ACCOUNTS PURCHASE AND SERVICING AGREEMENT
ACCOUNTS PURCHASE AND SERVICING AGREEMENT dated as of March 14th, 1996,
(this "Agreement") among LEXINGTON HEALTH CARE GROUP LLC, a Connecticut
Corporation in its individual capacity (the "Provider", and, in its capacity as
servicer, the "Servicer"), LEXINGTON HOLDING CORPORATION, a Delaware
corporation, as purchaser (the "Purchaser") and Copelco/American Healthfund,
Inc., a Delaware corporation, as administrator (the "Administrator").
Preliminary Statement
The Provider and the Purchaser intend that from time to time the Provider
will sell and the Purchaser will purchase certain Eligible Accounts originated
by the Provider. The Provider has agreed to act as the Servicer to perform
certain servicing, administrative and collection functions in respect of the
Purchased Accounts. The Purchaser and the Provider desire that the Administrator
perform certain administrative functions in respect of the Purchased Accounts.
(Capitalized terms which are not defined in the text of this Agreement are used
as defined in Exhibit A.)
The parties, intending to be legally bound, hereby agree as follows:
1. Commitment to Sell and Purchase Eligible Receivables. Subject to the
terms and conditions of this Agreement, from the date of this Agreement until
March 13, 1998, the Provider agrees to sell to the Purchaser without recourse
(except to the extent provided herein), and the Purchaser agrees to purchase
from the Provider, all Eligible Accounts originated by the Provider.
2. Purchase Price.
(a) The purchase price of each Batch of Purchased Accounts sold to the
Purchaser will be the Initial Payment plus any Deferred Payment. The Initial
Payment is payable to the Provider on the Purchase Date of the Batch. The amount
of the "Initial Payment" is (i) the Initial ENV of the Batch, minus (ii) the
Loss Discount, the Provider Reserve Discount, the Servicing Fee Discount, and
the Funding Discount.
(b) On each Purchase Date after the Collections (as posted by the
Servicer and reconciled to the satisfaction of the Administrator) have reduced
the Purchaser Capital Investment of the related Batch to zero and have been
otherwise distributed in the manner described in Section 5(h), the excess of
such Collections will be paid to the Provider as a "Deferred Payment".
(c) A sample illustration of the calculation of the Initial Payment
and the Deferred Payment is attached as Schedule 1.
Page 1 of 37
3. Purchase Procedure.
(a) Not less than four (4) Business Days prior to any Purchase Date on
which Eligible Accounts are to be purchased, the Provider will deliver to the
Administrator the computer file data required by the Administrator to enable the
Administrator to process and value the Provider's receivables. Upon completion
of the processing of the receivables data, the Administrator will prepare and
deliver to the Provider an assignment of the Provider's Eligible Accounts to be
sold substantially in the form of Exhibit B (an "Assignment") and a letter
substantially in the form of Exhibit C (a "CFO Letter"). In the event that any
purchase of such Eligible Accounts would cause any Concentration Limit to be
exceeded or would cause any other term or condition hereof to be breached, the
Administrator will select which of such Eligible Accounts are to be purchased on
the next Purchase Date in a manner such that all Concentration Limits and other
terms of this Agreement are adhered to.
(b) No later than 11:00 a.m. (locally prevailing Eastern time) on the
second Business Day prior to each Purchase Date, the Provider will sign and
return to the Administrator the Assignment, the CFO Letter, and the following
documents (the Assignment, CFO Letter and such documents, collectively, a
"Purchased Account File"):
(i) Any documentation of the claim giving rise to such Account
and any other related documents or information which the Administrator may
reasonably request; and
(ii) Any UCC financing statements and releases that the
Administrator may require in respect of each Account, in form acceptable to the
Administrator.
(c) On the Purchase Date, the Purchaser will send the Provider a check
or wire transfer in the amount of the Initial Payment for the Eligible Accounts
in the purchased Batch, and upon such payment all right, title and interest of
the Provider in and to such Accounts will be vested in the Purchaser and the
Purchaser will become the absolute owner of such Accounts ("Purchased
Accounts"). Thereafter the Purchaser may exercise all rights to enforce and
collect such Accounts, except that with respect to any Purchased Accounts which
are Government Accounts, the Provider will collect such Accounts but solely in
its capacity as Servicer hereunder.
(d) Unless otherwise agreed by the Purchaser and the Administrator,
the initial Purchase Date shall be March 14, 1996.
(e) The Administrator's determinations of the ENV, Initial Payment,
Deferred Payment, Collections and other amounts to be determined or calculated
under this Agreement shall, in the absence of a manifest error, be conclusive
among the Administrator, the Provider and the Purchaser.
4. Conditions of Purchase:
Page 2 of 37
(a) The purchase of the first Batch of Eligible Accounts is subject to
the following conditions:
(i) The Purchaser shall have received a certificate from the
Secretary or Assistant Secretary of the Provider certifying the names, titles
and signatures of the officers authorized to sign this Agreement, the
Assignments and the other documents to be delivered hereunder, and certifying
the resolutions authorizing this Agreement and the transactions contemplated
hereby.
(ii) The Administrator shall have received certified copies of
the Provider's charter and bylaws (or operating agreement) and an original
certificate, dated within 30 days prior to such purchase, issued by the
jurisdiction in which the Provider was formed, confirming the legal existence of
the Provider.
(iii) The Provider shall have signed and delivered to the
Administrator such UCC financing statements as the Administrator may require to
perfect the transfer of Accounts to the Purchaser.
(iv) The Provider shall have entered into lockbox agreements
required by Section 5(e).
(v) The Purchaser and the Administrator shall have received an
opinion of counsel with respect to the Provider and the transactions
contemplated by this Agreement which is in form and content satisfactory to
them. Such opinion of counsel shall include an opinion that in the event that
the sale of Accounts is treated as the creation of a security interest, the
Purchaser will have a first priority perfected security interest in the
Accounts.
(vi) The Provider shall have paid the Purchaser an origination
fee equal to two percent (2%) of the Maximum Purchaser Capital Investment set
forth in (b)(i) below. In addition, the Provider shall have paid the
Administrator all fees due in connection with its due diligence review and the
installation of the Value Track System and the Provider shall have reimbursed
the Administrator for its reasonable legal fees (whether incurred with respect
to outside or in-house legal counsel) and expenses incurred in connection with
the preparation and negotiation of this Agreement.
(vii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have executed and delivered to the
Purchaser or its assignee a guaranty of the obligations of the Provider under
this Agreement, in form and substance satisfactory to the Administrator (the
"Affiliate Guaranties").
(viii) The Provider will supply Copelco/American Healthfund, Inc.
internally prepared, consolidating and consolidated financial statements, in
reasonable detail with appropriate notes and prepared in accordance with
Generally Accepted Accounting Principles applied on a consistent basis for the
period ending December 31, 1995 and the year to date.
Page 3 of 37
(ix) The Provider will provide documentation, in form and in
detail satisfactory to the Administrator and its counsel regarding any due and
owing payroll tax obligation including any failure to remit trust taxes under
Section 6672 of the Internal Revenue Code, as amended, for the tax periods
September 30, 1995 and December 31, 1995, together with evidence satisfactory to
the Administrator in its sole discretion that any liability resulting therefrom
has been paid in full, satisfied and released, including by way of illustration,
an agreement of compromise and settlement accepted by the District Director of
the Internal Revenue Service.
(x) The Provider will provide a certified copy of the policy
insuring the life of ▇▇▇▇ Freidler in an amount not less than $1,000,000 naming
the Provider as beneficiary.
(xi) The audited financial statements of the Provider for the
year ending December 31, 1995 (otherwise meeting the requirements set forth in
Section 8(c) hereof) shall, with respect to the Current Ratio and tangible net
worth, reflect values which do not materially differ from the financial
statements for the eleven months ending November 30, 1995; provided, however, so
long as the net income of the Provider as indicated on the December 31, 1995
financial statements is between 3.7 and 2.0 percent of net revenue, then the
Current Ratio will be acceptable provided it is at least 0.82:1 when calculated
pursuant to Section 8(g).
(b) The purchase of each Batch of Eligible Accounts is subject to the
following conditions:
(i) After giving effect to such purchase
(1) until such time as the Provider has collected payments
from Medicare, if applicable, representing at least 120 days of patient service,
the Purchaser Capital Investment shall not exceed 60% of the ENV of all
Purchased Accounts with respect to such claims, and thereafter the Purchaser
Capital Investment shall not exceed 80% of the ENV of all Purchased Accounts
with respect to such claims, in each case, less the aggregate Funding Discounts
with respect to all Purchased Accounts;
(2) the Purchaser Capital Investment shall not exceed 80% of
the aggregate of the ENV of all Purchased Accounts, less the aggregate Funding
Discounts with respect to all Purchased Accounts;
(3) the ENV of all Purchased Accounts shall not exceed the
Concentration Limit;
(4) the ENV of all Purchased Accounts which have not been
billed shall not, in the aggregate, exceed the ENV of all Purchased Accounts
which have been billed.
(5) the Purchaser Capital Investment shall not exceed One
Million Eight Hundred Thousand Dollars, $1,800,000.
Page 4 of 37
(ii) All representations and warranties of the Provider shall be
true both before and after giving effect to such purchase, the Provider shall be
in compliance with this Agreement, and the Provider shall have certified such
matters to the Purchaser and the Administrator.
(iii) The Provider shall continue to be the Servicer under this
Agreement; no event shall have occurred and be continuing which would, with
notice or lapse of time or both, constitute a Termination Event; and the
Termination Date shall not have occurred.
(iv) The Provider shall have signed and delivered to the
Administrator notices, in the form of Exhibit D, directing the Obligors (other
than Obligors with respect to Government Accounts) to make payment to the
Commercial Lockbox; and, in the form of Exhibit E, directing the Obligors with
respect to Government Accounts to make payment to the Government Lockbox.
(v) All Accounts in the Batch shall have been recorded in the
Administrator's Value Track System, and the Administrator shall have received
the Purchased Account Files (as defined in Section 3(b)) with respect to such
Batch.
(vi) The lockbox arrangements required by Section 5(e) shall be
in effect.
(vii) The Provider shall have taken such other actions, including
the delivery of documents and opinions as the Purchaser or the Administrator may
reasonably request.
(viii) [OMITTED].
5. Collections; Deferred Payment.
(a) The Provider will cause all Collections with respect to all of the
Accounts, other than Government Accounts, to be sent directly to the Commercial
Lockbox, and will cause all Collections with respect to all of the Government
Accounts to be sent directly to the Government Lockbox. In the event that the
Provider receives any Collections that should have been sent to the Commercial
Lockbox or the Government Lockbox, the Provider will, promptly upon receipt and
in any event within one Business Day of receipt, forward such Collections to the
Commercial Lockbox or the Government Lockbox, as the case may be, and promptly
notify the Administrator of such event. Until so forwarded, such collections
shall be held in trust for the benefit of the Purchaser.
(b) The Provider shall not withdraw any amounts from the accounts into
which the Collections remitted to the Commercial Lockbox and Government Lockbox
are deposited and shall not change the procedures under the agreements governing
such Lockboxes and accounts.
Page 5 of 37
(c) The Provider will cooperate with the Administrator in the
identification and reconciliation on a daily basis of all amounts received in
the Commercial Lockbox and the Government Lockbox. If any such amount, which in
the aggregate is in excess of five percent (5%) of the Collections for that
Purchase Period, is not identified or reconciled to the satisfaction of the
Administrator within ten Business Days of receipt, the Discount Rate shall be
increased by 400 basis points until such amount is identified or is reconciled
to the satisfaction of the Administrator, as the case may be. In addition, if
any such amount cannot be identified or reconciled to the satisfaction of the
Administrator, the Administrator may utilize its own staff or, if it deems
necessary, engage an outside auditor, in either case at the Provider's expense
(which in the case of the Administrator's own staff shall be in accordance with
the Administrator's then prevailing customary charges, plus expenses), to make
such examination and report as may be necessary to identify and reconcile such
amount. The Purchaser agrees to cause any payments received on Accounts which
were not Purchased Accounts to be promptly returned to the Provider once such
payments are so identified.
(d) The Provider will not send to or deposit in the Commercial Lockbox
or the Government Lockbox any funds other than payments made with respect to
Accounts.
(e) The Provider will enter into lockbox agreements in respect of the
Government Lockbox and Commercial Lockbox in such form and with CoreStates Bank
or such other bank as is acceptable to the Administrator. The Provider shall
instruct the bank maintaining the Government Lockbox and the Commercial Lockbox
to sweep all amounts deposited therein on a daily basis to an account of the
Purchaser or its assignee to be designated by the Administrator (the "Collection
Account").
(f) On each Purchase Date, the Administrator shall determine for each
Batch:
(i) the amount of Collections received on Purchased Accounts
which were made during the preceding Purchase Period (or in respect of Retained
Receipts, were determined to be payments made in respect of Purchased Accounts)
(the "Purchased Receipts");
(ii) any amount of Collections received on Accounts which were
not Purchased Accounts (the "Provider Receipts"); and
(iii) any amount of Collections received during the preceding
Purchase Period representing payments on which no determination has yet been
made as to whether such amounts pertain to Purchased Accounts or are Provider
Receipts, which shall be retained pending such identification (the "Retained
Receipts").
(g) On each Purchase Date, the Administrator shall cause to be
disbursed an amount equal to any Provider Receipts to the Provider.
(h) On each Purchase Date, the Administrator shall cause all Purchased
Receipts in respect of a Batch to be distributed in the following order of
priority:
Page 6 of 37
(O) to the Administrator, an amount equal to the payroll tax
obligation of the Provider, including all penalties and interest to date.
(i) to the Purchaser, the Purchase Period Amount for all
prior Purchase Periods, less all Purchase Period Amounts previously distributed
under this clause (i) with respect to such Batch;
(ii) to the Purchaser, such amount as is necessary to reduce
Purchaser Capital Investment in respect of such Batch to zero;
(iii) to the Purchaser, such amount required to be paid with
respect to Rejected Accounts determined pursuant to Section 7(a);
(iv) to the Administrator, any unreimbursed expenses
required to be paid under Sections 8(j) or 15;
(v) to the Servicer, the Servicing Fee in respect of such
Batch;
(vi) to the Administrator, the Administrator Fee for all
prior Purchase Periods with respect to such Batch, less all Administrator Fees
previously distributed under this clause (vi) with respect to such Batch; and
(vii) to the Provider, the excess amount of such Purchased
Receipts, if any, which remain after the above distributions (such excess is the
Deferred Payment).
Notwithstanding the foregoing, all amounts payable in respect of a
Batch on any Purchase Date with respect to item (v) above (if the Provider is
then the Servicer) and item (vii) above shall not be paid to the Provider, and
instead shall remain in the Collection Account, if the following event (a
"Restricting Event") shall have occurred and be continuing: (A) if the Purchaser
Capital Investment under this Agreement, less the aggregate Funding Discounts
with respect to all such Purchased Accounts, exceeds 80% of the ENV of all
Purchased Accounts, less the aggregate Funding Discounts with respect to all
such Purchased Accounts. Upon the occurrence and during the continuation of a
Restricting Event, the Administrator shall cause all such amounts that would
otherwise have been paid to the Provider under items (v) and (vii) to be
distributed on account of any of items (i) - (iv) and (vi) in respect of any
other Batch or Batches that the Administrator may determine in its sole
discretion. Upon the termination of a Restricting Event, such amounts shall be
payable to the Provider.
6. Representations and Warranties.
(a) As of the date of this Agreement and on each Purchase Date, the
Provider shall be deemed to make each of the representations and warranties set
forth below:
Page 7 of 37
(i) If a corporation or a partnership or limited liability
company, the Provider is duly organized, validly existing and in good standing
as such under the laws of the jurisdiction of its organization, and has all the
power and authority necessary to carry on its business as now conducted and to
enter into and perform the Purchase Documents, or, if a sole proprietorship, the
Provider has the necessary power and capacity under applicable law to carry on
its business as now conducted and to enter into and perform the Purchase
Documents.
(ii) Each Purchase Document has been duly authorized, executed
and delivered on behalf of and by the Provider, and each constitutes a legal,
valid and binding obligation of the Provider, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of rights of creditors
generally and to the application of equitable principles.
(iii) The execution, delivery and performance of the Purchase
Documents by the Provider will not violate any law or regulation or any order,
writ, judgment, award, injunction or decree of any court or governmental
authority, or conflict with any provision of the Provider's organizational
documents (if a corporation or partnership) or any agreement to which the
Provider is a party or by which any of its assets are bound, or result in the
creation of any adverse claim upon any of the Provider's assets, except in favor
of the Purchaser.
(iv) The Provider owns and operates facilities to provide health
care services and has obtained all material licenses, accreditations and
approvals of governmental authorities and all other Persons necessary for the
Provider to own its assets, to carry on its business, to execute, deliver and
perform the Purchase Documents, and to receive payments from the Obligors and,
(A) if organized as a not-for-profit entity, has and maintains its status, if
any, as an organization exempt from federal taxation under Section 501(c)(3) of
the Internal Revenue Code and (B) if the Provider has ever been certified by the
JCAHO (or other nationally recognized organization providing accreditations if
the Provider is not the type of health care entity eligible for accreditation by
the JCAHO), the Provider either has obtained a current certification from the
JCAHO or such other relevant organization or has not had any such certification
withdrawn by JCAHO or such other relevant organizations. The Provider has not
been notified by any such governmental authority or other person during the
immediately preceding 24 month period that such party has rescinded or not
renewed, or intends to rescind or not renew, any such license or approval.
(v) There are no legal actions pending or threatened against the
Provider, its officers or directors, before any court, governmental authority or
arbitrator of any kind, nor has any injunction, writ or order been issued by any
court or governmental authority which could adversely affect the enforceability
of the Purchase Documents or the Provider's ability to perform thereunder.
(vi) Except as described in Section 4(a)(ix), the Provider has
timely filed all required tax returns and has paid or made adequate provision
for the payment of all taxes.
Page 8 of 37
(vii) The Medicaid and Medicare cost reports of each facility and
of the home office of the Provider for all cost reporting periods have been
submitted when and as required to (A) as to Medicaid, the state agency, or other
HCFA-designated agent or agent of such state agency, charged with such
responsibility or (B) as to Medicare, the Medicare intermediary or other
HCFA-designated agents charged with such responsibility. No cost report
indicates and no audit has resulted in any determination that the Provider was
overpaid for Medicaid and Medicare by 5% or more in any of the most recent three
fiscal years covered by such audit.
(viii) The location of the Provider's principal place of
business, chief executive office and all locations where the Provider maintains
records with respect to its Accounts are set forth on the signature page of this
Agreement, and such principal place of business and chief executive office is
not located within the states of Wyoming, Utah, Colorado, New Mexico, Kansas or
Oklahoma. Except as disclosed in writing to the Administrator: (i) the Provider
has not changed any such location in the last five years, (ii) the Provider has
not changed its name in the last five years, and (iii) during such period the
Provider did not use, nor does the Provider now use, any fictitious or trade
name.
(ix) There is no defaulted Debt of the Provider, which (together
with any other debt of the Provider subject to cross-default thereby) has an
outstanding principal amount in excess of $50,000 and during the past three
years the Provider has not defaulted on any Debt in excess of such amount.
(x) The Provider is in compliance in all material respects with
all applicable laws, rules, regulations, and orders with respect to it, its
business and properties and all Accounts and related Contracts (including,
without limitation, all applicable environmental, health and safety
requirements) and all restrictions contained in any agreement, bond, note, or
other agreement or instrument binding on or affecting the Provider or its
property.
(xi) With respect to the Provider or any of its Subsidiaries,
there has occurred no event which has or is reasonably likely to have a material
adverse effect on the Provider's financial condition, business or operations,
including its ability to perform its obligations under the Agreement.
(xii) The Provider is solvent and will not become insolvent after
giving effect to the transactions contemplated by the Agreement; the Provider is
paying its Debts as they become due and has not incurred Debts beyond its
ability to pay such debts as they mature; the Provider, after giving effect to
the transactions contemplated by the Agreement, will have an adequate amount of
capital to conduct its business in the foreseeable future; and the sales of
Purchased Accounts hereunder are made in good faith and without intent to
hinder, delay or defraud present or future creditors of the Provider; and the
Provider's sales of Purchased Accounts to the Purchaser will be made for
reasonably equivalent value and fair consideration.
(xiii) The Government Lockbox and the Commercial Lockbox are the
only lockbox accounts maintained by the Provider, and each Obligor of an
Page 9 of 37
Eligible Account has been directed by the notice attached as Exhibit D to the
Agreement, and is required to, remit all payments with respect to such Account
for deposit in the Commercial Lockbox (other than the Obligors of Government
Accounts which have been directed by the notice attached as Exhibit E to the
Agreement to remit all payments with respect to such Accounts for deposit in the
Government Lockbox).
(xiv) Each Assignment contains a complete and accurate list of
all Eligible Accounts sold by the Provider to the Purchaser as of its Purchase
Date and each CFO Letter contains an accurate summary of all Eligible Accounts
of the Provider as of its date.
(xv) This Agreement and each Assignment constitutes a valid
transfer and assignment to the Purchaser of all right, title and interest of the
Provider in and to the Purchased Accounts now existing and hereafter created and
if, contrary to the intent of the parties, are recharacterized as evidencing a
loan secured by the Purchased Accounts, evidence a first priority perfected
security interest in such Purchased Accounts.
(xvi) All information furnished by or on behalf of the Provider
to the Purchaser or the Administrator in connection with the Agreement or any
transaction contemplated thereby is true and complete in all material respects
when made and does not omit to state a material fact necessary to make the
statements contained therein not misleading when made.
(xvii) The Provider has not done and shall not do anything to
interfere with the collection of the Purchased Accounts and shall not amend or
waive the terms or conditions of any Purchased Account or any related Contract.
(xviii) The Provider has made and will continue to make all
payments to Obligors necessary to prevent any Obligor from offsetting any
earlier overpayment to the Provider against any amounts such Obligor owes on a
Purchased Account.
(xix) For federal income tax reporting and accounting purposes,
the Provider will treat the sale of each Purchased Account pursuant to the
Agreement as a sale, or absolute assignment, of its full right, title and
ownership interest in, such Purchased Account to the Purchaser and the Provider
has not in any other manner accounted for or treated the transactions in
Purchased Accounts.
(xx) Each pension or profit sharing plan to which the Provider is
a party has been funded in accordance with the obligations of the Provider set
forth in such plan.
(xxi) The transaction contemplated by the Agreement will not
cause the Purchaser to be subjected to any obligation to pay any transfer tax to
any governmental authority, including without limitation, any transfer, sales,
use, value-added, documentary stamp or other similar tax.
Page 10 of 37
(b) As of each Purchase Date, the Provider shall be deemed to make,
with respect to each Account sold under this Agreement, each of the
representations and warranties which are set forth below:
(i) Each Purchased Account is an Eligible Account.
(ii) All documents relating to the Purchased Accounts that have
been delivered to the Administrator are true and correct in all material
respects. With respect to each Purchased Account, the Provider has delivered to
the Obligor all requested supporting claim documents and all information set
forth in the ▇▇▇▇ and supporting claim documents is true, complete and correct
in all material respects.
(iii) There is no lien or adverse claim in favor of any third
party, nor any filing against the Provider, as debtor, covering or purporting to
cover any interest in any Purchased Account, except as been released by the
party holding such adverse claim.
(iv) Each Purchased Account is (A) payable in an amount not less
than its Estimated Net Value by the Obligor identified by the Provider as being
obligated to do so, and is recognized as such by the Obligor, (B) the legally
enforceable obligation of such Obligor, and (C) an account receivable or general
intangible within the meaning of the UCC of the state in which the Provider has
its principal place of business, or is a right to payment under a policy of
insurance or proceeds thereof and is not evidenced by any instrument or chattel
paper. There is no payor other than the Obligor identified by the Provider as
the payor primarily liable on any Purchased Account.
(v) No Purchased Account (A) requires the approval of any third
person for such Account to be purchased, (B) is subject to any legal action,
proceeding or investigation (ending or threatened), dispute, set-off,
counterclaim, defense, abatement, suspension, deferment, deductible, reduction
or termination by the Obligor, (C) is past, or within 180 days of, the statutory
limit for collection applicable to the Obligor, or (D) was generated by a
Provider facility located in any of the states of Wyoming, Utah, Colorado, New
Mexico, Kansas or Oklahoma.
(vi) The Provider does not have any guaranty of, letter of credit
support for, or collateral security for, any Purchased Account, other than any
such guaranty, letter of credit or collateral security as has been assigned to
the Purchaser.
(vii) The services constituting the basis of each Purchased
Account (A) were medically necessary for the patient and (B) at the time such
services were rendered, were fully covered by the insurance policy or Contract
obligating the applicable Obligor to make payment with respect to the Purchased
Account (and the Provider has verified such determination), and (C) the patient
received such services in the ordinary course of the Provider's business.
Page 11 of 37
(viii) The fees and charges charged for the services constituting
the basis for the Purchased Accounts were when rendered and are currently
consistent with the usual, customary and reasonable fees charged by other
similar medical service providers in the Provider's community or the community
in which the patient resides, whichever is less, for the same or similar
service.
(ix) The Obligor with respect to each Purchased Account is
located in the United States, and is (A) a party which in the ordinary course of
its business or activities agrees to pay for healthcare services received by
individuals, including, commercial insurance companies and non-profit insurance
companies issuing health, or other types of insurance, employers or unions,
self-insured healthcare organizations, preferred provider organizations, and
health insured, prepaid maintenance organizations, (B) a state, an agency or
instrumentality of a state or a political subdivision of a state, or (C) the
United States or an agency or instrumentality of the United States.
(x) The following have been delivered to the Administrator: (A)
an Assignment regarding payment with respect to each Purchased Account (other
than Government Accounts), along with a notice to the related Obligor; (B) UCC
search reports with respect to the Provider; (C) copies of each of the
accreditations, licenses and certifications referred to in Section 6(a)(iv); and
(D) copies of each of the documents required to be delivered pursuant to Section
4 of this Agreement.
(xi) The insurance policy or Contract obligating an Obligor to
make payment (A) does not prohibit the transfer of such payment obligation from
the patient to the Provider, and (B) is and was in full force and effect and
applicable to the patient at the time the services constituting the basis for
the Purchased Account were performed.
(xii) The representations and warranties made by the Provider in
the Purchase Documents and all financial or other information delivered to the
Administrator with respect to the Provider and the Purchased Accounts do not
contain any untrue statement of material fact or omit to state a material fact
necessary to make the statement made not misleading.
(xiii) A copy of each related Contract to which the Provider is a
party has been delivered to the Purchaser unless the Provider shall have, prior
to the related Purchase Date, certified in an Officer's Certificate that such
delivery is prohibited by the terms of the Contract or by law, and the
circumstances of such prohibition.
(xiv) The Billing Date with respect to such Account is no later
than 45 days after the discharge date or date of service of the Account, except
in the case of an Account payable by Medicare, Medicaid, HMOs or PPOs which
prohibit weekly billing, in which case the Billing Date shall be as required by
the related Contract, or if none exists or is specified, no later than is the
norm in respect of such providers or Obligors, as determined by the
Administrator based on an analysis of payment records.
Page 12 of 37
(xv) Such Account has an Estimated Net Value which, when added to
the Estimated Net Value of all other Accounts owing by the same Obligor and
which constitute Purchased Accounts hereunder, does not exceed any applicable
Concentration Limit.
(xvi) Neither such Account nor the related Contract contravenes
any laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to usury, consumer protection,
truth-in-lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and no party to such
related Contract is in violation of any such law, rule or regulation.
(xvii) As of the applicable Purchase Date, no Obligor on such
Account is bankrupt, insolvent, or is unable to make payment of its obligations
when due, and no other fact exists which would cause the Provider reasonably to
expect that the amount billed to the related Obligor for such Account will not
be paid in full when due.
(c) No representation or warranty made by the Provider with respect to
any Purchased Account will be deemed to constitute any guaranty of collection.
(d) The representations and warranties made in this Section 6 will
survive the sale of any Accounts and the termination of this Agreement.
7. Rejected Accounts; Reserve; Etc.
(a) Rejected Accounts. If any party to this Agreement obtains
knowledge that any representation or warranty with respect to any Purchased
Account is untrue, such party will give prompt written notice thereof to each
other party to this Agreement. If any representation or warranty made with
respect to a Purchased Account is untrue, the Provider will repurchase such
Account (a "Rejected Account") from the Purchaser. Such repurchase will occur on
the next Purchase Date following such written notice. The repurchase price (the
"Repurchase Price") will be equal to the Initial ENV of the Rejected Account
less any collections with respect to such Rejected Account pursuant to Section
5(h)(ii). Upon payment of the Repurchase Price, the Purchaser will reassign the
Rejected Account to the Provider without any representation, warranty or
recourse whatsoever, and the Purchaser shall have no further obligation to the
Provider with respect to such Rejected Account. After receipt of any payment of
all or any part of the Repurchase Price for any Rejected Account, if the
Purchaser is compelled to surrender such payment or any portion thereof, the
Provider will be liable to the Purchaser for the amount of such payment
surrendered.
(b) Disputed Accounts. If a Purchased Account is not collected within
120 days of its Billing Date, the Provider agrees to seek a written confirmation
from the Obligor that the amount payable is not in dispute. If within 30 days
thereafter the Purchased Account is still unpaid and the Provider has not
obtained such confirmation, unless the Obligor is then subject to a bankruptcy,
receivership or similar proceeding, the Purchased Account will be conclusively
presumed to be a Rejected Account due to a breach of a representation or
warranty.
Page 13 of 37
(c) [OMITTED].
(d) Payment for Rejected Accounts. In the event a Rejected Account is
required to be repurchased by the Provider, the Administrator shall cause the
amount of the Repurchase Price to be paid by the following means, in the
following order of priority: (i) an adjustment in the Servicing Fee (provided
that the breach giving rise to the Rejected Account occurred during such time as
the Provider acted as Servicer), (ii) an adjustment in any Deferred Payment due
the Provider, and/or (iii) an adjustment in any Initial Payment. On behalf of
the Purchaser the Administrator may also demand payment of the Repurchase Price
directly from the Provider or may pursue any other rights under this Agreement,
at law or in equity to obtain the Repurchase Price.
(e) Adjustments to Schedule, Etc. From time to time, in each case upon
not less than two Business Days' notice to the Provider, the Administrator may
amend all or any part of Schedule 2 (including, without limitation, the Provider
Reserve Percentage, the Loss Discount Percentage, the Servicing Fee Percentage
and the Concentration Limits) in order to reflect, in its reasonable judgment,
the experience with the Provider (including, by way of illustration, to adjust
for any known or potential offsets by Medicare or Medicaid), the Servicer or the
Purchased Accounts. In addition, upon not less than three days notice to the
Provider, the Administrator may amend all or any part of Schedule 2 in order to
comply with the requirements of any nationally recognized statistical rating
organization or party guaranteeing, rating or insuring payment of any
Securities.
(f) Disclaimer of Right of Repurchase. Except as otherwise set forth
in this Section 7, the Provider shall have no right to repurchase any Purchased
Accounts.
8. Covenants. The Provider agrees as follows:
(a) The Provider will execute such UCC financing statements (naming
the Purchaser as the purchaser/secured party) that the Administrator reasonably
requests with respect to any Purchased Accounts. From time to time, upon
reasonable request, the Provider will furnish any additional information, will
execute and deliver any additional agreements, documents or financing statements
and will take such other actions as the Administrator deems necessary or
desirable to give effect to the Purchase Documents, to evidence and perfect the
assignment of title to the Purchased Accounts or to aid the collection of the
Purchased Accounts.
(b) The Provider will keep its books and records in accordance with
generally accepted accounting principles and will ▇▇▇▇ its books and records,
including any computer files, to indicate which Accounts have been sold to the
Purchaser. From time to time the Purchaser or the Administrator or their
respective agents or designees may visit the offices of the Provider to (i)
examine its books and records and any related accountants' reports, (ii) make
copies or extracts therefrom, (iii) discuss the affairs of such Provider with
its employees, (iv) inspect the property of the Provider and (v) assist the
Provider in performing its obligations under this Agreement. In addition, the
Administrator may discuss the affairs of the Provider with the Provider's
accountants and attorneys.
Page 14 of 37
(c) The Provider will deliver to the Administrator (i) as soon as
available, but in no event later than 45 days after the end of each fiscal
quarter, the combined and combining financial statements of the Provider for
such period and for that portion of its fiscal year through the end of such
period, together with a certificate from the chief financial officer of the
Provider that the Provider and its Affiliates are in compliance with the
financial covenants set forth in Section 8 hereof, (ii) as soon as available but
in no event later than 120 days after the end of the Provider's fiscal year, the
combined and combining consolidated financial statements of the Provider for
such year, accompanied by a report and unqualified opinion of a firm of
independent certified public accountants selected by the Provider and acceptable
to the Administrator, together with a certificate from such accountants that the
Provider and its Affiliates are in compliance with the financial covenants set
forth in Section 8 hereof (provided, however, that in making their examination
such accountants shall not be required to go beyond the bounds of generally
accepted auditing procedures for the purpose of certifying financial statements)
and any letters of comments or recommendations issued by the independent
certified public accountants including, but not limited to, those comments
related to the internal accounting controls of the Provider and (iii) promptly
upon request, such other information concerning the Provider as the
Administrator may from time to time request, including Medicare cost reports and
audits, annual reports, securities law filings and reports to any
securityholders.
(d) The Provider will promptly notify the Administrator in the event
of any legal action, dispute, setoff, counterclaim, defense or reduction that is
or may be asserted by an Obligor with respect to any Purchased Account. The
Provider will make all payments to each Obligor necessary to prevent any setoff
against any amounts payable with respect to any Purchased Accounts.
(e) The Provider will not impede or interfere with the collection of
the Purchased Accounts, amend, waive or otherwise permit or agree to any
deviation from the terms or conditions of any Purchased Account, or purport to
sell, assign or grant a security interest in any Purchased Account. If
additional information with respect to any Account is requested by the Obligor
on such Account, the Provider will promptly provide the same. If any error has
been made, the Provider will promptly correct the same and, if necessary, rebill
the Purchased Account.
(f) The Provider will treat the purchase by the Purchaser of Purchased
Accounts as a sale for all purposes, including tax and accounting. The Provider
will respond to any inquiries about the ownership of any Purchased Accounts by
stating that it is no longer the owner and that it sold such Purchased Accounts
to the Purchaser.
(g) To help assure that the Provider will be able to perform its
obligations under this Agreement, including its obligation to repurchase
Rejected Accounts, the Provider agrees to maintain a pre-tax profit margin of no
less than two percent (2%) of net revenues based each fiscal quarter on the
average of such quarter and the three immediately preceding fiscal quarters and
tested against the consolidated statements of income delivered to the
Administrator pursuant to Section 8(c). The Provider further agrees to maintain
a Current Ratio of at least 0.85:1, 0.95:1, for the fiscal periods ending
December 31, 1995, March 31, 1996, respectively, and thereafter at 1.0:1, to be
computed and tested against the consolidated
Page 15 of 37
statements of income delivered to the Administrator pursuant to Section 8(c).
For purposes of determining the Current Ratio in the preceeding sentence, then
the liability of the Purchaser, in its capacity as Borrower to the
Administrator, in its capacity as Lender, as of any date of determination shall
be treated as a current liability.
(h) The Provider will notify the Administrator (i) immediately of any
default by it under any material agreement, including any financing agreement,
to which it is a party, (ii) immediately upon learning that any representation
or warranty made by the Provider in this Agreement is false in any material
respect, and (iii) 30 days prior to any change of its name or any of its
locations shown on the signature page of this Agreement.
(i) At the request of the Administrator, the Provider will promptly
provide and verify the accuracy of information concerning the Provider and its
Affiliates of the type provided to the Administrator in connection with the
Administrator's decision to enter into this Agreement and such other information
concerning the Provider and its Affiliates as the Administrator may reasonably
request in connection with any offering documents with respect to the
contemplated securitization of, and sale of securities backed by, the Purchased
Accounts (the "Securities"), including, without limitation, all information
necessary to provide full and complete disclosure of all material facts
pertaining to an investment in the Securities in compliance with federal and
state securities and blue sky laws, and such information may be published in
such offering documents and relied upon by the Purchaser and any party arranging
the offering of such Securities by the Purchaser or its assignee. Such
information will be true and complete in all material respects and will not omit
to state a material fact necessary to make the statements contained in such
information, in light of the circumstances under which they were made, not
misleading.
(j) The Provider will pay the reasonable third party expenses of the
Administrator incurred in connection with the transactions contemplated by this
Agreement including, without limitation, wire transfer fees, lockbox fees and
audit fees. In addition, the Provider will pay fees for Accounts analysis or
other business analysis conducted by the Administrator or its representatives
(including, without limitation, verifications of Accounts) in connection with
this Agreement, the need for which shall be determined by the Administrator.
Such fees shall be charged per day, per person, for each person employed to
perform such examinations, together with all costs, disbursements and expenses
incurred by Administrator and the person performing such examination. Such
analysis and audits may be performed on a quarterly basis, or more frequently if
deemed necessary or desirable in the sole discretion of the Administrator.
(k) The Provider will retain the first one million dollars of net
income, determined in accordance with GAAP; provided, however, that the Provider
may make such distributions to its shareholders in an amount not in excess of an
amount equal to the personal income tax (federal and state) levied or to be
levied on such income to the extent such income of the Provider is attributed to
such shareholders without actual distribution thereof.
9. Intent of Parties; Security Interest. The Provider and the Purchaser
confirm that the transactions contemplated by this Agreement are intended as
purchases and sales
Page 16 of 37
rather than loans. In the event that, contrary to such intent, any purchase of
Purchased Accounts is characterized as a loan and not a sale, the Provider will
be deemed to have granted (as of the date of this Agreement), and the Provider
does hereby grant, to the Purchaser a security interest in and to such Purchased
Accounts, all items and amounts deposited and held from time to time in the
Commercial Lockbox, the Government Lockbox, and the Collection Account, all
rights of payment under the Purchased Accounts and the Contracts related
thereto, and all proceeds thereof to secure all amounts to which the Purchaser
is entitled hereunder. In such event this Agreement will be deemed to be a
security agreement.
10. Servicing.
(a) The Purchaser and the Administrator hereby appoint the Servicer as
agent for the Purchaser to service the Purchased Accounts and to enforce the
Purchaser's rights and interests in each Purchased Account and to serve in such
capacity until the termination of its responsibilities pursuant to paragraphs
(g) or (h). The Servicer agrees to perform its duties and obligations set forth
herein. The Servicer may, with the prior written consent of the Administrator,
subcontract with a subservicer (a "SubServicer") for collection, servicing or
administration of the Accounts except, that (i) the Servicer shall continue to
perform its obligations with respect to Collections of Government Accounts, (ii)
the Servicer shall remain liable for the performance of the duties and
obligations of the Servicer, notwithstanding any arrangements it may have with
any SubServicer, (iii) any agreement relating to such subservicing shall be
assignable to the Purchaser, the Administrator or a third party designated by
either of them, and (iv) any agreement that may be entered into relating to the
Purchased Accounts involving a SubServicer shall be between the SubServicer and
the Servicer alone, and the Purchaser and Administrator shall have no
obligations, duties or liabilities with respect to the SubServicer.
(b) The Servicer shall conduct the servicing, administration and
collection of the Purchased and nonpurchased Accounts and shall take, or cause
to be taken, all actions as may be necessary or advisable to service, administer
and collect each Purchased and nonpurchased Account, all in accordance with (i)
customary and prudent servicing procedures for health care accounts receivable
of a similar type, (ii) all applicable laws, rules and regulations (including
Medicare, Medicaid and CHAMPUS regulations), and (iii) without limitation as to
its obligations under the preceding clauses (i) and (ii), no less a standard of
care than that which it applies to Accounts it services for its own account. Any
documents relating to the Purchased Accounts in the possession of the Servicer
shall be held in trust by the Servicer for the benefit of the Purchaser and any
assignee of the Purchaser.
(c) The duties of the Servicer shall include, without limitation:
(i) preparing and submitting claims to, and handling post-billing
liaison with, Obligors;
(ii) arranging for the direct remittance of all Collections to
the Commercial Lockbox (other than Collections with respect to Government
Accounts, which it shall arrange to be remitted directly to the Government
Lockbox) and remitting promptly, and in
Page 17 of 37
any event within one Business Day of receipt, to the Commercial Lockbox or the
Government Lockbox, as the case may be, any Collections the Servicer or the
Provider may receive. Until so remitted, such collections shall be held in trust
for the benefit of the Purchaser;
(iii) maintaining all necessary servicing records with respect to
the Purchased Accounts and providing such reports to the Administrator in
respect of the servicing of the Purchased Accounts as may be required hereunder
or as the Administrator may reasonably request;
(iv) at any time and from time to time at reasonable intervals
and during regular business hours, permitting the Purchaser, the Administrator
or any of their respective agents, designees or representatives, (A) to examine
and make copies of and abstracts from all servicing records, and (B) to visit
the offices and properties of the Servicer for the purpose of examining such
servicing records, and to discuss with employees of the Servicer matters
relating to the Accounts or the Servicer's performance under this Agreement; and
(v) immediately notifying the Administrator of (A) any action,
suit, proceeding, dispute, offset, deduction, defense or counterclaim that, to
the knowledge of the Servicer, is or may be asserted by an Obligor with respect
to any Purchased Account and (B) the occurrence of a Termination Event or an
event which, with notice or lapse of time or both would be a Termination Event
(such notice shall set forth the details of such event and any action which the
Servicer has taken or proposes to take with respect thereto).
(d) Each of the Provider and the Purchaser hereby authorizes the
Servicer (including any successor thereto) to take any and all reasonable steps
in its name and on its behalf necessary or desirable and not inconsistent with
the sale of the Purchased Accounts to the Purchaser, to collect all amounts due
under any and all Purchased Accounts, including, without limitation, endorsing
either of their names on checks and other instruments representing Collections,
executing and delivering any and all instruments of satisfaction, or of partial
or full release or discharge, and all other comparable instruments, with respect
to the Purchased Accounts and, after the delinquency of any Purchased Account,
to commence proceedings with respect to enforcing payment of such Purchased
Accounts, and adjusting, settling or compromising the Account or payment
thereof, to the same extent as the Provider could have done if it had continued
to own such Account. In no event shall the Servicer be entitled to make the
Purchaser or the Administrator a party to any litigation without such party's
express prior written consent.
(e) As compensation for its servicing activities hereunder, the
Servicer shall be entitled to receive a servicing fee equal to the Servicing Fee
Percentage (as set forth in Schedule 2) of the Purchased Receipts minus any
adjustment to such amount pursuant to Section 7(d) (the "Servicing Fee"). Such
Servicing Fee shall be payable as provided in Section 5(b). The Servicer shall
be required to pay for all expenses incurred by the Servicer in connection with
its activities hereunder without reimbursement and shall not be entitled to any
payment other than the Servicing Fee.
Page 18 of 37
(f) The Servicer agrees to comply with all laws, rules and regulations
applicable to it and with all Contracts to which it is a party and to maintain
its existence and all authorizations necessary or desirable to carry out its
duties hereunder. Without the written consent of the Administrator the Servicer
shall not:
(i) sell, assign or otherwise dispose of, or create or suffer to
exist any adverse claim upon or with respect to any Purchased Account or related
Contract, or upon or with respect to the Government Lockbox or the Commercial
Lockbox or any other account to which any Collections of any Purchased Account
are deposited, or assign any right to receive income in respect thereof;
(ii) extend, amend or otherwise modify the terms of any Purchased
Account, or amend, modify or waive any term or condition of any related
Contract;
(iii) make any material change in the character of its business;
(iv) make any change in the instructions to Obligors to make
payment to the Government Lockbox or the Commercial Lockbox; or
(v) merge or consolidate with, acquire all or substantially all
of the assets or capital stock of, or otherwise combine with, any person, or
permit any of its subsidiaries to do so.
(g) The Servicer shall not resign from its duties under this Agreement
except upon a determination that (a) the performance of such duties has become
impermissible under applicable law, and (b) there is no reasonable action which
the Servicer could take to make the performance of such duties permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced as to clause (a) by an opinion of counsel, at the
Servicer's expense, to such effect delivered to the Administrator. No such
resignation shall become effective until a Successor Servicer acceptable to both
the Purchaser and the Administrator shall have assumed the responsibilities and
obligations of the Servicer in accordance with this Agreement.
(h) An "Event of Servicing Termination" shall occur if a Termination
Event occurs pursuant to Section 12(b) or if within any twelve month period two
or more default notices are given by the Administrator under clause (i) of
Section 12(b) (whether or not the Provider or Servicer cures the defaults
described in such notices). Upon the occurrence of an Event of Servicing
Termination the Administrator may appoint another party (a "Successor
Servicer"), which may be the Administrator, to assume the obligations of the
Servicer. In connection therewith, the Successor Servicer shall succeed to and
assume all of the Servicer's responsibilities, rights, duties and obligations as
Servicer (but not in any other capacity) under this Agreement except with
respect to Government Accounts. The Servicer shall provide the Successor
Servicer with all information, documents and records, to the extent required by
the Successor Servicer to perform its duties. The Servicer shall also terminate
its activities as Servicer hereunder, except its collection functions in respect
of Government Accounts, in a manner acceptable to the Administrator and the
Successor Servicer so as to facilitate the transfer
Page 19 of 37
of servicing to the Successor Servicer including, without limitation, accounting
for all funds related to the Purchased Accounts. The Servicer shall terminate
each subservicing agreement that may have been entered into, and the Successor
Servicer shall not be deemed to have assumed any of the Servicer's interest
therein or to have replaced the Servicer as a party to any such agreement.
11. Termination.
Following the Termination Date no Deferred Payments and, if the
Provider is acting as the Servicer, no further Servicing Fees, will be payable
until the Evaluation Date immediately following the month in which Collections
result in reducing the Purchaser Capital Investment to zero. On such Evaluation
Date any amounts that otherwise would have been payable as a Deferred Payment or
Servicing Fee will be disbursed to the Provider. In addition, any Purchased
Accounts which then have an ENV greater than zero shall be transferred to the
Provider. Such disbursement and transfer will constitute the final Deferred
Payment to the Provider with respect to all Batches.
12. Termination Events.
(a) Upon 90 days notice to the Administrator, the Provider may
designate a Termination Date which is earlier than the end of the period
specified in Section 1.
(b) Each of the following events shall constitute a "Termination
Event":
(i) the Provider or the Servicer fails to perform or observe in
any material respect any term, covenant or agreement contained in this Agreement
or any related documents (other than a failure described in clause (xii) below)
and such failure continues for five Business Days after notice by the
Administrator (or in the case of a failure to repurchase Rejected Accounts,
fails to effect such repurchase within the period specified in Section 7(a)), or
any representation or warranty contained in Section 6(a) proves to be incorrect
in any material respect;
(ii) any judgment against the Provider for the payment of money
in the amount of $50,000 or more (other than one covered by adequate insurance
after giving effect to any deductible) remains unpaid or unstayed on appeal for
a period of 30 days or more or any governmental authority files notice of a lien
on any assets of the Provider (other than a lien which is limited to property
other than Accounts and does not have a material adverse effect on the financial
condition or business of the Provider);
(iii) any failure by the Provider to make any payment or deposit
required to be made hereunder or otherwise due the Purchaser or the
Administrator and the continuance of such failure for a period of two Business
Days after the date upon which the Provider becomes aware of or has received
written notice of such failure;
Page 20 of 37
(iv) the Administrator determines that an event which adversely
affects the collectibility of a material portion of the Purchased Accounts has
occurred other than due to the financial inability of any Obligors to pay;
(v) Accounts which became Rejected Accounts during the four weeks
prior to the end of the preceding calendar month, as a percentage of the Initial
ENV of all Purchased Accounts purchased during the same period exceeds five
percent (5%);
(vi) a material adverse change in the business or prospects of
the Provider (including a change in control or shareholders of the Provider) or
in the Obligor reimbursement rates for the Provider's services, including
without limitation, a change in federal or state laws or rules affecting the
provision of, or payment for, medical services;
(vii) a material change occurs in the marketplace for the
delivery or financing of healthcare services which causes a material adverse
change in the business or prospects of the Purchaser or the Administrator, or
any event occurs which results in the early amortization or termination of
commitments made to the Purchaser for the financing or repurchase of Accounts;
(viii) the Purchase Documents cease for any reason to evidence
the transfer to the Purchaser (or its assignees or transferees) of title to, and
ownership of, the Purchased Accounts;
(ix) any change in law prevents the sale of Government Accounts
under this Agreement, or any change in law or accounting principles occurs which
the Administrator believes would jeopardize treatment of the transactions
contemplated by this Agreement as sales;
(x) any instruction or agreement regarding the Commercial Lockbox
or the Government Lockbox or the bank accounts related thereto is amended or
terminated without the written consent of the Administrator, or the Provider or
the Servicer fails, within one Business Day of receipt, to forward Collections
it receives with respect to any Purchased Accounts to the Commercial Lockbox or
the Government Lockbox, as the case may be;
(xi) the Administrator appoints a Successor Servicer pursuant to
Section 10(h);
(xii) the Provider generally fails to pay its debts as such debts
become due, or admits in writing its inability to pay its debts generally, or
makes a general assignment for the benefit of creditors;
(xiii) the Provider is dissolved or liquidated, makes an
assignment for the benefit of creditors, files a petition in bankruptcy, is
adjudicated insolvent or bankrupt, petitions or applies to any tribunal for any
receiver or trustee, commences any proceeding relating to itself under any
bankruptcy, reorganization, readjustment of debt or dissolution or liquidation
law or statute of any jurisdiction, has commenced against it any bankruptcy,
reorganization or similar case or proceeding relating to it or its property
under the law of any
Page 21 of 37
jurisdiction which is not dismissed within sixty (60) days, or the Provider
seeks the appointment of a trustee or receiver or a trustee or receiver is
appointed for itself or any substantial part of its assets or permits such to
continue undismissed for a period of sixty (60) days; or,
(xiv) (A) the average ENV of the Purchased Accounts under all
Affiliate Purchase Agreements during the preceding three calendar months is less
than 120% of the average Purchaser Capital Investment under all Affiliate
Purchase Agreements during such period, or (B) the average ENV of the Purchased
Accounts under all Affiliate Purchase Agreements during any calendar month is
less than 115% of the average Purchaser Capital Investment under all Affiliate
Purchase Agreements during such period, or (C) the average ENV of the Purchased
Accounts under all Affiliate Purchase Agreements during any two consecutive
Purchase Periods is less than 110% of the average Purchaser Capital Investment
under all Affiliate Purchase Agreements during such period (for purposes of this
clause (xvi), the average ENV of the Purchased Accounts during a given period
shall be computed based on the ENV of the Purchased Accounts as of each Purchase
Date during such Period, and the average Purchaser Capital Investment during a
given period shall be computed by (i) treating the daily amount of the ENV of
the Purchased Accounts as the ENV of the Purchased Accounts as of the most
recent Purchase Date, (ii) totaling the daily amounts of the ENV of the
Purchased Accounts for all the days in the period, and (iii) dividing by the
number of days in the period. The average Purchaser Capital Investment shall be
computed in a similar manner.).
(xv) If the Administrator shall receive from either ▇▇▇▇ Freidler
or Stefani Freidler, or both, a notice that they have cancelled either of their
respective guaranties given the Administrator of even date hereof.
(c) If a Termination Event occurs under clauses (i) through (ix),
inclusive, of Section 12(b), then the Administrator or the Purchaser may, by
delivery of a notice to the Provider, declare the Termination Date to have
occurred. If a Termination Event occurs under any other clause of Section 12(b),
then the Termination Date shall be deemed to have occurred automatically without
notice of any kind. Following the occurrence of the Termination Date (whether
under Section 1, Section 12(a) or Section 12(b)) no Deferred Payments and, if
the Provider is acting as the Servicer, no further Servicing Fees shall be
payable, except in either case as provided in Section 11. Also, following the
occurrence of the Termination Date the Purchaser may, in addition to exercising
any and all rights under this Agreement, exercise any rights provided under the
UCC and other applicable law.
(d) If a Termination Event occurs by reason of an event described in
clauses (x), (xi), (xii) or (xiii) of Section 12(b), as soon as practicable but
in any event within three Business Days of any demand by the Administrator, the
Servicer will give the Administrator, any Successor Servicer and their
representatives and designees remote access to the Servicer's information system
for purposes of monitoring, posting payments, and rebilling Purchased Accounts
to the extent deemed necessary by the Administrator in its sole discretion.
(e). Upon the occurrence of a Termination Event, the Discount Rate
shall be increased by 400 basis points.
Page 22 of 37
13. Early Termination Fee. The Provider agrees to pay the Purchaser an
early termination fee if: (x) the Provider declares an early Termination Date as
permitted by Section 12(a) or (y) the Administrator or the Purchaser declares an
early Termination Date upon the occurrence of an event described in any of
clauses (i)-(v) inclusive, (x), (xi) or (xiv) of Section 12(b). The early
termination fee will be payable on the Termination Date and be determined
pursuant to the following schedule, which the Provider confirms is reasonable
under the circumstances:
Early Termination Fee Expressed
Year in Which as a Percentage of Maximum
Termination Date Occurs Purchaser Capital Investment
----------------------- ----------------------------
First Year 2.0%
Second Year 1.0%
14. Waiver; Remedies; Etc. No failure by the Purchaser or the Administrator
to exercise, and no delay in exercising, any right shall operate as a waiver
thereof; nor shall any single or partial exercise preclude any other or future
exercise thereof or of any other right. The remedies provided in this Agreement
are cumulative and not exclusive of any remedies provided by law. Neither this
Agreement nor any Assignment will constitute an assumption by the Purchaser or
the Administrator of any obligation to any Obligor.
15. Indemnification; Expenses.
(a) Each of the Provider and the Servicer severally agrees to
indemnify and hold harmless the Purchaser, the Administrator and their
respective officers, directors and agents, from and against all losses,
liabilities, costs and expenses (including reasonable attorneys' fees) which may
be imposed on, incurred by or asserted against any of them relating to or
arising out of any breach by the Provider or the Servicer, as the case may be,
of any representation, warranty, covenant or agreement contained in any Purchase
Document or, in the case of the Provider, any misstatement or omission in any
information furnished by the Provider pursuant to Section 8(i).
(b) Each of the Provider and the Servicer severally agrees to pay all
out-of-pocket reasonable expenses, including fees and expenses of counsel and
accountants, which may be expended or incurred by the Administrator in enforcing
or attempting to enforce any of the Purchaser's or the Administrator's rights
against such party under the Purchase Documents, which costs, if not paid on
demand, shall bear interest at a rate of 18% per annum or, if less, the highest
rate permitted under applicable law.
(c) The Provider shall pay, on each Purchase Date a claim monitoring
fee in an amount equal to the product of one quarter of one percent (0.25%)
multiplied by the amount of Collections in respect of Purchased Accounts for the
then ended Purchase Period; provided, however, that the Provider shall not be
required to pay on account of the foregoing to the extent the amounts paid in
respect of the foregoing exceeds during each annual period commencing with the
date first above written, 1.5% per annum of the average Purchaser Capital
Investment as
Page 23 of 37
determined using the Purchaser Capital Investment determined on each Purchase
Date. In addition, if as of the close of business on any Purchase Date the
Purchaser Capital Investment, is less than the Minimum Purchaser Capital
Investment, the Provider shall pay, on each Purchase Date a supplemental claim
monitoring fee in an amount equal to $2,000. This Section 15 will survive the
termination of this Agreement.
16. Confidentiality. Except to the extent required by law, the Provider,
the Servicer, the Purchaser and the Administrator agree to maintain the
confidentiality of this Agreement and not to disclose the contents hereof or
provide a copy hereof to any third party, except (i) accountants, lawyers and
financial advisers of the parties who are informed of and agree to be bound by
this Section 16, and (ii) that copies hereof may be provided to any assignee of
the Purchaser, any investors or prospective investors who acquire or may acquire
securities backed by Purchased Accounts and any parties which facilitate the
issuance of such securities, including rating agencies, guarantors and insurers.
The Purchaser and the Administrator agree to maintain the confidentiality of
patient information obtained as a result of its interests in, or duties with
respect to, the Purchased Accounts.
17. Governing Law. This Agreement, each of the other Purchase Documents and
all of the rights and obligations of the parties hereunder and thereunder will
be governed by and interpreted in accordance with the laws of Pennsylvania.
18. Waiver of Jury Trial and Consent to Jurisdiction.
(a) THE PROVIDER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COMMONWEALTH OF PENNSYLVANIA AND IRREVOCABLY
AGREES THAT, SUBJECT TO PURCHASER'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THE PURCHASE DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
THE PROVIDER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH ANY PURCHASE DOCUMENT. THE
PROVIDER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM (OR SUCH OTHER PERSON AS
SHALL ACT AS REGISTERED AGENT OF THE PROVIDER IN PENNSYLVANIA AND AS TO WHOM THE
PROVIDER SHALL PROVIDE NOTICE IN WRITING TO THE PURCHASER) AND SUCH OTHER
PERSONS AS MAY HEREAFTER BE SELECTED BY SUCH PERSON WHICH IRREVOCABLY AGREE IN
WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS
IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY THE PROVIDER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL
TO THE PROVIDER, AS APPLICABLE, IN ACCORDANCE WITH SECTION 19(e). IF ANY AGENT
APPOINTED BY THE PROVIDER REFUSES TO ACCEPT SERVICE, THE PROVIDER HEREBY AGREES
THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN
SHALL AFFECT
Page 24 of 37
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE PURCHASER TO BRING PROCEEDINGS AGAINST THE PROVIDER IN THE
COURTS OF ANY OTHER JURISDICTION.
(b) THE PROVIDER AND THE PURCHASER EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER PURCHASE DOCUMENTS, OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE
RELATIONSHIP ESTABLISHED HEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER PURCHASE DOCUMENTS,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PROVIDER AND THE
PURCHASER EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE
TRANSACTION, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE PROVIDER AND THE PURCHASER EACH FURTHER WARRANTS AND
REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT OR TO ANY OTHER PURCHASE DOCUMENTS. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
19. Miscellaneous.
(a) This Agreement includes the entire agreement of the parties
concerning the subject matter contained herein. This Agreement supersedes any
and all prior agreements and understandings among the parties with respect to
such subject matter.
(b) The Provider agrees that it will not file or join in any
involuntary petition in bankruptcy with respect to the Purchaser or seek the
appointment of any trustee or receiver for any assets of the Purchaser. The
Provider acknowledges that the Administrator has not been engaged by the
Provider to perform any services for it and does not have any fiduciary duty to
the Provider.
(c) Except as otherwise provided in Section 7(e), this Agreement may
only be amended in writing signed by the parties hereto. No waiver under this
Agreement or any Purchase Document will be effective unless it is in writing and
is signed by the waiving party. Any waiver will be effective only in the
specific instance and for the specific purpose for which it is given.
Page 25 of 37
(d) This Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns. Notwithstanding
the foregoing, the Provider may not assign this Agreement or its rights
hereunder without the prior written consent of the Purchaser and the
Administrator. The Purchaser may sell, assign, transfer and create a security
interest in any or all of the assets and interests conveyed to it hereunder,
including the Purchase Documents and the Purchased Accounts, and any purchaser
or assignee may enforce any or all the rights of the Purchaser hereunder without
the consent, participation or joinder of the Purchaser. The Purchaser and the
Administrator may offset against any amounts payable to the Provider or the
Servicer hereunder (including any amounts deposited into the Commercial Lockbox
or the Government Lockbox), any amounts due the Purchaser or the Administrator
from the Provider or the Servicer (except for shortfalls in Collections
resulting other than from a breach of representation and warranty or covenant of
the Provider or a breach of covenant by the Servicer).
(e) All notices, requests, demands, directions, declarations and other
communications provided for in this Agreement must be in writing and shall be
deemed to have been given when delivered by facsimile transmission or overnight
delivery service or five days after mailed by first class registered or
certified mail, postage prepaid, to the address set forth opposite the
recipient's signature on the signature page hereof, or at such other address as
may be furnished from time to time by notice to the other party.
(f) No Person who is not a party to this Agreement or a permitted
assignee hereof will be entitled to rely on, or will have any rights or benefits
under, this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
Address for notices:
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ LEXINGTON HEALTH CARE GROUP LLC
in its individual capacity and as Servicer
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Member
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Page 26 of 37
Locations of Provider:
Country Manor Health Care Center
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Bentley Gardens Health Care Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇-▇▇▇▇
Pond Point Health Care Center
▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fairfield Manor Health Care Center
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Address for notices LEXINGTON HOLDING CORPORATION
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
Address for notices: COPELCO/AMERICAN HEALTHFUND, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ Name ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Berwyn, Pennsylvania, 19312 Title: President
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
DEFINITIONS
"Account" means (a) the third party reimbursable portion of accounts
receivable owing to the Provider arising out of the delivery by the Provider of
medical, surgical, diagnostic or other professional or medical or dental
services, including all rights to reimbursement under any agreements with an
Obligor, (b) all accounts, general intangibles, rights, remedies, guarantees,
and security interests in respect of the foregoing, all rights of enforcement
and collection, all books and records evidencing or related to the foregoing,
all rights under this Accounts Purchase Agreement in respect of the foregoing,
(c) all information and data compiled or derived by the Servicer in respect of
such accounts receivable (other than any such information and data subject to
legal restrictions of patient confidentiality), and (d) all proceeds of any of
the foregoing.
"Administrator Fee" means the fee payable to the Administrator with
respect to a Batch on each Purchase Date as compensation for its duties
hereunder, equal to the product of (a) the Administrator Fee Rate, (b) the
average daily Purchaser Capital Investment with respect to such Batch during
each day of the Purchase Period, and (c) a fraction, the numerator of which is
the total number of days in such Purchase Period and the denominator of which is
360.
"Administrator Fee Rate" means 0%.
"Batch" means all the Accounts purchased from a Provider on a
particular Purchase Date.
"Billing Date" means the last Business Day of the week in which the
services were rendered in the case of out-patient services and the discharge
date in the case of in-patient services.
"Business Day" means any day other than a Saturday, Sunday or any day
on which banking institutions in New York City are permitted or required by law,
executive order or governmental decree to remain closed or a day on which either
the Purchaser or the Administrator is closed for business.
"CHAMPUS" means the Civilian Health and Medical Program of the
Uniformed Service, a medical benefits program supervised by the U.S. Department
of Defense.
"Collections" means with respect to any Purchased Account, all cash
collections on such Account (including any cash amounts representing the
Repurchase Price of any Rejected Account, but not including any reduction in the
Initial Payment in respect of the Repurchase Price of any Rejected Account).
"Collection Account" is defined in Section 5(e).
"Current Ratio" means the ratio of the current assets of the Provider
to the current liabilities of the Provider as determined in accordance with
generally accepted accounting principles. For purposes of this calculation the
Purchaser Capital Investment outstanding as of the date of the calculation will
be considered a current liability.
"Commercial Lockbox" means a lockbox in the name of a person (other
than the Provider) designated by the Administrator and maintained at CoreStates
Bank, or such other bank as is acceptable to the Administrator, to which
Collections on all Accounts, other than Government Accounts, are sent.
"Concentration Limits" means the various financial tests, expressed as
percentages of the then current ENV of all Purchased Accounts, described on
Schedule 2 as in effect from time to time.
"Contract" means an agreement by which an Obligor is obligated to pay
for services rendered to patients of a Provider.
"Debt" means all indebtedness for borrowed money, trade debt, debts of
others guaranteed by the Provider or secured by its assets, obligations under
capitalized leases and all other obligations which are or should be treated as
indebtedness under generally accepted accounting principles.
"Defaulted Account" means a Purchased Account as to which (a) the
Initial ENV has not been received in full as Collections within 150 days of the
Billing Date, or (b) the Administrator reasonably deems uncollectable because of
the bankruptcy or insolvency of the Obligor or any other reason.
"Deferred Payment" is defined in Section 2(b).
"Delinquent Account" means a Purchased Account as to which the Initial
ENV has not been received in full as Collections within 120 days of the Billing
Date.
"Discount Rate" is an annual rate equal to the sum of the annual rate
in effect in the London Interbank market applicable to one month deposits of
U.S. dollars as reported in the Wall Street Journal on the second Business Day
preceding the date of determination, plus 4.5%. If the Wall Street Journal is
not published on such Business Day or does not report such rate, such rate shall
be as reported by such other publication or source as the Administrator may
select.
"Eligible Account" means at any time, an Account:
(a) which is a liability of an Obligor which is (i) during such time
as the Provider is the Servicer, (A) Medicare, or (B) Medicaid, other than
those listed in Schedule 2,
(b) the Obligor of which is not an affiliate (meaning a party which
directly or indirectly controls, or is controlled by or under common control
with, a party hereto) of any of the parties hereto,
(c) the Obligor of which has received a letter substantially in the
form of Exhibit D, (in the case of all Accounts other than Government Accounts),
or a letter substantially in the form of Exhibit E (in the case of all
Government Accounts),
(d) in an amount not less than $5 nor more than $50,000, denominated
and payable in dollars in the United States,
(e) as to which the representations and warranties of Section 6 are
true,
(f) having a Billing Date no more than thirty days prior to the
Purchase Date (except in the case of the first Purchase Date, the Billing Date
shall be no more than 120 days prior to the Purchase Date),
(g) which does not arise from the delivery of cosmetic surgery
services or psychiatric services or which is not a workers' compensation claim
(unless expressly approved by the Administrator) or arise from any services
delivered for injury sustained in a motor vehicle accident, and
(h) which complies with such other criteria and requirements as may be
specified from time to time by the Administrator in its discretion.
"Estimated Net Value" or "ENV" means on any date of calculation with
respect to any Account or Batch an amount equal to the anticipated cash
collections as calculated by the Administrator using the Value Track System
(which system periodically adjusts such amount to reflect the Administrator's
evaluation of the performance of similar Accounts and to reflect payments
received with respect thereto), except that if the Administrator determines that
all Obligor payments with respect to an Account have been made or if an Account
has become a Defaulted Account, the ENV of such Account shall be zero.
"Evaluation Date" means the 10th of each month, or if the 10th is not a
Business Day, the next Business Day.
"Event of Servicing Termination" is defined in Section 10(h).
"Funding Discount" is an amount equal to (a) the sum of (i) the
Initial ENV of the Batch, minus (ii) the Loss Discount, the Provider Reserve
Discount and the Servicing Fee Discount, multiplied by (b)the Funding Discount
Percentage.
"Funding Discount Percentage" is a variable rate, determined on the
Purchase Date by the Administrator, equal to (a) the Discount Rate, multiplied
by (b) a fraction the numerator of which is the number of weeks which the
Administrator reasonably anticipates will be needed for the Collections on the
Batch to equal its Initial ENV and the denominator of which is 52.
"Government Accounts" means Accounts on which any federal or state
governmental unit is the Obligor.
"Government Lockbox" means a lockbox in the name of the Provider
maintained at CoreStates Bank, N.A. or such other bank as is acceptable to the
Administrator, to which Collections on all Accounts that are Government Accounts
are sent.
"Initial ENV" means with respect to any Account or Batch, the
Estimated Net Value as of the date of purchase of such Account or Batch.
"Initial Payment" is the amount described in Section 2(a).
"JCAHO" means the Joint Committee for Accreditation of Health Care
Organizations, a nationally recognized organization providing accreditations to
hospitals and other healthcare facilities, or any successor entity charged with
performing its functions.
"Loss Discount" means an amount equal to the product of the Initial
ENV of the Batch and the percentage identified in Schedule 2 as the "Loss
Discount Percentage," as such Schedule is in effect from time to time.
"Maximum Purchaser Capital Investment" is defined in Section
4(b)(i)(5).
"Minimum Purchaser Capital Investment" means $1,000,000.
"Obligor" means the party primarily obligated to pay an Account.
"Person" means any individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, joint
venture, court or government or political subdivision or agency thereof, or
other entity.
"Provider Receipts" is defined in Section 5(f)(ii).
"Provider Reserve Discount" means an amount equal to the product of
the Initial ENV of the Batch and the Percentage identified in Schedule 2 as the
"Provider Reserve Percentage," as such Schedule is in effect from time to time.
"Purchase Date" means the first Business Day of each Purchase Period,
whether or not Eligible Receivables are purchased on such date.
"Purchase Documents" means this Accounts Purchase and Servicing
Agreement and all Assignments and CFO Letters.
"Purchase Period" means the weekly period beginning on the first
Purchase Date and ending on the first day prior to the weekly anniversary
thereof and each like weekly period thereafter, or such other weekly period as
the Administrator may subsequently designate as the Purchase Period for purposes
of this Agreement.
"Purchase Period Amount" means, in respect of a Batch and Purchase
Period, the product of (a) the Discount Rate (determined on the first day of the
Purchase Period) (b) the average daily Purchaser Capital Investment with respect
to such Batch during each day of the Purchase Period and (c) a fraction, the
numerator of which the total number of days in such Purchase Period and the
denominator of which is 360.
"Purchased Account File" is defined in Section 3(b).
"Purchased Accounts" is defined in Section 3(c).
"Purchased Receipts" is defined in Section 5(f)(i).
"Purchaser Capital Investment" means as of any Purchase Date an amount
equal to the sum of the Initial Payments for all Purchased Accounts (without
giving effect to any reductions in such Initial Payments for the Repurchase
Price of Rejected Accounts) less the
amount of all Collections on such Purchased Accounts previously applied in the
reduction of the Purchaser Capital Investment pursuant to Section 5(h).
"Rejected Account" is defined in Section 7(a).
"Restricting Event" is defined in Section 5(h).
"Retained Receipts" is defined in Section 5(f)(iii).
"Securities" is defined in Section 8(i).
"Servicing Fee" is defined in Section 10(e).
"Servicing Fee Discount" means an amount equal to the product of the
Initial ENV of the Batch and the percentage identified in Schedule 2 as the
"Servicing Fee Percentage," as such Schedule is in effect from time to time.
"Termination Date" means the date specified in Section 1, or such
earlier date that the Termination Date is declared or automatically occurs under
Section 12.
"Termination Event" is defined in Section 12.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"Value Track System" means the proprietary business system used by the
Administrator to value and record the status of Accounts.
EXHIBIT B
ASSIGNMENT
Re: Provider: Date:__________________
Reference is made to the Accounts Purchase and Servicing Agreement
dated as of March___1996 (the "Agreement") among Lexington Health Care Group LLC
in its individual capacity (the "Provider") and in its capacity as servicer (the
"Servicer"), Lexington Holding Corporation, (the "Purchaser"), and
Copelco/American Healthfund, Inc., (the "Administrator") and the CFO Letter
dated ______________, 19__ (a copy of which is attached). Capitalized terms used
herein but not defined herein have the meanings assigned such terms in the
Agreement.
The Provider hereby acknowledges receipt of $_________________
representing the Initial Payment for Eligible Accounts being sold by the
Provider, net of adjustments under the Agreement, which are the subject matter
of the attached CFO Letter (the "Purchased Accounts"). The Provider hereby
certifies that: (i) the representations and warranties of the Provider set forth
in Section 6 of the Agreement are true and correct; (ii) no event has occurred
and is continuing, or would result from such purchase or from the application of
the proceeds therefrom, which constitutes a Termination Event or would
constitute a Termination Event but for the requirement that notice be given or
time elapse or both; and (iii) the Provider is in compliance with the terms and
conditions of the Agreement.
The Provider hereby sells, assigns, transfers and sets over to the
Purchaser, all of the Provider's right, title and interest in, to and under (a)
the Purchased Accounts, (b) all distributions with respect thereto and (c) all
proceeds of the foregoing. The foregoing assignment is given in furtherance of
Section 3(c) of the Agreement.
This Assignment and all of the rights and obligations of the parties
hereunder shall be governed by and interpreted in accordance with the laws of
Pennsylvania.
Lexington Health Care Group LLC
By:______________________________________
Name:
Title:
EXHIBIT D
NOTICE TO OBLIGOR
[Name and Address of Obligor] Date:_________________
Dear___________:
Lexington Health Group LLC (the "Provider") has established a lockbox (the
"Lockbox") for collection of accounts receivable (the "Accounts") on which [name
of Obligor] owes payment to the Provider. Accordingly, you are hereby instructed
to remit all payments on Accounts of which you are, or have been, the obligor to
the Provider to CoreStates Bank - Lockbox #_______________, P.O. Box
8500-________ Philadelphia, PA 19178-_________ You should, of course, not
forward cash remittances or other items of intrinsic value to the Lockbox.
The Provider has entered into an agreement with Lexington Holding
Corporation and Copelco/American Healthfund, Inc. under which certain of the
Accounts will be sold, from time to time, to Lexington Funding Corporation.
Lexington Holding Corporation may, in turn, from time to time, sell, assign or
pledge such Accounts as it deems appropriate.
It is contemplated that the Accounts will continue to be serviced by
the Provider.
Sending payment on such Accounts to the Lockbox will discharge your
obligation on such Accounts (to the extent of such payment), whether or not
ownership has been transferred to Lexington Funding Corporation or any assignee
thereof.
This direction may not be changed or revoked without the prior written
consent of the bank named above.
Very truly yours,
LEXINGTON HEALTH GROUP LLC
By:______________________________________
Name:
Title:
EXHIBIT E
NOTICE TO GOVERNMENTAL AGENCY/INTERMEDIARY
[Name and Address] Date:__________________
Dear__________:
We (the "Provider") have established a lockbox (the "Lockbox") in our
name for collection of accounts receivable (the "Accounts") due the Provider
under the [Medicare/Medicaid/CHAMPUS] program. Accordingly, you are hereby
instructed to remit all payments on Accounts of which you are, or have been, the
obligor to the Provider to CoreStates Bank - Lockbox Account #______________,
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Sending payment on such Accounts to the Lockbox will discharge your
obligation on such Accounts (to the extent of such payment).
This direction may not be changed or revoked without the prior written
consent of the bank named above.
Very truly yours,
LEXINGTON HEALTH GROUP LLC
By:______________________________________
Name:
Title: