EXHIBIT 10.7
ANNEX X
to
RECEIVABLES PURCHASE AND CONTRIBUTION AGREEMENT,
RECEIVABLES SALE AND CONTRIBUTION AGREEMENT,
and
RECEIVABLES PURCHASE AND SERVICING AGREEMENT
each dated as of
December 10, 2001
Definitions and Interpretation
SECTION 1. Definitions and Conventions. Capitalized terms used in the
Contribution Agreement, Sale Agreement and the Purchase Agreement shall have
(unless otherwise provided elsewhere therein) the following respective meanings:
Accession Agreement: An Accession Agreement substantially in the form of Exhibit
A to the Collateral Agent Agreement.
Accounting Changes: With respect to any Person, (i) changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement
or opinion of the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants (or any successor thereto or any agency with
similar functions); (ii) changes in accounting principles concurred in by such
Person's certified public accountants; (iii) purchase accounting adjustments
under A.P.B. 16 or 17 and EITF 88-16, and the application of the accounting
principles set forth in FASB 109, including the establishment of reserves
pursuant thereto and any subsequent reversal (in whole or in part) of such
reserves; and (iv) the reversal of any reserves established as a result of
purchase accounting adjustments.
Accounts: The Collection Account, the Lockbox Accounts and the Retention
Account, collectively.
Accrued Monthly Yield: As of any date of determination within or with respect to
a Settlement Period, the sum of the Daily Yields for each day from and including
the first day of the Settlement Period through and including such date.
Accrued Servicing Fee: As of any date of determination within or with respect to
a Settlement Period, the sum of the Servicing Fees calculated for each day from
and including the first day of the Settlement Period through and including such
date.
Accrued Unused Facility Fee: As of any date of determination within a Settlement
Period, the sum of the Unused Facility Fees calculated for each day from and
including the first day of the Settlement Period through and including such
date.
Additional Amounts: Any amounts payable to any Affected Party under Sections 2.9
or 2.10 of the Purchase Agreement.
Additional Costs: As defined in Section 2.9(b) of the Purchase Agreement.
Administrative Agent: GE Capital, in its capacity as administrative agent for
the Purchasers under the Purchase Agreement.
Administrative Services Agreement: That certain Administrative Services
Agreement dated as of March 7, 2000, between Redwood and the Operating Agent.
Adverse Claim: Any claim of ownership or any Lien, other than any ownership
interest or Lien created under the Contribution Agreement, the Sale Agreement,
the Purchase Agreement or the Collateral Agent Agreement.
ADVP Management: ADVP Management L.P., a Delaware limited partnership.
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AFC: Advance Funding Corporation, a Delaware corporation.
FC Indemnified Person: As defined in Section 5.1 of the Sale Agreement.
Affected Party: Each of the following Persons: the Conduit Purchaser, the
Committed Purchaser, the Liquidity Agent, each Liquidity Lender, the
Administrative Agent, the Operating Agent, the Letter of Credit Agent, each
Letter of Credit Provider, the Collateral Agent, the Depositary and each
Affiliate of the foregoing Persons.
Affiliate: With respect to any Person, (i) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or
other fiduciary, ten percent (10%) or more of the Stock having ordinary voting
power in the election of directors of such Person, (ii) each Person that
controls, is controlled by or is under common control with such Person, or (iii)
each of such Person's officers, directors, joint venturers and partners. For the
purposes of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
Appendices: With respect to any Related Document, all exhibits, schedules,
annexes and other attachments thereto, or expressly identified thereto.
Applicable Purchaser: (i) prior to the occurrence of a Committed Purchaser
Funding Event, the Conduit Purchaser, and (ii) on and after the occurrence of a
Committed Purchaser Funding Event, the Committed Purchaser.
Asset Securitization: The transactions contemplated by the Related Documents.
Assignment: As defined in Section 2.1(a) of the Sale Agreement.
Authorized Officer: With respect to any corporation, the Chairman or
Vice-Chairman of the Board, the President, any Vice President, the Secretary,
the Treasurer, any Assistant Secretary, any Assistant Treasurer and each other
officer of such corporation specifically authorized in resolutions of the Board
of Directors of such corporation to sign agreements, instruments or other
documents on behalf of such corporation in connection with the transactions
contemplated by the Contribution Agreement, the Sale Agreement, the Purchase
Agreement and the other Related Documents.
Availability: As of any date of determination, the amount equal to the lesser of
(i) (A) the Investment Base multiplied by the Purchase Discount Rate plus (B)
the Eligible Accrual Amount, minus (C) the Discount Reserve, and (ii) the
Maximum Purchase Limit.
Available LOC Percentage: 7.5%.
Bankruptcy Code: The provisions of Title 11 of the United States Code, 11
X.X.X.xx.xx. 101 et seq.
Billed Amount: With respect to any Receivable, the amount billed on the Billing
Date to the Obligor thereunder.
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Billing Date: With respect to any Receivable, the date on which the invoice with
respect thereto was generated.
Breakage Costs: As defined in Section 2.10 of the Purchase Agreement.
Bringdown Certificate: An Officer's Certificate substantially in the form of
Exhibit 3.1(a)(ii) to the Purchase Agreement.
Business Day: Any day that is not a Saturday, a Sunday or a day on which banks
are required or permitted to be closed in the States of New York or Texas.
Buyer: Holding, in its capacity as purchaser under the Contribution Agreement.
Buyer Indemnified Person: As defined in Section 5.1 of the Contribution
Agreement.
Capital Investment: As of any date of determination with respect to any
Purchaser, the amount equal to (i) the aggregate deposits made by the Purchaser
to the Collection Account pursuant to Section 2.4(b)(i) of the Purchase
Agreement on or before such date, plus (ii) in the case of the Committed
Purchaser only, any amounts advanced by the Committed Purchaser to the Conduit
Purchaser under the LAPA in respect of Capital Investment when purchasing the
Conduit Purchaser's Purchaser Interests, minus (iii) in the case of the Conduit
Purchaser only, any amounts advanced by the Committed Purchasers to the Conduit
Purchaser under the LAPA in respect of Capital Investment when purchasing the
Conduit Purchaser's Purchaser Interests, minus (iv) the sum of all amounts
disbursed to any Purchaser in reduction of Capital Investment pursuant to
Sections 6.3, 6.4 or 6.5 of the Purchase Agreement on or before such date.
Capital Investment Available: As of any date of determination, the amount, if
any, by which Availability exceeds Capital Investment, in each case as of the
end of the immediately preceding day.
Capital Purchase: As defined in Section 2.1 of the Purchase Agreement.
Capital Purchase Request: As defined in Section 2.3(b) of the Purchase
Agreement.
Capitalized Leases: All leases that have been or should be, in accordance with
GAAP, recorded as capitalized leases.
Change of Control: (a) With respect to any specified Person, any event,
transaction or occurrence as a result of which (i) any person or group of
persons (within the meaning of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities Exchange Commission under the Securities Exchange
Act of 1934, as amended) of 20% or more of the issued and outstanding shares of
capital Stock of the such specified Person having the right to vote for the
election of directors of the respective entity under ordinary circumstances; or
(ii) during any twelve (12) consecutive calendar months ending after the Closing
Date, individuals who at the beginning of such twelve-month period constituted
the board of directors of such specified Person (together with any new directors
whose election by such board or whose nomination for election by the
shareholders of such specified Person was approved by a vote of a majority of
the directors still
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in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) shall cease for
any reason to constitute a majority of the board of directors of such specified
Person then in office; (b) the Parent shall cease to own and control (directly
or indirectly) all of the economic and voting rights associated with all of the
outstanding capital Stock of the Originator; or (c) the Parent, the Originator,
the Buyer or the Seller has sold, transferred, conveyed, assigned or otherwise
disposed of all or substantially all of the assets of such Person.
Client: Any insurance companies, healthcare maintenance organizations,
healthcare benefit plans or other Persons for which the Originator provides
pharmacy benefit management services.
Client Rebate Reserve: An amount equal to the aggregate outstanding amount as of
any date of determination of all accounts payable, other monetary obligations
owing by the Originator to any Client with respect to Vendor Rebate Receivables,
or any other amounts owed by the Originator to any of its Clients or any accrued
amount payable to any of its Clients where any information required by the
Vendor as a condition to payment has been submitted to such Vendor, but which
amount has not yet been billed; provided that any part of such reserve that is
attributable to an identified Client shall not exceed the aggregate amount of
the Receivables by such Client to the Originator at such time, to the extent
such a determination can be made.
Closing Date: December 10, 2001.
Collateral Agent: GE Capital, in its capacity as collateral agent for the
Conduit Purchaser and the Conduit Purchaser Secured Parties pursuant to the
Collateral Agent Agreement.
Collateral Agent Agreement: That certain Third Amended and Restated Collateral
Agent and Security Agreement dated as of March 7, 2000, among Redwood, the
Depositary and GE Capital, in its capacities as (i) the Collateral Agent, (ii)
the Operating Agent, (iii) the Liquidity Agent and (iv) the Letter of Credit
Agent.
Collection Account: (i) prior to a Committed Purchaser Funding Event, that
certain segregated deposit account established by the Conduit Purchaser and
maintained with the Depositary designated as "Redwoods Main Collection Account"
account number 00000000, ABA No. 000000000, Reference: AdvancePCS, Reference
#32921, or such other account established in accordance with the requirements
set forth in Section 6.1(b) of the Purchase Agreement, and (ii) following the
occurrence of a Committed Purchaser Funding Event, an account established in
accordance with Section 3.3(a) of the LAPA.
Collections: With respect to any Receivable, all cash collections and other
proceeds of such Receivable (including late charges, fees and interest arising
thereon, and all recoveries with respect thereto that have been written off as
uncollectible).
Commercial Paper: Those certain short-term promissory notes issued by the
Conduit Purchaser (or, with respect to the Committed Purchaser, by GE Capital),
from time to time in the United States of America commercial paper market.
Committed Purchaser: GE Capital, its successors and assigns.
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Committed Purchaser Expiry Date: December 9, 2002, but such date shall be
automatically extended to a date occurring 364 days after the then-current
Committed Purchaser Expiry Date provided that (i) no Termination Event or
Incipient Termination Date has occurred and is continuing on such extension date
and (ii) in no event shall the Committed Purchaser Expiry Date be so
automatically extended beyond the Final Purchase Date.
Committed Purchaser Funding Event: (i) the occurrence of a Redwood Termination
Date, but only if both (A) no Termination Event has occurred and is continuing
at such time, and (B) the Committed Purchaser Expiry Date has not occurred at
such time, or (ii) the occurrence of a Redwood Transfer Date.
Committed Purchaser Daily Yield: For any day, the product of (i) the Committed
Purchaser Daily Yield Rate for such day, plus the Daily Margin on such day,
plus, if a Termination Event has occurred and is continuing, the Daily Default
Margin, multiplied by (ii) the Committed Purchaser's Capital Investment
outstanding on such day.
Committed Purchaser Daily Yield Rate: For any day during a Settlement Period,
(i) the weighted average Committed Purchaser Yield Rates applicable to the
Committed Purchaser's Capital Investment on such day, weighted by outstanding
Capital Investment, divided by (ii) 360.
Committed Purchaser Yield Rate: With respect to any portion of the Committed
Purchaser's Capital Investment on any day during a Settlement Period, (i) if and
to the extent that such Capital Investment is outstanding for the entire
Settlement Period, the LIBOR Rate for such Settlement Period, and (ii) if and to
the extent that such Capital Investment is not outstanding for the entire
Settlement Period, the Index Rate for such day. Commitment Reduction Notice: As
defined in Section 2.2(a) of the Purchase Agreement.
Commitment Termination Notice: As defined in Section 2.2(b) of the Purchase
Agreement.
Concentration Discount Amount: With respect to any Obligor and as of any date of
determination after giving effect to all Eligible Receivables plus the Eligible
Accruals to be transferred on such date, the amount by which the Outstanding
Balance of Eligible Receivables plus the Eligible Accruals owing by such Obligor
exceeds the product of (i) the Concentration Discount Percentage for such
Obligor multiplied by (ii) the Outstanding Balance of all Eligible Receivables
plus the Eligible Accruals on such date.
Concentration Discount Percentage: With respect to any Obligor and as of any
date of determination, the percentage set forth below opposite the current
rating of such Obligor's senior, unsecured and unguaranteed short-term and
long-term indebtedness (and in the event of a split rating, the lower rating
shall apply):
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Long-Term Debt Short-Term Debt Concentration Discount
Rating Rating Percentage
-------------- --------------- ----------------------
AA- and Aa3 or higher A-1+ and P-1 15.0%
A+ or A and A1 or A2 A-1 and P-1 10.0%
A- or BBB+ and A3 or Xxx0 X-0 and P-2 7.5%
BBB or BBB- and Baa2 or Xxx0 X-0 and P-3 5.0%
Less than BBB- and less than Less than A-3 and
Baa3 less than P-3
or unrated or unrated 3.0%;
provided, however, the Concentration Discount Percentage for any Special
Obligor shall be equal to the Special Obligor Concentration Limit for such
Special Obligor; provided, further, that the sum of the Concentration Discount
Percentages for all Blue Cross Blue Xxxxxxx that are members of Blue Cross and
Blue Shield Association in the aggregate shall not exceed 35%, it being
understood that any Concentration Discount Percentage for any Special Obligor
may be changed by the Administrative Agent upon not less than two (2) Business
Days' written notice to the Buyer and the Originator so long as the Rating
Agency Condition has been met.
Conduit Purchaser: Redwood and its assigns.
Conduit Purchaser Secured Parties: The Collateral Agent, the CP Holders, the
Depositary, the Liquidity Agent, the Liquidity Lenders, the Letter of Credit
Agent and the Letter of Credit Providers.
Consolidated: The consolidation of accounts in accordance with GAAP.
Contract: Any agreement (including any invoice) pursuant to, or under which, an
Obligor shall be obligated to make payments with respect to any Receivable.
Contributed Receivable: As defined in Section 2.1(d) of the Sale Agreement.
Contribution Agreement: That certain
Receivables Purchase and Contribution
Agreement, dated as of December 10, 2001, among the Parent, the Originator, the
Servicer and Holding (as the Buyer thereunder).
XX Xxxxxx: Any Person that holds record or beneficial ownership of Commercial
Paper.
Credit and Collection Policies: The credit, collection, customer relations and
service policies of the Originator in effect on the Closing Date, as the same
may from time to time be amended, restated, supplemented or otherwise modified
with the written consent of the Administrative Agent.
Daily Default Margin: For any day on which a Termination Event has occurred and
is continuing, two percent (2.0%) divided by 360.
Daily Margin: For any day, the Per Annum Daily Margin on such day divided by
360.
Daily Yield: For any day, the sum of (i) the Redwood Daily Yield for such day,
and (ii) the Committed Purchaser Daily Yield for such day.
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Daily Yield Rate: The Redwood Daily Yield Rate or the Committed Purchaser Daily
Yield Rate, as the case may be.
Dealer: Any dealer party to a Dealer Agreement.
Dealer Agreement: Any dealer agreement entered into by Redwood for the
distribution of Commercial Paper.
Debt: Of any Person means, such Person's (i) obligations for borrowed money,
(ii) obligations representing the deferred purchase price of property other than
accounts payable arising in the ordinary course of such Person's business on
terms customary in the trade, (iii) obligations, whether or not assumed, secured
by liens or payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, (iv) obligations which are evidenced
by notes, acceptances, or other instruments, and (v) Capitalized Lease
obligations.
Defaulted Receivable: Any Receivable (i) with respect to which any payment, or
part thereof, remains unpaid for sixty-one (61) days or more from its original
due date as specified in the original invoice, (ii) with respect to which the
Obligor thereunder has taken any action, or suffered any event to occur, of the
type described in Sections 9.1(c) or 9.1(d) of the Purchase Agreement or (iii)
that otherwise is determined to be uncollectible and is written off in
accordance with the Credit and Collection Policies.
Default Ratio: As of any date of determination, the ratio (expressed as a
percentage) of:
(i) the sum of, without duplication, (A) the average of the
respective Outstanding Balances of all Transferred Receivables which
constituted Defaulted Receivables as of the last day of each of the
three (3) Settlement Periods immediately preceding such date, plus (B)
the aggregate Outstanding Balance of Transferred Receivables that were
written off as uncollectible during such three Settlement Periods.
to
(ii) the average of the respective Outstanding Balances of all
Transferred Receivables as of the last day of each of the three (3)
Settlement Periods immediately preceding such date.
Delinquency Ratio: As of any date of determination, the ratio (expressed as a
percentage) of:
(i) the average of the respective Outstanding Balances of all
Transferred Receivables which remain unpaid for more than 30 days but
less than 61 days from their respective due dates as specified in the
original invoice as of the last day of each of the three (3) Settlement
Periods immediately preceding such date
to
(ii) the average of the Outstanding Balances of all
Transferred Receivables as of the last day of each of the three (3)
Settlement Periods immediately preceding such date.
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Depositary: Bankers Trust Company, or any other Person designated as the
successor Depositary pursuant to and in accordance with the terms of the
Depositary Agreement, in its capacity as issuing and paying agent or trustee in
connection with the issuance of Commercial Paper.
Depositary Agreement: That certain Depositary Agreement dated March 15, 1994, by
and between Redwood and the Depositary and consented to by the Liquidity Agent.
Dilution Factors: With respect to any Receivable, any net credits, rebates,
freight charges, cash discounts, volume discounts, cooperative advertising
expenses, royalty payments, warranties, cost of parts required to be maintained
by agreement (whether express or implied), warehouse and other allowances,
disputes, setoffs, chargebacks, defective returns, other returned or repossessed
goods, inventory transfers, allowances for early payments and other similar
allowances that are reflected on the books of the Originator and made or
coordinated with the usual practices of the Originator; provided, that any
allowances or adjustments in accordance with the Credit and Collection Policies
made on account of the insolvency of the Obligor thereunder or such Obligor's
inability to pay shall not constitute a Dilution Factor.
Dilution Ratio: As of any date of determination, the ratio (expressed as a
percentage) of:
(i) the aggregate Dilution Factors applicable to Transferred
Receivables during the Settlement Period immediately preceding such
date
to
(ii) the aggregate Billed Amount of all Transferred
Receivables originated during the second (2nd) Settlement Period
immediately preceding such date.
Dilution Reserve Ratio: As of any date of determination, the greater of (i) the
Dilution Reserve Ratio Floor and (ii) the ratio (expressed as a percentage)
calculated in accordance with the following formula:
[(ADR x 2.00) + [(HDR - ADR) x HDR]] x DILHOR
--- ------
ADR NRPB
where:
ADR = the average of the respective Dilution
Ratios as of the last day of each of the
twelve (12) Settlement Periods immediately
preceding such date.
HDR = the highest Dilution Ratio during each of
the twelve (12) Settlement Periods
immediately preceding such date.
DILHOR = the aggregate Billed Amount of Transferred
Receivables originated during the Settlement
Period immediately preceding such date.
NRPB = the Outstanding Balance of Transferred
Receivables as of the last day of the
Settlement Period immediately preceding such
date.
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Dilution Reserve Ratio Floor: 7.5%.
Dilution Trigger Ratio: As of any date of determination, the ratio (expressed as
a percentage) of:
(i) the aggregate Dilution Factors applicable to Transferred
Receivables during the first, second and third Settlement Periods
immediately preceding such date
to
(ii) the aggregate Billed Amount of all Transferred
Receivables originated during the first, second and third Settlement
Periods immediately preceding such date.
Discount Reserve: At any time, the product of (i) 1.5, (ii) the Index Rate plus
2.00%, (iii) Capital Investment and (iv) a fraction, the numerator of which is
the higher of (A) 30 and (B) the most recently reported Receivables Collection
Turnover multiplied by 2, and the denominator of which is 360.
Dollars or $: Lawful currency of the United States of America.
Dynamic Purchase Discount Rate: As of any date of determination, the rate
(expressed as a percentage) equal to (i) 100% minus (ii) the sum of (A) the Loss
Reserve Ratio plus (B) the Dilution Reserve Ratio, plus (iii) the Available LOC
Percentage.
Election Notice: As defined in Section 2.1(d) of the Sale Agreement.
Eligible Accrual: Any Transferred Receivable that satisfies all of the
requirements of the definition of Eligible Receivable, except for the
requirement set forth in clause (xiii)(B) of such definition; provided, however,
if after the last day of the billing cycle in which such Transferred Receivable
arises such Transferred Receivable that is otherwise an Eligible Receivable but
does not satisfy the requirement set forth in such clause (xiii)(B) such
Transferred Receivable shall not be an Eligible Accrual.
Eligible Accrual Amount: On any day the product of (a) the aggregate Outstanding
Balance of all Eligible Accruals on such day and (b) the Purchase Discount Rate
on such day minus 10%.
Eligible Obligor: Any obligor who is (i) an Included Obligor, (ii) making
payments on its Transferred Receivables to a Lockbox pursuant to a Lockbox
Account Agreement and (iii) approved by the Administrative Agent (in its sole
discretion) either (x) on or prior to the Closing Date or (y) if such obligor is
added or removed as an Included Obligor after the Closing Date at the time of
such addition or removal.
Eligible Receivable: As of any date of determination, a Transferred Receivable:
(i) that is not a liability of an Excluded Obligor;
(ii) that is not a liability of an Obligor (A) organized under
the laws of any jurisdiction outside of the United States of America
(including the District of Columbia and Puerto Rico but otherwise
excluding its territories and possessions)or (B) having its
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principal place of business outside of the United States of America
(including the District of Columbia and Puerto Rico but otherwise
excluding its territories and possessions);
(iii) that is only denominated and payable in Dollars in the
United States of America;
(iv) that is owned by the Seller and is not and will not be
subject to any right of rescission, claims, set-off, recoupment,
counterclaim, security interests or other encumbrances, and is not and
will not be subject to any defense or offset, whether arising out of
transactions concerning the Contract therefore or otherwise, including
without limitation, a Receivable from an Obligor who owes payments on
account of Transferred Receivables and other accounts payables to the
Seller, Holding, any member of the Parent Group or any of their
respective Affiliates except to the extent that (A) such Eligible
Receivable exceeds the offset claim, (B) the Obligor of such Receivable
has agreed pursuant to a written agreement in form and substance
satisfactory to the Administrative Agent, that such Receivable shall
not be subject to such offset or (C) the Administrative Agent gives the
Seller written notice that it has determined, in its sole discretion,
that appropriate reserves have already been established with respect to
such Transferred Receivable;
(v) that is not a Defaulted Receivable or an Unapproved
Receivable;
(vi) that does not represent "billed but not yet shipped"
goods or merchandise, unperformed services, consigned goods or "sale or
return" goods and does not arise from a transaction for which any
additional performance by the Originator, or acceptance by or other act
of the Obligor thereunder, remains to be performed as a condition to
any payments on such Receivable;
(vii) as to which the representations and warranties of
Sections 4.1(v)(ii)-(iv) of the Contribution Agreement and Sections
4.1(s)(i), (iii) and (iv) of the Sale Agreement are true and correct in
all respects as of the Originator Transfer Date or Transfer Date,
respectively therefor;
(viii) that is not the liability of an Obligor that has any
claim of a material nature against or affecting the Originator or the
property of the Originator;
(ix) that is a true, correct and bona fide indebtedness for
merchandise sold to or services rendered and accepted by the Obligor
thereunder;
(x) that was originated in accordance with and satisfies in
all material respects all applicable requirements of the Credit and
Collection Policies;
(xi) that represents the genuine, legal, valid and binding
obligation of the Obligor thereunder enforceable by the holder thereof
in accordance with its terms;
(xii) that is entitled to be paid pursuant to the terms of the
Contract therefor, has not been paid in full or been compromised,
adjusted, extended, satisfied, subordinated, rescinded or modified, and
is not subject to compromise, adjustment,
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extension, satisfaction, subordination, rescission, or modification by
the Originator (except for adjustments to the Outstanding Balance
thereof to reflect Dilution Factors made in accordance with the Credit
and Collection Policy);
(xiii) that arises pursuant to a Contract and (A) with respect
to which the Originator has fulfilled all of its obligations under such
Contract and (B) has been billed or for which all reports or other
documentation necessary for payment thereof under such Contract has
been submitted to the related Obligor;
(xiv) the stated term of which, if any, is not greater than
thirty (30) days after its Billing Date;
(xv) that does not contravene in any material respect any
laws, rules or regulations applicable thereto (including laws, rules
and regulations relating to usury, consumer protection, truth in
lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with
respect to which no party to the Contract therefor is in violation of
any such law, rule or regulation that could have a material adverse
effect on the collectibility, value or payment terms of such
Receivable;
(xvi) with respect to which no proceedings or investigations
are pending or threatened before any Governmental Authority (A)
asserting the invalidity of such Receivable or the Contract therefor,
(B) asserting the bankruptcy or insolvency of the Obligor thereunder,
(C) seeking payment of such Receivable or payment and performance of
such Contract or (D) seeking any determination or ruling that might
materially and adversely affect the validity or enforceability of such
Receivable or such Contract;
(xvii) with respect to which the Obligor thereunder is not:
(A) bankrupt or insolvent, (C) unable to make payment of its
obligations when due, (C) a debtor in a voluntary or involuntary
bankruptcy proceeding, or (D) the subject of a comparable receivership
or insolvency proceeding;
(xviii) that is an "account" within the meaning of the UCC of
each of the jurisdictions of formation of the Originator and the
Seller;
(xix) that is payable solely and directly to the Originator
and not to any other Person (including any shipper of the merchandise
or goods that gave rise to such Receivable), except to the extent that
payment thereof may be made to the Collection Account or otherwise as
directed pursuant to Article VI of the Purchase Agreement;
(xx) with respect to which all material consents, licenses,
approvals or authorizations of, or registrations with, any Governmental
Authority required to be obtained, effected or given in connection with
the creation of such Receivable or the Contract therefor have been duly
obtained, effected or given and are in full force and effect;
(xxi) that is created through the provision of merchandise,
goods or services by the Originator in the ordinary course of its
business in a current transaction;
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(xxii) that complies with such other criteria and requirements
as the Administrative Agent may from time to time, in its good faith
credit judgment and based on information regarding the Originator, the
Seller or the Transferred Receivables acquired by the Administrative
Agent in connection with the transactions contemplated by the Related
Documents, specify to the Seller or the Originator upon thirty (30)
days' prior written notice or, if so required by any Rating Agency,
upon such notice as may be specified by such Rating Agency; provided,
that during the period between the provision of such notice and the
effectiveness of such new or modified criteria, the Originator shall
have an opportunity to discuss the appropriateness of such new or
modified criteria with the Administrative Agent;
(xxiii) that is not the liability of an Obligor that, under
the terms of the Credit and Collection Policies, is receiving or should
receive merchandise, goods or services on a "cash on delivery" basis;
(xxiv) that does not constitute a rebilled amount arising from
a deduction taken by an Obligor with respect to a previously arising
Receivable;
(xxv) that is not subject to any Lien, right, claim, security
interest or other interest of any other Person, other than Liens in
favor of the Administrative Agent and the Purchasers;
(xxvi) that is not a Vendor Rebate Receivable;
(xxvii) that is not represented or evidenced by chattel paper
or a note or other negotiable instrument;
(xxviii) that represents the balance owed of a Receivable with
respect to which the Obligor thereon has previously made a partial
payment, or on which a check, draft or other item of payment was
returned unpaid or otherwise returned.
(xxix) that has been transferred to Holding in accordance with
the Contribution Agreement;
(xxx) that has been transferred to the Seller in accordance
with the Sale Agreement; and
(xxxi) the Obligor of which is an Eligible Obligor.
ERISA: The Employee Retirement Income Security Act of 1974 and any regulations
promulgated thereunder.
ERISA Affiliate: With respect to the Originator, any trade or business (whether
or not incorporated) that, together with such Originator, are treated as a
single employer within the meaning of Sections 414(b), (c), (m) or (o) of the
IRC.
ERISA Event: With respect to the Originator or any ERISA Affiliate, (i) any
event described in Section 4043(c) of ERISA with respect to a Title IV Plan;
(ii) the withdrawal of the Originator or
12
ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a
plan year in which it was a "substantial employer," as defined in Section
4001(a)(2) of ERISA; (iii) the complete or partial withdrawal of the Originator
or any ERISA Affiliate from any Multiemployer Plan; (iv) the filing of a notice
of intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (v) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (vi) the failure by
the Originator or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(vii) any other event or condition that might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA;
(viii) the termination of a Multiemployer Plan under Section 4041A of ERISA or
the reorganization or insolvency of a Multiemployer Plan under Section 4241 of
ERISA; or (ix) the loss of a Qualified Plan's qualification or tax exempt
status.
ESOP: A Plan that is intended to satisfy the requirements of Section 4975(e)(7)
of the IRC.
Excluded Obligor: Any Obligor (i) that is an Affiliate of the Originator or the
Seller, (ii) that is a Governmental Authority (subject to such exceptions as may
be granted in writing by the Administrative Agent in its good faith credit
judgment; provided the Rating Agency Condition has been met), or (iii) with
respect to which 50% or more of the aggregate Outstanding Balance of all
Receivables owing by such Obligor are Defaulted Receivables.
Excluded Receivables: All Receivables, the obligor of which is not an Included
Obligor.
Facility Termination Date: The earliest of (i) the date so designated or deemed
designated pursuant to the final clause of Section 9.1 of the Purchase
Agreement, (ii) ninety (90) days prior to the Final Purchase Date, (iii) ninety
(90) days prior to the date of termination of the Maximum Purchase Limit
specified in a notice from the Seller to the Purchaser delivered pursuant to and
in accordance with Section 2.2(b) of the Purchase Agreement and (iv) the
occurrence of the Committed Purchaser Expiry Date.
Federal Funds Rate: For any day, a floating rate equal to the weighted average
of the rates on overnight federal funds transactions among members of the
Federal Reserve System, as determined by the Administrative Agent.
Federal Reserve Board: The Board of Governors of the Federal Reserve System.
Fee Letter: That certain letter agreement dated August 31, 2001, between the
Parent, the Administrative Agent, the Committed Purchaser and the Conduit
Purchaser.
Final Purchase Date: December 10, 2006.
Formation Jurisdiction: With respect to any Person that is not an individual,
the jurisdiction in which such Person has been formed or organized.
GAAP: Generally accepted accounting principles in the United States of America
as in effect on the Closing Date, consistently applied as such term is further
defined in Section 2(a) of this Annex X.
13
GE Capital: General Electric Capital Corporation, a Delaware corporation, and
its successors and assigns.
General Trial Balance: With respect to the Originator and as of any date of
determination, the Originator's accounts receivable trial balance (whether in
the form of a computer printout, magnetic tape or diskette) as of such date,
listing Obligors and the Receivables owing by such Obligors as of such date
together with the aged Outstanding Balances of such Receivables, in form and
substance satisfactory to the Seller and the Purchasers.
Governmental Authority: Any nation or government, any state or other political
subdivision thereof, and any agency, department or other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Holding: AFC Receivables Holding Corporation, a Delaware corporation.
Incipient Servicer Termination Event: Any event that, with the passage of time
or notice or both, would, unless cured or waived, become a Servicer Termination
Event.
Incipient Termination Event: Any event that, with the passage of time or notice
or both, would, unless cured or waived, become a Termination Event.
Included Obligor: Any Obligor from time to time listed on the Included Obligor
Schedule.
Included Obligor Schedule: The schedule which lists each Obligor that shall be
an Included Obligor, which is attached as Schedule I to the Purchase Agreement.
Indemnified Amounts: With respect to any Person, any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal).
Indemnified Person: As defined in Section 12.1(a) of the Purchase Agreement.
Indemnified Taxes: As defined in Section 2.8(b) of the Purchase Agreement.
Index Rate: For any day, a floating rate equal to the higher of (i) the Prime
Rate and (ii) the Federal Funds Rate plus fifty (50) basis points per annum.
Each change in any interest rate provided for in the Purchase Agreement based
upon the Index Rate shall take effect at the time of such change in the Index
Rate.
Intercompany Loan: As defined in Section 9.1 of the Sale Agreement.
Intercompany Loan Limit: As defined in Section 9.1 of the Sale Agreement.
Intercompany Note: As defined in Section 9.2(a) of the Sale Agreement.
Intercreditor Agreement: That certain Intercreditor Agreement, dated as of
December 10, 2001, by and among the Administrative Agent, the Seller, the
Receivables Seller, the Originator, the Servicer,
AdvancePCS Puerto Rico, Inc.
and the Senior Credit Facility Collateral Agent.
14
Interest Payment Date: The last Business Day of each calendar month.
Investment Base: As of any date of determination, the amount equal to the sum of
(i) the Outstanding Balance of Eligible Receivables minus (ii) the Reserves, in
each case as disclosed in the most recently submitted Investment Base
Certificate or as otherwise determined by the Purchaser or the Administrative
Agent based on Seller Collateral information available to any of them, including
any information obtained from any audit or from any other reports with respect
to the Seller Collateral, which determination shall be final, binding and
conclusive on all parties to the Purchase Agreement (absent manifest error).
Investment Base Certificate: As defined in Section 2.3(a) of the Purchase
Agreement.
Investment Company Act: The provisions of the Investment Company Act of 1940, 15
U.S.C. Sections 80a et seq., and any regulations promulgated thereunder.
Investment Reports: The reports with respect to the Transferred Receivables and
the Seller Collateral referred to in Annex 5.2(b) to the Purchase Agreement.
Investments: With respect to any Seller Account Collateral, the certificates,
instruments, investment property or other investments in which amounts
constituting such collateral are invested from time to time.
Investor Portion: With respect to any specified amount, the product of (x) the
Purchaser Interest and (y) such specified amount.
IRC: The Internal Revenue Code of 1986 and any regulations promulgated
thereunder.
IRS: The Internal Revenue Service.
LAPA: That certain Liquidity Loan and Asset Purchase Agreement dated as of
December 10 2001, among Redwood and GE Capital, in its capacities as (i) the
administrative agent for the Conduit Purchaser and the Committed Purchaser, (ii)
the Collateral Agent and Operating Agent for Redwood, (iii) the initial
Liquidity Lender, (iv) the Liquidity Agent, and (v) the Committed Purchaser, as
amended, restated, supplemented or otherwise modified from time to time.
Letter of Credit: That certain letter of credit, issued by the Letter of Credit
Providers at the request of Redwood in favor of the Collateral Agent pursuant to
the Letter of Credit Agreement.
Letter of Credit Agent: GE Capital, in its capacity as agent for the Letter of
Credit Providers under the Letter of Credit Agreement.
Letter of Credit Agreement: That certain Third Amended and Restated Letter of
Credit Reimbursement Agreement dated as of March 7, 2000, among Redwood, the
Letter of Credit Agent, the Letter of Credit Providers and the Collateral Agent
Letter of Credit Providers: Initially, GE Capital, in its capacity as issuer of
the Letter of Credit under the Letter of Credit Agreement, and thereafter its
successors and permitted assigns in such capacity.
15
LIBOR Business Day: A Business Day on which banks in the city of London are
generally open for interbank or foreign exchange transactions.
LIBOR Rate: For each Settlement Period, a rate of interest determined by the
Administrative Agent equal to:
(i) the offered rate for deposits in United States Dollars for
a term of one month which appears on Telerate Page 3750 as of 11:00
a.m., London time, on the second full LIBOR Business Day next preceding
the first day of each Settlement Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); divided by
(ii) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) LIBOR Business Days
prior to the beginning of such Settlement Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve system or other
governmental authority having jurisdiction with respect thereto, as now
and from time to time in effect) for Eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such Board
which are required to be maintained by a member bank of the Federal
Reserve System;
provided, that if the introduction of or any change in any law or regulation (or
any change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for the
Committed Purchaser to agree to make or to make or to continue to fund or
maintain any Purchases or Capital Investment at the LIBOR Rate, then, unless
that Lender is able to make or to continue to fund or to maintain such Purchases
or Capital Investment at another branch or office of the Committed Purchaser
without, in the Committed Purchaser's opinion, adversely affecting it or its
Capital Investment or the income obtained therefrom, the LIBOR Rate shall in all
such cases be equal to the Index Rate.
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to the
Administrative Agent and the Seller.
Lien: Any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, easement or encumbrance, or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the UCC or comparable law of any
jurisdiction).
Liquidity Agent: GE Capital, in its capacity as agent for the Liquidity Lenders
pursuant to the LAPA.
Liquidity Lenders: Collectively, GE Capital and any other provider of Liquidity
Loans under the LAPA.
16
Liquidity Loans: Any and all borrowings by Redwood under the LAPA.
Litigation: With respect to any Person, any action, claim, lawsuit, demand,
investigation or proceeding pending or threatened against such Person before any
court, board, commission, agency or instrumentality of any federal, state, local
or foreign government or of any agency or subdivision thereof or before any
arbitrator or panel of arbitrators.
Lockbox: As defined in Section 6.1(a)(ii) of the Purchase Agreement.
Lockbox Account: Any segregated deposit account established by the Seller for
the deposit of Collections pursuant to and in accordance with Section 6.1(a) of
the Purchase Agreement.
Lockbox Account Agreement: Any agreement among the Originator, the Seller, GE
Capital, as Administrative Agent, and a Lockbox Account Bank with respect to a
Lockbox and Lockbox Account that provides, among other things, that (i) all
items of payment deposited in such Lockbox and Lockbox Account are held by such
Lockbox Account Bank as custodian for GE Capital, as Administrative Agent, (ii)
such Lockbox Account Bank has no rights of setoff or recoupment or any other
claim against such Lockbox Account other than for payment of its service fees
and other charges directly related to the administration of such Lockbox Account
and for returned checks or other items of payment and (iii) such Lockbox Account
Bank agrees to forward all Collections received in such Lockbox Account to the
Collection Account within one Business Day of receipt, and is otherwise in form
and substance acceptable to the Administrative Agent.
Lockbox Account Bank: Any bank or other financial institution at which one or
more Lockbox Accounts are maintained.
Loss Reserve Ratio: As of any date of determination, the ratio (expressed as a
percentage) calculated in accordance with the following formula:
2 x ARR x DEFHOR
------
NRPB
where:
ARR = the highest Three Month Aged Receivables
Ratio during each of the twelve (12)
Settlement Periods immediately preceding
such date.
DEFHOR = the aggregate Billed Amount of Transferred
Receivables originated during each of the
three (3) Settlement Periods immediately
preceding such date.
NRPB = the Outstanding Balance of Transferred
Receivables as of the last day of the
Settlement Period immediately preceding such
date.
Margin: For any day, the product of (i) the Capital Investment and (ii) the sum
of the Daily Margin plus Daily Default Margin, if any, for such day.
17
Material Adverse Effect: A material adverse effect on (i) the business, assets,
liabilities, operations, prospects or financial or other condition of (A) the
Parent and its Subsidiaries taken as a whole, (B) the Seller or Holding or (C)
the Servicer and its Subsidiaries considered as a whole, (ii) the ability of the
Originator, the Seller, Holding or the Servicer to perform any of its
obligations under the Related Documents in accordance with the terms thereof,
(iii) the validity or enforceability of any Related Document or the rights and
remedies of the Seller, the Purchasers, the Administrative Agent or the
Collateral Agent under any Related Document, (iv) the federal income tax
attributes of the sale, contribution or pledge of the Transferred Receivables
pursuant to any Related Document or (v) the Transferred Receivables, the
Contracts therefor, the Originator Collateral, the Seller Collateral or the
ownership interests or Liens of the Seller or the Purchasers or the
Administrative Agent thereon or the priority of such interests or Liens.
Maximum Purchase Limit: $150,000,000, as such amount may be reduced in
accordance with Section 2.2(a) of the Purchase Agreement.
Monthly Report: As defined in paragraph (a) of Annex 5.2(a) to the Purchase
Agreement.
Moody's: Xxxxx'x Investors Service, Inc. or any successor thereto.
Multiemployer Plan: A "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA with respect to which the Originator or ERISA Affiliate is making, is
obligated to make, or has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.
Net Worth Percentage: A fraction (expressed as a percentage) (i) the numerator
of which equals the excess of assets over liabilities, in each case determined
in accordance with GAAP consistently applied; provided, that with respect to
Holding, the Subordinated Note issued to Holding by AFC and the Parent Note and
the Intercompany Note issued to Holding by the Parent shall not be included as
assets in its calculation of assets for purposes hereof; and provided, further,
however that the Subordinated Originator Note issued by Holding and the
Subordinated Note issued by AFC shall be included as liabilities of each of
Holding and AFC, respectively, and (ii) the denominator of which equals (A) with
respect to Holding, the Outstanding Balance of Receivables (other than
Transferred Receivables), and (B) with respect to AFC, the Outstanding Balance
of Transferred Receivables.
Non-Transferred Receivables Servicing Fee: For any day, the amount equal to (i)
the product of (A) the Non-Transferred Receivables Servicing Fee Rate (or at any
time that ADVP Management L.P. or one of its Affiliates is the Servicer, such
lesser percentage as may be agreed between the Servicer and Holding on an arms
length basis based on then prevailing market terms for provision of similar
services) and (B) the aggregate Outstanding Balance of all Receivables that do
not constitute Transferred Receivables as of such day divided by (ii) 360.
Non-Transferred Receivables Servicing Fee Rate: 1.00%
Notice of Election: As defined in Section 2.1(d) of the Contribution Agreement.
Obligor: With respect to any Receivable, the Person primarily obligated to make
payments in respect thereof; provided that no Affiliate of the Parent may be an
Obligor.
18
Officer's Certificate: With respect to any Person, a certificate signed by an
Authorized Officer of such Person.
Operating Agent: GE Capital, in its capacity as operating agent for the Conduit
Purchaser under the Administrative Services Agreement.
Originator:
AdvancePCS Health L.P., a Delaware limited partnership.
Originator Collateral: As defined in Section 7.1 of the Contribution Agreement.
Originator Contributed Receivable: As defined in Section 2.1(d) of the
Contribution Agreement.
Originator Rejected Amount: As defined in Section 4.4 of the Contribution
Agreement.
Originator Sale: A sale of Originator Sold Receivables by the Originator to
Holding in accordance with the terms of the Contribution Agreement.
Originator Sale Price: With respect to any Originator Sale of Originator Sold
Receivables, the price calculated by the Originator, subject to the prior
approval of the Administrative Agent based on the prevailing market rates and
conditions and the following:
(i) the Outstanding Balance of such Originator Sold
Receivables, minus
(ii) the expected costs to be incurred by Holding in financing
the purchase of such Originator Sold Receivables until the Outstanding
Balance of such Originator Sold Receivables, as applicable, is paid in
full, minus
(iii) the portion of such Originator Sold Receivables that are
reasonably expected by such Originator to become Defaulted Receivables
pursuant to clause (ii) of the definition thereof, minus
(iv) the portion of such Originator Sold Receivables that are
reasonably expected by such Originator to be reduced by means other
than the receipt of Collections thereon or pursuant to clause (iii)
above, minus
(v) the amounts necessary to pay for the servicing,
administration and collection of such Originator Sold Receivables
calculated assuming that the Servicing Fee Rate is the actual cost of
such servicing, administration and collection;
provided, that such calculations shall be determined based on (A) the historical
experience of such Originator, with respect to the calculations required in each
of clauses (iii) and (iv) above, and (B) with respect to the calculation
required in clause (ii) and above, assuming such costs as of the initial
Originator Transfer Date for claims processing Receivables are no more than
LIBOR plus 4% and LIBOR plus 5% for any other Receivables as of such date.
Originator Sold Receivable: As defined in Section 2.1(b) of the Contribution
Agreement.
19
Originator Transfer: Any sale or capital contribution of Receivables by
Originator to Holding pursuant to the terms of the Contribution Agreement.
Originator Transfer Date: As defined in Section 2.1(a) of the Contribution
Agreement.
Other Funding Agreements: Any agreements entered into from time to time by the
Purchaser for the purchase or financing of receivables.
Outstanding Balance: With respect to any Receivable and as of any date of
determination, the amount (which amount shall not be less than zero) equal to
(i) the Billed Amount thereof (or, in the case of an Eligible Accrual, the
amount that the Obligor thereunder is then obligated to pay with respect to such
Eligible Accrual under the terms of the related Contract), minus (ii) all
Collections received to such date from the Obligor thereunder, minus (iii) all
discounts to or any other modifications that reduce such Billed Amount;
provided, that (A) if the Servicer (or if the Servicer is not available or
refuses to make such determination, then the Administrative Agent) makes a
determination that all payments by such Obligor with respect to such Billed
Amount have been made, the Outstanding Balance shall be zero and (B) the
Outstanding Balance of any Receivable shall exclude any finance charges,
interest or late fees.
Parent:
AdvancePCS, a Delaware corporation.
Parent Guaranty: The Parent Guaranty dated as of December 10, 2001 executed by
the Parent in favor of the Seller, the Receivables Seller, the Originator and
the Servicer.
Parent Group: The Parent, the Originator, the Servicer and the Parent's other
Subsidiaries (other than the Seller and Holding).
Parent Loan: As defined in Section 6.1 of the Sale Agreement.
Parent Note: As defined in Section 6.2 of the Sale Agreement.
PBGC: The Pension Benefit Guaranty Corporation.
Pension Plan: A Plan described in Section 3(2) of ERISA.
Per Annum Daily Margin: (i) 0.65% with respect to the Conduit Purchaser's
Capital Investment and (ii) the then prevailing "Applicable Margin" (as defined
in the Senior Credit Facility) with respect to the Committed Purchaser's Capital
Investment.
Permitted Encumbrances: The following encumbrances: (i) Liens for taxes or
assessments or other governmental charges not yet due and payable; (ii) pledges
or deposits securing obligations under workmen's compensation, unemployment
insurance, social security or public liability laws or similar legislation;
(iii) pledges or deposits securing bids, tenders, contracts (other than
contracts for the payment of money) or leases to which the Originator, the
Seller, Holding or the Servicer is a party as lessee made in the ordinary course
of business; (iv) deposits securing statutory obligations of the Originator, the
Seller or the Servicer; (v) inchoate and unperfected workers', mechanics',
suppliers', landlords' or similar Liens arising in the ordinary course of
business; (vi)carriers', warehousemen's or other similar possessory Liens
arising in the ordinary course of business and
20
securing liabilities in an outstanding aggregate amount not in excess of
$500,000 at any one time; (vii) deposits securing, or in lieu of, surety, appeal
or customs bonds in proceedings to which the Originator, the Seller, Holding or
the Servicer is a party; (viii) any attachment or judgment Lien not constituting
a Termination Event under Section 9.1(f) of the Purchase Agreement; (ix) Liens
existing on the Closing Date and listed on Schedule 4.3(b) of the Contribution
Agreement or Schedule 5.3(b) of the Purchase Agreement; and (x) presently
existing or hereinafter created Liens in favor of the Buyer, the Seller, the
Purchasers, the Administrative Agent or the Collateral Agent.
Permitted Investments: Any of the following:
(i) obligations of, or guaranteed as to the full and timely
payment of principal and interest by, the United States of America or
obligations of any agency or instrumentality thereof if such
obligations are backed by the full faith and credit of the United
States of America, in each case with maturities of not more than 90
days from the date acquired;
(ii) repurchase agreements on obligations of the type
specified in clause (a) of this definition; provided, that the
short-term debt obligations of the party agreeing to repurchase are
rated at least A-1+ or the equivalent by S&P and P-1 or the equivalent
by Moody's;
(iii) federal funds, certificates of deposit, time deposits
and bankers' acceptances of any depository institution or trust company
incorporated under the laws of the United States of America or any
state, in each case with original maturities of not more than 90 days
or, in the case of bankers' acceptances, original maturities of not
more than 365 days; provided, that the short-term obligations of such
depository institution or trust company are rated at least A-1+ or the
equivalent by S&P and P-1 or the equivalent by Moody's;
(iv) commercial paper of any corporation incorporated under
the laws of the United States of America or any state thereof with
original maturities of not more than 30 days that on the date of
acquisition are rated at least A-1+ or the equivalent by S&P and P-1 or
the equivalent by Moody's;
(v) securities of money market funds rated at least Aam or the
equivalent by S&P and P-1 or the equivalent by Moody's; and
(vi) such other investments with respect to which each Rating
Agency shall have confirmed in writing to the Purchaser and Collateral
Agent that such investments shall not result in a withdrawal or
reduction of the then current rating by such Rating Agency of the
Commercial Paper.
Person: Any individual, sole proprietorship, partnership, joint venture,
unincorporated organization, trust, association, corporation (including a
business trust), limited liability company, institution, public benefit
corporation, joint stock company, Governmental Authority or any other entity of
whatever nature.
21
Plan: At any time, an "employee benefit plan," as defined in Section 3(3) of
ERISA, that the Originator or ERISA Affiliate maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were
employed by the Originator or ERISA Affiliate.
Prime Rate: A rate publicly quoted from time to time by The Wall Street Journal
as the "base rate on corporate loans at large U.S. money center commercial
banks" (or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent).
Private Network Reserve: A reserve in an amount equal to the aggregate amount as
of any date of determination of Eligible Receivables where the Obligor thereon
is a third-party healthcare plan administered by the Originator.
Products: Pharmaceutical products and other related products.
Program Documents: The Letter of Credit Agreement, the LAPA, the Collateral
Agent Agreement, the Depositary Agreement, the Commercial Paper, the
Administrative Services Agreement, each Accession Agreement and the Dealer
Agreements.
Projections: The Originator's forecasted consolidated: (i) balance sheets; (ii)
profit and loss statements; (iii) cash flow statements; and (iv) capitalization
statements consistent with the historical financial statements of the
Originator, together with appropriate supporting details and a statement of
underlying assumptions.
Purchase: As defined in Section 2.1of the Purchase Agreement.
Purchase Agreement: That certain Receivables Purchase and Servicing Agreement
dated as of December 10, 2001, among the Seller, the Conduit Purchaser, the
Committed Purchaser, the Servicer and the Administrative Agent.
Purchase Assignment: That certain Purchase Assignment dated as of the Closing
Date by and between the Seller and the Applicable Purchaser in the form attached
as Exhibit 2.4(a) to the Purchase Agreement.
Purchase Date: Each day on which a Purchase is made.
Purchase Discount Rate: As of any date of determination, a rate equal to the
lesser of (i) the Dynamic Purchase Discount Rate and (ii) the Purchase Discount
Rate Cap.
Purchase Discount Rate Cap: A rate equal to eighty-five percent (85%).
Purchase Excess: As of any date of determination, the extent to which the
Capital Investment exceeds the Availability, in each case as disclosed in the
most recently submitted Investment Base Certificate or as otherwise determined
by the Applicable Purchaser or the Administrative Agent based on Seller
Collateral information available to any of them, including any information
obtained from any audit or from any other reports with respect to the Seller
Collateral, which
22
determination shall be final, binding and conclusive on all parties to the
Purchase Agreement (absent manifest error).
Purchaser Interest: The undivided percentage ownership interest of the
Purchasers in the Transferred Receivables which are purchased under the Purchase
Agreement. The Purchaser Interest of the Purchasers shall be expressed as a
fraction of the total Transferred Receivables computed as follows:
PI = C + DR
---------
(IB x PDR) + EAA
where:
PI = the Purchaser Interest at the time of
determination;
C = the aggregate Capital Investment at such
time;
DR = the Discount Reserve;
IB = the Investment Base at such time;
PDR = the Purchase Discount Rate at such time; and
EAA + the Eligible Accrual Amount
The Purchaser Interest shall be calculated (or deemed to be calculated) on each
Business Day from the Closing Date through the Facility Termination Date; from
and after the Facility Termination Date, the Purchaser Interest of the
Purchasers shall be 100% until the Termination Date, at which time the Purchaser
Interest shall equal zero.
Purchasers: The Conduit Purchaser and the Committed Purchaser
Qualified Plan: A Pension Plan that is intended to be tax-qualified under
Section 401(a) of the IRC.
Rating Agency: Moody's or S&P.
Rating Agency Condition: With respect to any action, that each Rating Agency has
notified the Conduit Purchaser and the Administrative Agent in writing that such
action will not result in a reduction or withdrawal of the rating of any
outstanding Commercial Paper.
Ratios: Collectively, the Default Ratio, the Delinquency Ratio, the Dilution
Ratio, the Dilution Reserve Ratio, the Dilution Trigger Ratio, the Loss Reserve
Ratio, the Receivables Collection Turnover and the Three Month Aged Receivables
Ratio.
Receivable: With respect to any Obligor:
(i) indebtedness of such Obligor (whether constituting an
account, chattel paper, document, instrument or general intangible)
arising from the provision of merchandise, goods or services to such
Obligor, including the right to payment of any interest or finance
charges and other obligations of such Obligor with respect thereto
(whether billed or unbilled);
23
(ii) all Liens and property subject thereto from time to time
securing or purporting to secure any such indebtedness of such Obligor;
(iii) all guaranties, indemnities and warranties, insurance
policies, financing statements and other agreements or arrangements of
whatever character from time to time supporting or securing payment of
any such indebtedness;
(iv) all Collections with respect to any of the foregoing; and
(v) all Records with respect to any of the foregoing;
provided that the term "Receivable" as used herein and in the other Related
Documents shall include only those Vendor Rebate Receivables that have been
recognized as a receivable for GAAP and federal income tax purposes.
Receivables Assignment: As defined in Section 2.1(a) of the Contribution
Agreement.
Receivables Collection Turnover: As of any date of determination, the amount
(expressed in days) equal to:
(i) a fraction, (A) the numerator of which is equal to the
average of the Outstanding Balances of Transferred Receivables on the
first day of each of the twelve (12) Settlement Periods immediately
preceding such date and (B) the denominator of which is equal to the
aggregate Collections received during such twelve (12) Settlement
Periods with respect to all Transferred Receivables,
multiplied by
(ii) the number of days contained in such twelve (12)
Settlement Periods.
Receivables Collateral: As defined in Section 7.1 of the Sale Agreement.
Receivables Purchaser: The Seller in its capacity as Receivables Purchaser under
the Sale Agreement.
Receivables Seller: Holding, in its capacity as seller under the Sale Agreement.
Records: All Contracts and other documents, books, records and other information
(including computer programs, tapes, disks, data processing software and related
property and rights) prepared and maintained by the Originator, the Servicer or
the Seller with respect to the Receivables and the Obligors thereunder, the
Originator Collateral, the Receivables Collateral and the Seller Collateral and
shall include without, limitation, all Records as defined in the applicable UCC.
Redwood: Redwood Receivables Corporation, a Delaware corporation.
Redwood Daily Yield: For any day, the product of (i) the Redwood Daily Yield
Rate for such day, multiplied by (ii) Redwood's Capital Investment outstanding
on such day.
24
Redwood Daily Yield Rate: On any day, a floating per annum rate equal to the sum
of (i) the Daily Margin on such day, plus (ii) if a Termination Event has
occurred and is continuing, the Daily Default Margin, plus (iii) (A) to the
extent the Conduit Purchaser's Purchases hereunder are being funded by the sale
of Commercial Paper, (1) the per annum rate equivalent to the weighted average
of the rates paid or payable by the Conduit Purchaser from time to time as
interest on or otherwise (by means of interest rate xxxxxx or otherwise) in
respect of Commercial Paper that is allocated, in whole or in part, to fund or
maintain the Conduit Purchaser's Capital Investment during the relevant
Settlement Period, which rates shall reflect and give effect to Dealer fees,
commissions of placement agents and other issuance costs in respect of such
Commercial Paper, divided by (2) 360 days; provided, however, that if any
component of such rate is a discount rate the rate used shall be the rate
resulting from converting such discount rate to an interest bearing equivalent
rate per annum and (B) to the extent the Conduit Purchaser's Purchases hereunder
are not being financed by the sale of Commercial Paper, the daily rate to the
Conduit Purchaser of borrowing such funds under the LAPA.
Redwood Termination Date: The date elected by Redwood or the Collateral Agent,
by notice to the Seller and the Administrative Agent as the Redwood Termination
Date; provided, that on such date, one or more of the following events shall
have occurred and be continuing: (i) a Seller LOC Draw; (ii) the obligations of
the Liquidity Lenders to make Liquidity Loans shall have terminated and such
Liquidity Lenders shall not have otherwise been replaced; (iii) an event of
default under the Collateral Agent Agreement or any other Program Document shall
have occurred; (iv) the short term debt rating of a Liquidity Lender shall have
been downgraded by a Rating Agency and such Liquidity Lender shall not have been
replaced in accordance with the terms of the LAPA within thirty (30) days
thereafter, or (v) Redwood or the Collateral Agent shall have determined that
the funding of Transferred Receivables under the Purchase Agreement is
impracticable for any reason whatsoever, including as a result of (A) a drop in
or withdrawal of any of the ratings assigned to the Commercial Paper by any
Rating Agency, (B) the imposition of Additional Amounts, (C) restrictions on the
amount of Transferred Receivables Redwood may finance or (D) the inability of
Redwood to issue Commercial Paper. Notwithstanding the foregoing, the Redwood
Termination Date shall be deemed to have automatically occurred, without the
giving of any notice or the taking of any other action, immediately upon the
occurrence of any event described in clause (iii) above in this definition.
Redwood Transfer Date: The date on which Redwood transfers to the Liquidity
Lenders pursuant to Section 3.1 of the LAPA all of the Redwood Interest (as
defined in the LAPA).
Regulatory Change: Any change after the Closing Date in any federal, state or
foreign law or regulation (including Regulation D of the Federal Reserve Board)
or the adoption or making after such date of any interpretation, directive or
request under any federal, state or foreign law or regulation (whether or not
having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof that, in each case, is applicable to
any Affected Party.
Reinvestment Purchase: As defined in Section 2.1 of the Purchase Agreement.
Rejected Amount: As defined in Section 4.4 of the Sale Agreement.
25
Related Documents: Each Lockbox Account Agreement, the Contribution Agreement,
the Sale Agreement, the Purchase Agreement, the Parent Guaranty, each
Receivables Assignment, the Purchase Assignment, the Parent Note, the
Intercompany Note, the Intercreditor Agreement, the Subordinated Originator
Note, the Subordinated Note and all other agreements, instruments, documents and
certificates identified in the Schedule of Documents and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Person, or any employee of any Person, and delivered in connection
with the Contribution Agreement, the Sale Agreement, the Purchase Agreement or
the transactions contemplated thereby. Any reference in the Contribution
Agreement, Sale Agreement, the Purchase Agreement or any other Related Document
to a Related Document shall include all Appendices thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to
such Related Document as the same may be in effect at any and all times such
reference becomes operative.
Repayment Notice: As defined in Section 2.3(c) of the Purchase Agreement.
Reportable Event: Any of the events set forth in Section 4043(b) of ERISA.
Reserves: The sum of the aggregate (i) Concentration Discount Amount for all
Obligors of Transferred Receivables, (ii) the Client Rebate Reserve, (iii) the
Private Network Reserve, (iv) the Unapplied Cash Reserve and (v) upon thirty
(30) days' prior written notice to the Originator, such other reserves as the
Administrative Agent may establish from time to time in its good faith credit
judgment; provided, that during the period between the provision of such notice
and the establishment of such other reserve, the Originator shall have an
opportunity to discuss the appropriateness of such new or modified criteria with
the Administrative Agent.
Retained Monthly Yield: As of any date of determination within or with respect
to a Settlement Period, the sum of all amounts transferred to or retained in the
Retention Account with respect to Daily Yield from and including the first day
of such Settlement Period through and including such date pursuant to Sections
6.3(a)(ii)(A) and (B) of the Purchase Agreement.
Retained Servicing Fee: As of any date of determination within or with respect
to a Settlement Period, the sum of all amounts transferred to or retained in the
Retention Account with respect to the Servicing Fee from and including the first
day of such Settlement Period through and including such date pursuant to
Sections 6.3(a)(ii)(C) and (D) of the Purchase Agreement.
Retained Unused Facility Fee: As of any date of determination within or with
respect to a Settlement Period, the sum of all amounts transferred to or
retained in the Retention Account with respect to the Unused Facility Fee from
and including the first day of such Settlement Period through and including such
date in accordance with Sections 6.3(a)(ii)(E) and (F) of the Purchase
Agreement.
Retention Account: That certain segregated deposit account established by the
Administrative Agent and maintained with the Depositary for the benefit of
Redwood and designated by the Administrative Agent to the Seller in a written
notice delivered on or after the Closing Date.
Retention Account Deficiency: As of any Settlement Date or Business Day (as
applicable), the amount, if any, by which the amounts necessary to make the
payments required under
26
Sections 6.4(a)(i), (ii) and (iii) of the Purchase Agreement exceeds (a) prior
to the earlier of the occurrence of the Redwood Transfer Date or a Committed
Purchaser Funding Event, the amounts on deposit in the Retention Account and (b)
from and after the earlier of the occurrence of the Redwood Transfer Date or a
Committed Purchaser Funding Event, the amounts transferred on such date to the
Administrative Agent pursuant to Section 6.3(a) of the Purchaser Agreement.
Retiree Welfare Plan: At any time, a Welfare Plan that provides for continuing
coverage or benefits for any participant or any beneficiary of a participant
after such participant's termination of employment, other than continuation
coverage provided pursuant to Section 4980B of the IRC and at the sole expense
of the participant or the beneficiary of the participant.
Revolving Period: The period from and including the Closing Date through and
including the day immediately preceding the Facility Termination Date.
S&P: Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc., or any successor thereto.
Sale: A sale of Sold Receivables by Holding to AFC in accordance with the terms
of the Sale Agreement.
Sale Agreement: that certain Receivables Sale and Contribution Agreement, dated
as of December 10, 2001, among Holding (as the Receivables Seller thereunder),
AFC (as the Receivables Purchaser thereunder) and the Servicer.
Sale Price: With respect to any Sale of Sold Receivables, the price calculated
by Receivables Seller, subject to the prior approval of the Administrative Agent
based on the prevailing market rates and conditions and the following:
(i) the Outstanding Balance of such Sold Receivables, minus
(ii) the expected costs to be incurred by the Receivables
Purchaser in financing the purchase of such Sold Receivables until the
Outstanding Balance of such Sold Receivables, as applicable, is paid in
full, minus
(iii) the portion of such Sold Receivables that are reasonably
expected by the Receivables Seller to become Defaulted Receivables
pursuant to clause (ii) of the definition of Defaulted Receivables,
minus
(iv) the portion of such Sold Receivables that are reasonably
expected by the Receivables Seller to be reduced by means other than
the receipt of Collections thereon or pursuant to clause (iii) above,
minus
(v) the servicing, administration and collection of such Sold
Receivables calculated assuming that the Servicing Fee Rate is the
actual cost of such servicing, administration and collection;
provided, that such calculations shall be determined based on (A) the historical
experience of the Originator, with respect to the calculations required in each
of clauses (iii) and (iv) above, and
27
(B) with respect to the calculations required in clause (ii) above, assuming
such costs as of the initial Transfer Date are no more than LIBOR plus 4%.
Schedule of Documents: The schedule, including all appendices, exhibits or
schedules thereto, listing certain documents and information to be delivered in
connection with the Contribution Agreement, the Sale Agreement, the Purchase
Agreement and the other Related Documents and the transactions contemplated
thereunder, substantially in the form attached as Annex Y to the Purchase
Agreement, the Sale Agreement and the Contribution Agreement.
Securities Act: The provisions of the Securities Act of 1933, 15 U.S.C. Sections
77a et seq., and any regulations promulgated thereunder.
Securities Exchange Act: The provisions of the Securities Exchange Act of 1934,
15 U.S.C. Sections 78a et seq., and any regulations promulgated thereunder.
Seller: Advance Funding Corporation, a Delaware corporation, in its capacity as
seller under the Purchase Agreement.
Seller Account: A deposit account maintained in the name of the Seller at a
commercial bank in the United States of America, as designated by the Seller
from time to time.
Seller Account Collateral: As defined in Section 8.1(c) of the Purchase
Agreement.
Seller Assigned Agreements: As defined in Section 8.1(b) of the Purchase
Agreement.
Seller Collateral: As defined in Section 8.1 of the Purchase Agreement.
Seller LOC Draws: Any payments made to the Purchaser in connection with the
Letter of Credit and allocated to the Seller.
Seller Secured Obligations: All loans, advances, debts, liabilities, indemnities
and obligations for the performance of covenants, tasks or duties or for payment
of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by the Seller
to any Affected Party under the Purchase Agreement and any document or
instrument delivered pursuant thereto, and all amendments, extensions or
renewals thereof, and all covenants and duties regarding such amounts, of any
kind or nature, present or future, whether or not evidenced by any note,
agreement or other instrument, arising thereunder, including Capital Investment,
Daily Yield, Yield Shortfall, Unused Facility Fees, Unused Facility Fee
Shortfall, Margin, amounts in reduction of Purchase Excess, Successor Servicing
Fees and Expenses, Additional Amounts and Indemnified Amounts. This term
includes all principal, interest (including all interest that accrues after the
commencement of any case or proceeding by or against the Seller in bankruptcy,
whether or not allowed in such case or proceeding), fees, charges, expenses,
attorneys' fees and any other sum chargeable to the Seller thereunder, whether
now existing or hereafter arising, voluntary or involuntary, whether or not
jointly owed with others, direct or indirect, absolute or contingent, liquidated
or unliquidated, and whether or not from time to time decreased or extinguished
and later increased, created or incurred, and all or any portion of such
obligations that are paid to the extent all or any portion of such payment is
avoided or recovered directly or indirectly from any Purchaser or the
28
Administrative Agent or any transferee of the Purchaser or the Administrative
Agent as a preference, fraudulent transfer or otherwise.
Seller's Share: The ratio of (i) the Maximum Purchase Limit under the Purchase
Agreement to (ii) the aggregate maximum purchase limits or commitments under the
Purchase Agreement and all Other Funding Agreements.
Senior Credit Facility: That certain Credit Agreement dated as of October 2,
2000, among the Parent, as borrower, certain subsidiaries of Parent, as
guarantors, the Senior Credit Facility Lenders, the Senior Credit Facility
Collateral Agent and the other parties thereto, and the other loan documents
executed in connection therewith; provided, however, any reference to the Senior
Credit Facility or any section therein in the Transaction Documents shall mean,
unless stated otherwise, the Senior Credit Facility as in effect on the Closing
Date; provided, further that the applicability of any amendment, restatement,
supplement or modification thereto or any refinancing, replacement or refunding
thereof must be expressly agreed to in writing by the Purchaser and the
Administrative Agent.
Senior Credit Facility Collateral Agent: Bank of America, N.A., as collateral
agent for the Senior Credit Facility Lenders, and its successors and assigns in
such capacity.
Senior Credit Facility Effective Date: The Effective Date (as defined in the
Senior Credit Facility).
Senior Credit Facility Lenders: The lenders parties from time to time to the
Senior Credit Facility.
Servicer: ADVP Management, or any other Person designated as a Successor
Servicer.
Servicer's Certificate: An Officer's Certificate substantially in the form of
Exhibit 3.1(a)(iii) to the Purchase Agreement.
Servicer Termination Event: As defined in Section 9.2 of the Purchase Agreement.
Servicer Termination Notice: Any notice by the Administrative Agent to the
Servicer that (i) a Servicer Termination Event has occurred and (ii) the
Servicer's appointment under the Purchase Agreement has been terminated.
Servicing Fee: For any day within a Settlement Period, the amount equal to (i)
the product of (A) the Servicing Fee Rate (or at any time that ADVP Management
L.P. or one of its Affiliates is the Servicer, such lesser percentage as may be
agreed between the Servicer and the Seller on an arms length basis based on then
prevailing market terms for provision of similar services) and (B) the aggregate
Outstanding Balance of all Transferred Receivables (other than Transferred
Receivables that are then Defaulted Receivables) on such day divided by (ii)
360.
Servicing Fee Rate: 1.00%.
Servicing Fee Shortfall: As of any date of determination within a Settlement
Period, the amount, if any, by which the Accrued Servicing Fee exceeds the
Retained Servicing Fee, in each case as
29
of such date; provided, however, that if on any date of determination, the
Servicing Fee is not required to be deposited in Retention Account pursuant to
Section 6.3(a)(ii)(C) of the Purchase Agreement, the Servicing Fee Shortfall
shall be zero.
Servicing Records: All documents, books, Records and other information
(including computer programs, tapes, disks, data processing software and related
property and rights) prepared and maintained by the Servicer with respect to the
Transferred Receivables, Seller Collateral and the Obligors thereunder.
Settlement Date: The fifth (5th) Business Day following the end of each
Settlement Period.
Settlement Period: (i) solely for purposes of determining the Ratios, (A) with
respect to all Settlement Periods other than the final Settlement Period, each
calendar month, whether occurring before or after the Closing Date, and (B) with
respect to the final Settlement Period, the period ending on the Termination
Date and beginning with the first day of the calendar month in which the
Termination Date occurs, and (ii) for all other purposes, (A) with respect to
the initial Settlement Period, the period from and including the Closing Date
through and including the last day of the calendar month in which the Closing
Date occurs, (B) with respect to the final Settlement Period, the period ending
on the Termination Date and beginning with the first day of the calendar month
in which the Termination Date occurs, and (C) with respect to all other
Settlement Periods, each calendar month; provided, however, that upon the
occurrence of the Committed Purchaser Funding Event, such Settlement Period
shall terminate on the day prior to the Committed Purchaser Funding Event, and
the next Settlement Period shall be the period from and including the day of the
Committed Purchaser Funding Event through and including the last day of the
calendar month in which the Committed Purchaser Funding Event occurs.
Sold Receivable: As defined in Section 2.1(b) of the Sale Agreement.
Solvency Certificate: An Officer's Certificate substantially in the form of
Exhibit 3.1(a)(i) to the Purchase Agreement.
Solvent: With respect to any Person on a particular date, that on such date (i)
the fair value of the property of such Person is greater than the total amount
of liabilities, including contingent liabilities, of such Person; (ii) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
Debts as they become absolute and matured; (iii) such Person does not intend to,
and does not believe that it will, incur Debts or liabilities beyond such
Person's ability to pay as such Debts and liabilities mature; and (iv) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person's property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
Litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can reasonably be expected to
become an actual or matured liability.
Special Obligor: Initially, Blue Cross and Blue Shield of Tennessee and
thereafter, any other Person from time to time designated as a Special Obligor
by the Administrative Agent in writing; provided, however, that any Special
Obligor may be removed as a Special Obligor upon two (2)
30
Business Days' prior written notice by the Administrative Agent to the Seller
and the Servicer so long as the Rating Agency Condition has been met.
Special Obligor Concentration Limit: Initially, with respect to Blue Cross and
Blue Shield of Tennessee, 7.5% and with respect to any Special Obligor, such
percentage specified in writing by the Administrative Agent from time to time,
any such percentage being subject to change or reduction to zero upon at least
two (2) Business Days prior written notice by the Administrative Agent to the
Seller and the Servicer.
Stock: With respect to any Person, shares of capital stock of, whether common or
preferred, (or other ownership interests in) such Person, warrants, options or
other rights for the purchase or other acquisition from such Person of shares of
capital stock of (or other ownership interests in) such Person, securities
convertible into or exchangeable for shares of capital stock of (or other
ownership interests in) such Person or warrants, rights or options for the
purchase or other acquisition from such Person of such shares (or such other
interests), and other ownership interests in such Person (including, without
limitation, partnership, member or trust interests therein and any other "equity
security" as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act), whether voting or nonvoting, and whether or not such
shares, warrants, options, rights or other interests are authorized or otherwise
existing on any date of determination.
Stockholder: With respect to any Person, each holder of Stock of such Person.
Subordinated Loan: As defined in Section 2.1(c) of the Sale Agreement.
Subordinated Note: As defined in Section 2.1(c) of the Sale Agreement.
Subordinated Originator Loan: As defined in Section 2.1(c) of the Contribution
Agreement.
Subordinated Originator Note: As defined in Section 2.1(c) of the Contribution
Agreement.
Subsidiary: With respect to any Person, any corporation or other entity (i) of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person or (ii)
that is directly or indirectly controlled by such Person within the meaning of
control under Section 15 of the Securities Act.
Successor Servicer: As defined in Section 11.2 of the Purchase Agreement.
Successor Servicing Fees and Expenses: The fees and expenses payable to the
Successor Servicer as agreed to by the Seller, the Purchasers and the
Administrative Agent.
Termination Date: The date on which (i) Capital Investment has been permanently
reduced to zero, (ii) all other Seller Secured Obligations under the Purchase
Agreement and the other Related Documents have been indefeasibly repaid in full
and completely discharged and (iii) the Maximum Purchase Limit has been
irrevocably terminated in accordance with the provisions of Section 2.2(b) of
the Purchase Agreement.
31
Termination Event: As defined in Section 9.1 of the Purchase Agreement.
Three Month Aged Receivables Ratio: As of any date of determination, the average
of the ratios (expressed as a percentage) for each of the three (3) Settlement
Periods preceding such date, of:
(i) the sum of (A) the respective Outstanding Balances of
Transferred Receivables with respect to which any payment, or part
thereof, remained unpaid for more than 60 but less than 90 days from
their respective due dates as of the last day of the three Settlement
Periods immediately preceding such date plus (B) the Outstanding
Balance of any and all Receivables that have been written off as
uncollectible less than 60 days from their respective due dates as
specified in the original invoice.
to
(ii) the aggregate Billed Amount of Transferred Receivables
originated during the third Settlement Period immediately preceding
such date.
Title IV Plan: A Pension Plan (other than a Multiemployer Plan) that is covered
by Title IV of ERISA and that the Originator or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
Transfer: Any sale or capital contribution of Transferred Receivables by Holding
to AFC pursuant to the terms of the Sale Agreement.
Transfer Date: As defined in Section 2.1(a) of the Sale Agreement.
Transferred Receivable: Any Sold Receivable or Contributed Receivable owing from
an Included Obligor, including, without limitation, Eligible Accruals; provided,
that any Transferred Receivable repurchased by the Receivables Seller pursuant
to Section 4.4 of the Sale Agreement shall not be deemed to be a Transferred
Receivable from and after the date of such repurchase unless such Receivable has
subsequently been repurchased by or contributed to the Seller; provided further
that the term "Transferred Receivable" as used herein and in the other Related
Documents shall not include any Vendor Rebate Receivables.
UCC: With respect to any jurisdiction, the Uniform Commercial Code as the same
may, from time to time, be enacted and in effect in such jurisdiction.
Unapplied Cash Reserve: As of any date, the positive difference if any of (i)
the sum of (A) the current day's Collections which have been transferred to the
Collection Account plus (B) the prior day's Collections which have been
transferred to the Collection Account on such day plus (C) all other Collections
which have been transferred to the Collection Account on any day other than a
day referred to in (A) and (B) above that have not, as of such date of
determination reduced the Outstanding Balance of Transferred Receivables
reported in the most recent Investment Base Certificate, less (ii) the Eligible
Accrual Amount for the day prior to the date of such Investment Base
Certificate.
Unapproved Receivable: Any receivable (i) with respect to which the obligor
thereunder is not an Obligor on any Transferred Receivable and whose customer
relationship with the Originator
32
arises as a result of the acquisition by the Originator of another Person or
(ii) that was originated in accordance with standards established by another
Person acquired by the Originator, in each case, solely with respect to any such
acquisitions that have not been approved in writing by the Administrative Agent
and then only for the period prior to any such approval.
Unfunded Pension Liability: At any time, the aggregate amount, if any, of the
sum of (i) the amount by which the present value of all accrued benefits under
each Title IV Plan exceeds the fair market value of all assets of such Title IV
Plan allocable to such benefits in accordance with Title IV of ERISA, all
determined as of the most recent valuation date for each such Title IV Plan
using the actuarial assumptions for funding purposes in effect under such Title
IV Plan, and (ii) for a period of five years following a transaction that might
reasonably be expected to be covered by Section 4069 of ERISA, the liabilities
(whether or not accrued) that could be avoided by the Originator or any ERISA
Affiliate as a result of such transaction.
Unused Facility Fee: As defined in Section 2.7(c) of the Purchase Agreement.
Unused Facility Fee Shortfall: As of any date of determination within a
Settlement Period, the amount, if any, by which the Accrued Unused Facility Fee
exceeds the Retained Unused Facility Fee, in each case as of such date.
Vendor Rebate Receivable: Any Indebtedness or other monetary obligation (whether
constituting an account, chattel paper, document or general intangible) owed to
the Originator by any Vendor that arise under rebate or similar provisions of
contracts between the Originator and such Vendor.
Vendor: Any Person that sell Products.
Welfare Plan: A Plan described in Section 3(1) of ERISA.
Yield Shortfall: As of any date of determination within a Settlement Period, the
amount, if any, by which the Accrued Monthly Yield exceeds the Retained Monthly
Yield, in each case as of such date.
33
SECTION 2. Other Terms and Rules of Construction.
(a) Accounting Terms. Unless otherwise specifically provided therein,
any accounting term used in any Related Document shall have the meaning
customarily given such term in accordance with GAAP, and all financial
computations thereunder shall be computed in accordance with GAAP consistently
applied. That certain items or computations are explicitly modified by the
phrase "in accordance with GAAP" shall in no way be construed to limit the
foregoing.
(b) Other Terms. All other undefined terms contained in any of the
Related Documents shall, unless the context indicates otherwise, have the
meanings provided for by the UCC as in effect in the State of New York to the
extent the same are used or defined therein.
(c) Rules of Construction. Unless otherwise specified, references in
any Related Document or any of the Appendices thereto to a Section, subsection
or clause refer to such Section, subsection or clause as contained in such
Related Document. The words "herein," "hereof" and "hereunder" and other words
of similar import used in any Related Document refer to such Related Document as
a whole, including all annexes, exhibits and schedules, as the same may from
time to time be amended, restated, modified or supplemented, and not to any
particular section, subsection or clause contained in such Related Document or
any such annex, exhibit or schedule. Any reference to or definition of any
document, instrument or agreement shall, unless expressly noted otherwise,
include the same as amended, restated, supplemented or otherwise modified from
time to time. Wherever from the context it appears appropriate, each term stated
in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Related Documents) or, in the case of Governmental Authorities, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations.
(d) Rules of Construction for Determination of Ratios. The Ratios as of
the last day of the Settlement Period immediately preceding the Closing Date
shall be established by the Administrative Agent on or prior to the Closing Date
and the underlying calculations for periods immediately preceding the Closing
Date to be used in future calculations of the Ratios shall be established by the
Administrative Agent on or prior to the Closing Date in accordance with Schedule
1 attached to this Annex X. For purposes of calculating the Ratios, (i) averages
shall be computed by rounding to the third decimal place and (ii) the Settlement
Period in which the date of determination thereof occurs shall not be included
in the computation thereof and the first Settlement Period immediately preceding
such date of determination shall be deemed to be the Settlement Period
immediately preceding the Settlement Period in which such date of determination
occurs.
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