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EXHIBIT 10.27
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RECEIVABLES PURCHASE AGREEMENT
Dated as of August 7, 1998
Among
D&K RECEIVABLES CORPORATION
as Seller
and
D&K HEALTHCARE RESOURCES, INC.
as initial Servicer
and
BLUE KEEL FUNDING, LLC
as Purchaser
and
FLEET NATIONAL BANK
as Administrator
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TABLE OF CONTENTS
Page
ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitment to Purchase; Limits on
Purchaser's Obligations..............................................................2
SECTION 1.02. Purchase Procedures; Assignment of
Purchaser's Interests................................................................2
SECTION 1.03. Reinvestments of Certain Collections;
Payment of Remaining Collections.....................................................2
SECTION 1.04. Asset Interest.......................................................................4
SECTION 1.05. Voluntary Termination of Purchase and
Reinvestment Obligations or Reduction of
Purchase Limit.......................................................................5
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Computation of Capital...............................................................5
SECTION 2.02. Computation of Concentration Limit...................................................5
SECTION 2.03. Computation of Earned Discount.......................................................5
SECTION 2.04. Estimates of Earned Discount Rate,
Fees, Etc............................................................................6
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures................................................................6
SECTION 3.02. Deemed Collections; Reduction of
Capital, Etc.........................................................................9
SECTION 3.03. Payments and Computations, Etc......................................................10
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees................................................................................11
SECTION 4.02. Yield Protection....................................................................11
SECTION 4.03. Funding Losses......................................................................13
ARTICLE V
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CONDITIONS TO PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase............................................13
SECTION 5.02. Conditions Precedent to All Purchases
and Reinvestments...................................................................15
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller............................................16
SECTION 6.02. Representations and Warranties of Parent............................................20
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants...............................................................22
SECTION 7.02. Reporting Requirements..............................................................25
SECTION 7.03. Negative Covenants..................................................................27
SECTION 7.04. Separate Existence..................................................................29
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer.............................................................31
SECTION 8.02. Duties of Servicer..................................................................33
SECTION 8.03. Rights of the Administrator.........................................................34
SECTION 8.04. Responsibilities of Seller..........................................................35
SECTION 8.05. Further Action Evidencing Purchases and
Reinvestments.......................................................................36
SECTION 8.06. Application of Collections..........................................................37
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest..........................................................37
SECTION 9.02. Further Assurances..................................................................37
SECTION 9.03. Remedies............................................................................37
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events..................................................................38
SECTION 10.02. Remedies............................................................................40
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ARTICLE XI
THE ADMINISTRATOR
SECTION 11.01. Authorization and Action............................................................40
SECTION 11.02. Administrator's Reliance, Etc.......................................................40
SECTION 11.03. Fleet and Affiliates................................................................41
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments.........................................................41
SECTION 12.02. Rights of Assignee..................................................................42
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities.........................................................................42
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc.....................................................................45
SECTION 14.02. Notices, Etc........................................................................45
SECTION 14.03. No Waiver; Remedies.................................................................45
SECTION 14.04. Binding Effect; Survival............................................................46
SECTION 14.05. Costs, Expenses and Taxes...........................................................46
SECTION 14.06. No Proceedings......................................................................47
SECTION 14.07. Confidentiality of Program Information..............................................47
SECTION 14.08. Confidentiality of Parent Information...............................................48
SECTION 14.09. Captions and Cross References.......................................................50
SECTION 14.10. Integration.........................................................................50
SECTION 14.11. Governing Law.......................................................................50
SECTION 14.12. Waiver Of Jury Trial................................................................50
SECTION 14.13. Consent To Jurisdiction; Waiver Of
Immunities..........................................................................51
SECTION 14.14. Execution in Counterparts...........................................................51
SECTION 14.15. No Recourse Against Other Parties...................................................51
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APPENDICES
APPENDIX A Definitions
SCHEDULES
SCHEDULE 6.01(m) List of Offices of Seller where Records Are
Kept
SCHEDULE 6.01(n) List of Lock-Box Banks
SCHEDULE 7.01(e) Forms of Contracts
SCHEDULE 7.01(g) Description of Credit and Collection Policy
SCHEDULE 14.02 Notice Addresses
EXHIBITS
EXHIBIT 1.02(a) Form of Purchase Notice
EXHIBIT 3.01(a)-1 Form of Servicer Report
EXHIBIT 3.01(a)-2 Form of Daily Report
EXHIBIT 5.01 Form of Lock-Box Agreement
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RECEIVABLES PURCHASE AGREEMENT
Dated as of August 7, 1998
THIS IS A RECEIVABLES PURCHASE AGREEMENT, among D&K RECEIVABLES
CORPORATION, a Delaware corporation ("Seller"), D&K HEALTHCARE RESOURCES, INC.,
a Delaware corporation ("Parent"), as initial Servicer, BLUE KEEL FUNDING, LLC,
a Delaware limited liability company ("Purchaser"), and FLEET NATIONAL BANK, a
national banking association ("Fleet"), as administrator for Purchaser (in such
capacity, the "Administrator"). Unless otherwise indicated, capitalized terms
used in this Agreement are defined in Appendix A.
Background
1. The Originators are engaged in the business of distribution and sale
of pharmaceuticals and related products.
2. Seller is a single purpose corporation formed for the purpose of
purchasing, and accepting contributions of, Receivables generated by the
Originators in the ordinary course of its business.
3. Seller has, and expects to have, Pool Receivables in which Seller
intends to sell an undivided interest. Seller has requested Purchaser, and
Purchaser shall, subject to the terms and conditions contained in this
Agreement, fund the purchase of such undivided interest, referred to herein as
the Asset Interest, from Seller from time to time during the term of this
Agreement.
4. Seller and Purchaser also desire that, subject to the terms and
conditions of this Agreement, certain of the daily Collections in respect of the
Asset Interest be reinvested in Pool Receivables, which reinvestment shall
constitute part of the Asset Interest.
5. Parent has been requested, and is willing, to act as initial
Servicer.
6. Fleet has been requested, and is willing, to act as the
Administrator.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
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ARTICLE I
PURCHASES AND REINVESTMENTS
SECTION 1.01. Commitment to Purchase; Limits on Purchaser's
Obligations. Upon the terms and subject to the conditions of this Agreement,
from time to time prior to the Termination Date, Seller may request that
Administrator, for the benefit of Purchaser, purchase from Seller an undivided
ownership interest in the Pool Assets (each being a "Purchase") and Purchaser
may, in its sole discretion, fund such Purchase; provided that no Purchase shall
be funded by Purchaser if, after giving effect thereto, either (a) the then
Capital would exceed an amount equal to $45,000,000 (the "Purchase Limit"), as
such amount may be decreased from time to time as provided in Section 1.05, or
(b) the Asset Interest would exceed 100% (the "Allocation Limit"); and provided
further that each Purchase made pursuant to this Section 1.01 shall have a
purchase price of at least $1,000,000.
SECTION 1.02. Purchase Procedures; Assignment of Interests.
(a) Notice of Purchase. Each Purchase from Seller shall be made on
notice from Seller to the Administrator received by the Administrator not later
than 11:00 a.m. (Boston, Massachusetts time) on the second Business Day next
preceding the date of such proposed Purchase. Each such notice of a proposed
Purchase shall be substantially in the form of Exhibit 1.02(a) (each a "Purchase
Notice"), and shall specify the desired amount and date of such Purchase, which
shall be a Settlement Date; provided, however, that Seller may give one
additional Purchase Notice each calendar month, specifying the desired amount,
which shall not exceed $10,000,000, and date of such Purchase, which shall be a
Business Day occurring on or before the 20th day of such calendar month, but
which need not be a Settlement Date, which Purchase Notice shall be given at
least three Business Days prior to the date of the proposed Purchase.
(b) Funding of Purchase. On the date of each Purchase, if Purchaser has
elected to fund such Purchase, Purchaser shall, upon satisfaction of the
applicable conditions set forth in Article V, make available to the
Administrator at the Administrator's Office the amount of its Purchase in
immediately available funds, and after receipt by the Administrator of such
funds, the Administrator will make such funds immediately available to Seller at
such office.
(c) Assignment of Asset Interest. Seller hereby sells, and transfers
to Administrator, for the benefit of Purchaser, the Asset Interest.
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SECTION 1.03. Reinvestments of Certain Collections; Payment of
Remaining Collections. (a) On the close of business on each day during the
period from the date hereof to the Termination Date, Servicer will, out of all
Collections received on such day:
(i) determine the portion of Collections attributable on any
day to the Asset Interest by multiplying (x) the amount of all
Collections times (y) the Asset Interest;
(ii) out of the portion of Collections allocated to the Asset
Interest pursuant to clause (i), set aside and hold in trust for
Purchaser an amount equal to the sum of the estimated amount of Earned
Discount accrued in respect of the Capital (based on rate information
provided by the Administrator pursuant to Section 2.04), the accrued
Fees, all other amounts due to Purchaser, the Administrator, the
Affected Parties or the Indemnified Parties hereunder (other than the
Capital) and the Purchaser's Share of the Servicer's Fee (in each case,
accrued through such day) and not so previously set aside; provided
that unless the Administrator shall request it to do so in writing,
Servicer shall not be required to hold Collections that have been
set-aside in a separate deposit account containing only such
Collections;
(iii) apply the Collections allocated to the Asset Interest
pursuant to clause (i) and not set aside pursuant to clause (ii) to the
purchase from Seller of ownership interests in Pool Assets (each such
purchase being a "Reinvestment"); provided that (A) if the Excess
Amount exceeds zero, then Servicer shall not reinvest, but shall set
aside and hold for the benefit of Purchaser, a portion of such
Collections which, together with other Collections previously set aside
and then so held, shall equal the Excess Amount; and (B) if the
conditions precedent to Reinvestment in Section 5.02 are not satisfied,
then Servicer shall not reinvest any of such Collections;
(iv) pay to Seller (A) the portion of Collections not
allocated to the Asset Interest pursuant to clause (i), less the
Seller's Share of the Servicer's Fee, and (B) the Collections applied
to Reinvestment pursuant to clause (iii); and
(v) out of the portion of Collections not allocated to the
Asset Interest pursuant to clause (i), pay to the Servicer the Seller's
Share of the Servicer's Fee accrued through such day.
(b) Unreinvested Collections. Servicer shall set aside and
hold in trust for the benefit of Purchaser all Collections which
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pursuant to clause (iii) of Section 1.03(a) may not be reinvested in Pool
Assets; provided that unless the Administrator shall request it to do so in
writing, Servicer shall not be required to hold Collections that have been
set-aside in a separate deposit account containing only such Collections. If,
prior to the date when such Collections are required to be paid to the
Administrator pursuant to Section 3.01, the amount of Collections set aside
pursuant to clause (iii) of Section 1.03(a) exceeds the Excess Amount, if any,
and the conditions precedent to Reinvestment set forth in Section 5.02 are
satisfied, then the Servicer shall apply such Collections (or, if less, a
portion of such Collections equal to the amount of such excess) to the making of
a Reinvestment.
SECTION 1.04. Asset Interest. (a) Components of Asset Interest.
On any date the Asset Interest will represent Administrator's (for the benefit
of Purchaser) combined undivided percentage ownership interest in (i) all then
outstanding Pool Receivables, (ii) all Related Security with respect to such
Pool Receivables, (iii) all of Seller's right and claims under the Purchase
Agreement, (iv) all Collections with respect to, and other proceeds of, the
foregoing as at such date, (v) all lock-boxes and lock-box or collection
accounts into which Collections of Pool Receivables are or may be deposited, and
all investments therein, and (vi) all books and records (including computer
disks, tapes and software) evidencing or relating to any of the foregoing, in
each case, whether now owned by Seller or hereafter acquired or arising, and
wherever located (all of the foregoing, collectively referred to as "Pool
Assets").
(b) Computation of Asset Interest. On any date, the Asset Interest
will be equal to a percentage, expressed as the following fraction:
C + RR
------
NPB
where:
C = the then Capital.
RR = the then Required Reserves.
NPB = the then Net Pool Balance;
provided, however, that from and after the Termination Date, the
Asset Interest will be 100%
(c) Frequency of Computation. The Asset Interest shall be computed as
of the Cut-Off Date for each Settlement Period. In addition, the Administrator
may require Servicer to provide a Servicer Report for purposes of computing the
Asset Interest as
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of any other date, and the Servicer agrees to do so within two Business Days of
its receipt of the Administrator's request.
SECTION 1.05. Voluntary Termination of Purchase and Reinvestment
Obligations or Reduction of Purchase Limit. Seller may, upon at least 60 days'
prior written notice to the Administrator, either (a) terminate Purchaser's
commitment to fund Purchases and Reinvestments hereunder, or (b) reduce the
Purchase Limit to an amount not less than $25,000,000; provided, however, that
(i) each partial reduction of the Purchase Limit shall be in an amount equal to
$1,000,000 or an integral multiple thereof, and (ii) after giving effect to such
reduction, the Capital will not exceed the Purchase Limit as so reduced. The
Purchase Limit may be increased upon the request of Seller and the written
consent of the Administrator and Purchaser thereto, which consent may be granted
or withheld in their sole discretion and may be subject to such conditions as
they may require.
ARTICLE II
COMPUTATIONAL RULES
SECTION 2.01. Computation of Capital. In making any determination of
Capital, the following rules shall apply:
(a) Capital shall not be considered reduced by any allocation,
setting aside or distribution of any portion of Collections unless such
Collections shall have been actually delivered to the Administrator
pursuant hereto for application to the Capital; and
(b) Capital shall not be considered reduced by any
distribution of any portion of Collections if at any time such
distribution is rescinded or must otherwise be returned for any reason.
SECTION 2.02. Computation of Concentration Limit. In the case of any
Obligor that is an Affiliate of any other Obligor, the Concentration Limit and
the aggregate Unpaid Balance of Pool Receivables of such Obligors shall be
calculated as if such Obligors were one Obligor.
SECTION 2.03. Computation of Earned Discount. In making any
determination of Earned Discount, the following rules shall apply:
(a) no provision of this Agreement shall require the payment
or permit the collection of Earned Discount in excess of the maximum
permitted by Applicable Law; and
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(b) Earned Discount for any period shall not be considered
paid by any distribution if at any time such distribution is rescinded
or must otherwise be returned for any reason.
SECTION 2.04. Estimates of Earned Discount Rate, Fees, Etc. For
purposes of determining the amounts required to be set aside by Servicer
pursuant to Section 1.03, the Administrator shall notify Servicer from time to
time of the Earned Discount Rate applicable to the Capital and the rates at
which fees and other amounts are accruing hereunder. It is understood and agreed
that (i) the Earned Discount Rate may change from time to time, (ii) certain
rate information provided by the Administrator to Servicer shall be based upon
the Administrator's good faith estimate, (iii) the amount of Earned Discount
actually accrued with respect to the Capital during any Settlement Period may
exceed, or be less than, the amount set aside with respect thereto by Servicer,
and (iv) the amount of fees or other payables accrued hereunder with respect to
any Settlement Period may exceed, or be less than, the amount set aside with
respect thereto by Servicer. Failure to set aside any amount so accrued shall
not relieve Servicer of its obligation to remit Collections to the Administrator
with respect to such accrued amount, as and to the extent provided in Section
3.01.
ARTICLE III
SETTLEMENTS
SECTION 3.01. Settlement Procedures.
The parties hereto will take the following actions with respect to each
Settlement Period:
(a) Servicer Report. On or before the ninth calendar day (or
if such day is not a Business Day, the next Business Day) after each
Cut-Off Date (each, a "Reporting Date"), Servicer shall deliver to the
Administrator a report containing the information described in Exhibit
3.01(a)-1 (each, a "Servicer Report"). On or before 12:00 noon (Boston,
Massachusetts time) on each Business Day, Servicer shall deliver to the
Administrator a report containing the information described in Exhibit
3.01(a)-2 (each, a "Daily Report").
(b) Earned Discount; Other Amounts Due. Two Business Days
prior to each Reporting Date, the Administrator shall notify Servicer
of (i) the amount of Earned Discount that will have accrued in respect
of the Capital as of the next Settlement Date and (ii) all Fees and
other amounts that
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will have accrued and be payable by Seller under this Agreement on the
next Settlement Date (other than Capital).
(c) Settlement Date Procedure - Reinvestment Period. On the
second Business Day after each Reporting Date (each, a "Settlement
Date") prior to the Termination Date, the Servicer shall distribute
from Collections set aside pursuant to Sections 1.03(a)(i) through
(iii) during the immediately preceding Settlement Period the following
amounts in the following order:
(1) to the Administrator, an amount equal to the
Earned Discount accrued during such Settlement Period, plus
any previously accrued Earned Discount not paid on a prior
Settlement Date, which amount shall be distributed by the
Administrator to the Purchaser for application to such Earned
Discount;
(2) to the Administrator, an amount equal to the
Program Fee and Commitment Fee accrued during such Settlement
Period, plus any previously accrued amounts described in this
clause (2) not paid on a prior Settlement Date;
(3) to the Servicer, if the Servicer is not Parent,
an amount equal to the Purchaser's Share of the Servicer's Fee
accrued during such Settlement Period, plus any previously
accrued Purchaser's Share of the Servicer's Fee not paid on a
prior Settlement Date;
(4) to the Administrator, all other amounts (other
than Capital) then due under this Agreement to the
Administrator, the Purchaser, the Affected Parties or the
Indemnified Parties;
(5) to the Administrator, an amount equal to the
Excess Amount, if any, which amount shall be distributed by
the Administrator to the Purchaser for application to the
Capital;
(6) to the Servicer, if the Servicer is Parent, an
amount equal to the Purchaser's Share of the Servicer's Fee
accrued during such Settlement Period, plus any previously
accrued Purchaser's Share of the Servicer's Fee not paid on a
prior Settlement Day; and
(7) to the Seller, any remaining amounts.
(d) Settlement Date Procedure - Liquidation Period. On each Settlement
Date during the Liquidation Period, the Servicer shall distribute from
Purchaser's Share of Collections received
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or deemed received pursuant to Section 3.02 during the immediately preceding
Settlement Period the following amounts in the following order:
(1) to the Administrator, an amount equal to the
Earned Discount accrued during such Settlement Period, plus
any previously accrued Earned Discount not paid on a prior
Settlement Date, which amount shall be distributed by the
Administrator to the Purchaser for application to such Earned
Discount;
(2) to the Administrator, an amount equal to the
Program Fee and Commitment Fee accrued during such Settlement
Period, plus any previously accrued Program Fee and Commitment
Fee not paid on a prior Settlement Date;
(3) to the Servicer, if the Servicer is not Parent,
an amount equal to the Purchaser's Share of the Servicer's Fee
accrued during such preceding Settlement Period, plus any
previously accrued Purchaser's Share of the Servicer's Fee not
paid on a prior Settlement Date;
(4) to the Administrator, an amount equal to the
remaining Purchaser's Share of Collections until the Capital
is reduced to zero, which amount shall be distributed by the
Administrator to the Purchaser for application to the Capital;
(5) to the Administrator, all other amounts (other
than Capital) then due under this Agreement to the
Administrator, the Purchaser, the Affected Parties or the
Indemnified Parties;
(6) to the Servicer, if the Servicer is Parent, an
amount equal to the Purchaser's Share of the Servicer's Fee
accrued during such Settlement Period, plus any previously
accrued Purchaser's Share of the Servicer's Fee not paid on a
prior Settlement Date; and
(7) to the Seller, any remaining amounts.
(e) Delayed Payment. If on any day described in this Section
3.01, because Collections during the relevant Settlement Period were
less than the aggregate amounts payable, Servicer does not make any
payment otherwise required, the next available Collections in respect
of the Asset Interest shall be applied to such payment, and no
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Reinvestment shall be permitted hereunder until such amount payable has
been paid in full.
SECTION 3.02. Deemed Collections; Reduction of Capital, Etc.
(a) Deemed Collections. If on any day
(i) a Dilution occurs or the Unpaid Balance of any Pool
Receivable is less than the amount included in calculating the Net Pool
Balance for purposes of any Servicer Report for any other reason, or
(ii) any of the representations or warranties of Seller set
forth in Section 6.01(k) or (o) with respect to any Pool Receivable
were not true when made with respect to any Pool Receivable, or any of
the representations or warranties of Seller set forth in Section
6.01(k) are no longer true with respect to any Pool Receivable, or
(iii) without duplication, Seller receives a Deemed Collection
pursuant to the Purchase Agreement,
then, on such day, Seller shall be deemed to have received a Collection of such
Pool Receivable
(I) in the case of clause (i) above, in the amount
of such Dilution or the difference between the actual Unpaid
Balance and the amount included in calculating such Net Pool
Balance, as applicable; and
(II) in the case of clause (ii) above, in the amount
of the Unpaid Balance of such Pool Receivable; and
(III) in the case of clause (iii) above, in the
amount of such Deemed Collection.
(b) Seller's Optional Reduction of Capital. Seller may at any time
elect to reduce the Capital as follows:
(i) Seller shall give the Administrator at least five (5)
Business Days' prior written notice of such reduction (including the
amount of such proposed reduction and the proposed date on which such
reduction will commence),
(ii) on the proposed date of commencement of such reduction
and on each day thereafter, Servicer shall refrain from reinvesting
Collections pursuant to Section 1.03 until the amount thereof not so
reinvested shall equal the desired amount of reduction, and
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(iii) Servicer shall hold such Collections in trust for
Purchaser, pending payment to the Administrator on the next Settlement
Date, as provided in Section 1.03;
provided that,
(A) the amount of any such reduction shall be not
less than $1,000,000, and the Capital after giving effect to
such reduction shall be not less than $25,000,000 (unless
Capital shall thereby be reduced to zero), and
(B) Seller shall use reasonable efforts to attempt to
choose a reduction amount, and the date of commencement
thereof, so that such reduction shall commence and conclude in
the same Settlement Period.
SECTION 3.03. Payments and Computations, Etc.
(a) Payments. All amounts to be paid or deposited by Seller or Servicer
to the Administrator or any other Person (other than to Seller, Parent or
Servicer) hereunder (other than amounts payable under Section 4.02) shall be
paid or deposited in accordance with the terms hereof no later than 10:00 a.m.
(Boston, Massachusetts time) on the day when due in lawful money of the United
States of America in immediately available funds to the Administrator at ABA#
011 000 138, account # 000 000 0000; attention: Blue Keel.
(b) Late Payments. Seller or Servicer, as applicable, shall, to the
extent permitted by law, pay to Purchaser or the Administrator, as the case may
be, interest on all amounts not paid or deposited when such amount is due
hereunder at 2% per annum above the Alternate Base Rate, payable on demand,
provided, however, that such interest rate shall not at any time exceed the
maximum rate permitted by Applicable Law.
(c) Method of Computation. All computations of interest, Earned
Discount and any fees payable hereunder shall be made on the basis of a year of
360 days for the actual number of days (including the first day but excluding
the last day) elapsed.
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ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees. Seller shall pay to the Administrator and Purchaser
the fees in the amounts and at the times set forth in the fee letter, dated as
of the date hereof, between the Administrator and Seller (as amended or
supplemented from time to time, the "Fee Letter").
SECTION 4.02. Yield Protection.
(a) If (i) Regulation D or (ii) any Regulatory Change occurring after
the date hereof
(A) shall subject an Affected Party to any tax, duty or other
charge with respect to any Asset Interest owned by or funded by it, or
any obligations or right to make Purchases or Reinvestments or to
provide funding therefor, or shall change the basis of taxation of
payments to the Affected Party of any Capital or Earned Discount owned
by, owed to or funded in whole or in part by it or any other amounts
due under this Agreement in respect of the Asset Interest owned by or
funded by it or its obligations or rights, if any, to make Purchases or
Reinvestments or to provide funding therefor (except for franchise
taxes or changes in the rate of tax on the overall net income of such
Affected Party imposed by the United States of America, by the
jurisdiction in which such Affected Party's principal executive office
is located and, if such Affected Party's principal executive office is
not in the United States of America, by the jurisdiction where such
Affected Party's principal office in the United States is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal
Reserve Board, special deposit, compulsory loan or similar requirement
against assets of any Affected Party, deposits or obligations with or
for the account of any Affected Party or with or for the account of any
affiliate (or entity deemed by the Federal Reserve Board to be an
affiliate) of any Affected Party, or credit extended by any Affected
Party, but excluding any reserve, special deposit or similar
requirement included in the determination of Earned Discount; or
(C) shall change the amount of capital maintained or required
or requested or directed to be maintained by any Affected Party; or
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(D) shall impose any other condition affecting any Asset
Interest owned or funded in whole or in part by any Affected Party, or
its obligations or rights, if any, to make Purchases or Reinvestments
or to provide funding therefor; or
(E) shall change the rate for, or the manner in which the
Federal Deposit Insurance Corporation (or a successor thereto)
assesses, deposit insurance premiums or similar charges;
and the result of any of the foregoing is
(x) to increase the cost to or to impose a cost on an Affected
Party funding or making or maintaining any Purchases or Reinvestments,
any purchases, reinvestments, or loans or other extensions of credit
under any Program Agreement, or any commitment of such Affected Party
with respect to any of the foregoing,
(y) to reduce the amount of any sum received or receivable by
an Affected Party under this Agreement, or under any Program Agreement
with respect thereto, or
(z) to reduce the rate of return on the capital of an Affected
Party as a consequence of its obligations hereunder or under any
Program Agreement or arising in connection herewith to a level below
that which such Affected Party could otherwise have achieved,
then within thirty days after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth the basis for, calculation of, and
amount of such additional costs or reduced amount receivable; provided, however,
that no Affected Party shall be required to disclose any confidential or tax
planning information in any such statement), Seller shall pay directly to such
Affected Party such additional amount or amounts as will compensate such
Affected Party for such additional or increased cost or such reduction, but
without duplication of any other similar additional amounts due under any other
Program Agreement.
(b) Each Affected Party will notify Seller and the Administrator within
one year of the occurrence of any event of which it has knowledge which will
entitle such Affected Party to compensation pursuant to this Section 4.02.
(c) In determining any amount provided for or referred to in this
Section 4.02, an Affected Party may use any reasonable averaging and attribution
methods that it shall deem applicable. Any Affected Party when making a claim
under this Section 4.02
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shall submit to Seller a statement as to such increased cost or reduced return
(including a calculation thereof in reasonable detail), which statement shall,
in the absence of demonstrable error, be conclusive and binding upon Seller.
SECTION 4.03. Funding Losses. In the event that any Affected Party
shall incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Affected Party to make or maintain any funding with respect to the Asset
Interest) as a result of (i) any settlement with respect to any portion of
Capital funded by such Affected Party being made on any day other than the
scheduled last day of an applicable Settlement Period with respect thereto, or
(ii) any Purchase not being made in accordance with a request therefor under
Section 1.02, then, within thirty days of written notice from the Administrator
to Seller, Seller shall pay to the Administrator for the account of such
Affected Party, the amount of such loss or expense. Such written notice (which
shall include calculations in reasonable detail) shall, in the absence of
demonstrable error, be conclusive and binding upon the Seller.
ARTICLE V
CONDITIONS TO PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase. The initial
Purchase hereunder is subject to the condition precedent that the Administrator
shall have received, on or before the date of such Purchase, the following, each
(unless otherwise indicated) dated such date and in form and substance
satisfactory to the Administrator:
(a) Good standing certificates for each of Parent and Seller
issued by the Secretaries of State of the jurisdiction of its
incorporation and its principal place of business;
(b) A certificate of the Secretary of each of Seller and
Parent certifying (i) a copy of the resolutions of its Board of
Directors approving this Agreement and the other Transaction Documents
to be delivered by it hereunder and the transactions contemplated
hereby; (ii) the names and true signatures of the officers authorized
on its behalf to sign this Agreement and the other Transaction
Documents to be delivered by it hereunder (on which certificate the
Administrator and Purchaser may conclusively rely until such time as
the Administrator shall receive from Seller or Parent, as the case may
be, a revised certificate meeting the requirements of this subsection
(b)); (iii) a copy of
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its by-laws; and (iv) all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect to
this Agreement and the other Transaction Documents;
(c) The Certificate of Incorporation or Articles of
Incorporation, as applicable, of each of Seller and Parent, duly
certified by the Secretary of State of the jurisdiction of its
incorporation, as of a recent date acceptable to Administrator;
(d) Acknowledgment copies, or time stamped receipt copies, of
proper financing statements (Form UCC-1), filed on or prior to the date
of the initial Purchase, naming (i) Parent as the debtor and seller of
Receivables, Seller as the secured party and purchaser and
Administrator, for the benefit of Purchaser, as the assignee and (ii)
Seller as the debtor and seller of Receivables or an undivided interest
therein and Administrator, for the benefit of Purchaser, as the secured
party and purchaser, or other, similar instruments or documents, as may
be necessary or, in the opinion of the Administrator, desirable under
the UCC or any comparable law of all appropriate jurisdictions to
perfect Seller's and Purchaser's interests in the Pool Assets;
(e) A search report provided in writing to and approved by the
Administrator listing all effective financing statements that name
Parent as debtor or assignor and that are filed in the jurisdictions in
which filings were made pursuant to subsection (d) above and in such
other jurisdictions that Administrator shall reasonably request,
together with copies of such financing statements (none of which shall
cover any Pool Assets, unless executed termination statements and/or
partial releases with respect thereto have been delivered to the
Administrator), and tax and judgment lien search reports from a Person
satisfactory to Servicer and the Administrator showing no evidence of
such liens filed against Parent;
(f) Duly executed copies of the Lock-Box Agreements with the
Lock-Box Banks;
(g) Favorable opinions of Armstrong, Teasdale, Schlafly &
Xxxxx, counsel to Parent and Seller, in substantially the forms of
Exhibits 5.01(g)-1 and 5.01(g)-2, respectively;
(h) Such powers of attorney as the Administrator shall
reasonably request to enable the Administrator to collect all amounts
due under any and all Pool Assets;
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(i) A pro forma Servicer Report, prepared in respect of the
proposed initial Purchase, assuming a Cut-Off Date of July 31, 1998;
(j) Satisfactory results of a review and audit, conducted by
Fleet, of the Parent's collection, operating and reporting systems,
Credit and Collection Policy, historical receivables data and accounts,
including satisfactory results of a review of the Parent's operating
location(s) and satisfactory review and approval of the Eligible
Receivables in existence on the date of the initial Purchase;
(k) Evidence of payment of the Seller by all accrued and
unpaid fees (including those contemplated by the Fee Letter), costs and
expenses to the extent then due and payable on the date thereof,
together with attorneys' fees of the Administrator to the extent
invoiced prior to or on such date, plus such additional amounts of
attorneys' fees as shall constitute the Administrator's reasonable
estimate of attorneys' fees incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Seller and
the Administrator), including any such costs, fees and expenses arising
under or referenced in Section 14.05;
(l) The Liquidity Agreement, duly executed by Purchaser, the
Liquidity Agent and each Liquidity Bank;
(m) The Purchase Agreement, duly executed by Parent and
Seller, and a copy of all documents required to be delivered
thereunder; and
(n) Such other documents, certificates or opinions as the
Administrator may reasonably request.
SECTION 5.02. Conditions Precedent to All Purchases and Reinvestments.
Each Purchase (including the initial Purchase) and each Reinvestment hereunder,
shall be subject to the further conditions precedent that:
(a) in the case of each Purchase, the Servicer shall have
delivered to the Administrator on or prior to such purchase, in form
and substance satisfactory to the Administrator, a completed Servicer
Report with respect to the immediately preceding calendar month, dated
within two (2) Business Days prior to the date of such Purchase,
together with such additional information as may be reasonably
requested by the Administrator;
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(b) on the date of such Purchase or Reinvestment the
following statements shall be true (and Seller by accepting the amount
of such Purchase or by receiving the proceeds of such Reinvestment
shall be deemed to have certified that):
(i) the representations and warranties contained in
Article VI are correct on and as of such day as though made on
and as of such day and shall be deemed to have been made on
such day (except that any such representation or warranty that
is expressly stated as being made only as of a specified
earlier date shall be true and correct in all material
respects as of such earlier date),
(ii) no event has occurred and is continuing, or
would result from such Purchase or Reinvestment, that
constitutes a Liquidation Event or Unmatured
Liquidation Event,
(iii) after giving effect to each proposed Purchase
or Reinvestment, Capital will not exceed the Purchase Limit
and the Asset Interest will not exceed the Allocation Limit,
and
(iv) the Termination Date shall not have occurred;
(c) the Administrator shall have received such other
approvals, opinions or documents as it may reasonably request;
provided, however, the absence of the occurrence and continuance of an Unmatured
Liquidation Event shall not be a condition precedent to any Reinvestment.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Seller. Seller
represents and warrants as follows:
(a) Organization and Good Standing. Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted, and had at
all relevant times, and now has, all necessary power, authority, and
legal right to acquire and own the Pool Assets.
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(b) Due Qualification. Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all other jurisdictions in which
the ownership or lease of property or the conduct of its business
requires such qualification, licenses or approvals has not had, and
except where the failure to so qualify or have such licenses or
approvals has not had, and could not reasonably be expected to have, a
Material Adverse Effect.
(c) Power and Authority; Due Authorization. Seller (i) has all
necessary power, authority and legal right to (A) execute and deliver
this Agreement and the other Transaction Documents to which it is a
party, (B) carry out the terms of the Transaction Documents to which it
is a party, and (C) sell and assign the Asset Interest on the terms and
conditions herein provided and (ii) has duly authorized by all
necessary corporate action the execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a
party and the sale and assignment of the Asset Interest on the terms
and conditions herein provided.
(d) Valid Transfer; Binding Obligations. This Agreement
constitutes a valid transfer and assignment of the Asset Interest to
the Administrator, for the benefit of Purchaser, enforceable against
creditors of, and purchasers from, Seller; and this Agreement
constitutes, and each other Transaction Document to be signed by Seller
when duly executed and delivered will constitute, a legal, valid and
binding obligation of Seller enforceable in accordance with its terms,
except as 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) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to
which it is a party and the fulfillment of the terms hereof and thereof
will not (i) conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of
time or both) a default under, the Seller's certificate of
incorporation or by-laws or any Contractual Obligation of Seller, (ii)
result in the creation or imposition of any Lien upon any of Seller's
properties pursuant to the terms of any such Contractual Obligation,
other than this Agreement, or (iii) violate any Applicable Law.
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(f) No Proceedings. There is no litigation, proceedings or
investigations pending, or to the best of Seller's knowledge,
threatened, before any Governmental Authority or arbitrator (i)
asserting the invalidity of this Agreement or any other Transaction
Document to which Seller is a party, (ii) seeking to prevent the sale
and assignment of the Asset Interest or the consummation of any of the
other transactions contemplated by this Agreement or any other
Transaction Document, or (iii) seeking any determination or ruling that
could reasonably be expected to have a Material Adverse Effect.
(g) Bulk Sales Act. No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(h) Government Approvals. No Governmental Action is required
for the due execution, delivery and performance by Seller of this
Agreement or any other Transaction Document to which Seller is a party,
except for the filing of the UCC financing statements referred to in
Article V, all of which, at the time required in Article V, shall have
been duly made and shall be in full force and effect.
(i) Financial Condition. Since the date of Seller's formation,
there has been no material adverse change in Seller's financial
condition, business, assets or operations.
(j) Margin Regulations. The use of all funds obtained by
Seller under this Agreement will not conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of the
Federal Reserve System from time to time.
(k) Quality of Title. Each Pool Asset is legally and
beneficially owned by Seller free and clear of any Lien (other than any
Lien arising solely as the result of any action taken by Purchaser or
the Administrator); when the Administrator, for the benefit of
Purchaser, makes a Purchase or Reinvestment, it shall have acquired a
valid and enforceable perfected first priority undivided percentage
interest to the extent of the Asset Interest in each Pool Asset, free
and clear of any Lien (other than any Lien arising solely as the result
of any action taken by Purchaser or the Administrator), enforceable
against any creditor of, or purchaser from, Seller or any Originator;
and no financing statement or other instrument similar in effect
covering any Pool Asset is on file in any recording office except such
as may be filed (i) in favor of an Originator in accordance with the
Contracts, (ii) in favor
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of Seller in accordance with the Purchase Agreement, or (iii) in favor
of Purchaser or the Administrator in accordance with this Agreement or
in connection with any Lien arising solely as the result of any action
taken by Purchaser or the Administrator.
(l) Accurate Reports. No Servicer Report or Daily Report (if
prepared by Seller, or to the extent information therein was supplied
by Seller) or other information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by or on
behalf of Seller to the Administrator or Purchaser in connection with
this Agreement was or will be inaccurate in any material respect as of
the date it was or will be dated or (except as otherwise disclosed to
the Administrator at such time) as of the date so furnished, or
contained or will contain any material misstatement of fact or omitted
or will omit to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
(m) Offices. The principal place of business and chief
executive office of Seller are located at the address of Seller
referred to in Section 14.02, and the offices where Seller keeps all
its books, records and documents evidencing or relating to Pool
Receivables are located at the addresses specified in Schedule 6.01(m)
(or at such other locations, notified to the Administrator in
accordance with Section 7.01(f), in jurisdictions where all action
required by Section 8.05 has been taken and completed).
(n) Lock-Box Accounts. The names and addresses of all the
Lock-Box Banks, together with the account numbers of the lock-box
accounts of Seller at such Lock-Box Banks, are specified in Schedule
6.01(n) (or have been notified to the Administrator in accordance with
Section 7.03(d)).
(o) Eligible Receivables. Each Receivable included in the Net
Pool Balance as an Eligible Receivable on the date of any Purchase,
Reinvestment or other calculation of Net Pool Balance shall be an
Eligible Receivable on such date.
(p) Accounting Sale. The Seller has accounted for each sale of
undivided percentage ownership interests in Receivables in its books
and financial statements as sales, consistent with GAAP.
(q) Credit and Collection Policy. The Seller has complied in
all material respects with the Credit and Collection Policy with regard
to each Receivable.
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(r) Corporate Name. The Seller's complete corporate name is
set forth in the preamble to this Agreement, and the Seller does not
use and has not during the last six years used any other corporate
name, trade name, doing business name or fictitious name.
SECTION 6.02. Representations and Warranties of Parent. Parent
represents and warrants as follows:
(a) Organization and Good Standing. Parent has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted.
(b) Due Qualification. Parent is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires
such qualification, licenses or approvals, except where the failure to
so qualify or have such licenses or approvals has not had, and could
not reasonably be expected to have, a Material Adverse Effect.
(c) Power and Authority; Due Authorization. Parent (i) has all
necessary power, authority and legal right to (A) execute and deliver
this Agreement and the other Transaction Documents to which it is a
party and (B) carry out the terms of the Transaction Documents to which
it is a party and (ii) has duly authorized by all necessary corporate
action the execution, delivery and performance of this Agreement and
the other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each
other Transaction Document to be signed by Parent when duly executed
and delivered will constitute, a legal, valid and binding obligation of
Parent enforceable in accordance with its terms, except as
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) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to
which Parent is a party and the fulfillment of the terms hereof and
thereof will not (i)
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conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a
default under the Parent's articles of incorporation or by-laws or any
Contractual Obligation of Parent, (ii) result in the creation or
imposition of any Lien upon any of Parent's properties pursuant to the
terms of any such Contractual Obligation (other than any Lien created
pursuant to the Transaction Documents), or (iii) violate any Applicable
Law.
(f) No Proceedings. There is no litigation, proceedings or
investigations pending or, to the best of Parent's knowledge,
threatened, before any Governmental Authority or arbitrator (i)
asserting the invalidity of this Agreement or any other Transaction
Document to which Parent is a party, (ii) seeking to prevent the sale
and assignment of the Asset Interest or the consummation of any of the
other transactions contemplated by this Agreement or any other
Transaction Document, or (iii) seeking any determination or ruling that
could reasonably be expected to have a Material Adverse Effect.
(g) Government Approvals. No Governmental Action is required
for the due execution, delivery and performance by Parent of this
Agreement or any other Transaction Document to which it is a party,
other than the filing of the UCC financing statements referred to in
Article V, all of which, at the time required in Article V, shall have
been duly made and shall be in full force and effect.
(h) Financial Condition. (x) The consolidated balance sheets
of Parent and its consolidated Subsidiaries as at June 30, 1997, and
the related statements of earnings, shareholders' equity and cash flows
of Parent and its consolidated Subsidiaries for the fiscal year then
ended, certified by Xxxxxx Xxxxxxxx, and the consolidated balance
sheets of Parent and its consolidated Subsidiaries as at March 31,
1998, and the related statements of earnings, shareholders' equity and
cash flows of Parent and its consolidated Subsidiaries for the fiscal
quarter then ended, copies of which have been furnished to the
Administrator, fairly present the consolidated financial condition,
business and operations of Parent and its consolidated Subsidiaries as
at such dates and the consolidated results of the operations of Parent
and its consolidated Subsidiaries for the periods ended on such dates,
all in accordance with GAAP consistently applied, and (y) since June
30, 1997 there has been no material adverse change in any such
condition, business or operations.
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(i) Accurate Reports. No Servicer Report or Daily Report (if
prepared by Parent, or to the extent information therein was supplied
by Parent) or other information, exhibit, financial statement,
document, book, record or report furnished or to be furnished by or on
behalf of Parent to the Administrator or Purchaser, in connection with
this Agreement was or will be inaccurate in any material respect as of
the date it was or will be dated or (except as otherwise disclosed to
the Administrator at such time) as of the date so furnished, or
contained or will contain any material misstatement of fact or omitted
or will omit to state a material fact or any fact necessary to make the
statements contained therein not materially misleading.
ARTICLE VII
GENERAL COVENANTS
SECTION 7.01. Affirmative Covenants. From the date hereof until the
Final Payout Date:
(a) Compliance with Laws, Etc. Each of Seller and Parent will
comply in all material respects with all Applicable Laws, including
those with respect to the Pool Receivables and the related Contracts,
except where noncompliance could not reasonably be expected to have a
Material Adverse Effect.
(b) Preservation of Corporate Existence. Each of Seller and
Parent will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its formation, and
qualify and remain qualified in good standing as a foreign corporation
in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification could
reasonably be expected to have a Material Adverse Effect.
(c) Audits. (i) Each of Parent and Seller will at any time and
from time to time during regular business hours, permit the
Administrator or any of its agents or representatives, (A) to examine
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in its
possession or under its control relating to Pool Assets, (B) to visit
its offices and properties for the purpose of examining such materials
described in clause (i)(A) above, and to discuss matters relating to
Pool Assets or its performance hereunder with any of its officers or
employees having knowledge of such matters, and (C) to verify the
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existence and amount of the Receivables; and (ii) without limiting the
provisions of clause (i) above, from time to time on request of
Administrator, permit certified public accountants or other auditors
acceptable to the Administrator to conduct, at Seller's or Parent's, as
the case may be, expense, a review of its books and records with
respect to the Pool Receivables; provided, however that unless a
Liquidation Event has occurred and is continuing, Seller and Parent
shall not be obligated to pay for more than one such review in each
calendar year.
(d) Keeping of Records and Books of Account. Each of Seller
and Parent will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate
records evidencing Pool Receivables in the event of the destruction of
the originals thereof), and keep and maintain all documents, books,
records and other information reasonably necessary or advisable for the
collection of all Pool Assets (including, without limitation, records
adequate to permit the daily identification of each new Pool Receivable
and all Collections of and adjustments to each existing Pool
Receivable).
(e) Performance and Compliance with Receivables and Contracts.
Seller will, at its expense, timely and fully perform and comply (or
cause an Originator to perform and comply pursuant to the Purchase
Agreement) with all provisions, covenants and other promises required
to be observed by it under the Contracts related to the Pool
Receivables and all other agreements related to such Pool Receivables,
except where failure to do so would not materially adversely affect the
validity, enforceability or collectibility of the related Pool
Receivable.
(f) Location of Records. Each of Seller and Parent will keep
its principal place of business and chief executive office, and the
offices where it keeps its records concerning the Pool Receivables and
all related Contracts and all other agreements related to such Pool
Receivables (and all original documents relating thereto), at its
address(es) referred to in Section 14.02 or, upon 30 days' prior
written notice to the Administrator, at such other locations in
jurisdictions where all action required by Section 8.05 shall have been
taken and completed.
(g) Credit and Collection Policies. Each of Seller and Parent,
at its own expense, will timely and fully perform and comply in all
material respects with the Credit and Collection Policy in regard to
each Pool Receivable and the related Contracts.
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(h) Collections. Each of Seller and Parent will instruct (i)
all Obligors to cause all Collections to be sent to a Lock-Box that is
the subject of a Lock-Box Agreement and (ii) each Lock-Box Bank to
deposit all such Collections directly into a Lock-Box Account that is
the subject of a Lock-Box Agreement. In the event that Parent or Seller
receives Collections directly from any Obligor, Parent or Seller, as
the case may be, shall deposit such Collections into a Lock-Box Account
within two Business Days of receipt thereof.
(i) Net Worth. Seller will maintain a Tangible Net Worth of
at least $1,000,000.
(j) Quality of Title. Each of Seller and Parent will take all
action necessary or desirable to establish and maintain a valid and
enforceable perfected first priority undivided percentage interest in
favor of the Administrator, for the benefit of the Purchaser, to the
extent of the Asset Interest in each Pool Asset, free and clear of any
Lien (other than any Lien arising solely as a result of any action
taken by Purchaser or the Administrator), enforceable against any
creditor of, or purchaser from, Seller or Parent.
(k) Financial Covenant. Parent will maintain at all times
during the periods specified below a Capital Base in an amount not less
than the amount shown below for the period corresponding thereto:
Period Amount
------ ------
July 1, 1998 through June 30, 1999 $10,000,000
July 1, 1999 through June 30, 2000 $12,500,000
July 1, 2000 and thereafter $15,000,000
SECTION 7.02. Reporting Requirements. From the date hereof the Final
Payout Date:
(a) Monthly Financial Statements. As soon as available and in
any event within 30 days after the end of each calendar month Parent
will furnish to the Administrator copies of the unaudited interim
financial statements of Parent and its Subsidiaries prepared on a
consolidated and consolidating basis, consisting of at least a balance
sheet as at the close of such month and statements of earnings for such
month and for the period from the beginning of the fiscal year to the
close of such month, in each case in conformity with GAAP (except for
footnote disclosures) and fairly presenting the consolidated financial
position and results of operations of Parent and its Subsidiaries for
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such month and period, duly certified by the principal financial
officer of Parent;
(b) Quarterly Financial Statements. As soon as available and
in any event within 45 days after the end of each of the first three
quarters of each fiscal year (i) Seller will furnish to the
Administrator copies of its financial statements, consisting of at
least a balance sheet as at the close of such quarter and statements of
earnings for such quarter and for the period from the beginning of the
fiscal year to the close of such quarter, in each case in conformity
with GAAP (except for footnote disclosures), duly certified by the
chief financial officer of Seller and (ii) Parent will furnish to the
Administrator copies of the financial statements of Parent and its
Subsidiaries prepared on a consolidated and consolidating basis,
consisting of at least a balance sheet as at the close of such quarter
and statements of earnings for such quarter and for the period from the
beginning of the fiscal year to the close of such quarter, in each case
in conformity with GAAP (except for footnote disclosures) and fairly
presenting the consolidated financial position and results of
operations of Parent and its Subsidiaries for such month and period,
duly certified by the principal financial officer of Parent;
(c) Annual Financial Statements. As soon as available and in
any event within 90 days after the end of each fiscal year (i) Seller
will furnish to the Administrator copies of its financial statements,
consisting of at least a balance sheet of Seller for such year and
statements of earnings, cash flows and shareholders' equity, in each
case in conformity with GAAP, consistently applied, setting forth in
each case in comparative form corresponding figures from the preceding
fiscal year, with all such statements duly certified by independent
certified public accountants of recognized standing selected by Seller
and (ii) Parent will furnish to the Administrator copies of the
unqualified audited financial statements of Parent and its Subsidiaries
prepared on a consolidated and consolidating basis, consisting of at
least a balance sheet of Parent and its Subsidiaries for such year and
consolidated and consolidating statements of earnings, cash flows and
shareholders' equity, in each case in conformity with GAAP,
consistently applied, setting forth in each case in comparative form
corresponding consolidated figures from the preceding fiscal year, with
all such statements duly certified by independent certified public
accountants of recognized standing selected by Parent, together with
copies of any and all letters, reports or other communications from
such accountants to management or to Parent's Board of Directors or any
committee thereof; provided that any
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accompanying consolidating schedules need not be separately
audited;
(d) Compliance Certificate. Together with each quarterly and
annual financial statement delivered in accordance with the preceding
paragraphs, Parent will furnish to the Administrator a compliance
certificate showing a calculation of the financial covenant set forth
in Section 7.01(k) certified by the principal financial officer of
Parent;
(e) Liquidation Events. Each of Seller and Parent will furnish
to the Administrator, as soon as possible and in any event within two
(2) Business Days after an officer of Seller or Parent obtains actual
knowledge of the occurrence of each Liquidation Event and each
Unmatured Liquidation Event, a written statement of the chief financial
officer or chief accounting officer of Seller or Parent, as the case
may be, setting forth details of such event and the action that Seller
or Parent, as the case may be, proposes to take with respect thereto;
(f) Litigation. Each of Seller and Parent will furnish to the
Administrator, as soon as possible and in any event within three
Business Days of Seller's or Parent's actual knowledge thereof, notice
of (i) any litigation, investigation or proceeding which may exist at
any time which could be reasonably expected to have a Material Adverse
Effect and (ii) any material adverse development in previously
disclosed litigation;
(g) Change in Credit and Collection Policy. Each of Seller
and Parent will furnish to the Administrator, prior to its effective
date, notice of any material change in the Credit and Collection
Policy;
(h) Change in Name. Seller will furnish to the Administrator,
at least thirty days prior to any change in the Seller's name, location
or any other change requiring the amendment of UCC financing
statements, a notice setting forth such changes and the effective date
thereof; and
(i) Other Information. Each of Seller and Parent will furnish
to the Administration such other information respecting the Receivables
or the condition or operations, financial or otherwise, of the Parent
or Seller or any of its Affiliates as the Administrator may from time
to time reasonably request.
SECTION 7.03. Negative Covenants. From the date hereof the Final
Payout Date:
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(a) Sales, Liens, Etc. Seller will not, except as otherwise
provided herein, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon or
with respect to, any Pool Asset or any interest therein.
(b) Extension or Amendment of Receivables. Neither Parent nor
Seller will, except as otherwise permitted in Section 8.02, extend,
amend or otherwise modify, or permit Servicer to extend, amend or
otherwise modify, the terms of any Pool Receivable; or amend, modify or
waive, or permit Servicer to amend, modify or waive, any term or
condition of any Contract related to a Pool Receivable.
(c) Change in Business or Credit and Collection Policy.
Neither Parent nor Seller will make any change in the character of its
business or in the Credit and Collection Policy, which change could
materially impair the collectibility of any Pool Receivable or
otherwise materially adversely affect the interests or remedies of the
Administrator or Purchaser under this Agreement or any other
Transaction Document.
(d) Change in Payment Instructions to Obligors. Neither Parent
or Seller will add or terminate any bank as a Lock-Box Bank or any
Lock-Box Account from those listed in Schedule 6.01(n) or make any
change, or permit Servicer to make any change, in its instructions to
Obligors regarding payments to be made to Seller or Servicer or
payments to be made to any Lock-Box Bank, unless the Administrator
shall have received notice of such addition, termination or change and
duly executed copies of Lock-Box Agreements with each new Lock-Box Bank
or with respect to each new Lock-Box Account, as the case may be.
(e) Mergers, Acquisitions, Sales, etc. Neither Parent nor
Seller will (i) be a party to any merger or consolidation, or purchase
or otherwise acquire all or any substantial part of the Properties of
any other Person without the consent of the Administrator (provided
that the consolidation of PBI with Parent shall not constitute a
violation of this covenant so long as such consolidation does not
include a merger and so long as Parent does not become directly or
indirectly liable for any Indebtedness of PBI) or (ii) sell, transfer,
convey or lease all or any substantial part of its assets, or sell or
assign with or without recourse any Receivables or any interest therein
(other than pursuant hereto or to the Purchase Agreement). Parent will
not sell any of the capital stock of Seller, or permit any Lien to
exist thereon.
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(f) Deposits to Special Accounts. Neither Parent nor Seller
will deposit or otherwise credit, or cause or permit to be so deposited
or credited, to any Lock-Box Account cash or cash proceeds other than
Collections of Pool Receivables.
(g) Other Business. Seller will not (i) engage in any business
other than the transactions contemplated by the Transaction Documents;
(ii) incur any indebtedness, obligation, liability or contingent
obligation of any kind other than pursuant to this Agreement or the
Purchase Agreement; or (iii) form any Subsidiary or make any
investments in any other Person.
(h) Certificate of Incorporation; Purchase Agreement. Seller
will not amend, modify, terminate, revoke or waive any provision of its
certificate of incorporation, the Initial Purchaser Note or the
Purchase Agreement.
(i) Restricted Payments. Seller will not declare or make any
dividend or other distributions to any of its shareholders, redeem or
purchase any of its capital stock or make any loan or other payments to
any of its shareholders (other than (1) payments of the purchase price
of Receivables as set forth in the Purchase Agreement, (2) the
turn-over of Collections of Reconveyed Receivables to an Originator as
set forth in the Purchase Agreement, (3) payment of the Servicer's Fee
so long as Parent is the Servicer and (4) payment of reasonable
management fees and reimbursement of reasonable expenses of Parent
incurred in connection with managing Seller, so long as such fees and
expenses are in an amount not in excess of those that would be paid in
a similar arms'-length transaction) unless, in each case, no
Liquidation Event or Unmatured Liquidation Event has occurred and is
continuing or would result therefrom.
(j) Change of Name or Location. Seller will not change its
name or the location of its principal place of business or chief
executive office or its corporate structure, unless Seller has given
the Administrator at least thirty (30) days prior notice thereof, and
has taken all steps necessary or advisable under the UCC to continue
the perfection and priority of the Administrator's and Purchaser's
interest in the Pool Assets.
SECTION 7.04. Separate Existence. Each of Seller and Parent hereby
acknowledges that Purchaser, the Program Support Providers and the Administrator
are entering into the transactions contemplated by this Agreement and the other
Transaction Documents in reliance upon Seller's identity as a legal entity
separate from Parent. Therefore, from and after the
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date hereof, each of Seller and Parent shall take all steps specifically
required by this Agreement or by the Purchaser or Administrator to continue
Seller's identity as a separate legal entity and to make it apparent to third
Persons that Seller is an entity with assets and liabilities distinct from those
of Parent and any other Person, and is not a division of Parent or any other
Person. Without limiting the generality of the foregoing and in addition to and
consistent with the other covenants set forth herein, each of Seller and Parent
shall take such actions as shall be required in order that:
(a) Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to
purchasing or otherwise acquiring from the Originators, owning,
holding, granting security interests, or selling interests, in Pool
Assets, entering into agreements for the selling and servicing of the
Receivables Pool, and conducting such other activities as it deems
necessary or appropriate to carry out its primary activities;
(b) Seller shall not engage in any business or activity, or
incur any indebtedness or liability other than as expressly permitted
by the Transaction Documents;
(c) Not less than one member of Seller's Board of Directors
shall be an Independent Director. The certificate of incorporation of
Seller shall provide that (i) Seller's Board of Directors shall not
approve, or take any other action to cause the filing of, a voluntary
bankruptcy petition or a merger or dissolution with respect to Seller
unless the Independent Director shall approve the taking of such action
in writing prior to the taking of such action and (ii) such provision
cannot be amended without the prior written consent of the Independent
Director;
(d) The Independent Director shall not at any time serve as a
trustee in bankruptcy for Seller, Parent or any Affiliate thereof;
(e) Any employee, consultant or agent of Seller will be
compensated from Seller's funds for services provided to Seller. Seller
will not engage any agents other than its attorneys, auditors and other
professionals, and a Servicer as contemplated by the Transaction
Documents for the Receivables Pool, which Servicer will be fully
compensated for its services by payment of the Servicer's Fee and a
manager, which manager will be fully compensated from Seller's funds;
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(f) Seller will not incur any material indirect or overhead
expenses for items shared with Parent (or any other Affiliate thereof)
which are not reflected in the Servicer's Fee or the fee to Parent in
its role as manager for Seller. To the extent, if any, that Seller (or
any other Affiliate thereof) share items of expenses not reflected in
the Servicer's Fee or the manager's fee, such as legal, auditing and
other professional services, such expenses will be allocated to the
extent practical on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to the actual use
or the value of services rendered, it being understood that Parent
shall pay all expenses relating to the preparation, negotiation,
execution and delivery of the Transaction Documents, including, without
limitation, legal and other fees;
(g) Seller's operating expenses will not be paid by Parent or
any other Affiliate thereof;
(h) Seller will have its own stationery;
(i) Seller's books and records will be maintained separately
from those of Parent and any other Affiliate thereof;
(j) All financial statements of Parent or any Affiliate
thereof that are consolidated to include Seller will contain detailed
notes clearly stating that (A) all of Seller's assets are owned by
Seller, and (B) Seller is a separate entity with creditors who have
received security interests in Seller's assets;
(k) Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of Parent
or any Affiliate thereof;
(l) Seller will strictly observe corporate formalities in its
dealings with Parent or any Affiliate thereof, and funds or other
assets of Seller will not be commingled with those of Parent or any
Affiliate thereof except as permitted by this Agreement in connection
with servicing the Pool Receivables. Seller shall not maintain joint
bank accounts or other depository accounts to which Parent or any
Affiliate thereof (other than Parent in its capacity as Servicer) has
independent access; and
(m) Seller will maintain arms'-length relationships with
Parent (and any Affiliate thereof). Any Person that renders or
otherwise furnishes services to Seller will be compensated by Seller at
market rates for such services it renders or otherwise furnishes to
Seller. Neither Seller
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nor Parent will be or will hold itself out to be responsible for the
debts of the other or the decisions or actions respecting the daily
business and affairs of the other. Seller and Parent will immediately
correct any known misrepresentation with respect to the foregoing, and
they will not operate or purport to operate as an integrated single
economic unit with respect to each other or in their dealing with any
other entity.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer.
(a) Parent as Initial Servicer. The servicing, administering and
collection of the Pool Receivables shall be conducted by the Person designated
as Servicer hereunder ("Servicer") from time to time in accordance with this
Section 8.01. Until the Administrator gives to Parent a Successor Notice, Parent
is hereby designated as, and hereby agrees to perform the duties and obligations
of, Servicer pursuant to the terms hereof.
(b) Successor Notice; Servicer Transfer Events. Upon Parent's receipt
of notice from the Administrator of the Administrator's designation of a new
Servicer (a "Successor Notice"), Parent agrees that it will terminate its
activities as Servicer hereunder in a manner that the Administrator reasonably
believes will facilitate the transition of the performance of such activities to
the new Servicer, and the new Servicer shall assume each and all of Parent's
obligations to service and administer such Pool Receivables, on the terms and
subject to the conditions herein set forth, and Parent shall use its best
efforts to assist the new Servicer in assuming such obligations. The
Administrator agrees not to give Parent a Successor Notice until after the
occurrence of a Liquidation Event (any such Liquidation Event being herein
called a "Servicer Transfer Event"), in which case such Successor Notice may be
given at any time in the Administrator's discretion.
(c) Resignation. The Parent acknowledges that the Administrator and
Purchaser have relied on the Parent's agreement to act as Servicer hereunder in
making their decision to execute and deliver this Agreement. Accordingly, the
Parent agrees that it will not voluntarily resign as Servicer.
(d) Subcontracts. Servicer may, with the prior consent of the
Administrator, subcontract with any other Person for servicing, administering or
collecting the Pool Receivables,
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provided that (i) such Sub-Servicer shall agree in writing to perform the duties
and obligations of the Servicer pursuant to the terms hereof; (ii) Servicer
shall remain primarily liable for the performance of the duties and obligations
of Servicer pursuant to the terms hereof, (iii) Seller, the Administrator and
Purchaser shall have the right to look solely to the Servicer for performance,
and (iv) any such subcontract may be terminated at the option of the
Administrator upon the occurrence of a Servicer Transfer Event.
(e) Servicing Programs. In the event that Servicer uses any software
program in servicing the Pool Receivables that it licenses from a third party,
Servicer shall use its best efforts to obtain whatever licenses or approvals are
necessary to allow the Administrator or the new Servicer to use such program.
SECTION 8.02. Duties of Servicer.
(a) Appointment; Duties in General. Each of Seller, Purchaser and the
Administrator hereby appoints as its agent Servicer, as from time to time
designated pursuant to Section 8.01, to enforce its rights and interests in and
under the Pool Assets. Servicer shall take or cause to be taken all such actions
as may be necessary or advisable to collect each Pool Receivable from time to
time, all in accordance with Applicable Law, with reasonable care and diligence
and in accordance with the Credit and Collection Policy.
(b) Allocation of Collections; Segregation. Servicer shall set aside
for the account of Seller and Purchaser their respective allocable shares of the
Collections of Pool Receivables in accordance with Section 1.03 but shall not be
required (unless otherwise instructed by the Administrator) to segregate the
funds constituting such portions of such Collections prior to the remittance
thereof in accordance with Section 3.01. If instructed by the Administrator,
Servicer shall segregate and deposit with a bank designated by the
Administrator, Purchaser's Share of Collections, on the second Business Day
following receipt by Servicer of such Collections in immediately available
funds.
(c) Modification of Receivables. So long as no Liquidation Event or
Unmatured Liquidation Event shall have occurred and be continuing, Servicer may
(i) in accordance with the Credit and Collection Policy, adjust the Unpaid
Balance of any Defaulted Receivable or extend the time for payment of any
Defaulted Receivable (but in no event to a date later than 120 days from the
date of the original invoice), provided that (A) such extension or adjustment
shall not alter the status of such Pool Receivable as a Delinquent Receivable or
a Defaulted Receivable or limit the rights of Purchaser or the Administrator
under this
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Agreement, and (B) the aggregate amount of all such adjustments made in any
Settlement Period, plus the aggregate Unpaid Balance of all Pool Receivables
that have been extended during such Settlement Period, shall not exceed 2% of
the aggregate Unpaid Balance of all Pool Receivables as at the Cut-Off Date for
such Settlement Period and (ii) adjust the Unpaid Balance of any Receivable to
reflect the reductions or cancellations described in the first sentence of
Section 3.02(a).
(d) Documents and Records. Seller shall deliver to Servicer, and
Servicer shall hold in trust for Seller and Purchaser in accordance with their
respective interests, all documents, instruments and records (including, without
limitation, computer tapes or disks) that evidence or relate to Pool
Receivables.
(e) Certain Duties to Seller. Servicer shall, as soon as practicable
following receipt, turn over to Seller (i) that portion of Collections of Pool
Receivables representing its undivided interest therein, less the Seller's Share
of the Servicer's Fee, and (ii) the Collections of any Receivable which is not a
Pool Receivable. Seller hereby directs Servicer to pay any Collections of any
Reconveyed Receivable directly to the related Originator to be applied pursuant
to the Purchase Agreement. Servicer shall, as soon as practicable upon demand,
deliver to Seller copies of documents, instruments and records in its possession
that evidence or relate to Pool Receivables.
(f) Termination. Servicer's authorization under this Agreement shall
terminate upon the Final Payout Date.
(g) Power of Attorney. Seller hereby grants to Servicer an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to
take in the name of Seller all steps which are necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of any
kind held or transmitted by Seller or transmitted or received by Purchaser
(whether or not from Seller) in connection with any Receivable. Notwithstanding
anything to the contrary contained herein, the Administrator may direct the
Servicer to commence or settle any legal action to enforce collection of any
Pool Receivable or to foreclose upon or repossess any Related Security;
provided, however, that no such direction may be given unless either (i) a
Liquidation Event has occurred or (ii) the Administrator believes is good faith
that failure to commence, settle, or effect such legal action, foreclosure or
repossession, could adversely affect Receivables constituting a material portion
of the Pool Receivables.
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SECTION 8.03. Rights of the Administrator.
(a) Notice to Obligors. At any time after the occurrence of a
Liquidation Event, the Administrator may notify the Obligors of Pool
Receivables, or any of them, of the ownership of the Asset Interest by the
Administrator, for the benefit of Purchaser.
(b) Notice to Lock-Box Banks. At any time following the earlier to
occur of (i) the occurrence of a Liquidation Event, and (ii) the commencement of
the Liquidation Period, the Administrator is hereby authorized to give notice to
the Lock-Box Banks, as provided in the Lock-Box Agreements, of the transfer to
the Administrator of dominion and control over the lock-boxes and Lock-Box
Accounts. Seller hereby transfers to the Administrator, effective when the
Administrator shall give notice to the LockBox Banks as provided in the Lock-Box
Agreements, the exclusive dominion and control over such lock-boxes and
accounts, and shall take any further action that the Administrator may
reasonably request to effect such transfer. Any proceeds of Pool Receivables
received by the Seller or Parent, as Servicer or otherwise, thereafter shall be
sent immediately to the Administrator.
(c) Rights on Servicer Transfer Event. At any time following the
designation of a Servicer other than Parent pursuant to Section 8.01:
(i) The Administrator may direct the Obligors of Pool
Receivables, or any of them, to pay all amounts payable under any Pool
Receivable directly to the Administrator or its designee.
(ii) Parent shall, at the Administrator's request and at
Parent's expense, give notice of such ownership to each said Obligor
and direct that payments be made directly to the Administrator or its
designee.
(iii) Parent and Seller shall, at the Administrator's request,
(A) assemble all of the documents, instruments and other records
(including, without limitation, computer programs, tapes and disks)
which evidence the Pool Receivables and the related Contracts and
Related Security, or which are otherwise necessary or desirable to
collect such Pool Receivables and make the same available to the
Administrator at a place selected by the Administrator, and (B)
segregate all cash, checks and other instruments received by it from
time to time constituting Collections in a manner acceptable to the
Administrator and promptly upon receipt, remit all such cash, checks
and instruments, duly
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endorsed or with duly executed instruments of transfer, to
the Administrator.
(iv) Each of Seller and Purchaser hereby authorizes the
Administrator, and grants to the Administrator an irrevocable power of
attorney, to take any and all steps in Seller's name and on behalf of
Seller and Purchaser which are necessary or desirable, in the
reasonable determination of the Administrator, to collect all amounts
due under any and all Pool Receivables including, without limitation,
endorsing Seller's name on checks and other instruments representing
Collections and enforcing such Pool Receivables and the related
Contracts.
SECTION 8.04. Responsibilities of Seller. Anything herein the
contrary notwithstanding:
(a) Contracts. Seller shall perform, or cause an Originator to
perform under the Purchase Agreement, all of its obligations under the
Contracts related to the Pool Receivables and under the other
agreements related thereto to the same extent as if the Asset Interest
had not been sold hereunder, and the exercise by the Administrator or
its designee of its rights hereunder shall not relieve Seller from such
obligations.
(b) Limitation of Liability. Neither the Administrator nor
Purchaser shall have any obligation or liability with respect to any
Pool Receivables, the related Contracts or any other related
agreements, nor shall any of them be obligated to perform any of the
obligations of Seller or any Originator thereunder.
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SECTION 8.05. Further Action Evidencing Purchases and Reinvestments.
(a) Further Assurances. The Seller shall, at its expense, take all
action necessary or desirable to establish and maintain a valid and enforceable
first priority perfected undivided ownership interest, to the extent of the
Asset Interest, in the Pool Assets, free and clear of any Lien, in favor of the
Administrator, for the benefit of Purchaser. Without limiting the generality of
the foregoing, Seller will upon the request of the Administrator or its designee
execute and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may be
necessary or appropriate to evidence or perfect the interest described in the
previous sentence.
(b) Data Processing Records. Each of Parent and Seller will xxxx its
master data processing records evidencing the Pool Receivables with a legend,
acceptable to the Administrator, evidencing that the Asset Interest has been
sold in accordance with this Agreement.
(c) Additional Financing Statements; Performance by Administrator.
Seller hereby authorizes the Administrator or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any portion of the Asset Interest now existing or
hereafter arising in the name of Seller. If Seller or Parent fails to perform
any of its agreements or obligations under this Agreement, the Administrator or
its designee may (but shall not be required to), after notice to Seller or
Parent (unless immediate action is reasonably required to protect the interests
of the Administrator or Purchaser), itself perform, or cause performance of,
such agreement or obligation, and the expenses of the Administrator or its
designee incurred in connection therewith shall be payable by Seller or Parent,
as the case may be.
(d) Continuation Statements; Opinion. Without limiting the generality
of subsection (a), Seller will, not earlier than six (6) months and not later
than three (3) months prior to the fifth anniversary of the date of filing of
the financing statement referred to in Section 5.01(d) or any other financing
statement filed pursuant to this Agreement or in connection with any Purchase
hereunder, unless the Final Payout Date shall have occurred execute and deliver
and file or cause to be filed an appropriate continuation statement with respect
to such financing statement.
SECTION 8.06. Application of Collections. Any payment by Obligor in
respect of any indebtedness owed by it to Seller
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shall, except as otherwise specified by such Obligor, required by the underlying
Contract or law or unless the Administrator instructs otherwise, be applied,
first, as a Collection of any Pool Receivable or Receivables then outstanding of
such Obligor in the order of the age of such Pool Receivables, starting with the
oldest of such Pool Receivable and, second, to any other indebtedness of such
Obligor.
ARTICLE IX
SECURITY INTEREST
SECTION 9.01. Grant of Security Interest. To secure all obligations of
Seller arising in connection with this Agreement and each other Transaction
Document, whether now or hereafter existing, due or to become due, direct or
indirect, or absolute or contingent, including, without limitation, all
Indemnified Amounts, payments on account of Collections of Pool Receivables
received or deemed to be received and fees, Seller hereby assigns and grants to
Administrator, for the benefit of the Secured Parties, a security interest in
all of Seller's right, title and interest (including specifically any undivided
interest retained by Seller hereunder) now or hereafter existing in, to and
under all the Pool Assets.
SECTION 9.02. Further Assurances. The provisions of 8.05 shall apply
to the security interest granted under Section 9.01 as well as to the Purchases,
Reinvestments and the Asset Interest hereunder.
SECTION 9.03. Remedies. Upon the occurrence of a Liquidation Event,
the Administrator and Purchaser shall have, with respect to the collateral
granted pursuant to Section 9.01, and in addition to all other rights and
remedies available to Purchaser or the Administrator under this Agreement or
other applicable law, all the rights and remedies of a secured party upon
default under the UCC.
ARTICLE X
LIQUIDATION EVENTS
SECTION 10.01. Liquidation Events. The following events be
"Liquidation Events" hereunder:
(a) (i) Servicer (if Parent or its Affiliate is Servicer)
shall fail to perform or observe any material term, covenant or
agreement that is an obligation of
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Servicer hereunder (other than as referred to in clause (ii) next
following) and such failure shall remain unremedied for more than
three Business Days or (ii) Seller or Servicer (if Parent or its
Affiliate is Servicer) shall fail to make any payment or deposit to be
made by it hereunder within two (2) Business Days of when due; or
(b) Any representation or warranty made or deemed to be made
by Seller, Parent or any Originator under or in connection with this
Agreement, any other Transaction Document, any Daily Report or any
Servicer Report or other information or report delivered pursuant
hereto shall prove to have been false or incorrect in any material
respect when made; or
(c) Seller, Parent or any Originator shall fail to perform or
observe any other term, covenant or agreement contained in this
Agreement or any of the other Transaction Documents on its part to be
performed or observed and any such failure shall remain unremedied for
ten (10) Business Days after written notice thereof shall have been
given by the Administrator to Seller or Parent, as the case may be; or
(d) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for the
issuance of indebtedness for borrowed money in excess of $10,000 of, or
guaranteed by, Parent or any Subsidiary thereof, which default is a
payment default or if unremedied, uncured, or unwaived (with or without
the passage of time or the giving of notice or both) would permit
acceleration of the maturity of such indebtedness and such default
shall have continued unremedied, uncured or unwaived for a period long
enough to permit such acceleration; or any default under any agreement
or instrument relating to the purchase of receivables of Parent or any
Subsidiary thereof (other than this Agreement), if the effect of such
default is to terminate, or permit the termination of, the commitment
of any party to such agreement or instrument to purchase receivables or
the right of Parent or such Subsidiary to reinvest in receivables the
principal amount paid by any party to such agreement or instrument for
an interest in receivables; or
(e) This Agreement or any Purchase or any Reinvestment
pursuant to this Agreement shall for any reason (other than pursuant to
the terms hereof) (i) cease to create, or the Asset Interest shall for
any reason cease to be, a valid and enforceable perfected undivided
percentage interest to the extent of the Asset Interest in each Pool
Asset, free and clear of any other Lien or (ii) cease to create with
respect
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to the items described in Section 9.01, or the interest of the
Administrator (for the benefit of Purchaser) with respect to such
items shall cease to be, a valid and enforceable first priority
perfected security interest, free and clear of any other Lien; or
(f) An Event of Bankruptcy shall have occurred and remain
continuing with respect to Seller, Parent or any Subsidiary thereof; or
(g) The Sales-Based Dilution Ratio for any Cut-Off
Date exceeds 7%; or
(h) The Default Ratio for any Cut-Off Date exceeds 2%;
or
(i) On any Settlement Date, after giving effect to the
payments made under Section 3.01(c), the Asset Interest exceeds the
Allocation Limit; or
(j) The Delinquency Ratio for any Cut-Off Date is
greater than 5%; or
(k) There shall exist any event or occurrence that has caused,
or has a reasonable possibility of causing, a Material Adverse Effect;
or
(l) Seller, any Originator or Parent is subject to a
Change-in-Control; or
(m) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to
any of the assets of Seller or Parent and such lien shall not have been
released within 5 Business Days, or the Pension Benefit Guaranty
Corporation shall file notice of a lien pursuant to Section 4068 of the
Employee Retirement Income Security Act of 1974 with regard to any of
the assets of Seller or Parent and such lien shall not have been
released within 5 Business Days.
SECTION 10.02. Remedies.
(a) Optional Liquidation. Upon the occurrence of a Liquidation Event
(other than a Liquidation Event described in subsection (f) of Section 10.01),
the Administrator shall, at the request, or may with the consent, of Purchaser,
by notice to Seller declare the Purchase Termination Date to have occurred and
the Liquidation Period to have commenced.
(b) Automatic Liquidation. Upon the occurrence of a Liquidation Event
described in subsection (f) of Section 10.01,
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the Purchase Termination Date shall occur and the Liquidation Period shall
commence automatically.
(c) Additional Remedies. Upon any Purchase Termination Date occurring
pursuant to this Section 10.02, no Purchases or Reinvestments thereafter will be
made, and the Administrator and Purchaser shall have, in addition to all other
rights and remedies under this Agreement or otherwise, all other rights and
remedies provided under the UCC of each applicable jurisdiction and other
Applicable Law, which rights shall be cumulative.
ARTICLE XI
THE ADMINISTRATOR
SECTION 11.01. Authorization and Action. Pursuant to the Program
Agreements, Purchaser has appointed and authorized the Administrator (or its
designees) to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrator by the terms
hereof, together with such powers as are reasonably incidental thereto.
SECTION 11.02. Administrator's Reliance, Etc. The Administrator and
its directors, officers, agents or employees shall not be liable for any action
taken or omitted to be taken by it or them under or in connection with the
Transaction Documents (including, without limitation, the servicing,
administering or collecting of Pool Receivables as Servicer pursuant to Section
8.01), except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Administrator: (a) may
consult with legal counsel (including counsel for Seller), 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 Purchaser or any other holder of any interest in Pool
Receivables and shall not be responsible to Purchaser or any such other holder
for any statements, warranties or representations made in or in connection with
any 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 any Transaction Document on the part of Seller or Parent or to inspect the
property (including the books and records) of Seller, any Originator or Parent;
(d) shall not be responsible to Purchaser or any other holder of any interest in
Pool Receivables for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Transaction Document; and (e) shall
incur no liability under or in respect of this Agreement by acting upon any
notice
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(including notice by telephone), consent, certificate or other instrument or
writing (which may be by facsimile or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 11.03. Fleet and Affiliates. Fleet and any of its Affiliates
may generally engage in any kind of business with Seller, Parent, any Originator
or any Obligor, any of their respective Affiliates and any Person who may do
business with or own securities of Seller, Parent, any Originator or any Obligor
or any of their respective Affiliates, all as if Fleet were not the
Administrator, and without any duty to account therefor to Purchaser or any
other holder of an interest in Pool Receivables.
ARTICLE XII
ASSIGNMENT OF PURCHASER'S INTEREST
SECTION 12.01. Restrictions on Assignments.
(a) Neither Seller nor Parent may assign its rights, or delegate its
duties, hereunder or any interest herein without the prior written consent of
the Administrator. Purchaser may not assign its rights hereunder (although it
may delegate its duties hereunder as expressly indicated herein) or the Asset
Interest (or any portion thereof) to any Person without the prior written
consent of Seller, which consent shall not be unreasonably withheld; provided,
however, that Purchaser may assign all of its rights and interests in the
Transaction Documents, together with all its interest in the Asset Interest, to
(i) Fleet or any Affiliate thereof, or (ii) to any "bankruptcy remote" special
purpose entity the business of which is administered by Fleet or any Affiliate
thereof, so long as such entity has the ability to issue commercial paper notes,
or to cause the issuance of commercial paper notes, to fund the Asset Interest
or (iii) to any Program Support Provider. If Purchaser notifies Seller and
Parent that it has decided to assign its rights and delegate its duties
hereunder to one or more Program Support Providers (or an agent therefor),
Seller and Parent agree to enter into such amendments hereto and to the other
Transaction Documents as the Administrator may reasonably request to reflect
such assignment and delegation, provided that, unless a Liquidation Event
exists, the Administrator shall be responsible for all reasonable out-of-pocket
costs and expenses incurred by Seller and Parent in connection therewith.
(b) Seller agrees to advise the Administrator within five (5) Business
Days after notice to Seller of any proposed assignment by Purchaser of the Asset
Interest (or any portion thereof), not otherwise permitted under subsection (a),
of
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Seller's consent or non-consent to such assignment and if it does not consent,
the reasons therefor. If Seller does not respond in such time period, Seller
shall be deemed to have consented to such assignment. All of the aforementioned
assignments shall be upon such terms and conditions as Purchaser and the
assignee may mutually agree.
SECTION 12.02. Rights of Assignee. Upon the assignment by Purchaser in
accordance with this Article XII, the assignee receiving such assignment shall
have all of the rights of Purchaser with respect to the Transaction Documents
and the Asset Interest (or such portion thereof as has been assigned).
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnities.
(a) General Indemnity by Seller. Without limiting any other rights
which any such Person may have hereunder or under Applicable Law, Seller hereby
agrees to indemnify each of the Administrator, Purchaser, each Program Support
Provider, each of their respective Affiliates, and all successors, permitted
transferees, participants and permitted assigns and all officers, directors,
shareholders, controlling persons, employees and agents of any of the foregoing
(each an "Indemnified Party"), within ten (10) Business Days of demand, from and
against any and all damages, losses, claims, liabilities and related costs and
expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them arising out of or relating to the Transaction
Documents or the ownership or funding of the Asset Interest or in respect of any
Receivable or any Contract, excluding, however, (a) Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party or (b) Indemnified Amounts which have the effect of recourse
for non-payment of the Pool Receivables due to credit problems of the Obligors
(except as otherwise specifically provided in this Agreement). Without limiting
the foregoing, Seller shall indemnify each Indemnified Party for Indemnified
Amounts arising out of or relating to:
(i) the transfer by Seller of any interest in any Pool
Receivable other than the transfer of an Asset Interest to the
Administrator, for the benefit of Purchaser, pursuant to this Agreement
and the grant of a security interest to the Administrator pursuant to
Section 9.01;
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(ii) any representation or warranty made by Seller under or
in connection with any Transaction Document, any Servicer Report, any
Daily Report or any other information or report delivered by or on
behalf of Seller pursuant hereto, which shall have been false,
incorrect or misleading in any respect when made or deemed made;
(iii) the failure by Seller to comply with any Applicable
Law, or the nonconformity of any Pool Receivable or the related
Contract with any Applicable Law;
(iv) the failure to vest and maintain vested in the
Administrator, for the benefit of Purchaser, an undivided percentage
ownership interest, to the extent of the Asset Interest, in the Pool
Assets, free and clear of any Lien, other than a Lien arising solely as
a result of an act of Purchaser or the Administrator, whether existing
at the time of any Purchase or Reinvestment of such Asset Interest or
at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to
any Pool Assets, whether at the time of any Purchase or Reinvestment or
at any time thereafter;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy or payment) of the Obligor to the payment of
any Receivable included in the Net Pool Balance (including, without
limitation, a defense based on such Receivable or the related Contract
not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the merchandise or services related to
such Receivable or the furnishing or failure to furnish such
merchandise or services;
(vii) any failure of Seller to perform its duties or
obligations in accordance with this Agreement;
(viii) any products liability claim arising out of or in
connection with merchandise or services that are the subject of any
Pool Receivable;
(ix) any litigation, proceedings or investigation against
Seller; or
(x) any tax or governmental fee or charge (but not
including taxes upon or measured by net income or representing a
franchise or unincorporated business tax of
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such Person), all interest and penalties thereon or with respect
thereto, and all out-of-pocket costs and expenses, including the
reasonable fees and expenses of counsel in defending against the same,
which may arise by reason of the purchase or ownership of any Asset
Interest, or any other interest in the Pool Receivables or in any goods
which secure any such Pool Receivables.
(b) Indemnity by Servicer. Without limiting any other rights which any
such Person may have hereunder or under applicable law, Servicer hereby agrees
to indemnify each Indemnified Party, forthwith on demand, from and against any
and all Indemnified Amounts awarded against or incurred by any of them arising
out of or relating to (i) any representation or warranty made by Servicer under
or in connection with any Transaction Document, any Servicer Report or any other
information or report delivered by or on behalf of Servicer pursuant hereto,
which shall have been false, incorrect or misleading in any material respect
when made or deemed made, (ii) the failure by Servicer to comply with any
Applicable Law, (iii) the failure of Servicer to perform its duties or
obligations in accordance with this Agreement or (iv) the commingling of any
Collections with other funds.
(c) After-Tax Basis. Indemnification hereunder shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the receipt of the indemnity provided
hereunder, including the effect of such tax or refund on the amount of tax
measured by net income or profits which is or was payable by the Indemnified
Party.
(d) Contribution. If for any reason the indemnification provided above
in this Section 13.01 is unavailable to an Indemnified Party or is insufficient
to hold an Indemnified Party harmless, then Seller or Servicer, as the case may
be, shall contribute to the amount paid or payable by such Indemnified Party as
a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and Seller or Servicer, as the case may be, on
the other hand but also the relative fault of such Indemnified Party as well as
any other relevant equitable considerations.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by any party therefrom shall in
any event be effective unless the same shall be in writing and signed by (a)
Seller, the Administrator, Parent and Purchaser (with respect to an amendment)
or (b) the Administrator and Purchaser (with respect to a waiver or consent by
them) or Seller or Parent (with respect to a waiver or consent by it), as the
case may be, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. The parties
acknowledge that, before entering into such an amendment or granting such a
waiver or consent, Purchaser may also be required to obtain the approval of some
or all of the Program Support Providers or to obtain confirmation from certain
rating agencies that such amendment, waiver or consent will not result in a
withdrawal or reduction of the ratings of the Commercial Paper Notes.
SECTION 14.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier or by certified mail, postage prepaid, or by facsimile,
to the intended party at the address or facsimile number of such party set forth
under its name on Schedule 14.02 or at such other address or facsimile number as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, (a) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (b) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
SECTION 14.03. No Waiver; Remedies. No failure on the part of the
Administrator, any Affected Party, any Indemnified Party, Purchaser or any other
holder of the Asset Interest (or any portion thereof) 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. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 14.04. Binding Effect; Survival. This Agreement shall be
binding upon and inure to the benefit of Seller, Parent, the Administrator,
Purchaser and their respective successors and assigns, and the provisions of
Section 4.02 and Article XIII
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shall inure to the benefit of the Affected Parties and the Indemnified Parties,
respectively, and their respective successors and assigns; provided, however,
nothing in the foregoing shall be deemed to authorize any assignment not
permitted by Section 12.01. 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. The rights
and remedies with respect to any breach of any representation and warranty made
by Seller or Parent pursuant to Article VI and the indemnification and payment
provisions of Article XIII and Sections 4.02, 14.05, 14.06, 14.07, 14.08 and
14.15 shall be continuing and shall survive any termination of this Agreement.
SECTION 14.05. Costs, Expenses and Taxes. In addition to its
obligations under Article XIII, Seller or Parent, as the case may be, agrees to
pay within five Business Days of demand;
(a) all costs and expenses incurred (i) by the Administrator
and Purchaser, and their respective Affiliates, in connection with the
negotiation, preparation, execution and delivery of, and (ii) by the
Administrator, any Program Support Provider and Purchaser and their
respective Affiliates, in connection with the enforcement after the
occurrence of a Liquidation Event against Seller or Parent, as the case
may be, of, or any actual or claimed breach by Seller or Parent, as the
case may be, of, this Agreement and the other Transaction Documents,
including, without limitation (A) the reasonable fees and expenses of
counsel to any of such Persons incurred in connection with any of the
foregoing or in advising such Persons as to their respective rights and
remedies under any of the Transaction Documents, and (B) all reasonable
out-of-pocket expenses (including reasonable fees and expenses of
independent accountants incurred in connection with any review of
Seller's or Parent's, as the case may be, books and records either
prior to the execution and delivery hereof or pursuant to Section
7.01(c) or otherwise); and
(b) all stamp and other taxes and fees payable or determined
to be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other Transaction Documents, and
agrees to indemnify each Indemnified Party against any liabilities with
respect to or resulting from any delay in paying or omission to pay
such taxes and fees.
SECTION 14.06. No Proceedings. Seller, Parent, Servicer and Fleet
(individually and as Administrator) each hereby agrees that it will not
institute against Purchaser, or join any other Person in instituting against
Purchaser, any insolvency
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proceeding (namely, any proceeding of the type referred to in the definition of
Event of Bankruptcy) so long as any Commercial Paper Notes shall be outstanding
or there shall not have elapsed one year plus one day since the last day on
which any such Commercial Paper Notes shall have been outstanding.
SECTION 14.07. Confidentiality of Program Information.
(a) Confidential Information. Each party hereto acknowledges that Fleet
regards the structure of the transactions contemplated by this Agreement to be
proprietary, and each such party severally agrees that:
(i) it will not disclose without the prior consent of Fleet
or as is required or authorized by the Transaction Documents (other
than to the directors, employees, agents, auditors, counsel or
affiliates (collectively, "representatives") of such party, each of
whom shall be informed by such party of the confidential nature of the
Program Information (as defined below) and of the terms of this Section
14.07), (A) any information regarding the pricing in, or copies of,
this Agreement or any transaction contemplated hereby, (B) any
information regarding the organization, business or operations of
Purchaser generally or the services performed by the Administrator for
Purchaser, or (C) any information which is furnished by Fleet to such
party and which is designated by Fleet to such party in writing or
otherwise as confidential or not otherwise available to the general
public (the information referred to in clauses (A), (B) and (C) is
collectively referred to as the "Program Information"); provided,
however, that such party may disclose any such Program Information (I)
to any other party to this Agreement for the purposes contemplated
hereby, (II) as may be required by any Governmental Authority having or
claiming to have jurisdiction over such party, (III) in order to comply
with Applicable Law, including, without limitation, by filing the
Transaction Documents with the Securities and Exchange Commission
(provided that neither Seller nor Parent shall file the Fee Letter, or,
if required by Applicable Law to file the Fee Letter, Parent or Seller,
as the case may be, shall request confidential treatment therefor) or
(IV) subject to subsection (c), in the event such party is legally
compelled (by interrogatories, requests for information or copies,
subpoena, civil investigative demand or similar process) to disclose
any such Program Information;
(ii) it will use the Program Information solely for the
purposes of evaluating, administering and enforcing the
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transactions contemplated by this Agreement and making any necessary
business judgments with respect thereto; and
(iii) it will, upon demand, return (and cause each of its
representatives to return) to Fleet, all documents or other written
material (other than documents executed by such party) received from
Fleet, as the case may be, in connection with (a)(i)(B) or (C) above
and all copies thereof made by such party which contain the Program
Information.
(b) Availability of Confidential Information. This Section 14.07 shall
be inoperative as to such portions of the Program Information which are or
become generally available to the public or such party on a nonconfidential
basis from a source other than Fleet or were known to such party on a
nonconfidential basis prior to its disclosure by Fleet.
(c) Legal Compulsion to Disclose. In the event that any party or anyone
to whom such party or its representatives transmits the Program Information is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any of the Program Information, such party will, to the
extent that it may legally do so,
(i) provide Fleet with prompt written notice so that Fleet
may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Section 14.07; and
(ii) unless Fleet waives compliance by such party with the
provisions of this Section 14.07, make a timely objection to the
request or confirmation to provide such Program Information on the
basis that such Program Information is confidential and subject to the
agreements contained in this Section 14.07.
In the event that such protective order or other remedy is not obtained, or
Fleet waives compliance with the provisions of this Section 14.07, such party
will furnish only that portion of the Program Information which (in such party's
good faith judgment) is legally required to be furnished and will exercise
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the Program Information.
(d) Survival. This Section 14.07 shall survive termination of this
Agreement.
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SECTION 14.08. Confidentiality of Parent Information.
(a) Confidential Information. Each party hereto acknowledges that
Parent regards certain information to be proprietary, and each such party
severally agrees that:
(i) it will not disclose without the prior consent of
Parent or as is required or authorized by the Transaction Documents
(other than to the directors, employees, agents, auditors, counsel or
affiliates (collectively, "representatives")of such party, each of whom
shall be informed by such party of the confidential nature of the
Parent Information (as defined below) and of the terms of this Section
14.08), any information which is furnished by Parent to such party and
which is designated by Parent to such party in writing or otherwise as
confidential or not otherwise available to the general public ("Parent
Information"); provided, however, that such party may disclose any such
Parent Information (I) to any other party to this Agreement for the
purposes contemplated hereby, (II) as may be required by any
Governmental Authority having or claiming to have jurisdiction over
such party, (III) in order to comply with any Applicable Law, (IV)
subject to subsection (c), in the event such party is legally compelled
(by interrogatories, requests for information or copies, subpoena,
civil investigative demand or similar process) to disclose any such
Program Information, (V) to any Affected Party, (VI) to the Rating
Agencies, or (VII) to any potential Liquidity Bank or any potential
assignee or participant of any Liquidity Bank, and any placement agent
for, or investor or potential investor in, the Commercial Paper Notes;
and
(ii) it will use the Parent Information solely for the
purposes of evaluating, administering and enforcing the transactions
contemplated by this Agreement and making any necessary business
judgments with respect thereto.
(b) Availability of Confidential Information. This Section 14.08
shall be inoperative as to such portions of the Parent Information which are
or become generally available to the public or such party on a nonconfidential
basis from a source other than Parent or were known to such party on a
nonconfidential basis prior to its disclosure by Parent.
(c) Legal Compulsion to Disclose. In the event that any party or
anyone to whom such party or its representatives transmits the Parent
Information is requested or becomes legally compelled (by interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar
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process) to disclose any of the Parent Information, such party will, to the
extent that it may legally do so,
(i) provide Parent with prompt written notice so that
Parent may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Section 14.08; and
(ii) unless Parent waives compliance by such party with the
provisions of this Section 14.08, make a timely objection to the
request or confirmation to provide such Parent Information on the basis
that such Parent Information is confidential and subject to the
agreements contained in this Section 14.08.
In the event that such protective order or other remedy is not obtained, or
Parent waives compliance with the provisions of this Section 14.08, such party
will furnish only that portion of the Parent Information which (in such party's
good faith judgment) is legally required to be furnished and will exercise
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the Parent Information.
(d) Survival. This Section 14.08 shall survive termination of this
Agreement.
SECTION 14.09. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION 14.10. Integration. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
SECTION 14.11. GOVERNING LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS
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PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS
OF THE ADMINISTRATOR IN THE POOL ASSETS IS GOVERNED BY THE LAWS OF THE
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 14.12. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY
BE IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT A JURY TRIAL.
SECTION 14.13. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. EACH OF
PARENT AND SELLER HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT HEREBY IRREVOCABLY (I) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN, STATE OF NEW YORK, OVER ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT;
(II) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH STATE OR UNITED STATES FEDERAL COURT;
(III) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING; (IV) CONSENTS TO THE SERVICE OF ANY AND
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN SECTION
14.02; AND (V) TO THE EXTENT ALLOWED BY LAW, AGREES 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. NOTHING IN THIS SECTION 14.13 SHALL
AFFECT THE ADMINISTRATOR'S OR PURCHASER'S RIGHT TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR
PROCEEDING AGAINST ANY OF SELLER OR PARENT OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTIONS.
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(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.
SECTION 14.14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
SECTION 14.15. No Recourse Against Other Parties. No recourse under
any obligation, covenant or agreement of Purchaser contained in this Agreement
shall be had against any stockholder (solely in its capacity as stockholder),
employee, officer, director, member or incorporator of Purchaser, provided,
however, that nothing in this Section 14.15 shall relieve any of the foregoing
Persons from any liability which such Person may otherwise have for his/her or
its gross negligence or willful misconduct.
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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.
D&K RECEIVABLES CORPORATION, as
Seller
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
D&K HEALTHCARE RESOURCES, INC., as
initial Servicer
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
BLUE KEEL FUNDING, LLC,
as Purchaser
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
FLEET NATIONAL BANK, as
Administrator
By:_____________________________________
Name Printed:___________________________
Title:__________________________________
RECEIVABLES PURCHASE
AGREEMENT
S-1
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APPENDIX A
DEFINITIONS
This is Appendix A to the Receivables Purchase Agreement dated as of
August 7, 1998 among D&K Receivables Corporation, as Seller, Blue Keel Funding,
LLC, as Purchaser, D&K Healthcare Resources, Inc., as initial Servicer, and
Fleet National Bank, as Administrator (as amended, supplemented or otherwise
modified from time to time, the "Agreement"). Unless otherwise indicated, all
Section, Exhibit and schedule references in this Appendix are to Sections of and
Exhibits and Schedules to the Agreement.
A. Defined Terms. As used in the Agreement, unless the context
requires a different meaning, the following terms have the meanings indicated
hereinbelow:
"Accounts" means all accounts, contract rights, chattel paper,
instruments and documents, whether now owned or hereafter created or acquired by
Parent or in which Parent now has or hereafter acquires any interest.
"Administrator" has the meaning set forth in the preamble.
"Administrator's Office" means the office of the Administrator at Xxx
Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 or such other address
as shall be designated by the Administrator in writing to Seller and Purchaser.
"Affected Party" means each of Purchaser, each Program Support
Provider, any assignee or participant of Purchaser or any Program Support
Provider, Fleet, any successor to Fleet as Administrator, and any sub-agent of
the Administrator.
"Affiliate" when used with respect to a Person means any other Person,
directly or indirectly, controlling, controlled by, or under common control with
such Person, except, when used with respect to the Purchaser, Affiliate shall
mean the holder(s) of its limited liability company interests.
"Allocation Limit" has the meaning set forth in
Section 1.01.
"Alternate Base Rate" means, on any date, a fluctuating rate
of interest per annum equal to the higher of
(a) the rate of interest most recently announced by the Liquidity
Agent in Boston, Massachusetts, as its prime rate; and
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(b) the Federal Funds Rate most recently determined by the
Liquidity Agent plus 0.50% per annum.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the Liquidity Agent in connection with extensions of
credit.
"Applicable Law" means all existing and future applicable laws, rules,
regulations (including proposed, temporary and final income tax regulations),
statutes, treaties, codes, ordinances, permits, certificates, orders and
licenses of and interpretations by any Governmental Authority, and applicable
judgments, decrees, injunctions, writs, orders or like action of any court,
arbitrator or other administrative, judicial or quasi-judicial tribunal or
agency of competent jurisdiction.
"Asset Interest" means an undivided ownership interest determined from
time to time as provided in Section 1.04(b) in all Pool Assets.
"Business Day" means a day other than a Saturday or a Sunday on which
both (a) the Administrator at its principal office in Boston, Massachusetts is
open for business and (b) commercial banks in New York City, Chicago, Illinois
and St. Louis, Missouri are not authorized or required to be closed for
business.
"Capital" means at any time with respect to the Asset Interest an
amount equal to (a) the aggregate of the amounts theretofore paid to Seller for
Purchases pursuant to Section 1.01, less (b) the aggregate amount of Collections
theretofore received and actually distributed to Purchaser on account of the
Capital pursuant to Section 3.01.
"Capital Base" at any date means the sum of (i) Consolidated Tangible
Net Worth, plus (ii) the principal amount of Subordinated Debt.
"Capital Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which would,
in accordance with GAAP, be required to be classified and accounted for as a
capital lease on a balance sheet of such Person, other than, in the case of
Parent or any of its Subsidiaries, any such lease under which Parent or a
wholly-owned Subsidiary of Parent is the lessor.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
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"Change in Control" means any of the following:
(a) in relation to Parent, the acquisition following the date
hereof by any person or group of persons (within the meaning of Section
13 or 14 of the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Exchange Act) of issued and outstanding shares of
the capital stock of Parent entitled (without regard to the occurrence
of any contingency) to vote for the election of members of the board of
directors of Parent and having a then present right to exercise 20% or
more of the voting power for the election of members of the board of
directors of Parent attached to all such outstanding shares of capital
stock of Parent, unless otherwise agreed in writing by the Liquidity
Banks and the Administrator; or
(b) the creation or imposition of any Lien on any shares of
capital stock of Seller; or
(c) the failure by Parent to own all of the issued and
outstanding capital stock of Seller and each Originator (other than
Parent).
"Collections" means, with respect to any Receivable, all funds which
either (a) are received by Seller, Servicer, an Originator or any other Person
from or on behalf of the related Obligors in payment of any amounts owed
(including, without limitation, purchase prices, finance charges, interest and
all other charges) in respect of such Receivable, or applied to such amounts
owed by such Obligors (including, without limitation, insurance payments that
Seller, an Originator or Servicer applies in the ordinary course of its business
to amounts owed in respect of such Receivable and net proceeds of sale or other
disposition of repossessed goods or other collateral or property of the Obligor
or any other party directly or indirectly liable for payment of such Receivable
and available to be applied thereon), or (b) are deemed to have been received by
Seller or any other Person as a Collection pursuant to Section 3.02.
"Commercial Paper Holders" means the holders from time to time of the
Commercial Paper Notes.
"Commercial Paper Notes" means short-term promissory notes issued or to
be issued by Purchaser, or the proceeds of which are loaned to Purchaser, to
fund its investments in accounts receivable or other financial assets.
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"Commitment Fee" means, for each day, the amount equal to the product
of (x) the unused Liquidity Commitment Amount on such day, times (y) the
Commitment Fee Rate, times (z) 1/360.
"Commitment Fee Rate" has the meaning set forth in the Fee
Letter.
"Concentration Limit" for any Obligor at any time means an amount equal
to (i) the aggregate Unpaid Balance of all Eligible Receivables at such time
times (ii) the applicable percentage as set forth below opposite the appropriate
ratings of such Obligor's long-term and short-term unsecured debt, or, in the
case of any Obligor listed on Schedule A hereto, the percentage set forth
opposite such Obligor's name on such Schedule A. Any Obligor that has a split
rating shall be deemed to be in the lower rating category.
Long Term Rating Short-Term Rating Applicable
---------------- ----------------- Percentage
----------
S&P Moody's S&P Moody's
--- ------- --- -------
A+ or better A+ or better A-1 P-1 8.0%
BBB+ to A Baa1 to A2 A-2 P-2 6.0%
BBB- to BBB Baa3 to Xxx0 X-0 P-3 4.0%
Not Rated Not Rated 2.0%
"Consolidated" means the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
"Contract" means a contract between an Originator and any Person, or an
invoice from an Originator to any Person, or any purchase order from any Person
to an Originator pursuant to or under which such Person shall be obligated to
make payments to an Originator. A "related" Contract with respect to the
Receivables means a Contract under which Receivables in the Receivables Pool
arise, which evidence such Receivables, or which is relevant to the collection
or enforcement of such Receivables.
"Contractual Obligation" with respect to any Person, means any
provision of any securities issued by such Person or any indenture, mortgage,
deed of trust, contract, undertaking, agreement, instrument or other document to
which such Person is party or by which it or any of its property is bound or is
subject.
"Cost of Funds Rate" for any period means the sum of (i) the rate
equivalent to the rate (or if more than one rate, the weighted average of rates)
at which Commercial Paper Notes having a term equal to such period and to be
issued to fund or maintain
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the Capital may be sold by any placement agent or commercial paper dealer
selected by the Purchaser or a Program Support Provider, as agreed between each
such agent or dealer and the Purchaser or such Program Support Provider and
notified by the Purchaser to the Agent and the Servicer; provided, however, if
the rate (or rates) as agreed between any such agent or dealer and the Purchaser
with regard to any period is a discount rate (or rates), the "Cost of Funds
Rate" for such period shall be the rate (or if more than one rate, the weighted
average of the rates) resulting from converting such discount rate (or rates) to
an interest-bearing equivalent rate (or rates) per annum, plus (ii), without
duplication, the commissions and charges charged as a percentage of such face
amount and converted to an interest-bearing equivalent rate per anum.
"Credit and Collection Policy" means those credit and collection
policies and practices relating to Contracts and Receivables described in
Schedule 7.01(g), as modified without violating Section 7.03(c).
"Current Assets" at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets on a
balance sheet at such date in accordance with GAAP, except that amounts due from
Affiliates, investments in Affiliates and prepaid expenses shall be excluded
therefrom.
"Cut-Off Date" means the last day of each calendar month.
"Daily Report" has the meaning set forth in Section 3.01(a).
"Deemed Collection" has the meaning set forth in the
Purchase Agreement.
"Defaulted Receivable" means a Receivable: (a) as to which any payment,
or part thereof, remains unpaid for more than 90 days from the original due date
for such payment, (b) as to which the Obligor thereof is the subject of an Event
of Bankruptcy, or (c) which, consistent with the Credit and Collection Policy,
would be written off the Seller's books as uncollectible.
"Default Ratio" means the ratio (expressed as a percentage) computed as
of a Cut-Off Date by dividing (x) the aggregate Unpaid Balance of all Overdue
Receivables as of such Cut-Off Date by (y) the aggregate Unpaid Balance of all
Pool Receivables as of the Cut-Off Date for the third preceding month.
"Delinquency Ratio" means the ratio (expressed as a percentage)
computed as of a Cut-Off Date by dividing (x) the aggregate Unpaid Balance of
all Overdue Receivables on such CutOff Date by (y) the aggregate Unpaid Balance
of all Pool Receivables on such date.
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"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and as to which any payment, or part thereof, remains unpaid for more
than 30 days from the original due date for such payment.
"Dilution" means any credit, adjustment, rebate, refund or setoff with
respect to any Receivable granted or allowed by Seller or any Affiliate of
Seller.
"Dilution Reserve" means, at any time, an amount equal to (i) the Net
Pool Balance at such time times (ii) greatest of (A) 4%, (B) the most recently
calculated Sales-Based Dilution Ratio and (C) the average of the three most
recently calculated Sales-Based Dilution Ratios times two.
"Dollars" means dollars in lawful money of the United States
of America.
"Dynamic Loss Reserve Percentage" shall be measured as an amount
calculated pursuant to the following formula:
DLRP = LR x LH x SF
where:
DLRP = the Dynamic Loss Reserve Percentage;
LR = the Loss Ratio, which shall be equal to the highest average
of the Sales-Based Default Ratios for any three consecutive
calendar months during the previous twelve calendar months;
LH = the Loss Horizon, which shall be equal to the cumulative
Sales over the previous three months divided by the Net Pool
Balance as of the most recent Cut-Off Date; and
SF = the Stress Factor, which shall be 2.
"Earned Discount" means for any Settlement Period:
C x ER x ED + LF
-----------
360
where:
C = the daily average (calculated at the close of business each
day) of the Capital during such Settlement Period,
ER = the Earned Discount Rate for such Settlement Period,
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ED = the actual number of days elapsed during such Settlement Period,
and
LF = the Liquidation Fee, if any, during such Settlement Period.
"Earned Discount Rate" means for any Settlement Period:
(a) in the case of any portion of the Capital funded by a
Liquidity Funding, the greater of (1) the sum of (i) the Eurodollar
Rate (Reserve Adjusted) for such Settlement Period, plus (ii) 2.00% per
annum and (2) the then applicable interest rate pursuant to the Loan
Agreement; and
(b) in the case of any portion of the Capital funded by any
Commercial Paper Notes, the LIBOR for such Settlement Period;
provided, however, that on any day during a Settlement Period when any
Liquidation Event or Unmatured Liquidation Event shall have occurred and be
continuing, the Earned Discount Rate for the Capital shall mean the "Default
Rate" as defined in the Loan Agreement plus 1.00% per annum or, if the Loan
Agreement is not then in effect, the higher of (i) the Alternate Base Rate in
effect on such day plus 2% per annum and (ii) the LIBOR for such Settlement
Period plus 3.50% per annum; provided, further that, unless the foregoing
proviso applies, with respect to any Incremental Capital, for the period from
the date of the related Purchase to the next Settlement Date, the Earned
Discount Rate shall be the Cost of Funds Rate for such period.
"Eligible Contract" means a Contract in one of the forms set forth in
Schedule 7.01(e) or otherwise approved by the Administrator.
"Eligible Receivable" means, at any time, a Receivable:
(a) which is originated by an Originator in the ordinary course
of its business for the sale of pharmaceuticals and related products;
(b) which constitutes an account as defined in the UCC;
(c) the Obligor of which is a resident of the United States, or
any of its possessions or territories, is not an Affiliate of Seller
and is not a Governmental Authority;
(d) which was purchased or otherwise acquired by Seller pursuant
to the Purchase Agreement and which was
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designated by the related Originator as an "Eligible
Receivable" pursuant to the Purchase Agreement;
(e) which is not a Delinquent Receivable or a Defaulted
Receivable;
(f) with respect to which the warranty of Seller in Section
6.01(k) is true and correct;
(g) the sale of which, or of an undivided interest in which, does
not contravene or conflict with Applicable Law, or require the consent
of the Obligor or any other Person;
(h) which is denominated and payable only in Dollars in the
United States;
(i) which arises under an Eligible Contract, which contract has
been duly authorized by the parties thereto and that, together with
such Receivable, is in full force and effect and constitutes the legal,
valid and binding obligation of the Obligor of such Receivable
enforceable against such Obligor in accordance with its terms and is
not subject to any defense whatsoever (other than discharge in
bankruptcy and payment);
(j) which, together with the Contract related thereto, does not
contravene in any material respect any Applicable Law and with respect
to which no party to the Contract related thereto is in violation of
any Applicable Law;
(k) which (i) satisfies all material applicable requirements of
the Credit and Collection Policy and (ii) complies with such other
criteria and requirements (other than those relating to the
collectibility of such Receivable) as the Administrator may from time
to time specify to Seller in the exercise of its reasonable business
judgment;
(l) as to which the payment terms have not been altered or
extended so as to materially affect the collectibility of such
Receivable;
(m) the Unpaid Balance of which is payable within 30 days or less
from the invoice date therefor;
(n) which are not Receivables owed by an Obligor for which more
than 20% of the aggregate Unpaid Balance of Receivables of such Obligor
constitute Defaulted Receivables;
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(o) which arise from the completion of the sale and delivery of
goods and services performed, and which do not represent an invoice in
advance of such completion; and
(p) which are not subject to any contingent performance
requirements of the Seller or the related Originator unless such
requirements are guaranteed or insured by third parties acceptable to
the Administrator.
"ERISA" means the U.S. Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any
Settlement Period and any portion of the Capital, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the
following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1 - Eurodollar
Reserve Percentage
where:
"Eurodollar Rate" means, with respect to any Settlement Period and any
portion of the Capital, the rate per annum at which Dollar deposits in
immediately available funds are offered to the Eurodollar Office of the
Administrator two Eurodollar Business Days prior to the beginning of
such period by prime banks in the interbank eurodollar market at or
about 11:00 a.m., New York City time for delivery on the first day of
such Settlement Period, for the number of days comprised therein and in
an amount equal or comparable to the applicable portion of the Capital
for such Settlement Period.
"Eurodollar Business Day" means a day of the year on which dealings are
carried on in the eurodollar interbank market and banks are open for
business in London and are not required or authorized to close in New
York City.
"Eurodollar Reserve Percentage" means, with respect to any Settlement
Period, the then maximum reserve percentage (expressed as a decimal,
rounded upward to the nearest 1/100th of 1%) prescribed by the Federal
Reserve Board for determining the maximum reserve requirements
applicable to "Eurocurrency Liabilities" pursuant to Regulation D
having a term comparable to such Settlement Period.
"Event of Bankruptcy" shall be deemed to have occurred with respect to
a Person if either:
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(a) any case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up,
or composition or readjustment of debts of such Person, the appointment
of a trustee, receiver, custodian, liquidator, assignee, sequestrator
or the like for such Person or all or substantially all of its assets,
or any similar action with respect to such Person under any law
relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person
shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect and shall either
not be contested or shall remain undismissed for 60 consecutive days;
or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Excess Amount" as of any date, means the amount, if any, by which the
sum of the Capital, plus the Required Reserves on such date exceeds the Net Pool
Balance, as most recently calculated.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal (for each day during such period) to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
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(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by Fleet from three federal funds brokers of
recognized standing selected by it.
"Fee Letter" has the meaning set forth in Section 4.01.
"Fees" means the Commitment Fee and the Program Fee.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto or to the functions thereof.
"Final Payout Date" means the date following the Termination Date on
which the Capital shall have been reduced to zero and all other amounts payable
by Seller to Purchaser, the Administrator, the Affected Parties and the
Indemnified Parties under the Transaction Documents shall have been paid in
full.
"Fleet" has the meaning set forth in the preamble.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"Governmental Action" means all permits, authorizations, registrations,
consents, approvals, waivers, exceptions, variances, orders, judgements,
decrees, licenses, exemptions, publications, filings, notices to and declaration
of or with, or required by, any Governmental Authority, or required by any
Applicable Law.
"Governmental Authority" means any foreign or domestic federal, state,
county, municipal or other governmental or regulatory authority, agency, board,
body, commission, instrumentality, court or any political subdivision thereof.
"Incremental Capital" means the amount paid to Seller for any Purchase
(other than the first Purchase) that is consummated on a day other than a
Settlement Date.
"Indebtedness" as applied to a Person means, without duplication,
(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a
balance sheet of such Person as at the date as of which Indebtedness is
to be determined, including, without limitation, Capitalized Lease
Obligations,
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(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such
Person, and
(iv) in the case of Parent (without duplication), the Obligations
(as defined in the Loan Agreement).
"Indemnified Amounts" has the meaning set forth in Section 13.01.
"Indemnified Party" has the meaning set forth in Section 13.01.
"Independent Director" shall mean an individual who is not, and never
was, (1) a member, stockholder, director, officer, employee, Affiliate, customer
or supplier of, or an individual that has received any benefit (excluding,
however, any compensation received in such individual's capacity as Independent
Director) in any form whatever from, or an individual who has provided any
service (excluding, however, any service provided by such individual in such
individual's capacity as Independent Director) in any form whatever to, the
Parent or any of its subsidiaries or Affiliates, or (2) an individual owning
beneficially, directly or indirectly, any interest in the Parent, or a
stockholder, director, officer, employee, Affiliate, customer or supplier
thereof, or an individual who has received any direct economic benefit
(excluding, however, any compensation received in such individual's capacity as
Independent Director) in any form whatever from, or an individual who has
provided any service (excluding, however, any service provided by such
individual in such individual's capacity as Independent Director) in any form
whatever to, such beneficial owner or any of such beneficial owner's Affiliates,
or (3) an individual who is a relative or spouse of an individual described in
clause (1) or (2) above.
"Interest Rate Contract" means all interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance and other agreements and arrangements designed to provide protection
against fluctuations in interest rates, in each case as the same may be from
time to time amended, restated, renewed, supplemented or otherwise modified.
"LIBOR" means, with respect to any Settlement Period or portion
thereof, the rate of interest (expressed as an annual rate and rounded upwards,
if necessary, to the nearest 1/16th of 1%) at which deposits in Dollars would be
offered by principal
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London offices of banks at approximately 11:00 a.m. (London time) on the first
day of the Settlement Period or portion thereof for the period from that day to
the next Settlement Date. For periods which extend from one Settlement Date to
the next Settlement Date, the applicable rate will be the one-month LIBOR rate
which appears on Telerate page 3750 as of 9:00 a.m. (Boston time) or as soon
thereafter as practicable. For periods which begin on a day other than a
Settlement Date, the applicable rate will be the rate equal to the average
(rounded up to the nearest 1/16th of 1%) of the rates shown on the display
referred to as the "LIBO" page (or any display substituted therefor) of the
Telerate matrix (presently page 5) for a period of time from that day to the
next Settlement Date. The determination of the applicable LIBOR rate by
Purchaser shall be conclusive in the absence of demonstratable error.
"Lien" means any mortgage, lien, pledge, encumbrance, charge, title
retention or other security interest of any kind, whether arising under a
security agreement, mortgage, deed of trust, assignment, pledge or financing
statement or arising as a matter of law, judicial process or otherwise.
"Liquidation Event" has the meaning set forth in Section 10.01.
"Liquidation Fee" means, for each day in any Settlement Period during
the Liquidation Period following the occurrence of a Liquidation Event, the
amount, if any, by which:
(a) the additional Earned Discount (calculated without taking
into account any Liquidation Fee) which would have accrued on the
reductions of the Capital during such Settlement Period (as so
computed) if such reductions had not been made, exceeds
(b) the income, if any, received by Purchaser from investing the
proceeds of such reductions of the Capital.
"Liquidation Period" means the period commencing on the date on which
the conditions precedent to Purchases and Reinvestments set forth in Section
5.02 are not satisfied (or expressly waived by Purchaser) and the Administrator
shall have notified Seller and Servicer in writing that the Liquidation Period
has commenced, and ending on the Final Payout Date.
"Liquidity Agent" means Fleet, as agent for the Liquidity Banks under
the Liquidity Agreement, or any successor to Fleet in such capacity.
"Liquidity Agreement" means and includes the Liquidity Agreement dated
as of August 7, 1998 among Purchaser, Fleet, as
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Liquidity Agent, and certain other financial institutions, party thereto as
liquidity providers, and any other agreement hereafter entered into by Purchaser
providing for the making of loans, purchases or undivided interests or other
extensions of credit to Purchaser to support all or part of Purchaser's payment
obligations with respect to the Commercial Paper Notes or to provide an
alternate means of funding Purchaser's investments in accounts receivable or
other financial assets, and under which the amount available from such
extensions of credit is limited to an amount calculated by reference to the
value or eligible unpaid balance of such accounts receivable or other financial
assets or any portion thereof or the level of deal-specific credit enhancement
available with respect thereto.
"Liquidity Bank" means any one of, and "Liquidity Banks" means all of,
Fleet and the other financial institutions that are at any time parties to a
Liquidity Agreement as liquidity providers.
"Liquidity Commitment Amount" means, at any time, the then aggregate
amount of the Liquidity Banks' commitments under the Liquidity Agreement.
"Liquidity Funding" means a loan or purchase made by the Liquidity Bank
(or simultaneous loans or purchases made by the Liquidity Banks) pursuant to a
Liquidity Agreement.
"Loan Agreement" means the Fourth Amended and Restated Loan and
Security Agreement, dated as of August 7, 1998, among Fleet Capital Corporation,
Parent and Jaron, Inc.
"Lock-Box" means any post office box to which Collections of Pool
Receivables are sent.
"Lock-Box Account" means any bank account to which Collections of Pool
Receivables are sent or deposited.
"Lock-Box Agreement" means a letter agreement, in substantially the
form of Exhibit 5.01(f), among Seller, Parent and any Lock-Box Bank.
"Lock-Box Bank" means any of the banks holding one or more Lock-Box
Accounts for receiving Collections from Pool Receivables.
"Loss Reserve" means the product of (A) the greater of (1) 8%; and (2)
the Dynamic Loss Reserve Percentage and (B) the Net Pool Balance.
"Material Adverse Effect" with respect to any event or circumstance,
means a material adverse effect on:
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(i) the business, financial condition, assets, prospects or
operations of Seller or Parent;
(ii) the ability of Servicer or Parent to perform its obligations
under this Agreement or any other Transaction Document;
(iii) the validity, enforceability or collectibility of this
Agreement or any other Transaction Document or the validity,
enforceability or collectibility of the Receivables; or
(iv) the status, existence, perfection, priority or
enforceability of the Administrator's or Purchaser's interest in the
Pool Assets.
"Monthly Servicer's Fee" means the Servicer's Fee accrued in
a calendar month.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Pool Balance" at any time means an amount equal to (i) the
aggregate Unpaid Balance of the Eligible Receivables in the Receivables Pool at
such time, minus (ii) the aggregate amount by which the aggregate Unpaid Balance
of the Eligible Receivables of each Obligor and its Affiliates exceeds the
Concentration Limit for such Obligor at such time.
"Obligor" means a Person obligated to make payments with respect to a
Receivable, including any guarantor thereof.
"Originator" means the Parent in its capacity as originator of
Receivables, together with the other originators party to the Purchase
Agreement.
"Overdue Receivable" means a Receivable that remains unpaid for more
than 60 days but no more than 90 days from the original due date for such
payment, or that has been charged off before it has become 91 days past due.
"Parent" has the meaning set forth in the preamble.
"Past Due Receivable" means a Receivable that remains unpaid for more
than 30 days but no more than 60 days from the original due date for such
payment, or that has been charged off before it has become 61 days past due.
"PBI" means Pharmaceutical Buyers, Inc., an Arkansas corporation.
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"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company, government or any agency or political
subdivision thereof or any other entity.
"Pool Assets" has the meaning set forth in Section 1.04(a).
"Pool Receivable" means a Receivable in the Receivables Pool.
"Program Agreement" means each Liquidity Agreement, each agreement
pursuant to which Purchaser obtains funding, through the issuance of Commercial
Paper Notes or otherwise, and each other agreement entered into by Purchaser in
connection with its securitization program.
"Program Fee" means, for each day, the amount equal to the product of
(x) the Capital on such day, times (y) the Program Fee Rate, times (z) 1/360.
"Program Fee Rate" has the meaning set forth in the Fee Letter.
"Program Information" has the meaning set forth in Section 14.07.
"Program Support Provider" means each of each entity that issues
Commercial Paper Notes, each Liquidity Bank and the Administrator.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Purchase" has the meaning set forth in Section 1.01.
"Purchase Agreement" means the Purchase and Sale Agreement, dated as of
August 7, 1998, among Seller and the Originators.
"Purchase Limit" has the meaning set forth in Section 1.01.
"Purchase Termination Date" means that day
(a) the Administrator declares a Purchase Termination Date in a
notice to Seller in accordance with Section 10.02(a); or
(b) in accordance with Section 10.02(b), becomes the Purchase
Termination Date automatically.
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"Purchaser" has the meaning set forth in the preamble.
"Purchaser's Share" of any amount means the then Asset Interest,
expressed as a percentage, (but not greater than 100%) times such amount.
"Rating Agencies" at any time means those rating agencies then rating
the Commercial Paper Notes.
"Receivable" means any right to payment from a Person, whether
constituting an account, chattel paper, instrument or general intangible,
arising under a Contract and includes the right to payment of any interest or
finance charges and other obligations of such Person with respect thereto.
Indebtedness and other obligations arising from any one transaction, including,
without limitation, indebtedness and other obligations represented by an
individual invoice or agreement, shall constitute a Receivable separate from a
Receivable consisting of the indebtedness and other obligations arising from any
other transaction.
"Receivables Pool" means at any time all then outstanding Receivables,
other than Reconveyed Receivables.
"Reconveyed Receivable" means a Receivable for which an Originator has
paid the full Unpaid Balance pursuant to the Purchase Agreement.
"Regulation D" means Regulation D of the Federal Reserve Board, or any
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"Regulatory Change" means, relative to any Affected Party
(a) any change in (or the adoption, implementation, change in
phase-in or commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to
such Affected Party of (A) any court, government authority charged
with the interpretation or administration of any law referred to
in clause (a)(i) or of (B) any fiscal, monetary or other authority
having jurisdiction over such Affected Party; or
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(iii) GAAP or regulatory accounting principles applicable to
such Affected Party and affecting the application to such Affected
Party of any law, regulation, interpretation, directive,
requirement or request referred to in clause (a)(i) or (a)(ii)
above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement,
request or accounting principles referred to in clause (a)(i), (a)(ii)
or (a)(iii) above.
"Reinvestment" has the meaning set forth in Section 1.03.
"Related Security" means, with respect to any Pool Receivable: (a) all
of Seller's or the related Originator's right, title and interest in and to all
Contracts that relate to such Pool Receivable; (b) all security interests or
liens and property subject thereto from time to time purporting to secure
payment of such Pool Receivable, whether pursuant to the Contract related to
such Pool Receivable or otherwise; (c) all UCC financing statements covering any
collateral securing payment of such Pool Receivable; (d) all guarantees and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Pool Receivable whether pursuant to the
Contract related to such Pool Receivable or otherwise; and (e) all of Seller's
and the related Originator's interest in the merchandise (including returned
merchandise), if any, relating to the sale that gave rise to such Pool
Receivable.
"Reporting Date" has the meaning set forth in Section 3.01(a).
"Required Reserves" means, on any day, an amount equal to the sum of
(1) the Dilution Reserve, (2) the Loss Reserve, and (3) the Yield Reserve, in
each case as most recently calculated.
"Restricted Investment" means any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of Parent to the
extent existing on the date hereof;
(ii) Property to be used in the ordinary course of business;
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(iii) Current Assets arising from the sale of goods and services
in the ordinary course of business of Parent and its Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United
States of America, provided that such obligations mature within one
year from the date of acquisition thereof;
(v) investments in certificates of deposit maturing within one
year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000;
(vi) investments made under and pursuant to the Transaction
Documents; and
(vii) investments in commercial paper given the highest rating by
a national credit rating agency and maturing not more than 270 days
from the date of creation thereof.
"S&P" means Standard & Poor's Ratings Services.
"Sales" means sales of the Originators which generate trade
receivables.
"Sales-Based Default Ratio" means, as of any Cut-Off Date, the ratio,
expressed as a percentage, of (i) the aggregate Unpaid Balance of all Past Due
Receivables for the two successive months occurring immediately prior to the
month ending on such Cut-off Date, divided by (ii) the aggregate xxxxxxxx for
the fourth and fifth preceding months. For example, as of April 30, the
numerator of the Sales-Based Default Ratio would be the aggregate Unpaid Balance
of all Pool Receivables that were Past Due Receivables as of February 28 and
March 31; the denominator of the Sales-Based Default Ratio would be the
aggregate xxxxxxxx for the months of December and January.
"Sales-Based Dilution Ratio" as of any Cut-Off Date means (a) the
aggregate reduction attributable to Dilutions occurring in the Unpaid Balance of
Pool Receivables which Dilutions were granted during the month ending on such
Cut-Off Date; divided by (b) the aggregate amount of Sales for the month
immediately preceding the month ending as of such Cut-Off Date.
"Secured Parties" means Purchaser, the Administrator, the
Indemnified Parties and the Affected Parties.
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"Security" shall have the meaning as in Section 2(l) of the Securities
Act of 1933, as amended.
"Seller" has the meaning set forth in the preamble.
"Seller's Share" of any amount means (x) 100% minus the Asset Interest
(but such Asset Interest shall not be greater than 100%) times (y) such amount.
"Servicer" has the meaning set forth in Section 8.01(a).
"Servicer Report" has the meaning set forth in Section 3.01.
"Servicer Transfer Event" has the meaning set forth in Section 8.01(b).
"Servicer's Fee" means, for each day, an amount equal to (x) the
Servicer's Fee Rate, times (y) the aggregate Unpaid Balance of all Pool
Receivables at the close of business on such day, times (z) 1/360.
"Servicer's Fee Rate" means .50% per annum or, in the event that Parent
is no longer the Servicer, such higher rate as may be charged by the successor
Servicer.
"Settlement Date" has the meaning set forth in Section 3.01(c).
"Settlement Period" means the period (i) in the case of the first
Settlement Period, from, and including, the date of the initial Purchase to, but
excluding the next Settlement Date and (ii) thereafter, from, and including,
each Settlement Date to, but excluding, the next Settlement Date.
"Subordinated Debt" means indebtedness of Parent that is expressly
subordinated to the Obligations (as defined in the Loan Agreement), including,
without limitation, Indebtedness evidenced by the Promissory Note of D&K in
favor of Xxxxxx X. Xxxxxxxx, as agent, issued in connection with the purchase of
Northern Drug Company.
"Subsidiary" means a corporation of which Parent and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election of directors.
"Successor Notice" has the meaning set forth in Section 8.01(b).
"Tangible Assets" means all assets except:
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(i) any surplus resulting from any write-up of assets after
June 30, 1997;
(ii) deferred assets, other than prepaid insurance and prepaid
taxes;
(iii) patents, copyrights, trademarks, trade names, noncompete
agreements, franchises and other similar intangibles;
(iv) goodwill, including any amounts, however designated on a
Consolidated balance sheet of a Person and its Subsidiaries,
representing the excess of the purchase price paid for assets or stock
over the value assigned thereto on the books of such Person;
(v) Restricted Investments;
(vi) unamortized debt discount and expense;
(vii) assets located and notes and receivables due from obligors
outside the Untied States of America; and
(viii) accounts, notes and other receivables due from Affiliates
or employees.
"Tangible Net Worth" at any date means a sum equal to: (i) the net book
value (after deducting related depreciation, obsolescence, amortization,
valuation, and other proper reserves) at which the Tangible Assets of a Person
would be shown on a balance sheet at such date in accordance with GAAP, plus
(ii) such Person's LIFO reserve at such date (computed in accordance with GAAP)
minus (iii) the amount at which such Person's liabilities (other than capital
stock and surplus) would be shown on such balance sheet in accordance with GAAP,
and including as liabilities all reserves for contingencies and other potential
liabilities.
"Termination Date" means the earliest of
(a) the date of termination (whether by scheduled expiration,
termination on default or otherwise) of any Program Support Provider's
commitment under any Program Agreement;
(b) the Purchase Termination Date;
(c) August 7, 2001; and
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(d) the date on which Seller terminates Purchaser's right to make
Purchases and Reinvestments pursuant to Section 1.05.
"Transaction Documents" means this Agreement, the Lock-Box Agreements,
the Purchase Agreement, the Fee Letter and other documents to be executed and
delivered in connection herewith.
"Turnover Rate" means, as of any Cut-Off Date, the ratio (expressed as
a percentage) of (i) the aggregate Unpaid Balance of the Pool Receivables as of
such Cut-Off Date, divided by (ii) the aggregate Collections for the month
ending on such Cut-Off Date.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction or jurisdictions.
"Unmatured Liquidation Event" means any event which, with the giving of
notice or lapse of time, or both, would become a Liquidation Event.
"Unpaid Balance" of any Receivable means at any time the
unpaid principal amount thereof.
"Yield Reserve" means, at any time, an amount equal to the product of
(i) the Net Pool Balance on such day, times (ii) the sum of (A) the LIBOR for
the current Settlement Period, plus (B) 2.00%, plus (C) the Servicer's Fee Rate,
divided by (iii) 12, times (iv) 2, times (v) the most recently calculated
Turnover Rate.
B. 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, and not specifically defined herein, are used
herein as defined in such Article 9.
C. Computation of Time Periods. Unless otherwise stated in 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".
D. Interpretation. In each Transaction Document, unless a clear
contrary intention appears:
(i) the singular number includes the plural number and vice
versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such
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successors and assigns are permitted by the Transaction Documents, and
reference to a Person in a particular capacity excludes such Person in
any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Transaction
Document), document or instrument means such agreement, document or
instrument as amended, supplemented or modified and in effect from time
to time in accordance with the terms thereof and, if applicable, the
terms of the other Transaction Documents and reference to any
promissory note includes any promissory note which is an extension or
renewal thereof or a substitute or replacement therefor; and
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in
part, and in effect from time to time, including rules and regulations
promulgated thereunder and reference to any section or other provision
of any Applicable Law means that provision of such Applicable Law from
time to time in effect and constituting the substantive amendment,
modification, codification, replacement or reenactment of such section
or other provision.
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SCHEDULE A
Obligor Rating Percentage**
------- ------ ----------
Walmart A1/P1 25.00%
Kroger BBB-/Baa3 12.00%
American Drug Stores P2/F2 10.00%
Eckerd*/ A 10.00%
-
Schnucks N/R 7.00%
Pamida B1 5.00%
ARH N/R 5.00%
Anthem N/R 5.00%
In addition, Schnucks, Pamida and ARH combined cannot exceed 15% during
any one month.
--------
*/ If Eckerd is no longer a wholly owned Subsidiary of XX Xxxxxx'x, the
Administrator may lower the listed percentage at any time at its
discretion.
**/ If any rating of any Obligor is lowered or withdrawn, or any Obligor is
placed on credit watch, the Administrator may lower the listed
percentage of such Obligor at any time at its discretion.
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