EXHIBIT 10.28
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RECEIVABLES PURCHASE AGREEMENT
between
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CAREMARK INC.,
as Seller
and
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MP RECEIVABLES COMPANY,
as Purchaser
Dated as of December 4, 1998
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.1. Definitions....................................... 1
SECTION 1.2. Other Terms....................................... 2
SECTION 1.3. Computation of Time Periods....................... 2
ARTICLE II PURCHASE, CONVEYANCE
AND SERVICING OF RECEIVABLES
SECTION 2.1. Sales............................................. 3
SECTION 2.2. Servicing of Receivables.......................... 4
ARTICLE III CONSIDERATION AND
PAYMENT; REPORTING
SECTION 3.1. Purchase Price.................................... 6
SECTION 3.2. Payment of Purchase Price......................... 6
SECTION 3.3. Settlement Report................................. 7
ARTICLE IV REPRESENTATIONS AND
WARRANTIES
SECTION 4.1. Seller's Representations and Warranties........... 9
SECTION 4.2. Reaffirmation of Representations and Warranties
by the Seller; Notice of Breach................................ 12
ARTICLE V COVENANTS OF THE
SELLER
SECTION 5.1. Covenants of the Seller........................... 13
ARTICLE VI REPURCHASE OBLIGATION
SECTION 6.1. Mandatory Repurchase.............................. 18
SECTION 6.2. Dilutions, Etc.................................... 18
ARTICLE VII CONDITIONS PRECEDENT
SECTION 7.1. Conditions Precedent.............................. 18
ARTICLE VIII TERM AND TERMINATION
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SECTION 8.1. Term.............................................. 20
SECTION 8.2. Effect of Termination............................. 20
ARTICLE IX MISCELLANEOUS
PROVISIONS
SECTION 9.1. Amendments, Etc................................... 21
SECTION 9.2. Governing Law; Submission to Jurisdiction......... 21
SECTION 9.3. Notices........................................... 21
SECTION 9.4. Severability of Provisions........................ 22
SECTION 9.5. Assignment........................................ 22
SECTION 9.6. Further Assurances................................ 23
SECTION 9.7. No Waiver; Cumulative Remedies.................... 23
SECTION 9.8. Counterparts...................................... 23
SECTION 9.9. Binding Effect; Third-Party Beneficiaries......... 23
SECTION 9.10. Merger and Integration........................... 23
SECTION 9.11. Headings......................................... 24
SECTION 9.12. Exhibits......................................... 24
EXHIBITS
EXHIBIT A Form of Subordinated Note........................... A-1
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RECEIVABLES PURCHASE AGREEMENT
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This RECEIVABLES PURCHASE AGREEMENT, dated as of December 4, 1998 (as
amended, supplemented or otherwise modified and in effect from time to time,
this "Agreement"), is entered into between CAREMARK INC., a California
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corporation, as seller (in such capacity, the "Seller") and MP RECEIVABLES
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COMPANY, a Delaware corporation, as purchaser (in such capacity, the
"Purchaser").
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W I T N E S S E T H :
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WHEREAS, the Purchaser desires to purchase from time to time certain
accounts receivable from the Seller existing on the Effective Date and
thereafter until the Purchase Termination Date;
WHEREAS, the Seller desires to sell and assign from time to time all
of the Seller's right, title and interest in, to and under certain accounts
receivable to the Purchaser upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and between
the Purchaser and the Seller as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Definitions. All capitalized terms used herein shall
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have the meanings specified herein or, if not so specified, the meanings
specified in, or incorporated by reference into, Schedule A to the Receivables
Transfer Agreement, dated as of December 4, 1998 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Receivables Transfer
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Agreement"), by and among MP Receivables Company, as Transferor thereunder,
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Caremark Inc., as Collection Agent thereunder, Park Avenue Receivables
Corporation, as purchaser thereunder and The Chase Manhattan Bank, as Funding
Agent thereunder.
SECTION I.2. Other Terms. All accounting terms not specifically
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defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the Relevant UCC, and not
specifically defined herein, are used herein as defined in such Article 9.
SECTION I.3. Computation of Time Periods. Unless otherwise stated in
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this Agreement, in the computation of a period of time from a specified date to
a later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding."
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ARTICLE II
PURCHASE, CONVEYANCE AND SERVICING OF RECEIVABLES
SECTION II.1. Sales. (a) Upon the terms and subject to the
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conditions set forth herein, and without recourse to the Seller (except to the
extent specifically provided herein), the Seller hereby sells, assigns,
transfers and conveys to the Purchaser, and the Purchaser hereby purchases from
the Seller, all of the Seller's right, title and interest, whether now owned or
hereafter acquired and wherever located, in, to and under the Receivables
outstanding on the Effective Date and thereafter owned by the Seller through any
Purchase Termination Date, together with all Related Security and Collections
with respect thereto and all Proceeds of the foregoing. Any sale, assignment,
transfer and conveyance hereunder does not constitute an assumption by the
Purchaser of any obligations of the Seller or any other Person to Obligors or to
any other Person in connection with the Receivables or under any Related
Security or any other agreement or instrument relating to the Receivables.
(b) In connection with the sales provided for herein, the Seller
agrees to record and file on or prior to the Effective Date, at its own expense,
a financing statement or statements with respect to the Receivables and the
other property described in Section 2.1(a) sold by the Seller hereunder meeting
the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect and protect the interests of the
Purchaser created hereby under the Relevant UCC against all creditors of, and
purchasers from, the Seller, and to deliver either the originals of such
financing statements or file-stamped copies of such financing statements or
other evidence of such filings to the Purchaser on or prior to the Effective
Date.
(c) The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents and take all actions
as may be necessary or as the Purchaser may reasonably request in order to
perfect or protect the interest of the Purchaser in the Receivables purchased
hereunder or to enable the Purchaser to exercise or enforce any of its rights
hereunder. Without limiting the foregoing, the Seller will, in order to
accurately reflect the purchase and sale transactions contemplated by this
Agreement, execute and file such financing or continuation statements or
amendments thereto or assignments thereof (as permitted pursuant hereto) as may
be requested by the Purchaser and will ▇▇▇▇ its master data processing records
(or related subledger) and other documents with a legend describing the purchase
by the Purchaser of the Receivables and the lien of the Funding Agent pursuant
to the Receivables Transfer Agreement and stating "These accounts
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receivable have been sold to MP Receivables Company. Subsequent to such sale, an
interest in these accounts receivable has been granted to The Chase Manhattan
Bank, as Funding Agent, pursuant to a Receivables Transfer Agreement dated as of
December 4, 1998". The Seller shall, upon request of the Purchaser, obtain such
search reports as the Purchaser shall request. To the fullest extent permitted
by applicable law, the Purchaser shall be permitted to sign and file
continuation statements and amendments thereto and assignments thereof without
the Seller's signature. Carbon, photographic or other reproduction of this
Agreement or any financing statement shall be sufficient as a financing
statement.
(d) It is the express intent of the Seller and the Purchaser that each
conveyance of the Receivables by the Seller to the Purchaser pursuant to this
Agreement be construed as a sale of such Receivables by the Seller to the
Purchaser. Further, it is not the intention of the Seller and the Purchaser
that such conveyances be deemed a grant of a security interest in the
Receivables by the Seller to the Purchaser to secure a debt or other obligation
of the Seller. However, in the event that, contrary to the mutual intent of the
parties, any conveyance of Receivables is not construed to be a sale of such
Receivables, then (i) this Agreement also shall be deemed to be, and hereby is,
a security agreement within the meaning of the Relevant UCC; and (ii) the Seller
shall be deemed to have granted to the Purchaser, and the Seller hereby grants
to the Purchaser, a security interest in, to and under all of the Seller's
right, title and interest in, to and under the Receivables, together with all
Related Security and Collections with respect thereto and all Proceeds of the
foregoing, to secure the rights of the Purchaser set forth in this Agreement or
as may be determined in connection therewith by applicable law. The Seller and
the Purchaser shall, to the extent consistent with this Agreement, take such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Receivables, such security interest would be
deemed to be a perfected security interest in favor of the Purchaser under
applicable law and will be maintained as such throughout the term of this
Agreement.
SECTION II.2. Servicing of Receivables. In connection with the
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consummation of the sales provided for in this Agreement, Seller hereby assigns
and transfers to Purchaser and Purchaser's assignees all of Seller's right,
title and interest in and to each Lock-Box Account, and Purchaser relinquishes
all power to transfer, possess and control the Lock-Box Accounts and the
contents thereof (except any powers with respect to the Lock-Box Accounts and
contents thereof that are granted to Purchaser in its capacity as Collection
Agent). The servicing, administering and collection of the Receivables shall be
conducted by the Seller for the benefit of the Purchaser and its assignees. The
Seller hereby agrees to perform, take or cause to be
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taken all such action as may be necessary or advisable to collect each
Receivable from time to time, all in accordance with applicable laws, rules and
regulations and with the care and diligence which the Seller employs in
servicing similar receivables for its own account, in accordance with the Credit
and Collection Policy. The Purchaser hereby appoints the Seller as its agent to
enforce the Purchaser's rights and interests in, to and under the Receivables,
the Related Security and the Collections with respect thereto. The Seller shall
hold in trust for the Purchaser all Records which evidence or relate to the
Receivables or Related Security, Collections and Proceeds with respect thereto.
Notwithstanding anything to the contrary contained herein, from and after the
occurrence of a Termination Event (or a Potential Termination Event that will
unavoidably lead to a Termination Event and that has a material adverse effect
on the ability of the Seller, as Collection Agent under the Receivables Transfer
Agreement, to perform its servicing obligations under the Receivables Transfer
Agreement) the Funding Agent, on behalf of PARCO and the APA Banks and in its
capacity as the agent for the assignees of the Purchaser under the Receivables
Transfer Agreement, shall have the absolute and unlimited right to terminate the
Seller's servicing activities described in this Section 2.2. In consideration of
the foregoing, the Purchaser agrees to pay the Seller a servicing fee of one
percent (1%) per annum on the aggregate amount of Receivables sold, payable
monthly, for its performance of the duties and obligations described in this
Section 2.2.; provided that any such monthly payment shall be reduced by any
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amounts payable in such month by PARCO or the APA Banks to the Seller, in its
capacity as Collection Agent pursuant to the Receivables Transfer Agreement.
The obligations of the Seller hereunder in the administration,
servicing and collection of Receivables may be delegated from time to time by
the Seller to any of its Affiliates; provided that no such delegation of duties
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shall relieve the Seller of any of its duties and obligations hereunder.
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ARTICLE III
CONSIDERATION AND PAYMENT; REPORTING
SECTION III.1. Purchase Price. The purchase price for the
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Receivables and related property conveyed to the Purchaser by the Seller under
this Agreement on any Business Day shall be a dollar amount equal to the product
of (i) the aggregate Outstanding Balance of the Receivables sold on such
Business Day and (ii) one minus the then applicable Discount Percentage (the
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"Purchase Price").
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SECTION III.2. Payment of Purchase Price. (a) The Purchase Price
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for Receivables sold by the Seller on any Business Day shall be paid either (i)
in cash to the extent funds are available therefor in excess of necessary
working capital or (ii) if Purchaser does not have sufficient cash to pay the
Purchase Price, by means of (A) an advance under the Subordinated Note (each, an
"Advance") or (B) with the consent of the Seller, treating a portion of the
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Purchase Price as capital contributed by the Seller to Purchaser or (iii) with
the consent of the Seller, any combination of the foregoing. In the event
Purchaser does not have sufficient cash to pay the Purchase Price due with
respect to any sale of Receivables hereunder, and the Seller is not willing to
consent to the treatment of such insufficiency as a capital contribution, such
insufficiency shall be evidenced by the making of an Advance in an original
principal amount equal to such cash shortfall owed to the Seller; provided,
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however, that the Seller shall not make an Advance to Purchaser to the extent
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that the aggregate amount of outstanding Advances would be an amount such that
the net worth of the Purchaser would be less than 90% of the Outstanding Balance
of the Receivables then owned by the Purchaser (the "Advance Limit"). No sales
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of Receivables hereunder shall be made on and after the Purchase Termination
Date. On the date of the initial purchase of Receivables hereunder, the net
worth of the Purchaser shall be $20,000,000.
(b) All Advances made by the Seller to Purchaser shall be evidenced by
a single subordinated note, duly executed on behalf of Purchaser, in
substantially the form of Exhibit A annexed hereto, delivered on the Effective
Date and payable to the Seller in a principal amount equal to the Advance Limit
thereunder (as amended, supplemented or otherwise modified and in effect from
time to time, the "Subordinated Note"). The Seller is hereby authorized by
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Purchaser to endorse on the schedule attached to the Subordinated Note (or a
continuation of such schedule attached thereto and made a part thereof) an
appropriate notation evidencing the date and amount of each Advance, as well as
the date and amount of each payment made by the Purchaser with respect thereto;
provided, however, that the
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failure of any Person to make such a notation shall not affect any obligations
of Purchaser thereunder. Any such notation shall be conclusive and binding as to
the date and amount of such Advance, or payment of principal or interest
thereon, absent manifest error.
(c) The terms and conditions of the Subordinated Note and all Advances
thereunder shall be as follows:
(i) Repayment of Advances. All amounts paid by the Purchaser with
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respect to the Advances shall be allocated first to the repayment of accrued
interest until all such interest is paid, and then to the outstanding principal
amount of the Advances. Subject to the provisions of this Agreement, the
Purchaser may borrow, repay and reborrow Advances on and after the date hereof
and prior to the termination of this Agreement, subject to the terms, provisions
and limitations set forth herein, including, without limitation, the requirement
that no Advance be made to the extent that after giving effect thereto the
aggregate outstanding principal amount of all Advances would exceed the Advance
Limit.
(ii) Interest. The Subordinated Note shall bear interest from its
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date on the outstanding principal balance thereof at a rate per annum equal to
the Prime Rate plus 2%, calculated as of the Effective Date, as reset for each
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succeeding calendar month following December 1998 as the rate in effect as of
the last Business Day of the calendar month immediately preceding such calendar
month. Interest on each Advance shall be computed based on the number of days
elapsed in a year of 360 days.
(iii) Subordination. The Seller's rights under the Subordinated
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Note shall be fully subordinated to any rights of the Funding Agent, on behalf
of PARCO and the APA Banks pursuant to the Receivables Transfer Agreement and
the Asset Purchase Agreement, and shall not evidence any rights in the
Receivables or related property.
(iv) Offsets, etc. The Purchaser may offset any amount due and
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owing by the Seller against any amount due and owing by Purchaser to the Seller
under the terms of the Subordinated Note.
SECTION III.3. Settlement Report. On each Settlement Date, the
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Seller shall deliver to the Purchaser a monthly report, substantially in the
form of Exhibit E attached to the Receivables Transfer Agreement, showing, among
other things, (i) the aggregate Purchase Price of Receivables sold by the Seller
to the
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Purchaser in the preceding month and (ii) the aggregate Outstanding Balance of
such Receivables that are Eligible Receivables.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION IV.1. Seller's Representations and Warranties. The Seller
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represents and warrants to the Purchaser as of the Effective Date and on each
Business Day on which Receivables are sold hereunder:
(a) Corporate Existence and Power. The Seller is a corporation duly
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organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is now conducted,
except where the failure to have such licenses, authorizations, consents and
approvals is not reasonably likely to have a Material Adverse Effect. The
Seller is duly qualified to do business in, and is in good standing in, every
other jurisdiction in which the nature of its business requires it to be so
qualified, except where the failure to be so qualified or in good standing would
not have a Material Adverse Effect.
(b) Corporate and Governmental Authorization; Contravention. The
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execution, delivery and performance by the Seller of the Transaction Documents
to which it is a party are within the Seller's corporate powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any Official Body or official thereof (except for the filing
of UCC financing statements as required by this Agreement), and do not
contravene, or constitute a default under, any provision of applicable law, rule
or regulation or of the Certificate of Incorporation or Bylaws of the Seller or
of any material agreement or instrument or any judgment, injunction, order, writ
or decree binding upon the Seller and will not result in the creation or
imposition of any Adverse Claim (except those created by this Agreement and the
Receivables Transfer Agreement) on the assets of the Seller or any of its
Affiliates (other than, in the case of an Affiliate, Adverse Claims that are not
reasonably likely to have a Material Adverse Effect).
(c) Valid Sale; Binding Effect. Each purchase of Receivables and
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Related Security by the Purchaser hereunder shall constitute a valid sale and
assignment by the Seller to the Purchaser, enforceable against creditors of, and
purchasers from, the Seller. Each of the Transaction Documents to which the
Seller is a party will constitute the legal, valid and binding obligation of the
Seller, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium
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or other similar laws affecting the rights of creditors and general equitable
principles (whether considered in a proceeding in equity or at law).
(d) Quality of Title. Immediately preceding the sale of the
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Receivables and related property pursuant to this Agreement, the Seller was the
owner of all of the Receivables, free and clear of any Adverse Claim. On or
prior to the date hereof, all financing statements and other documents required
to be recorded or filed in order to perfect and protect the interest of the
Purchaser in, to and under the Receivables against all creditors of and
purchasers from the Seller will have been duly filed in each filing office
necessary for such purpose and all filing fees and taxes, if any, payable in
connection with such filings shall have been paid in full.
(e) Accuracy of Information. All information heretofore furnished by
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the Seller to the Purchaser and the Funding Agent for purposes of or in
connection with this Agreement, any other Transaction Document, or any
transaction contemplated hereby or thereby is, and all such information
hereafter furnished by the Seller to the Purchaser, the Funding Agent, PARCO and
the APA Banks will be, true and correct in every material respect, on the date
such information is stated or certified.
(f) Tax Status. The Seller has filed all tax returns (Federal, state
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and local) required to be filed and has paid or made adequate provision for the
payment of all taxes, assessments and other governmental charges.
(g) Action, Suits. There are no actions, suits or proceedings
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pending, or to the knowledge of the Seller threatened, against or affecting the
Seller or its properties, in or before any court, arbitrator or other body,
which are reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect.
(h) Place of Business. The principal place of business and chief
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executive office of the Seller are located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the offices where the Seller keeps all of the Records, are
located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other
locations notified to the Purchaser in accordance with this Agreement in
jurisdictions where all action required by the terms of this Agreement has been
taken and completed.
(i) Solvency. The Seller is not insolvent, does not have unreasonably
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small capital with which to carry on its business, is able to pay its debts
generally as they become due and payable, and its liabilities do not exceed its
assets.
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(j) Tradenames, Etc. As of the date hereof: (i) the Seller's chief
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executive office is located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
(ii) the Seller has only the subsidiaries and divisions listed on Exhibit J to
the Receivables Transfer Agreement; and (iii) the Seller has, within the last
five (5) years, operated only under the tradenames identified on Exhibit J to
the Receivables Transfer Agreement, and, within the last five (5) years, has not
changed its name, merged with or into or consolidated with any other corporation
or been the subject of any proceeding under ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code
(Bankruptcy), except as disclosed in Exhibit J to the Receivables Transfer
Agreement.
(k) Nature of Receivables. Each Receivable sold by the Seller to the
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Purchaser hereunder is an Eligible Receivable as of the date of sale. Each
Receivable included in the calculation of the Net Receivables Balance in fact
satisfies at such time the definition of "Eligible Receivable" and is an
"eligible asset" as defined in Rule 3a-7 under the Investment Company Act of
1940, as amended.
(l) Credit and Collection Policy. Since November 1, 1998, there has
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been no change in the Credit and Collection Policy which could have a Material
Adverse Effect. Since such date, no change has occurred in the overall rate of
collection of the Receivables which could have a Material Adverse Effect.
(m) Collections and Servicing. Since November 1, 1998, there has been
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no change in the ability of the Seller to service and collect the Receivables
which could have a Material Adverse Effect.
(n) Binding Effect of Receivables and Contract. Each Receivable and
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related Contract constitutes a legal, valid and binding obligation of the
Obligor, enforceable against the Obligor, subject to the effect of bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
(whether considered in a proceeding at law or in equity).
(o) Not an Investment Company. The Seller is not, and is not
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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.
(p) ERISA. Each of the Seller and its ERISA Affiliates is in
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compliance in all material respects with ERISA, and no lien exists in favor of
the Pension Benefit Guaranty Corporation on any of the Receivables.
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(q) Lock-Box Accounts. The names and addresses of all the Lock-Box
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Banks, together with the account numbers of the Lock-Box Accounts at such Lock-
Box Banks, are specified in Exhibit C to the Receivables Transfer Agreement.
All Obligors have been instructed to make payment to a Lock-Box Account.
(r) Bulk Sales. No transaction contemplated by this Agreement
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requires compliance with any bulk sales act or similar law.
(s) Year 2000. Seller is implementing a comprehensive, detailed
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program to address on a timely basis the "Year 2000 Problem" (i.e., the risk
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that computer applications used by Seller may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999); Seller will on a timely basis successfully resolve the
"Year 2000 Problem" for all computer applications used in relation to
Receivables by no later than July 31, 1999 except where the failure to do so is
not reasonably likely to result in a Material Adverse Effect.
SECTION IV.2. Reaffirmation of Representations and Warranties by the
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Seller; Notice of Breach. On the Effective Date and on each Business Day on
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which Receivables are sold hereunder, the Seller, by accepting the proceeds of
such sale, shall be deemed to have certified that all representations and
warranties described in Section 4.1 are true and correct on and as of such day
as though made on and as of such day. The representations and warranties set
forth in Section 4.1 shall survive the conveyance of the Receivables to the
Purchaser. Upon discovery by the Purchaser or the Seller of a breach of any of
the foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other within three (3) Business Days of
such discovery.
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ARTICLE V
COVENANTS OF THE SELLER
SECTION V.1. Covenants of the Seller. The Seller hereby covenants
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and agrees with the Purchaser that, for so long as this Agreement is in effect,
and until all Receivables sold to the Purchaser pursuant hereto shall have been
paid in full or written-off as uncollectible, unless the Purchaser otherwise
consents in writing, the Seller covenants and agrees as follows:
(a) Conduct of Business. The Seller will, and will cause each of its
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Affiliates to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic corporation in its jurisdiction of
incorporation and will maintain all requisite authority to conduct its business
in each jurisdiction in which its business is conducted, except where the
failure to carry on and conduct such business, remain duly incorporated, validly
existing and in good standing or maintain such authority is not reasonably
likely to have a Material Adverse Effect.
(b) Compliance with Laws. The Seller will, and will cause each of its
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Affiliates to, comply in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure to so comply is not reasonably
likely to have a Material Adverse Effect.
(c) Furnishing of Information and Inspection of Records. The Seller
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will furnish to the Purchaser from time to time such information with respect to
the Receivables as the Purchaser may reasonably request, including, without
limitation, listings identifying the Obligor and the Outstanding Balance for
each Receivable. The Seller will, at any time and from time to time during
regular business hours, upon at least one (1) Business Day's prior notice, at
the Purchaser's expense, permit the Purchaser, or its agents or representatives,
(i) to examine and make copies of and abstracts from all Records and (ii) to
visit the offices and properties of the Seller for the purpose of examining such
Records, and to discuss matters relating to Receivables or the Seller's
performance hereunder with any of the officers, directors, employees or
independent public accountants of the Seller having knowledge of such matters.
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(d) Keeping of Records and Books of Account. The Seller will maintain
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a system of accounting established and administered in accordance with generally
accepted accounting principles, and will maintain and implement administrative
and operating procedures (including, without limitation, for up to twenty-four
(24) months, an ability to recreate records evidencing Receivables in the event
of the destruction of the originals thereof), and keep and maintain, or obtain,
as and when required, 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). The Seller will give the Purchaser prompt notice of any
change in the administrative and operating procedures referred to in the
previous sentence to the extent such change is reasonably likely to have a
Material Adverse Effect.
(e) Performance and Compliance with Receivables and Contracts. The
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Seller at its expense will timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it under the
Contracts related to the Receivables and shall pay when due any taxes
(including, without limitation, sales, excise or personal property taxes)
payable by it in connection with any of the Receivables.
(f) Credit and Collection Policies. The Seller will comply in all
------------------------------
material respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract.
(g) Collections. The Seller shall instruct all Obligors to cause all
-----------
Collections to be deposited directly to a Lock-Box Account.
(h) Collections Received. The Seller shall hold in trust, and remit
--------------------
immediately, but in no event later than one (1) Business Day after receipt
thereof, all Collections received from time to time by the Seller to a Lock-Box
Account.
(i) Sale Treatment. Except to the extent a conveyance is treated as a
--------------
capital contribution pursuant to Section 3.2(a) hereof, the Seller agrees to
treat each conveyance hereunder for all purposes (including, without limitation,
tax and financial accounting purposes) as a sale and, to the extent any
reporting is required, shall report the transactions contemplated by this
Agreement on all relevant books, records, tax returns, financial statements and
other applicable documents as a sale of the Receivables to the Purchaser.
14
(j) No Sales, Liens, Etc. Except as otherwise provided herein, 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 upon (or the filing
of any financing statement) or with respect to, any Receivable, Related Security
or Collections or upon or with respect to any Lockbox Account to which any
Collections of any Receivable are sent, or, in each case, assign any right to
receive income in respect thereof.
(k) No Extension or Amendment of Receivables. The Seller will extend,
----------------------------------------
amend or otherwise modify the terms of any Receivable, and will amend, modify or
waive any term or condition of any Contract related thereto, only as provided in
the Receivables Transfer Agreement or as contemplated by the Credit and
Collection Policy unless such modification is not reasonably likely to have a
Material Adverse Effect (solely with respect to the collectibility of such
Receivable).
(l) No Change in Business or Credit and Collection Policy. The Seller
-----------------------------------------------------
will not make any change in the Credit and Collection Policy which might impair
the collectibility of any Receivable, unless such change is not reasonably
likely to have a Material Adverse Effect.
(m) No Mergers, Etc. The Seller will not (i) consolidate or merge
---------------
with or into any other Person, or (ii) sell, lease or transfer all or
substantially all of its assets to any other Person; provided, that the Seller
--------
may merge with another Person if such merger or consolidation does not cause a
Termination Event or Potential Termination Event under the Receivables Transfer
Agreement.
(n) Change in Payment Instructions to Obligors; Deposits to Lockboxes.
-----------------------------------------------------------------
The Seller will not add or terminate, or make any change to, any Lock-Box
Account, except in accordance with the Receivables Transfer Agreement. The
Seller will not deposit or otherwise credit, or instruct to be so deposited or
credited, to any Lock-Box Account, cash or cash proceeds other than Collections
of Receivables.
(o) Change of Name, Etc. The Seller shall not change its name,
--------------------
identity or structure or its chief executive office, unless at least ten (10)
days prior to the effective date of any such change the Seller delivers to the
Purchaser and the Funding Agent (i) financing statements under the Relevant UCC,
executed by the Seller necessary to reflect such change and to continue the
perfection of the Purchaser's interest in the Receivables and (ii) new or
revised Lock-Box Agreements
15
which reflect such change and enable the Funding Agent, on behalf of PARCO and
the APA Banks, to exercise its rights under the Transaction Documents.
(p) Indemnification. The Seller agrees to indemnify, defend and hold
---------------
the Purchaser and its assignees harmless from and against any and all loss,
liability, damage, judgment, claim, deficiency, or expense (including interest,
penalties, reasonable attorneys' fees and amounts paid in settlement) to which
the Purchaser and its assignees may become subject insofar as such loss,
liability, damage, judgment, claim, deficiency, or expense arises out of or is
based upon a breach by the Seller of its representations, warranties and
covenants contained herein, or any written information certified in any schedule
or certificate delivered by the Seller hereunder or in connection with the
Transaction Documents, being untrue in any material respect at the time when
made or deemed made; provided, however (x) the foregoing indemnification is not
-------- -------
intended to, and shall not, constitute a guaranty of the collectibility or
payment of the Receivables conveyed hereunder and (y) nothing in this Section
5.1(p) shall require the Seller to indemnify the Purchaser or its assignees for
Receivables which are not collected, not paid or otherwise uncollectible on
account of the insolvency, bankruptcy or financial inability to pay of the
applicable Obligor. The obligations of the Seller under this Section 5.1(p)
shall be considered to have been relied upon by the Purchaser and the Funding
Agent and shall survive the execution, delivery, performance and termination of
this Agreement for a period of three (3) years following the Purchase
Termination Date, regardless of any investigation made by the Purchaser or the
Funding Agent or on behalf of either of them.
(q) ERISA. The Seller shall promptly give the Purchaser written
-----
notice upon becoming aware that the Seller is not in compliance in all material
respects with ERISA or that any ERISA lien on any of the Receivables exists.
(r) Separate Existence. The Seller shall at all times:
------------------
(i) maintain its deposit account or accounts separate from those
of the Purchaser and ensure that its funds will not be diverted to the
Purchaser nor will such funds be commingled with the funds of the Purchaser
(other than funds deposited to a Lock-Box Account, which funds may be
commingled for a period not exceeding two (2) Business Days);
(ii) to the extent that it shares any officers or other employees
with the Purchaser, the salaries of and the expenses related
16
to providing benefits to such officers and other employees shall be fairly
allocated among it and the Purchaser, and the Seller and the Purchaser
shall bear their respective fair share of the salary and benefit costs
associated with all such common officers and employees;
(iii) to the extent that it jointly contracts with the Purchaser
to do business with vendors or service providers or to share overhead
expenses, the costs incurred in so doing shall be allocated fairly between
it and the Purchaser, and it and the Purchaser shall bear their fair shares
of such costs. To the extent that it contracts or does business with
vendors or service providers where the goods and services provided are
partially for the benefit of the Purchaser, the costs incurred in so doing
shall be fairly allocated between it and the Purchaser in proportion to the
benefit of the goods or services each is provided, and the Seller and the
Purchaser shall bear their respective fair shares of such costs;
(iv) enter into all material transactions with the Purchaser,
whether currently existing or hereafter entered into, only on an arm's
length basis, it being understood and agreed that the transactions
contemplated in the Transaction Documents meet the requirements of this
clause (iv);
(v) maintain office space that is physically segregated from the
office space of the Purchaser (but which may be located at the same address
as the Purchaser) and, to the extent that it and the Purchaser have offices
in the same location, there shall be a fair and appropriate allocation of
overhead costs between them, and each shall bear its fair share of such
expenses; and
(vii) 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
comply with this Section 5.1.
17
ARTICLE VI
REPURCHASE OBLIGATION
SECTION VI.1. Mandatory Repurchase. If, on any day, any
--------------------
representation or warranty made herein with respect to any Receivable which has
been sold by the Seller hereunder is determined to be incorrect or untrue in any
material respect as of the date such representation or warranty was made, the
Seller shall on such day repurchase such Receivable and pay to the Purchaser an
amount equal to the aggregate Outstanding Balance of such Receivable.
SECTION VI.2. Dilutions, Etc. The Seller agrees that if, on any day,
---------------
the Outstanding Balance of a Receivable which has been sold by the Seller
hereunder is either (x) reduced as a result of defective, rejected or returned
goods or other dilution factor, any billing adjustment or other adjustment, or
(y) reduced or cancelled as a result of (i) a setoff or offset in respect of any
claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction), or (ii) any action by any Federal or
state taxing authority or as a result of the payment by any Obligor of any
portion of a Receivable constituting a tax or governmental fee or charge to any
Person other than the Purchaser, then the Seller shall be deemed to have
received on such day a collection of such Receivable to the extent of the amount
of such reduction, cancellation or payment made by the Obligor and shall pay to
the Purchaser an amount equal to such reduction or cancellation on the last
Business Day of the calendar month in which such reduction or cancellation
occurred.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. Conditions Precedent. The obligations of the Purchaser
--------------------
to purchase the Receivables on the Effective Date and on any Business Day on
which Receivables are sold hereunder shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of the Seller contained in this
Agreement shall be true and correct on the Effective Date and on the applicable
Business Day of sale, with the same effect as though such representations and
warranties had been made on such date;
18
(b) All information concerning the Receivables provided to the
Purchaser shall be true and correct in all material respects as of the Effective
Date, in the case of any Receivables sold on the Effective Date, or the date
such Receivables are sold, in the case of any Receivables created after the
Effective Date and sold by the Seller to the Purchaser on a subsequent Business
Day;
(c) The Seller shall have substantially performed all other
obligations required to be performed by the provisions of this Agreement and the
other Transaction Documents to which it is a party;
(d) The Seller shall have either filed or caused to be filed the
financing statement(s) required to be filed pursuant to Section 2.1(b);
(e) All corporate and legal proceedings, and all instruments in
connection with the transactions contemplated by this Agreement and the other
Transaction Documents shall be satisfactory in form and substance to the
Purchaser, and the Purchaser shall have received from the Seller copies of all
documents (including, without limitation, records of corporate proceedings)
relevant to the transactions herein contemplated as the Purchaser may reasonably
have requested;
(f) On the Effective Date, the Seller shall deliver to the Purchaser
and the Funding Agent a certification of the aggregate Outstanding Balance of
the Receivables in existence as of the close of business on November 23, 1998
(except that, with respect to Vendor Receivables, the aggregate Outstanding
Balance of the Vendor Receivables shall be as of the close of business on
October 31, 1998); and
(g) the Purchase Termination Date shall not have occurred.
19
ARTICLE VIII
TERM AND TERMINATION
SECTION VIII.1. Term. This Agreement shall commence as of the first
----
day on which all of the conditions precedent have been satisfied and shall
continue in full force and effect until the date following the earliest of (i)
the date designated by the Purchaser or the Seller as the Purchase Termination
Date at any time following ten (10) days= prior written notice to the other
(with a copy thereof to the Funding Agent), (ii) the date on which the Funding
Agent, on behalf of PARCO and the APA Banks, declares a Termination Event or a
Potential Termination Event pursuant to the Receivables Transfer Agreement,
(iii) upon the occurrence of an Event of Bankruptcy with respect to either the
Purchaser or the Seller or (iv) the date on which either the Purchaser or the
Seller defaults on its obligations hereunder, which default continues unremedied
for more than ten (10) days after written notice (any such date being a
"Purchase Termination Date"); provided, however, that the termination of this
-------------------------- -------- -------
Agreement pursuant to this Section 8.1 hereof shall not discharge any Person
from any obligations incurred prior to such termination, including, without
limitation, any obligations to make any payments with respect to any Receivable
sold prior to such termination.
SECTION VIII.2. Effect of Termination. Following the termination of
---------------------
this Agreement pursuant to Section 8.1, the Seller shall not sell, and the
Purchaser shall not purchase, any Receivables. No termination, rejection or
failure to assume the executory obligations of this Agreement in any Event of
Bankruptcy with respect to the Seller or the Purchaser shall be deemed to impair
or affect the obligations pertaining to any executed sale or executed
obligations, including, without limitation, pre-termination breaches of
representations and warranties by the Seller or the Purchaser. Without limiting
the foregoing, prior to termination, the failure of the Seller to deliver
computer records of Receivables or any reports regarding the Receivables shall
not render such transfer or obligation executory, nor shall the continued duties
of the parties pursuant to this Agreement render a completed sale executory.
20
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION IX.1. Amendments, Etc. This Agreement and the rights and
---------------
obligations of the parties hereunder may not be amended, supplemented, waived or
otherwise modified except in an instrument in writing signed by the Purchaser
and the Seller and consented to in writing by the Funding Agent (with the
consent of the Required APA Banks). Any reconveyance executed in accordance
with the provisions hereof shall not be considered an amendment or modification
to this Agreement.
SECTION IX.2. Governing Law; Submission to Jurisdiction.
-----------------------------------------
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(b) The parties hereto hereby submit to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any New York state court sitting in The City of New York for purposes of all
legal proceedings arising out of or relating to this agreement or the
transactions contemplated hereby. Each party hereto hereby irrevocably waives,
to the fullest extent it may effectively do so, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum. Nothing in this Section 9.2 shall affect
the right of the Purchaser to bring any other action or proceeding against the
Seller or its property in the courts of other jurisdictions.
SECTION IX.3. Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt requested,
to:
(a) in the case of the Purchaser:
MP RECEIVABLES COMPANY
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
21
(b) in the case of the Seller:
CAREMARK INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
in each case, with a copy to:
THE CHASE MANHATTAN BANK,
as Funding Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.
SECTION IX.4. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION IX.5. Assignment. This Agreement may not be assigned by the
----------
parties hereto, except that the Purchaser may assign its rights hereunder
pursuant to the Receivables Transfer Agreement to the Funding Agent for the
benefit of PARCO and the APA Banks as security for the Purchaser=s repayment
obligations under the Receivables Transfer Agreement and the Asset Purchase
Agreement. The Purchaser hereby notifies the Seller (and the Seller hereby
acknowledges) that the Purchaser, pursuant to the Receivables Transfer
Agreement, has assigned its rights (but not its obligations) hereunder to the
Funding Agent for the benefit of PARCO and the APA Banks. All rights of the
Purchaser hereunder may be exercised by the Funding Agent to the extent of its
rights hereunder and under the other Transaction Documents.
22
SECTION IX.6. Further Assurances. The Purchaser and the Seller agree
------------------
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the other party more
fully to effect the purposes of this Agreement and the other Transaction
Documents, including, without limitation, the execution of any financing
statements or continuation statements or equivalent documents relating to the
Receivables for filing under the provisions of the Relevant UCC or other laws of
any applicable jurisdiction.
SECTION IX.7. No Waiver; Cumulative Remedies. No failure to exercise
------------------------------
and no delay in exercising, on the part of the Purchaser, the Seller or the
Funding Agent, any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privilege provided by law.
SECTION IX.8. Counterparts. This Agreement may be executed in two or
------------
more counterparts including telecopy transmission thereof (and by different
parties on separate counterparts), each of which shall be an original, but all
of which together shall constitute one and the same instrument.
SECTION IX.9. Binding Effect; Third-Party Beneficiaries. This
-----------------------------------------
Agreement and the other Transaction Documents will inure to the benefit of and
be binding upon the parties hereto and their respective successors and permitted
assigns. PARCO, the APA Banks and the Funding Agent are each intended by the
parties hereto to be third-party beneficiaries of this Agreement.
SECTION IX.10. Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement and the other Transaction Documents set forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement
and the other Transaction Documents.
SECTION IX.11. Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
23
SECTION IX.12. Exhibits. The schedules and exhibits referred to
--------
herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
IN WITNESS WHEREOF, the Purchaser and the Seller each have caused this
Receivables Purchase Agreement to be duly executed by their respective officers
as of the day and year first above written.
CAREMARK INC.,
as Seller
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Secretary
MP RECEIVABLES COMPANY,
as Purchaser
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Secretary
Acknowledged and agreed as
of the date first above written:
THE CHASE MANHATTAN BANK, as
Funding Agent for the benefit of Park Avenue
Receivables Corporation and the several APA Banks
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
25
EXHIBIT A
---------
FORM OF SUBORDINATED NOTE
$81,290,000
December 4, 1998
FOR VALUE RECEIVED, the undersigned, MP RECEIVABLES COMPANY, a
Delaware corporation (the "Maker"), hereby promises to pay to the order of
-----
CAREMARK INC., a California corporation (the "Payee"), on December 4, 2001 or
-----
earlier as provided for in the Receivables Purchase Agreement dated as of the
date hereof between the Maker and the Payee (as such agreement may from time to
time be amended, supplemented or otherwise modified and in effect, the
"Receivables Purchase Agreement"), the lesser of the principal sum of EIGHTY
-------------------------------
ONE MILLION TWO HUNDRED NINETY THOUSAND Dollars ($81,290,000.00) or the
aggregate unpaid principal amount of all Advances to the Maker from the Payee
pursuant to the terms of the Receivables Purchase Agreement, in lawful money of
the United States of America in immediately available funds, and to pay interest
from the date thereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at the rate per annum set forth in
the Receivables Purchase Agreement and shall be payable in arrears on the last
Business Day of each calendar month.
The Maker hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the holder hereof of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Subordinated Note and all payments
and prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder in
its internal records; provided, however, that the failure of the holder hereof
-------- -------
to make such a notation or any error in such a notation shall not in any manner
affect the obligation of the Maker to make payments of principal and interest in
accordance with the terms of this Subordinated Note and the Receivables Purchase
Agreement.
A-1
The Maker shall have the right to prepay and, subject to the
limitations set forth in the Receivables Purchase Agreement, reborrow Advances
made to it without penalty or premium.
This Subordinated Note is the Subordinated Note referred to in the
Receivables Purchase Agreement, which, among other things, contains provisions
for the subordination of this Subordinated Note to the rights of certain parties
under the Receivables Transfer Agreement, all upon the terms and conditions
therein specified. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in, or incorporated by
reference into, the Receivables Purchase Agreement.
This Subordinated Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
MP RECEIVABLES COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Secretary
A-2
Advances and Payments
Amount of Payments Unpaid Principal Name of Person
Date Advance Principal/Interest Balance of Note Making Notation
---- ------- ------------------ --------------- ---------------
A-3