EX-10.3






Exhibit 10.3




EXECUTION VERSION




 





SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT




by and among




MEDCO HEALTH RECEIVABLES, LLC

as Seller




MEDCO HEALTH SOLUTIONS, INC.

as Servicer




The Persons Parties hereto as

Conduit Purchasers and Committed Purchasers




CITICORP NORTH AMERICA, INC.

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH

THE BANK OF NOVA SCOTIA

as Managing Agents




and




CITICORP NORTH AMERICA, INC.

as Administrative Agent




Dated as of July 28, 2008




 




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	Page	 
	ARTICLE I
	 	 	 	 
	 
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	SECTION 1.01 Certain Defined Terms
	 	 	1	 
	SECTION 1.02 Other Terms
	 	 	2	 
	SECTION 1.03 Amendment and Restatement
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 
	 	 	 	 
	AMOUNTS AND TERMS OF THE PURCHASES
	 	 	 	 
	 
	 	 	 	 
	SECTION 2.01 Purchase Facility
	 	 	2	 
	SECTION 2.02 Making Incremental Purchases
	 	 	3	 
	SECTION 2.03 Receivable Interest Computation
	 	 	5	 
	SECTION 2.04 Application of Collections Prior to Termination Date
	 	 	5	 
	SECTION 2.05 Application of Collections After Termination Date
	 	 	7	 
	SECTION 2.06 General Settlement Procedures
	 	 	9	 
	SECTION 2.07 Yield and Fees
	 	 	9	 
	SECTION 2.08 Payments and Computations, Etc
	 	 	10	 
	SECTION 2.09 Dividing or Combining Receivable Interests
	 	 	10	 
	SECTION 2.10 Breakage Costs
	 	 	11	 
	SECTION 2.11 Illegality
	 	 	11	 
	SECTION 2.12 Inability to Determine Eurodollar Rate
	 	 	11	 
	SECTION 2.13 Indemnity for Reserves and Expenses
	 	 	12	 
	SECTION 2.14 Indemnity for Taxes
	 	 	13	 
	SECTION 2.15 Security Interest
	 	 	16	 
	SECTION 2.16 Optional Liquidation
	 	 	16	 
	SECTION 2.17 Optional Repurchase
	 	 	17	 
	SECTION 2.18 Termination of Purchaser Groups
	 	 	17	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 
	 	 	 	 
	CONDITIONS OF PURCHASES
	 	 	 	 
	 
	 	 	 	 
	SECTION 3.01 Conditions Precedent to Agreement
	 	 	18	 
	SECTION 3.02 Conditions Precedent to All Purchases
	 	 	18	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	 
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
	 	 	 	 
	 
	 	 	 	 
	SECTION 4.01 Representations and Warranties of the Seller
	 	 	19	 






i









 






	 	 	 	 	 
	 	 	 	Page	 
	SECTION 4.02 Representations and Warranties of the Servicer
	 	 	22	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	 
	 	 	 	 
	COVENANTS
	 	 	 	 
	 
	 	 	 	 
	SECTION 5.01 Covenants of the Seller
	 	 	23	 
	SECTION 5.02 Audits
	 	 	32	 
	SECTION 5.03 Additional Covenants of the Servicer
	 	 	33	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	 	 	 	 
	ADMINISTRATION AND COLLECTION OF RECEIVABLES
	 	 	 	 
	 
	 	 	 	 
	SECTION 6.01 Designation of Servicer
	 	 	35	 
	SECTION 6.02 Duties of Servicer
	 	 	35	 
	SECTION 6.03 Reports
	 	 	36	 
	SECTION 6.04 Certain Rights of the Administrative Agent
	 	 	37	 
	SECTION 6.05 Rights and Remedies
	 	 	38	 
	SECTION 6.06 Indemnities by the Servicer
	 	 	39	 
	SECTION 6.07 Administrative Agent Account
	 	 	40	 
	SECTION 6.08 Servicer Replacement Event
	 	 	42	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	 
	 	 	 	 
	TERMINATION EVENTS
	 	 	 	 
	 
	 	 	 	 
	SECTION 7.01 Termination Events
	 	 	43	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	 
	 	 	 	 
	THE ADMINISTRATIVE AGENT
	 	 	 	 
	 
	 	 	 	 
	SECTION 8.01 Authorization and Action
	 	 	45	 
	SECTION 8.02 Agent’s Reliance, Etc
	 	 	45	 
	SECTION 8.03 CNAI and Affiliates
	 	 	46	 
	SECTION 8.04 Indemnification of Administrative Agent
	 	 	46	 
	SECTION 8.05 Delegation of Duties
	 	 	46	 
	SECTION 8.06 Action or Inaction by Administrative Agent
	 	 	47	 
	SECTION 8.07 Notice of Events of Termination; Action by Administrative Agent
	 	 	47	 
	SECTION 8.08 Non-Reliance on Administrative Agent and Other Parties
	 	 	47	 
	SECTION 8.09 Successor Administrative Agent
	 	 	48	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	 
	 	 	 	 
	THE MANAGING AGENTS
	 	 	 	 
	 
	 	 	 	 
	SECTION 9.01 Authorization and Action
	 	 	48	 






ii









 






	 	 	 	 	 
	 	 	 	Page	 
	SECTION 9.02 Managing Agent’s Reliance, Etc
	 	 	49	 
	SECTION 9.03 Managing Agent and Affiliates
	 	 	49	 
	SECTION 9.04 Indemnification of Managing Agents
	 	 	49	 
	SECTION 9.05 Delegation of Duties
	 	 	50	 
	SECTION 9.06 Action or Inaction by Managing Agent
	 	 	50	 
	SECTION 9.07 Notice of Events of Termination
	 	 	50	 
	SECTION 9.08 Non-Reliance on Managing Agent and Other Parties
	 	 	50	 
	SECTION 9.09 Successor Managing Agent
	 	 	51	 
	SECTION 9.10 Reliance on Managing Agent
	 	 	51	 
	 
	 	 	 	 
	ARTICLE X
	 	 	 	 
	 
	 	 	 	 
	INDEMNIFICATION
	 	 	 	 
	 
	 	 	 	 
	SECTION 10.01 Indemnities by the Seller
	 	 	52	 
	 
	 	 	 	 
	ARTICLE XI
	 	 	 	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	SECTION 11.01 Amendments, Etc
	 	 	54	 
	SECTION 11.02 Notices, Etc
	 	 	55	 
	SECTION 11.03 Assignability
	 	 	56	 
	SECTION 11.04 Costs and Expenses
	 	 	60	 
	SECTION 11.05 No Proceedings
	 	 	61	 
	SECTION 11.06 Confidentiality
	 	 	61	 
	SECTION 11.07 Amendments to Financial Covenants
	 	 	62	 
	SECTION 11.08 GOVERNING LAW
	 	 	63	 
	SECTION 11.09 Execution in Counterparts
	 	 	63	 
	SECTION 11.10 Integration; Binding Effect; Survival of Termination
	 	 	63	 
	SECTION 11.11 Consent to Jurisdiction
	 	 	63	 
	SECTION 11.12 WAIVER OF JURY TRIAL
	 	 	64	 
	SECTION 11.13 Right of Setoff
	 	 	64	 
	SECTION 11.14 Ratable Payments
	 	 	64	 
	SECTION 11.15 Limitation of Liability
	 	 	64	 
	SECTION 11.16 Intent of the Parties
	 	 	65	 






SCHEDULES




	 	 	 	 	 	 	 
	SCHEDULE I

	 	-
	 	Definitions
	 	 
	SCHEDULE II

	 	-
	 	Purchaser Groups	 	 
	SCHEDULE III

	 	-
	 	CP Rates	 	 
	SCHEDULE IV

	 	-
	 	Deposit Accounts and Deposit Account Banks	 	 
	SCHEDULE V

	 	-
	 	Credit and Collection Policy	 	 
	SCHEDULE VI

	 	-
	 	Financial Covenants	 	 






iii









 






	 	 	 	 	 	 	 
	SCHEDULE VII

	 	-
	 	Reviewed Contracts	 	 
	SCHEDULE VIII

	 	-
	 	Accounts Payable Deduction Amount and Rebate
Deduction Amount	 	 






iv









 






ANNEXES




	 	 	 	 	 	 	 
	ANNEX A-1

	 	-
	 	Form of Monthly Report
	 	 
	ANNEX A-2

	 	-
	 	Form of Weekly Report	 	 
	ANNEX B-1

	 	-
	 	Form of Control Agreement (Deposit Account)	 	 
	ANNEX B-2

	 	-
	 	Form of Control Agreement (Administrative Agent Account)	 	 
	ANNEX C

	 	-
	 	Form of Assignment and Acceptance	 	 
	ANNEX D

	 	-
	 	Form of Funds Transfer Letter	 	 
	ANNEX E

	 	-
	 	Form of Joinder Agreement	 	 







v











 





SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT




Dated as of July 28, 2008




          SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or
otherwise modified and in effect from time to time, this “Agreement”), dated as of July 28,
2008, by and among (i) MEDCO HEALTH RECEIVABLES, LLC, a Delaware limited liability company, as
Seller, (ii) MEDCO HEALTH SOLUTIONS, INC., a Delaware corporation, as initial Servicer, (iii) the
Conduit Purchasers from time to time parties hereto, (iv) the Committed Purchasers from time to
time parties hereto, (v) CITICORP NORTH AMERICA, INC., THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW
YORK BRANCH and THE BANK OF NOVA SCOTIA, as Managing Agents and (vi) CITICORP NORTH AMERICA, INC.,
as Administrative Agent.




PRELIMINARY STATEMENTS




     A. The Seller has acquired, and may continue to acquire, Receivables from the Originator
pursuant to the Originator Purchase Agreement by purchase or as a contribution to the capital of
the Seller.



     B. The Seller may desire to convey, transfer and assign, from time to time, undivided
percentage interests in the Receivables (referred to herein as “Receivable Interests”) on the terms
and conditions of this Agreement.



     C. The Conduit Purchasers may, in their sole discretion, purchase the Receivable Interests so
offered for sale from time to time, and if a Conduit Purchaser in any Purchaser Group elects not to
make any such purchase, the Committed Purchasers in such Purchaser Group have agreed that they
shall make such purchase, in each case subject to the terms and conditions of this Agreement.



     D. The Seller, Conduit Purchasers, the Bank Purchasers, the Managing Agents, Administrative
Agent and the Servicer are parties the Amended and Restated Receivables Purchase Agreement, dated
as of September 22, 2003 (as amended prior to the date hereof, the “Existing RPA”).



     E. On the terms and conditions set forth herein, the parties hereto have agreed to amend and
restate the Existing RPA in its entirety.



          Accordingly, the parties hereby agree as follows:




ARTICLE I




DEFINITIONS




          SECTION 1.01 Certain Defined Terms. Capitalized terms used and not otherwise defined
herein have the meanings specified on Schedule I.




 









 








          SECTION 1.02 Other Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York, as in effect on the date hereof and not specifically defined herein, are used herein as
defined in such Article 9. Unless otherwise expressly indicated, all references herein to
“Article,” “Section,” “Schedule” or “Annex” means articles and sections of, and schedules and
annexes to, this Agreement. Headings are for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision hereof. Any reference to any Law shall be
deemed to be a reference to such Law as the same may be amended or re-enacted from time to time.
Any reference to any Person appearing in any of the Transaction Documents shall include its
successors and permitted assigns.




          SECTION 1.03 Amendment and Restatement. Subject to the satisfaction of the conditions
precedent set forth in Section 3.01, this Agreement amends and restates the Existing RPA in its
entirety. This Agreement is not intended to constitute a novation of any obligations under the
Existing RPA. Upon the effectiveness of this Agreement in accordance with Section 3.01 (the date
of such effectiveness being the “Effective Date”), each reference to the Existing RPA in
any other document, instrument or agreement executed and/or delivered in connection therewith shall
mean and be a reference to this Agreement.




          SECTION 1.04 Adjustment of Capital. The parties hereto acknowledge that an adjustment
to the Capital held by the respective Purchaser Groups is required to be made on the Effective Date
in order to ensure that the Capital held by the Purchasers in each Purchaser Group is proportional
to the Conduit Purchase Limit(s) of the Conduit Purchaser(s) in each Purchaser Group. Accordingly,
on the Effective Date, the Seller shall request a special non-pro rata purchase of Receivable
Interests to be made by the Purchaser Group for which Scotiabank acts as Managing Agent in an
amount such that, after giving effect to such purchase and all other purchases to be made hereunder
on such date, the Capital held by the Purchasers in the respective Purchaser Groups shall be
proportional to the Conduit Purchase Limit(s) of the Conduit Purchaser(s) in each such Purchaser
Group.




ARTICLE II



AMOUNTS AND TERMS OF THE PURCHASES




          SECTION 2.01 Purchase Facility. (a) The Seller may, at its option from time to time
prior to the Termination Date, offer to sell and assign Receivable Interests to the Purchasers in
each Purchaser Group at the applicable Purchase Price specified pursuant to Section 2.02 (each such
sale and assignment, an “Incremental Purchase”). On the terms and conditions set forth
herein, (i) the Conduit Purchasers, ratably, in accordance with their respective Conduit Purchase
Limits, may, in their sole discretion, purchase the Receivable Interests so offered for sale by the
Seller and (ii) if a Conduit Purchaser in any Purchaser Group declines to purchase any such
Receivable Interest, or if a Conduit Purchaser’s Termination Event has occurred and is continuing
with respect to such Conduit Purchaser, the Committed Purchasers in such Purchaser Group shall,
ratably in accordance with their respective Commitments, severally and not jointly, purchase such
Receivable Interest. Each Incremental Purchase shall be made among the Purchaser Groups ratably in
accordance with their respective Purchaser Group Limits, except as provided in Section 2.02(b).
Under no circumstances shall an Incremental Purchase be made hereunder if, after giving effect
thereto, (i) the aggregate



2









 






outstanding Capital would exceed the Purchase Limit or (ii) the Receivable Interest Percentage
would exceed the Maximum Receivable Interest Percentage, as determined by reference to the
information set forth in the most recent Servicer Report delivered hereunder.




          (b) Until the Amortization Date for a Receivable Interest, the Collections attributable to
such Receivable Interest shall be automatically reinvested in the Pool Receivables and Related
Security and Collections with respect thereto pursuant to (and subject to the priority of payments
set forth in) Section 2.04 (each a “Reinvestment Purchase”) and such reinvested Collections
shall be applied pursuant to Section 2.03 of the Originator Purchase Agreement to pay the purchase
price for newly arising Receivables and/or to make payments in respect of the Subordinated Note or
other expenses of the Seller.




          (c) Upon five (5) Business Days’ written notice to the Administrative Agent and each Managing
Agent, the Seller may reduce the Commitments of the Committed Purchasers by an amount equal to
$10,000,000 or by a whole multiple of $1,000,000 in excess thereof; provided that no such
termination or reduction shall be permitted if, after giving effect thereto, the aggregate Capital
would exceed the Aggregate Commitment. Upon any such reduction, the Commitment of each Committed
Purchaser and the Conduit Purchase Limit of each Conduit Purchaser shall be reduced in an amount
equal to such Committed Purchaser’s or Conduit Purchaser’s ratable share of the amount of such
reduction. Once reduced, the Commitments shall not be subsequently reinstated without the consent
of each Committed Purchaser.




          SECTION 2.02 Making Incremental Purchases. (a) Each Incremental Purchase hereunder
shall be made on notice delivered by the Seller to each Managing Agent not later than 11:00 A.M.
(New York City time) on the second Business Day prior to the date of such Incremental Purchase.
Each such notice shall specify:





     (i) the aggregate amount (which shall not be less than $5,000,000 and integral
multiples of $100,000 in excess thereof) requested to be paid to the Seller for the
Receivable Interests which are the subject of such Incremental Purchase (the
“Purchase Price”);




     (ii) the allocation of such Purchase Price among the Purchaser Groups (which
shall be proportional to the respective Conduit Purchase Limits of the Conduit
Purchaser(s) in each Purchaser Group, unless such purchase is to be made by the
Committed Purchasers in a particular Purchaser Group and the proceeds of such
purchase are to be used solely to repay the Capital of the Receivable Interest of a
Conduit Purchaser pursuant to Section 2.02(b));




     (iii) the date of such Incremental Purchase (which shall be a Business Day);
and




     (iv) if the Assignee Rate is to apply to any such Receivable Interest, the
requested duration of the initial Fixed Period for such Receivable Interest.



          No more than two Incremental Purchases may be requested by the Seller during any single
calendar month.




3









 








          Each Conduit Purchaser shall promptly notify its Managing Agent whether it has determined to
make the requested Incremental Purchase on the terms specified by the Seller. If any Conduit
Purchaser has determined not to fund all or any portion of its share of the Purchase Price for an
Incremental Purchase, the Managing Agent for such Conduit Purchaser shall promptly send notice of
the proposed Incremental Purchase to the Committed Purchasers in such Conduit Purchaser’s Purchaser
Group concurrently by telecopier specifying the date of such Incremental Purchase, the aggregate
amount of Capital of the Receivable Interest being purchased by such Committed Purchasers (which
amount shall be equal to the portion of the Purchase Price that would otherwise have been funded by
the applicable Conduit Purchaser), each such Committed Purchaser’s portion thereof (determined
ratably in accordance with their respective Commitments), whether the Yield for the initial Fixed
Period for such Receivable Interest is calculated based on the Adjusted Eurodollar Rate (which may
be selected only if such notice is given at not later than 11:00 A.M. (New York City time) on the
second Business Day prior to the purchase date) or the Alternate Base Rate, and the duration of the
Fixed Period for such Receivable Interest (which shall be one day if the Seller has not selected
another period in accordance with the provisions set forth in the definition of “Fixed Period”).




          (b) On the date of each such Incremental Purchase, the applicable Conduit Purchasers and/or
Committed Purchasers shall, upon satisfaction of the applicable conditions set forth in
Article III, make available to the Seller in same day funds an aggregate amount equal to the
Purchase Price for the Receivable Interests which are the subject of such Incremental Purchase, at
the account set forth in the Funds Transfer Letter; provided, however, if such
Incremental Purchase is being made by the Committed Purchasers in a Purchaser Group following the
Amortization Date for a Receivable Interest owned by a Conduit Purchaser pursuant to clause (i)(a)
of the definition of Amortization Date and any Capital of such Receivable Interest is outstanding
on such date of purchase, the Seller hereby directs such Committed Purchasers to pay the Purchase
Price for such Incremental Purchase (to the extent of such outstanding Capital) to the applicable
Purchaser Group Account, for application to the reduction of the outstanding Capital of such
Receivable Interest.




          (c) Effective on the date of each Purchase, the Seller hereby sells and assigns to the
Purchaser(s) participating in such Purchase, an undivided percentage ownership interest, to the
extent of the Receivable Interests then being purchased or in respect of which the reinvestment is
being made, in each Pool Receivable then existing or thereafter arising and in the Related Security
and Collections with respect thereto.




          (d) No Conduit Purchaser shall participate in an Incremental Purchase under this Agreement at
any time in an amount which would exceed such Conduit Purchaser’s Conduit Purchase Limit less an
amount equal to the aggregate outstanding Capital held by such Conduit Purchaser.




          (e) Notwithstanding anything herein to the contrary, a Committed Purchaser shall not be
obligated to participate in an Incremental Purchase if, after giving effect thereto and the
application of the proceeds thereof, the aggregate Capital held by such Committed Purchaser would
exceed an amount equal to (i) such Committed Purchaser’s Commitment less (ii) such Committed
Purchaser’s ratable share of the aggregate outstanding Capital held by the Conduit Purchaser(s) in
such Committed Purchaser’s Purchaser Group (whether or not any portion



4









 






thereof has been assigned by such Conduit Purchaser(s) under an Asset Purchase Agreement).
Each Committed Purchaser’s obligation shall be several, such that the failure of any Committed
Purchaser to make available to the Seller any funds in connection with any Incremental Purchase
shall not relieve any other Committed Purchaser of its obligation, if any, hereunder to make funds
available on the date of such Incremental Purchase, but no Committed Purchaser shall be responsible
for the failure of any other Committed Purchaser to make funds available in connection with any
Incremental Purchase.




          SECTION 2.03 Receivable Interest Computation. (a) Upon the payment of the Purchase
Price for any Incremental Purchase hereunder, (i) each Conduit Purchaser participating in such
Purchase shall acquire a Receivable Interest the initial Capital of which is equal to the portion
of the Purchase Price paid by such Conduit Purchaser and (ii) to the extent the Committed
Purchasers in any Purchaser Group participate in such Purchase, such Committed Purchasers shall
acquire (ratably in accordance with their respective Commitments) a Receivable Interest the initial
Capital of which is equal to the portion of the Purchase Price paid by such Committed Purchasers.




          (b) Each Receivable Interest shall be initially computed on its date of Purchase. Thereafter
until the Amortization Date for such Receivable Interest, such Receivable Interest shall be
automatically recomputed (or deemed to be recomputed) on each day other than a Liquidation Day. Any
Receivable Interest, as computed (or deemed recomputed) as of the day immediately preceding the
Amortization Date for such Receivable Interest, shall thereafter remain constant until the
Termination Date occurs. From and after the Termination Date until the Final Payout Date, each
Receivable Interest shall be equal to a fraction (expressed as a percentage) the numerator of which
is equal to the Capital of such Receivable Interest as of the Termination Date and the denominator
of which is equal to the aggregate Capital of all Receivable Interests as of the Termination Date.




          (c) Each Purchase shall constitute a purchase of undivided percentage ownership interests in
each and every Pool Receivable, together with all Related Security and Collections with respect
thereto, then existing, as well as in each and every Pool Receivable, together with all Related
Security and Collections with respect thereto, which arises at any time after the date of such
Purchase. From and after the Termination Date, the aggregate Receivable Interests of the
Purchasers shall equal 100%. On the Final Payout Date, the Administrative Agent, on behalf of the
Conduit Purchasers and the Committed Purchasers, shall be deemed to have reconveyed to the Seller
all of the Conduit Purchasers’ and the Committed Purchasers’ respective right, title and interest
in, to and under the Pool Receivables and Related Security and Collections with respect thereto,
and the Receivable Interests shall accordingly be reduced to zero. Following the Final Payout
Date, the Administrative Agent, on behalf of the Conduit Purchasers and the Committed Purchasers,
shall execute and deliver to the Seller, at the Seller’s expense, such documents or instruments as
the Seller may reasonably request to terminate the Conduit Purchasers’ and the Committed
Purchasers’ respective interests in the Receivables and Related Security and Collections with
respect thereto. Any such documents shall be prepared by and at the expense of the Seller.




          SECTION 2.04 Application of Collections Prior to Termination Date.




5









 









          (a) On each Business Day prior to the Termination Date, the Servicer shall, out of the
Collections received prior to such Business Day and not previously applied pursuant to this Section
2.04 (including, if applicable, any investment earnings received with respect to funds on deposit
in the Collection Account), apply such Collections in the following order and priority:




     (i) set aside on its books and hold in trust for the Purchasers, the Managing
Agents and the Administrative Agent an amount equal to the aggregate Yield, Fees and
Servicing Fees accrued through such day and not previously set aside, such amount to
be allocated among the Purchasers, the Managing Agents, the Administrative Agent and
the Servicer ratably in accordance with the proportion of such amounts owing to each
such Person;




     (ii) if the Servicer Report with the most recent data delivered hereunder
indicates that the Receivable Interest Percentage exceeds the Maximum Receivable
Interest Percentage, either (A) pay to the Purchasers (ratably in accordance with
the outstanding Capital of their respective Receivable Interests) the amount
necessary to cause the Receivable Interest Percentage to be less than or equal to
the Maximum Receivable Interest Percentage or (B) if the Administrative Agent
Account has been established pursuant to Section 6.07, deposit to the Administrative
Agent Account the amount necessary to cause the Receivable Interest Percentage to be
less than or equal to the Maximum Receivable Interest Percentage;




     (iii) if such day is a Liquidation Day for one or more Receivable Interests
(each a “Liquidating Receivable Interest”), set aside and hold in trust for
the relevant Purchasers an amount equal to the excess, if any, of (1) the portion of
the Capital allocable to such Liquidating Receivable Interests over (2) the
Collections previously so set aside and allocable to such Capital pursuant to this
Section 2.04(a) and not yet distributed to the applicable Purchasers hereunder, such
amount to be allocated to such Liquidating Receivable Interests ratably in
proportion to the Capital of each; provided, however, that if such
day is a Liquidation Day by reason of the suspension of Reinvestment Purchases
pursuant to Section 2.16, then the amount required to be set aside pursuant to this
clause (iii) shall not exceed the applicable Reduction Amount;




     (iv) if any Seller Obligations (other than Yield, Fees, Servicing Fees and
Capital) are then due and payable by the Seller to any Indemnified Party, pay to
each such Indemnified Party (ratably in accordance with the amounts owing to each)
the Seller Obligations so due and payable; and




     (v) remit any remaining Collections to the Seller as a Reinvestment Purchase,
for the benefit of the Purchasers then holding Receivable Interests, pursuant to
Section 2.01(b).



          (b) On each Settlement Date for a Receivable Interest, the Servicer shall pay to the relevant
Purchaser(s) all Yield payable to such Purchaser(s) pursuant to Section 2.07 out of Collections
allocated or set aside for such purpose pursuant to Section 2.04(a). On each date on



6









 






which any Fees are payable pursuant to the Fee Letters, the Servicer shall pay such Fees to
the Persons entitled thereto pursuant to the Fee Letters out of Collections allocated or set aside
for such purpose pursuant to Section 2.04(a). On each Servicing Fee Payment Date, the Servicer
shall pay to itself the accrued and unpaid Servicing Fee out of Collections allocated or set aside
for such purpose pursuant to Section 2.04(a).




          (c) In the event any deposit is made to the Administrative Agent Account pursuant to Section
2.04(a)(ii)(B), the amount of such deposit shall be allocated among the Purchaser Groups ratably in
proportion to the outstanding Capital of their respective Receivable Interests. If the amount on
deposit in the Administrative Agent Account exceeds $25,000,000, then on the next Settlement Date
applicable to any Receivable Interest (or such earlier date as the Servicer may specify upon not
less than three Business Days notice to each Managing Agent), the Servicer shall distribute to each
Purchaser then holding a Receivable Interest such Purchaser’s allocable share of such deposit for
application to the reduction of the Capital of such Receivable Interest. Notwithstanding the
foregoing, if on any Business Day after such deposit is made and prior to the distribution of all
or any portion of such deposit pursuant to this Section 2.04(c), the Servicer delivers a Servicer
Report evidencing that the Receivable Interest Percentage is less than the Maximum Receivable
Interest Percentage, the Servicer may withdraw the Collections so deposited for application in
accordance with Section 2.04(a) to the extent that, after giving effect to such withdrawal and
application, the Receivable Interest Percentage would not exceed the Maximum Receivable Interest
Percentage.




          (d) In the event any Collections are set aside in respect of any Liquidating Receivable
Interest pursuant to Section 2.04(a)(iii), the Servicer shall distribute such Collections to the
relevant Purchaser(s) on or prior to the first Settlement Date for any such Receivable Interest;
provided, however, that if at any time prior to such distribution, such Receivable
Interest ceases to be a Liquidating Receivable Interest, the Servicer need not distribute such
Collections pursuant to this Section 2.04(d) but instead may apply such Collections in accordance
with the provisions of Section 2.04(a).




          (e) Following the occurrence and during the continuation of any Termination Event or any
Involuntary Bankruptcy Event, and at all times during any Rating Level 3 Period or any Rating Level
4 Period, the Servicer shall (i) transfer to the Collection Account all Collections set aside or
required to be set aside pursuant to this Section 2.04 by the Business Day following the Servicer’s
receipt of such Collections, (ii) make all distributions of such Collections pursuant to this
Section 2.04 by withdrawing such Collections from the Collection Account on the date such
distribution is to be made and (iii) not permit any withdrawals of such Collections from the
Collection Account except for the purpose of distributing such Collections in accordance with this
Section 2.04. Except as provided herein, the Servicer shall not be required to segregate any
amounts set aside by it pursuant to this Section 2.04 from its other funds.




          SECTION 2.05 Application of Collections After Termination Date. (a) On the
Termination Date, the Servicer shall deposit to the Collection Account all Collections held by it
on such date (including amounts previously set aside pursuant to Section 2.04(a)). On each
Business Day thereafter until the Final Payout Date, the Servicer shall deposit to the Collection
Account all Collections received prior to such Business Day that have not previously been



7









 






deposited to the Collection Account. The Servicer shall not make any withdrawals from the
Collection Account during such period except for the purpose of distributing such Collections in
accordance with this Section 2.05.




          (b) From and after the Termination Date, the Servicer shall apply all funds on deposit in the
Collection Account on any Business Day that have not been previously applied hereunder (including,
without limitation, any investment earnings received with respect to such funds) in the following
order of priority:





     (i) first, pay to the Administrative Agent an amount equal to the Seller
Obligations owing to the Administrative Agent in respect of costs and expenses incurred in
connection with the enforcement of any Transaction Document or the collection of any amounts
due thereunder;




     (ii) second, set aside and hold in trust for the Purchasers, the Managing
Agents and the Administrative Agent an amount equal to the aggregate Yield and Fees and, if
the Servicer is a Person other than Medco or an Affiliate thereof, Servicing Fees accrued
through such day and not previously set aside, such amount to be allocated among the
Purchasers, the Managing Agents, the Administrative Agent and (if applicable) the Servicer
ratably in accordance with the proportion of such amounts owing to each such Person;




     (iii) third, set aside in the Collection Account an amount equal to the
aggregate Capital for all outstanding Receivable Interests (to the extent not previously set
aside), such amount to be allocated among the Receivable Interests ratably in proportion to
the Capital of each;




     (iv) fourth, if any Seller Obligations (other than Yield, Fees, Servicing Fees
and Capital) are then due and payable by the Seller to any Indemnified Party, pay to each
such Indemnified Party (ratably in accordance with the amounts owing to each) the Seller
Obligations so due and payable;




     (v) sixth, if the Servicer is Medco or an Affiliate thereof, set aside in the
Collection Account the accrued and unpaid Servicing Fee not previously set aside; and




     (vi) seventh, on the Final Payout Date, pay to the Seller any remaining funds.



          (c) On each Settlement Date for a Receivable Interest from and after the Termination Date, the
Servicer shall withdraw from the Collection Account and pay to the relevant Purchaser all amounts
set aside in the Collection Account in respect of the accrued Yield and the Capital of such
Receivable Interest. On each date on which any Fees are payable pursuant to the Fee Letters, the
Servicer shall pay such Fees to the Persons entitled thereto pursuant to the Fee Letters out of
Collections set aside for such purpose pursuant to Section 2.05.




          (d) On each Servicing Fee Payment Date from and after the Termination Date, the Servicer shall
pay to the Servicer the accrued Servicing Fee out of Collections set aside for such purpose
pursuant to this Section 2.05.




8









 








          SECTION 2.06 General Settlement Procedures.




          (a) Except as otherwise required by applicable law or the relevant Contract, any payment
received from an Obligor of any Receivables shall be applied as a Collection of the Pool
Receivables of such Obligor in the order of the age of such Receivables, starting with the oldest
such Receivable.




          (b) If on any day any Pool Receivable (or portion thereof) becomes a Diluted Receivable, the
Seller shall be deemed to have received on such day a Collection of such Pool Receivable in the
amount of such Diluted Receivable.




          (c) If and to the extent the Administrative Agent, any Managing Agent or any Purchaser shall
be required for any reason to pay over to an Obligor any amount received on its behalf hereunder,
such amount shall be deemed not to have been so received but rather to have been retained by the
Seller and, accordingly, the Administrative Agent, such Managing Agent or such Purchaser, as the
case may be, shall have a claim against the Seller for such amount, payable when and only to the
extent that any distribution from or on behalf of such Obligor is made in respect thereof.




          (d) Within one Business Day after the end of each Fixed Period in respect of which Yield is
computed by reference to the CP Rate, the relevant Managing Agent shall furnish the Seller with an
invoice setting forth the amount of the accrued and unpaid Yield and Fees for such Fixed Period
with respect to the Receivable Interests held by the Conduit Purchaser(s) in such Managing Agent’s
Purchaser Group.




          (e) All payments required to be made hereunder to any Purchaser shall be made by paying such
amount to the applicable Purchaser Group Account in accordance with Section 2.08. Upon receipt of
funds, such Managing Agent shall pay such funds to the related Purchaser(s) owed such funds in
accordance with the records maintained by such Managing Agent. If a Managing Agent shall have paid
to any Purchaser any funds that (i) must be returned for any reason (including any Event of
Bankruptcy) or (ii) exceeds that which such Purchaser was entitled to receive, such amount shall be
promptly repaid to such Managing Agent by such Purchaser.




          SECTION 2.07 Yield and Fees. (a) The Servicer shall be entitled to receive a fee
(the “Servicing Fee”) of 0.25% per annum (the “Servicing Fee Rate”) on the average
daily Outstanding Balance of the Pool Receivables, payable in arrears on each Servicing Fee Payment
Date. Upon three Business Days’ notice to the Managing Agents, the Servicer (if not an Originator,
the Seller or its designee or an Affiliate of the Seller) may, with the prior written consent of
each Managing Agent, elect to be paid, as such fee, another percentage per annum on the average
daily Outstanding Balance of the Pool Receivables; provided, however, that in no
event shall the new Servicing Fee exceed 110% of the actual costs and expenses of such Servicer.
Notwithstanding anything herein to the contrary, the Servicing Fee shall be payable only from
Collections pursuant to, and subject to the priority of payments set forth in, Sections 2.04 and
2.05. To the extent such Collections are not sufficient to pay the Servicing Fee in full, none of
the Seller, the Administrative Agent, the Managing Agents or the Purchasers shall have any
liability for the deficiency.




9









 








          (b) The Seller shall pay to the Administrative Agent and each Managing Agent certain fees
(collectively, the “Fees”) in the amounts and on the dates set forth in (i) the fee letter
agreement dated as of the Initial Closing Date between the Seller and the Administrative Agent (as
the same may be amended or restated from time to time, the “Administrative Agent Fee
Letter”) and (ii) the amended and restated fee letter dated as of even date herewith among the
Seller, the Administrative Agent and the Managing Agents (as the same may be amended or restated
from time to time, the “Purchaser Fee Letter”).




          (c) On each Settlement Date for a Receivable Interest, the Seller shall pay to the relevant
Managing Agent all accrued and unpaid Yield with respect to such Receivable Interest.




          SECTION 2.08 Payments and Computations, Etc. (a) All amounts to be paid by the
Seller or the Servicer to the Administrative Agent, any Managing Agent or any Purchaser hereunder
shall be paid no later than 12:00 noon (New York City time) on the day when due in same day funds
to the applicable Purchaser Group Account. All amounts to be deposited by the Seller or the
Servicer into the Collection Account, any Purchaser Group Account or any other account shall be
deposited no later than 12:00 noon (New York City time) on the date when due.




          (b) Each of the Seller and the Servicer shall, to the extent permitted by law, pay interest on
any amount not paid or deposited by it when due hereunder, at an interest rate per annum equal to
2.00% per annum above the Alternate Base Rate, payable on demand.




          (c) All computations of Yield, Fees, and other amounts hereunder shall be made on the basis of
a year of 360 days for the actual number of days (including the first but excluding the last day)
elapsed, except that computations of interest and Yield based on the Alternate Base Rate shall be
made on the basis of a year of 365 days (or 366, as applicable). Whenever any payment or deposit to
be made hereunder shall be due on a day other than a Business Day, such payment or deposit shall be
made on the next succeeding Business Day and such extension of time shall be included in the
computation of such payment or deposit. Any computations by the Administrative Agent or the
applicable Managing Agent of amounts payable by the Seller hereunder shall be binding upon the
Seller absent manifest error.




          SECTION 2.09 Dividing or Combining Receivable Interests. Either the Seller or
(following a Termination Event or an Incipient Termination Event) the Administrative Agent may,
upon notice to the other party received at least three Business Days prior to the last day of any
Fixed Period in the case of the Seller giving notice, or up to the last day of such Fixed Period in
the case of the Administrative Agent giving notice, either (i) divide any Receivable Interest into
two or more Receivable Interests having an aggregate Capital equal to the Capital of such divided
Receivable Interest, or (ii) combine any two or more Receivable Interests originating on such last
day or having Fixed Periods ending on such last day into a single Receivable Interest having a
Capital equal to the aggregate of the Capital of such Receivable Interests; provided,
however, that no Receivable Interest owned by any Conduit Purchaser may be combined with a
Receivable Interest owned by any other Purchaser, and a Receivable Interest held by the Committed
Purchasers in any Purchaser Group may not be combined with any Receivable Interest held by
Purchasers in any other Purchaser Group.




10









 








          SECTION 2.10 Breakage Costs.




          (a) The Seller shall indemnify the Purchasers against any loss or expense incurred by the
Purchasers, either directly or indirectly, as a result of the failure of any Incremental Purchase
to be made for any reason on the date specified by the Seller pursuant to Section 2.02, including
any loss or expense incurred by the Purchasers by reason of the liquidation or reemployment of
funds acquired by the Purchasers (including funds obtained by issuing Promissory Notes, obtaining
deposits as loans from third parties and reemployment of funds) to fund such Incremental Purchase.




          (b) The Seller further agrees to pay all Liquidation Fees associated with a reduction of the
Capital at any time.




          (c) A certificate as to any loss, expense or Liquidation Fees payable pursuant to this Section
2.10 submitted by any Purchaser, through its Managing Agent, to the Seller shall be conclusive in
the absence of manifest error.




          SECTION 2.11 Illegality. Notwithstanding any other provision of this Agreement, if
the adoption of or any change in any Law or in the interpretation or application thereof by any
relevant Official Body shall make it unlawful for any Purchaser to make or maintain Receivable
Interests for which Yield is calculated by reference to the Adjusted Eurodollar Rate (each a
“Eurodollar Receivable Interest”) as contemplated by this Agreement or to obtain in the
interbank eurodollar market the funds with which to make or maintain any such Eurodollar Receivable
Interest, (a) such Purchaser shall promptly notify the Administrative Agent, its Purchaser Managing
Agent and the Seller thereof, (b) the obligation of such Purchaser to fund or maintain Eurodollar
Receivable Interests or continue Eurodollar Receivable Interests as such shall forthwith be
cancelled and (c) such Purchaser’s Receivable Interests then outstanding as Eurodollar Receivable
Interests, if any, shall be converted on the last day of the Fixed Period for such Receivable
Interests or within such earlier period as required by Law into Receivable Interest that accrue
Yield based on the Alternate Base Rate (each a “Base Rate Receivable Interest”).




          SECTION 2.12 Inability to Determine Eurodollar Rate. Notwithstanding any other
provision of this Agreement, if (i) the Administrative Agent reasonably determines that, by reason
of circumstances affecting the relevant market, adequate and reasonable means do not exist for
ascertaining a rate for Eurodollar Receivable Interests as provided in the definition of Adjusted
Eurodollar Rate for any Fixed Period or (ii) Committed Purchasers representing at least a majority
of the Aggregate Commitment shall determine (which determination shall be conclusive) that the
rates for the purpose of computing the Adjusted Eurodollar Rate do not adequately and fairly
reflect the cost to such Committed Purchasers of funding a Eurodollar Receivable Interests that the
Seller has requested be outstanding as a Eurodollar Receivable Interest during such Fixed Period,
the Administrative Agent shall forthwith give telephone notice of such determination, confirmed in
writing, to the Seller and each Managing Agent at least two Business Days prior to the first day of
such Fixed Period. Unless the Seller shall have notified the applicable Managing Agent upon receipt
of such telephone notice that it wishes to rescind or modify its request regarding such Eurodollar
Receivable Interest, any Receivable Interests that were requested to be funded as Eurodollar
Receivable Interests shall be Base Rate Receivable



11









 






Interests and any Receivable Interests that were requested to be converted into or continued
as Eurodollar Receivable Interests shall be converted into Base Rate Receivable Interests. Until
any such notice has been withdrawn by the Administrative Agent, no further Receivable Interests
shall be funded as, continued as, or converted into, Eurodollar Receivable Interests.




          SECTION 2.13 Indemnity for Reserves and Expenses. (a) If the adoption of or any
change in any Law or in the interpretation or application thereof or compliance by any Indemnified
Party with any request or directive (whether or not having the force of law) from any central bank
or other Official Body made subsequent to the date hereof (other than any such change that relates
to Taxes, which are governed by Section 2.14):





     (i) does or shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, advances or loans or purchases by, or
other credit extended by, or any other acquisition of funds by, any office of such
Indemnified Party which are not otherwise covered by the adjustment to the
Eurodollar Rate for the Eurodollar Rate Reserve Percentage as contemplated by the
definition of “Adjusted Eurodollar Rate”; or




     (ii) does or shall impose on such Indemnified Party any other condition
affecting this Agreement or any Receivable Interest or participation therein;


and the result of any of the foregoing shall be to increase the cost to such Indemnified Party of
making or maintaining Receivable Interests (or of maintaining its obligation to make any such
Receivable Interest) or to reduce any amount received or receivable by such Indemnified Party
hereunder, then, in any such case, the Seller shall promptly pay such Indemnified Party, upon
demand from such Indemnified Party, any additional amounts necessary to compensate such Indemnified
Party for such additional costs or reduction suffered which such Indemnified Party reasonably deems
to be material as determined by such Indemnified Party with respect to its Receivable Interests. A
certificate as to any additional amounts payable pursuant to this subsection submitted by such
Indemnified Party, through its Managing Agent, to the Seller setting forth, in reasonable detail,
the basis for and the calculation thereof, shall be conclusive in the absence of manifest error.




          (b) If any Indemnified Party shall have determined that the adoption of any applicable Law or
bank regulatory guideline regarding capital adequacy or any change therein, or any change in the
interpretation or administration thereof by any Official Body, or any request or directive
regarding capital adequacy (in the case of any bank regulatory guideline, whether or not having the
force of law) of any such Official Body, has or would have the effect of reducing the rate of
return on capital of such Indemnified Party (or its parent) as a consequence of such Indemnified
Party’s obligations hereunder or with respect hereto or otherwise as a consequence of the
transactions contemplated hereby to a level below that which such Indemnified Party (or its parent)
could have achieved but for such adoption, change, request or directive (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by such Indemnified Party to be
material, then from time to time, within fifteen days after demand by such Indemnified Party
through its Managing Agent, the Seller shall pay to such Managing



12









 






Agent, for the benefit of such Indemnified Party, such additional amount or amounts as will
compensate such Indemnified Party (or its parent) for such reduction. A certificate as to any
additional amounts payable pursuant to this subsection submitted by such Indemnified Party, through
its Managing Agent, to the Seller setting forth, in reasonable detail, the basis for and the
calculation thereof, shall be conclusive in the absence of manifest error.




          (c) Failure or delay on the part of any Indemnified Party to demand compensation pursuant to
this Section 2.13 shall not constitute a waiver of such Indemnified Party’s right to demand such
compensation; provided, however, that the Seller shall not be required to
compensate an Indemnified Party pursuant to this Section 2.13 for any increased costs or reductions
incurred more than 180 days prior to the date that such Indemnified Party notifies the Seller of
the change, event or circumstance giving rise to such increased costs or reductions and of such
Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided,
further, that, if the change giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.




          SECTION 2.14 Indemnity for Taxes. (a) Any and all payments and deposits required to
be made hereunder or under any other Transaction Document by the Servicer or the Seller shall be
made free and clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect thereto,
excluding net income, profits or branch profits taxes that are imposed by the United States
and franchise, profits, branch profits and net income taxes that are imposed on an Indemnified
Party by the state or foreign jurisdiction under the laws of which such Indemnified Party is
organized or in which it is a citizen, resident or domiciliary, or the jurisdiction in which any
office making or participating in a purchase hereunder is located, or in each case any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as “Taxes”). If the Seller or
the Servicer shall be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Indemnified Party, (i) the Seller shall make an additional payment to such
Indemnified Party, in an amount sufficient so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.14), such Indemnified Party
receives an amount equal to the sum it would have received had no such deductions been made, (ii)
the Seller or the Servicer, as the case may be, shall make such deductions and (iii) the Seller or
the Servicer, as the case may be, shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.




          (b) In addition, the Seller agrees to pay any present or future stamp or other documentary
taxes or any other excise or property taxes, charges or similar levies which arise from any payment
made hereunder or under any other Transaction Document or from the execution, delivery or
registration of this Agreement or any other Transaction Document (hereinafter referred to as
“Other Taxes”); provided that the Indemnified Party shall notify Seller prior to
the Initial Closing Date (or, if later, the date such Indemnified Party became a party to this
Agreement) that such Other Taxes imposed by (i) a foreign jurisdiction under the laws of which an
Indemnified Party is organized or in which it is a citizen, resident or domiciliary, or (ii) a
foreign jurisdiction in which any office making or participating in a purchase hereunder is



13









 






located, (including, in each case, any political subdivision thereof), will be due and owing
to the extent that such Indemnified Party has knowledge of the same prior to the Initial Closing
Date.




          (c) The Seller will indemnify each Indemnified Party for the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.14) paid by such Indemnified Party and any liability
(including penalties, interest and expenses) arising therefrom or with respect thereto whether or
not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be
made within thirty days from the date the Indemnified Party makes written demand therefor (and a
copy of such demand shall be delivered to the Administrative Agent and the Managing Agent for such
Indemnified Party’s Group). A certificate as to the amount of such indemnification submitted to the
Seller, the Administrative Agent and the Managing Agent for such Indemnified Party’s Group by such
Indemnified Party, setting forth, in reasonable detail, the basis for and the calculation thereof,
shall be conclusive and binding for all purposes absent manifest error.




          (d) Each Purchaser or Participant who is organized outside the United States (each, a
“Non-U.S. Person”) shall, prior to the date hereof (or, in the case of any Person who
becomes a Purchaser or a Participant after the date hereof, prior to the date on which it so
becomes a Purchaser or a Participant), (x) deliver to the Seller and the Administrative Agent such
properly completed and duly executed certificates, documents or other evidence, as required by the
IRC or Treasury regulations issued pursuant thereto, including Internal Revenue Service Form W-8BEN
or Form W-8ECI and any other certificate or statement of exemption required to establish that such
payment is (i) not subject to withholding under the IRC because such payment is effectively
connected with the conduct by such Indemnified Party of a trade or business in the United States or
(ii) totally exempt from United States tax under a provision of an applicable tax treaty and (y)
upon request of the Seller or the Administrative Agent, and to the extent it may do so under
applicable law, furnish any other government forms which are necessary or required under an
applicable tax treaty or otherwise by law to reduce or eliminate any withholding tax;
provided, however, that in the event that a Non-U.S. Person is classified as other
than a corporation for U.S. federal income tax purposes, such Non-U.S. Person agrees to provide any
other form certificate or statement of exemption necessary to fully establish such Non-U.S.
Person’s (and, if applicable, such Non-U.S. Person’s beneficial owners’) entitlement to a complete
exemption from withholding of U.S. taxes on all amounts to be received by such Non-U.S. Person (or,
if applicable, such Non-U.S. Person’s beneficial owners’) pursuant to this Agreement and the other
Transaction Documents. Each such Purchaser that changes its funding office shall promptly notify
the Seller and the Administrative Agent of such change and, upon written request from the Seller or
the Administrative Agent, shall deliver any new certificates, documents or other evidence required
pursuant to the preceding sentence prior to the immediately following due date of any payment by
the Seller hereunder. Unless the Seller and the Administrative Agent have received forms or other
documents satisfactory to them indicating that payments hereunder are not subject to United States
withholding tax, notwithstanding paragraph (a), the Seller or the Administrative Agent shall
withhold taxes from such payments at the applicable statutory rate in the case of payments to or
for any Indemnified Party organized under the laws of a jurisdiction outside the United States, and
the applicable provisions of paragraph (g) below shall apply to such Purchaser.




14









 








          (e) Further, each Non-U.S. Person agrees (i) to deliver to the Seller and the Administrative
Agent, and if applicable, the assigning Purchaser (or, in the case of a Participant, to the
Purchaser from which the related participation shall have been transferred) two further duly
completed and signed copies of any forms required to be delivered pursuant to Section 2.14(d), or
successor and related applicable forms, on or before the date that any such form expires or becomes
obsolete and promptly after the occurrence of any event requiring a change from the most recent
form(s) previously delivered by it to the Seller and Administrative Agent, and, if applicable, the
assigning Purchaser (or, in the case of a Participant, to the Purchaser from which the related
participation shall have been transferred) in accordance with applicable U.S. laws and regulations
and (ii) to notify promptly the Seller and the Administrative Agent, and, if applicable, the
assigning Purchaser (or, in the case of a Participant, the Purchaser from which the related
participation shall have been transferred) if it is no longer able to deliver, or if it is required
to withdraw or cancel, any form or statement previously delivered by it.




          (f) Each Purchaser or Participant that is not a Non-U.S. Person shall deliver to the Seller
and the Administrative Agent and, if applicable, the assigning Purchaser (or, in the case of a
Participant, to the Purchaser from which the related participation shall have been transferred) two
duly completed copies of United States Internal Revenue Service Form W-9 (or applicable successor
form) unless it establishes to the reasonable satisfaction of the Seller that it is otherwise
eligible for an exemption from backup withholding tax or other applicable withholding tax. Each
such Purchaser or Participant shall deliver to the Seller and the Administrative Agent and, if
applicable, the assigning Purchaser (or, in the case of a Participant, to the Purchaser from which
the related participation shall have been transferred) two further properly completed and duly
executed forms and statements (or applicable successor forms) at or before the time any such form
or statement becomes obsolete.




          (g) The Seller shall not be required to pay any amounts to any Purchaser in respect of Taxes
and Other Taxes pursuant to paragraphs (a), (b) and (c) above if the obligation to pay such amounts
would not have arisen but for a failure by such Purchaser to comply with the provisions of
paragraphs (b), (d), (e) and (f) above unless such Purchaser is unable to comply with paragraphs
(b), (d), (e) and (f) because of (i) a change in applicable law, regulation or official
interpretation thereof or (ii) an amendment, modification or revocation of any applicable tax
treaty or a change in official position regarding the application or interpretation thereof, in
each case after the date hereof (or, in the case of any Person who became a Purchaser after the
date hereof, after the date on which it so became a Purchaser).




          (h) If the Administrative Agent or any Purchaser or Participant determines, in its sole
discretion, that it has received a refund in respect of taxes paid or indemnified by the Seller, it
shall promptly pay such refund to the Seller, but only to the extent of amounts paid or indemnified
by the Seller with respect to Taxes, provided, however, that the Seller agrees to
promptly return such refund to the Administrative Agent or the applicable Purchaser or Participant,
as the case may be, if it receives notice from the applicable Purchaser or Participant that such
person is required to repay such refund, plus any penalties, interest or other charges imposed by
the relevant governmental authority. This Section shall not be construed to require the
Administrative Agent or any Purchaser or Participant to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the Seller or any other
Person.




15









 








          SECTION 2.15 Security Interest. As security for the performance by the Seller of all
the terms, covenants and agreements on the part of the Seller (whether as Seller or otherwise) to
be performed under this Agreement or any other Transaction Document, including the punctual payment
when due of all Seller Obligations, the Seller hereby assigns to the Administrative Agent for its
benefit and the ratable benefit of the other Indemnified Parties, and hereby grants to the
Administrative Agent for its benefit and the ratable benefit of the other Indemnified Parties, a
security interest in, all of the Seller’s right, title and interest in and to:





     (a) all Receivables, whether now owned and existing or hereafter acquired or arising,
together with all Related Security and Collections with respect thereto;




     (b) all Contracts, whether now owned or existing or hereafter acquired or arising,
including, without limitation, with respect to each Contract (i) all rights of the
Originator to receive moneys due or to become due under or pursuant to such Contract
(whether or not earned by performance), (ii) all security interests and property subject
thereto from time to time purporting to secure payment of monies due or to become due under
or pursuant to such Contract, (iii) all rights of the Originator to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to such Contract, (iv) claims of the
Originator for damages arising out of or for breach of or default under such Contract, and
(v) the right of the Originator to compel performance and otherwise exercise all remedies
thereunder;




     (c) the Deposit Accounts and the Collection Account, including, without limitation, (i)
all funds and other evidences of payment held therein and all certificates and instruments,
if any, from time to time representing or evidencing any of such accounts or any funds and
other evidences of payment held therein, (ii) all investment property and other financial
assets held in, or acquired with funds from, such accounts and all certificates and
instruments from time to time representing or evidencing such investment property and
financial assets, (iii) all notes, certificates of deposit and other instruments from time
to time hereafter delivered or transferred to, or otherwise possessed by, the Administrative
Agent in substitution for any of the then existing accounts and (iv) all interest,
dividends, cash, instruments, financial assets, investment property and other property from
time to time received, receivable or otherwise distributed in respect of or in exchange for
any and all of such accounts;




     (d) all other assets of the Seller, whether now owned and existing or hereafter
acquired or arising, including, without limitation, all accounts, chattel paper, goods,
instruments, investment property, deposit accounts and general intangibles (as those terms
are defined in the UCC as in effect on the date hereof in the State of New York), in which
the Seller has any interest; and




     (e) to the extent not included in the foregoing, all Proceeds of any and all of the
foregoing.



          SECTION 2.16 Optional Liquidation. The Seller may at any time direct that
Reinvestment Purchases cease for the Receivable Interests of all Purchasers. Any such direction
shall be made by giving the Administrative Agent and the Servicer at least two



16









 






Business Days’ prior written (including telecopy or other facsimile communication) notice
(each a “Reduction Notice”) specifying the date on which such Reinvestment Purchases shall
cease and, if desired, when such Reinvestment Purchases shall re-commence, identified as when the
aggregate outstanding Capital is reduced by a specified amount (the “Reduction Amount”).
If the Seller does not so specify the date on which Reinvestment Purchases shall re-commence, it
may cause Reinvestment Purchases to re-commence at any time before the Termination Date, subject to
the terms and conditions set forth herein, by notifying the Administrative Agent and the Servicer
in writing (including by telecopy or other facsimile communication) at least one Business Day
before the date on which it desires such Reinvestment Purchases to re-commence.




          SECTION 2.17 Optional Repurchase. The Seller may at any time at its option elect to
repurchase all or any portion of the Receivable Interests, such repurchase to be made ratably among
the Purchasers then holding Receivable Interests in proportion to the Capital of each. Any such
repurchase shall be made on not less than three (3) Business Days’ prior written notice (each a
“Repurchase Notice”) specifying the date on which such repurchase shall occur (the
“Repurchase Date”) and the aggregate Capital of the Receivable Interest to be repurchased
(the “Repurchase Amount”). On the Repurchase Date, the Seller shall pay the Repurchase
Amount to the Purchasers ratably in accordance with the outstanding Capital of their respective
Receivable Interests.




          SECTION 2.18 Termination of Purchaser Groups. If any Indemnified Party in a Purchaser
Group makes a claim for payment pursuant to Section 2.13 then the Seller may, at its option, take
either of the actions specified below.





     (i) The Seller may remove such Purchaser Group and terminate the Commitments of
the Committed Purchasers in such Purchaser Group by paying to the Managing Agent for
such Purchaser Group an amount (the “Payout Amount”) equal to the sum of
(i) the aggregate Capital held by the Purchasers in such Purchaser Group, (ii) all
Yield accrued and to accrue thereon through the last day of the applicable Fixed
Period(s) to which such Capital has been allocated, (iii) all accrued and unpaid
Fees owing to the members of such Purchaser Group and (iv) all other Seller
Obligations owing to the members of such Purchaser Group under the Transaction
Documents accrued through the date of such payment. Any such removal and
termination shall be made upon not less than five (5) Business Days notice delivered
by the Seller to the applicable Managing Agent and the Administrative Agent. The
Payout Amount for any Purchaser Group shall be calculated by the relevant Managing
Agent and notified to the Seller, which calculation shall be conclusive and binding
absent manifest error. Upon such removal and termination, (x) the members of such
Purchaser Group shall cease to be parties to this Agreement and the Commitments and
Conduit Purchase Limits of the Purchasers in such Purchaser Group shall be reduced
to zero and (y) the Purchase Limit will be reduced by an amount equal to the
Commitments (determined immediately prior to such termination) of the Committed
Purchasers in such Purchaser Group.




     (ii) The Seller may declare the Scheduled Commitment Termination Date to have
occurred for all Purchasers in such Purchaser Group. Any such



17









 







declaration shall be made upon not less than five (5) Business Days notice
delivered by the Seller to the applicable Managing Agent and the Administrative
Agent. Upon the effectiveness of such declaration, (w) the Conduit Purchase
Limit(s) and Purchaser Group Limit of such Purchaser Group shall be deemed to have
been reduced to zero and Purchasers in such Purchaser Group shall have no further
right or obligation to make any Purchases hereunder, (x) Amortization Date shall be
deemed to have occurred for all Receivable Interests held by the Purchasers in such
Purchaser Group, (y) the Capital allocable to such Receivable Interests shall be
reduced out of Collections available for such purpose pursuant to Section 2.04 or
2.05, as applicable and (z) on each date on which such Capital is so reduced the
Purchase Limit shall be deemed to be reduced by a corresponding amount. Once the
Capital of such Receivable Interests has been reduced to zero and the members of
such Purchaser Group shall have received payment in full of all accrued Yield, Fees
and other Seller Obligations owing to them, the members of such Purchaser Group
shall cease to be parties to this Agreement.



ARTICLE III




CONDITIONS OF PURCHASES




          SECTION 3.01 Conditions Precedent to Agreement. The effectiveness of this Agreement
is subject to the conditions precedent that (i) all Fees required to have been paid on or prior to
the date hereof pursuant to the Fee Letters shall have been paid in full and (ii) the
Administrative Agent and each Managing Agent shall have received on or before such date, each
(unless otherwise indicated) dated such date, in form and substance satisfactory to the
Administrative Agent and each Managing Agent:




          (a) A copy of this Agreement, duly executed and delivered by each of the parties hereto;




          (b) A copy of the amended and restated Purchaser Fee Letter, duly executed and delivered by
each of the parties thereto;




          (c) A certificate of the Secretary or Assistant Secretary of each Transaction Party certifying
the names and true signatures of the officers of such Transaction Party authorized to sign the
Transaction Documents to which it is a party; and




          (d) Such other documents, instruments, certificates and opinions as the Administrative Agent
or any Managing Agent shall reasonably request.




          SECTION 3.02 Conditions Precedent to All Purchases. Each Purchase (including the
initial Incremental Purchase and each Reinvestment Purchase) hereunder shall be subject to the
further conditions precedent that (a) the Servicer shall have delivered to the Administrative Agent
and each Managing Agent all Servicer Reports required to be delivered hereunder, each duly
completed and containing information covering the most recently ended reporting period for which
information is required pursuant to Section 6.03 and (b) on the date of



18









 






such Purchase the following statements shall be true (and acceptance of the proceeds of such
Purchase shall be deemed a representation and warranty by the Seller and the Servicer (each as to
itself) that such statements are then true):





     (i) The representations and warranties contained in Sections 4.01 and 4.02 of
this Agreement and Section 4.01 of the Originator Purchase Agreement are true and
correct in all material respects (except that, to the extent any such representation
or warranty is qualified by materiality or Material Adverse Effect, such
representation or warranty must be true and correct in all respects, subject only to
the materiality or Material Adverse Effect qualification set forth therein) on and
as of the date of such Purchase as though made on and as of such date, and




     (ii) No event has occurred and is continuing, or would result from such
Purchase, that constitutes a Termination Event or an Incipient Termination Event,
and




     (iii) In the case of any Purchase by a Conduit Purchaser, the applicable
Managing Agent shall not have given the Seller notice (with a copy to the
Administrative Agent) that such Conduit Purchaser has terminated the Reinvestment
Purchases hereunder (unless such notice has been revoked by such Managing Agent),
and




     (iv) Medco shall have sold or contributed to the Seller, pursuant to the
Originator Purchase Agreement, all outstanding Receivables as of such date; and



          (c) The Administrative Agent and each Managing Agent shall have received such other approvals,
opinions or documents as it may reasonably request for purposes of confirming compliance with the
foregoing conditions.




ARTICLE IV




REPRESENTATIONS AND WARRANTIES




          SECTION 4.01 Representations and Warranties of the Seller. The Seller hereby
represents and warrants as follows as of the date hereof and as of the date of each Purchase
hereunder:




          (a) The Seller is a limited liability company duly formed, validly existing and in good
standing under the laws of Delaware. The Seller is duly qualified to do business, and is in good
standing, in every other jurisdiction where the nature of its business requires it to be so
qualified, unless the failure to so qualify would not reasonably be expected to have a Material
Adverse Effect.




          (b) The execution, delivery and performance by the Seller of the Transaction Documents,
including the Seller’s use of the proceeds of Purchases, (i) are within the Seller’s limited
liability company powers, (ii) have been duly authorized by all necessary limited liability company
action, (iii) do not contravene (1) the Seller’s certificate of formation or limited liability
company agreement, (2) any law, rule or regulation applicable to the Seller, (3) any



19









 






contractual restriction binding on or affecting the Seller or its property or (4) any order,
writ, judgment, award, injunction or decree binding on or affecting the Seller or its property, and
(iv) do not result in or require the creation of any Adverse Claim upon or with respect to any of
its properties (except as created pursuant to this Agreement). Each of the Transaction Documents
has been duly executed and delivered by the Seller.




          (c) No authorization or approval or other action by, and no notice to or filing with, any
Official Body is required for the due execution, delivery and performance by the Seller of the
Transaction Documents to which it is a party or any other document to be delivered thereunder,
except for the filing of UCC financing statements referred to in Section 3.01.




          (d) Each of the Transaction Documents to which the Seller is a party constitutes the legal,
valid and binding obligation of the Seller enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors’ rights generally and by general
principles of equity, regardless of whether such enforceability is considered in a proceeding in
equity or at law.




          (e) The opening pro forma balance sheet of the Seller as of June 30, 2003, giving effect to
the initial Incremental Purchase to be made under this Agreement, a copy of which has been
furnished to the Administrative Agent and each Managing Agent, fairly presents the financial
condition of the Seller as of such date, in accordance with GAAP. Since its formation no change,
occurrence or development has occurred (including, without limitation, with respect to any
commenced or threatened material litigation or proceeding) that has had or could reasonably be
expected to have a Material Adverse Effect.




          (f) There is no pending or (to the best knowledge of the Seller) threatened action or
proceeding affecting the Seller before any Official Body. The Seller is not in default in any
material respect of any order of any Official Body.




          (g) No proceeds of any Purchase will be used for a purpose that violates or would be
inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal
Reserve System from time to time.




          (h) Each Receivable treated as or represented to be a Pool Receivable is owned by the Seller
free and clear of any Adverse Claim (other than Adverse Claims created hereunder). The Purchasers
have acquired a valid and perfected first priority security interest in each Pool Receivable now
existing or hereafter arising and in the Related Security and Collections with respect thereto, in
each case free and clear of any Adverse Claim (other than Adverse Claims created hereunder). No effective financing statement or other instrument
similar in effect is filed in any recording office listing the Seller as debtor, covering any asset
of the Seller except such as may be filed in favor of the Administrative Agent in accordance with
this Agreement. No effective financing statement or other instrument similar in effect, is filed
in any recording office listing the Originator as debtor, covering any Receivable, Related Security
or Collections except such as may be filed in favor of the Seller and assigned to the
Administrative Agent in accordance with this Agreement. Prior to giving effect to any transfer
under the Originator Purchase Agreement, all Receivables were payable to the Originator as
principal for



20









 






its own account. The Originator has no obligation (whether pursuant to any contract, any
requirement of Law or otherwise) to remit any Collections on the Receivables to any Pharmaceutical
Plan or to any other Person, other than to the Sellers and the Purchasers as provided in the
Originator Purchase Agreement and this Agreement.




          (i) Each Servicer Report (if prepared by any Transaction Party or one of their respective
Affiliates, or to the extent that information contained therein is supplied by any Transaction
Party or an Affiliate), information, exhibit, financial statement, document, book, record or report
furnished or to be furnished in writing at any time (whether before, on or after the date of this
Agreement) by or on behalf of any Transaction Party to the Administrative Agent, any Managing
Agent or any Purchaser in connection with this Agreement is or will be accurate in all material
respects as of its date or (except as otherwise disclosed to the Administrative Agent, such
Managing Agent or such Purchaser, as the case may be, at such time) as of the date so furnished,
and no such Servicer Report, information, exhibit, financial statement, document, book, record or
report contains or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained therein, in the light of
the circumstances under which they were made, not misleading.




          (j) The principal place of business and chief executive office of the Seller and the office
where the Seller keeps its records concerning the Receivables are located at the address or
addresses referred to in Section 5.01(b).




          (k) The names and addresses of all the Deposit Account Banks together with the account numbers
of the Deposit Accounts at such Deposit Account Banks are as specified in Schedule IV hereto, as
such Schedule IV may be updated from time to time pursuant to
Section 5.01(g).




          (l) Since the date of its formation, the Seller has not used any company name, tradename or
doing-business-as name other than the name in which it has executed this Agreement. The Seller’s
Federal Employer Identification Number is 83-08665.




          (m) The Seller was formed on July 10, 2003 and the Seller did not engage in any business
activities prior to the date of this Agreement. The Seller has no Subsidiaries. Medco directly
owns 100% of the membership interests of the Seller, free and clear of any Adverse Claims.




          (n) The Seller is not, and is not controlled by, an “investment company” within the meaning of
the Investment Company Act of 1940, as amended, or is exempt from all provisions of such Act.




          (o) The Seller is Solvent.




          (p) With respect to each Receivable treated as or represented to be a Pool Receivable, the
Seller (i) received such Receivable as a contribution to the capital of the Seller by the
Originator or (ii) purchased such Receivable from the Originator in exchange for payment (made by
the Seller to the Originator in accordance with the provisions of the Originator Purchase
Agreement) of cash, an addition to the principal amount of the Subordinated Note, or a



21









 






combination thereof in an amount which constitutes fair consideration and reasonably
equivalent value. No such sale or contribution was made for or on account of an antecedent debt
owed by the Originator to the Seller and no such sale or capital contribution is or may be voidable
or subject to avoidance under any section of the United States Bankruptcy Code.




          (q) Each Receivable included in the calculation of the Net Receivables Pool Balance on any
date shall be an Eligible Receivable as of such date.




          (r) The Receivable Interest Percentage does not exceed the Maximum Receivable Interest
Percentage.




          (s) No event has occurred and is continuing and no condition exists which constitutes a
Termination Event or Incipient Termination Event.




          SECTION 4.02 Representations and Warranties of the Servicer. Medco, in its capacity
as Servicer, hereby represents and warrants as follows as of the date hereof and as of the date of
each Purchase hereunder:




          (a) The Servicer is a corporation duly incorporated, validly existing and in good standing
under the laws of Delaware, and is duly qualified to do business, and is in good standing, in every
jurisdiction where the nature of its business requires it to be so qualified, unless the failure to
so qualify would not reasonably be expected to have a Material Adverse Effect.




          (b) The execution, delivery and performance by the Servicer of this Agreement and any other
documents to be delivered by it hereunder (i) are within the Servicer’s corporate powers, (ii) have
been duly authorized by all necessary corporate action, (iii) do not contravene (1) the Servicer’s
certificate of incorporation or by-laws, (2) any Law applicable to the Servicer, (3) any material
contractual restriction binding on or affecting the Servicer or its property or (4) any order,
writ, judgment, award, injunction or decree binding on or affecting the Servicer or its property,
except, in the case of each of sub-clauses (2) through (4) of this clause (iii), to the extent that
such contravention would not be reasonably expected to have a Material Adverse Effect, and (iv) do
not result in or require the creation of any Adverse Claim upon or with respect to any of its
properties. This Agreement has been duly executed and delivered by the Servicer.




          (c) 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 Servicer of this Agreement or any other Transaction Document to which it is a
party.




          (d) This Agreement constitutes the legal, valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with its terms.





(e) (i) The Servicer has heretofore furnished to the Purchasers its consolidated
balance sheet and statements of income, stockholders’ equity and cash flows (i) for
the fiscal years ending, and at, December 29, 2001 and December 28, 2002, and
(ii) as of and for the fiscal quarter and the portion of the



22









 







fiscal year ended March 29, 2003. The financial statements described in clause (i)
of this Section 4.02(e) were reported on by PricewaterhouseCoopers LLP for such
fiscal years ending, and at, December 29, 2001 and December 28 2002, and in
clause (ii) of this Section 4.02(e) were certified by the Servicer’s chief financial
officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Servicer and its
consolidated Subsidiaries as of such dates and for such periods in conformity with
GAAP, subject to year-end audit adjustments and the absence of footnotes in the case
of the statements referred to in clause (ii) above of this Section 4.02(e). The
Servicer has heretofore also furnished to the Purchasers its unaudited pro forma
condensed consolidated statement of income, for its fiscal year ended December 28,
2002, and for its fiscal quarter ended March 29, 2003 and its unaudited pro forma
condensed consolidated balance sheet at March 29, 2003. Such pro forma financial
statements comply, in all material respects, with the requirements of Article XI of
Regulation S-X of the SEC.




     (ii) Since December 28, 2002, there has been no change, occurrence or
development that has had or could reasonably be expected to have a Material Adverse
Effect.



          (f) There are no actions, suits or proceedings by or before any Official Body pending against
or, to the knowledge of the Executive Officers, threatened against or affecting the Servicer or any
of its Subsidiaries that (i) would reasonably be expected to be adversely determined, and (ii) if
so determined either (x) would reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect or (y) seek to enjoin, unwind or otherwise materially and adversely
affect the transactions contemplated by the Transaction Documents.




          (g) All Obligors have been instructed to remit all their payments in respect of Receivables
directly to a Deposit Account with respect to which a duly executed Control Agreement is in full
force and effect.




          (h) On the date of each Purchase hereunder (and after giving effect thereto) the Receivable
Interest Percentage does not exceed the Maximum Receivable Interest Percentage.




          (i) No event has occurred and is continuing and no condition exists which constitutes a
Termination Event or Incipient Termination Event.




          (j) All of the representations and warranties of Medco made pursuant to the Originator
Purchase Agreement are true and correct.




ARTICLE V




COVENANTS




          SECTION 5.01 Covenants of the Seller. Until the Final Payout Date:




23









 








          (a) Compliance with Laws, Etc. The Seller will comply in all respects with all
applicable Laws and preserve and maintain its limited liability company existence, rights,
franchises, qualifications, and privileges except to the extent that the failure so to comply with
such Laws or the failure so to preserve and maintain such rights, franchises, qualifications, and
privileges would not reasonably be expected to have a Material Adverse Effect.




          (b) Offices, Records and Books of Account. The Seller will keep its principal place
of business and chief executive office and the office where it keeps its records concerning the
Receivables at (i) the address of the Seller specified in Section 11.02 as of the date of this
Agreement or (ii) upon 30 days’ prior written notice to each Managing Agent, at any other locations
in jurisdictions where all actions reasonably requested by any Managing Agent to protect and
perfect the interests of the Administrative Agent and the Purchasers in the Receivables and the
other assets referred to in Section 2.15 have been taken and completed. The Seller also will
maintain and implement administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Receivables and related Contracts 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 daily identification of each
Receivable and all Collections of and adjustments to each existing Receivable).




          (c) Performance and Compliance with Contracts and Credit and Collection Policy. The
Seller will, at its expense, (i) timely and fully 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) timely and fully comply in all material respects with the
Credit and Collection Policy in regard to each Receivable and the related Contracts.




          (d) Sales, Liens, Etc. The Seller will not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse Claim (except for
Adverse Claims created hereunder) upon or with respect to, any Receivable, Related Security, or
Collections, or upon or with respect to any Deposit Account, the Collection Account or any other
asset of the Seller, or assign any right to receive income in respect thereof.




          (e) Extension or Amendment of Receivables and Contracts. Except as provided in
Section 6.02(c), the Seller will not, and will not permit the Originator to, extend, amend or
otherwise modify the terms of any Receivable.




          (f) Change in Business or Credit and Collection Policy. The Seller will not make any
change in the character of its business or in the Credit and Collection Policy, except for any such
change in a Credit and Collection Policy that would not (i) impair the collectibility of any
Receivables in any material respect or (ii) otherwise be reasonably likely to have a Material
Adverse Effect.




          (g) Change in Payment Instructions to Obligors. The Seller will not add or terminate
any Deposit Account from those listed in Schedule IV to this Agreement, or make any change in its
instructions to Obligors regarding payments to be made in respect of the Receivables or payments to
be made to any Deposit Account, unless the Administrative Agent shall have received notice of such
addition, termination or change (including an updated



24









 






Schedule IV) and a fully executed Control Agreement with respect to each new Deposit Account.
Each Deposit Account shall be maintained at all times in the name of the Seller.




          (h) Deposits to Deposit Accounts. The Seller will cause all Obligors to be instructed
to remit all their payments in respect of Receivables to Deposit Accounts directly by wire transfer
or electronic funds transfer to the relevant Deposit Account Bank. If the Seller or the Servicer
shall receive any Collections directly, the Seller shall promptly (and in any event within one
Business Day) cause such Collections to be deposited into a Deposit Account. The Seller will not
permit funds which do not constitute Collections of Receivables from being deposited into any
Deposit Account.




          (i) Further Assurances; Change in Name or Jurisdiction of Organization, etc.





     (A) The Seller agrees from time to time, at its expense, promptly to execute
and deliver all further instruments and documents, and to take all further actions,
that may be necessary or desirable, or that the Administrative Agent or any Managing
Agent may reasonably request, to perfect, protect or more fully evidence the
Receivable Interests purchased under this Agreement and/or security interest granted
pursuant to this Agreement, or to enable the Conduit Purchasers, the Committed
Purchasers, the Managing Agents or the Administrative Agent to exercise and enforce
their respective rights and remedies under this Agreement. Without limiting the
foregoing, the Seller will, upon the request of the Administrative Agent or any
Managing Agent, execute and file such financing or continuation statements, or
amendments thereto, and such other instruments and documents, that may be necessary
or desirable, or that the Administrative Agent or any Managing Agent may reasonably
request, to perfect, protect or evidence such Receivable Interests and/or such
security interest.




     (B) The Seller authorizes the Administrative Agent to file financing or
continuation statements, and amendments thereto and assignments thereof, relating to
the Receivables and the Related Security, the related Contracts and the Collections
with respect thereto and the other collateral described in Section 2.15 without the
signature of the Seller. A photocopy or other reproduction of this Agreement shall
be sufficient as a financing statement where permitted by law.




     (C) The Seller shall at all times be organized under the laws of the State of
Delaware and shall not take any action to change its jurisdiction of organization.




     (D) The Seller will not change its name, identity, limited liability company
structure or tax identification number unless (1) the Administrative Agent shall
have received at least thirty (30) days advance written notice of such change and
(2) all actions by the Seller necessary or appropriate to perfect or maintain the
perfection of the Receivable Interests and the security interest of the
Administrative Agent granted pursuant to Section 2.15 (including, without
limitation, the filing of all financing statements and the taking of such other



25









 







actions as the Administrative Agent may request in connection with such change)
shall have been duly taken.



          (j) Reporting Requirements. The Seller will cause to be provided to each Managing
Agent the following:





     (i) not later than the earlier of (i) 100 days after the end of each
fiscal year of the Originator and (ii) 5 Business Days after the filing
thereof with the SEC, (A) the audited consolidated balance sheet of the
Originator and related statements of operations, stockholders’ equity and
cash flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on
by PricewaterhouseCoopers LLP or other independent public accountants of
recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition
and results of operations of the Originator and its consolidated
Subsidiaries on a consolidated basis, as of such dates and for such periods,
in conformity with GAAP and (B) the consolidated balance sheet of the Seller
and related statements of operations, stockholders’ equity and cash flows as
of the end of and for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Seller as of such dates
and for such periods, in conformity with GAAP; provided that
delivery within the time frame specified above of copies of the Originator’s
Annual Report on Form 10-K filed with the SEC shall satisfy the requirements
for the delivery of the Originator’s financial statements set forth in this
clause (i);




     (ii) not later than the earlier of (i) 55 days after the end of each of
the first three fiscal quarters of each fiscal year of the Originator and
(ii) 5 Business Days after the filing thereof with the SEC, the unaudited
consolidated balance sheet of the Originator and related statements of
operations, stockholders’ equity and cash flows as of the end of and for
such fiscal quarter and the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end
of) the previous fiscal year, all certified by one of its Financial Officers
as presenting fairly in all material respects the financial condition and
results of operations of the Originator and its consolidated Subsidiaries,
on a consolidated basis, as of such dates and for such periods, in
conformity with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes; provided, however, that delivery within the
time frame specified above of copies of Originator’s Quarterly Report on
Form 10-Q filed with the SEC shall satisfy the requirements for the delivery
of the Originator’s financial statements set forth in this clause (ii);



26









 






     (iii) at the time of the delivery of the financial statements provided
for in clause (i) or clause (ii) of this Section 5.01(j), a certificate of a
Financial Officer of the Originator or the Seller, as applicable, (A)
certifying that, to the best of such officer’s knowledge, no Termination
Event or Incipient Termination Event has occurred and is continuing or, if
any Termination Event or Incipient Termination Event has occurred and is
continuing, specifying the nature and extent thereof and (B) demonstrating,
in reasonable detail, compliance with the financial ratios or requirements
set forth in Schedule VI;




     (iv) as soon as possible and in any event within one Business Day after
obtaining knowledge of the occurrence of each Termination Event or Incipient
Termination Event, a statement of a Financial Officer of the Seller setting
forth details of such Termination Event or Incipient Termination Event and
the action that the Seller has taken and proposes to take with respect
thereto;




     (v) promptly upon a Financial Officer becoming aware thereof, notice of
the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred and are then outstanding, would reasonably
be expected to result in liability of the Originator and its Subsidiaries in
an aggregate amount exceeding $5,000,000;




     (vi) at least thirty (30) days prior to any change in the name,
jurisdiction of organization, corporate structure or tax identification
number of any Transaction Party, a notice setting forth the new name,
jurisdiction of organization, corporate structure or tax identification
number, as applicable, and the effective date thereof;




     (vii) as soon as possible and in any event no later than the day of
occurrence thereof, notice that the Originator has stopped selling or
contributing to the Seller, pursuant to the Originator Purchase Agreement,
all newly arising Receivables;




     (viii) promptly after receipt thereof, copies of all notices received
by the Seller from the Originator under or in connection with the Originator
Purchase Agreement;




     (ix) promptly upon learning thereof, notice of any downgrade in the
Debt Rating (or the withdrawal by either S&P or Moody’s of a Debt Rating) of
Medco, setting forth the Indebtedness affected and the nature of such change
(or withdrawal);




     (x) promptly after the occurrence thereof any pending or threatened
litigation or other event or condition that has had, or could reasonably be
expected to have, a Material Adverse Effect;



27









 






     (xi) promptly upon learning thereof, and in any event no later than the
effective date thereof, notice of any amendment, waiver, termination or
other modification to, or replacement or substitution for, the Credit
Agreement;




     (xii) as soon as possible and in any event within one Business Day
after obtaining knowledge of any event or circumstance described in any of
clauses (i), (ii) or (iii) of the definition of “Rebate Conditions,” a
statement of an Executive Officer of the Originator setting forth in
reasonable detail the nature of such event or circumstance;




     (xiii) promptly upon the occurrence thereof, notice of any amendment to
the Credit and Collection Policy; and




     (xiv) such other information respecting the Receivables or the
condition or operations, financial or otherwise, of any Transaction Party
(including, without limitation, information regarding any pending or
threatened litigation) as the Administrative Agent or any Managing Agent may
from time to time reasonably request.



          (k) Separateness. (i) The Seller shall at all times maintain at least one independent
Manager who (w) is not currently and has not been during the five years preceding the date of this
Agreement an officer, director, manager or employee of, or a major vendor or supplier of services
to, an Affiliate of the Seller or any Other Medco Company, (x) is not a current or former officer
or employee of the Seller, (y) is not a stockholder or equity owner of any Other Medco Company or
any of their respective Affiliates (except through a mutual fund or similar pooled investment
vehicle) and (z) who (A) has prior experience as an independent director for a corporation and/or
independent manager of a limited liability company whose charter documents required the unanimous
consent of all independent directors or independent managers, as the case may be, thereof before
such corporation could consent to the institution of bankruptcy or insolvency proceedings against
it or could file a petition seeking relief under any applicable federal or state law relating to
bankruptcy and (B) has at least three years of employment experience with one or more entities that
provide, in the ordinary course of their respective businesses, or has otherwise been engaged for
at least three years in the business of providing, advisory, management or placement services to
issuers of securitization or structured finance instruments, agreements or securities.





     (ii) The Seller shall not direct or participate in the management of any other
Person’s operations.




     (iii) The Seller shall conduct its business from an office separate from that
of the Other Medco Companies (but which may be located in the same facility as one
or more of the Other Medco Companies). The Seller shall have stationery and other
business forms separate from that of the Other Medco Companies.



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     (iv) The Seller shall at all times be adequately capitalized in light of its
contemplated business.




     (v) The Seller shall at all times provide for its own operating expenses and
liabilities from its own funds except that (A) common overhead expenses may be
shared by the Seller and the Other Medco Companies on a basis reasonably related to
use and (B) the Servicer may pay operating expenses on the Seller’s behalf so long
as the Servicer determines in its good faith business judgment that it will be
reimbursed therefor out of the Seller’s own funds on or before the next succeeding
Settlement Date.




     (vi) The Seller shall maintain its assets and transactions separately from
those of any other Person, and the Seller shall reflect such assets and transactions
in financial statements separate and distinct from those of the Other Medco
Companies and evidence such assets and transactions by appropriate entries in books
and records separate and distinct from those of any other Person. The Seller shall
hold itself out to the public under the Seller’s own name as a legal entity separate
and distinct from any other Person. The Seller shall not hold itself out as having
agreed to pay, or as being liable, primarily or secondarily, for, any obligations of
any other Person.




     (vii) The Seller shall not maintain any joint account with any Other Medco
Company or become liable as a guarantor or otherwise with respect to any
Indebtedness or contractual obligation of any Other Medco Company. The membership
interests of the Seller and any Indebtedness (whether or not represented by
promissory notes) of or issued by the Seller to the Originator or any of its
Subsidiaries may not be pledged to secure Indebtedness of the Originator or any
Other Medco Company.




     (viii) The Seller shall not make any payment or distribution of assets with
respect to any obligation of any other Person or grant an Adverse Claim on any of
its assets to secure any obligation of any Other Person.




     (ix) The Seller shall not make loans, advances or otherwise extend credit to
any other Person except as expressly contemplated by the Originator Purchase
Agreement.




     (x) The Seller shall hold regular duly noticed meetings (or authorize actions
by unanimous written consent) of its Board of Managers, make and retain minutes of
such meetings and otherwise observe all limited liability company formalities.




     (xi) The Seller shall have bills of sale (or similar instruments of assignment)
with respect to all assets (other than Receivables or interests therein acquired
under the Originator Purchase Agreement) purchased from any of the Other Medco
Companies, in each case to the extent such bills of sale would be customarily
prepared in transactions with non-Affiliates.



29









 






     (xii) The Seller shall not engage in any transaction with any other Person,
except as contemplated by this Agreement and the Originator Purchase Agreement.




     (xiii) The Seller shall prepare its financial statements separately from those
of any of the Other Medco Companies and shall insure that any consolidated financial
statements of any Other Medco Company that are filed with the Securities and
Exchange Commission or any other Official Body or are furnished to any creditors of
any Other Medco Company have notes clearly stating that (A) the Seller is the owner
of the Pool Receivables and is a separate entity and (B) the Seller’s assets will be
available first and foremost to satisfy the claims of the creditors of the Seller.




     (xiv) The Seller shall take, or refrain from taking, as the case may be, all
other actions that are necessary to be taken or not to be taken in order to (x)
ensure that the assumptions and factual recitations set forth in the Specified
Bankruptcy Opinion Provisions remain true and correct with respect to the Seller and
(y) comply with those procedures described in such provisions which are applicable
to the Seller.




     (xv) The Seller will not commingle its funds or assets with those of any other
Person or entity. The Seller will provide separately for its expenses and
liabilities from its own funds (except as provided in paragraph (v) above), and will
fairly and reasonably allocate any expenses associated with services provided by
common employees, office space, or other overhead and administrative expenses with
any affiliate.




     (xvi) The Seller will not identify itself as a division of any other person or
entity, and will hold itself out to creditors and the public as a legal entity
separate and distinct from any other entity and will correct any known
misunderstanding regarding its separate identity.




     (xvii) The Seller will transact all business with Affiliates on an arms’ length
basis and pursuant to commercially reasonable agreements.




     (xviii) After entering into the transactions contemplated by this Agreement and
the Originator Purchase Agreement, the Seller will not transfer any of its assets to
the Originator other than (i) transfers for fair or reasonably equivalent
consideration and without the intent to hinder, delay or defraud the Seller’s
creditors, and (ii) distributions that are not fraudulent or in violation of
applicable entity law. If, after entering into the transactions contemplated by
this Agreement and the Originator Purchase Agreement, the Originator transfers any
of its assets to the Seller, the Seller will properly account for such transfers as
capital contributions or sales made in accordance with the Originator Purchase
Agreement and its limited liability company agreement, as applicable.



30









 





          (l) Transaction Documents. The Seller will not terminate, amend, waive or modify, or
consent to any termination, amendment, waiver or modification of, any provision of any Transaction
Document or grant any other consent or other indulgence under any Transaction Document, in each
case without the prior written consent of each Managing Agent. The Seller will perform all of its
obligations under the Originator Purchase Agreement and will enforce the Originator Purchase
Agreement in accordance with its terms. The Seller will take all actions to perfect and enforce
its rights and interests (and the rights and interests of the Administrative Agent and the
Purchasers as assignees of Seller) under the Originator Purchase Agreement as the Administrative
Agent may from time to time reasonably request, including, without limitation,
making claims to which it may be entitled under any indemnity, reimbursement or similar provision
contained in the Originator Purchase Agreement.




          (m) Nature of Business. The Seller will not engage in any business or engage in any
transactions other than the purchase of Receivables, Related Security and Collections from the
Originator and the transactions contemplated by this Agreement and the Originator Purchase
Agreement. The Seller will not create or form any Subsidiary.




          (n) Mergers, Etc. The Seller will not merge with or into or consolidate with or into,
or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of
transactions), all or substantially all of its assets (whether now owned or hereafter acquired) to,
or acquire all or substantially all of the assets or capital stock or other ownership interest of,
or enter into any joint venture or partnership agreement with, any Person, other than as
contemplated by this Agreement and the Originator Purchase Agreement.




          (o) Distributions, Etc. The Seller will not (A) declare or make any dividend payment
or other distribution of assets, properties, cash, rights, obligations or securities on account of
any membership interests or other equity interests in the Seller, or return any capital to its
members or other equity holders as such, or purchase, retire, defease, redeem or otherwise acquire
for value or make any payment in respect of any membership interests or other equity of the Seller
or any warrants, rights or options to acquire any membership interests or other equity of the
Seller, now or hereafter outstanding, (B) prepay, purchase or redeem any Indebtedness (other than
Indebtedness hereunder), (C) lend or advance any funds or (D) repay any loans or advances to, for
or from any of its Affiliates (the amounts described in clauses (A) through (D) being referred to
as “Restricted Payments”); provided, however, that, prior to the Termination Date,
the Seller may declare and pay cash dividends to its sole member, and may make payments in respect
of the Subordinated Note, in each case out of Collections available for such purpose pursuant to
Section 2.04 so long as (i) no Termination Event or Incipient Termination Event shall then exist or
would occur as a result thereof and (ii) any such dividends are in compliance with all applicable
law including the Delaware Limited Liability Company Act, and have been approved by all necessary
and appropriate limited liability company action of the Seller and its Board of Managers.




          (p) Indebtedness. 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 other obligations pursuant to, and, as expressly contemplated



31









 






in, the Originator Purchase Agreement, and (iv) the incurrence of operating expenses in the
ordinary course of business.




          (q) Limited Liability Company Agreement. The Seller will not amend, modify or delete
(or permit any amendment, modification or deletion of) (i) the definition of “Independent Manager”
in its limited liability company agreement as in effect on the Initial Closing Date or (ii) any
other provision of its limited liability company agreement as in effect on the Initial Closing Date
if, pursuant to the terms thereof, such amendment, modification or deletion requires the consent of
the Independent Manager thereunder.




          (r) Tangible Net Worth. The Seller will maintain Tangible Net Worth at all times equal
to at least 3% of the aggregate Purchase Price (as defined in the Originator Purchase Agreement) of
all outstanding Pool Receivables at such time (net of Collections that have been received on such
outstanding Pool Receivables).




          (s) Taxes. The Seller will file all material tax returns and reports required by law
to be filed by it and will promptly pay all taxes and governmental charges at any time owing,
except such as are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established. The Seller will pay when due any taxes payable in
connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of
the Administrative Agent, the Managing Agents, the Conduit Purchasers or the Committed Purchasers.




          (t) Treatment as Sales. The Seller shall not account for or treat (whether in
financial statements or otherwise) the transactions contemplated by the Originator Purchase
Agreement in any manner other than as the sale and/or absolute conveyance of Receivables by Medco
to the Seller.




          (u) Investments. The Seller shall not make any loans to, advances to, investments in
or otherwise acquire any capital stock or equity security of, or any equity interest in, any other
Person.




          (v) Control Agreements. The Seller shall cause all Deposit Accounts and the
Collection Account to be subject at all times to a Control Agreement duly executed by the Servicer,
the Seller, the Administrative Agent and the applicable bank at which such account is maintained.




          SECTION 5.02 Audits. Until the Final Payout Date, each of the Seller and the Servicer
will, at their respective expense, from time to time during regular business hours as requested by
the Administrative Agent or any Managing Agent upon reasonable prior notice, permit the
Administrative Agent, any Managing Agent, or their respective agents or representatives (including
independent public accountants, which may be the Seller’s or the Servicer’s independent public
accountants), (i) to conduct periodic audits of the Receivables, the Related Security and the
related Contracts, books and records and collections systems of the Seller or the Servicer, as the
case may be, (ii) to examine and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the possession or under the control of
the Seller or the Servicer, as the case may be, relating to



32









 






Receivables and the Related Security, including, without limitation, the Contracts, and (iii)
to visit the offices and properties of the Seller or the Servicer, as the case may be, for the
purpose of examining such materials described in clause (ii) above, and to discuss matters relating
to Receivables and the Related Security or the Seller’s or the Servicer’s performance under the
Transaction Documents or under the Contracts with any of the officers or employees of the Seller or
the Servicer, as the case may be, having knowledge of such matters. In addition, upon the
Administrative Agent’s request (acting either on its own initiative or at the request of any
Managing Agent), the Servicer will appoint independent public accountants acceptable to the
Administrative Agent, or utilize any Managing Agent’s representatives or auditors, to prepare and
deliver to the Administrative Agent and each Managing Agent a written report (each an
“Accountants’ Report”) with respect to the Receivables and the Servicer Reports (including,
in each case, the systems, procedures and records relating thereto) on a scope and in a form
reasonably requested by the Administrative Agent and the Managing Agents. On or prior to the end
of the sixth calendar month following the Initial Closing Date, an interim audit (the “Interim
Audit”), the scope of which shall be to validate the information provided in the Monthly Report,
shall be conducted at the Servicer’s expense and an Accountants’ Report submitted promptly
thereafter. Each Accountants’ Report shall be at the expense of the Servicer; provided,
however, that so long as no Termination Event or Incipient Termination Event has occurred
and is continuing, the Administrative Agent may only request an Accountant’s Report at the
Servicer’s expense once per calendar year (not including the Accountants’ Report relating to the
Interim Audit); and provided, further, that any follow-up audit resulting from a
material discrepancy disclosed in such report shall also be at the Servicer’s expense. The
Administrative Agent and each Managing Agent shall use commercially reasonable efforts to minimize
the disruption to the Servicer’s business in connection with any such audit, examination or visit.




          SECTION 5.03 Additional Covenants of the Servicer.




          (a) Compliance with Laws, Etc. The Servicer will comply in all respects with all
applicable Laws and preserve and maintain its corporate existence, rights, franchises,
qualifications, and privileges except to the extent that the failure so to comply with such Laws or
the failure so to preserve and maintain such rights, franchises, qualifications, and privileges
would not reasonably be expected to have a Material Adverse Effect.




          (b) Records and Books of Account. The Servicer will maintain and implement
administrative and operating procedures (including, without limitation, an ability to recreate
records evidencing Receivables and related Contracts 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 daily identification of each Receivable and all
Collections of and adjustments to each existing Receivable).




          (c) Compliance with Contracts and the Credit and Collection Policy. The Servicer
will (i) timely and fully 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) timely and fully comply in all material respects with the Credit and
Collection Policy in regard to each Receivable and the Contracts.




33









 








          (d) Extension or Amendment of Receivables and Contracts. Except as provided in
Section 6.02(c), the Servicer will not extend, amend or otherwise modify the terms of any
Receivable.




          (e) Change in Credit and Collection Policy. The Servicer will not make any change in
the Credit and Collection Policy, except for any such change that would not (i) impair the
collectibility of any Receivables in any material respect or (ii) otherwise be reasonably likely to
have a Material Adverse Effect. In the event that the Servicer makes any material change to the
Credit and Collection Policy, it shall, promptly following such change, provide the Administrative
Agent and each Managing Agent with an updated Credit and Collection Policy and a summary of all
material changes.




          (f) Change in Payment Instructions to Obligors. The Servicer will not add or
terminate any Deposit Account from those listed in Schedule IV to this Agreement, or make any
change in its instructions to Obligors regarding payments to be made in respect of the Receivables
or payments to be made to any Deposit Account, unless the Administrative Agent shall have received
notice of such addition, termination or change (including an updated Schedule IV) and a fully
executed Control Agreement with respect to each new Deposit Account. Each Deposit Account shall be
maintained at all times in the name of the Seller.




          (g) Deposits to Deposit Accounts. The Servicer will instruct all Obligors to remit
all their payments in respect of Receivables to Deposit Accounts directly by wire transfer or
electronic funds transfer to the relevant Deposit Account Bank. If the Servicer shall receive any
Collections directly, the Servicer shall promptly (and in any event within one Business Day) cause
such Collections to be either (i) deposited into a Deposit Account or (ii) in the case of checks
received by the Servicer, mailed to a Deposit Account Bank for deposit into a Deposit Account. The
Servicer will not permit funds which do not constitute Collections of Receivables from being
deposited into any Deposit Account.




          (h) Control Agreements. The Servicer shall cause all Deposit Accounts and the
Collection Account to be subject at all times to a Control Agreement duly executed by the Servicer,
the Seller, the Administrative Agent and the applicable bank.




          (i) Billing of Receivables. The Servicer shall bill all Unbilled Receivables as soon
as practicable under the terms of the relevant Contract, and shall furnish to the applicable
Obligor all supporting data and other information required to be furnished under the terms of such
Contract in order to cause such Receivable to become due and payable.




          (j) Other Covenants. Medco (both individually and in its capacity as Servicer) shall
perform and comply with all covenants required to be performed or observed by it pursuant to the
Originator Purchase Agreement and each other Transaction Document to which it is a party.




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ARTICLE VI




ADMINISTRATION
AND COLLECTION OF RECEIVABLES




          SECTION 6.01 Designation of Servicer. The servicing, billing, administration and
collection of the Pool Receivables shall be conducted by the Servicer so designated hereunder from
time to time. Until the Administrative Agent (with the consent or at the direction of the Majority
Managing Agents) gives notice to the Seller of the designation of a new Servicer (which notice may
be given at any time following the occurrence and during the continuation of a Servicer Replacement
Event), Medco is hereby designated as, and hereby agrees to perform the duties and obligations of,
the Servicer pursuant to the terms hereof. Medco may not resign from the obligations and
liabilities hereby imposed on it, unless required to do so by law as evidenced by an opinion of
counsel in form and substance satisfactory to each Managing Agent. The Administrative Agent (with
the consent or at the direction of the Majority Managing Agents), at any time after the occurrence
and during the continuation of a Servicer Replacement Event, may designate as Servicer any Person
(including itself) to succeed Medco or any successor Servicer, on such terms and conditions as the
Administrative Agent and such successor Servicer shall agree. The Servicer may, with the prior
consent of the Administrative Agent, subcontract with any other Person for the servicing,
administration or collection of the Receivables. Any such subcontract shall not affect the
Servicer’s liability for performance of its duties and obligations pursuant to the terms hereof.
Without limiting the generality of the foregoing, any action taken or omitted to be taken by any
Person that has entered into a subcontract with the Servicer shall be deemed to be an action or
omission by the Servicer (including, without limitation, for purposes of determining whether any
Receivable is a Diluted Receivable and for purposes of Sections 6.06 and 10.01).




          SECTION 6.02 Duties of Servicer. (a) The Servicer shall take or cause to be taken all
such actions as may be necessary or advisable to bill and collect each Pool Receivable from time to
time, all in accordance in all material respects with applicable Laws, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy and the terms of the Contracts.
The Seller, each Purchaser and the Administrative Agent hereby appoint the Servicer, from time to
time designated pursuant to Section 6.01, as their agent to enforce their respective rights and
interests in the Pool Receivables, the Related Security and the related Contracts. In performing
its duties as Servicer, the Servicer shall exercise the same care and apply the same policies as it
would exercise and apply if it owned such Receivables and shall act in such manner as it reasonably
deems to be in the best interests of the Purchasers and the Administrative Agent. Following the
occurrence and during the continuation of a Servicer Replacement Event the Administrative Agent
(with the consent or at the direction of the Majority Managing Agents) shall have the sole right to
direct the Servicer to commence or settle any legal action to enforce collection of any Pool
Receivable or any Related Security with respect thereto.




          (b) The Servicer shall administer the Collections in accordance with Article II.




          (c) If no Termination Event shall have occurred and be continuing, the Servicer, may, in
accordance with the Credit and Collection Policy, extend the maturity or adjust



35









 






the Outstanding Balance of any Pool Receivable as the Servicer deems appropriate to maximize
Collections thereof; provided, however, that the classification of any such
Receivable as a Delinquent Receivable or Defaulted Receivable shall not be affected by any such
extension; provided, further, that if such Receivable is an Eligible Receivable,
the Servicer shall not amend or modify such Receivable or any term or condition of any Contract
related thereto in a manner that would cause such Receivable to cease to be an Eligible Receivable;
provided, further, that the Servicer shall not, nor permit the Originator to,
amend, modify or waive any term or condition of any term or condition of any Receivable or any
Contract related thereto, unless such amendment, modification or waiver (i) is made in accordance
with the Credit and Collection Policy and (ii) could not reasonably be expected to cause any
existing Receivable to cease to be an Eligible Receivable or otherwise have a Material Adverse
Effect. The Servicer shall notify each Managing Agent of any such extension or adjustment for a
particular Obligor during any calendar year that affects Pool Receivables having an aggregate
Outstanding Balance of $50,000,000 or more. Following the occurrence and during the continuation
of a Termination Event, the Servicer may grant such extensions or adjustments only with the prior
written consent of the Administrative Agent (acting with the consent or at the direction of the
Majority Managing Agents). In no event shall the Servicer be entitled to make any Purchaser, any
Managing Agent or the Administrative Agent a party to any litigation involving the Transaction
Documents or the Receivables without such Purchaser’s, such Managing Agent’s or the Administrative
Agent’s prior written consent.




          (d) The Servicer shall hold in trust for the Seller, the Administrative Agent, the Managing
Agents and each Purchaser, in accordance with their respective interests, all documents,
instruments and records (including, without limitation, computer tapes or disks) which evidence or
relate to Pool Receivables or Related Security. The Servicer shall mark the Seller’s and the
Originator’s master data processing records evidencing the Pool Receivables with a legend,
reasonably acceptable to the Administrative Agent, evidencing that Receivable Interests therein
have been sold. At the request of the Administrative Agent following a Termination Event or
Involuntary Bankruptcy Event, the Servicer shall mark each Contract and each invoice which evidence
or relate to Pool Receivables with a legend, reasonably acceptable to the Administrative Agent,
evidencing that Receivable Interests therein have been sold and shall deliver to the Administrative
Agent a copy (which may be in electronic form) of each invoice evidencing each Receivable.




          (e) The Servicer shall, as soon as practicable following receipt and identification thereof,
and in any event within one Business Day, turn over to the Seller or such other Person as may be
entitled thereto any cash collections or other cash proceeds received in the Deposit Accounts and
not constituting Collections of Receivables.




          SECTION 6.03 Reports. (a)  Monthly Report. No later than 4:00 p.m., New York
City time, on each Monthly Reporting Date, the Servicer shall deliver to each Managing Agent and
the Seller a monthly report, substantially in the form of Annex A-1, containing the information
listed in Annex A-1 with respect to the immediately preceding Calculation Period and such other
information as the Administrative Agent or any Managing Agent may reasonably request.




36









 








          (b) Weekly Reports. During any Rating Level 2 Period, the Servicer shall deliver to
each Managing Agent and the Seller, no later than 11:00 a.m., New York City time, on the second
Business Day of each calendar week, a Weekly Report containing the information listed in Annex A-2
with respect to the immediately preceding calendar week, and such other information as the
Administrative Agent or any Managing Agent may reasonably request.




          (c) Daily Reports. During any Rating Level 3 Period or Rating Level 4 Period, the
Servicer shall deliver to each Managing Agent and the Seller, no later than 11:00 a.m., New York
City time, on each Business Day, a Daily Report setting forth total Collections received and
Receivables originated during the immediately preceding Business Day, the Net Receivables Pool
Balance at the end of the immediately preceding Business Day, and such other information as the
Administrative Agent or any Managing Agent may reasonably request.




          (d) Reports following Termination Event. On each Business Day after the occurrence of
a Termination Event, to the extent the Servicer is not otherwise required to deliver Daily Reports
pursuant to this Section 6.03, the Servicer shall deliver to each Managing Agent a daily report
setting forth Collections received on the previous Business Day and the Outstanding Balance of
Eligible Receivables as of the close of business on the previous Business Day, and such other
information as the Administrative Agent or any Managing Agent may reasonably request.




          (e) Transmission of Servicer Reports. The Servicer shall transmit each Servicer
Report to each Managing Agent by electronic mail. In addition, the Servicer shall transmit a copy
of each such Servicer Report to the Managing Agents by facsimile (certified by a Financial Officer
of the Servicer or such other employee of the Servicer as shall have primary responsibility for the
preparation of such report and shall have been authorized to certify Servicer Reports hereunder by
a Financial Officer).




          (f) Notice of Termination Events. The Servicer shall provide to each Managing Agent,
promptly, and in any event within one Business Day after the Servicer obtains knowledge thereof,
notice of any Termination Event or Incipient Termination Event.




          (g) Notice of Downgrades. Promptly upon learning thereof, the Servicer shall provide
to each Managing Agent notice of any downgrade in the Debt Rating (or the withdrawal by either S&P
or Moody’s of a Debt Rating) of the Originator, setting forth the Indebtedness affected and the
nature of such change (or withdrawal).




          (h) Other Information. The Servicer shall provide to each Managing Agent, promptly
upon request, such other information respecting the Receivables or the condition or operations,
financial or otherwise, of the Servicer (including, without limitation, information regarding any
pending or threatened litigation) as the Administrative Agent or any Managing Agent may from time
to time reasonably request.




          SECTION 6.04 Certain Rights of the Administrative Agent. (a) At any time following
the occurrence and during the continuation of (i) a Termination Event, (ii) an Involuntary
Bankruptcy Event, (iii) Rating Level 3 Period or (iv) Rating Level 4 Period, the Administrative
Agent may have each Deposit Account transferred into the name of the



37









 






Administrative Agent and/or assume exclusive control of the Deposit Accounts, and may take
such actions to effect such transfer or assumption as it may determine to be necessary or
appropriate (including, without limitation, delivering the notices attached to the Control
Agreements).




          (b) At any time following the occurrence and during the continuation of a Termination Event or
a Rating Level 4 Period:





     (i) At the Administrative Agent’s request (acting on its own initiative or at
the direction of the Majority Managing Agents) and at the Seller’s expense, the
Servicer shall (and if the Servicer shall fail to do so within three Business Days,
the Administrative Agent may) notify each Obligor of Receivables of the ownership of
Receivable Interests under this Agreement and direct that payments be made directly
to the Administrative Agent or its designee.




     (ii) At the Administrative Agent’s request (acting on its own initiative or at
the direction of the Majority Managing Agents) and at the Seller’s or the Servicer’s
expense, the Seller and the Servicer shall (A) assemble all of the documents,
instruments and other records (including, without limitation, computer tapes and
disks) that evidence or relate to the Receivables and the related Contracts and
Related Security, or that are otherwise necessary or desirable to collect the
Receivables, and shall make the same available to the Administrative Agent at a
place selected by the Administrative Agent or its designee, and (B) segregate all
cash, checks and other instruments received by it from time to time constituting
Collections of Receivables in a manner acceptable to the Administrative Agent and,
promptly upon receipt, remit all such cash, checks and instruments, duly indorsed or
with duly executed instruments of transfer, to the Administrative Agent or its
designee.



          (c) Each of the Seller and the Servicer authorizes the Administrative Agent, and hereby
irrevocably appoints the Administrative Agent as its attorney-in-fact coupled with an interest,
with full power of substitution and with full authority in place of the Seller or the Servicer,
following the occurrence and during the continuation of a Termination Event or any Rating Level 4
Period, to take any and all steps in the Seller’s or the Servicer’s name and on behalf of the
Seller or the Servicer that are necessary or desirable, in the determination of the Administrative
Agent, to collect amounts due under the Receivables, including, without limitation, endorsing the
Seller’s, the Servicer’s or the Originator’s name on checks and other instruments representing
Collections of Receivables and enforcing the Receivables and the Related Security and related
Contracts.




          SECTION 6.05 Rights and Remedies. (a) If the Servicer or the Seller fails to perform
any of its obligations under this Agreement, the Administrative Agent may (but shall not be
required to) itself perform, or cause performance of, such obligation; and the Administrative
Agent’s costs and expenses reasonably incurred in connection therewith shall be payable by the
Servicer or the Seller, as applicable.




38









 








          (b) The Seller and the Originator shall perform their respective obligations under the
Contracts related to the Receivables to the same extent as if Receivable Interests had not been
sold and the exercise by the Administrative Agent on behalf of the Conduit Purchasers, the Managing
Agents and the Committed Purchasers of their rights under this Agreement shall not release the
Originator or the Seller from any of their duties or obligations with respect to any Receivables or
related Contracts. None of the Administrative Agent, the Conduit Purchasers, the Managing Agents or
the Committed 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 or
the Originator thereunder.




          (c) The Administrative Agent’s rights and powers under this Article VI shall not subject the
Administrative Agent to any liability if any action taken by it proves to be inadequate or invalid,
nor shall such powers confer any obligation whatsoever upon the Administrative Agent.




          SECTION 6.06 Indemnities by the Servicer. Without limiting any other rights that the
Indemnified Parties may have hereunder or under applicable law, and in consideration of its
appointment as Servicer, the Servicer hereby agrees to indemnify each Indemnified Party from and
against any and all damages, losses, claims, liabilities, deficiencies, costs, disbursements and
expenses, including, without limitation, interest, penalties, amounts paid in settlement and
reasonable attorneys’ fees (all of the foregoing being collectively referred to as “Special
Indemnified Amounts”) arising out of or resulting from any of the following (excluding,
however, (a) Special Indemnified Amounts to the extent a final non-appealable judgment of a court
of competent jurisdiction finds that such Special Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of such Indemnified Party and (b) any income taxes or
any other tax or fee measured by income incurred by such Indemnified Party arising out of or as a
result of this Agreement or the ownership of Receivable Interests or in respect of any Receivable
or any Contract):





     (i) any representation, warranty, certification, report or other statement made
or deemed made by the Servicer under or in connection with this Agreement or any
other Transaction Document which shall have been incorrect in any respect when made
or deemed made;




     (ii) the failure by the Servicer to comply with any applicable Law with respect
to any Receivable or Contract;




     (iii) the failure to have filed, or any delay in filing, financing statements
or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any Receivables, the Contracts
and the Related Security and Collections in respect thereof, whether at the time of
any purchase or reinvestment or at any subsequent time;




     (iv) any failure of the Servicer to perform its duties or obligations in
accordance with the provisions of this Agreement or any other Transaction Document;



39









 






     (v) the commingling of Collections of Receivables at any time by the Servicer
or any of its Affiliates (other than the Seller) with other funds;




     (vi) any action by the Servicer (other than an action required by the
Transaction Documents) reducing or impairing the rights of the Administrative Agent,
the Conduit Purchasers or the Committed Purchasers with respect to any Receivable or
the value of any Receivable;




     (vii) any Servicing Fees or other costs and expenses payable to any replacement
Servicer, to the extent in excess of the Servicing Fees payable to Medco in its
capacity as Servicer hereunder;




     (viii) any claim brought by any Person other than an Indemnified Party arising
from any activity by the Servicer or its Affiliates in servicing, administering,
billing or collecting any Receivable; or




     (ix) any change in the Credit and Collection Policy which impairs the
collectibility of any Receivable or the ability of the Servicer to perform its
obligations under this Agreement.



          Notwithstanding anything to the contrary in this Agreement, solely for purposes of the
Servicer’s indemnification obligations in clauses (i) and (iv) of this Section 6.06, any
representation, warranty or covenant qualified by the occurrence or non-occurrence of a Material
Adverse Effect or similar concepts of materiality shall be deemed to be not so qualified. It is
expressly agreed and understood by the parties hereto (x) that the foregoing indemnification is not
intended to, and shall not, constitute a guarantee of collectibility or payment of the Receivables
and (y) that nothing in this Section 6.06 shall require the Servicer to indemnify any Person for
Receivables that are not collected, not paid or uncollectible solely on account of the insolvency,
bankruptcy, or financial inability to pay of the applicable Obligor except to the extent of any
Indemnified Amounts arising from the improper characterization of any such Receivables as Eligible
Receivables.




          SECTION 6.07 Administrative Agent Account. (a) At the request of the Administrative
Agent, upon the earliest to occur of (i) 30 days after the commencement of a Ratings Level 2
Period, (ii) two Business Days after the commencement of a Ratings Level 3 Period or Ratings Level
4 Period, (iii) the Termination Date or (iv) the occurrence and continuance of any Termination
Event or any Involuntary Bankruptcy Event, the Servicer shall (and if the Servicer fails to do so,
the Administrative Agent may) cause to be established with Citibank (or another bank satisfactory
to each Managing Agent) in the name of the Administrative Agent, a segregated account (the
“Administrative Agent Account”), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Purchasers. Upon the establishment of such
account, such account shall constitute the “Collection Account” for all purposes hereunder. The
Servicer shall deliver, or cause to be delivered to the Administrative Agent, as soon as
practicable and in any event no later than two Business Days after such Administrative Agent
Account is required to be established as provided above, a Control Agreement with respect to such
account in substantially the form attached as



40









 






Annex B-2 or in such other form as the Administrative Agent may approve, duly executed by the
Seller, the Servicer and the bank at which such account is maintained.




          (b) Each of the Seller and the Servicer agrees that the Administrative Agent shall have
exclusive dominion and control over the Administrative Agent Account and all monies, instruments
and other property from time to time deposited in or credited to the Administrative Agent Account;
provided, however, that, until notified to the contrary by the Administrative
Agent, the Servicer shall have the right to withdraw funds from the Administrative Agent Account
for application in accordance with Sections 2.04 or 2.05, as applicable. The Servicer shall cause
the Administrative Agent Account to be subject at all times to a Control Agreement, duly executed
by the Seller, the Servicer, the Administrative Agent and the bank at which the Administrative
Agent Account is maintained.




          (c) The Servicer may invest funds on deposit in the Administrative Agent Account, reinvest
proceeds of any such investments which may mature or be sold, and invest interest or other income
received from any such investments, in each case in such Permitted Investments as the Servicer may
select; provided, however, that each such Permitted Investment shall have a
maturity date no later than the next succeeding Settlement Date. Such proceeds, interest or income
which are not so invested or reinvested in Permitted Investments shall, except as otherwise
provided in this Agreement, be deposited and held in the Administrative Agent Account. Neither the
Administrative Agent nor any of its Affiliates shall be liable to the Seller, the Servicer or any
other Person for, or with respect to, any decline in value of amounts on deposit in the
Administrative Agent Account. Permitted Investments from time to time purchased and held pursuant
to this Section 6.07 shall be referred to as “Collateral Securities” and shall, for
purposes of this Agreement, constitute part of the funds held in the Administrative Agent Account
in amounts equal to their respective outstanding principal amounts. Each such Permitted Investment
shall be made in the name of the Administrative Agent or its designee.




          (d) Following the occurrence of any Termination Event, the Administrative Agent may, at any
time or from time to time after funds are either deposited in the Administrative Agent Account or
invested in Collateral Securities, and after selling, if necessary, any Collateral Securities,
withdraw funds then held in the Administrative Agent Account and remit the same to the respective
Purchaser Group Account for each Purchaser Group (ratably in proportion to the Capital held by the
Purchasers in each such Purchaser Group or, to the extent no such Capital remains outstanding, in
proportion to the remaining Seller Obligations then owing to the members of each such Purchaser
Group). The Seller agrees that Permitted Investments are of a type customarily sold on a
recognized market and, accordingly, no notice of sale of any Permitted Investments shall be
required. To the extent notice of sale of any Collateral Securities shall be required by law, at
least ten days’ notice to the Seller of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification. The Administrative
Agent may adjourn any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the time and place to
which it was so adjourned.




          (e) Except as expressly provided herein, the Administrative Agent shall have the sole right of
withdrawal with respect to the Administrative Agent Account. None of the Seller, the Servicer or
any Person claiming on behalf of or through the Seller or the Servicer shall



41









 






have any right to withdraw any of the funds held in the Administrative Agent Account except,
in the case of the Servicer, for withdrawals made in accordance with Section 2.04 or 2.05, as
applicable. The Administrative Agent may at any time terminate the Servicer’s right to make
withdrawals from the Administrative Agent Account. In such event, the Administrative Agent shall
make all withdrawals and distributions from the Administrative Agent Account required to be made
pursuant to Section 2.04 or 2.05, as applicable, that would otherwise be made by the Servicer.




          (f) The Administrative Agent shall exercise reasonable care in the custody and preservation of
any funds held in the Administrative Agent Account and shall be deemed to have exercised such care
if such funds are accorded treatment substantially equivalent to that which the Administrative
Agent accords its own property, it being understood that the Administrative Agent shall not have
any responsibility for taking any necessary steps to preserve rights against any parties with
respect to any such funds.




          (g) The Servicer shall cause the bank at which the Administrative Agent Account is maintained
to deliver a duplicate copy of all statements relating to the Administrative Agent Account directly
to the Administrative Agent.




          (h) On the Final Payout Date, any funds remaining on deposit in the Administrative Agent
Account shall be paid to the Seller.




          SECTION 6.08 Servicer Replacement Event. At any time following the occurrence and
during the continuation of (i) any Termination Event or (ii) a Rating Level 4 Period (each, a
“Servicer Replacement Event”), the Administrative Agent may (with the consent or at the
direction of the Majority Managing Agents) designate another Person to succeed Medco as the
Servicer. If replaced as Servicer, Medco agrees that it will (i) terminate, and cause each
existing sub-servicer to terminate, its collection activities in a manner and to the extent
requested by the Administrative Agent to facilitate the transition to a new Servicer and (ii)
transfer to the Administrative Agent (or its designee), or (to the extent permitted by applicable
Law and contract) license to the Administrative Agent (or its designee) the use of, all software
used in connection with the billing and collection of the Receivables. To the extent any such
transfer or license would require the payment of any license fee or other amount the Servicer
agrees to pay such fee or other amount out of its own funds promptly upon demand by the
Administrative Agent. The Servicer shall cooperate with and assist any successor Servicer in the
performance of its responsibilities as Servicer (including, without limitation, providing access
to, and transferring, to such successor Servicer all records related to the Receivables and
allowing (to the extent permitted by applicable law and contract) the successor Servicer to use all
licenses, hardware or software necessary or desirable to collect or obtain or store information
regarding the Receivables). Notwithstanding its removal as Servicer, Medco irrevocably agrees (to
the extent requested to do so by the Administrative Agent) (i) to continue to bill the Receivables
and to provide all supporting data required to be delivered to, or requested by, the Obligors
pursuant to the Contracts and (ii) to act as the data-processing agent for any successor Servicer,
in each case in substantially the same manner as Medco conducted such functions while it acted as
the Servicer.




42









 








ARTICLE VII




TERMINATION EVENTS




          SECTION 7.01 Termination Events. If any of the following events (each a
“Termination Event”) shall occur and be continuing:




          (a) any Transaction Party shall fail to make any payment or deposit required to be made by it
hereunder in respect of Capital when due; or any Transaction Party shall fail to make any other
payment or deposit required to be made by it hereunder or under any of the Transaction Documents
when due hereunder or thereunder and such failure shall remain unremedied for one Business Day; or




          (b) any representation, warranty, certification or statement made by any Transaction Party in
this Agreement, any other Transaction Document to which it is a party or in any other document
delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect
(or, to the extent any such representation or warranty is qualified by materiality or Material
Adverse Effect, such representation or warranty shall prove to have been incorrect in any respect
subject only to the materiality or Material Adverse Effect qualification set forth therein) when
made or deemed made; or




          (c) any Transaction Party shall fail to perform or observe (A) any term, covenant or agreement
contained in Section 5.01(a) (as to maintenance of existence only), 5.01(d), 5.01(j)(iv), 5.01(n)
or 5.01(v) of this Agreement or Section 5.01(a) (as to maintenance of existence only), 5.01(d) or
5.01(l)(iv) of the Originator Purchase Agreement or (B) any other term, covenant or agreement
contained in this Agreement or any other Transaction Document on its part to be performed or
observed and, solely in the case of this clause (B), such failure shall remain unremedied for ten
(10) days after such Transaction Party has knowledge or receives notice thereof; or




          (d) (i) any Transaction Party shall fail to make any payment (whether of principal or
interest and regardless of amount) in respect of any Material Indebtedness, when and as the same
shall become due and payable; or (ii) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity, other than at the election of the
Originator or any Subsidiary, or that, subject to any applicable grace period, enables or permits
(with or without the giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided, however, that this clause
(d)(ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale
or transfer of the property or assets securing such Indebtedness; or




          (e) any Event of Bankruptcy shall occur with respect to any Transaction Party; or




          (f) the Administrative Agent, on behalf of the Purchasers, shall, for any reason, fail or
cease to have a valid and perfected first priority security interest in the



43









 






Receivables and Related Security and Collections with respect thereto or there shall exist any
Adverse Claims (except as created in favor of the Seller pursuant to the Originator Purchase
Agreement or in favor of the Administrative Agent and the Purchasers pursuant to this Agreement) on
the Receivables or the Related Security or Collections with respect thereto; or




          (g) any Change of Control shall occur or the Originator shall cease to own directly 100% of
the issued and outstanding Equity Interests of the Seller; or




          (h) there shall have occurred since the Initial Closing Date any event or condition which has
had or could reasonably be expected to have a material adverse effect on (A) the ability of any
Transaction Party to perform its obligations under the Transaction Documents or (B) the
collectibility of the Receivables; or




          (i) the Receivable Interest Percentage exceeds the Maximum Receivable Interest Percentage
unless, within two Business Days of obtaining notice or knowledge thereof, the Seller reduces the
Capital from previously received Collections or other funds available to the Seller so as to reduce
the Receivable Interest Percentage to less than or equal to the Maximum Receivable Interest
Percentage; or




          (j) the average of the Dilution Ratios for any three consecutive Calculation Periods exceeds
4.50%; or




          (k) the average of the Default Ratios for any three consecutive Calculation Periods exceeds
3.25%; or




          (l) the average of the Delinquency Ratios for any three consecutive Calculation Periods
exceeds 3.00%; or




          (m) the average of the Loss-to-Liquidation Ratios for any twelve consecutive Calculation
Periods exceeds 1.00%; or




          (n) the average of the Portfolio Turnover Rates for any three consecutive Calculation Periods
exceeds 8; or




          (o) any Transaction Party receives notice or becomes aware that (i) a notice of federal tax
lien has been filed against any Transaction Party or (ii) a notice of lien has been filed against
any Transaction Party under Section 412(n) of the IRC or Section 302(f) of ERISA for a failure to
make a required installment or other payment to a plan to which Section 412(n) of the IRC or
Section 302(f) of ERISA applies; or




          (p) a “Termination Event” shall occur under (and as defined in) the Originator Purchase
Agreement; or




          (q) one or more judgments for the payment of money in an aggregate amount in excess of
$25,000,000 or, in the case of the Seller, in an aggregate amount in excess of $25,000 (except in
each case to the extent covered by insurance or other right of reimbursement or indemnification),
or which have or would reasonably be expected to have a Material Adverse Effect, shall be rendered
against the Originator, the Seller, any Subsidiary or any combination





44












 




thereof and the same shall remain undischarged for a period of 60 consecutive days during which
execution shall not be effectively stayed or bonded pending appeal; or




          (r) any of this Agreement or the Originator Purchase Agreement shall cease, for any reason, to
be in full force and effect, or any Transaction Party shall so assert in writing or any Transaction
Party shall otherwise seek to terminate or disaffirm its obligations under any such Transaction
Document; or




          (s) any Financial Covenant Default shall occur; or




          (t) an ERISA Event shall have occurred and shall be outstanding that, when taken together with
all other ERISA Events that have occurred and are then outstanding, would reasonably be expected to
result in liability of the Originator and its Subsidiaries in an aggregate amount exceeding
$25,000,000, individually or in the aggregate;




then, and in any such event, the Administrative Agent may, in its discretion, and shall, at the
direction of any Managing Agent or the Majority Committed Purchasers, declare the Termination Date
to have occurred upon notice to the Seller (in which case the Termination Date shall be deemed to
have occurred); provided, however, that the Termination Date shall occur
automatically upon the occurrence of any Event of Bankruptcy with respect to any Transaction Party
without any requirement for the giving of notice. Upon any such declaration or upon such automatic
occurrence, the Purchasers, the Managing Agents and the Administrative Agent shall have, in
addition to the rights and remedies which they may have under this Agreement, all other rights and
remedies provided after default under the UCC and under other applicable law, which rights and
remedies shall be cumulative.




ARTICLE VIII




THE ADMINISTRATIVE AGENT




          SECTION 8.01 Authorization and Action. Each Purchaser hereby appoints and authorizes
the Administrative Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. The Administrative Agent shall not have any
duties other than those expressly set forth in the Transaction Documents, and no implied
obligations or liabilities shall be read into any Transaction Document, or otherwise exist, against
the Administrative Agent. The Administrative Agent does not assume, nor shall it be deemed to have
assumed, any obligation to, or relationship of trust or agency with, any Transaction Party, the
Conduit Purchasers, the Committed Purchasers or the Managing Agents. Notwithstanding any provision
of this Agreement or any other Transaction Document, in no event shall the Administrative Agent
ever be required to take any action which exposes the Administrative Agent to personal liability or
which is contrary to any provision of any Transaction Document or applicable law.




          SECTION 8.02 Agent’s Reliance, Etc. Neither the Administrative Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or omitted to be
taken by it or them as Administrative Agent under or in connection with this




45









 




Agreement (including, without limitation, the Administrative Agent’s servicing, administering
or collecting Receivables as Servicer), in the absence of its or their own gross negligence or
willful misconduct. Without limiting the generality of the foregoing, the Administrative Agent: (a)
may consult with legal counsel (including counsel for a Managing Agent, the Seller or the
Servicer), independent certified public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (b) makes no warranty or representation to any
Managing Agent, Conduit Purchaser or Committed Purchaser (whether written or oral) and shall not be
responsible to any Managing Agent, Conduit Purchaser or Committed Purchaser for any statements,
warranties or representations (whether written or oral) made in or in connection with this
Agreement or any other Transaction Document; (c) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions of this Agreement
or any other Transaction Document on the part of any Transaction Party or to inspect the property
(including the books and records) of any Transaction Party; (d) shall not be responsible to any
Managing Agent, Conduit Purchaser or Committed Purchaser for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other Transaction
Document; and (e) shall incur no liability under or in respect of this Agreement by acting upon any
notice (including notice by telephone), consent, certificate or other instrument or writing (which
may be by telecopier) believed by it to be genuine and signed or sent by the proper party or
parties.




          SECTION 8.03 CNAI and Affiliates. The obligation of Citibank to purchase Receivable
Interests under this Agreement may be satisfied by CNAI or any of its Affiliates. With respect to
any Receivable Interest or interest therein owned by it, CNAI and its Affiliates shall have the
same rights and powers under this Agreement as any Committed Purchaser and may exercise the same as
though it were not the Administrative Agent. CNAI and any of its Affiliates may generally engage in
any kind of business with the Transaction Parties or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of the Transaction Parties or
any Obligor or any of their respective Affiliates, all as if CNAI were not the Administrative Agent
and without any duty to account therefor to the Managing Agents, the Conduit Purchasers or the
Committed Purchasers.




          SECTION 8.04 Indemnification of Administrative Agent. Each Committed Purchaser agrees
to indemnify the Administrative Agent (to the extent not reimbursed by the Transaction Parties),
ratably according to the respective Percentage of such Committed Purchaser, from and against any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out of this Agreement
or any other Transaction Document or any action taken or omitted by the Administrative Agent under
this Agreement or any other Transaction Document, provided that no Committed Purchaser
shall be liable for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative
Agent’s gross negligence or willful misconduct.




          SECTION 8.05 Delegation of Duties. The Administrative Agent may execute any of its
duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning
all matters pertaining to such duties. The Administrative Agent shall not be




46









 




responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care.




          SECTION 8.06 Action or Inaction by Administrative Agent. The Administrative Agent
shall in all cases be fully justified in failing or refusing to take action under any Transaction
Document unless it shall first receive such advice or concurrence of the Majority Managing Agents,
and assurance of its indemnification by the Committed Purchasers, as it deems appropriate. The
Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Transaction Document in accordance with a request or at the
direction of the Majority Managing Agents, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all Conduit Purchasers, Committed Purchasers
and the Managing Agents. The Purchasers, the Managing Agents, and the Administrative Agent agree
that unless any action to be taken by the Administrative Agent under a Transaction Document (i)
specifically requires the advice or concurrence of all the Managing Agents or all the Purchasers or
(ii) may be taken by the Administrative Agent alone or without any advice or concurrence of any
Managing Agent or any Purchaser, then the Administrative Agent may take action based upon the
advice or concurrence of the Majority Managing Agents.




          SECTION 8.07 Notice of Events of Termination; Action by Administrative Agent. The
Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any
Incipient Termination Event or of any Termination Event unless the Administrative Agent has
received notice from any Managing Agent, Purchaser or the Seller stating that an Incipient
Termination Event or Termination Event has occurred hereunder and describing such Incipient
Termination Event or Termination Event. If the Administrative Agent receives such a notice, it
shall promptly give notice thereof to each Managing Agent whereupon each Managing Agent shall
promptly give notice thereof to the Purchasers in its Purchaser Group. The Administrative Agent
shall take such action concerning an Incipient Termination Event or a Termination Event or any
other matter hereunder as may be directed by the Majority Managing Agents (subject to the other
provisions of this Article VIII), but until the Administrative Agent receives such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking
such action, as the Administrative Agent deems advisable and in the best interests of the
Purchasers.




          SECTION 8.08 Non-Reliance on Administrative Agent and Other Parties. Each Managing
Agent and Purchaser expressly acknowledges (i) that neither the Administrative Agent nor any of its
directors, officers, agents or employees has made any representations or warranties to it and (ii)
that no act by the Administrative Agent hereafter taken, including any review of the affairs of the
Transaction Parties, shall be deemed to constitute any representation or warranty by the
Administrative Agent. Each Purchaser represents and warrants to the Administrative Agent that,
independently and without reliance upon the Administrative Agent, any Managing Agent or any other
Purchaser and based on such documents and information as it has deemed appropriate, it has made and
will continue to make its own appraisal of and investigation into the business, operations,
property, prospects, financial and other conditions and creditworthiness of each Transaction Party
and the Receivables and Contracts and its own decision to enter into this Agreement and to take, or
omit, action under any Transaction Document. Except for items expressly required to be delivered
under any Transaction Document




47









 




by the Administrative Agent to any Managing Agent or Purchaser, the Administrative Agent shall
not have any duty or responsibility to provide any Managing Agent or Purchaser with any information
concerning the Transaction Parties or any of their Affiliates that comes into the possession of the
Administrative Agent or any of its directors, officers, agents, employees, attorneys-in-fact or
Affiliates.




          SECTION 8.09 Successor Administrative Agent. The Administrative Agent may, upon at
least thirty (30) days notice to the Seller, the Servicer and each Managing Agent, resign as
Administrative Agent. Except as provided below, such resignation shall not become effective until
a successor Administrative Agent is appointed by the Majority Managing Agents and has accepted such
appointment. If no successor Administrative Agent shall have been so appointed by the Majority
Managing Agents within 30 days after the departing Administrative Agent’s giving of notice of
resignation, the departing Administrative Agent may, on behalf of the Majority Managing Agents,
appoint a successor Administrative Agent, which successor Administrative Agent shall have
short-term debt ratings of at least A-1 from S&P and P-1 from Moody’s and shall be either a
commercial bank having a combined capital and surplus of at least $250,000,000 or an Affiliate of
such an institution. If no successor Administrative Agent shall have been so appointed by the
Majority Managing Agents within 60 days after the departing Administrative Agent’s giving of notice
of resignation, the departing Administrative Agent may, on behalf of the Majority Managing Agents,
petition a court of competent jurisdiction to appoint a successor Administrative Agent, which
successor Administrative Agent shall have short-term debt ratings of at least A-1 from S&P and P-1
from Moody’s, and shall be either a commercial bank having a combined capital and surplus of at
least $250,000,000 or an Affiliate of such an institution. Upon such acceptance of its appointment
as Administrative Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall succeed to and become vested with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations under the Transaction Documents. After any retiring Administrative Agent’s
resignation hereunder, the provisions of Section 6.06, Article X and this Article VIII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative
Agent.




ARTICLE IX




THE MANAGING AGENTS




          SECTION 9.01 Authorization and Action. Each Conduit Purchaser and each Committed
Purchaser which belongs to the same Purchaser Group hereby appoints and authorizes the Managing
Agent for such Purchaser Group to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to such Managing Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. No Managing Agent shall have any duties
other than those expressly set forth in the Transaction Documents, and no implied obligations or
liabilities shall be read into any Transaction Document, or otherwise exist, against any Managing
Agent. No Managing Agent assumes, nor shall it be deemed to have assumed, any obligation to, or
relationship of trust or agency with any Transaction Party, Conduit Purchaser or Committed
Purchaser. Notwithstanding any provision of this Agreement or any other Transaction Document, in no
event shall any Managing Agent ever




48









 







be required to take any action which exposes such Managing Agent to personal liability or
which is contrary to any provision of any Transaction Document or applicable law.




          SECTION 9.02 Managing Agent’s Reliance, Etc. No Managing Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or omitted to be
taken by it or them as a Managing Agent under or in connection with this Agreement or the other
Transaction Documents in the absence of its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, a Managing Agent: (a) may consult with legal
counsel (including counsel for the Administrative Agent, the Seller or the Servicer), independent
certified public accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to any Conduit Purchaser
or Committed Purchaser (whether written or oral) and shall not be responsible to any Conduit
Purchaser or Committed Purchaser for any statements, warranties or representations (whether written
or oral) made in or in connection with this Agreement or any other Transaction Document; (c) shall
not have any duty to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or any other Transaction Document on the part of
any Transaction Party or any other Person or to inspect the property (including the books and
records) of any Transaction Party; (d) shall not be responsible to any Conduit Purchaser or any
Committed Purchaser for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Transaction Documents or any other instrument or
document furnished pursuant hereto; and (e) shall incur no liability under or in respect of this
Agreement or any other Transaction Document by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by telecopier)
believed by it to be genuine and signed or sent by the proper party or parties.




          SECTION 9.03 Managing Agent and Affiliates. With respect to any Receivable Interest
or interests therein owned by it, each Managing Agent shall have the same rights and powers under
this Agreement as any Committed Purchaser and may exercise the same as though it were not a
Managing Agent. A Managing Agent and any of its Affiliates may generally engage in any kind of
business with any Transaction Party or any Obligor, any of their respective Affiliates and any
Person who may do business with or own securities of any Transaction Party or any Obligor or any of
their respective Affiliates, all as if such Managing Agent were not a Managing Agent and without
any duty to account therefor to any Conduit Purchasers or Committed Purchasers.




          SECTION 9.04 Indemnification of Managing Agents. Each Committed Purchaser in any
Purchaser Group agrees to indemnify the Managing Agent for such Purchaser Group (to the extent not
reimbursed by the Transaction Parties), ratably according to the proportion of the Percentage of
such Committed Purchaser to the aggregate Percentages of all Committed Purchasers in such Purchaser
Group, from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against such Managing Agent in any way relating to or arising
out of this Agreement or any other Transaction Document or any action taken or omitted by such
Managing Agent under this Agreement or any other Transaction Document, provided that no
Committed Purchaser shall




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be liable for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such Managing Agent’s
gross negligence or willful misconduct.




          SECTION 9.05 Delegation of Duties. Each Managing Agent may execute any of its duties
through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Managing Agent shall be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable care.




          SECTION 9.06 Action or Inaction by Managing Agent. Each Managing Agent shall in all
cases be fully justified in failing or refusing to take action under any Transaction Document
unless it shall first receive such advice or concurrence of the Conduit Purchasers and Committed
Purchasers in its Purchaser Group and assurance of its indemnification by the Committed Purchasers
in its Purchaser Group, as it deems appropriate. Each Managing Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any other Transaction
Document in accordance with a request or at the direction of the Committed Purchasers in its
Purchaser Group representing a majority of the Commitments in such Purchaser Group, and such
request or direction and any action taken or failure to act pursuant thereto shall be binding upon
all Conduit Purchasers and Committed Purchasers in its Purchaser Group.




          SECTION 9.07 Notice of Events of Termination. No Managing Agent shall be deemed to
have knowledge or notice of the occurrence of any Incipient Termination Event or of any Termination
Event unless such Managing Agent has received notice from the Administrative Agent, any other
Managing Agent, any Conduit Purchaser or Committed Purchaser or the Seller stating that an
Incipient Termination Event or Termination Event has occurred hereunder and describing such
Incipient Termination Event or Termination Event. If a Managing Agent receives such a notice, it
shall promptly give notice thereof to the Conduit Purchasers and Committed Purchasers in its
Purchaser Group and to the Administrative Agent (but only if such notice received by such Managing
Agent was not sent by the Administrative Agent). The Managing Agent may take such action concerning
an Incipient Termination Event or a Termination Event as may be directed by Committed Purchasers in
its Purchaser Group representing a majority of the Commitments in such Purchaser Group (subject to
the other provisions of this Article IX), but until such Managing Agent receives such directions,
such Managing Agent may (but shall not be obligated to) take such action, or refrain from taking
such action, as such Managing Agent deems advisable and in the best interests of the Conduit
Purchasers and Committed Purchasers in its Purchaser Group.




          SECTION 9.08 Non-Reliance on Managing Agent and Other Parties. Except to the extent
otherwise agreed to in writing between a Conduit Purchaser and its Managing Agent, each Conduit
Purchaser and Committed Purchaser in the same Purchaser Group expressly acknowledges that neither
the Managing Agent for its Purchaser Group nor any of such Managing Agent’s directors, officers,
agents or employees has made any representations or warranties to it and that no act by such
Managing Agent hereafter taken, including any review of the affairs of the Transaction Parties,
shall be deemed to constitute any representation or warranty by such Managing Agent. Each Conduit
Purchaser and Committed Purchaser in the same Purchaser Group represents and warrants to the
Managing Agent for such Purchaser Group




50









 




that, independently and without reliance upon such Managing Agent, any other Managing Agent,
the Administrative Agent or any other Conduit Purchaser or Committed Purchaser and based on such
documents and information as it has deemed appropriate, it has made and will continue to make its
own appraisal of and investigation into the business, operations, property, prospects, financial
and other conditions and creditworthiness of the Transaction Parties and the Receivables and
Contracts and its own decision to enter into this Agreement and to take, or omit, action under any
Transaction Document. Except for items expressly required to be delivered under any Transaction
Document by a Managing Agent to any Conduit Purchaser or Committed Purchaser in its Purchaser
Group, no Managing Agent shall have any duty or responsibility to provide any Conduit Purchaser or
Committed Purchaser in its Purchaser Group with any information concerning the Transaction Parties
or any of their Affiliates that comes into the possession of such Managing Agent or any of its
directors, officers, agents, employees, attorneys-in-fact or Affiliates.




          SECTION 9.09 Successor Managing Agent. Any Managing Agent may, upon at least thirty
(30) days’ notice to the Administrative Agent, the Seller, the Servicer and the Conduit Purchasers
and Committed Purchasers in its Purchaser Group, resign as Managing Agent for its Purchaser Group.
Such resignation shall not become effective until a successor Managing Agent is appointed in the
manner prescribed by the relevant Asset Purchase Agreement or, in the absence of any provisions in
such Asset Purchase Agreement providing for the appointment of a successor Managing Agent, until a
successor Managing Agent is appointed by the Conduit Purchaser(s) in such Purchaser Group (with the
consent of Committed Purchasers representing a majority of the Commitments in such Purchaser Group)
and has accepted such appointment. If no successor Managing Agent shall have been so appointed
within 30 days after the departing Managing Agent’s giving of notice of resignation, then the
departing Managing Agent may, on behalf of the Purchasers in its Purchaser Group, appoint a
successor Managing Agent for such Purchaser Group, which successor Managing Agent shall have
short-term debt ratings of at least A-1 from S&P and P-1 from Moody’s and shall be either a
commercial bank having a combined capital and surplus of at least $250,000,000 or an Affiliate of
such an institution. Upon such acceptance of its appointment as Managing Agent for such Purchaser
Group hereunder by a successor Managing Agent, such successor Managing Agent shall succeed to and
become vested with all the rights and duties of the retiring Managing Agent, and the retiring
Managing Agent shall be discharged from its duties and obligations under the Transaction Documents.
After any retiring Managing Agent’s resignation hereunder, the provisions of Section 6.06, Article
X and this Article IX shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was a Managing Agent.




          SECTION 9.10 Reliance on Managing Agent. Unless otherwise advised in writing by a
Managing Agent or by any Conduit Purchaser or Committed Purchaser in such Managing Agent’s
Purchaser Group, each party to this Agreement may assume that (i) such Managing Agent is acting for
the benefit and on behalf of each of the Conduit Purchasers and Committed Purchasers in its
Purchaser Group, as well as for the benefit of each assignee or other transferee from any such
Person, and (ii) each action taken by such Managing Agent has been duly authorized and approved by
all necessary action on the part of the Conduit Purchasers and Committed Purchasers in its
Purchaser Group.




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ARTICLE X




INDEMNIFICATION




          SECTION 10.01 Indemnities by the Seller. Without limiting any other rights that the
Administrative Agent, the Managing Agents, the Conduit Purchasers, the Committed Purchasers, the
Program Support Providers or any of their respective Affiliates (each, an “Indemnified
Party”) may have hereunder or under applicable law, the Seller hereby agrees to indemnify each
Indemnified Party from and against any and all damages, losses, claims, liabilities, deficiencies,
costs, disbursements and expenses, including, without limitation, interest, penalties, amounts paid
in settlement and reasonable attorneys’ fees (all of the foregoing being collectively referred to
as “Indemnified Amounts”) arising out of or resulting from this Agreement or any other
Transaction Document or the use of proceeds of purchases or reinvestments or the ownership of
Receivable Interests or in respect of any Receivable or any Contract, excluding, however, (a)
Indemnified Amounts to the extent a final non-appealable judgment of a court of competent
jurisdiction finds that such Indemnified Amounts resulted from gross negligence or willful
misconduct on the part of such Indemnified Party, (b) recourse (except as otherwise specifically
provided in this Agreement) for Receivables that are uncollectible solely on account of the
insolvency, bankruptcy or financial inability of the Obligor to pay or (c) any income, franchise,
profits, branch profits or similar taxes incurred by such Indemnified Party arising out of or as a
result of this Agreement or the ownership of Receivable Interests or in respect of any Receivable
or any Contract. Without limiting or being limited by the foregoing, the Seller shall pay on demand
to each Indemnified Party any and all amounts necessary to indemnify such Indemnified Party from
and against any and all Indemnified Amounts relating to or resulting from any of the following
(including, without limitation, Indemnified Amounts arising on account of uncollectible
Receivables, but excluding Indemnified Amounts and taxes described in clauses (a) and (c) above):





     (i) any Receivable which the Seller or the Servicer includes as part of the Net
Receivables Pool Balance but which is not an Eligible Receivable as of the date it
was transferred to the Seller by the Originator or which thereafter ceases to be an
Eligible Receivable;




     (ii) any representation, warranty, certification, report or other statement
made or deemed made by any Transaction Party (or any of their respective officers)
under or in connection with this Agreement or any of the other Transaction Documents
which shall have been incorrect in any respect when made;




     (iii) the failure by any Transaction Party to comply with any applicable Law
with respect to any Receivable or the related Contract; or the failure of any
Receivable or the related Contract to conform to any such applicable Law;




     (iv) the failure to vest (a) in the Purchasers a first priority perfected
undivided percentage ownership interest, to the extent of each Receivable Interest,
in the Receivables and the Related Security and Collections in respect thereof, or
(b) in the Administrative Agent a first priority perfected security interest in all
of



52









 







the property described in Section 2.15, in each case free and clear of any
Adverse Claim;




     (v) the failure to have filed, or any delay in filing, financing statements or
other similar instruments or documents under the UCC of any applicable jurisdiction
or other applicable laws with respect to any Receivables and the Related Security
and Collections in respect thereof, whether at the time of any purchase or
reinvestment or at any subsequent time;




     (vi) any dispute, claim or defense (other than discharge in bankruptcy) of an
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 relating to any Contract or relating to billing or
collection activities with respect to any such Contract or any Receivable (if such
billing or collection activities were performed by the Seller or any of its
Affiliates acting as Servicer) or relating to any Contract related thereto;




     (vii) any failure of any Transaction Party to perform its duties or obligations
in accordance with the provisions hereof and each other Transaction Document or to
perform its duties or obligations under the Contracts or to timely and fully comply
in all respects with the Credit and Collection Policy in regard to each Receivable
and the related Contract;




     (viii) any products liability, environmental or other claim arising out of or
in connection with merchandise, goods or services which are the subject of any
Contract or the sale of which gave rise to any Receivable;




     (ix) the commingling of Collections of Receivables at any time with other
funds;




     (x) any investigation, litigation or proceeding (actual or threatened) related
to this Agreement or any other Transaction Document or the use of proceeds of
Purchases or the ownership of Receivable Interests or in respect of any Receivable
or Related Security or Contract;




     (xi) any Receivable becoming a Diluted Receivable or any other setoff with
respect to any Receivable;




     (xii) any claim brought by any Person other than an Indemnified Party arising
from any activity by the Seller or any Affiliate of the Seller in servicing,
administering or collecting any Receivable; or




     (xiii) the failure by any Transaction Party to pay when due any taxes,
including, without limitation, sales, excise or personal property taxes.



          Notwithstanding anything to the contrary in this Agreement, solely for purposes of the
Seller’s indemnification obligations in clauses (ii) and (vii) of this Article X, any




53









 




representation, warranty or covenant qualified by the occurrence or non-occurrence of a
Material Adverse Effect or similar concepts of materiality shall be deemed to be not so qualified.




ARTICLE XI




MISCELLANEOUS




     SECTION 11.01 Amendments, Etc. No failure on the part of the Managing Agents, the
Purchasers or the Administrative Agent to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other right. No amendment or
waiver of any provision of this Agreement or consent to any departure by any Transaction Party
therefrom shall be effective unless in a writing signed by the Administrative Agent, each Managing
Agent and the Majority Committed Purchasers (and, in the case of any amendment, also signed by the
Seller and the Servicer), and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided, however,
that the consent of the Seller shall not be required for any amendment which modifies the
representations, warranties, covenants or responsibilities of the Servicer at any time when the
Servicer is not the Originator or any Affiliate of the Originator; provided,
further, that no amendment, waiver or consent shall, unless in writing and signed by each
Purchaser (or, in the case of clauses (c) and (d) below, each Purchaser having its fees reduced or
delayed or its Scheduled Commitment Termination Date extended, as applicable) in addition to the
Administrative Agent:





     (a) amend the definitions of Eligible Receivable, Delinquent Receivable,
Defaulted Receivable, Net Receivables Pool Balance, Loss Reserve, Dilution Reserve,
Yield and Fee Reserve or Total Reserve contained in this Agreement, or change the
calculation of the Receivable Interests as set forth in such definition;




     (b) reduce the amount of Capital or Yield that is payable on account of any
Receivable Interest or delay any scheduled date for payment thereof;




     (c) reduce fees payable by the Seller to the Managing Agents, the Conduit
Purchasers or the Committed Purchasers or delay the dates on which such fees are
payable;




     (d) extend the Scheduled Commitment Termination Date for such Purchaser (except
as set forth in the definition thereof); or




     (f) change any of the provisions of this Section or the definition of “Majority
Committed Purchasers”;


and provided, further, that no amendment, waiver or consent shall increase the
Commitment of any Committed Purchaser or the Conduit Purchase Limit of any Conduit Purchaser unless
in writing and signed by such Committed Purchaser or such Conduit Purchaser, as the case may be,
and the relevant Managing Agent.




54









 








          SECTION 11.02 Notices, Etc. Except as provided below, all communications and notices
provided for hereunder shall be in writing (including telecopy or electronic facsimile transmission
or similar writing) and shall be given to the other party at its address or telecopy number
specified below or at such other address or telecopy number as such party may hereafter specify for
the purposes of notice to such party. Each such notice or other communication shall be effective
(i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 11.02 and confirmation is received, (ii) if given by mail three (3) Business Days
following such posting, postage prepaid, U.S. certified or registered, (iii) if given by overnight
courier, one (1) Business Day after deposit thereof with a national overnight courier service, or
(iv) if given by any other means, when received at the address specified in this Section 11.02.
However, anything in this Section 11.02 to the contrary notwithstanding, the Seller hereby
authorizes the Administrative Agent and each Managing Agent to effect Purchases and Fixed Period
and Yield Rate selections based on telephonic notices made by any Person which the Administrative
Agent or such Managing Agent in good faith believes to be acting on behalf of the Seller. The
Seller agrees to deliver promptly to the Administrative Agent and each Managing Agent a written
confirmation of each telephonic notice signed by an authorized officer of Seller. However, the
absence of such confirmation shall not affect the validity of such notice. If the written
confirmation differs in any material respect from the action taken by the Administrative Agent or
such Managing Agent, the records of the Administrative Agent or such Managing Agent shall govern
absent manifest error.




          If to a Committed Purchaser, to its address set forth on Schedule II.




          If to a Conduit Purchaser, to its address set forth on Schedule II.




          If to a Managing Agent, to its address set forth on Schedule II.




          If to the Seller:





Medco Health Receivables, LLC

100 Parsons Pond Drive, Mail Stop F1-5b

Franklin Lakes, New Jersey 07417

Attention: President

Telecopy: (201) 269-1225



          If to the Servicer:





Medco Health Solutions, Inc.

100 Parsons Pond Drive

Franklin Lakes, New Jersey 07417

Attention: General Counsel

Telecopy: (201) 269-1225



55









 





          If to the Administrative Agent:





Citicorp North America, Inc.

450 Mamaroneck Avenue

Harrison, N.Y. 10528

Attention: Global Securitization

Facsimile No. 914-899-7890



          SECTION 11.03 Assignability. (a) This Agreement and each Purchasers’ rights and
obligations hereunder (including ownership of each Receivable Interest) shall be assignable by such
Purchaser and its successors and permitted assigns to any Eligible Assignee. Each assignor of a
Receivable Interest or any interest therein shall notify the Administrative Agent and the Seller of
any such assignment. Each assignor of a Receivable Interest or any interest therein may, in
connection with the assignment or participation, disclose to the assignee or participant any
information relating to the Transaction Parties, including the Receivables, furnished to such
assignor by or on behalf of any Transaction Party or by the Administrative Agent; provided,
however, that, prior to any such disclosure, the assignee or participant agrees to preserve
the confidentiality of any confidential information relating to the Transaction Parties received by
it from any of the foregoing entities in a manner consistent with Section 11.06(b). The Servicer
and the Seller agree to assist each Committed Purchaser, upon its reasonable request, in
syndicating their respective Commitments hereunder, including making management and representatives
of the Servicer and the Seller reasonably available to participate in information meetings with
potential assignees.




          (b) Assignments by Conduit Purchasers. Each Conduit Purchaser may assign, grant
security interests in or otherwise transfer all or any portion of the Receivable Interests to any
Eligible Assignee or Program Support Provider with respect to such Conduit Purchaser without prior
notice to or consent from any other party or any other condition or restriction of any kind.
Without limiting the generality of the foregoing, each Conduit Purchaser may, from time to time
with prior or concurrent notice to the Seller and each Managing Agent, assign all or any portion of
its interest in the Receivable Interest and its rights and obligations under this Agreement and any
other Transaction Documents to which it is a party to a Conduit Assignee with respect to such
Conduit Purchaser. Upon such assignment by a Conduit Purchaser to a Conduit Assignee, (A) unless a
new Purchaser Group is being established pursuant to Section 11.03(i) below, the Managing Agent for
the assigning Conduit Purchaser will act as the Managing Agent for the Conduit Assignee hereunder,
(B) such Conduit Assignee and its liquidity support provider(s) and credit support provider(s) and
other related parties shall have the benefit of all the rights and protections provided to such
Conduit Purchaser and its related Committed Purchasers herein and in the other Transaction
Documents (including, without limitation, any limitation on recourse against such Conduit
Assignee), (C) such Conduit Assignee shall assume all of such Conduit Purchaser’s obligations
hereunder or under any other Transaction Document (whenever created, whether before or after such
assignment) with respect to the assigned portion of the Receivable Interests held by such Conduit
Purchaser and such Conduit Purchaser shall be released from all such obligations, (D) all
distributions to such Conduit Purchaser hereunder with respect to the assigned portion of the
Receivable Interest shall be made to such Conduit Assignee, (E) the definition of the term “CP
Rate” shall be determined on the basis of the interest rate or discount applicable to Promissory
Notes issued by such




56









 




Conduit Assignee (rather than such assigning Conduit Purchaser), (F) the defined terms and
other terms and provisions of this Agreement and the other Transaction Documents shall be
interpreted in accordance with the foregoing, and (G) if requested by the Administrative Agent or
Managing Agent with respect to the Conduit Assignee, the parties will execute and deliver such
further agreements and documents (including amendments to this Agreement) and take such other
actions as the Administrative Agent or such Managing Agent may reasonably request to evidence and
give effect to the foregoing.




          (c) Assignment by Committed Purchasers. Each Committed Purchaser may assign to any
Eligible Assignee or to any other Committed Purchaser all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a portion of its Commitment
and any Receivable Interests or interests therein owned by it); provided, however
that





     (i) each such assignment shall be of a constant, and not a varying, percentage
of all rights and obligations under this Agreement,




     (ii) the amount being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment) shall
in no event be less than the lesser of (x) $10,000,000 and (y) all of the assigning
Committed Purchaser’s Commitment,




     (iii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register (as defined
below), an Assignment and Acceptance, and




     (iv) concurrently with such assignment, it shall assign to such assignee
Committed Purchaser or other Eligible Assignee an equal percentage of its rights and
obligations under the Asset Purchase Agreement to which such assignor Committed
Purchaser is a party.



          Upon such execution, delivery, acceptance and recording from and after the effective date
specified in such Assignment and Acceptance, (x) the assignee thereunder shall be a party to this
Agreement and, to the extent that rights and obligations under this Agreement have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations of a Committed
Purchaser thereunder and (y) the assigning Committed Purchaser shall, to the extent that rights and
obligations have been assigned by it pursuant to such Assignment and Acceptance, relinquish such
rights and be released from such obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning Committed
Purchaser’s rights and obligations under this Agreement, such Committed Purchaser shall cease to be
a party hereto). In addition, any Committed Purchaser or any of its Affiliates may assign any of
its rights (including, without limitation, rights to payment of Capital and Yield) under this
Agreement to any Federal Reserve Bank without notice to or consent of any Transaction Party, any
other Committed Purchaser or Conduit Purchaser, any Managing Agent or the Administrative Agent.




57









 








          (d) Register. The Administrative Agent shall maintain at its address referred to on
the signature page of this Agreement (or such other address of the Administrative Agent notified by
the Administrative Agent to the other parties hereto) a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names and addresses of
the Committed Purchasers and the Conduit Purchasers, the Commitment of each Committed Purchaser and
the aggregate outstanding Capital of the Receivable Interest or interests therein owned by each
Conduit Purchaser and Committed Purchaser from time to time (the “Register”). The entries
in the Register shall be conclusive and binding for all purposes, absent manifest error, and the
Seller, the Servicer, the Administrative Agent, the Managing Agents, the Conduit Purchasers and the
Committed Purchasers may treat each Person whose name is recorded in the Register as a Committed
Purchaser or Conduit Purchaser, as the case may be, under this Agreement for all purposes of this
Agreement. The Register shall be available for inspection by the Seller, any Managing Agent, any
Conduit Purchaser or any Committed Purchaser at any reasonable time and from time to time upon
reasonable prior notice.




          (e) Procedure. Upon its receipt of an Assignment and Acceptance executed by an
assigning Committed Purchaser and an Eligible Assignee or assignee Committed Purchaser, the
Administrative Agent shall, if such Assignment and Acceptance has been duly completed, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Seller.




          (f) Participations by Conduit Purchasers. Each Conduit Purchaser may, without the
consent of the Seller or any other Person, sell participations to one or more banks or other
entities in all or a portion of its rights and obligations hereunder (including the outstanding
Receivable Interests); provided, however, that





     (i) such Conduit Purchaser’s obligations under this Agreement shall remain
unchanged,




     (ii) such Conduit Purchaser shall remain solely responsible to the other
parties to this Agreement for the performance of such obligations, and




     (iii) the Administrative Agent, the Managing Agents, the Conduit Purchasers,
the other Purchasers, the Seller and the Servicer shall have the right to continue
to deal solely and directly with such Conduit Purchaser in connection with such
Conduit Purchaser’s rights and obligations under this Agreement.



          Any agreement or instrument pursuant to which a Conduit Purchaser sells such a participation
shall provide that the Participant shall not have any right to direct the enforcement of this
Agreement or other Transaction Documents or to approve any amendment, modification or waiver of any
provision of this Agreement or the other Transaction Documents; provided, however,
that such agreement or instrument may provide that such Conduit Purchaser will not, without the
consent of the Participant, agree to any amendment, modification or waiver of a type that would
require the consent of each Purchaser affected thereby pursuant to Section 11.01. Seller
acknowledges and agrees that a Conduit Purchaser’s source of funds may derive in part from its
Participants. Accordingly, references in Sections 2.10, 2.13, 2.14, 6.06, 10.01 and 11.04 and the
other terms and provisions of this Agreement and the other Transaction Documents to




58









 




determinations, reserve and capital adequacy requirements, expenses, increased costs, reduced
receipts, Indemnified Amounts and the like as they pertain to such Conduit Purchaser shall be
deemed also to include those of its Participants.




          (g) Participations by Committed Purchasers. Each Committed Purchaser may sell
participations to one or more banks or other entities (each a “Committed Purchaser
Participant”) in or to all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment and the interests in the
Receivable Interests owned by it); provided, however, that





     (i) such Committed Purchaser’s obligations under this Agreement (including,
without limitation, its Commitment to the Seller hereunder) shall remain unchanged,




     (ii) such Committed Purchaser shall remain solely responsible to the other
parties to this Agreement for the performance of such obligations,




     (iii) concurrently with the sale of such participation, the selling Committed
Purchaser shall sell to such bank or other entity a participation in an equal
percentage of its rights and obligations under the Asset Purchase Agreement to which
such Committed Purchaser is a party, and




     (iv) the Administrative Agent, the Managing Agents, the Conduit Purchasers, the
other Committed Purchasers, the Seller and the Servicer shall have the right to
continue to deal solely and directly with such Committed Purchaser in connection
with such Committed Purchaser’s rights and obligations under this Agreement.



          Any agreement or instrument pursuant to which a Committed Purchaser sells such a participation
shall provide that the Participant shall not have any right to direct the enforcement of this
Agreement or other Transaction Documents or to approve any amendment, modification or waiver of any
provision of this Agreement or the other Transaction Documents; provided, however,
that such agreement or instrument may provide that such Committed Purchaser will not, without the
consent of the Participant, agree to any amendment, modification or waiver of a type that would
require the consent of each Purchaser affected thereby pursuant to Section 11.01. Seller
acknowledges and agrees that a Committed Purchaser’s source of funds may derive in part from its
Participants. Accordingly, references in Sections 2.10, 2.13, 2.14, 6.06, 10.01 and 11.04 and the
other terms and provisions of this Agreement and the other Program Documents to determinations,
reserve and capital adequacy requirements, expenses, increased costs, reduced receipts, Indemnified
Amounts and the like as they pertain to such Committed Purchaser shall be deemed also to include
those of its Participants.




          (h) Assignments by Seller and Servicer. Neither the Seller nor the Servicer may
assign any of its rights or obligations hereunder or any interest herein without the prior written
consent of each Managing Agent.




          (i) Additional Purchaser Groups. In connection with any assignment by a Conduit
Purchaser of all or any portion of its Conduit Purchase Limit to a Conduit Assignee,




59









 




such Conduit Assignee may elect to establish a new Purchaser Group hereunder by the execution
and delivery of a Joinder Agreement by such Conduit Assignee, the Committed Purchasers which are to
be in its Purchaser Group and the Person which is to be the Managing Agent for such Purchaser
Group, in each case without the consent of any other party. Upon the effective date of such
Joinder Agreement, (a) the Person specified therein as a “New Managing Agent” shall become a party
hereto and a party to the Purchaser Fee Letter as a Managing Agent, entitled to the rights and
subject to the obligations of a Managing Agent hereunder, (b) each Person specified therein as a
“New Conduit Purchaser” shall become a party hereto as a Conduit Purchaser, entitled to the rights
and subject to the obligations of a Conduit Purchaser hereunder, (c) each Person specified therein
as a “New Committed Purchaser” shall become a party hereto as a Committed Purchaser, entitled to
the rights and subject to the obligations of a Committed Purchaser hereunder and (d) Schedule II
shall be deemed to have been amended as appropriate to incorporate the information set forth in
such Joinder Agreement.




          (j) Participants. No Participant shall receive any amount pursuant to Sections 2.10,
2.13, 2.14, 6.06, 10.01 or 11.04 of this Agreement greater than the amount the Purchaser, from whom
such participation was made, would have been entitled to receive under such Sections of this
Agreement had no such participation occurred.




          SECTION 11.04 Costs and Expenses. (a) In addition to the rights of indemnification
granted under Section 10.01 hereof, the Seller agrees to pay on demand all reasonable costs and
expenses in connection with the preparation, execution, delivery and administration of this
Agreement, any Asset Purchase Agreement and the Transaction Documents, including, without
limitation, (i) the reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent, the Conduit Purchasers, the Managing Agents, the Committed Purchasers and their respective
Affiliates with respect thereto and with respect to advising the Administrative Agent, the Managing
Agents, the Conduit Purchasers, the Committed Purchasers and their respective Affiliates as to
their rights and remedies under this Agreement, (ii) all rating agency fees, (iii) all reasonable
fees and expenses associated with any audits and other due diligence conducted prior to or after
the Initial Closing Date and (iv) any amendments, waivers or consents under the Transaction
Documents. In addition, the Seller agrees to pay on demand all costs and expenses (including
reasonable counsel fees and expenses) of the Administrative Agent, the Managing Agents, the Conduit
Purchasers, the Committed Purchasers and their respective Affiliates incurred in connection with
the enforcement of, or any dispute, work-out, litigation or preparation for litigation involving,
this Agreement or any other Transaction Document.




          (b) In addition, the Seller shall pay on demand each of the following to the extent not
included in the CP Rate for the applicable Conduit Purchaser: (i) any and all commissions of
placement agents and Promissory Notes dealers in respect of Promissory Notes issued to fund the
Receivable Interests, (ii) any and all reasonable costs and expenses of any issuing and paying
agent or other Person responsible for the administration of any Conduit Purchaser’s Promissory
Notes program in connection with the preparation, completion, issuance, delivery of payment of
Promissory Notes issued to fund the Promissory Notes up to a maximum amount of $20,000 per calendar
year per Conduit Purchaser and (iii) the applicable pro-rata costs and expenses of any Rating
Agency rating any Conduit Purchaser’s Promissory Notes (to the extent not paid pursuant to Section
11.04(a) above); provided, however, that if any Conduit




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Purchaser enters into agreements for the purchase of interests in receivables from one or more
Persons (each an “Other Seller”), such Conduit Purchaser shall equitably allocate such
expenses to the Seller and each Other Seller; and provided, further, that if such
expenses are attributable solely to the Seller, the Seller shall be solely liable for such
expenses, and if such expenses are attributable solely to Other Sellers, such Other Sellers shall
be solely liable for such expenses.




          SECTION 11.05 No Proceedings. Each of the Seller, the Administrative Agent, the
Servicer, each Managing Agent, each Conduit Purchaser, each Committed Purchaser, each assignee of a
Receivable Interest or any interest therein and each Person which enters into a commitment to
purchase Receivable Interests or interests therein hereby agrees that it will not institute against
any Conduit Purchaser any proceeding of the type referred to in the definition of “Event of
Bankruptcy” so long as any Promissory Notes or other senior indebtedness issued by such Conduit
Purchaser shall be outstanding or there shall not have elapsed one year plus one day since the last
day on which any such Promissory Notes or other senior indebtedness shall have been outstanding.




          SECTION 11.06 Confidentiality. (a) Each of the parties hereto hereby agrees that,
from the commencement of discussions with respect to the transactions contemplated by the
Transaction Documents (the “Transaction”), each of the parties hereto (and each of their
respective, and their respective affiliates, employees, officers, directors, advisors,
representatives and agents) are permitted to disclose to any and all Persons, without limitation of
any kind, the structure and tax aspects (as such terms are used in Internal Revenue Code Sections
6011, 6111 and 6112 and the regulations promulgated thereunder) of the Transaction, and all
materials of any kind (including opinions or other tax analyses) that are provided to any party
related to such structure and tax aspects. In this regard, the parties hereto acknowledge and
agree that the disclosure of the structure or tax aspects of the Transaction is not limited in any
way by an express or implied understanding or agreement, oral or written (whether or not such
understanding or agreement is legally binding). Furthermore, each of the parties hereto
acknowledges and agrees that it does not know or have reason to know that its use or disclosure of
information relating to the structure or tax aspects of the Transaction is limited in any other
manner (such as where the Transaction is claimed to be proprietary or exclusive) for the benefit of
any other Person.




          (b) Subject to Section 11.06(a), the Transaction Documents, the terms thereof (including,
without limitation, any specific pricing information contained therein), the structure of the
Transaction, any related structures developed by the Administrative Agent or any Managing Agent for
the Seller or any of its Affiliates, any related analyses, computer models, information or
documents, any written or oral reports from Administrative Agent or any Managing Agent to the
Seller or any of its Affiliates or any related written information (collectively, “Product
Information”) is confidential. Each of the Seller and the Servicer agrees:





     (i) to keep all Product Information confidential and to disclose Product Information
only to those of its officers, employees, agents, accountants, legal counsel and other
representatives (collectively “Representatives”) who have a need to know such
Product Information for the purpose of assisting in the Transaction;



61









 






     (ii) to use the Product Information only in connection with the Transaction and not
for any other purpose; and




     (iii) to cause its Representatives to comply with these provisions and to be
responsible for any failure of any Representative to so comply.



          The provisions of this Section shall not apply to Product Information that is or hereafter
becomes (through a source other than the Seller, the Servicer or any of their respective Affiliates
or Representatives) a matter of general public knowledge. The provisions of this Section shall not
prohibit the Seller or the Servicer from (i) filing with any governmental or regulatory agency any
information or other documents with respect to the Transaction as may be required by applicable Law
or (ii) making any other disclosure to the extent required by applicable law, Subpoena or other
legal process. The parties hereto acknowledge that the Originator will file this Agreement and the
Originator Purchase Agreement, and any other material agreements related thereto (other than the
Fee Letters) as the Originator may determine in its sole discretion, with the SEC.




          (c) Each Purchaser, each Managing Agent, and the Administrative Agent agrees to maintain the
confidentiality of all non-public information with respect to the Seller, the Originator, the
Contracts or the Receivables furnished or delivered to it pursuant to this Agreement;
provided, however, that such information may be disclosed (i) to such party’s
officers, employees, agents, accountants, legal counsel and other representatives (collectively
“Purchaser Representatives”) who have a need to know such information for the purpose of
assisting in the negotiation, completion and administration of the facility contemplated hereby,
(ii) to such party’s assignees and participants and potential assignees and participants to the
extent such disclosure is made pursuant to a written agreement of confidentiality substantially
similar to this Section 11.06(c), (iii) to the Rating Agencies, (iv) to the Program Support
Providers for each Conduit Purchaser and the dealers and investors in respect of the Promissory
Notes of any Conduit Purchaser, in each case in accordance with the customary practices of such
Conduit Purchaser for disclosures to Program Support Providers, dealers or investors, as the case
may be (it being understood and agreed that any disclosures to dealers or investors will not
identify the Originator or its Affiliates by name) and (v) to the extent required by applicable
Law, Subpoena or other legal process or by any Official Body.




          The provisions of Section 11.06(b) shall not apply to information that is or hereafter becomes
(through a source other than the applicable Purchaser, Managing Agent or the Administrative Agent
or any Purchaser Representative associated with such party) a matter of general public knowledge.
The provisions of this Section shall not prohibit any Purchaser, Managing Agent or the
Administrative Agent from filing with or making available to any Official Body any information or
other documents with respect to the Transaction as may be required by applicable Law or requested
by such Official Body .




          SECTION 11.07 Amendments to Financial Covenants. If the Credit Agreement is amended,
restated, supplemented or otherwise modified, or is substituted or replaced with a new credit
facility (each a “Modification”), and such Modification includes one or more financial
covenants which are different from the financial covenants set forth on Schedule VI (including,
without limitation, by reasons of a difference in levels), then the parties




62









 




hereto agree, promptly upon request of each Managing Agent, to amend this Agreement as
appropriate to modify the financial covenants set forth in Schedule VI to incorporate the financial
covenant or covenants contained in such Modification (which amendment shall include conforming
amendments to the definitions contained in Schedule VI).




          SECTION 11.08 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES) EXCEPT TO THE EXTENT THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION
OF THE INTERESTS OF THE ADMINISTRATIVE AGENT, THE CONDUIT PURCHASERS AND THE COMMITTED PURCHASERS
IN THE RECEIVABLES AND ANY OTHER COLLATERAL DESCRIBED IN SECTION 2.15 ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.




          SECTION 11.09 Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a
manually executed counterpart of this Agreement.




          SECTION 11.10 Integration; Binding Effect; Survival of Termination. This Agreement
and the other Transaction Documents executed by the parties hereto on the date hereof or on the
Initial Closing Date 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. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns (including any trustee in
bankruptcy). 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. This Agreement shall create and constitute the continuing obligations of
the parties hereto in accordance with its terms and shall remain in full force and effect until the
Final Payout Date; provided, however, that the provisions of Sections 2.10, 2.13,
2.14, 6.06, 10.01, 11.04, 11.05 and 11.06 shall survive any termination of this Agreement.




          SECTION 11.11 Consent to Jurisdiction. (a) Each party hereto hereby irrevocably
submits to the non-exclusive jurisdiction of any New York State or Federal court sitting in New
York City in any action or proceeding arising out of or relating to this Agreement, and each party
hereto hereby irrevocably agrees that all claims in respect of such action or proceeding may be
heard and determined in such New York State court or, to the extent permitted by law, in such
Federal court. The parties hereto hereby irrevocably waive, to the fullest extent they may
effectively do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. The parties hereto agree that a final judgment in any




63









 




such action or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.




          (b) Each of the Seller and the Servicer consents to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to it at its address specified
in Section 11.02. Nothing in this Section 11.11 shall affect the right of any Conduit Purchaser,
any Committed Purchaser, any Managing Agent or the Administrative Agent to serve legal process in
any other manner permitted by law.




          SECTION 11.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, 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 OR ANY OTHER TRANSACTION DOCUMENT.




          SECTION 11.13 Right of Setoff. Each of the Purchasers is hereby authorized (in
addition to any other rights it may have) at any time after the occurrence of the Termination Date
due to the occurrence of a Termination Event, or during the continuation of an Incipient
Termination Event, to set off, appropriate and apply (without presentment, demand, protest or other
notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by
such Purchaser to, or for the account of, the Seller against the amount of the Seller Obligations
owing by the Seller to such Person.




          SECTION 11.14 Ratable Payments. If any Committed Purchaser, whether by setoff or
otherwise, has a payment made to it with respect to any Seller Obligations in a greater proportion
than that received by any other Committed Purchaser entitled to receive a ratable share of such
Seller Obligations, such Committed Purchaser agrees, promptly upon demand, to purchase for cash
without recourse or warranty a portion of such Seller Obligations held by the other Committed
Purchasers so that after such purchase each Committed Purchaser will hold its ratable proportion of
such Seller Obligations; provided that if all or any portion of such excess amount is
thereafter recovered from such Committed Purchaser, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.




          SECTION 11.15 Limitation of Liability. (a) No claim may be made by any Transaction
Party or any other Person against any Purchaser, any Managing Agent, the Administrative Agent or
their respective Affiliates, directors, officers, employees, attorneys or agents (each a
“Purchaser Party”) 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 other Transaction Document, or any act,
omission or event occurring in connection herewith or therewith, except with respect to any claim
arising out of the willful misconduct or gross negligence of such Purchaser Party; and each of the
Seller and the Servicer 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.




64









 








          (b) Notwithstanding anything to the contrary contained herein, the obligations of the
respective Conduit Purchasers under this Agreement are solely the corporate obligations of each
such Conduit Purchaser and shall be payable only at such time as funds are actually received by, or
are available to, such Conduit Purchaser in excess of funds necessary to pay in full all
outstanding Promissory Notes issued by such Conduit Purchaser and, to the extent funds are not
available to pay such obligations, the claims relating thereto shall not constitute a claim against
such Conduit Purchaser. Each party hereto agrees that the payment of any claim (as defined in
Section 101 of Title 11 of the Bankruptcy Code) of any such party shall be subordinated to the
payment in full of all Promissory Notes.




          (c) No recourse under any obligation, covenant or agreement of any Conduit Purchaser contained
in this Agreement shall be had against any incorporator, stockholder, officer, director, member,
manager, employee or agent of such Conduit Purchaser, the Managing Agent with respect to such
Conduit Purchaser or any of their Affiliates (solely by virtue of such capacity) by the enforcement
of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise;
it being expressly agreed and understood that this Agreement is solely a corporate obligation of
such Conduit Purchaser, and that no personal liability whatever shall attach to or be incurred by
any incorporator, stockholder, officer, director, member, manager, employee or agent of any Conduit
Purchaser, any Managing Agent or any of their Affiliates (solely by virtue of such capacity) or any
of them under or by reason of any of the obligations, covenants or agreements of such Conduit
Purchaser contained in this Agreement, or implied therefrom, and that any and all personal
liability for breaches by any Conduit Purchaser of any of such obligations, covenants or
agreements, either at common law or at equity, or by statute, rule or regulation, of every such
incorporator, stockholder, officer, director, member, manager, employee or agent is hereby
expressly waived as a condition of and in consideration for the execution of this Agreement;
provided, however, that the foregoing shall not relieve any such Person from any
liability it might otherwise have as a result of fraudulent actions taken or fraudulent omissions
made by them.




          SECTION 11.16 Intent of the Parties. (a) It is the intention of the parties hereto
that each purchase of Receivable Interests shall convey to the Administrative Agent for the benefit
of the applicable Purchasers, to the extent of such Receivable Interests, an undivided interest in
the Receivables and the Related Security and Collections in respect thereof and that such
transaction shall constitute a purchase and sale and not a secured loan for all purposes other than
for United States federal, state and local income tax purposes. However, if a determination is
made that such purchase shall not be so treated, the transactions effected hereby shall be deemed
to constitute a secured financing under applicable law.




          (b) The Seller has structured the Transaction Documents with the intention that the Receivable
Interests and the obligations of the Seller hereunder will be treated under United States federal,
and applicable state, local and foreign tax law as debt (the “Intended Tax Treatment”). The
Seller, Medco, the Administrative Agent, the Conduit Purchasers and the Committed Purchasers agree
to file no tax return, or take any action, inconsistent with the Intended Tax Treatment. Each
assignee and each participant acquiring an interest in a Receivable Interest, by its acceptance of
such assignment or participation, agrees to comply with the immediately preceding sentence.




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[Remainder of page intentionally left blank]




66









 





          IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective
officers thereunto duly authorized, as of the date first above written.




	 	 	 	 	 	 	 
	SELLER:	 	MEDCO HEALTH RECEIVABLES, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Peter Gaylord
 

Name: Peter Gaylord
	 	 
	 

	 	 	 	Title: President & Treasurer	 	 
	 
	 	 	 	 	 	 
	CONDUIT PURCHASERS:	 	CAFCO, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Citicorp North America, Inc.,	 	 
	 

	 	 	 	     as Attorney-in-Fact	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tom Sullivan	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Tom Sullivan	 	 
	 

	 	 	 	Title: Director & VP	 	 
	 
	 	 	 	 	 	 
	 	 	VICTORY RECEIVABLES CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Geraldine St-Louis	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Geraldine St-Louis	 	 
	 

	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	LIBERTY STREET FUNDING LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jill A. Gordon	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jill A. Gordon	 	 
	 

	 	 	 	Title: Vice President	 	 






Signature Page to Second Amended and Restated Receivables Purchase Agreement




 









 





	 	 	 	 	 	 	 
	ADMINISTRATIVE AGENT:	 	CITICORP NORTH AMERICA, INC.,	 	 
	 	 	     as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tom Sullivan
 

Name: Tom Sullivan
	 	 
	 

	 	 	 	Title: Director & VP	 	 






Signature Page to Second Amended and Restated Receivables Purchase Agreement




 









 





	 	 	 	 	 	 	 
	MANAGING AGENTS:	 	CITICORP NORTH AMERICA, INC.,	 	 
	 	 	     as Managing Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tom Sullivan
 

	 	 
	 

	 	 	 	Name: Tom Sullivan	 	 
	 

	 	 	 	Title: Director & VP	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH,	 	 
	 	 	     as Managing Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Aditya Reddy	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Aditya Reddy	 	 
	 

	 	 	 	Title: VP and Manager	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF NOVA SCOTIA,	 	 
	 	 	     as Managing Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael Eden	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Michael Eden	 	 
	 

	 	 	 	Title: Director	 	 






Signature Page to Second Amended and Restated Receivables Purchase Agreement




 









 





	 	 	 	 	 	 	 
	COMMITTED PURCHASERS:	 	CITIBANK, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tom Sullivan
 

Attorney-in-Fact
	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Lillian Kim	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Lillian Kim	 	 
	 

	 	 	 	Title: Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF NOVA SCOTIA	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael Eden	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Michael Eden	 	 
	 

	 	 	 	Title: Director	 	 
	 
	 	 	 	 	 	 
	SERVICER:	 	MEDCO HEALTH SOLUTIONS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard J. Rubino	 	 
	 

	 	 	 	 	 	 
	 

	 	Name: Richard J. Rubino	 	 
	 

	 	Title: Senior Vice President and Chief Financial Officer	 	 






Signature Page to Second Amended and Restated Receivables Purchase Agreement





 









 








SCHEDULE 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):




          “Accountants’ Report” has the meaning specified in Section 5.02.




          “Accrual” means Receivables accrued on the books of the Originator in accordance with
GAAP and, to the extent consistent with GAAP, in a manner consistent with the practices of the
Originator as in effect on the Initial Closing Date.




          “Adjusted Eurodollar Rate” means, for any Fixed Period, an interest rate per annum
obtained by dividing (i) the Eurodollar Rate for such Fixed Period by (ii) a percentage equal to
100% minus the Eurodollar Rate Reserve Percentage for such Fixed Period.




          “Administrative Agent” means CNAI, in its capacity as contractual representative for
the Conduit Purchasers and Committed Purchasers hereunder, and any successor thereto in such
capacity appointed pursuant to Article VIII.




          “Administrative Agent Account” has the meaning specified in Section 6.07.




          “Administrative Agent Fee Letter” has the meaning specified in Section 2.07(b).




          “Adverse Claim” means a lien, security interest or other charge or encumbrance, or
other right or claim in, of or on any asset or property of a Person in favor of another Person.




          “Affiliate” means, as to any Person, any other Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with, such Person. For purposes of
this definition, a Person shall be deemed to be “controlled by” a Person if such Person possesses,
directly or indirectly, power to direct or cause the direction of the management and policies of
such Person, whether through the ability to exercise voting power, by contract or otherwise.




          “Aggregate Accounts Payable Deduction Amount” has the meaning specified on Schedule
VIII.




          “Aggregate Commitment” means, at any time, the sum of the Commitments then in effect.
The Aggregate Commitment as of the date hereof is $600,000,000.




          “Alternate Base Rate” means, with respect to any Receivable Interest of any Purchaser,
a fluctuating interest rate per annum as shall be in effect from time to time, which rate shall at
all times be equal to the higher of:





     (a) (i) in the case of a Purchaser for which CNAI acts as Managing Agent, the
rate of interest announced publicly by Citibank in New York, New York, from time to
time as Citibank’s base rate and (ii) in the case of any other



I-1









 







Purchaser, the rate of interest announced publicly by the applicable Managing
Agent from time to time as its prime or base rate; and



     (b) the Federal Funds Rate plus 0.50%.




          “Amortization Date” for any Receivable Interest means (i) in the case of a Receivable
Interest owned by a Conduit Purchaser, the earliest of (a) the date on which a Conduit Purchaser’s
Termination Event occurs with respect to such Conduit Purchaser, (b) the Scheduled Commitment
Termination Date for such Conduit Purchaser’s Purchaser Group and (c) the Termination Date and (ii)
in the case of a Receivable Interest owned by a Committed Purchaser, the earlier of (a) the
Scheduled Commitment Termination Date for such Committed Purchaser’s Purchaser Group and (b) the
Termination Date.




          “Applicable Eurodollar Rate Margin” has the meaning specified in the Purchaser Fee
Letter.




          “Asset Purchase Agreement” means, in the case of any Purchaser Group, a secondary
market agreement, asset purchase agreement or other liquidity agreement entered into by the
Committed Purchasers in such Purchaser Group or any of their respective Affiliates for the benefit
of one or more Conduit Purchasers in such Purchaser Group, to the extent relating to the sale or
transfer of interests in, or other financing of, Receivable Interests.




          “Assignee Rate” for any Fixed Period for any Receivable Interest means an interest
rate per annum equal to the sum of the Applicable Eurodollar Rate Margin plus the Adjusted
Eurodollar Rate for such Fixed Period; provided, however, that in case of:





     (i) any Fixed Period with respect to which the Adjusted Eurodollar Rate is not
available pursuant to Section 2.11 or 2.12,




     (ii) any Fixed Period of less than one month,




     (iii) any Fixed Period as to which the applicable Managing Agent does not
receive notice, by no later than 11:00 A.M. (New York City time) on the second
Business Day preceding the first day of such Fixed Period, that the related
Receivable Interest will not be funded by a Conduit Purchaser through the issuance
of Promissory Notes, or




     (iv) any Fixed Period for a Receivable Interest the Capital of which is less
than $500,000,


the Assignee Rate for such Fixed Period shall be an interest rate per annum equal to the Alternate
Base Rate in effect from time to time during such Fixed Period.




          “Assignment and Acceptance” means an assignment and acceptance agreement entered into
by a Committed Purchaser, an Eligible Assignee and such Committed Purchaser’s Managing Agent,
pursuant to which such Eligible Assignee may become a party to this Agreement, in substantially the
form of Annex C hereto.




I-2









 








          “Bad Debts Reserve” means the amount of the reserve established by the Servicer (in
accordance with GAAP and, to the extent consistent with GAAP, in a manner consistent with the
practices of the Originator in effect on the Initial Closing Date and reflected as “Allowance for
Doubtful Items/Bad Debts Reserve” in the Servicer’s accounting general ledger) that the Servicer
has determined to be a collection risk with respect to Receivables (or a portion thereof) that (i)
are unpaid 61 days or more from the original invoice date of such Receivables, (ii) have been
billed but which are unpaid less than 61 days from the original invoice date of such Receivables,
or (iii) have been accrued for but have not yet been billed.




          “Bad Debt Reserve Percentage” means, as of any Monthly Reporting Date, and continuing
until (but not including) the next Monthly Reporting Date, the product of:




[(BDR x NRPB/BPR) x 1.50]/NRPB




          where:




	 	 	 	 	 	 	 
	 

	 	    NRPB
	 	=
	 	the Net Receivables Pool Balance as of the
close of business of the Servicer on the last day of Current
Calculation Period (the “Calculation Date”)
	 
	 	 	 	 	 	 
	 

	 	    BDR
	 	=
	 	the Bad Debt Reserves as of such Calculation Date
	 
	 	 	 	 	 	 
	 

	 	    BPR
	 	=
	 	the Outstanding Balance of all Pool Receivables as of
such Calculation Date.






          “Base Rate Receivable Interest” has the meaning specified in Section 2.11.




          “BTM” means The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, and any successor
thereto.




          “Business Day” means any day on which (i) banks are not authorized or required to
close in New York City, New York and (ii) if this definition of “Business Day” is utilized in
connection with the determination of the Eurodollar Rate or any notice related thereto, dealings
are carried out in the London interbank market.




          “Calculation Period” means each period from and including the first day of a calendar
month to and including the last day of such calendar month.




          “Capital” means, with respect to any Receivable Interest, the original amount paid to
the Seller for such Receivable Interest pursuant to Article II, as such amount may be divided or
combined in accordance with Section 2.09, in each case as reduced from time to time by Collections
received by the applicable Purchaser(s) holding such Receivable Interest from distributions made
pursuant to Section 2.04 or Section 2.05, as applicable, on account of the Capital of such
Receivable Interest; provided that if such Capital shall have been reduced by any
distribution and thereafter all or a portion of such distribution is rescinded or must otherwise be




I-3









 




returned for any reason, such Capital shall be increased by the amount of such rescinded or
returned distribution as though it had not been received by such Purchaser(s).




          “Capital Lease” means any lease of (or other arrangement conveying the right to use)
real or personal property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of the Originator and its
Subsidiaries under GAAP.




          “Capital Lease Obligations” means the obligations of the Originator or its
Subsidiaries to pay rent or other amounts under any Capital Lease, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance with GAAP.




          “Change of Control” means (a) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (each within the meaning of the Securities
Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the Initial Closing Date)
not an Affiliate of the Originator or Merck of Equity Interests representing more than 30% of the
aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the
Originator, or (b) commencing after the Initial Closing Date, during any period of up to 12
consecutive months, the occupation of a majority of the seats (other than vacant seats) on the
board of directors of the Originator by Persons who were neither nominated nor appointed by a vote
of a majority or more of the members of the Originator’s board of directors who were either in
office at the beginning of such 12 month period or were so nominated or appointed.




          “Citibank” means Citibank, N.A. and any successor thereto.




          “Client” means any Person for whom the Originator or any of its Affiliates provides
PBM Services.




          “Client Contract” means an agreement with one or more Clients pursuant to which Medco
and/or any of its Affiliates provides PBM Services.




          “CNAI” means Citicorp North America, Inc., and any successor thereto.




          “Collection Account” means (i) at any time prior to the establishment of the
Administrative Agent Account pursuant to Section 6.07(a), the Deposit Account specified as such on
Schedule IV and (ii) at any other time, the Administrative Agent Account.




          “Collection Account Bank” means the bank at which the Collection Account is
maintained.




          “Collections” means, with respect to any Receivable, all cash collections and other
cash Proceeds of such Receivable, including, without limitation, (i) all cash Proceeds of Related
Security with respect to such Receivable, and (ii) any Deemed Collections of such Receivable.




          “Commitment” of any Committed Purchaser means the dollar amount set forth on Schedule
II hereto opposite such Committed Purchaser’s name or, in the case of a Committed




I-4









 




Purchaser that
became a party to this Agreement pursuant to an Assignment and Acceptance or Joinder Agreement, the
amount set forth therein as such Committed Purchaser’s Commitment, in each case as such amount may
be (i) reduced or increased by any Assignment and Acceptance
entered into by such Committed Purchaser in accordance with the terms hereof and (ii) reduced
pursuant to Section 2.01(c) or Section 2.18.




          “Committed Purchaser Participant” has the meaning specified in Section 11.03(g).




          “Committed Purchasers” means, collectively, the Persons identified as “Committed
Purchasers” on Schedule II and their respective successors and permitted assigns.




          “Concentration Limit” means, at any time for any Obligor:





     (a) if such Obligor has Debt Ratings of AA- or better from S&P and Aa3 or better from
Moody’s, an amount equal to the product of (i) the Loss Reserve Percentage Floor and (ii)
the Net Receivables Pool Balance at such time;




     (b) if such Obligor has Debt Ratings of BBB- or better from S&P and Baa3 or better from
Moody’s (and clause (a) does not apply), an amount equal to the product of (i) 50%, (ii) the
Loss Reserve Percentage Floor and (iii) the Net Receivables Pool Balance at such time; and




     (c) in the case of any other Obligor, 5% of the Net Receivables Pool Balance at such
time (the “Normal Concentration Limit”); provided that if at the time of determination a
Rating Level 2 Period, Rating Level 3 Period or Rating Level 4 Period is in effect, the
Normal Concentration Limit shall be 4% of the Net Receivables Pool Balance at such time;


provided, however, that, notwithstanding the foregoing, the Administrative Agent
(acting either on its own initiative or at the direction of any Managing Agent) may at any time
reduce the Concentration Limit of an Obligor described in clauses (a) and (b) above to the Normal
Concentration Limit upon not less than three (3) Business Days’ notice to the Servicer. In the
case of an Obligor and its Affiliates, the Concentration Limit shall be calculated as if such
Obligor and such Affiliates were a single Obligor. If an Obligor has a Debt Rating from only one
of S&P and Moody’s, then the Concentration Limit shall be determined by reference to such Debt
Rating. If an Obligor does not have a Debt Rating from either S&P or Moody’s, then the
Concentration Limit for such Obligor will be determined pursuant to clause (c) above.




          “Conduit Assignee” means, with respect to any assignment by a Conduit Purchaser, any
Person that (i) issues commercial paper rated at least A-1 by S&P or P-1 by Moody’s, (ii) is
managed by the Managing Agent for such assigning Conduit Purchaser or any Affiliate of such
Managing Agent and (iii) is designated by such Managing Agent to accept an assignment from such
Conduit Purchaser of such Conduit Purchaser’s rights and obligations pursuant to Section 11.03(b).




          “Conduit Participant” means any Person that shall have acquired a participation in a
Receivable Interest from a Conduit Purchaser (but excluding, for purposes of the definition of “CP
Rate”, interests sold pursuant to an Asset Purchase Agreement).





I-5









 








          “Conduit Purchasers” means, collectively, the Persons identified as “Conduit
Purchasers” on Schedule II and their respective successors and permitted assigns.




          “Conduit Purchase Limit” of any Conduit Purchaser means the dollar amount set forth on
Schedule II hereto opposite such Conduit Purchaser’s name, as such amount may be reduced pursuant
to Section 2.01(c) or Section 2.18.




          “Conduit Purchaser’s Termination Event” means, with respect to any Conduit Purchaser,
that the Managing Agent for such Conduit Purchaser shall have notified the Administrative Agent and
the Seller that no further Purchases shall be made by such Conduit Purchaser hereunder.




          “Contract” means an agreement pursuant to or under which a pharmaceutical manufacturer
shall be obligated to pay rebates, administrative fees, data fees or other fees to the Originator,
in each case as such agreement may be amended, restated, supplemented, renewed or otherwise
modified from time to time and any replacement or substitute agreement; provided that the
term “Contract” shall not include any agreement with Merck or any of its Affiliates so long as no
payments under such agreement are remitted to a Deposit Account.




          “Control Agreement” means (i) with respect to any Deposit Account, an agreement among
the Servicer, the Seller, the Administrative Agent and the applicable Deposit Account Bank in
substantially the form of Annex B-1 (or in such other form as the Administrative Agent shall
approve) and (ii) with respect to any Administrative Agent Account established pursuant to Section
6.07, an agreement among the Seller, the Administrative Agent and the bank at which the
Administrative Agent Account is maintained in substantially the form of Annex B-2 (or in such other
form as the Administrative Agent shall approve).




          “CP Fixed Period Date” means the last day of each calendar month.




          “CP Rate” when used in reference to any Conduit Purchaser shall have the meaning
specified on Schedule III or, in the case of a Conduit Purchaser that becomes a party hereto
pursuant to a Joinder Agreement, such other meaning (if any) as may be specified in such Joinder
Agreement.




          “Credit Agreement” means the credit agreement, dated as of April 30, 2007, among
Medco, the lenders and issuing banks party thereto, Bank of America, N.A., as administrative agent,
and the co-syndication agents and co-documentation agents party thereto, as amended, restated,
supplemented or otherwise modified from time to time, and any substitute for or replacement of such
credit agreement.




          “Credit and Collection Policy” means those standard operating procedures of the
Originator relating to the Contracts and Receivables in effect on the date of this Agreement and
summarized in Schedule V hereto, as modified in compliance with this Agreement.




          “Current Calculation Period” means, with respect to any Monthly Reporting Date, the
Calculation Period then most recently ended.





I-6









 








          “Daily Report” means a report furnished by the Servicer pursuant to Section 6.03(c).
Each such report shall be (i) if a form of daily report is delivered by the Administrative Agent to
the Servicer, substantially in the form so provided (which form shall be consistent with the form
of Monthly Report, with such changes as may be appropriate to reflect differences in
the duration of the periods being reported and such other changes as any Managing Agent may
reasonably request) or (ii) if a form of daily report is not so delivered by the Administrative
Agent to the Servicer, in a form prepared by the Servicer and reasonably acceptable to the Managing
Agents.




          “Debt Rating” for any Person at any time, means the then-current published rating by
S&P or Moody’s of such Person’s long-term senior unsecured non-credit-enhanced debt.




          “Deemed Collections” means any Collections on any Receivable deemed to have been
received by the Seller pursuant to Section 2.06(b) of this Agreement or by the Originator pursuant
to Section 2.04 of the Originator Purchase Agreement.




          “Deemed Loss Ratio” means the ratio (expressed as a percentage) computed as of each
Monthly Reporting Date for the Current Calculation Period by dividing (i) the sum of (a) the
aggregate Outstanding Balance of all Receivables as of the end of the Current Calculation Period
that remained unpaid more than 60 days from their original due dates but less than 91 days from
their original due dates and (b) (without duplication) the aggregate Outstanding Balance of all
Receivables that were (or which, pursuant to the Credit and Collection Policy, should have been)
written-off during the Current Calculation Period for credit reasons and which were less than 61
days from their original due dates at the time such write-off occurred by (ii) the aggregate amount
of Accruals that arose during the ninth Calculation Period immediately prior to the Current
Calculation Period.




          “Default Ratio” means the ratio (expressed as a percentage) computed as of each
Monthly Reporting Date for the immediately preceding Calculation Period by dividing (i) the
aggregate Outstanding Balance of all Receivables that were Defaulted Receivables as of the last day
of such Calculation Period (excluding, for the avoidance of doubt, any Defaulted Receivables that
were written off as uncollectible in a prior Calculation Period in accordance with the Credit and
Collection Policy) by (ii) the aggregate Outstanding Balance of all Receivables that have been
billed as of the last day of such Calculation Period; provided that, solely for purposes of
this definition, the number of days specified in clause (i) of the definition of “Defaulted
Receivable” shall be deemed to be 90 rather than 60.




          “Defaulted Receivable” means a Receivable:  (i) which remains unpaid for more than 60
days from the original due date for such Receivable; (ii) as to which an Event of Bankruptcy has
occurred and is continuing with respect to the Obligor thereof; or (iii) which, in accordance with
the Credit and Collection Policy, has been or should be written off as uncollectible.




          “Delinquency Ratio” means the ratio (expressed as a percentage) computed as of each
Monthly Reporting Date for the immediately preceding Calculation Period by dividing (i) the
aggregate Outstanding Balance of all Delinquent Receivables as of the end of such Calculation
Period by (ii) aggregate Outstanding Balance of all Receivables that have been billed




I-7









 




as of the end
of such Calculation Period (excluding Defaulted Receivables and Receivables owing by Obligors that
have a Debt Rating of AA- or better from S&P and Aa3 or better from Moody’s).




          “Delinquent Receivable” means a Receivable (other than a Defaulted Receivable or a
Receivable owing by an Obligor that has a Debt Rating of AA- or better from S&P and Aa3 or better
from Moody’s) which (i) remains unpaid for more than 60 days but equal to or less than 90 days from
the original due date for such Receivable or (ii) pursuant to the Credit and Collection Policy, has
been or should be classified as delinquent.




          “Deposit Account” means an account maintained at a bank for the purpose of receiving
Collections.




          “Deposit Account Bank” means any bank at which a Deposit Account is maintained.




          “Diluted Receivable” means that portion (and only that portion) of any Receivable
which is either (a) reduced or canceled as a result of (i) any failure by any Transaction Party to
perform any services or otherwise to perform under any Contract or invoice or any dispute under any
Contract or invoice, (ii) any change in the terms of, or cancellation of, any Contract or invoice,
(iii) any administrative fee, discount, credit memo, refund, non-cash payment, chargeback,
allowance or other adjustment of any kind (including, without limitation, any adjustment resulting
from an erroneous estimate of the Outstanding Balance of an Unbilled Receivable, but excluding any
such adjustment made by reason of such Receivable being uncollectible solely on account of the
insolvency, bankruptcy or financial inability to pay of the applicable Obligor) or (iv) any set-off
by an Obligor in respect of any claim by such Obligor (whether such claim arises out of the same or
a related transaction or an unrelated transaction) or (b) subject to any specific offset,
counterclaim or defense whatsoever (except the discharge in bankruptcy of the Obligor thereof);
provided that the term “Diluted Receivable” shall not include that certain adjustment in
the amount of $31,437,290 made in December 2007 relating to the implementation of a new computer
system for the accrual of rebates, as disclosed to the Managing Agents and the Purchasers prior to
January 23, 2008.




          “Dilution Horizon” means, as of any Monthly Reporting Date and continuing until (but
not including) the next Monthly Reporting Date, a number equal to a fraction, the numerator of
which is the (i) the aggregate original Outstanding Balance of all Accruals during the four most
recent Calculation Periods immediately preceding such earlier Monthly Reporting Date and (ii) the
denominator of which is the aggregate Outstanding Balance of all Receivables as of the end of the
Current Calculation Period minus the aggregate Outstanding Balance of Defaulted Receivables as of
the end of the Current Calculation Period.




          “Dilution Ratio” means the ratio (expressed as a percentage) computed as of each
Monthly Reporting Date for the immediately preceding Calculation Period (the “current Calculation
Period”) by dividing (i) the sum (without duplication) of (a) the aggregate amount of Receivables
which became Diluted Receivables during such Calculation Period and (b) the aggregate amount of
negative “true-ups” to the Accruals made during such Calculation Period,




I-8









 




by (ii) the aggregate
original Outstanding Balance of all Receivables which arose during the fourth Calculation Period
immediately preceding the current Calculation Period.




          “Dilution Reserve” means, on any date, an amount equal to the product of (i) the Net
Receivables Pool Balance as of the close of business of the Servicer on such date and (ii) the
greater of (x) the Dilution Reserve Percentage on such date and (y) the highest Bad Debt
Reserve Percentage calculated for the most recent 24 Monthly Reporting Dates.




          “Dilution Reserve Percentage” means, as of any Monthly Reporting Date, and continuing
until (but not including) the next Monthly Reporting Date, the higher of (i) the Dynamic Dilution
Reserve Ratio and (ii) 5%.




          “Dollars” and “$” each mean the lawful currency of the United States of
America.




          “Dynamic Dilution Reserve Ratio” means, as of any Monthly Reporting Date, and
continuing until (but not including) the next Monthly Reporting Date, an amount (expressed as a
percentage) that is calculated as follows:




DDRR = [(SF x AD) + [(DS-AD) x (DS/AD)]] x DH



Where:




	 	 	 	 	 	 	 
	 

	 	DDRR
	 	=
	 	Dynamic Dilution Reserve Ratio;
	 
	 	 	 	 	 	 
	 

	 	SF
	 	=
	 	the Stress Factor;
	 
	 	 	 	 	 	 
	 

	 	AD
	 	=
	 	the “Average Dilution”, defined as the twelve-month rolling
average of the three-month rolling average Dilution Ratio
that occurred during the period of twelve consecutive
Calculation Periods ending immediately prior to such earlier
Monthly Reporting Date;
	 
	 	 	 	 	 	 
	 

	 	DS
	 	=
	 	the “Dilution Spike”, defined as the highest four-month
rolling average Dilution Ratio that occurred during the
period of twelve consecutive Calculation Periods ending
immediately prior to such earlier Monthly Reporting Date;
and
	 
	 	 	 	 	 	 
	 

	 	DH
	 	=
	 	the Dilution Horizon.






          “Dynamic Loss Reserve Ratio” means, as of any Monthly Reporting Date, and continuing
until (but not including) the next Monthly Reporting Date, an amount (expressed as a percentage)
calculated as follows:




DLRR = SF x DLR x LHR




Where:




	 	 	 	 	 	 	 
	 

	 	DLRR
	 	=
	 	Dynamic Loss Reserve Ratio;






I-9









 






	 	 	 	 	 	 	 
	 

	 	SF
	 	=
	 	the Stress Factor;
	 
	 	 	 	 	 	 
	 

	 	DLR
	 	=
	 	the highest three-month rolling average Deemed Loss Ratio
that occurred during the period of twelve consecutive
Calculation Periods immediately preceding such earlier
Monthly Reporting Date; and
	 
	 	 	 	 	 	 
	 

	 	LHR
	 	=
	 	the Loss Horizon Ratio.






          “Effective Date” has the meaning specified in Section 1.03.




          “Eligible Assignee” means, with respect to any Purchaser Group, (i) any Person that is
a Managing Agent, a Purchaser, Scotiabank or an Affiliate thereof, (ii) any Person managed by a
Managing Agent, a Purchaser, Scotiabank or an Affiliate thereof and rated at least A-1 by S&P or
P-1 by Moody’s and (iii) any other Person that has been approved by the Managing Agent for such
Purchaser Group and, so long as no Termination Event has occurred and is continuing, that has been
approved by the Seller (such approval not to be unreasonably withheld or delayed).




          “Eligible Contract” means a Contract (i) that 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, (ii) with respect to which the Originator has performed
in all material respects all obligations required to be performed by it thereunder, (iii) except in
the case of the Contract with Pfizer, Inc., that requires the Obligor to pay all accrued
Receivables (including, without limitation, all Unbilled Receivables) upon termination of such
Contract (whether such termination results from a breach on the part of the Originator or for any
other reason), and (iv) that conforms in all material respects to one of the forms of contract
reviewed and approved by the Administrative Agent or its counsel as listed on Schedule VII under
the heading “Reviewed Contracts.”




          “Eligible Obligor” means any Obligor (i) that is a United States resident, (ii) that
is not an Official Body or an Affiliate of any of the Originator or the Seller, (iii) that is not
the subject of an Event of Bankruptcy, (iv) with respect to which not more than 20% of the
aggregate Outstanding Balance of such Obligor’s Receivables are Defaulted Receivables and (v) is
not Merck or an Affiliate thereof.




          “Eligible Receivable” means, at any time, any Receivable:





     (a) which arises under an Eligible Contract;




     (b) the Obligor of which is an Eligible Obligor;




     (c) which is fully assignable to the Seller and the Purchasers;




     (d) which constitutes the legal, valid and binding obligation of the related Obligor to
pay the Outstanding Balance thereof, enforceable against such Obligor in accordance with the
terms of the related Contract, subject to bankruptcy, insolvency,



I-10









 







reorganization, moratorium
and other similar laws affecting creditors’ rights generally and general principals of
equity;




     (e) which has been fully earned by the Originator in accordance with the terms of the
related Contract and no further performance or other action is required by the Originator in
order for such Receivable to become due and payable in full (except, in the
case of an Unbilled Receivable, for the presentation of an invoice therefor together
with the relevant supporting data required to be delivered under the terms of the related
Contract);




     (f) which is an “account” or a “payment intangible” within the meaning of Section 9-102
of the UCC of the applicable jurisdiction governing the perfection of the Administrative
Agent’s security interest therein;




     (g) which is not subject to (i) any Adverse Claim (other than Adverse Claims created
under the Originator Purchase Agreement or this Agreement) or (ii) any litigation, dispute,
offset, set-off, counterclaim or other defense, provided that only such portion of
such Receivable subject to any such dispute, offset, counterclaim or defense shall be deemed
ineligible under this criterion;




     (h) which is denominated and payable only in United States dollars in the United
States;




     (i) which was originated in the ordinary course of the Originator’s business in
accordance with the terms of the related Contract and satisfies in all material respects all
applicable requirements of the Credit and Collection Policy;




     (j) which was not a Defaulted Receivable as of the date on which such Receivable was
acquired by the Seller under the Originator Purchase Agreement;




     (k) which has not been extended, compromised, adjusted or modified from the original
terms thereof (including by the granting of any discounts, allowances or credits) except in
accordance with the Credit and Collection Policy, provided that only such portion of such
Receivable that has been so extended, compromised, adjusted or modified shall be deemed
ineligible pursuant to this criterion;




     (l) which, according to the Contract related thereto, is required to be paid in full
within 90 days of the original billing date therefor;




     (m) which either (i) has been billed within the time limits specified in the related
Contract or (ii) is an Eligible Unbilled Receivable;




     (n) which, pursuant to the terms of the related Contract, is billable no less
frequently than once each calendar quarter;




     (o) which, together with the Contract related thereto, does not contravene in any
material respect any Laws applicable thereto (including, without limitation, Laws relating
to truth in lending, fair credit billing, fair credit reporting, equal credit



I-11









 







opportunity,
fair debt collection practices, ERISA and privacy) and with respect to which no part of the
Contract related thereto is in violation of any such Law in any material respect;




     (p) which has been originated by the Originator and has been sold to the Seller
pursuant to (and in accordance with) the Originator Purchase Agreement, with the
result that the Seller has good and marketable title to such Receivable (together with
the Collections and Related Security related thereto), free and clear of all Adverse Claims
(except as created under this Agreement); and




     (q) which (together with the Collections and Related Security related thereto) is
subject to a first priority perfected security interest therein in favor of the
Administrative Agent, on behalf of the Purchasers.



          “Eligible Unbilled Receivable” means an Unbilled Receivable (i) which satisfies all
criteria specified in the definition of “Eligible Receivable” other than subclause (i) of clause
(m) of such definition, (ii) has accrued in accordance with the terms of the relevant Contract and
would be required to be paid in full by the Obligor thereof within 90 days following presentation
of an invoice therefor together with the relevant supporting data required to be delivered under
the terms of the related Contract, (iii) has been recognized as a receivable in the Originator’s
accounting records in accordance with GAAP and, to the extent consistent with GAAP, the accounting
practices of the Originator as in effect on the date of this Agreement and (iv) with respect to
which the time limit specified in the related Contract for the billing of such Receivable has not
yet expired.




          “Equity Interests” means, with respect to any Person, shares of capital stock,
partnership interests, membership interests in a limited liability company, beneficial interests in
a trust or other equity ownership interests issued by such Person, and any warrants, options or
other rights entitling the holder thereof to purchase or acquire any such equity interest.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.




          “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with the Originator, is treated as a single employer under Section 414(b) or (c) of the
IRC or, solely for purposes of Section 302 of ERISA and Section 412 of the IRC, is treated as a
single employer under Section 414 of the IRC.




          “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the IRC or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the IRC or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the
Originator or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Originator or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating




I-12









 




to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the Originator or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Originator or any ERISA Affiliate of any notice, or
the receipt by any Multiemployer Plan from the Originator or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.




          “Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of
the Board of Governors of the Federal Reserve System, as in effect from time to time.




          “Eurodollar Rate” means for any Fixed Period, the rate appearing on Page 3750 of the
Telerate Service (or on any successor or substitute page of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those currently provided on
such page of such service, as determined by the Administrative Agent from time to time for purposes
of providing quotations of interest rates applicable to dollar deposits in the London interbank
market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of
such Fixed Period, as the rate for dollar deposits with a maturity comparable to such Fixed Period.
In the event that such rate is not available at such time for any reason, then the “Eurodollar
Rate” shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Fixed Period are offered by the principal London office of Citibank in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Fixed Period, as determined by the Administrative Agent.




          “Eurodollar Rate Reserve Percentage” means for any Fixed Period in respect of which
Yield is computed by reference to the Eurodollar Rate the reserve percentage applicable two
Business Days before the first day of such Fixed Period under regulations issued from time to time
by the Board of Governors of the Federal Reserve System (or any successor) (or if more than one
such percentage shall be applicable, the daily average of such percentages for those days in such
Fixed Period during which any such percentage shall be so applicable) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental or other marginal
reserve requirement) with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that includes deposits by
reference to which the interest rate on Eurocurrency Liabilities is determined) having a term equal
to such Fixed Period.




          “Eurodollar Receivable Interest” has the meaning specified in Section 2.11.




          “Event of Bankruptcy” means, with respect to any Person, that:





     (i) such Person (a) shall generally not pay its debts as such debts become due or (b)
shall admit in writing its inability to pay its debts generally or (c) shall make a general
assignment for the benefit of creditors;




     (ii) any proceeding shall be instituted by or against such Person seeking to adjudicate
it as bankrupt or insolvent, or seeking liquidation, winding up, reorganization,



I-13









 







arrangement, adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property, and, if instituted against such
Person, shall remain undischarged for a period of 60 days; or




     (iii) such Person or any Subsidiary shall take any corporate or similar action to
authorize any of the actions set forth in the preceding clauses (i) or (ii).



          “Executive Officer” means the chief executive officer, the chief financial officer,
the general counsel or any other “officer” (as defined in Rule 16a-1 of the Securities Exchange Act
of 1934, as amended) of the Originator.




          “Existing RPA” has the meaning specified in the Preliminary Statements.




          “Federal Funds Rate” means, for any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing selected by it




          “Fee Letters” means, collectively, the Administrative Agent Fee Letter and the
Purchaser Fee Letter.




          “Fees” has the meaning specified in Section 2.07(b).




          “Final Payout Date” means the date after the Termination Date on which the Seller
Obligations have been reduced to zero by payment in full in cash.




          “Financial Covenant Default” has the meaning specified on Schedule VI.




          “Financial Officer” means, with respect to any Transaction Party, the chief financial
officer, the principal accounting officer, the treasurer, the controller, the general counsel or
any other “officer” (as defined in Rule 16a-1 of the Securities Exchange Act of 1934, as amended)
of such Transaction Party.




          “Fixed Period” means, with respect to any Receivable Interest:




          (a) in the case of any Receivable Interest held by a Conduit Purchaser and in respect of which
Yield is computed by reference to the CP Rate, (i) initially, the period commencing on (and
including) the date of purchase of such Receivable Interest and ending on (and including) the next
succeeding CP Fixed Period Date, and (ii) thereafter, each successive period commencing on (but
excluding) a CP Fixed Period Date and ending on (and including) the next succeeding CP Fixed Period
Date; and




I-14









 






          (b) in the case of any Receivable Interest in respect of which Yield is computed by reference
to the Assignee Rate, each successive period of from one to and including ten Business Days, or a
period of one month, as the Seller shall select on notice given by the Seller and received by the
applicable Managing Agent (including notice by telephone, confirmed in writing) not later than
11:00 A.M. (New York City time) on the second Business Day before the first day of such Fixed
Period, each such Fixed Period for such Receivable Interest to
commence on the last day of the immediately preceding Fixed Period for such Receivable
Interest (or, if there is no such Fixed Period, on the date of purchase of such Receivable
Interest), except that if such Managing Agent shall not have received such notice before 11:00 A.M.
(New York City time) on such second Business Day, such Fixed Period shall be one day;



provided, however, that:




     (i) any Fixed Period (other than of one day) which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding Business Day;
provided, however, that if Yield in respect of such Fixed Period is computed
by reference to the Eurodollar Rate, and such Fixed Period would otherwise end on a
day which is not a Business Day, and there is no subsequent Business Day in the same
calendar month as such day, such Fixed Period shall end on the next preceding
Business Day;




     (ii) in the case of any Fixed Period of one day, (A) if such Fixed Period is
the initial Fixed Period for a Receivable Interest, such Fixed Period shall be the
day of the purchase of such Receivable Interest; (B) any subsequently occurring
Fixed Period which is one day shall, if the immediately preceding Fixed Period is
more than one day, be the last day of such immediately preceding Fixed Period and,
if the immediately preceding Fixed Period is one day, be the day next following such
immediately preceding Fixed Period; and (C) if such Fixed Period occurs on a day
immediately preceding a day which is not a Business Day, such Fixed Period shall be
extended to the next succeeding Business Day;




     (iii) in the case of any Fixed Period for any Receivable Interest which
commences before the Amortization Date for such Receivable Interest and would
otherwise end on a date occurring after such Amortization Date, such Fixed Period
shall end on such Amortization Date and the duration of each Fixed Period which
commences on or after the Amortization Date for such Receivable Interest shall be of
such duration (including, without limitation, one day) as shall be selected by the
applicable Managing Agent; and




     (iv) at any time when the Alternate Base Rate shall have been in effect for a
Fixed Period of ten consecutive Business Days, and the conditions set forth in
clauses (i) and (iv) of the definition of Assignee Rate do not exist, any Managing
Agent may, on behalf of the Committed Purchasers in its Purchaser Group, upon one
Business Day’s notice to the Seller (with a copy to the Administrative Agent),
select as the next succeeding Fixed Period for such Receivable Interest (and any
subsequent Fixed Periods designated by such Managing Agent) a period of one month
during which Yield shall be computed by



I-15









 







reference to the Adjusted Eurodollar Rate;
provided, however, that prior to such selection the Seller may
notify the applicable Managing Agent that, in view of anticipated Collections and
repayments, Yield should continue to be computed by reference to the Alternate Base
Rate.



          “Formulary Rebate Receivable” means any “base rebate”, “formulary rebate” or similar
rebate payable by an Obligor under a Contract resulting from the inclusion of such Obligor’s
products on a formulary.




          “Funds Transfer Letter” means a letter in substantially the form of Annex D hereto
executed and delivered by the Seller to the Administrative Agent and the Managing Agents, as the
same may be amended or restated in accordance with the terms thereof.




          “GAAP” means generally accepted accounting principles as in effect in the United
States of America from time to time, consistently applied.




          “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation
of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation to purchase (or to advance or supply
funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services primarily for the purpose of assuring the owner of such Indebtedness or
other obligation of the payment thereof, (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guarantee issued to support such Indebtedness or other obligation;
provided, however, that the term “Guarantee” shall not include endorsements
for collection or deposit in the ordinary course of business.




          “Incipient Termination Event” means an event that but for notice or lapse of time or
both would constitute a Termination Event.




          “Incremental Purchase” has the meaning specified in Section 2.01(a).




          “Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person, (other than customary
reservations or retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person in respect of the deferred purchase price
of property or services (excluding current accounts payable and accrued expenses incurred in the
ordinary course of business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Adverse
Claim on property owned or acquired by such Person, whether or not the Indebtedness secured thereby
has been assumed, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital
Lease Obligations of such Person, (h) all obligations,




I-16









 




contingent or otherwise, of such Person as
an account party in respect of the face amount of letters of credit and letters of guarantee, (i)
all obligations, contingent or otherwise, of such Person in respect of the face amount of bankers’
acceptances, (j) Off-Balance Sheet Liabilities and (k) all aggregate principal component amounts
advanced to such Person and outstanding under any accounts receivable securitization or factoring
arrangement; provided, however, that
Indebtedness shall not include deferred tax liabilities, employee and retiree benefit
obligations or endorsements for collection or deposit in the ordinary course of business. The
Indebtedness of any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person’s ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not liable therefor.




          “Indemnified Amounts” has the meaning specified in Section 10.01.




          “Indemnified Party” has the meaning specified in Section 10.01.




          “Initial Closing Date” means August 8, 2003.




          “Involuntary Bankruptcy Event” means the occurrence of an event that, but for notice
or lapse of time or both, would constitute any Event of Bankruptcy with respect to any Transaction
Party.




          “IRC” means the Internal Revenue Code of 1986, as amended from time to time, and any
successor statute.




          “Joinder Agreement” means an agreement substantially in the form of Annex E pursuant
to which a new Purchaser Group is established hereunder pursuant to Section 11.03(i).




          “Law” means any law (including common law), constitution, statute, treaty, regulation,
rule, ordinance, order, injunction, writ, decree or award of any Official Body.




          “Liquidating Receivable Interest” has the meaning specified in Section 2.04.




          “Liquidation Day” means for any Receivable Interest, (i) each day during a Fixed
Period for such Receivable Interest on which the conditions set forth in Section 3.02 are not
satisfied, (ii) each day on which Reinvestment Purchases have been suspended by the Seller pursuant
to Section 2.16 and (iii) each day which occurs on or after the Amortization Date for such
Receivable Interest.




          “Liquidation Fee” means for (i) any Fixed Period for which Yield is computed by
reference to the CP Rate and a reduction of Capital is made for any reason or (ii) any Fixed Period
for which Yield is computed by reference to the Eurodollar Rate and a reduction of Capital is made
for any reason on any day other than the last day of such Fixed Period, the amount, if any, by
which (A) the additional Yield (calculated without taking into account any Liquidation Fee or any
shortened duration of such Fixed Period pursuant to clause (iii) of the definition thereof) which
would have accrued during such Fixed Period (or, in the case of clause (i) above, during the period
until the maturity of the underlying Promissory Note tranches) on the reductions
of Capital of the
Receivable Interest relating to such Fixed Period had such reductions




I-17









 




not occurred, exceeds (B) the
income, if any, received by the Purchaser which holds such Receivable Interest from the investment
of the proceeds of such reductions of Capital. A certificate as to the amount of any Liquidation
Fee (including the computation of such amount) shall be submitted by the affected Purchaser to the
Seller and shall be conclusive and binding for all purposes, absent manifest error.




          “Loss Horizon Ratio” means, as of any Monthly Reporting Date and continuing until (but
not including) the next Monthly Reporting Date, the amount obtained by dividing (i) the aggregate
Accruals which arose during the nine Calculation Periods immediately preceding such earlier Monthly
Reporting Date by (ii) the aggregate Outstanding Balance of Receivables as of the end of the
Current Calculation Period minus the aggregate Outstanding Balance of Defaulted Receivables as of
the end of the Current Calculation Period.




          “Loss Reserve” means, on any date, an amount equal to:




LRP x NRPB




          where:




	 	 	 	 	 	 	 
	 

	 	    LRP
	 	=
	 	the Loss Reserve Percentage on such date.
	 
	 	 	 	 	 	 
	 

	 	    NRPB
	 	=
	 	the Net Receivables Pool Balance at the close of business of
the Servicer on such date.






          “Loss Reserve Percentage” means, on any date, the greatest of (i) the Dynamic Loss
Reserve Ratio, (ii) four times the Normal Concentration Limit during a Rating Level 1 Period and,
during any other period, five times the Normal Concentration Limit and (iii) the Loss Reserve
Percentage Floor.




          “Loss Reserve Percentage Floor” means 20%.




          “Loss-to-Liquidation Ratio” means the ratio (expressed as a percentage) computed as of
each Monthly Reporting Date for the immediately preceding Calculation Period by dividing (i) the
aggregate Outstanding Balance of all Receivables written-off by the Originator, the Servicer or the
Seller, or which should have been written-off by the Originator, the Servicer or the Seller in
accordance with the Credit and Collection Policy, during such Calculation Period by (ii) the
aggregate amount of Collections of Receivables actually received during such Calculation Period.




          “Majority Committed Purchasers” means Committed Purchasers representing more than 50%
of the Aggregate Commitment (determined without giving effect to any termination of the Commitments
hereunder).




          “Majority Managing Agents” shall mean Managing Agents for Committed Purchasers
representing more than 50% of the Aggregate Commitment (determined without giving effect to any
termination of the Commitments hereunder); provided, however, that so long as there
are only two Managing Agents, the term “Majority Managing Agents” shall mean each such Managing
Agent.




I-18









 








          “Manager” means a “manager” of the Seller under (and as defined in) the limited
liability company agreement of the Seller.




          “Managing Agent” means, with respect to any Purchaser Group, the Person identified as
the “Managing Agent” for such Purchaser Group on Schedule II, together with (i)
any successor thereto designated pursuant to Article IX and (ii) any Person that becomes a
Managing Agent for a new Purchaser Group pursuant to Section 11.03(i).




          “Material Adverse Effect” means a material adverse effect on (i) the ability of any
Transaction Party to perform its obligations under any Transaction Document, subject to applicable
cure and grace periods, (ii) the legality, validity or enforceability of this Agreement or any
other Transaction Document, (iii) any Purchaser’s or the Administrative Agent’s interest in the
Receivables generally or in any material portion of the Receivables, the Related Security or the
Collections with respect thereto, (iv) the collectibility of the Receivables generally or of any
material portion of the Receivables or the legality, validity or enforceability of the Contracts
generally or of any material portion of the Contracts or (v) the business, operations, properties,
assets, liabilities or condition (financial or otherwise) of either (A) the Originator and its
Subsidiaries, taken as a whole or (B) the Seller.




          “Material Indebtedness” means Indebtedness (other than Seller Obligations), or net
termination payment obligations in respect of one or more Swap Agreements, of any one or more of
(i) the Originator and its Subsidiaries in an aggregate principal amount exceeding $25,000,000 or
(ii) the Seller in an aggregate principal amount exceeding $25,000. For purposes of determining
Material Indebtedness, the “principal amount” of the obligations of the Originator or any
Subsidiary or of the Seller in respect of any Swap Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Originator or such Subsidiary
or the Seller would be required to pay if such Swap Agreement were terminated at such time. As
used herein, the term “Swap Agreement” means any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or pricing risk or
value or any similar transaction or any combination of these transactions; provided,
however, that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or consultants of the
Originator or its Subsidiaries shall be a Swap Agreement.




          “Maximum Receivable Interest Percentage” means (i) during any period that the Servicer
is delivering Daily Reports hereunder, 100% and (ii) during any other period, 99%.




          “Medco” means Medco Health Solutions, Inc., a Delaware corporation, and any successor
thereto.




          “Merck” means Merck & Co., Inc., a New Jersey corporation.




          “Monthly Report” means a report in substantially the form of, and containing the
information described in, Annex A-1, and such additional information as any Managing Agent may
reasonably request from time to time, duly completed and furnished by the Servicer to each




I-19









 




Managing
Agent pursuant to Section 6.03(a), as such form may be amended by the Administrative Agent from
time to time subject to the prior consent of the Servicer (such consent not to be unreasonably
withheld); provided, however, that if the Servicer fails to object within 10 days
following receipt of any material change to the form of Monthly Report, the Servicer will be deemed
to have consented to such amendment.




          “Monthly Reporting Date” means the 20th day of each calendar month, or if that day is
not a Business Day, the next following Business Day.




          “Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.




          “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.




          “Net Receivables Pool Balance” means at any time the aggregate Outstanding Balance of
Pool Receivables reduced by the sum (without duplication) of:





     (i) the aggregate Outstanding Balance of Pool Receivables that are not Eligible
Receivables,




     (ii) the aggregate Outstanding Balance of all Eligible Receivables that are Defaulted
Receivables (excluding any portion of such aggregate Outstanding Balance for which a Bad
Debt Reserve has been established);




     (iii) the aggregate amount by which the Outstanding Balance of Eligible Receivables of
each Obligor (treating each Obligor and its Affiliates as if they were a single Obligor)
exceeds the Concentration Limit for such Obligor,




     (iv) the aggregate amount of Collections that have been received, which Collections
have not yet been applied to reduce the Outstanding Balance of any Receivables,




     (v) the aggregate amount by which the Outstanding Balances of Receivables which are to
be reduced or cancelled pursuant to any credit memos or other events or circumstances
described in the definition of “Diluted Receivable,” to the extent such reduction or
cancellation has not yet occurred,




     (vi) the Aggregate Accounts Payable Deduction Amount,




     (vii) the excess, if any, of (A) the aggregate Outstanding Balance of Eligible Unbilled
Receivables that remain unbilled as of the end of the third (3rd) calendar month after the
first date (the “Billing Cut-off Date”) on which such Unbilled Receivables could
have been billed under the terms of the related Contract (excluding any such Receivables
included in clauses (viii) and (ix) below) over (B) 20% of the aggregate Outstanding Balance
of such Unbilled Receivables as of their respective Billing Cut-off Dates,



I-20









 






     (viii) the excess, if any, of (A) the aggregate Outstanding Balance of Eligible
Unbilled Receivables that remain unbilled as of the end of the fourth (4th) calendar month
after their respective Billing Cut-off Dates (excluding any such Receivables included in
clause (ix) below) over (B) 10% of the aggregate Outstanding Balance of such Unbilled
Receivables as of their respective Billing Cut-off Dates,




     (ix) the aggregate Outstanding Balance of Eligible Unbilled Receivables that remain
unbilled as of the end of the fifth (5th) calendar month after their respective Billing
Cut-off Dates;




     (x) [Reserved];




     (xi) the Rebate Deduction Amount, and




     (xii) the Pfizer Deduction Amount;


provided, however, that no deduction will be made pursuant to clauses (vii), (viii) and
(ix) until the Monthly Reporting Date for the Calculation Period ending October 31, 2003.




          “Non-U.S. Person” has the meaning specified in Section 2.14(d).




          “Normal Concentration Limit” has the meaning specified in the definition of
“Concentration Limit.”




          “Obligor” means a Person obligated to make payments pursuant to a Contract.




          “Off-Balance Sheet Liability” of a Person shall mean (i) any liability under any Sale
and Leaseback or any lease leaseback transaction which is not a Capital Lease Obligation and (ii)
any liability under any so called “synthetic lease” transaction entered into by such Person.




          “Official Body” shall mean any government or political subdivision or any agency,
authority, bureau, central bank, commission, department or instrumentality of any such government
or political subdivision, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.




          “Originator” means Medco.




          “Originator Purchase Agreement” means the Receivables Purchase and Contribution
Agreement dated as of the Initial Closing Date between the Seller and Medco, as amended, restated,
supplemented or otherwise modified from time to time in accordance with the terms hereof and
thereof.




          “Other Medco Companies” means, collectively, the Originator and all of its
Subsidiaries and Affiliates except the Seller.




          “Outstanding Balance” means, with respect to any Receivable at any time, the then
outstanding principal amount thereof, excluding any finance charges related thereto. In the




I-21









 




case of an Unbilled Receivable, the Outstanding Balance thereof shall be determined by the Servicer in
accordance with GAAP and, to the extent consistent with GAAP, in a manner consistent with the
practices of the Originator as in effect on the Initial Closing Date.




          “Participant” means a Conduit Participant or a Committed Purchaser Participant.




          “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.




          “PBM Services” means any drug benefit management services, including, without
limitation, management of retail pharmacy networks, payment of claims to pharmacies for
prescription drugs, drug utilization review and formulary management services.




          “Percentage” means, at any time with respect to any Committed Purchaser, a fraction
(expressed as a percentage), the numerator of which is equal to its Commitment at such time, and
the denominator of which is equal to the Aggregate Commitment.




          “Permitted Investments” means any of the following investments denominated and payable
solely in Dollars: (a) readily marketable debt securities issued by, or the full and timely payment
of which is guaranteed by the full faith and credit of, the federal government of the United States
of America, (b) insured demand deposits, time deposits and certificates of deposit of any
commercial bank rated at least A-1+ by S&P and P-1 by Moody’s, (c) no load money market funds rated
in the highest ratings category by each of Moody’s and S&P (without the “r” symbol attached to any
such rating by S&P), (d) commercial paper of any corporation incorporated under the laws of the
United States or any political subdivision thereof, provided that such commercial paper is rated at
least A-1+ (and without any “r” symbol attached to any such rating) by S&P and at least Prime-1 by
Moody’s and (e) any other securities or investments of a passive nature approved in writing by each
Managing Agent.




          “Person” means an individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or agency thereof.




          “Pfizer Deduction Amount” means, on any date, the aggregate Outstanding Balance of the
Eligible Receivables owing by Pfizer, Inc. or any of its Affiliates that would not be required to
be paid upon the termination of the related Contract (whether such termination results from a
breach on the part of the Originator or for any other reason). The Pfizer Deduction Amount shall
include, without limitation, all Eligible Receivables owing by Pfizer, Inc. or any of its
Affiliates that have arisen since the last day of the most recently ended calendar quarter.




          “Pharmaceutical Plan” means any third-party payor plan, agreement or arrangement
through which Persons are entitled to receive pharmaceutical products.




          “Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the IRC or Section 302 of ERISA,
and in respect of which the Originator or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.





I-22









 








          “Pool Receivable” means any Receivable which has been sold or contributed to the
Seller from the Originator pursuant to the Originator Purchase Agreement.




          “Portfolio Turnover Rate” means, as of any Monthly Reporting Date and continuing until
(but not including) the next Monthly Reporting Date, a fraction, the numerator
of which is equal to the aggregate Outstanding Balance of the Receivables as of the last day
of the immediately preceding Calculation Period and the denominator of which is equal to the
aggregate amount of Accruals which arose during such Calculation Period.




          “Proceeds” means “proceeds” as defined in Section 9-102 of the UCC as in effect on the
date hereof in the State of New York.




          “Program Support Provider” means, with respect to any Conduit Purchaser, (i) each
Committed Purchaser with respect to such Conduit Purchaser and (ii) any other Person now or
hereafter (A) extending credit, or having a commitment to extend credit to or for the account of,
or to make purchases from, such Conduit Purchaser or (B) issuing a letter of credit, surety bond or
other instrument to support any obligations arising under or in connection with such Conduit
Purchaser’s securitization program.




          “Promissory Notes” means, collectively, (i) commercial paper and other promissory
notes issued by a Conduit Purchaser and (ii) solely in the case of a Conduit Purchaser for which
CNAI acts as Managing Agent, participations sold by such Conduit Purchaser to a Participant;
provided that the term “Promissory Note” shall not include any interest sold by a Conduit
Purchaser pursuant to any Asset Purchase Agreement.




          “Purchase” means an Incremental Purchase or a Reinvestment Purchase.




          “Purchase Limit” shall mean, at any time, the Aggregate Commitment then in effect;
provided, however, that from and after the Termination Date, the Purchase Limit
shall at all times equal the aggregate outstanding Capital of all Receivable Interests; and
provided further that the Purchase Limit may be reduced in connection with the termination of a
Purchaser Group as provided in Section 2.18. As of the date hereof, the Purchase Limit is
$600,000,000.




          “Purchase Price” has the meaning specified in Section 2.02(a).




          “Purchaser Fee Letter” has the meaning specified in Section 2.07(b).




          “Purchaser Group” means a group consisting of one or more Conduit Purchasers, one or
more Committed Purchasers and a Managing Agent for such Purchasers, as specified on Schedule II or
in the Joinder Agreement pursuant to which such Purchaser Group is established pursuant to Section
11.03(i).




          “Purchaser Group Account” means, with respect to any Purchaser Group, the account
specified on Schedule II for such Purchaser Group or such other account as the relevant Managing
Agent may designate in writing from time to time to the Seller and the Servicer.




          “Purchaser Group Limit” means, with respect to any Purchaser Group, the aggregate
Conduit Purchase Limit(s) of the Conduit Purchaser(s) in such Purchaser Group.





I-23









 








          “Purchasers” means, collectively, the Committed Purchasers and the Conduit Purchasers.




          “Rating Agencies” shall mean, on any date of determination, the rating agencies then
rating Promissory Notes at the request of any Conduit Purchaser.




          “Rating Level 1 Period” means any period during which the Originator has a Debt Rating
of BBB- or higher by S&P or Baa3 or higher by Moody’s; provided that a Rating Level 1
Period shall not be in effect at any time that the Originator (i) has a Debt Rating below BB+ by
S&P or below Ba1 by Moody’s, (ii) does not have a Debt Rating from S&P or (iii) does not have a
Debt Rating from Moody’s.




          “Rating Level 2 Period” means any period during which the Originator has a Debt Rating
of BB or higher by S&P and Ba2 or higher by Moody’s (and a Rating Level 1 Period is not then in
effect).




          “Rating Level 3 Period” means any period during which the Originator has a Debt Rating
of BB- or higher by S&P and Ba3 or higher by Moody’s (and neither a Rating Level 1 Period nor a
Rating Level 2 Period is then in effect).




          “Rating Level 4 Period” means any period during which the Originator (i) has a Debt
Rating of B+ or lower by S&P or B1 or lower by Moody’s, (ii) does not have a Debt Rating from S&P
or (iii) does not have a Debt Rating from Moody’s.




          “Rebate Conditions” has the meaning specified on Schedule VIII.




          “Rebate Deduction Amount” has the meaning specified on Schedule VIII.




          “Receivable” means all indebtedness and other obligations (in each case whether
present or future, due or to become due, billed or unbilled) of any Obligor arising under or
pursuant to a Contract, including, without limitation, the right to payment of any rebates,
administrative fees, data fees, interest or finance charges, late payment charges, delinquency
charges, extension or collection fees and all other obligations of such Obligor with respect
thereto.




          “Receivable Interest” means, at any time, an undivided percentage ownership interest
in (i) all Pool Receivables then existing or thereafter arising, (ii) all Related Security with
respect to such Pool Receivables, and (iii) all Collections with respect to, and other Proceeds of,
such Pool Receivables. Such undivided percentage ownership interest at any time shall be equal to
the product of (A) the Receivable Interest Percentage at such time and (B) a fraction, (1) the
numerator of which is equal to the Capital of such Receivable Interest at such time and (2) the
denominator of which is the total Capital of all Receivable Interests at such time.




          “Receivable Interest Percentage” means a fraction (expressed as a percentage) computed
on any date of determination as follows:




AC + TR

NRPB





I-24












 





Where:




	 	 	 	 	 	 	 
	 

	 	AC
	 	=
	 	the aggregate Capital of all Receivable Interests on the date of
such computation; provided that if the Administrative Agent
Account has been established pursuant to Section 6.07 then,
solely for purposes of computing the Receivable Interest
Percentage, the aggregate Capital on any day shall be deemed to
be reduced by an amount equal to the excess, if any, of (i) the
aggregate amount of funds then held in the Administrative Agent
Account over (ii) the aggregate accrued and unpaid Yield, Fees
and Servicing Fees.
	 
	 	 	 	 	 	 
	 

	 	TR
	 	=
	 	The Total Reserves on the date of such computation.
	 
	 	 	 	 	 	 
	 

	 	NRPB
	 	=
	 	the Net Receivables Pool Balance on the date of such computation.





Notwithstanding the foregoing, (i) from and after the date of the Termination Date until the Final
Payout Date, the aggregate Receivable Interests of the Purchasers shall equal 100% and (ii) from
and after the Final Payout Date, the Receivable Interest Percentage shall be reduced to zero as
provided in Section 2.03(c).




          “Reduction Amount” has the meaning specified in Section 2.16.




          “Register” has the meaning specified in Section 11.03(d).




          “Reinvestment Purchase” has the meaning specified in Section 2.01(b).




          “Related Security” means with respect to any Receivable:





     (i) all security interests or liens and property subject thereto from time to
time purporting to secure payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise, together with all financing
statements authorized by an Obligor describing any collateral securing such
Receivable;




     (ii) all guaranties, insurance and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Receivable
whether pursuant to the Contract related to such Receivable or otherwise;




     (iii) all other books, records and other information (including, without
limitation, computer programs, tapes, discs, punch cards, data processing software
and related property and rights) relating to such Receivable and the related
Obligor;




     (iv) all of the Seller’s and the Originator’s right, title and interest in and
to all Contracts or other agreements or documents that evidence, secure or otherwise
relate to such Receivable;



I-25









 






     (v) all of the Seller’s right, title and interest in, to and under the
Originator Purchase Agreement including, without limitation, (i) all rights of the
Seller to receive moneys due or to become due under or pursuant to the Originator
Purchase Agreement, (ii) all security interests and property subject thereto from
time to time purporting to secure payment of monies due or to become due under or
pursuant to the Originator Purchase Agreement, (iii) all rights of the Seller to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect to
the Originator Purchase Agreement, (iv) claims of the Seller for damages arising out
of or for breach of or default under the Originator Purchase Agreement, and (v) the
right of the Seller to compel performance and otherwise exercise all remedies
thereunder; and




     (vi) all Proceeds, products and profits of the foregoing.



          “Restricted Payments” has the meaning specified in Section 5.01(o).




          “Sale and Leaseback” means any lease of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, to which the Originator or any of its
Subsidiaries, directly or indirectly, becomes or remains liable as lessee or as a guarantor or
other surety and which the Originator has sold or transferred or is to sell or to transfer to any
other Person (other than any of its Subsidiaries).




          “S&P” means Standard & Poor’s Rating Services, a division of McGraw-Hill Companies,
Inc., or any successor to the rating agency business thereof.




          “Scheduled Commitment Termination Date” means, with respect to any Purchaser Group,
July 27, 2009, unless, prior to such date (or the date so extended pursuant to this
definition), upon the Seller’s request, made not more than 60 nor less than 45 days prior to the
then Scheduled Commitment Termination Date, each Committed Purchaser in such Purchaser Group shall
in its sole discretion consent, which consent shall be given not more than 30 days prior to the
then current Scheduled Commitment Termination Date for such Purchaser Group, to the extension of
the Scheduled Commitment Termination Date to a date occurring up to 364 days after the then current
Scheduled Commitment Termination Date. Each Committed Purchaser hereby agrees to respond to any
such request from the Seller within 30 days of its receipt thereof; provided, however, that
any failure of any Committed Purchaser to respond to the Seller’s request for such extension shall
be deemed a denial of such request by such Committed Purchaser. Notwithstanding the foregoing, the
Seller may declare the Scheduled Commitment Termination Date to have occurred for any Purchaser
Group for the reasons, and in accordance with the procedures, specified in Section 2.18.




          “Scotiabank” means The Bank of Nova Scotia, and any successor thereto.




          “SEC” means the Securities and Exchange Commission.






I-26









 








          “Seller” means Medco Health Receivables, LLC, a Delaware limited liability company,
and any successor thereto.




          “Seller Obligations” means all present and future indebtedness and other liabilities
and obligations (howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, or due or to become due) of the Seller to any Purchaser, any Managing Agent, the
Administrative Agent and/or any other Indemnified Party, arising under or in connection with this
Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, and
shall include, without limitation, all Capital, Yield, Fees and Servicing Fees and all other
amounts due or to become due under the Transaction Documents (whether in respect of fees, expenses,
indemnifications or otherwise), including, without limitation, interest, fees and other obligations
that accrue after the commencement of any bankruptcy, insolvency or similar proceeding with respect
to any Transaction Party (in each case whether or not allowed as a claim in such proceeding).




          “Servicer” means at any time the Person then authorized pursuant to Section 6.01 to
administer and collect Receivables.




          “Servicer Replacement Event” has the meaning specified in Section 6.08.




          “Servicer Report” means any Monthly Report, Weekly Report or Daily Report.




          “Servicing Fee” has the meaning specified in Section 2.07(a).




          “Servicing Fee Payment Date” means the third day of each calendar month (or, if such
day is not a Business Day, the next succeeding Business Day).




          “Servicing Fee Rate” has the meaning specified in Section 2.07(a).




          “Servicing Fee Reserve” means, on any date, an amount equal to




(OBR x SFRR) + AUSF




where:




	 	 	 	 	 	 	 
	 

	 	    OBR
	 	=
	 	the aggregate Outstanding Balance of all Pool Receivables as
of the end of the Current Calculation Period.
	 
	 	 	 	 	 	 
	 

	 	    SFRR
	 	=
	 	the Servicing Fee Reserve Ratio on such date.
	 
	 	 	 	 	 	 
	 

	 	    AUSF
	 	=
	 	the accrued and unpaid Servicing Fee as of such date.






          “Servicing Fee Reserve Ratio” means, as of any Monthly Reporting Date and continuing
until (but not including) the next succeeding Monthly Reporting Date, an amount equal to the
product of (i) the Servicing Fee Rate and (ii) a fraction having as the numerator the







I-27









 







Portfolio
Turnover Rate as of such earlier Monthly Reporting Date times 30 times 1.25, and as
the denominator, 360.




          “Settlement Date” for any Receivable Interest means (i) the last day of each Fixed
Period for such Receivable Interest and (ii) following the occurrence of the Termination Date, each
other Business Day specified by the Administrative Agent (at the direction of any Managing Agent)
in a written notice to the Servicer and each Managing Agent; provided, however,
that, in the case of a Receivable Interest held by a Conduit Purchaser, if Yield with respect to
such Receivable Interest is computed by reference to the CP Rate and no Liquidation Day exists on
the last day of a Fixed Period for such Receivable Interest, the Settlement Date for such
Receivable Interest for such Fixed Period shall be the third Business Day.




          “Significant Subsidiary” means, at any time, a Subsidiary that has or represents at
least 5% of (i) the consolidated gross revenues of the Originator and its Subsidiaries for the
fiscal year then most recently ended and/or (ii) the consolidated assets of the Originator and its
Subsidiaries as of the last day of the fiscal year then most recently ended; provided, that
if a combination of Subsidiaries would, on a combined basis, represent at least 5% of either of the
foregoing amounts, then each such Subsidiary shall be deemed a “Significant Subsidiary” for the
purposes hereof.




          “Solvent” means, with respect to any Person, that as of the date of determination (a)
the sum of such Person’s debt (including contingent liabilities) does not exceed all of its
property, at a present fair valuation on a going concern basis; (b) the fair saleable value of the
property on a going concern basis of such Person is not less than the amount that will be required
to pay the probable liabilities on such Person’s then existing debts as they become absolute and
matured; (c) such Person’s capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (d) such Person does not intend to incur, or believe
(nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts
as they become due. For purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to become an actual or matured
liability (irrespective of whether such contingent liabilities meet the criteria for accrual under
Statement of Financial Accounting Standard No. 5).




          “Special Indemnified Amounts” has the meaning specified in Section 6.06.




          “Specified Bankruptcy Opinion Provisions” means the factual assumptions (including
those contained in the factual certificate referred to therein) and the actions to be taken by the
Originator or the Seller, in each case as specified in the legal opinion of Arent Fox Kintner
Plotkin & Kahn, PLLC relating to certain bankruptcy matters delivered on the Initial Closing Date.




          “Specific Reserve” means the sum of the amounts in clauses (ii) and (iii) in the
definition of the Bad Debts Reserve.




          “Stress Factor” means: (i) during a Rating Level 1 Period, 2.0 and (ii) at any other
time, 2.25.





I-28









 








          “Subordinated Note” has the meaning specified in the Originator Purchase Agreement.




          “Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership interests are, as
of such date, owned, controlled or held. Unless the context otherwise requires, all references to
“Subsidiary” shall mean a Subsidiary of the Originator.




          “Tangible Net Worth” means at any time (a) the aggregate Purchase Price (as defined in
the Originator Purchase Agreement) of all outstanding Pool Receivables other than Defaulted
Receivables (net of Collections that have been received on such outstanding Pool Receivables), plus
(b) cash and cash equivalents owned by the Seller, minus (c) the aggregate outstanding Capital
hereunder, minus (d) the outstanding principal balance of the Subordinated Note.




          “Taxes” has the meaning specified in Section 2.14.




          “Termination Date” means the earliest of (a) the latest occurring Scheduled Commitment
Termination Date for any Purchaser Group, (b) the date determined pursuant to Section 7.01, (c) the
date specified by the Seller on not less than five (5) Business Days’ notice to each Managing Agent
and (d) July 30, 2010.




          “Termination Event” has the meaning specified in Section 7.01.




          “Total Reserve” means, at any time, an amount equal to the sum of (i) the Loss
Reserve, plus (ii) the Dilution Reserve, plus (iii) the Yield and Fee Reserve.




          “Transaction Documents” means this Agreement, the Originator Purchase Agreement, the
Control Agreements, the Fee Letters, the Asset Purchase Agreements, the limited liability company
agreement of the Seller and all other instruments, documents and agreements executed and/or
delivered in connection therewith.




          “Transaction Party” means any of the Seller, the Originator or (so long as it is Medco
or an Affiliate thereof) the Servicer.




          “UCC” means the Uniform Commercial Code, and any similar law, as from time to time in
effect in the specified jurisdiction.




          “Unbilled Receivable” means any Receivable that has not been billed to the Obligor by
either the Originator or the Servicer.




          “Weekly Report” means a report in substantially the form of, and containing the
information described in, Annex A-2, and such additional information as any Managing Agent







I-29









 







may
reasonably request from time to time, duly completed and furnished by the Servicer to each Managing
Agent pursuant to Section 6.03(b).




          “Yield” means, for any Receivable Interest and any Fixed Period, the sum for each day
during such Fixed Period of the following:



YR x C + LF

Y          




where:




	 	 	 	 	 	 	 
	 

	 	YR
	 	=
	 	the Yield Rate for such Receivable Interest for such day
	 
	 	 	 	 	 	 
	 

	 	C
	 	=
	 	the Capital of such Receivable Interest on such day
	 
	 	 	 	 	 	 
	 

	 	Y
	 	=
	 	(a) in the case of a Receivable Interest, the Yield Rate for
which is based on the Alternate Base Rate, 365 or 366 as
applicable and (b) in the case of any other Receivable
Interest, 360
	 
	 	 	 	 	 	 
	 

	 	LF
	 	=
	 	the Liquidation Fee, if any, for such Receivable Interest for
such Fixed Period;





provided, however, that no provision of this Agreement shall require the payment or
permit the collection of Yield in excess of the maximum permitted by applicable law;
provided, further, that Yield for any Receivable Interest 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.




          “Yield and Fee Reserve” means, on any date, an amount equal to




[(AC x YFRR) + AUYF] + SFR




where:




	 	 	 	 	 	 	 
	 

	 	AC
	 	=
	 	the aggregate Capital of all Receivable Interests at the
close of business of the Servicer on such date.
	 
	 	 	 	 	 	 
	 

	 	YFRR
	 	=
	 	the Yield and Fee Reserve Ratio on such date.
	 
	 	 	 	 	 	 
	 

	 	AUYF
	 	=
	 	accrued and unpaid Yield and Fees on such date.
	 
	 	 	 	 	 	 
	 

	 	SFR
	 	=
	 	the Servicing Fee Reserve on such date.






          “Yield and Fee Reserve Ratio” means, on any Monthly Reporting Date and continuing
until (but not including) the next Monthly Reporting Date, an amount, expressed as a percentage,
equal to:





I-30









 








YFRR = [(ER x 1.5) + (AEM + PFR)] x (PTR x 30 x 1.25)/360




where:




	 	 	 	 	 	 	 
	 

	 	YFRR
	 	=
	 	the Yield and Fee Reserve Ratio
	 
	 	 	 	 	 	 
	 

	 	ER
	 	=
	 	the one-month Eurodollar Rate as of the end of the Current
Calculation Period
	 
	 	 	 	 	 	 
	 

	 	AEM
	 	=
	 	the Applicable Eurodollar Rate Margin as of the end of the
Current Calculation Period
	 
	 	 	 	 	 	 
	 

	 	PFR
	 	=
	 	the Program Fee Rate (as defined in the Purchaser Fee
Letter) as of the end of the Current Calculation Period
	 
	 	 	 	 	 	 
	 

	 	PTR
	 	=
	 	Portfolio Turnover Rate as of the end of the Current
Calculation Period






          “Yield Rate” means, with respect to any Receivable Interest for any day (i) to the
extent such Receivable Interest is funded on such day by a Conduit Purchaser through the issuance
of Promissory Notes, the CP Rate and (ii) otherwise, the Assignee Rate; provided,
however, that at all times following the occurrence and during the continuation of a
Termination Event the Yield Rate for all Receivable Interests shall be a rate per annum equal to
the Alternate Base Rate in effect from time to time plus 2.00%.




          “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.





I-31









 








SCHEDULE II




PURCHASER GROUPS




Purchaser Group Managing Agent: Citicorp North America, Inc.




	 	 	 	 	 
	Committed Purchaser: Citibank, N.A.	 	Commitment: $250,000,000
	 

	 	450 Mamaroneck Avenue	 	 
	 

	 	Harrison, N.Y. 10528	 	 
	 

	 	Attention: Robert Kohl	 	 
	 

	 	Telephone: (914) 899-7218	 	 
	 

	 	Telecopy: (914) 899-7903	 	 






	 	 	 	 	 
	Conduit Purchaser: CAFCO, LLC	 	Conduit Purchase Limit: $250,000,000
	 

	 	450 Mamaroneck Avenue	 	 
	 

	 	Harrison, N.Y. 10528	 	 
	 

	 	Attention: Maryjo Gavigan	 	 
	 

	 	Telephone: (914) 899-7122	 	 
	 

	 	Telecopy: (914) 899-7903	 	 






 









 






	 	 	 	 	 
	Managing Agent: Citicorp North America, Inc.	 	 
	 

	 	450 Mamaroneck Avenue	 	 
	 

	 	Harrison, N.Y. 10528	 	 
	 

	 	Attention: Robert Kohl	 	 
	 

	 	Telephone: (914) 899-7218	 	 
	 

	 	Telecopy: (914) 899-7903	 	 
	 
	 	 	 	 
	 

	 	with a copy to:	 	 
	 
	 	 	 	 
	 

	 	Citicorp North America, Inc.	 	 
	 

	 	388 Greenwich Street, 19th Floor	 	 
	 

	 	New York, New York 10013	 	 
	 

	 	Attention: Patricia Schaupp (Global Securitized Markets)	 	 
	 

	 	Telecopy: (646) 843-3696	 	 






	 	 	 	 	 
	Purchaser Group’s Account:	 	 
	 

	 	Citibank, N.A.
	 	 
	 

	 	ABA # 021-000-089	 	 
	 

	 	Account # 4063-6695	 	 
	 

	 	Account Name: CAFCO Redemption Account	 	 
	 

	 	Attention: Maryjo Gavigan	 	 






I-2









 





Purchaser Group Managing Agent: The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch




	 	 	 	 	 
	Committed Purchaser: The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch	 	Commitment: $200,000,000
	 
	 	 	 	 
	 

	 	1251 Avenue of the Americas, 10th Floor	 	 
	 

	 	New York, NY 10020	 	 
	 

	 	Attention: Christopher Pohl	 	 
	 

	 	Telephone: (212) 782-4911	 	 
	 

	 	Telecopy: (212) 782-6998	 	 






	 	 	 	 	 
	Conduit Purchaser: Victory Receivables Corporation	 	Conduit Purchase Limit: $200,000,000
	 

	 	c/o The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch	 	 
	 

	 	1251 Avenue of the Americas, 10th Floor	 	 
	 

	 	New York, NY 10020	 	 
	 

	 	Attention: Hermina Batson	 	 
	 

	 	Telephone: (212) 782-4908	 	 
	 

	 	Telecopy: (212) 782-6998	 	 
	 
	 	 	 	 
	Managing Agent: The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch	 	 
	 

	 	1251 Avenue of the Americas, 10th Floor	 	 
	 

	 	New York, NY 10020	 	 
	 

	 	Attention: Hermina Batson	 	 
	 

	 	Telephone: (212) 782-4908	 	 
	 

	 	Telecopy: (212) 782-6998	 	 






	 	 	 	 	 
	Purchaser Group’s Account
	 	 
	 
	 	    To: Deutsche Bank Trust Company
Americas

    ABA No.:  021-001-033	 	 
	 
	 	    A/C Name:   Corporate Trust
& Agency Services	 	 
	 
	 	    A/C No.:   01419647	 	 
	 
	 	    Ref:  Victory Receivables / Medco	 	 






I-3









 





Purchaser Group Managing Agent: The Bank of Nova Scotia




	 	 	 	 	 
	Committed Purchaser: The Bank of Nova Scotia	 	Commitment: $150,000,000
	 

	 	One Liberty Plaza	 	 
	 

	 	New York, NY 10006	 	 
	 

	 	Attention: Michael Eden	 	 
	 

	 	Telephone: (212) 225-5007	 	 
	 

	 	Telecopy: (212) 225-5274	 	 






	 	 	 	 	 
	Conduit Purchaser: Liberty Street Funding LLC	 	Conduit Purchase Limit: $150,000,000
	 

	 	c/o The Bank of Nova Scotia	 	 
	 

	 	One Liberty Plaza	 	 
	 

	 	New York, NY 10006	 	 
	 

	 	Attention: Michael Eden	 	 
	 

	 	Telephone: (212) 225-5007	 	 
	 

	 	Telecopy: (212) 225-5274	 	 






I-4









 






	 	 	 	 	 
	Managing Agent: The Bank of Nova Scotia	 	 
	 

	 	One Liberty Plaza	 	 
	 

	 	New York, NY 10006	 	 
	 

	 	Attention: Michael Eden	 	 
	 

	 	Telephone: (212) 225-5007	 	 
	 

	 	Telecopy: (212) 225-5274	 	 
	 
	 	 	 	 
	 

	 	with copies to:	 	 
	 
	 	 	 	 
	 

	 	One Liberty Plaza	 	 
	 

	 	New York, NY 10006	 	 
	 

	 	Attention: Vilma Pindling	 	 
	 

	 	Telephone: (212) 225-5410	 	 
	 

	 	Telecopy: (212) 225-6465	 	 
	 
	 	 	 	 
	 

	 	One Liberty Plaza	 	 
	 

	 	New York, NY 10006	 	 
	 

	 	Attention: Judy Bookal	 	 
	 

	 	Telephone: (212) 225-5462	 	 
	 

	 	Telecopy: (212) 225-5290	 	 
	 
	 	 	 	 
	 

	 	and	 	 
	 
	 	 	 	 
	 

	 	One Liberty Plaza	 	 
	 

	 	New York, NY 10006	 	 
	 

	 	Attention: William Sun	 	 
	 

	 	Telephone: (212) 225-5331	 	 
	 

	 	Telecopy: (212) 225-5290	 	 
	 
	 	 	 	 
	Purchaser Group’s Account:	 	 
	 

	 	   The Bank of Nova Scotia — New York
Agency	 	 
	 

	 	   ABA#: 026 — 002532	 	 
	 

	 	   Account: Liberty Street Funding LLC	 	 
	 

	 	   Acct#: 2158-13	 	 






Aggregate Commitment: $600,000,000




Purchase Limit: $600,000,000




I-5









 








SCHEDULE III




CP RATES




          CNAI Purchaser Group




          When used in reference to any Conduit Purchaser for which CNAI acts as the Managing Agent (or
any successor Managing Agent for such Conduit Purchaser’s Purchaser Group), the term “CP
Rate” means, for each day during a Fixed Period and to the extent such Conduit Purchaser funds
the related Receivable Interest on such day through the issuance of Promissory Notes, the per annum
rate equivalent to the weighted average of the per annum rates paid or payable by such Conduit
Purchaser from time to time as interest on or otherwise (by means of interest rate hedges or
otherwise) in respect of those Promissory Notes issued by such Conduit Purchaser that are
allocated, in whole or in part, by such Managing Agent (on behalf of such Conduit Purchaser) to
fund such Receivable Interest on such day as determined by such Managing Agent (on behalf of such
Conduit Purchaser) and reported to the Seller, which rates shall reflect and give effect to the
commissions of placement agents and dealers in respect of such Promissory Notes, to the extent such
commissions are allocated, in whole or in part, to such Promissory Notes by such Managing Agent on
behalf of such Conduit Purchaser; provided, however, that if any component of such
rate is a discount rate, in calculating the “CP Rate” for such day the Managing Agent shall for
such component use the rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum; provided, further, that the CP Rate with respect to any
portion of a Receivable Interest funded by Conduit Participants shall be the same rate as in effect
from time to time on the Receivable Interest or portions thereof that are not funded by Conduit
Participants; and provided further that if all of the Receivable Interest is funded
by Conduit Participants, then the CP Rate applicable to such Receivable Interest shall be such
Conduit Purchaser’s pool funding rate in effect from time to time for its largest size pool of
transactions which settles with a frequency corresponding to the applicable Fixed Period.




          BTM Purchaser Group




          When used in reference to any Conduit Purchaser for which BTM acts as Managing Agent (or any
successor Managing Agent for such Conduit Purchaser’s Purchaser Group), the term “CP Rate”
means, for each day during a Fixed Period and to the extent such Conduit Purchaser funds the
related Receivable Interest (or any portion thereof) on such day through the issuance of Promissory
Notes, (i) unless such Conduit Purchaser or its Managing Agent has determined that the Pooled CP
Rate shall be applicable,  a rate per annum equal to the rate per
annum calculated by such Managing Agent to reflect such Conduit Purchaser’s cost of funding
such Receivable Interest (or portion thereof), taking into account the weighted daily average
interest rate payable in respect of such Promissory Notes during such period (determined in the
case of discount Promissory Notes by converting the discount to an interest bearing equivalent rate
per annum), applicable placement fees and commissions, and such other costs and
expenses as such Managing Agent in good faith deems appropriate; and (ii) to the extent such
Managing Agent has determined that the Pooled CP Rate shall be applicable, the Pooled CP Rate.




          For purposes of the foregoing:




 









 








          “Pooled Commercial Paper” means commercial paper notes of a Conduit Purchaser which
are subject to any particular pooling arrangement, as determined by the Managing Agent for such
Conduit Purchaser (it being recognized that there may be more than one distinct groups of Pooled
Commercial Paper at any time).



          “Pooled CP Rate” shall mean, for each day with respect to any Fixed Period as to which
the Pooled CP Rate is applicable, the sum of (i) discount or yield accrued (including, without
limitation, any associated with financing the discount or interest component on the roll-over of
any Pooled Commercial Paper) on Pooled Commercial Paper on such day, plus (ii) any and all accrued
commissions in respect of placement agents and commercial paper dealers, and issuing and paying
agent fees incurred, in respect of such Pooled Commercial Paper for such day, plus (iii) other
costs (including without limitation those associated with funding small or odd-lot amounts) with
respect to all receivable purchase, credit and other investment facilities which are funded by the
applicable Pooled Commercial Paper for such day. The Pooled CP Rate shall be determined by the
Managing Agent for the applicable Conduit Purchaser, whose determination shall be conclusive.




          Scotiabank Purchaser Group




          When used in reference to any Conduit Purchaser for which Scotiabank acts as Managing Agent
(or any successor Managing Agent for such Conduit Purchaser’s Purchaser Group), the term “CP
Rate” means, with respect to such Conduit Purchaser for any Fixed Period with respect to any
Receivable Interest, the per annum rate equivalent to the “weighted average cost” (as defined
below) related to the issuance of such Conduit Purchaser’s Promissory Notes that are allocated, in
whole or in part, by such Conduit Purchaser (or by its Managing Agent) to fund or maintain such
Receivable Interest (and which may also be allocated in part to the funding of other Receivable
Interests hereunder or of other assets of such Conduit Purchaser); provided,
however, that if any component of such rate is a discount rate, in calculating the “CP
Rate” for such Receivable Interest for such Fixed Period, such Conduit Purchaser shall for such
component use the rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum. As used in this definition, such Conduit Purchaser’s “weighted average
cost” shall consist of (x) the actual interest rate (or discount) paid to purchasers of such
Conduit Purchaser’s Promissory Notes, together with the commissions of placement agents and dealers
in respect of such Promissory Notes, to the extent such commissions are allocated, in whole or in
part, to such Promissory Notes by such Conduit Purchaser (or by its Managing Agent) and (y) any
incremental carrying costs incurred with respect to such Conduit Purchaser’s Promissory Notes
maturing on dates other than those on which corresponding funds are received by such Conduit
Purchaser.




          Other Purchaser Groups




          When used in reference to any Conduit Purchaser the Managing Agent for which is not BTM, CNAI
or Scotiabank (or any of their respective successors), except as otherwise provided in the Joinder
Agreement pursuant to which such Conduit Purchaser became a party hereto, the term “CP
Rate” means, for each day during a Fixed Period and to the extent such Conduit Purchaser funds
the related Receivable Interest on such day through the issuance of Promissory Notes, the per annum
rate equivalent to the weighted average cost (as determined by




 









 







such Managing Agent, and which shall include (without duplication) the fees and commissions of
placement agents and dealers, incremental carrying costs incurred with respect to Commercial Paper
maturing on dates other than those on which corresponding funds are received by such Conduit
Purchaser, other borrowings by such Conduit Purchaser and any other costs associated with the
issuance of Commercial Paper) of or related to the issuance of Promissory Notes that are allocated,
in whole or in part, by such Conduit Purchaser or its Managing Agent to fund or maintain such
Receivable Interest on such day (and which may also be allocated in part to the funding of other
assets of the Conduit Purchaser); provided, however, that if any component of any
such rate is a discount rate, in calculating the “CP Rate” for such Receivable Interest for
such Fixed Period, the Managing Agent shall for such component use the rate resulting from
converting such discount rate to an interest bearing equivalent rate per annum.





 









 








SCHEDULE IV




DEPOSIT ACCOUNTS AND DEPOSIT ACCOUNT BANKS




	 	 	 
	None, other than:
	 	 
	 
	 	 
	Bank:
	 	JPMorgan Chase Bank
	Account No.
	 	910-2-781078
	Account Name:
	 	Medco Health Receivables, LLC
	Bank Contact:
	 	Robert Garofalo
	 
	 	1 Chase Manhattan Plaza, 7th Floor
	 
	 	New York, NY 10005
	 
	 	Telephone:  212-552-4531
	 
	 	Fax:  212-383-0619





The account listed above is the “Collection Account” referred to in clause (a) of the definition of
such term.




 









 








SCHEDULE V




CREDIT AND COLLECTION POLICY




[Attached]




 









 





SCHEDULE VI




FINANCIAL COVENANTS

FINANCIAL COVENANT DEFAULTS




          “Financial Covenant Default” means the occurrence of the following:




               Leverage. The ratio of (i) Consolidated Total Debt as of the last day of any fiscal
quarter, or as of the date of any Purchase, to (ii) Consolidated EBITDA for the last four fiscal
quarters ending on or before such date shall be greater than 3.5:1.




          In calculating the ratio set forth above, pro forma effect shall be given to any acquisitions
or dispositions that occur during the applicable reference period, or thereafter and on or prior to
the reporting date with respect thereto, as if they had occurred on the first day of the applicable
reference period or as of the last day of the applicable quarter, as the case may be.



Capitalized terms used and not otherwise defined in this Schedule VI have the meanings specified in
the Credit Agreement as in effect on April 30, 2007.





 









 








SCHEDULE VII




REVIEWED CONTRACTS




Abbott Laboratories





	•	 	Agreement between Merck-Medco Managed Care, LLC and Abbott Laboratories, dated April 1,
2000
	 
	•	 	Managed Care Agreement between Medco Containment Services, Inc., Managed Care, Inc. and
Abbott Laboratories, dated April 1, 1994





AstraZeneca, LP





	•	 	Agreement between Merck-Medco Managed Care, LLC and AstraZeneca LP, dated October 1, 1999
	 
	•	 	Agreement between Merck-Medco Managed Care, LLC and Astra USA, Inc., dated January 1, 1998
	 
	•	 	Agreement between Medco Containment Services, Inc., Managed Care, Inc. and Astra USA, Inc.,
dated July 1, 1994





Aventis/HMR





	•	 	Data Report Agreement between Hoechst Marion Roussel, Inc. and Merck-Medco Managed Care,
LLC, dated January 1, 1997
	 
	•	 	Data Report Agreement between Aventis Pharmaceuticals, Inc. and Merck-Medco Managed Care,
LLC, dated January 1, 1998





Bayer, Inc.





	•	 	Agreement between Merck-Medco Managed Care, LLC and Bayer Corporation — Pharmaceutical
Division, dated July 12, 2000
	 
	•	 	Agreement between Bayer, Inc. Pharmaceutical Division and Merck-Medco Managed Care, LLC,
dated April 16, 1998
	 
	•	 	Agreement between Bayer, Inc. Pharmaceutical Division and Merck-Medco Managed Care, LLC,
dated April 16, 1998




 









 






	•	 	Agreement between Bayer, Inc. Pharmaceutical Division and Merck-Medco Managed Care, LLC,
dated December 22, 2000





Bristol-Myers Squibb Co.





	•	 	Pharmaceutical Discount Agreement between Medco Health Solutions, Inc. and Bristol-Myers
Squibb Company, dated July 19, 2002
	 
	•	 	Agreement between Merck-Medco Managed Care, LLC and the US Pharmaceuticals division of
Bristol-Myers Squibb Company, dated July 1, 2000
	 
	•	 	Agreement between Merck-Medco Managed Care, LLC and the US Pharmaceuticals division of
Bristol-Myers Squibb Company, dated February 29, 2000
	 
	•	 	Agreement between Merck-Medco Managed Care, LLC and the US Pharmaceuticals division of
Bristol-Myers Squibb Company, dated May 19, 1999





The DuPont Merck Pharmaceutical Company





	•	 	Rebate Agreement between Merck-Medco Managed Care, L.L.C. and The DuPont Merck
Pharmaceutical Company, effective December 1, 1997





Eli Lilly & Company





	•	 	Agreement between Merck-Medco Managed Care, LLC and Eli Lilly and Company, dated January 1,
2000





G.D. Searle & Co.





	•	 	Agreement between Merck-Medco Managed Care, L.L.C. and G.D. Searle & Co., dated February 1,
1997





GlaxoSmithKline





	•	 	Agreement between Merck-Medco and GlaxoSmithKline, dated October 1, 2001
	 
	•	 	Agreement between Merck-Medco Managed Care, L.L.C. and Glaxo Wellcome Inc., dated January
1, 1999
	 
	•	 	Agreement between Merck-Medco Managed Care, L.L.C. and Glaxo Wellcome Inc., dated January 1,
1997






	Johnson & Johnson




 









 












	•	 	Rebate Agreement between MedcoHealth Solutions, Inc. and Johnson & Johnson Health Care
Systems, Inc., dated January 1, 2002
	 
	•	 	Rebate Agreement between Merck-Medco and Johnson & Johnson Health Care Systems, Inc., dated
December 19, 1996





Knoll Pharmaceutical Co.





	•	 	Agreement between Merck-Medco Managed Care, L.L.C. and Knoll Pharmaceutical Company, dated
October 1, 1999





Novartis Consumer Health, Inc.





	•	 	Agreement between Medco Health Solutions and Novartis Pharmaceuticals Corporation, dated
July 1, 2002
	 
	•	 	Agreement between Merck-Medco Managed Care, L.L.C. and Novartis Pharmaceuticals
Corporation, dated September 20, 1999
	 
	•	 	Habitrol agreement between Merck-Medco Managed Care and Novartis, dated July 1, 1999





Pfizer, Inc.





	•	 	Rebate Agreement between Pfizer Inc. and Merck-Medco Managed Care, L.L.C., effective
January 1, 2002
	 
	•	 	Managed Care agreement between Merck-Medco and Pfizer Inc., dated December 20, 1996





Pharmacia Corp.





	•	 	Agreement between Merck-Medco Managed Care and Pharmacia & Upjohn, dated July 1, 1999
	 
	•	 	Agreement between Pharmacia Corporation and Merck-Medco Managed Care, L.L.C., dated October
1, 2000
	 
	•	 	Agreement between Merck-Medco Managed Care and Pharmacia & Upjohn Company, dated February
15, 2002





Pudue Pharma L.P.





	•	 	Agreement among Medco Containment Services, Inc., Managed Care, Inc., and Purdue Pharma
L.P., dated September 1, 1995




 









 












	•	 	Agreement among Medco Containment Services, Inc., Managed Care, Inc., and The Purdue
Frederick Company, dated September 1, 1995





Rhone-Poulenc Rorer





	•	 	Managed Care Agreement among Merck-Medco Managed Care, L.L.C., Managed Care, LLC, and
Rhone-Poulenc Rorer Pharmaceuticals, Inc., dated November 1, 1996





Roche Laboratories, Inc.





	•	 	Agreement between Merck-Medco Managed Care and Boehringer Mannheim Corporation, dated June
1, 1998






	•	 	Agreement between Merck-Medco Managed Care, L.L.C. and Boehringer Ingelheim
Pharmaceuticals, Inc., dated January 1, 1998





Schering Corporation




     (c) Agreement among Merck-Medco Managed Care, Inc, Managed Care, L.L.C., and Schering
Corporation, dated October 1, 1996



Takeda Pharmaceuticals





	•	 	Agreement between Medco Health Solutions, Inc. and Takeda Pharmaceuticals America, Inc.,
dated October 1, 2002






	•	 	Agreement between Merck-Medco Managed Care, L.L.C., and Takeda Pharmaceuticals America,
Inc., dated October 1, 1999





Warner-Lambert Company





	•	 	Agreement between Merck-Medco Managed Care, L.L.C. and Warner-Lambert Company, dated
January 1, 2000





Wyeth-Ayerst Laboratories





	•	 	Pharmaceutical Supply Agreement among Medco Containment Services, Inc., Managed Care, Inc.,
and Wyeth-Ayerst Laboratories Division of American Home Products Corporation, dated as of
October 1, 1995






	Zeneca Pharmaceuticals




 









 












	•	 	Agreement between Medco Containment Services, Inc. and Zeneca Pharmaceuticals Group, dated
October 26, 1993






 









 








SCHEDULE VIII




ACCOUNTS PAYABLE DEDUCTION AMOUNT AND

REBATE DEDUCTION AMOUNT




A. ACCOUNTS PAYABLE DEDUCTION AMOUNT




          “Aggregate Accounts Payable Deduction Amount” means, as of any Monthly Reporting Date
and continuing until (but not including) the next Monthly Reporting Date, an amount equal to:




          (a) during any Tier 1 Period (as defined below), the sum of:





(i) the greater of (x) the highest six-month rolling average aggregate
Accounts Payable for the Top 10 Obligors during the period of twelve
consecutive Calculation Periods ending immediately prior to such earlier
Monthly Reporting Date and (y) the aggregate Accounts Payable for the Top
Ten Obligors for the Current Calculation Period; and




(ii) the greater of (x) the highest six-month rolling average aggregate
Accounts Payable for the Non-Top 10 Obligors during the period of twelve
consecutive Calculation Periods ending immediately prior to such earlier
Monthly Reporting Date and (y) the aggregate Accounts Payable for the
Non-Top Ten Obligors for the Current Calculation Period;



          (b) during any Tier 2 Period (as defined below), the sum of:





(i) the greater of (x) (A) the highest six-month rolling average aggregate
Accounts Payable for the Top 10 Obligors during the period of twelve
consecutive Calculation Periods ending immediately prior to such earlier
Monthly Reporting Date, multiplied by (B) 1.2 and (y) the aggregate Accounts
Payable for the Top Ten Obligors for the Current Calculation Period; and




(ii) the greater of (x) (A) the highest six-month rolling average aggregate
Accounts Payable for the Non-Top 10 Obligors during the period of twelve
consecutive Calculation Periods ending immediately prior to such earlier
Monthly Reporting Date, multiplied by (B) 1.2 and (y) the aggregate Accounts
Payable for the Non-Top Ten Obligors for the Current Calculation Period; and



(c) during any period that is neither a Tier 1 Period nor a Tier 2 Period, the sum
of (i) the Accounts Payable Deduction Amount (Top 10 Obligors) and (ii) the Accounts
Payable Deduction Amount (Non-Top 10 Obligors).




          For purposes of this definition, the following terms have the following meanings:




 









 








          “Tier 1 Period” means a Rating Level 1 Period when the Originator has (1) a
Debt Rating of BBB or higher by S&P and Baa2 or higher by Moody’s or (2) a Debt
Rating of BBB- or lower by S&P or Baa3 or lower by Moody’s but neither Debt Rating
has a negative outlook or is on negative credit watch (or any equivalent
designation).




          “Tier 2 Period” means a Rating Level 1 Period that is not a Tier 1 Period.




          For purposes of the foregoing, the following terms shall have the following meanings:




          “Accounts Payable” means, with respect to any Obligor as of any Monthly Reporting Date
and continuing until (but not including) the next Monthly Reporting Date, the aggregate amount
payable by the Originator to such Obligor as of the last day of the Current Calculation Period
pursuant to any contract or other arrangement between the Originator and such Obligor;
provided, however, that in the case of an Obligor and its Affiliates, the Accounts
Payable shall be calculated as if such Obligor and such Affiliates were a single Obligor.




          “Accounts Payable Deduction Amount (Non-Top 10 Obligors)” means, as of any Monthly
Reporting Date and continuing until (but not including) the next Monthly Reporting Date, the
product of (a) the highest aggregate Accounts Payable for the Non-Top Ten Obligors for any
Calculation Period during the Look-Back Period times (b) a ratio (expressed as a percentage), (i)
the numerator of which is the Accounts Payable Deduction Amount (Top 10 Obligors) for the Current
Calculation Period and (ii) the denominator of which is the highest aggregate Accounts Payable for
the Top Ten Obligors for any Calculation Period during the Look-Back Period. For purposes of this
definition, “Look-Back Period” means the applicable period specified below (which in each case
shall include the Current Calculation Period):




	 	 	 
	Calculation Period ending:	 	Look-Back Period
	June 30, 2003

	 	2 most recent Calculation Periods
	July 31, 2003

	 	3 most recent Calculation Periods
	August 31, 2003

	 	4 most recent Calculation Periods
	September 30, 2003

	 	5 most recent Calculation Periods
	October 31, 2003

	 	6 most recent Calculation Periods
	November 30, 2003

	 	7 most recent Calculation Periods
	December 31, 2003

	 	8 most recent Calculation Periods
	January 31, 2004

	 	9 most recent Calculation Periods
	February 29, 2004

	 	10 most recent Calculation Periods
	March 31, 2004

	 	11 most recent Calculation Periods
	Any time after March 31, 2004

	 	12 most recent Calculation Periods






          “Accounts Payable Deduction Amount (Top 10 Obligors)” means, as of any Monthly
Reporting Date and continuing until (but not including) the next Monthly Reporting Date, an amount
computed by (i) determining the highest Accounts Payable for each of the Top Ten Obligors for any
Calculation Period during the Look-Back Period and (ii) summing the results determined pursuant to
clause (i) for each of the Top Ten Obligors. For purposes of this




 









 







definition, “Look-Back Period” means the applicable period specified below (which in each case
shall include the Current Calculation Period):




	 	 	 
	Calculation Period ending:

	 	Look-Back Period
	 
	June 30, 2003

	 	  8 most recent Calculation Periods
	July 31, 2003

	 	  9 most recent Calculation Periods
	August 31, 2003

	 	10 most recent Calculation Periods
	September 30, 2003

	 	11 most recent Calculation Periods
	Any time after September 30, 2003

	 	12 most recent Calculation Periods






          “Non-Top 10 Obligors” means, collectively, all Obligors other than the Top Ten
Obligors.




          “Top 10 Obligors” means, as of any Monthly Reporting Date and continuing until (but
not including) the next Monthly Reporting Date, the ten (10) Obligors with the greatest aggregate
Outstanding Balance of Eligible Receivables as of the last day of the Current Calculation Period,
determined as if each Obligor and its Affiliates were a single Obligor.




 









 








B. REBATE DEDUCTION AMOUNT




          “Additional Rebate Amount” means, at any time, the excess if any, of (i) the
aggregate amount payable by the Originator to the Clients pursuant to Client Contracts and arising
from or associated with rebate payments due the Originator under the Contracts over (ii) the
aggregate Outstanding Balance of Formulary Rebate Receivables at such time.




          “Rebate Conditions” means, at any time, the satisfaction of each of the following
conditions:




          (i) (A) the Originator is not, has not agreed to be and has not been found to be a fiduciary
under ERISA, any other federal Law or any state Law applicable to the pharmaceutical benefit
management industry specifically and (B) no similar pharmaceutical benefit manager is, has agreed
to be or has been found to be a fiduciary under ERISA, any other federal Law or any state Law
applicable to the pharmaceutical benefit management industry specifically unless, solely in the
case of this clause (B), the Seller establishes to the satisfaction of the Managing Agents that the
facts and circumstances which resulted in such pharmaceutical benefit manager being, agreeing to be
or being found to be such a fiduciary are not applicable to the Originator;




          (ii) none of the Managing Agents shall have determined, in its sole discretion, that there
exists any Law that would conflict with the general principles of common law discussed in the
Rebate Letters (as defined below) or that would otherwise increase the risk that a Client would be
able successfully to assert an Adverse Claim to any Receivables or Collections (whether or not such
Law was in existence at the time such Rebate Letters are delivered, but excluding any such Law that
was expressly cited and discussed in such Rebate Letters); and




          (iii) the Originator shall have taken, or refrained from taking, as the case may be, all
actions that are necessary to be taken or not to be taken in order to ensure that the assumptions
and factual recitations set forth in the Rebate Letters remain true and correct in all material
respects at all times.




          The occurrence of any event described in clause (i)(A) or clause (iii) shall result in the
Rebate Conditions not being satisfied immediately. The occurrence of any event described in clause
(i)(B) or any determination described in clause (ii) shall result in the Rebate Conditions not
being satisfied on the later of (x) the 30th day after the occurrence of such event or
determination and (y) the next occurring Settlement Date.




          “Rebate Deduction Amount” means, at any time, an amount equal to:




          (i) if the Rebate Conditions are not satisfied at such time, the aggregate Outstanding Balance
of all Eligible Receivables that are Formulary Rebate Receivables plus the Additional Rebate
Amount; and




          (ii) if the Rebate Conditions are satisfied at such time, an amount equal to:




(RR x RGP) + [(RR x (1 –RGP) + ARA) x RDP]




 









 








where:




	 	 	 	 	 	 	 
	 

	 	RR
	 	=
	 	the aggregate Outstanding Balance of all Eligible Receivables
that are Formulary Rebate Receivables at such time.
	 
	 	 	 	 	 	 
	 

	 	RGP
	 	=
	 	the Rebate Guaranty Percentage.
	 
	 	 	 	 	 	 
	 

	 	RDP
	 	=
	 	the Rebate Deduction Percentage.
	 
	 	 	 	 	 	 
	 

	 	ARA
	 	=
	 	the Additional Rebate Amount.






          “Rebate Deduction Percentage” means, any time, the applicable percentage set forth
below, determined by reference to the Level which contains the lower of (i) the Debt Rating of the
Originator by S&P and (ii) the Debt Rating of the Originator by Moody’s:




	 	 	 	 	 	 	 
	 	 	 	 	Rebate
	 	 	 	 	Deduction
	Level	 	Debt Rating of Medco	 	Percentage
	I

	 	Higher than BB by S&P and higher
than Ba2 by Moody’s
	 	 	0	%
	II

	 	BB by S&P or Ba2 by Moody’s
	 	 	25	%
	III

	 	BB- by S&P or Ba3 by Moody’s
	 	 	50	%
	IV

	 	B+ by S&P or B1 by Moody’s
	 	 	75	%
	V

	 	B or lower by S&P or B2 or lower
by Moody’s
	 	 	100	%





For purposes of the foregoing, if the Originator does not have a Debt Rating from S&P or does not
have a Debt Rating from Moody’s, it shall be deemed to have a Debt Rating lower than B by S&P or
lower than B2 by Moody’s, as applicable.




          “Rebate Guaranty Percentage” means, at any time, a fraction (expressed as a
percentage), the numerator of which is the aggregate amount of accrued rebates that are or will be
payable to the Clients and which are not subject to material guaranties under the terms of the
related Client Contracts, and the denominator of which is equal to the aggregate amount of all
accrued rebates that are or will be payable to the Clients under the Client Contracts. For
purposes of the foregoing, a guaranty of rebates shall be deemed to be “material” if (i) such
guaranty required the Originator to pay, for the prior calendar year, an amount not less than 40%
of the actual rebates payable during such prior calendar year and (ii) the Originator has
reasonably determined that, during the current calendar year, such guaranty will require the
Originator to pay an amount not less than 40% of the actual rebates payable during the current
calendar year.




 









 








          “Rebate Letters” means, collectively, (i) the memorandum of Fried, Frank, Harris,
Shriver & Jacobson to CNAI and Bank One, dated August 18, 2003 (the “FFHSJ Memorandum”) and
(ii) the various opinion letters delivered by counsel to the Originator and the Seller on or about
August 19, 2003 relating to the matters discussed in the FFHSJ Memorandum.