Exhibit 10.1
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RECEIVABLES PURCHASE AGREEMENT
dated as of May 22, 2000
among
KCI FUNDING CORPORATION
KPMG CONSULTING, INC.
MARKET STREET FUNDING CORPORATION
and
PNC BANK, NATIONAL ASSOCIATION
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TABLE OF CONTENTS
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility ...................................... 1
Section 1.2. Making Purchases ....................................... 1
Section 1.3. Purchased Interest Computation ......................... 3
Section 1.4. Settlement Procedures .................................. 3
Section 1.5. Fees ................................................... 6
Section 1.6. Payments and Computations, Etc. ........................ 6
Section 1.7. Increased Costs ........................................ 6
Section 1.8. Requirements of Law .................................... 7
Section 1.9. Inability to Determine Euro-Rate ....................... 8
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants .............. 9
Section 2.2. Termination Events ..................................... 9
ARTICLE III.
INDEMNIFICATION
Section 3.1. Indemnities by the Seller .............................. 9
Section 3.2. Indemnities by the Servicer ............................ 11
ARTICLE IV.
ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of the Servicer ............................ 11
Section 4.2. Duties of the Servicer ................................. 12
Section 4.3. Lock-Box Arrangements .................................. 13
Section 4.4. Enforcement Rights ..................................... 14
Section 4.5. Responsibilities of the Seller ......................... 14
Section 4.6. Servicing Fee .......................................... 15
ARTICLE V.
MISCELLANEOUS
Section 5.1. Amendments, Etc. ....................................... 15
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Section 5.2. Notices, Etc. .......................................... 15
Section 5.3. Assignability .......................................... 16
Section 5.4. Costs, Expenses and Taxes .............................. 17
Section 5.5. No Proceedings; Limitation on Payments ................. 17
Section 5.7. GOVERNING LAW AND JURISDICTION ......................... 18
Section 5.8. Execution in Counterparts .............................. 18
Section 5.9. Survival of Termination ................................ 18
Section 5.10. WAIVER OF JURY TRIAL .................................. 18
Section 5.11. Entire Agreement ...................................... 19
Section 5.12. Headings .............................................. 19
Section 5.13. Issuer's Liabilities .................................. 19
Section 5.14. Call Option ........................................... 19
Section 5.15. Secured Lending ....................................... 19
Section 5.16. Notice of Termination of Purchasers' Commitments ...... 20
EXHIBIT I Definitions
EXHIBIT II Conditions of Purchases
EXHIBIT III Representations and Warranties
EXHIBIT IV Covenants
EXHIBIT V Termination Events
SCHEDULE I Credit and Collection Policy
SCHEDULE II Lock-box Banks and Lock-box Accounts
SCHEDULE III Trade Names
SCHEDULE IV Addresses
ANNEX A Form of Information Package
ANNEX B Form of Purchase Notice
ANNEX C Form of Paydown Notice
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This RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Agreement") is entered into as of May 22,
2000, among KCI FUNDING CORPORATION, a Delaware corporation, as seller (the
"Seller"), KPMG CONSULTING, INC., a Delaware corporation ("KCI"), as initial
servicer (in such capacity, together with its successors and permitted assigns
in such capacity, the "Servicer"), MARKET STREET FUNDING CORPORATION, a Delaware
corporation (together with its successors and permitted assigns, the "Issuer"),
and PNC BANK, NATIONAL ASSOCIATION, a national banking association ("PNC"), as
administrator (in such capacity, together with its successors and assigns in
such capacity, the "Administrator").
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I. References in the Exhibits
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hereto to the "Agreement" refer to this Agreement, as amended, supplemented or
otherwise modified from time to time.
The Seller desires to sell, transfer and assign an undivided variable
percentage interest in a pool of receivables, and the Issuer desires to acquire
such undivided variable percentage interest, as such percentage interest shall
be adjusted from time to time based upon, in part, reinvestment payments that
are made by the Issuer.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility. (a) On the terms and conditions hereinafter
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set forth, the Issuer hereby agrees to purchase, and make reinvestments of,
undivided percentage ownership interests with regard to the Purchased Interest
from the Seller from time to time from the date hereof to the Facility
Termination Date. Under no circumstances shall the Issuer make any such purchase
or reinvestment if, after giving effect to such purchase or reinvestment, the
aggregate outstanding Capital of the Purchased Interest would exceed the
Purchase Limit. On the Closing Date, the Purchase Limit shall be $200,000,000.
(b) The Seller may, upon at least 60 days' written notice to the
Administrator, terminate the purchase facility provided in this Section in whole
or, upon at least 30 days' written notice to the Administrator, from time to
time, irrevocably reduce in part the unused portion of the Purchase Limit;
provided, that each partial reduction shall be in the amount of at least
$5,000,000, or an integral multiple of $1,000,000 in excess thereof, and that,
unless terminated in whole, the Purchase Limit shall in no event be reduced
below $20,000,000.
Section 1.2. Making Purchases. (a) Each purchase (but not reinvestment) of
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undivided percentage ownership interests with regard to the Purchased Interest
hereunder shall be made upon the Seller's irrevocable written notice in the form
of Annex B delivered to the Administrator in accordance with Section 5.2 (which
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notice must be received by the Administrator before 11:00 a.m., New York City
time) at least one Business Day before the requested purchase date, which notice
shall specify: (A) the amount requested to be paid to the Seller (such amount,
which shall not be less than $1,000,000 and shall be in integral multiples of
$100,000, being the Capital relating to the undivided percentage ownership
interest then being purchased), (B) the date of such purchase (which shall be a
Business Day), and (C) the pro forma calculation of the Purchased Interest after
giving effect to the increase in Capital. The Administrator shall promptly
thereafter notify the Seller whether the Issuer has exercised its discretion not
to fund such purchase with the issuance of Notes, in which case the Seller shall
be deemed to have not requested such purchase but shall have the option to
request a purchase to be funded at the Alternate Rate in accordance with
procedures described in this Section 1.2(a); provided, however, that such notice
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must be received by the Administrator before 11:00 a.m., New York City time at
least two Business Days before the requested purchase date
(b) On the date of each purchase (but not reinvestment) of undivided
percentage ownership interests with regard to the Purchased Interest hereunder,
the Issuer shall, upon satisfaction of the applicable conditions set forth in
Exhibit II, make available to the Seller in same day funds, at PNC Bank, account
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number 1011551718, ABA 000000000, an amount equal to the Capital relating to the
undivided percentage ownership interest then being purchased.
(c) Effective on the date of each purchase pursuant to this Section and
each reinvestment pursuant to Section 1.4, the Seller hereby sells and assigns
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to the Issuer an undivided percentage ownership interest in: (i) each Pool
Receivable then existing, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other proceeds of,
such Pool Receivables and Related Security.
(d) To secure all of the Seller's obligations (monetary or otherwise) under
this Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due, direct or
indirect, absolute or contingent, the Seller hereby grants to the Issuer a
security interest in all of the Seller's right, title and interest (including
any undivided interest of the Seller) in, to and under all of the following,
whether now or hereafter owned, existing or arising: (i) all Pool Receivables,
(ii) all Related Security with respect to such Pool Receivables, (iii) all
Collections with respect to such Pool Receivables, (iv) the Lock-Box Accounts
and all amounts on deposit therein, and all certificates and instruments, if
any, from time to time evidencing such Lock-Box Accounts and amounts on deposit
therein, (v) all rights (but none of the obligations) of the Seller under the
Purchase and Sale Agreement and under the Sale Agreement, (vi) all rights (but
none of the obligations) of KCI under the Sale Agreement, and (vii) all proceeds
of, and all amounts received or receivable under any or all of, the foregoing
(collectively, the "Pool Assets"). The Issuer shall have, with respect to the
Pool Assets, and in addition to all the other rights and
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remedies available to the Issuer, all the rights and remedies of a secured party
under any applicable UCC.
Section 1.3. Purchased Interest Computation. The Purchased Interest shall
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be initially computed on the date of the initial purchase hereunder. Thereafter,
until the Facility Termination Date, the Purchased Interest shall be
automatically recomputed (or deemed to be recomputed) on each Business Day other
than a Termination Day. The Purchased Interest as computed (or deemed
recomputed) as of the day before the Facility Termination Date shall thereafter
remain constant. The Purchased Interest shall become zero when the Capital
thereof and Discount thereon shall have been paid in full, all the amounts owed
by the Seller and the Servicer hereunder to the Issuer, the Administrator and
any other Indemnified Party or Affected Person are paid in full, and the
Servicer shall have received the accrued Servicing Fee thereon.
Section 1.4. Settlement Procedures. (a) The collection of the Pool
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Receivables shall be administered by the Servicer in accordance with this
Agreement. The Seller shall provide to the Servicer on a timely basis all
information needed for such administration, including notice of the occurrence
of any Termination Day and current computations of the Purchased Interest.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the Seller or the Servicer:
(i) set aside and hold in trust (and shall, at the request of the
Administrator, segregate in a separate account approved by the
Administrator if, at the time of such request, there exist an Unmatured
Termination Event or a Termination Event or if the failure to so segregate
reasonably could be expected to cause a Material Adverse Effect) for the
Issuer, out of the Issuer's Share of such Collections, first, an amount
equal to the Discount accrued through such day for each Portion of Capital
and not previously set aside, second, an amount equal to the fees set forth
in the Fee Letter accrued and unpaid through such day, and third, to the
extent funds are available therefor, an amount equal to the Issuer's Share
of the Servicing Fee accrued through such day and not previously set aside,
(ii) subject to Section 1.4(f), if such day is not a Termination Day,
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remit to the Seller, on behalf of the Issuer, the remainder of the Issuer's
Share of such Collections. Such remainder shall be automatically reinvested
in Pool Receivables, and in the Related Security, Collections and other
proceeds with respect thereto; provided, however, that if the Purchased
Interest would exceed 100%, then the Servicer shall not reinvest, but shall
set aside and hold in trust for the Issuer (and shall, at the request of
the Administrator, segregate in a separate account approved by the
Administrator) a portion of such Collections that, together with the other
Collections set aside pursuant to this paragraph, shall equal the amount
necessary to reduce the Purchased Interest to 100%,
(iii) if such day is a Termination Day, set aside, segregate and hold
in trust (and shall, at the request of the Administrator, segregate in a
separate account approved by the
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Administrator) for the Issuer the entire remainder of the Issuer's Share of
the Collections; provided, that if amounts are set aside and held in trust
on any Termination Day of the type described in clause (a) of the
definition of "Termination Day" and, thereafter, the conditions set forth
in Section 2 of Exhibit II are satisfied or waived by the Administrator,
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such previously set-aside amounts shall be reinvested in accordance with
clause (ii) on the day of such subsequent satisfaction or waiver of
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conditions, and
(iv) release to the Seller (subject to Section 1.4(f)) for its own
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account any Collections in excess of: (x) amounts required to be reinvested
in accordance with clause (ii) or the proviso to clause (iii) plus (y) the
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amounts that are required to be set aside pursuant to clause (i), the
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proviso to clause (ii) and clause (iii) plus (z) the Seller's Share of the
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Servicing Fee accrued and unpaid through such day and all reasonable and
appropriate out-of-pocket costs and expenses of the Servicer for servicing,
collecting and administering the Pool Receivables.
(c) The Servicer shall deposit into the Administration Account (or such
other account designated by the Administrator), on each Settlement Date,
Collections held for the Issuer pursuant to clause (b)(i) or (f) plus the amount
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of Collections then held for the Issuer pursuant to clauses (b)(ii) and (iii) of
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Section 1.4; provided, that if KCI or an Affiliate thereof is the Servicer, such
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day is not a Termination Day and the Administrator has not notified KCI (or such
Affiliate) that such right is revoked, KCI (or such Affiliate) may retain the
portion of the Collections set aside pursuant to clause (b)(i) that represents
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the Issuer's Share of the Servicing Fee. On the last day of each Settlement
Period, the Administrator will notify the Servicer by facsimile of the amount of
Discount accrued with respect to each Portion of Capital during such Settlement
Period or portion thereof.
(d) Upon receipt of funds deposited into the Administration Account
pursuant to clause (c), the Administrator shall cause such funds to be
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distributed as follows:
(i) if such distribution occurs on a day that is not a Termination
Day and the Purchased Interest does not exceed 100%, first to the Issuer in
payment in full of all accrued Discount and fees (other than Servicing
Fees) with respect to each Portion of Capital, and second, if the Servicer
has set aside amounts in respect of the Servicing Fee pursuant to clause
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(b)(i) and has not retained such amounts pursuant to clause (c), to the
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Servicer (payable in arrears on each Settlement Date) in payment in full of
the Issuer's Share of accrued Servicing Fees so set aside, and
(ii) if such distribution occurs on a Termination Day or on a day when
the Purchased Interest exceeds 100%, first to the Issuer in payment in full
of all accrued Discount with respect to each Portion of Capital, second to
the Issuer in payment in full of Capital (or, if such day is not a
Termination Day, the amount necessary to reduce the Purchased Interest to
100%), third, to the Servicer in payment in full of all accrued Servicing
Fees, and fourth, if the Capital and accrued Discount with respect to each
Portion of Capital have been reduced to zero, and all accrued Servicing
Fees payable to the Servicer have been paid in full, to the
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Issuer, the Administrator and any other Indemnified Party or Affected
Person in payment in full of any other amounts owed thereto by the Seller
hereunder.
After the Capital, Discount, fees payable pursuant to the Fee Letter and
Servicing Fees with respect to the Purchased Interest, and any other amounts
payable by the Seller and the Servicer to the Issuer, the Administrator or any
other Indemnified Party or Affected Person hereunder, have been paid in full,
all additional Collections with respect to the Purchased Interest shall be paid
to the Seller for its own account.
(e) For the purposes of this Section 1.4:
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(i) if on any day the Outstanding Balance of any Pool Receivable is
reduced or adjusted as a result of any defective, rejected, returned,
repossessed or foreclosed goods or services, or any revision, cancellation,
allowance, discount or other adjustment made by the Seller or any Affiliate
of the Seller, or any setoff or dispute between the Seller or any Affiliate
of the Seller and an Obligor, the Seller shall be deemed to have received
on such day a Collection of such Pool Receivable in the amount of such
reduction or adjustment;
(ii) if on any day any of the representations or warranties in
Section 1(g) or (n) of Exhibit III is not true with respect to any Pool
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Receivable, the Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in full;
(iii) except as provided in clause (i) or (ii), or as otherwise
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required by applicable law or the relevant Contract, all Collections
received from an Obligor of any Receivable shall be applied to the
Receivables of such Obligor in the order of the age of such Receivables,
starting with the oldest such Receivable, unless such Obligor designates in
writing its payment for application to specific Receivables; and
(iv) if and to the extent the Administrator or the Issuer shall be
required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency Proceeding) any
amount received by it hereunder, such amount shall be deemed not to have
been so received by the Administrator or the Issuer but rather to have been
retained by the Seller and, accordingly, the Administrator or the Issuer,
as the case may be, shall have a claim against the Seller for such amount,
payable when and to the extent that any distribution from or on behalf of
such Obligor is made in respect thereof.
(f) If at any time the Seller shall wish to cause the reduction of Capital
(but not to commence the liquidation, or reduction to zero, of the entire
Capital of the Purchased Interest), the Seller may do so as follows:
(i) the Seller shall give the Administrator and the Servicer
written notice in the form of Annex C (A) at least two Business Days' prior
to the date of such reduction for any
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reduction of Capital less than or equal to $10,000,000 and (B) at least
five Business Days' prior to the date of such reduction for any reduction
of Capital greater than $10,000,000;
(ii) (A) on the proposed date of commencement of such reduction and
on each day thereafter, the Servicer shall cause Collections not to be
reinvested until the amount thereof not so reinvested shall equal the
desired amount of reduction or (B) the Seller shall remit to the
Administration Account in immediately available funds an amount equal to
the desired amount of such reduction together with accrued and unpaid
Discount, and Discount to accrue through the next Settlement Date, with
respect to such Capital; and
(iii) in the case of clause (ii)(A) above, the Servicer shall hold
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such Collections in trust for the Issuer, for payment to the Administrator
on the next Settlement Date immediately following the current Settlement
Period, and Capital shall be deemed reduced in the amount to be paid to the
Administrator only when in fact finally so paid;
provided, that the amount of any such reduction shall be not less than
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$1,000,000 and shall be an integral multiple of $100,000, and the entire Capital
of the Purchased Interest after giving effect to such reduction shall be not
less than $20,000,000 and shall be in an integral multiple of $100,000.
Section 1.5. Fees. The Seller shall pay to the Administrator certain
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fees in the amounts and on the dates set forth in a letter, dated the date
hereof, among the Servicer, the Seller and the Administrator (as such
letter agreement may be amended, supplemented or otherwise modified from
time to time, the "Fee Letter").
Section 1.6. Payments and Computations, Etc. (a) All amounts to be
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paid or deposited by the Seller or the Servicer hereunder shall be made
without reduction for offset or counterclaim and shall be paid or deposited
no later than 1:00 p.m. (New York City time) on the day when due in same
day funds to the Administration Account. All amounts received after noon
(New York City time) will be deemed to have been received on the next
Business Day.
(b) The Seller or the Servicer, as the case may be, shall, to the
extent permitted by law, pay interest on any amount not paid or deposited
by the Seller or the Servicer, as the case may be, when due hereunder, at
an interest rate equal to 2.0% per annum above the Base Rate, payable on
demand.
(c) All computations of interest under clause (b) and all computations
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of Discount, fees and other amounts hereunder shall be made on the basis of
a year of 360 (or 365 or 366, as applicable, with respect to Discount or
other amounts calculated by reference to the Base Rate) days for the actual
number of days elapsed. Whenever any payment or deposit to be made
hereunder shall be due on a day other than a Business Day, such payment or
deposit shall be made on the next Business Day and such extension of time
shall be included in the computation of such payment or deposit.
Section 1.7. Increased Costs. (a) If the Administrator, the Issuer,
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any Purchaser, any other Program Support Provider or any of their
respective Affiliates (each an "Affected Person")
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reasonably determines that the existence of or compliance with: (i) any law or
regulation or any change therein or in the interpretation or application
thereof, in each case adopted, issued or occurring after the date hereof, or
(ii) any request, guideline or directive from any central bank or other
Governmental Authority (whether or not having the force of law) issued or
occurring after the date of this Agreement, affects or would affect the amount
of capital required or expected to be maintained by such Affected Person, and
such Affected Person determines that the amount of such capital is increased by
or based upon the existence of any commitment to make purchases of (or otherwise
to maintain the investment in) Pool Receivables related to this Agreement or any
related liquidity facility, credit enhancement facility and other commitments of
the same type, then, upon demand by such Affected Person (with a copy to the
Administrator), the Seller shall promptly pay to the Administrator, for the
account of such Affected Person, from time to time as specified by such Affected
Person, additional amounts sufficient to compensate such Affected Person in the
light of such circumstances, to the extent that such Affected Person reasonably
determines such increase in capital to be allocable to the existence of any of
such commitments. A certificate as to such amounts submitted to the Seller and
the Administrator by such Affected Person shall be conclusive and binding for
all purposes, absent manifest error.
(b) If, due to either: (i) the introduction of or any change in or in
the interpretation of any law or regulation or (ii) compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring after the date
of this Agreement, there shall be any increase in the cost to any Affected
Person of agreeing to purchase or purchasing, or maintaining the ownership
of, the Purchased Interest in respect of which Discount is computed by
reference to the Euro-Rate, then, upon demand by such Affected Person, the
Seller shall promptly pay to such Affected Person, from time to time as
specified by such Affected Person, additional amounts sufficient to
compensate such Affected Person for such increased costs. A certificate as
to such amounts submitted to the Seller and the Administrator by such
Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
(c) If such additional amounts described in clause (a) or increased
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costs described in clause (b) affect the related Affected Person's
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portfolio of financing transactions, such Affected Person shall use
reasonable averaging and attribution methods to allocate such additional
amounts or increased costs to the transactions contemplated by this
Agreement.
Section 1.8. Requirements of Law. If any Affected Person reasonably
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determines that the existence of or compliance with: (a) any law or
regulation or any change therein or in the interpretation or application
thereof, in each case adopted, issued or occurring after the date hereof,
or (b) any request, guideline or directive from any central bank or other
Governmental Authority (whether or not having the force of law) issued or
occurring after the date of this Agreement:
(i) does or shall subject such Affected Person to any tax of any
kind whatsoever with respect to this Agreement, any increase in the
Purchased Interest or in the amount of Capital relating thereto, or
does or shall change the basis of taxation of payments to such
Affected Person on account of Collections, Discount or any other
amounts payable hereunder
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(excluding taxes imposed on the overall pre-tax net income of such Affected
Person, and franchise taxes imposed on such Affected Person, by the
jurisdiction under the laws of which such Affected Person is organized or a
political subdivision thereof),
(ii) does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, purchases,
advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of such Affected Person that are not otherwise
included in the determination of the Euro-Rate or the Base Rate hereunder,
or
(iii) does or shall impose on such Affected Person any other
condition,
and the result of any of the foregoing is: (A) to increase the cost to such
Affected Person of acting as Administrator, or of agreeing to purchase or
purchasing or maintaining the ownership of undivided percentage ownership
interests with regard to the Purchased Interest (or interests therein) or any
Portion of Capital, or (B) to reduce any amount receivable hereunder (whether
directly or indirectly), then, in any such case, upon demand by such Affected
Person, the Seller shall promptly pay to such Affected Person additional amounts
necessary to compensate such Affected Person for such additional cost or reduced
amount receivable. All such amounts shall be payable as incurred. A certificate
from such Affected Person to the Seller and the Administrator certifying, in
reasonably specific detail, the basis for, calculation of, and amount of such
additional costs or reduced amount receivable shall be conclusive and binding
for all purposes, absent manifest error; provided, however, that no Affected
Person shall be required to disclose any confidential or tax planning
information in any such certificate.
Section 1.9. Inability to Determine Euro-Rate. (a) If the Administrator
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determines before the first day of any Settlement Period (which determination
shall be final and conclusive) that, by reason of circumstances affecting the
interbank eurodollar market generally, deposits in dollars (in the relevant
amounts for such Settlement Period) are not being offered to banks in the
interbank eurodollar market for such Settlement Period, or adequate means do not
exist for ascertaining the Euro-Rate for such Settlement Period, then the
Administrator shall give notice thereof to the Seller. Thereafter, until the
Administrator notifies the Seller that the circumstances giving rise to such
suspension no longer exist, (a) no Portion of Capital shall be funded at the
Alternate Rate determined by reference to the Euro-Rate and (b) the Discount for
any outstanding Portions of Capital then funded at the Alternate Rate determined
by reference to the Euro-Rate shall, on the last day of the then current
Settlement Period, be converted to the Alternate Rate determined by reference to
the Base Rate.
(b) If, on or before the first day of any Settlement Period, the
Administrator shall have been notified by any Purchaser that, such Purchaser has
determined (which determination shall be final and conclusive) that, any
enactment, promulgation or adoption of or any change in any applicable law, rule
or regulation, or any change in the interpretation or administration thereof by
a governmental authority, central bank or comparable agency charged with the
interpretation or
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administration thereof, or compliance by such Purchaser with any guideline,
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for such Purchaser to fund or maintain any Portion of Capital at the
Alternate Rate and based upon the Euro-Rate, the Administrator shall notify the
Seller thereof. Upon receipt of such notice, until the Administrator notifies
the Seller that the circumstances giving rise to such determination no longer
apply, (a) no Portion of Capital shall be funded at the Alternate Rate
determined by reference to the Euro-Rate and (b) the Discount for any
outstanding Portions of Capital then funded at the Alternate Rate determined by
reference to the Euro-Rate shall be converted to the Alternate Rate determined
by reference to the Base Rate either (i) on the last day of the then current
Settlement Period if such Purchaser may lawfully continue to maintain such
Portion of Capital at the Alternate Rate determined by reference to the
Euro-Rate to such day, or (ii) immediately, if such Purchaser may not lawfully
continue to maintain such Portion of Capital at the Alternate Rate determined by
reference to the Euro-Rate to such day.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants. Each of the Seller
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and the Servicer hereby makes the representations and warranties, and hereby
agrees to perform and observe the covenants, applicable to it set forth in
Exhibits III and IV, respectively.
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Section 2.2. Termination Events. If any of the Termination Events set forth
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in Exhibit V shall occur, the Administrator may, by notice to the Seller,
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declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred); provided, that
automatically upon the occurrence of any event (without any requirement for the
passage of time or the giving of notice) described in paragraph (f) of Exhibit
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V, the Facility Termination Date shall occur. Upon any such declaration,
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occurrence or deemed occurrence of the Facility Termination Date, the Issuer and
the Administrator shall have, in addition to the rights and remedies that they
may have under this Agreement, all other rights and remedies provided after
default under the New York UCC and under other applicable law, which rights and
remedies shall be cumulative.
ARTICLE III. INDEMNIFICATION
Section 3.1. Indemnities by the Seller. Without limiting any other rights
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that the Administrator, the Issuer, any Program Support Provider or any of their
respective Affiliates, employees, officers, directors, agents, counsel,
successors, transferees or assigns (each, an "Indemnified Party") may have
hereunder or under applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all claims, damages, expenses, costs,
9
losses and liabilities (including Attorney Costs) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
from this Agreement (whether directly or indirectly), the use of proceeds of
purchases or reinvestments, the ownership of the Purchased Interest, or any
interest therein, or in respect of any Receivable, Related Security or Contract,
excluding, however: (a) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or its
officers, directors, agents or counsel, (b) recourse (except as otherwise
specifically provided in this Agreement) for Receivables, or (c) any overall net
income taxes or franchise taxes imposed on such Indemnified Party by the
jurisdiction under the laws of which such Indemnified Party is organized or any
political subdivision thereof. Without limiting or being limited by the
foregoing, and subject to the exclusions set forth in the preceding sentence,
the Seller shall pay on demand (which demand shall be accompanied by
documentation of the Indemnified Amounts, in reasonable detail) to each
Indemnified Party any and all amounts necessary to indemnify such Indemnified
Party from and against any and all Indemnified Amounts relating to or resulting
from any of the following:
(i) the failure of any Receivable included in the calculation of the
Net Receivables Pool Balance as an Eligible Receivable to be an Eligible
Receivable, the failure of any information contained in an Information
Package to be true and correct, or the failure of any other written
information provided to the Issuer or the Administrator with respect to
Receivables or this Agreement to be true and correct,
(ii) the failure of any representation, warranty or statement made or
deemed made by the Seller (or any of its officers) under or in connection
with this Agreement to have been true and correct as of the date made or
deemed made in all respects when made,
(iii) the failure by the Seller to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related
Contract, or the failure of any Pool Receivable or the related Contract to
conform to any such applicable law, rule or regulation,
(iv) the failure to vest in the Issuer a valid and enforceable: (A)
perfected undivided percentage ownership interest, to the extent of the
Purchased Interest, in the Receivables in, or purporting to be in, the
Receivables Pool and the other Pool Assets, or (B) first priority perfected
security interest in the Pool Assets, in each case, free and clear of any
Adverse Claim,
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables in, or purporting to be in, the Receivables Pool and the other
Pool Assets, whether at the time of any purchase or reinvestment or at any
subsequent time,
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
in, or purporting to be in, the
10
Receivables Pool (including a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the goods or services related to such
Receivable or the furnishing or failure to furnish such goods or services
or relating to collection activities with respect to such Receivable (if
such collection activities were performed by the Seller or any of its
Affiliates acting as Servicer or by any agent or independent contractor
retained by the Seller or any of its Affiliates),
(vii) any failure of the Seller (or any of its Affiliates acting as
the Servicer) to perform its duties or obligations in accordance with the
provisions hereof or under the Contracts,
(viii) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with merchandise,
insurance or services that are the subject of any Contract,
(ix) the commingling of Collections at any time with other funds,
(x) the use of proceeds of purchases or reinvestments, or
(xi) any reduction in Capital as a result of the distribution of
Collections pursuant to Section 1.4(d), if all or a portion of such
--------------
distributions shall thereafter be rescinded or otherwise must be returned
for any reason.
Section 3.2. Indemnities by the Servicer. Without limiting any other rights
---------------------------
that the Administrator, the Issuer or any other Indemnified Party may have
hereunder or under applicable law, the Servicer hereby agrees to indemnify each
Indemnified Party from and against any and all Indemnified Amounts arising out
of or resulting from (whether directly or indirectly): (a) the failure of any
information contained in an Information Package to be true and correct, or the
failure of any other written information provided to the Issuer or the
Administrator by, or on behalf of, the Servicer to be true and correct, (b) the
failure of any representation, warranty or statement made or deemed made by the
Servicer (or any of its officers) under or in connection with this Agreement to
have been true and correct as of the date made or deemed made in all respects
when made, (c) the failure by the Servicer to comply with any applicable law,
rule or regulation with respect to any Pool Receivable or the related Contract,
(d) any dispute, claim, offset or defense of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool resulting from or
related to the collection activities with respect to such Receivable, or (e) any
failure of the Servicer to perform its duties or obligations in accordance with
the provisions hereof.
11
ARTICLE IV.
ADMINISTRATION AND COLLECTIONS
Section 4.1. Appointment of the Servicer. (a) The servicing, administering
---------------------------
and collection of the Pool Receivables shall be conducted by the Person so
designated from time to time as the Servicer in accordance with this Section.
Until the Administrator gives notice to KCI (in accordance with this Section) of
the designation of a new Servicer, KCI is hereby designated as, and hereby
agrees to perform the duties and obligations of, the Servicer pursuant to the
terms hereof. Upon the occurrence of a Termination Event, the Administrator may
designate as Servicer any Person (including itself) to succeed KCI or any
successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in clause(a),
---------
KCI agrees that it will terminate its activities as Servicer hereunder in a
manner that the Administrator determines will facilitate the transition of the
performance of such activities to the new Servicer, and KCI shall cooperate with
and assist such new Servicer. Such cooperation shall include access to and
transfer of related records and use by the new Servicer of all licenses,
hardware or software necessary or desirable to collect the Pool Receivables and
the Related Security.
(c) KCI acknowledges that, in making their decision to execute and deliver
this Agreement, the Administrator and the Issuer have relied on KCI's agreement
to act as Servicer hereunder. Accordingly, KCI agrees that it will not
voluntarily resign as Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to any
subservicer (each a "Sub-Servicer"); provided, that, in each such delegation:
--------
(i) such Sub-Servicer shall agree in writing to perform the duties and
obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer
shall remain primarily liable for the performance of the duties and obligations
so delegated, (iii) the Seller, the Administrator and the Issuer shall have the
right to look solely to the Servicer for performance, and (iv) the terms of any
agreement with any Sub-Servicer shall provide that the Administrator may
terminate such agreement upon the termination of the Servicer hereunder by
giving notice of its desire to terminate such agreement to the Servicer (and the
Servicer shall provide appropriate notice to each such Sub-Servicer); provided,
--------
however, that if any such delegation is to any Person other than the Originator
-------
or KPMG LLP, the Administrator shall have consented in writing in advance to
such delegation.
Section 4.2. Duties of the Servicer. (a) The Servicer shall take or cause
----------------------
to be taken all such action as may be necessary or advisable to administer and
collect each Pool Receivable from time to time, all in accordance with this
Agreement and all applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policies. The
Servicer shall set aside, for the accounts of the Seller and the Issuer, the
amount of the Collections to which each is entitled in accordance with
Article I. The Servicer may, in accordance with the
---------
12
applicable Credit and Collection Policy, extend the maturity of any Pool
Receivable and extend the maturity or adjust the Outstanding Balance of any
Defaulted Receivable as the Servicer may determine to be appropriate to maximize
Collections thereof; provided, however, that: for all purposes of this
-------- -------
Agreement, (i) such extension shall not change the number of days such Pool
Receivable has remained unpaid from the date of the invoice related to such Pool
Receivable, (ii) such extension or adjustment shall not alter the status of such
Pool Receivable as a Delinquent Receivable or a Defaulted Receivable or limit
the rights of the Issuer or the Administrator under this Agreement and (iii) if
a Termination Event has occurred and is continuing and KCI or an Affiliate
thereof is serving as the Servicer, KCI or such Affiliate may make such
extension or adjustment only upon the prior approval of the Administrator. The
Seller shall deliver to the Servicer and the Servicer shall hold for the benefit
of the Seller and the Administrator (individually and for the benefit of the
Issuer), in accordance with their respective interests, all records and
documents (including computer tapes or disks) with respect to each Pool
Receivable. Notwithstanding anything to the contrary contained herein, the
Administrator may direct the Servicer (whether the Servicer is KCI or any other
Person) to commence or settle any legal action to enforce collection of any Pool
Receivable or to foreclose upon or repossess any Related Security; provided,
--------
however, that no such direction may be given unless either: (A) a Termination
-------
Event has occurred or (B) the Administrator reasonably believes that failure to
commence, settle or effect such legal action, foreclosure or repossession could
adversely affect Receivables constituting a material portion of the Pool
Receivables.
(b) The Servicer shall, as soon as practicable following actual receipt of
collected funds, turn over to the Seller the collections of any indebtedness
that is not a Pool Receivable, less, if KCI or an Affiliate thereof is not the
Servicer, all reasonable and appropriate out-of-pocket costs and expenses of
such Servicer of servicing, collecting and administering such collections. The
Servicer, if other than KCI or an Affiliate thereof, shall, as soon as
practicable upon demand, deliver to the Seller all records in its possession
that evidence or relate to any indebtedness that is not a Pool Receivable, and
copies of records in its possession that evidence or relate to any indebtedness
that is a Pool Receivable.
(c) The Servicer's obligations hereunder shall terminate on the later of:
(i) the Facility Termination Date and (ii) the date on which all amounts
required to be paid to the Issuer, the Administrator and any other Indemnified
Party or Affected Person hereunder shall have been paid in full.
After such termination, if KCI or an Affiliate thereof was not the Servicer
on the date of such termination, the Servicer shall promptly deliver to the
Seller all books, records and related materials that the Seller previously
provided to the Servicer, or that have been obtained by the Servicer, in
connection with this Agreement.
Section 4.3. Lock-Box Arrangements. Prior to the initial purchase
---------------------
hereunder, the Seller shall enter into Lock-Box Agreements with all of the
Lock-Box Banks and deliver original counterparts thereof to the Administrator.
Upon the occurrence of a Termination Event, the Administrator may at any time
thereafter give notice to each Lock-Box Bank that the Administrator is
exercising its
13
rights under the Lock-Box Agreements to do any or all of the following: (a) to
have the exclusive ownership and control of the Lock-Box Accounts transferred to
the Administrator and to exercise exclusive dominion and control over the funds
deposited therein, (b) to have the proceeds that are sent to the respective
Lock-Box Accounts redirected pursuant to the Administrator's instructions rather
than deposited in the applicable Lock-Box Account, and (c) to take any or all
other actions permitted under the applicable Lock-Box Agreement. The Seller
hereby agrees that if the Administrator at any time takes any action set forth
in the preceding sentence, the Administrator shall have exclusive control of the
proceeds (including Collections) of all Pool Receivables and the Seller hereby
further agrees to take any other action that the Administrator may reasonably
request to transfer such control. Any proceeds of Pool Receivables received by
the Seller or the Servicer thereafter shall be sent immediately to the
Administrator. The parties hereto hereby acknowledge that if at any time the
Administrator takes control of any Lock-Box Account, the Administrator shall not
have any rights to the funds therein in excess of the unpaid amounts due to the
Administrator, the Issuer or any other Person hereunder, and the Administrator
shall distribute or cause to be distributed such funds in accordance with
Section 4.2(b) and Article I (in each case as if such funds were held by the
------------- ---------
Servicer thereunder).
Section 4.4. Enforcement Rights. (a) At any time following the occurrence
------------------
and during the continuance of a Termination Event:
(i) the Administrator may direct the Obligors that payment of all
amounts payable under any Pool Receivable is to be made directly to the
Administrator or its designee,
(ii) the Administrator may instruct the Seller or the Servicer to
give notice of the Issuer's interest in Pool Receivables to each Obligor,
which notice shall direct that payments be made directly to the
Administrator or its designee, and the Seller or the Servicer, as the case
may be, shall give such notice at the expense of the Seller or the
Servicer, as the case may be; provided, that if the Seller or the Servicer,
--------
as the case may be, fails to so notify each Obligor, the Administrator
(at the Seller's or the Servicer's, as the case may be, expense) may so
notify the Obligors, and
(iii) the Administrator may request the Servicer to, and upon such
request the Servicer shall: (A) assemble all of the records necessary or
desirable to collect the Pool Receivables and the Related Security, and
transfer or license to a successor Servicer the use of all software (to the
extent that the Servicer may transfer or allow such successor Servicer to
have access to such software without violating the terms of any agreement
between the Servicer and the provider of such software which relate to the
transfer or assignment of such software) necessary or desirable to collect
the Pool Receivables and the Related Security, and make the same available
to the Administrator or its designee at a place selected by the
Administrator, and (B) segregate all cash, checks and other instruments
received by it from time to time constituting Collections in a manner
acceptable to the Administrator and, promptly upon receipt, remit all such
cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Administrator or its designee.
14
(b) The Seller hereby authorizes the Administrator, and irrevocably
appoints the Administrator as its attorney-in-fact with full power of
substitution and with full authority in the place and stead of the Seller, which
appointment is coupled with an interest, to take any and all steps in the name
of the Seller and on behalf of the Seller necessary or desirable, in the
determination of the Administrator, to collect any and all amounts or portions
thereof due under any and all Pool Assets, including endorsing the name of the
Seller on checks and other instruments representing Collections and enforcing
such Pool Assets; provided, however, that the Administrator will not exercise
-------- -------
the rights given to it under this Section 4.4(b) or pursuant to any power of
--------------
attorney granted to the Administrator by the Seller, KCI or the Originator
unless: (A) a Termination Event has occurred or (B) the Administrator reasonably
believes that failure to exercise such rights could adversely affect the
Issuer's rights in the Pool Assets. Notwithstanding anything to the contrary
contained in this subsection, none of the powers conferred upon such
attorney-in-fact pursuant to the preceding sentence shall subject such
attorney-in-fact to any liability if any action taken by it shall prove to be
inadequate or invalid, nor shall they confer any obligations upon such
attorney-in-fact in any manner whatsoever.
Section 4.5. Responsibilities of the Seller. (a) Anything herein to the
------------------------------
contrary notwithstanding, the Seller shall: (i) perform all of its obligations,
if any, under the Contracts related to the Pool Receivables to the same extent
as if interests in such Pool Receivables had not been transferred hereunder, and
the exercise by the Administrator or the Issuer of their respective rights
hereunder shall not relieve the Seller from such obligations, and (ii) pay when
due any taxes, including any sales taxes payable in connection with the Pool
Receivables and their creation and satisfaction. The Administrator and the
Issuer shall not have any obligation or liability with respect to any Pool
Asset, nor shall either of them be obligated to perform any of the obligations
of the Seller, KCI or the Originator thereunder.
(b) KCI hereby irrevocably agrees that if at any time it shall cease to be
the Servicer hereunder, it shall act (if the then-current Servicer so requests)
as the data-processing agent of the Servicer and, in such capacity, KCI shall
conduct the data-processing functions of the administration of the Receivables
and the Collections thereon in substantially the same way that KCI conducted
such data-processing functions while it acted as the Servicer.
Section 4.6. Servicing Fee. (a) Subject to clause (b), the Servicer shall
-------------- ----------
be paid a fee equal to 0.50% per annum (the "Servicing Fee Rate") of the daily
--- -----
average aggregate Outstanding Balance of the Pool Receivables. The Issuer's
Share of such fee shall be paid through the distributions contemplated by
Section 1.4(d), and the Seller's Share of such fee shall be paid by the Seller
--------------
on each Monthly Settlement Date.
(b) If the Servicer ceases to be KCI or an Affiliate thereof, the servicing
fee shall be the greater of: (i) the amount calculated pursuant to clause (a),
----------
and (ii) an alternative amount specified by the successor Servicer not to exceed
110% of the aggregate reasonable costs and expenses incurred by such successor
Servicer in connection with the performance of its obligations as Servicer.
15
ARTICLE V.
MISCELLANEOUS
Section 5.1. Amendments, Etc. No amendment or waiver of any provision of
---------------
this Agreement or any other Transaction Document, or consent to any departure by
the Seller or the Servicer therefrom, shall be effective unless in a writing
signed by the Administrator, and, in the case of any amendment, by the other
parties thereto; and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of the Issuer or the Administrator to exercise, and no delay
in exercising any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
Section 5.2. Notices, Etc. All notices and other communications hereunder
------------
shall, unless otherwise stated herein, be in writing (which shall include
facsimile communication) and be sent or delivered to each party hereto at its
address set forth under its name on the signature pages hereof or at such other
address as shall be designated by such party in a written notice to the other
parties hereto. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by first class mail), and notices
and communications sent by other means shall be effective when received.
Section 5.3. Assignability. (a) This Agreement and the Issuer's rights and
-------------
obligations herein (including ownership of the Purchased Interest or an interest
therein) shall be assignable, in whole or in part, by the Issuer and its
successors and assigns with the prior written consent of the Seller; provided,
--------
however, that such consent shall not be unreasonably withheld; and provided
------- --------
further, that no such consent shall be required if the assignment is made to
-------
PNC, any Affiliate of PNC (other than a director or officer of PNC), any
Purchaser or other Program Support Provider or any Person that is: (i) in the
business of issuing Notes and (ii) associated with or administered by PNC or any
Affiliate of PNC. Each assignor may, in connection with the assignment, disclose
to the applicable assignee (that shall have agreed to be bound by Section 5.6)
any information relating to the Servicer, the Seller or the Pool Receivables
furnished to such assignor by or on behalf of the Servicer, the Seller, the
Issuer or the Administrator. The Administrator shall give prior written notice
of any assignment of the Issuer's rights and obligations (including ownership of
the Purchased Interest to any Person other than a Program Support Provider).
(b) The Issuer may at any time grant to one or more banks or other
institutions (each a "Purchaser") party to the Liquidity Agreement, or to any
other Program Support Provider, participating interests in the Purchased
Interest. In the event of any such grant by the Issuer of a participating
interest to a Purchaser or other Program Support Provider, the Issuer shall
remain responsible for the performance of its obligations hereunder. The Seller
agrees that each Purchaser or other Program Support Provider shall be entitled
to the benefits of Sections 1.7 and 1.8. The Issuer agrees that it will not,
------------ ---
after the date hereof, without the prior written consent of the Seller
16
(such consent not to be unreasonably withheld) permit any Person to become a
"Purchaser" under the Liquidity Agreement or a Program Support Provider (other
than a Program Support Provider that provides liquidity support for a
transaction not related to this Agreement) so long as the "Independence Rules"
of the Securities and Exchange Commission, the American Institute of Public
Accountants, the Independence Standards Board, state boards of accountancy and
other regulatory bodies applicable to KPMG LLP with respect to its audit
clients also apply to the relationships of KCI or the Originator because of KPMG
LLP's ownership interest in KCI or the Originator.
(c) This Agreement and the rights and obligations of the Administrator
hereunder shall be assignable, in whole or in part, by the Administrator and its
successors and assigns; provided, that unless: (i) such assignment is to an
--------
Affiliate of PNC, (ii) it becomes unlawful for PNC to serve as the Administrator
or (iii) a Termination Event exists, the Seller has consented to such
assignment, which consent shall not be unreasonably withheld.
(d) Except as provided in Section 4.1(d), none of the Seller or the
--------------
Servicer may assign its rights or delegate its obligations hereunder or any
interest herein without the prior written consent of the Administrator.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Issuer may be enforced through
it or by its agents.
Section 5.4. Costs, Expenses and Taxes. (a) In addition to the rights of
-------------------------
indemnification granted under Section 3.1, the Seller agrees to pay on demand
-----------
(which demand shall be accompanied by documentation thereof in reasonable
detail) all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic internal audits by
the Administrator of Pool Receivables but no more frequently than annually
unless (x) a Termination Event or Unmatured Termination Event has occurred and
is continuing or (y) in the opinion of the Administrator reasonable grounds for
insecurity exist with respect to the collectibility of a material amount of the
Pool Receivables or with respect to the Seller's performance or ability to
perform in any material respect its obligations under the Agreement) of this
Agreement, the other Transaction Documents and the other documents and
agreements to be delivered hereunder (and all reasonable costs and expenses in
connection with any amendment, waiver or modification of any thereof),
including: (i) Attorney Costs for the Administrator, the Issuer and their
respective Affiliates and agents with respect thereto and with respect to
advising the Administrator, the Issuer and their respective Affiliates and
agents as to their rights and remedies under this Agreement and the other
Transaction Documents, and (ii) all reasonable costs and expenses (including
Attorney Costs), if any, of the Administrator, the Issuer and their respective
Affiliates and agents in connection with the enforcement of this Agreement and
the other Transaction Documents.
(b) In addition, the Seller shall pay on demand any and all stamp and other
taxes and fees payable in connection with the execution, delivery, filing and
recording of this Agreement or the other documents or agreements to be delivered
hereunder, and agrees to save each Indemnified Party
17
harmless from and against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
Section 5.5. No Proceedings; Limitation on Payments. Each of the Seller,
--------------------------------------
KCI, the Servicer, the Administrator, each assignee of the Purchased Interest or
any interest therein, and each Person that enters into a commitment to purchase
the Purchased Interest or interests therein, hereby covenants and agrees that it
will not institute against, or join any other Person in instituting against, the
Issuer any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or similar
law, for one year and one day after the latest maturing Note issued by the
Issuer is paid in full. The provision of this Section 5.5 shall survive any
-----------
termination of this Agreement.
Section 5.6. Confidentiality. Each of the Seller and the Servicer agrees to
---------------
maintain the confidentiality of this Agreement and the other Transaction
Documents (and all drafts thereof) in communications with third parties and
otherwise; provided, that this Agreement may be disclosed to: (a) third parties
--------
to the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the
Administrator, and (b) the Seller's legal counsel and auditors if they agree to
hold it confidential. Unless otherwise required by applicable law, each of the
Administrator and the Issuer agrees to maintain the confidentiality of
non-public financial information regarding KCI, its Subsidiaries and Affiliates
and KPMG LLP; provided, that such information may be disclosed to: (i) third
parties to the extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to KCI (and with
respect to any information regarding KPMG LLP, reasonably satisfactory to KPMG
LLP), (ii) legal counsel and auditors of the Issuer or the Administrator if they
agree to hold it confidential, (iii) the rating agencies rating the Notes to the
extent such information relates to the Receivables Pool or the transactions
contemplated by this Agreement, or if not so related, upon obtaining the prior
consent of KCI and KPMG LLP if such information is regarding KPMG LLP (such
consent not to be unreasonably withheld), (iv) any Program Support Provider or
potential Program Support Provider (if they agree to hold it confidential) to
the extent such information relates to the Receivables Pool or the transactions
contemplated by this Agreement, or if not so related, upon obtaining the prior
consent of KCI and KPMG LLP if such information is regarding KPMG LLP (such
consent not to be unreasonably withheld), (v) any placement agent placing the
Notes to the extent such information relates to the Receivables Pool or the
transactions contemplated by this Agreement, or if not so related, upon
obtaining the prior consent of KCI and KPMG LLP if such information is regarding
KPMG LLP (such consent not to be unreasonably withheld) and (vi) any regulatory
authorities having jurisdiction over PNC, the Issuer, any Program Support
Provider or any Purchaser.
Section 5.7. GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL BE
------------------------------
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF A SECURITY
18
INTEREST OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY NEW YORK LAW.
Section 5.8. Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts, each of which, when so executed, shall be deemed to
be an original, and all of which, when taken together, shall constitute one and
the same agreement.
Section 5.9. Survival of Termination. The provisions of Sections 1.7, 1.8,
----------------------- ------------ ---
3.1, 3.2, 5.4, 5.5, 5.6, 5.7, 5.10 and 5.13 shall survive any termination of
--- --- --- --- --- --- ---- ----
this Agreement.
Section 5.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES THEIR
--------------------
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES
THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE
OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section 5.11. Entire Agreement. This Agreement and the other Transaction
----------------
Documents embody the entire agreement and understanding between the parties
hereto, and supersede all prior
19
or contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
Section 5.12. Headings. The captions and headings of this Agreement and any
--------
Exhibit, Schedule or Annex hereto are for convenience of reference only and
shall not affect the interpretation hereof or thereof.
Section 5.13. Issuer's Liabilities. The obligations of the Issuer under the
--------------------
Transaction Documents are solely the corporate obligations of the Issuer. No
recourse shall be had for any obligation or claim arising out of or based upon
any Transaction Document against any stockholder, employee, officer, director or
incorporator of the Issuer; provided, however, that this Section shall not
-------- -------
relieve any such Person of any liability it might otherwise have for its own
gross negligence or willful misconduct.
Section 5.14. Call Option. The Seller shall have the right to repurchase
-----------
the Purchased Interest from the Issuer on any Settlement Date on the terms
hereinafter set forth in this Section 5.14. The Seller shall give the
------------
Administrator at least five Business Days' prior written notice of such
repurchase and upon payment of the repurchase price for the Purchased Interest,
as hereinafter provided, the Issuer shall be deemed to have reconveyed the
Purchased Interest to the Seller without recourse, representation or warranty
except for a representation from the Issuer that the Purchased Interest assigned
is (or concurrently with the Issuer's receipt of such repurchase price shall
become) free of any Adverse Claim created by the Issuer. The Seller shall pay
such repurchase price for the Purchased Interest in immediately available funds
to the Administrator (for the benefit of the Issuer or the Administrator, as the
case may be) in an amount equal to the sum of (i) the Discount on the Capital
related to the Purchased Interest accrued to and including the repurchase date,
(ii) the Capital in the Purchased Interest, (iii) the amounts payable pursuant
to Sections 1.7, and 1.8, (of which the Seller has notice) related to the
------------ ---
Purchased Interest accrued to and including the repurchase date, (iv) all other
obligations that are then due and payable and (v) if KCI is not the Servicer,
the Servicing Fee allocated to the Purchased Interest that has accrued to and
including the repurchase date.
Section 5.15. Secured Lending. Notwithstanding anything in this Agreement
---------------
to the contrary, the parties hereto intend that this Agreement constitutes a
security agreement and the transactions effected hereby constitute secured loans
by the Issuer to the Seller under applicable laws and not a sale of the
Purchased Interest.
Section 5.16. Notice of Termination of Purchasers' Commitments. The
------------------------------------------------
Administrator shall use its reasonable efforts to give notice to the Seller and
the Servicer, at least 25 days before the termination of the commitments of the
Purchasers, of any Purchaser that has failed to renew its commitment under the
Liquidity Agreement; provided, however, that the failure to give such notice
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shall not prevent the occurrence of the Facility Termination Date or subject the
Administrator, the Issuer, any Purchaser, any Program Support Provider or any of
their Affiliates or subsidiaries to any liability for such failure.
20
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
KCI FUNDING CORPORATION
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address: 0 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Attention: Treasurer's Office
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address: 0000 Xxxxxxxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: General Counsel and Secretary
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
KPMG CONSULTING, INC., as Servicer
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Address: 0 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Attention: Treasurer's Office
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address: 0000 Xxxxxxxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
Attention: General Counsel and Secretary
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
X-0
XXXXXX XXXXXX FUNDING CORPORATION
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Address:
Market Street Funding Corporation
c/o AMACAR Group, LLC
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to:
PNC Bank, National Association
One PNC Plaza
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
S-2
PNC BANK, NATIONAL ASSOCIATION,
as Administrator
By:
----------------------------------
Name:
Title:
Address:
PNC Bank, National Association
One PNC Plaza
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
S-3
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits, Schedules and Annexes),
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
Unless otherwise indicated, all Section, Annex, Exhibit and Schedule references
in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to the
Agreement.
"Adjusted New Receivables" means at any time (a) for any month other than
March, April, May and June, the amount of New Receivables as reported by the
Seller in the Information Package covering the calendar month in which such New
Receivables were generated and (b) for the month of March, April, May and June
the amount of New Receivables on the last day of such month divided by 85% or
-------
such other factor (not to exceed 100%) as determined by the Administrator, in
its sole discretion, based on trends in monthly collection activity.
"Administration Account" means the account (account number 1002422076) of
the Administrator maintained at the office of PNC at One PNC Plaza, 000 Xxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000, or such other account as may be so
designated in writing by the Administrator to the Servicer.
"Administrator" has the meaning set forth in the preamble to the Agreement.
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement; it being understood
that any thereof in favor of, or assigned to, the Issuer or the Administrator
(for the benefit of the Issuer) shall not constitute an Adverse Claim.
"Affected Person" has the meaning set forth in Section 1.7 of the
-----------
Agreement.
"Affiliate" means, as to any Person: (a) any Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person, or (b) who is a director or officer: (i) of such Person or (ii) of
any Person described in clause (a), except that, (i) with respect to the Issuer,
----------
Affiliate shall mean the holder(s) of its capital stock and (ii) with respect to
the Seller, KCI and the Originator, Affiliate shall not mean KPMG LLP or any of
its Subsidiaries other than KCI and KCI's Subsidiaries. For purposes of this
definition, control of a Person shall mean the power, direct or indirect: (x) to
vote 25% or more of the securities having ordinary voting power for the election
of directors or managers of such Person, or (y) to direct or cause the direction
of the management and policies of such Person, in either case whether by
ownership of securities, contract, proxy or otherwise.
"Agreement" has the meaning set forth in the preamble to the Agreement.
I-1
"Alternate Rate" for any Settlement Period for any Portion of Capital of
the Purchased Interest means an interest rate per annum equal to: (a) 1.25% per
annum above the Euro-Rate for such Settlement Period; provided, however, that if
-------- -------
(x) it shall become unlawful for any Purchaser or Program Support Provider to
obtain funds in the London interbank eurodollar market in order to make, fund or
maintain any Purchased Interest, or if such funds shall not be reasonably
available to any Purchaser or Program Support Provider, or (y) there shall not
be at least two Business Days prior to the commencement of an applicable
Settlement Period to determine a Euro-Rate in accordance with its terms, then
the "Alternate Rate" shall be equal to the Base Rate in effect for each day
during the remainder of such Settlement Period or (b) if requested by the Seller
the Base Rate for such Settlement Period; provided, however, that the "Alternate
-------- -------
Rate" for any day while a Termination Event exists shall be an interest rate
equal to 2.00% per annum above the Base Rate in effect on such day.
"Attorney Costs" means and includes all reasonable fees and disbursements
of any law firm or other external counsel.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978 (11
U.S.C. (S) 101, et seq.), as amended from time to time.
"Base Rate" means, for any day, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate shall be at all times equal to
the higher of:
(a) the rate of interest in effect for such day as publicly announced
from time to time by PNC in Pittsburgh, Pennsylvania as its "prime rate."
Such "prime rate" is set by PNC based upon various factors, including PNC's
costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be
priced at, above or below such announced rate, and
(b) 0.50% per annum above the latest Federal Funds Rate.
"BBA" means the British Bankers' Association.
"Benefit Plan" means any employee benefit pension plan as defined in
Section 3(2) of ERISA in respect of which the Seller, the Originator, KCI or any
Affiliate is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
"Business Day" means any day (other than a Saturday or Sunday) on which:
(a) banks are not authorized or required to close in New York City, New York or
Pittsburgh, Pennsylvania, and (b) if this definition of "Business Day" is
utilized in connection with the Euro-Rate, dealings are carried out in the
London interbank market.
"Capital" means the amount paid to the Seller in respect of the Purchased
Interest by the Issuer pursuant to the Agreement, or such amount divided or
combined in order to determine the
I-2
Discount applicable to any Portion of Capital, in each case reduced from time to
time by Collections distributed and applied on account of such Capital pursuant
to Section 1.4(d) of the Agreement; provided, that if such Capital shall have
-------------- --------
been reduced by any distribution, and thereafter all or a portion of such
distribution is rescinded or must otherwise be returned for any reason, such
Capital shall be increased by the amount of such rescinded or returned
distribution as though it had not been made.
"Change in Control" means that KCI, ceases to own, directly or indirectly,
100% of the capital stock of the Seller free and clear of all Adverse Claims or
a majority of the capital stock of the Originator; provided that any merger or
liquidation of substantially all of the Originator's assets into KCI shall not
be a "Change of Control".
"Closing Date" means May 24, 2000.
"Collections" means, with respect to any Pool Receivable: (a) all funds
that are received by the Originator, KCI, the Seller or the Servicer in payment
of any amounts owed in respect of such Receivable (including purchase price,
finance charges, interest and all other charges), or applied to amounts owed in
respect of such Receivable (including insurance payments and net proceeds of the
sale or other disposition of repossessed goods or other collateral or property
of the related Obligor or any other Person directly or indirectly liable for the
payment of such Pool Receivable and available to be applied thereon), (b) all
Collections deemed to have been received pursuant to Section 1.4(e) of the
--------------
Agreement and (c) all other proceeds of such Pool Receivable.
"Company Note" has the meaning set forth in Section 3.1 of the Purchase and
-----------
Sale Agreement.
"Concentration Percentage" means: (a) for any Group A Obligor, 14.00%, (b)
for any Group B Obligor, 14.00%, (c) for any Group C Obligor, 7.00% and (d) for
any Group D Obligor, 3.50%.
"Concentration Reserve" means, at any time: (a) the aggregate Capital at
such time multiplied by (b)(i) the Concentration Reserve Percentage, divided by
(ii) 100%, minus the Concentration Reserve Percentage.
"Concentration Reserve Percentage" means, at any time, the largest of: (a)
the sum of the four largest Group D Obligor Percentages, (b) the sum of the two
largest Group C Obligor Percentages and (c) the largest Group B Obligor
Percentage or Group A Obligor Percentage.
"Contract" means, with respect to any Receivable, any and all contracts,
instruments, agreements, leases, invoices, notes or other writings pursuant to
which such Receivable arises or that evidence such Receivable or under which an
Obligor becomes or is obligated to make payment in respect of such Receivable.
I-3
"CP Rate" for any Settlement Period for any Portion of Capital means a rate
calculated by the Administrator equal to: (a) the rate (or if more than one
rate, the weighted average of the rates) at which Notes of the Issuer on each
day during such period have been outstanding; provided, that if such rate(s) is
--------
a discount rate(s), then the CP Rate shall be the rate (or if more than one
rate, the weighted average of the rates) resulting from converting such discount
rate(s) to an interest-bearing equivalent rate plus (b) the commissions and
charges charged by such placement agent or commercial paper dealer with respect
to such Notes, expressed as a percentage of the face amount of such Notes and
converted to an interest-bearing equivalent rate per annum. Notwithstanding the
foregoing, the "CP Rate" for any day while a Termination Event exists shall be
an interest rate equal to 2% above the Base Rate in effect on such day.
"Credit and Collection Policy" means, as the context may require, those
receivables credit and collection policies and practices of the Originator in
effect on the date of the Agreement and described in Schedule I to the
Agreement, as modified in compliance with the Agreement.
"Credit Facility" means the Credit Agreement to be entered into by and
among KCI, as borrower, KPMG LLC, as guarantor, the banks from time to time
party thereto, the other guarantors from time to time party thereto, PNC, as
arranger and PNC, as administration agent.
"Cut-off Date" has the meaning set forth in the Purchase and Sale
Agreement.
"Days' Sales Outstanding" means, at any time, an amount computed as of the
last day of each calendar month equal to: (a) the average of the Outstanding
Balance of all Pool Receivables as of the last day of each of the three most
recent calendar months divided by (b)(i) the New Receivables during the three
calendar months ended on or before the last day of such calendar month divided
by (ii) 90.
"Debt" means: (a) indebtedness for borrowed money, (b) obligations
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases that shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, and (e) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (d).
----------- ---
"Defaulted Receivable" means a Receivable:
(a) as to which any payment, or part thereof, remains unpaid for more than
180 days from the invoice date for such payment, or
(b) without duplication (i) as to which an Event of Bankruptcy shall have
occurred with respect to the Obligor thereof or any other Person obligated
thereon or owning any Related Security with respect thereto, or (ii) that has
been written off the Seller's books as uncollectible.
I-4
"Default Ratio" means the ratio (expressed as a percentage and rounded to
the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the
last day of each calendar month by dividing: (a) the aggregate Outstanding
Balance of all Pool Receivables that became Defaulted Receivables during such
month, by (b) the average New Receivables originated during the twelve most
recent calendar months.
"Delinquency Ratio" means the ratio (expressed as a percentage and rounded
to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of
the last day of each calendar month by dividing: (a) the aggregate Outstanding
Balance of all Pool Receivables that were Delinquent Receivables on such day by
(b) the aggregate Outstanding Balance of all Eligible Receivables on such day.
"Delinquent Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for more than 120 days from the invoice date for such
payment.
"Delinquency Reserve" means, on any date, an amount equal to: (a) the
Capital as of the close of business of the Servicer on such date multiplied by
(b)(i) the Delinquency Reserve Percentage on such date divided by (ii) 100%
minus the Delinquency Reserve Percentage on such date.
"Delinquency Reserve Percentage" means, on any date, the product of (i) the
average of the Late Stage Delinquency Ratios for the two most recent calendar
months multiplied by (ii) 2.
"Dilution Horizon" means, for any calendar month, the ratio (expressed as a
percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded
upward) computed as of the last day of such calendar month of: (a) the Adjusted
New Receivables originated by the Originator during such calendar month to (b)
the aggregate Outstanding Balance of the Eligible Receivables at the last day of
the most recent calendar month.
"Dilution Ratio" means the ratio (expressed as a percentage and rounded to
the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of
the last day of each calendar month by dividing: (a) the aggregate amount of
payments required to be made by the Seller pursuant to Section 1.4(e)(i) of the
-----------------
Agreement during such calendar month (provided, however, that payments relating
-------- -------
to Receivables which have remained unpaid for more than 120 days from the
invoice date for such payment shall not be included in the amount calculated
pursuant to clause (a)) by (b) the average of the Adjusted New Receivables
----------
originated during the twelve most recent calendar months.
"Dilution Reserve" means, on any day, an amount equal to: (a) the Capital
at the close of business of the Servicer on such date multiplied by (b) (i) the
---------- --
Dilution Reserve Percentage on such date, divided by (ii) 100% minus the
------- --
Dilution Reserve Percentage on such date.
I-5
"Dilution Reserve Percentage" means on any date the product of (a) the
Dilution Horizon multiplied by (b) the sum of (i) 2 times the average of the
Dilution Ratios for the twelve most recent calendar months and (ii) the Spike
Factor.
"Discount" means:
(a) for the Portion of Capital for any Settlement Period to the extent
the Issuer will be funding such Portion of Capital during such Settlement
Period through the issuance of Notes:
CPR x C x ED/360
(b) for the Portion of Capital for any Settlement Period to the extent
the Issuer will not be funding such Portion of Capital during such
Settlement Period through the issuance of Notes:
AR x C x ED/Year + TF
where:
AR = the Alternate Rate for the Portion of Capital for such Settlement
Period,
C = the Portion of Capital during such Settlement Period,
CPR = the CP Rate for the Portion of Capital for such Settlement
Period,
ED = the actual number of days during such Settlement Period,
Year = if such Portion of Capital is funded based upon: (i) the
Euro-Rate, 360 days, and (ii) the Base Rate, 365 or 366 days, as
applicable, and
TF = the Termination Fee, if any, for the Portion of Capital for such
Settlement Period;
provided, that no provision of the Agreement shall require the payment or permit
--------
the collection of Discount in excess of the maximum permitted by applicable law;
and provided further, that Discount for the Portion of Capital shall not be
-------- -------
considered paid by any distribution to the extent that at any time all or a
portion of such distribution is rescinded or must otherwise be returned for any
reason.
I-6
"Eligible Receivable" means, at any time, a Pool Receivable:
I-7
(a) the Obligor of which is (i) a United States resident, (ii) not a
government or a governmental subdivision, affiliate or agency; provided,
--------
however, that if the Obligor of such Receivable is a government or a
-------
governmental subdivision, affiliate or agency (other than a state
government as to which the Seller shall have provided evidence (including
opinions or memorandum of counsel) satisfactory to the Administrator that
the Receivables of such state government Obligor are not subject to any
limitations on assignment or offset rights similar in any respect to the
Federal Assignment of Claims Act), such Receivable shall satisfy the
requirements of this clause (a)(ii) if the Outstanding Balance of such
--------------
Receivable when added to the aggregate Outstanding Balance of all other
Eligible Receivables that are included in the calculation of Net
Receivables Pool Balance at such time of the Obligors that are governments
or governmental subdivisions, affiliates or agencies does not exceed the
lesser of (A) $20,000,000 or (B) 10% of the Net Receivables Pool Balance at
such time as determined without giving effect to this proviso, (iii) not
subject to any action of the type described in paragraph (f) of Exhibit V
---------
to the Agreement and (iv) not an Affiliate of KCI,
(b) that is denominated and payable only in U.S. dollars in the United
States,
(c) that does not have a stated maturity which is more than 30 days
after the invoice date of such Receivable,
(d) that arises under a duly authorized Contract for the sale and
delivery of goods and services in the ordinary course of the Originator's
business,
(e) that arises under a duly authorized Contract that is in full force
and effect and that is a legal, valid and binding obligation of the related
Obligor, enforceable against such Obligor in accordance with its terms,
(f) that conforms in all material respects with all applicable laws,
rulings and regulations in effect,
(g) that is not the subject of any asserted dispute, offset, hold back
defense, Adverse Claim or other claim,
(h) that satisfies all applicable requirements of the applicable
Credit and Collection Policy,
(i) that has not been modified, waived or restructured since its
creation, except as permitted pursuant to Section 4.2 of the Agreement,
-----------
(j) in which the Seller owns good and marketable title, free and clear
of any Adverse Claims, and that is freely assignable by the Seller
(including without any consent of the related Obligor),
I-8
(k) for which the Issuer shall have a valid and enforceable undivided
percentage ownership or security interest, to the extent of the Purchased
Interest, and a valid and enforceable first priority perfected security
interest therein and in the Related Security and Collections with respect
thereto, in each case free and clear of any Adverse Claim,
(l) that constitutes an account as defined in the UCC, and that is not
evidenced by instruments or chattel paper,
(m) that is neither a Defaulted Receivable nor a Delinquent
Receivable,
(n) for which neither the Originator thereof, KCI, the Seller nor the
Servicer has established any offset arrangements with the related Obligor,
(o) for which Defaulted Receivables of the related Obligor do not
exceed 25% of the Outstanding Balance of all such Obligor's Receivables,
and
(p) that represents amounts earned and payable by the Obligor that are
not subject to the performance of additional services by the Originator
thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"Euro-Rate" means with respect to any Settlement Period the interest rate
per annum determined by the Administrator by dividing (the resulting quotient
rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate of interest determined by the Administrator in accordance with its usual
procedures (which determination shall be conclusive absent manifest error) to be
the average of the London interbank market offered rates for U.S. dollars quoted
by the British Bankers' Association ("BBA") as set forth on Dow Xxxxx Markets
Service (formerly known as Telerate) (or appropriate successor or, if British
Bankers' Association or its successor ceases to provide display page 3750 (or
such other display page on the Dow Xxxxx Markets Service system as may replace
display page 3750) at or about 11:00 a.m. (London time) on the Business Day
which is two (2) Business Days prior to the first day of such Settlement Period
for an amount comparable to the Portion of Capital to be funded at the Alternate
Rate and based upon the Euro-Rate during such Settlement Period by (ii) a number
equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be
expressed by the following formula:
Average of London interbank offered rates quoted by BBA as
shown on Dow Xxxxx Markets Service display page 3750 or
appropriate successor
Euro-Rate =
----------------------------------------------------------
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1.00 - Euro-Rate Reserve Percentage
where "Euro-Rate Reserve Percentage" means, the maximum effective percentage in
effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including without limitation, supplemental, marginal, and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
"Eurocurrency Liabilities"). The Euro-Rate shall be adjusted with respect to any
Portion of Capital funded at the Alternate Rate and based upon the Euro-Rate
that is outstanding on the effective date of any change in the Euro-Rate Reserve
Percentage as of such effective date. The Administrator shall give prompt notice
to the Seller of the Euro-Rate as determined or adjusted in accordance herewith
(which determination shall be conclusive absent manifest error).
"Event of Bankruptcy" means (a) any case, action or proceeding before any
court or other governmental authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors or (b) any general assignment for the benefit of creditors of a Person
composition, marshaling of assets for creditors of a Person, or other similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each of cases (a) and (b) undertaken under U.S. Federal,
state or foreign law, including the U.S. Bankruptcy Code.
"Excess Concentration" means the sum of the amounts by which the
Outstanding Balance of Eligible Receivables of each Obligor then in the
Receivables Pool exceeds an amount equal to: (a) the Concentration Percentage
for such Obligor multiplied by (b) the Outstanding Balance of all Eligible
Receivables then in the Receivables Pool.
"Facility Termination Date" means the earliest to occur of: (a) May 21,
2003, (b) the date determined pursuant to Section 2.2 of the Agreement, (c) the
-----------
date the Purchase Limit reduces to zero pursuant to Section 1.1(b) of the
--------------
Agreement, (d) the date that the commitments of all Purchasers terminate under
the Liquidity Agreement and (e) the Issuer shall fail to cause the amendment or
modification of any Transaction Document or related opinion as required by
Moody's or Standard and Poor's, and such failure shall continue for 30 days
after such amendment is initially requested.
"Federal Funds Rate" means, for any day, the per annum rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be
the arithmetic mean as determined by the Administrator of the rates for the last
transaction in overnight Federal funds arranged before 9:00 a.m. (New York time)
on that
I-10
day by each of three leading brokers of Federal funds transactions in New York
City selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any entity succeeding to any of its principal functions.
"Fee Letter" has the meaning set forth in Section 1.5 of the Agreement.
-----------
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any body or entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any court, and any Person owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Group A Obligor" means any Obligor with a short-term rating of at least:
(a) "A-1" by Standard & Poor's, or if such Obligor does not have a short-term
rating from Standard & Poor's, a rating of "A+" or better by Standard & Poor's
on its long-term senior unsecured and uncredit-enhanced debt securities, and (b)
---
"P-1" by Moody's, or if such Obligor does not have a short-term rating from
Moody's, "A1"or better by Moody's on its long-term senior unsecured and
uncredit-enhanced debt securities.
"Group A Obligor Percentage" means, at any time, for each Group A Obligor,
the percentage equivalent of: (a) the aggregate Outstanding Balance of the
Eligible Receivables of such Group A Obligor less any Excess Concentrations of
such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible
Receivables at such time.
"Group B Obligor" means an Obligor, not a Group A Obligor, with a
short-term rating of at least: (a) "A-2" by Standard & Poor's, or if such
Obligor does not have a short-term rating from Standard & Poor's, a rating of
"BBB+" to "A" by Standard & Poor's on its long-term senior unsecured and
uncredit-enhanced debt securities, and (b) "P-2" by Moody's, or if such Obligor
---
does not have a short-term rating from Moody's, "Baa1" to "A2" by Moody's on its
long-term senior unsecured and uncredit-enhanced debt securities.
"Group B Obligor Percentage" means, at any time, for each Group B Obligor,
the percentage equivalent of: (a) the aggregate Outstanding Balance of the
Eligible Receivables of such Group B Obligor less any Excess Concentrations of
such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible
Receivables at such time.
"Group C Obligor" means an Obligor, not a Group A Obligor or a Group B
Obligor, with a short-term rating of at least: (a) "A-3" by Standard & Poor's,
or if such Obligor does not have a short-term rating from Standard & Poor's, a
rating of "BBB-" to "BBB" by Standard & Poor's on its long-term senior unsecured
and uncredit-enhanced debt securities, and (b) "P-3" by Moody's, or
---
I-11
if such Obligor does not have a short-term rating from Moody's, "Baa3" to "Baa2"
by Moody's on its long-term senior unsecured and uncredit-enhanced debt
securities.
"Group C Obligor Percentage" means, at any time, for each Group C Obligor,
the percentage equivalent of: (a) the aggregate Outstanding Balance of the
Eligible Receivables of such Group C Obligor less any Excess Concentrations of
such Obligor, divided by (b) the aggregate Outstanding Balance of all Eligible
Receivables at such time.
"Group D Obligor" means any Obligor that is not a Group A Obligor, Group B
Obligor or Group C Obligor.
"Group D Obligor Percentage" means, at any time, for each Group D Obligor:
(a) the aggregate Outstanding Balance of the Eligible Receivables of such Group
D Obligor less any Excess Concentrations of such Obligor, divided by (b) the
aggregate Outstanding Balance of all Eligible Receivables at such time.
"Indemnified Amounts" has the meaning set forth in Section 3.1 of the
-----------
Agreement.
"Indemnified Party" has the meaning set forth in Section 3.1 of the
-----------
Agreement.
"Independent Director" has the meaning set forth in paragraph 3(c) of
--------------
Exhibit IV to the Agreement.
----------
"Information Package" means a report, in substantially the form of Annex A
to the Agreement, furnished to the Administrator pursuant to the Agreement.
"Insolvency Proceeding" means: (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors, in each case undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of the Internal Revenue Code also refer to any successor
sections.
"Issuer" has the meaning set forth in the preamble to the Agreement.
"Issuer's Share" of any amount means such amount multiplied by the
Purchased Interest at the time of determination.
I-12
"KCI" has the meaning set forth in the preamble to the Agreement.
"KCI Assignment Certificate" means the assignment, in substantially the
form of Exhibit C to the Purchase and Sale Agreement, evidencing Seller's
ownership of the Receivables generated by the Originator, as the same may be
amended, supplemented, amended and restated, or otherwise modified from time to
time in accordance with the Purchase and Sale Agreement.
"KCI Note" has the meaning set forth in Section 3.1 of the Sale Agreement.
-----------
"Late Stage Delinquency Ratio" means the ratio (expressed as a percentage
and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward)
computed as of the last day of each calendar month by dividing: (a) the
aggregate Outstanding Balance of all Pool Receivables that were Late Stage
Delinquent Receivables on such day by (b) the aggregate Outstanding Balance of
all Receivables on such day.
"Late Stage Delinquent Receivable" means a Receivable as to which any
payment, or part thereof, remains unpaid for more than 180 days from the invoice
date for such payment.
"Liquidity Agent" means PNC in its capacity as the Liquidity Agent pursuant
to the Liquidity Agreement.
"Liquidity Agreement" means the Liquidity Asset Purchase Agreement, dated
as of even date herewith, between the purchasers from time to time party
thereto, the Issuer and PNC, as Administrator and Liquidity Agent, as the same
may be further amended, supplemented or otherwise modified from time to time.
"Lock-Box Account" means an account maintained at a bank or other financial
institution for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in form and substance satisfactory
to the Administrator, among the Seller, the Servicer, the Issuer and a Lock-Box
Bank.
"Lock-Box Bank" means any of the banks or other financial institutions
holding one or more Lock-Box Accounts.
"Loss Reserve" means, on any date, an amount equal to: (a) the Capital at
the close of business of the Servicer on such date multiplied by (b)(i) the Loss
Reserve Percentage on such date divided by (ii) 100% minus the Loss Reserve
Percentage on such date.
"Loss Reserve Percentage" means, on any date, the greater of: (a) 14.00% or
(b) (i) the product of (A) 2 times the highest average of the Default Ratios for
any three consecutive calendar months during the twelve most recent calendar
months multiplied by (B) the aggregate of the
I-13
Adjusted New Receivables for the five most recent calendar months divided by
(ii) the aggregate Outstanding Balance of Eligible Receivables as of such date.
"Material Adverse Effect" means, relative to any Person with respect to any
event or circumstance, a material adverse effect on:
(a) the assets, operations, business or financial condition of such
Person,
(b) the ability of any of such Person to perform its obligations under
the Agreement or any other Transaction Document to which it is a party,
(c) the validity or enforceability of any other Transaction Document,
or the validity, enforceability or collectibility of a material portion of
the Pool Receivables, or
(d) the status, perfection, enforceability or priority of the Issuer's
or the Seller's interest in the Pool Assets.
"Monthly Settlement Date" means the sixteenth day of each calendar month
(or the next succeeding Business Day if such day is not a Business Day),
beginning June 16, 2000.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Receivables Pool Balance" means, at any time: (a) the Outstanding
Balance of Eligible Receivables then in the Receivables Pool minus (b) the
Excess Concentration.
"New Receivables" means for any calendar month the aggregate amount of
xxxxxxxx in respect of new Receivables generated by the Originator in such
calendar month.
"Notes" means short-term promissory notes issued, or to be issued, by the
Issuer to fund its investments in accounts receivable or other financial assets.
"Obligor" means, with respect to any Receivable, the Person obligated to
make payments pursuant to the Contract relating to such Receivable.
"Obligor Percentage" means any of the Group A Obligor Percentage, the Group
B Obligor Percentage, the Group C Obligor Percentage or the Group D Obligor
Percentage.
"Originator" has the meaning set forth in the Sale Agreement; provided,
--------
however, upon the occurrence of and after any merger, liquidation or
-------
consolidation of KCI Consulting, LLC and KCI Consulting, Inc., "Originator"
shall mean the surviving entity of such merger, liquidation or consolidation.
I-14
"Originator Assignment Certificate" means the assignment, in substantially
the form of Exhibit C to the Sale Agreement, evidencing KCI's ownership of the
---------
Receivables generated by the Originator, as the same may be amended,
supplemented, amended and restated, or otherwise modified from time to time in
accordance with the Sale Agreement.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
"Payment Date" has the meaning set forth in Section 2.1 of the Purchase and
-----------
Sale Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.
"PNC" has the meaning set forth in the preamble to the Agreement.
"Pool Assets" has the meaning set forth in Section 1.2(d) of the Agreement.
--------------
"Pool Receivable" means a Receivable in the Receivables Pool.
"Portion of Capital" means any separate portion of Capital being funded or
maintained by the Issuer (or its successors or permitted assigns) by reference
to a particular interest rate basis. In addition, at any time when the Capital
of the Purchased Interest is not divided into two or more such portions,
"Portion of Capital" means 100% of the Capital.
"Program Support Agreement" means and includes the Liquidity Agreement and
any other agreement entered into by any Program Support Provider providing for:
(a) the issuance of one or more letters of credit for the account of the Issuer,
(b) the issuance of one or more surety bonds for which the Issuer is obligated
to reimburse the applicable Program Support Provider for any drawings
thereunder, (c) the sale by the Issuer to any Program Support Provider of the
Purchased Interest (or portions thereof) and/or (d) the making of loans and/or
other extensions of credit to the Issuer in connection with the Issuer's
Receivables-securitization program contemplated in the Agreement, together with
any letter of credit, surety bond or other instrument issued thereunder (but
excluding any discretionary advance facility provided by the Administrator).
"Program Support Provider" means and includes any Purchaser and any other
Person (other than any customer of the Issuer) now or hereafter extending credit
or having a commitment to extend credit to or for the account of, or to make
purchases from, the Issuer pursuant to any Program Support Agreement.
"Purchase and Sale Agreement" means the Purchase and Sale Agreement, dated
as of even date herewith, between the Seller and the KCI as such agreement may
be amended, amended and restated, supplemented or otherwise modified from time
to time.
I-15
"Purchase and Sale Indemnified Amounts" has the meaning set forth in
Section 9.1 of the Purchase and Sale Agreement.
-----------
"Purchase and Sale Indemnified Party" has the meaning set forth in Section
-------
9.1 of the Purchase and Sale Agreement.
---
"Purchase and Sale Termination Date" has the meaning set forth in Section
-------
1.4 of the Purchase and Sale Agreement.
---
"Purchase and Sale Termination Event" has the meaning set forth in Section
-------
8.1 of the Purchase and Sale Agreement.
---
"Purchase Facility" has the meaning set forth in Section 1.1 of the
-----------
Purchase and Sale Agreement.
"Purchase Limit" means the lesser of (a) $200,000,000, as such amount may
be reduced pursuant to Section 1.1(b) of the Agreement and (b) an amount equal
--------------
to the amount of the sum of the commitments of the Purchasers under the
Liquidity Agreement divided by 102%. References to the unused portion of the
Purchase Limit shall mean, at any time, the Purchase Limit minus the then
outstanding Capital.
"Purchase Price" has the meaning set forth in Section 2.1 of the Purchase
-----------
and Sale Agreement.
"Purchase Report" has the meaning set forth in Section 2.1 of the Purchase
-----------
and Sale Agreement.
"Purchased Interest" means, at any time, the undivided percentage ownership
interest in: (a) each and every Pool Receivable now existing or hereafter
arising, (b) all Related Security with respect to such Pool Receivables and (c)
all Collections with respect to, and other proceeds of, such Pool Receivables
and Related Security. Such undivided percentage interest shall be computed as:
Capital + Total Reserves
------------------------------
Net Receivables Pool Balance
The Purchased Interest shall be determined from time to time pursuant to Section
-------
1.3 of the Agreement.
---
"Purchaser" has the meaning set forth in Section 5.3(b) of the Agreement.
--------------
"Purchaser's Yield" means, for any Settlement Period, the Discount plus all
Fees payable under the Fee Letter accrued or to accrue during such Settlement
Period, expressed as a percentage of Capital and converted to an interest
bearing equivalent rate per annum.
I-16
"Receivable" means any indebtedness and other obligations owed to the
Seller (as assignee of KCI), KCI (as assignee of Originator) or the Originator
by, or any right of the Seller, KCI or the Originator to payment from or on
behalf of, an Obligor, whether constituting an account, chattel paper,
instrument or general intangible, arising in connection with the rendering of
services by the Originator, and includes the obligation to pay any finance
charges, fees and other charges with respect thereto. Indebtedness and other
obligations arising from any one transaction, including indebtedness and other
obligations represented by an individual invoice or agreement, shall constitute
a Receivable separate from a Receivable consisting of the indebtedness and other
obligations arising from any other transaction.
"Receivables Pool" means, at any time, all of the then outstanding
Receivables purchased or disposed of by the Seller pursuant to the Purchase and
Sale Agreement prior to the Facility Termination Date.
"Reference Bank" means PNC.
"Related Rights" has the meaning set forth in Section 1.1 of the Purchase
-----------
and Sale Agreement.
"Related Security" means, with respect to any Receivable:
(a) all of the Seller's, KCI's and the Originator's interest in any
goods (including returned goods), and documentation of title evidencing the
shipment or storage of any goods (including returned goods), relating to
any sale giving rise to such Receivable,
(b) all instruments and chattel paper that may evidence such
Receivable,
(c) all other security interests or liens and property subject thereto
from time to time purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise, together
with all UCC financing statements or similar filings relating thereto, and
(d) all of the Seller's KCI's and the Originator's rights, interests
and claims under the Contracts and all guaranties, indemnities, insurance
and other agreements (including the related Contract) or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable or otherwise relating to such Receivable, whether pursuant to
the Contract related to such Receivable or otherwise.
"Sale Agreement" means the Sale Agreement, dated as of even date herewith,
between KCI and the Originator as such agreement may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"Sale Cut-off Date" has the meaning set forth in the Sale Agreement.
I-17
"Sale Payment Date" has the meaning set forth in Section 2.1 of the Sale
-----------
Agreement.
"Sale Purchase Facility" has the meaning set forth in Section 1.1 of the
-----------
Sale Agreement.
"Sale Purchase Price" has the meaning set forth in Section 2.1 of the Sale
-----------
Agreement.
"Sale Purchase Report" has the meaning set forth in Section 2.1 of the Sale
-----------
Agreement.
"Sale Indemnified Amounts" has the meaning set forth in Section 9.1 of the
-----------
Sale Agreement.
"Sale Indemnified Party" has the meaning set forth in Section 9.1 of the
-----------
Sale Agreement.
"Sale Related Rights" has the meaning set forth in Section 1.1 of the Sale
-----------
Agreement.
"Sale Termination Date" has the meaning set forth in Section 1.4 of the
-----------
Sale Agreement.
"Sale Termination Event" has the meaning set forth in Section 8.1 of the
-----------
Sale Agreement.
"Seller" has the meaning set forth in the preamble to the Agreement.
"Seller's Share" of any amount means the greater of: (a) $0 and (b) such
amount minus the Issuer's Share.
"Servicer" has the meaning set forth in the preamble to the Agreement.
"Servicing Fee" shall mean the fee referred to in Section 4.6 of the
-----------
Agreement.
"Servicing Fee Rate" shall mean the rate referred to in Section 4.6 of the
-----------
Agreement.
"Settlement Date" means with respect to any Portion of Capital for any
Settlement Period, (i) prior to the Facility Termination Date, the Monthly
Settlement Date and (ii) on and after the Facility Termination Date, each day
selected from time to time by the Administrator (it being understood that the
Administrator may select such Settlement Date to occur as frequently as daily),
or, in the absence of such selection, the Monthly Settlement Date.
"Settlement Period" means: (a) before the Facility Termination Date: (i)
initially the period commencing on the date of the initial purchase pursuant to
Section 1.2 of the Agreement (or in the case of any fees payable hereunder,
-----------
commencing on the Closing Date) and ending on (but not including) the next
Monthly Settlement Date, and (ii) thereafter, each period commencing on such
Monthly Settlement Date and ending on (but not including) the next Monthly
Settlement Date, and (b) on and after the Facility Termination Date: such period
(including a period of one day) as shall be selected from time to time by the
Administrator or, in the absence of any such selection, each period of 30 days
from the last day of the preceding Settlement Period.
I-18
"Solvent" means, with respect to any Person at any time, a condition under
which:
(i) the fair value and present fair saleable value of such Person's
total assets is, on the date of determination, greater than such Person's
total liabilities (including contingent and unliquidated liabilities) at
such time;
(ii) the fair value and present fair saleable value of such Person's
assets is greater than the amount that will be required to pay such
Person's probable liability on its existing debts as they become absolute
and matured ("debts," for this purpose, includes all legal liabilities,
-----
whether matured or unmatured, liquidated or unliquidated, absolute, fixed,
or contingent);
(iii) such Person is and shall continue to be able to pay all of its
liabilities as such liabilities mature; and
(iv) such Person does not have unreasonably small capital with which
to engage in its current and in its anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or unliquidated liabilities
at any time shall be that amount which, in light of all the facts and
circumstances then existing, represents the amount which can reasonably be
expected to become an actual or matured liability;
(B) the "fair value" of an asset shall be the amount which may be
realized within a reasonable time either through collection or sale of such
asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount which
a capable and diligent business person could obtain for such asset from an
interested buyer who is willing to Purchase such asset under ordinary
selling conditions; and
(D) the "present fair saleable value" of an asset means the amount
which can be obtained if such asset is sold with reasonable promptness in
an arm's-length transaction in an existing and not theoretical market.
"Spike Factor" means, for any calendar month, (a) the positive difference,
if any, between: (i) the highest Dilution Ratio for any calendar month during
the twelve most recent calendar months and (ii) the arithmetic average of the
Dilution Ratios for such twelve months times (b) (i) the highest Dilution Ratio
-----
for any calendar month during the twelve most recent calendar months divided by
-------
(ii) the arithmetic average of the Dilution Ratios for such twelve months.
I-19
"Standard & Poor's" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc.
"Subsidiary" means, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock of each class or
other interests having ordinary voting power (other than stock or other
interests having such power only by reason of the happening of a contingency) to
elect a majority of the Board of Directors or other managers of such entity are
at the time owned, or management of which is otherwise controlled: (a) by such
Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and
one or more Subsidiaries of such Person.
"Termination Day" means: (a) each day on which the conditions set forth in
Section 2 of Exhibit II to the Agreement are not satisfied or (b) each day that
--------- ----------
occurs on or after the Facility Termination Date.
"Termination Event" has the meaning specified in Exhibit V to the
---------
Agreement.
"Termination Fee" means, for any Settlement Period during which a
Termination Day occurs, the amount, if any, by which: (a) the additional
Discount (calculated without taking into account any Termination Fee or any
shortened duration of such Settlement Period pursuant to the definition thereof)
that would have accrued during such Settlement Period on the reductions of
Capital relating to such Settlement Period had such reductions not been made,
exceeds (b) the income, if any, received by the Issuer from investing the
proceeds of such reductions of Capital, as determined by the Administrator,
which determination shall be binding and conclusive for all purposes, absent
manifest error.
"Total Reserves" means, at any time the sum of : (a) the Yield Reserve,
plus (b) the greater of (i) the sum of (A) Loss Reserve plus (B) the Dilution
Reserve, (ii) the Concentration Reserve, and (iii) the Delinquency Reserve.
"Transaction Documents" means the Agreement, the Lock-Box Agreements, the
Fee Letter, the Purchase and Sale Agreement, the Sale Agreement and all other
certificates, instruments, UCC financing statements, reports, notices,
agreements and documents executed or delivered under or in connection with the
Agreement, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the Agreement.
"Turnover Rate" means, for any calendar month, an amount computed as of the
last day of such calendar month equal to: (a) the Outstanding Balance of all
Pool Receivables as of the last day of such calendar month divided by (b)(i) the
aggregate of the Adjusted New Receivables originated by the Originator during
the three calendar months ended on or before the last day of such calendar month
divided by (ii) 3.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction.
I-20
"Unmatured Purchase and Sale Termination Event" means any event which, with
the giving of notice or lapse of time, or both, would become a Purchase and Sale
Termination Event.
"Unmatured Sale Termination Event" means any event which, with the giving
of notice or lapse of time, or both, would become a Sale Termination Event.
"Unmatured Termination Event" means an event that, with the giving of
notice or lapse of time, or both, would constitute a Termination Event.
"Year 2000 Problem" means with respect to any Person, the risk that certain
computer applications used by such Person may be unable to recognize and perform
properly date-sensitive functions involving dates prior to and after December
31, 1999.
"Yield Reserve" means, on any date, an amount equal to: (a) the Capital at
the close of business of the Servicer on such date multiplied by (b)(i) the
Yield Reserve Percentage on such date divided by (ii) 100% minus the Yield
Reserve Percentage on such date.
"Yield Reserve Percentage" means at any time:
(PY + SFR) x 1.5 x TR
--------
12
where:
PY = the Purchaser's Yield computed for the most recent Settlement
Period,
TR = the Turnover Rate, and
SFR = the Servicing Fee Rate
Other Terms. All accounting terms not specifically defined herein shall be
-----------
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC in the State of New York, and not specifically
defined herein, are used herein as defined in such Article 9. Unless the context
otherwise requires, "or" means "and/or," and "including" (and with correlative
meaning "include" and "includes") means including without limiting the
generality of any description preceding such term.
I-21
EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent to Initial Purchase. The Initial Purchase under
----------------------------------------
this Agreement is subject to the following conditions precedent that the
Administrator shall have received on or before the date of such purchase, each
in form and substance (including the date thereof) satisfactory to the
Administrator:
(a) A counterpart of the Agreement and the other Transaction Documents
executed by the parties thereto.
(b) Certified copies of: (i) the resolutions of the Board of Directors of
each of the Seller, the written consent of KCI as the member of the Originator
and the resolutions of the executive committee of the Broad of Directors of KCI
authorizing the execution, delivery and performance by the Seller, the
Originator and KCI, as the case may be, of the Agreement and the other
Transaction Documents to which it is a party; (ii) all documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to the Agreement and the other Transaction Documents and (iii) the
certificate of incorporation and by-laws of the Seller and KCI.
(c) A certificate of the Secretary or Assistant Secretary of the Seller,
the Originator and KCI certifying the names and true signatures of its officers
who are authorized to sign the Agreement and the other Transaction Documents.
Until the Administrator receives a subsequent incumbency certificate from the
Seller, the Originator or KCI, as the case may be, the Administrator shall be
entitled to rely on the last such certificate delivered to it by the Seller, the
Originator or KCI, as the case may be.
(d) Acknowledgment copies, or time stamped receipt copies, of proper
financing statements, duly filed on or before the date of such initial purchase
under the UCC of all jurisdictions that the Administrator may deem necessary or
desirable in order to perfect the interests of the Seller, KCI, the Originator
and the Issuer contemplated by the Agreement and the Sale Agreement.
(e) Acknowledgment copies, or time-stamped receipt copies, of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Receivables, Contracts or Related Security
previously granted by the Originator, KCI or the Seller.
(f) Completed UCC search reports, dated on or shortly before the date of
the initial purchase hereunder, listing the financing statements filed in all
applicable jurisdictions referred to in subsection (e) above that name the
--------------
Originator, KCI or the Seller as debtor, together with copies of such other
financing statements, and similar search reports with respect to judgment liens,
federal tax liens and liens of the Pension Benefit Guaranty Corporation in such
jurisdictions, as the Administrator may request, showing no Adverse Claims on
any Pool Assets.
II-1
(g) Favorable opinions, in form and substance reasonably satisfactory to
the Administrator, of: (i) Sidley & Austin, counsel for the Seller, KCI, the
Originator, and the Servicer, (ii) Hunton & Xxxxxxxx, special Virginia counsel
to the Seller, KCI and the Originator, and (iii) Xxxxxxx X. Xxxx, General
Counsel of KPMG LLP and counsel to KCI and the Originator.
(h) Satisfactory results of a review and audit (performed by
representatives of the Administrator) of the Servicer's collection, operating
and reporting systems, the Credit and Collection Policy of the Originator,
historical receivables data and accounts, including satisfactory results of a
review of the Servicer's operating location(s) and satisfactory review and
approval of the Eligible Receivables in existence on the date of the initial
purchase under the Agreement.
(i) A pro forma Information Package representing the performance of the
Receivables Pool for the calendar month before closing.
(j) Evidence of payment by the Seller of all accrued and unpaid fees
(including those contemplated by the Fee Letter), costs and expenses to the
extent then due and payable on the date thereof, including any such costs, fees
and expenses arising under or referenced in Section 5.4 of the Agreement and the
-----------
Fee Letter.
(k) The Fee Letter duly executed by the Seller and the Servicer.
(l) Good standing certificates with respect to each of the Seller, KCI, the
Originator and the Servicer issued by the Secretary of State (or similar
official) of the state of each such Person's organization or formation and
principal place of business.
(m) The Liquidity Agreement and all other Transaction Documents duly
executed by the parties thereto.
(n) A computer file containing all information with respect to the
Receivables as the Administrator or the Issuer may reasonably request.
(o) [RESERVED]
(p) Such other approvals, opinions or documents as the Administrator or the
Issuer may reasonably request.
2. Conditions Precedent to All Purchases and Reinvestments. Each purchase
-------------------------------------------------------
(except as to clause (a), including the initial purchase) and each reinvestment
----------
shall be subject to the further conditions precedent that:
(a) in the case of each purchase, the Servicer shall have delivered to the
Administrator on or before such purchase, in form and substance satisfactory to
the Administrator, a completed pro forma
II-2
Information Package to reflect the level of Capital and related reserves and the
calculation of the Purchased Interest after such subsequent purchase; and
(b) on the date of such purchase or reinvestment the following statements
shall be true (and acceptance of the proceeds of such purchase or reinvestment
shall be deemed a representation and warranty by the Seller that such statements
are then true):
(i) the representations and warranties contained in Exhibit III to
the Agreement are true and correct in all material respects on and as of
the date of such purchase or reinvestment as though made on and as of such
date;
(ii) no event has occurred and is continuing, or would result from
such purchase or reinvestment, that constitutes a Termination Event or an
Unmatured Termination Event; and
(iii) the Capital does not exceed the Purchase Limit.
II-3
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
1. Representations and Warranties of the Seller. The Seller represents and
--------------------------------------------
warrants as follows:
(a) The Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and is duly qualified to
do business and is in good standing as a foreign corporation in every
jurisdiction where the nature of its business requires it to be so qualified,
except where the failure to be so qualified would not have a Material Adverse
Effect.
(b) The execution, delivery and performance by the Seller of the Agreement
and the other Transaction Documents to which it is a party, including its use of
the proceeds of purchases and reinvestments: (i) are within its corporate
powers; (ii) have been duly authorized by all necessary corporate action; (iii)
do not contravene or result in a default under or conflict with: (A) its charter
or by-laws, (B) any law, rule or regulation applicable to it, (C) any indenture,
loan agreement, mortgage, deed of trust or other material agreement or
instrument to which it is a party or by which it is bound, or (D) any order,
writ, judgment, award, injunction or decree binding on or affecting it or any of
its property; and (iv) do not result in or require the creation of any Adverse
Claim upon or with respect to any of its properties. The Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered by the Seller.
(c) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or other Person is required for its due
execution, delivery and performance by the Seller of the Agreement or any other
Transaction Document to which it is a party, other than the Uniform Commercial
Code filings referred to in Exhibit II to the Agreement, all of which shall have
----------
been filed on or before the date of the first purchase hereunder.
(d) Each of the Agreement and the other Transaction Documents to which the
Seller is a party constitutes its legal, valid and binding obligation
enforceable against the Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws from time to time in effect affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) There is no pending or, to Seller's best knowledge, threatened action
or proceeding affecting Seller or any of its properties before any Governmental
Authority or arbitrator.
(f) [RESERVED]
III-1
(g) The Seller is the legal and beneficial owner of the Pool Receivables
and Related Security, free and clear of any Adverse Claim. Upon each purchase or
reinvestment, the Issuer shall acquire a valid and enforceable perfected
undivided percentage ownership or security interest, to the extent of the
Purchased Interest, in each Pool Receivable then existing or thereafter arising
and in the Related Security, Collections and other proceeds with respect
thereto, free and clear of any Adverse Claim. The Agreement creates a security
interest in favor of the Issuer in the Pool Assets, and the Issuer has a first
priority perfected security interest in the Pool Assets, free and clear of any
Adverse Claims. No effective financing statement or other instrument similar in
effect covering any Pool Asset is on file in any recording office, except those
filed in favor of KCI pursuant to the Sale Agreement and in favor of the Seller
pursuant to the Purchase and Sale Agreement and the Issuer relating to the
Agreement.
(h) Each Information Package (if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Seller or an Affiliate), written information, exhibit, financial statement,
document, book, record or report furnished or to be furnished at any time by or
on behalf of the Seller to the Administrator in connection with the Agreement or
any other Transaction Document to which it is a party is or will be complete and
accurate in all material respects as of its date or (except as otherwise
disclosed to the Administrator at such time) as of the date so furnished,
(i) The Seller's principal place of business and chief executive office (as
such terms are used in the UCC) and the office where it keeps its master records
concerning the Receivables are located at the address referred to in Sections
--------
1(b) and 2(b) of Exhibit IV to the Agreement.
---- ---- ----------
(j) The names and addresses of all the Lock-Box Banks, together with the
account numbers of the Lock-Box Accounts at such Lock-Box Banks, are specified
in Schedule II to the Agreement (or at such other Lock-Box Banks and/or with
-----------
such other Lock-Box Accounts as have been notified to the Administrator in
accordance with the Agreement) and all Lock-Box Accounts are subject to Lock-Box
Agreements.
(k) The Seller is not in violation of any order of any court, arbitrator or
Governmental Authority.
(l) Neither the Seller nor any of its Affiliates has any direct or indirect
ownership or other financial interest in the Issuer.
(m) No proceeds of any purchase or reinvestment will be used for any
purpose that violates any applicable law, rule or regulation, including
Regulations T, U or X of the Federal Reserve Board.
(n) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable.
III-2
(o) No event has occurred and is continuing, or would result from a
purchase in respect of, or reinvestment in respect of, the Purchased Interest or
from the application of the proceeds therefrom, that constitutes a Termination
Event or an Unmatured Termination Event.
(p) [RESERVED]
(q) The Seller has complied in all material respects with the Credit and
Collection Policies of the Originator with regard to each Receivable originated
by the Originator.
(r) The Seller has complied in all material respects with all of the terms,
covenants and agreements contained in the Agreement and the other Transaction
Documents that are applicable to it.
(s) The Seller's complete corporate name is set forth in the preamble to
the Agreement, and it does not use and has not during the last six years used
any other corporate name, trade name, doing-business name or fictitious name,
except as set forth on Schedule III to the Agreement and except for names first
------------
used after the date of the Agreement and set forth in a notice delivered to the
Administrator pursuant to Section 1(l)(iv) of Exhibit IV to the Agreement.
---------------- ----------
(t) The Seller is not an "investment company," or a company "controlled" by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended. In addition, the Seller is not a "holding company," a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(u) The Seller has reviewed the areas within its business and operations
which could be adversely affected by, and has developed or is developing a
program to address on a timely basis, the Year 2000 Problem. The Year 2000
Problem will not result in any Material Adverse Effect.
2. Representations and Warranties of the Servicer. The Servicer represents
----------------------------------------------
and warrants as follows:
(a) The Servicer is a corporation duly formed, validly existing and in good
standing under the laws of the State of Delaware, and is duly qualified to do
business and is in good standing as a foreign corporation in every jurisdiction
where the nature of its business requires it to be so qualified, except where
the failure to be so qualified would not have a Material Adverse Effect.
(b) The execution, delivery and performance by the Servicer of the
Agreement and the other Transaction Documents to which it is a party, including
the Servicer's use of the proceeds of purchases and reinvestments: (i) are
within its corporate powers; (ii) have been duly authorized by all necessary
corporate action; (iii) do not contravene or result in a default under or
conflict with: (A) its charter or bylaws, (B) any law, rule or regulation
applicable to it, (C) any indenture, loan agreement, mortgage, deed of trust or
other material agreement or instrument to which it is a party
III-3
or by which it is bound, or (D) any order, writ, judgment, award, injunction or
decree binding on or affecting it or any of its property; and (iv) do not result
in or require the creation of any Adverse Claim upon or with respect to any of
its properties. The Agreement and the other Transaction Documents to which the
Servicer is a party have been duly executed and delivered by the Servicer.
(c) No authorization, approval or other action by, and no notice to or
filing with any Governmental Authority or other Person, is required for the due
execution, delivery and performance by the Servicer of the Agreement or any
other Transaction Document to which it is a party.
(d) Each of the Agreement and the other Transaction Documents to which the
Servicer is a party constitutes the legal, valid and binding obligation of the
Servicer enforceable against the Servicer in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws from time to time in effect affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(e) The balance sheets of the Servicer and its consolidated Subsidiaries as
at June 30, 1999, and the related statements of income and retained earnings for
the fiscal year then ended, copies of which have been furnished to the
Administrator, fairly present the financial condition of the Servicer and its
consolidated Subsidiaries as at such date and the results of the operations of
the Servicer and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles consistently applied,
and since December 31, 1999 there has been no event or circumstances which have
had a Material Adverse Effect.
(f) Except as disclosed in the most recent audited financial statements of
the Servicer furnished to the Administrator or as otherwise disclosed to the
Administrator, there is no pending or, to its best knowledge, threatened action
or proceeding affecting it or any of its Subsidiaries before any Governmental
Authority or arbitrator that could reasonably be expected to have a Material
Adverse Effect on the Servicer or the Servicer and its Subsidiaries taken as a
whole.
(g) [RESERVED]
(h) Each Information Package (if prepared by the Servicer or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Servicer or an Affiliate), written information, exhibit, financial
statement, document, book, record or report furnished or to be furnished at any
time by or on behalf of the Servicer to the Administrator in connection with the
Agreement is or will be complete and accurate in all material respects as of its
date or (except as otherwise disclosed to the Administrator at such time) as of
the date so furnished.
(i) [RESERVED]
(j) the Servicer is not in violation of any order of any court, arbitrator
or Governmental Authority, which could reasonably be expected to have a Material
Adverse Effect.
III-4
(k) Neither the Servicer nor any of its Affiliates has any direct or
indirect ownership or other financial interest in the Issuer.
(l) The Servicer has complied in all material respects with the Credit and
Collection Policy of the Originator with regard to each Receivable originated by
the Originator.
(m) The Servicer has complied in all material respects with all of the
terms, covenants and agreements contained in the Agreement and the other
Transaction Documents that are applicable to it.
(n) [RESERVED]
(o) The Servicer has reviewed the areas within its business and operations
which could be adversely affected by, and has developed or is developing a
program to address on a timely basis, the Year 2000 problem. The Year 2000
problem will not result in any Material Adverse Effect.
III-5
EXHIBIT IV
COVENANTS
1. Covenants of the Seller. Until the latest of the Facility Termination
-----------------------
Date, the date on which no Capital of or Discount in respect of the Purchased
Interest shall be outstanding or the date all other amounts owed by the Seller
under the Agreement to the Issuer, the Administrator and any other Indemnified
Party or Affected Person shall be paid in full:
(a) Compliance with Laws, Etc. The Seller shall comply in all material
-------------------------
respects with all applicable laws, rules, regulations and orders, and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges, except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such rights,
franchises, qualifications and privileges would not have a Material Adverse
Effect.
(b) Offices, Records and Books of Account, Etc. The Seller: (i) shall keep
------------------------------------------
its principal place of business and chief executive office (as such terms or
similar terms are used in the UCC) and the office where it keeps its master
records concerning the Receivables at the addresses of the Seller set forth on
Schedule IV or, pursuant to clause (l)(iv) below, at any other locations in
--------------
jurisdictions where all actions reasonably requested by the Administrator to
protect and perfect the interest of the Issuer in the Receivables and related
items (including the Pool Assets) have been taken and completed and (ii) shall
provide the Administrator with at least 30 days' written notice before making
any change in the Seller's name or making any other change in the Seller's
identity or corporate structure (including a Change in Control) that could
render any UCC financing statement filed in connection with this Agreement
"seriously misleading" as such term (or similar term) is used in the UCC; each
notice to the Administrator pursuant to this sentence shall set forth the
applicable change and the effective date thereof. The Seller also will maintain
and implement (or cause the Servicer to maintain and implement) administrative
and operating procedures (including an ability to recreate records evidencing
Receivables and related Contracts in the event of the destruction of the
originals thereof within a reasonable time thereafter), and keep and maintain
(or cause the Servicer to keep and maintain) all documents, books, records,
computer tapes and disks and other information reasonably necessary or advisable
for the collection of all Receivables (including records adequate to permit the
daily identification of each Receivable and all Collections of and adjustments
to each existing Receivable). Notwithstanding the above, in no event shall the
Seller have or maintain, or be a partner in any partnership that has or
maintains, its jurisdiction of organization, principal place of business or
principal assets in any of the states of Colorado, Kansas, New Mexico, Oklahoma,
Utah or Wyoming.
(c) Performance and Compliance with Contracts and Credit and Collection
-------------------------------------------------------------------
Policy. The Seller shall (and shall cause the Servicer to), at its expense,
------
timely and fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Contracts
IV-1
related to the Receivables, and timely and fully comply in all material respects
with the applicable Credit and Collection Policies with regard to each
Receivable and the related Contract.
(d) Ownership Interest, Etc. The Seller shall (and shall cause the Servicer
-----------------------
to), at its expense, take all action necessary or desirable to establish and
maintain a valid and enforceable undivided percentage ownership or security
interest, to the extent of the Purchased Interest, in the Pool Receivables, the
Related Security and Collections with respect thereto, and a first priority
perfected security interest in the Pool Assets, in each case free and clear of
any Adverse Claim, in favor of the Issuer, including taking such action to
perfect, protect or more fully evidence the interest of the Issuer as the
Issuer, through the Administrator, may reasonably request.
(e) Sales, Liens, Etc. The Seller shall not sell, assign (by operation of
-----------------
law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any or all of its right, title or
interest in, to or under any Pool Assets (including the Seller's undivided
interest in any Receivable, Related Security or Collections, or upon or with
respect to any account to which any Collections of any Receivables are sent), or
assign any right to receive income in respect of any items contemplated by this
paragraph.
(f) Extension or Amendment of Receivables. Except as provided in the
-------------------------------------
Agreement, the Seller shall not, and shall not permit the Servicer to, extend
the maturity or adjust the Outstanding Balance or otherwise modify the terms of
any Pool Receivable in any material respect, or amend, modify or waive, in any
material respect, any term or condition of any related Contract (which term or
condition relates to payments under, or the enforcement of, such Contract).
(g) Change in Business or Credit and Collection Policy. Without the consent
--------------------------------------------------
of the Administrator (such consent not be unreasonably withheld), the Seller
shall not engage in (or permit the Originator or KCI to engage in) any new lines
of business other than lines substantially the same or substantially similar as
one or more lines of business then conducted by such party or make (or permit
the Originator or KCI to make) any material change in any Credit and Collection
Policy, or make (or permit the Originator or KCI to make) any change in the
Credit and Collection Policy that would have a Material Adverse Effect with
respect to the Receivables. The Seller shall not make (or permit the Originator
or KCI to make) any other change in any Credit and Collection Policy without
giving prior written notice thereof to the Administrator.
(h) Audits. The Seller shall (and shall cause the Originator and KCI to),
------
from time to time during regular business hours but no more frequently than
quarterly unless (x) a Termination Event or Unmatured Termination Event has
occurred and is continuing or (y) in the opinion of the Administrator reasonable
grounds for insecurity exist with respect to the collectibility of a material
amount of the Pool Receivables or with respect to the Seller's performance or
ability to perform in any material respect its obligations under the Agreement,
as reasonably requested in advance (unless a Termination Event or Unmatured
Termination Event exists) by the Administrator, permit the Administrator, or its
agents or representatives: (i) to examine and make copies of and abstracts from
all books, records and documents (including computer tapes and disks) in the
possession or under
IV-2
the control of the Seller (or the Originator or KCI ) relating to Receivables
and the Related Security, including the related Contracts, (ii) to visit the
offices and properties of the Seller, KCI and the Originator for the purpose of
examining such materials described in clause (i) above, and to discuss matters
----------
relating to Receivables and the Related Security or the Seller's, KCI's or the
Originator's performance under the Transaction Documents or under the Contracts
with any of the officers, employees, agents or contractors of the Seller, KCI or
the Originator having knowledge of such matters and (iii) without limiting the
clauses (i) and (ii) above, to engage certified public accountants or other
----------- ----
auditors acceptable to the Seller and the Administrator to conduct, at the
Seller's expense, a review of the Seller's books and records with respect to
such Receivables.
(i) Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to
-----------------------------------------------------------------------
Obligors. The Seller shall not, and shall not permit the Servicer, KCI or the
--------
Originator to, add or terminate any bank as a Lock-Box Bank or any account as a
Lock-Box Account from those listed in Schedule II to the Agreement, or make any
-----------
change in its instructions to Obligors regarding payments to be made to the
Seller, KCI, the Originator, the Servicer or any Lock-Box Account (or related
post office box), unless the Administrator shall have consented thereto in
writing and the Administrator shall have received copies of all agreements and
documents (including Lock-Box Agreements) that it may request in connection
therewith.
(j) Deposits to Lock-Box Accounts. The Seller shall (or shall cause the
-----------------------------
Servicer to): (i) instruct all Obligors to make payments of all Receivables to
one or more Lock-Box Accounts or to post office boxes to which only Lock-Box
Banks have access (and shall instruct the Lock-Box Banks to cause all items and
amounts relating to such Receivables received in such post office boxes to be
removed and deposited into a Lock-Box Account on a daily basis), and (ii)
deposit, or cause to be deposited, any Collections received by it, the Servicer,
KCI or the Originator into Lock-Box Accounts not later than one Business Day
after receipt thereof. Each Lock-Box Account shall at all times be subject to a
Lock-Box Agreement. The Seller will not (and will not permit the Servicer to)
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to any Lock-Box Account cash or cash proceeds other than Collections.
(k) Marking of Records. At its expense, the Seller shall: (i) xxxx (or
------------------
cause the Servicer to xxxx) its master data processing records relating to Pool
Receivables and related Contracts, including with a legend evidencing that the
undivided percentage ownership interests with regard to the Purchased Interest
related to such Receivables and related Contracts have been sold in accordance
with the Agreement, (ii) cause KCI so to xxxx its master data processing records
pursuant to the Purchase and Sale Agreement, and (iii) cause the Originator so
to xxxx its master data processing records pursuant to the Sale Agreement.
(l) Reporting Requirements. The Seller will provide to the Administrator
----------------------
(in multiple copies, if requested by the Administrator) the following:
(i) as soon as available and in any event within 90 days after the end
of each fiscal year of the Seller, a copy of the annual report for such
year for the Seller, containing
IV-3
unaudited financial statements for such year certified as to accuracy by
the chief financial officer or treasurer of the Seller;
(ii) as soon as possible and in any event within five days after
becoming aware of the occurrence of any Termination Event or Unmatured
Termination Event, a statement of the chief financial officer of the Seller
setting forth details of such Termination Event or Unmatured Termination
Event and the action that the Seller has taken and proposes to take with
respect thereto;
(iii) promptly after the filing or receiving thereof, copies of all
reports and notices that the Seller or any Affiliate files under ERISA with
the Internal Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or that the Seller or any Affiliate receives
from any of the foregoing or from any multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA) to which the Seller or any of its
Affiliates is or was, within the preceding five years, a contributing
employer, in each case in respect of the assessment of withdrawal liability
or an event or condition that could, in the aggregate, result in the
imposition of material liability on the Seller and/or any such Affiliate;
(iv) at least thirty days before any change in the Seller's name or
any other change requiring the amendment of UCC financing statements, a
notice setting forth such changes and the effective date thereof;
(v) promptly after the Seller obtains knowledge thereof, notice of
any: (A) material litigation, investigation or proceeding that may exist at
any time between the Seller and any Person or (B) material litigation or
proceeding relating to any Transaction Document;
(vi) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of the Seller, KCI, the Servicer or the Originator; and
(vii) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of the Seller or any of
its Affiliates as the Administrator may from time to time reasonably
request.
(m) Certain Agreements. Without the prior written consent of the
------------------
Administrator, the Seller will not (and will not permit the Originator or KCI
to) amend, modify, waive, revoke or terminate any Transaction Document to which
it is a party or any provision of Seller's certificate of incorporation or
by-laws.
(n) Restricted Payments. (i) Except pursuant to clause (ii) below, the
------------------- -----------
Seller will not: (A) purchase or redeem any shares of its capital stock, (B)
declare or pay any dividend or set aside any funds for any such purpose, (C)
prepay, purchase or redeem any Debt (other than Debt incurred hereunder), (D)
lend or advance any funds or (E) repay any loans or advances to, for or from any
of
IV-4
its Affiliates (the amounts described in clauses (A) through (E) being referred
----------- ---
to as "Restricted Payments").
(ii) Subject to the limitations set forth in clause (iii) below, the
------------
Seller may make Restricted Payments so long as such Restricted Payments are
made only in one or more of the following ways: (A) the Seller may make
cash payments (including prepayments) on the Company Note in accordance
with its terms (B) the Seller may make cash payments for operating expenses
incurred in the ordinary course of its business, and (C) if no amounts are
then outstanding under the Company Note, the Seller may declare and pay
dividends.
(iii) The Seller may make Restricted Payments only out of the funds it
receives pursuant to Sections 1.4(b)(ii) and (iv) of the Agreement.
------------------- ----
Furthermore, the Seller shall not pay, make or declare: (A) any dividend
if, after giving effect thereto, the Seller's tangible net worth would be
less than $14,000,000, or (B) any Restricted Payment (including any
dividend) if, after giving effect thereto, any Termination Event or
Unmatured Termination Event shall have occurred and be continuing.
(o) Other Business. The Seller will not: (i) engage in any business other
--------------
than the transactions contemplated by the Transaction Documents; (ii) create,
incur or permit to exist any Debt of any kind (or cause or permit to be issued
for its account any letters of credit or bankers' acceptances) other than
pursuant to this Agreement or the Company Note; or (iii) form any Subsidiary or
make any investments in any other Person; provided, however, that the Seller
shall be permitted to incur minimal obligations to the extent necessary for the
day-to-day operations of the Seller (such as expenses for stationery, audits,
maintenance of legal status, etc.).
(p) Use of Seller's Share of Collections. The Seller shall apply the
------------------------------------
Seller's Share of Collections to make payments in the following order of
priority: (i) the payment of its expenses (including all obligations payable to
the Issuer and the Administrator under the Agreement and under the Fee Letter);
(ii) the payment of accrued and unpaid interest on the Company Note; and (iii)
other legal and valid corporate purposes.
(q) Tangible Net Worth. The Seller will not permit its tangible net worth,
------------------
at any time, to be less than $14,000,000.
2. Covenants of the Servicer. Until the latest of the Facility Termination
-------------------------
Date, the date on which no Capital of or Discount in respect of the Purchased
Interest shall be outstanding or the date all other amounts owed by the Seller
under the Agreement to the Issuer, the Administrator and any other Indemnified
Party or Affected Person shall be paid in full:
(a) Compliance with Laws, Etc. The Servicer shall comply in all material
-------------------------
respects with all applicable laws, rules, regulations and orders, and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges, except to the extent that the failure so to comply with
IV-5
such laws, rules and regulations or the failure so to preserve and maintain such
existence, rights, franchises, qualifications and privileges would not have a
Material Adverse Effect.
(b) Offices, Records and Books of Account, Etc. The Servicer will maintain
------------------------------------------
and implement administrative and operating procedures (including an ability to
recreate records evidencing Receivables and related Contracts in the event of
the destruction of the originals thereof) within a reasonable time thereafter,
and keep and maintain all documents, books, records, computer tapes and disks
and other information reasonably necessary or advisable for the collection of
all Receivables (including records adequate to permit the daily identification
of each Receivable and all Collections of and adjustments to each existing
Receivable).
(c) Performance and Compliance with Contracts and Credit and Collection
-------------------------------------------------------------------
Policy. The Servicer shall at its expense, timely and fully perform and comply
------
with all material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Receivables, and timely and
fully comply in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract.
(d) Extension or Amendment of Receivables. Except as provided in the
-------------------------------------
Agreement, the Servicer shall not extend the maturity or adjust the Outstanding
Balance or otherwise modify the terms of any Pool Receivable in any material
respect, or amend, modify or waive, in any material respect, any term or
condition of any related Contract (which term or condition relates to payments
under, or the enforcement of, such Contract.
(e) Change in Business or Credit and Collection Policy. Without the consent
--------------------------------------------------
of the Administrator (such consent not to be unreasonably withheld), the
Servicer shall not engage in any new lines of business other than lines
substantially the same or substantially similar as one or more lines of business
then conducted by such party or make any material change in any Credit and
Collection Policy, or make any change in any Credit and Collection Policy that
would have a Material Adverse Effect. The Servicer shall not make any other
change in any Credit and Collection Policy without giving prior written notice
thereof to the Administrator.
(f) Audits. The Servicer shall from time to time during regular business
------
hours but no more frequently than quarterly unless (x) a Termination Event or
Unmatured Termination Event has occurred and is continuing or (y) in the opinion
of the Administrator reasonable grounds for insecurity exist with respect to the
collectibility of a material amount of the Pool Receivables or with respect to
the Seller's performance or ability to perform in any material respect its
obligations under the Agreement, as reasonably requested in advance (unless a
Termination Event or Unmatured Termination Event exists) by the Administrator,
permit the Administrator, or its agents or representatives: (i) to examine and
make copies of and abstracts from all books, records and documents (including
computer tapes and disks) in its possession or under its control relating to
Receivables and the Related Security, including the related Contracts; (ii) to
visit its offices and properties for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to Receivables
----------
and the Related Security or its performance hereunder or under the
IV-6
Contracts with any of its officers, employees, agents or contractors having
knowledge of such matters and (iii) without limiting the clauses (i) and (ii)
----------- ----
above, to engage certified public accountants or other auditors acceptable to
the Servicer and the Administrator to conduct, at the Servicer's expense, a
review of the Servicer's books and records with respect to such Receivables.
(g) Change in Lock-Box Banks, Lock-Box Accounts and Payment Instructions to
-----------------------------------------------------------------------
Obligors. The Servicer shall not (and shall not permit the Originator or KCI to)
--------
add or terminate any bank as a Lock-Box Bank or any account as a Lock-Box
Account from those listed in Schedule II to the Agreement, or make any change in
-----------
its instructions to Obligors regarding payments to be made to the Servicer or
any Lock-Box Account (or related post office box), unless the Administrator
shall have consented thereto in writing and the Administrator shall have
received copies of all agreements and documents (including Lock-Box Agreements)
that it may request in connection therewith.
(h) Deposits to Lock-Box Accounts. The Servicer shall: (i) instruct all
-----------------------------
Obligors to make payments of all Receivables to one or more Lock-Box Accounts or
to post office boxes to which only Lock-Box Banks have access (and shall
instruct the Lock-Box Banks to cause all items and amounts relating to such
Receivables received in such post office boxes to be removed and deposited into
a Lock-Box Account on a daily basis); and (ii) deposit, or cause to be
deposited, any Collections received by it into Lock-Box Accounts not later than
one Business Day after receipt thereof. Each Lock-Box Account shall at all times
be subject to a Lock-Box Agreement.
(i) Marking of Records. At its expense, the Servicer shall xxxx its master
------------------
data processing records relating to Pool Receivables and related Contracts,
including with a legend evidencing that the undivided percentage ownership
interests with regard to the Purchased Interest related to such Receivables and
related Contracts have been sold in accordance with the Agreement.
(j) Reporting Requirements. The Servicer shall provide to the Administrator
----------------------
(in multiple copies, if requested by the Administrator) the following:
(i) as soon as available and in any event within 45 days after the
end of the first three quarters of each fiscal year of the Servicer,
balance sheets of the Servicer and its consolidated Subsidiaries as of the
end of such quarter and statements of income, retained earnings and cash
flow of the Servicer and its consolidated Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end
of such quarter, certified by the chief financial officer of the Servicer;
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year of the Servicer, a copy of the annual report for
such year for the Servicer and its consolidated Subsidiaries, containing
financial statements for such year audited by independent certified public
accountants of nationally recognized standing;
(iii) as soon as available and in any event not later than two
Business Days prior to the Monthly Settlement Date, an Information Package
as of the most recently completed
IV-7
calendar month or, if in the opinion of the Administrator reasonable
grounds for insecurity exist with respect to the collectibility of the Pool
Receivables or with respect to the Seller or Servicer's performance or
ability to perform its obligations under the Agreement, within six Business
Days of a request by the Administrator, an Information Package for such
periods as is specified by the Administrator (but in no event more
frequently than weekly);
(iv) as soon as possible and in any event within five days after
becoming aware of the occurrence of each Termination Event or Unmatured
Termination Event, a statement of the chief financial officer of the
Servicer setting forth details of such Termination Event or Unmatured
Termination Event and the action that such Person has taken and proposes to
take with respect thereto;
(v) promptly after the sending or filing thereof, copies of all
reports that the Servicer sends to any of its security holders, and copies
of all reports and registration statements that the Servicer or any
Subsidiary files with the Securities and Exchange Commission or any
national securities exchange; provided, that any filings with the
Securities and Exchange Commission that have been granted "confidential"
treatment shall be provided promptly after such filings have become
publicly available;
(vi) promptly after the filing or receiving thereof, copies of all
reports and notices that the Servicer or any of its Affiliate files under
ERISA with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that the Servicer or any of
its Affiliates receives from any of the foregoing or from any multiemployer
plan (within the meaning of Section 4001(a)(3) of ERISA) to which the
Servicer or any of its Affiliate is or was, within the preceding five
years, a contributing employer, in each case in respect of the assessment
of withdrawal liability or an event or condition that could, in the
aggregate, result in the imposition of material liability on the Servicer
and/or any such Affiliate;
(vii) [RESERVED];
(viii) promptly after the Servicer obtains knowledge thereof, notice
of any: (A) litigation, investigation or proceeding that may exist at any
time between the Servicer or any of its Subsidiaries and any Governmental
Authority that, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect on the
Servicer or the Servicer and its Subsidiaries taken as a whole; (B)
litigation or proceeding adversely affecting the Servicer or any of its
Subsidiaries in which the amount involved is $10,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought; or
(C) litigation or proceeding relating to any Transaction Document;
(ix) promptly after the occurrence thereof, notice of a material
adverse change in the business, operations, property or financial or other
condition of the Servicer or any of its Subsidiaries; and
IV-8
(x) such other information respecting the Receivables or the condition
or operations, financial or otherwise, of the Servicer or any of its
Affiliates as the Administrator may from time to time reasonably request.
3. Separate Existence. Each of the Seller and the Servicer hereby
------------------
acknowledges that the Purchasers, the Issuer and the Administrator are entering
into the transactions contemplated by this Agreement and the other Transaction
Documents in reliance upon the Seller's identity as a legal entity separate from
KCI, the Originator and their Affiliates. Therefore, from and after the date
hereof, each of the Seller and the Servicer shall take all steps specifically
required by the Agreement or reasonably required by the Administrator to
continue the Seller's identity as a separate legal entity and to make it
apparent to third Persons that the Seller is an entity with assets and
liabilities distinct from those of KCI, the Originator and any other Person, and
is not a division of KCI, the Originator any of their Affiliates or any other
Person. Without limiting the generality of the foregoing and in addition to and
consistent with the other covenants set forth herein, each of the Seller and the
Servicer shall take such actions as shall be required in order that:
(a) The Seller will be a limited purpose corporation whose primary
activities are restricted in its certificate of incorporation to: (i)
purchasing or otherwise acquiring from KCI or the Originator (or its
Affiliates), owning, holding, granting security interests or selling
interests in Pool Assets (or other receivables originated by the Originator
or its Affiliates, and certain related assets), (ii) entering into
agreements for the selling and servicing of the Receivables Pool (or other
receivables pools originated by the Originator or its Affiliates), and
(iii) conducting such other activities as it deems necessary or appropriate
to carry out its primary activities;
(b) The Seller shall not engage in any business or activity, or incur
any indebtedness or liability, other than as expressly permitted by the
Transaction Documents;
(c) Not less than one member of the Seller's Board of Directors (the
"Independent Director") shall be an individual who is not a direct,
indirect or beneficial stockholder, officer, director, employee, affiliate,
associate or supplier of KCI, the Originator or any of their Affiliates.
The certificate of incorporation of the Seller shall provide that: (i) the
Seller's Board of Directors shall not approve, or take any other action to
cause the filing of, a voluntary bankruptcy petition with respect to the
Seller unless the Independent Director shall approve the taking of such
action in writing before the taking of such action, and (ii) such provision
cannot be amended without the prior written consent of the Independent
Director;
(d) The Independent Director shall not at any time serve as a trustee
in bankruptcy for the Seller, KCI, the Originator or any Affiliate thereof;
(e) Any employee, consultant or agent of the Seller will be
compensated from the Seller's funds for services provided to the Seller.
The Seller will not engage any agents other than its attorneys, auditors
and other professionals, and a servicer and any other agent
IV-9
contemplated by the Transaction Documents for the Receivables Pool, which
servicer will be fully compensated for its services by payment of the Servicing
Fee, and a manager, which manager will be fully compensated from the Seller's
funds;
(f) The Seller will contract with the Servicer to perform for the Seller
all operations required on a daily basis to service the Receivables Pool. The
Seller will pay the Servicer the Servicing Fee pursuant hereto. The Seller will
not incur any material indirect or overhead expenses for items shared with KCI
(or any other Affiliate thereof) that are not reflected in the Servicing Fee. To
the extent, if any, that the Seller (or any Affiliate thereof) shares items of
expenses not reflected in the Servicing Fee or the manager's fee, such as legal,
auditing and other professional services, such expenses will be allocated to the
extent practical on the basis of actual use or the value of services rendered,
and otherwise on a basis reasonably related to the actual use or the value of
services rendered; it being understood that KCI shall pay all expenses relating
to the preparation, negotiation, execution and delivery of the Transaction
Documents, including legal, agency and other fees;
(g) The Seller's operating expenses will not be paid by KCI, the Originator
or any other Affiliate of KCI or the Originator;
(h) All of the Seller's business correspondence and other communications
shall be conducted in the Seller's own name and on its own separate stationery;
(i) The Seller's books and records will be maintained separately from those
of KCI, the Originator and any other Affiliate of KCI or the Originator;
(j) All financial statements of KCI, the Originator or any Affiliate
thereof that are consolidated to include Seller will contain detailed notes
clearly stating that: (i) a special purpose corporation exists as a Subsidiary
of KCI, and (ii) the Originator has sold receivables and other related assets to
KCI, KCI, in turn has sold such receivables and other related rights to such
special purpose Subsidiary that, in turn, has sold undivided interests therein
to certain financial institutions and other entities;
(k) The Seller's assets will be maintained in a manner that facilitates
their identification and segregation from those of KCI, the Originator or any
Affiliate of KCI or the Originator;
(l) The Seller will strictly observe corporate formalities in its dealings
with KCI, the Originator or any Affiliate of KCI or the Originator, and funds or
other assets of the Seller will not be commingled with those of KCI, the
Originator or any Affiliate of KCI or the Originator except as permitted by the
Agreement in connection with servicing the Pool Receivables. The Seller shall
not maintain joint bank accounts or other depository accounts to which KCI, the
Originator or any Affiliate of KCI or the Originator has independent access. The
Seller is not named, and has not entered into any agreement to be named,
IV-10
directly or indirectly, as a direct or contingent beneficiary or loss payee on
any insurance policy with respect to any loss relating to the property of KCI or
any Subsidiary or other Affiliate of KCI. The Seller will pay to the appropriate
Affiliate the marginal increase or, in the absence of such increase, the market
amount of its portion of the premium payable with respect to any insurance
policy that covers the Seller and such Affiliate;
(m) The Seller will maintain arm's-length relationships with KCI, the
Originator (and any Affiliate of KCI or the Originator). Any Person that renders
or otherwise furnishes services to the Seller will be compensated by the Seller
at market rates for such services it renders or otherwise furnishes to the
Seller. Neither the Seller nor KCI will be or will hold itself out to be
responsible for the debts of the other or the decisions or actions respecting
the daily business and affairs of the other. The Seller and KCI will immediately
correct any known misrepresentation with respect to the foregoing, and they will
not operate or purport to operate as an integrated single economic unit with
respect to each other or in their dealing with any other entity;
(n) KCI shall not pay the salaries of Seller's employees, if any; and
(o) The Seller will take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the opinion issued by Sidley
& Austin, as counsel for the Seller, in connection with the closing or initial
purchase under this Agreement and relating to substantive consolidation issues
remain true and correct in all material respect at all times.
IV-11
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a)(i) the Seller, KCI, the Originator or the Servicer (if KCI or any of
its Affiliates) shall fail to perform or observe any term, covenant or agreement
under the Agreement or any other Transaction Document and, except as otherwise
provided herein, such failure shall continue for 10 Business Days after
knowledge or notice thereof, (ii) the Seller or the Servicer shall fail to make
when due any payment or deposit to be made by it under the Agreement and such
failure shall continue unremedied for one Business Day or (iii) KCI shall resign
as Servicer, and no successor Servicer reasonably satisfactory to the
Administrator shall have been appointed;
(b) KCI (or any Affiliate thereof) shall fail to transfer to any successor
Servicer when required any rights pursuant to the Agreement that KCI (or such
Affiliate) then has as Servicer;
(c) any representation or warranty made or deemed made by the Seller, KCI
or Originator (or any of their respective officers) under or in connection with
the Agreement or any other Transaction Document, or any written information or
report delivered by the Seller, KCI or Originator or the Servicer pursuant to
the Agreement or any other Transaction Document, shall prove to have been
incorrect or untrue in any material respect when made or deemed made or
delivered, and shall remain incorrect or untrue for 10 days after notice to the
Seller or the Servicer of such inaccuracy;
(d) the Seller or the Servicer shall fail to deliver the Information
Package pursuant to the Agreement, and such failure shall remain unremedied for
two days;
(e) the Agreement or any purchase or reinvestment pursuant to the Agreement
shall for any reason: (i) cease to create, or the Purchased Interest shall for
any reason cease to be, a valid and enforceable perfected undivided percentage
ownership or security interest to the extent of the Purchased Interest in each
Pool Receivable, the Related Security and Collections with respect thereto, free
and clear of any Adverse Claim, or (ii) cease to create with respect to the Pool
Assets, or the interest of the Issuer with respect to such Pool Assets shall
cease to be, a valid and enforceable first priority perfected security interest,
free and clear of any Adverse Claim,
(f) the Seller, KCI or Originator shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Seller, KCI or Originator
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of
V-1
an order for relief or the appointment of a receiver, trustee, custodian or
other similar official for it or for any substantial part of its property and,
in the case of any such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or unstayed for a period of
60 days, or any of the actions sought in such proceeding (including the entry of
an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Seller, KCI or Originator shall take any corporate
action to authorize any of the actions set forth above in this paragraph;
(g)(i) the (A) Default Ratio shall exceed 8% or (B) the Delinquency Ratio
shall exceed 36% or (ii) the average for three consecutive calendar months of:
(A) the Default Ratio shall exceed 6%, (B) the Delinquency Ratio shall exceed
33% or (C) the Dilution Ratio shall exceed 5%.
(h) a Change in Control shall occur,
(i) at any time (i) the sum of (A) the Capital plus (B) the Total Reserves,
exceeds (ii) the sum of (A) the Net Receivables Pool Balance at such time plus
(B) the Issuer's Share of the amount of Collections then on deposit in the
Lock-Box Accounts (other than amounts set aside therein representing Discount
and fees), and such circumstance shall not have been cured within two Business
Days,
(j)(i) KCI or any of its Subsidiaries shall fail to pay any principal of
or premium or interest on any of its Debt that is outstanding in a principal
amount of at least $15,000,000 in the aggregate when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement, mortgage, indenture or instrument
relating to such Debt (and shall have not been waived); or (ii) any other event
shall occur or condition shall exist under any agreement, mortgage, indenture or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement, mortgage, indenture or
instrument (and shall have not been waived), if, in either case: (a) the effect
of such non-payment, event or condition is to give the applicable debtholders
the right (whether acted upon or not) to accelerate the maturity of such Debt,
or (b) any such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to repay, redeem, purchase or defease such
Debt shall be required to be made, in each case before the stated maturity
thereof;
(k) either: (i) a contribution failure shall occur with respect to any
Benefit Plan sufficient to give rise to a lien under Section 302(f) of ERISA,
(ii) the Internal Revenue Service shall file a notice of lien asserting a claim
or claims of $100,000 or more in the aggregate pursuant to the Internal Revenue
Code with regard to any of the assets of Seller, Originator, KCI or any
Affiliate and such lien shall have been filed and not released within 10 days,
or (iii) the Pension Benefit Guaranty Corporation shall, or shall indicate its
intention in writing to the Seller, Originator, KCI or any Affiliate to, either
file a notice of lien asserting a claim pursuant to ERISA with regard to any
assets of the Seller, Originator, KCI or any Affiliate or terminate any Benefit
Plan that has unfunded benefit
V-2
liabilities, or any steps shall have been taken to terminate any Benefit Plan
subject to Title IV of ERISA so as to result in any liability in excess of
$1,000,000 and such lien shall have been filed and not released within 10 days;
(l) so long as no Debt is outstanding the following financial trigger shall
apply, the base net worth of KCI shall be less than $400,000,000; and
(m) any Information Package delivered on or after September 14, 2000 shall
fail to report the aggregate amount of payments required to be made by the
Seller pursuant to Section 1.4(e)(i) for the period covered by such Information
-----------------
Package.
V-3
SCHEDULE I
CREDIT AND COLLECTION POLICY
Schedule I-1
SCHEDULE II
LOCK-BOX BANKS AND LOCK-BOX ACCOUNTS
Lock-Box Bank Lock-Box Account
------------- -------- -------
Xxxxx Bank N.A. 0508 17-090-823
0569 17-179-502
Xxx Xxxxx Xxxxxxxxx Xxxx 00000 323-235190
40085
40111
40125
40149
40245
49983
49997
Mellon Bank, N.A. 050-1649
050-1614
050-1606
050-1542
050-1534
058-6208
100-5751
100-5760
Schedule II-1
SCHEDULE III
TRADE NAMES
Corporate Name Trade Names / Fictitious Names
-------------- ------------------------------
KCI FUNDING CORPORATION None
Schedule III-1
SCHEDULE IV
ADDRESSES
The Principal Place of Business and Chief Executive Office or the Seller is:
0000 Xxxxxxxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
The Seller maintains its master books and records relating to Receivables at:
000 Xxxxxxxxx Xxxxxx XX
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Schedule IV-1
ANNEX A
to Receivables Purchase Agreement
FORM OF INFORMATION PACKAGE
Annex A-1
ANNEX B
to Receivables Purchase Agreement
FORM OF PURCHASE NOTICE
Annex B-1
FORM OF PURCHASE NOTICE
________, [2000]
PNC Bank, National Association
One PNC Plaza, 3rd Floor
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Ladies and Gentlemen:
Reference is hereby made to the Receivables Purchase Agreement, dated as of
May 22, 2000 (as heretofore amended or supplemented, the "Receivables Purchase
--------------------
Agreement"), among KCI Funding Corporation, ("Seller"), KPMG Consulting, Inc.,
--------- ------
as Servicer, Market Street Funding Corporation ("Issuer") and PNC Bank National
------
Association, (the "Administrator"). Capitalized terms used in this Purchase
-------------
Notice and not otherwise defined herein shall have the meanings assigned thereto
in the Receivables Purchase Agreement.
This letter constitutes a Purchase Notice pursuant to Section 1.2(a) of the
--------------
Receivables Purchase Agreement. Seller desires to sell an undivided variable
interest in a pool of receivables on ___________, [2000], for a purchase price
of $____________. Subsequent to this Purchase, the aggregate outstanding Capital
will be $___________.
Seller hereby represents and warrants as of the date hereof, and as of the
date of Purchase, as follows:
(i) the representations and warranties contained in Exhibit III of the
-----------
Receivables Purchase Agreement are correct on and as of such dates as though
made on and as of such dates and shall be deemed to have been made on such
dates;
(ii) no Termination Event or Unmatured Termination Event has occurred and
is continuing, or would result from such purchase;
(iii) after giving effect to the purchase proposed hereby, the aggregate
outstanding Capital of the Purchased Interest will not exceed 100% and the
Capital will not exceed the Purchase Limit; and
(iv) the Facility Termination Date shall not have occurred.
IN WITNESS WHEREOF, the undersigned has caused this Purchase Notice to be
executed by its duly authorized officer as of the date first above written.
KCI FUNDING CORPORATION
By:
--------------------------------
Name Printed:
----------------------
Title:
-----------------------------
S-1
ANNEX C
to Receivables Purchase Agreement
FORM OF PAYDOWN NOTICE
Annex C-1
FORM OF PAYDOWN NOTICE
--------------, -----
PNC Bank, National Association
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxxx
Ladies and Gentlemen:
Reference is hereby made to the Receivables Purchase Agreement, dated as of
May 22, 2000 (as amended, supplemented or otherwise modified, the "Receivables
-----------
Purchase Agreement"), among KCI Funding Corporation, as Seller, KPMG Consulting,
------------------
Inc., as Servicer, Market Street Funding Corporation, as Issuer and PNC Bank,
National Association, as Administrator. Capitalized terms used in this paydown
notice and not otherwise defined herein shall have the meanings assigned thereto
in the Receivables Purchase Agreement.
This letter constitutes a paydown notice pursuant to Section 1.4(f)(i) of
-----------------
the Receivables Purchase Agreement. The Seller desires to reduce the Capital on
____________, _____/1/ by the application of $___________ in cash to pay Capital
and Discount to accrue (until such cash can be used to pay commercial paper
notes) with respect to such Capital, together with all costs related to such
reduction of Capital.
-------------------------
/1/ Notice must be given at least five Business Days' prior to the requested
paydown date, in the case of reductions in excess of $10,000,000, or at least
two Business Days' prior to the requested paydown date, in the case of
reductions of $10,000,000 or less.
IN WITNESS WHEREOF, the undersigned has caused this paydown notice to be
executed by its duly authorized officer as of the date first above written.
KCI FUNDING CORPORATION
By:
-------------------------------
Name:
Title:
S-1
