EXECUTION COPY
Exhibit 10.35
RECEIVABLES PURCHASE AGREEMENT
dated as of June 25, 1999
among
CGSF FUNDING CORPORATION, as Seller,
McKESSON HBOC, INC., as Servicer,
PREFERRED RECEIVABLES FUNDING CORPORATION,
FALCON ASSET SECURITIZATION CORPORATION
and
BLUE RIDGE ASSET FUNDING CORPORATION
as Conduits,
THE FIRST NATIONAL BANK OF CHICAGO
and
WACHOVIA BANK, N.A.
as Managing Agents,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTIES HERETO,
as Financial Institutions
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Collateral Agent
CGSF FUNDING CORPORATION
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement dated as of June 25, 1999 (as
amended, restated, supplemented or otherwise modified and in effect from time to
time, this "Agreement") is among CGSF Funding Corporation, a Delaware
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corporation ("Seller"), McKesson HBOC, Inc., a Delaware corporation
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("McKesson"), as initial Servicer (the Servicer together with the Seller, the
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"Seller Parties" and each a "Seller Party"), the funding entities listed on
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Schedule A to this Agreement (together with their respective successors and
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assigns hereunder, the "Financial Institutions"), Preferred Receivables Funding
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Corporation ("PREFCO"), Falcon Asset Securitization Corporation ("Falcon") and
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Blue Ridge Asset Funding Corporation ("Blue Ridge"; PREFCO, Falcon and Blue
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Ridge being referred to collectively as the "Conduits", and together with the
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Financial Institutions, the "Purchasers"), The First National Bank of Chicago
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and Wachovia Bank, N.A. (each, a "Managing Agent" and collectively, the
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"Managing Agents") and The First National Bank of Chicago, as collateral agent
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for the Purchasers hereunder or any successor collateral agent hereunder
(together with its successors and assigns hereunder, the "Collateral Agent").
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Unless defined elsewhere herein, capitalized terms used in this Agreement shall
have the meanings assigned to such terms in Exhibit I.
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PRELIMINARY STATEMENTS
Seller desires to transfer and assign Purchaser Interests to the
Purchasers from time to time.
The Conduits may, in their absolute and sole discretion, purchase
Purchaser Interests from Seller from time to time.
In the event that the Conduits decline to make any purchase, the
Financial Institutions shall, at the request of Seller, purchase Purchaser
Interests from time to time. In addition, the Financial Institutions have
agreed to provide a liquidity facility to the Conduits in accordance with the
terms hereof. Each Financial Institution which has so agreed on behalf of a
Conduit is sometimes hereinafter referred to as a "Committed Purchaser" for such
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Conduit.
The First National Bank of Chicago has been requested and is willing
to act as Collateral Agent on behalf of the Conduits and the Financial
Institutions in accordance with the terms hereof.
ARTICLE I
PURCHASE ARRANGEMENTS
Section 1.1 Purchase Facility. Upon the terms and subject to the
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conditions hereof, Seller hereby sells and assigns Purchaser Interests to the
Collateral Agent for the benefit of one or more of the Purchasers in all of its
Receivables, whether now owned or hereafter arising. In accordance with the
terms and conditions set forth herein, each Conduit may, at its option, instruct
the related Managing Agent to purchase on its behalf, or if such Conduits shall
decline to purchase, the Managing Agents shall purchase, on behalf of the
applicable Committed
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Purchasers, Purchaser Interests from time to time in an aggregate amount not to
exceed the Purchase Limit during the period from the date hereof to but not
including the Facility Termination Date.
Section 1.2 Increases. Seller shall provide each Managing Agent with
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at least two (2) Business Days' prior notice in a form set forth as Exhibit II
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hereto of each Incremental Purchase (a "Purchase Notice"), provided that only
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one Business Day's notice period shall be required in connection with the
initial purchase hereunder. Each Purchase Notice shall be subject to Section
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6.2 hereof and, except as set forth below, shall be irrevocable and shall
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specify the requested Purchase Price (which shall not be less than $15,000,000
in the aggregate for all Purchasers), date of purchase, the type of Discount
Rate and Tranche Period; provided, that the Seller may not send more than one
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(1) Purchase Notice in any one-week period. Following receipt of a Purchase
Notice, each Managing Agent will determine whether each of its related Conduits
agrees to make the purchase and whether such Conduit is capable of making a
purchase with the requested Tranche Period. If any Conduit declines to make a
proposed purchase, its Managing Agent shall promptly notify the Collateral Agent
and the Seller and the Seller may cancel the Purchase Notice or, in the absence
of such a cancellation, the Incremental Purchase of the Purchaser Interest will
be made by the applicable Committed Purchasers. On the date of each Incremental
Purchase, upon satisfaction of the applicable conditions precedent set forth in
Article VI, each Conduit or the applicable Committed Purchasers, as applicable,
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shall make available to its related Managing Agent at its address listed beneath
its signature on its signature page to this Agreement, for deposit to such
account as the Seller designates from time to time, in immediately available
funds, no later than 12:00 noon (Chicago time), an amount equal to (i) in the
case of a Conduit, such Conduit's Pro Rata Share of the Purchaser Interests then
being purchased or (ii) in the case of a Financial Institution, such Financial
Institution's Adjusted Pro Rata Share of the aggregate Purchase Price of the
Purchaser Interests then being purchased.
Section 1.3 Decreases. Seller shall provide each Managing Agent with
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prior written notice in conformity with the Required Notice Period of any
reduction from Collections requested by Seller of Capital (a "Reduction
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Notice"). Such Reduction Notice shall designate (i) the date (the "Proposed
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Reduction Date") upon which any such reduction of Capital by the Collateral
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Agent and the Managing Agents shall occur (which date shall give effect to the
applicable Required Notice Period), and (ii) the aggregate amount of Capital to
be reduced which shall be applied by the Managing Agents ratably to the
Purchaser Interests of the Conduits and the Financial Institutions in accordance
with the amount of Capital (if any) owing to the Conduits, on the one hand, and
the amount of Capital (if any) owing to the Financial Institutions on the other
hand (in each case, ratably, based on their respective Pro Rata Shares), (the
"Aggregate Reduction"). Only one (1) Reduction Notice shall be outstanding at
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any time.
Section 1.4 Payment Requirements. All amounts to be paid or
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deposited by any Seller Party pursuant to any provision of this Agreement shall
be paid or deposited in accordance with the terms hereof no later than 12:00
noon (Chicago time) on the day when due in immediately available funds, and if
not received before 12:00 noon (Chicago time) shall be deemed to be received on
the next succeeding Business Day. If such amounts are payable to a Purchaser
they shall be paid to the related Managing Agent, for the account of such
Purchaser, at its address listed beneath its signature on its signature page to
this Agreement until otherwise
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notified by such Managing Agent. All computations of Yield and per annum fees
hereunder and under the Fee Letter shall be made on the basis of a year of 360
days for the actual number of days elapsed. If any amount hereunder shall be
payable on a day which is not a Business Day, such amount shall be payable on
the next succeeding Business Day.
ARTICLE II
PAYMENTS AND COLLECTIONS
Section 2.1 Payments. Notwithstanding any limitation on recourse
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contained in this Agreement, Seller shall immediately pay to each Managing Agent
when due, for the account of the related Purchaser or Purchasers (i) such fees
as set forth in the exhibits to the Mandate Letter and as set forth in the Fee
Letter (which fees shall be sufficient to pay all fees owing to the Financial
Institutions), (ii) all amounts payable as Yield, (iii) all amounts payable as
Deemed Collections (which, subject to the servicing procedures set forth in
Article VIII, shall be applied to reduce outstanding Capital hereunder in
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accordance with Sections 2.2 and 2.3 hereof), (iv) all amounts payable to reduce
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the Seller Interest, if required, pursuant to Section 2.6, (v) all amounts
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payable pursuant to Article X, if any, (vi) all Servicer costs and expenses in
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connection with servicing, administering and collecting the Receivables, (vii)
all Broken Funding Costs and (viii) all Default Fees (collectively, the
"Obligations"). If any Person fails to pay any of the Obligations when due,
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such Person agrees to pay, on demand, the Default Fee in respect thereof until
paid. Notwithstanding the foregoing, no provision of this Agreement, the Fee
Letter or the Managing Agents' respective exhibits to the Mandate Letter shall
require the payment or permit the collection of any amounts hereunder in excess
of the maximum permitted by applicable law. If at any time Seller receives any
Collections or is deemed to receive any Collections, Seller shall immediately
pay such Collections or Deemed Collections to the Servicer and, at all times
prior to such payment, such Collections shall be held in trust by Seller for the
exclusive benefit of the Purchasers, the Managing Agents and the Collateral
Agent.
Section 2.2 Collections Prior to Amortization. Prior to the
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Amortization Date, and other than in connection with an Aggregate Reduction, any
Collections and/or Deemed Collections received by the Servicer (after the
initial purchase of a Purchaser Interest hereunder and on or prior to the
Amortization Date of such Purchaser Interest) shall be set aside and held in
trust by the Servicer for the payment of any accrued and unpaid Aggregate
Unpaids, subject to the Servicing procedures set forth in Article VIII, and,
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upon each such receipt of Collections by the Servicer, the Seller hereby
requests and the Purchasers hereby agree to make, a reinvestment of funds (each,
a "Reinvestment"), such that after giving effect to such application of funds,
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the amount of Aggregate Capital immediately after such receipt and corresponding
Reinvestment shall be equal to the amount of Aggregate Capital immediately prior
to such receipt. On each Settlement Date prior to the occurrence of the
Amortization Date, the Servicer shall remit to the Managing Agents' respective
accounts in accordance with the applicable Pro Rata Shares of the related
Purchasers, the amounts set aside during the preceding Settlement Period and
apply such amounts (if not previously paid in accordance with Section 2.1) to
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reduce unpaid Obligations. If such Obligations shall be reduced to zero, any
additional Collections received by the Servicer shall (i) if applicable, be
remitted to the Managing Agents' respective accounts in accordance with the
applicable Pro Rata Shares of the related Purchasers no later than 12:00 noon
(Chicago
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time) to the extent required to fund any Aggregate Reduction on such Settlement
Date and (ii) thereafter be remitted from the Servicer to Seller on such
Settlement Date.
Section 2.3 Collections Following Amortization. On the Amortization
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Date and on each day thereafter, the Servicer shall set aside and hold in trust,
for the holder of each Purchaser Interest, all Collections received on such day
and an additional amount of Collections for the payment of any accrued and
unpaid Obligations owed by Seller and not previously paid by Seller in
accordance with Section 2.1, whether or not any such Collections are allocable
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to the Purchaser Interests for the benefit of the Purchasers. On and after the
Amortization Date, the Servicer shall, at any time upon the request from time to
time by (or pursuant to standing instructions from) the Collateral Agent (i)
remit to the Managing Agents' respective accounts established for the benefit of
the related Purchasers, in accordance with the applicable Pro Rata Shares, the
amounts set aside pursuant to the preceding sentence, and (ii) apply such
amounts to reduce the Aggregate Capital and any other Aggregate Unpaids.
Section 2.4 Application of Collections. If there shall be
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insufficient funds on deposit for the Servicer to distribute funds in payment in
full of the aforementioned amounts pursuant to Section 2.2 or 2.3 (as
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applicable), the Servicer shall distribute funds:
first, ratably to the payment of all accrued and unpaid fees under the
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Fee Letter and Yield;
second, to the payment of the Servicer's reasonable out-of-pocket
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costs and expenses in connection with servicing, administering and
collecting the Receivables if Seller or one of its Affiliates is not then
acting as the Servicer,
third, to the reimbursement of the Collateral Agent's and each
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Managing Agent's costs of collection and enforcement of this Agreement,
fourth, (if applicable) in reduction of the Aggregate Capital
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fifth, for the ratable payment of all other unpaid Obligations,
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provided that to the extent such Obligations relate to the payment of
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Servicer costs and expenses when the Seller or one of its Affiliates is
acting as the Servicer, such costs and expenses will not be paid until
after the payment in full of all other Obligations, and
sixth, after the Aggregate Unpaids have been indefeasibly reduced to
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zero, to the Seller.
Collections applied to the payment of Aggregate Unpaids shall be
distributed in accordance with the aforementioned provisions, and, giving effect
to each of the priorities set forth in Section 2.4 above, shall be shared
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ratably (within each priority) among the Collateral Agent, the Managing Agents
and the Purchasers in accordance with the amount of such Aggregate Unpaids owing
to each of them in respect of each such priority.
Section 2.5 Payment Rescission. No payment of any of the Aggregate
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Unpaids shall be considered paid or applied hereunder to the extent that, at any
time, all or any
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portion of such payment or application is rescinded by application of law or
judicial authority, or must otherwise be returned or refunded for any reason.
Seller shall remain obligated for the amount of any payment or application so
rescinded, returned or refunded, and shall promptly pay to the Collateral Agent
(for application to the Person or Persons who suffered such rescission, return
or refund) the full amount thereof, plus the Default Fee from the date of any
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such rescission, return or refunding.
Section 2.6 Seller Interest. Seller shall ensure that the Purchaser
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Interests of the Purchasers shall at no time exceed in the aggregate 100%. If
the aggregate of the Purchaser Interests of the Purchasers exceeds 100%, Seller
shall immediately pay to the Managing Agents an amount to be applied to reduce
the Aggregate Capital, such that after giving effect to such payment the
aggregate of the Purchaser Interests equals or is less than 100%.
Section 2.7 Clean Up Call. In addition to Seller's rights pursuant
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to Section 1.3, Seller shall have the right (after providing written notice to
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the Managing Agents in accordance with the Required Notice Period), at any time
following the reduction of the Capital to a level that is less than 10.0% of the
original Purchase Limit, to repurchase from the Purchasers all, but not less
than all, of the then outstanding Purchaser Interests. The purchase price in
respect thereof shall be an amount equal to the Aggregate Unpaids through the
date of such repurchase, payable in immediately available funds. Such
repurchase shall be without representation, warranty or recourse of any kind by,
on the part of, or against any Purchaser, any Managing Agent or the Collateral
Agent.
ARTICLE III
[RESERVED]
ARTICLE IV
FUNDING
Section 4.1 General Funding Provisions. Each Purchaser Interest of
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the Financial Institutions shall accrue Yield for each day during its Tranche
Period at either the LIBO Rate or the Base Rate in accordance with the terms and
conditions hereof, and each Purchaser Interest of the Conduits shall accrue
Yield for each day during its Tranche Period at the CP Rate in accordance with
the terms and conditions hereof. Until Seller gives notice to the Managing
Agents of another Discount Rate in accordance with Section 4.4, the initial
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Discount Rate for any Purchaser Interest transferred to the Financial
Institutions pursuant to the terms and conditions hereof shall be the Base Rate.
If the Financial Institutions acquire by assignment from any Conduit any
Purchaser Interest pursuant to such Conduit's respective Liquidity Agreement,
each Purchaser Interest so assigned shall each be deemed to have a new Tranche
Period commencing on the date of any such assignment.
Section 4.2 Yield Payments. On the Settlement Date for each
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Purchaser Interest, Seller shall pay to each Managing Agent (for the benefit of
the applicable Purchasers) an aggregate amount equal to the accrued and unpaid
Yield for the entire Tranche Period of each such Purchaser Interest in
accordance with Article II.
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Section 4.3 Selection and Continuation of Tranche Periods. (a) With
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consultation from each related Managing Agent, Seller shall from time to time
request Tranche Periods for the Purchaser Interests; provided, however, that no
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more than fifteen (15) Tranche Periods shall be outstanding at any one time.
(b) Seller may, effective on the last day of a Tranche Period (the
"Terminating Tranche") for any Purchaser Interest, divide any such Purchaser
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Interest into multiple Purchaser Interests or combine any such Purchaser
Interest with one or more other Purchaser Interests which either have a
Terminating Tranche ending on such day or are newly created on such day (subject
to the Conduits' ability to accommodate such division or combination), provided,
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in no event may a Purchaser Interest of the Conduits be combined with a
Purchaser Interest of the Financial Institutions.
Section 4.4 Financial Institution Discount Rates. Seller may select
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the LIBO Rate or the Base Rate for each Purchaser Interest of the Financial
Institutions. Seller shall by 12:00 noon (Chicago time): (i) at least three (3)
Business Days prior to the expiration of any Terminating Tranche with respect to
which the LIBO Rate is being requested as a new Discount Rate and (ii) at least
one (1) Business Day prior to the expiration of any Terminating Tranche with
respect to which the Base Rate is being requested as a new Discount Rate, give
each related Managing Agent irrevocable notice of the new Discount Rate for the
Purchaser Interest associated with such Terminating Tranche.
Section 4.5 Suspension of the LIBO Rate. (a) If any Financial
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Institution notifies its related Managing Agent that it has determined that
funding its Pro Rata Share of the Purchaser Interests of the Financial
Institutions at a LIBO Rate would violate any applicable law, rule, regulation,
or directive of any governmental or regulatory authority, whether or not having
the force of law, or that (i) deposits of a type and maturity appropriate to
match fund its Purchaser Interests at such LIBO Rate are not available or (ii)
such LIBO Rate does not accurately reflect the cost of acquiring or maintaining
a Purchaser Interest at such LIBO Rate, then such Managing Agent shall notify
the Collateral Agent and shall suspend the availability of such LIBO Rate and
require Seller to select the Base Rate for any Purchaser Interest accruing Yield
at such LIBO Rate.
(b) If less than all of the Financial Institutions give a notice to
the Managing Agents pursuant to Section 4.5(a), each Financial Institution which
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gave such a notice shall be obligated, at the request of Seller or such
Financial Institution's Managing Agent (on behalf of the related Conduit or
Conduits), to assign all of its rights and obligations hereunder to (i) another
Financial Institution or (ii) another funding entity nominated by Seller that is
acceptable to the Conduits and willing to participate in this Agreement through
the Liquidity Termination Date in the place of such notifying Financial
Institution; provided that (i) the notifying Financial Institution receives
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payment in full, pursuant to an Assignment Agreement, of an amount equal to such
notifying Financial Institution's Pro Rata Share of the Capital and Yield owing
to all of the Financial Institutions and all accrued but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of the Purchaser
Interests of the Financial Institutions, and (ii) the replacement Financial
Institution otherwise satisfies the requirements of Section 12.1(b).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of Seller Parties. Each
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Seller Party hereby represents and warrants to the Collateral Agent, the
Managing Agents and the Purchasers, as to itself, that:
(a) Corporate Existence and Power. Such Seller Party is a corporation
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duly organized, validly existing and in good standing under the laws of its
state of incorporation, and is duly qualified to do business and is in good
standing as a foreign corporation, and has and holds all corporate power and all
governmental licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which its business is conducted except
where the failure to so qualify or so hold could not reasonably be expected to
have a Material Adverse Effect.
(b) Power and Authority; Due Authorization Execution and Delivery.
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The execution and delivery by such Seller Party of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, in the case of Seller, Seller's use of
the proceeds of purchases made hereunder, are within its corporate powers and
authority and have been duly authorized by all necessary corporate action on its
part. This Agreement and each other Transaction Document to which such Seller
Party is a party has been duly executed and delivered by such Seller Party.
(c) No Conflict. The execution and delivery by such Seller Party of
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this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate or articles of incorporation or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by which it or any
of its property is bound, or (iv) any order, writ, judgment, award, injunction
or decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on assets of such Seller Party or
its Material Subsidiaries (except as created hereunder) except, in any case,
where such contravention or violation could not reasonably be expected to have a
Material Adverse Effect; and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the
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financing statements required hereunder, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by such Seller
Party of this Agreement and each other Transaction Document to which it is a
party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. Except as otherwise disclosed to or discussed
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with the Managing Agents prior to the date hereof, there are no actions, suits
or proceedings pending, or to the best of such Seller Party's knowledge,
threatened, against or affecting such Seller Party, or any of its properties, in
or before any court, arbitrator or other body, that could reasonably be
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expected to have a Material Adverse Effect. Such Seller Party is not in default
with respect to any order of any court, arbitrator or governmental body.
(f) Binding Effect. This Agreement and each other Transaction
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Document to which such Seller Party is a party constitute the legal, valid and
binding obligations of such Seller Party enforceable against such Seller Party
in accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by
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such Seller Party or any of its Affiliates to the Collateral Agent, the Managing
Agents or the Purchasers for purposes of or in connection with this Agreement,
any Monthly Report, any of the other Transaction Documents or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by such Seller Party or any of its Affiliates to the Collateral Agent, the
Managing Agents or the Purchasers will be, true and accurate in every material
respect on the date such information is stated or certified (or, if such
information specifies another date, such other date) and does not and will not
contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not misleading.
(h) Use of Proceeds. No proceeds of any purchase hereunder will be
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used (i) for a purpose that violates, or would be inconsistent with, Regulation
T, U or X promulgated by the Board of Governors of the Federal Reserve System
from time to time or (ii) to acquire any "margin stock," as such term is defined
in Regulation U promulgated by the Board of Governors of the Federal Reserve
System from time to time.
(i) Good Title. Immediately prior to each purchase hereunder, Seller
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shall be the legal and beneficial owner of the Receivables and Related Security
with respect thereto, free and clear of any Adverse Claim, except as created by
the Transaction Documents. There have been duly filed all financing statements
or other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect Seller's ownership
interest in each Receivable, its Collections and the Related Security.
(j) Perfection. This Agreement, together with the filing of the
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financing statements contemplated hereby, is effective to transfer to the
Collateral Agent for the benefit of the relevant Purchaser or Purchasers (and
the Collateral Agent for the benefit of such Purchaser or Purchasers shall
acquire from Seller) a valid and perfected first priority undivided percentage
ownership interest in each Receivable existing or hereafter arising and in the
Related Security and Collections with respect thereto, free and clear of any
Adverse Claim, except as created by the Transactions Documents. There have been
duly filed all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect the Collateral Agent's (on behalf of the Purchasers) ownership
interest in the Receivables, the Related Security and the Collections.
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(k) Places of Business. The principal places of business and chief
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executive office of such Seller Party and the offices where it keeps all of its
Records are located at the addresses listed on Exhibit III or such other
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locations of which the Collateral Agent has been notified in accordance with
Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has
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been taken and completed. Each Seller Party's Federal Employer Identification
Number is correctly set forth on Exhibit III.
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(l) Collections. The conditions and requirements set forth in Section
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7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The
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names and addresses of all Collection Banks, together with the account numbers
of the Collection Accounts of Seller at each Collection Bank and the post office
box number of each Lock-Box, are listed on Exhibit IV.
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(m) Material Adverse Effect. (i) The initial Servicer represents and
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warrants that since December 31, 1998, no event has occurred with respect to the
initial Servicer that would have a material adverse effect on its financial
condition or operations or its ability to perform its obligations under this
Agreement, except as otherwise disclosed to or discussed with the Managing
Agents prior to the date hereof and (ii) Seller represents and warrants that
since the date of this Agreement, no event has occurred that would have a
material adverse effect on (A) the financial condition or operations of Seller,
(B) the ability of Seller to perform its obligations under this Agreement or (C)
the collectibility of the Receivables generally or any material portion of the
Receivables.
(n) Names. In the past five (5) years, Seller has not used any
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corporate names, trade names or assumed names other than the name in which it
has executed this Agreement.
(o) Ownership of Seller. The Originator and CGSF each own, directly
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or indirectly, 100% of the issued and outstanding capital stock of Seller, free
and clear of any Adverse Claim. Such capital stock is validly issued, fully
paid and nonassessable, and there are no options, warrants or other rights to
acquire securities of Seller.
(p) Not a Holding Company or an Investment Company. Such Seller Party
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is not a "holding company" or a "subsidiary holding company" of a "holding
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company" within the meaning of the Public Utility Holding Company Act of 1935,
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as amended, or any successor statute. Such Seller Party is not an "investment
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company" within the meaning of the Investment Company Act of 1940, as amended,
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or any successor statute.
(q) Compliance with Law. Such Seller Party has complied in all
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respects with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. Each Receivable, together with the Contract related thereto, does not
contravene any laws, rules or regulations applicable thereto (including, without
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limitation, laws, rules and regulations relating to truth in lending, fair
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credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy), and no part of such Contract is in violation
of any such law, rule or regulation, except where such contravention or
violation could not reasonably be expected to have a Material Adverse Effect.
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(r) Compliance with Credit and Collection Policy. Such Seller Party
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has complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any
material change to such Credit and Collection Policy, except such material
change as to which the Collateral Agent has been notified in accordance with
Section 7.1(a)(vii).
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(s) Payments to CGSF and Originator. With respect to each Receivable
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transferred to CGSF under the Tier One Receivables Sale Agreement, CGSF has
given reasonably equivalent value to the Originator in consideration therefor
and with respect to each Receivable transferred to Seller under the Tier Two
Receivables Sale Agreement, Seller has given reasonably equivalent value to CGSF
in consideration therefor, and no such transfer has been made for or on account
of an antecedent debt.
(t) Enforceability of Contracts. Each Contract with respect to each
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Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net
--------------------
Receivables Balance as an Eligible Receivable on the date of its purchase under
each Receivables Sale Agreement was an Eligible Receivable on such purchase
date.
(v) Net Receivables Balance. Each Seller Party has determined that,
-----------------------
immediately after giving effect to each purchase hereunder, the Net Receivables
Balance is at least equal to the sum of (i) the Aggregate Capital, plus (ii) the
----
Aggregate Reserves.
(w) Year 2000. Such Seller Party (i) has reviewed the areas within
---------
its business and operations which could be adversely affected by the Year 2000
Problem, (ii) has developed a Year 2000 Plan to address the Year 2000 Problem on
a timely basis, but in no event later than September 30, 1999 (iii) is taking
all actions reasonably necessary to meet the schedule and goals of the Year 2000
Plan and (iv) has established a reasonable level of reserves to implement the
Year 2000 Plan. Such Seller Party does not reasonably anticipate that the Year
2000 Problem could have a Material Adverse Effect.
(x) Accounting. Each Seller Party accounts for the transactions
----------
contemplated by this Agreement and the Receivables Sale Agreements on its books
and records and, for purposes of generally accepted accounting principles, as
sales.
(y) Compliance with Representations. On and as of the date of each
-------------------------------
purchase of a Purchaser Interest hereunder and the date of each Reinvestment
hereunder, each Seller Party hereby represents and warrants that all of the
other representations and warranties made by it set forth in this Section 5.1
-----------
are true and correct on and as of the date of such purchase or Reinvestment (and
after giving effect to such purchase or Reinvestment) as though made on and
11
as of each such date (except where such representation or warranty relates to an
earlier date, in which case as of such earlier date).
Section 5.2 Financial Institution Representations and Warranties.
----------------------------------------------------
Each Financial Institution hereby represents and warrants to the Collateral
Agent, the Managing Agents and the Conduits that:
(a) Existence and Power. Such Financial Institution is a corporation
-------------------
or a banking association duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, and has all
corporate power to perform its obligations hereunder.
(b) No Conflict. The execution and delivery by such Financial
-----------
Institution of this Agreement and the performance of its obligations hereunder
are within its corporate powers, have been duly authorized by all necessary
corporate action, do not contravene or violate (i) its certificate or articles
of incorporation or association or by-laws, (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or any of its property is bound, or (iv) any
order, writ, judgment, award, injunction or decree binding on or affecting it or
its property, and do not result in the creation or imposition of any Adverse
Claim on its assets. This Agreement has been duly authorized, executed and
delivered by such Financial Institution.
(c) Governmental Authorization. No authorization or approval or other
--------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by such Financial
Institution of this Agreement and the performance of its obligations hereunder.
(d) Binding Effect. This Agreement constitutes the legal, valid and
--------------
binding obligation of such Financial Institution enforceable against such
Financial Institution in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
ARTICLE VI
CONDITIONS OF PURCHASES
Section 6.1 Conditions Precedent to Initial Purchase. The initial
-----------------------------------------
purchase of a Purchaser Interest under this Agreement is subject to the
conditions precedent that (a) the Collateral Agent shall have received on or
before the date of such purchase those documents listed on Schedule B, (b) the
----------
Collateral Agent shall have received all fees and expenses required to be paid
on such date pursuant to the terms of this Agreement and under each Managing
Agent's respective exhibit to the Mandate Letter, and (c) the Originator and
CGSF shall have marked their respective records evidencing the Receivables in a
manner satisfactory to the Collateral Agent.
12
Section 6.2 Conditions Precedent to All Purchases and Reinvestment.
-------------------------------------------------------
Each purchase of a Purchaser Interest and each Reinvestment shall be subject to
the further conditions precedent that (a) in the case of each such purchase or
Reinvestment, the Servicer shall have delivered to the Managing Agents on or
prior to the date of such purchase, in form and substance satisfactory to the
Managing Agents, all Monthly Reports as and when due under Section 8.5 and (ii)
-----------
upon the Collateral Agent's or any Managing Agent's request, the Servicer shall
have delivered to the Managing Agents at least three (3) days prior to such
purchase or Reinvestment an interim Monthly Report showing the amount of
Eligible Receivables or such other form of report in form and substance
reasonably satisfactory to the Managing Agents showing adequate information
relating to the amount of Eligible Receivables; (b) the Facility Termination
Date shall not have occurred; (c) no Amortization Event or, with respect to any
Incremental Purchase, no Potential Amortization Event shall have occurred; and
(d) the Collateral Agent shall have received such other approvals, opinions or
documents as it may reasonably request. With respect to each Incremental
Purchase and Reinvestment, as a condition to such Incremental Purchase or
Reinvestment, on the date of such purchase the Seller represents and warrants
that the representations and warranties set forth in Section 5.1 are true and
-----------
correct on and as of the date of such Incremental Purchase or Reinvestment (and
after giving effect thereto) as though made on and as of such date (except where
such representation or warranty relates to an earlier date, in which case as of
such earlier date).
ARTICLE VII
COVENANTS
Section 7.1 Affirmative Covenants of the Seller Parties. Until the
-------------------------------------------
date on which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, as set forth below:
(a) Financial Reporting. Such Seller Party will maintain, for itself
-------------------
and each of its Material Subsidiaries, a system of accounting established and
administered in accordance with generally accepted accounting principles, and
furnish to the Collateral Agent and the Managing Agents:
(i) Annual Reporting. Within ninety (90) days after the close of each
---------------
of its respective fiscal years, audited, unqualified financial statements
(which shall include balance sheets, statements of income and retained
earnings and a statement of cash flows) for the Seller Parties on a
consolidated basis for such fiscal year certified in a manner acceptable to
the Collateral Agent and the Managing Agents by independent public
accountants acceptable to the Collateral Agent and the Managing Agents
together with unaudited consolidating financial statements for the Seller
and CGSF; provided, that the Seller shall only to be required to deliver
--------
financial statements for the Seller and CGSF to the extent such statements
are prepared; provided, further, that for the fiscal year ending March 31,
-------- -------
1999, the Seller Parties shall deliver the financial statements for such
year on or before August 1, 1999.
13
(ii) Quarterly Reporting. Within sixty (60) days after the close of
-------------------
the first three (3) quarterly periods of each of its respective fiscal
years, balance sheets of each of the Originator and the Servicer (if
different from the Originator, and, to the extent such financial statements
are prepared, for CGSF and the Seller), in each such case as at the close
of each such period, together with statements of income and retained
earnings and a statement of cash flows for each such Person for the period
from the beginning of such fiscal year to the end of such quarter, all
certified by its respective chief financial officer.
(iii) Compliance Certificate. Together with the financial statements
----------------------
required hereunder, a compliance certificate in substantially the form of
Exhibit V signed by such Seller Party's Authorized Officer and dated the
---------
date of such annual financial statement or such quarterly financial
statement, as the case may be.
(iv) Shareholders Statements and Reports. Promptly upon the
-----------------------------------
furnishing thereof to the shareholders of such Seller Party copies of all
financial statements, reports and proxy statements so furnished.
(v) Securities Exchange Commission Filings. Promptly upon the
--------------------------------------
filing thereof, copies of all registration statements and annual,
quarterly, monthly or other regular reports which such Seller Party or any
of its Subsidiaries files with the Securities and Exchange Commission.
(vi) Copies of Notices. Promptly upon its receipt of any notice,
-----------------
request for consent, financial statements, certification, report or other
communication under or in connection with any Transaction Document from any
Person other than the Collateral Agent, any Managing Agent or any Conduit,
copies of the same.
(vii) Change in Credit and Collection Policy. At least thirty (30)
--------------------------------------
days prior to the effectiveness of any material change in or amendment to
the Credit and Collection Policy, a copy of the Credit and Collection
Policy then in effect and a notice indicating such change or amendment.
(viii) Other Information. Promptly, from time to time, such other
-----------------
information, documents, records or reports relating to the Receivables or
the condition or operations, financial or otherwise, of such Seller Party
as the Collateral Agent or any Managing Agent may from time to time
reasonably request in order to protect the interests of the Collateral
Agent, the Managing Agents, and the Purchasers under or as contemplated by
this Agreement.
(b) Notices. Such Seller Party will notify the Collateral Agent
-------
and each Managing Agent in writing of any of the following promptly upon
learning of the occurrence thereof, describing the same and, if applicable,
the steps being taken with respect thereto:
(i) Amortization Events or Potential Amortization Events. The
----------------------------------------------------
occurrence of each Amortization Event and each Potential Amortization
Event, by a statement of an Authorized Officer of such Seller Party.
14
(ii) Judgment and Proceedings. (A) The entry of any judgment or
------------------------
decree against (1) the Servicer or any of its respective Material
Subsidiaries if the amount of any such judgment or decree against the
Servicer or one of its Material Subsidiaries exceeds $25,000,000 after
deducting (a) the amount with respect to which the Servicer or any such
Material Subsidiary is insured and with respect to which the insurer has
assumed responsibility in writing, and (b) the amount for which the
Servicer or any such Material Subsidiary is otherwise indemnified if the
terms of such indemnification are satisfactory to the Collateral Agent and
the Managing Agents, or (2) Seller; or (B) The institution of any
litigation, arbitration proceeding or governmental proceeding against CGSF
and the Seller.
(iii) Material Adverse Effect. The occurrence of any event or
-----------------------
condition that has, or could reasonably be expected to have, a Material
Adverse Effect.
(iv) Receivables Sale Agreement Amortization Date. The occurrence of
--------------------------------------------
the "Amortization Date" under either Receivables Sale Agreement.
-----------------
(v) Defaults Under Other Agreements. The occurrence of a default or
-------------------------------
an event of default under any other financing arrangement pursuant to which
such Seller Party is a debtor or an obligor that is reasonably likely to
result in a Material Adverse Effect.
(vi) Downgrade of the Originator. Any downgrade in the rating of any
---------------------------
Indebtedness of the Originator by S&P or by Moody's, setting forth the
Indebtedness affected and the nature of such change.
(c) Compliance with Laws and Preservation of Corporate Existence.
------------------------------------------------------------
Such Seller Party will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Such Seller Party will preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where its business is
conducted, except where the failure to so preserve and maintain or qualify could
not reasonably be expected to have a Material Adverse Effect.
(d) Audits. Such Seller Party will furnish to the Collateral Agent
------
and each Managing Agent from time to time such information with respect to it
and the Receivables as the Collateral Agent or such Managing Agent may
reasonably request. Such Seller Party will, from time to time during regular
business hours as requested by the Collateral Agent or such Managing Agent upon
reasonable notice and at the sole cost of such Seller Party, permit the
Collateral Agent or such Managing Agent, or its agents or representatives, (i)
to examine and make copies of and abstracts from all Records in the possession
or under the control of such Person relating to the Receivables and the Related
Security, including, without limitation, the related Contracts, and (ii) to
visit the offices and properties of such Person for the purpose of examining
such materials described in clause (i) above, and to discuss matters relating to
----------
such
15
Person's financial condition or the Receivables and the Related Security or
any Person's performance under any of the Transaction Documents or any Person's
performance under the Contracts (subject to confidentiality restrictions in the
relevant Contracts) and, in each case, with any of the officers or employees of
Seller or the Servicer having knowledge of such matters; provided, however, that
-------- -------
prior to the Amortization Date, so long as no Amortization Event has occurred
and is continuing, the Collateral Agent, the Managing Agents and their
respective agents or representatives shall not, on a collective basis, conduct
the activities described in clauses (i) and (ii) above more frequently than one
----------- ----
time per year. Without limiting any of the foregoing, the Seller Parties shall
deliver to each Managing Agent a copy of the management letter prepared by
Deloitte & Touche in connection with the audit being conducted as of the date
hereof as soon as such letter is available and, in any event, no later than July
31, 1999.
(e) Keeping and Marking of Records and Books.
----------------------------------------
(i) The Servicer will maintain and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records evidencing Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of
all Receivables (including, without limitation, records adequate to permit
the identification of each new Receivable and all Collections of and
adjustments to each existing Receivable).
(ii) Such Seller Party will on or prior to the date hereof, mark its
records and other books and records relating to the Purchaser Interests
with a legend, acceptable to the Collateral Agent, describing the Purchaser
Interests.
(f) Compliance with Contracts and Credit and Collection Policy.
----------------------------------------------------------
Seller Party will timely and fully (i) perform and comply with all provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Receivables, and (ii) comply in all respects with the Credit and
Collection Policy in regard to each Receivable and the related Contract, except,
in each case, where the failure to so comply would not result in a Material
Adverse Effect. Seller will pay when due any taxes payable in connection with
the Receivables, exclusive of taxes on or measured by income or gross receipts
of the Conduits, the Collateral Agent, the Managing Agents or any Financial
Institution.
(g) Performance and Enforcement of Receivables Sale Agreements.
----------------------------------------------------------
Seller shall, and shall require the Originator and CGSF to, perform each of
their respective obligations and undertakings under and pursuant to each
Receivables Sale Agreement, as applicable, shall purchase Receivables thereunder
in strict compliance with the terms thereof and shall take all action necessary
or reasonably appropriate to enforce the rights and remedies accorded to Seller
under the Receivables Sale Agreements. Seller shall take all actions reasonably
necessary to perfect and enforce its rights and interests (and the rights and
interests of the Collateral Agent and the Purchasers as assignees of Seller)
under the Tier Two Receivables Sale Agreement (including its rights and
interests under the Tier One Receivables Sale Agreement, as assignee of CGSF) as
the Collateral Agent may from time to time reasonably request, including,
---------
without
- -------
16
limitation, making claims to which it may be entitled under any indemnity,
- ----------
reimbursement or similar provision contained in the Tier Two Receivables Sale
Agreement.
(h) Ownership. Seller shall take all necessary action to (i) vest
---------
legal and equitable title to the Receivables, the Related Security and the
Collections purchased under the Tier Two Receivables Sale Agreement irrevocably
in Seller, free and clear of any Adverse Claims other than Adverse Claims in
favor of the Collateral Agent and the Purchasers (including, without limitation,
--------- ------------------
the filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Seller's interest in such Receivables, Related Security and
Collections and such other action to perfect, protect or more fully evidence the
interest of Seller therein as the Collateral Agent may reasonably request), and
(ii) establish and maintain, in favor of the Collateral Agent, for the benefit
of the Purchasers, a valid and perfected first priority undivided percentage
ownership interest (and/or a valid and perfected first priority security
interest) in all Receivables, Related Security and Collections to the full
extent contemplated herein, free and clear of any Adverse Claims other than
Adverse Claims in favor of the Collateral Agent for the benefit of the
Purchasers (including, without limitation, the filing of all financing
--------- ------------------
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect the Collateral
Agent's (for the benefit of the Purchasers) interest in such Receivables,
Related Security and Collections and such other action to perfect, protect or
more fully evidence the interest of the Collateral Agent for the benefit of the
Purchasers as the Collateral Agent may reasonably request).
(i) Purchasers' Reliance. Seller acknowledges that the Purchasers are
--------------------
entering into the transactions contemplated by this Agreement in reliance upon
Seller's identity as a legal entity that is separate from the Originator and
CGSF. Therefore, from and after the date of execution and delivery of this
Agreement, Seller shall take all reasonable steps, including, without
limitation, all steps that the Collateral Agent, any Managing Agent or any
Purchaser may from time to time reasonably request, to maintain Seller's
identity as a separate legal entity and to make it manifest to third parties
that Seller is an entity with assets and liabilities distinct from those of the
Originator, CGSF and any Affiliates thereof and not just a division of the
Originator or CGSF. Without limiting the generality of the foregoing and in
addition to the other covenants set forth herein, Seller shall:
(A) conduct its own business in its own name and require that all
full-time employees of Seller, if any, identify themselves as such and not
as employees of the Originator or CGSF;
(B) if applicable, compensate all employees, consultants and agents
directly, from Seller's bank accounts, for services provided to Seller by
such employees, consultants and agents and, to the extent any employee,
consultant or agent of Seller is also an employee, consultant or agent of
the Originator or CGSF, allocate the compensation of such employee,
consultant or agent between Seller and the Originator or CGSF, as
applicable, on a basis that reflects the services rendered to Seller and
the Originator or CGSF, as applicable;
17
(C) clearly identify its offices (by signage or otherwise) as its
offices, if any, and, if any such office is located in the offices of the
Originator or CGSF, Seller shall lease such office at a fair market rent;
(D) if applicable, have separate stationery, invoices and checks in
its own name;
(E) conduct all transactions with the Originator, CGSF and the
Servicer (including, without limitation, any delegation of its obligations
hereunder as Servicer) strictly on an arm's-length basis, allocate all
overhead expenses (including, without limitation, telephone and other
utility charges), if any, for items shared between Seller and the
Originator or CGSF on the basis of actual use to the extent practicable, if
any, and, to the extent such allocation is not practicable, on a basis
reasonably related to actual use;
(F) at all times have a Board of Directors consisting of at least
three members, at least one member of which is an Independent Director;
(G) observe all corporate formalities as a distinct entity, and
ensure that all corporate actions relating to (A) the selection,
maintenance or replacement of the Independent Director, (B) the dissolution
or liquidation of Seller or (C) the initiation of, participation in,
acquiescence in or consent to any bankruptcy, insolvency, reorganization or
similar proceeding involving Seller, are duly authorized by unanimous vote
of its Board of Directors (including the Independent Director);
(H) maintain Seller's books and records separate from those of the
Originator and CGSF and otherwise readily identifiable as its own assets
rather than assets of the Originator or CGSF;
(I) prepare its financial statements, if any, separately from those
of the Originator and CGSF and ensure that any consolidated financial
statements of the Originator, CGSF or any Affiliate thereof that include
Seller and that are filed with the Securities and Exchange Commission or
any other governmental agency have notes stating to the effect that Seller
is a separate corporate entity and that its assets will be available to
satisfy the claims of the creditors of Seller and of no other Person;
(J) except as herein specifically otherwise provided, maintain the
funds or other assets of Seller separate from, and not commingled with,
those of the Originator or CGSF and only maintain bank accounts or other
depository accounts to which the Seller alone is the account party, into
which the Seller alone makes deposits and from which the Seller alone (or
the Collateral Agent or Managing Agents hereunder) has the power to make
withdrawals;
(K) pay all of Seller's operating expenses, if any, from the Seller's
own assets (except for certain payments by the Originator, CGSF or other
Persons pursuant to allocation arrangements that comply with the
requirements of this Section 7.1(i));
--------------
18
(L) operate its business and activities such that: it does not engage
in any business or activity of any kind, or enter into any transaction or
indenture, mortgage, instrument, agreement, contract, lease or other
undertaking, other than the transactions contemplated and authorized by
this Agreement and the Receivables Sale Agreements; and does not create,
incur, guarantee, assume or suffer to exist any indebtedness or other
liabilities, whether direct or contingent, other than (1) as a result of
the endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business, (2) the incurrence
of obligations under this Agreement, (3) the incurrence of obligations, as
expressly contemplated in the Receivables Sale Agreements, to make payment
to CGSF for the purchase of Receivables from CGSF under the Tier Two
Receivables Sale Agreement, and (4) the incurrence of operating expenses in
the ordinary course of business of the type otherwise contemplated by this
Agreement;
(M) maintain its corporate charter in conformity with this Agreement,
such that it does not amend, restate, supplement or otherwise modify its
Certificate of Incorporation or By-Laws in any respect that would impair
its ability to comply with the terms or provisions of any of the
Transaction Documents, including, without limitation, Section 7.1(i) of
--------------
this Agreement;
(N) maintain the effectiveness of, and continue to perform under the
Receivables Sale Agreements, such that it does not amend, restate,
supplement, cancel, terminate or otherwise modify either Receivables Sale
Agreement, or give any consent, waiver, directive or approval thereunder or
waive any default, action, omission or breach under either Receivables Sale
Agreement or otherwise grant any indulgence thereunder, without (in each
case) the prior written consent of the Collateral Agent and each Managing
Agent;
(O) maintain its corporate separateness such that it does not merge
or consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions, and
except as otherwise contemplated herein) all or substantially all of its
assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any Person, nor at any time create,
have, acquire, maintain or hold any interest in any Subsidiary.
(P) maintain at all times the Required Capital Amount and refrain
from making any dividend, distribution, redemption of capital stock or
payment of any subordinated indebtedness which would cause the Required
Capital Amount to cease to be so maintained; and
(Q) take such other actions as are necessary on its part to ensure
that the facts and assumptions set forth in the opinion issued by Skadden,
Arps, Slate, Meagher & Flom, LLP as counsel for Seller, in connection with
the closing or initial purchase under this Agreement and relating to
substantive consolidation issues, and in the certificates accompanying such
opinion, remain true and correct in all material respects at all times.
19
(j) Collections. Such Seller Party shall cause (1) all proceeds from
-----------
all Lock-Boxes to be directly deposited by a Collection Bank into a Collection
Account and (2) each Lock-Box and Collection Account to be, at all times
following July 25, 1999, subject to a Collection Account Agreement that is in
full force and effect. In the event any payments relating to Receivables are
remitted directly to Seller or any Affiliate of Seller, Seller shall remit (or
shall cause all such payments to be remitted) directly to a Collection Bank and
deposited into a Collection Account within two (2) Business Days following
receipt thereof and, at all times prior to such remittance, Seller shall itself
hold or, if applicable, shall cause such payments to be held in trust for the
exclusive benefit of the Collateral Agent, the Managing Agents and the
Purchasers. Seller shall maintain exclusive ownership, dominion and control
(subject to the terms of this Agreement) of each Lock-Box and Collection Account
and shall not grant the right to take dominion and control of any Lock-Box or
Collection Account at a future time or upon the occurrence of a future event to
any Person, except to the Collateral Agent as contemplated by this Agreement.
(k) Taxes. Such Seller Party shall file all tax returns and reports
-----
required by law to be filed by it and shall promptly pay all taxes and
governmental charges at any time owing, except any such taxes which are not yet
delinquent or are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted accounting principles shall have been set aside on its books.
(l) Corporate Ownership. The Seller shall remain a wholly-owned,
-------------------
direct or indirect Subsidiary of McKesson and CGSF.
(m) Year 2000. The Seller Parties' Year 2000 Plan will address the
---------
Year 2000 Problem on a timely basis, but in no event later than September 30,
1999.
Section 7.2 Negative Covenants of the Seller Parties. Until the date
----------------------------------------
on which the Aggregate Unpaids have been indefeasibly paid in full and this
Agreement terminates in accordance with its terms, each Seller Party hereby
covenants, as to itself, that:
(a) Name Change, Offices and Records. Such Seller Party will not
--------------------------------
change its name, identity or corporate structure (within the meaning of Section
9-402(7) of any applicable enactment of the UCC) or relocate its chief executive
office or any office where Records are kept unless it shall have: (i) given the
Collateral Agent prior written notice thereof and (ii) delivered to the
Collateral Agent all financing statements, instruments and other documents
requested by the Collateral Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. Such Seller Party
------------------------------------------
will not add or terminate any bank as a Collection Bank, or make any change in
the instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless the Collateral Agent shall have received, at least
ten (10) days before the proposed effective date therefor, (i) written notice of
such addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Account or Lock-Box;
provided, however, that the Servicer may make changes in instructions to
- -------- -------
Obligors regarding payments if
20
such new instructions require such Obligor to make payments to another existing
Collection Account.
(c) Modifications to Contracts and Credit and Collection Policy. Such
-----------------------------------------------------------
Seller Party will not make any change to the Credit and Collection Policy that
could adversely affect the collectibility of the Receivables or decrease the
credit quality of any newly created Receivables. Except as provided in Section
-------
8.2(d), the Servicer will not, and will not extend, amend or otherwise modify
- ------
the terms of any Receivable or any Contract related thereto other than in
accordance with the Credit and Collection Policy.
(d) Sales, Liens. Seller shall not sell, assign (by operation of law
------------
or otherwise) or otherwise dispose of, or grant any option with respect to, or
create or suffer to exist any Adverse Claim upon (including, without limitation,
the filing of any financing statement) or with respect to, any Receivable,
Related Security or Collections, or upon or with respect to any Contract under
which any Receivable arises, or any Lock-Box or Collection Account, or assign
any right to receive income with respect thereto (other than, in each case, the
creation of the interests therein in favor of the Collateral Agent and the
Purchasers provided for herein), and Seller shall defend the right, title and
interest of the Collateral Agent and the Purchasers in, to and under any of the
foregoing property, against all claims of third parties claiming through or
under Seller, CGSF or the Originator. Seller shall not create or suffer to exist
any mortgage, pledge, security interest, encumbrance, lien, charge or other
similar arrangement on any inventory the sale of which would give rise to a
Receivable.
(e) Net Receivables Balance. At no time prior to the Amortization
-----------------------
Date shall Seller permit the Net Receivables Balance to be less than an amount
equal to the sum of (i) the Aggregate Capital plus (ii) the Aggregate Reserves
----
for any period of time greater than one (1) Business Day.
(f) Amortization Date Determination. Seller shall not designate an
-------------------------------
Amortization Date (as defined in either Receivables Sale Agreement), or send any
written notice to Originator or CGSF in respect thereof, without the prior
written consent of the Collateral Agent, except with respect to the occurrence
of such Amortization Date arising pursuant to Section 5.1(d) of either
Receivables Sale Agreement.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
Section 8.1 Designation of Servicer. (a) The servicing,
-----------------------
administration and collection of the Receivables shall be conducted by such
Person (the "Servicer") so designated from time to time in accordance with this
--------
Section 8.1. McKesson is hereby designated as, and hereby agrees to perform the
- -----------
duties and obligations of, the Servicer pursuant to the terms of this Agreement.
After the occurrence and during the continuance of a Trigger Event, the
Collateral
21
Agent may at any time designate as Servicer any Person to succeed McKesson or
any successor Servicer.
(b) Without the prior written consent of the Collateral Agent and the
Required Financial Institutions, McKesson shall not be permitted to delegate any
of its duties or responsibilities as Servicer to any Person other than (i)
Seller or another Affiliate of McKesson and (ii) with respect to certain
Defaulted Receivables, outside collection agencies in accordance with its
customary practices. Seller shall not be permitted to further delegate to any
other Person any of the duties or responsibilities of the Servicer delegated to
it by McKesson. If at any time after the occurrence of a Trigger Event, the
Collateral Agent shall designate as Servicer any Person other than McKesson or
an Affiliate of McKesson, all duties and responsibilities theretofore delegated
by McKesson or another Affiliate of McKesson to Seller may, at the discretion of
the Collateral Agent, be terminated forthwith on notice given by the Collateral
Agent to McKesson and to Seller.
(c) So long as the Servicer is McKesson or an Affiliate of McKesson,
(i) McKesson shall be and remain primarily liable to the Collateral Agent and
the Purchasers for the full and prompt performance of all duties and
responsibilities of the Servicer hereunder; (ii) the Collateral Agent and the
Purchasers shall be entitled to deal exclusively with McKesson in matters
relating to the discharge by the Servicer of its duties and responsibilities
hereunder; and (iii) the Collateral Agent and the Purchasers shall not be
required to give notice, demand or other communication to any Person other than
McKesson in order for communication to the Servicer and its sub-servicer or
other delegate with respect thereto to be accomplished. McKesson, at all times
that it is the Servicer, shall be responsible for providing any sub-servicer or
other delegate of the Servicer with any notice given to the Servicer under this
Agreement.
Section 8.2 Duties of Servicer. (a) The Servicer shall take or
------------------
cause to be taken all such actions as may be necessary or advisable to collect
each Receivable from time to time, all in accordance with applicable laws, rules
and regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy.
(b) The Servicer will instruct all Obligors to pay all Collections
directly to a Lock-Box or Collection Account. The Servicer shall effect a
Collection Account Agreement with each bank party to a Collection Account at any
time after July 25, 1999. In the case of any remittances received in any Lock-
Box or Collection Account that shall have been identified, to the satisfaction
of the Servicer, to not constitute Collections or other proceeds of the
Receivables or the Related Security, the Servicer shall promptly remit such
items to the Person identified to it as being the owner of such remittances.
From and after the date the Collateral Agent delivers to any Collection Bank a
Collection Notice pursuant to Section 8.3, the Collateral Agent may request that
-----------
the Servicer, and the Servicer thereupon promptly shall instruct all Obligors
with respect to the Receivables, to remit all payments thereon to a new
depositary account specified by the Collateral Agent and, at all times
thereafter, Seller and the Servicer shall not deposit or otherwise credit, and
shall not permit any other Person to deposit or otherwise credit to such new
depositary account any cash or payment item other than Collections.
22
(c) The Servicer shall administer the Collections in accordance with
the procedures described herein and in Article II. The Servicer shall set aside
----------
and hold in trust for the account of Seller and the Purchasers their respective
shares of the Collections of Receivables in accordance with Article II;
----------
provided, that nothing in this sentence shall require the Servicer to segregate
- --------
Collections on a daily basis from its other funds. The Servicer shall, upon the
request of the Collateral Agent after the occurrence and during the continuance
of a Trigger Event, segregate, in a manner acceptable to the Collateral Agent,
all cash, checks and other instruments received by it from time to time
constituting Collections from the general funds of the Servicer or Seller prior
to the remittance thereof in accordance with Article II. If the Servicer shall
----------
be required to segregate Collections pursuant to the preceding sentence, the
Servicer shall segregate and deposit with a bank designated by the Collateral
Agent such allocable share of Collections of Receivables set aside for the
Purchasers on the first Business Day following receipt by the Servicer of such
Collections, duly endorsed or with duly executed instruments of transfer.
(d) The Servicer may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer determines to be appropriate to maximize
Collections thereof; provided, however, that such extension or adjustment shall
-------- -------
not alter the status of such Receivable as a Delinquent Receivable or Defaulted
Receivable or limit the rights of the Collateral Agent or the Purchasers under
this Agreement. Notwithstanding anything to the contrary contained herein, the
Collateral Agent shall have the absolute and unlimited right to direct the
Servicer to commence or settle any legal action with respect to any Receivable
or to foreclose upon or repossess any Related Security.
(e) The Servicer shall hold in trust for Seller and the Purchasers
all Records that (i) evidence or relate to the Receivables, the related
Contracts and Related Security or (ii) are otherwise necessary or desirable to
collect the Receivables and shall, as soon as practicable upon demand of the
Collateral Agent after the occurrence and during the continuance of a Trigger
Event deliver or make available to the Collateral Agent all such Records, at a
place selected by the Collateral Agent. The Servicer shall, as soon as
practicable following receipt thereof turn over to Seller any cash collections
or other cash proceeds received with respect to Indebtedness not constituting
Receivables. After the occurrence and during the continuance of a Trigger Event,
the Servicer shall, from time to time at the request of any Purchaser, furnish
to the Purchasers (promptly after any such request) a calculation of the amounts
set aside for the Purchasers pursuant to Article II.
----------
(f) Any payment by an Obligor in respect of any indebtedness owed by
it to the Originator, CGSF or Seller shall, except as reasonably identified by
the Servicer as not constituting a Collection, as otherwise specified by such
Obligor, as otherwise required by contract or law or unless otherwise instructed
by the Collateral Agent, be applied as a Collection of any Receivable of such
Obligor (starting with the oldest such Receivable) to the extent of any amounts
then due and payable thereunder before being applied to any other receivable or
other obligation of such Obligor.
Section 8.3 Collection Notices. The Collateral Agent is authorized
------------------
at any time after the occurrence of an Amortization Event to date and to deliver
to the Collection Banks the
23
Collection Notices. Seller hereby transfers to the Collateral Agent for the
benefit of the Purchasers, effective when the Collateral Agent delivers such
notice, the exclusive ownership and control of each Lock-Box and the Collection
Accounts. In case any authorized signatory of Seller whose signature appears on
a Collection Account Agreement shall cease to have such authority before the
delivery of such notice, such Collection Notice shall nevertheless be valid as
if such authority had remained in force. After the occurrence and during the
continuance of a Trigger Event, Seller hereby authorizes the Collateral Agent,
and agrees that the Collateral Agent shall be entitled, to (i) endorse Seller's
name on checks and other instruments representing Collections and (ii) take such
action as shall be necessary or desirable to cause all cash, checks and other
instruments constituting Collections of Receivables to come into the possession
of the Collateral Agent rather than Seller. Following the Amortization Date,
Seller hereby authorizes the Collateral Agent, and agrees that the Collateral
Agent shall be entitled, to enforce the Receivables, the related Contracts and
the Related Security.
Section 8.4 Responsibilities of Seller. Anything herein to the
--------------------------
contrary notwithstanding, the exercise by the Collateral Agent and the
Purchasers of their rights hereunder shall not release the Servicer, the
Originator, CGSF or Seller from any of their duties or obligations with respect
to any Receivables or under the related Contracts. The Purchasers shall have no
obligation or liability with respect to any Receivables or related Contracts,
nor shall any of them be obligated to perform the obligations of Seller.
Section 8.5 Reports. The Servicer shall prepare and forward to each
-------
Managing Agent (i) on the fifteenth (15th) day of each month and at such more
frequent times as each Managing Agent shall request if an Amortization Event has
occurred and is continuing, a Monthly Report accompanied by, if the Collateral
Agent or any Managing Agent shall request, a listing by Obligor of all
Receivables together with an aging of such Receivables.
Section 8.6 Servicing Fees. In consideration of McKesson's
--------------
agreement to act as Servicer hereunder, the Purchasers hereby agree that, so
long as McKesson shall continue to perform as Servicer hereunder, the Seller
shall pay over to McKesson on each Monthly Settlement Date a fee equal to (i)
one percent (1%) of the average daily Net Receivables Balance during the
preceding Collection Period, times (ii) 1/12, as compensation for its servicing
activities.
Section 8.7 Financial Covenant. The Servicer agrees that it will,
------------------
as of the end of each calendar month, maintain a ratio of Total Debt to Total
Capitalization of not greater than 0.565 to 1.00.
ARTICLE IX
AMORTIZATION EVENTS
Section 9.1 Amortization Events. The occurrence of any one or more
-------------------
of the following events shall constitute an Amortization Event:
(a) Any Seller Party shall fail (i) to make any payment or deposit
required hereunder when due and, for any such payment or deposit which is not in
respect of Capital, such
24
failure continues for one (1) day, or (ii) to perform or observe any term,
covenant or agreement hereunder (other than as referred to in clause (i) of this
----------
paragraph (a)) and such failure shall continue for five (5) consecutive Business
Days after the earlier of written notice from the Collateral Agent or any
Managing Agent or Purchaser or actual knowledge on the part of such Seller Party
of such failure.
(b) Any representation or warranty made by any Seller Party in this
Agreement, any other Transaction Document or in any other document delivered
pursuant hereto or thereto shall prove to have been incorrect in any material
respect when made or deemed made.
(c) (i) Failure of Seller to pay any Indebtedness when due; (ii)
failure of any other Seller Party to pay Indebtedness when due in excess of
$25,000,000; or (iii) the default by any Seller Party in the performance of any
term, provision or condition contained in any agreement under which any such
Indebtedness was created or is governed, the effect of which is to cause, or to
permit the holder or holders of such Indebtedness to cause, such Indebtedness to
become due prior to its stated maturity; or any such Indebtedness of any Seller
Party shall be declared to be due and payable or required to be prepaid (other
than by a regularly scheduled payment) prior to the date of maturity thereof.
(d) (i) Any Seller Party or any of its Material Subsidiaries 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
any Seller Party or any of its Material Subsidiaries seeking to adjudicate it
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 an order for relief or the appointment of a
receiver, trustee or other similar official for it or any substantial part of
its property, and, with respect to a Seller Party or any of its Subsidiaries
other than the Seller, such proceeding shall not be stayed, released, vacated or
fully bonded within sixty (60) days after commencement, filing or levy or (ii)
any Seller Party or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth in clause (i) above in this subsection
---------- ----------
(d).
- ---
(e) The aggregate Purchaser Interests shall exceed 100% and shall
continue as such until the earlier of (i) one Business Day following the date
any Seller Party has actual knowledge thereof and (ii) the next Settlement Date.
(f) As at the end of any calendar month, the Delinquency Ratio shall
exceed 6.25%, or the Loss-to-Balance Ratio shall exceed 5.25%, or the
Receivables Dilution Ratio shall exceed 6.75%.
(g) A Change of Control shall occur with respect to any Seller Party.
(h) One or more final judgments for the payment of money shall be
entered against Seller or one or more final judgments for the payment of money
in excess of $25,000,000 shall be entered against any other Seller Party on
claims not covered by insurance or as to which
25
the insurance carrier has denied its responsibility, and such judgment shall
continue unsatisfied and in effect for fifteen (15) consecutive days without a
stay of execution.
(i) (i) Any "Amortization Event" or the "Amortization Date" shall
------------------ -----------------
occur under either Receivables Sale Agreement, (ii) the Originator shall for any
reason cease to transfer, or cease to have the legal capacity to transfer, or
otherwise be incapable of transferring Receivables to CGSF under the Tier One
Receivables Sale Agreement, or (iii) CGSF shall for any reason cease to
transfer, or cease to have legal capacity to transfer, or otherwise be incapable
of transferring Receivables to Seller under the Tier Two Receivables Sale
Agreement.
(j) This Agreement shall terminate in whole or in part (except in
accordance with its terms), or shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Seller, or any Obligor on
Receivables constituting a material portion of the Receivables shall directly or
indirectly contest in any manner such effectiveness, validity, binding nature or
enforceability, or the Collateral Agent for the benefit of the Purchasers shall
cease to have a valid and perfected first priority security interest in the
Receivables, the Related Security and the Collections with respect thereto and
the Collection Accounts.
Section 9.2 Remedies. (a) Upon the occurrence and during the
--------
continuation of an Amortization Event, the Collateral Agent may with the consent
of, and shall, upon the direction of, either Managing Agent, take any of the
following actions (with written notice to the Seller): (i) declare the
Amortization Date to have occurred, whereupon the Amortization Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by each Seller Party; provided, however, that
-------- -------
upon the occurrence of an Amortization Event described in Section 9.1(d), or of
--------------
an actual or deemed entry of an order for relief with respect to any Seller
Party under the Federal Bankruptcy Code, the Amortization Date shall
automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by each Seller Party and (ii) to the fullest
extent permitted by applicable law, declare that the Default Fee shall accrue
with respect to any of the Aggregate Unpaids outstanding at such time.
(b) Upon the occurrence and during the continuation of a Trigger Event,
the Collateral Agent may with the consent of, and shall, upon the direction of,
either Managing Agent, take any of the following actions (with written notice to
the Seller): (i) replace the Person then acting as Servicer and (ii) deliver the
Collection Notices to the Collection Banks.
(c) Upon the occurrence of the Amortization Date, the Collateral Agent may
with the consent of, and shall, upon the direction of, either Managing Agent
(with written notice to the Seller) notify Obligors of the Purchasers' interest
in the Receivables.
The aforementioned rights and remedies shall be in addition to all other rights
and remedies of the Collateral Agent and the Purchasers available under this
Agreement, by operation of law, at equity or otherwise, all of which are hereby
expressly preserved, including, without limitation, all rights and remedies
provided under the UCC, all of which rights shall be cumulative.
26
ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnities by the Seller Parties. (a) Without limiting
---------------------------------
any other rights that the Collateral Agent, any Managing Agent or any Purchaser
may have hereunder or under applicable law, (A) Seller hereby agrees to
indemnify the Collateral Agent, the Managing Agents and each Purchaser and their
respective assigns, officers, directors, agents and employees (each an
"Indemnified Party") from and against any and all damages, losses, claims,
-----------------
taxes, liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of the Collateral
Agent, the Managing Agents or such Purchaser) and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
-------------------
against or incurred by any of them arising out of or as a result of this
Agreement or the acquisition, either directly or indirectly, by a Purchaser of
an interest in the Receivables, and (B) the Servicer hereby agrees to indemnify
each Indemnified Party for Indemnified Amounts awarded against or incurred by
any of them arising out of any breach by the Servicer of a representation,
warranty, covenant or obligation made by the Servicer hereunder or under any
other Transaction Document excluding, however, in all of the foregoing instances
under the preceding clauses (A) and (B):
----------- ---
(i) Indemnified Amounts to the extent a final judgment of a court of
competent jurisdiction holds that such Indemnified Amounts resulted from
gross negligence or willful misconduct on the part of the Indemnified Party
seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes losses in
respect of Receivables that are uncollectible on account of the insolvency,
bankruptcy or financial inability to pay of the related Obligor; or
(iii) taxes imposed by the jurisdiction in which such Indemnified
Party's principal executive office is located, on or measured by the
overall net income of such Indemnified Party to the extent that the
computation of such taxes is consistent with the characterization for
income tax purposes of the acquisition by the Purchasers of Purchaser
Interests as a loan or loans by the Purchasers to Seller secured by the
Receivables, the Related Security, the Collection Accounts and the
Collections;
provided, however, that nothing contained in this sentence shall limit the
- -------- -------
liability of any Seller Party or limit the recourse of the Purchasers to any
Seller Party for amounts otherwise specifically provided to be paid by such
Seller Party under the terms of this Agreement.
Without limiting the generality of the foregoing indemnification, Seller
shall indemnify the Collateral Agent, the Managing Agent and the Purchasers for
Indemnified Amounts (including, without limitation, losses in respect of
uncollectible receivables, subject to clause (ii) in the preceding paragraph,
-----------
but otherwise regardless of whether reimbursement therefor would constitute
recourse to Seller or the Servicer) relating to or resulting from:
27
(i) any representation or warranty made by any Seller Party, CGSF
or the Originator (or any officers of any such Person) under or in
connection with this Agreement, any other Transaction Document or any other
information or report delivered by any such Person pursuant hereto or
thereto, which shall have been false or incorrect when made or deemed made;
(ii) the failure by any Seller, the Servicer, CGSF or the Originator
to comply with any applicable law, rule or regulation with respect to any
Receivable or Contract related thereto, or the nonconformity of any
Receivable or Contract included therein with any such applicable law, rule
or regulation or any failure of the Originator to keep or perform any of
its obligations, express or implied, with respect to any Contract;
(iii) any failure of Seller, the Servicer, CGSF or the Originator to
perform its duties, covenants or other obligations in accordance with the
provisions of this Agreement or any other Transaction Document;
(iv) any products liability, personal injury, damage or similar
claim arising out of or in connection with merchandise, insurance or
services that are the subject of any Contract;
(v) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
(including, without limitation, a defense based on such Receivable or the
related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other
claim resulting from the sale of the merchandise or service related to such
Receivable or the furnishing or failure to furnish such merchandise or
services;
(vi) the commingling of Collections of Receivables at any time with
other funds;
(vii) any investigation, litigation or proceeding related to or
arising from this Agreement or any other Transaction Document, the
transactions contemplated hereby, the use of the proceeds of a purchase,
the ownership of the Purchaser Interests or any other investigation,
litigation or proceeding relating to Seller, the Servicer, CGSF or the
Originator in which any Indemnified Party becomes involved as a result of
any of the transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor in
respect of any Receivable as a result of such Obligor being immune from
civil and commercial law and suit on the grounds of sovereignty or
otherwise from any legal action, suit or proceeding;
(ix) any Amortization Event described in Section 9.1(d);
--------------
(x) any failure of Seller to acquire and maintain legal and
equitable title to, and ownership of any Receivable and the Related
Security and Collections with respect thereto from CGSF and the Originator,
free and clear of any Adverse Claim (other than as created hereunder); or
any failure of Seller to give reasonably equivalent value to CGSF
28
under the Tier Two Receivables Sale Agreement or any failure of CGSF to
give reasonably equivalent value to the Originator under the Tier One
Receivables Sale Agreement in consideration of the transfer by CGSF or the
Originator, respectively, of any Receivable, or any attempt by any Person
to void such transfer under statutory provisions or common law or equitable
action;
(xi) any failure to vest and maintain vested in the Collateral Agent
and the Purchasers, or to transfer to the Collateral Agent and the
Purchasers, legal and equitable title to, and ownership of, a first
priority undivided percentage ownership (to the extent of the Purchaser
Interests contemplated hereunder) in the Receivables, the Related Security
and the Collections, free and clear of any Adverse Claim;
(xii) 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
Receivable, the Related Security and Collections with respect thereto, and
the proceeds of any thereof, whether at the time of any Incremental
Purchase or Reinvestment or at any subsequent time;
(xiii) any action or omission by any Seller Party which reduces or
impairs the rights of the Collateral Agent or the Purchasers with respect
to any Receivable or the value of any such Receivable;
(xiv) any attempt by any Person to void any Incremental Purchase or
Reinvestment hereunder under statutory provisions or common law or
equitable action; and
(xv) the Year 2000 Problem.
(b) Notwithstanding anything to the contrary in this Agreement,
solely for the purposes of determining Indemnified Amounts owing under this
Section 10.01, any representation, warranty or covenant qualified by materiality
- -------------
or the occurrence of a Material Adverse Effect shall not be so qualified.
Section 10.2 Increased Cost and Reduced Return. If after the date
---------------------------------
hereof, any Funding Source shall be charged any fee, expense or increased cost
on account of the adoption of any applicable law, rule or regulation (including
any applicable law, rule or regulation regarding capital adequacy) or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency: (i) that subjects any Funding Source to any
charge or withholding on or with respect to any Funding Agreement or a Funding
Source's obligations under a Funding Agreement, or on or with respect to the
Receivables, or changes the basis of taxation of payments to any Funding Source
of any amounts payable under any Funding Agreement (except for changes in the
rate of tax on the overall net income of a Funding Source) or (ii) that imposes,
modifies or deems applicable any reserve, assessment, insurance charge, special
deposit or similar requirement against assets of,
29
deposits with or for the account of a Funding Source, or credit extended by a
Funding Source pursuant to a Funding Agreement or (iii) that imposes any other
condition the result of which is to increase the cost to a Funding Source of
performing its obligations under a Funding Agreement, or to reduce the rate of
return on a Funding Source's capital as a consequence of its obligations under a
Funding Agreement, or to reduce the amount of any sum received or receivable by
a Funding Source under a Funding Agreement or to require any payment calculated
by reference to the amount of interests or loans held or interest received by
it, then, within ten (10) days following demand therefor by the Collateral Agent
or the relevant Managing Agent, Seller shall pay to the applicable Managing
Agent, for the benefit of the relevant Funding Source, such amounts charged to
such Funding Source or compensate such Funding Source for such reduction.
Section 10.3 Other Costs and Expenses. Seller shall pay to the
------------------------
Collateral Agent, the Managing Agents and the Conduits on demand all costs and
out-of-pocket expenses in connection with the preparation, execution, delivery
and administration of this Agreement, the transactions contemplated hereby and
the other documents to be delivered hereunder, including without limitation, the
cost of the Conduits' auditors auditing the books, records and procedures of
Seller, reasonable fees and out-of-pocket expenses of legal counsel for the
Conduits, the Managing Agents and the Collateral Agent (which such counsel may
be employees of the Conduits, the Managing Agents or the Collateral Agent) with
respect thereto and with respect to advising the Conduits, the Managing Agents
and the Collateral Agent as to their respective rights and remedies under this
Agreement. Seller shall pay to the Collateral Agent or the relevant Managing
Agent, within ten (10) days following demand therefor, any and all costs and
expenses of the Collateral Agent, the Managing Agents and the Purchasers, if
any, including reasonable counsel fees and expenses in connection with the
enforcement of this Agreement and the other documents delivered hereunder and in
connection with any restructuring or workout of this Agreement or such
documents, or the administration of this Agreement following an Amortization
Event.
ARTICLE XI
THE AGENTS
Section 11.1 Authorization and Action. Each Purchaser hereby
------------------------
designates and appoints First Chicago to act as its agent hereunder and under
each other Transaction Document, and authorizes the Collateral Agent and its
related Managing Agent to take such actions as agent on its behalf and to
exercise such powers as are delegated to the Collateral Agent or such Managing
Agent by the terms of this Agreement and the other Transaction Documents
together with such powers as are reasonably incidental thereto. Neither the
Collateral Agent nor any Managing Agent shall have any duties or
responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with any Purchaser, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Collateral Agent or the Managing Agents shall be
read into this Agreement or any other Transaction Document or otherwise exist
for the Collateral Agent or the Managing Agents. In performing their respective
functions and duties hereunder and under the other Transaction Documents, (i)
the Collateral Agent shall act solely as agent for the Purchasers, (ii) each
30
Managing Agent shall act solely as agent for the Conduits and Financial
Institutions in the related Purchase Group and (iii) neither the Collateral
Agent nor any Managing Agent shall be deemed to have assumed any obligation or
relationship of trust or agency with or for any Seller Party or any of such
Seller Party's successors or assigns. Neither the Collateral Agent nor any
Managing Agent shall be required to take any action that exposes the Collateral
Agent or the Managing Agents to personal liability or that is contrary to this
Agreement, any other Transaction Document or applicable law. The appointment and
authority of the Collateral Agent and the Managing Agents hereunder shall
terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each
Purchaser hereby authorizes the Collateral Agent and each Managing Agent, as
applicable, to execute each of the Uniform Commercial Code financing statements,
this Agreement and such other Transaction Documents as may require the
Collateral Agent's or a Managing Agent's signature on behalf of such Purchaser
(the terms of which shall be binding on such Purchaser).
Section 11.2 Delegation of Duties. The Collateral Agent and the
--------------------
Managing Agents may execute any of their respective duties under this Agreement
and each other Transaction Document by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Neither the Collateral Agent nor any Managing Agent shall be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
Section 11.3 Exculpatory Provisions. None of the Collateral Agent,
----------------------
the Managing Agents or any of their respective directors, officers, agents or
employees shall be (i) liable for any action lawfully taken or omitted to be
taken by it or them under or in connection with this Agreement or any other
Transaction Document (except for its, their or such Person's own gross
negligence or willful misconduct), or (ii) responsible in any manner to any of
the Purchasers for any recitals, statements, representations or warranties made
by any Seller Party contained in this Agreement, any other Transaction Document
or any certificate, report, statement or other document referred to or provided
for in, or received under or in connection with, this Agreement, or any other
Transaction Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any other Transaction
Document or any other document furnished in connection herewith or therewith, or
for any failure of any Seller Party to perform its obligations hereunder or
thereunder, or for the satisfaction of any condition specified in Article VI, or
----------
for the perfection, priority, condition, value or sufficiency of any collateral
pledged in connection herewith. Neither the Collateral Agent nor any Managing
Agent shall be under any obligation to any Purchaser to ascertain or to inquire
as to the observance or performance of any of the agreements or covenants
contained in, or conditions of, this Agreement or any other Transaction
Document, or to inspect the properties, books or records of the Seller Parties.
Neither the Collateral Agent nor any Managing Agent shall be deemed to have
knowledge of any Amortization Event or Potential Amortization Event unless the
Collateral Agent or such Managing Agent, as applicable, has received notice from
Seller or a Purchaser.
Section 11.4 Reliance by Agents. The Collateral Agent and the
-----------------
Managing Agents shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document or conversation believed by it to be
genuine and correct and to have been signed, sent
31
or made by the proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to Seller), independent
accountants and other experts selected by the Collateral Agent or any Managing
Agent. The Collateral Agent and the Managing Agents shall in all cases be fully
justified in failing or refusing to take any action under this Agreement or any
other Transaction Document unless it shall first receive such advice or
concurrence of the Conduits or the Required Financial Institutions or all of the
Purchasers, as applicable, as they deem appropriate and they shall first be
indemnified to their satisfaction by the Purchasers, provided that unless and
--------
until the Collateral Agent or any Managing Agent shall have received such
advice, the Collateral Agent or such Managing Agent may take or refrain from
taking any action, as the Collateral Agent or such Managing Agent shall deem
advisable and in the best interests of the Purchasers. The Collateral Agent and
the Managing Agents shall in all cases be fully protected in acting, or in
refraining from acting, in accordance with a request of the related Conduits or
the Required Financial Institutions or all of the Purchasers, as applicable, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Purchasers.
Section 11.5 Non-Reliance on Agents and Other Purchasers. Each
-------------------------------------------
Purchaser expressly acknowledges that none of the Collateral Agent, the Managing
Agents or any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by the Collateral Agent or any Managing Agent hereafter taken,
including, without limitation, any review of the affairs of any Seller Party,
shall be deemed to constitute any representation or warranty by the Collateral
Agent or such Managing Agent. Each Purchaser represents and warrants to the
Collateral Agent and the Managing Agents that it has and will, independently and
without reliance upon the Collateral Agent, any Managing Agent or any other
Purchaser and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of Seller and made its own decision to enter into this
Agreement, the other Transaction Documents and all other documents related
hereto or thereto.
Section 11.6 Reimbursement and Indemnification. The Financial
---------------------------------
Institutions agree to reimburse and indemnify the Collateral Agent, the Managing
Agents and their respective officers, directors, employees, representatives and
agents ratably according to their Pro Rata Shares, to the extent not paid or
reimbursed by the Seller Parties (i) for any amounts for which the Collateral
Agent, acting in its capacity as Collateral Agent, or any Managing Agent, acting
in its capacity as a Managing Agent, is entitled to reimbursement by the Seller
Parties hereunder and (ii) for any other expenses incurred by the Collateral
Agent, in its capacity as Collateral Agent, or any Managing Agent, acting in its
capacity as a Managing Agent, and acting on behalf of the related Purchasers, in
connection with the administration and enforcement of this Agreement and the
other Transaction Documents.
Section 11.7 Agents in their Individual Capacities. The Collateral
-------------------------------------
Agent, each Managing Agent and each of its respective Affiliates may make loans
to, accept deposits from and generally engage in any kind of business with
Seller or any Affiliate of Seller as though it were not the Collateral Agent or
a Managing Agent hereunder. With respect to the acquisition of Purchaser
Interests pursuant to this Agreement, the Collateral Agent and each Managing
Agent
32
shall have the same rights and powers under this Agreement in its individual
capacity as any Purchaser and may exercise the same as though it were not the
Collateral Agent or a Managing Agent, and the terms "Financial Institution,"
---------------------
"Purchaser," "Financial Institutions" and "Purchasers" shall include the
--------- ---------------------- ----------
Collateral Agent and each Managing Agent in its individual capacity.
Section 11.8 Successor Agent. The Collateral Agent and each
---------------
Managing Agent may, upon five (5) days' notice to Seller and the Purchasers, and
the Collateral Agent or any Managing Agent will, upon the direction of all of
the Purchasers (other than such Collateral Agent or Managing Agent, in its
individual capacity, as applicable) resign as Collateral Agent or Managing
Agent, as applicable. If the Collateral Agent or a Managing Agent shall resign,
then the Required Financial Institutions during such five-day period shall
appoint from among the Purchasers a successor agent. If for any reason no
successor agent is appointed by the Required Financial Institutions during such
five-day period, then effective upon the termination of such five-day period,
the Purchasers shall perform all of the duties of the Collateral Agent or the
applicable Managing Agent hereunder and under the other Transaction Documents
and Seller and the Servicer (as applicable) shall make all payments in respect
of the Aggregate Unpaids directly to the applicable Purchasers and for all
purposes shall deal directly with the Purchasers. After the effectiveness of any
retiring Collateral Agent's or Managing Agent's resignation hereunder as
Collateral Agent or Managing Agent, as applicable, the retiring Collateral Agent
or Managing Agent shall be discharged from its duties and obligations hereunder
and under the other Transaction Documents and the provisions of this Article XI
----------
and Article X shall continue in effect for its benefit with respect to any
---------
actions taken or omitted to be taken by it while it was Collateral Agent or
Managing Agent under this Agreement and under the other Transaction Documents.
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS
Section 12.1 Assignments. (a) Seller and each Financial
-----------
Institution hereby agree and consent to the complete or partial assignment by
each Conduit of all or any portion of its rights under, interest in, title to
and obligations under this Agreement to the Financial Institutions pursuant to a
Liquidity Agreement, and upon such assignment, such Conduit shall be released
from its obligations so assigned. Further, Seller and each Financial Institution
hereby agree that any assignee of the Conduits of this Agreement or all or any
of the Purchaser Interests of the Conduits shall have all of the rights and
benefits under this Agreement as if the term "Conduit" explicitly referred to
-------
such party, and no such assignment shall in any way impair the rights and
benefits of the Conduits hereunder. Neither the Seller nor the Servicer shall
have the right to assign its rights or obligations under this Agreement.
(b) Any Financial Institution may at any time and from time to time,
subject to the confidentiality provisions of Section 14.5 hereof, assign to one
------------
or more Persons ("Purchasing Financial Institutions") all or any part of its
---------------------------------
rights and obligations under this Agreement pursuant to an assignment agreement,
substantially in the form set forth in Exhibit VII hereto (the "Assignment
----------- ----------
Agreement") executed by such Purchasing Financial Institution and
- ---------
33
such selling Financial Institution. The consent of the Conduits in such
Financial Institution's Purchase Group shall be required prior to the
effectiveness of any such assignment. The selling Financial Institution will
consult with the Seller regarding the suitability of the Purchasing Financial
Institution prior to the effectiveness of any assignment pursuant to this
Section 12.1(b) and, so long as the Seller's response is not unreasonably
- ---------------
withheld or delayed, such Financial Institution will use commercially reasonable
efforts to accommodate the Seller's preferences and, if the Seller timely
solicits a commitment from an eligible assignee on terms that are not
disadvantageous to the assigning Financial Institution, such Financial
Institution will accommodate the Seller's request. Each assignee of a Financial
Institution must have a short-term debt rating of A-1 or better by Standard &
Poor's Ratings Group and P-1 by Moody's Investor Service, Inc. and must agree to
deliver to the Collateral Agent, promptly following any request therefor by the
Collateral Agent or the affected Conduits, an enforceability opinion in form and
substance satisfactory to the Collateral Agent and such Conduits. Upon delivery
of the executed Assignment Agreement to the Collateral Agent (with a copy to the
Seller), such selling Financial Institution shall be released from its
obligations hereunder to the extent of such assignment. Thereafter the
Purchasing Financial Institution shall for all purposes be a Financial
Institution party to this Agreement and shall have all the rights and
obligations of a Financial Institution under this Agreement to the same extent
as if it were an original party hereto and no further consent or action by
Seller, the Purchasers or the Collateral Agent shall be required.
(c) Each of the Financial Institutions agrees that in the event that
it shall cease to have a short-term debt rating of A-1 or better by Standard &
Poor's Ratings Group and P-1 by Moody's Investor Service, Inc. (an "Affected
--------
Financial Institution"), such Affected Financial Institution shall be obliged,
- ---------------------
at the request of the Conduits in such Financial Institution's Purchase Group or
the applicable Managing Agent, to assign all of its rights and obligations
hereunder to (x) another Financial Institution or (y) another funding entity
nominated by such Managing Agent and acceptable to the affected Conduits, and
willing to participate in this Agreement through the Liquidity Termination Date
in the place of such Affected Financial Institution; provided that the Affected
--------
Financial Institution receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such Financial Institution's Pro Rata Share of
the Capital and Yield owing to the Financial Institutions and all accrued but
unpaid fees and other costs and expenses payable in respect of its Pro Rata
Share of the Purchaser Interests of the Financial Institutions.
Section 12.2 Participations. Any Financial Institution may, in the
--------------
ordinary course of its business at any time, subject to the confidentiality
provisions of Section 14.5 hereof, sell to one or more Persons (each a
------------
"Participant") participating interests in its Pro Rata Share of the Purchaser
-----------
Interests of the Financial Institutions, its obligation to pay the applicable
Conduits its Acquisition Amounts or any other interest of such Financial
Institution hereunder. The selling Financial Institution will consult with the
Seller regarding the suitability of each Participant prior to the effectiveness
of any participation pursuant to this Section 12.2 and, so long as the Seller's
------------
response is not unreasonably withheld or delayed, such Financial Institution
will use commercially reasonable efforts to accommodate the Seller's
preferences, and, if the Seller timely solicits a commitment from an eligible
Participant on terms that are not disadvantageous to the selling Financial
Institution, such Financial Institution will accommodate the Seller's request.
Notwithstanding any such sale by a Financial Institution of a participating
34
interest to a Participant, such Financial Institution's rights and obligations
under this Agreement shall remain unchanged, such Financial Institution shall
remain solely responsible for the performance of its obligations hereunder, and
Seller, the Conduits, the Managing Agents and the Collateral Agent shall
continue to deal solely and directly with such Financial Institution in
connection with such Financial Institution's rights and obligations under this
Agreement. Each Financial Institution agrees that any agreement between such
Financial Institution and any such Participant in respect of such participating
interest shall not restrict such Financial Institution's right to agree to any
amendment, supplement, waiver or modification to this Agreement, except for any
amendment, supplement, waiver or modification described in Section 14.1(b)(i).
------------------
Section 12.3 Pro Rata Syndication. Notwithstanding the provisions
--------------------
of Sections 12.1(b) and 12.2 above, until such time as one of the Managing
--------------- ----
Agents has syndicated $100,000,000 of the aggregate Commitments of the Financial
Institutions in its respective Purchaser Group or Purchaser Groups, as
applicable (the "Initial Syndication Completion Date"), the Seller and the
-----------------------------------
Managing Agents agree that each amount assigned pursuant to Section 12.1(b) or
---------------
participated pursuant to Section 12.2 shall be allocated to the Managing Agents
------------
in accordance with their applicable Managing Agent Percentages; provided,
--------
however, that no such allocation shall occur with respect to any assignment
- -------
described in Section 12.1(c) above; provided, further, that after the Initial
--------------- -------- -------
Syndication Completion Date, each Financial Institution shall be permitted to
make assignments and sell participations in accordance with the provisions of
Sections 12.1(b) and 12.2 above without regard to the requirements in this
- ---------------- ----
Section 12.3.
- ------------
ARTICLE XIII
[RESERVED]
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Waivers and Amendments. (a) No failure or delay on
----------------------
the part of the Collateral Agent, the Managing Agents or any Purchaser in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing in accordance with the provisions of this
Section 14.1(b). The Conduits, Seller, the Servicer, the Managing Agents and
- ---------------
the Collateral Agent, at the direction of the Required Financial Institutions,
may enter into written modifications or waivers of any provisions of this
Agreement, provided, however, that no such modification or waiver shall:
-------- -------
(i) without the consent of each affected Purchaser, (A) extend the
Liquidity Termination Date or the date of any payment or deposit of
Collections by Seller or the
35
Servicer, (B) reduce the rate or extend the time of payment of Yield (or
any component thereof), (C) reduce any fee payable to the Collateral Agent
or the Managing Agents for the benefit of the Purchasers, (D) except
pursuant to Article XII hereof, change the amount of the Capital of any
-----------
Purchaser, any Financial Institution's Pro Rata Share (except as may be
required pursuant to a Conduit's Liquidity Agreement) or any Financial
Institution's Commitment, (E) amend, modify or waive any provision of the
definition of Required Financial Institutions or this Section 14.1(b), (F)
---------------
consent to or permit the assignment or transfer by Seller of any of its
rights and obligations under this Agreement, (G) change the definition of
"Concentration Limit," "Defaulted Receivables," "Default Proxy Ratio,"
------------------- --------------------- -------------------
"Delinquency Ratio," "Delinquent Receivable," "Discount and Servicing Fee
----------------- --------------------- --------------------------
Reserve," "Dilution Horizon Ratio," "Dilution Reserve," "Dilution Reserve
------- ---------------------- ---------------- ----------------
Ratio," "Dilution Ratio," "Eligible Receivable," "Loss Horizon Ratio,"
----- -------------- ------------------- ------------------
"Loss Reserve," "Loss Reserve Ratio," "Loss-to-Balance Ratio," or
------------ ------------------ ---------------------
"Receivables Dilution Ratio"or (H) amend or modify any defined term (or any
--------------------------
defined term used directly or indirectly in such defined term) used in
clauses (A) through (G) above in a manner that would circumvent the
----------- ---
intention of the restrictions set forth in such clauses; or
(ii) without the written consent of any then Collateral Agent or
Managing Agent, amend, modify or waive any provision of this Agreement if
the effect thereof is to affect the rights or duties of such Collateral
Agent or Managing Agent, as applicable.
Notwithstanding the foregoing, (i) without the consent of the Financial
Institutions, the Collateral Agent may, with the consent of Seller, amend this
Agreement solely to add additional Persons as Financial Institutions hereunder
and (ii) the Collateral Agent, the Required Financial Institutions and the
Conduits may enter into amendments to modify any of the terms or provisions of
Article XI, Article XII and Section 14.13 or any other provision of this
- ---------- ----------- -------------
Agreement without the consent of Seller, provided that such amendment has no
negative impact upon Seller. Any modification or waiver made in accordance with
this Section 14.1 shall apply to each of the Purchasers equally and shall be
------------
binding upon Seller, the Purchasers, the Managing Agents and the Collateral
Agent.
Section 14.2 Notices. Except as provided below, all communications
-------
and notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof or at such other address or
telecopy number as such Person may hereafter specify for the purpose of notice
to each of the other parties hereto. Each such notice or other communication
shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if
given by mail, three (3) Business Days after the time such communication is
deposited in the mail with first class postage prepaid or (iii) if given by any
other means, when received at the address specified in this Section 14.2.
------------
Seller hereby authorizes the Collateral Agent to effect purchases and Tranche
Period and Discount Rate selections based on telephonic notices made by any
Person whom the Collateral Agent in good faith believes to be acting on behalf
of Seller. Seller agrees to deliver promptly to the Collateral Agent a written
confirmation of each telephonic notice signed by an authorized officer of
Seller; however, the absence of such confirmation shall not affect the validity
of such notice. If the written confirmation differs from the action taken by
the Collateral Agent, the records of the Collateral Agent shall govern absent
manifest error.
36
Section 14.3 Ratable Payments. If any Purchaser, whether by setoff
----------------
or otherwise, has payment made to it with respect to any portion of the
Aggregate Unpaids owing to such Purchaser (other than payments received pursuant
to Section 10.2 or 10.3) in a greater proportion than that received by any other
------------ ----
Purchaser entitled to receive a ratable share of such Aggregate Unpaids, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of such Aggregate Unpaids held by the other Purchasers so
that after such purchase each Purchaser will hold its ratable proportion of such
Aggregate Unpaids; provided that if all or any portion of such excess amount is
thereafter recovered from such Purchaser, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
Section 14.4 Protection of Ownership Interests of the Purchasers.
---------------------------------------------------
(a) Seller agrees that from time to time, at its expense, it will promptly
execute and deliver all instruments and documents, and take all actions, that
may be necessary or desirable, or that the Collateral Agent may reasonably
request, to perfect, protect or more fully evidence the Purchaser Interests, or
to enable the Collateral Agent or the Purchasers to exercise and enforce their
rights and remedies hereunder. At any time following the occurrence of the
Amortization Date resulting from an Amortization Event, the Collateral Agent
may, or the Collateral Agent may direct Seller or the Servicer to, notify the
Obligors of Receivables, at Seller's expense, of the ownership interests of the
Purchasers under this Agreement and after the occurrence and during the
continuance of a Trigger Event, may also direct that payments of all amounts due
or that become due under any or all Receivables be made directly to the
Collateral Agent or its designee. Seller or the Servicer (as applicable)
shall, at any Purchaser's request, withhold the identity of such Purchaser in
any such notification.
(b) If any Seller Party fails to perform any of its obligations
hereunder, the Collateral Agent or any Purchaser may (but shall not be required
to) perform, or cause performance of, such obligation, and the Collateral
Agent's or such Purchaser's costs and expenses incurred in connection therewith
shall be payable by Seller as provided in Section 10.3. Each Seller Party
------------
irrevocably authorizes the Collateral Agent at any time and from time to time in
the sole discretion of the Collateral Agent, and appoints the Collateral Agent
as its attorney-in-fact, to act on behalf of such Seller Party (i) to execute on
behalf of Seller as debtor and to file financing statements necessary or
desirable in the Collateral Agent's sole discretion to perfect and to maintain
the perfection and priority of the interest of the Purchasers in the Receivables
and (ii) to file a carbon, photographic or other reproduction of this Agreement
or any financing statement with respect to the Receivables as a financing
statement in such offices as the Collateral Agent in its sole discretion deems
necessary or desirable to perfect and to maintain the perfection and priority of
the interests of the Purchasers in the Receivables. This appointment is coupled
with an interest and is irrevocable.
Section 14.5 Confidentiality. (a) Each Seller Party and each
---------------
Purchaser shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of this Agreement and the other confidential
proprietary information with respect to the Collateral Agent, the Managing Agent
and the Conduits and their respective businesses obtained by it or them in
connection with the structuring, negotiating and execution of the transactions
contemplated herein, except that such Seller Party and such Purchaser and its
officers and
37
employees may disclose such information to such Seller Party's and such
Purchaser's external accountants and attorneys and as required pursuant to any
law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings (whether or not having the
force or effect of law).
(b) Anything herein to the contrary notwithstanding, each Seller
Party hereby consents to the disclosure of any nonpublic information with
respect to it (i) to the Collateral Agent, the Managing Agents, the Financial
Institutions or the Conduits by each other, (ii) by the Collateral Agent, the
Managing Agents, or the Purchasers to any prospective or actual assignee or
participant of any of them or (iii) by the Collateral Agent or the Managing
Agents to any rating agency, Commercial Paper dealer or provider of a surety,
guaranty or credit or liquidity enhancement to the Conduits or any entity
organized for the purpose of purchasing, or making loans secured by, financial
assets for which First Chicago or Wachovia acts as the collateral agent and to
any officers, directors, employees, outside accountants and attorneys of any of
the foregoing, provided each such Person is informed of the confidential nature
--------
of such information and (with the exception of any rating agency described in
clause (iii) above) has agreed to keep such information confidential. In
- ------------
addition, the Purchasers, and the Collateral Agent and the Managing Agents may
disclose any such nonpublic information pursuant to any law, rule, regulation,
direction, request or order of any judicial, administrative or regulatory
authority or proceedings (whether or not having the force or effect of law).
Section 14.6 Bankruptcy Petition. Each of Seller, the Servicer, the
-------------------
Collateral Agent, the Managing Agents and each Financial Institution hereby
covenants and agrees that, prior to the date that is one year and one day after
the payment in full of all outstanding senior Indebtedness of a Conduit, it will
not institute against, or join any other Person in instituting against, such
Conduit, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
Section 14.7 Limitation of Liability. Except with respect to any
-----------------------
claim arising out of the willful misconduct or gross negligence of the Conduits,
the Managing Agents, the Collateral Agent, or any Financial Institution, no
claim may be made by any Seller Party or any other Person against any Conduit,
the Collateral Agent or any Financial Institution or their respective
Affiliates, directors, officers, employees, attorneys or agents for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and each Seller Party hereby waives,
releases, and agrees not to sue upon any claim for any such damages, whether or
not accrued and whether or not known or suspected to exist in its favor.
Section 14.8 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF NEW YORK EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE
PURCHASERS' SECURITY INTEREST IN THE PURCHASER INTERESTS IS GOVERNED BY THE LAW
OF ANOTHER STATE, AS REQUIRED BY THE LAWS OF THE STATE OF NEW YORK.
38
Section 14.9 CONSENT TO JURISDICTION. EACH SELLER PARTY HEREBY
-----------------------
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED
BY SUCH PERSON PURSUANT TO THIS AGREEMENT AND EACH OF SELLER PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT, THE MANAGING
AGENTS OR ANY PURCHASER TO BRING PROCEEDINGS AGAINST ANY SELLER PARTY IN THE
COURTS OF ANY OTHER JURISDICTION TO THE EXTENT NECESSARY TO REALIZE ON THE
INTERESTS OF THE PURCHASERS AND THE COLLATERAL AGENT IN ANY RECEIVABLES, RELATED
SECURITY OR PROCEEDS THEREOF. ANY JUDICIAL PROCEEDING BY ANY SELLER PARTY
AGAINST THE COLLATERAL AGENT, ANY MANAGING AGENT OR ANY PURCHASER OR ANY
AFFILIATE OF ANY SUCH PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY
DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE
BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
Section 14.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES
--------------------
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY THE
SELLER PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR
THEREUNDER.
Section 14.11 Integration; Binding Effect; Survival of Terms.
----------------------------------------------
(a) This Agreement and each other Transaction Document contain the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
-------- -------
respect to (i) any breach of any representation and warranty made by any Seller
Party pursuant to Article V, (ii) the indemnification and payment provisions of
---------
Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any
- --------- ------------- ----
termination of this Agreement.
39
Section 14.12 Counterparts; Severability; Section References. This
----------------------------------------------
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Unless otherwise expressly indicated, all references herein
to "Article," "Section," "Schedule" or "Exhibit" shall mean articles and
sections of, and schedules and exhibits to, this Agreement.
Section 14.13 Managing Agent Roles. (a) First Chicago Roles. Each
-------------------- -------------------
of the Financial Institutions acknowledges that First Chicago acts, or may in
the future act, (i) as collateral agent for the Conduits, (ii) as Managing Agent
for PREFCO and Falcon, (iii) as issuing and paying agent for PREFCO's and
Falcon's Commercial Paper, (iv) to provide credit or liquidity enhancement for
the timely payment for the Commercial Paper and (v) to provide other services
from time to time for some or all of the Conduits (collectively, the "First
-----
Chicago Roles"). Without limiting the generality of this Section 14.13(a), each
- ------------- ----------------
Financial Institution hereby acknowledges and consents to any and all First
Chicago Roles and agrees that in connection with any First Chicago Role, First
Chicago may take, or refrain from taking, any action that it, in its discretion,
deems appropriate, including, without limitation, in its role as collateral
agent and Managing Agent for the related Conduits, and the giving of notice to
the Collateral Agent or Managing Agent of a mandatory purchase pursuant its
Liquidity Agreement.
(b) Wachovia Roles. Each of the Financial Institutions acknowledges that
--------------
Wachovia acts, or may in the future act, (i) as Managing Agent for Blue Ridge,
(ii) as issuing and paying agent for Blue Ridge's Commercial Paper, (iii) to
provide credit or liquidity enhancement for the timely payment for the
Commercial Paper and (iv) to provide other services from time to time for some
or all of the Conduits (collectively, the "Wachovia Roles"). Without limiting
--------------
the generality of this Section 14.13(b), each Financial Institution hereby
----------------
acknowledges and consents to any and all Wachovia Roles and agrees that in
connection with any Wachovia Role, Wachovia may take, or refrain from taking,
any action that it, in its discretion, deems appropriate, including, without
limitation, in its role as Managing Agent for the related Conduits, and the
giving of notice to the Collateral Agent or Managing Agent of a mandatory
purchase pursuant to its liquidity back-stop program.
Section 14.14 Characterization. (a) It is the intention of the
----------------
parties hereto that each purchase hereunder shall constitute and be treated as
an absolute and irrevocable sale, which purchase shall provide the applicable
Purchaser with the full benefits of ownership of the applicable Purchaser
Interest. Except as specifically provided in this Agreement, each sale of a
Purchaser Interest hereunder is made without recourse to Seller; provided,
--------
however, that (i) Seller shall be liable to each Purchaser and the Collateral
- -------
Agent for all representations, warranties and covenants made by Seller pursuant
to the terms of this Agreement, and (ii) such sale does not constitute and is
not intended to result in an assumption by any Purchaser or the Collateral Agent
or any assignee thereof of any obligation of Seller, CGSF or the Originator or
40
any other person arising in connection with the Receivables, the Related
Security, or the related Contracts, or any other obligations of Seller, CGSF or
the Originator.
(b) The Seller hereby grants to the Collateral Agent for the ratable
benefit of the Purchasers a valid and perfected security interest in all of
Seller's right, title and interest in, to and under all Receivables now existing
or hereafter arising, the Collections, each Collection Account, all Related
Security, all other rights and payments relating to such Receivables, all of
Seller's rights under the Receivables Sale Agreements and all proceeds of any
thereof to secure the prompt and complete payment of the Aggregate Unpaids.
After an Amortization Event, the Collateral Agent and the Purchasers shall have,
in addition to the rights and remedies that they may have under this Agreement,
all other rights and remedies provided to a secured creditor after default under
the UCC and other applicable law, which rights and remedies shall be cumulative.
[SIGNATURE PAGES FOLLOW]
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
hereof.
CGSF FUNDING CORPORATION, as the Seller
By:__________________________________
Name:
Title:
Address: One Post Street
San Francisco, California 94104
Fax:
McKESSON HBOC, INC., as the Servicer
By:__________________________________
Name:
Title:
Address: One Post Street
San Francisco, California 94104
Fax:
PREFERRED RECEIVABLES FUNDING
CORPORATION, as a Conduit
By:__________________________________
Authorized Signatory
Address: c/o The First National Bank of Chicago, as
Managing Agent
Asset Backed Finance
Suite 0079, 1-19
One First National Plaza
Chicago, Illinois 60670-0019
Fax: (312) 732-1844
FALCON ASSET SECURITIZATION
CORPORATION, as a Conduit
By:__________________________________
42
Authorized Signatory
Address: c/o The First National Bank of Chicago, as
Managing Agent
Asset Backed Finance
Suite 0079, 1-19
One First National Plaza
Chicago, Illinois 60670-0019
Fax: (312) 732-1844
BLUE RIDGE ASSET FUNDING CORPORATION, as a
Conduit
By: Wachovia Bank, N.A., as Attorney-In-Fact
By:__________________________________
Name: Victoria A. Dudley
Title: Senior Vice President
Address: 191 Peachtree Street, NE
Atlanta, Georgia 30303
Fax: (404) 332-5152
THE FIRST NATIONAL BANK OF CHICAGO,
as a Committed Purchaser for PREFCO and Falcon, a
Financial Institution, a Managing Agent and as
Collateral Agent
By:__________________________________
Name:
Title:
Address: The First National Bank of Chicago
Asset Backed Finance
Suite 0596, 1-21
One First National Plaza
Chicago, Illinois 60670-0596
Fax: (312) 732-4487
WACHOVIA BANK, N.A., as a Committed Purchaser for Blue
Ridge, a Financial Institution and a Managing Agent
43
By:__________________________________
Name: Kevin McConnell
Title: Senior Vice President
Address: 191 Peachtree Street, NE
Atlanta, Georgia 30303
Fax: (404) 332-5152
44
EXHIBIT I
DEFINITIONS
As used in this Agreement, 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):
"Accrual Period" means each calendar month, provided that the initial
--------------
Accrual Period hereunder means the period from (and including) the date of the
initial purchase hereunder to (and including) the last day of the calendar month
thereafter.
"Adjusted Pro Rata Share" means, for each Committed Purchaser, the
-----------------------
Commitment of such Committed Purchaser within a given Purchase Group divided by
----------
the sum of the Commitments of each Committed Purchaser in such Purchase Group,
adjusted as necessary to give effect to any assignments pursuant to Article XII.
-----------
"Adverse Claim" means a lien, security interest, charge or
-------------
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person.
"Affected Financial Institution" has the meaning specified in Section
------------------------------
12.1(c).
"Affiliate" means, with respect to any Person, any other Person
---------
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person or any Subsidiary of such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.
"Collateral Agent" has the meaning set forth in the preamble to this
----------------
Agreement.
"Aggregate Capital" means, at any time, the sum of all Capital of all
------------------
Purchaser Interests.
"Aggregate Reduction" has the meaning specified in Section 1.3.
------------------- -----------
"Aggregate Reserves" means, on any date of determination, the sum of
------------------
the Loss Reserve, the Discount and Servicer Fee Reserve and the Dilution
Reserve.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of
-----------------
all Capital and all other unpaid Obligations (whether due or accrued) at such
time.
"Agreement" means this Receivables Purchase Agreement, as it may be
---------
amended or modified and in effect from time to time.
45
"Alternate Base Rate" means, for any day, the rate per annum equal to
-------------------
the higher as of such day of (i) the Prime Rate or (ii) one-half of one percent
(0.50%) per annum above the Federal Funds Effective Rate. For purposes of
determining the Alternate Base Rate for any day, changes in the Prime Rate or
the Federal Funds Effective Rate shall be effective on the date of each such
change. The Alternate Base Rate is not necessarily intended to be the lowest
rate of interest determined by Wachovia in connection with extensions of credit.
"Amortization Date" means the earliest to occur of (i) the day on
-----------------
which any of the conditions precedent set forth in Section 6.2 are not
-----------
satisfied, (ii) the Business Day immediately prior to the occurrence of an
Amortization Event set forth in Section 9.1(d), (iii) the Business Day specified
--------------
in a written notice from the Collateral Agent pursuant to Section 9.2 following
-----------
the occurrence of any other Amortization Event, and (iv) the date which is sixty
(60) Business Days after the Collateral Agent's receipt of written notice from
Seller that it wishes to terminate the facility evidenced by this Agreement.
"Amortization Event" has the meaning specified in Article IX.
------------------ ----------
"Applicable Margin" means, on any date and with respect to each
-----------------
funding made at the LIBO Rate (subject to clauses (b) through (d) of the
definition of "Applicable Rating Level"), the applicable margin set forth below
based on the Applicable Rating Level on such date:
Applicable Applicable Margin
Rating Level (in basis points)
------------ -----------------
Level I 18.0
Level II 22.0
Level III 23.5
Level IV 26.5
Level V 30.0
Level VI 47.5
"Applicable Rating Level" means and shall be determined by the ratings
-----------------------
issued from time to time by S&P and Moody's (or S&P or Moody's, if ratings shall
be available from only one of such Rating Agencies) in respect of McKesson's
long-term, senior unsecured debt in accordance with the following:
Rating Level S&P Moody's
------------ --- -------
Level I A or more A2 or more
favorable favorable
Level II A- A3
Level III BBB+ Baa1
Level IV BBB Baa2
Level V BBB- Baa3
Level VI BB+ or less Ba1 or less
46
or not rated or not rated
For purposes of the foregoing, (a) if ratings are available from both S&P and
Moody's, and the ratings available from such Rating Agencies do not correspond
to the same rating level on the chart above, then (1) if such rating levels
differ by only one level on the chart above, then the Applicable Rating Level
shall correspond to the higher of the two ratings, and (2) if such rating levels
differ by more than one level on the chart above, then the Applicable Rating
Level shall correspond to that rating which is one rating higher than the lower
of the two ratings; (b) if determinative ratings shall change (other than as a
result of a change in the ratings systems used by any applicable Rating Agency),
such that a change in the Applicable Rating Level would result, such change
shall effect a change in the Applicable Rating Level as of the day on which the
Managing Agents receive notice of such change (such day, a "Change Day"), and
----------
any change in the Applicable Margin shall take effect commencing on such Change
Day and ending on the date immediately preceding the next Change Day; (c) if the
rating system of any of the Rating Agencies shall change prior to the date all
obligations hereunder have been paid and the Commitments cancelled, McKesson and
the Managing Agents shall negotiate in good faith to amend the references to
specific ratings in this definition to reflect such changed rating system, and
pending such amendment, if no Applicable Rating Level is otherwise determinable
based upon the foregoing, the most recent Applicable Rating Level in effect
shall apply; (d) if McKesson shall fail to give notice to the Managing Agents of
any decrease in rating by any Rating Agency in respect of the Company's long-
term, senior unsecured debt on the date required by Section 7.1(b)(vi), the
------------------
Applicable Rating Level shall be deemed to be Level VI for the period from the
date such notice was required to be delivered to the dates such notice is
received by the Managing Agents; and (e) upon the occurrence and during the
continuance of an Amortization Event, the Applicable Rating Level shall be
deemed to be Level VI plus any Default Fee required pursuant to this Agreement.
----
"Assignment Agreement" has the meaning set forth in Section 12.1(b).
-------------------- --------------
"Authorized Officer" shall mean, with respect to any Seller Party, its
------------------
respective corporate controller, treasurer, assistant treasurer, vice president-
finance or chief financial officer.
"Base Rate" means (a) with respect to PREFCO and its Financial
---------
Institutions and Falcon and its Committed Purchasers, a rate per annum equal to
the corporate base rate, prime rate or base rate of interest, as applicable,
announced by the Reference Bank from time to time, changing when and as such
rate changes and (b) with respect to Blue Ridge and its Committed Purchasers,
the Alternate Base Rate.
"Blue Ridge" has the meaning set forth in the preamble to this
----------
Agreement.
"Broken Funding Costs" means for any Purchaser Interest which: (i) has
--------------------
its Capital reduced without compliance by the Seller with the notice
requirements hereunder or (ii) does not become subject to an Aggregate Reduction
following the delivery of any Reduction Notice or (iii) is assigned under
Article XIII or terminated prior to the date on which it was originally
- ------------
scheduled to end; an amount equal to the excess, if any, of (A) Yield that would
have
47
accrued during the remainder of the Tranche Periods determined by the Collateral
Agent or the applicable Managing Agent to relate to such Purchaser Interest (as
applicable) subsequent to the date of such reduction or termination (or in
respect of clause (ii) above, the date such Aggregate Reduction was designated
to occur pursuant to the Reduction Notice) of the Capital of such Purchaser
Interest if such reduction, assignment or termination had not occurred or such
Reduction Notice had not been delivered, over (B) the sum of (x) to the extent
all or a portion of such Capital is allocated to another Purchaser Interest, the
amount of Yield actually accrued during the remainder of such period on such
Capital for the new Purchaser Interest, and (y) to the extent such Capital is
not allocated to another Purchaser Interest, the income, if any, actually
received during the remainder of such period by the holder of such Purchaser
Interest from investing the portion of such Capital not so allocated. All Broken
Funding Costs shall be due and payable hereunder upon demand.
"Business Day" means any day on which banks are not authorized or
------------
required to close in New York, New York, Atlanta, Georgia, San Francisco,
California or Chicago, Illinois and The Depository Trust Company of New York is
open for business, and, if the applicable Business Day relates to any
computation or payment to be made with respect to the LIBO Rate, any day on
which dealings in dollar deposits are carried on in the London interbank market.
"Capital" of any Purchaser Interest means, at any time, (A) the
-------
Purchase Price of such Purchaser Interest, minus (B) the sum of the aggregate
-----
amount of Collections and other payments received by the Collateral Agent which
in each case has been applied to reduce such Capital in accordance with the
terms and conditions of this Agreement; provided that such Capital shall be
restored (in accordance with Section 2.5) in the amount of any Collections or
-----------
other payments so received and applied if at any time the distribution of such
Collections or payments are rescinded, returned or refunded for any reason.
"CGSF" means California Golden State Finance Company, a California
----
corporation.
"Change of Control" means, (i) with respect to McKesson, the
-----------------
acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 51% or more of
the outstanding shares of voting stock of McKesson and (ii) with respect the
Seller or CGSF, McKesson's failure to own, directly or indirectly, 100% of the
issued and outstanding capital stock of the applicable entity.
"Collection Account" means each concentration account, depositary
------------------
account, lock-box account or similar account in which any Collections are
collected or deposited and which is listed on Exhibit IV.
----------
"Collection Account Agreement" means an agreement substantially in the
----------------------------
form of Exhibit VI ,or such other agreement in form and substance acceptable to
----------
the Collateral Agent, among the Originator, Seller, the Collateral Agent and a
Collection Bank.
48
"Collection Bank" means, at any time, any of the banks holding one or
---------------
more Collection Accounts.
"Collection Notice" means a notice, in substantially the form of Annex
----------------- -----
A to Exhibit VI, from the Collateral Agent to a Collection Bank.
- - ----------
"Collection Period" means each calendar month.
-----------------
"Collections" means, with respect to any Receivable, all cash
-----------
collections and other cash proceeds in respect of such Receivable, including,
without limitation, all yield, finance charges or other related amounts accruing
in respect thereof and all cash proceeds of Related Security with respect to
such Receivable.
"Commercial Paper" means promissory notes of any Conduit issued by
----------------
such Conduit in the commercial paper market.
"Committed Purchaser" has the meaning set forth in the Preliminary
-------------------
Statements to this Agreement.
"Commitment" means, for each Financial Institution, the commitment of
----------
such Financial Institution to purchase its Pro Rata Share of Purchaser Interests
from (i) Seller and (ii) the Conduits, such Pro Rata Share not to exceed, in the
aggregate, the amount set forth opposite such Financial Institution's name on
Schedule A to this Agreement, as such amount may be modified in accordance with
- ----------
the terms hereof.
"Concentration Limit" means, at any time, for any Obligor, the maximum
-------------------
amount of Receivables owned by the Seller which may be owing from such Obligor,
which at any time shall be equal to such Obligor's Standard Concentration Limit
or Special Concentration Limit, as applicable by definition to such Obligor;
provided, that in the case of an Obligor and any Affiliate of such Obligor, the
- --------
Concentration Limit shall be calculated as if such Obligor and such Affiliate
are one Obligor.
"Conduit" means PREFCO, Falcon or Blue Ridge, as appropriate.
-------
"Conduit Percentage" means, (a) with respect to PREFCO, a fraction
------------------
(expressed as a percentage) equal to 1/3, (b) with respect to Falcon, a fraction
(expressed as a percentage) equal to 1/3 and (c) with respect to Blue Ridge, a
fraction (expressed as a percentage) equal to 1/3, as the same may be adjusted
to give effect to any assignments from one Conduit to another Conduit.
"Contingent Obligation" of a Person means any agreement, undertaking
---------------------
or arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
49
"Contract" means, with respect to any Receivable, any and all
--------
instruments, agreements, invoices or other writings pursuant to which such
Receivable arises or which evidences such Receivable.
"CP Rate" means, with respect to any Conduit for any CP Tranche
-------
Period, the rate equivalent to the rate (or if more than one rate, the weighted
average of the rates) at which Commercial Paper issued by such Conduit having a
term equal to such CP Tranche Period are sold by plus any and all applicable
----
issuing and paying agent fees and commissions of placement agents and commercial
paper dealers in respect of such Commercial Paper and other costs associated
with funding small or odd-lot amounts; provided, however, that if the rate (or
-------- -------
rates) as agreed between any such agent or dealer and the applicable Conduit is
a discount rate (or rates), the "CP Rate" for such Conduit for such CP Tranche
Period shall be the rate (or if more than one rate, the weighted average of the
rates) resulting from the relevant Managing Agent's converting such discount
rate (or rates) to an interest-bearing equivalent rate per annum.
"CP Tranche Period" means a period of not less than one (1) nor more
-----------------
than ninety (90) days, commencing on a Business Day requested by the Seller and
agreed to by the applicable Managing Agent pursuant to Section 1.2.
-----------
"Credit and Collection Policy" means Seller's credit and collection
----------------------------
policies and practices relating to Contracts and Receivables existing on the
date hereof and summarized in Exhibit VIII hereto, as modified from time to time
------------
in accordance with this Agreement.
"Deemed Collections" means the aggregate of all amounts Seller shall
------------------
have been deemed to have received as a Collection of a Receivable. Seller shall
be deemed to have received a Collection in full of a Receivable if at any time
(i) the Outstanding Balance of any such Receivable is either (x) reduced as a
result of any defective or rejected goods or services, any discount or any
adjustment or otherwise by Seller (other than cash Collections on account of the
Receivables) or (y) reduced or canceled as a result of a setoff in respect of
any claim by any Person (whether such claim arises out of the same or a related
transaction or an unrelated transaction) or (ii) any of the representations or
warranties in Article V are no longer true with respect to such Receivable.
---------
"Defaulted Receivable" means a Receivable: (i) as to which the Obligor
--------------------
thereof has taken any action, or suffered any event to occur, of the type
described in Section 9.1(d) (as if references to Seller Party therein refer to
--------------
such Obligor); (ii) as to which the Obligor thereof, if a natural person, is
deceased, (iii) which, consistent with the Credit and Collection Policy, would
be written off Seller's books as uncollectible, (iv) which has been identified
by Seller as uncollectible in accordance with the Credit and Collection Policy
or (v) as to which any payment, or part thereof, remains unpaid for ninety (90)
days or more from the original due date for such payment.
"Default Fee" means with respect to any amount due and payable by
-----------
Seller in respect of any Aggregate Unpaids, an amount equal to the greater of
(i) $1000 and (ii) interest on any such unpaid Aggregate Unpaids at a rate per
annum equal to 2% above the Base Rate.
50
"Default Proxy Ratio" means, for any Collection Period, a fraction
-------------------
(calculated as a percentage) equal to (i) the aggregate Outstanding Balance of
all Receivables (without duplication) which remain unpaid for more than sixty
(60) but less than ninety (90) or more days from the original due date at any
time during the Collection Period then ending plus the aggregate Outstanding
----
Balance of all Receivables (without duplication) which, consistent with the
Credit and Collection Policy, were or should have been written off the Seller's
books as uncollectible and are less than ninety (90) days old during such
period, divided by (ii) the aggregate Outstanding Balance of all Receivables
----------
generated during the Collection Period which ended three (3) Collection Periods
prior to such last day.
"Delinquency Ratio" means, as of the last day of any Collection
-----------------
Period, a fraction (calculated as a percentage) equal to (i) the aggregate
Outstanding Balance of all Receivables that were Delinquent Receivables at such
time and as of the last day of the two (2) preceding Collection Periods by (ii)
the sum of the aggregate Outstanding Balance of all Receivables as of the last
day of each of such three (3) Collection Periods.
"Delinquent Receivable" means a Receivable as to which any payment, or
---------------------
part thereof, remains unpaid for sixty (60) days or more from the original due
date for such payment.
"Designated Obligor" means an Obligor indicated by the Collateral
------------------
Agent to Seller in writing.
"Dilution Horizon Ratio" means, as of any date as set forth in the
----------------------
most recent Monthly Report, a ratio computed by dividing (i) the aggregate of
all Receivables generated during the most recently ended Collection Period by
(ii) the aggregate Outstanding Balance of total Eligible Receivables as at the
last day of the most recently ended Collection Period.
"Dilution Ratio" means, for any Collection Period, the ratio
--------------
(expressed as a percentage) computed as of the last day of such Collection
Period by dividing (i) an amount equal to the aggregate reductions in the
Outstanding Balance of any Receivable as a result of any Dilutions during such
Collection Period by (ii) the aggregate Outstanding Balance of all Receivables
generated during such Collection Period.
"Dilution Reserve" means, on any date, an amount equal to (x) the
----------------
greater of (i) 3% and (ii) the Dilution Reserve Ratio then in effect times (y)
the aggregate Outstanding Balance of Eligible Receivables (net of Earned
Discounts and quarterly volume rebates) as of the close of business on the
immediately preceding Business Day.
"Dilution Reserve Ratio" means, as of any date, an amount calculated
----------------------
as follows:
DRR = [(2.0 x ADR) + [(HDR-ADR) x (HDR/ADR)]] x DHR
where:
DRR = the Dilution Reserve Ratio;
51
ADR = the average of the Dilution Ratios for the past twelve
Collection Periods;
HDR = the highest average of the Dilution Ratios for any three
consecutive Collection Periods during the most recent twelve
months; and
DHR = the Dilution Horizon Ratio.
The Dilution Reserve Ratio shall be calculated monthly in each Monthly Report
and such Dilution Reserve Ratio shall, absent manifest error, be effective from
the corresponding Monthly Settlement Date until the next succeeding Monthly
Settlement Date.
"Dilutions" means, at any time, the aggregate amount of reductions or
---------
cancellations described in clause (i) of the definition of "Deemed Collections",
----------
other than any Earned Discounts or quarterly volume rebates which have been
subtracted from the Net Receivables Balance.
"Discount and Servicing Fee Reserve" means, on any date, the sum of
----------------------------------
(i) one and one-half of one percent (1.5%) times the lower of the Net
Receivables Balance and the Purchase Limit as of the close of business on the
immediately preceding Business Day plus (ii) the average outstanding amount of
----
accrued and unpaid Yield and fees during the preceding Collection Period, such
component to be calculated in each Monthly Report which component shall, absent
manifest error, become effective from the corresponding Monthly Settlement Date
until the next succeeding Monthly Settlement Date. The Collateral Agent shall
estimate the component of the Discount and Servicing Fee Reserve described in
clause (ii) above for the period from the initial purchase hereunder until the
- -----------
first Monthly Settlement Date.
"Discount Rate" means the CP Rate, the LIBO Rate or the Base Rate, as
-------------
applicable, with respect to each Purchaser Interest.
"Earned Discount" means any reduction in the Outstanding Balance of
---------------
any Eligible Receivable resulting from a discount earned by an Obligor due to a
payment made by such Obligor within its payment terms.
"Eligible Receivable" means, at any time, a Receivable:
-------------------
(i) the Obligor of which (a) if a natural person, is a resident of
the United States or, if a corporation or other business organization, is
organized under the laws of the United States or any political subdivision
thereof and has its chief executive office in the United States; (b) is not
an Affiliate of any of the parties hereto; (c) is not a Designated Obligor;
and (d) is not a government or a governmental subdivision or agency,
(ii) the Obligor of which is not an Obligor on Defaulted
Receivables, the balance of which exceeds twenty-five percent (25%) or more
of such Obligor's Receivables,
(iii) which is not a Defaulted Receivable or a Delinquent Receivable,
52
(iv) which by its terms is due and payable within thirty (30) days
of the original billing date therefor and has not had its payment terms
extended,
(v) which is an "account" within the meaning of Section 9-105 of
the UCC of all applicable jurisdictions,
(vi) which is denominated and payable only in United States dollars
in the United States,
(vii) which arises under a Contract in substantially the form of one
of the form contracts set forth on Exhibit IX hereto or otherwise approved
----------
by the Collateral Agent in writing, which, together with such Receivable,
is in full force and effect and constitutes the legal, valid and binding
obligation of the related Obligor enforceable against such Obligor in
accordance with its terms subject to no offset, rescission, counterclaim or
other defense,
(viii) which arises under a Contract which (A) does not require the
Obligor under such Contract to consent to the transfer, sale or assignment
of the rights and duties of Seller under such Contract and (B) does not
contain a confidentiality provision that purports to restrict the ability
of any Purchaser to exercise its rights under this Agreement.
(ix) which arises under a Contract that contains an obligation to
pay a specified sum of money, contingent only upon the sale of goods or the
provision of services by the Originator, which goods shall have been sold
and delivered and which services shall have been fully performed,
(x) which, together with the Contract related thereto, does not
contravene any law, rule or regulation applicable thereto (including,
without limitation, any law, rule and regulation relating to truth in
lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and with respect
to which no part of the Contract related thereto is in violation of any
such law, rule or regulation,
(xi) which satisfies in all material respects all applicable
requirements of the Credit and Collection Policy,
(xii) which was generated in the ordinary course of Originator's
business pursuant to duly authorized Contracts,
(xiii) which arises solely from the sale of goods or the provision of
services, within the meaning of Section 3(c)(5) of the Investment Company
Act of 1940, to the related Obligor by Originator, and not by any other
Person (in whole or in part),
(xiv) which has been validly transferred by (a) the Originator to
CGSF under the Tier One Receivables Sale Agreement and (b) by CGSF to the
Seller under the Tier Two Receivables Sale Agreement, and
53
(xv) in which the Collateral Agent has a valid and perfected
security interest.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Facility Termination Date" means the earlier of June 30, 2004 and the
-------------------------
Liquidity Termination Date.
"Falcon" has the meaning set forth in the preamble to this Agreement.
------
"Federal Funds Effective Rate" means, for any period, a fluctuating
----------------------------
interest rate per annum equal for each day during such period equal to (a) the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York in the Composite Closing
Quotations for U.S. Government Securities; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (Chicago time) for such day on such transactions
received by the Reference Bank from three federal funds brokers of recognized
standing selected by it.
"Fee Letter" means that certain letter agreement dated as of the date
----------
hereof among the Seller, the Originator, the Managing Agents and the Collateral
Agent, as it may be amended or modified and in effect from time to time.
"Finance Charges" means, with respect to a Contract, any finance,
---------------
interest, late payment charges or similar charges owing by an Obligor pursuant
to such Contract.
"Financial Institutions" has the meaning set forth in the preamble in
----------------------
this Agreement.
"First Chicago" means The First National Bank of Chicago, in its
-------------
individual capacity, and its successors.
"Funding Agreement" means this Agreement and any agreement or
-----------------
instrument executed by any Funding Source with or for the benefit of a Conduit.
"Funding Source" means (i) any Financial Institution or (ii) any
--------------
insurance company, bank or other funding entity providing liquidity, credit
enhancement or back-up purchase support or facilities to a Conduit.
"Incremental Purchase" means a purchase of one or more Purchaser
--------------------
Interests which increases the total outstanding Capital hereunder.
"Indebtedness" of a Person means such Person's (i) obligations for
------------
borrowed money, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by liens or payable out
54
of the proceeds or production from property now or hereafter owned or acquired
by such Person, (iv) obligations which are evidenced by notes, acceptances, or
other instruments, (v) capitalized lease obligations, (vi) net liabilities under
interest rate swap, exchange or cap agreements, (vii) Contingent Obligations and
(viii) liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA.
"Independent Director" shall mean a member of the Board of Directors
--------------------
of the Seller who (i) is in fact independent, (ii) does not have any direct
financial interest or any material indirect financial interest in the Seller or
any Affiliate of the Seller and (iii) is not connected as an officer, employee,
promoter, underwriter, trustee, partner, director of person performing similar
functions within the Seller, any Affiliate of the Seller or any Person with a
material direct or indirect financial interest in the Seller.
"Initial Syndication Completion Date" has the meaning set forth in
-----------------------------------
Section 12.3.
"LIBO Business Day" means a day of the year on which dealings in U.S.
-----------------
Dollar deposits are carried on the London interbank market.
"LIBO Rate" means (a) with respect to PREFCO and its Financial
---------
Institutions and Falcon and its Financial Institutions, the rate per annum equal
to the sum of (i) (x) the rate at which deposits in U.S. Dollars are offered by
the Reference Bank to first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of the relevant Tranche Period, such deposits being in the approximate amount of
the Capital of the Purchaser Interest to be funded or maintained, divided by (y)
----------
one minus the maximum aggregate reserve requirement (including all basic,
-----
supplemental, marginal or other reserves) which is imposed against the Reference
Bank in respect of Eurocurrency liabilities, as defined in Regulation D of the
Board of Governors of the Federal Reserve System as in effect from time to time
(expressed as a decimal), applicable to such Tranche Period plus (ii) the
----
Applicable Margin, rounded, if necessary, to the next higher 1/16 of 1%; and
(b) with respect to Blue Ridge and its Financial Institutions, the
rate per annum equal to the sum of (i) (x) the rate per annum determined on the
basis of the offered rate for deposits in U.S. Dollars of amounts equal or
comparable to the approximate amount of the Capital of the Purchaser Interest to
be funded or maintained offered for a term comparable to the relevant Tranche
Period, which rates appear on a Bloomberg L.P. terminal, displayed under the
address "US0001M <Index> Q <Go>," effective as of 11:00 a.m. (London time) two
(2) LIBO Business Days prior to the first day of the relevant Tranche Period,
provided, that if no such offered rates appear on such page, the rate for such
- --------
Tranche Period will be the arithmetic average (rounded upwards, if necessary, to
the next higher 1/100th of 1% of rates quoted by not less than two major banks
in New York City, selected by the Managing Agents, at approximately 10:00 a.m.
(New York City time), two LIBO Business Days prior to the first day of such
Tranche Period, for deposits in U.S. Dollars offered by leading European banks
for a period comparable to such Tranche Period in an amount equal or comparable
to the approximate amount of the Capital of the Purchaser Interest to be funded
or maintained, divided by (y) one minus the maximum reserve percentage, if any,
---------- -----
applicable to Wachovia under Regulation D during such Tranche Period (or if more
than one percentage shall be applicable, the daily average of such
55
percentages for those days in such Tranche Period during which any such
percentage shall be applicable) for determining Wachovia's reserve requirement
(including any marginal, supplemental or emergency reserves) with respect to
liabilities or assets having a term comparable to such Tranche Period consisting
or included in the computation of "Eurocurrency Liabilities" pursuant to
Regulation D, plus (ii) the Applicable Margin. Without limiting the effect of
----
the foregoing clause (b), the maximum reserve percentage calculated pursuant to
----------
clause (b)(i)(y) above shall reflect any other reserves required to be
- ----------------
maintained by Wachovia by reason of any regulatory change against (a) any
category of liabilities which included deposits by reference to which the
"London Interbank Offered Rate" is to be determined or (b) any category of
extensions of credit or other assets which include London Interbank Offered
Rate-based credits or assets.
"Liquidity Agreement" means an agreement entered into by a Conduit
-------------------
with its Committed Purchasers in connection herewith for the purpose of
providing liquidity with respect to the Capital funded by such Conduit under
this Agreement.
"Liquidity Termination Date" means June 23, 2000, unless such date is
--------------------------
extended with the consent of the parties hereto.
"Lock-Box" means a locked postal box maintained by McKesson, in its
--------
capacity as Servicer with respect to which a bank who has executed a Collection
Account Agreement has been granted exclusive access for the purpose of
retrieving and processing payments made on the Receivables and which is listed
on Exhibit IV.
----------
"Loss Horizon Ratio" means, for any Collection Period, a fraction
------------------
(calculated as a percentage) computed by dividing (i) the aggregate Outstanding
Balance of all Receivables generated during the three (3) most recently ended
Collection Periods by (ii) the aggregate Outstanding Balance of total Eligible
Receivables as at the last day of the most recently ended Collection Period.
"Loss Reserve" means, on any date, an amount equal to (x) the greater
------------
of (i) 12% and (ii) the Loss Reserve Ratio then in effect times (y) the
aggregate Outstanding Balance of Eligible Receivables (net of Earned Discounts
and quarterly volume rebates) as of the close of business on the immediately
preceding Business Day.
"Loss-to-Balance Ratio" means, as of the last day of any Collection
---------------------
Period, a percentage equal to (i) the aggregate amount of Receivables which were
Defaulted Receivables as of the last day of such Collection Period and as of the
last day of the two (2) preceding Collection Periods plus, without duplication,
----
the dollar amount of Receivables less than ninety (90) days past due which were
written off as uncollectible during such three Collection Periods, divided by
----------
(ii) the sum of the aggregate Outstanding Balance of all Receivables as of the
last day of such three (3) Collection Periods.
"Loss Reserve Ratio" means, as of any date, an amount calculated as
------------------
follows:
LRR = 2.0 X DPR X LHR, where
56
LRR = the Loss Reserve Ratio;
DPR = the highest average of the Default Proxy Ratios for any
three consecutive Collection Periods during the most recent
twelve months; and
LHR = the Loss Horizon Ratio.
The Loss Reserve Ratio shall be calculated monthly in each Monthly Report and
such Loss Reserve Ratio shall, absent manifest error, be effective from the
corresponding Monthly Settlement Date until the next succeeding Monthly
Settlement Date.
"Managing Agent" means, as to any Conduit, the financial institution
--------------
responsible for the administration of such Conduit's Commercial Paper program
and related activities. As of the date hereof, First Chicago is the Managing
Agent for PREFCO and Falcon and their Committed Purchasers and Wachovia is the
Managing Agent for Blue Ridge and its Committed Purchasers.
"Managing Agent Percentage" means, (a) with respect to First Chicago,
-------------------------
a fraction (expressed as a percentage) equal to 2/3 and (b) with respect to
Wachovia, a fraction (expressed as a percentage) equal to 1/3.
"Mandate Letter" means that certain mandate letter dated as of June
--------------
15, 1999 addressed to Nicholas A. Loiacono from First Chicago, Wachovia, Banc
One Capital Markets, Inc. and Wachovia Securities, Inc.
"Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
financial condition or operations of any Seller Party and its Material
Subsidiaries(except as otherwise disclosed to or discussed with the Managing
Agents prior to the date hereof), (ii) the ability of any Seller Party to
perform its obligations under this Agreement, (iii) the legality, validity or
enforceability of this Agreement or any other Transaction Document, (iv) any
Purchaser's interest in the Receivables generally or in any significant portion
of the Receivables, the Related Security or the Collections with respect
thereto, or (v) the collectibility of the Receivables generally or of any
material portion of the Receivables.
"Material Subsidiary" means, at any time, (i) Medis and (ii) any other
-------------------
Subsidiary of McKesson having at such time ten percent (10%) or more of
McKesson's consolidated total (gross) revenues for the preceding four fiscal
quarter period, as of the last day of the preceding fiscal quarter based upon
McKesson's most recent annual or quarterly financial statements delivered to the
Collateral Agent and the Managing Agents under Section 7.1(a).
--------------
"McKesson" has the meaning set forth in the preamble to this
--------
Agreement.
"Medis" means Medis Health and Pharmaceutical Services Inc., an
-----
Ontario corporation and an indirect, wholly-owned Subsidiary of McKesson.
57
"Monthly Report" means a report, in substantially the form of Exhibit
-------------- -------
X hereto (appropriately completed), furnished by the Servicer to the Managing
- -
Agents pursuant to Section 8.5.
-----------
"Monthly Settlement Date" means the twentieth (20th) day of each
-----------------------
month, or, if such date is not a Business Day, the next succeeding Business Day.
"Moody's" means Moody's Investors Service, Inc. and any successor
-------
thereto.
"Net Receivables Balance" means, at any time, the aggregate
-----------------------
Outstanding Balance of all Eligible Receivables at such time (net of all Earned
Discounts and quarterly volume rebates then in effect) reduced by the aggregate
amount by which the Outstanding Balance of all Eligible Receivables of each
Obligor and its Affiliates exceeds the Concentration Limit for such Obligor.
"Net Worth" means the sum of a capital stock and additional paid in
---------
capital plus retained earnings (or minus accumulated deficits) of the Originator
---- -----
and its Subsidiaries determined on a consolidated basis in conformity with
generally accepted accounting principles on such date.
"Obligations" shall have the meaning set forth in Section 2.1.
----------- -----------
"Obligor" means a Person obligated to make payments pursuant to a
-------
Contract.
"Originator" means McKesson, in its capacity as Seller under the Tier
----------
One Receivables Sale Agreement.
"Outstanding Balance" of any Receivable at any time means the then
-------------------
outstanding principal balance thereof.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Potential Amortization Event" means an event which, with the passage
----------------------------
of time or the giving of notice, or both, would constitute an Amortization
Event.
"PREFCO" has the meaning set forth in the preamble to this Agreement.
------
"Prime Rate" means the rate of interest per annum publicly announced
----------
from time to time by Wachovia as its "prime rate." (The "prime rate" is a rate
set by Wachovia based upon various factors including Wachovia'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.) Any change in the prime rate announced by Wachovia shall
take effect at the opening of business on the day specified in the public
announcement of such change.
58
"Proposed Reduction Date" has the meaning set forth in Section 1.3.
----------------------- -----------
"Pro Rata Share" means, (1) for each Financial Institution, the
--------------
Commitment of such Financial Institution divided by the Purchase Limit, adjusted
----------
as necessary to give effect to the application of any assignments pursuant to
Article XII and (2) for each Conduit, its Conduit Percentage.
- -----------
"Purchase Group" means any Conduit and its Committed Purchasers.
--------------
"Purchase Limit" means $750,000,000.
--------------
"Purchase Notice" has the meaning set forth in Section 1.2.
--------------- -----------
"Purchase Price" means, with respect to any Incremental Purchase of a
--------------
Purchaser Interest, the amount paid to Seller for such Purchaser Interest which
shall not exceed the least of (i) the amount requested by Seller in the
applicable Purchase Notice, (ii) the unused portion of the Purchase Limit on the
applicable purchase date and (iii) the excess, if any, of the Net Receivables
Balance (less the Aggregate Reserves) on the applicable purchase date over the
aggregate outstanding amount of Capital determined as of the date of the most
recent Monthly Report, taking into account such proposed Incremental Purchase.
"Purchaser" means any Conduit or Financial Institution, as applicable.
---------
"Purchaser Interest" means, at any time, an undivided percentage
------------------
ownership interest (computed as set forth below) associated with a designated
amount of Capital, Discount Rate and Tranche Period selected pursuant to the
terms and conditions hereof in (i) each and every Receivable, (ii) all Related
Security with respect to the Receivables, and (iii) all Collections with respect
to, and other proceeds of the Receivables. Each such undivided percentage
interest shall equal:
C
NRB- AR
where:
C = the aggregate outstanding Capital of all Purchaser Interests in a
Purchase Group
AR = Aggregate Reserves
NRB = the Net Receivables Balance.
Such undivided percentage ownership interest shall be initially computed on its
date of purchase. Thereafter, until its Amortization Date, each Purchaser
Interest shall be automatically recomputed (or deemed to be recomputed) on each
day prior to its Amortization Date. The variable percentage represented by any
Purchaser Interest as computed (or deemed recomputed)
59
as of the close of the business day immediately preceding its Amortization Date
shall remain constant at all times after such Amortization Date.
"Rating Agency" means each of S&P and Moody's.
-------------
"Receivable" means any indebtedness or obligations owed to Seller by
----------
an Obligor (without giving effect to any transfer or conveyance hereunder) or in
which the Seller has a security interest or other interest, whether constituting
an account, chattel paper, instrument or general intangible, arising in
connection with the sale of pharmaceutical and other products and related
services by the Originator to retail, chain and hospital pharmacies or
drugstores and other healthcare facilities, and any other entities engaged in
the sale or provision of pharmaceutical products and other products and related
services, including, without limitation, the obligation to pay any Finance
Charges with respect thereto. Indebtedness and other rights and obligations
arising from any one transaction, including, without limitation, indebtedness
and other rights and obligations represented by an individual invoice, shall
constitute a Receivable separate from a Receivable consisting of the
indebtedness and other rights and obligations arising from any other
transaction.
"Receivables Dilution Ratio" means, as of the last day of any
--------------------------
Collection Period, a percentage equal to (i) the aggregate amount of Dilutions
plus any Earned Discounts or quarterly volume rebates) during such Collection
- ----
Period and the two (2) preceding Collection Periods, divided by (ii) the sum of
----------
the aggregate Outstanding Balance of all Receivables as of the last day of each
of such three (3) Collection Periods.
"Receivables Sale Agreement" means (1) the Tier One Receivables Sale
--------------------------
Agreement, or (2) the Tier Two Receivables Sale Agreement, as applicable.
"Records" means, with respect to any Receivable, all Contracts and
-------
other documents, books, records and other information (including, without
limitation, computer programs, tapes, disks, punch cards, data processing
software and related property and rights) relating to such Receivable, any
Related Security therefor and the related Obligor.
"Reduction Notice" has the meaning set forth in Section 1.3.
---------------- -----------
"Reference Bank" means First Chicago or such other bank as First
--------------
Chicago shall designate with the consent of Seller.
"Reinvestment" has the meaning set forth in Section 2.2.
------------ -----------
"Related Security" means, with respect to any Receivable:
----------------
(i) all of Seller's interest in the inventory and goods (including
returned or repossessed inventory or goods), if any, the sale of which by
Originator gave rise to such Receivable, and all insurance contracts with
respect thereto,
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the
60
Contract related to such Receivable or otherwise, together with all
financing statements and security agreements describing any collateral
securing such Receivable,
(iii) all guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise,
(iv) all service contracts and other contracts and agreements
associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of Seller's right, title and interest in, to and under
the Receivables Sale Agreements in respect of such Receivable, and
(vii) all proceeds of any of the foregoing.
"Required Capital Amount" means, as of any date of determination, an
-----------------------
amount equal to the Net Receivables Balance multiplied by 3%.
-------------
"Required Financial Institutions" means, at any time, Financial
-------------------------------
Institutions with Commitments in excess of 66-2/3% of the Purchase Limit.
"Required Notice Period" means the number of days required notice set
----------------------
forth below applicable to the Aggregate Reduction indicated below:
Aggregate Reduction Required Notice Period
------------------- ----------------------
#$100,000,000 two Business Days
$100,000,000 to $250,000,000 five Business Days
*$250,000,000 ten Business Days
provided, that the Required Notice Period shall be one Business Day if the
- --------
Seller is curing a default of the type described in Section 9.1(e) or a breach
--------------
of the negative covenant set forth in Section 7.2(e).
--------------
"Revolving Credit Agreement" means that certain Credit Agreement dated
--------------------------
as of November 10, 1998 among McKesson, Medis, Bank of America National Trust
and Savings Association, as agent, Bank of America Canada, as administrative
agent, The Chase Manhattan Bank, First Union National Bank and First Chicago, as
documentation agents, and the other financial institutions parties thereto (as
amended, restated, supplemented or otherwise modified from time to time), or any
successor facility.
"S&P" means Standard & Poor's Ratings Services, a division of The
---
McGraw-Hill Companies, Inc., and any successor thereto.
"Seller" has the meaning set forth in the preamble to this Agreement.
------
* = greater than
61
"Seller Interest" means, at any time, an undivided percentage
---------------
ownership interest of Seller in the Receivables, Related Security and all
Collections with respect thereto equal to (i) one, minus (ii) the aggregate of
-----
the Purchaser Interests.
"Seller Parties" has the meaning set forth in the preamble to this
--------------
Agreement.
"Servicer" means at any time the Person (which may be the Collateral
--------
Agent) then authorized pursuant to Article VIII to service, administer and
------------
collect Receivables.
"Settlement Date" means (A) the Monthly Settlement Date and (B) the
---------------
last day of the relevant Tranche Period in respect of each Purchaser Interest.
"Settlement Period" means (A) in respect of each Purchaser Interest
-----------------
of the Conduits, the immediately preceding Accrual Period, and (B) in respect of
each Purchaser Interest of the Financial Institutions, the entire Tranche Period
of such Purchaser Interest.
"Special Concentration Limit" means, at any time, with respect to any
---------------------------
Special Obligor (together with its Affiliates or subsidiaries), the lesser of
(i) the applicable percentage set forth below multiplied by the aggregate
-------------
Outstanding Balance of Eligible Receivables (net of all Earned Discounts and
quarterly volume rebates) at such time and (ii) the maximum dollar amounts set
forth below, in each case corresponding to the Moody's and S&P short-term debt
ratings for such Special Obligor at such time or such percentage as may be
otherwise set forth below such Special Obligor's name below:
Special Obligors with ratings at or above:
- -----------------------------------------
S&P Rating Moody's Rating Percentage Maximum Dollar Amount
- ---------------- ----------------- ----------- ---------------------
A-1+ and P-1 11% $165,000,000
A-1 and P-1 9% $135,000,000
A-2 and P-2 6% $ 90,000,000
lower than lower than
A-2 or P-2 or
unrated and unrated 3% $ 45,000,000
provided, that either Managing Agent or the Required Financial Institutions may,
- --------
upon not less than thirty (30) Business Days' notice to Seller, cancel or reduce
any Special Concentration Limit.
"Special Obligor" means Rite Aid, Osco Drug (American Stores), CVS
---------------
Corp., Wal-Mart, and such other Special Obligors as may be designated by the
Managing Agents from time to time.
62
"Standard Concentration Limit" means, at any time, with respect to any
----------------------------
Obligor other than a Special Obligor, the lesser of (i) 3% times the aggregate
Outstanding Balance of Eligible Receivables (net of all Earned Discounts and
quarterly volume rebates) at such time and (ii) $45,000,000.
"Subsidiary" of a Person means (i) any corporation more than 50% of
----------
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries,
or (ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of Seller.
"Terminating Tranche" has the meaning set forth in Section 4.3(b).
------------------- --------------
"Tier One Receivables Sale Agreement" means that certain Receivables
-----------------------------------
Sale Agreement, dated as of the date hereof, between the Originator and CGSF,
(as amended, restated, supplemented or otherwise modified and in effect from
time to time).
"Tier Two Receivables Sale Agreement" means that certain Receivables
-----------------------------------
Sale Agreement, dated as of the date hereof, between CGSF and the Seller, (as
amended, restated, supplemented or otherwise modified and in effect from time to
time).
"Total Capitalization" means, on any date, the sum of (a) Total Debt
--------------------
and (b) the Net Worth on such date.
"Total Debt" means, on any date, all "Indebtedness" (as such term is
----------
defined in the Revolving Credit Agreement) of the Originator and its
Subsidiaries determined on a consolidated basis.
"Tranche Period" means, with respect to any Purchaser Interest:
--------------
(a) if Yield for such Purchaser Interest is calculated with respect
to the CP Rate, the relevant CP Tranche Period;
(b) if Yield for such Purchaser Interest is calculated on the basis
of the LIBO Rate, a period of one, two, three or six months, or such other
period as may be mutually agreeable to the applicable Managing Agent and
Seller, commencing on a Business Day selected by Seller or such Managing
Agent pursuant to this Agreement. Such Tranche Period shall end on the day
in the applicable succeeding calendar month which corresponds numerically
to the beginning day of such Tranche Period, provided, however, that if
there is no such numerically corresponding day in such succeeding month,
such Tranche Period shall end on the last Business Day of such succeeding
month; or
63
(c) if Yield for such Purchaser Interest is calculated on the basis
of the Base Rate, a period commencing on a Business Day selected by Seller
and agreed to by the applicable Managing Agent, provided no such period
shall exceed one month.
If any Tranche Period would end on a day which is not a Business Day, such
Tranche Period shall end on the next succeeding Business Day, provided, however,
--------
that in the case of Tranche Periods corresponding to the LIBO Rate, if such next
succeeding Business Day falls in a new month, such Tranche Period shall end on
the immediately preceding Business Day. In the case of any Tranche Period for
any Purchaser Interest of which commences before the Amortization Date and would
otherwise end on a date occurring after the Amortization Date, such Tranche
Period shall end on the Amortization Date. The duration of each Tranche Period
which commences after the Amortization Date shall be of such duration as
selected by the applicable Managing Agent. In no event shall any Tranche Period
extend beyond the Facility Termination Date.
"Transaction Documents" means, collectively, this Agreement, each
---------------------
Purchase Notice, the Receivables Sale Agreements, each Collection Account
Agreement, the Fee Letter, each Liquidity Agreement and all other instruments,
documents and agreements executed and delivered in connection herewith.
"Trigger Event" means, (i) the occurrence of an Amortization Event of
-------------
the type described in Section 9.1(b) or (f) if such Amortization Event shall
-------------- ---
continue for five (5) consecutive Business Days after the earlier of written
notice from the Collateral Agent or any Managing Agent or Purchaser or actual
knowledge on the part of a Seller Party of such Amortization Event, (ii) the
occurrence of any other Amortization Event described in Article IX or (iii) the
----------
declaration of the Amortization Date as a result of an Amortization Event.
"UCC" means the Uniform Commercial Code as from time to time in effect
---
in the specified jurisdiction.
"Wachovia" means Wachovia Bank, N.A., in its individual capacity, and
--------
its successors.
"Year 2000 Plan" means a plan to prevent the Year 2000 Problem from
--------------
having an adverse effect upon the business, financial condition, operations,
property or prospects of a Person .
"Year 2000 Problem" means, with respect to any Person, the risk that
-----------------
computer applications directly used by that Person cannot or will not: (a)
handle date information involving any and all dates before, during and/or after
January 1, 2000, including accepting input, providing output and performing date
calculations in whole or in part; (b) operate accurately without interruption on
and in respect of any and all dates before, during and/or after January 1, 2000;
and (c) store and provide date input information without creating any ambiguity
as to the century.
"Yield" means for each respective Tranche Period relating to Purchaser
-----
Interests, an amount equal to the product of the applicable Discount Rate for
each Purchaser Interest
64
multiplied by the Capital of such Purchaser Interest for each day elapsed during
- -------------
such Tranche Period, annualized on a 360 day basis.
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 or California, as
applicable, and not specifically defined herein, are used herein as defined in
such Article 9.
65
EXHIBIT II
FORM OF PURCHASE NOTICE
[Date]
[The First National Bank of Chicago,
as Managing Agent for Preferred Receivables
Funding Corporation and Falcon Asset
Securitization Corporation
Suite 0079, 1-21
One First National Plaza
Chicago, Illinois 60670
Attention: Asset Backed Finance]
[Wachovia Bank, N.A.
as Managing Agent for Blue Ridge
Asset Funding Corporation
191 Peachtree Street, NE-GA-423
Atlanta, Georgia 30303
Attention: Elizabeth Wagner
Re: Purchase Notice
---------------
Ladies and Gentlemen:
The undersigned refers to the Receivables Purchase Agreement, dated as
of June 25, 1999 (the "Receivables Purchase Agreement," the terms defined
therein being used herein as therein defined), among the undersigned, as Seller
and McKesson HBOC, Inc., as initial Servicer, Preferred Receivables Funding
Corporation, Falcon Asset Securitization Corporation and Blue Ridge Asset
Funding Corporation (collectively, the "Conduits"), certain Financial
Institutions parties thereto, The First National Bank of Chicago and Wachovia
Bank, N.A., as Managing Agents, and The First National Bank of Chicago, as
Collateral Agent for the Conduits and such Financial Institutions, and hereby
gives you notice, irrevocably, pursuant to Section 1.2 of the Receivables
Purchase Agreement, that the undersigned hereby requests an Incremental Purchase
under the Receivables Purchase Agreement, and in that connection sets forth
below the information relating to such Incremental Purchase (the "Proposed
Purchase") as required by Section 1.2 of the Receivables Purchase Agreement:
(i) The Business Day of the Proposed Purchase is [insert purchase
date], which date is at least two (2) Business Days after the date hereof.
(ii) The requested Purchase Price in respect of the Proposed Purchase
is $__________.
66
(iii) If the Proposed Purchase to be funded by the Financial
Institutions, the requested Discount Rate is ____________ and the requested
Tranche Period is __________.
(iv) The requested maturity date for the Tranche Period is
_______________.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Purchase
(before and after giving effect to the Proposed Purchase):
(i) the representations and warranties of the undersigned set
forth in Section 5.1 of the Receivables Purchase Agreement are true and correct
on and as of the date of such Proposed Purchase as though made on and as of such
date;
(ii) no event has occurred and is continuing, or would result
from such Proposed Purchase, that will constitute an Amortization Event or a
Potential Amortization Event; and
(iii) the Facility Termination Date shall not have occurred, the
aggregate Capital of all Purchaser Interests shall not exceed the Purchase Limit
and the aggregate Receivable Interests shall not exceed 100%.
Very truly yours,
CGSF FUNDING CORPORATION
By:_________________________
Name:
Title:
67
EXHIBIT III
PLACES OF BUSINESS OF THE SELLER PARTIES;
LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)
@@
- -------------------------------------------------------------------------------------------------
CGSF Funding Corporation McKesson HBOC, Inc.
- -------------------------------------------------------------------------------------------------
PRINCIPAL PLACE OF One Post Street One Post Street
OF BUSINESS San Francisco CA 94104 San Francisco, CA 94104
- -------------------------------------------------------------------------------------------------
LOCATION OF One Post Street One Post Street
RECORDS San Francisco, CA 94104 San Francisco, CA 94104
Customer and Financial Services Customer and
1220 Senlac Drive Financial
Carrollton, TX 75006 Services
1220 Senlac Drive
Carrollton, TX 75006
- -------------------------------------------------------------------------------------------------
FEIN(S) 94-3269972 94-3207296
- -------------------------------------------------------------------------------------------------
@@
68
EXHIBIT IV
NAMES OF COLLECTION BANKS; COLLECTION ACCOUNTS
- ------------------------------------------------------------------------------------------------
COLLECTION BANK COLLECTION LOCK-BOX ADDRESS
--------------- ---------- -----------------
ACCOUNT
-------
NUMBER
------
- ------------------------------------------------------------------------------------------------
Am South Bank 02799251 P.O. Box 11407
Drawer #278
Birmingham, AL 35246-0278
- ------------------------------------------------------------------------------------------------
Fifth Third Bank 72906223 P.O. Box 631307
Cincinnati, OH 45263-1307
- ------------------------------------------------------------------------------------------------
First Union National Bank 2000001388389 P.O. Box 862013
Orlando, FL 32886-2013
- ------------------------------------------------------------------------------------------------
Firstar Bank Milwaukee, N.A. 182862268 P.O. Box 78865
Milwaukee, WI 53278-0865
- ------------------------------------------------------------------------------------------------
Fleet National Bank 2921456 P.O. Box 40000
Dept. #517
Hartford, CT 06151-0517
- ------------------------------------------------------------------------------------------------
First National Bank of Maryland 19178327 P.O. Box 64638
Baltimore, MD 21264-4638
- ------------------------------------------------------------------------------------------------
The First National Bank of Chicago 5114489 P.O. Box 73984
Chicago, IL 60673-7984
- ------------------------------------------------------------------------------------------------
The First National Bank of Chicago 5114497 P.O. Box 730477
Dallas, TX 75373-0477
- ------------------------------------------------------------------------------------------------
The First National Bank of Chicago 5114470 P.O. Box 100681
Pasadena, CA 91189-0681
- ------------------------------------------------------------------------------------------------
The First National Bank of Chicago 5110939 P.O. Box 13451
Newark, NJ 07188-0451
- ------------------------------------------------------------------------------------------------
Mellon Bank, N.A. 0378986 P. O. Box 371648
Pittsburgh, PA 15251-7648
- ------------------------------------------------------------------------------------------------
Mercantile Bank N.A. 1005014202 P.O. Box 952331
St. Louis, MO 63195-2331
- ------------------------------------------------------------------------------------------------
Norwest Bank Minnesota, N.A. 1018214174 Department #1070
Denver, CO 80291-1070
- ------------------------------------------------------------------------------------------------
Norwest Bank Minnesota, N.A. 0755008 P.O. Box 1450
NW9024
Minneapolis, MN 55485-9024
- ------------------------------------------------------------------------------------------------
U.S. Bank 153505531530 P.O. Box 3646
Seattle, WA 98124-3646
- ------------------------------------------------------------------------------------------------
Wachovia Bank, N.A. 8733043871 P.O. Box 75698
Charlotte, NC 28275-0698
- ------------------------------------------------------------------------------------------------
Bank of Montreal/Harris Bank 337897 n/a
- ------------------------------------------------------------------------------------------------
69
EXHIBIT V
FORM OF COMPLIANCE CERTIFICATE
To: The First National Bank of Chicago and Wachovia Bank, N.A., as Managing
Agents
This Compliance Certificate is furnished pursuant to that certain
Receivables Purchase Agreement dated as of June 25, 1999 among CGSF Funding
Corporation (the "Seller"), McKesson HBOC, Inc. (the "Servicer"), the Purchasers
------ --------
party thereto The First National Bank of Chicago and Wachovia Bank, N.A., as
managing agents and The First National Bank of Chicago, as collateral agent for
such Purchasers (the "Agreement").
---------
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________ of Seller.
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of Seller and its Subsidiaries during the accounting period
covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or event which constitutes an
Amortization Event or Potential Amortization Event, as each such term is defined
under the Agreement, during or at the end of the accounting period covered by
the attached financial statements or as of the date of this Certificate, except
as set forth in paragraph 5 below.
4. Schedule I attached hereto sets forth financial data and computations
----------
evidencing the compliance with certain covenants of the Agreement, all of which
data and computations are true, complete and correct.
5. Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which Seller has taken, is taking, or proposes to take
with respect to each such condition or event:
70
The foregoing certifications, together with the computations set forth in
Schedule I hereto and the financial statements delivered with this Certificate
- ----------
in support hereof, are made and delivered this ____ day of _________, _____.
_________________________________
Name:
Title:
71
SCHEDULE I TO COMPLIANCE CERTIFICATE
A. Schedule of Compliance as of __________, ____ with Section ___ of the
Agreement. Unless otherwise defined herein, the terms used in this Compliance
Certificate have the meanings ascribed thereto in the Agreement.
This schedule relates to the month ended: _________
72
EXHIBIT VI
FORM OF COLLECTION ACCOUNT AGREEMENT
[On letterhead of Originator]
[Date]
[Lock-Box Bank/Concentration Bank/Depositary Bank]
Re: McKesson HBOC, Inc.
-------------------
Ladies and Gentlemen:
Reference is hereby made to P.O. Box #_____________ in [city, state,
----- ------
zip code] (the "Lock-Box") of which you have exclusive control for the purpose
- -------- --------
of receiving mail and processing payments therefrom pursuant to that certain
[name of lock-box agreement] between you and McKesson HBOC, Inc. (the "Company")
-------
dated __________ (the "Agreement"). You hereby confirm your agreement to
---------
perform the services described therein. Among the services you have agreed to
perform therein, is to endorse all checks and other evidences of payment, and
credit such payments to the Company's checking account no. __________ maintained
with you in the name of the Company (the "Lock-Box Account").
----------------
The Company hereby informs you that (i) pursuant to that certain
Receivables Sale Agreement, dated as of June 25, 1999 between the Company and
California Golden State Finance Company ("CGSF"), the Company has transferred
----
all of its right, title and interest in and to, and exclusive ownership and
control of, the Lock-Box and the Lock-Box Account to CGSF, and (ii) pursuant to
that certain Receivables Sale Agreement, dated as of June 25, 1999 between CGSF
and CGSF Funding Corporation (the "Seller"), CGSF has transferred all of its
------
right, title and interest in and to, and exclusive ownership and control of, the
Lock-Box and the Lock-Box Account to the Seller. The Company, CGSF and the
Seller hereby request that the name of the Lock-Box Account be changed to "CGSF
Funding Corporation, an indirect subsidiary of McKesson HBOC, Inc."
The Company hereby irrevocably instructs you, and you hereby agree,
that upon receiving notice from The First National Bank of Chicago ("FNBC") in
----
the form attached hereto as Annex A: (i) the name of the Lock-Box Account will
be changed to FNBC for itself and as collateral agent (or any designee of FNBC)
and FNBC will have exclusive ownership of and access to the Lock-Box and the
Lock-Box Account, and none of the Company, CGSF, the Seller or any of their
respective affiliates will have any control of the Lock-Box or the Lock-Box
Account or any access thereto, (ii) you will either continue to send the funds
from the Lock-Box to the Lock-Box Account, or will redirect the funds as FNBC
may otherwise request, (iii) you will transfer monies on deposit in the Lock-Box
Account, at any time, as directed by FNBC, (iv) all services to be performed by
you under the Agreement will be performed on behalf of FNBC, and (v) all
correspondence or other mail which you have agreed to send to the Company or the
Seller will be sent to FNBC at the following address:
73
The First National Bank of Chicago
Suite 0596, 21st Floor
One First National Plaza
Chicago, Illinois 60670
Attention: Credit Manager, Asset Backed
Securities Division
Moreover, upon such notice, FNBC for itself and as collateral agent
will have all rights and remedies given to the Company (and CGSF and the Seller,
as the Company's assignees) under the Agreement. The Company agrees, however,
to continue to pay all fees and other assessments due thereunder at any time.
You hereby acknowledge that monies deposited in the Lock-Box Account
or any other account established with you by FNBC for the purpose of receiving
funds from the Lock-Box are subject to the liens of FNBC for itself and as
collateral agent, and will not be subject to deduction, set-off, banker's lien
or any other right you or any other party may have against the Company or the
Seller, except that you may debit the Lock-Box Account for any items deposited
therein that are returned or otherwise not collected and for all charges, fees,
commissions and expenses incurred by you in providing services hereunder, all in
accordance with your customary practices for the charge back of returned items
and expenses.
THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. This letter agreement may be executed in any
number of counterparts and all of such counterparts taken together will be
deemed to constitute one and the same instrument.
This letter agreement contains the entire agreement between the
parties, and may not be altered, modified, terminated or amended in any respect,
nor may any right, power or privilege of any party hereunder be waived or
released or discharged, except upon execution by all parties hereto of a written
instrument so providing. In the event that any provision in this letter
agreement is in conflict with, or inconsistent with, any provision of the
Agreement, this letter agreement will exclusively govern and control. Each
party agrees to take all actions reasonably requested by any other party to
carry out the purposes of this letter agreement or to preserve and protect the
rights of each party hereunder.
74
Please indicate your agreement to the terms of this letter agreement
by signing in the space provided below. This letter agreement will become
effective immediately upon execution of a counterpart of this letter agreement
by all parties hereto.
Very truly yours,
MCKESSON HBOC, INC.
By:____________________________
Name:
Title:
CGSF FUNDING CORPORATION
By:____________________________
Name:
Title:
Acknowledged and agreed to
this ______ day of ______
[COLLECTION BANK]
By:_________________________
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO, as Collateral Agent
By:_________________________
Name:
Title:
75
ANNEX A
FORM OF NOTICE
[On letterhead of FNBC]
___________,
[Collection Bank/Depositary Bank/Concentration Bank]
Re: McKesson HBOC, Inc.
-------------------
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to
that certain letter agreement among McKesson HBOC, Inc., CGSF Funding
Corporation, you and us, to have the name of, and to have exclusive ownership
and control of, account number [________] (the "Lock-Box Account") maintained
----------------
with you, transferred to us. [Lock-Box Account will henceforth be a zero-
balance account, and funds deposited in the Lock-Box Account should be sent at
the end of each day to _______________.] You have further agreed to perform all
other services you are performing under that certain agreement dated [_________]
between you and McKesson HBOC, Inc. on our behalf.
We appreciate your cooperation in this matter.
Very truly yours,
THE FIRST NATIONAL BANK OF
CHICAGO
(for itself and as Collateral Agent)
By:_________________________________
Name:
Title:
76
EXHIBIT VII
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT is entered into as of the [___] day of
[[____________, ____], by and between _____________________ ("Seller") and
------
__________________ ("Purchaser").
---------
PRELIMINARY STATEMENTS
A. This Assignment Agreement is being executed and delivered in
accordance with Section 12.1(b) of that certain Receivables Purchase Agreement
dated as of June 25, 1999 by and among CGSF Funding Corporation, as Seller,
McKesson HBOC, Inc., as Servicer, Preferred Receivables Funding Corporation
("PREFCO"), Falcon Asset Securitization Corporation ("Falcon"), Blue Ridge Asset
------ ------
Funding Corporation ("Blue Ridge", and together with PREFCO and Falcon, the
----------
"Conduits"), The First National Bank of Chicago and Wachovia Bank, N.A., as
--------
Managing Agents, The First National Bank of Chicago as Collateral Agent, and the
Financial Institutions party thereto (as amended, modified or restated from time
to time, the "Purchase Agreement"). Capitalized terms used and not otherwise
------------------
defined herein are used with the meanings set forth or incorporated by reference
in the Purchase Agreement.
B. The Seller is a Financial Institution party to the Purchase
Agreement, and the Purchaser wishes to become a Financial Institution
thereunder; and
C. The Seller is selling and assigning to the Purchaser an undivided
____________% (the "Transferred Percentage") interest in all of Seller's rights
----------------------
and obligations under the Purchase Agreement and the Transaction Documents,
including, without limitation, the Seller's Commitment, the Seller's
obligations under [describe applicable Liquidity Agreement] and (if applicable)
the Capital of the Seller's Purchaser Interests as set forth herein;
The parties hereto hereby agree as follows:
1. This sale, transfer and assignment effected by this Assignment
Agreement shall become effective (the "Effective Date") two (2) Business Days
--------------
(or such other date selected by the Collateral Agent in its sole discretion)
following the date on which a notice substantially in the form of Schedule II to
-----------
this Assignment Agreement ("Effective Notice") is delivered by the Collateral
----------------
Agent to the Conduits, the Seller and the Purchaser. From and after the
Effective Date, the Purchaser shall be a Financial Institution party to the
Purchase Agreement for all purposes thereof as if the Purchaser were an original
party thereto and the Purchaser agrees to be bound by all of the terms and
provisions contained therein.
2. If the Seller has no outstanding Capital under the Purchase
Agreement, on the Effective Date, Seller shall be deemed to have hereby
transferred and assigned to the Purchaser, without recourse, representation or
warranty (except as provided in paragraph 6 below), and the Purchaser shall be
deemed to have hereby irrevocably taken, received and assumed from the Seller,
the Transferred Percentage of the Seller's Commitment and all rights and
obligations associated therewith under the terms of the Purchase Agreement,
including,
77
without limitation, the Transferred Percentage of the Seller's future funding
obligations under Section 4.1 of the Purchase Agreement.
3. If the Seller has any outstanding Capital under the Purchase
Agreement, at or before 12:00 noon, local time of the Seller, on the Effective
Date the Purchaser shall pay to the Seller, in immediately available funds, an
amount equal to the sum of (i) the Transferred Percentage of the outstanding
Capital of the Seller's Purchaser Interests (such amount, being hereinafter
referred to as the "Purchaser's Capital"); (ii) all accrued but unpaid (whether
-------------------
or not then due) Yield attributable to the Purchaser's Capital; and (iii)
accruing but unpaid fees and other costs and expenses payable in respect of the
Purchaser's Capital for the period commencing upon each date such unpaid amounts
commence accruing, to and including the Effective Date (the "Purchaser's
-----------
Acquisition Cost");
- ----------------
whereupon, the Seller shall be deemed to have sold, transferred and assigned to
the Purchaser, without recourse, representation or warranty (except as provided
in paragraph 6 below), and the Purchaser shall be deemed to have hereby
irrevocably taken, received and assumed from the Seller, the Transferred
Percentage of the Seller's Commitment and the Capital of the Seller's Purchaser
Interests (if applicable) and all related rights and obligations under the
Purchase Agreement and the Transaction Documents, including, without limitation,
the Transferred Percentage of the Seller's future funding obligations under
Section 4.1 of the Purchase Agreement.
4. Concurrently with the execution and delivery hereof, the Seller
will provide to the Purchaser copies of all documents requested by the Purchaser
which were delivered to such Seller pursuant to the Purchase Agreement.
5. Each of the parties to this Assignment Agreement agrees that at
any time and from time to time upon the written request of any other party, it
will execute and deliver such further documents and do such further acts and
things as such other party may reasonably request in order to effect the
purposes of this Assignment Agreement.
6. By executing and delivering this Assignment Agreement, the Seller
and the Purchaser confirm to and agree with each other, the Collateral Agent and
the Financial Institutions as follows: (a) other than the representation and
warranty that it has not created any Adverse Claim upon any interest being
transferred hereunder, the Seller makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made by any other Person in or in connection with the Purchase
Agreement or the Transaction Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Purchaser, the Purchase
Agreement or any other instrument or document furnished pursuant thereto or the
perfection, priority, condition, value or sufficiency of any collateral; (b) the
Seller makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Seller, any Obligor, any Seller
Affiliate or the performance or observance by the Seller, any Obligor, any
Seller Affiliate of any of their respective obligations under the Transaction
Documents or any other instrument or document furnished pursuant thereto or in
connection therewith; (c) the Purchaser confirms that it has received a copy of
the Transaction Documents, together with such other documents and
78
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement; (d) the Purchaser will,
independently and without reliance upon the Collateral Agent, the Conduits, the
Seller or any other Financial Institution or Purchaser and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Purchase
Agreement and the Transaction Documents; (e) the Purchaser appoints and
authorizes the Collateral Agent to take such action as collateral agent on its
behalf and to exercise such powers under the Transaction Documents as are
delegated to the Collateral Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (f) the Purchaser appoints and
authorizes the Collateral Agent to take such action as collateral agent on its
behalf and to exercise such powers under the Transaction Documents as are
delegated to the Collateral Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (g) the Purchaser agrees that
it will perform in accordance with their terms all of the obligations which, by
the terms of the Purchase Agreement and the Transaction Documents, are required
to be performed by it as a Financial Institution or, when applicable, as a
Purchaser.
7. Each party hereto represents and warrants to and agrees with the
Collateral Agent that it is aware of and will comply with the provisions of the
Purchase Agreement, including, without limitation, Sections 4.1 and 14.6
thereof.
8. Schedule I hereto sets forth the revised Commitment of the Seller
----------
and the Commitment of the Purchaser, as well as administrative information with
respect to the Purchaser.
9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10. The Purchaser hereby covenants and agrees that, prior to the date
which is one year and one day after the payment in full of all senior
indebtedness for borrowed money of the Conduits, it will not institute against,
or join any other Person in instituting against, any Conduit, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
79
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers of the
date hereof.
[SELLER]
By:____________________________
Name:
Title:
[Purchaser]
By:____________________________
Name:
Title:
80
SCHEDULE I TO ASSIGNMENT AGREEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
Date: _______________, ____
- ----
Transferred Percentage:________%
- ----------------------
A-1 A-2 B-1 B-2
--- --- --- ---
Outstanding
Commitment Commitment Capital Ratable
Seller [existing] [revised] (if any) Share
- -------------------------------------------------------------
A-1 B-1 B-2
--- ---
Outstanding
Commitment Capital Ratable
Purchaser [initial] (if any) Share
- -------------------------------------------------------------
Address for Notices
- -------------------
- ------------
- ------------
Attention:
Phone:
Fax:
81
SCHEDULE II TO ASSIGNMENT AGREEMENT
EFFECTIVE NOTICE
TO:________________________, Seller
________________________
________________________
________________________
TO:________________________, Purchaser
________________________
________________________
________________________
The undersigned, as Collateral Agent under the Receivables Purchase
Agreement dated as of June 25, 1999 by and among CGSF Funding Corporation, as
Seller, McKesson HBOC, Inc., as Servicer, Preferred Receivables Funding
Corporation, ("PREFCO"), Falcon Asset Securitization Corporation ("Falcon"),
Blue Ridge Asset Funding Corporation ("Blue Ridge", and together with PREFCO and
Falcon, the "Conduits"), The First National Bank of Chicago and Wachovia Bank,
N.A., as Managing Agents, The First National Bank of Chicago, as Collateral
Agent, and the Financial Institutions party thereto, hereby acknowledges receipt
of executed counterparts of a completed Assignment Agreement dated as of
____________, ____ between __________________, as Seller, and
__________________, as Purchaser. Terms defined in such Assignment Agreement
are used herein as therein defined.
1. Pursuant to such Assignment Agreement, you are advised that the
Effective Date will be ______________, ____.
2. The Managing Agent, on behalf of the affected Conduits, hereby
consents to the Assignment Agreement as required by Section 12.1(b) of the
Purchase Agreement.
82
[3. Pursuant to such Assignment Agreement, the Purchaser is required
to pay $____________ to the Seller at or before 12:00 noon (local time of the
Seller) on the Effective Date in immediately available funds.]
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO, individually and as
Collateral Agent [and a Managing Agent]
By:__________________________
Title:
[WACHOVIA BANK, N.A., as a Managing Agent
By: ____________________________
Authorized Signatory]
83
EXHIBIT VIII
CREDIT AND COLLECTION POLICY
Attached.
84
EXHIBIT IX
FORM OF CONTRACT(S)
Attached.
85
EXHIBIT X
FORM OF MONTHLY REPORT
Attached.
86
SCHEDULE A
COMMITMENTS OF FINANCIAL INSTITUTIONS
PURCHASE GROUP: PREFCO
Financial Institution Commitment
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
The First National Bank of Chicago $250,000,000
- ----------------------------------------------------------------------------------------------
PURCHASE GROUP: Falcon
Financial Institution Commitment
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
The First National Bank of Chicago $250,000,000
- ----------------------------------------------------------------------------------------------
PURCHASE GROUP: Blue Ridge
Financial Institution Commitment
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Wachovia Bank, N.A. $250,000,000
- ----------------------------------------------------------------------------------------------
87
SCHEDULE B
DOCUMENTS TO BE DELIVERED TO THE AGENTS
ON OR PRIOR TO THE INITIAL PURCHASE
Attached.
88
TABLE OF CONTENTS
Section 14.11 Integration; Binding Effect; Survival of Terms.
----------------------------------------------
90
EXHIBITS
Exhibit I Definitions
Exhibit II Form of Purchase Notice
Exhibit III Places of Business of the Seller Parties; Locations of Records;
Federal Employer Identification Number(s)
Exhibit IV Names of Collection Banks; Collection Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Collection Account Agreement
Exhibit VII Form of Assignment Agreement
Exhibit VIII Credit and Collection Policy
Exhibit IX Form of Contract(s)
Exhibit X Form of Monthly Report
SCHEDULES
Schedule A Commitments of Financial Institutions
Schedule B Documents to Be Delivered to the Agents on or Prior to the
Initial Purchase
91