Exhibit 10.1
--------------------------------------------------------------------------------
RECEIVABLES PURCHASE AGREEMENT
Dated as of April 30, 2002
among
O&M Funding Corp., as Seller,
▇▇▇▇▇ & MINOR MEDICAL, INC., as Servicer,
BLUE RIDGE ASSET FUNDING CORPORATION,
WACHOVIA BANK, NATIONAL ASSOCIATION, individually and as Blue Ridge
Agent,
BLUE KEEL FUNDING, L.L.C.,
FLEET NATIONAL BANK, individually, FLEET SECURITIES, INC., as Blue Keel
Agent,
and
WACHOVIA BANK, NATIONAL ASSOCIATION, as Collateral Agent
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I. PURCHASE ARRANGEMENTS.................................................2
Section 1.1 Purchase Facility..............................................2
Section 1.2 Increases......................................................3
Section 1.3 Decreases......................................................3
Section 1.4 Payment Requirements...........................................3
ARTICLE II. PAYMENTS AND COLLECTIONS.............................................4
Section 2.1 Payments.......................................................4
Section 2.2 Collections Prior to Amortization..............................5
Section 2.3 Collections Following Amortization.............................5
Section 2.4 Application of Collections.....................................5
Section 2.5 Payment Rescission.............................................6
Section 2.6 Maximum Receivable Interests...................................6
Section 2.7 Clean Up Call..................................................6
ARTICLE III. CONDUIT FUNDING.....................................................7
Section 3.1 CP Costs.......................................................7
Section 3.2 CP Costs Payments..............................................7
Section 3.3 Calculation of CP Costs........................................7
ARTICLE IV. LIQUIDITY BANK FUNDING...............................................7
Section 4.1 Liquidity Bank Funding.........................................7
Section 4.2 Yield Payments.................................................8
Section 4.3 Selection and Continuation of Tranche Periods..................8
Section 4.4 Liquidity Bank Discount Rates..................................8
Section 4.5 Suspension of the LIBO Rate....................................8
ARTICLE V. REPRESENTATIONS AND WARRANTIES........................................9
Section 5.1 Representations and Warranties of the Seller Parties...........9
Section 5.2 Liquidity Bank Representations and Warranties.................13
ARTICLE VI. CONDITIONS OF PURCHASES.............................................13
Section 6.1 Conditions Precedent to Initial Incremental Purchase..........13
Section 6.2 Conditions Precedent to All Purchases and Reinvestments.......14
ARTICLE VII. COVENANTS..........................................................15
Section 7.1 Affirmative Covenants of the Seller Parties...................15
Section 7.2 Negative Covenants of the Seller Parties......................22
ARTICLE VIII. ADMINISTRATION AND COLLECTION.....................................23
Section 8.1 Designation of Servicer.......................................23
Section 8.2 Duties of Servicer............................................24
Section 8.3 Collection Notices............................................26
Section 8.4 Responsibilities of Seller....................................26
Section 8.5 Reports.......................................................26
Section 8.6 Servicing Fees................................................26
ARTICLE IX. AMORTIZATION EVENTS.................................................26
Section 9.1 Amortization Events...........................................26
Section 9.2 Remedies......................................................28
i
ARTICLE X. INDEMNIFICATION......................................................29
Section 10.1 Indemnities by the Seller Parties.............................29
Section 10.2 Increased Cost and Reduced Return.............................34
Section 10.3 Other Costs and Expenses......................................34
ARTICLE XI. THE AGENTS..........................................................35
Section 11.1 Appointment...................................................35
Section 11.2 Delegation of Duties..........................................36
Section 11.3 Exculpatory Provisions........................................36
Section 11.4 Reliance by Agents............................................36
Section 11.5 Notice of Amortization Events.................................37
Section 11.6 Non-Reliance on Agents and Other Purchasers...................38
Section 11.7 Indemnification of Agents.....................................38
Section 11.8 Agents in their Individual Capacities.........................39
Section 11.9 Successor Collateral Agent....................................39
Section 11.10 Agents' Conflict Waivers......................................39
Section 11.11 UCC Filings...................................................40
ARTICLE XII. ASSIGNMENTS; PARTICIPATIONS........................................40
Section 12.1 Assignments...................................................40
Section 12.2 Participations................................................42
Section 12.3 Limitation on Assignments and Participations..................42
ARTICLE XIII. MISCELLANEOUS.....................................................42
Section 13.1 Waivers and Amendments........................................42
Section 13.2 Notices.......................................................43
Section 13.3 Ratable Payments..............................................44
Section 13.4 Protection of Ownership Interests of the Purchasers...........44
Section 13.5 Confidentiality...............................................45
Section 13.6 Bankruptcy Petition...........................................45
Section 13.7 Limitation of Liability.......................................45
Section 13.8 CHOICE OF LAW.................................................46
Section 13.9 CONSENT TO JURISDICTION.......................................46
Section 13.10 WAIVER OF JURY TRIAL..........................................46
Section 13.11 Integration; Binding Effect; Survival of Terms................46
Section 13.12 Counterparts; Severability; Section References................47
Section 13.13 Characterization..............................................47
Section 13.14 Nonrecourse Nature of Transactions............................48
Section 13.15 U.S. Persons..................................................48
ii
Exhibits and Schedules
Exhibit I Definitions
Exhibit II Form of Purchase Notice
Exhibit III Seller's State of Organization; Chief Executive Office; Locations
of Records; Federal Employer and Organizational Identification
Numbers
Exhibit IV Names of Collection Banks; Collection Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Assignment Agreement
Exhibit VII Credit and Collection Policy
Exhibit VIII Form of Contract(s)
Exhibit IX Form of Settlement Report
Exhibit X Form of Performance Undertaking
Exhibit XI Form of Interim Settlement Report
Schedule A Commitments
Schedule B Closing Documents
iii
RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES PURCHASE AGREEMENT dated as of April 30, 2002, is
among:
(a) O&M Funding Corp., a Virginia corporation ("Seller"),
(b) ▇▇▇▇▇ & Minor Medical, Inc., a Virginia corporation ("O&M
Medical"), as initial Servicer,
(c) Blue Ridge Asset Funding Corporation, a Delaware corporation
("Blue Ridge" or a "Conduit"), and Blue Keel Funding, L.L.C., a Delaware
limited liability company ("Blue Keel" or a "Conduit"),
(d) Wachovia Bank, National Association, a national banking
association ("Wachovia"), and its assigns (collectively, the "Blue Ridge
Liquidity Banks" and, together with Blue Ridge, the "Blue Ridge Group"),
and Fleet National Bank, a national banking association ("Fleet"), and its
assigns (collectively, the "Blue Keel Liquidity Banks" and, together with
Blue Keel, the "Blue Keel Group"),
(e) Wachovia Bank, National Association, a national banking
association, in its capacity as agent for the Blue Ridge Group (the "Blue
Ridge Agent" or a "Co-Agent"), and Fleet Securities, Inc., a New York
corporation, ("FSI"), in its capacity as agent for the Blue Keel Group (the
"Blue Keel Agent" or a "Co-Agent"), and
(f) Wachovia Bank, National Association, a national banking
association, in its capacity as administrative agent for the Blue Keel
Group, the Blue Ridge Group and each Co-Agent (in such capacity, together
with its successors and assigns, the "Collateral Agent" and, together with
each of the Co-Agents, the "Agents").
Unless defined elsewhere herein, capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Seller desires to transfer and assign Receivable Interests to the
Collateral Agent, for the benefit of the Purchasers, from time to time.
Each of the Conduits may, in its absolute and sole discretion,
purchase its Percentage of each Receivable Interest from Seller from time
to time.
In the event that either Conduit declines to make any such purchase,
its Liquidity Banks shall, at the request of Seller, make such purchase.
Wachovia Bank, National Association has been requested and is willing
to act as Blue Ridge Agent on behalf of the Blue Ridge Group in accordance
with the terms hereof.
FSI has been requested and is willing to act as Blue Keel Agent on
behalf of the Blue Keel Group in accordance with the terms hereof.
Wachovia Bank, National Association has been requested and is willing
to act as Collateral Agent on behalf of the Purchasers in accordance with
the terms hereof.
ARTICLE I.
PURCHASE ARRANGEMENTS
Section 1.1 Purchase Facility.
-----------------
(a) On the terms and subject to the conditions set forth in this
Agreement, Seller (or the Servicer on Seller's behalf) may from time to time
prior to the Facility Termination Date, sell Receivable Interests to the
Collateral Agent, for the benefit of the Purchasers, by delivering a Purchase
Notice to the Co-Agents in accordance with Section 1.2. No later than 12:00
p.m., New York time, on the proposed date of purchase, each of the Co-Agents
shall determine whether its Conduit will fund its Percentage of such Receivable
Interest, and
(i) in the event that Blue Keel elects not to make any such
purchase of its Percentage, the Blue Keel Agent shall promptly notify Seller and
the Blue Keel Liquidity Banks of such fact, whereupon each of the Blue Keel
Liquidity Banks severally agrees to purchase its Ratable Share of such
Percentage, on the terms and subject to the conditions hereof, provided that at
no time may the Aggregate Invested Amount of the Blue Keel Group at any one time
outstanding exceed the lesser of (A) the aggregate amount of the Blue Keel
Liquidity Banks' Commitments, and (B) Blue Keel's Percentage of an amount equal
to the Net Pool Balance (such lesser amount, the "Blue Keel Allocation Limit")
less the Required Reserves; and
(ii) in the event that Blue Ridge elects not to make any such
purchase of its Percentage, the Blue Ridge Agent shall promptly notify Seller
and each of the Blue Ridge Liquidity Banks of such fact, whereupon each of the
Blue Ridge Liquidity Banks severally agrees to purchase its Ratable Share of
such Percentage, on the terms and subject to the conditions hereof, provided
that at no time may the Aggregate Invested Amount of the Blue Ridge Group at any
one time outstanding exceed the lesser of (A) the aggregate amount of the Blue
Ridge Liquidity Banks' Commitments, and (B) Blue Ridge's Percentage of the Net
Pool Balance (such lesser amount, the "Blue Ridge Allocation Limit") less the
Required Reserves.
In no event shall the Aggregate Invested Amount of all of the Purchasers
outstanding hereunder exceed the lesser of (1) the Purchase Limit and (2) the
Net Pool Balance less the Required Reserves. All Liquidity Banks' Commitments to
Seller under this Agreement shall terminate on the Facility Termination Date
(although their commitments to their respective Conduits under their respective
Liquidity Agreement may continue beyond such date). Nothing contained in this
Agreement shall, or shall be deemed to, constitute a commitment by any Conduit
to fund the purchase of any Receivable Interest or Percentage therein.
(b) Seller may, upon at least 10 Business Days' notice to the Agents,
terminate in whole or reduce in part, ratably between the Blue Ridge Group and
the Blue Keel
2
Group in accordance with their respective Percentages (and within each Group,
ratably among the Liquidity Banks that are members thereof in accordance with
their respective Ratable Shares), the unused portion of the Purchase Limit;
provided that each partial reduction of the Purchase Limit shall be in an
aggregate amount at least equal to $10,000,000 and any larger integral multiple
of $1,000,000, and provided further that in no event shall the Purchase Limit be
reduced to less than $75,000,000.
Section 1.2 Increases. Seller shall provide each of the Co-Agents with at
---------
least two (2) Business Days' prior notice in a form set forth as Exhibit II
hereto of each Incremental Purchase (a "Purchase Notice"). Each Purchase Notice
shall be subject to Section 6.2 hereof and, except as set forth below, shall be
irrevocable and shall specify the requested Purchase Price (which shall not be
less than $3,000,000 in the aggregate, or less than $1,000,000 for any Conduit),
the date of purchase and, in the case of an Incremental Purchase to be funded by
either Conduit's Liquidity Banks, the requested Discount Rate and Tranche
Period; provided, however, that not more than 4 Aggregate Changes may be made in
any calendar month. Following receipt of a Purchase Notice, each Co-Agent will
determine whether its Conduit agrees to make its the purchase. If either Conduit
declines to make a proposed purchase, the Incremental Purchase of that Conduit's
Percentage of such Receivable Interest will be made by such Conduit's Liquidity
Banks. On the date of each Incremental Purchase, subject to prior satisfaction
of the applicable conditions precedent set forth in Article VI, each of the
Conduits or its Liquidity Banks, as applicable, shall initiate the wire to the
Facility Account, in immediately available funds, no later than 3:00 p.m. (New
York time), an amount equal to (i) in the case of a Conduit, its Percentage of
the Purchase Price of the Receivable Interest then being purchased or (ii) in
the case of a Liquidity Bank, such Liquidity Bank's Ratable Share of its
Conduit's Percentage of the Purchase Price of the Receivable Interest then being
purchased.
Section 1.3 Decreases. Seller shall provide each of the Co-Agents with
---------
prior written notice in conformity with the Required Notice Period (each, a
"Reduction Notice") of any proposed reduction of Aggregate Invested Amount. Such
Reduction Notice shall designate (i) the date (the "Proposed Reduction Date")
upon which any such reduction of Aggregate Invested Amount shall occur (which
date shall give effect to the applicable Required Notice Period), (ii) the
amount of Aggregate Invested Amount to be reduced (the "Aggregate Reduction"),
(iii) each Group's Percentage of such Aggregate Reduction, which shall be
applied ratably to the Receivable Interests of the related Conduit and Liquidity
Banks in such Group in accordance with the amount of Invested Amount (if any)
owing to such Conduit, on the one hand, and the amount of Invested Amount (if
any) owing to such Liquidity Banks (ratably, based on their respective Ratable
Shares), on the other hand. Only one (1) Reduction Notice shall be outstanding
at any time and no more than 4 Aggregate Changes may be made in any calendar
month. Notwithstanding compliance with the foregoing notice requirements, if any
Aggregate Reduction of Blue Keel's Invested Amount occurs (i) on a date other
than a Settlement Date, or (ii) on a Settlement Date in an amount in excess of
33% of Blue Keel's Invested Amount as of the end of the prior month, Seller
shall pay any resulting Broken Funding Costs, or any component thereof,
associated therewith upon demand.
Section 1.4 Payment Requirements. All amounts to be paid or deposited by
--------------------
any Seller Party pursuant to any provision of this Agreement shall be paid or
deposited in accordance with the terms hereof no later than 11:00 a.m. (New York
time) on the day when due in immediately
3
available funds, and if not received before 11:00 a.m. (New York time) shall be
deemed to be received on the next succeeding Business Day. If such amounts are
payable to the Blue Keel Agent or to a member of the Blue Keel Group, they shall
be paid to account no. ▇▇▇▇▇▇▇▇▇▇ at Fleet National Bank, in Boston, MA, ABA No.
011 000 138 until otherwise notified by the Blue Keel Agent (the "Blue Keel
Group Account"). If such amounts are payable to the Blue Ridge Agent, the
Collateral Agent, or to a member of the Blue Ridge Group, they shall be paid to
account no. 8735-098787 at Wachovia Bank, National Association, in
Winston-Salem, North Carolina, ABA No. ▇▇▇▇▇▇▇▇▇ until otherwise notified by the
Blue Ridge Agent or the Collateral Agent (the "Blue Ridge Group Account"). All
computations of Yield, per annum fees calculated as part of any CP Costs, per
annum fees hereunder and per annum fees under the Fee Letters shall be made on
the basis of a year of 360 days for the actual number of days elapsed. If any
amount hereunder shall be payable on a day which is not a Business Day, such
amount shall be payable on the next succeeding Business Day.
ARTICLE II.
PAYMENTS AND COLLECTIONS
Section 2.1 Payments. Notwithstanding any limitation on recourse contained
--------
in this Agreement, Seller shall immediately pay to each of the Co-Agents when
due, for the account of the relevant Purchaser or Purchasers in its Group, on a
full recourse basis, all of the following (collectively, the "Obligations"):
(i) such fees as set forth in the Fee Letters (which fees shall be
sufficient to pay all fees owing to each Conduit's Liquidity Banks),
(ii) all CP Costs,
(iii) all amounts payable as Yield,
(iv) all amounts payable as Deemed Collections (which shall be
immediately due and payable by Seller and applied to reduce outstanding
Aggregate Invested Amount hereunder in accordance with Sections 2.2 and 2.3
hereof),
(v) all amounts required pursuant to Section 2.6,
(vi) all amounts payable pursuant to Article X, if any,
---------
(vii) all Servicer costs and expenses, including the Servicing Fee, in
connection with servicing, administering and collecting the Receivables,
such amounts to be paid to the Servicer on behalf of the Purchasers,
(viii) all Broken Funding Costs (which shall be immediately due and
payable by Seller upon the occurrence of any Aggregate Reduction giving
rise thereto), and
(ix) all Default Fees (which shall be immediately due and payable by
Seller upon demand).
4
If Seller fails to pay any of the Obligations when due, Seller agrees to pay, on
demand, the Default Fee in respect thereof until paid. Notwithstanding the
foregoing, no provision of this Agreement or the Fee Letters shall require the
payment or permit the collection of any amounts hereunder in excess of the
maximum permitted by applicable law. If at any ▇▇▇▇ ▇▇▇▇▇▇ receives any
Collections or is deemed to receive any Collections, Seller shall immediately
notify the Servicer thereof and direct the Servicer to apply such Collections or
deemed Collections in accordance with the terms and conditions hereof and, at
all times prior to such application, such Collections or Deemed Collections
shall be held in trust by Seller for the exclusive benefit of the Purchasers and
the Agents.
Section 2.2 Collections Prior to Amortization. Prior to the Amortization
---------------------------------
Date, on each day, any Collections and/or Deemed Collections received by the
Seller (net of Estimated Daily Sales Taxes Receivable) shall be set aside and
held in trust by the Servicer for the payment of any accrued and unpaid
Aggregate Unpaids or for a Reinvestment as provided in this Section 2.2. If at
any time any Collections are received by the Seller prior to the Amortization
Date, Seller hereby requests and the Purchasers hereby agree to make,
simultaneously with such receipt, a reinvestment (each, a "Reinvestment") with
that portion of the balance of each and every Collection received by the Seller
that is part of any Receivable Interest, such that after giving effect to such
Reinvestment, the Invested Amount of such Receivable Interest immediately after
such receipt and corresponding Reinvestment shall be equal to the amount of
Invested Amount immediately prior to such receipt. On each Settlement Date prior
to the occurrence of the Amortization Date, the Servicer shall remit to the Blue
Ridge Group's Account and the Blue Keel Group's Account each Group's respective
Percentage of the amounts set aside during the preceding Settlement Period that
have not been subject to a Reinvestment and apply such amounts (if not
previously paid in accordance with Section 2.1) to reduce unpaid Obligations.
Once such Obligations shall be reduced to zero, any additional Collections
received by the Servicer (i) if applicable, shall be remitted to the Blue Ridge
Group's Account and the Blue Keel Group's Account no later than 11:00 a.m. (New
York time) to the extent required to fund the Groups' respective Percentages of
any Aggregate Reduction on such Settlement Date and (ii) any balance remaining
thereafter shall be remitted from the Servicer to Seller on such Settlement
Date.
Section 2.3 Collections Following Amortization. On the Amortization Date
----------------------------------
and on each day thereafter, the Servicer shall set aside and hold in trust, for
the holders of each Receivable Interest, all Collections received on such day
(net of Estimated Daily Sales Taxes Receivable) and an additional amount for the
payment of any accrued and unpaid Obligations owed by Seller and not previously
paid by Seller in accordance with Section 2.1. On and after the Amortization
Date, the Servicer shall, at any time upon the request from time to time by (or
pursuant to standing instructions from) any Agent, but in any event on each
Settlement Date, after deduction of the Servicing Fee, (i) remit to the Blue
Ridge Group's Account and the Blue Keel Group's Account the Groups' respective
Percentages of the amounts set aside pursuant to the preceding sentence, and
(ii) apply such amounts to reduce the applicable Group's Invested Amount
associated with each such Receivable Interest and any other Aggregate Unpaids.
Section 2.4 Application of Collections. If there shall be insufficient
--------------------------
funds on deposit for the Servicer to distribute funds in payment in full of the
aforementioned amounts pursuant to Section 2.2 or 2.3 (as applicable), the
Servicer shall distribute funds:
5
first, to the payment of the Servicer's reasonable out-of-pocket costs
and expenses in connection with servicing, administering and collecting the
Receivables , including the Servicing Fee, if Seller or one of its
Affiliates is not then acting as the Servicer,
second, to the reimbursement of the Collateral Agent's costs of
collection and enforcement of this Agreement,
third, ratably to the payment of all accrued and unpaid fees under the
Fee Letters, CP Costs and Yield,
fourth, (to the extent applicable) to the ratable reduction of the
Aggregate Invested Amount,
fifth, for the ratable payment of all other unpaid Obligations,
provided that to the extent such Obligations relate to the payment of
Servicer costs and expenses, including the Servicing Fee, when Seller or
one of its Affiliates is acting as the Servicer, such costs and expenses
will not be paid until after the payment in full of all other Obligations,
and
sixth, after the Aggregate Unpaids have been indefeasibly reduced to
zero, to Seller.
Collections applied to the payment of Aggregate Unpaids shall be distributed in
accordance with the aforementioned provisions, and, giving effect to each of the
priorities set forth above in this Section 2.4, shall be shared ratably (within
each priority) among the Agents and the Purchasers in accordance with the amount
of such Aggregate Unpaids owing to each of them in respect of each such
priority.
Section 2.5 Payment Rescission. No payment of any of the Aggregate Unpaids
------------------
shall be considered paid or applied hereunder to the extent that, at any time,
all or any portion of such payment or application is rescinded by application of
law or judicial authority, or must otherwise be returned or refunded for any
reason. Seller shall remain obligated for the amount of any payment or
application so rescinded, returned or refunded, and shall promptly pay to the
applicable Co-Agent (for application to the Person or Persons who suffered such
rescission, return or refund) the full amount thereof, plus the Default Fee from
the date of any such rescission, return or refunding.
Section 2.6 Maximum Receivable Interests. Seller shall ensure that the
----------------------------
Receivable Interests of the Purchasers shall at no time exceed in the aggregate
100%. If the aggregate of the Receivable Interests of the Purchasers exceeds
100%, Seller shall pay to each of the Co-Agents within one (1) Business Day its
respective Percentage of an amount to be applied to reduce the Aggregate
Invested Amount outstanding from the members of its Group (as allocated by such
Co-Agent), such that after giving effect to such payment, the aggregate of the
Receivable Interests equals or is less than 100%.
Section 2.7 Clean Up Call. In addition to Seller's rights pursuant to
-------------
Section 1.3, Seller shall have the right (after providing written notice to the
Agents in accordance with the Required Notice Period), on any Settlement Date
following the reduction of the Aggregate Invested Amount to a level that is less
than 10.0% of the original Purchase Limit, to repurchase from the
6
Purchasers all, but not less than all, of the then outstanding Receivable
Interests. The purchase price in respect thereof shall be an amount equal to the
Aggregate Unpaids through the date of such repurchase, payable in immediately
available funds. Such repurchase shall be without representation, warranty or
recourse of any kind by, on the part of, or against any Purchaser or any Agent.
ARTICLE III.
CONDUIT FUNDING
Section 3.1 CP Costs. Seller shall pay CP Costs with respect to the
--------
Invested Amount associated with each Receivable Interest of a Conduit for each
day that any Invested Amount in respect of such Receivable Interest is
outstanding. Each Receivable Interest of Blue Ridge funded substantially with
Pooled Commercial Paper will accrue CP Costs each day on a pro rata basis, based
upon the percentage share the Invested Amount in respect of such Receivable
Interest represents in relation to all assets held by Blue Ridge and funded
substantially with related Pooled Commercial Paper
Section 3.2 CP Costs Payments. On each Settlement Date, Seller shall pay to
-----------------
each of the Co-Agents (for the benefit of its Conduit) an aggregate amount equal
to all accrued and unpaid CP Costs in respect of the Invested Amount associated
with all Receivable Interests of such Conduit for the immediately preceding
Accrual Period in accordance with Article II.
Section 3.3 Calculation of CP Costs. Not later than the 3rd Business Day
-----------------------
after each Accrual Period, each Co-Agent shall calculate the aggregate amount of
CP Costs allocated to the Invested Amount of its Conduit's Receivable Interests
for the applicable Accrual Period and shall notify Seller of such aggregate
amount. Such calculation shall represent actual CP Costs for the Accrual Period
then most recently ended in the case of Blue Ridge and shall represent a good
faith estimate of CP Costs for the current Accrual Period in the case of Blue
Keel. In light of Blue Keel's Accrual Periods, in performing such calculation,
the Blue Keel Agent may assume that there will be no change in its cost of funds
between the date of such calculation and the day preceding the upcoming
Settlement Date and, if any change does, in fact, occur, Blue Keel shall credit
Seller on the next succeeding Settlement Date with any overpayment resulting
from a decrease in Blue Keel's actual cost of funds, and Seller shall pay Blue
Keel on the next succeeding Settlement Date any deficiency from the preceding
Accrual Period resulting from any increase in Blue Keel's actual cost of funds.
ARTICLE IV.
LIQUIDITY BANK FUNDING
Section 4.1 Liquidity Bank Funding. Each Receivable Interest of either
----------------------
Conduit's Liquidity Banks shall accrue Yield for each day during its Tranche
Period at either the LIBO Rate or the Prime Rate in accordance with the terms
and conditions hereof. Until Seller gives notice to the applicable Co-Agent of
another Discount Rate in accordance with Section 4.4, the initial Discount Rate
for any Receivable Interest transferred by a Conduit to its Liquidity Banks
7
pursuant to the terms and conditions of its Liquidity Agreement, or funded by
the Liquidity Banks pursuant to this Agreement, shall be the Prime Rate. If
either Conduit's Liquidity Banks acquire by assignment from such Conduit any
Receivable Interest pursuant to the applicable Liquidity Agreement, each
Receivable Interest so assigned shall each be deemed to have a new Tranche
Period commencing on the date of any such assignment.
Section 4.2 Yield Payments. On the Settlement Date for each Receivable
--------------
Interest of a Conduit's Liquidity Banks, Seller shall pay to the applicable
Co-Agent (for the ratable benefit of the Liquidity Banks in its Group) an
aggregate amount equal to the accrued and unpaid Yield for the entire Tranche
Period of each such Receivable Interest in accordance with Article II.
Section 4.3 Selection and Continuation of Tranche Periods.
----------------------------------------------
(a) With consultation from (and approval by) the applicable Co-Agent,
Seller shall from time to time request Tranche Periods for the Receivable
Interests of the Liquidity Banks in such Co-Agent's Group, provided that if at
any time such Liquidity Banks shall have a Receivable Interest, Seller shall
always request Tranche Periods such that at least one Tranche Period shall end
on the date specified in clause (A) of the definition of Settlement Date.
(b) Seller or the applicable Co-Agent, upon notice to and consent by
the other received at least three (3) Business Days prior to the end of a
Tranche Period (the "Terminating Tranche") for any Receivable Interest, may,
effective on the last day of the Terminating Tranche: (i) divide any such
Receivable Interest into multiple Receivable Interests, (ii) combine any such
Receivable Interest with one or more other Receivable Interests that have a
Terminating Tranche ending on the same day as such Terminating Tranche or (iii)
combine any such Receivable Interest with a new Receivable Interest to be
purchased on the day such Terminating Tranche ends, provided that in no event
may a Receivable Interest of a Conduit be combined with a Receivable Interest of
its Liquidity Banks.
Section 4.4 Liquidity Bank Discount Rates. Seller may select the LIBO Rate
-----------------------------
or the Prime Rate for each Receivable Interest of either Conduit's Liquidity
Banks. Seller shall by 12:00 p.m. (New York time): (i) at least three (3)
Business Days prior to the expiration of any Terminating Tranche with respect to
which the LIBO Rate is being requested as a new Discount Rate and (ii) at least
one (1) Business Day prior to the expiration of any Terminating Tranche with
respect to which the Prime Rate is being requested as a new Discount Rate, give
the applicable Co-Agent irrevocable notice of the new Discount Rate for the
Receivable Interest associated with such Terminating Tranche. Until Seller gives
notice to the applicable Co-Agent of another Discount Rate, the initial Discount
Rate for any Receivable Interest transferred to the Liquidity Banks in its Group
pursuant to the terms and conditions of the applicable Liquidity Agreement shall
be the Prime Rate.
Section 4.5 Suspension of the LIBO Rate
---------------------------
(a) If any Liquidity Bank notifies the applicable Co-Agent that it has
determined that funding its Ratable Share of the Receivable Interests of the
Liquidity Banks in its Group at a LIBO Rate would violate any applicable law,
rule, regulation, or directive of any governmental or regulatory authority,
whether or not having the force of law, or that (i) deposits
8
of a type and maturity appropriate to match fund its Receivable Interests at
such LIBO Rate are not available or (ii) such LIBO Rate does not accurately
reflect the cost of acquiring or maintaining a Receivable Interest at such LIBO
Rate, then such Co-Agent shall suspend the availability of such LIBO Rate for
its Group and require Seller to select the Prime Rate for any Receivable
Interest of its Group funded by its Liquidity Banks.
(b) If less than all of the Liquidity Banks in a Group give a notice
to their applicable Co-Agent pursuant to Section 4.5(a), each Liquidity Bank
which gave such a notice shall be obliged, at the request of Seller, the
applicable Conduit or the applicable Co-Agent, to assign all of its rights and
obligations hereunder to (i) another Liquidity Bank or (ii) another funding
entity nominated by Seller or such Co-Agent that is acceptable to the applicable
Conduit and willing to participate in this Agreement through the Scheduled
Termination Date in the place of such notifying Liquidity Bank; provided that
(i) the notifying Liquidity Bank receives payment in full, pursuant to an
Assignment Agreement, of an amount equal to such notifying Liquidity Bank's
Ratable Share of the Invested Amount and owing to all of the Liquidity Banks in
its Group and all accrued but unpaid fees and other costs and expenses payable
in respect of its Ratable Share of the Receivable Interests of such Liquidity
Banks, and (ii) the replacement Liquidity Bank otherwise satisfies the
requirements of Section 12.1(b).
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Seller Parties. Each
----------------------------------------------------
Seller Party hereby represents and warrants to the Agents and the Purchasers, as
to itself, as of the date hereof and as of the date of each Incremental Purchase
and the date of each Reinvestment that:
(a) Existence and Power. Such Seller Party is duly organized, validly
-------------------
existing and in good standing under the laws of its state of organization. Such
Seller Party is duly qualified to do business and is in good standing as a
foreign corporation, and has and holds all corporate power and all governmental
licenses, authorizations, consents and approvals required to carry on its
business in each jurisdiction in which its business is conducted except where
the failure to so qualify or so hold would have a Material Adverse Effect on
such Seller Party or the Receivables.
(b) Power and Authority; Due Authorization, Execution and Delivery.
--------------------------------------------------------------
The execution and delivery by such Seller Party of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, in the case of Seller, Seller's use of
the proceeds of purchases made hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary corporate action on its
part. This Agreement and each other Transaction Document to which such Seller
Party is a party has been duly executed and delivered by such Seller Party.
(c) No Conflict. The execution and delivery by such Seller Party of
-----------
this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate or articles of incorporation or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions
9
under any agreement, contract or instrument to which it is a party or by which
it or any of its property is bound, or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting it or its property except, in any
case described in the foregoing clauses (ii), (iii) and (iv), where such
contravention or violation could not reasonably be expected to have a Material
Adverse Effect, and do not result in the creation or imposition of any Adverse
Claim on assets of such Seller Party or its Subsidiaries (except as created
hereunder); and no transaction contemplated hereby requires compliance with any
bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the financing
--------------------------
statements required hereunder, no authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution and delivery by such Seller Party of this
Agreement and each other Transaction Document to which it is a party and the
performance of its obligations hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings
--------------
pending, or to the best of such Originator's knowledge, threatened, against or
affecting such Seller Party, or any of its properties, in or before any court,
arbitrator or other body, that, if adversely determined, would have a Material
Adverse Effect on such Seller Party or the Receivables. Such Seller Party is not
in default with respect to any order of any court, arbitrator or governmental
body.
(f) Binding Effect. This Agreement and each other Transaction Document
--------------
to which such Seller Party is a party constitute the legal, valid and binding
obligations of such Seller Party enforceable against such Seller Party in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by
-----------------------
such Seller Party or any of its Affiliates to any of the Agents or the
Purchasers for purposes of or in connection with this Agreement, any of the
other Transaction Documents or any transaction contemplated hereby or thereby
is, and all such information hereafter furnished by such Seller Party or any of
its Affiliates to any of the Agents or the Purchasers will be, true and accurate
in every material respect on the date such information is stated or certified
(or, if such information specifies another date, such other date) and does not
and will not contain any material misstatement of fact or omit to state a
material fact or any fact necessary to make the statements contained therein not
misleading.
(h) Use of Proceeds. No use of the proceeds of any purchase hereunder
---------------
will violate or result in a violation of the Securities Act of 1933, as amended,
or the regulations issued pursuant thereto, or the Securities Exchange Act of
1934, as amended, or the regulations issued pursuant thereto, or Regulation T, U
or X promulgated by the Board of Governors of the Federal Reserve System. Seller
will not use the proceeds of any purchase hereunder to purchase or carry "Margin
Stock" with the meaning of Regulation U promulgated by the Board of Governors of
the Federal Reserve System.
(i) Good Title. Except with respect to the Purchased Receivables (as
----------
defined in the recitals of the Receivables Sale Agreement) and associated
Related Security on each of
10
which all Adverse Claims will be extinguished concurrently with the initial
purchase under the Receivables Sale Agreement, Seller shall be the legal and
beneficial owner of the Receivables and Related Security with respect thereto,
free and clear of any Adverse Claim, except as created by the Transaction
Documents. There have been duly filed all financing statements or other similar
instruments or documents necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect Seller's ownership interest in each
Receivable, the Collections and the Related Security.
(j) Perfection. This Agreement, together with the filing of the
----------
financing statements contemplated hereby, is effective to, and shall, upon each
purchase hereunder, transfer to the Collateral Agent for the benefit of the
relevant Purchaser or Purchasers (and the Collateral Agent for the benefit of
such Purchaser or Purchasers shall acquire from Seller) a valid and perfected
first priority undivided percentage ownership or security interest in each
Receivable existing or hereafter arising and in the Related Security and
Collections with respect thereto, free and clear of any Adverse Claim, except as
created by the Transactions Documents. There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect the Collateral
Agent's (on behalf of the Purchasers) ownership or security interest in the
Receivables, the Related Security and the Collections.
(k) Places of Business and Locations of Records. Seller's state of
-------------------------------------------
organization and chief executive office and the offices where it or the Servicer
keeps all of the Records are located at the address(es) listed on Exhibit III or
such other locations of which the Agents have been notified in accordance with
Section 7.2(a) in jurisdictions where all action required by Section 13.4(a) has
been taken and completed. Seller's Federal Employer Identification Number and
Organizational Identification Number are correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in Section
-----------
7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The
names and addresses of all Collection Banks, together with the account numbers
of the Collection Accounts of Seller at each Collection Bank and the post office
box number of each Lock-Box, are listed on Exhibit IV. Seller has not granted
any Person, other than the Collateral Agent as contemplated by this Agreement,
dominion and control of any Lock-Box or Collection Account, or the right to take
dominion and control of any such Lock-Box or Collection Account at a future time
or upon the occurrence of a future event.
(m) Material Adverse Effect. Each Seller Party represents and warrants
-----------------------
that since December 31, 2001, no event has occurred that would have a Material
Adverse Effect.
(n) Names. In the past five (5) years, Seller has not used any
-----
corporate names, trade names or assumed names other than the name in which it
has executed this Agreement.
(o) Ownership of Seller. Parent and ▇▇▇▇▇ & Minor Distribution, Inc.,
-------------------
collectively, own, directly or indirectly, 100% of the issued and outstanding
capital stock of all classes of Seller, free and clear of any Adverse Claim.
Such capital stock is validly issued, fully
11
paid and nonassessable, and there are no options, warrants or other rights to
acquire securities of Seller.
(p) Not a Holding Company or an Investment Company. Such Seller Party
----------------------------------------------
is not a "holding company" or a "subsidiary holding company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or any successor statute. Such Seller Party is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or any successor statute.
(q) Compliance with Law. Such Seller Party has complied in all
-------------------
respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply would not have a Material Adverse Effect on such Seller
Party or the Receivables. Each Receivable, together with the Contract related
thereto, does not contravene any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and regulations relating to truth in
lending, fair credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy), and no part of such Contract is in
violation of any such law, rule or regulation, except where such contravention
or violation could not reasonably be expected to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Seller Party
--------------------------------------------
has complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any
material change to such Credit and Collection Policy, except such material
change as to which the Agents have been notified in accordance with Section
7.1(a)(vii).
(s) Payments to Applicable Originator. With respect to each Receivable
---------------------------------
transferred to Seller under the Receivables Sale Agreement, Seller has given
reasonably equivalent value to the applicable Originator in consideration
therefor and such transfer was not made for or on account of an antecedent debt.
No transfer by any Originator of any Receivable under the Receivables Sale
Agreement is or may be voidable under any section of the Bankruptcy Reform Act
of 1978 (11 U.S.C.(S)(S)101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each
---------------------------
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net Pool
--------------------
Balance as an Eligible Receivable on the date of its purchase under the
Receivables Sale Agreement was an Eligible Receivable on such purchase date.
(v) Net Pool Balance. Seller has determined that, immediately after
----------------
giving effect to each purchase hereunder, the Net Pool Balance is at least equal
to the sum of (i) the Aggregate Invested Amount, plus (ii) the Required
Reserves.
12
(w) Accounting. Such Seller Party accounts for the transactions
----------
contemplated by the Sale Agreement on its books and records and, for purposes of
generally accepted accounting principles, as sales in accordance with SFAS 140.
Section 5.2 Liquidity Bank Representations and Warranties.
--------------------------------------------- -
Each Liquidity Bank hereby represents and warrants to the applicable
Co-Agent and the applicable Conduit that:
(a) Existence and Power. Such Liquidity Bank is a corporation or a
-------------------
banking association duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation or organization, and has all
corporate power to perform its obligations hereunder.
(b) No Conflict. The execution and delivery by such Liquidity Bank of
-----------
this Agreement and the performance of its obligations hereunder are within its
corporate powers, have been duly authorized by all necessary corporate action,
do not contravene or violate (i) its certificate or articles of incorporation or
association or by-laws, (ii) any law, rule or regulation applicable to it, (iii)
any restrictions under any agreement, contract or instrument to which it is a
party or any of its property is bound, or (iv) any order, writ, judgment, award,
injunction or decree binding on or affecting it or its property, except where
such contravention or violation could not reasonably be expected to have a
material adverse effect on its ability to perform its obligations hereunder; and
do not result in the creation or imposition of any Adverse Claim on its assets.
This Agreement has been duly authorized, executed and delivered by such
Liquidity Bank.
(c) Governmental Authorization. No authorization or approval or other
--------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by such Liquidity
Bank of this Agreement and the performance of its obligations hereunder.
(d) Binding Effect. This Agreement constitutes the legal, valid and
--------------
binding obligation of such Liquidity Bank enforceable against such Liquidity
Bank in accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors' rights generally and by general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law).
ARTICLE VI.
CONDITIONS OF PURCHASES
Section 6.1 Conditions Precedent to Initial Incremental Purchase. The
----------------------------------------------------
initial Incremental Purchase of a Receivable Interest under this Agreement is
subject to the conditions precedent that (a) the Collateral Agent shall have
received on or before the date of such purchase those documents listed on
Schedule B, and (b) each of the Agents shall have received all fees and
13
expenses required to be paid on such date pursuant to the terms of this
Agreement and the applicable Fee Letter.
Section 6.2 Conditions Precedent to All Purchases and Reinvestments. Each
-------------------------------------------------------
Incremental Purchase of a Receivable Interest and each Reinvestment shall be
subject to the further conditions precedent that (a) in the case of each such
Incremental Purchase or Reinvestment: (i) the Servicer shall have delivered to
the Co-Agents on or prior to the date of such purchase, in form and substance
satisfactory to each of the Co-Agents, all Settlement Reports or Interim
Settlement Reports as and when due under Section 8.5 and (ii) upon either
Co-Agent's request, the Servicer shall have delivered to the Co-Agents at least
three (3) days prior to such Incremental Purchase or Reinvestment an interim
Settlement Report showing the amount of Eligible Receivables; (b) the Facility
Termination Date shall not have occurred; (c) the Agents shall have received
such other approvals, opinions or documents as any of them may reasonably
request and (d) on the date of each such Incremental Purchase or Reinvestment
and after giving effect thereto, the following statements shall be true (and
acceptance of the proceeds of such Incremental Purchase or Reinvestment shall be
deemed a representation and warranty by Seller that such statements are then
true):
(i) the representations and warranties set forth in Section 5.1
are true and correct on and as of the date of such Incremental Purchase or
Reinvestment as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result
from such Incremental Purchase or Reinvestment, that will constitute an
Amortization Event, and no event has occurred and is continuing, or would result
from such Incremental Purchase or Reinvestment, that would constitute a
Potential Amortization Event; and
(iii) the Aggregate Invested Amount does not exceed the Purchase
Limit and the aggregate Receivable Interests do not exceed 100%.
It is expressly understood that each Reinvestment shall, unless otherwise
directed by any Agent or Purchaser, occur automatically on each day that the
Servicer shall receive any Collections without the requirement that any further
action be taken on the part of any Person and notwithstanding the failure of
Seller to satisfy any of the foregoing conditions precedent in respect of such
Reinvestment. The failure of Seller to satisfy any of the foregoing conditions
precedent in respect of any Reinvestment shall give rise to a right of each
Co-Agent, which right may be exercised at any time on demand of such Co-Agent,
to rescind the related purchase and direct Seller to pay to the Co-Agents for
the benefit of the Purchasers in their respective Group's their respective
Percentages of the Collections prior to the Amortization Date that shall have
been applied to the affected Reinvestment.
14
ARTICLE VII.
COVENANTS
Section 7.1 Affirmative Covenants of the Seller Parties. Until the date on
-------------------------------------------
which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, as set forth below:
(a) Financial Reporting. Such Seller Party will maintain, for itself
-------------------
and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, and furnish or cause to be furnished to
the Agents:
(i) Annual Reporting. As soon as available and in any event
----------------
within 90 days after the close of each fiscal year of the Parent, a consolidated
balance sheet of the Parent and its Subsidiaries as at the end of such fiscal
year, together with related consolidated statements of income and of cash flows
for such fiscal year, setting forth in comparative form consolidated figures for
the preceding fiscal year, all in reasonable detail and examined by KPMG LLP or
other independent certified public accountants of recognized national standing
reasonably acceptable to each of the Agents and whose opinion shall be to the
effect that such consolidated financial statements have been prepared in
accordance with GAAP applied on a consistent basis (except for changes with
which such accountants concur), together with an unaudited annual balance sheet
and income statement for the Seller.
(ii) Quarterly Reporting. As soon as available and in any event
-------------------
within 45 days after the close of each fiscal quarter of the Parent: (i) a
consolidated balance sheet of the Parent and its Subsidiaries as at the end of
such fiscal quarter, together with related consolidated statements of income and
of cash flows, (ii) a condensed consolidating balance sheet of the Parent and
its Subsidiaries as at the end of such fiscal quarter, together with related
condensed consolidating statements of operations and of cash flows, in each case
for such fiscal quarter and for the portion of the fiscal year ending with such
period (except that the consolidated and condensed consolidating statements of
cash flows which shall be prepared on a year to date basis) and in each case
setting forth in comparative form consolidated figures for the corresponding
period of the preceding fiscal year (except the consolidated and condensed
consolidating balance sheets shall be compared to the prior year end), and all
in reasonable form and detail acceptable to the Agents, together with an
unaudited balance sheet and income statement for the Seller for the calendar
year to date.
(iii) Compliance Certificate. Together with the financial
----------------------
statements required hereunder, a compliance certificate in substantially the
form of Exhibit V signed by such Seller Party's Authorized Officer and dated the
date of such annual financial statement or such quarterly financial statement,
as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
-----------------------------------
furnishing thereof to the shareholders of such Seller Party copies of all
financial statements, reports and proxy statements so furnished.
15
(v) Copies of Notices. Promptly upon its receipt of any notice,
-----------------
request for consent, financial statements, certification, report or other
communication under or in connection with any Transaction Document from any
Person other than the Agents or Conduits, copies of the same.
(vi) Change in Credit and Collection Policy. At least ten (10)
--------------------------------------
days prior to the effectiveness of any material change in or material amendment
to the Credit and Collection Policy, a copy of the Credit and Collection Policy
then in effect and a notice (A) indicating such change or amendment, and (B) if
such proposed change or amendment would materially and adversely affect the
collectibility of the Receivables or materially decrease the credit quality of
any newly created Receivables, requesting the Agents' consent thereto; provided,
--------
however, the Agents agree not to unreasonably withhold or delay giving their
-------
consent and further the Agents shall use reasonable efforts to respond regarding
any proposed change or amendment to the Credit and Collection Policy within ten
(10) days from the receipt of such notice.
(vii) Other Information. Promptly, from time to time, such other
-----------------
information, documents, records or reports relating to the Receivables or the
condition or operations, financial or otherwise, of such Seller Party as any of
the Agents may from time to time reasonably request in order to protect the
interests of the Agents and the Purchasers under or as contemplated by this
Agreement.
(b) Notices. Servicer will notify the Agents in writing of any of the
-------
following promptly (but in any event within three (3) Business Days) upon
learning of the occurrence thereof, describing the same and, if applicable, the
steps being taken with respect thereto:
(i) Amortization Events or Potential Amortization Events. The
----------------------------------------------------
occurrence of each Amortization Event and each Potential Amortization Event, by
a statement of an Authorized Officer of such Seller Party.
(ii) Judgment and Proceedings. (A) The institution of any
------------------------
litigation, arbitration proceeding or governmental proceeding against Servicer,
which, if adversely determined, would have a Material Adverse Effect on Servicer
or the Receivables serviced by it, or which seeks to enjoin performance of or
otherwise relates to the Transaction Documents, and (B) the entry of any
judgment or decree or the institution of any litigation, arbitration proceeding
or governmental proceeding against Seller.
(iii) Material Adverse Effect. The occurrence of any event or
-----------------------
condition that has had, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Termination Date. The occurrence of the "Termination Date"
----------------
under and as defined in the Receivables Sale Agreement.
(v) Downgrade of Performance Guarantor. Any downgrade in the
----------------------------------
rating of any Indebtedness of Performance Guarantor by Standard & Poor's Ratings
Group or by ▇▇▇▇▇'▇ Investors Service, Inc., setting forth the Indebtedness
affected and the nature of such change.
16
(c) Compliance with Laws and Preservation of Corporate Existence. Such
------------------------------------------------------------
Seller Party will comply in all material respects with all applicable laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject, except where the failure to so comply would not have a
Material Adverse Effect on such Seller Party or the Receivables. Such Seller
Party will preserve and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and remain
qualified in good standing as a foreign corporation in each jurisdiction where
its business is conducted, except where the failure to so preserve and maintain
or qualify would not have a Material Adverse Effect.
(d) Audits. Such Seller Party will provide access to the Agents from
------
time to time to such information with respect to it and the Receivables as any
of the Agents may reasonably request upon reasonable notice at the Servicer's
place of business during normal business hours. Such Seller Party will, from
time to time during regular business hours as requested by any of the Agents
upon reasonable notice (unless an Amortization Event has occurred and is
continuing in which case no notice shall be required) and at the sole cost of
such Seller Party, permit each of the Agents, or its agents or representatives
(and shall cause each Originator to permit each of the Agents or its agents or
representatives): (i) to examine and make abstracts from all Records in the
possession or under the control of such Person relating to the Receivables and
the Related Security, including, without limitation, the related Contracts;
provided, however, that the Agents may not make and retain copies of any
Contract, and (ii) to visit the offices and properties of such Person for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to such Person's financial condition or the Receivables
and the Related Security or any Person's performance under any of the
Transaction Documents or any Person's performance under the Contracts (subject
to confidentiality restrictions in the relevant Contracts) and, in each case,
with any of the officers or employees of Seller or the Servicer having knowledge
of such matters (each of the foregoing examinations and visits, a "Review");
provided, however, that, so long as no Amortization Event or Potential
Amortization Event has occurred, (A) the Seller Parties shall only be
responsible for the costs and expenses of one (1) Review in any one calendar
year and (B) the Agents will not request more than four (4) Reviews in any one
calendar year
(e) Keeping and Marking of Records and Books.
----------------------------------------
(i) The Servicer will (and will cause each Originator to)
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 prompt identification of each new Receivable and
all Collections of and adjustments to each existing Receivable); provided,
however, that nothing in this sentence shall require any Seller Party to retain
records for a period longer than seven (7) years after creation. The Servicer
will (and will cause each Originator to) give the Agents notice of any material
change in the administrative and operating procedures referred to in the
previous sentence.
(ii) Such Seller Party will (and will cause each Originator to)
(A) on or prior to the date hereof, ▇▇▇▇ its master data processing records and
other books and records
17
relating to the Receivable Interests with a legend, acceptable to the Agents,
describing the Receivable Interests and (B) upon the request of any of the
Agents following the occurrence of an Amortization Event which is not waived in
writing by the Agents: (x) ▇▇▇▇ each Contract, if any, constituting an
instrument, promissory note, chattel paper, document or certificated security
(each, as defined in the UCC) with a legend describing the Receivable Interests
and (y) deliver to the Collateral Agent all Contracts (including, without
limitation, all multiple originals of any such Contract) relating to the
Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Such
----------------------------------------------------------
Seller Party will (and the Parent will require each Originator to) timely and
fully (i) perform and comply in all material respects with all provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables, and (ii) comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related
Contract.
(g) Performance and Enforcement of Receivables Sale Agreement. Seller
---------------------------------------------------------
will, and will require each Originator to, perform each of their respective
obligations and undertakings under and pursuant to the Receivables Sale
Agreement, will purchase Receivables thereunder in strict compliance with the
terms thereof and shall take all action necessary or reasonably appropriate to
enforce the rights and remedies accorded to Seller under the Receivables Sale
Agreement. Seller will take all actions reasonably necessary to perfect and
enforce its rights and interests (and the rights and interests of the Agents and
the Purchasers as assignees of Seller) under the Receivables Sale Agreement as
any Agent may from time to time reasonably request, including, without
limitation, making claims to which it may be entitled under any indemnity,
reimbursement or similar provision contained in the Receivables Sale Agreement.
(h) Ownership. Seller will (or the Servicer will cause each Originator
---------
to) take all necessary action to (i) vest legal and equitable title to the
Receivables, the Related Security and the Collections purchased under the
Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse
Claims other than Adverse Claims in favor of the Collateral Agent and the
Purchasers (including, without limitation, the filing of all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect Seller's
interest in such Receivables, Related Security and Collections and such other
action to perfect, protect or more fully evidence the interest of Seller therein
as any Agent may reasonably request), and (ii) establish and maintain, in favor
of the Collateral Agent, for the benefit of the Purchasers, a valid and
perfected first priority undivided percentage ownership interest (and/or a valid
and perfected first priority security interest) in all Receivables, Related
Security and Collections to the full extent contemplated herein, free and clear
of any Adverse Claims other than Adverse Claims in favor of the Collateral Agent
for the benefit of the Purchasers (including, without limitation, the filing of
all financing statements or other similar instruments or documents necessary
under the UCC (or any comparable law) of all appropriate jurisdictions to
perfect the Collateral Agent's (for the benefit of the Purchasers) interest in
such Receivables, Related Security and Collections and such other action to
perfect, protect or more fully evidence the interest of the Collateral Agent for
the benefit of the Purchasers as any Agent may reasonably request).
18
(i) Purchasers' Reliance. Seller acknowledges that the Agents and the
--------------------
Purchasers are entering into the transactions contemplated by this Agreement in
reliance upon Seller's identity as a legal entity that is separate from each of
the Originators, the Performance Guarantor and their respective Affiliates other
than Seller (collectively, the "O&M Group"). Therefore, from and after the date
of execution and delivery of this Agreement, Seller shall take all reasonable
steps, including, without limitation, all steps that any Agent or Purchaser may
from time to time reasonably request, to maintain Seller's identity as a
separate legal entity and to make it manifest to third parties that Seller is an
entity with assets and liabilities distinct from those of the members of the O&M
Group thereof and not merely a division thereof. Without limiting the generality
of the foregoing and in addition to the other covenants set forth herein, Seller
will:
(A) conduct its own business in its own name and require
that all full-time employees of Seller, if any, identify themselves as such and
not as employees of any member of the O&M Group (including, without limitation,
by means of providing appropriate employees with business or identification
cards identifying such employees as Seller's employees);
(B) compensate all employees, consultants and agents
directly, from Seller's own funds, for services provided to Seller by such
employees, consultants and agents and, to the extent any employee, consultant or
agent of Seller is also an employee, consultant or agent of a member of the O&M
Group, allocate the compensation of such employee, consultant or agent between
Seller and the members of the O&M Group on a basis that reflects the services
rendered to Seller and the O&M Group;
(C) clearly identify its offices (by signage or otherwise)
as its offices and, if such office is located in the offices of a member of the
O&M Group, Seller shall lease such office at a fair market rent;
(D) have a separate telephone number, which will be answered
only in its name and separate stationery, invoices and checks in its own name;
(E) conduct all transactions with the members of the O&M
Group strictly on an arm's-length basis, allocate all overhead expenses
(including, without limitation, telephone and other utility charges) for items
shared between Seller and the O&M Group on the basis of actual use to the extent
practicable and, to the extent such allocation is not practicable, on a basis
reasonably related to actual use;
(F) at all times have a Board of Directors consisting of not
less than three members, at least one member of which is an Independent
Director;
(G) observe all corporate formalities as a distinct entity,
and ensure that all corporate actions relating to (A) the selection, maintenance
or replacement of the Independent Director, (B) the dissolution or liquidation
of Seller or (C) the initiation of, participation in, acquiescence in or consent
to any bankruptcy, insolvency, reorganization or similar proceeding involving
Seller, are duly authorized by unanimous vote of its Board of Directors
(including the Independent Director);
19
(H) maintain Seller's books and records separate from those
of the members of the O&M Group and otherwise readily identifiable as its own
assets rather than assets of a member of the O&M Group; (I) prepare its
financial statements separately from those of the O&M Group and insure that any
consolidated financial statements of the O&M Group (or any member thereof) that
include Seller and that are filed with the Securities and Exchange Commission or
any other governmental agency have notes clearly stating that Seller is a
separate legal entity and that its assets will be available first and foremost
to satisfy the claims of the creditors of Seller;
(J) except as herein specifically otherwise provided,
maintain the funds or other assets of Seller separate from, and not commingled
with, those of the members of the O&M Group and only maintain bank accounts or
other depository accounts to which Seller alone is the account party, into which
Seller alone makes deposits and from which Seller alone (or the Collateral Agent
hereunder) has the power to make withdrawals;
(K) pay all of Seller's operating expenses, if any, from
Seller's own assets (except for certain payments by a member of the O&M Group or
other Persons pursuant to allocation arrangements that comply with the
requirements of this Section 7.1(i));
(L) operate its business and activities such that: it does
not engage in any business or activity of any kind, or enter into any
transaction or indenture, mortgage, instrument, agreement, contract, lease or
other undertaking, other than the transactions contemplated and authorized by
this Agreement and the Receivables Sale Agreement; and does not create, incur,
guarantee, assume or suffer to exist any indebtedness or other liabilities,
whether direct or contingent, other than (1) as a result of the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business, (2) the incurrence of obligations under this
Agreement, (3) the incurrence of obligations, as expressly contemplated in the
Receivables Sale Agreement, to make payment to Originators thereunder for the
purchase of Receivables from Originators under the Receivables Sale Agreement,
and (4) the incurrence of operating expenses in the ordinary course of business
of the type otherwise contemplated by this Agreement;
(M) maintain its Organic Documents in conformity with this
Agreement, such that it does not amend, restate, supplement or otherwise modify
its Organic Documents in any respect that would impair its ability to comply
with the terms or provisions of any of the Transaction Documents, including,
without limitation, this Section 7.1(i);
(N) maintain the effectiveness of, and continue to perform
under the Receivables Sale Agreement and the Performance Undertaking, such that
it does not amend, restate, supplement, cancel, terminate or otherwise modify
the Receivables Sale Agreement or the Performance Undertaking, or give any
consent, waiver, directive or approval thereunder or waive any default, action,
omission or breach under the Receivables Sale Agreement or the Performance
Undertaking or otherwise grant any indulgence thereunder, without (in each case)
the prior written consent of each of the Agents;
20
(O) maintain its legal separateness such that it does not
merge or consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions, and
except as otherwise contemplated herein) all or substantially all of its assets
(whether now owned or hereafter acquired) to, or acquire all or substantially
all of the assets of, any Person, nor at any time create, have, acquire,
maintain or hold any interest in any Subsidiary;
(P) maintain at all times the Required Capital Amount (as
defined in the Receivables Sale Agreement) and refrain from making any dividend,
distribution, redemption of capital stock or payment of any subordinated
indebtedness which would cause the Required Capital Amount to cease to be so
maintained; and
(Q) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the opinion issued by Hunton
& ▇▇▇▇▇▇▇▇, as counsel for Seller, in connection with the closing or initial
Incremental Purchase under this Agreement and relating to substantive
consolidation and true sale issues, and in the certificates accompanying such
opinion, remain true and correct in all material respects at all times.
(j) Collections. Such Seller Party will cause (1) all proceeds from
-----------
all Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (2) each Lock-Box and Collection Account to be subject at all times
to a Collection Account Agreement that is in full force and effect; provided
--------
however, that with respect to each Existing Collection Account Agreement, such
-------
agreement shall have been assigned to the Collateral Agent on or prior to the
date hereof (in the case of each Existing Collection Account Agreement with
Wachovia Bank, National Association or Fleet National Bank), or shall be
replaced by a new Collection Account Agreement on or prior to the date thirty
(30) days after the date of this Agreement, and in the case of each Collection
Account Agreement assigned to the Collateral Agent on or before the date of this
Agreement, shall be replaced by a new Collection Account Agreement on or prior
to the date 90 days after the date of this Agreement. In the event any payments
relating to Receivables are remitted directly to Seller or any Affiliate of
Seller, Seller will remit (or will cause all such payments to be remitted)
directly to a Collection Bank and deposited into a Collection Account within two
(2) Business Days following receipt thereof, and, at all times prior to such
remittance, Seller will itself hold or, if applicable, will cause such payments
to be held in trust for the benefit of the Agents and the Purchasers to the
extent of the Receivable Interests or the Collateral Agent's security interest,
as the case may be. Seller will maintain exclusive ownership, dominion and
control (subject to the terms of this Agreement) of each Lock-Box and Collection
Account and shall not grant the right to take dominion and control of any
Lock-Box or Collection Account at a future time or upon the occurrence of a
future event to any Person, except to the Collateral Agent as contemplated by
this Agreement.
(k) Taxes. Such Seller Party will file all tax returns and reports
-----
required by law to be filed by it and will promptly pay all material taxes and
governmental charges at any time owing; provided, however, that no Seller Party
shall be required to pay any such taxes and governmental charges which are not
yet delinquent or are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books unless the failure to make any such payment (1)
shall give rise to an immediate right to foreclose on an Adverse Claim securing
such amounts, (2) shall result in
21
the attachment of an Adverse Claim on the Receivables, the Collections or the
Related Security, or (3) would have a Material Adverse Effect. As set forth in
Section 10.2, Seller will pay when due any taxes payable to Purchaser in
connection with the Receivables, exclusive of taxes excluded under Section 10.2.
(l) Payment to Originators. With respect to any Receivable purchased
----------------------
by Seller from an Originator, such sale shall be effected under, and in strict
compliance with the terms of, the Receivables Sale Agreement, including, without
limitation, the terms relating to the amount and timing of payments to be made
to such Originator in respect of the purchase price for such Receivable.
Section 7.2 Negative Covenants of the Seller Parties. Until the date on
----------------------------------------
which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, that:
(a) Name Change, Offices and Records. Seller will not change its name,
--------------------------------
identity or legal structure (within the meaning of Section 9-507(c) of any
applicable enactment of the UCC) or change its jurisdiction of organization or
organize in an additional jurisdiction or relocate its chief executive office or
any office where Records are kept unless it shall have: (i) given the Agents at
least forty-five (45) days' prior written notice thereof and (ii) delivered to
the Collateral Agent all financing statements, instruments and other documents
reasonably requested by any of the Agents in connection with such change or
relocation.
(b) Change in Payment Instructions to Obligors. Except as may be
------------------------------------------
required by the Collateral Agent pursuant to Section 8.2(b), such Seller Party
will not add or terminate any bank as a Collection Bank, or make any change in
the instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless the Agents shall have received, at least ten (10)
days before the proposed effective date therefor, (i) written notice of such
addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Account or Lock-Box;
provided, however, that the Servicer may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Collection Account.
(c) Modifications to Contracts and Credit and Collection Policy. Such
-----------------------------------------------------------
Seller Party will not, and will not permit any Originator to, make any change to
the Credit and Collection Policy that could materially and adversely affect the
collectibility of the Receivables or materially decrease the credit quality of
any newly created Receivables. Except as provided in Section 8.2(d), the
Servicer will not, and will not permit any Originator to, extend, amend or
otherwise modify the terms of any Receivable or any Contract related thereto
other than in accordance with the Credit and Collection Policy without the prior
consent of the Agents (which consent shall be given or denied within 10 days
after receipt by the Agents of written notice of such proposed change).
(d) Sales, Liens. Seller will not sell, assign (by operation of law or
------------
otherwise) or otherwise dispose of, or grant any option with respect to, or
create or suffer to exist any Adverse Claim upon (including, without limitation,
the filing of any financing statement) or with
22
respect to, any Receivable, Related Security or Collections, or upon or with
respect to any Contract under which any Receivable arises, or any Lock-Box or
Collection Account, or assign any right to receive income with respect thereto
(other than, in each case, the creation of the interests therein in favor of the
Collateral Agent and the Purchasers provided for herein), and Seller will defend
the right, title and interest of the Agents and the Purchasers in, to and under
any of the foregoing property, against all claims of third parties claiming
through or under Seller or any Originator.
(e) Net Pool Balance. At no time prior to the Amortization Date shall
----------------
Seller permit the Net Pool Balance to be less than an amount equal to the sum of
(i) the Aggregate Invested Amount plus (ii) the Required Reserves.
(f) Termination Date Determination. Seller will not designate the
------------------------------
Termination Date (as defined in the Receivables Sale Agreement), or send any
written notice to any Originator in respect thereof, without the prior written
consent of the Agents, except with respect to the occurrence of such Termination
Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(g) Restricted Junior Payments. From and after the occurrence of any
--------------------------
Amortization Event, Seller will not make any Restricted Junior Payment while any
Aggregate Unpaids remain outstanding.
(h) Seller Indebtedness. Seller will not incur or permit to exist any
-------------------
Indebtedness or liability on account of deposits except: (i) the Obligations,
(ii) the Subordinated Loans (as defined in the Receivables Sale Agreement), and
(iii) other current accounts payable arising in the ordinary course of business
and not overdue.
(i) Prohibition on Additional Negative Pledges. No Seller Party will
------------------------------------------
enter into or assume any agreement (other than this Agreement and the other
Transaction Documents) prohibiting the creation or assumption of any Adverse
Claim upon the Receivable, Collections, and Related Security except as
contemplated by the Transaction Documents, or otherwise prohibiting or
restricting any transaction contemplated hereby or by the other Transaction
Documents, and no Seller Party will enter into or assume any agreement creating
any Adverse Claim upon the Subordinated Notes (as defined in the Receivables
Sale Agreement) or on the stock of Seller.
ARTICLE VIII.
ADMINISTRATION AND COLLECTION
Section 8.1 Designation of Servicer.
-----------------------
(a) The servicing, administration and collection of the Receivables
shall be conducted by such Person (the "Servicer") so designated from time to
time in accordance with this Section 8.1. O&M Medical is hereby designated as,
and hereby agrees to perform the duties and obligations of, the Servicer
pursuant to the terms of this Agreement. At any time after the occurrence of an
Amortization Event, the Agents may at any time designate as Servicer any Person
to succeed O&M Medical or any successor Servicer.
23
(b) O&M Medical may delegate, and O&M Medical hereby advises the
Purchasers and the Agents that it has delegated, to the Originators, as
sub-servicers of the Servicer, certain of its duties and responsibilities as
Servicer hereunder in respect of the Receivables originated by such Originators.
Without the prior written consent of the Agents, O&M Medical shall not be
permitted to delegate any of its duties or responsibilities as Servicer to any
Person other than the Originators, other than with respect to certain Defaulted
Receivables, outside collection agencies in accordance with its customary
practices. If at any time following the occurrence of an Amortization Event the
Agents shall designate as Servicer any Person other than O&M Medical, all duties
and responsibilities theretofore delegated by O&M Medical to any Originator may,
at the discretion of any of the Agents, be terminated forthwith on notice given
by any Agent to the other Agents, O&M Medical and to Seller.
(c) Notwithstanding the foregoing subsection (b), (i) O&M Medical
shall be and remain primarily liable to the Agents and the Purchasers for the
full and prompt performance of all duties and responsibilities of the Servicer
hereunder and (ii) the Agents and the Purchasers shall be entitled to deal
exclusively with O&M Medical in matters relating to the discharge by the
Servicer of its duties and responsibilities hereunder. The Agents and the
Purchasers shall not be required to give notice, demand or other communication
to any Person other than O&M Medical in order for communication to the Servicer
and its sub-servicer or other delegate with respect thereto to be accomplished.
O&M Medical, at all times that it is the Servicer, shall be responsible for
providing any sub-servicer or other delegate of the Servicer with any notice
given to the Servicer under this Agreement.
Section 8.2 Duties of Servicer.
------------------
(a) The Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Receivable from time to time, all
in accordance with applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policy.
(b) The Servicer will instruct all Obligors to pay all Collections
directly to a Lock-Box or Collection Account. The Servicer shall effect a
Collection Account Agreement in a form reasonably acceptable to the Agents and
Seller with each bank party to a Collection Account at any time. In the case of
any remittances received in any Lock-Box or Collection Account that shall have
been identified, to the satisfaction of the Servicer, to not constitute
Collections or other proceeds of the Receivables or the Related Security, the
Servicer shall promptly remit such items to the Person identified to it as being
the owner of such remittances. From and after the date the Collateral Agent
delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, the
Collateral Agent may request that the Servicer, and the Servicer thereupon
promptly shall instruct all Obligors with respect to the Receivables, to remit
all payments thereon to a new depositary account specified by the Collateral
Agent and, at all times thereafter, Seller and the Servicer shall use reasonable
efforts not to deposit or otherwise credit, and shall not authorize any other
Person to deposit or otherwise credit to such new depositary account any cash or
payment item other than Collections and collections in respect of sales taxes.
No Collection Account Agreement may be amended, terminated or otherwise modified
without the prior written consent of the Collateral Agent; provided, however,
that so long as no Amortization Event has occurred and not been waived by the
Agents, the Collateral Agent will
24
not unreasonably withhold or delay its consent to the closing of a Collection
Account if the Obligors who otherwise would have made payments to such
Collection Account have been directed to make payments to another Collection
Account with respect to which a Collection Account Agreement has been executed
by all requisite parties.
(c) The Servicer shall administer the Collections in accordance with
the procedures described herein and in Article II; provided that nothing in this
sentence shall require the Servicer to segregate Collections on a daily basis
from its other funds prior to the occurrence of the Amortization Date. The
Servicer shall set aside and hold in trust for the account of Seller and the
Purchasers their respective shares of the Collections in accordance with Article
II. The Servicer shall, upon the request of any Agent, segregate, in a manner
acceptable to the Agents, all cash, checks and other instruments received by it
from time to time constituting Collections from the general funds of the
Servicer or Seller prior to the remittance thereof in accordance with Article
II. If the Servicer shall be required to segregate Collections pursuant to the
preceding sentence, the Servicer shall segregate and deposit with a bank
designated by the Collateral Agent such allocable share of Collections of
Receivables set aside for the Purchasers on the first Business Day following
receipt by the Servicer of such Collections, duly endorsed or with duly executed
instruments of transfer.
(d) The Servicer may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer determines to be appropriate to maximize
Collections thereof; provided, however, that such extension or adjustment shall
not alter the status of such Receivable as a Delinquent Receivable or Defaulted
Receivable or limit the rights of the Agents or the Purchasers under this
Agreement. Notwithstanding anything to the contrary contained herein, following
the occurrence of an Amortization Event which is not waived in writing by the
Agents, each Agent shall have the absolute and unlimited right to direct the
Servicer to commence or settle any legal action with respect to any Receivable
or to foreclose upon or repossess any Related Security.
(e) The Servicer shall hold in trust for Seller and the Purchasers all
Records that (i) evidence or relate to the Receivables, the related Contracts
and Related Security or (ii) are otherwise necessary or desirable to collect the
Receivables and shall, as soon as practicable upon demand of any Agent following
the occurrence of an Amortization Event which is not waived in writing by the
Agents, deliver or make available to the Collateral Agent all such Records, at a
place selected by the Collateral Agent. The Servicer shall, as soon as
practicable following receipt thereof turn over to Seller any cash collections
or other cash proceeds received with respect to Indebtedness not constituting
Receivables, Related Security, Collections or proceeds of any of the foregoing.
The Servicer shall, from time to time at the request of any Purchaser, furnish
to the Purchasers (promptly after any such request) a calculation of the amounts
set aside for the Purchasers pursuant to Article II.
(f) Any payment by an Obligor in respect of any indebtedness owed by
it to an Originator or Seller shall, except as otherwise specified by such
Obligor or otherwise required by contract or law and unless otherwise instructed
by the Collateral Agent, be applied as a Collection of any Receivable of such
Obligor (starting with the oldest such Receivable) to the extent of any amounts
then due and payable thereunder before being applied to any other receivable or
other obligation of such Obligor.
25
Section 8.3 Collection Notices. The Collateral Agent is authorized at any
------------------
time after the occurrence of an Amortization Event which is not waived in
writing by the Agents, to date and to deliver to the Collection Banks the
Collection Notices. Seller hereby transfers to the Collateral Agent for the
benefit of the Purchasers, effective when the Collateral Agent delivers such
notice, the exclusive ownership and control of each Lock-Box and the Collection
Accounts. In case any authorized signatory of Seller whose signature appears on
a Collection Account Agreement shall cease to have such authority before the
delivery of such notice, such Collection Notice shall nevertheless be valid as
if such authority had remained in force. Seller hereby authorizes the Collateral
Agent, and agrees that the Collateral Agent shall be entitled after the
occurrence of an Amortization Event to (i) endorse Seller's name on checks and
other instruments representing Collections, (ii) enforce the Receivables, the
related Contracts and the Related Security and (iii) take such action as shall
be necessary or desirable to cause all cash, checks and other instruments
constituting Collections of Receivables to come into the possession of the
Collateral Agent, for the benefit of the Agents and the Purchasers, rather than
Seller.
Section 8.4 Responsibilities of Seller. Anything herein to the contrary
--------------------------
notwithstanding, the exercise by the Agents and the Purchasers of their rights
hereunder shall not release the Servicer, any Originator or Seller from any of
their duties or obligations with respect to any Receivables or under the related
Contracts. The Purchasers shall have no obligation or liability with respect to
any Receivables or related Contracts, nor shall any of them be obligated to
perform the obligations of Seller.
Section 8.5 Reports. The Servicer shall prepare and forward to the Agents
-------
(i) on the 15th day of each month or if such date is not a Business Day, the
next Business Day (the "Monthly Reporting Date"), and at such other times as any
Agent shall request, a Settlement Report and (ii) at such times as any Agent
shall request, a listing by Obligor of all Receivables together with an aging of
such Receivables.
Section 8.6 Servicing Fees. In consideration of O&M Medical's agreement to
--------------
act as Servicer hereunder, the Purchasers hereby agree that, (a) so long as O&M
Medical shall continue to perform as Servicer hereunder, Seller shall pay over
to O&M Medical a fee (the "Servicing Fee") on each Settlement Date, in arrears
for the immediately preceding month, equal to 1% per annum of the average
aggregate Outstanding Balance of all Receivables during such period, as
compensation for its servicing activities or (b) in the case of the Servicer not
being a member of the O&M Group, the Servicing Fee will be such reasonable rate
as may be charged by the successor Servicer.
ARTICLE IX.
AMORTIZATION EVENTS
Section 9.1 Amortization Events. The occurrence of any one or more of the
-------------------
following events shall constitute an Amortization Event:
(a) Any Seller Party shall fail (i) to make any payment or deposit
required hereunder when due which failure (except in the case of Invested
Amount) continues for two (2) Business Days, or (ii) to perform or observe any
term, covenant or agreement hereunder (other
26
than as referred to in clause (i) of this paragraph (a) and paragraph 9.1(e))
and such failure shall continue for three (3) consecutive Business Days.
(b) Any representation, warranty, certification or statement made by
any Seller Party in this Agreement, any other Transaction Document or in any
other document delivered pursuant hereto or thereto shall prove to have been
incorrect when made or deemed made in any respect which would have a Material
Adverse Effect.
(c) (i) Failure of Seller to pay any Indebtedness when due taking into
account any applicable grace period, and failure of Performance Guarantor and/or
any of its Subsidiaries other than Seller to pay Indebtedness in excess of $10
million in aggregate principal amount when due taking in to account any
applicable grace period; or (ii) the default by any Seller Party or Originator
in the performance of any term, provision or condition contained in any
agreement under which any Indebtedness described in the preceding clause (i) was
created or is governed, the effect of which is to cause, or to permit the holder
or holders of such Indebtedness to cause, such Indebtedness to become due prior
to its stated maturity; or (iii) any Indebtedness described in clause (i) shall
be declared to be due and payable or required to be prepaid (other than by a
regularly scheduled payment) prior to the date of maturity thereof.
(d) (i) Any Seller Party or any of its Subsidiaries shall generally
not pay its debts as such debts become due or shall admit in writing its
inability to pay its debts generally or shall make a general assignment for the
benefit of creditors; (ii) any proceeding shall be instituted by any Seller
Party or any of its Subsidiaries seeking to adjudicate it bankrupt or insolvent,
or seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or any substantial part of its property, (iii) any
proceeding of the type described in the preceding clause (ii) shall be
instituted against any Seller Party and shall continue undismissed, or unstayed
and in effect, for a period of 60 consecutive days; or (iv) an order for relief
in respect of such Person shall be entered in an involuntary case under the
federal bankruptcy laws or other similar laws now or hereafter in effect, or (v)
any Seller Party or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth in clauses (i) or (ii) above in this
subsection (d).
(e) Seller shall fail to comply with the terms of Section 2.6 hereof.
(f) As at the end of any calendar month:
(i) the average of the Dilution Ratios for the three months then
most recently ended shall exceed 3.5%;
(ii) the average of the Delinquency Ratios for the three months
then most recently ended shall exceed 4.5%; or
(iii) the average of the Default Ratios for the three months then
most recently ended shall exceed 4.35%.
(g) A Change of Control shall occur with respect to any Seller Party.
27
(h) (i) One or more final judgments or decrees for the payment of
money in excess of $10,750 shall be entered against Seller or (ii) one or more
final judgments for the payment of money in an amount in excess of $500,000 in
the aggregate for all such judgments or decrees, shall be entered against
Servicer or Performance Guarantor on claims not covered by insurance or as to
which the insurance carrier has denied its responsibility, and such judgment
shall not have been vacated, discharged, stayed or satisfied and in effect for
thirty (30) consecutive days without a stay of execution
(i) Either (i) the "Termination Date" under and as defined in the
Receivables Sale Agreement shall occur under the Receivables Sale Agreement or
(ii) any Originator shall for any reason cease to transfer, or cease to have the
legal capacity to transfer, or otherwise be incapable of transferring
Receivables to Seller under the Receivables Sale Agreement.
(j) This Agreement shall terminate in whole or in part (except in
accordance with its terms), or shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Seller or Servicer, or any Seller
Party shall directly or indirectly contest in any manner such effectiveness,
validity, binding nature or enforceability, or the Collateral Agent for the
benefit of the Purchasers shall cease to have a valid and perfected first
priority security interest in the Receivables, the Related Security and the
Collections with respect thereto and the Collection Accounts.
(k) Performance Guarantor shall fail to perform or observe any term,
covenant or agreement required to be performed by it under the Performance
Undertaking, or the Performance Undertaking shall cease to be effective or to be
the legally valid, binding and enforceable obligation of Performance Guarantor,
or Performance Guarantor shall directly or indirectly contest in any manner such
effectiveness, validity, binding nature or enforceability.
(l) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Tax Code with regard to any of the Receivables,
Collections or Related Security and such lien shall not have been released
within fifteen (15) days, or the PBGC shall, or shall indicate its intention to,
file notice of a lien pursuant to Section 4068 of ERISA with regard to any of
the Receivables, Collections or Related Security.
(m) Any event shall occur which (i) materially and adversely impairs
the ability of the Originators to originate Receivables of a credit quality that
is at least equal to the credit quality of the Receivables sold or contributed
to Seller on the date of this Agreement and (ii) has, or could be reasonably
expected to have, a Material Adverse Effect.
(n) On any Settlement Date, after giving effect to the application of
Collections in accordance with this Agreement, the Net Pool Balance is less than
the sum of Aggregate Invested Amount plus Required Reserves.
Section 9.2 Remedies. Upon the occurrence and during the continuation of an
--------
Amortization Event, the Collateral Agent may, and upon the direction of either
of the Co-Agents, shall, take any of the following actions: (i) replace the
Person then acting as Servicer, (ii) declare the Amortization Date to have
occurred, whereupon the Amortization Date shall forthwith occur, without demand,
protest or further notice of any kind, all of which are hereby
28
expressly waived by each Seller Party; provided, however, that upon the
occurrence of an Amortization Event described in Section 9.1(d)(ii), or of an
actual or deemed entry of an order for relief with respect to any Seller Party
under the Federal Bankruptcy Code, the Amortization Date shall automatically
occur, without demand, protest or any notice of any kind, all of which are
hereby expressly waived by each Seller Party, (iii) to the fullest extent
permitted by applicable law, declare that the Default Fee shall accrue with
respect to any of the Aggregate Unpaids outstanding at such time, (iv) deliver
the Collection Notices to the Collection Banks, and (v) notify Obligors of the
Purchasers' interest in the Receivables. The aforementioned rights and remedies
shall be without limitation, and shall be in addition to all other rights and
remedies of the Agents and the Purchasers otherwise available under any other
provision of this Agreement, by operation of law, at equity or otherwise, all of
which are hereby expressly preserved, including, without limitation, all rights
and remedies provided under the UCC (including the right to foreclose upon and
sell the Receivables and the Related Security, or any part thereof), all of
which rights shall be cumulative.
ARTICLE X.
INDEMNIFICATION
Section 10.1 Indemnities by the Seller Parties. Without limiting any other
---------------------------------
rights that any Agent or any Purchaser may have hereunder or under applicable
law, (A) Seller hereby agrees to indemnify (and pay upon demand to) each of the
Agents, the Purchasers and their respective assigns, members, direct or indirect
owners, officers, directors, agents and employees (each, an "Indemnified
Party"), from and against any and all damages, losses, claims, taxes,
liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or incurred
by any of them arising out of or as a result of this Agreement or the
acquisition, either directly or indirectly, by a Purchaser of an interest in the
Receivables, and (B) the Servicer hereby agrees to indemnify (and pay upon
demand to) each Indemnified Party, for Indemnified Amounts awarded against or
incurred by any of them arising out of the Servicer's activities as Servicer
hereunder excluding, however, in all of the foregoing instances under the
preceding clauses (A) and (B):
(a) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party seeking
indemnification; or
(b) Indemnified Amounts to the extent the same includes losses in
respect of Receivables that are uncollectible on account of the insolvency,
bankruptcy or lack of creditworthiness of the related Obligor; or
(c) any Excluded Taxes except to the extent the Indemnified Party is
entitled to receive an amount equal to the sum it would have received had no
deductions for Taxes and Other Taxes been made as set forth in Section
10.1(d)(i);
provided, however, that nothing contained in this sentence shall limit the
liability of any Seller Party or limit the recourse of the Agents and the
Purchasers to any Seller Party for amounts
29
otherwise specifically provided to be paid by such Seller Party under the terms
of this Agreement. Without limiting the generality of the foregoing
indemnification, Seller (and to the extent any of the following arise from
actions or inactions of the Servicer, the Servicer) shall indemnify the
Indemnified Parties for Indemnified Amounts (including, without limitation,
losses in respect of uncollectible receivables, regardless of whether
reimbursement therefor would constitute recourse to Seller or the Servicer)
relating to or resulting from:
(i) any representation or warranty made by any Seller Party or
any Originator (or any officers of any such Person) under or in connection with
this Agreement, any other Transaction Document or any other information or
report delivered by any such Person pursuant hereto or thereto, which shall have
been false or incorrect when made or deemed made;
(ii) the failure by any Seller Party or any Originator to comply
with any applicable law, rule or regulation with respect to any Receivable or
Contract related thereto, or the nonconformity of any Receivable or Contract
included therein with any such applicable law, rule or regulation or any failure
of any Originator to keep or perform any of its obligations, express or implied,
with respect to any Contract;
(iii) any failure of any Seller Party or any Originator to
perform its duties, covenants or other obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage suit, or
other similar claim arising out of or in connection with merchandise, insurance
or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than discharge
in bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or service related to such Receivable
or the furnishing or failure to furnish such merchandise or services;
(vi) [reserved];
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the transactions
contemplated hereby, the use of the proceeds of an Incremental Purchase or a
Reinvestment, the ownership of the Receivable Interests or any other
investigation, litigation or proceeding relating to any Seller Party or any
Originator in which any Indemnified Party becomes involved as a result of any of
the transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune from civil
and commercial law and suit on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding;
(ix) any Amortization Event described in Section 9.1(d);
30
(x) any failure of Seller to acquire and maintain legal and
equitable title to, and ownership of any Receivable and the Related Security and
Collections with respect thereto from any Originator, free and clear of any
Adverse Claim (other than as created hereunder); or any failure of Seller to
give reasonably equivalent value to the applicable Originator under the
Receivables Sale Agreement in consideration of the transfer by such Originator
of any Receivable, or any attempt by any Person to void such transfer under
statutory provisions or common law or equitable action;
(xi) any failure to vest and maintain vested in the Collateral
Agent for the benefit of the Purchasers, or to transfer to the Collateral Agent
for the benefit of the Purchasers, legal and equitable title to, and ownership
of, a first priority perfected undivided percentage ownership interest (to the
extent of the Receivable Interests contemplated hereunder) or security interest
in the Receivables, the Related Security and the Collections, free and clear of
any Adverse Claim (except as created by the Transaction Documents);
(xii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any
Receivable, the Related Security and Collections with respect thereto, and the
proceeds of any thereof, whether at the time of any Incremental Purchase or
Reinvestment or at any subsequent time;
(xiii) any action or omission by any Seller Party which reduces
or impairs the rights of the Agents or the Purchasers with respect to any
Receivable or the value of any such Receivable;
(xiv) any attempt by any Person to void any Incremental Purchase
or Reinvestment hereunder under statutory provisions or common law or equitable
action; and
(xv) the failure of any Receivable included in the calculation of
the Net Pool Balance as an Eligible Receivable to be an Eligible Receivable at
the time so included.
(d) Taxes.
-----
(i) Any and all payments made hereunder to an Indemnified Party
shall be made free and clear of and without deduction for any and all current or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto excluding: (A) franchise taxes, excise taxes
---------
and taxes imposed on or measured by all or part of the gross or net income (but
not including any such tax in the nature of a withholding tax) of such
Indemnified Party, in each case, by the jurisdiction under the laws of which
such Indemnified Party is organized or has its applicable lending or
administrative office or any political subdivision of any thereof, to the extent
that the imposition of such taxes is consistent with the Intended
Characterization of the Receivable Interests for income tax purposes, and (B)
taxes that would not have been imposed if the only connection between such
Indemnified Party and the jurisdiction imposing such taxes was the activities of
such Indemnified Party pursuant to or in respect of this Agreement (including
entering into, lending money or extending credit pursuant to, receiving payments
under, or enforcing this Agreement) (all such excluded taxes, levies, imposts,
deductions, charges, withholding and liabilities collectively or individually
31
referred to herein as "Excluded Taxes" and all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings, and liabilities collectively or
individually referred to herein as "Taxes"). If any Seller shall be required to
deduct any Taxes or Other Taxes from or in respect of any sum payable hereunder
to any Indemnified Party: (A) the sum payable shall be increased by the amount
(an "additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
-------
10.1(d)) such Indemnified Party shall receive an amount equal to the sum it
-------
would have received had no such deductions been made, (B) such Seller shall make
such deductions and (C) such Seller shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(ii) In addition, each Seller agrees to pay to the relevant
Governmental Authority in accordance with applicable law all taxes, levies,
imposts, deductions, charges, assessments or fees of any kind (including but not
limited to any current or future stamp or documentary taxes or any other excise
or property taxes, charges, or similar levies, but excluding any Excluded Taxes)
imposed upon any Indemnified Party as a result of the transactions contemplated
by this Agreement or that arise from any payment made hereunder or from the
execution, delivery, or registration of or otherwise similarly with respect to,
this Agreement ("Other Taxes").
(iii) Each Seller agrees to indemnify each Indemnified Party from
and against the full amount of Taxes and Other Taxes arising out of this
Agreement (whether directly or indirectly) imposed upon or paid by such Person
and any liability (including penalties, interest, and expenses (including
reasonable attorneys' fees and expenses)) arising with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally asserted by the
relevant Governmental Authority (including any Taxes or Other Taxes imposed upon
such Person on account of the Intended Characterization not being respected by a
relevant Government Authority). A certificate as to the amounts prepared by an
Indemnified Party, absent manifest error, shall be final, conclusive, and
binding for all purposes. Such indemnification shall be made within 30 days
after the date the Indemnified Party makes a timely written demand therefor or
the time at which such amount is payable after a timely written demand therefor
has been made, whichever is earlier. A written demand will be considered
"timely" for purposes of the preceding sentence only if it is received by such
Seller no later than 180 days after the earlier of (A) the date on which such
Indemnified Party makes such payment of Taxes or Other Taxes or liability
arising therefrom or with respect thereto and (B) the date on which the relevant
Governmental Authority or other party makes written demand upon such Indemnified
Party for payment of such Taxes or Other Taxes or liability arising therefrom or
with respect thereto (after all appeals have been fully pursued to the extent
the Indemnified Party elects to pursue such appeals). Each Indemnified Party
agrees to provide the related Originator with written notice of any official
demand for payment after the appeals process with such Governmental Authority
has been completed by a Governmental Authority or other party pursuant to clause
(B) above promptly upon such Indemnified Party's receipt of such official
demand. As soon as reasonably practicable, the Indemnified Party shall promptly
provide the Seller with a copy of any written proposed assessment from a
Governmental Authority with respect to indemnifiable Taxes or Other Taxes
assessed against Indemnified Party. Failure to provide such notice of proposed
assessment will not affect the Seller's obligations under this Agreement.
32
(iv) As soon as practicable after the date of any payment of
Taxes or Other Taxes by a Seller to a Governmental Authority hereunder, such
Seller will deliver to the relevant Indemnified Party the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
payment thereof.
(v) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section
-------
10.1(d) shall survive the termination of this Agreement.
-------
(vi) Notwithstanding any other provision of this Section 10.1(d),
no Seller shall be required to indemnify or pay any additional amounts to any
Non-U.S. Purchaser or Agent pursuant to Sections 10.1(d)(i), (ii), or (iii) with
respect to Taxes or Other Taxes imposed by the United States if the obligation
to withhold with respect to such Taxes or Other Taxes results from, or would not
have occurred but for, the failure of any Non-U.S. Purchaser or Agent to deliver
the forms described in this paragraph (vi) (it being understood that the
Non-U.S. Purchaser or Agent shall not have failed to comply with the provisions
of paragraph (vi) if it is legally unable to deliver the forms described
therein); for any period with respect to which the Non-U.S. Purchaser or Agent
have failed to provide the relevant Sellers with (A) a complete and properly
executed Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Indemnified Party is entitled to benefits under an income tax treaty to which
the United States is a party which reduces to zero the rate of withholding tax
on payments due under this Agreement or certifying that the income receivable
pursuant to this Agreement or any of the other Transaction Documents is
effectively connected with the conduct of a trade or business in the United
States, (B) a complete and properly executed Internal Revenue Service Form W-9,
or any successor form prescribed by the Internal Revenue Service, (C) any other
complete and properly executed form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Tax Code), certifying that such Indemnified Party is entitled to a complete
exemption from tax on payments pursuant to this Agreement or any of the other
Transaction Documents, (D) a complete and properly executed Internal Revenue
Service Form W-8IMY and any related documents required in conjunction with such
W-8IMY, (unless such failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided); provided, however, that should an Indemnified Party, which is
-------- -------
otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Seller shall take such steps as the Indemnified Party shall reasonably
request to assist such Indemnified Party in recovering such Taxes. A Seller
shall be required to pay any Taxes or Other Taxes resulting from a change in law
(or interpretation thereof) that becomes effective after the date hereof. Upon
becoming aware of a change in law (or interpretation) each Party hereto will use
its best effort, to provide the other party with notice of such change.
(vii) Any Indemnified Party claiming any indemnity payment or
additional amounts payable pursuant to this Section 10.1(d) shall use reasonable
---------------
efforts (consistent with legal and regulatory restrictions) to file any
certificate or document reasonably requested in writing by a Seller or to change
the jurisdiction of its applicable lending office or administrative office if
the making of such a filing or change would avoid the need for or reduce the
amount of any such indemnity payment or additional amounts that may thereafter
accrue and
33
would not, in the good faith determination of such Indemnified Party, be
otherwise disadvantageous to such Indemnified Party.
(viii) Nothing contained in this Section 10.1(d) shall require an
---------------
Indemnified Party to make available any of its tax returns (or any other
information that it deems to be confidential or proprietary).
(ix) If any Indemnified Party receiving an indemnification
payment hereunder with respect to Taxes or Other Taxes or liabilities arising
therefrom shall subsequently receive a refund from any taxing authority which is
specifically attributable to such indemnification payment, such Person shall
promptly pay such refund to the applicable Seller.
Section 10.2 Increased Cost and Reduced Return. If after the date hereof,
---------------------------------
any Funding Source shall be charged any fee, expense or increased cost, on such
Funding Source's return shall be reduced, on account of the adoption of any
applicable law, rule or regulation (including any applicable law, rule or
regulation regarding capital adequacy) or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency, or any change in GAAP (a "Regulatory Change"): (i) that subjects any
Funding Source to any charge or withholding on or with respect to any Funding
Agreement or a Funding Source's obligations under a Funding Agreement, or on or
with respect to the Receivables, or changes the basis of taxation of payments to
any Funding Source of any amounts payable under any Funding Agreement (except
for changes in the rate of tax on the overall net income of a Funding Source or
taxes excluded by Section 10.1) or (ii) that imposes, modifies or deems
applicable any reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of a Funding
Source, or credit extended by a Funding Source pursuant to a Funding Agreement
or (iii) that imposes or results in any other condition the result of which is
to increase the cost to a Funding Source of performing its obligations under a
Funding Agreement, or to reduce the rate of return on a Funding Source's capital
as a consequence of its obligations under a Funding Agreement, or to reduce the
amount of any sum received or receivable by a Funding Source under a Funding
Agreement or to require any payment calculated by reference to the amount of
interests or loans held or interest received by it, then, such Funding Source
shall notify the Agents and the Seller within 180 days of its determination of
any such fee, expense, increased cost or reduced return and, upon written demand
by the applicable Co-Agent setting forth in reasonable detail the basis for and
computation of the amount of such claim (which written demand and computation
shall, absent manifest error, be conclusive and binding), Seller shall pay to
such Co-Agent, for the benefit of the relevant Funding Source, such amounts
charged to such Funding Source or such amounts to otherwise compensate such
Funding Source for such increased cost or such reduction.
Section 10.3 Other Costs and Expenses. Seller shall pay to the Agents and
------------------------
Conduits on demand all costs and out-of-pocket expenses in connection with the
preparation, execution, delivery and administration of this Agreement, the
transactions contemplated hereby and the other documents to be delivered
hereunder, including without limitation, the cost of Conduit's or Agent's
auditors auditing the books, records and procedures of Seller, reasonable fees
and out-
34
of-pocket expenses of legal counsel for Conduits and the Agents with respect
thereto and with respect to advising Conduits and the Agents as to their
respective rights and remedies under this Agreement. Seller shall pay to the
Agents on demand any and all costs and expenses of the Agents and the
Purchasers, if any, including reasonable counsel fees and expenses in connection
with the enforcement of this Agreement and the other documents delivered
hereunder and in connection with any restructuring or workout of this Agreement
or such documents, or the administration of this Agreement following an
Amortization Event.
ARTICLE XI.
THE AGENTS
Section 11.1 Appointment.
-----------
(a) Each Purchaser and Co-Agent hereby irrevocably designates and
appoints Wachovia Bank, National Association as Collateral Agent hereunder, and
authorizes the Collateral Agent to take such action on its behalf under the
provisions of the Transaction Documents and to exercise such powers and perform
such duties as are expressly delegated to the Collateral Agent by the terms of
the Transaction Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Collateral Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Purchaser or Co-Agent, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities on the part of
the Collateral Agent shall be read into this Agreement or otherwise exist
against the Collateral Agent.
(b) Each of Blue Ridge and the Blue Ridge Liquidity Banks hereby
irrevocably designates and appoints Wachovia Bank, National Association as its
Co-Agent hereunder, and authorizes such Co-Agent to take such action on its
behalf under the provisions of this Agreement, the Blue Ridge Fee Letter and the
Blue Ridge Liquidity Agreement and to exercise such powers and perform such
duties as are expressly delegated to such Co-Agent by the terms of this
Agreement, if any, together with such other powers as are reasonably incidental
thereto. Each of Blue Keel and the Blue Keel Liquidity Banks hereby irrevocably
designates and appoints FSI as its Co-Agent hereunder, and authorizes such
Co-Agent to take such action on its behalf under the provisions of this
Agreement, the Blue Keel Fee Letter and the Blue Keel Liquidity Agreement and to
exercise such powers and perform such duties as are expressly delegated to such
Co-Agent by the terms of this Agreement, if any, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Fee Letters or the Liquidity
Agreements, no Co-Agent shall have any duties or responsibilities, except those
expressly set forth herein , or any fiduciary relationship with any Purchaser,
Liquidity Bank or other Agent, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on the part of such
Co-Agent shall be read into this Agreement, the Fee Letters or the Liquidity
Agreements or otherwise exist against such Co-Agent.
(c) The provisions of this Article XI are solely for the benefit of
the Agents and the Purchasers, and neither of the Seller Parties shall have any
rights as a third-party beneficiary
35
or otherwise under any of the provisions of this Article XI, except that this
Article XI shall not affect any obligations which any Agent or any Purchaser may
have to either of the Seller Parties under the other provisions of this
Agreement. Furthermore, no Purchaser or Liquidity Bank shall have any rights as
a third-party beneficiary or otherwise under any of the provisions hereof in
respect of a Co-Agent which is not the Co-Agent for such Person.
(d) In performing its functions and duties hereunder, the Collateral
Agent shall act solely as the agent of the Purchasers and the Co-Agents and does
not assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for either of the Seller Parties or any of their
respective successors and assigns. In performing its functions and duties
hereunder, each Co-Agent shall act solely as the agent of its respective Conduit
and its respective Liquidity Bank(s), and does not assume nor shall be deemed to
have assumed any obligation or relationship of trust or agency with or for
either of the Seller Parties, any other Purchaser, Liquidity Bank or Agent, or
any of their respective successors and assigns.
Section 11.2 Delegation of Duties. Each Agent may execute any of its duties
--------------------
under the applicable Transaction Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 11.3 Exculpatory Provisions. No Agent nor any of its directors,
----------------------
officers, agents or employees shall be (i) liable for any action lawfully taken
or omitted to be taken by it or them or any Person described in Section 11.2
under or in connection with the Transaction Documents (except for its, their or
such Person's own bad faith, gross negligence or willful misconduct), or (ii)
responsible in any manner to any of the Purchasers or other agents for any
recitals, statements, representations or warranties made by the Seller contained
in this Agreement or in any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other document furnished in connection
herewith, or for any failure of either of the Seller Parties to perform its
respective obligations hereunder, or for the satisfaction of any condition
specified in Article V, except receipt of items required to be delivered to such
Agent. No Agent shall be under any obligation to any Purchaser, Liquidity Bank
or other Agent to ascertain or to inquire as to the observance or performance of
any of the agreements or covenants contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of the Seller Parties.
This Section 11.3 is intended solely to govern the relationship between each
Agent, on the one hand, and the Purchasers and their respective Liquidity Banks,
on the other.
Section 11.4 Reliance by Agents.
------------------
(a) Each Agent shall in all cases be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Seller Parties), independent accountants and other
experts selected by
36
such Agent. Each Agent shall in all cases be fully justified in failing or
refusing to take any action under this Agreement or any other document furnished
in connection herewith unless it shall first receive such advice or concurrence
of (i) in the case of the Collateral Agent, each of the Co-Agents (except where
another provision of this Agreement specifically authorizes the Collateral Agent
to take action based on the instructions of either of the Co-Agents) or (ii) in
the case of a Co-Agent, such of its Purchasers and Liquidity Banks, as it shall
determine to be appropriate under the relevant circumstances, or it shall first
be indemnified to its satisfaction by its Constituent Liquidity Banks against
any and all liability, cost and expense which may be incurred by it by reason of
taking or continuing to take any such action.
(b) Any action taken by the Collateral Agent in accordance with
Section 11.4(a) shall be binding upon all Purchasers and Agents.
(c) Each Co-Agent shall determine with its Conduit and, as applicable,
its Liquidity Banks, the number of such Persons which shall be required to
request or direct such Co-Agent to take action, or refrain from taking action,
under this Agreement on behalf of such Persons and whether any consent of the
rating agencies who rate such Conduit's Commercial Paper is required (such
Persons and, if applicable, rating agencies, a "Voting Block"). Such Co-Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement in accordance with a request of its appropriate Voting
Block, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of such Co-Agent's Constituents.
(d) Unless otherwise advised in writing by a Co-Agent or by any
Purchaser or Liquidity Bank on whose behalf such Co-Agent is purportedly acting,
each party to this Agreement may assume that (i) such Co-Agent is acting for the
benefit of each of its Constituent Purchasers and, as applicable, Liquidity
Banks, as well as for the benefit of each permitted assignee from any such
Person, and (ii) each action taken by such Co-Agent has been duly authorized and
approved by all necessary action on the part of its Voting Block. Each Conduit
(or its Liquidity Banks) shall have the right to designate a new Co-Agent (which
may be itself) to act on its behalf and on behalf of its assignees and
transferees for purposes of this Agreement by giving to the Agents and the
Seller Parties written notice thereof signed by such Purchaser(s) and the newly
designated Co-Agent. Such notice shall be effective when receipt thereof is
acknowledged by the retiring Co-Agent and the Seller Parties, which
acknowledgments shall not be withheld or unreasonably delayed, and thereafter
the party named as such therein shall be Co-Agent for such Purchasers under this
Agreement. Each Co-Agent and its Purchasers and Liquidity Banks shall agree
amongst themselves as to the circumstances and procedures for removal and
resignation of such Co-Agent.
Section 11.5 Notice of Amortization Events. No Agent shall be deemed to
-----------------------------
have knowledge or notice of the occurrence of any Amortization Event or
Potential Amortization Event unless such Agent has received notice from another
Agent, a Purchaser, a Liquidity Bank or a Seller Party referring to this
Agreement, stating that an Amortization Event or Potential Amortization Event
has occurred hereunder and describing such Amortization Event or Potential
Amortization Event. In the event that any of the Agents receives such a notice,
it shall promptly give notice thereof to the other Agents for distribution, in
the case of a Co-Agent, to the members of its Group. The Collateral Agent shall
take such action with respect to such
37
Amortization Event or Potential Amortization Event as shall be directed by
either of the Co-Agents.
Section 11.6 Non-Reliance on Agents and Other Purchasers. Each of the
-------------------------------------------
Purchasers expressly acknowledges that no Agent, nor any of such Agent's
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by any Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller
Parties, shall be deemed to constitute any representation or warranty by such
Agent. Each of the Purchasers also represents and warrants to the Agents and the
other Purchasers that it has, independently and without reliance upon any such
Person (or any of their Affiliates) and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, prospects, financial and other conditions
and creditworthiness of the Seller Parties and made its own decision to enter
into this Agreement. Each of the Purchasers also represents that it will,
independently and without reliance upon any Agent or any other Liquidity Bank or
Purchaser, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, prospects, financial and other condition and
creditworthiness of the Seller Parties. None of the Agents or the Purchasers,
nor any of their respective Affiliates, shall have any duty or responsibility to
provide any party to this Agreement with any credit or other information
concerning the business, operations, property, prospects, financial and other
condition or creditworthiness of the Seller Parties which may come into the
possession of such Person or any of its respective officers, directors,
employees, agents, attorneys-in-fact or affiliates, except that each of the
Co-Agents shall promptly distribute to its related Conduit (and, as applicable,
its Liquidity Banks), copies of financial and other information expressly
provided to such Co-Agent by either of the Seller Parties pursuant to this
Agreement for distribution to the Agents and/or Purchasers.
Section 11.7 Indemnification of Agents.
-------------------------
(a) Each Liquidity Bank agrees to indemnify the Collateral Agent and
its officers, directors, employees, representatives and agents (to the extent
not reimbursed by the Seller Parties and without limiting the obligation of the
Seller Parties to do so), ratably in accordance with their respective
Percentages or Invested Amount, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for the Collateral
Agent or such Person in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not the Collateral Agent
in its capacity as Collateral Agent or such Person shall be designated a party
thereto) that may at any time be imposed on, incurred by or asserted against the
Collateral Agent or such Person as a result of, or arising out of, or in any way
related to or by reason of, any of the transactions contemplated hereunder or
the execution, delivery or performance of this Agreement or any other document
furnished in connection herewith (but excluding any such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent resulting from the bad faith, gross
negligence or willful misconduct of the Collateral Agent or such Person).
38
(b) Each Liquidity Bank agrees to indemnify its Co-Agent and such
Co-Agent's officers, directors, employees, representatives and agents (to the
extent not reimbursed by the Seller and without limiting the obligation of the
Seller to do so), ratably in accordance with their respective Percentages or
Invested Amount, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Co-Agent or such Person in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Co-Agent in its capacity as Co-Agent or such Person shall be
designated a party thereto) that may at any time be imposed on, incurred by or
asserted against such Co-Agent or such Person as a result of, or arising out of,
or in any way related to or by reason of, any of the transactions contemplated
hereunder or the execution, delivery or performance of this Agreement or any
other document furnished in connection herewith (but excluding any such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting from the bad faith,
gross negligence or willful misconduct of such Co-Agent or such Person).
Section 11.8 Agents in their Individual Capacities. Each of the Agents in
-------------------------------------
its individual capacity and its Affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Seller Parties and
any Obligor and their respective Affiliates as though such Agent were not an
Agent hereunder. With respect to its Invested Amount, if any, pursuant to this
Agreement, each Agent shall have the same rights and powers under this Agreement
as any Purchaser and may exercise the same as though it were not an Agent, and
the terms "Purchaser" and "Purchasers" shall include each of the Agents in their
individual capacities.
Section 11.9 Successor Collateral Agent. The Collateral Agent, upon five
--------------------------
(5) days' notice to the Seller Parties, the Purchasers and the Co-Agents, may
voluntarily resign and may be removed at any time, with or without cause, by
both Co-Agents, whereupon FSI shall become the successor Collateral Agent;
provided, however, that Wachovia shall not voluntarily resign as the Collateral
Agent so long as any of the Blue Ridge Liquidity Banks' respective Commitments
remain in effect or Blue Ridge has any outstanding Receivable Interests
hereunder. Upon resignation or replacement of any Collateral Agent in accordance
with this Section 11.9, the retiring Collateral Agent shall execute such UCC-3
assignments and amendments, and assignments and amendments of the Transaction
Documents, as may be necessary to give effect to its replacement by a successor
Collateral Agent. After any retiring Collateral Agent's resignation hereunder as
Collateral Agent, the provisions of this Article XI and Article XIII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent under this Agreement.
Section 11.10 Agents' Conflict Waivers.
------------------------
(a) Wachovia acts, or may in the future act, (i) as administrative
agent for Blue Ridge, (ii) as issuing and paying agent for Blue Ridge's
Commercial Paper Notes, (iii) to provide credit or liquidity enhancement for the
timely payment for Blue Ridge's Commercial Paper Notes and (iv) to provide other
services from time to time for Blue Ridge (collectively, the "Wachovia Roles").
Without limiting the generality of Sections 11.1 and 11.8, each Agent, Purchaser
and Liquidity Bank hereby acknowledges and consents to any and all Wachovia
Roles and agrees that in connection with any Wachovia Role, Wachovia may take,
or refrain from
39
taking, any action which it, in its discretion, deems appropriate, including,
without limitation, in its role as administrative agent for Blue Ridge, the
giving of notice to Blue Ridge's Liquidity Banks of a mandatory purchase
pursuant to Blue Ridge's Liquidity Agreement, and hereby acknowledges that
neither Wachovia nor any of its Affiliates has any fiduciary duties hereunder to
any Purchaser (other than Blue Ridge) or to any of Blue Ridge's Liquidity Banks
arising out of any Wachovia Roles.
(b) Fleet and/or FSI acts, or may in the future act, (i) as
administrative agent for Blue Keel, (ii) as issuing and paying agent for Blue
Keel's Commercial Paper, (iii) to provide credit or liquidity enhancement for
the timely payment for Blue Keel's Commercial Paper and (iv) to provide other
services from time to time for Blue Keel (collectively, the "Fleet Roles").
Without limiting the generality of Sections 11.1 and 11.8, each of the Agents
and the Purchasers hereby acknowledges and consents to any and all Fleet Roles
and agrees that in connection with any Fleet Role, Fleet and/or FSI may take, or
refrain from taking, any action which it, in its discretion, deems appropriate,
including, without limitation, in its role as administrative agent for Blue
Keel, the giving of notice to Blue Keel's Liquidity Banks of a mandatory
purchase pursuant to Blue Keel's Liquidity Agreement, and hereby acknowledges
that neither Fleet nor any of its Affiliates has any fiduciary duties hereunder
to any Purchaser or to any of Blue Keel's Liquidity Banks arising out of any
Fleet Roles.
Section 11.11 UCC Filings. Each of the Secured Parties hereby expressly
-----------
recognizes and agrees that the Collateral Agent may be listed as the assignee or
secured party of record on the various UCC filings required to be made under the
Transaction Documents in order to perfect their respective interests in the
Collateral, that such listing shall be for administrative convenience only in
creating a record or nominee holder to take certain actions hereunder on behalf
of the Secured Parties and that such listing will not affect in any way the
status of the Secured Parties as the true parties in interest with respect to
the Receivable, Collections, and Related Security. In addition, such listing
shall impose no duties on the Collateral Agent other than those expressly and
specifically undertaken in accordance with this Article XI.
ARTICLE XII.
ASSIGNMENTS; PARTICIPATIONS
Section 12.1 Assignments.
-----------
(a) Subject to the provisions of Section 12.3, each of the parties
------------
hereto hereby agrees and consents to the complete or partial assignment by a
Conduit of all or any portion of its rights under, interest in, title to and
obligations under this Agreement to such Conduit's Liquidity Banks pursuant to
its Liquidity Agreement or to any other Person that (a) is organized under the
laws of the United States of America, one of the states thereof or the District
of Columbia and prior to the effectiveness of the applicable Assignment
---
Agreement deliver to Seller an officer's certificate stating that such Person is
a "U.S. person" within the meaning of Section 7701(a)(30) of the Tax Code, or
(b) prior to the effectiveness of the applicable Assignment Agreement delivers
to Seller two (2) duly originals of a completed and executed Internal Revenue
Service Form W-8BEN or W-8ECI, as appropriate, or any successor form prescribed
by the Internal Revenue Service, certifying that such Person is entitled to
benefits under an income tax treaty to
40
which the United States is a party which reduces to zero the rate of withholding
tax on payments due under this Agreement or certifying that the income
receivable pursuant to this Agreement or any of the other Transaction Documents
is effectively connected with the conduct of a trade or business in the United
States, and upon such assignment, such Conduit shall be released from its
obligations so assigned. Further, each of the parties hereto hereby agrees that
any assignee of a Conduit of this Agreement or all or any of the Receivable
Interests of such Conduit shall have all of the rights and benefits under this
Agreement as if the term "Conduit" explicitly referred to such party, and no
such assignment shall in any way impair the rights and benefits of such Conduit
hereunder. Neither Seller nor the Servicer shall have the right to assign its
rights or obligations under this Agreement; provided, however, that if the
servicer is a Subsidiary directly or indirectly wholly owned by the Parent, the
Servicer may merge with another Subsidiary (other than the Seller) directly or
indirectly wholly owned by the Parent, so long as the surviving entity of such
merger expressly assumes the obligations of Servicer hereunder and the
Performance Guarantor confirms that the guaranty under the Performance
Undertaking covers the obligations of such surviving entity as Servicer.
(b) Subject to the provisions of Section 12.3, any Liquidity Bank may
------------
at any time and from time to time assign to one or more Persons ("Purchasing
Liquidity Banks") all or any part of its rights and obligations under this
Agreement pursuant to an assignment agreement, substantially in the form set
forth in Exhibit VI hereto (the "Assignment Agreement"), and an assignment
pursuant to the applicable Liquidity Agreement executed by such Purchasing
Liquidity Bank and such selling Liquidity Bank. The consent of the applicable
Conduit shall be required prior to the effectiveness of any such assignment.
Each assignee of a Liquidity Bank must (i) have a short-term debt rating of A-1
or better by Standard & Poor's Ratings Group and P-1 by ▇▇▇▇▇'▇ Investor
Service, Inc., (ii) agree to deliver to the applicable Co-Agent, promptly
following any request therefor by such Co-Agent or its Conduit, an
enforceability opinion in form and substance satisfactory to such Co-Agent and
Conduit, and (iii) either (A) be organized under the laws of the United States
of America, one of the states thereof or the District of Columbia and, prior to
---
the effectiveness of the applicable Assignment Agreement, deliver to Seller an
officer's certificate stating that such assignee is a "U.S. person" within the
meaning of Section 7701(a)(30) of the Tax Code, or (B) prior to the
--
effectiveness of the applicable Assignment Agreement deliver to Seller two (2)
duly originals of a completed and executed Internal Revenue Service Form W-8BEN
or W-8ECI, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such assignee is entitled to benefits under an
income tax treaty to which the United States is a party which reduces to zero
the rate of withholding tax on payments due under this Agreement or certifying
that the income receivable pursuant to this Agreement or any of the other
Transaction Documents is effectively connected with the conduct of a trade or
business in the United States. Upon delivery of the executed Assignment
Agreement, and an assignment pursuant to the applicable Liquidity Agreement to
such Co-Agent, such selling Liquidity Bank shall be released from its
obligations hereunder and under the applicable Liquidity Agreement to the extent
of such assignment. Thereafter the Purchasing Liquidity Bank shall for all
purposes be a Liquidity Bank party to this Agreement and shall have all the
rights and obligations of a Liquidity Bank under this Agreement and the
applicable Liquidity Agreement to the same extent as if it were an original
party hereto and thereto, and no further consent or action by Seller, the
Purchasers or the Agents shall be required.
41
Section 12.2 Participations. Subject to the provisions of Section 12.3, any
-------------- ------------
Liquidity Bank may, in the ordinary course of its business, and subject to the
terms of the applicable Liquidity Agreement, at any time sell to one or more
Persons that (a) are organized under the laws of the United States of America,
one of the states thereof or the District of Columbia and prior to the
---
effectiveness of the applicable Assignment Agreement deliver to Seller an
officer's certificate stating that such Person is a "U.S. person" within the
meaning of Section 7701(a)(30) of the Tax Code, or (b) prior to the
effectiveness of the applicable Assignment Agreement deliver to Seller two (2)
duly originals of a completed and executed Internal Revenue Service Form W-8BEN
or W-8ECI, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Person is entitled to benefits under an
income tax treaty to which the United States is a party which reduces to zero
the rate of withholding tax on payments due under this Agreement or certifying
that the income receivable pursuant to this Agreement or any of the other
Transaction Documents is effectively connected with the conduct of a trade or
business in the United States (each such Person, a "Participant") participating
interests in its Ratable Share of the Commitments and Receivable Interests of
the Liquidity Banks in its Group. Notwithstanding any such sale by a Liquidity
Bank of a participating interest to a Participant, such Liquidity Bank's rights
and obligations under this Agreement shall remain unchanged, such Liquidity Bank
shall remain solely responsible for the performance of its obligations
hereunder, and each of the parties hereto shall continue to deal solely and
directly with such Liquidity Bank in connection with such Liquidity Bank's
rights and obligations under this Agreement. Each Liquidity Bank agrees that any
agreement between such Liquidity Bank and any such Participant in respect of
such participating interest shall not restrict such Liquidity Bank's right to
agree to any amendment, supplement, waiver or modification to this Agreement,
except for any amendment, supplement, waiver or modification described in
Section 13.1(b)(i).
Section 12.3 Limitation on Assignments and Participations. Neither the
--------------------------------------------
Purchasers nor the Seller shall allow any Receivable Interests or any
participating interest therein to become (i) traded on an established securities
market (as defined in U.S. Department of Treasury (the "Treasury") regulations
--------
section 1.7704-1(b) or (ii) readily tradable on a secondary market or the
substantial equivalent thereof (as defined in Treasury regulations section
1.7704-1(c)). In addition, neither the Receivable Interests nor any
participating interest therein may be issued or sold in a transaction or
transactions that are required to be registered under the Securities Act of 1933
(15 U.S.C. 77a et seq.). Any assignment or transfer of the Receivable Interests
or any participating interest therein in violation of the foregoing restrictions
will be void.
ARTICLE XIII.
MISCELLANEOUS
Section 13.1 Waivers and Amendments.
----------------------
(a) No failure or delay on the part of any Agent or any Purchaser in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law. Any
42
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing in accordance with the provisions of this
Section 13.1(b). Each of the Conduits, Seller and the Agents may enter into
written modifications or waivers of any provisions of this Agreement, provided,
however, that no such modification or waiver shall:
(i) without the consent of each affected Purchaser, (A) extend
the Scheduled Termination Date or the date of any payment or deposit of
Collections by Seller or the Servicer, (B) reduce the rate or extend the time of
payment of Yield or any CP Costs (or any component of Yield or CP Costs), (C)
reduce any fee payable to the Collateral Agent for the benefit of the
Purchasers, (D) except pursuant to Article XII hereof, change the amount of the
Invested Amount of any Purchaser, any Liquidity Bank's Pro Rata Share (except
pursuant to Sections 13.1 or 13.5) or any Liquidity Bank's Commitment, (E)
increase the obligation of any Conduit, (F) amend, modify or waive any provision
of the definition of this Section 13.1(b) or Section 12.1(a), 13.6 or 13.14, (G)
consent to or permit the assignment or transfer by Seller of any of its rights
and obligations under this Agreement, (H) change the definition of "Accrual
Period," "Eligible Receivable," "Loss Reserve," "Default Ratio," "Delinquency
Ratio," "Dilution Reserve," "Dilution Ratio," "Required Reserve," "Required
Reserve Factor Floor," "Servicing Reserve," "Settlement Date," "Settlement
Period" or "Yield Reserve" or (I) amend or modify any defined term (or any
defined term used directly or indirectly in such defined term) used in clauses
(A) through (H) above in a manner that would circumvent the intention of the
restrictions set forth in such clauses; or
(ii) without the written consent of the then Agent, amend, modify
or waive any provision of this Agreement if the effect thereof is to affect the
rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Liquidity Banks,
but with the consent of Seller, the Collateral Agent may amend this Agreement
solely to add additional Persons as Liquidity Banks hereunder and (ii) the
Agents and Conduits may enter into amendments to modify any of the terms or
provisions of Article XI, Article XII, Section 13.13 or any other provision of
this Agreement without the consent of Seller, provided that such amendment has
no negative impact upon Seller. Any modification or waiver made in accordance
with this Section 13.1 shall apply to each of the Purchasers equally and shall
be binding upon Seller, the Purchasers and the Agents.
Section 13.2 Notices. Except as provided in this Section 13.2, all
-------
communications and notices provided for hereunder shall be in writing (including
bank wire, telecopy or electronic facsimile transmission or similar writing) and
shall be given to the other parties hereto at their respective addresses or
telecopy numbers set forth on the signature pages hereof or at such other
address or telecopy number as such Person may hereafter specify for the purpose
of notice to each of the other parties hereto. Each such notice or other
communication shall be effective (i) if given by telecopy, upon the receipt
thereof, (ii) if given by mail, three (3) Business Days after the time such
communication is deposited in the mail with first class postage prepaid or (iii)
if given by any other means, when received at the address specified in this
Section 13.2. Seller
43
hereby authorizes the Collateral Agent to effect purchases and Tranche Period
and Discount Rate selections based on telephonic notices made by any Person whom
the Collateral Agent in good faith believes to be acting on behalf of Seller.
Seller agrees to deliver promptly to the Collateral Agent a written confirmation
of each telephonic notice signed by an authorized officer of Seller; provided,
however, the absence of such confirmation shall not affect the validity of such
notice. If the written confirmation differs from the action taken by the
Collateral Agent, the records of the Collateral Agent shall govern absent
manifest error.
Section 13.3 Ratable Payments. If any Purchaser, whether by setoff or
----------------
otherwise, has payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
Section 10.2 or 10.3) in a greater proportion than that received by any other
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of such Aggregate Unpaids held by the other Purchasers so
that after such purchase each Purchaser will hold its ratable proportion of such
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
Section 13.4 Protection of Ownership Interests of the Purchasers.
---------------------------------------------------
(a) Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Collateral Agent may
request, to perfect, protect or more fully evidence the Receivable Interests, or
to enable the Collateral Agent or the Purchasers to exercise and enforce their
rights and remedies hereunder. At any time after the occurrence of an
Amortization Event, the Collateral Agent may, or the Collateral Agent may direct
Seller or the Servicer to, notify the Obligors of Receivables, at Seller's
expense, of the ownership or security interests of the Purchasers under this
Agreement and may also direct that payments of all amounts due or that become
due under any or all Receivables be made directly to the Collateral Agent or its
designee. Seller or the Servicer (as applicable) shall, at any Purchaser's
request, withhold the identity of such Purchaser in any such notification.
(b) If any Seller Party fails to perform any of its obligations
hereunder, the Collateral Agent or any Purchaser may (but shall not be required
to) perform, or cause performance of, such obligations, and the Collateral
Agent's or such Purchaser's costs and expenses incurred in connection therewith
shall be payable by Seller as provided in Section 10.3. Each Seller Party
irrevocably authorizes the Collateral Agent at any time and from time to time in
the sole discretion of the Collateral Agent, and appoints the Collateral Agent
as its attorney-in-fact, to act on behalf of such Seller Party (i) to execute on
behalf of Seller as debtor and to file (or to file without Seller's signature to
the extent permitted by applicable law) financing statements necessary or
desirable in the Collateral Agent's sole discretion to perfect and to maintain
the perfection and priority of the interest of the Purchasers in the Receivables
and (ii) to file a carbon, photographic or other reproduction of this Agreement
or any financing statement with respect to the Receivables as a financing
statement in such offices as the Collateral Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and
44
priority of the interests of the Purchasers in the Receivables. This appointment
is coupled with an interest and is irrevocable.
Section 13.5 Confidentiality.
---------------
(a) Each Seller Party, Agent and Purchaser shall maintain and shall
cause each of its employees and officers to maintain the confidentiality of this
Agreement and the other confidential or proprietary information with respect to
the Agents and Conduits and their respective businesses obtained by it or them
in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that such Seller Party, Agent or
Purchaser and its officers and employees may disclose such information to its
external accountants and attorneys, its rating agencies, to the banks from time
to time party to the Parent Credit Agreement, in connection with the enforcement
hereof, and as required by any law, rule, regulation, direction, request or
order of any judicial, administrative or regulatory authority or proceedings
(whether or not having the force or effect of law), including disclosure in its
required filings with the Securities and Exchange Commission.
(b) Anything herein to the contrary notwithstanding, each Seller Party
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Agents or the Purchasers by each other, (ii) by the Agents or the
Purchasers to any prospective or actual assignee or participant of any of them
and (iii) by each of the Co-Agents to any rating agency, Commercial Paper dealer
or provider of a surety, guaranty or credit or liquidity enhancement to its
Conduit or any entity organized for the purpose of purchasing, or making loans
secured by, financial assets for which such Co-Agent acts as the administrative
agent and to any officers, directors, members, direct or indirect owners,
employees, outside accountants and attorneys of any of the foregoing, provided
that each such Person is informed of the confidential nature of such
information. In addition, the Purchasers and the Agents may disclose any such
nonpublic information pursuant to any law, rule, regulation, direction, request
or order of any judicial, administrative or regulatory authority or proceedings
(whether or not having the force or effect of law) or in connection with the
enforcement hereof.
Section 13.6 Bankruptcy Petition. Each of Seller, the Servicer, the Agents
-------------------
and the other Purchasers hereby covenants and agrees that, prior to the date
that is one year and one day after the payment in full of all outstanding
indebtedness of a Conduit, it will not institute against, or join any other
Person in instituting against, such Conduit any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States. This
Section 13.6 shall survive termination of this Agreement.
Section 13.7 Limitation of Liability. Except with respect to any claim
-----------------------
arising out of the willful misconduct or gross negligence of any Agent or any
Purchaser, no claim may be made by any Seller Party or any other Person against
any Agent or Purchaser or their respective Affiliates, directors, members,
direct or indirect owners, officers, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect of any claim for
breach of contract or any other theory of liability arising out of or related to
the transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and each Seller
45
Party hereby waives, releases, and agrees not to ▇▇▇ upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
Section 13.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF OTHER THAN SECTION 5-1401 ET SEQ. OF THE
GENERAL OBLIGATIONS LAW AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE
RECEIVABLE INTERESTS OR ANY SECURITY INTEREST GRANTED HEREIN IS GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 13.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY IRREVOCABLY
-----------------------
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE
COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT
TO THIS AGREEMENT AND EACH SELLER PARTY HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT
OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE
RIGHT OF ANY AGENT OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER
PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY
SELLER PARTY AGAINST ANY AGENT OR ANY PURCHASER OR ANY AFFILIATE OF ANY AGENT OR
ANY PURCHASER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY
SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN
NEW YORK, NEW YORK.
Section 13.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL
--------------------
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY
SELLER PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED
HEREUNDER OR THEREUNDER.
Section 13.11 Integration; Binding Effect; Survival of Terms.
----------------------------------------------
(a) This Agreement and each other Transaction Document contain the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
46
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by any Seller
Party pursuant to Article V, (ii) the indemnification and payment provisions of
Article X, and (iii) Sections 13.5, 13.6 and 13.14 shall be continuing and shall
survive any termination of this Agreement.
Section 13.12 Counterparts; Severability; Section References. This
----------------------------------------------
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
Section 13.13 Characterization.
----------------
(a) It is the intention of the parties hereto that each purchase
hereunder shall constitute and be treated as an absolute and irrevocable sale,
which purchase shall provide the applicable Purchaser with the full benefits of
ownership of the applicable Receivable Interest. Except as specifically provided
in this Agreement, each sale of a Receivable Interest hereunder is made without
recourse to Seller; provided, however, that (i) Seller shall be liable to each
Purchaser and the Collateral Agent for all representations, warranties,
covenants and indemnities made by Seller pursuant to the terms of this
Agreement, and (ii) such sale does not constitute and is not intended to result
in an assumption by any Purchaser or any Agent or any assignee thereof of any
obligation of Seller or any Originator or any other Person arising in connection
with the Receivables, the Related Security, or the related Contracts, or any
other obligations of Seller or any Originator.
(b) In addition to any ownership interest which the Collateral Agent
may from time to time acquire pursuant hereto, Seller hereby grants to the
Collateral Agent for the ratable benefit of the Purchasers a valid and perfected
security interest in all of Seller's right, title and interest in, to and under
all Receivables now existing or hereafter arising, the Collections, each
Lock-Box, each Collection Account, all Related Security, all other rights and
payments relating to such Receivables, and all proceeds of any thereof prior to
all other liens on and security interests therein to secure the prompt and
complete payment of the Aggregate Unpaids. The Collateral Agent and the
Purchasers shall have, in addition to the rights and remedies that they may have
under this Agreement, all other rights and remedies provided to a secured
creditor under the UCC and other applicable law, which rights and remedies shall
be cumulative.
47
(c) The Seller and Purchasers hereby agree to treat the Purchaser
Receivables Interests as debt instruments for purposes of United States federal
and state income tax or state franchise tax to the extent permitted by
applicable law.
Section 13.14 Nonrecourse Nature of Transactions. Each of the parties
----------------------------------
hereto hereby acknowledges and agrees that all transactions with the Conduits
hereunder shall be without recourse of any kind to such Conduit. Each Conduit
shall have no obligation to pay any amounts owing hereunder unless and until
such Conduit has received such amounts pursuant to the Receivable Interests or
the Liquidity Agreement. In addition, each party agrees that each Conduit shall
have no obligation to pay any party, any amounts constituting fees, a
reimbursement for expenses or indemnities, (collectively, "Expense Claims") and
such Expense Claims shall not constitute a claim against such Conduit (as
defined in Section 101 of Title 11 of the United States Bankruptcy Code), unless
or until such Conduit has received amounts sufficient to pay such Expense Claims
pursuant to the Receivable Interests or the Liquidity Agreement and such amounts
are not required to pay the commercial paper of such Conduit. This provision
shall survive termination of the Agreement.
Section 13.15 U.S. Persons. Each of the Agents and Purchasers who is a
------------
party to this Agreement as of the date hereof hereby certifies to the Seller
Parties that it is organized under the laws of the United States of America, one
of the states thereof or the District of Columbia.
[SIGNATURE PAGES FOLLOW]
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
hereof.
O&M Funding Corp., as Seller
By:
-----------------------------------
Name:
Title:
Address:
▇▇▇▇▇ & MINOR MEDICAL, INC., as Servicer
By:
-----------------------------------
Name:
Title:
Address:
49
BLUE KEEL FUNDING, L.L.C.
By:
-----------------------------------
Name:
Title:
Address:
FLEET NATIONAL BANK, individually
By:
-----------------------------------
Name:
Title:
Address:
FLEET SECURITIES, INC., as Blue Keel Agent
By:
-----------------------------------
Name:
Title:
Address:
50
BLUE RIDGE ASSET FUNDING CORPORATION
By: Wachovia Bank, National Association, Attorney-in Fact
By:
-----------------------------------
Name:
Title:
Address:
WACHOVIA BANK, NATIONAL ASSOCIATION, INDIVIDUALLY, as Blue Ridge Agent
and as Collateral Agent
By:
-----------------------------------
Name:
Title:
Address:
51
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Accrual Period" means each calendar month, provided that the initial
Accrual Period hereunder means the period from (and including) the date of the
initial purchase hereunder to (and including) the last day of the calendar month
thereafter.
"Adjusted Dilution Ratio" means, at any time, the rolling average of
the Dilution Ratio for the twelve (12) Calculation Periods then most recently
ended.
"Adverse Claim" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
"Affected Liquidity Bank" has the meaning specified in Section
12.1(c).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person or any Subsidiary of such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.
"Agents" has the meaning set forth in the preamble to this Agreement.
"Aggregate Invested Amount" means, on any date of determination, the
aggregate amount of the Invested Amount of all Receivable Interests outstanding
on such date.
"Aggregate Changes" means the aggregate amount of changes to the
Aggregated Invested Amount.
"Aggregate Reduction" has the meaning specified in Section 1.3.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of
the Aggregate Invested Amount and all unpaid Obligations (whether due or
accrued) at such time.
"Agreement" means this Receivables Purchase Agreement, as it may be
amended or modified and in effect from time to time.
"Amortization Date" means the earliest to occur of (i) the day on
which any of the conditions precedent set forth in Section 6.2 are not
satisfied, (ii) the Business Day
52
immediately prior to the occurrence of an Amortization Event set forth in
Section 9.1(d)(ii), (iii) the Business Day specified in a written notice from
any Agent following the occurrence of any other Amortization Event, (iv) the
date which is 30 days after the Co-Agents' receipt of written notice from Seller
that it wishes to terminate the facility evidenced by this Agreement, and (v)
the Scheduled Termination Date.
"Amortization Event" has the meaning specified in Article IX.
"Assignment Agreement" has the meaning set forth in Section 12.1(b).
"Authorized Officer" means, with respect to any Person, its president,
corporate controller, treasurer or chief financial officer.
"Blue Keel" has the meaning provided in the preamble of this
Agreement.
"Blue Keel Agent" has the meaning provided in the preamble of this
Agreement.
"Blue Keel Allocation Limit" has the meaning set forth in Section
1.1(a).
"Blue Keel Fee Letter" means that certain Blue Keel Fee Letter dated
as of the date hereof by and among Seller, Blue Keel and the Blue Keel Agent.
"Blue Keel Liquidity Agreement" means the Liquidity Agreement dated as
of the date hereof among Blue Keel, the Blue Keel Agent, and the Blue Keel
Liquidity Banks from time to time party thereto, as the same may be amended,
restated, supplemented, replaced or otherwise modified from time to time.
"Blue Ridge" has the meaning specified in the preamble to this
Agreement.
"Blue Ridge Allocation Limit" has the meaning set forth in Section
1.1(a).
"Blue Ridge Fee Letter" means that certain Blue Ridge Fee Letter dated
as of the date hereof by and among Seller, Blue Ridge and the Blue Ridge Agent.
"Blue Ridge Liquidity Agreement" means the Liquidity Asset Purchase
Agreement dated as of the date hereof among Blue Ridge, the Blue Ridge Agent,
and the Blue Ridge Liquidity Banks from time to time party thereto, as the same
may be amended, restated, supplemented, replaced or otherwise modified from time
to time.
"Broken Funding Costs" means for any Receivable Interest which: (i)
has its Invested Amount reduced on a day other than a Settlement Date and in any
event without compliance by Seller with the notice requirements hereunder, (ii)
has its Invested Amount reduced on a Settlement Date in an amount in excess of
33% of the Invested Amount as of the end of the prior month, (iii) does not
become subject to an Aggregate Reduction following the delivery of any Reduction
Notice, or (iv) is assigned under Article XII or terminated prior to the date on
which it was originally scheduled to end; an amount equal to the excess, if any,
of (A) the CP Costs or Yield (as applicable) that would have accrued during the
remainder of the Tranche Periods or the tranche periods based on the actual
maturity for Commercial Paper
53
determined by the related Co-Agent to relate to such Receivable Interest (as
applicable) subsequent to the date of such reduction, assignment or termination
(or in respect of clause (ii) above, the date such Aggregate Reduction was
designated to occur pursuant to the Reduction Notice) of the Invested Amount of
such Receivable Interest if such reduction, assignment or termination had not
occurred or such Reduction Notice had not been delivered, over (B) the sum of
(x) to the extent all or a portion of such Invested Amount is allocated to
another Receivable Interest, the amount of CP Costs or Yield actually accrued
during the remainder of such period on such Invested Amount for the new
Receivable Interest, and (y) to the extent such Invested Amount is not allocated
to another Receivable Interest, the income, if any, actually received during the
remainder of such period by the holder of such Receivable Interest from
investing the portion of such Invested Amount not so allocated. All Broken
Funding Costs, or any component thereof, shall be due and payable hereunder upon
demand.
"Business Day" means any day on which banks are not authorized or
required to close in New York, New York, Atlanta, Georgia, Chicago, Illinois,
Richmond, Virginia, or Boston, Massachusetts and The Depository Trust Company of
New York is open for business, and, if the applicable Business Day relates to
any computation or payment to be made with respect to the LIBO Rate, any day on
which dealings in dollar deposits are carried on in the London interbank market.
"Calculation Period" means a calendar month.
"Change of Control" means (a) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock
of Performance Guarantor, or (b) Performance Guarantor ceases to own, directly
or indirectly, 100% of the outstanding voting stock of any other Seller Party or
any Originator.
"Co-Agent" has the meaning set forth in the preamble to this
Agreement.
"Collateral Agent" has the meaning set forth in the preamble to this
Agreement.
"Collection Account" means each concentration account, depositary
account, lock-box account or similar account in which any Collections are
collected or deposited and which is listed on Exhibit IV.
"Collection Account Agreement" means an agreement in form reasonably
acceptable to the Agents and Seller among an Originator, Seller, the Collateral
Agent and a Collection Bank with respect to a Collection Account and/or
Lock-Box.
"Collection Bank" means, at any time, any of the banks holding one or
more Collection Accounts.
"Collection Notice" means a notice from the Collateral Agent to a
Collection Bank.
54
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds in respect of such Receivable, including,
without limitation, all yield, Finance Charges or other related amounts accruing
in respect thereof and all cash proceeds of Related Security with respect to
such Receivable.
"Commercial Paper" means promissory notes of a Conduit issued by or on
behalf of such Conduit in the commercial paper market.
"Commitment" means, for each Liquidity Bank, the commitment of such
Liquidity Bank to purchase Receivable Interests from (i) Seller and (ii)
Conduit, in an amount not to exceed (i) in the aggregate, the amount set forth
opposite such Liquidity Bank's name on Schedule A to this Agreement, as such
amount may be modified in accordance with the terms hereof (including, without
limitation, any termination of Commitments pursuant to Section 13.6 hereof) and
(ii) with respect to any individual purchase hereunder, its Ratable Share of the
Purchase Price therefor.
"Conduit" has the meaning set forth in the preamble to this Agreement.
"Constituents" means, as to either Co-Agent, the Conduit represented
by it as specified in the preamble to this Agreement, and each of such Conduit's
Liquidity Banks, and the term "Constituent" when used as an adjective shall have
a correlative meaning.
"Contingent Obligation" of a Person means any agreement, undertaking
or arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
"Contract" means, with respect to any Receivable, any and all
instruments, agreements, invoices or other writings pursuant to which such
Receivable arises or which evidences such Receivable.
"CP Costs" means:
(a) for Blue Ridge for each day, the sum of (i) (A) discount or yield
accrued on Blue Ridge's Pooled Commercial Paper on such day, plus (B) any and
all accrued commissions in respect of placement agents and Commercial Paper
dealers, and issuing and paying agent fees incurred, in respect of Blue Ridge's
Pooled Commercial Paper for such day, plus (C) other costs associated with
funding small or odd-lot amounts with respect to all receivable purchase
facilities which are funded by Blue Ridge's Pooled Commercial Paper for such
day, minus (D) any accrual of income net of expenses received on such day from
investment of collections received under all receivable purchase facilities
funded substantially with Blue Ridge's Pooled Commercial Paper, minus (E) any
payment received on such day by such Conduit net of expenses in respect of
Broken Funding Costs related to the prepayment of any Receivable Interest of
Blue Ridge pursuant to the terms of any receivable purchase facilities funded
substantially with its Pooled Commercial Paper, plus (ii) the Program Fee. In
addition to the
55
foregoing costs, if Seller shall request any Incremental Purchase during any
period of time determined by the Blue Ridge Agent in its sole discretion to
result in incrementally higher CP Costs applicable to such Incremental Purchase,
the Invested Amount associated with any such Incremental Purchase shall, during
such period, be deemed to be funded by Blue Ridge in a special pool (which may
include capital associated with other receivable purchase facilities) for
purposes of determining such additional CP Costs applicable only to such special
pool and charged each day during such period against such Invested Amount; and
(b) for Blue Keel, for any Accrual Period (or portion thereof), the
discount which may be paid or payable by Blue Keel from time to time as the sum
of (i) interest on or otherwise (by means of Hedge Agreements or otherwise) in
respect of Commercial Paper issued by, or on behalf of, Blue Keel that are
allocated in whole or in part by, or on behalf of Blue Keel to fund or maintain
Receivables Interests during such Accrual Period as determined by or on behalf
of Blue Keel, plus (ii) interest on such interest since the last Settlement
Date, as determined by or on behalf of Blue Keel, plus (iii) the Program Fee,
which discount shall reflect and give effect to the commissions of placement
agents and dealers in respect of such allocated Commercial Paper and to net
payments owed or received by or on behalf of Blue Keel under any Hedge
Agreements (provided, however, that if any component of the rates used in
calculating the "CP Costs" for such Accrual Period is a discount rate, Blue Keel
shall for such component use the rate resulting from converting such discount
rate to an interest bearing equivalent rate per annum).
"Credit and Collection Policy" means the Originators' credit and
collection policies and practices relating to Contracts and Receivables existing
on the date hereof and summarized in Exhibit VII hereto, as modified from time
to time in accordance with this Agreement.
"Cut-Off Date" means the last day of a Calculation Period.
"Days Sales Outstanding" means, as of any day, an amount equal to the
product of (x) 91, multiplied by (y) the amount obtained by dividing (i) the
aggregate outstanding balance of Receivables as of the most recent Cut-Off Date,
by (ii) the aggregate Outstanding Balance of Receivables created during the
three (3) months including and immediately preceding such Cut-Off Date.
"Deemed Collections" means the aggregate of all amounts Seller shall
have been deemed to have received as a Collection of a Receivable. Seller shall
be deemed to have received a Collection of a Receivable if at any time the
Outstanding Balance of any such Receivable is either (a) reduced as a result of
any defective or rejected goods or services, any discount or any adjustment or
otherwise by Seller or any Affiliate thereof (other than cash Collections on
account of the Receivables) or (b) reduced or canceled as a result of a setoff
in respect of any claim by any Person (whether such claim arises out of the same
or a related transaction or an unrelated transaction), in each of the foregoing
cases, to the extent of such reduction or cancellation, and Seller shall be
deemed to have received a Collection of a Receivable in full if at any time any
of the representations or warranties in Section 5.1(g) (to the extent it relates
to such Receivable) or any of Sections 5.1(i), (j), (t) and (u) are no longer
true with respect to any Receivable.
56
"Default Fee" means with respect to any amount due and payable by
Seller in respect of any Aggregate Unpaids, an amount equal to the greater of
(i) $1,000 and (ii) interest on any such unpaid Aggregate Unpaids at a rate per
annum equal to 2% above the Prime Rate.
"Default Horizon Ratio" means, as of any Cut-Off Date, the ratio
(expressed as a decimal) computed by dividing (i) the aggregate sales generated
by the Originators during the four months ending on such Cut-Off Date, by (ii)
the Net Pool Balance as of such Cut-off Date.
"Defaulted Receivable" means a Receivable: (i) as to which the Obligor
thereof has suffered an event of bankruptcy; (ii) which, has been or consistent
with the Originators' credit and collection policies, should be, written off as
uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid
for 91 days or more from the original due date for such payment.
"Default Ratio" means, as of any Cut-Off Date, the ratio (expressed as
a percentage) computed by dividing (x) the aggregate Outstanding Balance of
Receivables which became Defaulted Receivables during the month that includes
such Cut-Off Date, by (y) the aggregate sales generated by the Originators
during the month occurring four months prior to the month ending on such Cut-Off
Date.
"Delinquency Ratio" means, at any time, a percentage equal to (i) the
aggregate Outstanding Balance of all Receivables that were Delinquent
Receivables at such time divided by (ii) the aggregate Outstanding Balance of
all Receivables at such time.
"Delinquent Receivable" means a Receivable as to which any payment, or
part thereof, remains unpaid for 61-90 days from the original due date for such
payment.
"Dilution Horizon Ratio" means, as of any Cut-off Date, a ratio
(expressed as a decimal), computed by dividing (i) the aggregate sales generated
by the Originators during the one (1) month ending on such Cut-Off Date, by (ii)
the Net Pool Balance as of such Cut-Off Date.
"Dilution Ratio" means, as of any Cut-Off Date, a ratio (expressed as
a percentage), computed by dividing (i) the total amount of decreases in
outstanding principal balances due to Dilutions during the month ending on such
Cut-Off Date, by (ii) the aggregate sales generated by the Originators during
the month immediately prior to the current month ending on such Cut-Off Date.
"Dilution Reserve" means, for any month, the product (expressed as a
percentage) of: (a) the sum of (i) 2.25 times the Adjusted Dilution Ratio as of
the immediately preceding Cut-Off Date, plus (ii) the Dilution Volatility
Component as of the immediately preceding Cut-Off Date, times (b) the Dilution
Horizon Ratio as of the immediately preceding Cut-Off Date.
"Dilution Volatility Component" means the product (expressed as a
percentage) of (i) the difference between (a) the highest three (3)-month
rolling average Dilution Ratio over the past 12 months and (b) the Adjusted
Dilution Ratio, and (ii) a fraction, the numerator of
57
which is equal to the amount calculated in (i)(a) of this definition and the
denominator of which is equal to the amount calculated in (i)(b) of this
definition.
"Dilutions" means, at any time, the aggregate amount of reductions or
cancellations described in clause (i) of the definition of "Deemed Collections".
"Discount Rate" means, the LIBO Rate or the Prime Rate, as applicable,
with respect to each Receivable Interest of the Liquidity Banks.
"Downgraded Liquidity Bank" means a Liquidity Bank which has been the
subject of a Downgrading Event.
"Downgrading Event" with respect to any Person means the lowering of
the rating with regard to the short-term securities of such Person to below (i)
A-1 by S&P, or (ii) P-1 by Moody's.
"Eligible Receivable" means, at any time, a Receivable:
(a) the Obligor of which to the knowledge of the originators and/or
Seller (i) if a natural person, is a resident of the United States or, if a
corporation or other business organization, is organized under the laws of
the United States or any political subdivision thereof and has its chief
executive office in the United States and (ii) is not an Affiliate of
Seller,
(b) which is not a Defaulted Receivable or owing from an Obligor as to
which more than 50% of the aggregate Outstanding Balance of all Receivables
owing from such Obligor are Defaulted Receivables,
(c) which was not a Delinquent Receivable on the date on which it was
acquired by Seller from the applicable Originator,
(d) which by its terms is due and payable within 90 days of the
original billing date therefor and has not had its payment terms extended,
(e) which is an "account" or a "payment intangible" within the meaning
of Section 9-102 of the UCC of all applicable jurisdictions,
(f) which is denominated and payable only in United States dollars in
the United States,
(g) which arises under a Contract which, together with such
Receivable, is in full force and effect and constitutes the legal, valid
and binding obligation of the related Obligor enforceable against such
Obligor in accordance with its terms subject to no offset, counterclaim or
other defense,
(h) which arises under a Contract which (A) does not require the
Obligor under such Contract to consent to the transfer, sale, pledge or
assignment of the rights and duties of the applicable Originator or any of
its assignees under such contract and (B)
58
does not contain a confidentiality provision that purports to restrict the
ability of the Collateral Agent on behalf of the Purchasers to exercise its
rights under this Agreement, including, without limitation, its right to
review the Contract, or if such a confidentiality provision is contained
therein, as to which each of the Agents has executed a written
confidentiality agreement with the applicable Obligor on terms reasonably
acceptable to such Agent,
(i) which arises under a Contract that contains an obligation to pay a
specified sum of money, contingent only upon the sale of goods or the
provision of services by the applicable Originator,
(j) which, together with the Contract related thereto, does not
contravene any law, rule or regulation applicable thereto (including,
without limitation, any law, rule and regulation relating to truth in
lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect
to which no part of the Contract related thereto is in violation of any
such law, rule or regulation,
(k) which satisfies in all material respects the applicable
requirements of the Credit and Collection Policy,
(l) which was generated in the ordinary course of the applicable
Originator's business,
(m) which arises solely from the sale of goods or the provision of
services to the related Obligor by the applicable Originator, and not by
any other Person (in whole or in part),
(n) which is not subject to any dispute (other than in the ordinary
course of business), counterclaim, right of rescission, set-off,
counterclaim or any other defense (including defenses arising out of
violations of usury laws) of the applicable Obligor against the applicable
Originator or any other adverse claim, and the Obligor thereon holds no
right as against such Originator to cause such Originator to repurchase the
goods or merchandise the sale of which shall have given rise to such
Receivable (except with respect to sale discounts effected pursuant to the
Contract, or defective goods returned in accordance with the terms of the
contract); provided, however, that if such dispute, offset, counterclaim or
defense affects only a portion of the outstanding principal balance of such
Receivable, then such Receivable may be deemed an Eligible Receivable to
the extent of the portion of such outstanding principal balance which is
not so affected, and provided, further, that Receivables of any Obligor
which has any accounts payable by the applicable Originator or by a
wholly-owned subsidiary of such Originator (thus giving rise to a potential
offset against such Receivables) may be treated as Eligible Receivables to
the extent that the Obligor of such Receivables has agreed pursuant to a
written agreement in form and substance satisfactory to the Agents, that
such Receivables shall not be subject to such offset,
(o) as to which the applicable Originator has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and
59
further action is required to be performed by any Person with respect
thereto other than payment thereon by the applicable Obligor,
(p) as to which each of the representations and warranties contained
in Section 5.1(g) (to the extent it relates to such Receivable) or any of
-------------
Sections 5.1(i), (j), (r), (s), (t) and (u) is true and correct, and
-------------------------------------------
(q) all right, title and interest to and in which has been validly
transferred by the applicable Originator directly to Seller under and in
accordance with the Receivables Sale Agreement, and Seller has good and
marketable title thereto free and clear of any Adverse Claim.
"Equity Interests" means, with respect to any Person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of capital of such
Person, including, if such Person is a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership, whether outstanding on the date
hereof or issued after the date of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations issued thereunder.
"Estimated Daily Sales Taxes Receivable" means, for any day, the
product of (a) the Sales Tax Ratio for the Accrual Period then most recently
ended multiplied by (b) Collections received during the Accrual Period then most
recently ended, multiplied by (c) a fraction, the numerator of which is one and
the denominator of which is the actual number of days in the calendar month of
determination.
"Estimated Sales Taxes" means, on any date of determination, the
product of Total Accounts Receivable as of the last day of the Accrual Period
then most recently ended multiplied by the Sales Tax Ratio for the Accrual
Period then most recently ended.
"Excluded Taxes" has the meaning set forth in Section 10.1(d).
---------------
"Existing Collection Account Agreements" means a collection account
agreement entered into in connection with the Existing Receivables Purchase
Facility.
"Existing Receivables Purchase Facility" means the receivables
purchase facility evidenced by the Receivables Purchase Agreement dated as of
July 14, 2000 among Seller, the Parent, ▇▇▇▇▇ &Minor Medical, Inc., Falcon Asset
Securitization Corporation, Receivables Capital Corporation and Liberty Street
Funding Corp., as Conduits, Bank One, NA, Bank of America, National Association
and The Bank of Nova Scotia, as Managing Agents and Bank One, N.A., as
Collateral Agent, and certain Financial Institutions from time to time party
hereto, as amended by Amendment No. 1 dated as of July 12, 2001 and Amendment
No. 2 dated as of December 31, 2001.
60
"Facility Account" means Seller's account no. XXXXXXXXX at SunTrust
Bank in Richmond, VA.
"Facility Termination Date" means the earlier of (i) the Scheduled
Termination Date, and (ii) the Amortization Date.
"Federal Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy," as amended and any successor statute thereto.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum for each day during such period equal to (a) the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York in the Composite Closing
Quotations for U.S. Government Securities; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 11:30 a.m. (New York time) for such day on such transactions
received by the applicable Co-Agent from three federal funds brokers of
recognized standing selected by it.
"Federal Government Receivables" means any Receivables which
constitute obligations incurred by or on behalf of the federal government of the
United States or any agency thereof.
"Fee Letters" means, collectively, the Blue Ridge Fee Letter and the
Blue Keel Fee Letter.
"Finance Charges" means, with respect to a Contract, any finance,
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
"Fleet" has the meaning specified in the preamble to this Agreement.
"FSI" has the meaning specified in the preamble to this Agreement.
"Funding Agreement" means this Agreement and any agreement or
instrument executed by any Funding Source with or for the benefit of Conduit.
"Funding Source" means (i) any Liquidity Bank or (ii) any insurance
company, bank or other funding entity providing liquidity, credit enhancement or
back-up purchase support or facilities to Conduit.
"GAAP" means generally accepted accounting principles in effect in the
United States of America as of the date of this Agreement.
"Governmental Authority" means any federal, state, local or foreign
court or governmental agency, authority, instrumentality, or regulatory body.
"Group" means the Blue Ridge Group or the Blue Keel Group.
61
"Hedge Agreement" means any financial futures contract, option,
forward contract, warrant, swap, swaption, collar, floor, cap and other
agreement, instrument and derivative and other transactions of a similar nature
(whether currency linked, rate linked, index linked, insurance risk linked,
credit risk linked or otherwise) entered into by a Conduit with the consent of
Seller in respect of Commercial Paper issued by, or on behalf of, Blue Keel that
are allocated in whole or in part by, or on behalf of Blue Keel to fund or
maintain Receivables Interests as determined by or on behalf of Blue Keel.
"Incremental Purchase" means a purchase of a Receivable Interest which
increases the total outstanding Aggregate Invested Amount hereunder (and shall
include the initial Purchase hereunder).
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person issued or assumed as the deferred purchase price of property or services
purchased by such Person which would appear as liabilities on a balance sheet of
such Person in accordance with GAAP, (d) all contingent obligations of such
Person with respect to Indebtedness of another Person, (e) the maximum stated
amount of all standby letters of credit issued or bankers' acceptances created
for the account of such Person and, without duplication, all drafts drawn
thereunder to the extent unreimbursed (other than letters of credit (i)
supporting other Indebtedness of such Person or (ii) offset by a like amount of
cash or government securities pledged or held in escrow to secured such letter
of credit and draws thereunder), (f) the principal portion of all obligations of
such Person under capital leases, (g) all Indebtedness of another Person secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Adverse Claim on, or payable out
of the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, provided that
for purposes hereof, the amount of such Indebtedness shall be limited to the
amount of such Indebtedness as to which there is recourse to such Person or the
fair market value of the property which is subject to the Adverse Claim, if
less, (h) all obligations of such Person under take-or-pay or similar
arrangements or under commodities agreements, (i) all obligations of such Person
under interest rate protection agreements and foreign currency exchange
agreements, (j) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person (other
than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (k) all preferred
stock issued by such Person which by the terms thereof could be (at the request
of the holders thereof or otherwise) subject o mandatory sinking fund payments,
redemption or other acceleration at any time prior to the Facility Termination
Date, (l) the principal portion of obligations of such Person under any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product where such transaction is considered
borrowed money indebtedness for tax purposes but is classified as an operating
lease under GAAP, and (m) the Indebtedness of any partnership or unincorporated
joint venture in which such ▇▇▇▇▇ is a general partner or a joint venturer, but
only to the extent to which there is recourse to such Person (or its assets) for
the payment of such Indebtedness. For purposes hereof, Indebtedness shall also
include payments in respect of Indebtedness which constitute current liabilities
of the obligor under GAAP. The Indebtedness of any Person shall not include (i)
trade debt incurred in the ordinary course of
62
business and due within twelve months of the incurrence thereof, (ii) accrued
expenses, and (iii) accrued pension and retirement plan liabilities to the
extent such liabilities would not appear as debt on a balance sheet of such
Person in accordance with GAAP.
"Independent Director" shall mean a member of the Board of Directors
of Seller who is not at such time, and has not been at any time during the
preceding five (5) years, (A) a director, officer, employee or Affiliate of any
Seller Party, any Originator, or any of their respective Subsidiaries or
Affiliates, or (B) the beneficial owner (at the time of such individual's
appointment as an Independent Director or at any time thereafter while serving
as an Independent Director) of any of the outstanding common shares of any
Seller Party, any Originator, or any of their respective Subsidiaries or
Affiliates, having general voting rights, or a spouse, parent, child or sibling
of any of the foregoing.
"Interim Settlement Reports" means a report, in substantially the form
of Exhibit XI hereto.
"Invested Amount" of any Purchaser's Receivable Interest means, at any
time, (A) the Purchase Price of such Receivable Interest, minus (B) the sum of
the aggregate amount of Collections and other payments received by the
applicable Co-Agent which in each case are applied to reduce such Invested
Amount in accordance with the terms and conditions of this Agreement; provided
that such Invested Amount shall be restored (in accordance with Section 2.5) in
the amount of any Collections or other payments so received and applied if at
any time the distribution of such Collections or payments are rescinded,
returned or refunded for any reason.
"LIBO Rate" means, for any Tranche Period, the rate per annum
determined on the basis of the offered rate for deposits in U.S. dollars of
amounts equal or comparable to the principal amount of the related Loan offered
for a term comparable to such Tranche Period, which rates appear on a Bloomberg
L.P. terminal, displayed under the address "US0001M *Index** Q *Go**" effective
as of 11:00 A.M., London time, two Business Days prior to the first day of such
Tranche Period, provided that if no such offered rates appear on such page, the
LIBO Rate for such Tranche Period will be the arithmetic average (rounded
upwards, if necessary, to the next higher 1/100th of 1%) of rates quoted by not
less than two major banks in New York, New York, selected by the applicable
Co-Agent, at approximately 10:00 a.m.(New York time), two Business Days prior to
the first day of such Tranche Period, for deposits in U.S. dollars offered by
leading European banks for a period comparable to such Tranche Period in an
amount comparable to the Invested Amount allocated to such Tranche Period,
divided by (b) one minus the maximum aggregate reserve requirement (including
all basic, supplemental, marginal or other reserves) which is imposed against
any Liquidity Bank in respect of Eurocurrency liabilities, as defined in
Regulation D of the Board of Governors of the Federal Reserve System as in
effect from time to time (expressed as a decimal), applicable to such Tranche
Period plus (ii) the Program Fee per annum. The LIBO Rate shall be rounded, if
necessary, to the next higher 1/16 of 1%.
"Liquidity Agreements" means the Blue Keel Liquidity Agreement and
Blue Ridge Liquidity Agreement.
63
"Liquidity Banks" means, collectively, the Blue Ridge Liquidity Banks
and the Blue Keel Liquidity Banks.
"Lock-Box" means each locked postal box with respect to which a bank
who, not later than the 91st day following the date hereof, has executed a
Collection Account Agreement has been granted exclusive access for the purpose
of retrieving and processing payments made on the Receivables and which is
listed on Exhibit IV.
"Loss Reserve" means, for any month, the product (expressed as a
percentage) of (a) 2.0, times (b) the highest three-month rolling average
Default Ratio during the 12 months ending on the immediately preceding Cut-Off
Date, times (c) the Default Horizon Ratio as of the immediately preceding
Cut-Off Date.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition, assets, business prospects or operations of Seller or
Parent and its consolidated subsidiaries, taken as a whole (at any time Parent
or any of its Affiliates is acting as Servicer or Performance Guarantor), (ii)
the ability of any Seller Party to perform its obligations under this Agreement
or the Performance Guarantor to perform its obligations under the Performance
Undertaking, (iii) the legality, validity or enforceability of this Agreement or
any other Transaction Document, (iv) any Purchaser's interest in the Receivables
generally or in any significant portion of the Receivables, the Related Security
or the Collections with respect thereto, or (v) the collectibility of the
Receivables generally or of any material portion of the Receivables.
"Monthly Reporting Date" shall have the meaning set forth in Section
8.5.
"Net Pool Balance" means, at any time, Total Accounts Receivable,
minus Estimated Sales Taxes for the Accrual Period then most recently ended,
minus the aggregate Outstanding Balance of all Receivables that are not Eligible
Receivables at such time, minus the aggregate amount by which the Outstanding
Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds
the Obligor Concentration Limit for such Obligor.
"Non-U.S. Purchaser" means each Purchaser and each Participant that is
granted a participating interest in any Receivable Interest and that is not a
United States Person within the meaning of Section 7701(a)(30) of the Tax Code.
"Obligations" shall have the meaning set forth in Section 2.1.
"Obligor" means a Person obligated to make payments pursuant to a
Contract.
"Obligor Concentration Limit" means, at any time:
(a) not more than 15% of the aggregate Outstanding Balance of all
Eligible Receivables may be Receivables with 31-60 day payment terms;
(b) not more than 7.5% of the aggregate Outstanding Balance of all
Eligible Receivables may be Receivables with 61-90 day payment terms,
64
(c) not more than 2.5% of the aggregate Outstanding Balance of all
Eligible Receivables may be Federal Government Receivables, and
(d) in relation to the aggregate Outstanding Balance of Eligible
Receivables owed by any single Obligor and its Affiliates (if any), the
applicable concentration limit shall be determined as follows for Obligors who
have short term unsecured debt ratings currently assigned to them by S&P and
▇▇▇▇▇'▇ (or in the absence thereof, the equivalent long term unsecured senior
debt ratings), the applicable concentration limit shall be determined according
to the following table:
-----------------------------------------------------------------------------
Allowable % of Eligible
S&P Rating ▇▇▇▇▇'▇ Rating Receivables
-----------------------------------------------------------------------------
A-1+ P-1 10%
-----------------------------------------------------------------------------
A-1 P-1 8%
-----------------------------------------------------------------------------
A-2 P-2 6%
-----------------------------------------------------------------------------
A-3 P-3 4%
-----------------------------------------------------------------------------
Below A-3 or Not Rated Below P-3 or Not
by either S&P or Rated by either S&P or 3%
▇▇▇▇▇'▇ ▇▇▇▇▇'▇
-----------------------------------------------------------------------------
; provided, however, that (i) if any Obligor has a split rating, the applicable
rating will be the lower of the two, (ii) if any Obligor is not rated by either
S&P or ▇▇▇▇▇'▇, the applicable Obligor Concentration Limit shall be the one set
forth in the last line of the table above, (iii) subject to rating agency
approval and/or an increase in the Required Reserve Factor Floor, upon Seller's
request from time to time, the Co-Agents may agree to a higher percentage of
Eligible Receivables for a particular Obligor and its Affiliates (each such
higher percentage, a "Special Concentration Limit"), it being understood that
any Special Concentration Limit may be cancelled by any Co-Agent upon not less
than five (5) Business Days' written notice to Seller, (d) both Co-Agents must
agree to establish a Special Concentration Limit, however either one may decide
to remove an Obligor as a special obligor, and (iv) a Special Concentration
Limit has been declared for ▇▇▇▇▇ Healthcare Corporation to be 7.50%.
"Organic Document" means, relative to any Person, its certificate of
incorporation, its by-laws, its partnership agreement, its memorandum and
articles of association, its limited liability company agreement and/or
operating agreement, share designations or similar organization documents and
all shareholder agreements, voting trusts and similar arrangements applicable to
any of its authorized Equity Interests.
"Originator" means each of Parent, O&M Distribution, and O&M Medical,
in its capacity as a seller under the Receivables Sale Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"O&M Distribution" means ▇▇▇▇▇ & Minor Distribution, Inc., a Virginia
corporation.
65
"O&M Medical" means ▇▇▇▇▇ & Minor Medical, Inc., a Virginia
corporation.
"Parent" means ▇▇▇▇▇ & Minor, Inc., a Virginia corporation.
"Parent Credit Agreement" means that certain Credit Agreement dated as
of April 30, 2002, by and among the Parent, as borrower, various of its
Subsidiaries, as guarantors, the banks, syndication agents and co-agents from
time to time party thereto, and Bank of America, N.A., as administrative agent,
as in effect on the date hereof.
"Participant" has the meaning set forth in Section 12.2.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Percentage" means (a) 66-2/3% as to Blue Ridge, and (b) 33-1/3% as to
Blue Keel.
"Performance Guarantor" means Parent and its successors.
"Performance Undertaking" means that certain Performance Undertaking,
dated as of April 30, 2002, by Performance Guarantor in favor of Seller,
substantially in the form of Exhibit X, as the same may be amended, restated or
otherwise modified from time to time.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Pooled Commercial Paper" means Commercial Paper notes of a Conduit
subject to any particular pooling arrangement by such Conduit, but excluding
Commercial Paper issued by such Conduit for a tenor and in an amount
specifically requested or allocated by any Person in connection with any
agreement effected by such Conduit.
"Potential Amortization Event" means an event which, with the passage
of time or the giving of notice, or both, would constitute an Amortization
Event.
"Prime Rate" means, as to either Group, a rate per annum equal to the
prime rate of interest announced from time to time by the applicable Co-Agent or
its parent (which is not necessarily the lowest rate charged to any customer),
changing when and as said prime rate changes.
"Program Fee" has the meaning set forth in the Fee Letters.
"Proposed Reduction Date" has the meaning set forth in Section 1.3.
"Purchase Limit" means $225,000,000.
"Purchase Notice" has the meaning set forth in Section 1.2.
66
"Purchase Price" means, with respect to any Incremental Purchase of a
Receivable Interest, the amount paid to Seller for such Receivable Interest
which shall not exceed the least of (i) the amount requested by Seller in the
applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the
applicable purchase date and (iii) the excess, if any, of the Net Pool Balance
(less the Required Reserves) on the applicable purchase date over the aggregate
outstanding amount of Aggregate Invested Amount determined as of the date of the
most recent Settlement Report, taking into account such proposed Incremental
Purchase.
"Purchasers" means, collectively, the Conduits and the Liquidity
Banks.
"Purchasing Liquidity Bank" has the meaning set forth in Section
12.1(b).
"Qualifying Liquidity Bank" means a Liquidity Bank with a rating of
its short-term securities equal to or higher than (i) A-1 by S&P and (ii) P-1 by
▇▇▇▇▇'▇.
"Ratable Share" means with respect to any Liquidity Bank, the ratio
which its Commitment bears to the sum of the Commitments of all Liquidity Banks
for the same Conduit.
"Receivable" means each "Receivable" under and as defined in the
Receivables Sale Agreement in which Seller now has or hereafter acquires any
right, title or interest.
"Receivable Interest" means, at any time, an undivided percentage
ownership interest (computed as set forth below) associated with a designated
amount of Invested Amount, selected pursuant to the terms and conditions hereof
in (i) each Receivable arising prior to the time of the most recent computation
or recomputation of such undivided interest, (ii) all Related Security with
respect to each such Receivable, and (iii) all Collections with respect to, and
other proceeds of, each such Receivable. Each such undivided percentage interest
shall equal:
IA
----------------
NPB - RR
where:
IA = the Invested Amount of such Receivable Interest.
RR = the Required Reserve.
NPB = the Net Pool Balance.
Such undivided percentage ownership interest shall be initially computed on its
date of purchase. Thereafter, until the Amortization Date, each Receivable
Interest shall be automatically recomputed (or deemed to be recomputed) on each
day prior to the Amortization Date. The variable percentage represented by any
Receivable Interest as computed (or deemed recomputed) as of the close of the
business day immediately preceding the Amortization Date shall remain constant
at all times thereafter.
67
"Receivables Sale Agreement" means that certain Receivables Sale
Agreement, dated as of April 30, 2002, between Originators and Seller, as the
same may be amended, restated or otherwise modified from time to time.
"Records" means, with respect to any Receivable, all Contracts and
other documents, books, records and other information (including, without
limitation, computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable, any
Related Security therefor and the related Obligor.
"Reduction Notice" has the meaning set forth in Section 1.3.
"Regulatory Change" has the meaning set forth in Section 10.2(a).
"Reinvestment" has the meaning set forth in Section 2.2.
"Related Security" means, with respect to any Receivable:
(i) all "Related Security" under and as defined in the Receivables
Sale Agreement in which Seller now has or hereafter acquires any right, title or
interest,
(ii) all of Seller's right, title and interest in, to and under the
Receivables Sale Agreement in respect of such Receivable and all of Seller's
right, title and interest in, to and under the Performance Undertaking, and
(iii) all proceeds of any of the foregoing.
"Required Notice Period" means the number of days required notice set
forth below applicable to the Aggregate Reduction indicated below:
Aggregate Reduction Required Notice Period
---------------------------- ----------------------
less than $75 million 2 Business Days
greater than $75 million and 5 Business Days
less than or equal to $225
million
"Required Reserve" means, on any day during a month, the product of
(a) the greater of (i) the Required Reserve Factor Floor and (ii) the sum of the
Loss Reserve, the Yield Reserve, the Dilution Reserve and the Servicing Reserve,
times (b) the Net Pool Balance as of the Cut-Off Date immediately preceding such
month.
"Required Reserve Factor Floor" means, for any month, the sum
(expressed as a percentage) of (a) 18.50%, plus (b) the product of the Adjusted
Dilution Ratio and the Dilution Horizon Ratio, in each case, as of the
immediately preceding Cut-Off Date, plus (c) if the Total Consolidated Leverage
Ratio for the 4 fiscal quarters ending with the quarter in which such month
falls exceeds 3.0 to 1.0, 3.0%.
68
"Response Date" has the meaning set forth in Section 1.5 of this
Agreement.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of Seller now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock or in any junior class of stock of
Seller, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of capital stock of Seller now or hereafter outstanding, (iii) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to the Subordinated Loans (as defined in the Receivables Sale
Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of capital stock of Seller now or hereafter
outstanding, and (v) any payment of management fees by Seller (except for
reasonable management fees to an Originator or its Affiliates in reimbursement
of actual management services performed); provided, however, that payment of the
Facility Fee (under and as defined in the Receivable Sale Agreement) shall not
constitute a Restricted Junior Payment.
"Sales Tax Ratio" means, on any date of determination, the ratio of
collections in respect of sales taxes as a proportion of total collections,
estimated on any date of determination as the quotient (expressed as a
percentage) of sales tax billed by the Originators for the Accrual Period then
most recently ended, divided by total sales billed by the Originators for the
Accrual Period then most recently ended; provided that, on a quarterly basis the
Servicer (or its designee) shall reconcile the estimates and determine the
actual ratio for such quarter and any discrepancy shall be paid by the
applicable Originator or the Buyer, as applicable.
"Scheduled Termination Date" means April 27, 2005.
"Seller" has the meaning set forth in the preamble to this Agreement.
"Seller Parties" means, collectively, (a) Seller, (b) at any time that
Parent is acting as Performance Guarantor, Parent, and (c) at any time while O&M
Medical or one of its Affiliates is acting as Servicer, Servicer.
"Servicer" means at any time the Person (which may be the Collateral
Agent) then authorized pursuant to Article VIII to service, administer and
collect Receivables.
"Servicing Fee" has the meaning set forth in Section 8.6.
"Servicing Reserve" means, for any month, the product (expressed as a
percentage) of (a) 1%, times (b) a fraction, the numerator of which is the
highest Days Sales Outstanding for the most recent 12 months and the denominator
of which is 360.
"Settlement Date" means (A) two (2) Business Days after each Monthly
Reporting Date (and each other date, if any, on which a Settlement Report is
required to be delivered under Section 8.5(i)), and (B) the last day of the
relevant Tranche Period in respect of each Receivable Interest of the Liquidity
Banks.
69
"Settlement Period" means (A) in respect of each Receivable Interest
of a Conduit, the immediately preceding Accrual Period, and (B) in respect of
each Receivable Interest of the Liquidity Banks, the entire Tranche Period of
such Receivable Interest.
"Settlement Report" means a report, in substantially the form of
Exhibit IX hereto (appropriately completed), furnished by the Servicer to the
Co-Agents pursuant to Section 8.5.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, limited liability company, joint venture
or similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
"Tax Code" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Terminating Tranche" has the meaning set forth in Section 4.3(b).
"Total Accounts Receivable" means, on any date of determination, the
aggregate Outstanding Balance of all Receivables, plus any sales taxes payable
by the Originators.
"Tranche Period" means, with respect to any Receivable Interest held
by a Liquidity Bank:
(a) if Yield for such Receivable Interest is calculated on the basis
of the LIBO Rate, a period of one, two, three or six months, or such other
period as may be mutually agreeable to the applicable Co-Agent and Seller,
commencing on a Business Day selected by Seller or such Co-Agent pursuant to
this Agreement. Such Tranche Period shall end on the day in the applicable
succeeding calendar month which corresponds numerically to the beginning day of
such Tranche Period, provided, however, that if there is no such numerically
corresponding day in such succeeding month, such Tranche Period shall end on the
last Business Day of such succeeding month; or
(b) if Yield for such Receivable Interest is calculated on the basis
of the Prime Rate, a period commencing on a Business Day selected by Seller,
provided that no such period shall exceed one month.
If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day, provided, however,
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding Business Day falls in a new month, such Tranche Period shall end on
the immediately preceding Business Day. In the case of any Tranche Period for
any Receivable Interest which commences before the Amortization Date and would
otherwise end on a date occurring after the Amortization Date, such Tranche
Period shall end on the Amortization Date. The duration of each Tranche Period
which commences after the Amortization Date shall be of such duration as
selected by the applicable Co-Agent.
70
"Transaction Documents" means, collectively, this Agreement, each
Purchase Notice, the Receivables Sale Agreement, each Collection Account
Agreement, the Performance Undertaking, the Fee Letters, the Liquidity
Agreements, the Subordinated Notes (as defined in the Receivables Sale
Agreement) and all other instruments, documents and agreements executed and
delivered in connection herewith.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
"Yield" means for each respective Tranche Period relating to
Receivable Interests of the Liquidity Banks, an amount equal to the product of
the applicable Discount Rate for each Receivable Interest multiplied by the
Invested Amount of such Receivable Interest for each day elapsed during such
Tranche Period, annualized on a 360 day basis.
"Yield Reserve" means, for any month, the product (expressed as a
percentage) of (i) 1.5 times (ii) the Alternate Base Rate as of the immediately
-----
preceding Cut-Off Date times (iii) a fraction the numerator of which is the
highest Days Sales Outstanding for the most recent 12 months and the denominator
of which is 360.
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
71