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EXHIBIT 4-B
EXECUTION COPY
RECEIVABLES PURCHASE AGREEMENT
Dated as of December 28, 1998
Among
BINDLEY WESTERN FUNDING CORPORATION
as Seller
and
FALCON ASSET SECURITIZATION CORPORATION,
and
THE FINANCIAL INSTITUTIONS PARTY HERETO,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
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BINDLEY WESTERN FUNDING CORPORATION
RECEIVABLES PURCHASE AGREEMENT
This Receivables Purchase Agreement dated as of December 28, 1998 is among
Bindley Western Funding Corporation, a Delaware corporation (the "Seller"), the
Investors, Falcon Asset Securitization Corporation ("Falcon") and The First
National Bank of Chicago, as Agent. Unless defined elsewhere herein, capitalized
terms used in this Agreement shall have the meanings assigned to such terms in
Exhibit I hereto.
PRELIMINARY STATEMENTS
The Seller desires to transfer and assign Receivable Interests to the Purchasers
from time to time.
Falcon may, in its absolute and sole discretion, purchase Receivable Interests
from the Seller from time to time.
The Investors shall, at the request of the Seller, purchase Receivable Interests
from time to time. In addition, the Investors have agreed to provide a liquidity
facility to Falcon.
The First National Bank of Chicago has been requested and is willing to act as
Agent on behalf of Falcon and the Investors in accordance with the terms hereof.
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility. (a) Upon the terms and subject to the conditions
hereof, the Seller may, at its option, sell and assign Receivable Interests to
the Agent for the benefit of the Purchasers up to four times per calendar month.
Falcon may, at its option, instruct the Agent to purchase on behalf of Falcon,
or if Falcon shall decline to purchase, the Agent shall purchase on behalf of
the Investors, Receivable Interests from time to time during the period from the
date hereof to but not including the Termination Date. The Seller hereby
assigns, transfers and conveys to the Agent for the benefit of the relevant
Purchaser or Purchasers, and the Agent hereby acquires, effective upon the
receipt of the Seller of the Purchase Price therefor, all of the Seller's right,
title and interest in and to the Receivable Interests.
(b) The Seller may, upon at least thirty days' prior notice to the Agent,
terminate in whole or reduce in part ratably among the Investors the unused
portion of the Purchase
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Limit; provided that each partial reduction of the Purchase Limit shall be in an
amount equal to $5,000,000 or an integral multiple thereof.
Section 1.2. Making Purchases. (a) The Seller shall provide the Agent with a
purchase notice, in substantially the form of Exhibit IX hereto (each a
"Purchase Notice"), at least (i) three Business Days prior to the date of an
Incremental Purchase in the event the applicable Discount Rate is requested to
be the LIBO Rate, (ii) two Business Days prior to the date of an Incremental
Purchase in the event the applicable Discount Rate is requested to be the CP
Rate and (iii) one Business Day prior to the date of an Incremental Purchase in
the event the applicable Discount Rate is requested to be the Base Rate. Each
Purchase Notice shall, except as set forth below, be irrevocable and shall
specify the requested Purchase Price (which shall not be less than $1,000,000,
and shall be an integral multiple of $100,000) and date of purchase, together
with the duration of the initial Tranche Period and the initial Discount Rate
related thereto. Following receipt of a Purchase Notice, the Agent will
determine whether Falcon agrees to make the purchase. If Falcon declines to make
a proposed purchase, the Seller may cancel the Purchase Notice or the
Incremental Purchase of the Receivable Interests will be made by the Investors.
(b) On the date of each Incremental Purchase, upon
satisfaction of the applicable conditions precedent set forth in Article IV,
Falcon or each Investor, as applicable, shall deposit to the Facility Account,
in immediately available funds, no later than 12:00 noon (Chicago time), an
amount equal to (i) in the case of Falcon, the aggregate Purchase Price of each
Receivable Interests Falcon is then purchasing or (ii) in the case of an
Investor, such Investor's Pro Rata Share of the aggregate Purchase Price of each
of the Receivable Interests the Investors are purchasing.
Section 1.3. Selection of Tranche Periods and Discount Rates. (a) Each
Receivable Interest shall at all times have an associated amount of Capital, a
Discount Rate and Tranche Period applicable to it. Not less than $10,000,000 of
Capital may be allocated to any single Receivable Interest. The Seller shall
request Discount Rates and Tranche Periods for the Receivable Interests of the
Purchasers. The Seller may select the CP Rate (with the concurrence of the
Agent) or the Base Rate for the Receivable Interests of Falcon and the LIBO Rate
or the Base Rate for the Receivable Interests of the Investors. In the case of
any Tranche Period with respect to which either the LIBO Rate or the Base Rate
applies, the Seller shall by 9:00 a.m. (Chicago time), (i) at least three
Business Days prior to the expiration of any then existing Tranche Period with
respect to which the LIBO Rate is being requested as a new Discount Rate and
(ii) at least one Business Day prior to the expiration of any Tranche Period
with respect to which the Base Rate is being requested as a new Discount Rate,
give the Agent irrevocable notice of the new Tranche Period and Discount Rate
for the Receivable Interest associated with such expiring Tranche Period. In the
case of any Tranche Period with respect to which the CP Rate applies, unless the
Agent shall otherwise direct, or the Seller shall otherwise request (i) at least
three Business Days prior to the expiration of such Tranche Period with respect
to which the LIBO Rate is being
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requested as a new Discount Rate and (ii) at least one Business Days prior to
the expiration of such Tranche Period with respect to which the Base Rate is
being requested as a new Discount Rate, a new Tranche Period with respect to
which the CP Rate applies shall automatically commence at the expiration of such
existing Tranche Period. Until the Seller gives notice to the Agent of another
Discount Rate, the initial Discount Rate for any Receivable Interest transferred
to the Investors pursuant to Section 2.1 shall be the Base Rate.
(b) If any Purchaser notifies the Agent that it has determined that funding all
or any portion of any Receivable Interest at a LIBO Rate would violate any
applicable law, rule, regulation, or directive, whether or not having the force
of law, or that (i) deposits of a type and maturity appropriate to match fund
its Receivable Interests at such LIBO Rate are not available or (ii) such LIBO
Rate does not accurately reflect the cost of acquiring or maintaining a
Receivable Interest at such LIBO Rate, then the Agent shall suspend the
availability of such LIBO Rate and require the Seller to select a new Discount
Rate for any Receivable Interest accruing Discount at such LIBO Rate.
Section 1.4. Percentage Evidenced by Receivable Interests. Each Receivable
Interest shall be initially computed on its date of purchase. Thereafter, until
its Liquidation Day, each Receivable Interest shall be automatically recomputed
(or deemed to be recomputed) on each day prior to its Liquidation Day. The
variable percentage represented by any Receivable Interest as computed (or
deemed recomputed) as of the close of business on the day immediately preceding
its Liquidation Day shall remain constant at all times after such Liquidation
Day.
Section 1.5. Dividing or Combining Receivable Interests. The Seller or the Agent
may, upon notice to and consent by the other received at least three Business
Days prior to the end of a Tranche Period for any Receivable Interest, take any
of the following actions with respect to such Receivable Interest: (i) divide
the Receivable Interest into two or more Receivable Interests having aggregate
Capital equal to the Capital of such divided Receivable Interest, (ii) combine
the Receivable Interest with another Receivable Interest with a Tranche Period
ending on the same day, creating a new Receivable Interest having Capital equal
to the Capital of the two Receivable Interests combined or (iii) combine the
Receivable Interest with a Receivable Interest to be purchased on such day by
such Purchaser, creating a new Receivable Interest having Capital equal to the
Capital of the two Receivable Interests combined, provided that, a Receivable
Interest of Falcon may not be combined with a Receivable Interest of the
Investors.
Section 1.6. Reinvestment Purchases. Subject to Section 1.12 and Section 4.2, at
any time that any Collection or Collections are received by the Servicer after
the initial purchase of a Receivable Interest hereunder and on or prior to the
Liquidation Day of such Receivable Interest, the Seller hereby requests and the
Purchasers hereby agree to make, simultaneously with such receipt, a
reinvestment (each a "Reinvestment") with that portion of each and every
Collection received by the Servicer that is part of such
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Receivable Interest, such that after giving effect to such Reinvestment, the
amount of the Capital of such Receivable Interest immediately after any such
receipt and corresponding Reinvestment shall be equal to the amount of the
Capital immediately prior to such receipt.
Section 1.7. Liquidation Settlement Procedures. On the Liquidation Day of a
Receivable Interest and on each day thereafter, and on each day during a
Commitment Reduction Period, the Servicer shall set aside and hold in trust for
the holder of such Receivable Interest, the percentage evidenced by such
Receivable Interest of Collections received on such day. On each Settlement Date
after the occurrence of the Liquidation Day in respect of such Receivable
Interest, the Servicer shall remit to the Agent's account the amounts set aside
pursuant to the preceding sentence, together with any remaining amounts set
aside pursuant to Section 1.8 prior to such day, but not to exceed the sum of
(i) the accrued Discount or Funding Charges for, and Servicing Fee allocable to,
such Receivable Interest, (ii) the Capital of such Receivable Interest, and
(iii) the aggregate of all other amounts then owed hereunder by Seller to the
Purchasers. If there shall be insufficient funds on deposit for the Servicer to
distribute funds in payment in full of the aforementioned amounts, the Servicer
shall distribute funds first, to reimbursement of the Agent's costs of
collection and enforcement of this Agreement, second, to enable the applicable
Purchasers to pay their allocable portion of the accrued Servicing Fee, third,
in reduction of the Capital of the Receivable Interests, fourth, in payment of
all accrued Discount and Funding Charges for the Receivable Interests and fifth,
in payment of all other amounts payable to the Purchasers. Subject to Section
1.12, collections allocated to the Receivable Interests of the Investors shall
be shared ratably by the Investors in accordance with their Pro Rata Shares.
Collections applied to the payment of fees, expenses, Discount, Funding Charges
and all other amounts payable by the Seller to the Agent and the Purchasers
hereunder shall be allocated ratably among the Agent and the Purchasers in
accordance with such amounts owing to each of them. Following the date on which
the Aggregate Unpaids are reduced to zero, the Servicer shall pay to Seller any
remaining Collections set aside and held by the Servicer pursuant to this
Section 1.7.
Section 1.8. Deemed Collections. If on any day the Outstanding Balance of a
Receivable is either (x) reduced as a result of any defective or rejected goods
or services, any Unauthorized Deductions, Adjustments, any cash discount or any
other adjustment by the Seller, the Originator, the Transferor or the Servicer,
(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 (z) reduced or canceled and re-billed, the Seller
shall be deemed to have received on such day a Collection of such Receivable in
the amount of such reduction or cancellation. If on any day any of the
representations or warranties in Article III are no longer true with respect to
a Receivable, the Seller shall be deemed to have received on such day a
Collection of such Receivable in full. If the Seller receives any Collections or
is deemed to receive Collections pursuant to this Section 1.8 or otherwise, the
Seller shall immediately pay such Collections or deemed Collections to the
Servicer and, at all
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times prior to such payment, such Collections shall be held in trust by the
Seller for the exclusive benefit of the Purchasers and the Agent.
Section 1.9. Discount and Funding Charges; Payments and Computations, Etc. (a)
Funding Charges shall accrue for each Receivable Interest for which the CP Rate
applies for each day occurring during the Tranche Period for such Receivable
Interest. Each Receivable Interest for which the CP Rate applies shall be funded
substantially with Pooled Commercial Paper and will accrue Funding Charges each
day based on the Pooled Allocation; provided, however, that each Receivable
Interest funded substantially with Specially Pooled Paper (in accordance with
Section 1.9(b) hereof) will accrue Funding Charges each day based on the
Specially Pooled Allocation. Discount shall accrue for each Receivable Interest
for which either the LIBO Rate or Base Rate applies for each day occurring
during the Tranche Period for such Receivable Interest. On each Settlement Date,
the Seller shall pay to the Agent an amount equal to the accrued and unpaid
Discount and Funding Charges for the immediately preceding Accrual Period in
respect of all Receivable Interests at such time.
(b) If the Seller shall request any Incremental Purchase with respect to which
the applicable Discount Rate is the CP Rate during any Special Pooled Period,
the Capital associated with any such Incremental Purchase shall be deemed to be
funded by Falcon with Specially Pooled Paper, and shall be aggregated by Falcon
with any other Specially Pooled Paper outstanding at the time of such
Incremental Purchase for purposes of determining the Funding Charges applicable
to such Incremental Purchase. Each such Incremental Purchase shall be deemed to
be funded with Specially Pooled Paper until the end of the Special Pooled Period
during which any such Incremental Purchase occurred.
(c) Notwithstanding any limitation on recourse contained in this Agreement, the
Seller shall pay to the Agent, for the account of the relevant Purchasers, such
fees as set forth in the Fee Letter, all amounts payable as Discount, all
amounts payable as Funding Charges, all amounts payable pursuant to Article
VIII, if any, all Servicer costs, if any, payable pursuant to Section 6.2 and on
demand therefor, any Early Collection Fee. If any Person fails to pay any amount
when due hereunder, such Person agrees to pay, on demand, the Default Fee.
(d) All amounts to be paid or deposited by any Person hereunder 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; if such amounts are
payable to a Purchaser they shall be paid to the Agent, for the account of such
Purchaser, at One First National Plaza, Chicago, Illinois 60670 until otherwise
notified by the Agent. Upon notice to the Seller, the Agent may debit the
Facility Account for all amounts due and payable hereunder. All computations of
Discount, Funding Charges 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 (including the first but excluding the last day). All per annum fees
shall be payable monthly in arrears. If any amount
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hereunder shall be payable on a day which is not a Business Day, such amount
shall be payable on the next succeeding Business Day.
Section 1.10. Seller Interest. The Seller shall ensure that the Receivable
Interests of the Purchasers shall at no time exceed in the aggregate 100%. If on
the Liquidation Day of a Receivable Interest, the aggregate of the Receivable
Interests of the Purchasers exceeds 100%, the Seller shall immediately pay to
the Agent an amount to be applied to reduce the Capital of the Receivable
Interests, such that after giving effect to such payment the aggregate of the
Receivable Interest equals or is less than 100%. Such amount shall be applied to
the reduction of the Capital of the Receivable Interests ratably in accordance
with the percentages of the Receivable Interests. Any amounts received by the
Investors pursuant to the preceding sentence shall be applied ratably in
accordance with their Pro Rata Shares. The Seller hereby grants to the Agent for
the ratable benefit of the Purchasers a security interest in all of its interest
in the Receivables, Related Security, Collections and proceeds thereof to secure
payment of the Aggregate Unpaids, including its indemnity obligations under
Article VIII and all other obligations owed hereunder to the Purchasers.
Section 1.11. Seller's Option to Repurchase. Upon three (3) Business Days' prior
written notice to the Agent, the Seller shall have the option to repurchase all
or any portion of the Receivable Interests of the Purchasers for an amount equal
to (i) the Capital of such Receivable Interests, plus (ii) the accrued and
unpaid Discount and Funding Charges allocable to such Receivable Interests, plus
(iii) the accrued and unpaid Servicing Fee allocable to such Receivable
Interests, plus (iv) any Early Collection Fee, plus (v) all other amounts
payable to the Agent or the Purchasers with respect to such Receivable
Interests.
Section 1.12. Commitment of NBD Bank, N.A.. The initial Commitment of NBD Bank,
N.A. ("NBD") shall be the amount set forth opposite the name of such Investor on
the signature pages to this Agreement. On March 12, 1999 (the "Commitment
Reduction Date"), the Commitment of NBD shall reduce, if such reduction shall
not have occurred prior to such date, to an amount equal to $125,000,000 and the
Purchase Limit shall reduce accordingly (after giving effect to such reduction,
the "Adjusted Purchase Limit"); provided that in the event that the aggregate
Capital of all Receivables Interests on the Commitment Reduction Date shall
exceed the Adjusted Purchase Limit, (i) the Purchase Limit shall nonetheless, at
all times after the Commitment Reduction Date, be an amount equal to the
Adjusted Purchase Limit, subject to further reductions in accordance with the
terms of this Agreement; (ii) no Incremental Purchases or Reinvestments shall be
made hereunder at any time during the period (the "Commitment Reduction Period")
from the Commitment Reduction Date until such later date (the "Commitment
Compliance Date") on which the aggregate Capital of all Receivables Interests
shall be less than the Adjusted Purchase Limit; (iii) at any time during the
Commitment Reduction Period, the Commitment of NBD shall be an amount equal to
the lesser of (A) the amount by which the aggregate Capital of all Receivables
Interests at such time exceeds the aggregate Commitments of all
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Investors other than NBD at such time and (B) $137,000,000; and (iv) if, during
the Commitment Reduction Period, any amounts are to be distributed pursuant to
Section 1.7 by the Agent to the Investors in respect of the Capital of the
Receivables Interests held by the Investors, (A) if no Termination Event shall
have occurred and is then continuing, such distribution shall be made first to
NBD until the later to occur of (1) the date the outstanding Capital in respect
of NBD shall be equal to or less than $125,000,000 and (2) the Commitment
Compliance Date, and thereafter shall be distributed ratably to the Investors in
accordance with the terms of Section 1.7 and (B) if a Termination Event shall
have occurred and is then continuing, such distribution shall be made ratably
among the Investors based upon the Commitments then in effect.
ARTICLE II
LIQUIDITY FACILITY
Section 2.1. Transfer to Investors. Each Investor hereby agrees, subject to
Section 2.4, that immediately upon written notice from Falcon delivered on or
prior to the Liquidity Termination Date, it shall acquire by assignment from
Falcon, without recourse or warranty, its Pro Rata Share of one or more of the
Receivable Interests of Falcon as specified by Falcon. Each Investor shall
promptly pay to the Agent at an account designated by the Agent, for the benefit
of Falcon, its Acquisition Amount. Unless an Investor has notified the Agent
that it does not intend to pay its Acquisition Amount, the Agent may assume that
such payment has been made and may, but shall not be obligated to, make the
amount of such payment available to Falcon in reliance upon such assumption.
Falcon hereby sells and assigns to the Agent for the ratable benefit of the
Investors, and the Agent hereby purchases and assumes from Falcon, effective
upon the receipt by Falcon of the Falcon Transfer Price, the Receivable
Interests of Falcon which are the subject of any transfer pursuant to this
Article II.
Section 2.2. Transfer Price Reduction Discount. If the Adjusted Liquidity Price
is included in the calculation of the Falcon Transfer Price for any Receivable
Interest, each Investor agrees that the Agent shall pay to Falcon the Reduction
Percentage of any Discount or Funding Charges received by the Agent with respect
to such Receivable Interest.
Section 2.3. Payments to Falcon. In consideration for the reduction of the
Falcon Transfer Prices by the Falcon Transfer Price Reductions, effective only
at such time as the aggregate amount of the Capital of the Receivable Interests
of the Investors equals the Falcon Residual, each Investor hereby agrees that
the Agent shall not distribute to the Investors and shall immediately remit to
Falcon any Discount, Funding Charges, Collections or other payments received by
it to be applied pursuant to the terms hereof or otherwise to reduce the Capital
of the Receivable Interests of the Investors.
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Section 2.4. Limitation on Commitment to Purchase from Falcon. Notwithstanding
anything to the contrary in this Agreement, no Investor shall have any
obligation to purchase any Receivable Interest from Falcon, pursuant to Section
2.1 or otherwise, if:
(i) Falcon shall have voluntarily commenced any proceeding or
filed any petition under any bankruptcy, insolvency or similar law
seeking the dissolution, liquidation or reorganization of Falcon or
taken any corporate action for the purpose of effectuating any of the
foregoing; or
(ii) involuntary proceedings or an involuntary petition shall
have been commenced or filed against Falcon by any Person under any
bankruptcy, insolvency or similar law seeking the dissolution,
liquidation or reorganization of Falcon and such proceeding or petition
shall have not been dismissed.
Section 2.5. Defaulting Investors. If one or more Investors defaults in its
obligation to pay its Acquisition Amount pursuant to Section 2.1 (each such
Investor shall be called a "Defaulting Investor" and the aggregate amount of
such defaulted obligations being herein called the "Falcon Transfer Price
Deficit"), then upon notice from the Agent, each Investor other than the
Defaulting Investors (a "Non-Defaulting Investor") shall promptly pay to the
Agent, in immediately available funds, an amount equal to the lesser of (x) such
Non-Defaulting Investor's proportionate share (based upon the relative
Commitments of the Non-Defaulting Investors) of the Falcon Transfer Price
Deficit and (y) the unused portion of such Non-Defaulting Investor's Commitment.
A Defaulting Investor shall forthwith upon demand pay to the Agent for the
account of the Non-Defaulting Investors all amounts paid by each Non-Defaulting
Investor on behalf of such Defaulting Investor, together with interest thereon,
for each day from the date a payment was made by a Non-Defaulting Investor until
the date such Non-Defaulting Investor has been paid such amounts in full, at a
rate per annum equal to the Federal Funds Effective Rate plus 2%. In addition,
without prejudice to any other rights that Falcon may have under applicable law,
each Defaulting Investor shall pay to Falcon forthwith upon demand, the
difference between such Defaulting Investor's unpaid Acquisition Amount and the
amount paid with respect thereto by the non-Defaulting Investors, together with
interest thereon, for each day from the date of the Agent's request for such
Defaulting Investor's Acquisition Amount pursuant to Section 2.1 until the date
the requisite amount is paid to Falcon in full, at a rate per annum equal to the
Federal Funds Effective Rate plus 2%.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Seller Representations and Warranties. The Seller, individually and
in its capacity as Servicer, hereby represents and warrants to the Purchasers
that:
(a) Corporate Existence and Power. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, and
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has all corporate power and all governmental licenses, authorizations, consents
and approvals required to carry on its business in each jurisdiction in which
the nature of its business requires such authorization.
(b) No Conflict. The execution, delivery and performance by the Seller of this
Agreement and each other Transaction Document, and the Seller's use of the
proceeds of purchases made 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 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 the Seller or its
Subsidiaries (except as created hereunder); and no transaction contemplated
hereby requires compliance with any bulk sales act or similar law. This
Agreement and each other Transaction Document has been duly authorized, executed
and delivered by the Seller.
(c) Governmental Authorization. Other than the filing of the 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, delivery and performance by the Seller of the
Transaction Documents.
(d) Binding Effect. The Transaction Documents constitute the legal, valid and
binding obligations of the Seller enforceable against the Seller 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.
(e) Accuracy of Information. All information heretofore furnished by the Seller,
the Transferor, the Originator or the Servicer to the Agent or the Purchasers
for purposes of or in connection with this Agreement, any of the other
Transaction Documents or any transaction contemplated hereby or thereby is, and
all such information hereafter furnished by the Seller, the Transferor, the
Originator or the Servicer to the Agent or the Purchasers will be, true and
accurate in every material respect, on the date as of which such information is
stated or certified 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.
(f) Use of Proceeds. No proceeds of any purchase hereunder will be used (i) for
a purpose which 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 security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
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(g) Title to Receivables Purchased from the Originator. Each Receivable
transferred to the Seller has been (i) in the case of an Originator Receivable,
purchased by the Transferor from the Originator in accordance with the terms of
the Originator Transfer Agreement, and the Transferor has thereby irrevocably
obtained all legal and equitable title to, and has the legal right to sell and
encumber, such Receivable and the Related Security and (ii) purchased by the
Seller from the Transferor in accordance with the terms of the Transfer
Agreement, and the Seller has thereby irrevocably obtained all legal and
equitable title to, and has the legal right to sell and encumber, such
Receivable and the Related Security. Each such Receivable has been, in the case
of an Originator Receivable, transferred to the Transferor free and clear of any
Adverse Claim, and, transferred to the Seller free and clear of any Adverse
Claim. Without limiting the foregoing, there has been duly filed all financing
statements or other similar instruments or documents necessary under the UCC of
all appropriate jurisdictions (or any comparable law) to perfect the Seller's
ownership interest in such Receivable.
(h) Good Title; Perfection. Immediately prior to each purchase hereunder, the
Seller 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. This Agreement is effective to, and shall,
upon each purchase hereunder, transfer to the relevant Purchaser or Purchasers
(and such Purchaser or Purchasers shall acquire from the 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.
(i) Places of Business. The principal places of business and chief executive
office of the Seller and the offices where the Seller keeps all its Records are
located at the address(es) listed on Exhibit II or such other locations notified
to the Agent in accordance with Section 5.2(a) in jurisdictions where all action
required by Section 5.2(a) has been taken and completed. The Seller's Federal
Employer Identification Number is correctly set forth on Exhibit II.
(j) Collection Banks; etc. Except as otherwise notified to the Agent in
accordance with Section 5.2(b), (i) the Seller has instructed, or has caused the
Originator and the Transferor to instruct, all Obligors to pay all Collections
directly to a lock-box or a depository account listed on Exhibit III, (ii) all
proceeds from such lock-boxes are deposited directly by a Collection Bank into a
depository account listed on Exhibit III, (iii) the names and addresses of all
Collection Banks, together with the account numbers of the Collection Accounts
of the Seller at each Collection Bank, are listed on Exhibit III, and (iv) each
Collection Account to which Collections are remitted is, or will be within 30
days of the date hereof, subject to a Collection Account Agreement that is in
full force and effect. The Seller has not granted any Person, other than the
Agent as contemplated by this Agreement, dominion and control of any Collection
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Account, or the right to take dominion and control of any Collection Account at
a future time or upon the occurrence of a future event.
(k) Material Adverse Effect. Since the date of the Seller's incorporation no
event has occurred which would have a Material Adverse Effect.
(l) Names. In the past five years, the Seller has not used any corporate names,
trade names or assumed names other than those listed on Exhibit II.
(m) Actions, Suits. There are no actions, suits or proceedings pending or
threatened against or affecting the Seller or any of its properties. There are
no actions, suits or proceedings pending or threatened, against or affecting,
the Transferor or the Originator, or any of the respective properties of the
Transferor or the Originator, in or before any court, arbitrator or other body,
which are reasonably likely to (i) adversely affect the collectibility of the
Receivables, (ii) materially adversely affect the financial condition of the
Seller, the Transferor or the Originator or (iii) materially adversely affect
the ability of the Seller, the Transferor or the Originator to perform its
obligations under the Transaction Documents. None of the Seller, the Transferor,
or the Originator is in default with respect to any order of any court,
arbitrator or governmental body.
(n) Credit and Collection Policies. With respect to each Receivable, each of the
Seller, the Transferor, the Originator, and the Servicer has complied in all
material respects with, and has not made any material changes in, the Credit and
Collection Policy.
(o) Payments to Transferor and Originator. With respect to each Receivable
transferred to the Seller, the Seller has given reasonably equivalent value to
the Transferor in consideration for such transfer of such Receivable and the
Related Security with respect thereto under the Transfer Agreement and such
transfer was not made for or on account of an antecedent debt. No transfer by
the Transferor to the Seller of any Receivable is or may be voidable under any
section of the Bankruptcy Code. With respect to each Receivable transferred to
the Transferor, the Transferor has given reasonably equivalent value to the
Originator in consideration for such transfer of such Receivable and the Related
Security with respect thereto under the Originator Transfer Agreement and such
transfer was not made for or on account of an antecedent debt. No transfer by
the Originator to the Transferor of any Receivable is or may be voidable under
any section of the Bankruptcy Code.
(p) Ownership of the Seller. The Transferor owns one hundred percent (100%) of
the issued and outstanding capital stock of the Seller. Such capital stock is
validly issued, fully paid and nonassessable and there are no options, warrants
or other rights to acquire securities of the Seller.
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(q) Not an Investment Company. The Seller is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended from time to time,
or any successor statute.
(r) Purpose. The Seller has determined that, from a business viewpoint, the
purchase of the Receivables and related interests thereto from the Transferor
under the Transfer Agreement, and the sale of Receivable Interests to the
Purchasers and the other transactions contemplated herein, are in the best
interests of the Seller.
(s) Other Representations and Warranties. Each of the representations and
warranties of the Originator and the Transferor under each of the other
Transaction Documents is true and correct on and as of the date when made under
such Transaction Document.
(t) Year 2000 Issues. The Seller has made a full and complete assessment of the
Year 2000 Issues and has a realistic and achievable program for remediating the
Year 2000 Issues on a timely basis. Based on such assessment and program, the
Seller does not reasonably anticipate that Year 2000 Issues will have a Material
Adverse Effect.
(u) Minimum Receivables Balance. The Net Receivables Balance is equal to or
greater than the Minimum Receivables Balance.
(v) Eligible Receivables. Each Receivable included in the calculation of Net
Receivables Balance is an Eligible Receivable.
Section 3.2. Investor Representations and Warranties. Each Investor hereby
represents and warrants to the Agent and Falcon that:
(a) Existence and Power. Such Investor 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, delivery and performance by such Investor of
this Agreement 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 Investor.
(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, delivery and performance by such Investor of
this Agreement.
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(d) Binding Effect. This Agreement constitutes the legal, valid and binding
obligation of such Investor enforceable against such Investor 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.
ARTICLE IV
CONDITIONS OF PURCHASES
Section 4.1. Conditions Precedent to Initial Purchase. The initial purchase of a
Receivable Interest under this Agreement is subject to the conditions precedent
that the Agent shall have received on or before the date of such purchase those
documents listed on Schedule A hereto.
Section 4.2. Conditions Precedent to All Purchases and Reinvestments. Each
purchase of a Receivable Interest (other than pursuant to Section 2.1) and each
Reinvestment shall be subject to the further conditions precedent that (a) in
the case of each such purchase, the Servicer shall have delivered to the Agent
on or prior to the date of such purchase, in form and substance satisfactory to
the Agent, all Monthly Reports as and when due under Section 6.5; (b) on the
date of each such purchase or Reinvestment, the following statements shall be
true (and acceptance of the proceeds of such purchase or Reinvestment shall be
deemed a representation and warranty by the Seller that such statements are then
true):
(i) the representations and warranties set forth in
Article III are correct on and as of the date of such
purchase or Reinvestment as though made on and as of
such date;
(ii) no event has occurred, or would result from such
purchase or Reinvestment, that will constitute a
Termination Event, and no event has occurred and is
continuing, or would result from such purchase or
Reinvestment, that would constitute a Potential
Termination Event; and
(iii) the Liquidity Termination Date shall not have
occurred, the aggregate Capital of all Receivable
Interests does not exceed the Purchase Limit and the
aggregate Receivable Interests do not exceed 100%;
and (c) the Agent shall have received such other approvals, opinions or
documents as it may reasonably request.
ARTICLE V
COVENANTS
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Section 5.1. Affirmative Covenants of Seller. Until the date on which the
Aggregate Unpaids have been indefeasibly paid in full, the Seller, individually
and in its capacity as Servicer, hereby covenants that:
(a) Financial Reporting. The Seller will maintain, for itself and each of its
Subsidiaries, a system of accounting established and administered in accordance
with generally accepted accounting principles, and furnish to the Agent:
(i) Annual Reporting. Within 90 days after the close of each of its
fiscal years, financial statements for such fiscal year certified in a
manner acceptable to the Agent by the senior financial officer of the
Seller or such other Person as may be acceptable to the Agent.
(ii) Compliance Certificate; Quarterly Reporting. Within 90 days
after the close of each of its fiscal years and within 45 days after the
close of each of the first three quarterly periods of each fiscal year, a
compliance certificate in substantially the form of Exhibit IV, together
with financial statements for such quarterly periods, signed by the senior
financial officer of the Seller or such other Person as may be acceptable
to the Agent.
(iii) Notices under Transaction Documents. Forthwith 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 Agent or any
Purchaser, copies of the same.
(iv) Change in Credit and Collection Policy. At least 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.
(v) Other Information. Such other information (including
non-financial information) as the Agent or any Purchaser may from time
to time reasonably request.
(b) Notices. The Seller will notify the Agent in writing of any of the following
immediately upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken with respect thereto:
(i) Termination Events or Potential Termination Events. The
occurrence of each Termination Event or each Potential Termination Event,
by a statement of the corporate comptroller or senior financial officer of
the Seller.
(ii) Judgment. The entry of any material judgment or decree against
the Seller.
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(iii) Litigation. The institution of any litigation,
arbitration proceeding or governmental proceeding against the Seller or
which the Seller becomes a party.
(c) Compliance with Laws. The Seller will comply in all respects with all
applicable laws, rules, regulations, orders writs, judgments, injunctions,
decrees or awards to which it may be subject.
(d) Audits. The Seller will furnish to the Agent from time to time such
information with respect to it and the Receivables as the Agent may reasonably
request. The Seller shall, from time to time during regular business hours as
requested by the Agent upon reasonable notice, permit the Agent, or its agents
or representatives (and shall cause the Transferor and the Originator to permit
the Agent or its agents or representatives) at the Seller's expense, (i) to
examine and make copies of and abstracts from all Records in the possession or
under the control of the Seller, the Transferor, or the Originator relating to
Receivables and the Related Security, including, without limitation, the related
Contracts, and (ii) to visit the offices and properties of the Seller, the
Transferor or the Originator for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to the Seller's,
the Transferor's or the Originator's financial condition or the Receivables and
the Related Security or the Seller's performance hereunder, or the Transferor's
or the Originator's performance under any of the other Transaction Documents, or
the Seller's, the Transferor's or the Originator's performance under the
Contracts with any of the officers or employees of the Seller, the Transferor or
the Originator having knowledge of such matters.
(e) Keeping and Marking of Records and Books.
(i) The Seller will, and will cause the Transferor and the
Originator to, 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 immediate identification of each new Receivable
and all Collections of and adjustments to each existing Receivable).
The Seller will, and will cause the Transferor and the Originator to,
give the Agent notice of any material change in the administrative and
operating procedures referred to in the previous sentence.
(ii) The Seller will, and will cause the Transferor and the
Originator to, (a) on or prior to the date hereof, mark its master data
processing records relating to the Receivable Interests with a legend,
acceptable to the Agent, describing the Receivable Interests and (b)
upon the request of the Agent (x) mark each Contract with a legend
describing the Receivable Interests and (y)
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deliver to the Agent all Contracts (including, without limitation, all
multiple originals of any such Contract) relating to the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. The Seller will,
and will cause the Transferor and the Originator to, timely and fully (i)
perform and comply in all material respects 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 material respects with the Credit and
Collection Policy in regard to each Receivable and the related Contract. The
Seller will, and will cause the Transferor and the Originator to, pay when due
any taxes payable in connection with the Receivables.
(g) Purchase of Receivables from the Transferor. With respect to each Receivable
purchased under the Transfer Agreement, the Seller shall (or shall cause the
Transferor to) take all actions necessary to vest legal and equitable title to
such Receivable and the Related Security irrevocably in the Seller, including,
without limitation, the filing of all financing statements or other similar
instruments or documents necessary under the UCC of all appropriate
jurisdictions (or any comparable law) to perfect the Seller's interest in such
Receivable and such other actions to perfect, protect or more fully evidence the
interest of the Seller as the Agent may reasonable request.
(h) Receivable Interest. The Seller shall take all necessary actions to
establish and maintain a valid and perfected first priority undivided percentage
ownership interest in the Receivables and the Related Security and Collections
with respect thereto, to the full extent contemplated herein, in favor of the
Agent and the Purchasers, including, without limitation, taking such actions to
perfect, protect or more fully evidence the interest of the Agent and the
Purchasers hereunder as the Agent may reasonably request.
(i) Payment to the Transferor and Originator. With respect to any Receivable
purchased by the Seller from the Transferor, such sale shall be effected under,
and in strict compliance with the terms of, the Transfer Agreement, including,
without limitation, the terms relating to the amount and timing of payments to
be made to the Transferor in respect of the purchase price for such Receivable.
With respect to any Receivable purchased by the Transferor from the Originator,
such sale shall be effected under, and in strict compliance with the terms of,
the Originator Transfer Agreement, including, without limitation, the terms
relating to the amount and timing of payments to be made to the Originator in
respect of the purchase price for such Receivable.
(j) Performance and Enforcement of the Transfer Agreement. The Seller shall
timely perform the obligations required to be performed by the Seller, and shall
vigorously enforce the rights and remedies accorded to the Seller, under the
Transfer Agreement. The Seller shall take all actions to perfect and enforce its
rights and interests (and the rights and interests of the Purchasers and the
Agents, as assignees of the Seller) under the Transfer Agreement as the Agent
may from time to time reasonably request,
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including, without limitation, making claims to which it may be entitled under
any indemnity, reimbursement or similar provision contained in the Transfer
Agreement.
(k) Purchasers' Reliance. The Seller acknowledges that the Purchasers are
entering into the transactions contemplated by this Agreement in reliance upon
the Seller's identity as a separate legal entity from the Transferor. Therefore,
from and after the date of execution and delivery of this Agreement, the Seller
shall take all reasonable steps including, without limitation, all steps that
the Agent or any Purchaser may from time to time reasonably request to maintain
the Seller's identity as a separate legal entity and to make it manifest to
third parties that the Seller is an entity with assets and liabilities distinct
from those of the Transferor or the Originator and any Affiliates thereof and
not just a division of the Transferor or the Originator. Without limiting the
generality of the foregoing and in addition to the other covenants set forth
herein, the Seller shall:
(i) conduct its own business in its own name and require that
all full-time employees of the Seller identify themselves as such and
not as employees of the Transferor (including, without limitation, by
means of providing appropriate employees with business or
identification cards identifying such employees as the Seller's
employees);
(ii) compensate all employees, consultants and agents
directly, from the Seller's bank accounts, for services provided to the
Seller by such employees, consultants and agents and, to the extent any
employee, consultant or agent of the Seller is also an employee,
consultant or agent of the Transferor, allocate the compensation of
such employee, consultant or agent between the Seller and the
Transferor on a basis which reflects the services rendered to the
Seller and the Transferor;
(iii) clearly identify its offices (by signage or otherwise)
as its offices and, if such office is located in the offices of the
Transferor, the Seller shall lease such office at a fair market rent;
(iv) have a separate telephone number, which will be answered
only in its name and separate stationary, invoices and checks in its
own name;
(v) conduct all transactions with the Transferor (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) for items shared between the Seller and the Transferor on the
basis of actual use to the extent practicable and, to the extent such
allocation is not practicable, on a basis reasonably related to actual
use;
(vi) at all times have at least one member of its Board of
Directors (an "Independent Director") who is not (A) a director,
officer or employee of the
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Transferor or an Affiliate thereof, (B) a Person related to any officer
or director of the Transferor, (C) a holder (directly or indirectly) of
any securities of the Transferor, or (D) a Person related to a holder
(directly or indirectly) of any voting securities of the Transferor;
and promptly reimburse the Transferor in respect of any losses or
expenses which are claimed by such Independent Director in his or her
capacity as Independent Director and which are paid by the Transferor;
(vii) 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 the Seller or (C) the initiation or
participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving the Seller,
are duly authorized by unanimous vote of its Board of Directors
(including the Independent Director);
(viii) maintain the Seller's books and records separate from
those of the Transferor and otherwise readily identifiable as its own
assets rather than assets of the Transferor;
(ix) prepare its financial statements separately from those of
the Transferor and insure that any consolidated financial statements of
the Transferor or any Affiliate thereof that include Seller have
detailed notes clearly stating that the Seller is a separate corporate
entity and that its assets will be available first and foremost to
satisfy the claims of the creditors of the Seller;
(x) except as herein specifically otherwise provided, not
commingle funds or other assets of the Seller with those of the
Transferor and not maintain bank accounts or other depository accounts
to which the Transferor is an account party, into which the Transferor
makes deposits or from which the Transferor has the power to make
withdrawals;
(xi) not permit the Transferor to pay any of the Seller's
operating expenses (except pursuant to allocation arrangements that
comply with the requirements of this Section 5.1(k));
(xii) not permit the Seller to be named as an insured on the
insurance policy covering the property of the Transferor or enter into
an agreement with the holder of such policy whereby in the event of a
loss in connection with such property, proceeds are paid to the Seller;
and
(xiii) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the opinion issued
by Baker & Daniels as counsel for the Seller, in connection with the
closing or initial purchase under this Agreement and relating to
substantive consolidation issues, and in the
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certificates accompanying such opinion, remain true and correct in all
material respects at all times.
(l) True Sale. The Seller shall take all such actions as are necessary on its
part to ensure that the facts and assumptions set forth in the opinion issued by
Baker & Daniels as counsel for the Seller, the Transferor and the Originator, in
connection with the closing or initial purchase under this Agreement and
relating to true sale issues under the Originator Transfer Agreement and the
Transfer Agreement, and in the certificates accompanying such opinion, remain
true and correct in all material respects at all times.
(m) Collections. The Seller or the Servicer shall instruct, or cause the
Transferor and the Originator to instruct, all Obligors to pay all Collections
directly to a lock-box or depository account listed on Exhibit III. In the case
of payments remitted to any such lock-box, the Seller or the Servicer shall
cause all proceeds from such lock-box to be deposited directly by a Collection
Bank into a depositary account listed on Exhibit III. Within 30 days of the date
hereof, the Seller shall cause each lock-box and Collection Account to be
subject to a Collection Account Agreement that is in full force and effect. The
Seller shall, subject to the terms of a Collection Account Agreement and the
terms of this Agreement, maintain exclusive dominion and control to each such
lock-box, concentration account and depositary account; neither the Transferor
nor the Originator shall have any interest in, or any dominion or control over,
any such lock-box, concentration account or depositary account. In the case of
any Collections received by the Seller, the Transferor or the Originator, the
Seller shall remit (or shall cause the Transferor or the Originator to remit)
such Collections to a Collection Account not later than the Business Day
immediately following the date of receipt of such Collections, and, at all times
prior to such remittance, the Seller shall itself hold (or, if applicable, shall
cause the Transferor or the Originator to hold) such Collections in trust, for
the exclusive benefit of the Purchasers and the Agent. The Seller shall not (and
shall cause the Transferor and the Originator to not) deposit or otherwise
credit to any Collection Account any check or payment item other than
Collections and payments on the Receivables and Related Security. The Agent may
at any time request that the Seller, and the Seller thereupon promptly shall,
direct all Obligors on Receivables to remit all payments thereon to a new
depository account specified by the Agent.
(n) Net Worth. The Seller shall at all times maintain net worth of not less than
three percent (3%) of the aggregate Capital at such time.
(o) Year 2000 Issues. The Seller will take all actions reasonably necessary to
assure that the Year 2000 Issues will not have a Material Adverse Effect. Upon
the Agent's request, the Seller will provide to the Agent a description of its
Year 2000 program, including updates and progress reports. The Seller will
advise the Agent of any reasonably anticipated Material Adverse Effect as a
result of Year 2000 Issues.
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(p) Ownership of the Seller. The Transferor shall at all times own, free and
clear of all Adverse Claims, 100% of the issued and outstanding capital stock of
the Seller.
(q) Consolidated Net Worth. The Transferor shall at all times maintain a
Consolidated Net Worth of not less than Two Hundred Seventy Five Million and
00/100 dollars ($275,000,000.00), which required minimum amount will increase as
of the end of each fiscal quarter of the Transferor, commencing with the quarter
ending December 31, 1998 by an amount equivalent to the sum of (i) fifty percent
(50.0%) of the Transferor's Consolidated Net Income for such quarter (with no
deduction on account of negative Consolidated Net Income for a fiscal quarter),
plus (ii) one hundred percent (100.0%) of the net proceeds, cash or otherwise,
of all offerings and issuances of additional equity by the Transferor and its
Subsidiaries.
(r) Consolidated Total Debt to Consolidated EBITDA. The Transferor shall at all
times maintain a ratio of Consolidated Total Debt to Consolidated EBITDA for the
period of four (4) consecutive fiscal quarters most recently ended on or prior
to such determination date of not greater than 3.50 to 1.0.
(s) Consolidated Interest Expense Coverage Ratio. During each period of four (4)
consecutive fiscal quarters, the Transferor shall maintain at all times a
Consolidated Interest Expense Coverage Ratio for the period of four (4)
consecutive fiscal quarters most recently ended on or prior to such
determination date of not less than 2.50 to 1.0.
Section 5.2. Negative Covenants of Seller. Until the date on which the Aggregate
Unpaids have been indefeasibly paid in full, the Seller, individually and in its
capacity as Servicer, hereby covenants that:
(a) Name Change, Offices, Records and Books of Accounts. The Seller 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
Agent at least 45 days prior notice thereof and (ii) delivered to the Agent all
financing statements, instruments and other documents requested by the Agent in
connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. The Seller will not add or
terminate any bank as a Collection Bank from those listed in Exhibit III, or
make any change in its instructions to Obligors regarding payments to be made to
the Seller or payments to be made to any Collection Account or Collection Bank,
unless the Agent shall have received, at least 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 Account or a
Collection Bank, an executed account agreement and an executed Collection
Account Agreement from such Collection Bank relating thereto; provided, however,
that the Seller may make changes in instructions to Obligors regarding payments
if such new instructions require such Obligor to make payments to
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another existing Collection Account that is subject to a Collection Account
Agreement then in effect.
(c) Modifications to Contracts and Credit and Collection Policy. The Seller will
not, and will not permit the Transferor or the Originator to, make any change to
the Credit and Collection Policy which would be reasonably likely to adversely
affect the collectibility of the Receivables or decrease the credit quality of
any newly created Receivables. The Seller will not, and will not permit the
Transferor or the Originator to, make any material change to the Credit and
Collection Policy without the prior consent of the Agent. Except as provided in
Section 6.2(c), the Seller will not (and will not permit the Servicer, the
Transferor or the Originator to) 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, Etc. The 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 or
Related Security or Collections in respect thereof, or upon or with respect to
any Contract under which any Receivable arises, or any Collection Account or
assign any right to receive income in respect thereof (other than, in each case,
the creation of the interests therein in favor of the Agent and the Purchasers
provided for herein), and the Seller shall defend the right, title and interest
of the Agent and the Purchasers in, to and under any of the foregoing property,
against all claims of third parties claiming through or under the Seller.
(e) Nature of Business; Other Agreements; Other Indebtedness. The Seller shall
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 Transfer Agreement. Without limiting the generality of the
foregoing, the Seller shall not create, incur, guarantee, assume or suffer to
exist any indebtedness or other liabilities, whether direct or contingent, other
than (i) as a result of the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business, (ii) the
incurrence of obligations under this Agreement, (iii) the incurrence of
obligations, as expressly contemplated in the Transfer Agreement, to make
payment to the Transferor thereunder for the purchase of Receivables from the
Transferor under such Transfer Agreement, and (iv) the incurrence of operating
expenses in the ordinary course of business of the type otherwise contemplated
in Section 5.1(k) of this Agreement. In the event the Seller shall at any time
borrow a "Revolving Loan" under the Transfer Agreement, the obligations of the
Seller in connection therewith shall be subordinated to the obligations of the
Seller to the Purchasers and the Agent under this Agreement, on such terms as
shall be satisfactory to the Agent.
(f) Amendments to the Transfer Agreement. The Seller shall not, without the
prior written consent of the Agent, (i) cancel or terminate the Transfer
Agreement, (ii) give
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any consent, waiver, directive or approval under the Transfer Agreement, (iii)
waive any default, action, omission or breach under the Transfer Agreement, or
otherwise grant any indulgence thereunder, or (iv) amend, supplement or
otherwise modify any of the terms of the Transfer Agreement.
(g) Amendments to Corporate Documents. The Seller shall not amend 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 5.1(k) of this Agreement.
(h) Merger. The Seller shall 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 any
material part of its assets (whether now owned or hereafter acquired) to, or
acquire all or any material part of the assets of, any Person.
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section 6.1. 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 6.1. The Seller
is hereby designated as, and hereby agrees to perform the duties and obligations
of, the Servicer pursuant to the terms of this Agreement. The Agent may at any
time in its sole discretion terminate the Seller as Servicer on notice given by
the Agent to the Seller and may designate as Servicer any Person to succeed the
Seller or any successor Servicer.
(b) The Seller is permitted to delegate, and the Seller hereby advises the
Purchasers and the Agent that it has delegated, to the Transferor, as
subservicer of the Servicer, certain of its duties and responsibilities as
Servicer hereunder. The Seller hereby further advises the Purchasers and the
Agent that the Transferor has delegated, to the Originator as subservicer of the
Transferor, its duties and responsibilities as subservicer with respect to the
Originator Receivables. Notwithstanding the foregoing, (i) the Seller shall be
and remain primarily liable to the Agent and the Purchasers for the full and
prompt performance of all duties and responsibilities of the Servicer hereunder
and (ii) the Agent and the Purchasers shall be entitled to deal exclusively with
the Seller in matters relating to the discharge by the Servicer of its duties
and responsibilities hereunder, and the Agent and the Purchasers shall not be
required to give notice, demand or other communication to any Person other than
the Seller in order for communication to the Servicer and its respective
delegates and subservicers in respect thereof to be accomplished. The Seller, at
all times that it is the Servicer, shall be responsible for providing its
delegates and subservicers with any notice given under this Agreement. The Agent
may at any time in its sole discretion direct the Seller to
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replace any of its delegates or subservicers on notice given by the Agent to the
Seller and may designate as subservicer any Person to succeed such subservicer
or any successor subservicer.
(c) Without the prior written consent of the Required Investors, (i) the Seller
shall not be permitted to delegate any of its duties or responsibilities as
Servicer to any Person other than the Transferor, and then such delegation shall
be limited to the activities of Servicer hereunder, (ii) the Transferor shall
not be permitted to further delegate any of its duties or responsibilities of
the Servicer delegated to it by the Seller to any Person other than the
Originator and (iii) the Originator shall not be permitted to further delegate
to any other Person any of its duties or responsibilities of the Servicer
delegated to it by the Transferor. If the Agent shall designate as Servicer any
Person other than the Seller in accordance with this Section 6.1, all duties and
responsibilities theretofore delegated by the Seller to the Transferor, and by
the Transferor to the Originator may, at the discretion of the Agent, be
terminated forthwith on notice given by the Agent to the Seller.
Section 6.2. Duties of Servicer. (a) The Servicer shall take or cause to be
taken all such actions required to be taken by the Credit and Collection Policy
and all such other reasonable 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 shall administer the Collections in accordance with the
procedures described herein and in Article I. The Servicer shall set aside and
hold in trust for the account of the Seller and the Purchasers their respective
shares of the Collections of Receivables in accordance with Section 1.7. The
Servicer shall upon the request of the Agent after the occurrence of a
Liquidation Day, segregate, in a manner acceptable to the Agent, all cash,
checks and other instruments received by it from time to time constituting
Collections from the general funds of the Servicer or the Seller prior to the
remittance thereof in accordance with Section 1.7. 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 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.
(c) 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 may determine 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 Agent or the Purchasers under this
Agreement. Notwithstanding anything to the contrary contained herein, the 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.
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(d) The Servicer shall hold in trust for the Seller and the Purchasers, in
accordance with their respective Receivable Interests, all Records that evidence
or relate to the Receivables, the related Contracts and Related Security or that
are otherwise necessary or desirable to collect the Receivables and shall, as
soon as practicable upon demand of the Agent, deliver or make available to the
Agent all such Records, at a place selected by the Agent. The Servicer shall, as
soon as practicable following receipt thereof, turn over to the Seller (i) that
portion of Collections of Receivables representing the Seller's undivided
fractional ownership interest therein, less, in the event the Seller is not the
Servicer, all reasonable out-of-pocket costs and expenses of the Servicer of
servicing, administering and collecting the Receivables not otherwise covered by
the Servicing Fee, and (ii) any cash collections or other cash proceeds received
with respect to Indebtedness not constituting Receivables. 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 Section 1.7.
(e) Any payment by an Obligor in respect of any indebtedness owed by it to the
Transferor or the Originator shall, except as otherwise specified by such
Obligor or otherwise required by contract or law and unless otherwise instructed
by the 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 6.3. Collection Notices. The Agent is authorized at any time to date and
to deliver to the Collection Banks a Collection Notice under any Collection
Account Agreement. The Seller hereby transfers to the Agent for the benefit of
the Purchasers, effective when the Agent delivers any such Collection Notice,
the exclusive ownership and control of the Collection Accounts. In case any
authorized signatory of the Seller whose signature appears on a Collection
Account Agreement shall cease to have such authority before the delivery of such
notice, such Collection Account Agreement shall nevertheless be valid as if such
authority had remained in force. The Seller hereby authorizes the Agent, and
agrees that the Agent shall be entitled to (i) endorse the Seller's name on
checks and other instruments representing Collections, (ii) enforce the
Receivables, the related Contracts and the Related Security and (iii) 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 Agent rather than the Seller.
Section 6.4. Responsibilities of the Seller. Anything herein to the contrary
notwithstanding, the exercise by the Agent and the Purchasers of their rights
hereunder shall not release the Servicer or the Seller from any of their duties
or obligations with respect to any Receivables or under the related Contracts.
Neither the Agent nor any of the Purchasers shall have any obligation or
liability with respect to any Receivables or related Contracts, nor shall any of
them be obligated to perform the obligations of the Seller.
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Section 6.5. Reports. On the Reporting Date of each month and at such other
times as the Agent shall request, the Servicer shall prepare and forward to the
Agent a Monthly Report.
Section 6.6. Servicer Fee. In consideration of the Servicer's agreement to
perform the duties and obligations of the Servicer hereunder, the parties hereto
severally agree to pay to the Servicer on each Settlement Date a fee (the
"Servicing Fee") in an amount equal to (i) 0.4375% per annum multiplied by (ii)
the Outstanding Balance of the Receivables at the beginning of the calendar
month during which such Settlement Date occurs. The payment obligation in
respect of the Servicing Fee shall be allocated among the parties hereto ratably
in accordance with their respective interests from time to time in the
Receivables. During the period that the Seller or any of its Affiliates is the
Servicer hereunder, unless a Termination Event shall have occurred and then be
continuing, the Seller shall be permitted to retain an amount from the
Collections on each Settlement Date equal to the Servicing Fee accrued and
payable to such date.
ARTICLE VII
TERMINATION EVENTS
Section 7.1. Termination Event. If any one or more of the following events shall
occur (each a "Termination Event"):
(a) The Seller, the Transferor or the Servicer shall fail (i) to make any
payment or deposit required hereunder and such failure shall remain unremedied
for one Business 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 other than the financial covenants set forth in paragraphs (p), (q) and
(r) of Section 5.1) and such failure shall remain unremedied for three Business
Days.
(b) Any representation, warranty, certification or statement made by the Seller,
the Transferor, the Originator, or the Servicer in this Agreement, any other
Transaction Document or in any other document delivered pursuant hereto shall
prove to have been incorrect in any material respect when made or deemed made.
(c) Failure of the Seller, the Transferor, the Originator or the Servicer to pay
any Indebtedness when due or the default by the Seller, the Transferor, the
Originator or the Servicer in the performance of any term, provision or
condition contained in any agreement under which any 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 Indebtedness of the Seller, the Transferor, the
Originator or the Servicer 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.
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(d) (i) The Seller, the Transferor, the Originator or the Servicer shall
generally not pay its debts as such debts become due or shall admit in writing
its inability to pay its debts generally or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Seller, the Transferor, the Originator or the Servicer 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 or (ii) the Seller, the Transferor, the Originator or the Servicer
shall take any corporate action to authorize any of the actions set forth in
clause (i) above in this subsection (d).
(e) As at the end of any calendar month,
(i) the average of the Delinquency Ratios of the three most
recently ended calendar months shall exceed 28.0%;
(ii) the average of the Loss-to-Liquidation Ratios of the
three most recently ended calendar months shall exceed 2.5%; or
(iii) the average of the Expected Dilution Ratios of the three
most recently ended calendar months shall exceed 4.0%.
(f) The Transferor (i) shall fail to perform or observe any term, covenant or
agreement contained in any other Transaction Document to which it is a party, or
(ii) shall for any reason cease to transfer, or cease to have the legal capacity
or otherwise be incapable of transferring, Receivables under the Transfer
Agreement, or any "Event of Default" shall occur under the Transfer Agreement.
(g) The Originator (i) shall fail to perform or observe any term, covenant or
agreement contained in any other Transaction Document to which it is a party, or
(ii) shall for any reason cease to transfer, or cease to have the legal capacity
or otherwise be incapable of transferring, Receivables under the Originator
Transfer Agreement, or any "Event of Default" shall occur under the Originator
Transfer Agreement.
(h) The aggregate Receivable Interests hereunder shall at any time exceed 100%.
(i) A Change of Control shall occur.
(j) A Material Adverse Effect shall occur.
(k) The Transferor shall fail to observe any of the financial covenants set
forth in paragraphs (p), (q) and (r) of Section 5.1.
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then, and in any such event, the Agent shall at the request, or may with the
consent, of the Required Purchasers by notice to the Seller declare the
Termination Date to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Seller; provided, however, that upon
the occurrence of a Termination Event described in subsection (d) above or of an
actual or deemed entry of an order for relief with respect to the Seller, the
Transferor, the Originator or the Servicer, the Termination Date shall
automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Seller and the Servicer. Upon the
occurrence of the Termination Date for any reason whatsoever, the Agent and the
Purchasers shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the UCC of
all applicable jurisdictions and all other applicable laws, which rights shall
be cumulative. Promptly following the declaration of the Termination Date, the
Agent shall notify the Seller of such declaration in writing and shall confirm
therein that the requisite Purchasers shall have requested or consented to such
declaration (it being understood that no such notice is required in the case of
a Termination Event described in subsection (d) above or of an actual or deemed
entry of an order for relief with respect to the Seller, the Transferor, the
Originator or the Servicer). No action taken by the Agent or the Purchasers
under this Article VII shall limit, modify or otherwise affect the obligations
of any Investor to make any purchase requested by Falcon pursuant to Section 2.1
hereof.
ARTICLE VIII
INDEMNIFICATION
Section 8.1. Indemnities by the Seller. Without limiting any other rights which
the Agent or any Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Agent and each Purchaser and their
respective 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 Agent 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,
excluding, however:
(a) Indemnified Amounts to the extent final judgment of a court of
competent jurisdiction holds such Indemnified Amounts resulted from
gross negligence or willful misconduct on the part of the Indemnified
Party seeking indemnification;
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(b) Indemnified Amounts to the extent the same includes losses
in respect of Eligible Receivables which are uncollectible on account
of the insolvency, bankruptcy or lack of creditworthiness of the
related Obligor; or
(c) taxes imposed by the United States, by the jurisdiction in
which such Indemnified Party's principal executive office is located,
or by any other jurisdiction in the United States where such
Indemnified Party has established a taxable nexus, 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 Intended
Characterization;
provided, however, that nothing contained in this sentence shall limit the
liability of the Seller or the Servicer or limit the recourse of the Purchasers
to the Seller or Servicer for amounts otherwise specifically provided to be paid
by the Seller or the Servicer under the terms of this Agreement. Without
limiting the generality of the foregoing indemnification, the Seller shall
indemnify the Agent and the Purchasers for Indemnified Amounts (including,
without limitation, losses in respect of uncollectible receivables, regardless
of whether reimbursement therefor would constitute recourse to the Seller or the
Servicer) relating to or resulting from:
(i) any representation or warranty made by the Seller, the
Transferor, the Originator or, if the Servicer is the
Seller or an Affiliate of the Seller, the Servicer (or
any officers of the Seller, the Transferor, the
Originator or, if the Servicer is the Seller or an
Affiliate of the Seller, the Servicer) under or in
connection with this Agreement, any other Transaction
Document, any Monthly Report or any other information or
report delivered by the Seller, the Transferor, the
Originator or, if the Servicer is the Seller or an
Affiliate of the Seller, the Servicer pursuant hereto,
which shall have been false or incorrect when made or
deemed made;
(ii) the failure by the Seller, the Transferor, the Originator or,
if the Servicer is the Seller or an Affiliate of the
Seller, the Servicer 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;
(iii) any failure of the Seller, the Transferor, the Originator or,
if the Servicer is the Seller or an Affiliate of the
Seller, the Servicer to perform its duties or
obligations in accordance with the provisions of this
Agreement, any Contract relating to the Receivables, or
any other Transaction Document;
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(iv) any products liability, personal injury or damage suit, or
other similar claim arising out of or in connection with
merchandise, insurance or services which are the subject
of any Contract or any Receivable;
(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 or
thereby, the use of the proceeds of a purchase, the
ownership of the Receivable Interests or any other
investigation, litigation or proceeding relating to the
Seller, the Transferor or the Originator in which any
Indemnified Party becomes involved as a result of any of
the transactions contemplated hereby or thereby (except
to the extent set forth in clause (a) in this Section
8.1);
(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 Termination Event described in Section 7.1(d);
(x) the failure to vest and maintain vested in the Agent and the
Purchasers, or to transfer to the Agent and the
Purchasers, legal and equitable title to, and ownership
of, a first priority perfected undivided percentage
ownership (to the extent of the Receivable Interests
contemplated hereunder) in the Receivables, the Related
Security and the Collections, free and clear of any
Adverse Claim;
(xi) any failure to vest and maintain vested in the Seller (except
to the extent further transferred hereunder) legal and
equitable title to, and ownership of, the Receivables,
the Related Security and the Collections from the
Transferor, free and clear of any Adverse
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Claim; or any failure of the Seller to give reasonably
equivalent value to the Transferor under the Transfer
Agreement in consideration of the transfer by the
Transferor of any Receivable; or any attempt by any
Person to void any such transfer under statutory
provisions or common law or equitable action, including,
without limitation, any provision of the Bankruptcy
Code;
(xii) any failure to vest and maintain vested in the Transferor
(except to the extent further transferred to the Seller
under the Transfer Agreement) legal and equitable title
to, and ownership of, the Receivables, the Related
Security and the Collections from the Originator, free
and clear of any Adverse Claim; or any failure of the
Transferor to give reasonably equivalent value to the
Originator under the Originator Transfer Agreement in
consideration of the transfer by the Originator of any
Receivable; or any attempt by any Person to void any
such transfer under statutory provisions or common law
or equitable action, including, without limitation, any
provision of the Bankruptcy Code;
(xiii) the Year 2000 Issue; or
(xiv) the failure of any Receivable included in the calculation of
the Net Receivables Balance as an Eligible Receivable to
be an Eligible Receivable.
Section 8.2. 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 (a "Regulatory Change"): (i) which 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) which
imposes, modifies or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for
the account of a Funding Source, or credit extended by a Funding Source pursuant
to a Funding Agreement or (iii) which imposes any other condition the result of
which is to increase the cost to a Funding Source of performing its obligations
under
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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, upon demand
by the Agent, the Seller shall pay to the 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 8.3. Other Costs and Expenses. The Seller shall pay to the Agent and
Falcon on demand all costs and out-of-pocket expenses in connection with the
preparation, execution, delivery and administration of this Agreement and the
other Transaction Documents, the transactions contemplated hereby and the other
documents to be delivered hereunder, including without limitation, the cost of
Falcon's auditors auditing the books, records and procedures of the Seller, fees
and out-of-pocket expenses of legal counsel for Falcon and the Agent (which such
counsel may be employees of Falcon or the Agent) with respect thereto and with
respect to advising Falcon and the Agent as to their respective rights and
remedies under this Agreement. The Seller shall pay to the Agent on demand any
and all costs and expenses of the Agent 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 a Termination Event. The Seller shall
reimburse Falcon on demand for all other costs and expenses incurred by Falcon
or any shareholder of Falcon ("Other Costs"), including, without limitation, the
cost of auditing Falcon's books by certified public accountants, the cost of
rating the Commercial Paper by independent financial rating agencies, 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 the
reasonable fees and out-of-pocket expenses of counsel for Falcon or any counsel
for any shareholder of Falcon with respect to advising Falcon or such
shareholder as to matters relating to Falcon's operations.
Section 8.4. Allocations. Falcon shall allocate the liability for Other Costs
among the Seller and other Persons with whom Falcon has entered into agreements
to purchase interests in receivables ("Other Sellers"). If any Other Costs are
attributable to the Seller and not attributable to any Other Seller, the Seller
shall be solely liable for such Other Costs. However, if Other Costs are
attributable to Other Sellers and not attributable to the Seller, such Other
Sellers shall be solely liable for such Other Costs. All allocations to be made
pursuant to the foregoing provisions of this Article VIII shall be made by
Falcon in its sole discretion and shall be binding on the Seller and the
Servicer.
ARTICLE IX
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THE AGENT
Section 9.1. Authorization and Action. (a) Each Purchaser hereby designates and
appoints First Chicago to act as its agent hereunder and under each other
Transaction Document, and authorizes the Agent to take such actions as agent on
its behalf and to exercise such powers as are delegated to the Agent by the
terms of this Agreement and the other Transaction Documents together with such
powers as are reasonably incidental thereto. The Agent shall not 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 Agent shall be read into this Agreement or any
other Transaction Document or otherwise exist for the Agent. In performing its
functions and duties hereunder and under the other Transaction Documents, the
Agent shall act solely as agent for the Purchasers and does not assume nor shall
be deemed to have assumed any obligation or relationship of trust or agency with
or for the Seller or any of its successors or assigns. The Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement, any other Transaction Document or
applicable law. The appointment and authority of the Agent hereunder shall
terminate upon the indefeasible payment in full of all Aggregate Unpaids. Each
Purchaser hereby authorizes the Agent to execute each of the Uniform Commercial
Code financing statements, together with such other instruments or documents
determined by the Agent to be necessary or desirable in order to perfect,
evidence or more fully protect the interest of the Purchasers contemplated
hereunder, on behalf of such Purchaser (the terms of which shall be binding on
such Purchaser).
(b) Without limiting the generality of the foregoing, the Agent is authorized
(but not required) to act on behalf of the Purchasers in connection with
providing such instructions, approvals, waivers or consents as may from time to
time be required hereunder or under the Transfer Agreement to permit or
authorize or direct the Seller to take or refrain from taking any action under
the Transfer Agreement; provided that the Agent may at any time, in its sole
discretion, elect to refrain from providing any such instructions, approvals,
waivers or consents until such time as it shall have received the consent
thereto of the Required Investors.
Section 9.2. Delegation of Duties. The Agent may execute any of its 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. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
Section 9.3. Exculpatory Provisions. Neither the Agent nor any of its 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
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willful misconduct), or (ii) responsible in any manner to any of the Purchasers
for any recitals, statements, representations or warranties made by the Seller
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
the Seller to perform its obligations hereunder or thereunder, or for the
satisfaction of any condition specified in Article IV, or for the perfection,
priority, condition, value or sufficiency or any collateral pledged in
connection herewith. The Agent shall not 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. The Agent shall not be deemed to have knowledge of any
Termination Event or Potential Termination Event unless the Agent has received
notice from the Seller or a Purchaser.
Section 9.4. Reliance by Agent. The Agent 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 or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Seller), independent accountants
and other experts selected by the Agent. The Agent 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 Falcon or the Required Investors or all of the Purchasers, as
applicable, as it deems appropriate and it shall first be indemnified to its
satisfaction by the Purchasers, provided that unless and until the Agent shall
have received such advice, the Agent may take or refrain from taking any action,
as the Agent shall deem advisable and in the best interests of the Purchasers.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, in accordance with a request of Falcon or the Required Investors 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 9.5. Non-Reliance on Agent and Other Purchasers. Each Purchaser
expressly acknowledges that neither the Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of the Seller,
shall be deemed to constitute any representation or warranty by the Agent. Each
Purchaser represents and warrants to the Agent that it has and will,
independently and without reliance upon the 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 the Seller and
made its own decision to enter
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into this Agreement, the other Transaction Documents and all other documents
related hereto or thereto.
Section 9.6. Reimbursement and Indemnification. The Investors agree to reimburse
and indemnify the Agent and its officers, directors, employees, representatives
and agents ratably according to their Pro Rata Shares, to the extent not paid or
reimbursed by the Seller (i) for any amounts for which the Agent, acting in its
capacity as Agent, is entitled to reimbursement by the Seller hereunder and (ii)
for any other expenses incurred by the Agent, in its capacity as Agent and
acting on behalf of the Purchasers, in connection with the administration and
enforcement of this Agreement and the other Transaction Documents.
Section 9.7. Agent in its Individual Capacity. The Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Seller or any Affiliate of the Seller as though the Agent were not the
Agent hereunder. With respect to the acquisition of Receivable Interests
pursuant to this Agreement, the Agent shall have the same rights and powers
under this Agreement as any Purchaser and may exercise the same as though it
were not the Agent, and the terms "Investor," "Purchaser," "Investors" and
"Purchasers" shall include the Agent in its individual capacity.
Section 9.8. Successor Agent. The Agent may, upon five days' notice to the
Seller and the Purchasers, and the Agent will, upon the direction of all of the
Purchasers (other than the Agent, in its individual capacity) resign as Agent.
If the Agent shall resign, then the Required Investors 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 Investors 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 Agent hereunder and under
the other Transaction Documents and the Seller 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 Agent's resignation hereunder as Agent, the retiring Agent shall be
discharged from its duties and obligations hereunder and under the other
Transaction Documents and the provisions of this Article IX and Article VIII
shall continue in effect for its benefit with respect to any actions taken or
omitted to be taken by it while it was Agent under this Agreement and under the
other Transaction Documents.
ARTICLE X
ASSIGNMENTS; PARTICIPATIONS
Section 10.1. Assignments. (a) The Seller and each Investor hereby agree and
consent to the complete or partial assignment by Falcon of all of its rights
under, interest in, title to and obligations under this Agreement to the
Investors pursuant to Section 2.1 or to any other Person, and upon such
assignment, Falcon shall be released
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from its obligations so assigned. Further, the Seller and each Investor hereby
agree that any assignee of Falcon of this Agreement or all or any of the
Receivable Interests of Falcon shall have all of the rights and benefits under
this Agreement as if the term "Falcon" explicitly referred to such party, and no
such assignment shall in any way impair the rights and benefits of Falcon
hereunder. The Seller shall not have the right to assign its rights or
obligations under this Agreement.
(b) Any Investor may at any time and from time to time assign to one or more
Persons ("Purchasing Investors") all or any part of its rights and obligations
under this Agreement pursuant to an assignment agreement, in a form and
substance satisfactory to the Agent (the "Assignment Agreement",) executed by
such Purchasing Investor and such selling Investor. The consent of Falcon shall
be required prior to the effectiveness of any such assignment. Each assignee of
an Investor must have a short-term debt rating of A-1 or better by S&P and P-1
by Moody's and must agree to deliver to the Agent, promptly following any
request therefor by the Agent or Falcon, an enforceability opinion in form and
substance satisfactory to the Agent and Falcon. Upon delivery of the executed
Assignment Agreement to the Agent, such selling Investor shall be released from
its obligations hereunder to the extent of such assignment. Thereafter the
Purchasing Investor shall for all purposes be an Investor party to this
Agreement and shall have all the rights and obligations of an Investor under
this Agreement to the same extent as if it were an original party hereto and no
further consent or action by the Seller, the Purchasers or the Agent shall be
required.
(c) Each of the Investors agrees that in the event that it shall cease to have a
short-term debt rating of A-1 or better by S&P and P-1 by Moody's (an "Affected
Investor"), such Affected Investor shall be obliged, at the request of Falcon or
the Agent, to assign all of its rights and obligations hereunder to (x) another
Investor or (y) another financial institution nominated by the Agent and
acceptable to Falcon, and willing to participate in this Agreement through the
Liquidity Termination Date in the place of such Affected Investor; provided that
the Affected Investor receives payment in full, pursuant to an Assignment
Agreement, of an amount equal to such Investor's Pro Rata Share of the Capital
and Discount owing to the Investors and all accruing but unpaid fees and other
costs and expenses payable in respect of its Pro Rata Share of the Receivable
Interests.
Section 10.2. Participations. Any Investor may, in the ordinary course of its
business at any time sell to one or more Persons (each a "Participant")
participating interests in its Pro Rata Share of the Receivable Interests of the
Investors, its obligation to pay Falcon its Acquisition Amounts or any other
interest of such Investor hereunder. Notwithstanding any such sale by an
Investor of a participating interest to a Participant, such Investor's rights
and obligations under this Agreement shall remain unchanged, such Investor shall
remain solely responsible for the performance of its obligations hereunder, and
the Seller, Falcon and the Agent shall continue to deal solely and directly with
such Investor in connection with such Investor's rights and obligations under
this Agreement. Each Investor agrees that any agreement between such Investor
and any such Participant in respect of such participating interest shall not
restrict such
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Investor's right to agree to any amendment, supplement, waiver or modification
to this Agreement, except for any amendment, supplement, waiver or modification
described in clause (i) of Section 11.1(b).
ARTICLE XI
MISCELLANEOUS
Section 11.1. Waivers and Amendments. (a) No failure or delay on the part of the
Agent 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
11.1(b). Falcon, the Seller and the Agent, at the direction of the Required
Investors, 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 the Seller or the Servicer, (B) reduce the rate or
extend the time of payment of Discount or Funding Charges (or any
component thereof), (C) reduce any fee payable to the Agent for the
benefit of the Purchasers, (D) except pursuant to Article X hereof,
change the amount of the Capital of any Purchaser, an Investor's Pro
Rata Share or an Investor's Commitment, (E) amend, modify or waive any
provision of the definition of Required Investors or this Section
11.1(b), (F) consent to or permit the assignment or transfer by the
Seller of any of its rights and obligations under this Agreement, (G)
change the definition of "Dilution Reserve Percentage,"
"Discount/Servicing Reserve Percentage," "Eligible Receivable," or
"Loss Reserve Percentage," 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 (H) above in a manner which would circumvent the
intention of the restrictions set forth in such clauses; or
(ii) without the written consent of the then Agent, amend, modify
or waive any provision of this Agreement if the effect thereof is to
affect the rights or duties of such Agent.
Notwithstanding the foregoing, (i) without the consent of the Investors, the
Agent may, with the consent of the Seller, amend this Agreement solely to add
additional Persons as Investors hereunder and (ii) without the consent of the
Seller, the Agent, the Required Investors and Falcon may enter into amendments
to modify any of the terms
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or provisions of Article II, Article IX, Article X, Section 11.13 or any other
provision of this Agreement, provided that such amendment has no negative impact
upon the Seller. Any modification or waiver made in accordance with this Section
11.1 shall apply to each of the Purchasers equally and shall be binding upon the
Seller, the Purchasers and the Agent.
Section 11.2. 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. The Seller hereby authorizes the Agent to effect
purchases and Tranche Period and Discount Rate selections based on telephonic
notices made by any Person whom the Agent in good faith believes to be acting on
behalf of the Seller. The Seller agrees to deliver promptly to the Agent a
written confirmation of each telephonic notice signed by an authorized officer
of the 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 Agent, the records of the Agent shall govern absent manifest error.
Section 11.3. Ratable Payments. If any Purchaser, whether by setoff or
otherwise, has a payment made to it with respect to any portion of the Aggregate
Unpaids owing to such Purchaser (other than payments received pursuant to
Section 8.2 or 8.3) 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 the Aggregate Unpaids held by the other Purchasers so that
after such purchase each Purchaser will hold its ratable proportion of the
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 11.4. Protection of Ownership Interests of the Purchasers. (a) The
Seller agrees that from time to time, at its expense, it will promptly execute
and deliver all instruments and documents, and take all actions which the Agent
determines to be reasonable that may be necessary or desirable, or that the
Agent determines to be reasonable and requests, to perfect, protect or more
fully evidence the Receivable Interests, or to enable the Agent or the
Purchasers to exercise and enforce their rights and remedies hereunder. The
Agent may, or the Agent may direct the Seller to, notify the Obligors of
Receivables, at any time and at the Seller's expense, of the ownership interests
of the Purchasers under this Agreement and may also direct that payments of all
amounts due or that become due under any or all Receivables be made directly to
the Agent or its designee. The Seller shall, at any Purchaser's request,
withhold the identity of such Purchaser in any such notification.
(b) If the Seller or the Servicer fails to perform any of its obligations
hereunder, the Agent or any Purchaser may (but shall not be required to)
perform, or cause
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performance of, such obligation; and the Agent's or such Purchaser's costs and
expenses incurred in connection therewith shall be payable by the Seller (if the
Servicer that fails to so perform is the Seller or an Affiliate thereof) as
provided in Section 8.3, as applicable. The Seller and the Servicer each
irrevocably authorizes the Agent at any time and from time to time in the sole
discretion of the Agent, and appoints the Agent as its attorney-in-fact, to act
on behalf of the Seller and the Servicer (i) to execute on behalf of the Seller
as debtor and to file financing statements necessary or desirable in the 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
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 11.5. Confidentiality. (a) The Seller shall maintain and shall cause
each of its employees and officers to maintain the confidentiality of this
Agreement and the other Transaction Documents and the other confidential
proprietary information with respect to the Agent and Falcon and their
respective businesses obtained by it or them in connection with the structuring,
negotiating and execution of the transactions contemplated herein and therein,
except that the Seller and its officers and employees may disclose such
information to the Seller's external accountants and attorneys and as required
by any applicable law or order of any judicial or administrative proceeding. In
addition, the Seller 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).
(b) The Agent, the Investors and Falcon shall maintain and shall cause each of
its employees and officers to maintain the confidentiality of this Agreement and
the other Transaction Documents and the other confidential proprietary
information with respect to the Seller, the Transferor, and the Originator and
their businesses obtained by them in connection with the structuring,
negotiating and execution of the transactions contemplated herein and therein.
Anything herein to the contrary notwithstanding, the Seller hereby consents to
the disclosure of any nonpublic information with respect to it (i) to the Agent,
the Investors or Falcon by each other, (ii) by the Agent or the Purchasers to
any prospective or actual assignee or participant of any of them or (iii) by the
Agent to any rating agency, Commercial Paper dealer or provider of a surety,
guaranty or credit or liquidity enhancement to Falcon or any entity organized
for the purpose of purchasing, or making loans secured by, financial assets for
which First Chicago acts as the administrative agent and to any officers,
directors, employees, outside accountants and attorneys of any of the foregoing.
In addition, the Purchasers and the Agent 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).
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Section 11.6. Bankruptcy Petition. The Seller, the Agent and each Investor
hereby covenants and agrees that, prior to the date which is one year and one
day after the payment in full of all outstanding senior Indebtedness of Falcon,
it will not institute against, or join any other Person in instituting against,
Falcon 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 11.7. Limitation of Liability. Except with respect to any claim arising
out of the willful misconduct or gross negligence of Falcon, the Agent or any
Investor, no claim may be made by the Seller, the Servicer or any other Person
against Falcon, the Agent or any Investor 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 the Seller 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 11.8. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.
SECTION 11.9. CONSENT TO JURISDICTION. THE SELLER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT TO THIS
AGREEMENT AND THE SELLER 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 AGENT OR
ANY PURCHASER TO BRING PROCEEDINGS AGAINST THE SELLER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE SELLER AGAINST THE AGENT OR ANY
PURCHASER OR ANY AFFILIATE OF THE AGENT OR A PURCHASER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER PURSUANT TO THIS AGREEMENT
SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
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SECTION 11.10. WAIVER OF JURY TRIAL. THE AGENT, THE SELLER AND EACH PURCHASER
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 11.11. Integration; Survival of Terms. (a) This Agreement, the
Collection Account Agreements and the Fee Letter 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) The provisions of Article VIII and Section 11.6 shall survive any
termination of this Agreement.
Section 11.12. Counterparts; Severability. 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.
Section 11.13. First Chicago Roles. Each of the Investors acknowledges that
First Chicago acts, or may in the future act, (i) as administrative agent for
Falcon, (ii) as issuing and paying agent for the 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 Falcon
(collectively, the "First Chicago Roles"). Without limiting the generality of
this Section 11.13, each Investor 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 which it, in
its discretion, deems appropriate, including, without limitation, in its role as
administrative agent for Falcon, the giving of notice to the Agent of a
mandatory purchase pursuant to Section 2.1.
Section 11.14. Characterization. If the conveyance by the Seller to the
Purchasers of interests in Receivables hereunder shall be characterized as a
secured loan and not a sale, it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under applicable law, and that
the Seller shall be deemed to have granted to the Agent for the ratable benefit
of the Purchasers a duly perfected security interest in all of the Seller's
right, title and interest in, to and under the Receivables, the
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Collections, each Collection Account, all Related Security, all payments on or
with respect to such Receivables, all other rights relating to and payments made
in respect of the Receivables, and all proceeds of any thereof prior to all
other liens on and security interests therein to secure the payment of the
Aggregate Unpaids, including the indemnity obligations of the Seller under
Article VIII, the payment and reimbursement by the Seller to the Purchasers of
all Capital hereunder, and the payment of all other obligations owed hereunder
to the Agent and the Purchasers. After a Termination Event, the Agent and the
Purchasers shall have, in addition to the rights and remedies which 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.
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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.
BINDLEY WESTERN FUNDING CORPORATION
By:
Name:_______________________
Title:_______________________
FALCON ASSET SECURITIZATION
CORPORATION
By:
Authorized Signatory
c/o The First National Bank
of Chicago, as Agent
Suite 0596, 21st Floor
Chicago, Illinois 60670
Fax: (312) 732-4487
THE FIRST NATIONAL BANK OF CHICAGO, as Agent
By:
Title:
The First National Bank of Chicago
Suite 0596, 21st Floor
One First National Plaza
Chicago, Illinois 60670
Fax: (312) 732-4487
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INVESTORS:
Commitment
$[___,000,000] NBD BANK, N.A., as an Investor
By:
Title:
[Address]
Fax: [_________]
[$___,000,000] TOTAL COMMITMENT
*Subject to Section 1.12.
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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 the period from (and including) the first day of each
calendar month to (and including) the last day of such 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 during which the date of such initial purchase occurs.
"Acquisition Amount" means, on the date of any purchase from Falcon of
Receivable Interests pursuant to Section 2.1, (i) with respect to each Investor
other than NBD, the lesser of (a) such Investor's Pro Rata Share of the Falcon
Transfer Price and (b) such Investor's unused Commitment and (ii) with respect
to NBD, the difference between (a) the Falcon Transfer Price and (b) the
aggregate amount payable by all other Investors on such date pursuant to clause
(i) above.
"Adjusted Liquidity Price" means, in determining the Falcon Transfer Price for
any Receivable Interest, an amount equal to
RI DC + NDR
----
1+ (.50 x LR)
where:
RI = the undivided percentage interest evidenced by
such Receivable Interest.
DC = the Deemed Collections.
NDR= the Outstanding Balance of all Receivables that
are not more than 60 days past due.
LR = the Loss Reserve Percentage.
Each of the foregoing shall be determined from the most recent Monthly Report
received from the Servicer.
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"Adjustment" means a credit given to an Obligor by the Transferor or the
Originator for a prior Unauthorized Deduction taken by such Obligor.
"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.
"Affiliate" means any Person directly or indirectly controlling, controlled by,
or under direct or indirect common control with, another Person or any
Subsidiary of such other 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.
"Agent" means First Chicago in its capacity as agent for the Purchasers pursuant
to Article IX, and not in its individual capacity as an Investor, and any
successor Agent appointed pursuant to Article IX.
"Aggregate Unpaids" means, at any time, an amount equal to the sum of all
accrued and unpaid Discount, accrued and unpaid Funding Charges, accrued and
unpaid Servicing Fee, Capital and all other amounts owed (whether due or
accrued) hereunder or under the Fee Letter to the Agent and the Purchasers at
such time.
"Agreement" means this Receivables Purchase Agreement, as it may be amended or
modified and in effect from time to time.
"Allocated Commercial Paper" means Commercial Paper notes issued by Falcon for a
tenor and in an amount specially requested by any Person in connection with a
Receivable Purchase Facility then being made available by Falcon (or by any
agent on behalf of Falcon).
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. ss.ss.101
et seq., as amended.
"Base Rate" means, (i) prior to the occurrence of a Termination Event, 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 (ii) at all times after the occurrence of a
Termination Event, such rate plus 2% per annum.
"Business Day" means any day on which banks are not authorized or required to
close in New York, New York 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.
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"Capital" of any Receivable Interest means, at any time, the Purchase Price of
such Receivable Interest, minus the sum of the aggregate amount of Collections
and other payments received by the Agent which in each case are applied to
reduce such Capital; provided that such Capital shall be restored in the amount
of any Collections or payments so received and applied if at any time the
distribution of such Collections or payments are rescinded or must otherwise be
returned for any reason.
"Change of Control" means (i) 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 20% or more of the outstanding shares of voting stock of the
Servicer or the Transferor; or (ii) the Transferor shall cease to own, free and
clear of all Adverse Claims, all of the outstanding shares of voting stock of
the Seller or the Originator on a fully diluted basis.
"Charged-Off 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 7.1(d) (as if references to the Seller 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
the Seller's books as uncollectible, or (iv) which has been identified by the
Seller as uncollectible.
"Collection Account" means each concentration account, depositary account,
lock-box account or similar account in which any Collections are collected or
deposited.
"Collection Account Agreement" means, in the case of any actual or proposed
Collection Account, an agreement in substantially the form of Exhibit V hereto.
"Collection Bank" means, at any time, any of the banks or other financial
institutions holding one or more Collection Accounts.
"Collection Notice" means a notice, in substantially the form of the Collection
Notice contained in Annex A to Exhibit V hereto, from the Agent to a Collection
Bank.
"Collections" means, with respect to any Receivable, all cash collections and
other cash proceeds in respect of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable and all amounts payable to the Purchasers by the Seller pursuant to
Section 1.8.
"Commercial Paper" means promissory notes of Falcon issued by Falcon in the
commercial paper market.
"Commitment" means, for each Investor, the commitment of such Investor to
purchase its Pro
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Rata Share of Receivable Interests from (i) the Seller and (ii) Falcon, such Pro
Rata Share not to exceed, in the aggregate, the amount set forth opposite such
Investor's name on the signature pages of this Agreement, as such amount may be
modified in accordance with the terms hereof.
"Commitment Compliance Period", "Commitment Reduction Date" and "Commitment
Reduction Period" shall have the respective meanings set forth in Section 1.12.
"Concentration Limit" means, at any time, for any Obligor, a percentage of the
aggregate Outstanding Balance of all Eligible Receivables at such time equal to
the product of .33 multiplied by the Loss Reserve Percentage at such time, or
such greater or lesser amount (which may be zero) (a "Special Concentration
Limit") for such Obligor designated by the Agent at any time on not less than
ten (10) Business Days' prior written notice to the Seller; 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.
"Consolidated" means: (a) when used herein with reference to financial
statements, ratios, assets or liabilities, that any calculations have been made
by consolidating the assets and liabilities of the Transferor and its
consolidated Subsidiaries after eliminating all intercompany items and making
such adjustments as required by generally accepted accounting principals in the
United States; and (b) when used herein with reference to a Subsidiary of the
Transferor, a Subsidiary whose financial statements have been or, in accordance
with generally accepted accounting principals in the United States, are required
to be, presented together on a consolidated basis with those of the Transferor.
"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.
"Contract" means, with respect to any Receivable, any and all instruments,
agreements, leases, invoices or other writings pursuant to which such Receivable
arises or which evidences such Receivable, including, without limitation, the
applicable Obligor acknowledgments and acceptances and related purchase orders.
"CP Rate" means, in respect of any Accrual Period, the rate per annum which
reflects all Funding Charges accruing during such Accrual Period.
"Credit and Collection Policy" means the Seller's credit and collection policies
and practices relating to Contracts and Receivables existing on the date hereof
and
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summarized in Exhibit VI hereto, as modified from time to time in accordance
with this Agreement.
"Deemed Collections" means the aggregate of all amounts owing to Falcon pursuant
to Sections 1.8 and 8.1.
"Default Fee" means with respect to any amount due and payable by any Person
hereunder or under the Fee Letter, an amount equal to the greater of (i) $1,000
and (ii) interest on any such amount at a rate per annum equal to 2% above the
Base Rate, provided, however, that such interest rate will not at any time
exceed the maximum rate permitted by applicable law.
"Default Ratio" means, as of the last day of any month, a percentage equal to
(i) the aggregate Outstanding Balance of all Defaulted Receivables, plus the
aggregate Outstanding Balance of all Receivables less than 61 days past due that
became Charged-off Receivables during such month, divided by (ii) the aggregate
Originator Sales during the calendar month which ended three months prior to the
most recently ended calendar month.
"Defaulted Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for more than 60 days and less than 91 days from the
original due date for such payment; provided that for purposes of any Receivable
originated by the J.E. Goold division of the Transferor, "Defaulted Receivable"
means a Receivable as to which any payment, or part thereof, remains unpaid for
more that 60 days and less than 75 days from the original due date for such
payment.
"Delinquency Ratio" means, at any time, a percentage equal to (i) the aggregate
Outstanding Balance of all Receivables that were Delinquent Receivables at such
time, divided by (ii) the aggregate Outstanding Balance of all Receivables at
such time.
"Delinquent Receivable" means a Receivable as to which any payment, or part
thereof, remains unpaid for more than 30 days from the original due date.
"Designated Obligor" means an Obligor indicated by the Agent to the Seller in
writing.
"Dilution Ratio" means, at any time, a percentage equal to (i) the aggregate
amount of Dilutions which occurred during the month then most recently ended,
divided by (ii) the aggregate Originator Sales during the calendar month which
ended one month prior to the most recently ended calendar month.
"Dilution Reserve Percentage" means as of the last day of any month, a
percentage equal to the greater of (a) 5% and (b) the following:
ED + (2 x DS)
where:
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ED = the Expected Dilution Ratio at such time
DS = the Dilution Spike Ratio at such time
"Dilutions" means, at any time, the aggregate amount of reductions in the
Outstanding Balances of the Receivables as a result of any setoff, discount,
adjustment or otherwise, including, without limitation, Unauthorized Deductions,
other than (i) cash Collections on account of the Receivables, (ii) charge-offs
and (iii) Adjustments.
"Dilution Spike Ratio" means, as of any date, the highest Dilution Ratio in
respect of any of the three months most recently ended.
"Discount" means, for each Receivable Interest for any Tranche Period in respect
of which the LIBO Rate or the Base Rate applies:
DR~x~C~x~AD over 360
where:
DR = the Discount Rate for such Receivable Interest
for such Tranche Period;
C = the Capital of such Receivable Interest during
such Tranche Period; and
AD = the actual number of days elapsed during such
Tranche Period;
provided, that no provision of this Agreement shall require the payment or
permit the collection of Discount in excess of the maximum permitted by
applicable law; and provided, further, that Discount for any Tranche Period
shall not be considered paid by any distribution to the extent that at any time
all or a portion of such distribution is rescinded or must otherwise be returned
for any reason.
"Discount Rate" means the CP Rate, the LIBO Rate or the Base Rate, as
applicable.
"Discount/Servicing Reserve Percentage" means, on any date, an amount equal to
2.0%.
"Early Collection Fee" means, for any Receivable Interest which has its Capital
reduced, or its Tranche Period terminated prior to the date on which it was
originally scheduled to end, the excess, if any, of (i) the Discount or Funding
Charges that would have accrued during the remainder of the Tranche Period
subsequent to the date of such reduction or termination on the Capital of such
Receivable Interest if such reduction or termination had not occurred, over (ii)
the sum of (a) to the extent all or a portion of such Capital is allocated to
another Receivable Interest, the Discount or Funding
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Charges actually accrued during such period on such Capital for the new
Receivable Interest, and (b) to the extent such Capital is not allocated to
another Receivable Interest, the income, if any, actually received during such
period by the holder of such Receivable Interest from investing the portion of
such Capital not so allocated. In the event that the amount referred to in
clause (ii) exceeds the amount referred to in clause (i), the relevant Purchaser
or Purchasers agree to pay to the Seller the amount of such excess.
"EBITDA" means the Transferor's (on a FIFO basis) earnings before interest
expense, taxes, depreciation and amortization expense excluding any one-time
gains or losses from asset dispositions; provided, however, that such amount
shall exclude any earnings and expenses attributable to Priority Healthcare
Corporation.
"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;
and (c) is not a Designated Obligor,
(ii) the Obligor of which is not the Obligor of any
Charged-Off Receivable,
(iii) with respect to the related Obligor of such Receivable,
not more than 25% of the aggregate Outstanding Balance net of any
Unauthorized Deductions of such Obligor's Receivables is more than 90
days past due,
(iv) which is not a Defaulted Receivable, a Charged-Off
Receivable, a Delinquent Receivable or a Finance Charge Receivable,
(v) which by its terms is due and payable in full within 60
days of the original billing date therefor, has not been re-billed
(including, without limitation, a re-bill due to an Unauthorized
Deduction) or re-written and has not had its payment terms extended,
(vi) which is an account receivable representing all or part
of the sales price of merchandise, insurance and services within the
meaning of Section 3(c)(5) of the Investment Company Act of 1940, as
amended,
(vii) which is an "account" within the meaning of Section
9-106 of the UCC of all applicable jurisdictions, and which is not
under any circumstances evidenced by a note or other instrument,
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(viii) which is denominated and payable only in United States
dollars in the United States,
(ix) which arises under a Contract in substantially the form
of one of the form contracts set forth on Exhibit VII hereto or
otherwise approved by the 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,
counterclaim or other defense,
(x) 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 the Transferor or the
Originator, as applicable, or any of its assignees under such Contract
and (b) does not contain a confidentiality provision that purports to
restrict the ability of the Agent or any Purchaser to exercise its
rights under this Agreement, including, without limitation, its right
to review the Contract,
(xi) 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 Transferor or the Originator, as
applicable, and such Contract is in a form acceptable to the Agent,
(xii) which is not subject to any right of rescission,
set-off, counterclaim, any other defense (including defenses arising
out of violations of usury laws) of the applicable Obligor or the
Transferor or the Originator, as applicable, or any other Adverse
Claim, and the Obligor thereon holds no right as against the Transferor
or the Originator, as applicable to cause the Transferor or the
Originator to repurchase the goods or merchandise the sale of which
shall have given rise to such Receivable,
(xiii) as to which the Transferor or the Originator, as
applicable, has satisfied and fully performed all obligations on its
part with respect to such Receivable required to be fulfilled by it,
and no further action is required to be performed by any Person with
respect thereto other than payment thereon by the applicable Obligor,
(xiv) all right, title and interest to and in which has been
(i) in the case of an Originator Receivable, validly transferred by the
Originator directly to the Transferor under and in accordance with the
Originator Transfer Agreement, and the Transferor has good and
marketable title thereto free and clear of any Adverse Claim and (ii)
validly transferred by the Transferor directly to the Seller under and
in accordance with the Transfer Agreement, and the Seller has good and
marketable title thereto free and clear of any Adverse Claim,
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(xv) 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,
(xvi) which satisfies all applicable requirements of the
Credit and Collection Policy,
(xvii) which was generated in the ordinary course of the
Transferor's or the Originator's, as applicable, business and is of the
type generated as of the date hereof,
(xviii) which arises solely from the sale or the provision of
services to the related Obligor by the Transferor or the Originator, as
applicable, and not by any other Person (in whole or in part), and
(xix) as to which the Agent has not notified the Seller that
the Agent has determined that such Receivable or class of Receivables
is not acceptable as an Eligible Receivable, including, without
limitation, because such Receivable arises under a Contract that is not
acceptable to the Agent.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"Expected Dilution Ratio" means, as of any date, the average of the Dilution
Ratios in respect of the three immediately preceding months.
"Facility Account" means the Seller's Account No. 5690838 at First Chicago.
"Facility Termination Date" means December 28, 2003.
"Falcon Residual" means the sum of the Falcon Transfer Price Reductions.
"Falcon Transfer Price" means, with respect to the assignment by Falcon of one
or more Receivable Interests to the Agent for the benefit of the Investors
pursuant to Section 2.1, the sum of (i) the lesser of (a) the Capital of each
Receivable Interest and (b) the Adjusted Liquidity Price of each Receivable
Interest and (ii) all accrued and unpaid Discount and Funding Charges for such
Receivable Interests.
"Falcon Transfer Price Reduction" means in connection with the assignment of a
Receivable Interest by Falcon to the Agent for the benefit of the Investors, the
positive difference between (i) the Capital of such Receivable Interest and (ii)
the Adjusted Liquidity Price for such Receivable Interest.
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"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. Governments 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.
"Federal Government Obligor" means an Obligor which is the federal government or
a governmental subdivision or agency of the federal government.
"Federal Government Obligor Limit" means 5% of the aggregate Outstanding Balance
of all Eligible Receivables.
"Fee Letter" means that certain letter agreement dated as of the date hereof
between the Seller and the 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.
"Finance Charge Receivable" means a Receivable for the obligation to pay a
Finance Charge.
"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 Falcon.
"Funding Charges" means (i) in respect of each Receivable Interest funded
substantially with Pooled Commercial Paper, the Pooled Funding Charges, and (ii)
in respect of each Receivable Interest funded substantially with Specially
Pooled Paper, the Special Funding Charges.
"Funding Source" means (i) any Investor or (ii) any insurance company, bank or
other financial institution providing liquidity, credit enhancement or back-up
purchase support or facilities to Falcon.
"Government Obligor" means an Obligor which is a government or a governmental
subdivision or agency.
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"Incremental Purchase" means a purchase of one or more Receivable 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 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.
"Intended Characterization" means, for income tax purposes, the characterization
of the acquisition by the Purchasers of Receivable Interests as a loan or loans
by the Purchasers to the Seller secured by the Receivables, the Related Security
and the Collections.
"Interest Expense Coverage Ratio" means the ratio of net income (excluding all
extraordinary gains and losses and without giving effect to FASB 106 and
excluding any net income attributable to Priority Healthcare Corporation), plus
income tax and interest expense (including the allowance for interest used in
computing net lease rental payments under financing leases) for such period over
interest payments due on all indebtedness during such period (including the
allowance for interest used in computing net lease rental payments under
financing leases), all determined on a Consolidated basis.
"Investor Fee" means, for each Investor, a fee agreed to in writing by the Agent
or Falcon and such Investor.
"Investors" means the financial institutions listed on the signature pages of
this Agreement under the heading "Investors" and their respective successors and
assigns.
"LIBO Rate" means the rate per annum equal to the sum of (i) (a) 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 Receivable
Interest to be funded or maintained, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Tranche Period plus (ii)
1.25% per annum. The LIBO Rate shall be rounded, if necessary, to the next
higher 1/16 of 1%.
"Liquidation Day" means, for any Receivable Interest, the earliest to occur of
(i) the day on which the conditions precedent set forth in Section 4.2 are not
satisfied, (ii) any
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Business Day so designated by the Seller or Falcon after the occurrence of the
Termination Date and (iii) the Business Day immediately prior to the occurrence
of a Termination Event set forth in Section 7.1(d).
"Liquidity Termination Date" means December 27, 1999.
"Loss Horizon Ratio" means, as of the last day of any month, a percentage equal
to (i) the aggregate Originator Sales during the two most recently ended
calendar months divided by (ii) the aggregate Outstanding Balance of all
Eligible Receivables at such time.
"Loss Ratio" means, at any time, a percentage equal to the highest three month
rolling average of the Default Ratios during the twelve most recently ended
calendar months.
"Loss Reserve Percentage" means, at any time, the greater of (i) the Loss Ratio
times the Loss Horizon Ratio times 2 and (ii) 15%.
"Loss-to-Liquidation Ratio" means, as of the last day of any month, a percentage
equal to (i) the aggregate Outstanding Balance of all Defaulted Receivables plus
the aggregate Outstanding Balance of all Receivables less than 61 days past due
which became Charged-off Receivables during such month, divided by (ii) the
aggregate Collections received during such month.
"Material Adverse Effect" means a material adverse effect on (i) the financial
condition, business or operations of the Seller, the Transferor or the
Originator, (ii) the ability of the Seller, the Transferor or the Originator to
perform its obligations under any Transaction Document, (iii) the legality,
validity or enforceability of this Agreement, any Transaction Document or any
Collection Account Agreement or Collection Notice relating to a Collection
Account into which a material portion of Collections are deposited, (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 (other than due
to general economic developments in the industry of the Transferor and the
Originator) or of any material portion of the Receivables.
"Minimum Receivables Balance" means, at any time, an amount equal to the
aggregate Capital of the Receivable Interests divided by (i) 1 minus (ii) the
sum, expressed as a decimal, of the Loss Reserve Percentage, the
Discount/Servicing Reserve Percentage and the Dilution Reserve Percentage.
"Monthly Report" means a report, in substantially the form of Exhibit VIII
hereto (appropriately completed), furnished by the Servicer to the Agent
pursuant to Section 6.5.
"Moody's" means Moody's Investors Service, Inc., and any successor thereto.
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"NBD" means NBD Bank, N.A. in its individual capacity and its successors.
"Net Federal Government Obligor Balance" means the lesser of (i) the aggregate
Outstanding Balance of all Eligible Receivables for which the Obligor is a
Federal Government Obligor and (ii) the Federal Government Obligor Limit of the
aggregate Outstanding Balance of all Eligible Receivables.
"Net Income" means with reference to any period, the net income (or loss) of the
Transferor and its Consolidated Subsidiaries computed for such period on a
consolidated basis consistently applied, in accordance with GAAP.
"Net Receivables Balance" means, at any time, the aggregate Outstanding Balance
of the Eligible Receivables at such time reduced by (i) 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, (ii) the
aggregate amount by which the Outstanding Balance of all Eligible Receivables
for which the Obligor is a Federal Government Obligor exceeds the Federal
Government Obligor Limit and (iii) the aggregate amount by which the sum of (a)
the Outstanding Balance of all Eligible Receivables for which the Obligor is a
Government Obligor other than a Federal Government Obligor, plus (b) the Net
Federal Government Obligor Balance, exceeds the Total Government Obligor Limit.
"Net Worth" means total assets minus total liabilities of the Transferor and its
Consolidated Subsidiaries, computed on a consolidated basis consistently
applied, in accordance with generally accepted accounting principals in the
United States.
"Obligor" means a Person obligated to make payments pursuant to a Contract.
"Originator" means Special Services Company, an Indiana corporation.
"Originator Receivable" means a Receivable sold to the Transferor by the
Originator pursuant to the Originator Transfer Agreement.
"Originator Sales" means, in respect of any period, aggregate sales by the
Transferor and the Originator that shall have given rise to Receivables in
accordance with generally accepted accounting principles.
"Originator Transfer Agreement" means that certain Originator Transfer Agreement
of even date herewith between the Transferor, as buyer, and the Originator, as
seller, as the same may be amended, restated, supplemented or otherwise modified
from time to time.
"Other Costs" has the meaning assigned to that term in Section 8.3.
"Outstanding Balance" of any Receivable at any time means the then outstanding
principal balance thereof, which shall exclude Finance Charges.
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"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.
"Pooled Allocation" means, for each Receivable Interest funded substantially
with Pooled Commercial Paper, an amount each day equal to the product of (i) the
Pooled Percentage Share of such Receivable Interest on such day multiplied by
(ii) the aggregate amount of Pooled Funding Charges for such day.
"Pooled Commercial Paper" means Commercial Paper notes of Falcon except (A)
Allocated Commercial Paper, and (B) Specially Pooled Paper.
"Pooled Funding Charges" means, for each day, the sum of (i) discount accrued on
Pooled Commercial Paper on such day, plus (ii) any and all accrued commissions
in respect of placement agents and Commercial Paper dealers in respect of such
Pooled Commercial Paper for such day, plus (iii) issuing and paying agent fees
incurred on such Pooled Commercial Paper for such day, plus (iv) other costs
associated with funding small or odd-lot amounts with respect to all Receivable
Purchase Facilities which are funded by Pooled Commercial Paper for such day,
minus (v) any accrual of income net of expenses received on such day from
investment of collections received under all Receivable Purchase Facilities
funded with Pooled Commercial Paper, minus (vi) any payment received on such day
net of expenses in respect of broken funding costs related to the prepayment of
any Receivables Interest of Falcon pursuant to the terms of any Receivable
Purchase Facilities funded substantially with Pooled Commercial Paper.
"Pooled Percentage Share" means, for each Receivable Interest funded
substantially with Pooled Commercial Paper, a fraction (expressed as a
percentage) the numerator of which is equal to the Capital associated with such
Receivable Interest and the denominator of which is equal to the aggregate
amount of all outstanding capital associated with receivable interests (or
comparable terms used in any Receivable Purchase Facility) held by Falcon which
is funded substantially with Pooled Commercial Paper.
"Potential Termination Event" means an event which, with the passage of time or
the giving of notice, or both, would constitute a Termination Event.
"Pro Rata Share" means, for each Investor, the Commitment of such Investor
divided by the Purchase Limit, adjusted as necessary to give affect to the
application of the terms of Section 2.5.
"Purchase Limit" means the aggregate of the Commitments of the Investors
hereunder.
"Purchase Notice" has the meaning assigned to that term in Section 1.2.
"Purchase Price" means, with respect to any Incremental Purchase of a Receivable
Interest, the amount paid to the Seller for such Receivable Interest.
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"Purchaser" means Falcon or an Investor, as applicable.
"Receivable" means the indebtedness and other obligations owed (at the time it
arises, and before giving effect to any transfer or conveyance contemplated
under the Originator Transfer Agreement, the Transfer Agreement or hereunder) to
the Transferor or the Originator, as applicable, whether constituting an
account, chattel paper, instrument or general intangible, arising in connection
with the sale of goods or the rendering of services by the Transferor or the
Originator, as applicable, and includes, 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.
"Receivable Interest" means, at any time, an undivided percentage ownership
interest associated with a designated amount of Capital, Discount Rate and
Tranche Period selected pursuant to Section 1.3 in (i) all Receivables arising
prior to the time of the most recent computation or recomputation of such
undivided interest pursuant to Section 1.4, (ii) all Related Security with
respect to such Receivables, and (iii) all Collections with respect to, and
other proceeds of, such Receivables. Such undivided percentage interest in the
Receivables shall equal:
C
----
NRB - (R * NRB)
where:
C = the Capital of such Receivable Interest.
R = the sum, expressed as a decimal, of the
Loss Reserve Percentage, the
Discount/Servicing Reserve Percentage and
the Dilution Reserve Percentage.
NRB = the Net Receivables Balance.
"Receivable Purchase Facility" means any receivables purchase agreement or other
similar contracted arrangement to which Falcon is a party relating to the
transfer, purchase or funding of receivables or other financial assets.
"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
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rights) relating to such Receivable, any Related Security therefor and the
related Obligor.
"Reduction Percentage" means, for any Receivable Interest acquired by the
Investors from Falcon for less than the Capital of such Receivable Interest, a
percentage equal to a fraction the numerator of which is the Falcon Transfer
Price Reduction for such Receivable Interest and the denominator of which is the
Capital of such Receivable Interest.
"Reference Bank" means First Chicago or such other bank as the Agent shall
designate with the consent of the Seller.
"Reinvestment" has the meaning assigned to that term in Section 1.6.
"Related Security" means, with respect to any Receivable:
(i) all of the Seller's interest in the inventory
and goods (including returned or repossessed inventory or goods), if
any, the financing or lease of which by the Transferor or the
Originator, as applicable, 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 Contract
related to such Receivable or otherwise, together with all financing
statements and security agreements describing any collateral securing
such Receivable,
(iii) all guaranties, letters of credit, 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 Receivables,
(v) all Records related to such Receivables,
(vi) all of the Seller's right, title and interest
in, to and under the Transfer Agreement, the Originator Transfer
Agreement and each instrument, document or agreement executed in
connection therewith in favor of or otherwise for the benefit of the
Seller; and
(vii) all proceeds of any of the foregoing.
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"Reporting Date" means the 15th calendar day of each month or, if such day is
not a Business Day, the next following calendar day that is a Business Day.
"Required Investors" means, at any time, Investors with Commitments in excess of
66-2/3% of the Purchase Limit; provided, however that if the Commitment of NBD
or any of its Affiliates (including, without limitation, First Chicago) is
included in the calculation for purposes of this definition, then "Required
Investors" shall mean Investors with Commitments in excess of 66-2/3% of the
Purchase Limit plus at least two (2) Investors other than NBD or any of its
Affiliates (including, without limitation, First Chicago).
"Reserve Requirement" means the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and 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.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, or any successor thereto.
"Section" means a numbered section of this Agreement, unless another document is
specifically referenced.
"Seller Interest" means, at any time, an undivided percentage ownership interest
of the Seller in the Receivables, Related Security and all Collections with
respect thereto equal to (i) one, minus (ii) the aggregate of the Receivable
Interests.
"Servicer" means at any time the Person (which may be the Agent) then authorized
pursuant to Section 6.1 to service, administer and collect Receivables.
"Servicing Fee" has the meaning specified in Section 6.6.
"Settlement Date" means (i) the 15th day of each calendar month, or if such 15th
day is not a Business Day, the next succeeding Business Day, and (ii) during the
Commitment Reduction Period, or at any time from and after the Termination Date
or the occurrence of any Termination Event, each additional day designated as
such by the Agent.
"Special Concentration Limit" means, at any time, for each of Eckerd
Corporation, CVS Corporation, NCS Healthcare, Inc. and Peyton's, 10% of the
aggregate Outstanding Balance of all Eligible Receivables.
"Special Funding Charges" means, for each day, the sum of (i) discount accrued
on Specially Pooled Paper on such day, plus (ii) any and all accrued commissions
in respect of placement agents and Commercial Paper dealers in respect of such
Specially Pooled Paper for such day, plus (iii) issuing and paying agent fees
incurred on such Specially Pooled Paper for such day, plus (iv) other costs
associated with funding small or odd-lot
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amounts with respect to all Receivable Purchase Facilities which are funded by
Specially Pooled Paper for such day, minus (v) any accrual of income net of
expenses received on such day from investment of collections received under all
Receivable Purchase Facilities funded with Specially Pooled Paper, minus (vi)
any payment received on such day net of expenses in respect of broken funding
costs related to the prepayment of any Receivable Interest of Falcon pursuant to
the terms of any Receivable Purchase Facility funded substantially with
Specially Pooled Paper.
"Special Percentage Share" means, for each Receivable Interest funded
substantially with Specially Pooled Paper, a fraction (expressed as a
percentage) the numerator of which is equal to the Capital associated with
such Receivable Interest and the denominator of which is equal to the aggregate
amount of all outstanding capital associated with receivable interests (or
comparable terms used in any Receivable Purchase Facility) held by Falcon which
is funded substantially with Specially Pooled Paper.
"Special Pooled Period" means any period commencing on (i) each March 15th and
ending on the following April 5th, (ii) each June 15th and ending on the
following July 5th, (iii) each September 15th and ending on the following
October 5th, or (iv) each December 15th and ending on the following January 5th.
If the last day of any Special Pooled Period shall not be a Business Day, the
last day of such Special Pooled Period shall be the next succeeding Business
Day.
"Specially Pooled Allocation" means, for each Receivable Interest funded
substantially with Specially Pooled Paper, an amount each day equal to the
product of (i) the Special Percentage Share of such Receivable Interest on such
day multiplied by the (ii) the aggregate amount of Special Funding Charges for
such day.
"Specially Pooled Paper" means the aggregate of all Commercial Paper notes of
Falcon issued during any Special Pooled Period and allocated by the Agent to
Specially Pooled Paper in accordance with Section 1.9(b) hereof. Specially
Pooled Paper will not include Pooled Commercial Paper or Allocated Commercial
Paper at any time.
"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 the Seller.
"Termination Date" means, the earliest of (i) the Facility Termination Date,
(ii) the Liquidity Termination Date, (iii) the date of the declaration or
automatic occurrence of the Termination Date pursuant to Section 7.1 and (iv)
the date designated by the Seller or the Transferor upon 30 Business Days' prior
written notice to the Agent; provided that, solely with respect to any
Receivable Interest of Falcon, "Termination Date" shall
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in addition be any date designated by Falcon as such in a notice given to the
Seller and the Agent.
"Termination Event" has the meaning specified in Article VII.
"Total Debt" means all outstandings for borrowed money exclusive of the debt
associated with the transactions contemplated hereunder.
"Total Government Obligor Limit" means 10% of the aggregate Outstanding Balance
of all Eligible Receivables.
"Tranche Period" means, with respect to any Receivable Interest:
(a) if the Discount Rate with respect to such Receivable Interest is
the CP Rate, the Accrual Period;
(b) if Discount for such Receivable Interest is calculated on the basis
of the LIBO Rate, a period of one, two or three months, or such other period
as may be mutually agreeable to the Agent and the Seller, commencing on a
Business Day selected by the Seller or the 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; and
(c) if Discount for such Receivable Interest is calculated on the basis
of the Base Rate, a period of 30 days commencing on a Business Day selected
by the Seller.
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 Receivable Interest of which commences before the Termination Date and would
otherwise end on a date occurring after the Termination Date, such Tranche
Period shall end on the Termination Date. The duration of each Tranche Period
which commences after the Termination Date shall be of such duration as selected
by the Agent.
"Transaction Documents" means, collectively, this Agreement, the Transfer
Agreement, the Originator Transfer Agreement, the Fee Letter, each Collection
Account Agreement and all other instruments, documents and agreements executed
and delivered by the Seller, the Transferor or the Originator in connection
herewith.
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"Transfer Agreement" means that certain Transfer Agreement of even date herewith
between the Seller, as buyer, and the Transferor, as seller, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Transferor" means Bindley Western Industries, Inc., an Indiana corporation.
"UCC" means the Uniform Commercial Code as from time to time in effect in the
specified jurisdiction.
"Unauthorized Deduction" means a deduction taken by an Obligor of the
Transferor's or the Originator's bulk business from the total amount of an
invoice, without the authorization of the Transferor or the Originator, as
applicable.
"Year 2000 Issues" means anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to effectively
handle data including dates on and after January 1, 2000, as such inability
affects the business, operations, and financial condition of the Seller, the
Servicer, the Transferor, or the Originator and of the Seller's, the Servicer's
the Transferor's or the Originator's material customers, suppliers and vendors.
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 Illinois, and not specifically defined
herein, are used herein as defined in such Article 9.
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EXHIBIT II
PRINCIPAL PLACE OF BUSINESS OF THE SELLER; LOCATION(S) OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBERS
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EXHIBIT III
LOCK-BOXES;
CONCENTRATION ACCOUNTS; AND DEPOSITARY ACCOUNTS
65
67
EXHIBIT IV
FORM OF COMPLIANCE CERTIFICATE
To: The First National Bank of Chicago, as Agent
This Compliance Certificate is furnished pursuant to that certain Receivables
Purchase Agreement dated as of December 28, 1998, among Bindley Western Funding
Corporation (the "Seller"), Falcon Asset Securitization Corporation, the
financial institutions party thereto and The First National Bank of Chicago, as
agent (the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the 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 the 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 a
Termination Event or Potential Termination 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 below; and
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.
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 the Seller has taken, is taking, or proposes to
take with respect to each such condition or event:
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 , 19 .
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SCHEDULE I TO COMPLIANCE REPORT
A. Schedule of Compliance as of , 19 with Sections 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:___________
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EXHIBIT V
FORM OF COLLECTION ACCOUNT AGREEMENT
[On letterhead of Seller]
19
------
[Lock-Box Bank/Concentration Bank/Depositary Bank]
Re: [ORIGINATOR]
Bindley Western Industries, Inc.
Bindley Western Funding Corporation
Ladies and Gentlemen:
You have exclusive control of P.O. Box # in [city, state, zip code] (the
"Lock-Box") for the purpose of receiving mail and processing payments therefrom
pursuant to that certain [name of lock-box agreement) between you and
[ORIGINATOR][Bindley Western Industries, Inc.] 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 our checking account no.
maintained with you in the name of [ORIGINATOR][Bindley Western Industries,
Inc.] (the "Lock-Box Account").
[ORIGINATOR][Bindley Western Industries, Inc.], hereby transfers and assigns all
of its right, title and interest in and to, and exclusive ownership and control
over, the Lock-Box and the Lock-Box Account to Bindley Western Funding
Corporation (the "Seller"). We hereby request that the name of the Lock-Box
Account be changed to Bindley Western Funding Corporation, as "Collection Agent"
for the benefit of The First National Bank of Chicago ("FNBC"), as agent under
that certain Receivables Purchase Agreement (the "Receivables Purchase
Agreement") dated as of December [__], 1998 among the Seller, Falcon Asset
Securitization Corporation, certain financial institutions parties thereto and
FNBC.
The Seller hereby irrevocably instructs you, and you hereby agree, that upon
receiving notice from 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 agent (or any
designee of FNBC) and FNBC will have exclusive ownership of and access to such
Lock-Box Account, and neither the Seller nor any of our affiliates will have any
control of such 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
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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 us will be sent to
FNBC at the following address:
The First National Bank of Chicago
Suite , 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 agent will have all rights
and remedies given to us under the Agreement. We agree, 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 agent under
the Receivables Purchase Agreement, and will not be subject to deduction,
set-off, banker's lien or any other right you or any other party may have
against us, 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 Illinois. 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. All references herein to "we" or "us"
refer to [ORIGINATOR][Bindley Western Industries, Inc.] and Bindley Western
Funding Corporation.
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.
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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,
[ORIGINATOR][BINDLEY WESTERN INDUSTRIES,
By:
Name:
-------------------
Title
-------------------------
BINDLEY WESTERN FUNDING CORPORATION
By:
Name:
--------------------
Title
-------------------------
Acknowledged and agreed to
this day of
[COLLECTION BANK]
By:
Name:
------------------------
Title:
Acknowledged and agreed to
this day of , 19
THE FIRST NATIONAL BANK OF
CHICAGO (for itself and
as agent)
By:
Name:
----------------------
Title:
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---------------
ANNEX A
FORM OF COLLECTION NOTICE
[On letterhead of FNBC]
, 19
--------
[Collection Bank/Depositary Bank/Concentration Bank]
Re: Bindley Western Funding Corporation
Ladies and Gentlemen:
We hereby notify you that we are exercising our rights pursuant to that certain
letter agreement among [ORIGINATOR][Bindley Western Industries, Inc.], Bindley
Western 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 Bindley Western Funding Corporation on our
behalf.
We appreciate your cooperation in this matter.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
(for itself and as agent)
By:
Title:
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EXHIBIT VI
CREDIT AND COLLECTION POLICY
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EXHIBIT VII
FORM OF CONTRACT(S)
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EXHIBIT VIII
FORM OF MONTHLY REPORT
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EXHIBIT IX
FORM OF PURCHASE NOTICE
[Date]
The First National Bank of Chicago
as Agent for the Purchasers parties
to the Receivables Purchase Agreement
referred to below
Suite
One First National Plaza
Chicago Illinois 60670
Attention: Asset-Backed Markets
Gentlemen:
The undersigned, BINDLEY WESTERN FUNDING CORPORATION, refers
to the Receivables Purchase Agreement, dated as of December 28, 1998 (the
"Receivables Purchase Agreement", the terms defined therein being used herein as
therein defined), among the undersigned, Falcon Asset Securitization Corporation
("Falcon"), certain Investors parties thereto and The First National Bank of
Chicago, as Agent for Falcon and such Investors (Falcon and Investors,
collectively, the "Purchasers"), and hereby gives you notice irrevocably,
pursuant to Section 1.2 of the Receivables Purchase Agreement, that the
undersigned hereby requests a purchase under the Receivables Purchase Agreement,
and in that connection sets forth below the information relating to such
purchase (the "Proposed Purchase") as required by Section 1.2 of the Receivables
Purchase Agreement:
(i) The Business Day of the Proposed
Purchase is , 19 .
(ii) The requested Purchase Price in
respect of the Proposed Purchase is $ .
(iii) The requested Purchaser[s] in respect of the
Proposed Purchase [is Falcon] [are the Investors].
(iii) The duration of the initial Tranche Period for the
Proposed Purchase is [days] [months][the
Accrual Period].
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(iv) The Discount Rate related to such
initial Tranche Period is requested to be the
[CP][LIBO] [Base] Rate [and is requested to be
funded with Specially Pooled Paper in accordance
with Section 1.9(b)].
The undersigned hereby certifies that the conditions precedent in
Section 4.2 of the Receivables Purchase Agreement are satisfied, including,
without limitation, 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):
(A) the representations and warranties set forth in Article III of
the Receivables Purchase Agreement are correct on and as of
such date, as though made on and as of such date;
(B) no event has occurred, or would result from the Proposed
Purchase that will constitute a Termination Event, and no
event has occurred and is continuing, or would result from
such Proposed Purchase, that would constitute a Potential
Termination Event; and
(C) the Liquidity Termination Date shall not have occurred, the
aggregate Capital of all Receivable Interests shall not exceed
the Purchase Limit and the aggregate Receivable Interests
shall not exceed 100%.
Very truly yours,
BINDLEY WESTERN FUNDING CORPORATION
By:
--------------------------------
Name:
--------------------------
Title:
--------------------------
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SCHEDULE A
[TO BE COMPLETED]
DOCUMENTS AND RELATED ITEMS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
1. Copy of the Resolutions of the Board of Directors of the Seller
certified by its Secretary authorizing the Seller's execution, delivery
and performance of this Agreement and the other documents to be
delivered by it thereunder.
2. Articles or Certificate of Incorporation of the Seller certified by the
Secretary of State of the jurisdiction of incorporation of the Seller
on or within thirty (30) days prior to the initial Purchase.
3. Good Standing Certificate for the Seller issued by the Secretaries of
State of each jurisdiction where it has material operations.
4. A certificate of the Secretary of the Seller certifying (i) the names
and signatures of the officers authorized on its behalf to execute the
Agreement and any other documents to be delivered by it thereunder and
(ii) a copy of the Seller's By-Laws.
5. Time stamped receipt copies of proper financing statements, duly filed
under the UCC on or before the date of such initial Purchase in all
jurisdictions as may be necessary or, in the opinion of the Agent,
desirable, under the UCC of all appropriate jurisdictions or any
comparable law in order to perfect the ownership interests contemplated
by the Agreement.
6. Time stamped receipt copies of proper UCC termination statements, if
any, necessary to release all security interests and other rights of
any Person in the Receivables, Contracts or Related Security previously
granted by the Seller.
7. Executed copy of the Collection Account Agreements.
8. A favorable opinion of legal counsel for the Seller reasonably
acceptable to the Agent which addresses the following matters and such
other matters as the Agent may reasonably request:
-- The Seller is a corporation duly incorporated,
validly existing, and in good standing under the
laws of its state of incorporation.
-- The Seller has all requisite authority to conduct
its business in each jurisdiction where failure to
be so qualified would have a material adverse effect
on the Seller's business.
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-- The execution and delivery by the Seller of
the Agreement and Collection Account Agreements and
its performance of its obligations thereunder have
been duly authorized by all necessary corporate
action and proceedings on the part of the Seller and
will not:
(a) require any action by or in
respect of, or filing with, any governmental
body, agency or official (other than the
filing of UCC financing statements);
(b) contravene, or constitute a
default under, any provision of applicable
law or regulation or of its Articles of
Incorporation or By-Laws or of any
agreement, judgment, injunction, order,
decree or other instrument binding upon the
Seller; or
(c) result in the creation or
imposition of any Adverse Claim on assets of
the Seller or any of its Subsidiaries
(except as contemplated by the Agreement).
-- The Agreement and Collection Account Agreements have
been duly executed and delivered by the Seller and
constitute the legal, valid, and binding obligation
of the Seller enforceable in accordance with their
terms, except to the extent the enforcement thereof
may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights
generally and subject also to the availability of
equitable remedies if equitable remedies are sought.
-- the Seller has a valid and unencumbered
ownership interest in each Receivable in existence
as of the date of the Agreement and, if a Purchase
is made as of such date, the Agent for the benefit
of the Purchasers shall acquire a first perfected
ownership interest in each Receivable, the related
Collections and the Related Security.
-- To the best of the opinion givers knowledge, there
is no action, suit or other proceeding against the
Seller or any Affiliate of the Seller, which would
materially adversely affect the business or
financial condition of the Seller and its Affiliates
taken as a whole or which would materially adversely
affect the ability of the Seller to perform its
obligations under the Agreement.
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9. If requested by Falcon or the Agent, a favorable opinion of legal
counsel for each Investor, reasonably acceptable to the Agent which
addresses the following matters:
-- The Agreement has been duly authorized by all
necessary corporate action of the Investor.
-- The Agreement has been duly executed and delivered
by the Investor and, assuming due authorization,
execution and delivery by each of the other parties
thereto, constitutes a legal, valid and binding
obligation of the Investor, enforceable against the
Investor in accordance with its terms.
10. A Compliance Certificate.
11. Written information from the Borrower, satisfactory to each Agent and
each Lender, indicating that the Borrower (a) has made a full and
complete assessment of the Year 2000 Issues; (b) has a realistic and
achievable program for remediating the Year 2000 Issues on a timely
basis, and (c) does not reasonably anticipate that Year 2000 Issues
will have a Material Adverse Effect.
12. The Fee Letter.
13. A direction letter executed by the Seller authorizing the Agent, and
directing warehousemen to allow the Agent, to inspect and make copies
from Seller's books and records maintained at off-site data processing
or storage facilities.
14. A Monthly Report as at , 19 .
15. Executed copies of (i) all consents from and authorizations by any
Persons and (ii) all waivers and amendments to existing credit
facilities, that are necessary in connection with the Agreement.
16. For each Purchaser that is not incorporated under the laws of the
United States of America, or a state thereof, two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, certifying
in either case that such Purchaser is entitled to receive payments
under the Agreement without deduction or withholding of any United
States federal income taxes.
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TABLE OF CONTENTS
PAGE
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES Page 1
Section 1.1. Purchase Facility Page 1
Section 1.2. Making Purchases Page 2
Section 1.3. Selection of Tranche Periods and Discount Rates Page 2
Section 1.4. Percentage Evidenced by Receivable Interests Page 3
Section 1.5. Dividing or Combining Receivable Interests Page 3
Section 1.6. Reinvestment Purchases Page 3
Section 1.7. Liquidation Settlement Procedures. Page 3
Section 1.8. Deemed Collections Page 4
Section 1.9. Discount and Funding Charges; Payments and
Computations, Etc Page 4
Section 1.10. Seller Interest Page 5
Section 1.11. Seller's Option to Repurchase Page 6
Section 1.12 Commitment of NBD Bank, N.A.. Page 6
ARTICLE II LIQUIDITY FACILITY Page 7
Section 2.1. Transfer to Investors Page 7
Section 2.2. Transfer Price Reduction Discount Page 7
Section 2.3. Payments to Falcon Page 7
Section 2.4. Limitation on Commitment to Purchase from Falcon Page 7
Section 2.5. Defaulting Investors Page 8
ARTICLE III REPRESENTATIONS AND WARRANTIES Page 8
Section 3.1. Seller Representations and Warranties Page 8
Section 3.2. Investor Representations and Warranties Page 12
ARTICLE IV CONDITIONS OF PURCHASES Page 12
Section 4.1. Conditions Precedent to Initial Purchase Page 12
Section 4.2. Conditions Precedent to All Purchases and
Reinvestments Page 12
ARTICLE V COVENANTS Page 13
Section 5.1. Affirmative Covenants of Seller Page 13
Section 5.2. Negative Covenants of Seller Page 19
ARTICLE VI ADMINISTRATION AND COLLECTION Page 21
Section 6.1. Designation of Servicer Page 21
Section 6.2. Duties of Servicer Page 22
Section 6.3. Collection Notices Page 23
Section 6.4. Responsibilities of the Seller Page 24
Section 6.5. Reports Page 24
Section 6.6. Servicer Fee Page 24
82
ARTICLE VII TERMINATION EVENTS Page 24
Section 7.1. Termination Event Page 24
ARTICLE VIII INDEMNIFICATION Page 26
Section 8.1. Indemnities by the Seller Page 26
Section 8.2. Increased Cost and Reduced Return Page 29
Section 8.3. Other Costs and Expenses Page 30
Section 8.4. Allocations Page 30
ARTICLE IX THE AGENT Page 30
Section 9.1. Authorization and Action Page 30
Section 9.2. Delegation of Duties Page 31
Section 9.3. Exculpatory Provisions Page 31
Section 9.4. Reliance by Agent Page 32
Section 9.5. Non-Reliance on Agent and Other Purchasers Page 32
Section 9.6. Reimbursement and Indemnification Page 32
Section 9.7. Agent in its Individual Capacity Page 32
Section 9.8. Successor Agent Page 33
ARTICLE X ASSIGNMENTS; PARTICIPATIONS Page 33
Section 10.1. Assignments Page 33
Section 10.2. Participations Page 34
ARTICLE XI MISCELLANEOUS Page 34
Section 11.1. Waivers and Amendments Page 34
Section 11.2. Notices Page 35
Section 11.3. Ratable Payments Page 35
Section 11.4. Protection of Ownership Interests
of the Purchasers Page 36
Section 11.5. Confidentiality Page 36
Section 11.6. Bankruptcy Petition Page 37
Section 11.7. Limitation of Liability Page 37
SECTION 11.8. CHOICE OF LAW Page 37
SECTION 11.9. CONSENT TO JURISDICTION Page 37
SECTION 11.10. WAIVER OF JURY TRIAL Page 38
Section 11.11. Integration; Survival of Terms Page 38
Section 11.12. Counterparts; Severability Page 38
Section 11.13. First Chicago Roles Page 39
Section 11.14. Characterization Page 39
83
EXHIBITS AND SCHEDULES
EXHIBIT I DEFINITIONS
EXHIBIT II PRINCIPAL PLACE OF BUSINESS OF THE SELLER;
LOCATION(S) OF RECORDS; FEDERAL EMPLOYER
IDENTIFICATION NUMBERS
EXHIBIT III LOCK-BOXES; CONCENTRATION ACCOUNTS; DEPOSITARY
ACCOUNTS
EXHIBIT IV FORM OF COMPLIANCE CERTIFICATE
EXHIBIT V FORM OF COLLECTION ACCOUNT AGREEMENT
EXHIBIT VI CREDIT AND COLLECTION POLICY
EXHIBIT VII FORM OF CONTRACT(S)
EXHIBIT VIII FORM OF MONTHLY REPORT
EXHIBIT IX FORM OF PURCHASE NOTICE
SCHEDULE A LIST OF DOCUMENTS TO BE DELIVERED TO THE AGENT PRIOR
TO THE INITIAL PURCHASE