction or event, the performance of which is required after the
Facility Termination Date. Except as otherwise expressly provided herein or in
any other Related Document, all undertakings, agreements, covenants, warranties
and representations of or binding upon the Originator, and all rights of Buyer
hereunder, all as contained in the Related Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the
rights and remedies pursuant to Sections 4.2(o), 4.4, the indemnification and
payment provisions of Article V, and the provisions of Sections 8.3, 8.12 and
8.14 shall be continuing and shall survive any termination of this Agreement.
SECTION 8.5 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT.
This Agreement and the other Related Documents constitute the complete
agreement between the parties with respect to the subject matter hereof and
thereof, supersede all prior agreements and understandings relating to the
subject matter hereof and thereof, and may not be modified, altered or amended
except as set forth in Section 8.6.
SECTION 8.6 AMENDMENTS AND WAIVERS.
No amendment, modification, termination or waiver of any provision of
this Agreement or any of the other Related Documents, or any consent to any
departure by the Originator therefrom, shall in any event be effective unless
the same shall be in writing and signed by each of the parties hereto and the
Purchasers and the Administrative Agent. No consent or demand in any case shall,
in itself, entitle any party to any other consent or further notice or demand in
similar or other circumstances.
SECTION 8.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT AND EACH RELATED DOCUMENT (EXCEPT TO THE EXTENT THAT
ANY RELATED DOCUMENT EXPRESSLY PROVIDES TO THE CONTRARY) AND THE OBLIGATIONS
ARISING HEREUNDER AND
28
THEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES), EXCEPT TO THE EXTENT THAT THE PERFECTION, EFFECT OF PERFECTION OR
PRIORITY OF THE INTERESTS OF THE BUYER IN THE RECEIVABLES OR REMEDIES HEREUNDER
OR THEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF
NEW YORK, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA.
(b) EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN
NEW YORK CITY SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THEM
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED DOCUMENT; PROVIDED, THAT EACH PARTY HERETO ACKNOWLEDGES
THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE OF THE BOROUGH OF MANHATTAN IN
NEW YORK CITY; PROVIDED FURTHER, THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE BUYER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE ORIGINATOR COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OF THE
ORIGINATOR ARISING HEREUNDER, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF BUYER. EACH PARTY HERETO SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PARTY
HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH
BENEATH ITS NAME ON THE SIGNATURE PAGES HEREOF AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR
THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE PREPAID.
NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
29
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS AGREEMENT OR ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.
SECTION 8.8 COUNTERPARTS.
This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
facsimile shall be as effective as delivery of a manually executed counterpart
of a signature page to this Agreement.
SECTION 8.9 SEVERABILITY.
Wherever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
SECTION 8.10 SECTION TITLES.
The section titles and table of contents contained in this Agreement
are provided for ease of reference only and shall be without substantive meaning
or content of any kind whatsoever and are not a part of the agreement between
the parties hereto.
SECTION 8.11 NO SETOFF.
The Originator's obligations under this Agreement shall not be affected
by any right of setoff, counterclaim, recoupment, defense or other right the
Originator might have against Buyer, any Purchaser or the Administrative Agent,
all of which rights are hereby expressly waived by the Originator.
SECTION 8.12 CONFIDENTIALITY.
(a) Except to the extent otherwise required by applicable law, as
required to be filed publicly with the Securities and Exchange Commission, or
unless each Affected Party shall otherwise consent in writing, the Originator
and Buyer agree to maintain the confidentiality of this Agreement (and all
drafts hereof and documents ancillary hereto) in its communications with third
parties other than any Affected Party or any Buyer Indemnified Person and
otherwise and
30
not to disclose, deliver or otherwise make available to any third party (other
than its directors, officers, employees, accountants or counsel) the original or
any copy of all or any part of this Agreement (or any draft hereof and documents
ancillary hereto) except to an Affected Party or an Buyer Indemnified Person.
(b) The Originator agrees that it shall not (and shall not permit any
of its Subsidiaries to) issue any news release or make any public announcement
pertaining to the transactions contemplated by this Agreement and the Related
Documents without the prior written consent of Buyer and each of the Committed
Purchaser and the Conduit Purchaser (which consent shall not be unreasonably
withheld) unless such news release or public announcement is required by law, in
which case the Originator shall consult with Buyer and each of the Committed
Purchaser and the Conduit Purchaser prior to the issuance of such news release
or public announcement. The Originator may, however, disclose the general terms
of the transactions contemplated by this Agreement and the Related Documents to
trade creditors, suppliers and other similarly-situated Persons so long as such
disclosure is not in the form of a news release or public announcement.
(c) Except to the extent otherwise required by applicable law, or in
connection with any judicial or administrative proceedings, as required to be
filed publicly with the Securities Exchange Commission, or unless the Originator
otherwise consents in writing, the Buyer agrees (i) to maintain the
confidentiality of (A) this Agreement (and all drafts hereof and documents
ancillary hereto) and (B) all other confidential proprietary information with
respect to the Originator and its Affiliates and each of their respective
businesses obtained by the Buyer in connection with the structuring, negotiation
and execution of the transactions contemplated herein and in the other documents
ancillary hereto, in each case, in its communications with third parties other
than any Affected Party or the Originator and (ii) not to disclose, deliver, or
otherwise make available to any third party (other than its directors, officers,
employees, accountants or counsel) the original or any copy of all or any part
of this Agreement (or any draft hereof and documents ancillary hereto) except to
an Affected Party or the Originator.
SECTION 8.13 FURTHER ASSURANCES.
(a) The Originator shall, at its sole cost and expense, upon request of
Buyer, any Purchaser or the Administrative Agent, promptly and duly execute and
deliver any and all further instruments and documents and take such further
actions that may be necessary or desirable or that Buyer, any Purchaser or the
Administrative Agent may request to carry out more effectively the provisions
and purposes of this Agreement or any other Related Document or to obtain the
full benefits of this Agreement and of the rights and powers herein granted,
including (i) using its best efforts to secure all consents and approvals
necessary or appropriate for the assignment to or for the benefit of Buyer of
any Originator Sold Receivable, Originator Contributed Receivable or Originator
Collateral held by the Originator or in which the Originator has any rights not
heretofore assigned, (ii) filing any financing or continuation statements under
the UCC with respect to the ownership interests or Liens granted hereunder or
under any other Related Document, (iii) transferring Originator Collateral to
Buyer's possession if such collateral consists of chattel paper or instruments
or if a Lien upon such collateral can be perfected only by possession, or if
otherwise requested by Buyer; and (iv) entering into "control agreements" (as
defined in the UCC) with respect to any Originator Collateral to the extent that
a first priority Lien upon such Originator Collateral can be perfected only by
control. The Originator hereby authorizes Buyer,
31
each Purchaser and the Administrative Agent to file any such financing or
continuation statements without the signature of the Originator to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Agreement or of any notice or financing statement covering the Receivables,
the Originator Collateral or any part thereof shall be sufficient as a notice or
financing statement where permitted by law. If any amount payable under or in
connection with any of the Originator Collateral is or shall become evidenced by
any instrument, such instrument, other than checks and notes received in the
ordinary course of business, shall be duly endorsed in a manner satisfactory to
Buyer immediately upon the Originator's receipt thereof and promptly delivered
to Buyer.
(b) If the Originator fails to perform any agreement or obligation
under this Section 8.13, Buyer, any Purchaser or the Administrative Agent may
(but shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the reasonable expenses of Buyer, such Purchaser or
the Administrative Agent incurred in connection therewith shall be payable by
the Originator upon demand of Buyer, such Purchaser or the Administrative Agent.
SECTION 8.14 FEES AND EXPENSES.
In addition to its indemnification obligations pursuant to Article V,
the Originator agrees to pay on demand all costs and expenses incurred by Buyer
in connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Related Documents, including the fees and out-of-pocket
expenses of Buyer's counsel, advisors, consultants and auditors retained in
connection with the transactions contemplated thereby and advice in connection
therewith, and the Originator agrees to pay all costs and expenses, if any
(including attorneys' fees and expenses but excluding any costs of enforcement
or collection of the Receivables), in connection with the enforcement of this
Agreement and the other Related Documents.
[Remainder of Page Intentionally Left Blank].
32
IN WITNESS WHEREOF, the parties have caused this
Receivables Purchase
and Contribution Agreement to be executed by their respective duly authorized
representatives, as of the date first above written.
ADVANCEPCS
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ADVANCEPCS HEALTH L.P.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
AFC RECEIVABLES HOLDING CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
ADVP MANAGEMENT, L.P.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
33
Exhibit 2.1(a)
Form of
Receivables Assignment
THIS RECEIVABLES ASSIGNMENT (the "Receivables Assignment") is entered
into as of ______ __, 2001, by and between ADVANCEPCS HEALTH L.P. (the
"Originator") and AFC RECEIVABLES HOLDING CORPORATION (the "Buyer").
1. We refer to that certain
Receivables Purchase and Contribution
Agreement (as amended, restated, supplemented or otherwise modified from time to
time, the "Contribution Agreement") of even date herewith among the Originator,
the Buyer and AdvancePCS. All of the terms, covenants and conditions of the
Contribution Agreement are hereby made a part of this Receivables Assignment and
are deemed incorporated herein in full. Unless otherwise defined herein,
capitalized terms or matters of construction defined or established in the
Contribution Agreement shall be applied herein as defined or established
therein.
2. For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Originator hereby sells, or sells or
contributes, to Buyer, without recourse, except as provided in Sections 4.2(o)
and 4.4 of the Contribution Agreement, all of the Originator's right, title and
interest in, to and under all of its Receivables (including all Collections,
Records and proceeds with respect thereto) existing as of the Closing Date and
thereafter created or arising at any time until the Facility Termination Date.
3. Subject to the terms and conditions of the Contribution Agreement,
the Originator hereby covenants and agrees to sign, sell or contribute, as
applicable, execute and deliver, or cause to be signed, sold or contributed,
executed and delivered, and to do or make, or cause to be done or made, upon
request of Buyer and at the Originator's expense, any and all agreements,
instruments, papers, deeds, acts or things, supplemental, confirmatory or
otherwise, as may be reasonably required by Buyer for the purpose of or in
connection with acquiring or more effectively vesting in Buyer or evidencing the
vesting in Buyer of the property, rights, title and interests of the Originator
sold or contributed hereunder or intended to be sold or contributed hereunder.
4. Wherever possible, each provision of this Receivables Assignment
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Receivables Assignment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Receivables Assignment.
5. THIS RECEIVABLES ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK,
INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT
REGARD TO THE PRINCIPLES
THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA.
IN WITNESS WHEREOF, the parties have caused this Receivables Assignment
to be executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
ADVANCEPCS HEALTH L.P.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
AFC RECEIVABLES HOLDING CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Exhibit 2.1(c)
FORM OF SUBORDINATED ORIGINATOR NOTE
[_____ __, 2001]
FOR VALUE RECEIVED, the undersigned, AFC RECEIVABLES HOLDING
CORPORATION, a Delaware corporation (the "Borrower"), hereby promises to pay to
the order of ADVANCEPCS HEALTH L.P., a Delaware limited partnership (the
"Subordinated Lender"), or its assigns, at ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or at such other place as the holder of this Subordinated
Originator Note ("Note") may designate from time to time in writing, in lawful
money of the United States of America and in immediately available funds, the
aggregate unpaid principal amount of all Subordinated Originator Loans (as
defined in the Contribution Agreement referred to below) made to the Borrower,
upon the earlier to occur of (i) the Final Purchase Date and (ii) the
Termination Date (in each case, as defined in Annex X to the Contribution
Agreement referred to below), together with interest thereon at the Prime Rate
(the "Interest Rate") on the unpaid principal amount of each Subordinated
Originator Loan for the period commencing on and including the date of such
Subordinated Originator Loan to but excluding the date such Subordinated
Originator Loan is paid in full.
The date, amount and interest rate of each Subordinated
Originator Loan made by the Subordinated Lender to the Borrower, and each
payment made by or on behalf of the Borrower on account of the principal
thereof, shall be recorded by the Subordinated Lender on its books and, prior to
any transfer of this Note, endorsed by the Subordinated Lender on the schedule
attached hereto or any continuation thereof. The books of the Subordinated
Lender and such schedule shall be presumptive evidence of the amounts due and
owing to the Subordinated Lender by the Borrower; provided; that any failure of
the Subordinated Lender to record a notation in its books or on the schedule to
this Note as aforesaid or any error in so recording shall not limit or otherwise
affect the obligation of the Borrower to repay Subordinated Originator Loans in
accordance with their respective terms set forth herein.
All capitalized terms, unless otherwise defined herein, shall
have the meanings assigned to them in the
Receivables Purchase and Contribution
Agreement of even date herewith (as the same may be subsequently amended,
restated or otherwise modified, the "Contribution Agreement") by and among the
Borrower, the Subordinated Lender, AdvancePCS and ADVP Management L.P. This Note
is issued pursuant to the Contribution Agreement and is the Subordinated
Originator Note referred to therein. All of the terms, covenants and conditions
of the Contribution Agreement and all other instruments evidencing the
indebtedness hereunder, including the other Related Documents, are hereby made a
part of this Note and are deemed incorporated herein in full.
The Borrower may at any time and from time to time upon prior
written notice to the Subordinated Lender voluntarily repay, in whole or in
part, all Subordinated Originator Loans made hereunder. Any amount so repaid
may, subject to the terms and conditions hereof, be reborrowed hereunder;
provided, that all repayments of Subordinated Originator Loans or any portion
thereof shall be made together with payment of all interest accrued on the
amount repaid to (but excluding) the date of such repayment. Any such notice
must be given in writing on or before the Business Day immediately preceding the
day the proposed Subordinated Originator Loan is to be repaid (which shall be a
Business Day). Each such notice of repayment shall specify the amount of
Subordinated Originator Loans to be repaid and the repayment date thereof.
Interest shall be payable on the outstanding principal amount
of this Note from time to time in arrears on the first Business Day of each
month. All computations of interest shall be made by the Lender on the basis of
a 365 day year, in each case for the actual number of days occurring in the
period for which such interest is payable. The Interest Rate shall be determined
(i) on the first Business Day immediately prior to the date any Subordinated
Originator Loan is made for calculation of the Interest Rate for the period from
the date such Subordinated Originator Loan is made through the end of the first
calendar month following such date, and (ii) as of the last Business Day of each
month for use in calculating the interest that is payable for the following
calendar month, and the Interest Rate so determined shall be utilized for such
calendar month. Each determination by the Subordinated Lender of an interest
rate hereunder shall be final, binding and conclusive on the Borrower (absent
manifest error). The Borrower shall pay interest at the applicable Interest Rate
on unpaid interest on any Subordinated Originator Loan or any installment
thereof, and on any other amount payable by the Borrower hereunder (to the
extent permitted by law) that shall not be paid in full when due (whether at
stated maturity, by acceleration or otherwise) for the period commencing on the
due date thereof to (but excluding) the date the same is indefeasibly paid in
full.
If any payment or prepayment on this Note becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the Interest Rate during such
extension.
As set forth below, the indebtedness evidenced by this
Subordinated Note is subordinate in right of payment to all "Seller Secured
Obligations" (as defined in Annex X of the Contribution Agreement) and all
renewals, extensions, refinancings or refundings of any such obligations
(whether for principal, interest (including but not limited to interest accruing
after the filing of a petition initiating any bankruptcy, insolvency or
receivership proceeding (each, an "Insolvency Proceeding") whether or not such
interest is allowed in such Insolvency Proceeding), fees, indemnities,
repurchase price, expenses or otherwise) (collectively, the "Senior
Obligations"). The subordination provisions contained herein are for the direct
benefit of, and may be enforced by, any holder of a Senior Obligation, and may
not be terminated, amended or otherwise revoked until the Senior Obligations
have been indefeasibly paid in full in cash and the Related Documents terminated
in accordance with their respective terms. Upon the occurrence and during the
continuance of any Termination Event or Incipient Termination Event,
the Subordinated Lender shall not demand, accelerate, ▇▇▇ for, take, receive or
accept from the Borrower, directly or indirectly, in cash or other property or
by set-off or any other manner (including, without limitation, from or by way of
collateral) any payment of or security for all or any part of the indebtedness
under this Subordinated Note or exercise any remedies or take any action or
proceeding to enforce the same. The Subordinated Lender hereby agrees that prior
to the date that is one year and one day after all of the Senior Obligations
have been indefeasibly paid in full in cash and the Related Documents terminated
in accordance with their respective terms, the Subordinated Lender will not take
any action to institute any Insolvency Proceeding in respect of the Borrower or
which would be reasonably likely to cause the Borrower to be subject to, or seek
the protection of, any such Insolvency Proceeding.
If the Borrower becomes subject to any Insolvency Proceeding,
then the holders of the Senior Obligations shall receive payment in full of all
amounts due or to become due on or with respect to the Senior Obligations before
the Subordinated Lender shall be entitled to receive any payment on account of
this Subordinated Note. Accordingly, any payment or distribution of assets of
the Borrower of any kind or character, whether in cash, securities or other
property, in any applicable Insolvency Proceeding, that would otherwise be
payable to or deliverable upon or with respect to any or all indebtedness under
this Subordinated Note, is hereby assigned to and shall be paid or delivered by
the person making such payment or delivery (whether a trustee in bankruptcy, a
receiver, custodian or liquidating trustee or otherwise) directly to the
Administrative Agent for application to, or as collateral for the payment of,
the Senior Obligations until such Senior Obligations shall have been
indefeasibly paid in full in cash.
In no contingency or event whatsoever, whether by reason of
advancement of the proceeds hereof or otherwise, shall the amount paid or agreed
to be paid to Subordinated Lender for the use, forbearance or detention of money
advanced hereunder exceed the highest rate of interest permissible under law
(the "Maximum Lawful Rate"). In the event that a court of competent jurisdiction
determines that Subordinated Lender has charged or received interest hereunder
in excess of the Maximum Lawful Rate, the amount of interest payable hereunder
shall be equal to the amount payable under the Maximum Lawful Rate; provided,
that if at any time thereafter the amount of interest payable to Subordinated
Lender hereunder is less than the amount payable under the Maximum Lawful Rate,
the Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Subordinated Lender from the
making of Subordinated Originator Loans hereunder is equal to the total interest
that Subordinated Lender would have received had the amount of interest payable
to Subordinated Lender hereunder been (but for the operation of this paragraph)
paid. Thereafter, the amount of interest payable hereunder shall be the amount
determined in accordance with the terms hereof unless and until the amount so
calculated again exceeds the amount payable under the Maximum Lawful Rate, in
which event this paragraph shall again apply. In no event shall the total
interest received by Subordinated Lender pursuant to the terms hereof exceed the
amount that Lender could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate. In the
event the amount payable under the Maximum Lawful Rate is calculated pursuant to
this paragraph, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made. In the event that a court of
competent jurisdiction, notwithstanding the provisions of this Note, shall make
a final determination that Subordinated Lender has received interest hereunder
in excess of the Maximum Lawful Rate, Subordinated Lender shall, to the extent
permitted by applicable law, promptly apply such excess first to any interest
due and not yet paid hereunder, then to the outstanding principal amount of the
Subordinated Originator Loans, then to fees and any other unpaid charges, and
thereafter shall refund any excess to the Borrower or as a court of competent
jurisdiction may otherwise order.
Wherever possible each provision of this Note shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such provision
or remaining provisions of this Note.
Time is of the essence of this Note. To the fullest extent
permitted by applicable law, the Borrower expressly waives presentment, demand,
diligence, protest and all notices of any kind whatsoever with respect to this
Note.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
BORROWER HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS NOTE,
THE CONTRIBUTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO
THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA.
IN WITNESS WHEREOF, the Borrower has caused this Note to be
signed and delivered by its duly authorized officer as of the date set forth
above.
AFC RECEIVABLES HOLDING CORPORATION
By:
--------------------------------------------
Name:
Title:
SCHEDULE OF LOANS TO SUBORDINATED NOTE
Amount of Unpaid
Subordinated Amount of Principal Notation made
Date Originator Loan Principal Paid Balance by (initials)
---- --------------- -------------- --------- -------------
Schedule 4.1(b)
Formation Jurisdiction; Executive Offices; Collateral Locations;
Corporate Names; FEIN
PARENT:
Formation Jurisdiction: Delaware.
ORIGINATOR:
Formation Jurisdiction: Delaware.
The Originator's chief executive office and principal place of business are
located at ▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Locations of Originator's offices, the warehouses and premises within which any
Originator Collateral has been stored or located, and the locations of all
records concerning Originator Collateral over the past 12 months and names in
which Originator Collateral at such locations has been held over the past 12
months are as follows:
ADVP Operations, L.P.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇. ▇'▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇*
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇*
ADVP Operations, L.P.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADVP Operations, L.P.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
Cardinal Tech Park
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
92 Mountain View Office Complex
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADVP Operations, L.P.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇*
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, ▇.▇.
▇▇▇▇▇▇ Center IV
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇*
ADVP Operations, L.P.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADVP Operations, L.P.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PCS Health Systems, Inc.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AdvancePCS Health, L.P.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ADVP Operations, L.P.
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AdvancePCS, L.P.
AdvancePCS Health, L.P.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
*Locations where Originator Collateral has been stored or located over the past
twelve (12) months.
Names of the limited partnership over the past five (5) years: The limited
partnership now known as AdvancePCS Health, L.P. was formed on May 31, 2000 as
ADVP Operations, L.P. On November 28, 2000, the limited partnership's name was
changed to AdvancePCS, L.P. and on July 16, 2001 the limited partnership's name
was changed to AdvancePCS Health, L.P. Prior to July 31, 2000, some of the
assets now held by AdvancePCS Health, L.P. were held by Advance Paradigm, Inc.,
now known as AdvancePCS. In addition, on July 31, 2000 the following entities
merged into the limited partnership: Advance Paradigm Clinical Services, Inc.,
Advance Paradigm Data Services, Inc. and Foundation Health Pharmaceutical
Services, Inc. Therefore, assets currently held by the limited partnership were
held by those entities prior to July 31, 2000. Also, on June 30, 2001, PCS
Health Systems, Inc. merged into the limited partnership. Additionally, Clinical
Pharmaceuticals, Inc. had previously merged into PCS Health Systems, Inc. on
March 30, 2001. Therefore, prior to June 30, 2001, some of the assets currently
held by the limited partnership were held by PCS Health Systems, Inc. and, prior
to March 30, 2001, Clinical Pharmaceuticals, Inc.
Trade names: AdvancePCS
FEIN: ▇▇-▇▇▇▇▇▇▇
Schedule 4.1(d)
Litigation
1. ▇▇▇▇▇▇ v. PCS Health Systems, Inc.
2. Blue Cross Blue Shield of Michigan v. PCS Health Systems, Inc.
3. PCS Health Systems, Inc. v. Keystone Mercy Health Plan
4. EEOC v. IMR
5. AdvancePCS Health L.P. v. PEBTF (Arbitration)
6. ▇▇▇▇▇▇▇▇▇.▇▇▇ v. AdvancePCS (Arbitration)
7. Allcare Health Management System, Inc. v. Advance Paradigm, Inc. et al
8. OIG Subpoena - Investigative subpoena issued on November 23, 1999 by
the Office of the Inspector General of the Department of Health and
Human Services
Schedule 4.1(h)
Ventures, Subsidiaries and Affiliates; Outstanding Stock
SEE ATTACHED ORGANIZATIONAL CHART.
Ownership of Buyer: At closing, AdvancePCS Health, L.P. (the Originator) owns
100% of the stock of the Buyer.
Ownership of Originator: AdvancePCS Health Systems, LLC is the 1% general
partner of the Originator and ADVP Consolidation, L.L.C. is the 99% limited
partner of the Originator.
Schedule 4.1(i)
Tax Matters
None.
Schedule 4.1(j)
Intellectual Property
The Parent is currently in the discovery stage of the patent infringement case
filed by Allcare Health Management System, Inc. alleging that the Parent has
infringed on Allcare's patent of a fully integrated and comprehensive health
care system that includes the integrated interconnection and interaction of the
patient, health care provider, bank or other financial institution, insurance
company, utilization reviewer and employer so as to include within a single
system each of the essential participants to provide patients with complete and
comprehensive pre-treatment, treatment and post treatment health care and
predetermined financial support.
Schedule 4.1(m)
ERISA
The Plans are as follows:
AdvancePCS Health Plan
AdvancePCS Short Term Disability Plan
AdvancePCS Long Term Disability Plan
AdvancePCS Excess Savings Plan
AdvancePCS Excess Retirement Plan
AdvancePCS Flexible Benefits Plan
AdvancePCS Health Care Flexible Spending Plan
AdvancePCS Dependent Day Care Spending Plan
AdvancePCS Employee Savings Plan
AdvancePCS Retirement Plan
AdvancePCS Limited Term Deferred Compensation Plan
AdvancePCS Deferred Compensation Plan
AdvancePCS Holiday and Vacation Plan
AdvancePCS Educational Assistance Plan
Schedule 4.1(t)
Deposit and Disbursement Accounts
None.
Schedule 4.2(g)
Trade Names
AdvancePCS Health, L.P.
AdvancePCS
Schedule 4.3(a)
Existing Liens
All Liens imposed pursuant to the terms and conditions of the Senior Credit
Facility.