HEALTHCARE RECEIVABLES
PURCHASE AND TRANSFER
AGREEMENT
Dated as of December 23, ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, INC.
as Primary Servicer
and
EACH OF THE PROVIDERS NAMED HEREIN
as Providers
and
CCA FUNDING LLC,
as Purchaser
ALL THE RIGHT, TITLE AND INTEREST OF THE PURCHASER IN AND TO, ALL
BENEFITS OF THE PURCHASER UNDER AND ALL MONIES DUE OR TO BECOME DUE TO
THE PURCHASER UNDER OR IN CONNECTION WITH, THIS AGREEMENT HAVE BEEN
ASSIGNED TO DAIWA HEALTHCO-2 LLC, AS COLLATERAL SECURITY FOR ANY AND
ALL THE OBLIGATIONS OF THE PURCHASER PURSUANT TO A LOAN AND SECURITY
AGREEMENT DATED AS OF DECEMBER 23, 1996 BETWEEN THE PURCHASER AND
DAIWA HEALTHCO-2 LLC
TABLE OF CONTENTS
Page
ARTICLE I
COMMITMENTS; AMOUNTS AND TERMS
OF THE PURCHASES AND CONTRIBUTIONS
SECTION 1.01. Sale, Contribution and Purchase of Receivables............................................1
SECTION 1.02. Receivable Information and Transferred Batch Determination................................1
SECTION 1.03. The Transfers.............................................................................2
SECTION 1.04. Collection and Payment Procedures.........................................................2
SECTION 1.05. Allocation of Servicer Responsibilities...................................................2
ARTICLE II
GENERAL PAYMENT MECHANICS;
GOVERNMENTAL ENTITIES PAYMENT MECHANICS;
EOB'S; MISDIRECTED PAYMENTS
SECTION 2.01. General Payment Mechanics.................................................................4
SECTION 2.02. Governmental Entities Payment Mechanics...................................................4
SECTION 2.03. Misdirected Payments; EOB's...............................................................5
SECTION 2.04. Unidentified Payments; Purchaser's Right of Presumption...................................5
SECTION 2.05. No Rights of Withdrawal...................................................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF TERMINATION
SECTION 3.01. Representations and Warranties; Covenants.................................................6
SECTION 3.02. Group-Wide Events of Termination; Events of Termination...................................6
ARTICLE IV
INDEMNIFICATION;
GRANT OF SECURITY INTEREST
SECTION 4.01. Indemnification and Set-Off Rights for Denied Receivables.................................7
SECTION 4.02. Indemnities by the Providers..............................................................7
SECTION 4.03. Right of Set-Off..........................................................................9
SECTION 4.04. Grant of Security Interest................................................................9
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Page
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Amendments, etc...........................................................................9
SECTION 5.02. Notices, etc.............................................................................10
SECTION 5.03. Assignability............................................................................10
SECTION 5.04. Further Assurances.......................................................................10
SECTION 5.05. Costs, Expenses and Termination Fee......................................................10
SECTION 5.06. Confidentiality..........................................................................11
SECTION 5.07. Term and Termination.....................................................................12
SECTION 5.08. Sale Treatment...........................................................................12
SECTION 5.09. Grant of Security Interest...............................................................12
SECTION 5.10. No Liability of the Purchaser............................................................13
SECTION 5.11. Attorney-in-Fact.........................................................................13
SECTION 5.12. Entire Agreement; Severability...........................................................13
SECTION 5.13. GOVERNING LAW............................................................................13
SECTION 5.14. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE.............................................13
SECTION 5.15. Execution in Counterparts................................................................14
SECTION 5.16. No Proceedings...........................................................................14
SECTION 5.17. Joint and Several Liability; Providers...................................................14
SECTION 5.18. Survival of Termination..................................................................14
SECTION 5.19. Addition, Removal and Suspension of Providers............................................14
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EXHIBITS
Exhibit IDefinitions
Exhibit II Conditions of Purchases
Exhibit III Representations and Warranties
Exhibit IV Covenants
Exhibit V Events of Termination
Exhibit VI Receivable Information
Exhibit VII-A Form of Notice to Governmental Entities
Exhibit VII-B Form of Notice to Insurers
Exhibit VIII Primary Servicer Responsibilities
Exhibit IX Servicer Termination Events
Exhibit X Interface Between Providers and Master Servicer
Exhibit XI-A Form of Opinion of Providers' Counsel
with Respect to the Patient Consent Form
Exhibit XI-B Form of Opinion of Providers' Counsel
with Respect to Certain Corporate Matters
Exhibit XII Form of Depositary Agreement
SCHEDULES
Schedule I Addresses for Notices
Schedule II Credit and Collection Policy
Schedule III License Revocations
Schedule IV Lockbox Information
Schedule V List of the Providers
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Healthcare Receivables Purchase and transfer Agreement
Dated as of December __, 1996
COMMUNITY CARE OF AMERICA, INC., a Delaware corporation (together with its
corporate successors and assigns, the "Primary Servicer"), each of the parties
named on Schedule V hereto and as such Schedule V may be amended from time to
time pursuant to Section 5.19 herein (each a "Provider" and collectively the
"Providers"), and CCA FUNDING LLC, a Delaware limited liability company
(together with its successors and assigns, the "Purchaser"), agree as follows:
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in Exhibit I to this Agreement. References
herein and in the Exhibits and Schedules hereto to the "Agreement" refer to this
Agreement, as amended, restated, modified or supplemented from time to time in
accordance with its terms (the "Agreement").
Each Provider wishes to sell or contribute to the Purchaser on a continuing
basis all of its healthcare receivables. The Purchaser is prepared to purchase
or to accept the contribution of such healthcare receivables on the terms and
subject to the conditions set forth herein. Accordingly, the parties agree as
follows:
ARTICLE I
COMMITMENTS; AMOUNTS AND TERMS
OF THE PURCHASES AND CONTRIBUTIONS
SECTION 1.01. Sale, Contribution and Purchase of Receivables. On each
Transfer Date until the Facility Termination Date and on the terms and
conditions set forth herein, each Provider agrees to sell, without recourse
except to the extent expressly provided herein, or contribute to the Purchaser,
and the Purchaser agrees to purchase or accept such contribution of, all of such
Provider's Accounts.
SECTION 1.02. Receivable Information and Transferred Batch Determination.
(a) On each Batching Day after the Initial Transfer Date, the Servicer, on
behalf of the Providers, shall provide the Master Servicer by Transmission the
information listed on Exhibit VI hereto (as such Exhibit may be modified by the
Purchaser from time to time, the "Receivable Information") with respect to new
Accounts that it has determined constitute Eligible Receivables (the "Proposed
Eligible Receivables") and with respect to new Accounts that it has determined
do not constitute Eligible Receivables. Each Transmission of Receivable
Information shall constitute an offer by each Provider to sell, or, at such
Provider's option, contribute, the Proposed Eligible Receivables set forth in
the Transmission.
(b) All Proposed Eligible Receivables for which Receivable Information has
been received by the Master Servicer between the prior Batching Time and the
current Batching Time
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shall be reviewed by the Daiwa Group. On or prior to each Transfer Date, the
Purchaser or the Program Manager shall prepare a list of those Proposed Eligible
Receivables that the Purchaser will purchase on the Transfer Date (a "Purchased
Batch", and together with the remaining Proposed Eligible Receivables that will
not be purchased and instead will be contributed to the Purchaser, the
"Transferred Batch"), together with an explanation stating that the identified
Proposed Eligible Receivables not included in the Purchased Batch are not
Eligible Receivables and the basis thereof.
SECTION 1.03. The Transfers. (a) On each Transfer Date, subject to
satisfaction of the applicable conditions set forth in Exhibit II hereto, the
Purchaser shall pay to the Providers in same day funds, at the Primary Servicer
Account, an amount equal to the Purchase Price of the Purchased Batch.
(b) Effective on each Transfer Date, in consideration of the Purchase Price
and other good and valuable consideration, each Provider hereby sells,
contributes and assigns to the Purchaser and the Purchaser hereby purchases and
accepts, as absolute owner, the Transferred Batch purchased and/or contributed
on such Transfer Date.
SECTION 1.04. Collection and Payment Procedures.
(a) Collections on the Transferred Batch. The Purchaser shall be entitled
with respect to each Transferred Batch, (i) to receive all Collections on such
Transferred Batch, and (ii) to have and to exercise any and all rights (x) to
collect, record, track and take all actions to obtain Collections with respect
to each Batch Receivable payable by Persons other than Governmental Entities,
and (y) to the extent permitted by law and in a manner consistent with all
applicable laws and regulations, to collect, record, track and take all actions
to obtain Collections with respect to each Batch Receivable payable by
Governmental Entities.
(b) Collections Not Part of Transferred Batch. On each Settlement Date, and
provided that the Providers shall have (i) paid all amounts then due and owing
to the Purchaser under this Agreement, and (ii) successfully sent by
Transmission to the Master Servicer all information required with respect to the
Batch Receivables for the immediately preceding Settlement Period, the Purchaser
shall pay or turn over, as the case may be, to the Primary Servicer any and all
cash collections or other cash or non-cash proceeds received by the Purchaser
during the immediately preceding Settlement Period with respect to Accounts that
are not part of any Transferred Batch.
(c) Distributions on each Settlement Date. On each Settlement Date and with
respect to each Transferred Batch, Total Collections shall be distributed to the
Purchaser.
SECTION 1.05. Allocation of Servicer Responsibilities. (a) Tracking of
purchases, Collections and other transactions pertaining to each Transferred
Batch shall be administered by the Master Servicer in a manner consistent with
the terms of this Agreement. The responsibilities of the Providers to the Master
Servicer have been set forth in Exhibit X attached hereto. The Providers shall
cooperate fully with the Master Servicer in establishing and maintaining the
Transmission of the Receivable Information, including, without limitation, the
matters described in Exhibit X, and
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shall provide promptly to the Master Servicer such other information necessary
or desirable for the administration of Collections on the Batch Receivables as
may be requested from time to time.
(b) The Purchaser hereby appoints each Provider as its agent for the
administration and servicing obligations set forth in Exhibit VIII hereto with
respect to the Accounts sold or transferred by each such Provider to the
Purchaser hereunder (the "Primary Servicer Responsibilities"), and each Provider
hereby accepts such appointment and agrees to perform the Primary Servicer
Responsibilities. Each of the Providers hereby contracts its Primary Servicer
Responsibilities to the Primary Servicer and appoints the Primary Servicer to
act as Servicer hereunder, provided, however, that such contracting and
appointment shall not relieve any Provider from any of its duties,
responsibilities, liabilities and obligations resulting or arising hereunder.
The Primary Servicer hereby accepts such appointment as Servicer and agrees to
perform the Primary Servicer Responsibilities on behalf of the Providers. Each
of the Providers, the Servicer and the Purchaser hereby acknowledge that the
Servicer's appointment is subject to and limited by DH-2's appointment of the
Purchaser as its agent for performance of the Primary Servicer Responsibilities
under the Loan Agreement and DH-2's rights thereunder to replace the Purchaser
(which replacement may be effectuated through the outplacement to a qualified
and experienced third-party of all back office duties, including billing,
collection and processing responsibilities, and access to all personnel,
hardware and software utilized in connection with such responsibilities). The
Purchaser may, at any time following the occurrence of a Servicer Termination
Event (and shall, without requirement of notice to any party, upon a Servicer
Termination Event resulting from the events described in clauses (g) or (j) of
Exhibit V hereto) appoint another Person to succeed the Servicer as its agent
for performance of the Primary Servicer Responsibilities (which appointment may
be effectuated through the outplacement to a qualified and experienced
third-party of all back office duties, including billing, collection and
processing responsibilities, and access to all personnel, hardware and software
utilized in connection with such responsibilities). The Purchaser may, at any
time following the occurrence of one or more Servicer Termination Events (and
may, without requirement of notice to any party, upon one or more Servicer
Termination Events resulting from the events described in clauses (g) or (j) of
Exhibit V hereto) affecting the Providers that have sold or contributed to the
Purchaser more than 25% of the Batch Receivables (whether or not purchased) in
the prior ninety days (or the number of days from the date of this Agreement to
such date, if less than ninety days) (in each case, a "Group-Wide Servicer
Termination Event"), designate the Master Servicer or any other Person to
succeed the Servicer as its agent for performance of the Primary Servicer
Responsibilities.
(c) As compensation for the performance of the Primary Servicer
Responsibilities, the Primary Servicer (or the successor Servicer who performs
such Primary Servicer Responsibilities) shall be entitled to a Primary Servicing
Fee with respect to each Purchased Batch; provided, that the Primary Servicing
Fee shall be payable solely, to the extent received, from a similar fee payable
by DH-2 to the Purchaser, and, to the extent not received, the Servicer hereby
waives its right to receive it.
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ARTICLE II
GENERAL PAYMENT MECHANICS;
GOVERNMENTAL ENTITIES PAYMENT MECHANICS;
EOB'S; MISDIRECTED PAYMENTS
SECTION 2.01. General Payment Mechanics. (a) On or prior to the Initial
Transfer Date each of the Primary Servicer, the Providers, the Purchaser, and
DH-2 shall have entered into the Depositary Agreement and shall have caused the
Lockbox Bank to establish the Purchaser Lockbox, the Purchaser Lockbox Account,
the Provider Ancillary Lockbox, and the Provider Ancillary Lockbox Account.
(b) Each Provider shall prepare, execute and deliver to each Insurer, with
copies to the Purchaser, on or prior to the Initial Transfer Date, a Notice to
Insurers addressed to each Insurer who is proposed to be a payor of Receivables,
which Notice to Insurers shall provide that, effective the Initial Transfer
Date, all checks and EOB's from Insurers on account of Receivables shall be sent
to the Purchaser Lockbox and all wire transfers on account of Receivables shall
be wired directly into the Purchaser Lockbox Account.
(c) Each Provider covenants and agrees that, on and after the Initial
Transfer Date, all invoices (and, if provided by such Provider, return
envelopes) shall, (i) if to be sent to Insurers, set forth only the address of
the Purchaser Lockbox as a return address for payment of Receivables and
delivery of EOB's, and only the Purchaser Lockbox Account with respect to wire
transfers for payment of Receivables, and (ii) if to be sent to private payors,
set forth only the address of the Provider Ancillary Lockbox as a return address
for payment of such Receivables and delivery of EOB's, and only the Provider
Ancillary Lockbox Account with respect to wire transfers for payment of such
Receivables. Each Provider hereby further covenants and agrees to instruct and
notify each of the members of its accounting and collections staff to provide
identical information in communications with Persons other than Governmental
Entities with respect to Collections, wire transfers and EOB's.
SECTION 2.02. Governmental Entities Payment Mechanics. (a) On or prior to
the Initial Transfer Date, each of the Primary Servicer, the Providers, the
Purchaser, and DH-2 shall have entered into the Depositary Agreement, and the
Providers shall have caused the Lockbox Bank to establish the Provider
Government Lockbox and the Provider Government Lockbox Account. Each Provider
shall prepare, execute and deliver to the Purchaser on or prior to the Initial
Transfer Date, Notices to Governmental Entities addressed to each Governmental
Entity or its fiscal intermediary who is proposed to be a payor of Receivables,
which Notices to Governmental Entities shall provide that all checks and EOB's
from Governmental Entities on account of Receivables shall be sent to the
Provider Government Lockbox and all wire transfers on account of Receivables
shall be wired directly into the Provider Government Lockbox Account.
(b) Each Provider covenants and agrees that, on and after the Initial
Transfer Date, all invoices to be sent to Governmental Entities (and, if
provided by such Provider, return envelopes)
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shall set forth only the address of the Provider Government Lockbox as a return
address for payment of Receivables and delivery of EOB's, and only the Provider
Government Lockbox Account with respect to wire transfers for payment of
Receivables. Each Provider further covenants and agrees to instruct and notify
each of the members of its accounting and collections staff to provide identical
information in communications with Governmental Entities with respect to
Collections, wire transfers and EOB's.
SECTION 2.03. Misdirected Payments; EOB's. (a) In the event that a Provider
receives an EOB or a Misdirected Payment in the form of a check, such Provider
shall immediately send such Misdirected Payment by overnight delivery service to
the appropriate Purchaser Lockbox or Provider Lockbox, as the case may be,
together with the EOB and the envelope in which such payment was received. In
the event a Provider receives a Misdirected Payment in the form of cash or wire
transfer, such Provider shall immediately wire transfer the amount of such
Misdirected Payment directly into the Purchaser Lockbox Account. All Misdirected
Payments and EOB's shall be sent promptly upon receipt thereof, and in no event
later than the close of business, on the first Business Day after receipt
thereof.
(b) If a Misdirected Payment in the form of a check is received by the
Purchaser more than six days after the postmark date on the envelope enclosing a
check from the Obligor (or, if no such envelope is sent to the Purchaser Lockbox
Account by a Provider, more than six days after the date of such check or wire
transfer with respect thereto), then the Providers shall pay interest on such
Misdirected Payment to the Purchaser from such sixth subsequent day to and
including the date such check is received in the Purchaser Lockbox Account, at a
rate equal to the LIBO Rate then in effect under the Loan Agreement (or the
maximum rate legally permitted if less than such rate).
(c) Each Provider hereby agrees and consents to the Purchaser taking such
actions as are reasonably necessary to ensure that future payments from the
Obligor of a Misdirected Payment shall be made in accordance with the Notice
previously delivered to such Obligor, including, without limitation, to the
maximum extent permitted by law, (i) any member of the Daiwa Group executing on
a Provider's behalf and delivering to such Obligor a new Notice, and (ii) any
member of the Daiwa Group contacting such Obligor by telephone to confirm the
instructions previously set forth in the Notice to such Obligor. Upon the
Purchaser's request, a Provider shall promptly (and in any event, within two
Business Days from such request) take such similar actions as the Purchaser may
request.
SECTION 2.04. Unidentified Payments; Purchaser's Right of Presumption. Each
of the Providers and the Purchaser agrees and consents that the Daiwa Group may
apply any payment it receives from an Obligor or any other payor against a
Purchased Batch if the Daiwa Group is unable in good faith (after making
reasonable attempts to contact the applicable Provider) to determine from the
information in the EOB whether such payment relates to a Purchased Batch.
SECTION 2.05. No Rights of Withdrawal. None of the Providers nor the
Purchaser shall have any rights of direction or withdrawal with respect to
amounts held in the Purchaser Lockbox Account.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF TERMINATION
SECTION 3.01. Representations and Warranties; Covenants. Each Provider
makes, on the Initial Transfer Date and on each subsequent Transfer Date, the
representations and warranties on and as of such dates, and hereby agrees to
perform and observe the covenants, set forth in Exhibits III and IV,
respectively, hereto.
SECTION 3.02. Group-Wide Events of Termination; Events of Termination. (a)
If any Group-Wide Event of Termination shall occur and be continuing, the
Purchaser may, by notice to the Primary Servicer on behalf of each of the
Providers (which notice shall be deemed to have been given to each Provider),
take either or both of the following actions: (x) declare the Facility
Termination Date to have occurred (except with respect to the Group-Wide Event
of Termination in clause (g) of Exhibit V, in which case the Facility
Termination Date shall be deemed to have occurred automatically and without
notice), and (y) without limiting any rights hereunder, terminate the
appointment of the Servicer to perform any or all of the Primary Servicer
Responsibilities and replace the Servicer in the manner set forth in Section
1.05(b). Upon any such declaration or designation, the Purchaser shall have, in
addition to the rights and remedies which it 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.
(b) If an Event of Termination shall occur and be continuing, the Purchaser
may terminate the appointment of the Primary Servicer to perform any or all of
the Primary Servicer Responsibilities in the manner set forth in Section
1.05(b), and, with respect to an individual Provider that does not constitute a
Group-Wide Event of Termination, the Purchaser, in its sole discretion, may
require the immediate removal of such Provider from the program and, on or prior
to the effective date of such removal, (x) all Receivables contributed by such
Provider to the Purchaser shall be re-purchased by such Provider as if such
Receivables were Denied Receivables and payment in full shall have been received
by the Purchaser, or (y) all rights and obligations in respect of Receivables
contributed by such Provider to the Purchaser shall be transferred to another
Provider. Such Provider shall also withdraw as a member of the Purchaser;
provided, however, that such Provider's capital account as a member of the
Purchaser shall not be paid out until the date of termination of this Agreement
as set forth in Section 5.07 herein.
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ARTICLE IV
INDEMNIFICATION;
GRANT OF SECURITY INTEREST
SECTION 4.01. Indemnification and Set-Off Rights for Denied Receivables.
(a) If a breach of any of the representations or warranties contained herein
relating to a Purchased Receivable shall be discovered at any time (each, a
"Denied Receivable"), the Provider that sold or contributed such Denied
Receivable shall, on the next Settlement Date, repurchase such Denied Receivable
from the Purchaser at the Repurchase Price.
(b) For ease of administration, the Purchaser shall be entitled to presume
that the failure of any Purchased Receivable (or portion thereof) to be paid in
full on or after the 180th day following the Last Service Date thereof is the
result of a breach of a representation or warranty contained herein with respect
to such Purchased Receivable, unless the Purchaser shall have actual knowledge
to the contrary (such as, by way of example, actual knowledge of the financial
inability of an Obligor to pay its obligations represented by a Receivable). In
the event the Purchaser receives the Repurchase Price for any such Purchased
Receivable and it is thereafter determined that the failure of such Purchased
Receivable to be paid in full was not the result of a breach of representation
or warranty contained herein, the parties hereto shall make an appropriate
adjustment by increasing the Purchase Price of any Purchased Batch to be
purchased on or after such date.
(c) Upon receipt by (or on behalf of) the Purchaser of the Repurchase Price
with respect to any Denied Receivable, the Purchaser shall be deemed to have
reassigned and resold to the applicable Provider such Denied Receivable without
any representation, warranty or recourse whatsoever, and thereafter neither the
Purchaser nor any member of the Daiwa Group shall have any further servicing or
other obligation to such Provider with respect to such Denied Receivable.
(d) From time to time at the request of a Provider, the Purchaser shall
deliver to such Provider (at such Provider's sole cost and expense) such
documents, assignments, releases and instruments of termination as such Provider
may reasonably request to evidence the reconveyance by the Purchaser of a Denied
Receivable pursuant to the terms of Section 4.01(c).
SECTION 4.02. Indemnities by the Providers. Without limiting any other
rights that the Purchaser, the Program Manager, the Master Servicer or any of
their respective Affiliates (together with their respective officers, directors,
shareholders and lenders, each, an "Indemnified Party") may have hereunder or
under applicable law, each Provider hereby agrees jointly and severally to
indemnify each Indemnified Party from and against any and all claims, losses and
liabilities (including, without limitation, reasonable attorneys' fees) (all of
the foregoing being collectively referred to as "Indemnified Amounts") arising
out of or resulting from any of the following:
7
(a) the sale of any Receivable which purports to be part of a Purchased
Batch but which is not, at the date of such sale, the type of Receivable
described in subsection (j) of Exhibit III to this Agreement;
(b) any representation or warranty made or deemed made by any Provider (or
any of its officers) under or in connection with this Agreement and not relating
to a Purchased Receivable which shall have been incorrect in any material
respect when made;
(c) the failure by any Provider or any Batch Receivable to comply with any
applicable law, rule or regulation with respect to any Batch Receivable;
(d) the failure to vest in the Purchaser a perfected ownership interest in
each Receivable included in a Transferred Batch and the Collections in respect
thereof, free and clear of any Liens;
(e) any dispute, claim, set-off or defense to the payment, in whole or in
part, of any Receivable (including, without limitation, a defense based on such
Receivable not being a legal, valid and binding obligation) or any other claim
resulting from the services or merchandise related to such Receivable or the
furnishing or failure to furnish such services or merchandise or relating to
collection activities with respect to such Receivable (if such collection
activities were performed by any Provider or any of its Affiliates acting as
Servicer), provided, however, this clause (e) shall not be deemed to include any
dispute, claim, set-off or defense to the payment of any Receivable (i) arising
out of the financial inability of an Obligor to pay its obligations represented
by such Receivable including, without limitation, a discharge in bankruptcy, or
(ii) arising after the sale of such Receivable to the Purchaser hereunder and
arising solely as a result of actions taken by any member of the Daiwa Group;
(f) a failure of any Provider, including, without limitation, the Primary
Servicer's actions on behalf of the Providers under Section 1.05(b) of this
Agreement with respect to Primary Servicer Responsibilities, to perform its
duties or obligations in accordance with the provisions hereof or to perform its
duties or obligations hereunder; or
(g) the commingling by any Provider of Collections at any time with other
funds of such Provider, provided, however, that in all events there shall be
excluded from the foregoing indemnification any claims, losses or liabilities
resulting solely from the gross negligence or willful misconduct of an
Indemnified Person or which constitutes recourse for an uncollectible Purchased
Receivable.
Such Indemnified Person shall notify the Primary Servicer, on behalf of the
Providers, of such claim, provided that the failure to so notify shall not
affect or invalidate the indemnity granted pursuant to this Section 4.02.
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SECTION 4.03. Right of Set-Off. Unless a Provider notifies the Purchaser in
writing that it desires to pay on the date when due the Repurchase Price under
Section 4.01 or any Indemnified Amounts under Section 4.02 and such Provider
makes such payment to the Purchaser in immediately available funds on such date,
each such Provider hereby irrevocably instructs the Purchaser to set-off the
full amount of the Repurchase Price or the Indemnified Amounts, as the case may
be, against the Purchase Price of any Purchased Batch to be purchased on or
after such date. No further notification, act or consent of any nature
whatsoever is required prior to the right of the Purchaser to exercise such
right of set-off, provided, however, the Purchaser or a member of the Daiwa
Group shall notify the Primary Servicer on behalf of such Provider that a
set-off pursuant to this Section 4.03 occurred, the amount of such set-off and a
description of the Denied Receivable or Indemnified Amounts, as the case may be.
The Purchaser shall exercise its right to set-off hereunder to the extent funds
are available prior to making a demand for indemnification under Section 4.02
SECTION 4.04. Grant of Security Interest. (a) As collateral security for
each Provider's existing and future (i) obligations to repurchase Denied
Receivables under Section 4.01 hereof, (ii) indemnification obligations to the
Purchaser under Section 4.02 hereof, and (iii) obligations to pay costs and
expenses under Section 5.05 hereof, each Provider hereby grants to the Purchaser
a first priority lien on and security interest in and right of set-off against,
all of the Accounts owned or held by the Providers.
(b) Each Provider agrees to execute, and hereby authorizes the Purchaser to
file, one or more financing statements or continuation statements or amendments
thereto or assignments thereof in respect of the lien created pursuant to this
Section 4.04 which may at any time be required or, in the opinion of the
Purchaser, be desirable, and to do so without the signature of such Provider
where permitted by law.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Amendments, etc. (a) No amendment or waiver of any provision
of this Agreement or consent to any departure therefrom by a party hereto shall
be effective unless in writing signed by the Primary Servicer, the Providers,
the Purchaser, and DH-2 as assignee of all of the Purchaser's rights and
remedies hereunder, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Purchaser, the Primary Servicer or a
Provider 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.
(b) The parties hereto agree to make any change, modification or amendment
to this Agreement as may be requested by Duff & ▇▇▇▇▇▇ Credit Rating Co. or any
other rating agency
9
then rating the healthcare finance program of DH-2, so long as any such
change, modification or amendment does not materially adversely affect the
parties hereto.
SECTION 5.02. Notices, etc. All notices and other communications hereunder
shall, unless otherwise stated herein, be in writing (which may include
facsimile communication) and shall be faxed or delivered, (i) to each party
hereto, at its address set forth under its name on the signature pages hereto or
at such other address as shall be designated by such party in a written notice
to the other parties hereto (each Provider hereby acknowledges and agrees that
notices to or for the benefit of a Provider may be delivered to the Primary
Servicer and such delivery to the Primary Servicer shall be deemed to be
received by each such Provider), and (ii) to the Program Manager and the Master
Servicer at the addresses set forth on Schedule I attached hereto. Notices and
communications by facsimile shall be effective when sent (and shall be followed
by hard copy sent by regular mail), and notices and communications sent by other
means shall be effective when received.
SECTION 5.03. Assignability. (a) This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective permitted
successors and assigns.
(b) Subject to Section 5.03(b) of the Loan Agreement, this Agreement and
the Purchaser's rights and obligations herein (including without limitation,
ownership of the Purchased Receivables in each Purchased Batch, the Purchaser
Lockbox and Purchaser Lockbox Account and rights in relation to the Provider
Lockboxes and the Provider Lockbox Accounts) shall be assignable by the
Purchaser and its successors and assigns. Each Provider hereby acknowledges that
the Purchaser is granting to DH-2, which is further granting to its lenders, a
security interest in this Agreement and all of the Purchaser's rights, title and
interests hereunder (including, without limitation, the Purchased Receivables,
each Provider's obligations hereunder, the Purchaser Lockbox and Purchaser
Lockbox Account, and rights in relation to the Provider Lockboxes and the
Provider Lockbox Accounts).
(c) No Provider may assign its rights or obligations hereunder or any
interest herein without the prior written consent of the Purchaser and DH-2.
SECTION 5.04. Further Assurances. The Providers shall, at their cost and
expense, upon the request of the Purchaser, duly execute and deliver, or cause
to be duly executed and delivered, to the Purchaser such further instruments and
do and cause to be done such further acts as may be necessary or proper in the
reasonable opinion of the Purchaser to carry out more effectively the provisions
and purposes of this Agreement.
SECTION 5.05. Costs, Expenses and Termination Fee. In addition to the
rights of indemnification granted under Section 4.02 hereof, the Providers agree
to pay on demand all reasonable costs and expenses in connection with the
preparation, execution and delivery of this Agreement and any waiver,
modification, supplement or amendment hereto, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Purchaser and the
members of the Daiwa Group, and all costs and expenses, if any (including
reasonable counsel fees
10
and expenses), of the Purchaser, its Affiliates and the members of the Daiwa
Group in connection with the enforcement of this Agreement. The Providers
further agree to pay on the Initial Transfer Date (and with respect to costs and
expenses incurred following the Initial Transfer Date, within seven days of
demand therefor) (a) all reasonable costs and expenses incurred by the Purchaser
or its agent in connection with periodic audits of the Receivables, (b) all
reasonable costs and expenses incurred by the Master Servicer or the Program
Manager to accommodate any significant coding or data system changes made by a
Provider that would affect the transmission or interpretation of data received
through the interface, and (c) all reasonable costs and expenses incurred by the
Purchaser for additional time (calculated at a rate of $100 per hour) and
material expenses of the Master Servicer resulting from a lack of cooperation or
responsiveness of any Provider or the Primary Servicer to agreed-upon protocol
and schedules with the Master Servicer; provided, that such Provider or the
Primary Servicer has been informed of the alleged lack of cooperation or
responsiveness and has been provided an opportunity to correct such problems.
In the event that any Facility Termination Date is declared (or is deemed
to have occurred) pursuant to Section 3.02 of this Agreement, the Providers
shall pay to the Purchaser an early termination fee in an amount equal to 1.25%
of the Revolving Commitment (as defined in the Loan Agreement) then in effect
pursuant to the Loan Agreement.
SECTION 5.06. Confidentiality. (a) Each Provider, the Primary Servicer and
the Purchaser hereby acknowledge that this Agreement, the Loan Agreement and the
documents delivered hereunder, thereunder or in connection with, including,
without limitation, any information relating to any member of the Daiwa Group,
contains confidential and proprietary information. Unless otherwise required by
applicable law, each of the Providers, the Primary Servicer and the Purchaser
hereby agrees to maintain the confidentiality of this Agreement (and all drafts
and other documents delivered in connection therewith including, without
limitation, any information relating to any member of the Daiwa Group delivered
hereunder or under the Loan Agreement) in communications with third parties and
otherwise and to take all reasonable action to prevent the unauthorized use or
disclosure of and to protect the confidentiality of such confidential
information; provided, that, such confidential information may be disclosed to
(i) the Providers' and Purchaser's legal counsel and auditors, (ii) the Program
Manager, DH-2, the Primary Servicer, each member of the Daiwa Group, investors
in and creditors of DH-2, appropriate rating agencies with respect to DH- 2, and
each of their respective legal counsel and auditors, (iii) any Person, if such
information otherwise becomes available to such Person or publicly available
through no fault of any party governed by this Section 5.06, (iv) any
Governmental Entity requesting such information, and (v) to any other Person
with the written consent of the applicable party, which consent shall not be
unreasonably withheld, and provided further that the Providers shall not
disclose such confidential information to any financial adviser not a party to
this Agreement except with the consent of the Program Manager. Notwithstanding
the foregoing, it is understood that the Primary Servicer is a publicly traded
company and, as such, may be required to disclose this transaction and the terms
thereof by a filing with the Securities and Exchange Commission or by the
issuance of a press release.
11
(b) Each of the Providers, the Primary Servicer and the Purchaser
understands and agrees that the other or the Daiwa Group may suffer irreparable
harm if the obligations under this Section 5.06 are breached and that monetary
damages shall be inadequate to compensate the injured party for such breach.
Accordingly, each of the Providers, the Primary Servicer and the Purchaser
agrees that, in the event of their respective breach of Section 5.06(a), the
injured party, in addition and not in limitation of its rights and remedies
under law, shall be entitled to a temporary restraining order, preliminary
injunction and permanent injunction to prevent or restrain any such breach.
(c) All parties hereto agree to comply with all applicable state or federal
statutes or regulations relating to patient medical record confidentiality.
SECTION 5.07. Term and Termination. This Agreement shall continue in full
force and effect from the date hereof until the Final Payment Date; provided,
however, that while the occurrence of the Final Payment Date shall terminate any
security interest of the Purchaser hereunder, it shall not relieve or discharge
any of the Providers, the Primary Servicer or the Purchaser of their respective
duties, obligations or covenants hereunder with respect to any Transferred
Batches transferred prior to the Final Payment Date and not repurchased pursuant
to Section 4.01, and all the terms, provisions and conditions of this Agreement
shall remain in effect for such purpose until such obligations have been
satisfied and performed in full. The Purchaser shall deliver all assignments,
certificates, releases, notices and other documents at the Providers' expense,
as the Providers may reasonably request to effect such termination.
SECTION 5.08. Sale Treatment. The Providers and the Purchaser have
structured the transactions contemplated by this Agreement with respect to each
Purchased Batch as a sale and intend that such transactions constitute a sale,
and each of the Providers and the Purchaser agree to treat each such transaction
as a sale for all purposes, including, without limitation, in their respective
books, records, computer files, tax returns (federal, state and local),
regulatory and governmental filings (and shall reflect such sale in their
respective financial statements). Each Provider will advise all persons
inquiring about the ownership of the Batch Receivables that all Batch
Receivables have been sold or contributed to the Purchaser. The Providers will
pay all taxes (excluding income or franchise taxes), if any, relating to the
transactions contemplated under this Agreement, including, without limitation,
the sale, transfer and contribution of each Transferred Batch to the Purchaser.
SECTION 5.09. Grant of Security Interest. In the event that, contrary to
the mutual intent of the Providers and the Purchaser, any purchase of a
Purchased Batch is not characterized as a sale, each Provider shall, effective
as of the date hereof, be deemed to have granted (and each Provider hereby does
grant) to the Purchaser a first priority security interest in and to any and all
Batch Receivables and the proceeds thereof to secure the repayment of all
amounts paid to the Providers hereunder with accrued interest thereon, and this
Agreement shall be deemed to be a security agreement. With respect to such grant
of a security interest, the Purchaser may at its option exercise from time to
time any and all rights and remedies available to it under the UCC or otherwise.
Each Provider agrees that five days shall be reasonable prior notice to the
applicable Provider or to the Primary Servicer on behalf of such Provider of the
date of any public or private sale or other disposition of all or any of the
Batch Receivables.
12
SECTION 5.10. No Liability of the Purchaser. Neither this Agreement nor any
document executed in connection herewith shall constitute an assumption by the
Purchaser of any obligation to an Obligor or a patient of any Provider.
SECTION 5.11. Attorney-in-Fact. Each Provider hereby
irrevocably designates and appoints the Purchaser, the Primary Servicer, the
Master Servicer and each Person in the Daiwa Group, to the extent permitted by
applicable law and regulation, as such Provider's attorneys-in-fact, which
irrevocable power of attorney is coupled with an interest, with authority to
endorse or sign such Provider's name to financing statements and checks (other
than payments from Governmental Entities), and, during the continuance of an
Event of Termination, to (i) endorse or sign such Provider's name to financing
statements, remittances, invoices, assignments, checks (other than payments from
Governmental Entities), drafts or other instruments or documents in respect of
the Batch Receivables, (ii) notify Insurers to make payments on the Batch
Receivables directly to the Purchaser, and (iii) bring suit in such Provider's
name and settle or compromise such Batch Receivables as the Purchaser, the
Primary Servicer, the Master Servicer or each Person in the Daiwa Group may, in
its discretion, deem appropriate.
SECTION 5.12. Entire Agreement; Severability. (a) This Agreement embodies
the entire agreement and understanding of the parties concerning the subject
matter contained herein. This Agreement supersedes any and all prior agreements
and understandings between the parties, whether written or oral.
(b) If any provision of this Agreement shall be declared invalid or
unenforceable, the parties hereto agree that the remaining provisions of this
Agreement shall continue in full force and effect.
SECTION 5.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
SECTION 5.14. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE. THE PARTIES
HERETO HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION
WITH RESPECT TO ANY MATTER RELATED TO THIS AGREEMENT, AND HEREBY IRREVOCABLY
CONSENT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK
COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION WITH ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN ANY SUCH LITIGATION, THE
PARTIES HERETO WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS
AND AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL
DIRECTED TO EACH PROVIDER AT ITS ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF.
THE PARTIES HERETO SHALL APPEAR IN ANSWER TO SUCH SUMMONS, COMPLAINT OR OTHER
PROCESS WITHIN THE TIME PRESCRIBED BY
13
LAW, FAILING WHICH THE PARTIES FAILING TO SO APPEAR SHALL BE DEEMED IN DEFAULT
AND JUDGMENT MAY BE ENTERED BY THE PARTY PROSECUTING THE CLAIM FOR THE AMOUNT OF
THE CLAIM AND OTHER RELIEF REQUESTED THEREIN.
SECTION 5.15. Execution in Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
SECTION 5.16. No Proceedings. Each of the Providers hereby agrees that it
will not institute against the Purchaser or DH-2 any proceeding of the type
referred to in paragraph (g) of Exhibit V so long as any senior indebtedness
issued by the Purchaser or DH-2 shall be outstanding or there shall not have
elapsed one year plus one day since the last day on which any such senior
indebtedness shall have been outstanding.
SECTION 5.17. Joint and Several Liability; Providers. Each Provider agrees
that each reference to "the Providers" in this Agreement shall be deemed to
refer to each such Provider jointly and severally. Each Provider (i) shall be
jointly and severally liable for the obligations, duties and covenants under
this Agreement and the acts and omissions of each other such Provider including,
without limitation, under Article IV hereof, and (ii) jointly and severally
makes each representation and warranty under this Agreement; provided however
that the breach of an obligation, duty, covenant, representation or warranty by
one Provider shall not result in an Event of Termination with respect to any
other Provider unless such breach constitutes a Group-Wide Event of Termination.
SECTION 5.18. Survival of Termination. The provisions of Article IV (and
the representations and warranties with respect thereto) (other than Section
4.04) and Sections 5.05, 5.06 and 5.16 shall survive any termination of this
Agreement.
SECTION 5.19. Addition, Removal and Suspension of Providers. (a) Subject to
the conditions set forth below, upon 30-days' prior written request from time to
time of the Primary Servicer, the Purchaser hereby agrees to the adding of other
Persons designated by the Primary Servicer as additional Providers hereunder
(each such event, an "Addition"); provided, that, in the reasonable commercial
judgment of the Purchaser and its designees and assignees):
(i) no Group-Wide Event of Termination is existing and the proposed
Addition shall not cause, or not reasonably be expected to cause, a Group-Wide
Event of Termination;
(ii) as of the effective date of such Addition, such applicable conditions
precedent set forth in Exhibit II hereto shall have been fulfilled with respect
to such Person;
14
(iii) as of the effective date of such Addition, each applicable
representation and warranty set forth in Exhibit III hereto shall be true and
correct in all material respects with respect to such Person;
(iv) if such Person is not an Affiliate of the Primary Servicer, the
Purchaser shall have determined that such Person will be able to perform the
Primary Servicer Responsibilities, or have waived such requirement in writing;
(v) the Purchaser shall have received a certificate from the Master
Servicer stating that all computer linkups and interfaces necessary or
desirable, in the sole discretion of the Master Servicer, to effectuate the
transactions and information transfers under this Agreement with respect to the
Addition are fully operational to the satisfaction of the Master Servicer and
the Master Servicer shall have received an interface fee for each additional
computer interface;
(vi) such Person shall execute such agreements, instruments and documents
as the Purchaser may reasonably request, in form and substance satisfactory to
the Purchaser to effectuate the Addition, including without limitation (x) an
amendment to this Agreement whereby such Person agrees to be bound by the terms
of this Agreement, and (y) financing statements covering Receivables that such
Person may contribute to the Purchaser;
(vii) the Purchaser and its assigns shall have been provided with such
information (whether financial or otherwise) and time necessary and desirable
(in the sole discretion of the Purchaser and its assigns) to make the
assessments under clauses (i), (ii) and (iii); and
(viii) such Person shall become a member of the Purchaser.
(b) Subject to the conditions set forth below, upon 30-days' prior written
request from time to time of the Primary Servicer, the Purchaser hereby agrees
to the removal of any Provider designated by the Primary Servicer from time to
time (each such event, a "Removal"); provided, that, in the reasonable
commercial judgment of the Purchaser (and DH-2 as its assignee):
(i) no Group-Wide Event of Termination is existing and the proposed Removal
shall not cause, or not reasonably be expected to cause, a Group-Wide Event of
Termination;
(ii) on or prior to the effective date of such Removal (x) all Receivables
contributed by such Provider to the Purchaser shall be repurchased by such
Provider as if such Receivables were Denied Receivables and payment in full
shall have been received by the Purchaser, or (y) all rights and obligations in
respect of Receivables contributed by such Provider to the Purchaser shall be
transferred to another Provider;
15
(iii) after giving effect to such Removal, the aggregate minimum Tangible
Net Worth of the remaining Providers hereunder shall (x) equal at least
$5,000,000, and (y) not have decreased as a result of the Removal (combined with
all other Removals) by greater than 10%;
(iv) such Person shall execute such agreements, instruments and documents
as the Purchaser may reasonably request, in form and substance satisfactory to
the Purchaser to effectuate the Removal, including without limitation an
amendment to this Agreement effectuating such Removal;
(v) the Purchaser and DH-2, as its assignee, have been provided with such
information (whether financial or otherwise) and time necessary and desirable
(in the sole discretion of the Purchaser and DH-2, as its assignee) to make the
assessments under clauses (i), (ii), (iii) and (iv) above; and
(vi) such Person shall withdraw as a member of the Purchaser; provided,
however, that such Provider's capital account as a member of the Purchaser shall
not be paid out until the date of termination of this Agreement as set forth in
Section 5.07 herein.
(c) The Purchaser hereby agrees to the suspension of any Provider
designated by the Primary Servicer from time to time (each such event a
"Suspension"); provided, that in the reasonable commercial judgment of the
Purchaser (and DH-2 as its assignee), no Group-Wide Event of Termination is
existing and the proposed Suspension shall not cause, or not reasonably be
expected to cause, a Group-Wide Event of Termination. For the period of the
Suspension, such suspended Provider shall be deemed not to be a Provider for the
purpose hereof or for the purposes of the Loan Agreement. Such Suspension shall
cure any breach of a covenant, representation or warranty by such suspended
Provider, provided, that such cure shall not be deemed, in and of itself, to
cure a Group-Wide Event of Termination and not reasonably be expected to cure a
Group-Wide Event of Termination.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
16
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.
PRIMARY SERVICER: COMMUNITY CARE OF AMERICA, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
PROVIDERS: ECA HOLDINGS, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
COMMUNITY CARE OF NEBRASKA, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
17
COMMUNITY CARE OF GEORGIA, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
COMMUNITY CARE OF AMERICA OF ALABAMA, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
CCA OF MIDWEST, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
18
ECA PROPERTIES, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
LULING/SCC, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
DUBLIN/SCC, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
19
MARIETTA/SCC, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
MACON/SCC, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
COLLEGE PARK/SCC, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
20
GLENWOOD/SCC, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
QUALITY CARE OF COLUMBUS, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
QUALITY CARE OF ▇▇▇▇▇, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
21
W.S.T. CARE, INC.
By:
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Trade names: See Schedule V attached hereto
PURCHASER: CCA FUNDING LLC
By:
Name:
Title: Manager
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
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EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits and Schedules), 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):
"Accounts" means all accounts (including, without limitation, all
Receivables), general intangibles and other obligations for the payment of money
arising out of a Provider's sale of merchandise or rendition of services in the
ordinary course of business, whether now existing or hereafter arising,
including all rights to reimbursement under any agreements with and payments
from Obligors, patients, residents and other Persons, and all proceeds of any of
the foregoing.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person. For the purposes of this
definition, "control", when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" has the meaning set forth in the preliminary statements hereto.
"Batch Receivable" means a Receivable that is included in a Transferred
Batch, but excludes a Denied Receivable for which the Repurchase Price has been
received by the Purchaser.
"Batching Day" means each Monday of each week, or if such day is not a
Business Day, the next preceding Business Day.
"Batching Time" means 11:00 a.m. New York City time, on each Batching Day.
"Business Day" means any day on which banks are not authorized or required
to close in New York City or Naples, Florida.
"Capital Lease" means, as applied to any Person, any lease of any Property
(whether real, personal or mixed) by that Person as lessee, the obligations of
which are required, in accordance with GAAP, to be capitalized on the balance
sheet of that Person.
"CHAMPUS" means the Civilian Health and Medical Program of the Uniformed
Service, a program of medical benefits covering former and active members of the
uniformed services and certain of their dependents, financed and administered by
the United States Departments of Defense, Health and Human Services and
Transportation and established pursuant to 10 USC ▇▇.▇▇. 1071-1106, and all
regulations promulgated thereunder including without limitation (a) all federal
statutes (whether set forth in 10 USC ▇▇.▇▇. 1071-1106 or elsewhere) affecting
CHAMPUS; and (b) all rules, regulations (including 32 CFR 199), manuals, orders
and administrative, reimbursement and
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other guidelines of all Governmental Authorities (including, without limitation,
the Department of Health and Human Services, the Department of Defense, the
Department of Transportation, the Assistant Secretary of Defense (Health
Affairs), and the Office of CHAMPUS, or any Person or entity succeeding to the
functions of any of the foregoing) promulgated pursuant to or in connection with
any of the foregoing (whether or not having the force of law) in each case as
may be amended, supplemented or otherwise modified from time to time.
"Collections" means, with respect to any Batch Receivable or Transferred
Batch, all cash collections, wire transfers, electronic funds transfers and
other cash proceeds of such Batch Receivable or Transferred Batch, as the case
may be, deposited in the Purchaser Lockbox Account, including, without
limitation, all cash proceeds of any related security with respect to such Batch
Receivable.
"Credit and Collection Policy" means those receivables credit and
collection policies and practices of the Providers in effect on the date of the
Agreement and described in Schedule II hereto, as modified from time to time
with the consent of the Purchaser.
"Daiwa Group" means (i) DH-2, the Program Manager and the Master Servicer
and (ii) DH-2's agents and delegates identified from time to time to effectuate
this Agreement.
"Debt" means as to any Person (without duplication): (i) all obligations of
such party for borrowed money, (ii) all obligations of such party evidenced by
bonds, notes, debentures, or other similar instruments, (iii) all obligations of
such party to pay the deferred purchase price of property of services (other
than trade payables in the ordinary course of business), (iv) all Capital Leases
of such party, (v) all Debt of others directly or indirectly Guaranteed (which
term shall not include endorsements in the ordinary course of business) by such
party, (vi) all obligations secured by a Lien existing on property owned by such
party, whether or not the obligations secured thereby have been assumed by such
party or are non-recourse to the credit of such party (but only to the extent of
the value of such property), and (vii) all reimbursement obligations of such
party (whether contingent or otherwise) in respect of letters of credit,
bankers' acceptance and similar instruments.
"Defaulted Receivable" means a Batch Receivable (i) as to which the Obligor
thereof or any other Person obligated thereon has taken any action, or suffered
any event to occur, of the type described in paragraph (g) of Exhibit V or (ii)
which, consistent with the Credit and Collection Policy, would be written off
the appropriate Provider's books as uncollectible.
"Delinquency Ratio" means, as of the last Business Day of each month, a
percentage equal to:
DR / OPP
where:
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DR= The Expected Net Value of all Purchased Receivables
which became Delinquent Receivables in the four week
period immediately prior to the date of calculation.
OPP= The average Outstanding Purchase Price (calculated as
the arithmetic average of all daily balances) of all
Purchased Receivables in the four week period
immediately prior to the date of calculation.
"Delinquent Receivable" means a Batch Receivable (a) that has not been paid
in full on or following the 180th day following the Last Service Date thereof,
or (b) that is a Denied Receivable.
"Denied Receivable" has the meaning set forth in Section 4.01 hereto.
"Depositary Agreement" means that certain Depositary Account Agreement,
dated the date hereof, among each of the Providers, the Purchaser, DH-2 and the
Lockbox Bank, in substantially the form attached hereto as Exhibit XII, as such
agreement may be amended, modified or supplemented from time to time in
accordance with its terms.
"DH-2" means Daiwa Healthco-2 LLC, a Delaware limited liability company.
"Eligibility Criteria" has the meaning specified in the Loan Agreement as
such Eligibility Criteria may be modified from time to time by DH-2 upon written
notice to the Provider.
"Eligible Receivables" has the meaning specified in the Loan Agreement.
"Employee Benefit Plan" means any employee benefit plan within the meaning
of ss. 3(3) of ERISA maintained by any Provider or any ERISA Affiliate, or with
respect to which any of them have any liability.
"EOB" means the explanation of benefit from an Obligor that identifies the
services rendered on account of the Batch Receivable specified therein.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity which is under common control with any
Provider within the meaning of ERISA or which is treated as a single employer
with any Provider under the Internal Revenue Code of 1986, as amended.
"Event of Termination" means any of the events specified in Exhibit V
hereto.
"Expected Net Value" means, with respect to any Batch Receivable, the gross
unpaid amount of such Receivable on the Transfer Date therefor, times the Net
Value Factor.
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"Facility Termination Date" means the earlier of (a) 36 months after the
Initial Transfer Date (subject to an automatic extension of such date to equal
the "Facility Termination Date" under the Loan Agreement) and (b) the occurrence
of a Group-Wide Event of Termination and the delivery of notice with respect
thereto, if required pursuant to Section 3.02 hereof, unless such event is
waived by the Purchaser in writing.
"Final Payment Date" means the first Settlement Date following the
Settlement Period in which final collection has been received for all Purchased
Receivables or such Purchased Receivables have become Denied Receivables or
Defaulted Receivables.
"GAAP" means generally accepted accounting principles in the United States
of America, applied on a consistent basis, as set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board
and/or the rules and regulations of the Securities and Exchange Commission
and/or their respective successors and which are applicable in the circumstances
as of the date in question.
"Governmental Entity" means the United States of America, any state, any
political subdivision of a state and any agency or instrumentality of the United
States of America or any state or political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. Payments from Governmental Entities
shall be deemed to include payments governed under the Social Security Act (42
U.S.C. 1395, et seq.), including payments under Medicare, Medicaid, and
CHAMPUS/Champva, and payments administered or regulated by HCFA.
"Group-Wide Event of Termination" has the meaning set forth in Exhibit V.
"Group-Wide Providers" has the meaning set forth in Exhibit V.
"Group-Wide Servicer Termination Event" has the meaning set forth in
Section 1.05(b).
"Guaranty" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay), or (ii) entered into for the purpose of assuring in any other
manner the obligee of such Debt or other obligation of the payment thereof or to
protect the obligee of such Debt or other obligation of the payment thereof or
to protect the obligee against loss in respect thereof (in whole or in part),
provided that the term Guaranty shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
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"HCFA" means the Health Care Financing Administration of the United States
Department of Health and Human Services.
"Indemnified Amounts" has the meaning set forth in Section 4.02 hereto.
"Indemnified Party" has the meaning set forth in Section 4.02 hereto.
"Initial Transfer Date" means the date of the initial purchase of
Receivables hereunder.
"Insurer" means any Person which in the ordinary course of its business or
activities agrees to pay for healthcare goods and services received by
individuals, including commercial insurance companies, nonprofit insurance
companies (such as Blue Cross, Blue Shield entities), employers or unions which
self-insure for employee or member health insurance, prepaid health care
organizations, preferred provider organizations and health maintenance
organizations. "Insurer" includes insurance companies issuing health, personal
injury, workers' compensation or other types of insurance but does not include
any individual guarantors.
"Last Service Date" means, with respect to any Receivable, the date set
forth on the related invoice or statement as the most recent date on which
services or merchandise were provided by the applicable Provider to the related
patient.
"LIBO Rate" has the meaning specified in the Loan Agreement.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
hypothecation, assignment, preference, priority, other charge or encumbrance, or
any other type of preferential arrangement of any kind or nature whatsoever by
or with any Person (including, without limitation, any conditional sale or title
retention agreement), whether arising by contract, operation of law, or
otherwise.
"Loan Agreement" means the Loan and Security Agreement dated as of the date
hereof between the Purchaser as borrower and DH-2 as Lender, as such agreement
may be modified, supplemented or amended from time to time in accordance with
its terms.
"Lockbox Bank" means KeyBank as lockbox bank under the Depositary
Agreement.
"Loss-to-Liquidation Ratio" means, as of the last Business Day
of each month, a percentage equal to:
DR /C
where:
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DR= The Expected Net Value of all Purchased Receivables
which became Defaulted Receivables in the four week
period immediately prior to the date of calculation.
C= Collections in the four week period immediately prior
to the date of calculation.
"Master Servicer" means RJE Data Processing, Inc., and any other Person
then identified by the Program Manager to the Providers, or the Primary Servicer
on behalf of the Providers, as being authorized to administer and service
Receivables.
"Material Adverse Effect" means any event, condition, change or effect that
(a) has a materially adverse effect on the business, Properties, capitalization,
liabilities, operations, prospects or financial condition of (i) the Group-Wide
Providers, (ii) the Primary Servicer on a consolidated basis, or (iii) the
Purchaser, (b) materially impairs the ability of the Primary Servicer, the
Group- Wide Providers or the Purchaser to perform its obligations under this
Agreement, (c) materially impairs the validity or enforceability of, or
materially impairs the rights, remedies or benefits available to the Purchaser
under this Agreement, or (d) changes, or could reasonably be expected to change,
the characterization and treatment of the sales of Receivables under this
Agreement as something other than a true sale.
"Misdirected Payment" means any form of payment in respect of a Batch
Receivable made in a manner other than to the Purchaser Lockbox, the Purchaser
Lockbox Account, the Provider Lockboxes or the Provider Lockbox Accounts.
"Multiemployer Plan" means a plan, within the meaning of ss. 3(37) of
ERISA, as to which any Provider or any ERISA Affiliate contributed or was
required to contribute within the preceding five (5) years.
"Net Value Factor" means, initially, 0.85, and thereafter (i) the
historical actual final collections received on the Provider's Receivables
within 180 days of the Last Service Date of such Receivables, divided by (ii)
the gross value of such Receivables.
"New Patient Consent Form" has the meaning set forth in clause (i) of
Exhibit II hereto.
"Notice" means a Notice to Governmental Entities or Notice to Insurers, as
applicable.
"Notice to Governmental Entities" means a notice letter on a Provider's
corporate letterhead in substantially the form attached hereto as Exhibit VII-A.
"Notice to Insurers" means a notice letter on a Provider's corporate
letterhead in substantially the form attached hereto as Exhibit VII-B.
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"Obligor" means the Insurer or Governmental Entity, as applicable, who is
responsible for the payment of all or any portion of a Receivable.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
"Primary Servicer" means Community Care of America, Inc., a Delaware
corporation.
"Primary Servicer Account" means account #2090001393229 of the Primary
Servicer on behalf of the Providers at First Union National Bank of Florida, ABA
#063 0000 21, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other bank
account designated by the Primary Servicer by written notice to the Providers,
the Master Servicer, the Purchaser and the Program Manager from time to time, as
the account for receipt of proceeds on behalf of the Providers.
"Primary Servicer Responsibilities" has the meaning set forth in Section
1.05(b) hereto.
"Primary Servicing Fee" means, with respect to any Purchased Batch, an
amount equal to $8 multiplied by the number of Receivables in such Purchased
Batch.
"Program Manager" means (i) Daiwa Securities America Inc., or (ii) any
other Person then identified by DH-2 to the Primary Servicer as being authorized
to provide administrative services with respect to the Purchaser and the
Purchaser's purchase, funding and collection of healthcare receivables.
"Property" means property of all kinds, real, personal or mixed, tangible
or intangible (including, without limitation, all rights relating thereto),
whether owned or acquired on or after the date of this Agreement.
"Proposed Eligible Receivables" has the meaning set forth in Section 1.02
hereto.
"Provider" or "Providers" has the meaning set forth in the preliminary
statements hereto.
"Provider Ancillary Lockbox" means the lockbox set forth on Schedule IV
hereto to receive checks and EOB's with respect to Receivables payable by
private payors.
"Provider Ancillary Lockbox Account" means the account set forth on
Schedule IV hereto in the name of the Providers and associated with the Provider
Ancillary Lockbox established
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and controlled by the Providers to deposit Collections, including Collections
received in the Provider Ancillary Lockbox and Collections received by wire
transfer, all as more fully set forth in the Depositary Agreement.
"Provider Government Lockbox" means the lockbox set forth on Schedule IV
hereto to receive checks and EOB's with respect to Receivables payable by
Governmental Entities.
"Provider Government Lockbox Account" means the account set forth on
Schedule IV hereto in the name of the Providers and associated with the Provider
Government Lockbox established and controlled by the Providers to deposit
Collections, including Collections received in the Provider Government Lockbox
and Collections received by wire transfer directly from Governmental Entities,
all as more fully set forth in the Depositary Agreement.
"Provider Lockboxes" means, collectively, the Provider Ancillary Lockbox
and the Provider Government Lockbox, or, as the context requires, either such
lockbox.
"Provider Lockbox Account" means, collectively, the Provider Ancillary
Lockbox Account and the Provider Government Lockbox Account, or, as the context
requires, either such lockbox account.
"Purchase Price" means, with respect to Receivables in each Purchased
Batch, (i) the aggregate Expected Net Value of the Receivables, minus (ii) 5%.
"Purchased Batch" has the meaning set forth in Section 1.02(b) hereto.
"Purchased Receivable" means a Receivable that has been purchased by the
Purchaser.
"Purchaser" has the meaning set forth in the preliminary statements hereto.
"Purchaser Lockbox" means the lockbox set forth on Schedule IV hereto to
receive checks and EOB's with respect to Receivables payable by Insurers.
"Purchaser Lockbox Account" means the lockbox account set forth on Schedule
IV hereto associated with the Purchaser Lockbox established by the Purchaser to
deposit Collections, including Collections received in the Purchaser Lockbox and
Collections received by wire transfer directly from Insurers, all as more fully
set forth in the Depositary Agreement.
"Receivable Information" has the meaning set forth in Section 1.02 hereto.
"Receivables" means all third-party reimbursable portions or third-party
directly payable portions of healthcare accounts receivable, owing to a Provider
(or in the case of Unbilled Receivables, to be owing), arising out of the
rendition of medical, surgical, diagnostic or other professional medical
services or nursing home services or the sale of medical products by a Provider,
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including all rights to reimbursement under any agreements with and payments
from Obligors, together with, to the maximum extent permitted by law, all
accounts and general intangibles related thereto, all rights, remedies,
guaranties, security interests and Liens in respect of the foregoing, all books,
records and other Property evidencing or related to the foregoing and all
proceeds of any of the foregoing,
"Repurchase Price" means an amount equal to (x) the Purchase Price of such
Denied Receivable, minus (y) any cash received from the Obligor in the Purchaser
Lockbox Account with respect to such Denied Receivable, plus (z) interest on
such amount calculated at the interest rate then in effect under the Loan
Agreement (or the maximum rate legally permitted if less than such rate) on the
average outstanding difference between clauses (x) and (y) from and including
the Business Day following the Transfer Date of such Denied Receivable to the
date the Repurchase Price is received by the Purchaser.
"Servicer" means the Primary Servicer, if it is then authorized to perform
the Primary Servicer Responsibilities pursuant to Section 1.05(b), or the Master
Servicer, or any other Person then authorized hereunder to perform the Primary
Servicer Responsibilities.
"Servicer Termination Event" means any of the events specified in Exhibit
IX hereto.
"Settlement Date" means Tuesday of each week; or if such day is not a
Business Day, the next succeeding Business Day; provided, that, if, following
the occurrence of an Event of Termination, the Purchaser shall have selected a
period shorter than one week as the Settlement Period, the Settlement Date shall
mean the 5th Business Day following the end of each such Settlement Period.
"Settlement Period" means the period beginning on Friday of each week and
ending on the Friday of the following week; provided, that notwithstanding the
foregoing, the first Settlement Period shall be the period from and including
the Initial Transfer Date through December 20, 1996; and provided, further, that
following the occurrence of an Event of Termination, the Purchaser may from time
to time, by notice to the Provider, select a shorter period as the Settlement
Period.
"Subsidiary" means, with respect to any Provider, any corporation or entity
of which at least a majority of the outstanding shares of stock or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors (or Persons performing similar functions) of
such corporation or entity (irrespective of whether or not at the time, in the
case of a corporation, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Provider.
"Tangible Net Worth" means, with respect to any Person at any time, the sum
of (i) such Person's capital stock, capital in excess of par or stated value of
shares of its capital stock,
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retained earnings and any other account which, in accordance with GAAP,
constitutes stockholders' equity, less (ii) treasury stock, minus (iii) the book
value of all assets classified as intangible under GAAP, including, without
limitation, goodwill, deferred taxes, deferred financing costs, trademarks,
trade names, patents, copyrights and licenses.
"Total Collections" means, as to each Transferred Batch, the sum of all
Collections, Repurchase Prices and Indemnified Amounts, but only to the extent
that such Indemnified Amounts are received in lieu of Collections, distributed
to and received by the Purchaser with respect thereto.
"Transfer Date" means Tuesday of each week after the Initial Transfer Date,
or if such day is not a Business Day, the next succeeding Business Day provided
that there shall not be more than one Transfer Date in any single week, and,
provided further that, each Transfer Date shall occur simultaneously with each
Funding Date as defined in the Loan Agreement.
"Transferred Batch" has the meaning set forth in Section 1.02 hereto.
"Transmission" means, upon establishment of computer interface between the
Provider and the Master Servicer in accordance with the specifications
established by the Master Servicer, the transmission of Receivable Information
through computer interface to the Master Servicer in a manner satisfactory to
the Master Servicer.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the specified jurisdiction.
"Unbilled Receivable" means a Receivable in respect of which the goods have
been shipped, or the services rendered, to the relevant patient, and rights to
payment therefor have accrued, but the invoice has not been rendered to the
applicable Obligor.
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, and not specifically defined herein, are used herein as
defined in such Article 9.
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EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent on Initial Transfer Date. The purchase of a
Purchased Batch under the Agreement on the Initial Transfer Date is subject to
the conditions precedent that the Purchaser shall have received on or before the
Initial Transfer Date the following, each (unless otherwise indicated) dated
such date, in form and substance satisfactory to the Purchaser:
(a) For each Provider and the Primary Servicer, a certificate issued by the
Secretary of State of the state of such entity's (i) organization as to the
legal existence and good standing of such entity and (ii) locale of operation,
if different from its state of organization, as to the foreign qualification,
authorization and good standing of such entity in such locale (all of which
certificates shall be dated not more than 20 days prior to the Initial Transfer
Date) or an opinion of counsel for such entity to such effect.
(b) For each Provider and the Primary Servicer, certified copies of the
charter and by-laws of such entity, certified copies of resolutions of the Board
of Directors of such entity approving the Agreement, certified copies of all
documents filed to register any assumed names of such entity, and certified
copies of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Agreement.
(c) For each Provider and the Primary Servicer, a certificate of the
Secretary or Assistant Secretary of such entity certifying the names and true
signatures of the incumbent officers of such entity authorized to sign the
Agreement and the other documents to be delivered by it hereunder.
(d) (i) Certified copies of the balance sheets of the Primary Servicer and
its Subsidiaries as at December 31, 1995, and for the prior 3 fiscal years and
the related statements of income and expense and retained earnings of the
Primary Servicer and its Subsidiaries for the fiscal year then ended, certified
in a manner acceptable to the Purchaser by independent public accountants
acceptable to the Purchaser and demonstrating that there has been no Material
Adverse Effect and (ii) unaudited balance sheets of the Primary Servicer and its
Subsidiaries for the fiscal quarter ended September 30, 1996 and the related
statements of income and expense and retained earnings of the Primary Servicer
and its Subsidiaries for such fiscal quarter then ended.
(e) Acknowledgment or time stamped receipt copies of proper financing
statements (showing each Provider as debtor/seller, the Purchaser as secured
party/purchaser and DH-2 as assignee, and stating that the financing statements
are being filed because UCC Section 9-102 does not distinguish between a sale
and a secured loan for filing purposes) duly filed on or before the Initial
Transfer Date under the UCC of all jurisdictions that the Purchaser may deem
necessary or desirable in order to perfect the ownership interests contemplated
by the Agreement.
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(f) Acknowledgment or time stamped receipt copies of proper financing
statements (showing each Provider as debtor and the Purchaser as secured party
and DH-2 as assignee with respect to the grant by the Providers of a first
priority security interest to the Purchaser in the Providers' Accounts, as
contemplated by Section 4.04 of the Agreement) duly filed on or before the
Initial Transfer Date under the UCC of all jurisdictions that the Purchaser may
deem necessary or desirable in order to perfect such security interest.
(g) Completed requests for information, dated on or before the Initial
Transfer Date, listing all effective financing statements filed in the
jurisdictions referred to in subsections (e) and (f) above that name each
Provider as debtor, together with copies of such other financing statements
(none of which shall cover any Receivables).
(h) Releases of, and acknowledgment copies of proper termination statements
(Form UCC-3), if any, necessary to evidence the release of all security
interests, ownership and other rights of any Person previously granted by any
Provider in its Accounts.
(i) Favorable opinions of such local counsels for the Providers as the
Daiwa Group requests, substantially in the form attached hereto as Exhibit XI-A,
and including a new form of patient consent form to be used by the Providers in
such locales (the "New Patient Consent Forms"), and as to such other matters as
the Daiwa Group requests.
(j) A favorable opinion of Blass & ▇▇▇▇▇▇, counsel for the Primary Servicer
and the Providers, substantially in the form attached hereto as Exhibit XI-B.
(k) Payment of $150,000 which sum is equal to the advisory fee payable by
the Purchaser to Daiwa Securities America Inc.
(l) Payment of all reasonable attorneys' fees and disbursements incurred by
the Purchaser and the Daiwa Group.
(m) A duly executed Depositary Agreement, together with evidence
satisfactory to the Purchaser that the Purchaser Lockbox, the Provider
Lockboxes, the Purchaser Lockbox Account and the Provider Lockbox Accounts have
been established.
(n) Copies of all Notices required pursuant to Article II of the Agreement,
together with evidence satisfactory to the Purchaser that such Notices have been
or will be delivered to the addressees thereof.
(o) A copy of each new form of invoice from each Provider showing the
proper Provider Lockbox or Purchaser Lockbox as the remittance address.
(p) A copy of all of the Providers' existing forms of patient consents
which were signed by each patient for which the currently existing Receivables
were created, as well as a copy of each New Patient Consent Form to be signed by
each patient for which a Receivable will be
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created on or after the Initial Funding Date, which consents authorize certain
demographic and medical information with respect to such patient to be disclosed
by each Provider to its servicing agents and by such servicing agents to any
third party obligors thereon, certified by an officer of each Provider, or the
Primary Servicer on behalf of the Providers, as being true, complete, correct
and the only consent forms presently in effect.
2. Conditions Precedent on All Transfer Dates. Each purchase of a Purchased
Batch on a Transfer Date (including the Initial Transfer Date) shall be subject
to the further conditions precedent that the Provider and the Purchaser shall
have agreed upon the terms of such purchase and also that:
(a) Each Provider shall have delivered to the Purchaser or the Master
Servicer, as the case may be, on or prior to such Transfer Date, in form and
substance satisfactory to the Purchaser:
(i) completed Receivable Information with respect to each Proposed Eligible
Receivable (such Receivable Information having been delivered on or prior to the
most recent Batching Time preceding such Transfer Date), together with such
additional information as may reasonably be requested by the Purchaser or the
Master Servicer; and
(ii) to the extent not previously provided, executed Notices to each
Obligor responsible for the payment of any of the Batch Receivables to be
purchased on such Transfer Date, directing such Obligors to make payment to the
address and account designated in the Notices, as set forth in Article II
hereof, together with evidence that such Notices have been delivered to such
Obligors.
(b) On each such Transfer Date the following statements shall be true (and
acceptance of the proceeds of such purchase by the Primary Servicer on behalf of
the Providers shall be deemed a representation and warranty by each Provider
that such statements are then true):
(i) the representations and warranties contained in Exhibit III are correct
on and as of the date of such purchase as though made on and as of such date
except to the extent made with respect to an earlier date, and
(ii) no event has occurred and is continuing, or would result from such
purchase, that constitutes a Group-Wide Event of Termination or that would
constitute a Group-Wide Event of Termination but for the requirement that notice
be given or time elapse or both.
(c) The Purchaser shall have received such other approvals, opinions or
documents as it may reasonably request.
II-3
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
Each of the Providers and the Primary Servicer represents and warrants as
follows:
(a) It is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of its incorporation as set forth on
Schedule V hereto, 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.
(b) The execution, delivery and performance by it of the Agreement and the
other documents to be delivered by it thereunder, (i) are within its corporate
powers, (ii) have been duly authorized by all necessary corporate action, (iii)
do not contravene (1) its charter or by-laws, (2) any law, rule or regulation
applicable to it, (3) any contractual restriction binding on or affecting it or
its Property, or (4) any order, writ, judgment, award, injunction or decree
binding on or affecting it or its Property, and (iv) do not result in or require
the creation of any Lien upon or with respect to any of its Properties, other
than the interest created by the Agreement. The Agreement has been duly executed
and delivered by it. It has furnished to the Purchaser a correct and complete
copy of its certificate of incorporation and by-laws, including all amendments
thereto.
(c) No authorization or approval or other action by, and no notice to or
filing with, any Governmental Entity is required for the due execution, delivery
and performance by it of the Agreement or any other document to be delivered
thereunder.
(d) The Agreement constitutes the legal, valid and binding obligation of
it, enforceable against it in accordance with its terms, except as limited by
bankruptcy, insolvency, moratorium, fraudulent conveyance or other laws relating
to the enforcement of creditors' rights generally and general principles of
equity (regardless of whether enforcement is sought at equity or law).
(e) It has all power and authority, and has all permits, licenses,
accreditations, certifications, authorizations, approvals, consents and
agreements of all Insurers, Governmental Entities, accreditation agencies and
any other Person (including without limitation, accreditation by the appropriate
Governmental Entities and industry accreditation agencies and accreditation and
certifications as a provider of healthcare services eligible to receive payment
and compensation and to participate under Medicare, Medicaid, CHAMPUS/Champva,
Blue Cross/Blue Shield and other equivalent programs), necessary or required for
it (i) to own the assets (including Receivables) that it now owns, (ii) to carry
on its business as now conducted, except where failure to have such permits,
licenses, agreements with third-party payors, accreditation and certifications
(including, without limitation, accreditation by the appropriate Governmental
Entities and industry accreditation agencies and accreditation and
certifications as a provider of healthcare services eligible to receive payment
and compensation and to participate under Medicare, Medicaid, CHAMPUS/Champva,
Blue Cross/Blue Shield and other equivalent programs) would not have a Material
Adverse Effect.
III-1
(f) It has not been notified by any Insurer, Governmental Entity or
instrumentality, accreditation agency or any other Person, during the
immediately preceding 24 month period, that such party has rescinded or not
renewed, or is reasonably likely to rescind or not renew, any such permit,
license, accreditation, certification, authorization, approval, consent or
agreement granted to it or to which it is a party except as disclosed in
Schedule III hereto.
(g) As of the Initial Transfer Date, all conditions precedent set forth in
Exhibit II have been fulfilled or waived in writing by the Purchaser, and as of
each Transfer Date, the conditions precedent set forth in paragraph 2 of such
Exhibit II shall have been fulfilled or waived in writing by the Purchaser.
(h) The balance sheets of the Primary Servicer and its Subsidiaries as at
December 31, 1995, and as at September 30, 1996 and the related statements of
income and expense, cash flows and retained earnings of the Primary Servicer and
its Subsidiaries for the fiscal periods then ended, copies of which have been
furnished to the Purchaser, fairly present the financial condition of the
Primary Servicer and its Subsidiaries as at such date and the results of the
operations of the Primary Servicer and its Subsidiaries for the period ended on
such date, all in accordance with GAAP, and since December 31, 1995 there has
been no change resulting in a Material Adverse Effect.
(i) There is no pending or, to the Primary Servicer's knowledge, threatened
action or proceeding or injunction, writ or restraining order affecting the
Primary Servicer or any of its Subsidiaries before any court, Governmental
Entity or arbitrator which could reasonably be expected to result in a Material
Adverse Effect, and the Primary Servicer or any Subsidiary is not currently the
subject of, and has no present intention of commencing, an insolvency proceeding
or petition in bankruptcy.
(j) Each Provider is the legal and beneficial owner of the Receivables in
each Transferred Batch free and clear of any Lien (other than any Lien on
Accounts that is expressly subordinated in writing to the Lien created hereunder
in a manner acceptable to the Purchaser, in its sole discretion); upon each
purchase or contribution of a Transferred Batch, the Purchaser shall acquire
valid ownership of each Receivable in such Transferred Batch and in the
Collections with respect thereto prior to all other Liens thereon. No effective
financing statement or other instrument similar in effect covering any
Receivable or the Collections with respect thereto is on file in any recording
office, except those filed in favor of the Purchaser, DH-2 or any permitted
assignee of DH-2 relating to the Agreement, and no competing notice or notice
inconsistent with the transactions contemplated in the Agreement remains in
effect with respect to any Obligor.
(k) All Receivable Information, information provided in the application for
the program effectuated by the Agreement, and each other document, report and
Transmission provided by the Primary Servicer or any Provider to the Daiwa Group
is or shall be accurate in all material respects as of its date and as of the
date so furnished, and no such document 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.
III-2
(l) The principal place of business and chief executive office of each
Provider and the office where such Provider keeps its records concerning the
Receivables are located at the respective address referred to on the signature
pages of the Agreement and there have been no other such locations for the four
immediately prior months.
(m) Each purchase of a Purchased Batch will constitute a purchase or other
acquisition of notes, drafts, acceptances, open accounts receivable or other
obligations representing part or all of the sales price of merchandise,
insurance or services within the meaning of Section 3(c)(5) of the Investment
Company Act of 1940, as amended.
(n) Each Receivable included in a Purchased Batch is, as of the Transfer
Date of such Purchased Batch, an Eligible Receivable.
(o) The provisions of the Agreement create, on the Initial Transfer Date,
legal and valid liens in all of the Accounts owned or held by the Providers
(other than the Batch Receivables that have been sold to the Purchaser pursuant
to the provisions of the Agreement) in the Purchaser's favor, and when all
proper filings and other actions necessary to perfect such liens have been
completed, will constitute a perfected and continuing lien on all of the
Accounts owned or held by the Providers (other than the Batch Receivables that
have been sold to the Purchaser pursuant to the provisions of the Agreement),
having priority over all other liens on such Accounts of the Providers,
enforceable against each Provider and all third parties.
(p) All required Notices have been prepared and delivered to each
applicable Governmental Entity and Insurer, and all invoices now bear only the
appropriate remittance instructions for payment direction to the Purchaser
Lockbox, the Purchaser Lockbox Account, the appropriate Provider Lockbox or the
appropriate Provider Lockbox Account, as the case may be.
(q) No Provider has changed its principal place of business or chief
executive office in the last five years.
(r) The exact name of each Provider is as set forth on the signature pages
of the Agreement and, except as set forth on such signature page, such Provider
has not changed its name in the last five years and, except as set forth
opposite such Provider's name on Schedule V hereto, during such period such
Provider has not used, nor does such Provider now use, any other fictitious,
assumed or trade name.
(s) The Provider Lockbox Accounts are the only lockbox accounts maintained
by the Providers with respect to Eligible Receivables.
(t) With respect to itself or any of its Subsidiaries, since the Transfer
Date prior to the making of this representation, there exists no event which has
or is reasonably likely to have a Material Adverse Effect.
III-3
(u) It is not in violation under any applicable statute, rule, order,
decree or regulation of any court, arbitrator or governmental body or agency
having jurisdiction over any Provider which could have a Material Adverse
Effect.
(v) It has filed on a timely basis all tax returns (federal, state and
local) required to be filed and has paid, or made adequate provision for payment
of, all taxes, assessments and other governmental charges due from it, unless
contested in good faith by appropriate proceedings. No tax lien has been filed
and is now effective against it or any of its Properties, except any Lien in
respect of taxes and other charges not yet due or contested in good faith by
appropriate proceedings. To its knowledge, there are no pending investigations
of it by any taxing authority or any pending but unassessed tax liability of it.
It does not have any obligation under any tax sharing agreement.
(w) It is solvent and will not become insolvent after giving effect to the
transactions contemplated by this Agreement; it has not incurred debts or
liabilities beyond its ability to pay; it will, after giving effect to the
transaction contemplated by this Agreement, have an adequate amount of capital
to conduct its business in the foreseeable future; the sales of Receivables
hereunder are made in good faith and without intent to hinder, delay or defraud
its present or future creditors.
(x) The Provider Government Lockbox is the only post office box and the
Provider Government Lockbox Account is the only lockbox account maintained by
the Providers for Receivables, the Obligors of which are Governmental Entities;
and no direction of any Provider is in effect directing Obligors to remit
payments on Proposed Eligible Receivables or Batch Receivables other than to the
applicable Purchaser Lockbox, Purchaser Lockbox Account, Provider Lockbox, or
Provider Lockbox Account.
(y) Each pension plan or profit sharing plan to which it is a party has
been fully funded in accordance with its obligations as set forth in such plan.
(z) To its knowledge, there are no pending civil or criminal investigations
by any Governmental Entity involving it or its officers or directors and neither
it nor any of its officers or directors has been involved in, or the subject of,
any civil or criminal investigation by any Governmental Entity.
(aa) The primary business of each Provider is the provision of healthcare
services, merchandise and/or equipment.
(bb) The assets of each Provider are free and clear of any liens in favor
of the Internal Revenue Service, any Employee Benefit Plan or the PBGC other
than inchoate tax liens resulting from an assessment of such Provider.
(cc) With respect to each Employee Benefit Plan of it, including to its
knowledge as to any Multiemployer Plan, such Employee Benefit Plan has complied
and been administered in accordance with its terms and in substantial compliance
with all applicable provisions of ERISA and the Internal Revenue Code of 1986,
as amended; neither it nor any ERISA Affiliate has been notified
III-4
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA;
and it has no material unpaid liability for any Employee Benefit Plan.
(dd) None of the Proposed Eligible Receivables or Batch Receivables
constitutes or has constituted an obligation of any Subsidiary, parent or other
Person which is its Affiliate.
(ee) The Obligor of each Proposed Eligible Receivable and each Batch
Receivable has not been the Obligor of any Defaulted Receivables in the past 12
months (other than, for the purpose of this clause, as a result of good faith
disputes).
(ff) No transaction contemplated under this Agreement requires compliance
with any bulk sales act or similar law.
(gg) It has, or has the right to use, valid provider identification numbers
and licenses to generate the Receivables.
(hh) It shall treat each sale of Receivables hereunder as a sale for
federal and state income tax, reporting and accounting purposes and shall treat
each contribution of Receivables hereunder as a contribution for federal and
state income tax, reporting and accounting purposes.
(ii) It is not engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation G, T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
extension of credit under this Agreement will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of purchasing or
carrying margin stock.
(jj) With respect to each Transferred Batch, each Provider shall receive,
for its own capital account, its proportional share (based on such Provider's
portion of the Receivables contributed to the Purchaser) of the aggregate
Expected Net Value of the Transferred Batch.
(kk) Each Receivable that is an Unbilled Receivable will be, or has been,
billed to the Obligor of such Receivable within 45 days of the Last Service
Date.
(ll) Commencing January 1, 1997, only the New Patient Consent Forms are
being obtained from each patient and resident receiving services from the
Providers.
III-5
EXHIBIT IV
COVENANTS
Until the later of the Facility Termination Date and the Final Payment
Date, each Provider agrees as follows:
(a) Compliance with Laws, etc. It will comply in all material respects with
all applicable laws, rules, regulations and orders and preserve and maintain its
corporate existence, rights, franchises, qualifications, and privileges except
to the extent that the failure so to comply with such laws, rules and
regulations or the failure so to preserve and maintain such existence, rights,
franchises, qualifications, and privileges would not result in a Material
Adverse Effect.
(b) Offices, Records and Books of Account. It will keep its principal place
of business and chief executive office and the office where it keeps its records
concerning the Receivables at the address set forth under its name on the
signature pages to the Agreement or, upon 30 days' prior written notice to the
Purchaser, at any other locations in jurisdictions where all actions reasonably
requested by the Purchaser or otherwise necessary to protect and perfect the
Purchaser's interest in the Receivables have been taken and completed. It shall
keep its books and accounts in accordance with generally accepted accounting
principles and shall make a notation on its books and records, including any
computer files, to indicate which Receivables have been sold to the Purchaser
and the security interest of the Purchaser in its Accounts not sold to the
Purchaser. It shall 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 collecting all Batch
Receivables (including, without limitation, records adequate to permit the daily
identification of each Batch Receivable and all Collections of and adjustments
to each existing Batch Receivable) and for providing the Receivable Information.
(c) Performance and Compliance with Contracts and Credit and Collection
Policy. It will, at its expense, timely and fully perform and comply with all
material provisions, covenants and other promises required to be observed by it
under the contracts related to the Batch Receivables, and timely and fully
comply in all material respects with the Credit and Collection Policy in regard
to each Batch Receivable and the related contract, and it shall maintain, at its
expense, in full operation each of the bank accounts and lockboxes required to
be maintained under the Agreement. It shall not do anything to impede or
interfere with the collection by the Purchaser or the Master Servicer, on behalf
of the Purchaser, of the Batch Receivables.
(d) Notice of Breach of Representations and Warranties. It shall promptly
(and in no event later than one Business Day following actual knowledge thereof)
inform the Purchaser and the Master Servicer of any breach of covenants or
representations and warranties hereunder, including, without limitation, upon
discovery that a Receivable ceases to be an Eligible Receivable.
IV-1
(e) Sales, Liens, etc. It will not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Liens upon
or with respect to, its Accounts, or upon or with respect to any account to
which any Collections of any Batch Receivable are sent, or assign any right to
receive income in respect thereof except (i) it may ▇▇▇▇▇ ▇ ▇▇▇▇ on Accounts
that is expressly subordinated in writing to the Lien created hereunder in a
manner acceptable to DH-2, in its sole discretion and (ii) those Liens in favor
of the Purchaser, DH-2 or any assignee of DH-2 relating to the Agreement.
(f) Extension or Amendment of Batch Receivables. It shall not amend, waive
or otherwise permit or agree to any deviation from the terms or conditions of
any Batch Receivable except in accordance with the Credit and Collection Policy.
(g) Change in Business or Credit and Collection Policy. It will not make
any change in the Credit and Collection Policy or make any change in the
character of its business that, in either event, could result in a Material
Adverse Effect. It will not make any other material changes in the Credit and
Collection Policy without the prior written consent of the Purchaser.
(h) Audits and Visits. It will, at any time and from time to time during
regular business hours as requested by the Purchaser, permit the Purchaser, or
its agents or representatives (including the Master Servicer), (i) to examine
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in its possession or
under its control relating to Batch Receivables including, without limitation,
the related contracts, and (ii) to visit its offices and properties for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to Batch Receivables or its performance hereunder or
under the contracts with any of its officers or employees having knowledge of
such matters. It shall permit the Master Servicer to have at least one agent or
representative physically present in its administrative office during normal
business hours to assist it in performing its obligations under the Agreement,
including its obligations with respect to the collection of Batch Receivables
pursuant to Article I of the Agreement.
(i) Change in Payment Instructions. It will not terminate the Provider
Lockboxes, the Provider Lockbox Accounts, the Purchaser Lockbox or the Purchaser
Lockbox Account, or make any change or replacement in the instructions contained
in any invoice, Notice or otherwise, or regarding payments with respect to
Receivables to be made to it, the Purchaser or the Master Servicer, except upon
the prior and express direction of the Program Manager or the Purchaser.
(j) Reporting Requirements. It will provide to the Purchaser (in multiple
copies, if requested by the Purchaser) the following:
(i) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Primary Servicer,
consolidated balance sheets of the Primary Servicer and its Subsidiaries as of
the end of such quarter and consolidated statements of income, cash flows and
retained earnings of the Primary Servicer and its Subsidiaries for the period
commencing at the beginning of the current fiscal year and
IV-2
ending with the end of such quarter, certified by the chief financial officer of
the Primary Servicer;
(ii) as soon as available and in any event within 90 days after the end of
each fiscal year of the Primary Servicer, a copy of the audited consolidated
financial statements (together with explanatory notes thereon) and the auditor's
report letter for such year for the Primary Servicer and its Subsidiaries,
containing financial statements for such year audited by KPMG Peat Marwick LLP
or other independent public accountants acceptable to the Purchaser;
(iii) as soon as available and in any event within 45 days after the end of
each fiscal quarter of the Primary Servicer, an officer's certificate as to its
performance under and compliance with this Agreement during the preceding
quarter;
(iv) on or before the 15th of each month, monthly and year-to-date
statistical and financial reports, including volume and time business reports
(to be requested by the Purchaser) and unaudited consolidated profit and loss
reports, from the chief financial officer of the Primary Servicer;
(v) promptly and in any event within ten days after the occurrence of each
Event of Termination or event which, with the giving of notice or lapse of time,
or both, would constitute an Event of Termination, a statement of the chief
financial officer of the Primary Servicer setting forth details of such Event of
Termination or event, and the action that it or such applicable Provider has
taken and proposes to take with respect thereto;
(vi) promptly after the sending or filing thereof, copies of all reports
and registration statements that the Primary Servicer or any Subsidiary files
with the Securities and Exchange Commission or any national securities exchange
and official statements that the Primary Servicer or any Subsidiary files with
respect to the issuance of tax-exempt indebtedness and after an Event of
Termination or Servicer Termination Event, copies of all reports (if any) that
the Primary Servicer or any Subsidiary sends to any of its security holders;
(vii) promptly after the filing or receiving thereof, copies of all reports
and notices that the Primary Servicer or any Affiliate files under ERISA with
the Internal Revenue Service or the PBGC or the U.S. Department of Labor or that
the Primary Servicer or any Affiliate receives from any of the foregoing or from
any Multiemployer Plan to which the Primary Servicer or Affiliate is or was,
within the preceding five years, a contributing employer, in each case in
respect of the assessment of withdrawal liability or an event or condition which
could, in the aggregate, result in the imposition of liability on the Primary
Servicer and/or any such Affiliate in excess of $10,000;
(viii) at least ten Business Days prior to any change in any Provider's
name, a notice setting forth the new name and the proposed effective date
thereof;
IV-3
(ix) promptly (and in no event later than one Business Day following actual
knowledge or receipt thereof), written notice in reasonable detail, of (w) any
Lien asserted or claim made against a Batch Receivable, (x) the occurrence of a
Servicer Termination Event, (y) the occurrence of any other event which could
have a Material Adverse Effect on the value of a Batch Receivable or on the
interest of the Purchaser in a Batch Receivable or (z) the results of any cost
report or similar audits being conducted by any federal, state or county
Governmental Entity or its agents or designees;
(x) at least 30 days prior to the commencement of each fiscal year, a
consolidated and consolidating operating plan (together with a complete
statement of the assumptions on which such plan is based) of the Primary
Servicer and its Subsidiaries approved by its Board of Directors, which shall
include monthly budgets for the prospective year in reasonable detail acceptable
to the Purchaser and will integrate operating profit and cash flow projections
and personnel, capital expenditures, and facilities plans;
(xi) promptly upon receipt thereof, a copy of any management letter or
written report submitted to the Primary Servicer by independent certified public
accountants with respect to the Subsidiaries, business, condition (financial or
otherwise), operations, prospects, or Properties of the Primary Servicer;
(xii) no later than five (5) days after the commencement thereof, written
notice of all actions, suits, and proceedings before any Governmental Authority
or arbitrator affecting any Provider which, if determined adversely to such
Provider, could have a Material Adverse Effect;
(xiii) promptly after the furnishing thereof, copies of any statement or
report furnished by a Provider to any other party pursuant to the terms of any
indenture, loan, or credit or similar agreement and not otherwise required to be
furnished to the Purchaser pursuant to this Agreement;
(xiv) as soon as possible and in any event within five (5) days after
becoming aware of the occurrence thereof, written notice of any matter that
could reasonably be expected to result in a Material Adverse Effect;
(xv) as soon as available, (A) one copy of each financial statement,
report, notice or proxy statement sent by the Primary Servicer or any of its
Subsidiaries to its stockholders generally, (B) and one copy of each regular,
periodic or special report, registration statement, or prospectus filed by the
Primary Servicer or any Subsidiary with any securities exchange or the
Securities and Exchange Commission or any successor agency or the Bankruptcy
Court, and (C) all press releases and other statements made available by the
Primary Servicer to the public concerning developments in the business of the
Primary Servicer or any Subsidiary;
IV-4
(xvi) within the sixty (60) day period prior to the end of each fiscal year
of the Primary Servicer, a report satisfactory in form to the Purchaser, listing
all material insurance coverage maintained as of the date of such report by the
Primary Servicer and its Subsidiaries and all material insurance planned to be
maintained by the Primary Servicer and its Subsidiaries in the subsequent fiscal
year; and
(xvii) such other information respecting the Receivables or the condition
or operations, financial or otherwise, of the Primary Servicer or any Subsidiary
as the Purchaser may from time to time reasonably request.
(k) Notice of Proceedings; Overpayments. The Primary Servicer shall
promptly notify the Master Servicer in the event of any action, suit,
proceeding, dispute, set-off, deduction, defense or counterclaim that is or may
be asserted by an Obligor with respect to any Batch Receivable. The Primary
Servicer shall cause each Provider to make any and all payments to the Obligors
necessary to prevent the Obligors from offsetting any earlier overpayment to any
Provider against any amounts the Obligors owe on any Batch Receivables.
(l) Officer's Certificate. On the date the financial statements referred to
in clause (ii) above are to be delivered in each fiscal year after the Initial
Transfer Date, the chief financial officer of each Provider shall deliver a
certificate to the Purchaser, stating that, as of such date, (i) all
representations and warranties are true and correct, (ii) the conditions
precedent set forth in paragraph 2 of Exhibit II have been fulfilled or waived
in writing by the Purchaser, and (iii) no Group-Wide Event of Termination exists
and is continuing.
(m) Further Instruments, Continuation Statements. Each
Provider shall, at its expense, promptly execute and deliver all further
instruments and documents, and take all further action that the Program Manager
or the Purchaser may reasonably request, from time to time, in order to perfect,
protect or more fully evidence the full and complete transfer of ownership of
the Batch Receivables, or to enable the Purchaser or the Program Manager to
exercise or enforce the rights of the Purchaser hereunder or under the Batch
Receivables. Without limiting the generality of the foregoing, each Provider
will upon the request of the Program Manager execute and file such UCC financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be, in the opinion of the Program
Manager, necessary or appropriate. Each Provider hereby authorizes the Program
Manager or its designees, upon two Business Days' notice, to file one or more
financing or continuation statements and amendments thereto and assignments
thereof, relative to all or any of the Batch Receivables now existing or
hereafter arising without the signature of such Provider where permitted by law.
If a Provider fails to perform any of its agreements or obligations under the
Agreement, the Program Manager may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the expenses
of the Program Manager incurred in connection therewith shall be payable by the
Providers.
IV-5
(n) Taxes. The Providers shall pay any and all taxes relating to the
transactions contemplated under this Agreement, including but not limited to the
sale, transfer and assignment of each Batch Receivable.
(o) Deviation from Terms of Batch Receivable, etc. No Provider shall,
without the prior written consent of the Purchaser:
(i) other than in connection with the repurchase of a Denied Receivable,
compromise, adjust, extend, satisfy, subordinate, rescind, set off, waive,
amend, or otherwise modify, or permit or agree to any deviation from, the terms
and conditions of any Batch Receivable, or materially or adversely amend, modify
or waive any term or condition of any contract related thereto;
(ii) (x) amend, modify, supplement or delete in any way or to any extent
any provision for uncollectible accounts and free care applicable to any Batch
Receivable or (y) amend, modify or supplement in any way or to any extent any
financial category or change in any way or to any extent the manner in which any
financial category is treated or reflected in a Provider's records;
(iii) materially or adversely alter or modify (x) its claims processing
system, or (y) its third party billing system, as applicable; or
(iv) change, modify or rescind any direction contained in any invoice or
previously delivered Notice.
(p) Purchaser's Ownership of Batch Receivables. It shall not prepare or
permit to be prepared any financial statements which shall account for the
transactions contemplated hereby in a manner which is, or in any other respect
account for the transactions contemplated hereby in a manner which is,
inconsistent with the Purchaser's ownership of the Batch Receivables.
(q) Merger, Consolidation. It shall not merge with or into or consolidate
with or into, another Person, or convey, transfer, lease or otherwise dispose of
all or substantially all of its assets (whether now owned or hereafter
acquired).
(r) No "Instruments". It shall not take any action which would allow,
result in or cause any Transferred Batch or Batch Receivable to be evidenced by
an "instrument" within the meaning of the UCC of the applicable jurisdiction.
(s) Master Servicer Certificate. On or before the thirtieth calendar day
after the Initial Transfer Date, the Purchaser shall receive a certificate from
the Master Servicer stating that all computer linkups and interfaces necessary
or desirable, in the judgment of the Master Servicer, to effectuate the
transactions and information transfers contemplated hereunder, are fully
operational to the satisfaction of the Master Servicer.
IV-6
(t) Implementation of New Patient Consent Forms. As soon as possible after
the Initial Transfer Date and in any event no later than December 31, 1996, the
Purchaser shall receive a certificate from an officer of each Provider stating
that the New Patient Consent Forms are the only forms being used by such
Provider and that all reasonable steps have been and are being taken to obtain
New Patient Consent Forms from patients and residents currently being provided
services by such Provider.
(u) Deviation from New Patient Consent Form. No Provider shall, without the
prior written consent of the Purchaser, substitute, alter, modify or change in
any way the New Patient Consent Form applicable to it.
(v) Implementation of New Invoices. Each Provider shall take all reasonable
steps to ensure that all invoices rendered or dispatched on or after the Initial
Transfer Date contain only the remittance instructions required under Article II
of this Agreement.
(w) Assumed Name Certificates. On or before December 31, 1996, the
Purchaser shall receive copies of all certificates filed by the Providers in
each applicable jurisdiction regarding the use of each of the trade names set
forth opposite each Provider's name on Schedule V attached hereto.
IV-7
EXHIBIT V
EVENTS OF TERMINATION
Each of the following shall be an "Event of Termination" with respect to
each individual Provider and, if any Event of Termination relates either (in
each case, a "Group-Wide Event of Termination") to the Primary Servicer or to
Providers responsible in the aggregate for the sale or contribution to the
Purchaser of more than 25% of the Batch Receivables (whether or not purchased)
in the prior 90 days (or the number of days from the date of the Agreement to
the date of such Event of Termination, if less than 90 days) ("Group-Wide
Providers"), such Event of Termination shall relate to each Provider:
(a) The Servicer, in its capacity as agent for the Purchaser pursuant to
Section 1.05(b), shall fail to perform or observe any term, covenant or
agreement included in the Primary Servicer Responsibilities (other than a
Servicer Termination Event resulting from the events described in paragraph (g)
of this Exhibit) and such failure shall remain unremedied for fifteen (15) days,
or the Servicer or any Provider shall fail to make when due any payment or
deposit to be made by it under the Agreement.
(b) Any Provider or the Servicer (i) fails to transfer any servicing rights
and obligations with respect to the Batch Receivables to any successor
designated pursuant to Section 1.05(b) of the Agreement, (ii) fails to make any
payment required under the Agreement (unless such payment obligation has been
fulfilled in full pursuant to the Purchaser's set-off rights under Section 4.03
of the Agreement) or (iii) sends a "Revocation Order" (as defined in the
Depositary Agreement) or makes any change or replacement in the "Standing
Revocable Instruction" (as defined in the Depositary Agreement).
(c) Any representation or warranty (other than those
representations and warranties (i) with respect to the purchase of Receivables
that are covered by paragraph (f) of this Exhibit and (ii) with respect to Batch
Receivables, the Repurchase Price with respect thereto is paid to the Purchaser
in the manner set forth in Article IV of this Agreement within five Business
Days following demand therefor) made or deemed made by a Provider under or in
connection with the Agreement or any information or report delivered by a
Provider pursuant to the Agreement shall prove to have been incorrect or untrue
in any material respect when made or deemed made or delivered.
(d) Any Provider fails to perform or observe any other term, covenant or
agreement contained in the Agreement on its part to be performed or observed and
any such failure shall remain unremedied for three Business Days after the
earlier of (i) the discovery thereof by such Provider and (ii) written notice
thereof shall have been given to such Provider or the Primary Servicer by the
Purchaser; unless such Provider is removed as a Provider in accordance with
Section 5.19(b) after the earlier of clauses (i) and (ii).
V-1
(e) Any Provider or any of its Subsidiaries shall fail to pay any principal
of or premium or interest on any of its Debt when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such Debt;
or any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the applicable
grace period, if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to repay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof.
(f) Any purchase of a Purchased Batch pursuant to the Agreement shall for
any reason (other than pursuant to the terms hereof) fail or cease to create or
fail or cease to be a valid and perfected ownership interest in each Batch
Receivable in such Purchased Batch and the Collections with respect thereto free
and clear of all Liens (other than Liens referred to in clauses (i) and (ii) of
paragraph (e) of Exhibit IV) unless, as to any such Batch Receivable, the
Repurchase Price with respect thereto is paid to the Purchaser in the manner set
forth in Article IV of the Agreement within five Business Days following demand
therefor.
(g) Any Provider or any of its Subsidiaries shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against a Provider or any
of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its Property and, in the
case of any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period of 30
days, or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar official for, it or for any
substantial part of its Property) shall occur; or a Provider or any of its
Subsidiaries shall take any action to authorize any of the actions set forth
above in this paragraph (g).
(h) As of any date of determination, any Provider is found to have been
overpaid by Governmental Entities by 8% or more during any period covered by an
audit conducted by the HCFA and such overpayment is not repaid within 30 days of
the earlier of receipt of a notice by, or the knowledge of, such Provider.
(i) There shall have occurred any Material Adverse Effect since September
30, 1996.
(j) A Provider or the Primary Servicer shall have consummated, or have
entered into any transaction which shall result in the consummation of (i) the
merger or consolidation of such
V-2
Provider or the Primary Servicer, (ii) the acquisition of all or a substantial
portion of the assets of any Person, (iii) the transfer, sale, assignment, lease
or other disposition of all or a substantial portion of such Provider's or the
Primary Servicer's assets or Properties, (iv) a change in the general nature of
such Provider's or the Primary Servicer's business, or (v) the sale of a
controlling interest, directly or indirectly, in such Provider or the Primary
Servicer.
(k) Judgments or orders for payment of money (other than judgments or
orders in respect of which adequate insurance is maintained for the payment
thereof) against the Providers in excess of $500,000 in the aggregate remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period
of 30 days or more.
(l) Any governmental authority (including, without limitation, the Internal
Revenue Service or the PBGC) files a notice of a Lien against the assets of a
Provider other than a Lien (i) that is limited by its terms to assets other than
Receivables and (ii) that does not result in a Material Adverse Effect.
(m) Any Provider does not maintain, keep, and preserve all of its
Properties necessary or useful in the proper conduct of its business in good
repair, working order, and condition (ordinary wear and tear excepted) and make
all necessary repairs, renewals, replacements, betterments, and improvements
thereof.
(n) Any Provider does not pay or discharge at or before maturity or before
becoming delinquent (i) all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its Property, and (ii) all
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its Property.
(o) Any Provider does not keep insured by financially sound and reputable
insurers all Property of a character usually insured by corporations engaged in
the same or similar business similarly situated against loss or damage of the
kinds and in the amounts customarily insured against by such corporations and
carry such other insurance as is usually carried by such corporations. Each
policy referred to in this Subsection (o) shall provide that it will not be
canceled, amended, or reduced except after not less than thirty (30) days' prior
written notice to the Purchaser and DH-2 and shall also provide that the
interests of the Purchaser shall not be invalidated by any act or negligence of
a Provider. Any Provider does not advise the Purchaser promptly of any policy
cancellation, reduction, or amendment. Any insurance policy for property,
casualty, liability and business interruption coverage for a Provider does not
name DH-2 as assignee of the Purchaser as loss payee (as the Purchaser's
interests may appear) or an additional insured, as appropriate.
(p) Any Provider does not maintain proper books of record and account in
which full, true and correct entries in conformity with GAAP are made of all
dealings and transactions in relation to its business and activities.
V-3
(q) Any Provider does not comply in all material respects with (i) any
document directly relating to the responsibilities of such Provider under the
Agreement or (ii) any agreement, contract, or instrument that results in a
Material Adverse Effect.
(r) Any Provider does not comply with all minimum funding requirements and
all other material requirements of ERISA, if applicable, so as not to give rise
to any liability thereunder.
(s) Any Provider engages in any line or lines of business activity other
than the businesses in which it is engaged on the date hereof.
(t) The Loss-to-Liquidation Ratio in any four consecutive calendar weeks to
exceeds 5%.
(u) The Delinquency Ratio in any four consecutive calendar weeks to exceeds
10%.
(v) An "Event of Default" (as defined in the Loan Agreement) shall occur
under the Loan Agreement.
(w) Any provision of this Agreement shall for any reason cease to be valid
and binding on a Provider or a Provider shall so state in writing.
V-4
EXHIBIT VI
RECEIVABLE INFORMATION
The following information shall, as appropriate, be provided
by each Provider to the Master Servicer with respect to each Batch Receivable,
together with such other information and in such form as may reasonably be
requested from time to time by the Master Servicer and as, in accordance with
applicable law, may be disclosed and/or released to the Master Servicer (the
"Receivable Information"):
(i) patient demographic information;
(ii) insured party demographic and other policy-related information;
(iii) Provider services classification information (i.e., D.R.G. and other
like information established by the Provider from time to time to classify
services rendered at the Provider's institution);
(iv) Obligor required information (i.e., information provided in the
ordinary course of business to any specified Obligor or any other information
required to be provided to an Obligor pursuant to any agreement, contract or
other arrangement with such Obligor); and
(v) billing information (i.e., all information
provided by the Provider on invoices to Obligors and any other
information required to be provided pursuant to the Credit and
Collection Policy and, to the extent the Transmission will not be via
computer interface, including a copy of the admitting face sheet, HCFA
Form and a detailed copy of the ▇▇▇▇).
VI-1
EXHIBIT VII-A
FORM OF NOTICE TO GOVERNMENTAL ENTITIES
[Letterhead of the applicable Provider]
[Date]
[Name and Address
of Governmental Entity]
Re: Change of Account and Address
To Whom it May Concern:
Please be advised that we have opened a new bank account at _____________
and a post-office box with respect to such bank account. Accordingly, until
further notice, we hereby request that:
(1) All wire transfers be made directly into our account at:
======================
----------------------
Account #_______________
ABA #_____________________
Confirm Phone Number: _______________
Attention: ___________________
(2) All Explanations of Benefits, remittance advices and
other forms of payment, including checks, be made to our
post office box located at:
=================
-----------------
Reference: Account #____________
Thank you for your cooperation in this matter.
[Applicable Provider]
By:____________________
[Authorized Officer]
VII-A-1
EXHIBIT VII-B
FORM OF NOTICE TO INSURERS
[Letterhead of the applicable Provider]
[Date]
[Name and Address
of Insurer]
Re: Change of Account and Address
To Whom it May Concern:
Please be advised that we (the "Provider") are selling and contributing to
CCA Funding LLC (the "Purchaser"), an affiliated company, our existing and
future receivables payable by you to us; and the Purchaser is assigning the
aforementioned existing and future arising receivables as collateral to Daiwa
Healthco-2 LLC (the "Lender"). Accordingly, you are hereby directed to make:
(1) All wire transfers directly to the following account:
=======================
-----------------------
Account #_______________
ABA #_____________________
Confirm Phone Number: _______________
Attention: ___________________
(2) All Explanation of Benefits, remittance advices and
other forms of payment, including checks, to the
following address:
======================
Reference: DAIWA HEALTHCO-2 LLC
The foregoing directions shall apply to all existing receivables payable to
us and (until further written notice) to all receivables arising in the future
and may not be revoked except by a writing executed by the Purchaser.
VII-B-1
Please acknowledge your receipt of this notice by signing the enclosed copy
of this letter and returning it in the enclosed envelope.
Thank you for your cooperation in this matter.
[Applicable Provider]
By:____________________
[Authorized Officer]
CCA FUNDING LLC
By:____________________
[Authorized Officer]
Receipt Acknowledged:
[Name of Insurer]
By: ____________________
Title:
VII-B-2
EXHIBIT VIII
PRIMARY SERVICER RESPONSIBILITIES
Each Provider shall be responsible for the following
administration and servicing obligations (the "Primary Servicer
Responsibilities") which shall be performed by the Primary Servicer on behalf of
the Providers until such time as a successor servicer shall be designated and
shall accept appointment pursuant to Section 1.05(b) of the Agreement:
(a) Servicing Standards and Activities. Each Provider agrees to administer
and service the Batch Receivables sold or contributed by such Provider in each
Transferred Batch (i) to the extent consistent with the standards set forth in
clauses (b) (i) through (iv) below, with the same care that it exercises in
administering and servicing similar receivables for its own account, (ii) within
the parameters of services set forth in paragraph (b) of this Exhibit VIII, as
such parameters may be modified by mutual written agreement of the Purchaser and
the Providers, (iii) in compliance at all times with applicable law and with the
agreements, covenants, objectives, policies and procedures set forth in the
Agreement, and (iv) in accordance with industry standards for servicing
healthcare receivables unless such standards conflict with the procedures set
forth in paragraph (b) of this Exhibit VIII in which case the provisions of
paragraph (b) shall control. The Providers shall establish and maintain
electronic data processing services for monitoring, administering and collecting
the Batch Receivables in accordance with the foregoing standards and shall,
within three (3) Business Days of the deposit of any checks, other forms of cash
deposits, EOB's or other written matter into a Lockbox, post such information to
its electronic data processing services.
(b) Parameters of Primary Servicing. The Primary Servicer Responsibilities
shall be performed within the following parameters:
(i) Subject to the review and authority of the Purchaser and except as
otherwise provided herein, each Provider shall have full power and authority to
take all actions that it may deem necessary or desirable, consistent in all
material respects with its existing policies and procedures with respect to the
administration and servicing of accounts receivable, in connection with the
administration and servicing of Batch Receivables. Without limiting the
generality of the foregoing, each Provider shall, in the performance of its
servicing obligations hereunder, act in accordance with all legal requirements
and subject to the terms and conditions of the Agreement. Each Provider agrees
that the Primary Servicing Fee has been calculated to cover all costs and
expenses incurred in the performance of its servicing obligations hereunder and
no other reimbursement of costs and expenses shall be payable to the Servicer.
(ii) A Provider shall not be entitled to ▇▇▇ to enforce or collect any
Batch Receivable without the prior written consent of the Purchaser unless such
Provider shall have repurchased such Batch Receivable in accordance with the
Agreement.
VIII-1
(iii) No Provider shall change in any material respect its existing
policies and procedures with respect to the administration and servicing of
accounts receivable (including, without limitation, the amount and timing of
write-offs) without the prior written consent of the Purchaser.
(iv) Each Provider will be responsible for the monitoring and collection of
the Batch Receivables, including, without limitation, contacting Obligors that
have not made payment on their respective Batch Receivables within the customary
time period for such Obligor, and resubmitting any claim rejected by an Obligor
due to incomplete information.
(v) If a Provider determines that a payment with respect to a Batch
Receivable has been received directly by a patient or any other Person, such
Provider shall promptly advise the Purchaser, and the Purchaser shall be
entitled to presume that the reason such payment was made to such patient or
other Person was because of a breach of representation or warranty in the
Agreement with respect to such Batch Receivable (such as, by way of example, the
forms related to such Batch Receivable not being properly completed so as to
provide for direct payment by the Obligor to such Provider), unless such
Provider shall demonstrate that such is not the case. In the case of any such
Batch Receivable which is determined not to be a Denied Receivable, each
Provider shall promptly demand that such patient or other Person remit and
return such funds. If such funds are not promptly received by the applicable
Provider, such Provider shall take all reasonable steps to obtain such funds.
(vi) Notwithstanding anything to the contrary contained herein, no Provider
may amend, waive or otherwise permit or agree to any deviation from the terms or
conditions of any Batch Receivable in any material respect without the prior
consent of the Purchaser.
(c) Aged Term Servicing. The parties hereby agree that at such time as any
Batch Receivable is unpaid for more than 120 days after the Last Service Date,
the applicable Provider shall, upon the request of the Purchaser, turn over all
of its Primary Servicer Responsibilities under this Agreement with respect to
such Batch Receivable to a successor servicer selected by the Purchaser, and
such servicer shall thereafter service such Batch Receivable.
(d) Termination of Primary Servicer Responsibilities; Cooperation. Upon the
occurrence of a Servicer Termination Event, the Purchaser may, by written
notice, terminate each Provider's Primary Servicer Responsibilities, in which
event the Providers shall immediately transfer to a successor servicer
designated by the Purchaser all records, computer access and other information
as shall be necessary or desirable, in the judgment of such successor servicer,
to perform such responsibilities. The Providers shall otherwise cooperate fully
with such successor servicer.
(e) Primary Servicing Fee. Upon the transfer of servicing with respect to
any Purchased Receivable pursuant to this Agreement, the Providers shall no
longer be paid the Primary Servicing Fee relating to such Purchased Receivables,
which will be paid to the successor Person performing the Primary Servicer
Responsibilities.
VIII-2
EXHIBIT IX
SERVICER TERMINATION EVENTS
Each of the following shall be a "Servicer Termination Event":
(a) An event has occurred and is continuing that constitutes
an Event of Termination or that would constitute an Event of Termination but for
the requirement that notice be given or time elapse or both.
(b) The Servicer is not performing, or becomes unable (in the
commercially reasonable determination of the Purchaser) to perform, fully the
Primary Servicer Responsibilities set forth in Exhibit VIII hereof.
(c) A Provider is unable to maintain the Transmission
interface described in Exhibit X to the complete satisfaction of the Master
Servicer, or the electronic information servicing capabilities of a Provider are
not functioning for a period of more than three consecutive Business Days.
(d) Any Provider has sent multiple Transmissions to the Master
Servicer in a manner that is not in compliance with the specifications set forth
in Exhibit X hereof.
(e) The Purchaser, in its sole judgement, which judgment shall
be commercially reasonable, is not satisfied with the performance by any
Provider of the Primary Servicer Responsibilities or the Servicer on behalf of
the Providers with respect to the Batch Receivables.
(f) If, at any date, the aggregate Expected Net Value of all
Delinquent Receivables that became Delinquent during the prior 3 months is in
excess of 20% of the aggregate Expected Net Value of all Receivables sold by the
Providers to the Purchaser during the prior 3 months (regardless of whether the
Denied Receivables are repurchased by the Providers pursuant to Article IV of
the Agreement).
(g) As of any date after the Initial Transfer Date, (i) the
dollar-weighted average days outstanding with respect to all outstanding Batch
Receivables on such date and on the same day of each of the two preceding
calendar months (or if there is no corresponding day in any such preceding
month, the last day of such month) is greater than 65 days, or (ii) the average
over the preceding 90- day period of the dollar-weighted average days
outstanding with respect to all outstanding Batch Receivables on each day during
such period is greater than 60 days.
(i) As of any date, after the Initial Transfer Date more than
25% of all outstanding Batch Receivables (excluding Denied Receivables) are aged
more than 120 days but less than 180 days from the respective Last Service Dates
of such Batch Receivables.
IX-1
(j) As of any date, Collections on all Batch Receivables that
have been liquidated or written off during the then most recent 13 week period,
are less than 50% of the aggregate gross value (billed amount) of such Batch
Receivables.
IX-2
EXHIBIT X
INTERFACE BETWEEN MASTER SERVICER AND THE PROVIDERS
1. The Master Servicer will convey appropriate data requirements and
instructions to the Providers to establish a computer interface between
the Providers' systems and the Master Servicer's receivables monitoring
system. The interface will permit the Master Servicer to receive
electronically the Providers' accounts receivable data, including the
Receivable Information, billing data and collection and other
transaction data relating to the Receivables.
2. The Providers shall give the Master Servicer and the Purchaser at least
ten Business Days' notice of any coding changes or electronic data
processing system modifications made by any Provider which could affect
the Master Servicer's processing or interpretation of data received
through the interface.
3. The Master Servicer shall have no responsibility to return to a
Provider any information which the Master Servicer receives pursuant to
the computer interface.
4. Each Provider will prepare daily accounts receivable data files of all
transaction types for all of the Providers' sites that are included in
the funding program. The weekly cutoff will occur at a predetermined
time each week, and the weekly cutoff date for all of the sites must
occur at exactly the same time. The cutoff date that will be selected
will be at the end of business for a specific day of the week, or in
other words, at the end of the Providers' transaction posting process
for that day. Each Provider will temporarily maintain a copy of the
accounts data files in the event that the data is degraded during
transmission, and needs to be re-transmitted.
The Master Servicer will be responsible for the management of the
hardware, communications and software used in the funding transaction.
5. The Master Servicer's data center will receive the Receivable files,
and immediately confirm that the files have been passed without
degradation of data by balancing the detailed items to the control
totals that accompany the files. Any problems in this process will be
immediately reported to the Providers so that the Receivable file can
be re-transmitted, if necessary.
6. Once the receipt of the Receivable data has been confirmed, the Master
Servicer will perform certain tests and edits to ensure that each
Receivable meets the specified eligibility criteria for purchase by the
Purchaser. Compliance with concentration limits will be verified and
the Master Servicer will notify the Program Manager to initiate a
Receivable purchase using the Receivable file received. Upon the
successful completion of a purchase, the Master Servicer will generate
a one-line trial balance (listing all purchased accounts) confirming
the Receivables that have been purchased. A copy of the trial balance
will be forwarded to each
X-1
Provider, to the Primary Servicer, to the Purchaser and to the Program
Manager to confirm the purchase.
7. The Providers' sites will continue to post daily transactions to their
respective Receivable files. The Providers' Receivable files for each
of the eligible sites will include all transactions posted through
that day. The Providers will create a transaction report and a
Receivable file for each of the eligible sites. The transaction report
will contain all transactions posted to the respective site Receivable
file for the specified period (and will indicate the respective site
and the number of items and total dollars on each transaction report
for control purposes). The Receivable file will contain balances that
reflect the transactions posted on the Providers' systems through the
end of business of the specified period.
Each Provider will transmit the billing, transaction, and the most
current Receivable data files to the Master Servicer's data center
according to the established schedule. The Providers and the Primary
Servicer should, again, maintain the backup of each of these files in
the event that a re-transmission is necessary.
8. The Master Servicer's data center will confirm that the files have
been received intact, and will immediately communicate any problems to
the Providers in order to initiate a re- transmission. The Master
Servicer will then post the transaction files to the accounts
receivable for the previously purchased accounts that the Master
Servicer is maintaining, and consequently update the affected
balances. Upon completion of the posting process, the Master Servicer
will generate summary reports of the posting process that the Program
Manager will use to complete various funding activities. The Master
Servicer summary reports will reference the Providers' transaction
codes and activity to codes that are common to the funding program.
9. The Master Servicer will then compare the updated accounts balances on
the Master Servicer's system to the corresponding account balances
reflected on the Receivable file. The Master Servicer expects that the
balances for the funded Receivables will be congruent, and any
discrepancies will be immediately examined and resolved through the
cooperative effort of the Master Servicer and the Provider. The Master
Servicer shall produce discrepancy reports (e.g., "Funding Only" or
"Out of Balance" reports) and the Providers shall respond promptly to
such reports.
10. Once the reconciliation process has been completed and any
discrepancies between the Master Servicer and the Providers' Receivable
files resolved through the discrepancy report process described in
paragraph 9 above, the Master Servicer will then process the Receivable
file and advise the Purchaser that it may purchase any new Receivable
that is eligible. The Master Servicer will then proceed through exactly
the same process described in paragraph 6 above.
[ADD ATTACHMENT 1 WITH INTERFACE DATA]
X-2
EXHIBIT XI-A
FORM OF OPINION OF PROVIDERS' COUNSELS
WITH RESPECT TO THE PATIENT CONSENT FORMS
RJE Data Processing, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Daiwa Healthco-2 LLC
c/o Lord Securities Corporation
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
As [special local] counsel to COMMUNITY CARE OF AMERICA, INC.
(the "CCA"), a Delaware corporation and to [each of the Providers listed on
Schedule 1 attached hereto] (the "Providers"), we have examined the following in
connection with the proposed sale by the Providers of certain healthcare
receivables (the "Receivables") to CCA FUNDING LLC (the "Purchaser") and the
assignment of those Receivables by the Purchaser to DAIWA HEALTHCO-2 LLC
("DH-2"):
(a) A copy of the Healthcare Receivables Purchase and Transfer Agreement
(the "RPA") among CCA, the Providers and the Purchaser;
(b) A copy of the Loan and Security Agreement (the "LSA") between the
Purchaser and DH-2 (terms not otherwise defined herein shall have the meanings
provided in the RPA);
(c) A sample of the Receivables proposed to be sold by the Providers and
assigned by the Purchaser;
(d) Each patient consent form used by each Provider (the "Patient Consent
Form"), copies of which are attached hereto as Exhibit A; and
(e) Such other documents, statutes, regulations and materials as we have
deemed necessary to deliver the opinion set forth herein.
This opinion is being delivered pursuant to clause 1(i) of the conditions
precedent listed on Exhibit II of the RPA.
Based upon the foregoing examination, we are of the opinion that the
Patient Consent Forms are sufficient to permit the lawful disclosure and/or
release of relevant medical information
XI-A-1
and documents which have been redacted to remove patient-specific diagnostic and
procedural information or diagnosis to the Purchaser, DH-2, any third-party
servicer acting for the Purchaser or DH-2 pursuant to the RPA or LSA (whether
such servicer is performing the Primary Servicer Responsibilities or providing
data processing services with respect to the Receivables, and including without
limitation the Master Servicer), and any person guarantying such servicer's
obligations.
In order to disclose and/or release the full complement of
information regarding services rendered to a patient or resident in [name of
locale], the Provider should obtain a patient consent form in the form attached
hereto as Exhibit B (the "New Patient Consent Form") from each new and existing
patient and resident. Subject to the proper completion and execution of such New
Patient Consent Form by each patient and resident, we are of the opinion that
the New Patient Consent Form is sufficient to permit the lawful disclosure
and/or release of medical information and documents to the Purchaser, DH-2, any
third-party servicer acting for the Purchaser or DH-2 pursuant to the RPA or LSA
(whether such servicer is performing the Primary Servicer Responsibilities or
providing data processing services with respect to the Receivables, and
including without limitation the Master Servicer), and any person guarantying
such servicer's obligations.
Very truly yours,
XI-A-2
EXHIBIT XI-B
FORM OF OPINION OF PROVIDER'S AND PURCHASER'S COUNSEL
WITH RESPECT TO CERTAIN CORPORATE MATTERS
[TO BE ATTACHED]
XI-B-1
EXHIBIT XII
FORM OF DEPOSITARY AGREEMENT
[TO BE ATTACHED]
XII-1
SCHEDULE I
ADDRESSES FOR NOTICE
If to the Program Manager:
Daiwa Securities America Inc.
Financial Square
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Master Servicer:
RJE Data Processing, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE II
CREDIT AND COLLECTION POLICY
[TO BE ATTACHED]
SCHEDULE III
LICENSE REVOCATIONS
The following facilities have been decertified from the Medicaid and Medicare
Programs during the past 24 months:
(1) Community Care of America at Toledo (Toledo, Iowa)
Community Care of America voluntarily decertified this
facility from both the Medicare and Iowa state Medicaid
programs on March 8, 1996. The company has been recertified to
participate in both programs effective September 20, 1996 and
November 20, 1996 respectively.
(2) Community Care of America at Council Bluffs North (Council
Bluffs, Iowa) This facility was decertified from both the
Medicare and Iowa state Medicaid programs on April 17, 1996.
The company has been recertified to participate in both
programs effective July 1, 1996.
SCHEDULE IV
LOCKBOX INFORMATION
Provider Ancillary Lockbox:
CCA - Self-pay
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Provider Ancillary Lockbox Account:
CCA - Self-pay
Account #00109-98906
KeyBank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ABA #041 001 039
Provider Government Lockbox:
CCA - Governmental
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Provider Government Lockbox Account:
CCA - Governmental
Account #00109-98891
KeyBank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ABA #▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Purchaser Lockbox Account:
Account # 50020-61106
KeyBank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ABA #041 001 039
SCHEDULE V
LIST OF THE PROVIDERS
Provider Trade Names State of Incorporation
-------- ----------- ----------------------
ECA Holdings, Inc. Delaware
Active Care
Community Care of America at Canon City
Community Care of America at Delta
Community Care of America at Grand Junction
Community Care of America at Paonia
Community Care of America at Prospect Lake
Family Physicians Health
La Villa Grande
Springs Village Care Center
Community Care of America at Clarinda
Community Care of America at Mediapolis
Community Care of America at Muscatine
Community Care of America at Toledo
Community Care of America at Winterset
Community Care of America at Council Bluffs North
Community Care of America at Council Bluffs South
Community Care of America at Pacific Junction
Community Care of America at Glenwood
Community Care of America at Brighton Place
Community Care of America at ▇▇▇▇▇ Center
Community Care of America at Highland Park
Community Care of America at Arma
Community Care of America at Central Topeka
Community Care of America at Ellinwood
Community Care of America at Tarkio
Community Care of America at Oak Grove
Community Care of America at Grand Island
Community Care of America at Laramie
Community Care of America at Saratoga
Community Care of America at Worland
CCA of Midwest, Inc. Delaware
Community Care of America at ▇▇▇▇▇▇
Doc #RPA.WPD RPTA
Community Care of Nebraska, Inc. Delaware
Community Care of America at Ainsworth
Community Care of America at Ashland
Community Care of America at Aurora
Community Care of America at Blue Hill
Community Care of America at Central City
Community Care of America at ▇▇▇▇▇
Community Care of America at Exeter
Community Care of America at Gretna
Community Care of America at ▇▇▇▇▇▇▇▇▇▇
Community Care of America at Utica
Community Care of America at Waverly
Community Care of Georgia, Inc. Delaware
▇▇▇▇▇ Hospital
Community Care of America of Alabama, Inc. Delaware
Family Care Medical Center of Arcadia
Georgiana Doctor's Hospital
Greensboro Health Care Center
▇▇▇▇▇▇▇▇▇▇ Nursing Home
Reliable Home Health Services, d/b/a
Georgiana Home Health Agency
Rural Health Clinic, d/b/a
Georgiana Health Clinic
H.P. ▇▇▇▇▇▇, M.D., sole proprietorship d/b/a
The Evergreen Clinic
Southgate Village
▇▇▇▇▇▇ Clinic
ECA Properties, Inc. Delaware
Grandview Manor
Luling/SCC, Inc. Georgia
Community Care of America at Luling
Dublin/SCC, Inc. Georgia
Community Care of America at Dublin
Marietta/SCC, Inc. Georgia
Community Care of America at ▇▇▇▇▇▇▇▇
▇▇▇▇▇/SCC, Inc. Georgia
Community Care of America at Macon
College Park/SCC, Inc. Georgia
Community Care of America at College Park
Glenwood/SCC, Inc. Georgia
Community Care of America at Connor
Quality Care of Columbus, Inc. Nebraska
Community Care of America at Columbus
Quality Care of ▇▇▇▇▇, Inc. Nebraska
Community Care of America at ▇▇▇▇▇
W.S.T. Care, Inc. Nebraska
Community Care of America at Milford