Exhibit 10.12
--------------------------------------------------------------------------------
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
by and among
MEDCO HEALTH RECEIVABLES, LLC
as Seller
MEDCO HEALTH SOLUTIONS, INC.
as Servicer
The Persons Parties hereto as
Conduit Purchasers and Committed Purchasers
CITICORP NORTH AMERICA, INC.
and
BANK ONE, NA (MAIN OFFICE CHICAGO)
as Managing Agents
and
CITICORP NORTH AMERICA, INC.
as Administrative Agent
Dated as of September 22, 2003
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms..........................................1
SECTION 1.02 Other Terms....................................................1
SECTION 1.03 Amendment and Restatement......................................2
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01 Purchase Facility..............................................2
SECTION 2.02 Making Incremental Purchases...................................3
SECTION 2.03 Receivable Interest Computation................................4
SECTION 2.04 Application of Collections Prior to Termination Date...........5
SECTION 2.05 Application of Collections After Termination Date..............7
SECTION 2.06 General Settlement Procedures..................................8
SECTION 2.07 Yield and Fees.................................................9
SECTION 2.08 Payments and Computations, Etc................................10
SECTION 2.09 Dividing or Combining Receivable Interests....................10
SECTION 2.10 Breakage Costs................................................10
SECTION 2.11 Illegality....................................................11
SECTION 2.12 Inability to Determine Eurodollar Rate........................11
SECTION 2.13 Indemnity for Reserves and Expenses...........................11
SECTION 2.14 Indemnity for Taxes...........................................13
SECTION 2.15 Security Interest.............................................15
SECTION 2.16 Optional Liquidation..........................................16
SECTION 2.17 Optional Repurchase...........................................17
SECTION 2.18 Termination of Purchaser Groups...............................17
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01 Conditions Precedent to Agreement.............................18
SECTION 3.02 Conditions Precedent to All Purchases.........................18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Seller..................19
i
SECTION 4.02 Representations and Warranties of the Servicer................22
ARTICLE V
COVENANTS
SECTION 5.01 Covenants of the Seller.......................................23
SECTION 5.02 Audits........................................................32
SECTION 5.03 Additional Covenants of the Servicer..........................33
ARTICLE VI
ADMINISTRATION AND COLLECTION OF RECEIVABLES
SECTION 6.01 Designation of Servicer.......................................34
SECTION 6.02 Duties of Servicer............................................35
SECTION 6.03 Reports.......................................................36
SECTION 6.04 Certain Rights of the Administrative Agent....................37
SECTION 6.05 Rights and Remedies...........................................38
SECTION 6.06 Indemnities by the Servicer...................................39
SECTION 6.07 Administrative Agent Account..................................40
SECTION 6.08 Servicer Replacement Event....................................42
ARTICLE VII
TERMINATION EVENTS
SECTION 7.01 Termination Events............................................42
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01 Authorization and Action......................................45
SECTION 8.02 Agent's Reliance, Etc.........................................45
SECTION 8.03 CNAI and Affiliates...........................................46
SECTION 8.04 Indemnification of Administrative Agent.......................46
SECTION 8.05 Delegation of Duties..........................................46
SECTION 8.06 Action or Inaction by Administrative Agent....................46
SECTION 8.07 Notice of Events of Termination; Action by Administrative
Agent.........................................................47
SECTION 8.08 Non-Reliance on Administrative Agent and Other Parties........47
SECTION 8.09 Successor Administrative Agent................................47
ARTICLE IX
THE MANAGING AGENTS
SECTION 9.01 Authorization and Action......................................48
ii
SECTION 9.02 Managing Agent's Reliance, Etc................................48
SECTION 9.03 Managing Agent and Affiliates.................................49
SECTION 9.04 Indemnification of Managing Agents............................49
SECTION 9.05 Delegation of Duties..........................................49
SECTION 9.06 Action or Inaction by Managing Agent..........................49
SECTION 9.07 Notice of Events of Termination...............................50
SECTION 9.08 Non-Reliance on Managing Agent and Other Parties..............50
SECTION 9.09 Successor Managing Agent......................................51
SECTION 9.10 Reliance on Managing Agent....................................51
ARTICLE X
INDEMNIFICATION
SECTION 10.01 Indemnities by the Seller.....................................51
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Amendments, Etc...............................................53
SECTION 11.02 Notices, Etc..................................................54
SECTION 11.03 Assignability.................................................55
SECTION 11.04 Costs and Expenses............................................59
SECTION 11.05 No Proceedings................................................60
SECTION 11.06 Confidentiality...............................................60
SECTION 11.07 Amendments to Financial Covenants.............................62
SECTION 11.08 GOVERNING LAW.................................................62
SECTION 11.09 Execution in Counterparts.....................................62
SECTION 11.10 Integration; Binding Effect; Survival of Termination..........63
SECTION 11.11 Consent to Jurisdiction.......................................63
SECTION 11.12 WAIVER OF JURY TRIAL..........................................63
SECTION 11.13 Right of Setoff...............................................63
SECTION 11.14 Ratable Payments..............................................64
SECTION 11.15 Limitation of Liability.......................................64
SECTION 11.16 Intent of the Parties.........................................65
SCHEDULES
---------
SCHEDULE I - Definitions
SCHEDULE II - Purchaser Groups
SCHEDULE III - CP Rates
SCHEDULE IV - Deposit Accounts and Deposit Account Banks
SCHEDULE V - Credit and Collection Policy
SCHEDULE VI - Financial Covenants
iii
SCHEDULE VII - Reviewed Contracts
SCHEDULE VIII - Accounts Payable Deduction Amount and Rebate Deduction
Amount
SCHEDULE VII-A - Schedule of Client Contracts Reviewed (Assumed Governing
Law)
iv
ANNEXES
-------
ANNEX A-1 - Form of Monthly Report
ANNEX A-2 - Form of Weekly Report
ANNEX B-1 - Form of Control Agreement (Deposit Account)
ANNEX B-2 - Form of Control Agreement (Administrative Agent Account)
ANNEX C - Form of Assignment and Acceptance
ANNEX D - Form of Funds Transfer Letter
ANNEX E - Form of Joinder Agreement
v
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
Dated as of September 22, 2003
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), dated as of September 22, 2003, by and among (i) MEDCO HEALTH
RECEIVABLES, LLC, a Delaware limited liability company, as Seller, (ii) MEDCO
HEALTH SOLUTIONS, INC., a Delaware corporation, as initial Servicer, (iii) the
Conduit Purchasers from time to time parties hereto, (iv) the Committed
Purchasers from time to time parties hereto, (v) CITICORP NORTH AMERICA, INC.
and BANK ONE, NA (MAIN OFFICE CHICAGO), as Managing Agents and (vi) CITICORP
NORTH AMERICA, INC., as Administrative Agent.
PRELIMINARY STATEMENTS
----------------------
A. The Seller has acquired, and may continue to acquire, Receivables from
the Originator pursuant to the Originator Purchase Agreement by purchase or as a
contribution to the capital of the Seller.
B. The Seller may desire to convey, transfer and assign, from time to
time, undivided percentage interests in the Receivables (referred to herein as
"Receivable Interests") on the terms and conditions of this Agreement.
C. The Conduit Purchasers may, in their sole discretion, purchase the
Receivable Interests so offered for sale from time to time, and if a Conduit
Purchaser in any Purchaser Group elects not to make any such purchase, the
Committed Purchasers in such Purchaser Group have agreed that they shall make
such purchase, in each case subject to the terms and conditions of this
Agreement.
D. The Seller, Conduit Purchasers, the Bank Purchasers, the Managing
Agents, Administrative Agent and the Servicer are parties the Receivables
Purchase Agreement, dated as of August 8, 2003 (as amended prior to the date
hereof, the "Existing RPA").
E. On the terms and conditions set forth herein, the parties hereto have
agreed to amend and restate the Existing RPA in its entirety.
Accordingly, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. Capitalized terms used and not
otherwise defined herein have the meanings specified on Schedule I.
SECTION 1.02 Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, as in effect on the date hereof
and not specifically defined herein, are
used herein as defined in such Article 9. Unless otherwise expressly indicated,
all references herein to "Article," "Section," "Schedule" or "Annex" means
articles and sections of, and schedules and annexes to, this Agreement. Headings
are for purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof. Any reference to any Law shall be deemed
to be a reference to such Law as the same may be amended or re-enacted from time
to time. Any reference to any Person appearing in any of the Transaction
Documents shall include its successors and permitted assigns.
SECTION 1.03 Amendment and Restatement. Subject to the satisfaction
of the conditions precedent set forth in Section 3.01, this Agreement amends and
restates the Existing RPA in its entirety. This Agreement is not intended to
constitute a novation of any obligations under the Existing RPA. Upon the
effectiveness of this Agreement (the date of such effectiveness being the
"Effective Date"), each reference to the Existing RPA in any other document,
instrument or agreement executed and/or delivered in connection therewith shall
mean and be a reference to this Agreement.
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01 Purchase Facility. (a) The Seller may, at its option
from time to time prior to the Termination Date, offer to sell and assign
Receivable Interests to the Purchasers in each Purchaser Group at the applicable
Purchase Price specified pursuant to Section 2.02 (each such sale and
assignment, an "Incremental Purchase"). On the terms and conditions set forth
herein, (i) the Conduit Purchasers, ratably, in accordance with their respective
Conduit Purchase Limits, may, in their sole discretion, purchase the Receivable
Interests so offered for sale by the Seller and (ii) if a Conduit Purchaser in
any Purchaser Group declines to purchase any such Receivable Interest, or if a
Conduit Purchaser's Termination Event has occurred and is continuing with
respect to such Conduit Purchaser, the Committed Purchasers in such Purchaser
Group shall, ratably in accordance with their respective Commitments, severally
and not jointly, purchase such Receivable Interest. Each Incremental Purchase
shall be made among the Purchaser Groups ratably in accordance with their
respective Purchaser Group Limits, except as provided in Section 2.02(b). Under
no circumstances shall an Incremental Purchase be made hereunder if, after
giving effect thereto, (i) the aggregate outstanding Capital would exceed the
Purchase Limit or (ii) the Receivable Interest Percentage would exceed the
Maximum Receivable Interest Percentage, as determined by reference to the
information set forth in the most recent Servicer Report delivered hereunder.
(b) Until the Amortization Date for a Receivable Interest, the
Collections attributable to such Receivable Interest shall be automatically
reinvested in the Pool Receivables and Related Security and Collections with
respect thereto pursuant to (and subject to the priority of payments set forth
in) Section 2.04 (each a "Reinvestment Purchase") and such reinvested
Collections shall be applied pursuant to Section 2.03 of the Originator Purchase
Agreement to pay the purchase price for newly arising Receivables and/or to make
payments in respect of the Subordinated Note or other expenses of the Seller.
(c) Upon five (5) Business Days' written notice to the Administrative
Agent and each Managing Agent, the Seller may reduce the Commitments of the
Committed Purchasers
2
by an amount equal to $10,000,000 or by a whole multiple of $1,000,000 in excess
thereof; provided that no such termination or reduction shall be permitted if,
after giving effect thereto, the aggregate Capital would exceed the Aggregate
Commitment. Upon any such reduction, the Commitment of each Committed Purchaser
and the Conduit Purchase Limit of each Conduit Purchaser shall be reduced in an
amount equal to such Committed Purchaser's or Conduit Purchaser's ratable share
of the amount of such reduction. Once reduced, the Commitments shall not be
subsequently reinstated without the consent of each Committed Purchaser.
SECTION 2.02 Making Incremental Purchases. (a) Each Incremental
Purchase hereunder shall be made on notice delivered by the Seller to each
Managing Agent not later than 11:00 A.M. (New York City time) on the second
Business Day prior to the date of such Incremental Purchase. Each such notice
shall specify:
(i) the aggregate amount (which shall not be less than
$5,000,000 and integral multiples of $100,000 in excess thereof)
requested to be paid to the Seller for the Receivable Interests which
are the subject of such Incremental Purchase (the "Purchase Price");
(ii) the allocation of such Purchase Price among the Purchaser
Groups (which shall be proportional to the respective Conduit Purchase
Limits of the Conduit Purchaser(s) in each Purchaser Group, unless
such purchase is to be made by the Committed Purchasers in a
particular Purchaser Group and the proceeds of such purchase are to be
used solely to repay the Capital of the Receivable Interest of a
Conduit Purchaser pursuant to Section 2.02(b));
(iii) the date of such Incremental Purchase (which shall be a
Business Day); and
(iv) if the Assignee Rate is to apply to any such Receivable
Interest, the requested duration of the initial Fixed Period for such
Receivable Interest.
No more than two Incremental Purchases may be requested by the Seller
during any single calendar month.
Each Conduit Purchaser shall promptly notify its Managing Agent
whether it has determined to make the requested Incremental Purchase on the
terms specified by the Seller. If any Conduit Purchaser has determined not to
fund all or any portion of its share of the Purchase Price for an Incremental
Purchase, the Managing Agent for such Conduit Purchaser shall promptly send
notice of the proposed Incremental Purchase to the Committed Purchasers in such
Conduit Purchaser's Purchaser Group concurrently by telecopier specifying the
date of such Incremental Purchase, the aggregate amount of Capital of the
Receivable Interest being purchased by such Committed Purchasers (which amount
shall be equal to the portion of the Purchase Price that would otherwise have
been funded by the applicable Conduit Purchaser), each such Committed
Purchaser's portion thereof (determined ratably in accordance with their
respective Commitments), whether the Yield for the initial Fixed Period for such
Receivable Interest is calculated based on the Adjusted Eurodollar Rate (which
may be selected only if such notice is given at not later than 11:00 A.M. (New
York City time) on the second Business Day
3
prior to the purchase date) or the Alternate Base Rate, and the duration of the
Fixed Period for such Receivable Interest (which shall be one day if the Seller
has not selected another period in accordance with the provisions set forth in
the definition of "Fixed Period").
(b) On the date of each such Incremental Purchase, the applicable
Conduit Purchasers and/or Committed Purchasers shall, upon satisfaction of the
applicable conditions set forth in Article III, make available to the Seller in
same day funds an aggregate amount equal to the Purchase Price for the
Receivable Interests which are the subject of such Incremental Purchase, at the
account set forth in the Funds Transfer Letter; provided, however, if such
Incremental Purchase is being made by the Committed Purchasers in a Purchaser
Group following the Amortization Date for a Receivable Interest owned by a
Conduit Purchaser pursuant to clause (i)(a) of the definition of Amortization
Date and any Capital of such Receivable Interest is outstanding on such date of
purchase, the Seller hereby directs such Committed Purchasers to pay the
Purchase Price for such Incremental Purchase (to the extent of such outstanding
Capital) to the applicable Purchaser Group Account, for application to the
reduction of the outstanding Capital of such Receivable Interest.
(c) Effective on the date of each Purchase, the Seller hereby sells
and assigns to the Purchaser(s) participating in such Purchase, an undivided
percentage ownership interest, to the extent of the Receivable Interests then
being purchased or in respect of which the reinvestment is being made, in each
Pool Receivable then existing or thereafter arising and in the Related Security
and Collections with respect thereto.
(d) No Conduit Purchaser shall participate in an Incremental Purchase
under this Agreement at any time in an amount which would exceed such Conduit
Purchaser's Conduit Purchase Limit less an amount equal to the aggregate
outstanding Capital held by such Conduit Purchaser.
(e) Notwithstanding anything herein to the contrary, a Committed
Purchaser shall not be obligated to participate in an Incremental Purchase if,
after giving effect thereto and the application of the proceeds thereof, the
aggregate Capital held by such Committed Purchaser would exceed an amount equal
to (i) such Committed Purchaser's Commitment less (ii) such Committed
Purchaser's ratable share of the aggregate outstanding Capital held by the
Conduit Purchaser(s) in such Committed Purchaser's Purchaser Group (whether or
not any portion thereof has been assigned by such Conduit Purchaser(s) under an
Asset Purchase Agreement). Each Committed Purchaser's obligation shall be
several, such that the failure of any Committed Purchaser to make available to
the Seller any funds in connection with any Incremental Purchase shall not
relieve any other Committed Purchaser of its obligation, if any, hereunder to
make funds available on the date of such Incremental Purchase, but no Committed
Purchaser shall be responsible for the failure of any other Committed Purchaser
to make funds available in connection with any Incremental Purchase.
SECTION 2.03 Receivable Interest Computation. (a) Upon the payment of
the Purchase Price for any Incremental Purchase hereunder, (i) each Conduit
Purchaser participating in such Purchase shall acquire a Receivable Interest the
initial Capital of which is equal to the portion of the Purchase Price paid by
such Conduit Purchaser and (ii) to the extent the Committed Purchasers in any
Purchaser Group participate in such Purchase, such Committed
4
Purchasers shall acquire (ratably in accordance with their respective
Commitments) a Receivable Interest the initial Capital of which is equal to the
portion of the Purchase Price paid by such Committed Purchasers.
(b) Each Receivable Interest shall be initially computed on its date
of Purchase. Thereafter until the Amortization Date for such Receivable
Interest, such Receivable Interest shall be automatically recomputed (or deemed
to be recomputed) on each day other than a Liquidation Day. Any Receivable
Interest, as computed (or deemed recomputed) as of the day immediately preceding
the Amortization Date for such Receivable Interest, shall thereafter remain
constant until the Termination Date occurs. From and after the Termination Date
until the Final Payout Date, each Receivable Interest shall be equal to a
fraction (expressed as a percentage) the numerator of which is equal to the
Capital of such Receivable Interest as of the Termination Date and the
denominator of which is equal to the aggregate Capital of all Receivable
Interests as of the Termination Date.
(c) Each Purchase shall constitute a purchase of undivided percentage
ownership interests in each and every Pool Receivable, together with all Related
Security and Collections with respect thereto, then existing, as well as in each
and every Pool Receivable, together with all Related Security and Collections
with respect thereto, which arises at any time after the date of such Purchase.
From and after the Termination Date, the aggregate Receivable Interests of the
Purchasers shall equal 100%. On the Final Payout Date, the Administrative Agent,
on behalf of the Conduit Purchasers and the Committed Purchasers, shall be
deemed to have reconveyed to the Seller all of the Conduit Purchasers' and the
Committed Purchasers' respective right, title and interest in, to and under the
Pool Receivables and Related Security and Collections with respect thereto, and
the Receivable Interests shall accordingly be reduced to zero. Following the
Final Payout Date, the Administrative Agent, on behalf of the Conduit Purchasers
and the Committed Purchasers, shall execute and deliver to the Seller, at the
Seller's expense, such documents or instruments as the Seller may reasonably
request to terminate the Conduit Purchasers' and the Committed Purchasers'
respective interests in the Receivables and Related Security and Collections
with respect thereto. Any such documents shall be prepared by and at the expense
of the Seller.
SECTION 2.04 Application of Collections Prior to Termination Date.
(a) On each Business Day prior to the Termination Date, the Servicer
shall, out of the Collections received prior to such Business Day and not
previously applied pursuant to this Section 2.04 (including, if applicable, any
investment earnings received with respect to funds on deposit in the Collection
Account), apply such Collections in the following order and priority:
(i) set aside on its books and hold in trust for the
Purchasers, the Managing Agents and the Administrative Agent an amount
equal to the aggregate Yield, Fees and Servicing Fees accrued through
such day and not previously set aside, such amount to be allocated
among the Purchasers, the Managing Agents, the Administrative Agent
and the Servicer ratably in accordance with the proportion of such
amounts owing to each such Person;
5
(ii) if the Servicer Report with the most recent data delivered
hereunder indicates that the Receivable Interest Percentage exceeds
the Maximum Receivable Interest Percentage, either (A) pay to the
Purchasers (ratably in accordance with the outstanding Capital of
their respective Receivable Interests) the amount necessary to cause
the Receivable Interest Percentage to be less than or equal to the
Maximum Receivable Interest Percentage or (B) if the Administrative
Agent Account has been established pursuant to Section 6.07, deposit
to the Administrative Agent Account the amount necessary to cause the
Receivable Interest Percentage to be less than or equal to the Maximum
Receivable Interest Percentage;
(iii) if such day is a Liquidation Day for one or more
Receivable Interests (each a "Liquidating Receivable Interest"), set
aside and hold in trust for the relevant Purchasers an amount equal to
the excess, if any, of (1) the portion of the Capital allocable to
such Liquidating Receivable Interests over (2) the Collections
previously so set aside and allocable to such Capital pursuant to this
Section 2.04(a) and not yet distributed to the applicable Purchasers
hereunder, such amount to be allocated to such Liquidating Receivable
Interests ratably in proportion to the Capital of each; provided,
however, that if such day is a Liquidation Day by reason of the
suspension of Reinvestment Purchases pursuant to Section 2.16, then
the amount required to be set aside pursuant to this clause (iii)
shall not exceed the applicable Reduction Amount;
(iv) if any Seller Obligations (other than Yield, Fees,
Servicing Fees and Capital) are then due and payable by the Seller to
any Indemnified Party, pay to each such Indemnified Party (ratably in
accordance with the amounts owing to each) the Seller Obligations so
due and payable; and
(v) remit any remaining Collections to the Seller as a
Reinvestment Purchase, for the benefit of the Purchasers then holding
Receivable Interests, pursuant to Section 2.01(b).
(b) On each Settlement Date for a Receivable Interest, the Servicer
shall pay to the relevant Purchaser(s) all Yield payable to such Purchaser(s)
pursuant to Section 2.07 out of Collections allocated or set aside for such
purpose pursuant to Section 2.04(a). On each date on which any Fees are payable
pursuant to the Fee Letters, the Servicer shall pay such Fees to the Persons
entitled thereto pursuant to the Fee Letters out of Collections allocated or set
aside for such purpose pursuant to Section 2.04(a). On each Servicing Fee
Payment Date, the Servicer shall pay to itself the accrued and unpaid Servicing
Fee out of Collections allocated or set aside for such purpose pursuant to
Section 2.04(a).
(c) In the event any deposit is made to the Administrative Agent
Account pursuant to Section 2.04(a)(ii)(B), the amount of such deposit shall be
allocated among the Purchaser Groups ratably in proportion to the outstanding
Capital of their respective Receivable Interests. If the amount on deposit in
the Administrative Agent Account exceeds $25,000,000, then on the next
Settlement Date applicable to any Receivable Interest (or such earlier date as
the Servicer may specify upon not less than three Business Days notice to each
Managing Agent),
6
the Servicer shall distribute to each Purchaser then holding a Receivable
Interest such Purchaser's allocable share of such deposit for application to the
reduction of the Capital of such Receivable Interest. Notwithstanding the
foregoing, if on any Business Day after such deposit is made and prior to the
distribution of all or any portion of such deposit pursuant to this Section
2.04(c), the Servicer delivers a Servicer Report evidencing that the Receivable
Interest Percentage is less than the Maximum Receivable Interest Percentage, the
Servicer may withdraw the Collections so deposited for application in accordance
with Section 2.04(a) to the extent that, after giving effect to such withdrawal
and application, the Receivable Interest Percentage would not exceed the Maximum
Receivable Interest Percentage.
(d) In the event any Collections are set aside in respect of any
Liquidating Receivable Interest pursuant to Section 2.04(a)(iii), the Servicer
shall distribute such Collections to the relevant Purchaser(s) on or prior to
the first Settlement Date for any such Receivable Interest; provided, however,
that if at any time prior to such distribution, such Receivable Interest ceases
to be a Liquidating Receivable Interest, the Servicer need not distribute such
Collections pursuant to this Section 2.04(d) but instead may apply such
Collections in accordance with the provisions of Section 2.04(a).
(e) Following the occurrence and during the continuation of any
Termination Event or any Involuntary Bankruptcy Event, and at all times during
any Rating Level 3 Period or any Rating Level 4 Period, the Servicer shall (i)
transfer to the Collection Account all Collections set aside or required to be
set aside pursuant to this Section 2.04 by the Business Day following the
Servicer's receipt of such Collections, (ii) make all distributions of such
Collections pursuant to this Section 2.04 by withdrawing such Collections from
the Collection Account on the date such distribution is to be made and (iii) not
permit any withdrawals of such Collections from the Collection Account except
for the purpose of distributing such Collections in accordance with this Section
2.04. Except as provided herein, the Servicer shall not be required to segregate
any amounts set aside by it pursuant to this Section 2.04 from its other funds.
SECTION 2.05 Application of Collections After Termination Date. (a)
On the Termination Date, the Servicer shall deposit to the Collection Account
all Collections held by it on such date (including amounts previously set aside
pursuant to Section 2.04(a)). On each Business Day thereafter until the Final
Payout Date, the Servicer shall deposit to the Collection Account all
Collections received prior to such Business Day that have not previously been
deposited to the Collection Account. The Servicer shall not make any withdrawals
from the Collection Account during such period except for the purpose of
distributing such Collections in accordance with this Section 2.05.
(b) From and after the Termination Date, the Servicer shall apply all
funds on deposit in the Collection Account on any Business Day that have not
been previously applied hereunder (including, without limitation, any investment
earnings received with respect to such funds) in the following order of
priority:
(i) first, pay to the Administrative Agent an amount equal to the
Seller Obligations owing to the Administrative Agent in respect of costs
and expenses incurred
7
in connection with the enforcement of any Transaction Document or the
collection of any amounts due thereunder;
(ii) second, set aside and hold in trust for the Purchasers, the
Managing Agents and the Administrative Agent an amount equal to the
aggregate Yield and Fees and, if the Servicer is a Person other than Medco
or an Affiliate thereof, Servicing Fees accrued through such day and not
previously set aside, such amount to be allocated among the Purchasers, the
Managing Agents, the Administrative Agent and (if applicable) the Servicer
ratably in accordance with the proportion of such amounts owing to each
such Person;
(iii) third, set aside in the Collection Account an amount equal to
the aggregate Capital for all outstanding Receivable Interests (to the
extent not previously set aside), such amount to be allocated among the
Receivable Interests ratably in proportion to the Capital of each;
(iv) fourth, if any Seller Obligations (other than Yield, Fees,
Servicing Fees and Capital) are then due and payable by the Seller to any
Indemnified Party, pay to each such Indemnified Party (ratably in
accordance with the amounts owing to each) the Seller Obligations so due
and payable;
(v) sixth, if the Servicer is Medco or an Affiliate thereof, set
aside in the Collection Account the accrued and unpaid Servicing Fee not
previously set aside; and
(vi) seventh, on the Final Payout Date, pay to the Seller any
remaining funds.
(c) On each Settlement Date for a Receivable Interest from and after
the Termination Date, the Servicer shall withdraw from the Collection Account
and pay to the relevant Purchaser all amounts set aside in the Collection
Account in respect of the accrued Yield and the Capital of such Receivable
Interest. On each date on which any Fees are payable pursuant to the Fee
Letters, the Servicer shall pay such Fees to the Persons entitled thereto
pursuant to the Fee Letters out of Collections set aside for such purpose
pursuant to Section 2.05.
(d) On each Servicing Fee Payment Date from and after the Termination
Date, the Servicer shall pay to the Servicer the accrued Servicing Fee out of
Collections set aside for such purpose pursuant to this Section 2.05.
SECTION 2.06 General Settlement Procedures.
(a) Except as otherwise required by applicable law or the relevant
Contract, any payment received from an Obligor of any Receivables shall be
applied as a Collection of the Pool Receivables of such Obligor in the order of
the age of such Receivables, starting with the oldest such Receivable.
(b) If on any day any Pool Receivable (or portion thereof) becomes a
Diluted Receivable, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in the amount of such Diluted Receivable.
8
(c) If and to the extent the Administrative Agent, any Managing Agent
or any Purchaser shall be required for any reason to pay over to an Obligor any
amount received on its behalf hereunder, such amount shall be deemed not to have
been so received but rather to have been retained by the Seller and,
accordingly, the Administrative Agent, such Managing Agent or such Purchaser, as
the case may be, shall have a claim against the Seller for such amount, payable
when and only to the extent that any distribution from or on behalf of such
Obligor is made in respect thereof.
(d) Within one Business Day after the end of each Fixed Period in
respect of which Yield is computed by reference to the CP Rate, the relevant
Managing Agent shall furnish the Seller with an invoice setting forth the amount
of the accrued and unpaid Yield and Fees for such Fixed Period with respect to
the Receivable Interests held by the Conduit Purchaser(s) in such Managing
Agent's Purchaser Group.
(e) All payments required to be made hereunder to any Purchaser shall
be made by paying such amount to the applicable Purchaser Group Account in
accordance with Section 2.08. Upon receipt of funds, such Managing Agent shall
pay such funds to the related Purchaser(s) owed such funds in accordance with
the records maintained by such Managing Agent. If a Managing Agent shall have
paid to any Purchaser any funds that (i) must be returned for any reason
(including any Event of Bankruptcy) or (ii) exceeds that which such Purchaser
was entitled to receive, such amount shall be promptly repaid to such Managing
Agent by such Purchaser.
SECTION 2.07 Yield and Fees. (a) The Servicer shall be entitled to
receive a fee (the "Servicing Fee") of 0.25% per annum (the "Servicing Fee
Rate") on the average daily Outstanding Balance of the Pool Receivables, payable
in arrears on each Servicing Fee Payment Date. Upon three Business Days' notice
to the Managing Agents, the Servicer (if not an Originator, the Seller or its
designee or an Affiliate of the Seller) may, with the prior written consent of
each Managing Agent, elect to be paid, as such fee, another percentage per annum
on the average daily Outstanding Balance of the Pool Receivables; provided,
however, that in no event shall the new Servicing Fee exceed 110% of the actual
costs and expenses of such Servicer. Notwithstanding anything herein to the
contrary, the Servicing Fee shall be payable only from Collections pursuant to,
and subject to the priority of payments set forth in, Sections 2.04 and 2.05. To
the extent such Collections are not sufficient to pay the Servicing Fee in full,
none of the Seller, the Administrative Agent, the Managing Agents or the
Purchasers shall have any liability for the deficiency.
(b) The Seller shall pay to the Administrative Agent and each
Managing Agent certain fees (collectively, the "Fees") in the amounts and on the
dates set forth in (i) the fee letter agreement dated as of the Initial Closing
Date between the Seller and the Administrative Agent (as the same may be amended
or restated from time to time, the "Administrative Agent Fee Letter") and (ii)
the fee letter dated as of the Initial Closing Date among the Seller, the
Administrative Agent and the Managing Agents (as the same may be amended or
restated from time to time, the "Purchaser Fee Letter").
9
(c) On each Settlement Date for a Receivable Interest, the Seller
shall pay to the relevant Managing Agent all accrued and unpaid Yield with
respect to such Receivable Interest.
SECTION 2.08 Payments and Computations, Etc. (a) All amounts to be
paid by the Seller or the Servicer to the Administrative Agent, any Managing
Agent or any Purchaser hereunder shall be paid no later than 12:00 noon (New
York City time) on the day when due in same day funds to the applicable
Purchaser Group Account. All amounts to be deposited by the Seller or the
Servicer into the Collection Account, any Purchaser Group Account or any other
account shall be deposited no later than 12:00 noon (New York City time) on the
date when due.
(b) Each of the Seller and the Servicer shall, to the extent
permitted by law, pay interest on any amount not paid or deposited by it when
due hereunder, at an interest rate per annum equal to 2.00% per annum above the
Alternate Base Rate, payable on demand.
(c) All computations of Yield, Fees, and other amounts hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed, except that
computations of interest and Yield based on the Alternate Base Rate shall be
made on the basis of a year of 365 days (or 366, as applicable). Whenever any
payment or deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
such payment or deposit. Any computations by the Administrative Agent or the
applicable Managing Agent of amounts payable by the Seller hereunder shall be
binding upon the Seller absent manifest error.
SECTION 2.09 Dividing or Combining Receivable Interests. Either the
Seller or (following a Termination Event or an Incipient Termination Event) the
Administrative Agent may, upon notice to the other party received at least three
Business Days prior to the last day of any Fixed Period in the case of the
Seller giving notice, or up to the last day of such Fixed Period in the case of
the Administrative Agent giving notice, either (i) divide any Receivable
Interest into two or more Receivable Interests having an aggregate Capital equal
to the Capital of such divided Receivable Interest, or (ii) combine any two or
more Receivable Interests originating on such last day or having Fixed Periods
ending on such last day into a single Receivable Interest having a Capital equal
to the aggregate of the Capital of such Receivable Interests; provided, however,
that no Receivable Interest owned by any Conduit Purchaser may be combined with
a Receivable Interest owned by any other Purchaser, and a Receivable Interest
held by the Committed Purchasers in any Purchaser Group may not be combined with
any Receivable Interest held by Purchasers in any other Purchaser Group.
SECTION 2.10 Breakage Costs.
(a) The Seller shall indemnify the Purchasers against any loss or
expense incurred by the Purchasers, either directly or indirectly, as a result
of the failure of any Incremental Purchase to be made for any reason on the date
specified by the Seller pursuant to Section 2.02, including any loss or expense
incurred by the Purchasers by reason of the liquidation or reemployment of funds
acquired by the Purchasers (including funds obtained by
10
issuing Promissory Notes, obtaining deposits as loans from third parties and
reemployment of funds) to fund such Incremental Purchase.
(b) The Seller further agrees to pay all Liquidation Fees associated
with a reduction of the Capital at any time.
(c) A certificate as to any loss, expense or Liquidation Fees payable
pursuant to this Section 2.10 submitted by any Purchaser, through its Managing
Agent, to the Seller shall be conclusive in the absence of manifest error.
SECTION 2.11 Illegality. Notwithstanding any other provision of this
Agreement, if the adoption of or any change in any Law or in the interpretation
or application thereof by any relevant Official Body shall make it unlawful for
any Purchaser to make or maintain Receivable Interests for which Yield is
calculated by reference to the Adjusted Eurodollar Rate (each a "Eurodollar
Receivable Interest") as contemplated by this Agreement or to obtain in the
interbank eurodollar market the funds with which to make or maintain any such
Eurodollar Receivable Interest, (a) such Purchaser shall promptly notify the
Administrative Agent, its Purchaser Managing Agent and the Seller thereof, (b)
the obligation of such Purchaser to fund or maintain Eurodollar Receivable
Interests or continue Eurodollar Receivable Interests as such shall forthwith be
cancelled and (c) such Purchaser's Receivable Interests then outstanding as
Eurodollar Receivable Interests, if any, shall be converted on the last day of
the Fixed Period for such Receivable Interests or within such earlier period as
required by Law into Receivable Interest that accrue Yield based on the
Alternate Base Rate (each a "Base Rate Receivable Interest").
SECTION 2.12 Inability to Determine Eurodollar Rate. Notwithstanding
any other provision of this Agreement, if (i) the Administrative Agent
reasonably determines that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining a rate for
Eurodollar Receivable Interests as provided in the definition of Adjusted
Eurodollar Rate for any Fixed Period or (ii) Committed Purchasers representing
at least a majority of the Aggregate Commitment shall determine (which
determination shall be conclusive) that the rates for the purpose of computing
the Adjusted Eurodollar Rate do not adequately and fairly reflect the cost to
such Committed Purchasers of funding a Eurodollar Receivable Interests that the
Seller has requested be outstanding as a Eurodollar Receivable Interest during
such Fixed Period, the Administrative Agent shall forthwith give telephone
notice of such determination, confirmed in writing, to the Seller and each
Managing Agent at least two Business Days prior to the first day of such Fixed
Period. Unless the Seller shall have notified the applicable Managing Agent upon
receipt of such telephone notice that it wishes to rescind or modify its request
regarding such Eurodollar Receivable Interest, any Receivable Interests that
were requested to be funded as Eurodollar Receivable Interests shall be Base
Rate Receivable Interests and any Receivable Interests that were requested to be
converted into or continued as Eurodollar Receivable Interests shall be
converted into Base Rate Receivable Interests. Until any such notice has been
withdrawn by the Administrative Agent, no further Receivable Interests shall be
funded as, continued as, or converted into, Eurodollar Receivable Interests.
SECTION 2.13 Indemnity for Reserves and Expenses. (a) If the adoption
of or any change in any Law or in the interpretation or application thereof or
compliance by any
11
Indemnified Party with any request or directive (whether or not having the force
of law) from any central bank or other Official Body made subsequent to the date
hereof (other than any such change that relates to Taxes, which are governed by
Section 2.14):
(i) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans or purchases by, or other credit
extended by, or any other acquisition of funds by, any office of such
Indemnified Party which are not otherwise covered by the adjustment to
the Eurodollar Rate for the Eurodollar Rate Reserve Percentage as
contemplated by the definition of "Adjusted Eurodollar Rate"; or
(ii) does or shall impose on such Indemnified Party any other
condition affecting this Agreement or any Receivable Interest or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Indemnified Party of making or maintaining Receivable Interests (or of
maintaining its obligation to make any such Receivable Interest) or to reduce
any amount received or receivable by such Indemnified Party hereunder, then, in
any such case, the Seller shall promptly pay such Indemnified Party, upon demand
from such Indemnified Party, any additional amounts necessary to compensate such
Indemnified Party for such additional costs or reduction suffered which such
Indemnified Party reasonably deems to be material as determined by such
Indemnified Party with respect to its Receivable Interests. A certificate as to
any additional amounts payable pursuant to this subsection submitted by such
Indemnified Party, through its Managing Agent, to the Seller setting forth, in
reasonable detail, the basis for and the calculation thereof, shall be
conclusive in the absence of manifest error.
(b) If any Indemnified Party shall have determined that the
adoption of any applicable Law or bank regulatory guideline regarding capital
adequacy or any change therein, or any change in the interpretation or
administration thereof by any Official Body, or any request or directive
regarding capital adequacy (in the case of any bank regulatory guideline,
whether or not having the force of law) of any such Official Body, has or would
have the effect of reducing the rate of return on capital of such Indemnified
Party (or its parent) as a consequence of such Indemnified Party's obligations
hereunder or with respect hereto or otherwise as a consequence of the
transactions contemplated hereby to a level below that which such Indemnified
Party (or its parent) could have achieved but for such adoption, change, request
or directive (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Indemnified Party to be material, then
from time to time, within fifteen days after demand by such Indemnified Party
through its Managing Agent, the Seller shall pay to such Managing Agent, for the
benefit of such Indemnified Party, such additional amount or amounts as will
compensate such Indemnified Party (or its parent) for such reduction. A
certificate as to any additional amounts payable pursuant to this subsection
submitted by such Indemnified Party, through its Managing Agent, to the Seller
setting forth, in reasonable detail, the basis for and the calculation thereof,
shall be conclusive in the absence of manifest error.
12
(c) Failure or delay on the part of any Indemnified Party to demand
compensation pursuant to this Section 2.13 shall not constitute a waiver of such
Indemnified Party's right to demand such compensation; provided, however, that
the Seller shall not be required to compensate an Indemnified Party pursuant to
this Section 2.13 for any increased costs or reductions incurred more than 180
days prior to the date that such Indemnified Party notifies the Seller of the
change, event or circumstance giving rise to such increased costs or reductions
and of such Lender's or the Issuing Bank's intention to claim compensation
therefor; provided, further, that, if the change giving rise to such increased
costs or reductions is retroactive, then the 180-day period referred to above
shall be extended to include the period of retroactive effect thereof.
SECTION 2.14 Indemnity for Taxes. (a) Any and all payments and
deposits required to be made hereunder or under any other Transaction Document
by the Servicer or the Seller shall be made free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding net
income, profits or branch profits taxes that are imposed by the United States
and franchise, profits, branch profits and net income taxes that are imposed on
an Indemnified Party by the state or foreign jurisdiction under the laws of
which such Indemnified Party is organized or in which it is a citizen, resident
or domiciliary, or the jurisdiction in which any office making or participating
in a purchase hereunder is located, or in each case any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Seller or the Servicer shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to any Indemnified Party, (i) the Seller
shall make an additional payment to such Indemnified Party, in an amount
sufficient so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14), such Indemnified
Party receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Seller or the Servicer, as the case may be, shall
make such deductions and (iii) the Seller or the Servicer, as the case may be,
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Seller agrees to pay any present or future stamp
or other documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under any other
Transaction Document or from the execution, delivery or registration of this
Agreement or any other Transaction Document (hereinafter referred to as "Other
Taxes"); provided that the Indemnified Party shall notify Seller prior to the
Initial Closing Date (or, if later, the date such Indemnified Party became a
party to this Agreement) that such Other Taxes imposed by (i) a foreign
jurisdiction under the laws of which an Indemnified Party is organized or in
which it is a citizen, resident or domiciliary, or (ii) a foreign jurisdiction
in which any office making or participating in a purchase hereunder is located,
(including, in each case, any political subdivision thereof), will be due and
owing to the extent that such Indemnified Party has knowledge of the same prior
to the Initial Closing Date.
(c) The Seller will indemnify each Indemnified Party for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.14) paid by such Indemnified Party and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto
13
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within thirty days from the date the
Indemnified Party makes written demand therefor (and a copy of such demand shall
be delivered to the Administrative Agent and the Managing Agent for such
Indemnified Party's Group). A certificate as to the amount of such
indemnification submitted to the Seller, the Administrative Agent and the
Managing Agent for such Indemnified Party's Group by such Indemnified Party,
setting forth, in reasonable detail, the basis for and the calculation thereof,
shall be conclusive and binding for all purposes absent manifest error.
(d) Each Purchaser or Participant who is organized outside the United
States (each, a "Non-U.S. Person") shall, prior to the date hereof (or, in the
case of any Person who becomes a Purchaser or a Participant after the date
hereof, prior to the date on which it so becomes a Purchaser or a Participant),
(x) deliver to the Seller and the Administrative Agent such properly completed
and duly executed certificates, documents or other evidence, as required by the
IRC or Treasury regulations issued pursuant thereto, including Internal Revenue
Service Form W-8BEN or Form W-8ECI and any other certificate or statement of
exemption required to establish that such payment is (i) not subject to
withholding under the IRC because such payment is effectively connected with the
conduct by such Indemnified Party of a trade or business in the United States or
(ii) totally exempt from United States tax under a provision of an applicable
tax treaty and (y) upon request of the Seller or the Administrative Agent, and
to the extent it may do so under applicable law, furnish any other government
forms which are necessary or required under an applicable tax treaty or
otherwise by law to reduce or eliminate any withholding tax; provided, however,
that in the event that a Non-U.S. Person is classified as other than a
corporation for U.S. federal income tax purposes, such Non-U.S. Person agrees to
provide any other form certificate or statement of exemption necessary to fully
establish such Non-U.S. Person's (and, if applicable, such Non-U.S. Person's
beneficial owners') entitlement to a complete exemption from withholding of U.S.
taxes on all amounts to be received by such Non-U.S. Person (or, if applicable,
such Non-U.S. Person's beneficial owners') pursuant to this Agreement and the
other Transaction Documents. Each such Purchaser that changes its funding office
shall promptly notify the Seller and the Administrative Agent of such change
and, upon written request from the Seller or the Administrative Agent, shall
deliver any new certificates, documents or other evidence required pursuant to
the preceding sentence prior to the immediately following due date of any
payment by the Seller hereunder. Unless the Seller and the Administrative Agent
have received forms or other documents satisfactory to them indicating that
payments hereunder are not subject to United States withholding tax,
notwithstanding paragraph (a), the Seller or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the case
of payments to or for any Indemnified Party organized under the laws of a
jurisdiction outside the United States, and the applicable provisions of
paragraph (g) below shall apply to such Purchaser.
(e) Further, each Non-U.S. Person agrees (i) to deliver to the Seller
and the Administrative Agent, and if applicable, the assigning Purchaser (or, in
the case of a Participant, to the Purchaser from which the related participation
shall have been transferred) two further duly completed and signed copies of any
forms required to be delivered pursuant to Section 2.14(d), or successor and
related applicable forms, on or before the date that any such form expires or
becomes obsolete and promptly after the occurrence of any event requiring a
change from the most recent form(s) previously delivered by it to the Seller and
Administrative Agent,
14
and, if applicable, the assigning Purchaser (or, in the case of a Participant,
to the Purchaser from which the related participation shall have been
transferred) in accordance with applicable U.S. laws and regulations and (ii) to
notify promptly the Seller and the Administrative Agent, and, if applicable, the
assigning Purchaser (or, in the case of a Participant, the Purchaser from which
the related participation shall have been transferred) if it is no longer able
to deliver, or if it is required to withdraw or cancel, any form or statement
previously delivered by it.
(f) Each Purchaser or Participant that is not a Non-U.S. Person shall
deliver to the Seller and the Administrative Agent and, if applicable, the
assigning Purchaser (or, in the case of a Participant, to the Purchaser from
which the related participation shall have been transferred) two duly completed
copies of United States Internal Revenue Service Form W-9 (or applicable
successor form) unless it establishes to the reasonable satisfaction of the
Seller that it is otherwise eligible for an exemption from backup withholding
tax or other applicable withholding tax. Each such Purchaser or Participant
shall deliver to the Seller and the Administrative Agent and, if applicable, the
assigning Purchaser (or, in the case of a Participant, to the Purchaser from
which the related participation shall have been transferred) two further
properly completed and duly executed forms and statements (or applicable
successor forms) at or before the time any such form or statement becomes
obsolete.
(g) The Seller shall not be required to pay any amounts to any
Purchaser in respect of Taxes and Other Taxes pursuant to paragraphs (a), (b)
and (c) above if the obligation to pay such amounts would not have arisen but
for a failure by such Purchaser to comply with the provisions of paragraphs (b),
(d), (e) and (f) above unless such Purchaser is unable to comply with paragraphs
(b), (d), (e) and (f) because of (i) a change in applicable law, regulation or
official interpretation thereof or (ii) an amendment, modification or revocation
of any applicable tax treaty or a change in official position regarding the
application or interpretation thereof, in each case after the date hereof (or,
in the case of any Person who became a Purchaser after the date hereof, after
the date on which it so became a Purchaser).
(h) If the Administrative Agent or any Purchaser or Participant
determines, in its sole discretion, that it has received a refund in respect of
taxes paid or indemnified by the Seller, it shall promptly pay such refund to
the Seller, but only to the extent of amounts paid or indemnified by the Seller
with respect to Taxes, provided, however, that the Seller agrees to promptly
return such refund to the Administrative Agent or the applicable Purchaser or
Participant, as the case may be, if it receives notice from the applicable
Purchaser or Participant that such person is required to repay such refund, plus
any penalties, interest or other charges imposed by the relevant governmental
authority. This Section shall not be construed to require the Administrative
Agent or any Purchaser or Participant to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Seller or any other Person.
SECTION 2.15 Security Interest. As security for the performance by
the Seller of all the terms, covenants and agreements on the part of the Seller
(whether as Seller or otherwise) to be performed under this Agreement or any
other Transaction Document, including the punctual payment when due of all
Seller Obligations, the Seller hereby assigns to the Administrative Agent for
its benefit and the ratable benefit of the other Indemnified Parties, and
15
hereby grants to the Administrative Agent for its benefit and the ratable
benefit of the other Indemnified Parties, a security interest in, all of the
Seller's right, title and interest in and to:
(a) all Receivables, whether now owned and existing or hereafter
acquired or arising, together with all Related Security and Collections
with respect thereto;
(b) all Contracts, whether now owned or existing or hereafter
acquired or arising, including, without limitation, with respect to each
Contract (i) all rights of the Originator to receive moneys due or to
become due under or pursuant to such Contract (whether or not earned by
performance), (ii) all security interests and property subject thereto from
time to time purporting to secure payment of monies due or to become due
under or pursuant to such Contract, (iii) all rights of the Originator to
receive proceeds of any insurance, indemnity, warranty or guaranty with
respect to such Contract, (iv) claims of the Originator for damages arising
out of or for breach of or default under such Contract, and (v) the right
of the Originator to compel performance and otherwise exercise all remedies
thereunder;
(c) the Deposit Accounts and the Collection Account, including,
without limitation, (i) all funds and other evidences of payment held
therein and all certificates and instruments, if any, from time to time
representing or evidencing any of such accounts or any funds and other
evidences of payment held therein, (ii) all investment property and other
financial assets held in, or acquired with funds from, such accounts and
all certificates and instruments from time to time representing or
evidencing such investment property and financial assets, (iii) all notes,
certificates of deposit and other instruments from time to time hereafter
delivered or transferred to, or otherwise possessed by, the Administrative
Agent in substitution for any of the then existing accounts and (iv) all
interest, dividends, cash, instruments, financial assets, investment
property and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any and all of such
accounts;
(d) all other assets of the Seller, whether now owned and existing or
hereafter acquired or arising, including, without limitation, all accounts,
chattel paper, goods, instruments, investment property, deposit accounts
and general intangibles (as those terms are defined in the UCC as in effect
on the date hereof in the State of New York), in which the Seller has any
interest; and
(e) to the extent not included in the foregoing, all Proceeds of any
and all of the foregoing.
SECTION 2.16 Optional Liquidation. The Seller may at any time direct
that Reinvestment Purchases cease for the Receivable Interests of all
Purchasers. Any such direction shall be made by giving the Administrative Agent
and the Servicer at least two Business Days' prior written (including telecopy
or other facsimile communication) notice (each a "Reduction Notice") specifying
the date on which such Reinvestment Purchases shall cease and, if desired, when
such Reinvestment Purchases shall re-commence, identified as when the aggregate
outstanding Capital is reduced by a specified amount (the "Reduction Amount").
If the Seller does not so specify the date on which Reinvestment Purchases shall
re-commence, it
16
may cause Reinvestment Purchases to re-commence at any time before the
Termination Date, subject to the terms and conditions set forth herein, by
notifying the Administrative Agent and the Servicer in writing (including by
telecopy or other facsimile communication) at least one Business Day before the
date on which it desires such Reinvestment Purchases to re-commence.
SECTION 2.17 Optional Repurchase. The Seller may at any time at its
option elect to repurchase all or any portion of the Receivable Interests, such
repurchase to be made ratably among the Purchasers then holding Receivable
Interests in proportion to the Capital of each. Any such repurchase shall be
made on not less than three (3) Business Days' prior written notice (each a
"Repurchase Notice") specifying the date on which such repurchase shall occur
(the "Repurchase Date") and the aggregate Capital of the Receivable Interest to
be repurchased (the "Repurchase Amount"). On the Repurchase Date, the Seller
shall pay the Repurchase Amount to the Purchasers ratably in accordance with the
outstanding Capital of their respective Receivable Interests.
SECTION 2.18 Termination of Purchaser Groups. If any Indemnified
Party in a Purchaser Group makes a claim for payment pursuant to Section 2.13
then the Seller may, at its option, take either of the actions specified below.
(i) The Seller may remove such Purchaser Group and terminate
the Commitments of the Committed Purchasers in such Purchaser Group by
paying to the Managing Agent for such Purchaser Group an amount (the
"Payout Amount") equal to the sum of (i) the aggregate Capital held by
the Purchasers in such Purchaser Group, (ii) all Yield accrued and to
accrue thereon through the last day of the applicable Fixed Period(s)
to which such Capital has been allocated, (iii) all accrued and unpaid
Fees owing to the members of such Purchaser Group and (iv) all other
Seller Obligations owing to the members of such Purchaser Group under
the Transaction Documents accrued through the date of such payment.
Any such removal and termination shall be made upon not less than five
(5) Business Days notice delivered by the Seller to the applicable
Managing Agent and the Administrative Agent. The Payout Amount for any
Purchaser Group shall be calculated by the relevant Managing Agent and
notified to the Seller, which calculation shall be conclusive and
binding absent manifest error. Upon such removal and termination, (x)
the members of such Purchaser Group shall cease to be parties to this
Agreement and the Commitments and Conduit Purchase Limits of the
Purchasers in such Purchaser Group shall be reduced to zero and (y)
the Purchase Limit will be reduced by an amount equal to the
Commitments (determined immediately prior to such termination) of the
Committed Purchasers in such Purchaser Group.
(ii) The Seller may declare the Scheduled Commitment
Termination Date to have occurred for all Purchasers in such Purchaser
Group. Any such declaration shall be made upon not less than five (5)
Business Days notice delivered by the Seller to the applicable
Managing Agent and the Administrative Agent. Upon the effectiveness of
such declaration, (w) the Conduit Purchase Limit(s) and Purchaser
Group Limit of such Purchaser Group shall be deemed to have been
reduced to zero and Purchasers in such Purchaser Group shall have no
17
further right or obligation to make any Purchases hereunder, (x)
Amortization Date shall be deemed to have occurred for all Receivable
Interests held by the Purchasers in such Purchaser Group, (y) the
Capital allocable to such Receivable Interests shall be reduced out of
Collections available for such purpose pursuant to Section 2.04 or
2.05, as applicable and (z) on each date on which such Capital is so
reduced the Purchase Limit shall be deemed to be reduced by a
corresponding amount. Once the Capital of such Receivable Interests
has been reduced to zero and the members of such Purchaser Group shall
have received payment in full of all accrued Yield, Fees and other
Seller Obligations owing to them, the members of such Purchaser Group
shall cease to be parties to this Agreement.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01 Conditions Precedent to Agreement. The effectiveness of
this Agreement is subject to the conditions precedent that (i) all Fees required
to have been paid on or prior to the date hereof pursuant to the Fee Letters
shall have been paid in full and (ii) the Administrative Agent and each Managing
Agent shall have received on or before such date, each (unless otherwise
indicated) dated such date, in form and substance satisfactory to the
Administrative Agent and each Managing Agent:
(a) A copy of this Agreement, duly executed and delivered by each of
the parties hereto;
(b) A certificate of the Secretary or Assistant Secretary of each
Transaction Party certifying the names and true signatures of the officers of
such Transaction Party authorized to sign the Transaction Documents to which it
is a party; and
(c) Such other documents, instruments, certificates and opinions as
the Administrative Agent or any Managing Agent shall reasonably request.
SECTION 3.02 Conditions Precedent to All Purchases. Each Purchase
(including the initial Incremental Purchase and each Reinvestment Purchase)
hereunder shall be subject to the further conditions precedent that (a) the
Servicer shall have delivered to the Administrative Agent and each Managing
Agent all Servicer Reports required to be delivered hereunder, each duly
completed and containing information covering the most recently ended reporting
period for which information is required pursuant to Section 6.03 and (b) on the
date of such Purchase the following statements shall be true (and acceptance of
the proceeds of such Purchase shall be deemed a representation and warranty by
the Seller and the Servicer (each as to itself) that such statements are then
true):
(i) The representations and warranties contained in Sections
4.01 and 4.02 of this Agreement and Section 4.01 of the Originator
Purchase Agreement are true and correct in all material respects
(except that, to the extent any such representation or warranty is
qualified by materiality or Material Adverse Effect,
18
such representation or warranty must be true and correct in all
respects, subject only to the materiality or Material Adverse Effect
qualification set forth therein) on and as of the date of such
Purchase as though made on and as of such date, and
(ii) No event has occurred and is continuing, or would result
from such Purchase, that constitutes a Termination Event or an
Incipient Termination Event, and
(iii) In the case of any Purchase by a Conduit Purchaser, the
applicable Managing Agent shall not have given the Seller notice (with
a copy to the Administrative Agent) that such Conduit Purchaser has
terminated the Reinvestment Purchases hereunder (unless such notice
has been revoked by such Managing Agent), and
(iv) Medco shall have sold or contributed to the Seller,
pursuant to the Originator Purchase Agreement, all outstanding
Receivables as of such date; and
(c) The Administrative Agent and each Managing Agent shall have
received such other approvals, opinions or documents as it may reasonably
request for purposes of confirming compliance with the foregoing conditions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Representations and Warranties of the Seller. The Seller
hereby represents and warrants as follows as of the date hereof and as of the
date of each Purchase hereunder:
(a) The Seller is a limited liability company duly formed, validly
existing and in good standing under the laws of Delaware. The Seller is duly
qualified to do business, and is in good standing, in every other jurisdiction
where the nature of its business requires it to be so qualified, unless the
failure to so qualify would not reasonably be expected to have a Material
Adverse Effect.
(b) The execution, delivery and performance by the Seller of the
Transaction Documents, including the Seller's use of the proceeds of Purchases,
(i) are within the Seller's limited liability company powers, (ii) have been
duly authorized by all necessary limited liability company action, (iii) do not
contravene (1) the Seller's certificate of formation or limited liability
company agreement, (2) any law, rule or regulation applicable to the Seller, (3)
any contractual restriction binding on or affecting the Seller or its property
or (4) any order, writ, judgment, award, injunction or decree binding on or
affecting the Seller or its property, and (iv) do not result in or require the
creation of any Adverse Claim upon or with respect to any of its properties
(except as created pursuant to this Agreement). Each of the Transaction
Documents has been duly executed and delivered by the Seller.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Official Body is required for the due execution, delivery
and performance by the Seller
19
of the Transaction Documents to which it is a party or any other document to be
delivered thereunder, except for the filing of UCC financing statements referred
to in Section 3.01.
(d) Each of the Transaction Documents to which the Seller is a party
constitutes the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
(e) The opening pro forma balance sheet of the Seller as of June 30,
2003, giving effect to the initial Incremental Purchase to be made under this
Agreement, a copy of which has been furnished to the Administrative Agent and
each Managing Agent, fairly presents the financial condition of the Seller as of
such date, in accordance with GAAP. Since its formation no change, occurrence or
development has occurred (including, without limitation, with respect to any
commenced or threatened material litigation or proceeding) that has had or could
reasonably be expected to have a Material Adverse Effect.
(f) There is no pending or (to the best knowledge of the Seller)
threatened action or proceeding affecting the Seller before any Official Body.
The Seller is not in default in any material respect of any order of any
Official Body.
(g) No proceeds of any Purchase will be used for a purpose that
violates or would be inconsistent with, Regulation T, U or X promulgated by the
Board of Governors of the Federal Reserve System from time to time.
(h) Each Receivable treated as or represented to be a Pool Receivable
is owned by the Seller free and clear of any Adverse Claim (other than Adverse
Claims created hereunder). The Purchasers have acquired a valid and perfected
first priority security interest in each Pool Receivable now existing or
hereafter arising and in the Related Security and Collections with respect
thereto, in each case free and clear of any Adverse Claim (other than Adverse
Claims created hereunder). No effective financing statement or other instrument
similar in effect is filed in any recording office listing the Seller as debtor,
covering any asset of the Seller except such as may be filed in favor of the
Administrative Agent in accordance with this Agreement. No effective financing
statement or other instrument similar in effect, is filed in any recording
office listing the Originator as debtor, covering any Receivable, Related
Security or Collections except such as may be filed in favor of the Seller and
assigned to the Administrative Agent in accordance with this Agreement. Prior to
giving effect to any transfer under the Originator Purchase Agreement, all
Receivables were payable to the Originator as principal for its own account. The
Originator has no obligation (whether pursuant to any contract, any requirement
of Law or otherwise) to remit any Collections on the Receivables to any
Pharmaceutical Plan or to any other Person, other than to the Sellers and the
Purchasers as provided in the Originator Purchase Agreement and this Agreement.
(i) Each Servicer Report (if prepared by any Transaction Party or one
of their respective Affiliates, or to the extent that information contained
therein is supplied by any Transaction Party or an Affiliate), information,
exhibit, financial statement, document, book,
20
record or report furnished or to be furnished in writing at any time (whether
before, on or after the date of this Agreement) by or on behalf of any
Transaction Party to the Administrative Agent, any Managing Agent or any
Purchaser in connection with this Agreement is or will be accurate in all
material respects as of its date or (except as otherwise disclosed to the
Administrative Agent, such Managing Agent or such Purchaser, as the case may be,
at such time) as of the date so furnished, and no such Servicer Report,
information, exhibit, financial statement, document, book, record or report
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading.
(j) The principal place of business and chief executive office of the
Seller and the office where the Seller keeps its records concerning the
Receivables are located at the address or addresses referred to in Section
5.01(b).
(k) The names and addresses of all the Deposit Account Banks together
with the account numbers of the Deposit Accounts at such Deposit Account Banks
are as specified in Schedule IV hereto, as such Schedule IV may be updated from
time to time pursuant to Section 5.01(g).
(l) Since the date of its formation, the Seller has not used any
company name, tradename or doing-business-as name other than the name in which
it has executed this Agreement. The Seller's Federal Employer Identification
Number is 83-08665.
(m) The Seller was formed on July 10, 2003 and the Seller did not
engage in any business activities prior to the date of this Agreement. The
Seller has no Subsidiaries. Medco directly owns 100% of the membership interests
of the Seller, free and clear of any Adverse Claims.
(n) The Seller is not, and is not controlled by, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or is exempt from all provisions of such Act.
(o) The Seller is Solvent.
(p) With respect to each Receivable treated as or represented to be a
Pool Receivable, the Seller (i) received such Receivable as a contribution to
the capital of the Seller by the Originator or (ii) purchased such Receivable
from the Originator in exchange for payment (made by the Seller to the
Originator in accordance with the provisions of the Originator Purchase
Agreement) of cash, an addition to the principal amount of the Subordinated
Note, or a combination thereof in an amount which constitutes fair consideration
and reasonably equivalent value. No such sale or contribution was made for or on
account of an antecedent debt owed by the Originator to the Seller and no such
sale or capital contribution is or may be voidable or subject to avoidance under
any section of the United States Bankruptcy Code.
(q) Each Receivable included in the calculation of the Net
Receivables Pool Balance on any date shall be an Eligible Receivable as of such
date.
21
(r) The Receivable Interest Percentage does not exceed the Maximum
Receivable Interest Percentage.
(s) No event has occurred and is continuing and no condition exists
which constitutes a Termination Event or Incipient Termination Event.
SECTION 4.02 Representations and Warranties of the Servicer. Medco,
in its capacity as Servicer, hereby represents and warrants as follows as of the
date hereof and as of the date of each Purchase hereunder:
(a) The Servicer is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware, and is duly qualified to do
business, and is in good standing, in every jurisdiction where the nature of its
business requires it to be so qualified, unless the failure to so qualify would
not reasonably be expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by the Servicer of this
Agreement and any other documents to be delivered by it hereunder (i) are within
the Servicer's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene (1) the Servicer's certificate of
incorporation or by-laws, (2) any Law applicable to the Servicer, (3) any
material contractual restriction binding on or affecting the Servicer or its
property or (4) any order, writ, judgment, award, injunction or decree binding
on or affecting the Servicer or its property, except, in the case of each of
sub-clauses (2) through (4) of this clause (iii), to the extent that such
contravention would not be reasonably expected to have a Material Adverse
Effect, and (iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. This Agreement has been duly
executed and delivered by the Servicer.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Servicer of this Agreement or
any other Transaction Document to which it is a party.
(d) This Agreement constitutes the legal, valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its terms.
(e) (i) The Servicer has heretofore furnished to the Purchasers its
consolidated balance sheet and statements of income, stockholders'
equity and cash flows (i) for the fiscal years ending, and at,
December 29, 2001 and December 28, 2002, and (ii) as of and for the
fiscal quarter and the portion of the fiscal year ended March 29,
2003. The financial statements described in clause (i) of this Section
4.02(e) were reported on by PricewaterhouseCoopers LLP for such fiscal
years ending, and at, December 29, 2001 and December 28 2002, and in
clause (ii) of this Section 4.02(e) were certified by the Servicer's
chief financial officer. Such financial statements present fairly, in
all material respects, the financial position and results of
operations and cash flows of the Servicer and its consolidated
Subsidiaries as of such dates and for such periods in conformity with
22
GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii)
above of this Section 4.02(e). The Servicer has heretofore also
furnished to the Purchasers its unaudited pro forma condensed
consolidated statement of income, for its fiscal year ended December
28, 2002, and for its fiscal quarter ended March 29, 2003 and its
unaudited pro forma condensed consolidated balance sheet at March 29,
2003. Such pro forma financial statements comply, in all material
respects, with the requirements of Article XI of Regulation S-X of the
SEC.
(ii) Since December 28, 2002, there has been no change,
occurrence or development that has had or could reasonably be expected
to have a Material Adverse Effect.
(f) There are no actions, suits or proceedings by or before any
Official Body pending against or, to the knowledge of the Executive Officers,
threatened against or affecting the Servicer or any of its Subsidiaries that (i)
would reasonably be expected to be adversely determined, and (ii) if so
determined either (x) would reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect or (y) seek to enjoin, unwind
or otherwise materially and adversely affect the transactions contemplated by
the Transaction Documents.
(g) All Obligors have been instructed to remit all their payments in
respect of Receivables directly to a Deposit Account with respect to which a
duly executed Control Agreement is in full force and effect.
(h) On the date of each Purchase hereunder (and after giving effect
thereto) the Receivable Interest Percentage does not exceed the Maximum
Receivable Interest Percentage.
(i) No event has occurred and is continuing and no condition exists
which constitutes a Termination Event or Incipient Termination Event.
(j) All of the representations and warranties of Medco made pursuant
to the Originator Purchase Agreement are true and correct.
ARTICLE V
COVENANTS
SECTION 5.01 Covenants of the Seller. Until the Final Payout Date:
(a) Compliance with Laws, Etc. The Seller will comply in all respects
with all applicable Laws and preserve and maintain its limited liability company
existence, rights, franchises, qualifications, and privileges except to the
extent that the failure so to comply with such Laws or the failure so to
preserve and maintain such rights, franchises, qualifications, and privileges
would not reasonably be expected to have a Material Adverse Effect.
(b) Offices, Records and Books of Account. The Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning
23
the Receivables at (i) the address of the Seller specified in Section 11.02 as
of the date of this Agreement or (ii) upon 30 days' prior written notice to each
Managing Agent, at any other locations in jurisdictions where all actions
reasonably requested by any Managing Agent to protect and perfect the interests
of the Administrative Agent and the Purchasers in the Receivables and the other
assets referred to in Section 2.15 have been taken and completed. The Seller
also will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Receivables and related Contracts in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
existing Receivable).
(c) Performance and Compliance with Contracts and Credit and
Collection Policy. The Seller will, at its expense, (i) timely and fully perform
and comply in all material respects with all provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Receivables and (ii) timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related
Contracts.
(d) Sales, Liens, Etc. The Seller will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim (except for Adverse Claims created hereunder) upon or with respect
to, any Receivable, Related Security, or Collections, or upon or with respect to
any Deposit Account, the Collection Account or any other asset of the Seller, or
assign any right to receive income in respect thereof.
(e) Extension or Amendment of Receivables and Contracts. Except as
provided in Section 6.02(c), the Seller will not, and will not permit the
Originator to, extend, amend or otherwise modify the terms of any Receivable.
(f) Change in Business or Credit and Collection Policy. The Seller
will not make any change in the character of its business or in the Credit and
Collection Policy, except for any such change in a Credit and Collection Policy
that would not (i) impair the collectibility of any Receivables in any material
respect or (ii) otherwise be reasonably likely to have a Material Adverse
Effect.
(g) Change in Payment Instructions to Obligors. The Seller will not
add or terminate any Deposit Account from those listed in Schedule IV to this
Agreement, or make any change in its instructions to Obligors regarding payments
to be made in respect of the Receivables or payments to be made to any Deposit
Account, unless the Administrative Agent shall have received notice of such
addition, termination or change (including an updated Schedule IV) and a fully
executed Control Agreement with respect to each new Deposit Account. Each
Deposit Account shall be maintained at all times in the name of the Seller.
(h) Deposits to Deposit Accounts. The Seller will cause all Obligors
to be instructed to remit all their payments in respect of Receivables to
Deposit Accounts directly by wire transfer or electronic funds transfer to the
relevant Deposit Account Bank. If the Seller or the Servicer shall receive any
Collections directly, the Seller shall promptly (and in any event within one
Business Day) cause such Collections to be deposited into a Deposit Account. The
24
Seller will not permit funds which do not constitute Collections of Receivables
from being deposited into any Deposit Account.
(i) Further Assurances; Change in Name or Jurisdiction of
Organization, etc.
(A) The Seller agrees from time to time, at its expense,
promptly to execute and deliver all further instruments and documents,
and to take all further actions, that may be necessary or desirable,
or that the Administrative Agent or any Managing Agent may reasonably
request, to perfect, protect or more fully evidence the Receivable
Interests purchased under this Agreement and/or security interest
granted pursuant to this Agreement, or to enable the Conduit
Purchasers, the Committed Purchasers, the Managing Agents or the
Administrative Agent to exercise and enforce their respective rights
and remedies under this Agreement. Without limiting the foregoing, the
Seller will, upon the request of the Administrative Agent or any
Managing Agent, execute and file such financing or continuation
statements, or amendments thereto, and such other instruments and
documents, that may be necessary or desirable, or that the
Administrative Agent or any Managing Agent may reasonably request, to
perfect, protect or evidence such Receivable Interests and/or such
security interest.
(B) The Seller authorizes the Administrative Agent to file
financing or continuation statements, and amendments thereto and
assignments thereof, relating to the Receivables and the Related
Security, the related Contracts and the Collections with respect
thereto and the other collateral described in Section 2.15 without the
signature of the Seller. A photocopy or other reproduction of this
Agreement shall be sufficient as a financing statement where permitted
by law.
(C) The Seller shall at all times be organized under the laws of
the State of Delaware and shall not take any action to change its
jurisdiction of organization.
(D) The Seller will not change its name, identity, limited
liability company structure or tax identification number unless (1)
the Administrative Agent shall have received at least thirty (30) days
advance written notice of such change and (2) all actions by the
Seller necessary or appropriate to perfect or maintain the perfection
of the Receivable Interests and the security interest of the
Administrative Agent granted pursuant to Section 2.15 (including,
without limitation, the filing of all financing statements and the
taking of such other actions as the Administrative Agent may request
in connection with such change) shall have been duly taken.
(j) Reporting Requirements. The Seller will cause to be provided to
each Managing Agent the following:
(i) not later than the earlier of (i) 100 days after the
end of each fiscal year of the Originator and (ii) 5 Business
Days after the filing thereof with the SEC, (A) the audited
consolidated balance sheet of the
25
Originator and related statements of operations, stockholders'
equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the
previous fiscal year, all reported on by PricewaterhouseCoopers
LLP or other independent public accountants of recognized
national standing (without a "going concern" or like
qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the
Originator and its consolidated Subsidiaries on a consolidated
basis, as of such dates and for such periods, in conformity with
GAAP and (B) the consolidated balance sheet of the Seller and
related statements of operations, stockholders' equity and cash
flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal
year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial
condition and results of operations of the Seller as of such
dates and for such periods, in conformity with GAAP; provided
that delivery within the time frame specified above of copies of
the Originator's Annual Report on Form 10-K filed with the SEC
shall satisfy the requirements for the delivery of the
Originator's financial statements set forth in this clause (i);
(ii) not later than the earlier of (i) 55 days after the
end of each of the first three fiscal quarters of each fiscal
year of the Originator and (ii) 5 Business Days after the filing
thereof with the SEC, the unaudited consolidated balance sheet of
the Originator and related statements of operations,
stockholders' equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all
certified by one of its Financial Officers as presenting fairly
in all material respects the financial condition and results of
operations of the Originator and its consolidated Subsidiaries,
on a consolidated basis, as of such dates and for such periods,
in conformity with GAAP, subject to normal year-end audit
adjustments and the absence of footnotes; provided, however, that
delivery within the time frame specified above of copies of
Originator's Quarterly Report on Form 10-Q filed with the SEC
shall satisfy the requirements for the delivery of the
Originator's financial statements set forth in this clause (ii);
(iii) at the time of the delivery of the financial
statements provided for in clause (i) or clause (ii) of this
Section 5.01(j), a certificate of a Financial Officer of the
Originator or the Seller, as applicable, (A) certifying that, to
the best of such officer's knowledge, no Termination Event or
Incipient Termination Event has occurred and is continuing or, if
any Termination Event or Incipient Termination Event has occurred
and is continuing, specifying the nature and extent thereof and
(B)
26
demonstrating, in reasonable detail, compliance with the
financial ratios or requirements set forth in Schedule VI;
(iv) as soon as possible and in any event within one
Business Day after obtaining knowledge of the occurrence of each
Termination Event or Incipient Termination Event, a statement of
a Financial Officer of the Seller setting forth details of such
Termination Event or Incipient Termination Event and the action
that the Seller has taken and proposes to take with respect
thereto;
(v) promptly upon a Financial Officer becoming aware
thereof, notice of the occurrence of any ERISA Event that, alone
or together with any other ERISA Events that have occurred and
are then outstanding, would reasonably be expected to result in
liability of the Originator and its Subsidiaries in an aggregate
amount exceeding $5,000,000;
(vi) at least thirty (30) days prior to any change in the
name, jurisdiction of organization, corporate structure or tax
identification number of any Transaction Party, a notice setting
forth the new name, jurisdiction of organization, corporate
structure or tax identification number, as applicable, and the
effective date thereof;
(vii) as soon as possible and in any event no later than
the day of occurrence thereof, notice that the Originator has
stopped selling or contributing to the Seller, pursuant to the
Originator Purchase Agreement, all newly arising Receivables;
(viii) promptly after receipt thereof, copies of all notices
received by the Seller from the Originator under or in connection
with the Originator Purchase Agreement;
(ix) promptly upon learning thereof, notice of any
downgrade in the Debt Rating (or the withdrawal by either S&P or
▇▇▇▇▇'▇ of a Debt Rating) of Medco, setting forth the
Indebtedness affected and the nature of such change (or
withdrawal);
(x) promptly after the occurrence thereof any pending or
threatened litigation or other event or condition that has had,
or could reasonably be expected to have, a Material Adverse
Effect;
(xi) promptly upon learning thereof, and in any event no
later than the effective date thereof, notice of any amendment,
waiver, termination or other modification to, or replacement or
substitution for, the Revolving Credit Agreement;
(xii) as soon as possible and in any event within one
Business Day after obtaining knowledge of any event or
circumstance described in any of clauses (i), (ii) or (iii) of
the definition of "Rebate Conditions," a
27
statement of an Executive Officer of the Originator setting forth
in reasonable detail the nature of such event or circumstance;
(xiii) promptly upon the occurrence thereof, notice of any
amendment to the Credit and Collection Policy; and
(xiv) such other information respecting the Receivables or
the condition or operations, financial or otherwise, of any
Transaction Party (including, without limitation, information
regarding any pending or threatened litigation) as the
Administrative Agent or any Managing Agent may from time to time
reasonably request.
(k) Separateness. (i) The Seller shall at all times maintain at least
one independent Manager who (w) is not currently and has not been during the
five years preceding the date of this Agreement an officer, director, manager or
employee of, or a major vendor or supplier of services to, an Affiliate of the
Seller or any Other Medco Company, (x) is not a current or former officer or
employee of the Seller, (y) is not a stockholder or equity owner of any Other
Medco Company or any of their respective Affiliates (except through a mutual
fund or similar pooled investment vehicle) and (z) who (A) has prior experience
as an independent director for a corporation and/or independent manager of a
limited liability company whose charter documents required the unanimous consent
of all independent directors or independent managers, as the case may be,
thereof before such corporation could consent to the institution of bankruptcy
or insolvency proceedings against it or could file a petition seeking relief
under any applicable federal or state law relating to bankruptcy and (B) has at
least three years of employment experience with one or more entities that
provide, in the ordinary course of their respective businesses, or has otherwise
been engaged for at least three years in the business of providing, advisory,
management or placement services to issuers of securitization or structured
finance instruments, agreements or securities.
(ii) The Seller shall not direct or participate in the
management of any other Person's operations.
(iii) The Seller shall conduct its business from an office
separate from that of the Other Medco Companies (but which may be
located in the same facility as one or more of the Other Medco
Companies). The Seller shall have stationery and other business forms
separate from that of the Other Medco Companies.
(iv) The Seller shall at all times be adequately capitalized
in light of its contemplated business.
(v) The Seller shall at all times provide for its own
operating expenses and liabilities from its own funds except that (A)
common overhead expenses may be shared by the Seller and the Other
Medco Companies on a basis reasonably related to use and (B) the
Servicer may pay operating expenses on the Seller's behalf so long as
the Servicer determines in its good faith business judgment that
28
it will be reimbursed therefor out of the Seller's own funds on or
before the next succeeding Settlement Date.
(vi) The Seller shall maintain its assets and transactions
separately from those of any other Person, and the Seller shall
reflect such assets and transactions in financial statements separate
and distinct from those of the Other Medco Companies and evidence such
assets and transactions by appropriate entries in books and records
separate and distinct from those of any other Person. The Seller shall
hold itself out to the public under the Seller's own name as a legal
entity separate and distinct from any other Person. The Seller shall
not hold itself out as having agreed to pay, or as being liable,
primarily or secondarily, for, any obligations of any other Person.
(vii) The Seller shall not maintain any joint account with any
Other Medco Company or become liable as a guarantor or otherwise with
respect to any Indebtedness or contractual obligation of any Other
Medco Company. The membership interests of the Seller and any
Indebtedness (whether or not represented by promissory notes) of or
issued by the Seller to the Originator or any of its Subsidiaries may
not be pledged to secure Indebtedness of the Originator or any Other
Medco Company.
(viii) The Seller shall not make any payment or distribution of
assets with respect to any obligation of any other Person or grant an
Adverse Claim on any of its assets to secure any obligation of any
Other Person.
(ix) The Seller shall not make loans, advances or otherwise
extend credit to any other Person except as expressly contemplated by
the Originator Purchase Agreement.
(x) The Seller shall hold regular duly noticed meetings (or
authorize actions by unanimous written consent) of its Board of
Managers, make and retain minutes of such meetings and otherwise
observe all limited liability company formalities.
(xi) The Seller shall have bills of sale (or similar
instruments of assignment) with respect to all assets (other than
Receivables or interests therein acquired under the Originator
Purchase Agreement) purchased from any of the Other Medco Companies,
in each case to the extent such bills of sale would be customarily
prepared in transactions with non-Affiliates.
(xii) The Seller shall not engage in any transaction with any
other Person, except as contemplated by this Agreement and the
Originator Purchase Agreement.
(xiii) The Seller shall prepare its financial statements
separately from those of any of the Other Medco Companies and shall
insure that any consolidated financial statements of any Other Medco
Company that are filed with the Securities and Exchange Commission or
any other Official Body or are
29
furnished to any creditors of any Other Medco Company have notes
clearly stating that (A) the Seller is the owner of the Pool
Receivables and is a separate entity and (B) the Seller's assets will
be available first and foremost to satisfy the claims of the creditors
of the Seller.
(xiv) The Seller shall take, or refrain from taking, as the
case may be, all other actions that are necessary to be taken or not
to be taken in order to (x) ensure that the assumptions and factual
recitations set forth in the Specified Bankruptcy Opinion Provisions
remain true and correct with respect to the Seller and (y) comply with
those procedures described in such provisions which are applicable to
the Seller.
(xv) The Seller will not commingle its funds or assets with
those of any other Person or entity. The Seller will provide
separately for its expenses and liabilities from its own funds (except
as provided in paragraph (v) above), and will fairly and reasonably
allocate any expenses associated with services provided by common
employees, office space, or other overhead and administrative expenses
with any affiliate.
(xvi) The Seller will not identify itself as a division of any
other person or entity, and will hold itself out to creditors and the
public as a legal entity separate and distinct from any other entity
and will correct any known misunderstanding regarding its separate
identity.
(xvii) The Seller will transact all business with Affiliates on
an arms' length basis and pursuant to commercially reasonable
agreements.
(xviii) After entering into the transactions contemplated by this
Agreement and the Originator Purchase Agreement, the Seller will not
transfer any of its assets to the Originator other than (i) transfers
for fair or reasonably equivalent consideration and without the intent
to hinder, delay or defraud the Seller's creditors, and (ii)
distributions that are not fraudulent or in violation of applicable
entity law. If, after entering into the transactions contemplated by
this Agreement and the Originator Purchase Agreement, the Originator
transfers any of its assets to the Seller, the Seller will properly
account for such transfers as capital contributions or sales made in
accordance with the Originator Purchase Agreement and its limited
liability company agreement, as applicable.
(l) Transaction Documents. The Seller will not terminate, amend,
waive or modify, or consent to any termination, amendment, waiver or
modification of, any provision of any Transaction Document or grant any other
consent or other indulgence under any Transaction Document, in each case without
the prior written consent of each Managing Agent. The Seller will perform all of
its obligations under the Originator Purchase Agreement and will enforce the
Originator Purchase Agreement in accordance with its terms. The Seller will take
all actions to perfect and enforce its rights and interests (and the rights and
interests of the Administrative Agent and the Purchasers as assignees of Seller)
under the Originator Purchase Agreement as the Administrative Agent may from
time to time reasonably request, including, without limitation,
30
making claims to which it may be entitled under any indemnity, reimbursement or
similar provision contained in the Originator Purchase Agreement.
(m) Nature of Business. The Seller will not engage in any business or
engage in any transactions other than the purchase of Receivables, Related
Security and Collections from the Originator and the transactions contemplated
by this Agreement and the Originator Purchase Agreement. The Seller will not
create or form any Subsidiary.
(n) Mergers, Etc. The Seller will not merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, other than as contemplated by this Agreement and the
Originator Purchase Agreement.
(o) Distributions, Etc. The Seller will not (A) declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any membership interests or other equity
interests in the Seller, or return any capital to its members or other equity
holders as such, or purchase, retire, defease, redeem or otherwise acquire for
value or make any payment in respect of any membership interests or other equity
of the Seller or any warrants, rights or options to acquire any membership
interests or other equity of the Seller, now or hereafter outstanding, (B)
prepay, purchase or redeem any Indebtedness (other than Indebtedness hereunder),
(C) lend or advance any funds or (D) repay any loans or advances to, for or from
any of its Affiliates (the amounts described in clauses (A) through (D) being
referred to as "Restricted Payments"); provided, however, that, prior to the
Termination Date, the Seller may declare and pay cash dividends to its sole
member, and may make payments in respect of the Subordinated Note, in each case
out of Collections available for such purpose pursuant to Section 2.04 so long
as (i) no Termination Event or Incipient Termination Event shall then exist or
would occur as a result thereof and (ii) any such dividends are in compliance
with all applicable law including the Delaware Limited Liability Company Act,
and have been approved by all necessary and appropriate limited liability
company action of the Seller and its Board of Managers.
(p) Indebtedness. The Seller shall not create, incur, guarantee,
assume or suffer to exist any Indebtedness or other liabilities, whether direct
or contingent, other than (i) as a result of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, (ii) the incurrence of obligations under this Agreement,
(iii) the incurrence of other obligations pursuant to, and, as expressly
contemplated in, the Originator Purchase Agreement, and (iv) the incurrence of
operating expenses in the ordinary course of business.
(q) Limited Liability Company Agreement. The Seller will not amend,
modify or delete (or permit any amendment, modification or deletion of) (i) the
definition of "Independent Manager" in its limited liability company agreement
as in effect on the Initial Closing Date or (ii) any other provision of its
limited liability company agreement as in effect on the Initial Closing Date if,
pursuant to the terms thereof, such amendment, modification or deletion requires
the consent of the Independent Manager thereunder.
31
(r) Tangible Net Worth. The Seller will maintain Tangible Net Worth
at all times equal to at least 3% of the aggregate Purchase Price (as defined in
the Originator Purchase Agreement) of all outstanding Pool Receivables at such
time (net of Collections that have been received on such outstanding Pool
Receivables).
(s) Taxes. The Seller will file all material tax returns and reports
required by law to be filed by it and will promptly pay all taxes and
governmental charges at any time owing, except such as are being contested in
good faith by appropriate proceedings and for which appropriate reserves have
been established. The Seller will pay when due any taxes payable in connection
with the Receivables, exclusive of taxes on or measured by income or gross
receipts of the Administrative Agent, the Managing Agents, the Conduit
Purchasers or the Committed Purchasers.
(t) Treatment as Sales. The Seller shall not account for or treat
(whether in financial statements or otherwise) the transactions contemplated by
the Originator Purchase Agreement in any manner other than as the sale and/or
absolute conveyance of Receivables by Medco to the Seller.
(u) Investments. The Seller shall not make any loans to, advances to,
investments in or otherwise acquire any capital stock or equity security of, or
any equity interest in, any other Person.
(v) Control Agreements. The Seller shall cause all Deposit Accounts
and the Collection Account to be subject at all times to a Control Agreement
duly executed by the Servicer, the Seller, the Administrative Agent and the
applicable bank at which such account is maintained.
SECTION 5.02 Audits. Until the Final Payout Date, each of the Seller
and the Servicer will, at their respective expense, from time to time during
regular business hours as requested by the Administrative Agent or any Managing
Agent upon reasonable prior notice, permit the Administrative Agent, any
Managing Agent, or their respective agents or representatives (including
independent public accountants, which may be the Seller's or the Servicer's
independent public accountants), (i) to conduct periodic audits of the
Receivables, the Related Security and the related Contracts, books and records
and collections systems of the Seller or the Servicer, as the case may be, (ii)
to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of the Seller or the Servicer, as the case may
be, relating to Receivables and the Related Security, including, without
limitation, the Contracts, and (iii) to visit the offices and properties of the
Seller or the Servicer, as the case may be, for the purpose of examining such
materials described in clause (ii) above, and to discuss matters relating to
Receivables and the Related Security or the Seller's or the Servicer's
performance under the Transaction Documents or under the Contracts with any of
the officers or employees of the Seller or the Servicer, as the case may be,
having knowledge of such matters. In addition, upon the Administrative Agent's
request (acting either on its own initiative or at the request of any Managing
Agent), the Servicer will appoint independent public accountants acceptable to
the Administrative Agent, or utilize any Managing Agent's representatives or
auditors, to prepare and deliver to the Administrative Agent and each Managing
Agent a written report (each an
32
"Accountants' Report") with respect to the Receivables and the Servicer Reports
(including, in each case, the systems, procedures and records relating thereto)
on a scope and in a form reasonably requested by the Administrative Agent and
the Managing Agents. On or prior to the end of the sixth calendar month
following the Initial Closing Date, an interim audit (the "Interim Audit"), the
scope of which shall be to validate the information provided in the Monthly
Report, shall be conducted at the Servicer's expense and an Accountants' Report
submitted promptly thereafter. Each Accountants' Report shall be at the expense
of the Servicer; provided, however, that so long as no Termination Event or
Incipient Termination Event has occurred and is continuing, the Administrative
Agent may only request an Accountant's Report at the Servicer's expense once per
calendar year (not including the Accountants' Report relating to the Interim
Audit); and provided, further, that any follow-up audit resulting from a
material discrepancy disclosed in such report shall also be at the Servicer's
expense. The Administrative Agent and each Managing Agent shall use commercially
reasonable efforts to minimize the disruption to the Servicer's business in
connection with any such audit, examination or visit.
SECTION 5.03 Additional Covenants of the Servicer.
(a) Compliance with Laws, Etc. The Servicer will comply in all
respects with all applicable Laws and preserve and maintain its corporate
existence, rights, franchises, qualifications, and privileges except to the
extent that the failure so to comply with such Laws or the failure so to
preserve and maintain such rights, franchises, qualifications, and privileges
would not reasonably be expected to have a Material Adverse Effect.
(b) Records and Books of Account. The Servicer will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables and related
Contracts in the event of the destruction of the originals thereof), and keep
and maintain all documents, books, records and other information reasonably
necessary or advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the daily identification of each
Receivable and all Collections of and adjustments to each existing Receivable).
(c) Compliance with Contracts and the Credit and Collection Policy.
The Servicer will (i) timely and fully perform and comply in all material
respects with all provisions, covenants and other promises required to be
observed by it under the Contracts related to the Receivables and (ii) timely
and fully comply in all material respects with the Credit and Collection Policy
in regard to each Receivable and the Contracts.
(d) Extension or Amendment of Receivables and Contracts. Except as
provided in Section 6.02(c), the Servicer will not extend, amend or otherwise
modify the terms of any Receivable.
(e) Change in Credit and Collection Policy. The Servicer will not
make any change in the Credit and Collection Policy, except for any such change
that would not (i) impair the collectibility of any Receivables in any material
respect or (ii) otherwise be reasonably likely to have a Material Adverse
Effect. In the event that the Servicer makes any material change to the Credit
and Collection Policy, it shall, promptly following such change, provide the
33
Administrative Agent and each Managing Agent with an updated Credit and
Collection Policy and a summary of all material changes.
(f) Change in Payment Instructions to Obligors. The Servicer will not
add or terminate any Deposit Account from those listed in Schedule IV to this
Agreement, or make any change in its instructions to Obligors regarding payments
to be made in respect of the Receivables or payments to be made to any Deposit
Account, unless the Administrative Agent shall have received notice of such
addition, termination or change (including an updated Schedule IV) and a fully
executed Control Agreement with respect to each new Deposit Account. Each
Deposit Account shall be maintained at all times in the name of the Seller.
(g) Deposits to Deposit Accounts. The Servicer will instruct all
Obligors to remit all their payments in respect of Receivables to Deposit
Accounts directly by wire transfer or electronic funds transfer to the relevant
Deposit Account Bank. If the Servicer shall receive any Collections directly,
the Servicer shall promptly (and in any event within one Business Day) cause
such Collections to be either (i) deposited into a Deposit Account or (ii) in
the case of checks received by the Servicer, mailed to a Deposit Account Bank
for deposit into a Deposit Account. The Servicer will not permit funds which do
not constitute Collections of Receivables from being deposited into any Deposit
Account.
(h) Control Agreements. The Servicer shall cause all Deposit Accounts
and the Collection Account to be subject at all times to a Control Agreement
duly executed by the Servicer, the Seller, the Administrative Agent and the
applicable bank.
(i) Billing of Receivables. The Servicer shall ▇▇▇▇ all Unbilled
Receivables as soon as practicable under the terms of the relevant Contract, and
shall furnish to the applicable Obligor all supporting data and other
information required to be furnished under the terms of such Contract in order
to cause such Receivable to become due and payable.
(j) Other Covenants. Medco (both individually and in its capacity as
Servicer) shall perform and comply with all covenants required to be performed
or observed by it pursuant to the Originator Purchase Agreement and each other
Transaction Document to which it is a party.
ARTICLE VI
ADMINISTRATION AND COLLECTION
OF RECEIVABLES
SECTION 6.01 Designation of Servicer. The servicing, billing,
administration and collection of the Pool Receivables shall be conducted by the
Servicer so designated hereunder from time to time. Until the Administrative
Agent (with the consent or at the direction of the Majority Managing Agents)
gives notice to the Seller of the designation of a new Servicer (which notice
may be given at any time following the occurrence and during the continuation of
a Servicer Replacement Event), Medco is hereby designated as, and hereby agrees
to perform the duties and obligations of, the Servicer pursuant to the terms
hereof. Medco may not resign from the obligations and liabilities hereby imposed
on it, unless required to do so
34
by law as evidenced by an opinion of counsel in form and substance satisfactory
to each Managing Agent. The Administrative Agent (with the consent or at the
direction of the Majority Managing Agents), at any time after the occurrence and
during the continuation of a Servicer Replacement Event, may designate as
Servicer any Person (including itself) to succeed Medco or any successor
Servicer, on such terms and conditions as the Administrative Agent and such
successor Servicer shall agree. The Servicer may, with the prior consent of the
Administrative Agent, subcontract with any other Person for the servicing,
administration or collection of the Receivables. Any such subcontract shall not
affect the Servicer's liability for performance of its duties and obligations
pursuant to the terms hereof. Without limiting the generality of the foregoing,
any action taken or omitted to be taken by any Person that has entered into a
subcontract with the Servicer shall be deemed to be an action or omission by the
Servicer (including, without limitation, for purposes of determining whether any
Receivable is a Diluted Receivable and for purposes of Sections 6.06 and 10.01).
SECTION 6.02 Duties of Servicer. (a) The Servicer shall take or cause
to be taken all such actions as may be necessary or advisable to ▇▇▇▇ and
collect each Pool Receivable from time to time, all in accordance in all
material respects with applicable Laws, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy and the terms of the
Contracts. The Seller, each Purchaser and the Administrative Agent hereby
appoint the Servicer, from time to time designated pursuant to Section 6.01, as
their agent to enforce their respective rights and interests in the Pool
Receivables, the Related Security and the related Contracts. In performing its
duties as Servicer, the Servicer shall exercise the same care and apply the same
policies as it would exercise and apply if it owned such Receivables and shall
act in such manner as it reasonably deems to be in the best interests of the
Purchasers and the Administrative Agent. Following the occurrence and during the
continuation of a Servicer Replacement Event the Administrative Agent (with the
consent or at the direction of the Majority Managing Agents) shall have the sole
right to direct the Servicer to commence or settle any legal action to enforce
collection of any Pool Receivable or any Related Security with respect thereto.
(b) The Servicer shall administer the Collections in accordance with
Article II.
(c) If no Termination Event shall have occurred and be continuing,
the Servicer, may, in accordance with the Credit and Collection Policy, extend
the maturity or adjust the Outstanding Balance of any Pool Receivable as the
Servicer deems appropriate to maximize Collections thereof; provided, however,
that the classification of any such Receivable as a Delinquent Receivable or
Defaulted Receivable shall not be affected by any such extension; provided,
further, that if such Receivable is an Eligible Receivable, the Servicer shall
not amend or modify such Receivable or any term or condition of any Contract
related thereto in a manner that would cause such Receivable to cease to be an
Eligible Receivable; provided, further, that the Servicer shall not, nor permit
the Originator to, amend, modify or waive any term or condition of any term or
condition of any Receivable or any Contract related thereto, unless such
amendment, modification or waiver (i) is made in accordance with the Credit and
Collection Policy and (ii) could not reasonably be expected to cause any
existing Receivable to cease to be an Eligible Receivable or otherwise have a
Material Adverse Effect. The Servicer shall notify each Managing Agent of any
such extension or adjustment for a particular Obligor during any calendar year
that affects Pool Receivables having an aggregate Outstanding Balance of
35
$50,000,000 or more. Following the occurrence and during the continuation of a
Termination Event, the Servicer may grant such extensions or adjustments only
with the prior written consent of the Administrative Agent (acting with the
consent or at the direction of the Majority Managing Agents). In no event shall
the Servicer be entitled to make any Purchaser, any Managing Agent or the
Administrative Agent a party to any litigation involving the Transaction
Documents or the Receivables without such Purchaser's, such Managing Agent's or
the Administrative Agent's prior written consent.
(d) The Servicer shall hold in trust for the Seller, the
Administrative Agent, the Managing Agents and each Purchaser, in accordance with
their respective interests, all documents, instruments and records (including,
without limitation, computer tapes or disks) which evidence or relate to Pool
Receivables or Related Security. The Servicer shall ▇▇▇▇ the Seller's and the
Originator's master data processing records evidencing the Pool Receivables with
a legend, reasonably acceptable to the Administrative Agent, evidencing that
Receivable Interests therein have been sold. At the request of the
Administrative Agent following a Termination Event or Involuntary Bankruptcy
Event, the Servicer shall ▇▇▇▇ each Contract and each invoice which evidence or
relate to Pool Receivables with a legend, reasonably acceptable to the
Administrative Agent, evidencing that Receivable Interests therein have been
sold and shall deliver to the Administrative Agent a copy (which may be in
electronic form) of each invoice evidencing each Receivable.
(e) The Servicer shall, as soon as practicable following receipt and
identification thereof, and in any event within one Business Day, turn over to
the Seller or such other Person as may be entitled thereto any cash collections
or other cash proceeds received in the Deposit Accounts and not constituting
Collections of Receivables.
SECTION 6.03 Reports. (a) Monthly Report. No later than 4:00 p.m.,
New York City time, on each Monthly Reporting Date, the Servicer shall deliver
to each Managing Agent and the Seller a monthly report, substantially in the
form of Annex A-1, containing the information listed in Annex A-1 with respect
to the immediately preceding Calculation Period and such other information as
the Administrative Agent or any Managing Agent may reasonably request.
(b) Weekly Reports. During any Rating Level 2 Period, the Servicer
shall deliver to each Managing Agent and the Seller, no later than 11:00 a.m.,
New York City time, on the second Business Day of each calendar week, a Weekly
Report containing the information listed in Annex A-2 with respect to the
immediately preceding calendar week, and such other information as the
Administrative Agent or any Managing Agent may reasonably request.
(c) Daily Reports. During any Rating Level 3 Period or Rating Level 4
Period, the Servicer shall deliver to each Managing Agent and the Seller, no
later than 11:00 a.m., New York City time, on each Business Day, a Daily Report
setting forth total Collections received and Receivables originated during the
immediately preceding Business Day, the Net Receivables Pool Balance at the end
of the immediately preceding Business Day, and such other information as the
Administrative Agent or any Managing Agent may reasonably request.
36
(d) Reports following Termination Event. On each Business Day after
the occurrence of a Termination Event, to the extent the Servicer is not
otherwise required to deliver Daily Reports pursuant to this Section 6.03, the
Servicer shall deliver to each Managing Agent a daily report setting forth
Collections received on the previous Business Day and the Outstanding Balance of
Eligible Receivables as of the close of business on the previous Business Day,
and such other information as the Administrative Agent or any Managing Agent may
reasonably request.
(e) Transmission of Servicer Reports. The Servicer shall transmit
each Servicer Report to each Managing Agent by electronic mail. In addition, the
Servicer shall transmit a copy of each such Servicer Report to the Managing
Agents by facsimile (certified by a Financial Officer of the Servicer or such
other employee of the Servicer as shall have primary responsibility for the
preparation of such report and shall have been authorized to certify Servicer
Reports hereunder by a Financial Officer).
(f) Notice of Termination Events. The Servicer shall provide to each
Managing Agent, promptly, and in any event within one Business Day after the
Servicer obtains knowledge thereof, notice of any Termination Event or Incipient
Termination Event.
(g) Notice of Downgrades. Promptly upon learning thereof, the
Servicer shall provide to each Managing Agent notice of any downgrade in the
Debt Rating (or the withdrawal by either S&P or ▇▇▇▇▇'▇ of a Debt Rating) of the
Originator, setting forth the Indebtedness affected and the nature of such
change (or withdrawal).
(h) Other Information. The Servicer shall provide to each Managing
Agent, promptly upon request, such other information respecting the Receivables
or the condition or operations, financial or otherwise, of the Servicer
(including, without limitation, information regarding any pending or threatened
litigation) as the Administrative Agent or any Managing Agent may from time to
time reasonably request.
SECTION 6.04 Certain Rights of the Administrative Agent. (a) At any
time following the occurrence and during the continuation of (i) a Termination
Event, (ii) an Involuntary Bankruptcy Event, (iii) Rating Level 3 Period or (iv)
Rating Level 4 Period, the Administrative Agent may have each Deposit Account
transferred into the name of the Administrative Agent and/or assume exclusive
control of the Deposit Accounts, and may take such actions to effect such
transfer or assumption as it may determine to be necessary or appropriate
(including, without limitation, delivering the notices attached to the Control
Agreements).
(b) At any time following the occurrence and during the continuation
of a Termination Event or a Rating Level 4 Period:
(i) At the Administrative Agent's request (acting on its own
initiative or at the direction of the Majority Managing Agents) and at
the Seller's expense, the Servicer shall (and if the Servicer shall
fail to do so within three Business Days, the Administrative Agent
may) notify each Obligor of Receivables of the
37
ownership of Receivable Interests under this Agreement and direct that
payments be made directly to the Administrative Agent or its designee.
(ii) At the Administrative Agent's request (acting on its own
initiative or at the direction of the Majority Managing Agents) and at
the Seller's or the Servicer's expense, the Seller and the Servicer
shall (A) assemble all of the documents, instruments and other records
(including, without limitation, computer tapes and disks) that
evidence or relate to the Receivables and the related Contracts and
Related Security, or that are otherwise necessary or desirable to
collect the Receivables, and shall make the same available to the
Administrative Agent at a place selected by the Administrative Agent
or its designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections
of Receivables in a manner acceptable to the Administrative Agent and,
promptly upon receipt, remit all such cash, checks and instruments,
duly indorsed or with duly executed instruments of transfer, to the
Administrative Agent or its designee.
(c) Each of the Seller and the Servicer authorizes the Administrative
Agent, and hereby irrevocably appoints the Administrative Agent as its
attorney-in-fact coupled with an interest, with full power of substitution and
with full authority in place of the Seller or the Servicer, following the
occurrence and during the continuation of a Termination Event or any Rating
Level 4 Period, to take any and all steps in the Seller's or the Servicer's name
and on behalf of the Seller or the Servicer that are necessary or desirable, in
the determination of the Administrative Agent, to collect amounts due under the
Receivables, including, without limitation, endorsing the Seller's, the
Servicer's or the Originator's name on checks and other instruments representing
Collections of Receivables and enforcing the Receivables and the Related
Security and related Contracts.
SECTION 6.05 Rights and Remedies. (a) If the Servicer or the Seller
fails to perform any of its obligations under this Agreement, the Administrative
Agent may (but shall not be required to) itself perform, or cause performance
of, such obligation; and the Administrative Agent's costs and expenses
reasonably incurred in connection therewith shall be payable by the Servicer or
the Seller, as applicable.
(b) The Seller and the Originator shall perform their respective
obligations under the Contracts related to the Receivables to the same extent as
if Receivable Interests had not been sold and the exercise by the Administrative
Agent on behalf of the Conduit Purchasers, the Managing Agents and the Committed
Purchasers of their rights under this Agreement shall not release the Originator
or the Seller from any of their duties or obligations with respect to any
Receivables or related Contracts. None of the Administrative Agent, the Conduit
Purchasers, the Managing Agents or the Committed Purchasers shall have any
obligation or liability with respect to any Receivables or related Contracts,
nor shall any of them be obligated to perform the obligations of the Seller or
the Originator thereunder.
(c) The Administrative Agent's rights and powers under this Article
VI shall not subject the Administrative Agent to any liability if any action
taken by it proves to be
38
inadequate or invalid, nor shall such powers confer any obligation whatsoever
upon the Administrative Agent.
SECTION 6.06 Indemnities by the Servicer. Without limiting any other
rights that the Indemnified Parties may have hereunder or under applicable law,
and in consideration of its appointment as Servicer, the Servicer hereby agrees
to indemnify each Indemnified Party from and against any and all damages,
losses, claims, liabilities, deficiencies, costs, disbursements and expenses,
including, without limitation, interest, penalties, amounts paid in settlement
and reasonable attorneys' fees (all of the foregoing being collectively referred
to as "Special Indemnified Amounts") arising out of or resulting from any of the
following (excluding, however, (a) Special Indemnified Amounts to the extent a
final non-appealable judgment of a court of competent jurisdiction finds that
such Special Indemnified Amounts resulted from gross negligence or willful
misconduct on the part of such Indemnified Party and (b) any income taxes or any
other tax or fee measured by income incurred by such Indemnified Party arising
out of or as a result of this Agreement or the ownership of Receivable Interests
or in respect of any Receivable or any Contract):
(i) any representation, warranty, certification, report or
other statement made or deemed made by the Servicer under or in
connection with this Agreement or any other Transaction Document which
shall have been incorrect in any respect when made or deemed made;
(ii) the failure by the Servicer to comply with any applicable
Law with respect to any Receivable or Contract;
(iii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables, the Contracts and the Related Security and
Collections in respect thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;
(iv) any failure of the Servicer to perform its duties or
obligations in accordance with the provisions of this Agreement or any
other Transaction Document;
(v) the commingling of Collections of Receivables at any time
by the Servicer or any of its Affiliates (other than the Seller) with
other funds;
(vi) any action by the Servicer (other than an action required
by the Transaction Documents) reducing or impairing the rights of the
Administrative Agent, the Conduit Purchasers or the Committed
Purchasers with respect to any Receivable or the value of any
Receivable;
(vii) any Servicing Fees or other costs and expenses payable to
any replacement Servicer, to the extent in excess of the Servicing
Fees payable to Medco in its capacity as Servicer hereunder;
39
(viii) any claim brought by any Person other than an Indemnified
Party arising from any activity by the Servicer or its Affiliates in
servicing, administering, billing or collecting any Receivable; or
(ix) any change in the Credit and Collection Policy which
impairs the collectibility of any Receivable or the ability of the
Servicer to perform its obligations under this Agreement.
Notwithstanding anything to the contrary in this Agreement, solely for
purposes of the Servicer's indemnification obligations in clauses (i) and (iv)
of this Section 6.06, any representation, warranty or covenant qualified by the
occurrence or non-occurrence of a Material Adverse Effect or similar concepts of
materiality shall be deemed to be not so qualified. It is expressly agreed and
understood by the parties hereto (x) that the foregoing indemnification is not
intended to, and shall not, constitute a guarantee of collectibility or payment
of the Receivables and (y) that nothing in this Section 6.06 shall require the
Servicer to indemnify any Person for Receivables that are not collected, not
paid or uncollectible solely on account of the insolvency, bankruptcy, or
financial inability to pay of the applicable Obligor except to the extent of any
Indemnified Amounts arising from the improper characterization of any such
Receivables as Eligible Receivables.
SECTION 6.07 Administrative Agent Account. (a) At the request of the
Administrative Agent, upon the earliest to occur of (i) 30 days after the
commencement of a Ratings ▇▇▇▇▇ ▇ ▇▇▇▇▇▇, (▇▇) two Business Days after the
commencement of a Ratings ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇, (▇▇▇) the
Termination Date or (iv) the occurrence and continuance of any Termination Event
or any Involuntary Bankruptcy Event, the Servicer shall (and if the Servicer
fails to do so, the Administrative Agent may) cause to be established with
Citibank (or another bank satisfactory to each Managing Agent) in the name of
the Administrative Agent, a segregated account (the "Administrative Agent
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Purchasers. Upon the establishment of
such account, such account shall constitute the "Collection Account" for all
purposes hereunder. The Servicer shall deliver, or cause to be delivered to the
Administrative Agent, as soon as practicable and in any event no later than two
Business Days after such Administrative Agent Account is required to be
established as provided above, a Control Agreement with respect to such account
in substantially the form attached as Annex B-2 or in such other form as the
Administrative Agent may approve, duly executed by the Seller, the Servicer and
the bank at which such account is maintained.
(b) Each of the Seller and the Servicer agrees that the
Administrative Agent shall have exclusive dominion and control over the
Administrative Agent Account and all monies, instruments and other property from
time to time deposited in or credited to the Administrative Agent Account;
provided, however, that, until notified to the contrary by the Administrative
Agent, the Servicer shall have the right to withdraw funds from the
Administrative Agent Account for application in accordance with Sections 2.04 or
2.05, as applicable. The Servicer shall cause the Administrative Agent Account
to be subject at all times to a Control Agreement, duly executed by the Seller,
the Servicer, the Administrative Agent and the bank at which the Administrative
Agent Account is maintained.
40
(c) The Servicer may invest funds on deposit in the Administrative
Agent Account, reinvest proceeds of any such investments which may mature or be
sold, and invest interest or other income received from any such investments, in
each case in such Permitted Investments as the Servicer may select; provided,
however, that each such Permitted Investment shall have a maturity date no later
than the next succeeding Settlement Date. Such proceeds, interest or income
which are not so invested or reinvested in Permitted Investments shall, except
as otherwise provided in this Agreement, be deposited and held in the
Administrative Agent Account. Neither the Administrative Agent nor any of its
Affiliates shall be liable to the Seller, the Servicer or any other Person for,
or with respect to, any decline in value of amounts on deposit in the
Administrative Agent Account. Permitted Investments from time to time purchased
and held pursuant to this Section 6.07 shall be referred to as "Collateral
Securities" and shall, for purposes of this Agreement, constitute part of the
funds held in the Administrative Agent Account in amounts equal to their
respective outstanding principal amounts. Each such Permitted Investment shall
be made in the name of the Administrative Agent or its designee.
(d) Following the occurrence of any Termination Event, the
Administrative Agent may, at any time or from time to time after funds are
either deposited in the Administrative Agent Account or invested in Collateral
Securities, and after selling, if necessary, any Collateral Securities, withdraw
funds then held in the Administrative Agent Account and remit the same to the
respective Purchaser Group Account for each Purchaser Group (ratably in
proportion to the Capital held by the Purchasers in each such Purchaser Group
or, to the extent no such Capital remains outstanding, in proportion to the
remaining Seller Obligations then owing to the members of each such Purchaser
Group). The Seller agrees that Permitted Investments are of a type customarily
sold on a recognized market and, accordingly, no notice of sale of any Permitted
Investments shall be required. To the extent notice of sale of any Collateral
Securities shall be required by law, at least ten days' notice to the Seller of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Administrative Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(e) Except as expressly provided herein, the Administrative Agent
shall have the sole right of withdrawal with respect to the Administrative Agent
Account. None of the Seller, the Servicer or any Person claiming on behalf of or
through the Seller or the Servicer shall have any right to withdraw any of the
funds held in the Administrative Agent Account except, in the case of the
Servicer, for withdrawals made in accordance with Section 2.04 or 2.05, as
applicable. The Administrative Agent may at any time terminate the Servicer's
right to make withdrawals from the Administrative Agent Account. In such event,
the Administrative Agent shall make all withdrawals and distributions from the
Administrative Agent Account required to be made pursuant to Section 2.04 or
2.05, as applicable, that would otherwise be made by the Servicer.
(f) The Administrative Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Administrative Agent Account
and shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Administrative Agent
accords its own property, it being understood that the
41
Administrative Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any such funds.
(g) The Servicer shall cause the bank at which the Administrative
Agent Account is maintained to deliver a duplicate copy of all statements
relating to the Administrative Agent Account directly to the Administrative
Agent.
(h) On the Final Payout Date, any funds remaining on deposit in the
Administrative Agent Account shall be paid to the Seller.
SECTION 6.08 Servicer Replacement Event. At any time following the
occurrence and during the continuation of (i) any Termination Event or (ii) a
Rating Level 4 Period (each, a "Servicer Replacement Event"), the Administrative
Agent may (with the consent or at the direction of the Majority Managing Agents)
designate another Person to succeed Medco as the Servicer. If replaced as
Servicer, Medco agrees that it will (i) terminate, and cause each existing
sub-servicer to terminate, its collection activities in a manner and to the
extent requested by the Administrative Agent to facilitate the transition to a
new Servicer and (ii) transfer to the Administrative Agent (or its designee), or
(to the extent permitted by applicable Law and contract) license to the
Administrative Agent (or its designee) the use of, all software used in
connection with the billing and collection of the Receivables. To the extent any
such transfer or license would require the payment of any license fee or other
amount the Servicer agrees to pay such fee or other amount out of its own funds
promptly upon demand by the Administrative Agent. The Servicer shall cooperate
with and assist any successor Servicer in the performance of its
responsibilities as Servicer (including, without limitation, providing access
to, and transferring, to such successor Servicer all records related to the
Receivables and allowing (to the extent permitted by applicable law and
contract) the successor Servicer to use all licenses, hardware or software
necessary or desirable to collect or obtain or store information regarding the
Receivables). Notwithstanding its removal as Servicer, Medco irrevocably agrees
(to the extent requested to do so by the Administrative Agent) (i) to continue
to ▇▇▇▇ the Receivables and to provide all supporting data required to be
delivered to, or requested by, the Obligors pursuant to the Contracts and (ii)
to act as the data-processing agent for any successor Servicer, in each case in
substantially the same manner as Medco conducted such functions while it acted
as the Servicer.
ARTICLE VII
TERMINATION EVENTS
SECTION 7.01 Termination Events. If any of the following events (each
a "Termination Event") shall occur and be continuing:
(a) any Transaction Party shall fail to make any payment or deposit
required to be made by it hereunder in respect of Capital when due; or any
Transaction Party shall fail to make any other payment or deposit required to be
made by it hereunder or under any of the Transaction Documents when due
hereunder or thereunder and such failure shall remain unremedied for one
Business Day; or
42
(b) any representation, warranty, certification or statement made by
any Transaction Party in this Agreement, any other Transaction Document to which
it is a party or in any other document delivered pursuant hereto or thereto
shall prove to have been incorrect in any material respect (or, to the extent
any such representation or warranty is qualified by materiality or Material
Adverse Effect, such representation or warranty shall prove to have been
incorrect in any respect subject only to the materiality or Material Adverse
Effect qualification set forth therein) when made or deemed made; or
(c) any Transaction Party shall fail to perform or observe (A) any
term, covenant or agreement contained in Section 5.01(a) (as to maintenance of
existence only), 5.01(d), 5.01(j)(iv), 5.01(n) or 5.01(v) of this Agreement or
Section 5.01(a) (as to maintenance of existence only), 5.01(d) or 5.01(l)(iv) of
the Originator Purchase Agreement or (B) any other term, covenant or agreement
contained in this Agreement or any other Transaction Document on its part to be
performed or observed and, solely in the case of this clause (B), such failure
shall remain unremedied for ten (10) days after such Transaction Party has
knowledge or receives notice thereof; or
(d) (i) any Transaction Party shall fail to make any payment (whether
of principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable; or (ii) any
event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity, other than at the election of the Originator or
any Subsidiary, or that, subject to any applicable grace period, enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided, however, that this clause (d)(ii) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness; or
(e) any Event of Bankruptcy shall occur with respect to any
Transaction Party; or
(f) the Administrative Agent, on behalf of the Purchasers, shall, for
any reason, fail or cease to have a valid and perfected first priority security
interest in the Receivables and Related Security and Collections with respect
thereto or there shall exist any Adverse Claims (except as created in favor of
the Seller pursuant to the Originator Purchase Agreement or in favor of the
Administrative Agent and the Purchasers pursuant to this Agreement) on the
Receivables or the Related Security or Collections with respect thereto; or
(g) any Change of Control shall occur or the Originator shall cease
to own directly 100% of the issued and outstanding Equity Interests of the
Seller; or
(h) there shall have occurred since the Initial Closing Date any
event or condition which has had or could reasonably be expected to have a
material adverse effect on (A) the ability of any Transaction Party to perform
its obligations under the Transaction Documents or (B) the collectibility of the
Receivables; or
43
(i) the Receivable Interest Percentage exceeds the Maximum Receivable
Interest Percentage unless, within two Business Days of obtaining notice or
knowledge thereof, the Seller reduces the Capital from previously received
Collections or other funds available to the Seller so as to reduce the
Receivable Interest Percentage to less than or equal to the Maximum Receivable
Interest Percentage; or
(j) the average of the Dilution Ratios for any three consecutive
Calculation Periods exceeds 4.50%; or
(k) the average of the Default Ratios for any three consecutive
Calculation Periods exceeds 4.50%; or
(l) the average of the Delinquency Ratios for any three consecutive
Calculation Periods exceeds 5.25%; or
(m) the average of the Loss-to-Liquidation Ratios for any twelve
consecutive Calculation Periods exceeds 1.00%; or
(n) the average of the Portfolio Turnover Rates for any three
consecutive Calculation Periods exceeds 8; or
(o) any Transaction Party receives notice or becomes aware that (i) a
notice of federal tax lien has been filed against any Transaction Party or (ii)
a notice of lien has been filed against any Transaction Party under Section
412(n) of the IRC or Section 302(f) of ERISA for a failure to make a required
installment or other payment to a plan to which Section 412(n) of the IRC or
Section 302(f) of ERISA applies; or
(p) a "Termination Event" shall occur under (and as defined in) the
Originator Purchase Agreement; or
(q) one or more judgments for the payment of money in an aggregate
amount in excess of $25,000,000 or, in the case of the Seller, in an aggregate
amount in excess of $25,000 (except in each case to the extent covered by
insurance or other right of reimbursement or indemnification), or which have or
would reasonably be expected to have a Material Adverse Effect, shall be
rendered against the Originator, the Seller, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 60 consecutive
days during which execution shall not be effectively stayed or bonded pending
appeal; or
(r) any of this Agreement or the Originator Purchase Agreement shall
cease, for any reason, to be in full force and effect, or any Transaction Party
shall so assert in writing or any Transaction Party shall otherwise seek to
terminate or disaffirm its obligations under any such Transaction Document; or
(s) any Financial Covenant Default shall occur; or
(t) an ERISA Event shall have occurred and shall be outstanding that,
when taken together with all other ERISA Events that have occurred and are then
outstanding, would
44
reasonably be expected to result in liability of the Originator and its
Subsidiaries in an aggregate amount exceeding $25,000,000, individually or in
the aggregate;
then, and in any such event, the Administrative Agent may, in its discretion,
and shall, at the direction of any Managing Agent or the Majority Committed
Purchasers, declare the Termination Date to have occurred upon notice to the
Seller (in which case the Termination Date shall be deemed to have occurred);
provided, however, that the Termination Date shall occur automatically upon the
occurrence of any Event of Bankruptcy with respect to any Transaction Party
without any requirement for the giving of notice. Upon any such declaration or
upon such automatic occurrence, the Purchasers, the Managing Agents and the
Administrative Agent shall have, in addition to the rights and remedies which
they may have under this Agreement, all other rights and remedies provided after
default under the UCC and under other applicable law, which rights and remedies
shall be cumulative.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01 Authorization and Action. Each Purchaser hereby appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. The Administrative Agent shall not have any
duties other than those expressly set forth in the Transaction Documents, and no
implied obligations or liabilities shall be read into any Transaction Document,
or otherwise exist, against the Administrative Agent. The Administrative Agent
does not assume, nor shall it be deemed to have assumed, any obligation to, or
relationship of trust or agency with, any Transaction Party, the Conduit
Purchasers, the Committed Purchasers or the Managing Agents. Notwithstanding any
provision of this Agreement or any other Transaction Document, in no event shall
the Administrative Agent ever be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to any provision
of any Transaction Document or applicable law.
SECTION 8.02 Agent's Reliance, Etc. Neither the Administrative Agent
nor any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Administrative Agent under
or in connection with this Agreement (including, without limitation, the
Administrative Agent's servicing, administering or collecting Receivables as
Servicer), in the absence of its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Administrative
Agent: (a) may consult with legal counsel (including counsel for a Managing
Agent, the Seller or the Servicer), independent certified public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to any
Managing Agent, Conduit Purchaser or Committed Purchaser (whether written or
oral) and shall not be responsible to any Managing Agent, Conduit Purchaser or
Committed Purchaser for any statements, warranties or representations (whether
written or oral) made in or in connection with this Agreement or any other
Transaction Document; (c) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this
45
Agreement or any other Transaction Document on the part of any Transaction Party
or to inspect the property (including the books and records) of any Transaction
Party; (d) shall not be responsible to any Managing Agent, Conduit Purchaser or
Committed Purchaser for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Transaction
Document; and (e) shall incur no liability under or in respect of this Agreement
by acting upon any notice (including notice by telephone), consent, certificate
or other instrument or writing (which may be by telecopier) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 8.03 CNAI and Affiliates. The obligation of Citibank to
purchase Receivable Interests under this Agreement may be satisfied by CNAI or
any of its Affiliates. With respect to any Receivable Interest or interest
therein owned by it, CNAI and its Affiliates shall have the same rights and
powers under this Agreement as any Committed Purchaser and may exercise the same
as though it were not the Administrative Agent. CNAI and any of its Affiliates
may generally engage in any kind of business with the Transaction Parties or any
Obligor, any of their respective Affiliates and any Person who may do business
with or own securities of the Transaction Parties or any Obligor or any of their
respective Affiliates, all as if CNAI were not the Administrative Agent and
without any duty to account therefor to the Managing Agents, the Conduit
Purchasers or the Committed Purchasers.
SECTION 8.04 Indemnification of Administrative Agent. Each Committed
Purchaser agrees to indemnify the Administrative Agent (to the extent not
reimbursed by the Transaction Parties), ratably according to the respective
Percentage of such Committed Purchaser, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any other Transaction Document
or any action taken or omitted by the Administrative Agent under this Agreement
or any other Transaction Document, provided that no Committed Purchaser shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct.
SECTION 8.05 Delegation of Duties. The Administrative Agent may
execute any of its duties through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 8.06 Action or Inaction by Administrative Agent. The
Administrative Agent shall in all cases be fully justified in failing or
refusing to take action under any Transaction Document unless it shall first
receive such advice or concurrence of the Majority Managing Agents, and
assurance of its indemnification by the Committed Purchasers, as it deems
appropriate. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or at the direction of the
Majority Managing Agents, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all Conduit Purchasers,
Committed Purchasers and the Managing Agents. The Purchasers, the Managing
46
Agents, and the Administrative Agent agree that unless any action to be taken by
the Administrative Agent under a Transaction Document (i) specifically requires
the advice or concurrence of all the Managing Agents or all the Purchasers or
(ii) may be taken by the Administrative Agent alone or without any advice or
concurrence of any Managing Agent or any Purchaser, then the Administrative
Agent may take action based upon the advice or concurrence of the Majority
Managing Agents.
SECTION 8.07 Notice of Events of Termination; Action by
Administrative Agent. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Incipient Termination Event or of
any Termination Event unless the Administrative Agent has received notice from
any Managing Agent, Purchaser or the Seller stating that an Incipient
Termination Event or Termination Event has occurred hereunder and describing
such Incipient Termination Event or Termination Event. If the Administrative
Agent receives such a notice, it shall promptly give notice thereof to each
Managing Agent whereupon each Managing Agent shall promptly give notice thereof
to the Purchasers in its Purchaser Group. The Administrative Agent shall take
such action concerning an Incipient Termination Event or a Termination Event or
any other matter hereunder as may be directed by the Majority Managing Agents
(subject to the other provisions of this Article VIII), but until the
Administrative Agent receives such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
as the Administrative Agent deems advisable and in the best interests of the
Purchasers.
SECTION 8.08 Non-Reliance on Administrative Agent and Other Parties.
Each Managing Agent and Purchaser expressly acknowledges (i) that neither the
Administrative Agent nor any of its directors, officers, agents or employees has
made any representations or warranties to it and (ii) that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Transaction Parties, shall be deemed to constitute any representation or
warranty by the Administrative Agent. Each Purchaser represents and warrants to
the Administrative Agent that, independently and without reliance upon the
Administrative Agent, any Managing Agent or any other Purchaser and based on
such documents and information as it has deemed appropriate, it has made and
will continue to make its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of each Transaction Party and the Receivables and Contracts and
its own decision to enter into this Agreement and to take, or omit, action under
any Transaction Document. Except for items expressly required to be delivered
under any Transaction Document by the Administrative Agent to any Managing Agent
or Purchaser, the Administrative Agent shall not have any duty or responsibility
to provide any Managing Agent or Purchaser with any information concerning the
Transaction Parties or any of their Affiliates that comes into the possession of
the Administrative Agent or any of its directors, officers, agents, employees,
attorneys-in-fact or Affiliates.
SECTION 8.09 Successor Administrative Agent. The Administrative Agent
may, upon at least thirty (30) days notice to the Seller, the Servicer and each
Managing Agent, resign as Administrative Agent. Except as provided below, such
resignation shall not become effective until a successor Administrative Agent is
appointed by the Majority Managing Agents and has accepted such appointment. If
no successor Administrative Agent shall have been so appointed by the Majority
Managing Agents within 30 days after the departing
47
Administrative Agent's giving of notice of resignation, the departing
Administrative Agent may, on behalf of the Majority Managing Agents, appoint a
successor Administrative Agent, which successor Administrative Agent shall have
short-term debt ratings of at least A-1 from S&P and P-1 from ▇▇▇▇▇'▇ and shall
be either a commercial bank having a combined capital and surplus of at least
$250,000,000 or an Affiliate of such an institution. If no successor
Administrative Agent shall have been so appointed by the Majority Managing
Agents within 60 days after the departing Administrative Agent's giving of
notice of resignation, the departing Administrative Agent may, on behalf of the
Majority Managing Agents, petition a court of competent jurisdiction to appoint
a successor Administrative Agent, which successor Administrative Agent shall
have short-term debt ratings of at least A-1 from S&P and P-1 from ▇▇▇▇▇'▇, and
shall be either a commercial bank having a combined capital and surplus of at
least $250,000,000 or an Affiliate of such an institution. Upon such acceptance
of its appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations under the Transaction Documents. After any retiring
Administrative Agent's resignation hereunder, the provisions of Section 6.06,
Article X and this Article VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Administrative Agent.
ARTICLE IX
THE MANAGING AGENTS
SECTION 9.01 Authorization and Action. Each Conduit Purchaser and
each Committed Purchaser which belongs to the same Purchaser Group hereby
appoints and authorizes the Managing Agent for such Purchaser Group to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to such Managing Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. No Managing Agent shall have any
duties other than those expressly set forth in the Transaction Documents, and no
implied obligations or liabilities shall be read into any Transaction Document,
or otherwise exist, against any Managing Agent. No Managing Agent assumes, nor
shall it be deemed to have assumed, any obligation to, or relationship of trust
or agency with any Transaction Party, Conduit Purchaser or Committed Purchaser.
Notwithstanding any provision of this Agreement or any other Transaction
Document, in no event shall any Managing Agent ever be required to take any
action which exposes such Managing Agent to personal liability or which is
contrary to any provision of any Transaction Document or applicable law.
SECTION 9.02 Managing Agent's Reliance, Etc. No Managing Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as a Managing Agent under or
in connection with this Agreement or the other Transaction Documents in the
absence of its or their own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, a Managing Agent: (a) may consult with
legal counsel (including counsel for the Administrative Agent, the Seller or the
Servicer), independent certified public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (b) makes no warranty or representation to any Conduit Purchaser or
Committed Purchaser (whether written or oral) and shall not be responsible to
any
48
Conduit Purchaser or Committed Purchaser for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement or any other Transaction Document; (c) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement or any other Transaction Document on
the part of any Transaction Party or any other Person or to inspect the property
(including the books and records) of any Transaction Party; (d) shall not be
responsible to any Conduit Purchaser or any Committed Purchaser for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any other Transaction Documents or any other instrument or
document furnished pursuant hereto; and (e) shall incur no liability under or in
respect of this Agreement or any other Transaction Document by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by telecopier) believed by it to be genuine and signed
or sent by the proper party or parties.
SECTION 9.03 Managing Agent and Affiliates. With respect to any
Receivable Interest or interests therein owned by it, each Managing Agent shall
have the same rights and powers under this Agreement as any Committed Purchaser
and may exercise the same as though it were not a Managing Agent. A Managing
Agent and any of its Affiliates may generally engage in any kind of business
with any Transaction Party or any Obligor, any of their respective Affiliates
and any Person who may do business with or own securities of any Transaction
Party or any Obligor or any of their respective Affiliates, all as if such
Managing Agent were not a Managing Agent and without any duty to account
therefor to any Conduit Purchasers or Committed Purchasers.
SECTION 9.04 Indemnification of Managing Agents. Each Committed
Purchaser in any Purchaser Group agrees to indemnify the Managing Agent for such
Purchaser Group (to the extent not reimbursed by the Transaction Parties),
ratably according to the proportion of the Percentage of such Committed
Purchaser to the aggregate Percentages of all Committed Purchasers in such
Purchaser Group, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against such Managing Agent in any way relating to or arising out of
this Agreement or any other Transaction Document or any action taken or omitted
by such Managing Agent under this Agreement or any other Transaction Document,
provided that no Committed Purchaser shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Managing Agent's gross
negligence or willful misconduct.
SECTION 9.05 Delegation of Duties. Each Managing Agent may execute
any of its duties through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. No Managing
Agent shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 9.06 Action or Inaction by Managing Agent. Each Managing
Agent shall in all cases be fully justified in failing or refusing to take
action under any Transaction Document unless it shall first receive such advice
or concurrence of the Conduit Purchasers and Committed Purchasers in its
Purchaser Group and assurance of its
49
indemnification by the Committed Purchasers in its Purchaser Group, as it deems
appropriate. Each Managing Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Transaction Document in accordance with a request or at the direction of the
Committed Purchasers in its Purchaser Group representing a majority of the
Commitments in such Purchaser Group, and such request or direction and any
action taken or failure to act pursuant thereto shall be binding upon all
Conduit Purchasers and Committed Purchasers in its Purchaser Group.
SECTION 9.07 Notice of Events of Termination. No Managing Agent shall
be deemed to have knowledge or notice of the occurrence of any Incipient
Termination Event or of any Termination Event unless such Managing Agent has
received notice from the Administrative Agent, any other Managing Agent, any
Conduit Purchaser or Committed Purchaser or the Seller stating that an Incipient
Termination Event or Termination Event has occurred hereunder and describing
such Incipient Termination Event or Termination Event. If a Managing Agent
receives such a notice, it shall promptly give notice thereof to the Conduit
Purchasers and Committed Purchasers in its Purchaser Group and to the
Administrative Agent (but only if such notice received by such Managing Agent
was not sent by the Administrative Agent). The Managing Agent may take such
action concerning an Incipient Termination Event or a Termination Event as may
be directed by Committed Purchasers in its Purchaser Group representing a
majority of the Commitments in such Purchaser Group (subject to the other
provisions of this Article IX), but until such Managing Agent receives such
directions, such Managing Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, as such Managing Agent deems
advisable and in the best interests of the Conduit Purchasers and Committed
Purchasers in its Purchaser Group.
SECTION 9.08 Non-Reliance on Managing Agent and Other Parties. Except
to the extent otherwise agreed to in writing between a Conduit Purchaser and its
Managing Agent, each Conduit Purchaser and Committed Purchaser in the same
Purchaser Group expressly acknowledges that neither the Managing Agent for its
Purchaser Group nor any of such Managing Agent's directors, officers, agents or
employees has made any representations or warranties to it and that no act by
such Managing Agent hereafter taken, including any review of the affairs of the
Transaction Parties, shall be deemed to constitute any representation or
warranty by such Managing Agent. Each Conduit Purchaser and Committed Purchaser
in the same Purchaser Group represents and warrants to the Managing Agent for
such Purchaser Group that, independently and without reliance upon such Managing
Agent, any other Managing Agent, the Administrative Agent or any other Conduit
Purchaser or Committed Purchaser and based on such documents and information as
it has deemed appropriate, it has made and will continue to make its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the
Transaction Parties and the Receivables and Contracts and its own decision to
enter into this Agreement and to take, or omit, action under any Transaction
Document. Except for items expressly required to be delivered under any
Transaction Document by a Managing Agent to any Conduit Purchaser or Committed
Purchaser in its Purchaser Group, no Managing Agent shall have any duty or
responsibility to provide any Conduit Purchaser or Committed Purchaser in its
Purchaser Group with any information concerning the Transaction Parties or any
of their Affiliates that comes into the possession of such Managing Agent or any
of its directors, officers, agents, employees, attorneys-in-fact or Affiliates.
50
SECTION 9.09 Successor Managing Agent. Any Managing Agent may, upon
at least thirty (30) days' notice to the Administrative Agent, the Seller, the
Servicer and the Conduit Purchasers and Committed Purchasers in its Purchaser
Group, resign as Managing Agent for its Purchaser Group. Such resignation shall
not become effective until a successor Managing Agent is appointed in the manner
prescribed by the relevant Asset Purchase Agreement or, in the absence of any
provisions in such Asset Purchase Agreement providing for the appointment of a
successor Managing Agent, until a successor Managing Agent is appointed by the
Conduit Purchaser(s) in such Purchaser Group (with the consent of Committed
Purchasers representing a majority of the Commitments in such Purchaser Group)
and has accepted such appointment. If no successor Managing Agent shall have
been so appointed within 30 days after the departing Managing Agent's giving of
notice of resignation, then the departing Managing Agent may, on behalf of the
Purchasers in its Purchaser Group, appoint a successor Managing Agent for such
Purchaser Group, which successor Managing Agent shall have short-term debt
ratings of at least A-1 from S&P and P-1 from ▇▇▇▇▇'▇ and shall be either a
commercial bank having a combined capital and surplus of at least $250,000,000
or an Affiliate of such an institution. Upon such acceptance of its appointment
as Managing Agent for such Purchaser Group hereunder by a successor Managing
Agent, such successor Managing Agent shall succeed to and become vested with all
the rights and duties of the retiring Managing Agent, and the retiring Managing
Agent shall be discharged from its duties and obligations under the Transaction
Documents. After any retiring Managing Agent's resignation hereunder, the
provisions of Section 6.06, Article X and this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was a
Managing Agent.
SECTION 9.10 Reliance on Managing Agent. Unless otherwise advised in
writing by a Managing Agent or by any Conduit Purchaser or Committed Purchaser
in such Managing Agent's Purchaser Group, each party to this Agreement may
assume that (i) such Managing Agent is acting for the benefit and on behalf of
each of the Conduit Purchasers and Committed Purchasers in its Purchaser Group,
as well as for the benefit of each assignee or other transferee from any such
Person, and (ii) each action taken by such Managing Agent has been duly
authorized and approved by all necessary action on the part of the Conduit
Purchasers and Committed Purchasers in its Purchaser Group.
ARTICLE X
INDEMNIFICATION
SECTION 10.01 Indemnities by the Seller. Without limiting any other
rights that the Administrative Agent, the Managing Agents, the Conduit
Purchasers, the Committed Purchasers, the Program Support Providers or any of
their respective Affiliates (each, an "Indemnified Party") may have hereunder or
under applicable law, the Seller hereby agrees to indemnify each Indemnified
Party from and against any and all damages, losses, claims, liabilities,
deficiencies, costs, disbursements and expenses, including, without limitation,
interest, penalties, amounts paid in settlement and reasonable attorneys' fees
(all of the foregoing being collectively referred to as "Indemnified Amounts")
arising out of or resulting from this Agreement or any other Transaction
Document or the use of proceeds of purchases or reinvestments or the ownership
of Receivable Interests or in respect of any Receivable or any Contract,
excluding, however, (a) Indemnified Amounts to the extent a final non-appealable
51
judgment of a court of competent jurisdiction finds that such Indemnified
Amounts resulted from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement) for Receivables that are uncollectible solely on account of the
insolvency, bankruptcy or financial inability of the Obligor to pay or (c) any
income, franchise, profits, branch profits or similar taxes incurred by such
Indemnified Party arising out of or as a result of this Agreement or the
ownership of Receivable Interests or in respect of any Receivable or any
Contract. Without limiting or being limited by the foregoing, the Seller shall
pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from any of the following (including, without
limitation, Indemnified Amounts arising on account of uncollectible Receivables,
but excluding Indemnified Amounts and taxes described in clauses (a) and (c)
above):
(i) any Receivable which the Seller or the Servicer includes
as part of the Net Receivables Pool Balance but which is not an
Eligible Receivable as of the date it was transferred to the Seller by
the Originator or which thereafter ceases to be an Eligible
Receivable;
(ii) any representation, warranty, certification, report or
other statement made or deemed made by any Transaction Party (or any
of their respective officers) under or in connection with this
Agreement or any of the other Transaction Documents which shall have
been incorrect in any respect when made;
(iii) the failure by any Transaction Party to comply with any
applicable Law with respect to any Receivable or the related Contract;
or the failure of any Receivable or the related Contract to conform to
any such applicable Law;
(iv) the failure to vest (a) in the Purchasers a first priority
perfected undivided percentage ownership interest, to the extent of
each Receivable Interest, in the Receivables and the Related Security
and Collections in respect thereof, or (b) in the Administrative Agent
a first priority perfected security interest in all of the property
described in Section 2.15, in each case free and clear of any Adverse
Claim;
(v) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables and the Related Security and Collections in
respect thereof, whether at the time of any purchase or reinvestment
or at any subsequent time;
(vi) any dispute, claim or defense (other than discharge in
bankruptcy) of an Obligor to the payment of any Receivable (including,
without limitation, a defense based on such Receivable or the related
Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any
other claim relating to any Contract or relating to billing or
collection activities with respect to any such Contract or any
Receivable (if such
52
billing or collection activities were performed by the Seller or any
of its Affiliates acting as Servicer) or relating to any Contract
related thereto;
(vii) any failure of any Transaction Party to perform its duties
or obligations in accordance with the provisions hereof and each other
Transaction Document or to perform its duties or obligations under the
Contracts or to timely and fully comply in all respects with the
Credit and Collection Policy in regard to each Receivable and the
related Contract;
(viii) any products liability, environmental or other claim
arising out of or in connection with merchandise, goods or services
which are the subject of any Contract or the sale of which gave rise
to any Receivable;
(ix) the commingling of Collections of Receivables at any time
with other funds;
(x) any investigation, litigation or proceeding (actual or
threatened) related to this Agreement or any other Transaction
Document or the use of proceeds of Purchases or the ownership of
Receivable Interests or in respect of any Receivable or Related
Security or Contract;
(xi) any Receivable becoming a Diluted Receivable or any other
setoff with respect to any Receivable;
(xii) any claim brought by any Person other than an Indemnified
Party arising from any activity by the Seller or any Affiliate of the
Seller in servicing, administering or collecting any Receivable; or
(xiii) the failure by any Transaction Party to pay when due any
taxes, including, without limitation, sales, excise or personal
property taxes.
Notwithstanding anything to the contrary in this Agreement, solely for
purposes of the Seller's indemnification obligations in clauses (ii) and (vii)
of this Article X, any representation, warranty or covenant qualified by the
occurrence or non-occurrence of a Material Adverse Effect or similar concepts of
materiality shall be deemed to be not so qualified.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Amendments, Etc. No failure on the part of the Managing
Agents, the Purchasers or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. No amendment or waiver of
any provision of this Agreement or consent to any departure by any Transaction
Party therefrom shall be effective unless in a writing signed by the
Administrative Agent, each Managing Agent and the Majority Committed Purchasers
(and, in the case of any amendment, also signed by the Seller and the Servicer),
and then such amendment, waiver or
53
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that the consent of the Seller shall
not be required for any amendment which modifies the representations,
warranties, covenants or responsibilities of the Servicer at any time when the
Servicer is not the Originator or any Affiliate of the Originator; provided,
further, that no amendment, waiver or consent shall, unless in writing and
signed by each Purchaser (or, in the case of clauses (c) and (d) below, each
Purchaser having its fees reduced or delayed or its Scheduled Commitment
Termination Date extended, as applicable) in addition to the Administrative
Agent:
(a) amend the definitions of Eligible Receivable, Delinquent
Receivable, Defaulted Receivable, Net Receivables Pool Balance, Loss
Reserve, Dilution Reserve, Yield and Fee Reserve or Total Reserve
contained in this Agreement, or change the calculation of the
Receivable Interests as set forth in such definition;
(b) reduce the amount of Capital or Yield that is payable on
account of any Receivable Interest or delay any scheduled date for
payment thereof;
(c) reduce fees payable by the Seller to the Managing Agents,
the Conduit Purchasers or the Committed Purchasers or delay the dates
on which such fees are payable;
(d) extend the Scheduled Commitment Termination Date for such
Purchaser (except as set forth in the definition thereof); or
(f) change any of the provisions of this Section or the
definition of "Majority Committed Purchasers";
and provided, further, that no amendment, waiver or consent shall increase the
Commitment of any Committed Purchaser or the Conduit Purchase Limit of any
Conduit Purchaser unless in writing and signed by such Committed Purchaser or
such Conduit Purchaser, as the case may be, and the relevant Managing Agent.
SECTION 11.02 Notices, Etc. Except as provided below, all
communications and notices provided for hereunder shall be in writing (including
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other party at its address or telecopy number specified below or at
such other address or telecopy number as such party may hereafter specify for
the purposes of notice to such party. Each such notice or other communication
shall be effective (i) if given by telecopy, when such telecopy is transmitted
to the telecopy number specified in this Section 11.02 and confirmation is
received, (ii) if given by mail three (3) Business Days following such posting,
postage prepaid, U.S. certified or registered, (iii) if given by overnight
courier, one (1) Business Day after deposit thereof with a national overnight
courier service, or (iv) if given by any other means, when received at the
address specified in this Section 11.02. However, anything in this Section 11.02
to the contrary notwithstanding, the Seller hereby authorizes the Administrative
Agent and each Managing Agent to effect Purchases and Fixed Period and Yield
Rate selections based on telephonic notices made by any Person which the
Administrative Agent or such Managing Agent in good
54
faith believes to be acting on behalf of the Seller. The Seller agrees to
deliver promptly to the Administrative Agent and each Managing Agent a written
confirmation of each telephonic notice signed by an authorized officer of
Seller. However, the absence of such confirmation shall not affect the validity
of such notice. If the written confirmation differs in any material respect from
the action taken by the Administrative Agent or such Managing Agent, the records
of the Administrative Agent or such Managing Agent shall govern absent manifest
error.
If to a Committed Purchaser, to its address set forth on Schedule II.
If to a Conduit Purchaser, to its address set forth on Schedule II.
If to a Managing Agent, to its address set forth on Schedule II.
If to the Seller:
Medco Health Receivables, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ Drive, Mail Stop ▇▇-▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Servicer:
Medco Health Solutions, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Administrative Agent:
Citicorp North America, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: Global Securitization
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
SECTION 11.03 Assignability. (a) This Agreement and each Purchasers'
rights and obligations hereunder (including ownership of each Receivable
Interest) shall be assignable by such Purchaser and its successors and permitted
assigns to any Eligible Assignee. Each assignor of a Receivable Interest or any
interest therein shall notify the Administrative Agent and the Seller of any
such assignment. Each assignor of a Receivable Interest or any interest therein
may, in connection with the assignment or participation, disclose to the
assignee or participant any information relating to the Transaction Parties,
including the Receivables, furnished to such assignor by or on behalf of any
Transaction Party or by the Administrative Agent; provided, however, that, prior
to any such disclosure, the assignee or participant agrees to preserve the
confidentiality of any confidential information relating to the Transaction
Parties received by it from any of the foregoing entities in a manner consistent
with Section 11.06(b).
55
The Servicer and the Seller agree to assist each Committed Purchaser, upon its
reasonable request, in syndicating their respective Commitments hereunder,
including making management and representatives of the Servicer and the Seller
reasonably available to participate in information meetings with potential
assignees.
(b) Assignments by Conduit Purchasers. Each Conduit Purchaser may
assign, grant security interests in or otherwise transfer all or any portion of
the Receivable Interests to any Eligible Assignee or Program Support Provider
with respect to such Conduit Purchaser without prior notice to or consent from
any other party or any other condition or restriction of any kind. Without
limiting the generality of the foregoing, each Conduit Purchaser may, from time
to time with prior or concurrent notice to the Seller and each Managing Agent,
assign all or any portion of its interest in the Receivable Interest and its
rights and obligations under this Agreement and any other Transaction Documents
to which it is a party to a Conduit Assignee with respect to such Conduit
Purchaser. Upon such assignment by a Conduit Purchaser to a Conduit Assignee,
(A) unless a new Purchaser Group is being established pursuant to Section
11.03(i) below, the Managing Agent for the assigning Conduit Purchaser will act
as the Managing Agent for the Conduit Assignee hereunder, (B) such Conduit
Assignee and its liquidity support provider(s) and credit support provider(s)
and other related parties shall have the benefit of all the rights and
protections provided to such Conduit Purchaser and its related Committed
Purchasers herein and in the other Transaction Documents (including, without
limitation, any limitation on recourse against such Conduit Assignee), (C) such
Conduit Assignee shall assume all of such Conduit Purchaser's obligations
hereunder or under any other Transaction Document (whenever created, whether
before or after such assignment) with respect to the assigned portion of the
Receivable Interests held by such Conduit Purchaser and such Conduit Purchaser
shall be released from all such obligations, (D) all distributions to such
Conduit Purchaser hereunder with respect to the assigned portion of the
Receivable Interest shall be made to such Conduit Assignee, (E) the definition
of the term "CP Rate" shall be determined on the basis of the interest rate or
discount applicable to Promissory Notes issued by such Conduit Assignee (rather
than such assigning Conduit Purchaser), (F) the defined terms and other terms
and provisions of this Agreement and the other Transaction Documents shall be
interpreted in accordance with the foregoing, and (G) if requested by the
Administrative Agent or Managing Agent with respect to the Conduit Assignee, the
parties will execute and deliver such further agreements and documents
(including amendments to this Agreement) and take such other actions as the
Administrative Agent or such Managing Agent may reasonably request to evidence
and give effect to the foregoing.
(c) Assignment by Committed Purchasers. Each Committed Purchaser may
assign to any Eligible Assignee or to any other Committed Purchaser all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and any Receivable Interests or
interests therein owned by it); provided, however that
(i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this
Agreement,
(ii) the amount being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with
respect to such
56
assignment) shall in no event be less than the lesser of (x)
$10,000,000 and (y) all of the assigning Committed Purchaser's
Commitment,
(iii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register (as defined below), an Assignment and Acceptance, and
(iv) concurrently with such assignment, it shall assign to such
assignee Committed Purchaser or other Eligible Assignee an equal
percentage of its rights and obligations under the Asset Purchase
Agreement to which such assignor Committed Purchaser is a party.
Upon such execution, delivery, acceptance and recording from and after
the effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party to this Agreement and, to the extent that rights and
obligations under this Agreement have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Committed
Purchaser thereunder and (y) the assigning Committed Purchaser shall, to the
extent that rights and obligations have been assigned by it pursuant to such
Assignment and Acceptance, relinquish such rights and be released from such
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Committed
Purchaser's rights and obligations under this Agreement, such Committed
Purchaser shall cease to be a party hereto). In addition, any Committed
Purchaser or any of its Affiliates may assign any of its rights (including,
without limitation, rights to payment of Capital and Yield) under this Agreement
to any Federal Reserve Bank without notice to or consent of any Transaction
Party, any other Committed Purchaser or Conduit Purchaser, any Managing Agent or
the Administrative Agent.
(d) Register. The Administrative Agent shall maintain at its address
referred to on the signature page of this Agreement (or such other address of
the Administrative Agent notified by the Administrative Agent to the other
parties hereto) a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Committed Purchasers and the Conduit Purchasers, the Commitment of each
Committed Purchaser and the aggregate outstanding Capital of the Receivable
Interest or interests therein owned by each Conduit Purchaser and Committed
Purchaser from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Seller, the Servicer, the Administrative Agent, the Managing Agents, the Conduit
Purchasers and the Committed Purchasers may treat each Person whose name is
recorded in the Register as a Committed Purchaser or Conduit Purchaser, as the
case may be, under this Agreement for all purposes of this Agreement. The
Register shall be available for inspection by the Seller, any Managing Agent,
any Conduit Purchaser or any Committed Purchaser at any reasonable time and from
time to time upon reasonable prior notice.
(e) Procedure. Upon its receipt of an Assignment and Acceptance
executed by an assigning Committed Purchaser and an Eligible Assignee or
assignee Committed Purchaser, the Administrative Agent shall, if such Assignment
and Acceptance has been duly completed, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Seller.
57
(f) Participations by Conduit Purchasers. Each Conduit Purchaser may,
without the consent of the Seller or any other Person, sell participations to
one or more banks or other entities in all or a portion of its rights and
obligations hereunder (including the outstanding Receivable Interests);
provided, however, that
(i) such Conduit Purchaser's obligations under this Agreement
shall remain unchanged,
(ii) such Conduit Purchaser shall remain solely responsible to
the other parties to this Agreement for the performance of such
obligations, and
(iii) the Administrative Agent, the Managing Agents, the Conduit
Purchasers, the other Purchasers, the Seller and the Servicer shall
have the right to continue to deal solely and directly with such
Conduit Purchaser in connection with such Conduit Purchaser's rights
and obligations under this Agreement.
Any agreement or instrument pursuant to which a Conduit Purchaser
sells such a participation shall provide that the Participant shall not have any
right to direct the enforcement of this Agreement or other Transaction Documents
or to approve any amendment, modification or waiver of any provision of this
Agreement or the other Transaction Documents; provided, however, that such
agreement or instrument may provide that such Conduit Purchaser will not,
without the consent of the Participant, agree to any amendment, modification or
waiver of a type that would require the consent of each Purchaser affected
thereby pursuant to Section 11.01. Seller acknowledges and agrees that a Conduit
Purchaser's source of funds may derive in part from its Participants.
Accordingly, references in Sections 2.10, 2.13, 2.14, 6.06, 10.01 and 11.04 and
the other terms and provisions of this Agreement and the other Transaction
Documents to determinations, reserve and capital adequacy requirements,
expenses, increased costs, reduced receipts, Indemnified Amounts and the like as
they pertain to such Conduit Purchaser shall be deemed also to include those of
its Participants.
(g) Participations by Committed Purchasers. Each Committed Purchaser
may sell participations to one or more banks or other entities (each a
"Committed Purchaser Participant") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the interests in the Receivable Interests owned by
it); provided, however, that
(i) such Committed Purchaser's obligations under this
Agreement (including, without limitation, its Commitment to the Seller
hereunder) shall remain unchanged,
(ii) such Committed Purchaser shall remain solely responsible
to the other parties to this Agreement for the performance of such
obligations,
(iii) concurrently with the sale of such participation, the
selling Committed Purchaser shall sell to such bank or other entity a
participation in an equal percentage of its rights and obligations
under the Asset Purchase Agreement to which such Committed Purchaser
is a party, and
58
(iv) the Administrative Agent, the Managing Agents, the Conduit
Purchasers, the other Committed Purchasers, the Seller and the
Servicer shall have the right to continue to deal solely and directly
with such Committed Purchaser in connection with such Committed
Purchaser's rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Committed Purchaser
sells such a participation shall provide that the Participant shall not have any
right to direct the enforcement of this Agreement or other Transaction Documents
or to approve any amendment, modification or waiver of any provision of this
Agreement or the other Transaction Documents; provided, however, that such
agreement or instrument may provide that such Committed Purchaser will not,
without the consent of the Participant, agree to any amendment, modification or
waiver of a type that would require the consent of each Purchaser affected
thereby pursuant to Section 11.01. Seller acknowledges and agrees that a
Committed Purchaser's source of funds may derive in part from its Participants.
Accordingly, references in Sections 2.10, 2.13, 2.14, 6.06, 10.01 and 11.04 and
the other terms and provisions of this Agreement and the other Program Documents
to determinations, reserve and capital adequacy requirements, expenses,
increased costs, reduced receipts, Indemnified Amounts and the like as they
pertain to such Committed Purchaser shall be deemed also to include those of its
Participants.
(h) Assignments by Seller and Servicer. Neither the Seller nor the
Servicer may assign any of its rights or obligations hereunder or any interest
herein without the prior written consent of each Managing Agent.
(i) Additional Purchaser Groups. In connection with any assignment by
a Conduit Purchaser of all or any portion of its Conduit Purchase Limit to a
Conduit Assignee, such Conduit Assignee may elect to establish a new Purchaser
Group hereunder by the execution and delivery of a Joinder Agreement by such
Conduit Assignee, the Committed Purchasers which are to be in its Purchaser
Group and the Person which is to be the Managing Agent for such Purchaser Group,
in each case without the consent of any other party. Upon the effective date of
such Joinder Agreement, (a) the Person specified therein as a "New Managing
Agent" shall become a party hereto and a party to the Purchaser Fee Letter as a
Managing Agent, entitled to the rights and subject to the obligations of a
Managing Agent hereunder, (b) each Person specified therein as a "New Conduit
Purchaser" shall become a party hereto as a Conduit Purchaser, entitled to the
rights and subject to the obligations of a Conduit Purchaser hereunder, (c) each
Person specified therein as a "New Committed Purchaser" shall become a party
hereto as a Committed Purchaser, entitled to the rights and subject to the
obligations of a Committed Purchaser hereunder and (d) Schedule II shall be
deemed to have been amended as appropriate to incorporate the information set
forth in such Joinder Agreement.
(j) Participants. No Participant shall receive any amount pursuant to
Sections 2.10, 2.13, 2.14, 6.06, 10.01 or 11.04 of this Agreement greater than
the amount the Purchaser, from whom such participation was made, would have been
entitled to receive under such Sections of this Agreement had no such
participation occurred.
SECTION 11.04 Costs and Expenses. (a) In addition to the rights of
indemnification granted under Section 10.01 hereof, the Seller agrees to pay on
demand all
59
reasonable costs and expenses in connection with the preparation, execution,
delivery and administration of this Agreement, any Asset Purchase Agreement and
the Transaction Documents, including, without limitation, (i) the reasonable
fees and out-of-pocket expenses of counsel for the Administrative Agent, the
Conduit Purchasers, the Managing Agents, the Committed Purchasers and their
respective Affiliates with respect thereto and with respect to advising the
Administrative Agent, the Managing Agents, the Conduit Purchasers, the Committed
Purchasers and their respective Affiliates as to their rights and remedies under
this Agreement, (ii) all rating agency fees, (iii) all reasonable fees and
expenses associated with any audits and other due diligence conducted prior to
or after the Initial Closing Date and (iv) any amendments, waivers or consents
under the Transaction Documents. In addition, the Seller agrees to pay on demand
all costs and expenses (including reasonable counsel fees and expenses) of the
Administrative Agent, the Managing Agents, the Conduit Purchasers, the Committed
Purchasers and their respective Affiliates incurred in connection with the
enforcement of, or any dispute, work-out, litigation or preparation for
litigation involving, this Agreement or any other Transaction Document.
(b) In addition, the Seller shall pay on demand each of the following
to the extent not included in the CP Rate for the applicable Conduit Purchaser:
(i) any and all commissions of placement agents and Promissory Notes dealers in
respect of Promissory Notes issued to fund the Receivable Interests, (ii) any
and all reasonable costs and expenses of any issuing and paying agent or other
Person responsible for the administration of any Conduit Purchaser's Promissory
Notes program in connection with the preparation, completion, issuance, delivery
of payment of Promissory Notes issued to fund the Promissory Notes up to a
maximum amount of $20,000 per calendar year per Conduit Purchaser and (iii) the
applicable pro-rata costs and expenses of any Rating Agency rating any Conduit
Purchaser's Promissory Notes (to the extent not paid pursuant to Section
11.04(a) above); provided, however, that if any Conduit Purchaser enters into
agreements for the purchase of interests in receivables from one or more Persons
(each an "Other Seller"), such Conduit Purchaser shall equitably allocate such
expenses to the Seller and each Other Seller; and provided, further, that if
such expenses are attributable solely to the Seller, the Seller shall be solely
liable for such expenses, and if such expenses are attributable solely to Other
Sellers, such Other Sellers shall be solely liable for such expenses.
SECTION 11.05 No Proceedings. Each of the Seller, the Administrative
Agent, the Servicer, each Managing Agent, each Conduit Purchaser, each Committed
Purchaser, each assignee of a Receivable Interest or any interest therein and
each Person which enters into a commitment to purchase Receivable Interests or
interests therein hereby agrees that it will not institute against any Conduit
Purchaser any proceeding of the type referred to in the definition of "Event of
Bankruptcy" so long as any Promissory Notes or other senior indebtedness issued
by such Conduit Purchaser shall be outstanding or there shall not have elapsed
one year plus one day since the last day on which any such Promissory Notes or
other senior indebtedness shall have been outstanding.
SECTION 11.06 Confidentiality. (a) Each of the parties hereto hereby
agrees that, from the commencement of discussions with respect to the
transactions contemplated by the Transaction Documents (the "Transaction"), each
of the parties hereto (and each of their respective, and their respective
affiliates, employees, officers, directors, advisors, representatives and
agents) are permitted to disclose to any and all Persons, without limitation of
any kind, the
60
structure and tax aspects (as such terms are used in Internal Revenue Code
Sections 6011, 6111 and 6112 and the regulations promulgated thereunder) of the
Transaction, and all materials of any kind (including opinions or other tax
analyses) that are provided to any party related to such structure and tax
aspects. In this regard, the parties hereto acknowledge and agree that the
disclosure of the structure or tax aspects of the Transaction is not limited in
any way by an express or implied understanding or agreement, oral or written
(whether or not such understanding or agreement is legally binding).
Furthermore, each of the parties hereto acknowledges and agrees that it does not
know or have reason to know that its use or disclosure of information relating
to the structure or tax aspects of the Transaction is limited in any other
manner (such as where the Transaction is claimed to be proprietary or exclusive)
for the benefit of any other Person.
(b) Subject to Section 11.06(a), the Transaction Documents, the terms
thereof (including, without limitation, any specific pricing information
contained therein), the structure of the Transaction, any related structures
developed by the Administrative Agent or any Managing Agent for the Seller or
any of its Affiliates, any related analyses, computer models, information or
documents, any written or oral reports from Administrative Agent or any Managing
Agent to the Seller or any of its Affiliates or any related written information
(collectively, "Product Information") is confidential. Each of the Seller and
the Servicer agrees:
(i) to keep all Product Information confidential and to disclose
Product Information only to those of its officers, employees, agents,
accountants, legal counsel and other representatives (collectively
"Representatives") who have a need to know such Product Information for the
purpose of assisting in the Transaction;
(ii) to use the Product Information only in connection with the
Transaction and not for any other purpose; and
(iii) to cause its Representatives to comply with these provisions and
to be responsible for any failure of any Representative to so comply.
The provisions of this Section shall not apply to Product Information
that is or hereafter becomes (through a source other than the Seller, the
Servicer or any of their respective Affiliates or Representatives) a matter of
general public knowledge. The provisions of this Section shall not prohibit the
Seller or the Servicer from (i) filing with any governmental or regulatory
agency any information or other documents with respect to the Transaction as may
be required by applicable Law or (ii) making any other disclosure to the extent
required by applicable law, Subpoena or other legal process. The parties hereto
acknowledge that the Originator will file this Agreement and the Originator
Purchase Agreement, and any other material agreements related thereto (other
than the Fee Letters) as the Originator may determine in its sole discretion,
with the SEC.
(c) Each Purchaser, each Managing Agent, and the Administrative Agent
agrees to maintain the confidentiality of all non-public information with
respect to the Seller, the Originator, the Contracts or the Receivables
furnished or delivered to it pursuant to this Agreement; provided, however, that
such information may be disclosed (i) to such party's officers, employees,
agents, accountants, legal counsel and other representatives (collectively
61
"Purchaser Representatives") who have a need to know such information for the
purpose of assisting in the negotiation, completion and administration of the
facility contemplated hereby, (ii) to such party's assignees and participants
and potential assignees and participants to the extent such disclosure is made
pursuant to a written agreement of confidentiality substantially similar to this
Section 11.06(c), (iii) to the Rating Agencies, (iv) to the Program Support
Providers for each Conduit Purchaser and the dealers and investors in respect of
the Promissory Notes of any Conduit Purchaser, in each case in accordance with
the customary practices of such Conduit Purchaser for disclosures to Program
Support Providers, dealers or investors, as the case may be (it being understood
and agreed that any disclosures to dealers or investors will not identify the
Originator or its Affiliates by name) and (v) to the extent required by
applicable Law, Subpoena or other legal process or by any Official Body.
The provisions of Section 11.06(b) shall not apply to information that
is or hereafter becomes (through a source other than the applicable Purchaser,
Managing Agent or the Administrative Agent or any Purchaser Representative
associated with such party) a matter of general public knowledge. The provisions
of this Section shall not prohibit any Purchaser, Managing Agent or the
Administrative Agent from filing with or making available to any Official Body
any information or other documents with respect to the Transaction as may be
required by applicable Law or requested by such Official Body .
SECTION 11.07 Amendments to Financial Covenants. If the Revolving
Credit Agreement is amended, restated, supplemented or otherwise modified, or is
substituted or replaced with a new credit facility (each a "Modification"), and
such Modification includes one or more financial covenants which are different
from the financial covenants set forth on Schedule VI (including, without
limitation, by reasons of a difference in levels), then the parties hereto
agree, promptly upon request of each Managing Agent, to amend this Agreement as
appropriate to modify the financial covenants set forth in Schedule VI to
incorporate the financial covenant or covenants contained in such Modification
(which amendment shall include conforming amendments to the definitions
contained in Schedule VI).
SECTION 11.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK BUT
OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) EXCEPT TO THE EXTENT
THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE
INTERESTS OF THE ADMINISTRATIVE AGENT, THE CONDUIT PURCHASERS AND THE COMMITTED
PURCHASERS IN THE RECEIVABLES AND ANY OTHER COLLATERAL DESCRIBED IN SECTION 2.15
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 11.09 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement.
62
SECTION 11.10 Integration; Binding Effect; Survival of Termination.
This Agreement and the other Transaction Documents executed by the parties
hereto on the date hereof or on the Initial Closing Date contain the final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement among the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written understandings. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns (including any trustee in bankruptcy). Any provisions of this
Agreement which are prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms and shall remain in full force and effect until the
Final Payout Date; provided, however, that the provisions of Sections 2.10,
2.13, 2.14, 6.06, 10.01, 11.04, 11.05 and 11.06 shall survive any termination of
this Agreement.
SECTION 11.11 Consent to Jurisdiction. (a) Each party hereto hereby
irrevocably submits to the non-exclusive jurisdiction of any New York State or
Federal court sitting in New York City in any action or proceeding arising out
of or relating to this Agreement, and each party hereto hereby irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court. The parties hereto hereby irrevocably waive, to the fullest
extent they may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The parties hereto agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(b) Each of the Seller and the Servicer consents to the service of
any and all process in any such action or proceeding by the mailing of copies of
such process to it at its address specified in Section 11.02. Nothing in this
Section 11.11 shall affect the right of any Conduit Purchaser, any Committed
Purchaser, any Managing Agent or the Administrative Agent to serve legal process
in any other manner permitted by law.
SECTION 11.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
SECTION 11.13 Right of Setoff. Each of the Purchasers is hereby
authorized (in addition to any other rights it may have) at any time after the
occurrence of the Termination Date due to the occurrence of a Termination Event,
or during the continuation of an Incipient Termination Event, to set off,
appropriate and apply (without presentment, demand, protest or other notice
which are hereby expressly waived) any deposits and any other
63
indebtedness held or owing by such Purchaser to, or for the account of, the
Seller against the amount of the Seller Obligations owing by the Seller to such
Person.
SECTION 11.14 Ratable Payments. If any Committed Purchaser, whether by
setoff or otherwise, has a payment made to it with respect to any Seller
Obligations in a greater proportion than that received by any other Committed
Purchaser entitled to receive a ratable share of such Seller Obligations, such
Committed Purchaser agrees, promptly upon demand, to purchase for cash without
recourse or warranty a portion of such Seller Obligations held by the other
Committed Purchasers so that after such purchase each Committed Purchaser will
hold its ratable proportion of such Seller Obligations; provided that if all or
any portion of such excess amount is thereafter recovered from such Committed
Purchaser, such purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest.
SECTION 11.15 Limitation of Liability. (a) No claim may be made by any
Transaction Party or any other Person against any Purchaser, any Managing Agent,
the Administrative Agent or their respective Affiliates, directors, officers,
employees, attorneys or agents (each a "Purchaser Party") for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Transaction Document,
or any act, omission or event occurring in connection herewith or therewith,
except with respect to any claim arising out of the willful misconduct or gross
negligence of such Purchaser Party; and each of the Seller and the Servicer
hereby waives, releases, and agrees not to ▇▇▇ upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
(b) Notwithstanding anything to the contrary contained herein, the
obligations of the respective Conduit Purchasers under this Agreement are solely
the corporate obligations of each such Conduit Purchaser and shall be payable
only at such time as funds are actually received by, or are available to, such
Conduit Purchaser in excess of funds necessary to pay in full all outstanding
Promissory Notes issued by such Conduit Purchaser and, to the extent funds are
not available to pay such obligations, the claims relating thereto shall not
constitute a claim against such Conduit Purchaser. Each party hereto agrees that
the payment of any claim (as defined in Section 101 of Title 11 of the
Bankruptcy Code) of any such party shall be subordinated to the payment in full
of all Promissory Notes.
(c) No recourse under any obligation, covenant or agreement of any
Conduit Purchaser contained in this Agreement shall be had against any
incorporator, stockholder, officer, director, member, manager, employee or agent
of such Conduit Purchaser, the Managing Agent with respect to such Conduit
Purchaser or any of their Affiliates (solely by virtue of such capacity) by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue
of any statute or otherwise; it being expressly agreed and understood that this
Agreement is solely a corporate obligation of such Conduit Purchaser, and that
no personal liability whatever shall attach to or be incurred by any
incorporator, stockholder, officer, director, member, manager, employee or agent
of any Conduit Purchaser, any Managing Agent or any of their Affiliates (solely
by virtue of such capacity) or any of them under or by reason of any of the
obligations, covenants or agreements of such Conduit Purchaser contained in this
Agreement, or implied therefrom, and that any and all personal liability for
breaches by any Conduit Purchaser
64
of any of such obligations, covenants or agreements, either at common law or at
equity, or by statute, rule or regulation, of every such incorporator,
stockholder, officer, director, member, manager, employee or agent is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement; provided, however, that the foregoing shall not relieve any such
Person from any liability it might otherwise have as a result of fraudulent
actions taken or fraudulent omissions made by them.
SECTION 11.16 Intent of the Parties. (a) It is the intention of the
parties hereto that each purchase of Receivable Interests shall convey to the
Administrative Agent for the benefit of the applicable Purchasers, to the extent
of such Receivable Interests, an undivided interest in the Receivables and the
Related Security and Collections in respect thereof and that such transaction
shall constitute a purchase and sale and not a secured loan for all purposes
other than for United States federal, state and local income tax purposes.
However, if a determination is made that such purchase shall not be so treated,
the transactions effected hereby shall be deemed to constitute a secured
financing under applicable law.
(b) The Seller has structured the Transaction Documents with the
intention that the Receivable Interests and the obligations of the Seller
hereunder will be treated under United States federal, and applicable state,
local and foreign tax law as debt (the "Intended Tax Treatment"). The Seller,
Medco, the Administrative Agent, the Conduit Purchasers and the Committed
Purchasers agree to file no tax return, or take any action, inconsistent with
the Intended Tax Treatment. Each assignee and each participant acquiring an
interest in a Receivable Interest, by its acceptance of such assignment or
participation, agrees to comply with the immediately preceding sentence.
[Remainder of page intentionally left blank]
65
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SELLER: MEDCO HEALTH RECEIVABLES, LLC
By:
-----------------------------------
Name:
Title:
CONDUIT
PURCHASERS: CAFCO, LLC
By: Citicorp North America, Inc.,
as Attorney-in-Fact
By:
-----------------------------------
Name:
Title:
FALCON ASSET SECURITIZATION CORPORATION
By:
-----------------------------------
Name:
Title:
ADMINISTRATIVE AGENT: CITICORP NORTH AMERICA, INC.,
as Administrative Agent
By:
-----------------------------------
Name:
Title:
MANAGING AGENTS: CITICORP NORTH AMERICA, INC.,
as Managing Agent
By:
-----------------------------------
Name:
Title:
BANK ONE, NA (MAIN OFFICE CHICAGO),
as Managing Agent
By:
-----------------------------------
Name:
Title:
COMMITTED PURCHASERS: CITIBANK, N.A.
By:
-----------------------------------
Attorney-in-Fact
BANK ONE, NA (MAIN OFFICE CHICAGO)
By:
-----------------------------------
Name:
Title:
SERVICER: MEDCO HEALTH SOLUTIONS, INC.
By:
-----------------------------------
Name:
Title:
67