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EXHIBIT 10.2
FORM OF SALE AND SUBSERVICING AGREEMENT
by and among
HEALTHPLAN SOUTHEAST, INCORPORATED, BETTER HEALTH PLAN, INC.,
COASTAL GOVERNMENT SERVICES, INC., COASTAL CORRECTIONAL
HEALTHCARE, INC. and INTEGRATED PROVIDER NETWORKS, INC.
as Sellers and Subservicers,
NPF-WL, INC.,
as Purchaser,
and
NATIONAL PREMIER FINANCIAL SERVICES, INC.
as Servicer
NOTE -- All Agreements are substantially identical except for names, dates and
purchase commitments. The aggregate purchase commitments for the five
Agreements totals $36 million.
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SALE AND SUBSERVICING AGREEMENT
Dated as of June 6, 1997
by and among
HEALTHPLAN SOUTHEAST, INCORPORATED
as Seller and as Subservicer,
NPF-WL, INC.,
as Purchaser,
and
NATIONAL PREMIER FINANCIAL SERVICES, INC.
as Servicer
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................................2
Section 1.1 Certain Defined Terms.............................................................................2
ARTICLE II PURCHASE AND SALE; ESTABLISHMENT OF ACCOUNTS.........................................................12
Section 2.1 Purchase and Sale................................................................................12
Section 2.2 Conveyance of Receivables........................................................................12
Section 2.3 Establishment of Accounts; Conveyance of Interests Therein; Investment...........................14
Section 2.4 Grant of Security Interest.......................................................................15
Section 2.5 Further Action Evidencing Purchases..............................................................16
Section 2.6 Eligible Receivables.............................................................................16
Section 2.7 Offsets..........................................................................................16
Section 2.8 Administrative Fee...............................................................................17
Section 2.9 Assignment of Agreement..........................................................................17
ARTICLE III CONDITIONS OF PURCHASES.............................................................................17
Section 3.1 Conditions Precedent to Effectiveness of Agreement...............................................17
Section 3.2 Conditions Precedent to All Purchases............................................................19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER.........................................................20
Section 4.1 Representations and Warranties as to the Seller..................................................20
Section 4.2 Representations and Warranties of the Seller as to Purchased Receivables..........................24
Section 4.3 Repurchase Obligations...........................................................................27
ARTICLE V GENERAL COVENANTS OF THE SELLER.......................................................................27
Section 5.1 Affirmative Covenants of the Seller..............................................................27
Section 5.2 Reporting Requirements of the Seller.............................................................28
Section 5.3 Negative Covenants of the Seller.................................................................29
ARTICLE VI ACCOUNTS ADMINISTRATION..............................................................................30
Section 6.1 Collection Account...............................................................................30
Section 6.2 Determinations of the Servicer...................................................................30
Section 6.3 Distributions from Accounts......................................................................31
Section 6.4 Allocation of Moneys Following Termination Date..................................................31
Section 6.5 Accounting.......................................................................................32
ARTICLE VII APPOINTMENT OF THE SUBSERVICER AND SUCCESSOR SERVICER...............................................32
Section 7.1 Appointment of the Subservicer...................................................................32
Section 7.2 Additional Subservicers..........................................................................32
Section 7.3 Duties and Responsibilities of the Subservicer...................................................33
Section 7.4 Authorization of the Servicer....................................................................35
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Section 7.5 Subservicing Fee; Subservicing Expenses..........................................................36
Section 7.6 Annual Statement as to Compliance................................................................36
Section 7.7 Transfer of Servicing Between Subservicer and Servicer..........................................36
Section 7.8 Subservicer Not to Resign........................................................................37
Section 7.9 Appointment of the Successor Subservicer.........................................................37
Section 7.10 Duties of the Subservicer to the Successor Servicer.............................................37
Section 7.11 Effect of Termination or Resignation............................................................38
ARTICLE VIII EVENTS OF SELLER DEFAULT...........................................................................39
Section 8.1 Events of Seller Default.........................................................................39
ARTICLE IX INDEMNIFICATION......................................................................................41
Section 9.1 Indemnities by the Seller........................................................................41
Section 9.2 Security Interest................................................................................42
ARTICLE X MISCELLANEOUS.........................................................................................42
Section 10.1 Notices, Etc....................................................................................42
Section 10.2 Remedies........................................................................................42
Section 10.3 Binding Effect; Assignability...................................................................43
Section 10.4 Costs, Expenses and Taxes.......................................................................43
Section 10.5 No Proceedings..................................................................................44
Section 10.6 Amendments; Waivers; Consents...................................................................44
Section 10.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL....................................44
Section 10.8 Execution in Counterparts; Severability.........................................................45
Schedule 1 Ineligible Medicaid States
Schedule 2 Ineligible Blue Cross/Blue Shield Plans
Schedule 3 Seller's Payor and Provider Numbers
Schedule 4 List of Names Under Which Seller is Doing
Business and Addresses at Which Seller is Doing Business
Exhibit A Form of Notice to Payors
Exhibit B Form of Lockbox Account Agreement
Exhibit C Form of Purchase Assignment
Exhibit D Form of Officer's Certificate for the Seller
Exhibit E Form of Opinion of Counsel for the Seller
Exhibit F Form of Repurchase Assignment
Exhibit G Form of Section 6.2 Determination of the Servicer
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SALE AND SUBSERVICING AGREEMENT (the "Agreement"), dated as of
June 6, 1997, by and among HEALTHPLAN SOUTHEAST, INCORPORATED, a Florida
corporation, as Seller (as such, together with its successors and permitted
assigns, the "Seller") and as Subservicer hereunder (as such, together with its
successors and permitted assigns, the "Subservicer"), NPF-WL, INC., an Ohio
corporation, as Purchaser (as such, together with its successors and permitted
assigns, the "Purchaser"), and NATIONAL PREMIER FINANCIAL SERVICES, INC., an
Ohio corporation, as Servicer (as such, together with its successors and
permitted assigns, the "Servicer").
WITNESSETH:
WHEREAS, the Seller desires to sell certain health care
receivables originated by the Seller;
WHEREAS, the Purchaser is a special purpose corporation formed
for the purpose of purchasing certain health care receivables and funding such
purchases with the proceeds from the issuance of promissory notes;
WHEREAS, the Seller and the Purchaser intend that the Purchaser
will purchase certain health care receivables from the Seller from time to time;
WHEREAS, the Purchaser has appointed the Servicer to perform
certain servicing, administrative and collection functions in respect of the
receivables purchased by the Purchaser under this Agreement (the "Purchased
Receivables");
WHEREAS, in order to effectuate the purposes of this Agreement,
the Purchaser and the Servicer desire that the Subservicer be appointed to
perform certain servicing, administrative and collection functions in respect of
the Purchased Receivables;
WHEREAS, the Seller has been requested and is willing to act as
the Subservicer; and
WHEREAS, the Seller acknowledges and consents to the Purchaser's
anticipated assignment to an affiliate of all its right, title, interest and
obligations with respect to this Agreement.
NOW, THEREFORE, the parties agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS.
As used in this Agreement, the following terms shall have the
following meanings:
"ACCREDITATION" means certification by the JCAHO that a facility
fully complies with the standards set by the JCAHO for operation of such
facility.
"ADDITIONAL SUBSERVICER" has the meaning specified in Section
7.2.
"ADDITIONAL SUBSERVICING AGREEMENT" has the meaning specified in
Section 7.2.
"ADVERSE CLAIM" means any claim of ownership or any lien,
security interest or other charge or encumbrance, or other type of preferential
arrangement having the effect of a lien or security interest.
"ADMINISTRATIVE FEE" means, as of any Purchase Date, an amount
equal to 7.5% of the Net Value of Purchased Receivables purchased on such
Purchase Date, deposited, for subservicing expenses, with the Servicer,
reimbursable, from time to time, in whole or in part, to the Seller in its
capacity as Subservicer by payment of the Subservicing Fee.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person within the meaning of control under Section 15 of the
Securities Act of 1933.
"BASE RATE" means, as of any Purchase Date, a percentage equal to
12.5% per annum.
"BILLED AMOUNT" means, with respect to any Receivable the amount
billed to the related Payor with respect thereto prior to the application of any
Contractual Allowance.
"BILLING DATE" means the date on which the claim with respect to
a Receivable was submitted to the related Payor.
"BLUE CROSS/BLUE SHIELD CONTRACT" means any and all agreements
currently in force between the Seller and any Blue Cross/Blue Shield plan.
"BUSINESS DAY" means any day of the year other than a Saturday,
Sunday or any day on which banks are required, or authorized, by law to close in
the State of Ohio or the State of New York.
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"CHAMPUS" means the Civilian Health and Medical Program of the
Uniformed Service, a program of medical benefits covering retirees and
dependents of a member or a former member of a uniformed service, provided,
financed and supervised by the United States Department of Defense established
by 10 USC ▇▇.▇▇. 1071 et seq.
"CHAMPUS RECEIVABLE" means a Receivable payable pursuant to
CHAMPUS.
"CHAMPUS REGULATIONS" means collectively, all regulation of the
Civilian Health and Medical Program of the Uniformed Services including (a) all
federal statutes (whether set forth in 10 USC 1071 or elsewhere) affecting
CHAMPUS; and (b) all applicable provisions of all rules, regulations (including
32 CFR 199), manuals, orders, and administrative, reimbursement and other
guidelines of all Governmental Authorities (including, without limitation, HSS,
the Department of Defense, the Department of Transportation, the Assistant
Secretary of Defense (Health Affairs), and the Office of CHAMPUS, or any Person
or entity succeeding to the functions of any of the foregoing) promulgated
pursuant to or in connection with any of the foregoing (whether or not having
the force of law), in each case as may be amended, supplemented or otherwise
modified from time to time.
"CLOSING DATE" means June 6, 1997.
"COLLECTION ACCOUNT" means the trust account maintained with the
Trustee described in Section 2.3(c).
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable.
"COMMERCIAL LOCKBOX ACCOUNT" has the meaning specified in Section
2.3(a).
"CONCENTRATION LIMITS" means: the following expressed as a
percentage or Dollar amount of the aggregate Net Value of the Purchased
Receivables then outstanding:
(a) Receivables payable by Blue Cross and Blue Shield Payors -
20%;
(b) Receivables for which any one commercial insurer or HMO,
PPO or other similar managed care program or Provider Payor
is Payor during the time such Payor has a long-term rating
of A or better but less than AA from D&P or if such Payor
is not rated by D&P, then which has a long-term rating of A
or better but less than AA from S&P - 8%;
(c) Receivables payable by all commercial insurance Payors,
HMO, PPO or other similar managed care program Payors and
Provider Payors which are unrated or which have a long-term
rating of below A from D&P or, if unrated by D&P, which
have long-term ratings below A from S&P - 1%; and
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(d) Receivables payable by any one state Medicaid program does
not exceed the greater of (i) $5,000,000 and (ii) 50%.
"CONTRACT" means an agreement (or agreements), pursuant to, or
under which, a Payor shall be obligated to pay for services rendered or
merchandise administered by the Seller from time to time.
"CONTRACTUAL ALLOWANCE" means an amount verified by the Servicer
in accordance with historical liquidation experience (actual collections
received on the Billed Amount within 180 days of the Billing Date) and current
reimbursement schedules by Payor Class by which the amount of charges billed to
any Payor are to be adjusted to reflect the entitled reimbursement pursuant to
any contract or other arrangement between such Payor and the Seller.
"CREDIT DEFICIENCY" has the meaning specified in Section 6.2(d).
"CURRENT NET VALUE AMOUNT" has the meaning specified in Section
6.2(c).
"DEBT" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) obligations of such Person to pay the
deferred purchase price of property or services, (d) obligations of such Person
as lessee under leases which have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases, (e)
obligations secured by any lien or other charge upon property or assets owned by
such Person, even though such Person has not assumed or become liable for the
payment of such obligations, (f) obligations of such Person under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (a) through (e) above, and (g) liabilities in respect of unfunded vested
benefits under plans covered by Title IV of the Employee Retirement Income
Security Act of 1974, as amended.
"DEFAULTED RECEIVABLE" means a Receivable as to which, on any
Determination Date (a) any part of the Net Value thereof remains unpaid for more
than 180 days from the Billing Date for such Receivable; or (b) the Payor
thereof has taken any action, or suffered any event to occur, of the type
described in Section 8.1(c); or (c) the Servicer or the Subservicer otherwise
deems any part of the Net Value thereof to be uncollectible.
"DETERMINATION DATE" means the Business Day preceding the Purchase
Date of each week.
"DISCHARGE DATE" means, with respect to any Receivable, the date
of discharge by a Seller of the related patient, in the case of an in-patient
and the Billing Date, in the case of an out-patient and a Receivable originated
by a nursing home.
"DOLLAR" and "$" means lawful money of the United States of
America.
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"DRG CODE" means the Diagnosis Related Group code assigned by
HCFA.
"D&P" means Duff & ▇▇▇▇▇▇ Credit Rating Co., its successors and
assigns.
"ELIGIBLE PAYOR" means a Payor which is
(a) (i) a commercial insurance company, organized under the
laws of any jurisdiction in the United States, having its
principal office in the United States; (ii) a Blue
Cross/Blue Shield plan other than those listed on Schedule
2; (iii) during such time as the Seller is the Subservicer
hereunder, (A) Medicare, (B) Medicaid plans other than
those administered by the states listing on Schedule 1, or
(C) CHAMPUS; (iv) a HMO, PPO or other similar managed care
program, each organized under the laws of any jurisdiction
in the United States, having its principal office in the
United States; (v) a Provider Payor provided that a
Provider Payor shall not be an Eligible Payor without the
consent of the Servicer or (vi) a Governmental Authority
Payor;
(b) not an Affiliate of any of the parties hereto;
(c) in the case of (a) (i), (ii), (iv) and (v) above, in
receipt of a letter substantially in the form of Exhibit A
hereto; and
(d) not subject to bankruptcy or insolvency proceedings at the
time of sale of the Receivable to the Purchaser.
"ELIGIBLE RECEIVABLE" means, at any time, a Receivable as to which
the representations and warranties of Section 4.2 are true and correct in all
respects at the time of Purchase.
"ELIGIBLE RECEIVABLE AMOUNT" means, with respect to any Eligible
Receivable, an amount equal to its Billed Amount after giving effect to any
Contractual Allowance with respect to such Eligible Receivable.
"EQUITY ACCOUNT" means the trust account of the Purchase
maintained with the Trustee titled "Equity Account."
"EVENT OF SELLER DEFAULT" has the meaning specified in Section
8.1.
"GOVERNMENTAL AUTHORITY" means the United States of America,
federal, any state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"GOVERNMENTAL CONSENTS" has the meaning specified in Section
4.1(h).
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"GOVERNMENTAL RECEIVABLE" means a Receivable generated under a
written contract with a Governmental Authority.
"HCFA" means the Health Care Financing Administration, an agency
of the HHS charged with administering and regulating, inter alia, certain
aspects of Medicaid and Medicare.
"HEALTH FACILITY LICENSE" means a license issued by a state health
agency or similar agency or body certifying that the facility has been inspected
and found to comply with applicable laws for operating such a health facility.
"HHS" means the Department of Health and Human Services, an agency
of the Federal Government of the United States.
"HMO" means a health maintenance organization.
"INDEMNIFIED AMOUNTS" has the meaning specified in Section 9.1(a).
"INDEMNIFIED PARTY" has the meaning specified in Section 9.1(a).
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
as amended.
"INVESTMENT INCOME" means income of any nature from the investment
or deposit of funds in the Seller Credit Reserve Account or Offset Reserve
Account or any other reserve or account required hereunder.
"JCAHO" means the Joint Commission for Accreditation of Health
Care Organizations.
"LOCKBOX ACCOUNT" has the meaning specified in Section 2.3(a).
"LOCKBOX ACCOUNT AGREEMENT" means an agreement among the Servicer
and a depository institution satisfactory to the Purchaser with respect to the
Commercial Lockbox Account and among the Seller, the Servicer and a depository
institution satisfactory to the Purchaser with respect to the Medicare Lockbox
Account, in each case (a) providing that all Collections therein shall be
remitted directly by such depository institution to the Collection Account
within one Business Day of receipt and (b) otherwise satisfactory to the
Purchaser.
"MEDICAID" means the medical assistance program established by
Title XIX of the Social Security Act (42 USC ▇▇.▇▇. 1396 et seq.) and any
statutes succeeding thereto.
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"MEDICAID CERTIFICATION" means certification of a facility by HCFA
or a state agency or entity under contract with HCFA that the facility fully
complies with all the conditions of participation set forth in Medicaid
Regulations.
"MEDICAID PROVIDER AGREEMENT" means an agreement entered into
between a federal or state agency or other such entity administering the
Medicaid program and a health care facility under which the health care facility
agrees to provide services or merchandise for Medicaid patients in accordance
with the terms of the agreement and Medicaid Regulations.
"MEDICAID RECEIVABLE" means a Receivable payable pursuant to a
Medicaid Provider Agreement.
"MEDICAID REGULATIONS" means, collectively, (a) all federal
statutes (whether set forth in Title XIX of the Social Security Act or
elsewhere) affecting Medicaid; (b) all state statutes and plans for medical
assistance enacted in connection with such statutes and federal rules and
regulations promulgated pursuant to or in connection with such statutes; and (c)
all applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities (including, without limitation, HHS, HCFA, the office of the
Inspector General for HHS, or any Person succeeding to the functions of any of
the foregoing) promulgated pursuant to or in connection with any of the
foregoing (whether or not having the force of law), in each case as may be
amended, supplemented or otherwise modified from time to time.
"MEDICARE" means the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act (42 USC ▇▇.▇▇.
1395 et seq.) and any statutes succeeding thereto.
"MEDICARE CERTIFICATION" means certification of a facility by HCFA
or a state agency or entity under contract with HCFA that the facility fully
complies with all the conditions of participation set forth in Medicare
Regulations.
"MEDICARE LOCKBOX ACCOUNT" has the meaning specified in Section
2.3(a).
"MEDICARE/MEDICAID OFFSET" means, with respect to Medicare
Receivables and Medicaid Receivables, an offset against payment thereof, which
has occurred due to a Medicare or Medicaid settlement.
"MEDICARE PROVIDER AGREEMENT" means an agreement entered into
between a federal or state agency or other such entity administering the
Medicare program and a health care facility under which the health care facility
agrees to provide services or merchandise for Medicare patients in accordance
with the terms of the agreement and Medicare Regulations.
"MEDICARE RECEIVABLE" means a Receivable payable pursuant to a
Medicare Provider Agreement.
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"MEDICARE REGULATIONS" means, collectively, (a) federal statutes
(whether set forth tin Title XVIII of the Social Security Act or elsewhere)
affecting Medicare; and (b) all applicable provisions of all rules, regulations,
manuals, orders and administrative, reimbursement and other guidelines of all
Governmental Authorities (including, without limitation, HHS, HCFA, the Office
of the Inspector General for HHS, or any Person succeeding to the functions of
any of the foregoing) promulgated pursuant to or in connection with the
foregoing (whether or not having the force of law), as each may be amended,
supplemented or otherwise modified from time to time.
"NET ADMINISTRATIVE FEE" means, as of any Purchase Date, an amount
equal to the Administrative Fee minus the Subservicing Fee for such Purchase
Date (but not less than zero).
"NET SUBSERVICING FEE" means, as of any Purchase Date, an amount
equal to the Subservicing Fee minus the Administrative Fee for such Purchase
Date (but not less than zero).
"NET VALUE" of any Receivable at any time means an amount (not
less than zero) equal to (a)(i) the Eligible Receivable Amount multiplied by
(ii) 0.97; minus (b) all payments received from the Payor with respect thereto;
provided, that if the Servicer makes a determination that all payments by the
Payor with respect to such Receivable have been made, the Net Value shall be
zero, and provided, further, that for purposes of calculations under Article VI,
the Net Value of a Defaulted Receivable shall be zero and no deductions in Net
Value will be made until such time as the Servicer has received Collections with
respect to a Purchased Receivable and processed the related Remittance Advice.
"OFFICERS' CERTIFICATE" means a certificate signed by two persons,
one of whom shall (a) hold the office of the Chairman of the Board, President,
Vice President or Treasurer and (b) the second of whom shall hold (i) any of the
offices described in the preceding clause (a) or (ii) the office of Assistant
Treasurer, Secretary of Assistant Secretary.
"OFFSET RESERVE ACCOUNT" means the trust account maintained with
the Trustee as specified in Section 2.3(b).
"OTHER SELLERS" has the meaning specified in Section 2.7.
"PAID RECEIVABLE" means, as of any Determination Date, a Purchased
Receivable as to which a payment by the Payor with respect to such Receivable
has been received.
"PAID RECEIVABLES AMOUNT" has the meaning specified in Section
6.2(b).
"PAYOR" means, with respect to any Receivable, the Person
primarily obligated to make payments in respect thereto.
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"PAYOR CLASS" means, with respect to any Payor, one of the
following: (a) commercial insurance Payors; (b) Medicare Payors; (c) Medicaid
Payors; (d) Blue Cross/Blue Shield Payors; (e) CHAMPUS Payors; (f) HMO and PPO
Payors; (g) Provider Payors; and (h) Governmental Authority Payors.
"PERSON" means an individual, partnership, corporation (including
a business trust) joint stock company, trust, voluntary association, joint
venture, a government or any agency or political subdivision thereof, or any
other entity of whatever nature.
"PPO" means a preferred provider organization.
"PRINCIPAL AMORTIZATION EVENt" means an event under any loan
agreement or indenture following which the funding of the Purchaser to be
utilized in purchasing Receivables hereunder may be terminated.
"PRIOR NET VALUE AMOUNT" has the meaning specified in Section
6.2(a).
"PROGRAM FEE" means, (a) as of the first Purchase Date in any
month, an amount determined by the Servicer, equal to (i) 1/12 of the annualized
Base Rate multiplied by (ii) the aggregate Net Value of all Purchased
Receivables including (A) Defaulted Receivables (net of recoveries) and (B)
those Receivables to be purchased on such Purchase Date; and (b) as of any
subsequent Purchase Date in any month, an amount determined by the Servicer,
equal to (i) 7/360 of the annualized Base Rate multiplied by (ii) any increase
in the aggregate Net Value of all Purchased Receivables since such first
Purchase Date including (A) Defaulted Receivables (net of recoveries) and (B)
those Receivables to be purchased on such Purchase Date.
"PROVIDER PAYOR" means any medical services provider reimbursed by
an HMO, PPO or managed care program, commercial insurer, Medicare, Medicaid, or
CHAMPUS organized under the laws of any jurisdiction in the United States,
having its principal office in the United States.
"PURCHASE" means a purchase by the Purchaser of Eligible
Receivables from the Seller pursuant to Section 2.2.
"PURCHASE ACCOUNT" means the trust account of the Purchaser
maintained with the Trustee titled "NPF-WL - Purchase Account."
"PURCHASE ASSIGNMENT" means the assignment of Purchased
Receivables entered into between the Seller and the Purchaser on the initial
Purchase Date and any subsequent Purchase Date upon Purchaser's request
substantially in the form of Exhibit C.
"PURCHASE COMMITMENT" means an amount not to exceed $6,000,000.
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"PURCHASE DATE" means the Closing Date and thereafter, Tuesday of
each week or the preceding Business Day if such day is not a Business Day.
"PURCHASE NOTICE" means a notice in a form acceptable to the
Purchaser, which enables the Purchaser to identify all Eligible Receivables
owned on such date by the Seller, and the Required Information with respect
thereto, segregated by Payor Class.
"PURCHASE PRICE" has the meaning specified in Section 2.2(b).
"PURCHASED RECEIVABLE" means any Receivable which has been
purchased by the Purchaser hereunder, including a Rejected Receivable prior to
its repurchase. Notwithstanding anything to the contrary herein, Purchased
Receivable shall only refer to a Receivable (or part thereof) payable to the
primary Payor thereof.
"PURCHASER" means NPF-WL, Inc., an Ohio corporation, together with
its successors and assigns.
"RECEIVABLE" means (a) an account receivable billed to a Payor
arising from the provision of health care administrative services (and any
services or sales ancillary thereto) by the Seller including the right to
payment of any interest or finance charge and other obligations of such Payor
with respect thereto;
(b) all security interests or liens and property subject thereto
from time to time purporting to secure payment by the Payor;
(c) all guarantees, indemnities and warranties and proceeds
thereof, proceeds of insurance policies, UCC financing statements and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Receivable;
(d) all Collections with respect to any of the foregoing.
(e) all Records with respect to any of the foregoing; and
(f) all proceeds of any of the foregoing.
"RECORDS" means all Contracts and other documents, books, records
and other information (including, without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
prepared and maintained by the Seller or the Subservicer with respect to
Receivables (including Purchase Receivables) and the related Payors.
"REJECTED AMOUNT" has the meaning specified in Section 6.2(e).
"REJECTED RECEIVABLE" has the meaning specified in Section 4.3.
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"RELATED DOCUMENTS" means each Purchase Assignment, the Lockbox
Account Agreement and all documents required to be delivered thereunder and
under this Agreement.
"REMITTANCE ADVICE" means, in respect of a Receivable, written
confirmation received by the Servicer from the Subservicer or the related Payor
of the amount paid on a patient specific Receivable.
"REQUIRED INFORMATION" means, with respect to a Receivable, (a)
the Payor, (b) the DRG Code, (c) the Eligible Receivable Amount, (d) the Billing
Date, (e) the patient account number and (f) the Discharge Date, in each case if
applicable.
"S & P" means Standard & Poor's Corporation, and its successors
and assigns.
"SELLER" means Healthplan Southeast, Incorporated, a Florida
corporation, together with its successors and assigns.
"SELLER CREDIT RESERVE ACCOUNT" means the trust account maintained
with the Trustee as specified in Section 2.3(b).
"SERVICE DATE" means the date on which services are rendered to
the applicable patient or health care facility with respect to a particular
Receivable.
"SERVICER" means National Premier Financial Services, Inc., an
Ohio corporation, or any Person designated as the successor Servicer, and its
successors and assigns, from time to time.
"SERVICING OFFICER" means any officer of the Subservicer involved
in, or responsible for, the administration and servicing of the Purchased
Receivables whose name appears on an Officer's Certificate listing servicing
officers furnished to the Purchaser and the Servicer by the Subservicer, as
amended, from time to time.
"SERVICING RECORDS" means all documents, books, records and other
information (including, without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights) prepared
and maintained by the Subservicer or the Servicer with respect to the Purchased
Receivables and the related Payors.
"SPECIFIED CREDIT RESERVE BALANCE" means, with respect to the
Seller in the Seller Credit Reserve Account, as of any Purchase Date, an amount
equal to 6.50% of the Net Value of Purchased Receivables including (a) Defaulted
Receivables (net of recoveries) and (b) those Receivables to be purchased on
such Purchase Date.
"SPECIFIED OFFSET RESERVE BALANCE" means, with respect to the
Seller in the Offset Reserve Account, as of any Purchase Date, an amount equal
to the greater of (a) 3% of the Net Value of Purchased Receivables including (i)
Defaulted Receivables (net of recoveries) and
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(ii) those Receivables to be purchased on such Purchase Date and (b) an amount
equal to the most recent year's aggregate audited Medicare and Medicaid cost
report liabilities for the Seller.
"SUBSERVICER" means the Seller, or any Person designated as
Subservicer, from time to time, hereunder.
"SUBSERVICING OFFICER" means any officer of the Subservicer
involved, or responsible for, the administration and servicing o the Purchased
Receivables whose name appears on an Officer's Certificate listing servicing
officers furnished to the Servicer by the Subservicer, as amended, from time to
time.
"SUBSIDIARY" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions are at the time directly or indirectly owned by such Person.
"TERMINATION DATE" means the earlier of (a) July 1, 1998; or (b)
the date of declaration or automatic occurrence of the Termination Date pursuant
to Section 8.1.
"TRUSTEE" means Bankers Trust Company, a national banking
association, or any successor Trustee appointed by the Purchaser.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the state of the location of the Seller's chief executive office.
SECTION 1.2 OTHER TERMS.
All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC, and not specifically defined herein, are used
herein as defined in such Article 9.
ARTICLE II
PURCHASE AND SALE; ESTABLISHMENT OF ACCOUNTS
SECTION 2.1 PURCHASE AND SALE.
The Seller does hereby agree to sell, transfer, assign, set over
and convey to the Purchaser, without recourse, all right, title and interest of
the Seller in and to the Purchased Receivables sold pursuant to this Agreement
and the Purchaser does hereby agree to purchase Eligible Receivables pursuant to
the terms of this Agreement; provided, that with respect to each Purchased
Receivable which is a Medicare Receivable, a Medicaid Receivable or a CHAMPUS
Receivable, the Seller, as Subservicer hereunder, shall retain all rights of
collection with respect to such Receivable.
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SECTION 2.2 CONVEYANCE OF RECEIVABLES.
(a) No later than 2:00 p.m. on the fifth Business Day prior to
each Purchase Date, the Seller shall deliver, or cause to be delivered, to the
Servicer a Purchase Notice. In the event that the Seller does not provide such
notification, the Purchaser will have no obligation to purchase any Eligible
Receivable on such Purchase Date. Upon receipt of a Purchase Notice, the
Servicer, as agent for the Purchaser, shall determine which of the Receivables
specified therein are Eligible Receivables. In the event the Servicer determines
that any Receivables identified on such notice are not Eligible Receivables,
such Receivables shall not be eligible for sale on such Purchase Date. On each
Purchase Date, following its selection of Eligible Receivables, the Servicer
will determine the Purchase Price in accordance with the subsection (b) hereof.
The Seller shall be obligated to execute and deliver to the Purchaser a Purchase
Assignment with respect to Purchased Receivables as of the initial Purchase Date
and thereafter upon the written request of the Purchaser. Notwithstanding the
foregoing, the Purchaser shall have no obligation to purchase Receivables from
the Seller to the extent the aggregate Net Value of all Purchased Receivables
(including Defaulted Receivables to the extent recoveries have not been made
with respect to such Defaulted Receivables) is in excess of the Purchase
Commitment.
(b) The Purchase Price with respect to Purchased Receivables
purchased on any Purchase Date shall be an amount (not less than zero) equal to
(i) the aggregate Net Values of such Purchased Receivables; minus (ii) the sum
of (A) the Program Fee as of such Purchase Date; (B) the amount, if any, by
which the amount in the Seller Credit Reserve Account deposited hereunder (net
of withdrawals required hereunder) is less than the Specified Credit Reserve
Balance as of such Purchase Date (which amount will be the full Specified Credit
Reserve Balance on the initial Purchase Date); and (C) the amount, if any, by
which the amount in the Offset Reserve Account deposited hereunder (net of
withdrawals required hereunder) is less than the Specified Offset Reserve
Balance as of such Purchase Date (which amount will be the full Specified Offset
Reserve Balance on the initial Purchase Date) and (D) the Net Administrative Fee
due to the Servicer. Following delivery of a duly executed Purchase Assignment,
subject to the satisfaction of the conditions set forth in Section 3.2, the
Purchaser shall, by withdrawal from the Purchase Account, (w) pay to the Seller
the Purchase Price for all Purchased Receivables purchased on such Purchase
Date, (x) deposit the Program Fee in the Equity Account, (y) make a deposit in
the amount set forth in (b) above, if any, in the Seller Credit Reserve Account,
and (z) make a deposit in the amount set forth in (c) above, if any, in the
Offset Reserve Account and pay to the Servicer the Net Administrative Fee.
Payment of such Purchase Price shall be made by the Servicer, as agent for the
Purchaser, causing the Trustee to effect such payment. In the event the Purchase
Price is zero on any Purchase Date, the Purchaser shall only be required to make
deposits specified in (w), (x), (y), and (z) above in an amount equal to the Net
Value of such Purchased Receivables as of such Purchase Date, with priority
being given in the foregoing order. In the event the Net Value of such Purchased
Receivables purchased on that Purchase Date is less than the Program Fee
(including where no Receivables are purchased on the relevant Purchase Date),
the extent funds deposited hereunder (net of withdrawals required hereunder) are
sufficient, the Servicer shall cause the Trustee to withdraw
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the difference from the Seller Credit Reserve Account to the extent of amounts
in excess of the Specified Credit Reserve Balance on such Purchase Date deposit
it in the Equity Account.
(c) Following payment of the Purchase Price on any Purchase Date,
ownership of each Purchased Receivable will be vested in the Purchaser. The
Seller shall not take any action inconsistent with such ownership and shall not
claim any ownership interest in any Purchased Receivable. The Seller shall
indicate in its Records that ownership of each Purchased Receivable is held by
the Purchaser. In addition, the Seller shall respond to any inquiries with
respect to ownership of a Purchased Receivable by stating that it is no longer
the owner of such Purchased Receivable and that ownership of such Purchased
Receivable is held by the Purchaser. Documents (other than medical records,
which shall be retained by the Seller) relating to the Purchased Receivables
shall be held in trust by the Seller and the Subservicer, for the benefit of the
Purchaser as the owner thereof, and possession of any Required Information or
incident relating to the Purchased Receivables so retained is for the sole
purpose of facilitating the servicing of the Purchased Receivables. Such
retention and possession is at the will of the Purchaser and in a custodial
capacity for the benefit of the Purchaser only. To further evidence such sale,
at the request of the Purchaser, the Seller shall (i) ▇▇▇▇ conspicuously each
invoice evidencing each Purchased Receivable with a legend, acceptable to the
Purchaser, evidencing that the Purchaser has purchased all right and title
thereto and interest therein as provided in this Agreement; (ii) ▇▇▇▇ its master
data processing records evidencing such Purchased Receivables with such legend;
and (iii) send notification to Payors as to the transfer of such interest in the
Purchased Receivables.
SECTION 2.3 ESTABLISHMENT OF ACCOUNTS; CONVEYANCE OF INTERESTS
THEREIN; INVESTMENT.
(a) Lockbox Account. Prior to the execution and deliver of this
Agreement, the Seller shall (i) establish and maintain at the Seller's expense
(A) an account in the name of the Seller with a depository institution
satisfactory to the Purchaser (the "Medicare Lockbox Account") into which all
Collections in respect of Medicaid, Medicare and CHAMPUS Receivables shall be
deposited and (B) an account in the name of the Servicer into which all
Collections from Eligible Payors in respect of other Receivables shall be
deposited (the "Commercial Lockbox Account"); provided that neither the Seller
nor the Servicer shall be permitted to withdraw any amounts from the Commercial
Lockbox Account or change the procedures under the Lockbox Account Agreement
except in the case of an assignment by the Purchaser of its interests herein
under Section 10.3. The Medicare Lockbox Account and the Commercial Lockbox
Account are referred to collectively in this Agreement as the "Lockbox Account")
and (ii) enter into the Lockbox Account Agreement. The provisions of the Lockbox
Account Agreement described in the definition thereof may not be amended without
the consent of the Trustee. The Seller hereby agrees to direct each Payor of an
Eligible Receivable to remit all payments with respect to such Receivable for
deposit in the Commercial Lockbox Account (other than the Payors of Medicaid,
Medicare and CHAMPUS Receivables which shall be directed to remit all payments
with respect to such Receivables for deposit in the Medicare Lockbox Account) by
delivering to such Payor a notice attached as Exhibit A. The Seller further
agrees not to change such directive to Payors without the prior written consent
of the Purchaser
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and the Servicer. The Seller agrees not to terminate the Medicare Lockbox
Account Agreement without first providing the Purchaser and the Servicer with
written notice at least 30 days prior to the effective date of such termination.
The Seller acknowledges that payments deposited in the Medicare Lockbox Account
will be swept from the Medicare Lockbox Account to the Collection Account on a
daily basis. The Seller hereby agrees not to change or direct the custodian
thereof to modify such sweep order without first providing the Purchaser and the
Servicer with written notice at least 30 days prior to the effective date of
such change in sweep order. In the event the Seller terminates the Medicare
Lockbox Account, changes the sweep order with respect to the Medicare Lockbox
Account or the Payors receive any instruction whatsoever from the Seller
indicating that Collections with respect to the Eligible Receivables should be
sent to any location other than the Lockbox Account, the Seller hereby
acknowledges and agrees that such actions would be an express violation of this
Agreement, would cause irreparable harm to the Purchaser for which there would
be no adequate remedy at law, and agrees and consents to grant the Purchaser
specific performance of the terms and provisions of this Agreement. The
custodian of the Lockbox Account may rely upon the terms and restrictions set
forth in subsection 2.3(a).
(b) Seller Credit Reserve Account; Offset Reserve Account. The
Purchaser has established and shall maintain trust accounts with the corporate
trust department of the Trustee titled "NPF-WL - Seller Credit Reserve Account"
(the "Seller Credit Reserve Account") and "NPF-WL - Offset Reserve Account" (the
"Offset Reserve Account").
(c) Collection Account. The Purchaser has established and shall
maintain a trust account with the corporate trust department of the Trustee
titled "NPF-WL - Collection Account" (the "Collection Account").
(d) The Seller does hereby sell, transfer, assign, set over and
convey to the Purchaser all right, title and interest of the Seller in and to
(i) all amounts deposited, from time to time, in the Seller Credit Reserve
Account and the Offset Reserve Account and (ii) subject to the provisions of
Article VI hereunder, all amounts deposited, from time to time, in the Lockbox
Account and the Collection Account. Any Collections in respect of Purchased
Receivables held by the Seller or the Subservicer pending transfer to the
Collection Account as provided in this Agreement, shall be held by the Seller in
trust for the benefit of the Purchaser until such amounts are deposited into the
Collection Account or the Lockbox Account. In the event Collections in respect
of Purchased Receivables held by the Seller (whether in the Lockbox Account or
otherwise) shall not be remitted to the Collection Account on the day of receipt
or the following Business Day if the day of receipt is not a Business Day in
addition to its other remedies hereunder, the Purchaser shall be entitled to
receive a late charge (which shall be in addition to the Program Fee) equal to
12% per annum or the maximum rate legally permitted if less than such rate,
calculated as of the first Business Day of such delinquency.
(e) Notwithstanding anything to the contrary herein, the Seller
may, but shall not be obligated to, make a deposit at any time in the Seller
Credit Reserve Account or the Offset Reserve Account. Further, the Seller is not
entitled to, nor shall the Seller have any interest in, Investment Income.
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SECTION 2.4 GRANT OF SECURITY INTEREST.
It is the intention of the parties hereto that each payment by the
Purchaser to the Seller with respect to Purchased Receivables to be made
hereunder shall constitute part of the purchase and sale of such Purchased
Receivables and not a loan. In the event, however, that a court of competent
jurisdiction were to hold that the transaction evidenced hereby constitutes a
loan and not a purchase and sale, it is the intention of the parties hereto that
this Agreement shall constitute a security agreement under the UCC and any other
applicable law, and that the Seller shall be deemed to have granted to the
Purchaser a first priority perfected security interest in all of the Seller's
right, title and interest in, to and under the Purchased Receivables; all
payments of principal of or interest on such Purchased Receivables; all amounts
on deposit from time to time in the Seller Credit Reserve Account, the Offset
Reserve Account; and all amounts on deposit with respect to Purchased
Receivables from time to time in the Lockbox Account and the Collection Account,
all other rights relating to and payments made in respect of this Agreement, and
all proceeds of any of the foregoing.
SECTION 2.5 FURTHER ACTION EVIDENCING PURCHASES.
(a) The Seller agrees that, from time to time, at its expense, it
will promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or appropriate, or that the
Purchaser may reasonable request, in order to perfect, protect or more fully
evidence the transfer of ownership of the Purchased Receivables or to enable the
Purchaser to exercise or enforce any of its rights hereunder or under any
Purchase Assignment. Without limiting the generality of the foregoing, the
Seller will, upon the request of the Purchaser, execute and file such financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate, or as the
Purchaser may request.
(b) The Seller hereby authorizes the Purchaser to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relating to all or any of the Purchased Receivables and Collections
with respect thereto without the signature of the Seller.
SECTION 2.6 ELIGIBLE RECEIVABLES.
All determinations of the Servicer under this Agreement including,
without limitation, whether Receivables are Eligible Receivables and the
Eligible Receivable Amounts, shall be conclusive.
SECTION 2.7 OFFSETS.
The parties acknowledge that the Purchaser and the Servicer have
entered into a series of agreements in substantially the form as this Agreement
with other sellers of Receivables ("Other Sellers") and that the Offset Reserve
Account has been established to provide liquidity to the Purchaser with respect
to Rejected Receivables, whether such Receivables were sold to the
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Purchaser by the Seller or by Other Sellers. In the event of an offset with
respect to a Receivable purchased by the Purchaser from the Seller or an Other
Seller and such Rejected Receivable is not repurchased by such Seller or Other
Seller in the manner set forth in Section 4.3, herein, the Servicer will cause
the Trustee to withdraw the Net Value of such Rejected Receivable from the
Offset Reserve Account and deposit it in the Purchase Account. In the event such
Receivable was sold to the Purchaser by an Other Seller, the Purchaser agrees to
enforce the Other Seller's obligation to repurchase such Receivable under the
terms of its agreement with such Other Seller and to cause the amount of such
repurchase by the Other Seller to be deposited in the Offset Reserve Account.
The Servicer will maintain a detailed accounting record of all deposits and
withdrawals from the Offset Reserve Account including whether a withdrawal was
made with respect to a Medicare/Medicaid Offset on a Receivable sold to the
Purchaser by the Seller or an Other Seller. For purposes of calculating whether
the amount in the Offset Reserve Account deposited by the Servicer on behalf of
the Seller (net of withdrawals required hereunder with respect to the Seller) is
equal to the Specified Offset Reserve Balance, only withdrawals with respect to
a Rejected Receivable sold to the Purchaser by the Seller will be deemed to be
with respect to the Seller.
SECTION 2.8 ADMINISTRATIVE FEE.
On each Purchase Date, the Seller shall deposit with the Servicer
an amount equal to the Administrative Fee. The Subservicer acknowledges that
such amount may be offset by the Subservicing Fee pursuant to Section 7.5.
Payment of the Net Administrative Fee may be made by application of amounts
otherwise payable to the Seller (including the Purchase Price to the extent
allocable to the Seller).
SECTION 2.9 ASSIGNMENT OF AGREEMENT.
The Seller does hereby agree, acknowledge and consent to the
assignment by the Purchaser of all of the Purchaser's right, title, interest and
obligations with respect to this Agreement. The Seller does hereby further agree
to execute and deliver to the Purchaser all documents and amendments presented
to the Seller by the Purchaser in order to effectuate the assignment by the
Purchaser in furtherance of this Section 2.9 consistent with the terms and
provisions of this Agreement.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF AGREEMENT.
The effectiveness of this Agreement is subject to the condition
precedent that the Purchaser and the Servicer shall have received on or before
the Closing Date the following, in form and substance satisfactory to the
Purchaser and the Servicer.
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(a) With respect to the Seller:
(i) the certificate or articles of incorporation of the
Seller certified, as of a date no more than ten days prior to the
Closing Date, by the Secretary of State of its state of
incorporation;
(ii) a Good Standing Certificate, dated no more than ten
days prior to the Closing Date, from the respective Seller of
State of its state of incorporation and each state in which the
Seller is required to qualify to do business;
(iii) a certificate of the Secretary or Assistant
Secretary of the Seller (on which certificate the Servicer and the
Purchaser may conclusively rely until such time as the Servicer
shall receive from the Seller a revised certificate meeting the
requirements of this subsection) certifying as of the Closing
Date: (A) the names and true signatures of the officers authorized
on its behalf to sign this Agreement and the Related Documents,
(B) a copy of the Seller's by-laws or code of regulations, and (C)
a copy of the resolutions of the board of directors of the Seller
approving this Agreement, the Related Documents and the
transactions contemplated thereby;
(iv) an Officer's Certificate in the form of Exhibit D
hereto;
(v) certified copies of Requests for Information or
Copies (Form UCC-11) (or a similar search report certified by a
party acceptable to the Purchaser), dated a date no more than ten
days prior to the Closing Date listing all effective financing
statements which name the Seller (under its present name and any
previous name) as debtor, together with copies of such financing
statements, and searches of applicable federal and state court and
agency dockets and lien records showing all judgment liens
affecting the Seller or the Eligible Receivables and tax liens;
and
(vi) acknowledgment copies of proper financing statements
(Form UCC-3), if any, necessary to release all security interests
and other rights of any Person in Purchased Receivables previously
granted by the Seller including, without limitation, all such
releases specified by the Seller prior to the date hereof;
(b) Consents required by, or of, any Person or
Governmental Authority, if any, to the closing of the transactions contemplated
hereby, in form and substance satisfactory to the Purchaser;
(c) Acknowledgment copies of proper financing statements
(Form UCC-1), duly filed, in respect of Purchased Receivables, naming the Seller
as the assignor and the Purchaser as the assignee or other, similar instruments
or documents, as may be necessary or, in the opinion of the Purchaser or the
Servicer, desirable under the UCC of all appropriate jurisdictions or any
comparable law to perfect the Purchaser's ownership interests in all Purchased
Receivables in which an interest may be assigned hereunder;
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(d) Fully executed copies of the Lockbox Account Agreement;
(e) The favorable opinion of counsel to the Seller substantially
in the form attached hereto as Exhibit E;
(f) Such other approvals, opinions, documents and instruments, as
the Purchaser or the Servicer may reasonably request;
(g) The Seller shall have paid such closing costs as have
previously been agreed with the Purchaser; and
(h) The Seller shall have sent each Eligible Payor a notice
substantially in the form of Exhibit A hereto.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL PURCHASES.
Each Purchase (including the initial Purchase) from the Seller by
the Purchaser shall be subject to the further conditions precedent that:
(a) The representations and warranties of the Seller set forth in
Sections 4.1 and 4.2 are true and correct on and as of such date, before and
after giving effect to such Purchase and to the application of the proceeds
therefrom, as though made on and as of such date;
(b) No event has occurred, or would result from such Purchase or
from the application of the proceeds therefrom, which constitutes an Event of
Seller Default or would constitute an Event of Seller Default, but for the
requirement that notice be given or time elapse or both;
(c) The Seller is in compliance with each of its covenants set
forth herein;
(d) The Termination Date shall not have occurred;
(e) Each Receivable submitted by the Seller for purchase is an
Eligible Receivable; and
(f) The Seller shall have taken such other action, including
delivery of approvals, opinions or documents to the Purchaser, as the Purchaser
may reasonably request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 4.1 REPRESENTATIONS AND WARRANTIES AS TO THE SELLER.
The Seller (in its capacities as Seller and Subservicer hereunder)
represents and warrants to the Purchaser and the Servicer, as of the date hereof
and on each subsequent Purchase Date, as follows:
(a) The Seller is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation and is duly
qualified to do business, and is in good standing in each jurisdiction in which
the nature of its business requires it to be so qualified;
(b) The Seller has the power and authority to own and convey all
of its properties and assets and to execute and deliver, this Agreement and the
Related Documents and to perform the transactions contemplated hereby and
thereby;
(c) The execution, delivery and performance by the Seller of this
Agreement and the Related Documents, and the transactions contemplated thereby,
(i) have been duly authorized by all necessary corporate or other action on the
part of the Seller, (ii) do not contravene or cause the Seller to be in default
under (A) the Seller's certificate or articles of incorporation or by-laws or
code of regulations, (B) any contractual restriction contained in any indenture,
loan or credit agreement, lease, mortgage, security agreement, bond, note, or
other agreement or instrument binding on or affecting the Seller or its property
or (C) any law, rule, regulation, order, writ, judgment, award, injunction, or
decree applicable to, binding on or affecting the Seller or its property and
(iii) do not result in or require the creation of any Adverse Claim upon or with
respect to any of the property of the Seller (other than in favor of the
Purchaser as contemplated hereunder);
(d) This Agreement and the Related Documents have each been duly
executed and delivered on behalf of the Seller and each is the legal, valid and
binding obligation of the Seller enforceable against the Seller in accordance
with its terms;
(e) No consent of, or other action by, and no notice to or filing
with, any Governmental Authority (other than notices to Payors) or any other
party, is required for the due execution, delivery and performance by the Seller
of this Agreement or any of the Related Documents or for the perfection of or
the exercise by the Purchaser or the Servicer of any of their rights or remedies
thereunder;
(f) There is no pending or threatened action, suit or proceeding,
of a material nature against or affecting the Seller, its officers or directors,
or the property of the Seller, in any court or tribunal, or before any
arbitrator of any kind or before or by any Governmental Authority (i) asserting
the invalidity of this Agreement or any of the Related Documents, (ii) seeking
to
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prevent the sale and assignment of any Receivable or the consummation of any
of the transactions contemplated thereby, (iii) seeking any determination or
ruling that might materially and adversely affect (A) the performance by the
Seller or the Subservicer of its obligations under this Agreement or any of the
Related Documents, (B) the validity or enforceability of this Agreement or any
of the Related Documents, (C) the Receivables or the Contracts or (D) the
federal income tax attributes of the Purchases, or (iv) asserting a claim for
payment of money in excess of $100,000 (other than such judgments or orders in
respect of which adequate insurance is maintained by the Seller for the payment
thereof);
(g) No injunction, bankruptcy petition, writ, restraining order or
other order of any material nature adverse to the Seller or the conduct of its
business or which is inconsistent with the due consummation of the transactions
contemplated by this Agreement has been issued by or filed with a Governmental
Authority;
(h) The Seller has complied in all material respect with all
applicable laws, rules, regulations, and orders with respect to it, its business
and properties and all Receivables and related Contracts (including without
limitation, all applicable environmental, health and safety requirements) and
all restrictions contained in any indenture, loan or credit agreement, mortgage,
security agreement, bond, note, or other agreement or instrument binding on or
affecting the Seller or its property, and has and maintains all permits,
licenses, authorizations, registrations, approvals and consents of Governmental
Authorities, and all certificates of need for the construction or expansion of
or investment in health care facilities, all Health Facility Licenses,
Accreditations, Medicaid Certifications and Medicare Certifications necessary
for the activities and business of the Seller and each of its Subsidiaries as
currently conducted and as proposed to be conducted, the ownership, use,
operation and maintenance by each of them of its properties, facilities and
assets and the performance by the Seller of this Agreement and the related
Documents (hereinafter referred to collectively as "Governmental Consents");
(i) Without limiting the generality of the prior representation:
(A) each Health Facility License, Medicaid Certification, Medicare
Certification, Medicaid Provider Agreement, Medicare Provider Agreement and each
of the Blue Cross/Blue Shield Contracts, if any, of the Seller and each of its
Subsidiaries is in full force and effect and has not been amended or otherwise
modified, rescinded or revoked or assigned, (B) the Seller and each Subsidiary
is in compliance with any applicable requirements of Medicaid, Medicare, CHAMPUS
and related programs, and the Blue Cross/Blue Shield Contracts, and (C) no
condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture, non-renewal of any Governmental Consent applicable to
the Seller or any other health care facility owned or operated by the Seller or
any of its Subsidiaries or such facility's participation in any Medicaid,
Medicare, CHAMPUS or other similar program, or of any Blue Cross/Blue Shield
Contracts and there is no claim that any applicable Governmental Consent,
participation or contract is not in full force and effect;
(j) The Seller has filed on a timely basis all tax returns
(federal, state, and local) required to be filed and has paid or made adequate
provisions for the payment of all taxes, assessments, and other governmental
charges due from the Seller;
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(k) The primary business of the Seller is the provision of health
care administrative services and/or equipment. The Payors' related provider
numbers set forth on Schedule 3 have been issued to the Seller and Schedule 3 is
a true and complete list of all provider numbers assigned by Payors to the
Seller or its Subsidiaries;
(l) The Seller is not required to prepare and submit Medicaid and
Medicare cost reports of each facility and of the home office of the Seller (A)
as to Medicaid, to the state agency, or other HCFA-designated agents or agents
of such state agency, charged with such responsibility or (B) as to Medicare, to
the Medicare intermediary or other HCFA-designated agents charged with such
responsibility. In the event the Seller is required to prepare and submit
Medicaid and Medicare cost reports to the appropriate agencies, the Seller
hereby represents and warrants that it will prepare and submit such reports to
such agencies on a timely basis and notify the Purchaser and the Servicer of
such requirement;
(m) All information heretofore or hereafter furnished by or on
behalf of the Seller to the Servicer or the Purchaser in connection with this
Agreement or any transaction contemplated hereby is and will be true and
complete in all material respects and does not and will not omit to state a
material fact necessary to make the statements contained therein not misleading;
(n) With respect to the Seller or any of its Subsidiaries, there
has occurred no event which has or is reasonably likely to have a material
adverse effect on the Seller's financial condition, business or operations,
including its ability to perform its obligations under this Agreement. The
Servicer acknowledges that the Seller may continue to experience further deficit
cash flows and net losses through the fourth quarter of 1997 in the absence of
gains on asset divestitures sufficient to offset such negative cash flows and/or
losses;
(o) The Seller is solvent and will not become insolvent after
giving effect to the transactions contemplated by this Agreement; the Seller has
not incurred Debts beyond its ability to pay; the Seller, after giving effect to
the transactions contemplated by this Agreement, will have an adequate amount of
capital to conduct its business in the foreseeable future; and the sales of
Purchased Receivables hereunder are made in good faith and without intent to
hinder, delay or defraud present or future creditors of the Seller;
(p) The consolidated balance sheets of the Seller's indirect
parent, Coastal Physician Group, Inc., and its consolidated Subsidiaries as at
December 31, 1995, and the related statements of income and shareholders' equity
of Coastal Physician Group, Inc. and its consolidated Subsidiaries for the
fiscal year then ended, prepared by KPMG Peat Marwick, independent certified
public accountant(s), copies of which have been furnished to the Purchaser and
Servicer, fairly present the consolidated financial condition, business and
operations of Coastal Physician Group, Inc. and its consolidated Subsidiaries as
at such date and the consolidated results of the operations of Coastal Physician
Group, Inc. and its consolidated Subsidiaries for the period ended on such date,
all in accordance with generally accepted accounting principles consistently
applied. The Servicer acknowledges that the Seller may
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continue to experience further deficit cash flows and net losses through the
fourth quarter of 1997 in the absence of gains on asset divestitures sufficient
to offset such negative cash flows and/or losses;
(q) The Medicare Lockbox Account and the Commercial Lockbox
Account are the only lockbox accounts maintained by the Seller and each Payor of
an Eligible Receivable has been directed upon its receipt of the notice attached
as Exhibit A hereto, which notice was mailed on the Closing Date, and is
required to, remit all payments with respect to such Receivable for deposit in
the Commercial Lockbox Account (other than the Payors of Medicaid, Medicare and
CHAMPUS Receivables which have been directed to remit all payments with respect
to such Receivables for deposit in the Medicare Lockbox Account);
(r) The principal place of business and chief executive office of
the Seller are located at the address of the Seller set forth under its
signature below and there are now no, and during the past four months there have
not been, any other locations where the Seller is located (as that term is used
in the UCC) or keeps Records except as set forth in the designated space beneath
its signature line in this Agreement;
(s) The legal name of the Seller is as set forth at the beginning
of this Agreement and the Seller has not changed its legal name in the last six
years, and except as set forth in the designated space beneath its signature
line in this Agreement, the Seller did not use, nor does the Seller now use any
tradenames, fictitious names, assumed names or "doing business as" names during
such period;
(t) The Receivables of the Seller have been and will continue to
be adjusted to reflect reimbursement policies of the Payors with respect
thereto; in particular, the Eligible Receivable Amounts of Receivables relating
to such Payors do not and shall not exceed amounts the Seller is entitled to
receive under any capitation agreement, fee schedule, discount formula,
cost-based reimbursement, or other adjustment or limitation to the usual charges
of the Seller;
(u) No Payor of an Eligible Receivable being sold on any Purchase
Date has any claim of a material nature against or affecting the Seller or the
property of the Seller;
(v) The Seller has not done and shall not do anything to impede or
interfere with the collection by the Purchaser of the Purchased Receivables and
shall not amend, waive or otherwise permit or agree to any deviation from the
terms or conditions of any Purchased Receivable or any related Contract;
(w) The Seller has made and will continue to make all payments to
Payors necessary to prevent any Payor from offsetting any earlier overpayment to
the Seller against any amounts such Payor owes on a Purchased Receivable;
(x) Each Purchase Notice contains a complete and accurate list of
all Eligible Receivables of the Seller as of its date;
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(y) For federal income tax reporting and accounting purposes, the
Seller will treat the sale of each Purchased Receivable pursuant to this
Agreement as a sale of, or absolute assignment of its full right, title and
ownership interest in, such Purchased Receivable to the Purchaser and the Seller
has not in any other manner accounted for or treated the transactions in
Purchased Receivables by the Seller contemplated hereby;
(z) This Agreement constitutes a valid transfer, assignment,
set-over and conveyance to the Purchaser of all right, title and interest of the
Seller in and to the Purchased Receivables now existing and hereafter created;
(aa) The Seller has valid business reasons for selling its
interests in the Purchased Receivables rather than obtaining a loan with the
Purchased Receivables as collateral; and
(bb) As of the date first above written, the Seller operates the
facilities included on Schedule 4 hereto. The Seller is not doing business under
any name other than those listed on Schedule 4 hereto. Further, one or more but
no more than those names listed on Schedule 4 hereto are payees on the checks
received from Eligible Payors.
SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO
PURCHASED RECEIVABLES.
With respect to each Purchased Receivable sold pursuant to this
Agreement (including, without limitation, claims which may be satisfied by
set-off of any amounts due under any Receivable), the Seller represents and
warrants, as of the date hereof and on each subsequent Purchase Date, as
follows:
(a) Such Receivable is the primary liability of an Eligible Payor
and is recognized by the Eligible Payor as its primary liability;
(b) The Required Information contained in the Purchase Notice is
true and correct;
(c) Such Receivable is not a Defaulted Receivable and has not
become a Paid Receivable;
(d) The Seller has submitted all necessary documentation and
supplied all necessary information for payment of such Receivable to the Payor
and has fulfilled all of its other obligations, in respect thereof, including
verification of the eligibility of the Receivable for payment by such Payor;
(e) Neither the Receivable nor the related Contract has been
satisfied, subordinated or rescinded, or except as disclosed in writing to the
Purchaser, amended in any manner;
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(f) The Eligible Receivable Amount set forth in the applicable
Required Information of such Receivable is net of any Contractual Allowance or
other modifications and neither the Receivable nor the related Contract has or
will be comprised, adjusted, extended, satisfied, subordinated, rescinded,
set-off or modified by the Seller or Payor, and is not nor will be subject to
compromise, adjustment, extension, satisfaction, subordination, rescission,
set-off, counterclaim, defense, abatement, suspension, deferment, deductible,
reduction, termination or modification, whether arising out of transactions
concerning the Contract or otherwise;
(g) Such Receivable is an account receivable created through the
provision of medically necessary services or merchandise supplied by the Seller
in the ordinary course of its business and the sales prices of such services or
merchandise were usual, customary and reasonable in the Seller's community for
such services;
(h) Such Receivable is an "account' within the meaning of the UCC
and is not evidenced by an "instrument" within the meaning of the UCC;
(i) Such Receivable has a Net Value which, when added to the Net
Value of all other Receivables of such Payor or in such Payor Class and which
constitute Purchased Receivables hereunder, does not exceed the Concentration
Limits;
(j) Such Receivable (A) has a Purchase Date no later than 150 days
from its Billing Date, (B) with respect to all Purchases following the initial
Purchase, the claim with respect to the related Receivable must be submitted to
the related Payor no later than 10 days after the end of the calendar month for
which the health care services giving rise to the Receivable were rendered, and
(C) is not past the statutory limit for collection applicable to the Payor;
(k) The related Contract is, and was at the time of the services
giving rise to the Receivable, in full force and effect and constitutes the
legal, valid and binding obligation of the Payor enforceable against such Payor
in accordance with its terms, such Receivable was created in accordance with the
requirements of the Contract and applicable law, including, without limitation,
to the extent the Receivable is subject to limitations imposed by workers'
compensation law or a related Contract and is entitled to be paid pursuant to
the terms of the related Contract, and a copy of any related Contract to which
the Seller is a party has been delivered to the Purchaser, the amount of the
Eligible Receivables does not exceed the limitations so imposed, and each
Receivable to which the fees are so restricted has been clearly identified as
being subject to such restrictions.
(l) Such Receivable is denominated and payable in Dollars of the
United States and, except as otherwise agreed to by the Purchaser and the
Servicer, the Eligible Receivable Amount of such Receivable is not in excess of
$150,000;
(m) Such Receivable is owned by the Seller free and clear of any
Adverse Claim, and the Seller has the right to sell, assign and transfer the
same and interests therein as
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contemplated under this Agreement and, upon such sale, the Purchaser has
acquired a valid ownership interest in such Receivable, free and clear of any
Adverse Claim;
(n) No consent from the Payor or any other Person shall be
required to effect the sale of any Purchased Receivables;
(o) There are no procedures or investigations pending or
threatened before any Governmental Authority (i) asserting the invalidity of
such Receivable or such Contract, (ii) asserting the bankruptcy or insolvency of
the related Payor, (iii) seeking the payment of such Receivable or payment and
performance of such Contract or (iv) seeking any determination or ruling that
might materially and adversely affect the validity or enforceability of such
Receivable or such Contract;
(p) Neither such Receivable nor the related Contract contravenes
in any material respect 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 in any material respect;
(q) Such Receivable complies with such additional criteria and
requirements (other than those relating to the collectibility of such
Receivables) as the Purchaser may from time to time specify to the Seller
following 30 days' notice;
(r) The Seller has no knowledge of any fact which should have led
it to expect at the time of sale of such Receivable to the Purchaser that the
Eligible Receivable Amount of such Receivable would not be paid in full.
The parties acknowledge that some of the foregoing representations and
warranties may have been made only to the best of the Seller's knowledge.
Nevertheless, notwithstanding the Seller's lack of knowledge with respect to an
inaccuracy of a representation and warranty, the parties agree that any such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.
SECTION 4.3 REPURCHASE OBLIGATIONS.
Upon discovery by any party hereto of a breach of any
representation or warranty in this Article IV which materially and adversely
affects the value of a Purchased Receivable or the interests of the Purchaser
therein, the party discovering such breach shall give prompt written notice to
the other parties hereto. Thereafter, on the next Purchase Date, the Purchase
Price for new Purchased Receivables, to the extent sufficient, shall be offset
by the Net Value of such Receivable or the Seller shall, prior to the succeeding
Determination Date, remit to the Purchaser the Net Value of such Receivable or
the Purchaser shall offset the Net Value of such Receivable from other amounts
due to the Seller hereunder. Such amount shall be deemed to be Collections of
such Receivable (each such Receivable, a "Rejected Receivable") received and
shall be
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deposited in the Collection Account. It is understood and agreed that the
obligation of the Seller with respect to any Rejected Receivable pursuant to
this Section 4.3 shall constitute the sole remedy for the breach of any
representation or warranty in respect of such Receivable; provided, that the
foregoing limitation shall not be construed to limit in any manner the
Purchaser's right to (a) in the event the Seller fails to effect a repurchase as
set forth herein above offset against any amounts it owes the Seller under this
Agreement (including any Purchase Price), the Net Value of such Rejected
Receivable; or (b) declare the Termination Date to have occurred or to terminate
the responsibilities of the Subservicer hereunder to the extent that such
breaches also constitute an Event of Seller Default. Except as set forth in this
Section 4.3, the Seller shall have no right to repurchase or remit funds with
respect to any Purchased Receivable.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE SELLER.
The seller shall, unless the Purchaser shall otherwise consent in
writing:
(a) Comply in all material respects with all applicable laws,
rules, regulations and orders with respect to it, its business and properties
and all Receivables, related Contracts and Collections with respect thereto;
(b) Preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation and continue
to operate its business in the manner set forth in Section 4.1(a);
(c) Cause to be delivered to the Purchaser on or before June 1 of
each year beginning with June 1, 1998, (i) an Officer's Certificate of the
Seller in the form of Exhibit D, dated the date of such delivery; and (ii) an
opinion of counsel, in form and substance satisfactory to the Purchaser,
reaffirming as of the date of its delivery of the opinion of counsel which the
Seller delivered to the Purchaser and the Servicer on the Closing Date pursuant
to Section 3.1(e);
(d) Deposit all Collections received in respect of Purchased
Receivables into the appropriate Lockbox Account within one Business Day of
receipt; and
(e) Make all payments to any Payors necessary to prevent the Payor
from offsetting a prior overpayment to the Seller against any amount the Payor
owes on a Purchased Receivable.
(f) Timely, pay the Program Fee and all amounts due to the
Purchaser under Sections 2.3, 4.3, 9.1(a) and (b), and 10.4 of this Agreement.
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SECTION 5.2 REPORTING REQUIREMENTS OF THE SELLER.
The Seller shall furnish, or cause to be furnished, to the
Purchaser:
(a) As soon as available and in any event within 45 days after the
end of each of the first three quarters of its fiscal year a consolidated and
consolidating financial statement of Coastal Physician Group, Inc. and its
consolidated Subsidiaries as of the end of such quarter, for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, certified by the chief financial officer or chief accounting
officer of Coastal Physician Group, Inc.;
(b) As soon as available and in any event within 120 days after
the end of its fiscal year, a copy of the consolidated and consolidating
financial statement of Coastal Physician Group, Inc. and its consolidated
Subsidiaries as of the end of such year and the related consolidated statements
of income and retained earnings, and of cash flow, of Coastal Physician Group,
Inc. and its consolidated Subsidiaries for such year, in each case audited by a
firm of independent public accountants acceptable to the Servicer;
(c) Promptly after the sending or filing thereof, copies of all
reports which the Seller files with any Governmental Authority as they relate to
the Seller's Receivables or sends to any of its security holders and a copy of
the annual report (if any) of the Seller;
(d) As soon as possible and in any event within five days after
the occurrence of an Event of Seller Default (including without limitation a
material adverse change in the financial condition of the Seller as determined
by the Servicer; the Servicer acknowledges that the Seller may continue to
experience further deficit cash flows and net losses through the fourth quarter
of 1997 in the absence of gains on asset divestitures sufficient to offset such
negative cash flows and/or losses) or each event which, with the giving of
notice or lapse of time or both, would constitute an Event of Seller Default,
the statement of the chief executive officer of the Seller setting forth
complete details of such Event of Seller Default and the action which the Seller
has taken, is taking and proposes to take with respect thereto; and
(e) Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the Contracts or the
condition or operations, financial or otherwise, of the Seller, or the Seller or
any of its Subsidiaries, if any, as the Purchaser may, from time to time,
reasonably request.
SECTION 5.3 NEGATIVE COVENANTS OF THE SELLER.
The Seller shall not, without the written consent of the Purchaser
and the Servicer:
(a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim upon or with respect
to, any Receivable or related Contract with respect thereto, or, upon or with
respect to the Lockbox Account, the Seller Credit Reserve Account, the Offset
Reserve Account, the Collection Account, or any other account in
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which any Collections of any Receivable are deposited, or assign any right to
receive income in respect of any Purchased Receivable;
(b) Extend, amend or otherwise modify the terms of any Purchased
Receivable, or amend, modify or waive any term or condition of any Contract
related thereto or in any manner impede or interfere with the collection of such
Purchased Receivable;
(c) Make any material change in the character of its business;
(d) Make any change in its instructions to Payors regarding
payments to be made to the Seller or payments to be deposited to the Lockbox
Account;
(e) Be the subject of or have the Person(s) controlling, directly
or indirectly, the Seller be the subject of a merger or merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of all
or substantially all of its assets (whether now owned or hereafter acquired), or
acquire all of substantially all of the assets or capital stock or other
ownership interest of, any Person;
(f) Make any change to (i) the location of its chief executive
office or the location of the office where Records are kept or (ii) its
corporate name or use any tradenames, fictitious names, assumed names or "doing
business as" names; or
(g) Prepare any financial statements which shall account for the
transactions contemplated hereby in any manner other than as a sale of the
Purchased Receivables by the Seller to the Purchaser, and will not in any other
respect account for or treat the transactions contemplated hereby (including but
not limited to, for accounting, tax and reporting purposes) in any manner other
than as a sale of the Purchased Receivables by the Seller to the Purchaser. It
is understood and agreed that the obligation of the Seller to comply with the
covenants set forth in this Section 5.3 shall be subject to the Seller's
obligation to comply with any order or directive of a Governmental Authority of
competent jurisdiction and that compliance with such order or directive shall
not constitute a breach of such covenant; provided, that the foregoing shall not
be construed to limit in any manner the Purchaser's right to declare the
Termination Date to have occurred to the extent that such noncompliance with
such covenant (whether or not resulting from such an order or directive) shall
constitute, or contribute to the determination of, an Event of Seller Default.
ARTICLE VI
ACCOUNTS ADMINISTRATION
SECTION 6.1 COLLECTION ACCOUNT.
The Purchaser and the Servicer acknowledge that certain amounts
deposited in the Collection Account may relate to Receivables other than
Purchased Receivables and that such
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amounts continue to be owned by the Seller. All such amounts shall be returned
to the Seller in accordance with Section 6.3.
SECTION 6.2 DETERMINATIONS OF THE SERVICER.
On each Determination Date, the Servicer will determine:
(a) the Net Value of all Purchased Receivables as of the prior
Determination Date plus the Net Value of all Purchased Receivables purchased on
the prior Purchase Date (the "Prior Net Value Amount");
(b) the amount of Collections on all Purchased Receivables
received since the prior Determination Date (the "Paid Receivables Amount");
(c) the Net Value of all Purchased Receivables as of the current
Determination Date (the "Current Net Value Amount");
(d) an amount equal to (i) the Prior Net Value Amount minus (ii)
the Paid Receivables Amount minus (iii) the Current Net Value Amount (but not
less than zero) (the "Credit Deficiency"); and
(e) the Net Value of Purchased Receivables which became Rejected
Receivables since the prior Determination Date and which have not been
repurchased or offset in the manner set forth in Section 4.3 or Section 2.7 (the
"Rejected Amount").
The Servicer's determinations of the foregoing amounts shall be conclusive in
the absence of manifest error. The Servicer shall notify the Seller and the
Purchaser of such determinations.
SECTION 6.3 DISTRIBUTIONS FROM ACCOUNTS
(a) No later than 11:00 a.m. on each Determination Date,
following the determinations set forth in Section 6.2, the Servicer will notify
the Trustee of such determinations and will cause the Trustee to withdraw in the
following priority:
(i) the Paid Receivables Amount from the Collection Account and
deposit such amount in the Purchase Account;
(ii) the Credit Deficiency, if any, from the Seller Credit
Reserve Account and deposit such amount in the Purchase Account;
(iii) the Rejected Amount, if any, from the Collection Account
and deposit it in the Purchase Account; and
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(iv) the remaining amount from the Collection Account and pay
such amount by wire transfer to the Seller.
(b) Until the Termination Date on each Purchase Date following
the Purchase on such date, the Servicer shall cause the Trustee to withdraw
(i) all amounts deposited hereunder (net of withdrawals required hereunder) from
the Seller Credit Reserve Account in excess of the Specified Credit Reserve
Balance and (ii) all amounts deposited hereunder (net of withdrawals required
hereunder) from the Offset Reserve Account in excess of the Specified Offset
Reserve Balance and shall pay such amounts by wire transfer to the Seller.
SECTION 6.4 ALLOCATION OF MONEYS FOLLOWING TERMINATION DATE.
(a) Following the Termination Date, the Servicer shall cause
the Trustee to the extent funds deposited hereunder (net of withdrawals
required hereunder) are sufficient, to withdraw an amount equal to the Program
Fee from the Offset Reserve Account on each Purchase Date and deposit it in the
Equity Account.
(b) On the first Determination Date on which the aggregate Net
Value of all Purchased Receivables (other than Defaulted Receivables) (i) is
less than 10% of the aggregate Net Value of Purchased Receivables (other than
Defaulted Receivables) on the Termination Date and (ii) is less than the
aggregate amounts deposited hereunder (net of withdrawals required hereunder)
and remaining in the Seller Credit Reserve Account and the Offset Reserve
Account, the Servicer shall cause the Trustee to withdraw an amount equal to
such aggregate Net Value from such accounts and deposit it in the Purchase
Account. Thereupon the Servicer shall cause the Trustee to disburse all
remaining amounts held in the Collection Account, the Seller Credit Reserve
Account and the Offset Reserve Account to the Seller and all interests of the
Purchaser in all Purchased Receivables owned by the Purchaser shall be
reconveyed by the Purchaser to the Seller. Following such disbursement and
reconveyance, this Agreement shall be deemed terminated.
SECTION 6.5 ACCOUNTING.
The Servicer shall make all determinations of actual and required
amounts in each of the accounts established pursuant to this Agreement, maintain
detailed accounting records of all deposits and withdrawals for each such
account, including the Seller and the Receivables with respect to which such
deposits and withdrawals were made and notify the Trustee as to such
determinations.
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ARTICLE VII
APPOINTMENT OF THE SUBSERVICER
AND SUCCESSOR SERVICER
SECTION 7.1 APPOINTMENT OF THE SUBSERVICER.
The Servicer and the Purchaser hereby appoint the Seller to act as
Subservicer hereunder. The Subservicer shall service the Purchased Receivables
and enforce the Purchaser's respective rights and interests in and under each
Purchased Receivable and each related Contract and shall serve in such capacity,
including, in the event the Servicer has resigned or been terminated, until the
termination of its responsibilities pursuant to Section 7.9, 7.11 or 8.1. The
Subservicer hereby agrees to perform the duties and obligations with respect
thereto set forth herein. Notwithstanding any term or provision hereof to the
contrary, the Seller, the Subservicer and the Purchaser hereby acknowledge and
agree that the Servicer acts as agent hereunder for the Purchaser and has no
duties or obligations to, will incur no liabilities or obligations to, and does
not act as an agent in any capacity for, the Seller or the Subservicer.
SECTION 7.2 ADDITIONAL SUBSERVICERS.
The Subservicer may, with the prior consent of the Purchaser and
the Servicer, which consent shall not be unreasonably withheld, subcontract with
a subservicer (each such servicer, an "Additional Subservicer") for collection,
servicing or administration of the Receivables, provided, that (a) the
Subservicer shall continue to perform its obligations with respect to
collections of Medicaid Receivables, Medicare Receivables and CHAMPUS
Receivables, (b) the Subservicer shall remain liable for the performance of the
duties and obligations of the Additional Subservicer pursuant to the terms
hereof and (c) any subservicing agreement that may be entered into and any other
transactions or services relating to the Purchased Receivables involving an
Additional Subservicer (each such agreement, an "Additional Subservicing
Agreement") shall be deemed to be between the Additional Subservicer and the
Subservicer alone and the Purchaser and Servicer shall not be deemed parties
thereto and shall have no obligations, duties or liabilities with respect to the
Additional Subservicer.
SECTION 7.3 DUTIES AND RESPONSIBILITIES OF THE SUBSERVICER.
(a) The Subservicer shall conduct the servicing, administration
and collection of the Purchased Receivables and shall take, or cause to be
taken, all such actions as may be necessary or advisable to service, administer
and collect each Purchased Receivable, from time to time, all in accordance with
(i) customary and prudent servicing procedures for health care receivables of a
similar type, and (ii) all applicable laws, rules and regulations.
(b) The duties of the Subservicer shall include, without
limitation:
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(i) preparation and submission of claims to, and post-billing
liaison with, Eligible Payors;
(ii) arranging for the direct remittance of all Collections on
Purchased Receivables to the Commercial Lockbox Account (other than
Collections with respect to Medicaid Receivables, Medicare Receivables
and CHAMPUS Receivables, in respect of which it shall arrange for the
direct remittance of such Collections to the Medicare Lockbox Account);
(iii) remitting any Collections with respect to Medicaid
Receivables, Medicare Receivables and CHAMPUS Receivables it may receive
directly for deposit in the Medicare Lockbox Account and remitting any
Collections on other Purchased Receivables it may receive directly for
deposit in the Commercial Lockbox Account, in each case no later than by
the end of the day of receipt or the following Business Day if the day of
receipt is not a Business Day;
(iv) maintaining all necessary Servicing Records with respect to
the Purchased Receivables and promptly delivering such reports to the
Purchaser or the Servicer in respect of the servicing of the Purchased
Receivables (including information relating to its performance under this
Agreement) as may be required hereunder or as the Purchaser or the
Servicer may reasonably request;
(v) maintaining and implementing administrative and operating
procedures (including, without limitation, an ability to recreate
Servicing Records evidencing the Purchased Receivables in the event of
the destruction of the originals thereof) and keeping and maintaining all
documents, books, records and other information reasonably necessary or
advisable for the collection of the Purchased Receivables (including,
without limitation, records adequate to permit the identification of each
new Purchased Receivable and all Collections of and adjustments to each
existing Purchased Receivable);
(vi) identifying each Purchased Receivable clearly and
unambiguously in its Servicing Records to reflect that such Purchased
Receivable is owned by the Purchaser;
(vii) complying in all material respects with all applicable
laws, rules, regulations and orders with respect to it, its business and
properties and all Purchased Receivables and related Contracts and
Collections with respect thereto;
(viii) preserving and maintaining its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and
qualifying and remaining qualified in good standing as a foreign
corporation and qualifying to and remaining authorized to perform
obligations as Subservicer (including enforcement of collection of
Purchased Receivables on behalf of the Purchaser) in each jurisdiction
where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would materially adversely
affect (A) the rights or interests of the of the Purchaser in the
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Purchased Receivables, (B) the collectibility of any Purchased Receivable
or (C) the ability of the Subservicer to perform its obligations
hereunder or under the Contracts;
(ix) any time and from time to time at reasonable intervals upon
notice to the Subservicer and during regular business hours, permitting
the Purchaser, the Servicer or any of their agents 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 Subservicer
for the purpose of examining such Servicing Records, and to discuss
matters relating to the Receivables or the Subservicer's performance
under this Agreement with any officer or employee of the Subservicer
having knowledge of such matters;
(x) at the request of the Servicer, maintaining at is
own expense, a blanket fidelity bond with broad coverage, with
responsible companies acceptable to the Servicer, on all officers,
employees or other persons acting on behalf of the Subservicer in any
capacity with regard to the Purchased Receivables, including those
handling funds, money, documents and papers relating to the Purchased
Receivables. Any such fidelity bond shall protect and insure the
Subservicer (and through the Subservicer, the Servicer and the Purchaser)
against losses commonly protected against by bonds of a similar type,
including forgery, theft, embezzlement, fraud, and negligent acts of such
persons and shall be maintained at a level acceptable to the Servicer. No
provision of this Section requiring such fidelity bond shall diminish or
relieve the Subservicer from its duties and obligations as set forth in
this Agreement. Any amounts received under any such bond with respect to
Purchased Receivables shall be deposited by the Subservicer in the
Collection Account and treated in the same manner as Collections with
respect to such Purchased Receivables. Upon request of the Purchaser or
the Servicer, the Subservicer shall cause to be delivered to the
Purchaser and the Servicer a certification evidencing coverage under such
fidelity bond. Promptly upon receipt of any notice from the surety or the
insurer that such fidelity bond has been terminated or modified in a
materially adverse manner, the Subservicer shall notify the Servicer of
any such termination or modification;
(xi) notifying the Purchaser and the Servicer of any action,
suit, proceeding, dispute, offset, deduction, defense or counterclaim
that is or may be asserted by a Payor with respect to any Purchased
Receivable; and
(xii) providing the Purchaser and the Servicer with a report on
each Determination Date in the form of Exhibit G.
(c) Notwithstanding anything herein to the contrary, all
collection functions in respect of Medicaid Receivables, Medicare Receivables
and CHAMPUS Receivables shall be performed in accordance with Medicaid
Regulations, Medicare Regulations and CHAMPUS Regulations.
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(d) The Purchaser shall not have any obligation or liability with
respect to any Purchased Receivables or related Contracts, nor shall it be
obligated to perform any of the obligations of the Subservicer hereunder.
SECTION 7.4 AUTHORIZATION OF THE SERVICER.
The Seller hereby authorizes the Servicer (including any
successors 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 Receivables to the Purchaser, in the determination of the Servicer as
the case may be, to collect all amounts due under any and all Purchased
Receivables and process all Collections and related Remittance Advices within
five Business Days of receipt thereof. Further, the Servicer is authorized, to
the extent permitted under and in compliance with applicable law and
regulations, to commence proceedings with respect to enforcing payment of such
Purchased Receivables and the related Contracts, and adjusting, settling or
compromising the account or payment thereof, to the same extent as the Seller
could have done if it had continued to own such Receivable. The Seller shall
furnish the Servicer (and any successors thereto) with any powers of attorney
and other documents necessary or appropriate to enable to Servicer to carry out
its servicing and administrative duties hereunder, and shall cooperate with the
Servicer to the fullest extent in order to ensure the collectibility of the
Purchased Receivables. Notwithstanding anything to the contrary contained
herein, the Servicer shall have the absolute and unlimited right to direct the
Subservicer to commence or settle any legal action to enforce collection of any
Purchased Receivable or to foreclose upon, repossess or take any other action
which the Servicer deems necessary or advisable with respect thereto. In no
event shall the Subservicer be entitled to make the Purchaser or the Servicer a
party to any litigation without such party's express prior written consent.
SECTION 7.5 SUBSERVICING FEE; SUBSERVICING EXPENSES.
On each Purchase Date, the Subservicer shall be paid a
subservicing fee by the Servicer for its performance as Subservicer hereunder
(the "Subservicing Fee") from the Servicer's own funds in an amount equal to
7.5% of the Collections, if any, with respect to Purchased Receivables that were
received by the Servicer during the period from the prior Determination Date to
such Determination Date; provided that, if the Seller ceases to be Subservicer
hereunder, the Servicer's obligation to pay the Subservicing Fee shall
terminate. The Servicer shall offset the Subservicing Fee from the
Administrative Fee to be deposited with the Servicer on such Purchase Date. In
the event the Subservicing Fee is greater than the Administrative Fee to be
deposited on such Purchase Date, the Servicer shall pay to the Subservicer an
amount equal to the Net Subservicing Fee for such Purchase Date. The Subservicer
shall be required to pay for all expenses incurred by the Subservicer in
connection with its activities hereunder (including any payments to accountants,
counsel or any other Person) and shall not be entitled to any payment or
reimbursement therefor.
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SECTION 7.6 ANNUAL STATEMENT AS TO COMPLIANCE.
The Subservicer shall deliver to the Purchaser and the Servicer on
or before June 1 of each year beginning with June 1, 1998, an Officer's
Certificate stating, as to each signer thereof, that (a) a review of the
activities of the Subservicer during the preceding calendar year and of
performance under this Agreement has been made under such officer's supervision;
(b) to the best of such officer's knowledge, based on such review, the
Subservicer has fulfilled all its obligations as Subservicer under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
SECTION 7.7 TRANSFER OF SERVICING BETWEEN SUBSERVICER AND
SERVICER.
(a) Upon determination by the Servicer that greater than 10% of
the Purchased Receivables remain outstanding for greater than 120 days after
their respective Billing Date, the Servicer may immediately give notice to the
Subservicer that the Servicer will assume servicing of such portion of the
Purchased Receivables that remain outstanding for greater than 120 days after
their respective Billing Date. Thereupon, the Servicer shall assume the
servicing responsibilities of Subservicer in respect of such Purchased
Receivables. The Subservicer shall thereupon provide the Servicer with all
information, documents and records (including original copies of documents), to
the extent required by the Servicer to perform its duties (including such
records stored electronically on computer tapes, magnetic discs and the like as
may be reasonably requested by the Servicer).
(b) Notwithstanding the provisions of the preceding clause (a),
the Subservicer shall maintain ongoing payment records with respect to each
Purchased Receivable serviced by the Servicer.
(c) The Subservicer shall pay all fees and costs of the Servicer
in connection with its duties under this Section 7.7.
SECTION 7.8 SUBSERVICER NOT TO RESIGN.
The Subservicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that (a) the performance of its
duties hereunder has become impermissible under applicable law and (b) there is
no reasonable action which the Subservicer could take to make the performance of
its duties hereunder permissible under applicable law. Any such determination
permitting the resignation of the Subservicer shall be evidenced as to clause
(a) above by an opinion of counsel to such effect delivered to the Purchaser and
the Servicer. No such resignation shall become effective until the Servicer
shall have assumed the responsibilities and obligations of the Subservicer in
accordance with Section 7.9.
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SECTION 7.9 APPOINTMENT OF THE SUCCESSOR SUBSERVICER
In connection with the termination of the Subservicer's
responsibilities under this Agreement pursuant to Section 8.1, the Servicer may,
in its discretion, except with respect to Section 8.1(c) in which case the
Servicer shall, (a) succeed to and assume all of the Subservicer's
responsibilities, rights, duties and obligations as Servicer (but not in any
other capacity) under this Agreement except with respect to Medicaid
Receivables, Medicare Receivables and CHAMPUS Receivables or (b) require the
Seller to continue to act as Subservicer for all of its outstanding Purchased
Receivables at the time of the Event of Seller Default.
SECTION 7.10 DUTIES OF THE SUBSERVICER TO THE SUCCESSOR SERVICER.
At any time following the succession of the Servicer to the
responsibilities of Subservicer under Section 7.9(a):
(a) The Subservicer agrees that it will terminate its activities
as Subservicer hereunder, except its collection functions in respect of
Medicaid, Medicare and CHAMPUS Receivables, in a manner acceptable to the
Servicer so as to facilitate the transfer of servicing to the Servicer
including, without limitation, timely delivery (i) to the Servicer of any funds
that were required to be remitted to the Servicer for deposit in the Collection
Account, and (ii) to the Servicer, at a place selected by the Servicer, of all
information, documents and records (including original copies of documents), to
the extent required by the Servicer to perform its duties under the Agreement
(including such records stored electronically on computer tapes, magnetic discs
and the like as may be reasonably requested by the Servicer). The Subservicer
shall account for all funds and shall execute and deliver such instruments and
do such other things as may reasonably be required to more fully and definitely
vest and confirm in the Servicer all rights, powers, duties, responsibilities,
obligations and liabilities of the Subservicer.
(b) The Subservicer shall terminate each Additional Subservicing
Agreement that may have been entered into and the Servicer shall not be deemed
to have assumed any of the Subservicer's interest therein or to have replaced
the Subservicer as a party to any such Additional Subservicing Agreement.
(c) Notwithstanding any termination of the Seller as Subservicer
hereunder, the Seller agrees that it will continue to follow the procedures set
forth in Section 7.3(b)(iii) with respect to Collections on Purchased
Receivables.
SECTION 7.11 EFFECT OF TERMINATION OR RESIGNATION.
Any termination or resignation of the Subservicer under this
Agreement shall not affect any claims that the Purchaser or the Servicer may
have against the Subservicer for events or actions taken or not taken by the
Subservicer arising prior to any such termination or resignation.
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ARTICLE VIII
EVENTS OF SELLER DEFAULT
SECTION 8.1 EVENTS OF SELLER DEFAULT.
If any of the following events (each, an "Event of Seller
Default") shall occur and be continuing:
(a) The Seller (either as Seller or Subservicer) shall materially
fail to perform or observe any term, covenant or agreement contained in this
Agreement;
(b) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for the issuance of
Debt of the Seller;
(c) The Seller shall generally not pay any of its respective Debts
as such Debts become due, or shall admit in writing its inability to pay its
Debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Seller
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or any of its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property, or any of
the actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Seller shall take any corporate action to
authorize any of the actions set forth in this subsection.
(d) Judgments or orders for the payment of money (other than such
judgments or orders in respect of which adequate insurance is maintained for the
payment thereof) in excess of $100,000 in the aggregate against the Seller or
any of its Affiliates shall remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of 30 days or more;
(e) There is a material breach of any of the representations and
warranties of the Seller set forth in Sections 4.1 or 4.2 that has remained
uncured for a period of 30 days;
(f) Any Governmental Authority (including the Internal Revenue
Servicer or the Pension Benefit Guaranty Corporation) shall file notice of a
lien with regard to any of the assets of the Seller or with regard to the Seller
other than a lien that does not materially adversely affect the financial
condition of the Seller or the Seller's ability to perform as Subservicer and
that (1) is limited by its terms to assets other than Receivables or (2) remains
undischarged for a period of 30 days;
(g) As of the first day of any month, the aggregate Net Value of
Purchased Receivables which became Defaulted Receivables or Rejected Receivables
(other than those with
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respect to which a withdrawal has previously been made from the Offset Reserve
Account) during the prior three-month period shall exceed 8% of the average
aggregate Net Values of all Purchased Receivables then owned by the Purchaser
(other than Defaulted Receivables) at the end of each of such three months;
(h) The Servicer shall have reasonably determined that any event
which with the passage of time will result in a breach under Section 8.1(g), or
that any other event which materially adversely affects the ability of the
Seller to sell Receivables to the Purchaser, the ability of the Subservicer to
collect Purchased Receivables in its capacity as Subservicer or the ability of
the Seller or Subservicer to perform hereunder or under any Related Document has
occurred. The Servicer acknowledges that the Seller may continue to experience
further deficit cash flows and net losses through the fourth quarter of 1997 in
the absence of gains on asset divestitures sufficient to offset such negative
cash flows and/or losses;
(i) The Servicer shall have reasonably determined that a
deterioration has taken place in the quality of servicing of Purchased
Receivables or other Receivables serviced by the Seller such that (a)
Receivables are billed, on average, 30 days or longer past the date of service,
or (b) the average age of Purchased Receivables exceeds 120 days;
(j) This Agreement shall for any reason cease to evidence the
transfer to the Purchaser (or its assignees or transferees) of the legal and
equitable title to, and ownership of, the Purchased Receivables;
(k) The Lockbox Account Agreement shall have been amended or
terminated without the written consent of the Purchaser and the Servicer;
(l) The amount deposited hereunder (net of withdrawals required
hereunder) in the Seller Credit Reserve Account has remained at less than the
Specified Credit Reserve Balance for fourteen consecutive days;
(m) The amount deposited hereunder (net of withdrawals required
hereunder) in the Offset Reserve Account has remained at less than the Specified
Offset Reserve Balance for fourteen consecutive days; or
(n) A Principal Amortization Event shall have been declared;
then and in any such event, the Servicer shall, by notice to the Seller and the
Purchaser declare that an Event of Seller Default shall have occurred and, the
Termination date shall forthwith occur, without demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Seller and
the Purchaser shall make no further Purchases from the Seller. Upon any such
declaration or automatic occurrence, the Purchaser and the Servicer shall have,
in addition to all other rights and remedies under this Agreement, all other
rights and remedies
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provided under the UCC and other applicable law, which rights shall be
cumulative provided, that, if an event of the kind described in 8.1(c) occurs
with regard to the Seller, an Event of Seller Default shall be deemed to have
occurred automatically.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNITIES BY THE SELLER.
(a) Without limiting any other rights that the Purchaser, the
Servicer, or any director, officer, employee or agent of either such party (each
an "Indemnified Party") may have hereunder or under applicable law, the Seller
hereby agrees to indemnify each Indemnified Party from and against any and all
claims, losses, liabilities, obligations, damages, penalties, actions,
judgments, suits, and related costs and expenses of any nature whatsoever,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") which may be imposed
on, incurred by or asserted against an Indemnified Party in any way arising out
of or relating to any breach of the Seller's obligations (including its
obligations as Subservicer) under this Agreement or the ownership of the
Purchased Receivables or in respect of any Receivable or any Contract,
excluding, however, (i) Indemnified Amounts to the extent resulting from gross
negligence or willful misconduct on the part of such Indemnified Party or (ii)
recourse for unpaid Purchased Receivables. Without limiting or being limited by
the foregoing, the Seller shall pay on demand to each Indemnified Party any and
all amounts necessary to indemnify such Indemnified Party from and against any
and al Indemnified Amounts relating to or resulting from:
(A) reliance on any representation or warranty made or deemed
made by the Seller (or any of its officers) under or in connection with
this Agreement (except with respect to a Purchased Receivable, as to
which the Purchaser's remedies are set forth in Section 4.3), any
report or any other information delivered by the Seller pursuant
hereto, which shall have been incorrect in any material respect when
made or deemed made or delivered;
(B) the failure by the Seller to comply with any term, provision
or covenant contained in this Agreement, or any agreement executed by
it in connection with this Agreement or with any applicable law, rule
or regulation with respect to any Purchased Receivable, the related
Contract, or the nonconformity of any Purchased Receivable or the
related Contract with any such applicable law, rule or regulation; or
(C) the failure to vest and maintain vested in the Purchaser,
or to transfer to the Purchaser, legal and equitable title to and
ownership of the Receivables which are, or are purported to be,
Purchased Receivables, together with all Collections in respect
thereof, free and clear of any Adverse Claim (except as permitted
hereunder) whether existing at the time of the Purchase of such
Receivable or at any time thereafter.
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(b) Any Indemnified Amounts subject to the indemnification
provisions of this Section shall be paid to the Indemnified Party within five
Business Days following demand therefor, together with interest at the lesser of
12% per annum or the highest rate permitted by law from the date of demand for
such Indemnified Amount.
SECTION 9.2 SECURITY INTEREST.
The Seller hereby grants to the Purchaser a first priority
perfected security interest in the Seller's right, title and interest in, to and
under all of the Seller's Receivables not sold to the Purchaser hereunder,
including all rights to payments under any related Contracts or other agreements
with all Payors, and all the Collections, Records and proceeds thereof, as
security for the timely payment and performance of any and all obligations the
Seller or the Subservicer may owe the Purchaser under Sections 2.3, 4.3, 5.1(f),
9.1(a) and (b), and 10.4, but excluding recourse for unpaid Purchased
Receivables. This Section 9.2 shall constitute a security agreement under the
UCC and any other applicable law and the Purchaser shall have the rights and
remedies of a secured party thereunder. Such security interest shall be further
evidenced by Seller's execution of appropriate UCC-1 financing statements
prepared by and acceptable to the Purchaser, and such other further assurances
that may be reasonably requested by the Purchaser from time to time.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 NOTICES, ETC.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, shall be in writing and mailed or
telecommunicated, or delivered as to each party hereto, as its address set forth
under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto. All
such notices and communications shall not be effective until received by the
party to whom such notice or communication is addressed.
SECTION 10.2 REMEDIES.
No failure on the part of the Purchaser or the Servicer to
exercise, and no delay in exercising, any right hereunder or under any Purchase
Assignment shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
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SECTION 10.3 BINDING EFFECT; ASSIGNABILITY.
This Agreement shall be binding upon and inure to the benefit of
the Seller, the Subservicer, the Purchaser, the Servicer and their respective
successors and permitted assigns. Neither the Seller nor the Subservicer may
assign any of their rights and obligations hereunder or any interest herein
without the prior written consent of the Purchaser and the Servicer. The
Purchaser may, at any time, without the consent of the Seller or the
Subservicer, assign any of its rights and obligations hereunder or interest
herein to any Person. Any such assignee may further assign at any time its
rights and obligations hereunder or interests herein without the consent of the
Seller or the Subservicer. Without limiting the generality of the foregoing, the
Seller acknowledges that the Purchaser has assigned its rights hereunder to the
Trustee for the benefit of third parties. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms, and shall remain in full force and effect until its termination;
provided, that the rights and remedies with respect to any breach of any
representation and warranty made by the Seller or the Servicer pursuant to
Article IV and the indemnification and payment provisions of Article IX shall be
continuing and shall survive any termination of this Agreement.
SECTION 10.4 COSTS, EXPENSES AND TAXES.
(a) In addition to the rights of indemnification under Article IX,
the Seller agrees to pay upon demand, all reasonable costs and expenses in
connection with the administration (including periodic auditing, modification
and amendment) of this Agreement, and the other documents to be delivered
hereunder, including, without limitation: (i) the reasonable fees and
out-of-pocket expenses of counsel for the Purchaser or the Servicer with respect
to (A) advising the Purchaser as to its rights and remedies under this Agreement
or (B) the enforcement (whether through negotiations, legal proceedings or
otherwise) of this Agreement, the Purchase Assignment or the other documents to
be delivered hereunder; and (ii) any and all stamp, sales, excise and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing or recording of this Agreement, each Purchase
Assignment or the other agreements and documents to be delivered hereunder, and
agrees to indemnify and save each Indemnified Party from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
(b) If the Seller or the Subservicer fails to perform any
agreement or obligation contained herein, the Purchaser may, or may direct the
Servicer to, (but shall not be required to) itself perform, or cause performance
of, such agreement or obligation, and the expenses of the Purchaser or the
Servicer incurred in connection therewith shall be payable by the party which
has failed to so perform upon the Purchaser's or the Servicer's demand therefor.
SECTION 10.5 NO PROCEEDINGS.
The Seller and the Subservicer each hereby agree that it will not,
directly or indirectly, institute, or cause to be instituted, against the
Purchaser any proceeding of the type
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referred to in Section 8.1(c) so long as there shall not have elapsed one year
plus one day from the termination of the NPF-WL, Inc. Health Care Receivables
Securitization Program.
SECTION 10.6 AMENDMENTS; WAIVERS; CONSENTS.
No modification, amendment or waiver of, or with respect to, any
provision of this Agreement, and all other agreements, instruments and documents
delivered pursuant hereto or thereto, nor consent to any departure by the Seller
or the Subservicer from any of the terms or conditions thereof, shall be
effective unless it shall be in writing and signed by each of the parties
hereto. Any waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No consent to or demand on the Seller or
the Subservicer in any case shall, in itself, entitle it to any other consent or
further notice or demand in similar or other circumstances. This Agreement, the
Related Documents and the documents referred to therein embody the entire
agreement among the Seller, the Subservicer, the Purchaser and the Servicer, and
supersede all prior agreements and understandings relating to the subject
hereof, whether written or oral.
SECTION 10.7 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF OHIO, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE INTERESTS OF THE PURCHASER IN THE PURCHASED RECEIVABLES OR REMEDIES
HEREUNDER OR THEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF OHIO.
(b) THE SELLER AND THE SUBSERVICER HEREBY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF OHIO AND THE UNITED STATES DISTRICT
COURT LOCATED IN THE SOUTHERN DISTRICT OF OHIO, AND EACH WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH ON THE SIGNATURE PAGE
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE
SAME SHALL HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE SELLER,
AND THE SUBSERVICER EACH HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE
PURCHASER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF THE PURCHASER TO BRING ANY ACTION OR PROCEEDING AGAINST THE SELLER
OR ITS PROPERTY, OR THE SUBSERVICER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION. THE SELLER AND THE SUBSERVICER EACH HEREBY AGREE THAT THE
EXCLUSIVE AND
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APPROPRIATE FORUMS FOR ANY DISPUTE HEREUNDER ARE THE COURTS OF THE STATE OF OHIO
AND THE UNITED STATES DISTRICT COURT LOCATED IN THE SOUTHERN DISTRICT OF OHIO
AND AGREE NOT TO INSTITUTE ANY ACTION IN ANY OTHER FORUM.
(c) THE SELLER, AND THE SUBSERVICER EACH HEREBY WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
SECTION 10.8 EXECUTION IN COUNTERPARTS; SEVERABILITY.
This Agreement may be executed in any number of counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
HEALTHPLAN SOUTHEAST, INCORPORATED, as Seller and
as Subservicer
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
Address at which the chief executive office is
located:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Phone number: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier number: ▇▇▇-▇▇▇-▇▇▇▇
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Additional locations at which Records are
maintained:
▇-▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Additional names under which, and locations at
which, Seller does business:
Discovery Healthplan
NPF-WL, INC.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇
NATIONAL PREMIER FINANCIAL
SERVICES, INC.
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇
45