EXHIBIT 10.3
LOAN AND SECURITY AGREEMENT
Dated as of October 24, 2002
Among
FSQC FUNDING CO., LLC,
as Borrower,
the Lenders party hereto,
DRESDNER KLEINWORT ▇▇▇▇▇▇▇▇▇▇▇ LLC,
as Co-Program Manager, Syndication Agent and Lead Arranger
HEALTHCARE FINANCE GROUP, INC.,
as Co-Program Manager
and
HFG HEALTHCO-4 LLC,
as Collateral Agent
TABLE OF CONTENTS
Page
ARTICLE I. COMMITMENT; REVOLVING LOAN
Section 1.01. Commitments........................................1
Section 1.02. Revolving Loans....................................2
Section 1.03. Notice of Borrowing................................2
Section 1.04. Termination and Reduction of the Commitments.......3
Section 1.05. Interest...........................................3
Section 1.06. Fees ...........................................4
Section 1.07. Prepayments of Revolving Loans.....................4
Section 1.08. Procedures for Payment; Evidence of Debt ..........5
Section 1.09. Taxes ...........................................6
Section 1.10. Indemnities........................................6
Section 1.11. Increased Costs....................................8
Section 1.12. Break Funding Payments.............................9
Section 1.13. Telephonic Notice..................................9
Section 1.14. Maximum Interest...................................9
Section 1.15. Computation of Interest and Fees..................10
ARTICLE II. COLLECTION AND DISTRIBUTION
Section 2.01. Collections on the Receivables....................10
Section 2.02. Distributions.....................................10
Section 2.03. Distribution of Funds at the Maturity Date or
Upon an Event of Default........................11
Section 2.04. Distributions to the Borrower Generally...........11
ARTICLE III. REPRESENTATIONS AND WARRANTIES; COVENANTS; EVENTS OF DEFAULT
Section 3.01. Representations and Warranties; Covenants.........11
Section 3.02. Events of Default; Remedies.......................11
Section 3.03. Attorney-in-Fact..................................12
ARTICLE IV. SECURITY
Section 4.01. Grant of Security Interest........................12
ARTICLE V. MISCELLANEOUS
Section 5.01. Amendments, Waivers...............................13
Section 5.02. Notices, etc......................................13
Section 5.03. Assignability; Participations.....................14
Section 5.04. Further Assurances................................16
Section 5.05. Costs and Expenses; Collection Costs..............16
Section 5.06. Confidentiality...................................17
Section 5.07. Term and Termination; Early Termination Fee.......17
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Page
Section 5.08. No Liability; No Fiduciary Duty...................18
Section 5.09. Entire Agreement; Severability....................19
Section 5.10. Governing Law.....................................19
Section 5.11. Waiver of Jury Trial, Jurisdiction and Venue .....19
Section 5.12. Execution in Counterparts.........................20
Section 5.13. No Proceedings....................................20
ARTICLE VI. AGENTS
EXHIBITS
--------
Exhibit I Definitions
Exhibit II Conditions of Revolving Loans
Exhibit III Representations and Warranties
Exhibit IV Covenants
Exhibit V Events of Default
Exhibit VI Eligibility Criteria
Exhibit VII-A Form of Borrowing Base Certificate
Exhibit VII-B Form of Borrower's Certificate
Exhibit VIII Form of Depositary Agreement
Exhibit IX-A Form of Opinion of Counsel
Exhibit IX-B Form of Opinion of Counsel
Exhibit X Form of Assignment of Contracts
Exhibit XI Form of Government Depositary Agreement
SCHEDULES
---------
Schedule I Addresses for Notices
Schedule II Credit and Collection Policy
Schedule III Disclosures
Schedule IV Lockbox Information
Schedule V Net Value Factors
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LOAN AND SECURITY AGREEMENT, dated as of October 24, 2002, among FSQC
FUNDING CO., LLC, a limited liability company organized under the laws of the
State of Delaware (together with its successors and assigns, the "Borrower"),
the LENDERS party hereto, DRESDNER KLEINWORT ▇▇▇▇▇▇▇▇▇▇▇ LLC, a Delaware limited
liability company, as a Program Manager, Lead Arranger and Syndication Agent,
HEALTHCARE FINANCE GROUP, INC., a Delaware corporation, as a Program Manager,
and HFG HEALTHCO-4 LLC, a Delaware limited liability company, as Collateral
Agent.
Certain terms that are capitalized and used throughout this Agreement
are defined in Exhibit I to this Agreement. References herein, and in the
Exhibits and Schedules hereto, to the "Agreement" refer to this Agreement, as
amended, restated, modified or supplemented from time to time in accordance with
its terms (this "Agreement").
The Borrower (i) is a limited liability company owned by the Providers,
(ii) has acquired and will acquire healthcare receivables from the Providers by
purchase or contribution to the capital of the Borrower pursuant to the RPTA, as
determined from time to time by the Borrower and the Providers, and (iii) wishes
to borrow funds from the Lenders on a continuing and revolving basis secured by
all of its assets, including the healthcare receivables acquired from the
Providers.
The Lenders are, severally and not jointly, prepared to make revolving
loans secured by the Borrower's assets, including such healthcare receivables on
the terms and subject to the conditions set forth herein.
Accordingly, the parties agree as follows:
ARTICLE I.
COMMITMENT; REVOLVING LOANS
Section 1.01. Commitments. Subject to and upon the terms and conditions
herein set forth, each Lender, severally and not jointly, agrees to make
Revolving Loans to the Borrower, on any Funding Date, in an aggregate principal
amount at any time outstanding not to exceed the amount of such Lender's
Revolving Commitment as set forth under its name on the signature pages hereto
or in the Assignment and Assumption pursuant to which such Lender assumed its
Revolving Commitment, as applicable, as such Revolving Commitment may be
increased or reduced from time to time in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the aggregate principal amount of
Revolving Loans outstanding at any time to the Borrower shall not exceed the
lesser of (i) the Total Revolving Commitment and (ii) the Borrowing Base minus
Accrued Amounts as of such time (the lesser of (i) and (ii) being the "Borrowing
Limit").
(a) Subject to the foregoing and within the foregoing limits, the
Borrower may borrow, repay (without premium or penalty) and reborrow Revolving
Loans, on and after the date hereof through, but not including, the Maturity
Date, subject to the terms, provisions and limitations set forth herein and in
Exhibit II hereof, including, without limitation, the requirement that no
Revolving Loan shall be made hereunder if after giving effect thereto the sum of
the aggregate principal amount of the Revolving Loans outstanding hereunder
would exceed the Borrowing Limit.
(b) So long as no Default or Event of Default then exists or would
result therefrom, the Borrower may request by Written Notice to the Program
Manager, and the Program Manager and the Lenders may approve, in their sole
discretion, an increase in the Total Revolving Commitment by an amount equal to
$5,000,000 or an integral multiple thereof up to a maximum of $25,000,000. If
the Program Manager and the Lenders approve such request, then the Program
Manager shall request that the Syndication Agent use its best efforts to arrange
for a further syndication of the additional commitments to the Lenders or other
Persons reasonably satisfactory to the Borrower. No Lender shall be required to
participate in any of the additional commitments. The Borrower shall, upon the
effective date of any such increase, pay to the Syndication Agent and to the
Lenders or other Persons agreeing to such additional commitments such fees as
shall be agreed upon by the Syndication Agent, such Lenders or such other
Persons, as the case may be, and the Borrower.
Section 1.02. Revolving Loans. The Revolving Loans made by the Lenders
on any Funding Date shall be made by the Lenders ratably in accordance with
their respective Revolving Commitments and shall be in a minimum amount of
$500,000 and in an aggregate amount that is an integral multiple of $250,000;
provided that a Revolving Loan may be in an aggregate amount that is equal to
the entire unused balance of the Borrowing Limit.
(a) Each Lender at its option may make any Revolving Loan by causing
any domestic or foreign branch or Affiliate of such Lender to make such
Revolving Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Revolving Loan in accordance with the
terms of this Agreement.
(b) Each Lender shall make each Revolving Loan to be made by it
hereunder on the proposed Funding Date thereof by wire transfer of immediately
available funds by 12:00 noon, (New York City time) to the account of the
Program Manager most recently designated by it for such purpose by notice to the
Lenders. The Program Manager will make such Revolving Loans available to the
Borrower by promptly transferring the amount so received, in like funds, to the
Borrower Account. The failure of any Lender to make any Revolving Loan or
portion thereof required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Revolving Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Revolving Loans as required.
Section 1.03. Notice of Borrowing. Whenever the Borrower desires a
Revolving Loan be made, the Borrower shall give the Program Manager, not later
than (x) 10:00 a.m. (New York City time) two Business Days prior to the proposed
Funding Date of a LIBOR Loan and (y) 11:00 a.m. (New York City time) on the
proposed Funding Date of a Market Rate Loan or a Prime Rate Loan, written
notice, or telephonic notice from an Authorized Representative confirmed
promptly by a Written Notice (which notice, in each case, shall be irrevocable)
of its desire to make a borrowing of a Revolving Loan. Each notice of borrowing
under this Section 1.03 shall (i) be signed by the Borrower, (ii) be
substantially in the form of Exhibit VII-B hereto (each, a "Borrower's
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Certificate"), (iii) specify the proposed Funding Date (which in each instance
shall be a Business Day), (iv) specify the aggregate amount of the Revolving
Loan being requested, (v) specify whether such Revolving Loan is to be a Market
Rate Loan, a LIBOR Loan or a Prime Rate Loan, (vi) specify the Interest Period
to be applicable thereto, which shall be a period contemplated by the definition
of the term "Interest Period" and (vii) be accompanied by a Borrowing Base
Certificate dated as of such date. If no Interest Period is specified, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration in the case of a LIBOR Loan or a Prime Rate Loan and one day in the
case of a Market Rate Loan.
Promptly following receipt of a Borrower's Certificate in accordance
with this Section, the Program Manager shall advise each applicable Lender of
the details thereof and of the amount of such Lender's portion of the requested
Revolving Loan.
Section 1.04. Termination and Reduction of the Commitments. On the
Maturity Date, the Revolving Commitments shall terminate automatically and the
outstanding balance of each Revolving Loan shall become due and payable in full.
(a) The Borrower may at any time terminate in whole, pursuant to
Section 5.07(c), or from time to time reduce in part, the Total Revolving
Commitment, ratably among the Lenders in accordance with the amounts of their
Revolving Commitments; provided, however, that the Total Revolving Commitment
shall not be reduced at any time to an amount less than the Revolving Loans
outstanding at such time. Each partial reduction of the Total Revolving
Commitment shall be in a minimum $1,000,000 or an integral multiple of $500,000
in excess thereof.
(b) The Borrower shall provide the Program Manager with Written Notice
(which shall be irrevocable) of any election to terminate or reduce the Total
Revolving Commitment under paragraph (b) of this Section at least five Business
Days prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. Promptly following receipt of any
such notice, the Program Manager shall advise the Lenders of the contents
thereof.
(c) On the effective date of such decrease, the Borrower shall pay to
each Lender, through the Program Manager, (i) the Non-Utilization Fee due and
owing through and including the date of such termination or reduction on the
amount of the Revolving Commitment of such Lender so terminated or reduced, and
(ii) the Early Termination Fee, if any, required to be paid pursuant to Section
5.07(d).
Section 1.05. Interest. Subject to the provisions of Section 1.05(e)
and (f) hereof, each Market Rate Loan shall bear interest at a rate per annum
equal to the Market Rate plus 3.60%.
(a) Subject to the provisions of Section 1.05(e) and (f) hereof, each
LIBOR Loan shall bear interest at a rate per annum equal to LIBOR plus 3.60%.
(b) Subject to the provisions of Section 1.05(e) and (f) hereof, each
Prime Rate Loan shall bear interest at a rate per annum equal to the Prime Rate
plus 2.00%.
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(c) The Borrower shall pay interest on the average daily Outstanding
Balance during the prior Month (i) on the first Business Day of each Month, and
(ii) on the Maturity Date (whether by acceleration or otherwise).
(d) Notwithstanding anything to the contrary contained herein, while
any Event of Default is continuing, each Outstanding Balance shall bear interest
at a rate per annum equal to 4.00% in excess of the rate then otherwise
applicable pursuant to paragraph (a) of this Section. Interest accrued pursuant
to this paragraph (b) shall be payable on demand.
(e) The Program Manager shall determine the interest rate applicable to
the Revolving Loans and shall promptly advise the Borrower and the Lenders
thereof.
(f) The Borrower shall have the right at any time upon prior
irrevocable Written Notice to the Program Manager given in the manner and at the
times specified in Section 1.03 hereof to convert or continue all or any portion
of any Revolving Loan as a LIBOR Loan, a Market Rate Loan or a Prime Rate Loan
for any permissible Interest Period, subject to the terms and conditions of this
Agreement, including without limitation Section 1.02(a). If the Borrower fails
to deliver a timely notice to convert or continue any Revolving Loan, the
Borrower shall be deemed to have elected to convert or continue, as the case may
be, such Revolving Loan as a LIBOR Loan.
Section 1.06. Fees. The Borrower shall pay to the Program Manager, for
the account of each Lender, a fee (the "Non-Utilization Fee") equal to 0.40% per
annum on the average amount, calculated on a daily basis, by which the Revolving
Commitment of such Lender exceeded the Revolving Loans made by such Lender
during the period from and including the Initial Funding Date to but excluding
the date on which such Revolving Commitment terminates. Accrued Non- Utilization
Fees shall be payable in arrears on (i) the first Business Day of each Month,
commencing November 1, 2002, (ii) on the date of any reduction of the Revolving
Commitments pursuant to this Agreement, including without limitation Sections
1.04 and 5.07(c) and (iii) on the Maturity Date.
(a) The Borrower shall pay to the to the Program Manager, for the
account of the Master Servicer, a fee (the "Collateral Tracking Fee") equal to
$25,000 per annum, which fee shall be due and payable in advance, on the Initial
Funding Date and on the first Business Day of each Month thereafter.
(b) The Borrower shall pay to the Lead Arranger, for its own account,
fees in the amounts and at the times separately agreed upon in writing between
the Borrower and the Lead Arranger.
Section 1.07. Prepayments of Revolving Loans. The Borrower may, on any
Funding Date, prepay any Revolving Loan, in whole or in part, without penalty
(except as otherwise provided herein); provided, however, that the Borrower
shall provide the Program Manager with at least five Business Days' prior
Written Notice (which notice shall be irrevocable) to the extent such reduction
shall be more than the greater of (i) $3,000,000 or (ii) 20% of the then
aggregate
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outstanding principal amount of all Revolving Loans. Promptly following receipt
of any such notice, the Program Manager shall advise the Lenders of the contents
thereof.
(a) If at any time the aggregate outstanding principal amount of all
Revolving Loans exceeds the Borrowing Limit at such time, the Borrower shall
promptly, in accordance with Article II hereof, eliminate such excess by paying
an amount equal to such excess until such excess is eliminated in full.
(b) All prepayments hereunder shall be accompanied by accrued interest
to the extent required by Section 1.05.
Section 1.08. Procedures for Payment; Evidence of Debt . Each payment
required to be made hereunder by Borrower (whether of principal, interest, fees
or otherwise) shall be made not later than 12:00 noon (New York City time) on
the day when due in lawful money of the United States of America to the Lender
without counterclaim, offset, claim or recoupment of any kind. All such payments
shall be made to the Program Manager at the offices of Healthcare Finance Group,
Inc. at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ with a notification copy to
Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ LLC at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
and the Program Manager shall distribute any such payments received by it in
accordance with Article II hereof.
(a) Whenever any payment to be made hereunder or under any other
Document shall be stated to be due and payable on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and such
extension of time shall in such case be included in computing interest on such
payment.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Revolving Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder. The Program Manager shall maintain accounts in which it shall record
the amount of each Revolving Loan made hereunder, the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and the amount of any sum received or applied by the Program
Manager pursuant to Article II for the account of the Lenders and each Lender's
share thereof.
(c) The entries made in the accounts maintained pursuant to paragraph
(c) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of any Lender or
the Program Manager to maintain such accounts or any error therein shall not in
any manner affect the obligation of the Borrower to repay the Revolving Loans in
accordance with the terms of this Agreement.
Section 1.09. Taxes. Any and all payments required to be made by or on
account of the Borrower hereunder (whether of principal, interest, fees or
otherwise) shall be made free and clear of, and without deduction for, any
present or future withholding or other taxes, duties or charges of any nature
imposed on such payments or prepayments by or on behalf of any Governmental
Entity thereof or therein, except for Excluded Taxes. If any such taxes, duties
or charges are so levied or
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imposed on any payment to any Lender, the Borrower will make additional payments
in such amounts as may be necessary so that the net amount received by such
Lender, after withholding or deduction for or on account of all taxes, duties or
charges, including deductions applicable to additional sums payable under this
Section, will be equal to the amount provided for herein. Whenever any taxes,
duties or charges are payable by the Borrower with respect to any payments
hereunder, the Borrower shall furnish promptly to the Program Manager
information, including certified copies of official receipts (to the extent that
the relevant governmental authority delivers such receipts), evidencing payment
of any such taxes, duties or charges so withheld or deducted. If the Borrower
fails to pay any such taxes, duties or charges when due to the appropriate
taxing authority or fails to remit to the Program Manager the required
information evidencing payment of any such taxes, duties or charges so withheld
or deducted, the Borrower shall indemnify the Lenders for any incremental taxes,
duties, charges, interest or penalties that may become payable by any Lender as
a result of any such failure.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Borrower agrees to pay any present or future stamp or documentary
taxes, any intangibles tax or any other sales, excise or property taxes, charges
or similar levies now or hereafter assessed that arise from and are attributable
to any payment made hereunder or from the execution, delivery of, or otherwise
with respect to, this Agreement or any other Documents and any and all recording
fees relating to any Documents securing any Lender Debt ("Other Taxes").
(b) The Borrower shall indemnify each Lender for the full amount of any
taxes, duties or charges other than Excluded Taxes (including, without
limitation, any taxes other than Excluded Taxes imposed by any jurisdiction on
amounts payable under this Section) duly paid or payable by such Lender and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. Indemnification payments due under this Section shall be made
within 30 days after written demand therefor.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section shall survive the payment in full of principal and interest
hereunder.
Section 1.10. Indemnities. The Borrower hereby agrees to indemnify the
Program Manager, the Syndication Agent, the Lead Arranger and each Lender on
demand against any loss or expense which such Program Manager, Syndication
Agent, Lead Arranger, Lender or branch or Affiliate of such Person may sustain
or incur as a consequence of: (i) any default in payment or prepayment of the
principal amount of any Revolving Loan or any portion thereof made to it or any
portion thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by irrevocable notice of payment or prepayment, or otherwise);
(ii) the effect of the occurrence of any Event of Default upon any Revolving
Loan made to it or any portion thereof; (iii) the payment or prepayment of the
principal amount of any Revolving Loan made to it or any portion thereof, on any
day other than a Funding Date; or (iv) the failure by the Borrower to accept a
Revolving Loan after it has requested such borrowing; in each case including,
but not limited to, any loss or expense sustained or incurred in liquidating or
employing deposits from third parties acquired to effect or maintain such
Revolving Loan or any portion thereof. The Lender shall provide to the Borrower
a
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statement, supported when applicable by documentary evidence, explaining the
amount of any such loss or expense it incurs, which statement shall be
conclusive absent manifest error.
(a) The Borrower hereby agrees to indemnify and hold harmless each
Lender, the Program Manager, the Master Servicer, the Syndication Agent, the
Lead Arranger, the Collateral Agent and their respective Affiliates, directors,
officers, agents, representatives, counsel and employees and each other Person,
if any, controlling them or any of their respective Affiliates within the
meaning of either Section 15 of the Securities Act of 1933, as amended, or
Section 20(a) of The Securities Exchange Act of 1934, as amended (each, an
"Indemnified Party"), from and against any and all losses, claims, damages,
costs, expenses (including reasonable counsel fees and disbursements) and
liabilities which may be incurred by or asserted against such Indemnified Party
with respect to or arising out of the commitments hereunder to make Revolving
Loans, or the financings contemplated hereby, the other Documents, the
Collateral (including, without limitation, the use thereof by any of such
Persons or any other Person, the execution and delivery of this Agreement or any
agreement or instrument contemplated hereby, the exercise by any Indemnified
Party of rights and remedies or any power of attorney with respect thereto, and
any action or inaction of any Indemnified Party under and in accordance with any
Documents), the use of proceeds of any financial accommodations provided
hereunder, any investigation, litigation or other proceeding (brought or
threatened) relating thereto, or the role of any such Person or Persons in
connection with the foregoing, whether or not they or any other Indemnified
Party is named as a party to any legal action or proceeding ("Claims"). The
Borrower will not, however, be responsible to any Indemnified Party hereunder
for any Claims to the extent that a court having jurisdiction shall have
determined by a final nonappealable judgment that any such Claim shall have
arisen out of or resulted from (a)(i) actions taken or omitted to be taken by
such Indemnified Party by reason of the bad faith, willful misconduct or gross
negligence of any Indemnified Party, or (ii) in violation of any law or
regulation applicable to such Indemnified Party (except to the extent that such
violation is attributable to any breach of any representation, warranty or
agreement by or on behalf of the Borrower, any Provider or any of their
respective designees, in each case, as determined by a final nonappealable
decision of a court of competent jurisdiction), or (b) a successful claim by any
Provider against such Indemnified Party ("Excluded Claims"). The Indemnified
Party shall give the Borrower prompt Written Notice of any Claim setting forth a
description of those elements of the Claim of which such Indemnified Party has
knowledge. The Program Manager, as an Indemnified Party shall be permitted
hereunder to select counsel to defend such Claim at the expense of the Borrower
and, if such Indemnified Party shall decide to do so, then all such Indemnified
Parties shall select the same counsel to defend such Indemnified Parties with
respect to such Claim; provided, however, that if any such Indemnified Party
shall in its reasonable opinion consider that the retention of one joint counsel
as aforesaid shall result in a conflict of interest, such Indemnified Party may,
at the expense of the Borrower, select its own counsel to defend such
Indemnified Party with respect to such Claim. The Indemnified Parties and the
Borrower and their respective counsel shall cooperate with each other in all
reasonable respects in any investigation, trial and defense of any such Claim
and any appeal arising therefrom.
(b) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Program Manager under paragraph (a) or (b) of this Section,
each Lender severally agrees to pay to the Program Manager such Lender's pro
rata share (determined as of the time that the
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unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred or asserted
against the Program Manager in its capacity as such.
(c) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnified Party, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement, the other Documents or any agreement or
instrument contemplated hereby or thereby, the financings contemplated hereunder
or thereunder, any Revolving Loan or the use of the proceeds thereof.
Section 1.11. Increased Costs. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in LIBOR); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Revolving Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or main taining any Revolving Loan (or of maintaining its
obligation to make any such Revolving Loan) or to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of principal, interest
or otherwise with respect to its Revolving Loans), then the Borrower will pay to
such Lender such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered. If the Borrower determines
in good faith that such additional amount or amounts are unreasonable, the
Borrower may terminate this Agreement upon payment in full of such additional
amount or amounts and all amounts payable pursuant to Section 5.07 other than
the Early Termination Fee.
(a) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Revolving Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender,
as the case may be, such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such reduction suffered. If the
Borrower determines in good faith that such additional amount or amounts are
unreasonable, the Borrower may terminate this Agreement upon payment in full of
such additional amount or amounts and all amounts payable pursuant to Section
5.07 other than the Early Termination Fee.
(b) A certificate of a Lender setting forth in reasonable detail the
calculation of the amount or amounts necessary to compensate such Lender or its
holding company, as the case
8
may be, as specified in paragraph (a) or (b) of this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(c) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
Section 1.12. Break Funding Payments. In the event of (a) the payment
of any principal of any Revolving Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default) or (b)
the failure to borrow, convert, continue or prepay any Revolving Loan on the
date specified in any notice delivered pursuant hereto (regardless of whether
such notice may be revoked), then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. A certificate of any Lender setting forth in reasonable detail any amount
or amounts that such Lender is entitled to receive pursuant to this Section
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
Section 1.13. Telephonic Notice. Without in any way limiting the
Borrower's obligation to confirm in writing any telephonic notice of a
borrowing, the Program Manager may act without liability upon the basis of
telephonic notice believed by the Program Manager in good faith to be from an
Authorized Representative of the Borrower prior to receipt of written
confirmation.
Section 1.14. Maximum Interest. No provision of this Agreement shall
require the payment to any Lender or permit the collection by any Lender of
interest in excess of the maximum rate of interest from time to time permitted
(after taking into account all consideration which constitutes interest) by laws
applicable to the Lender Debt and binding on such Lender (such maximum rate
being such Lender's "Maximum Permissible Rate").
(a) If the amount of interest (computed without giving effect to this
Section) payable on the first Business Day of each Month in respect of the
preceding interest computation period would exceed the amount of interest
computed in respect of such period at a Lender's Maximum Permissible Rate, the
amount of interest payable to such Lender on such date in respect of such period
shall be computed at such Lender's Maximum Permissible Rate.
(b) If at any time and from time to time: (i) the amount of interest
payable to any Lender on the first Business Day of each Month shall be computed
at the Maximum Permissible Rate pursuant to the preceding subsection (b); and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the
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amount of interest payable to such Lender computed at the Maximum Permissible
Rate, then the amount of interest payable to such Lender in respect of such
subsequent interest computation period shall continue to be computed at the
Maximum Permissible Rate until the amount of interest payable to such Lender
shall equal the total amount of interest which would have been payable to such
Lender if the total amount of interest had been computed without giving effect
to the preceding subsection (b).
Section 1.15. Computation of Interest and Fees. All interest, fees and
other amounts calculated by the Program Manager hereunder or under any other
Document shall be computed on the basis of actual days elapsed (including the
first day but excluding the last day) over a 360-day year.
ARTICLE II.
COLLECTION AND DISTRIBUTION
Section 2.01. Collections on the Receivables. The Collateral Agent, for
the benefit of the Lenders, shall be entitled with respect to all Receivables,
(i) to receive and to hold as collateral all Receivables and all Collections on
Receivables in accordance with the terms of the Depositary Agreement, and (ii)
to have and to exercise any and all rights (x) to collect, record, track and,
during the continuance of an Event of Default, take all actions to obtain
Collections with respect to all Receivables payable by non-Governmental
Entities, and (y) to the extent permitted by law and in a manner consistent with
all applicable laws and regulations, record, track and, during the continuance
of an Event of Default, take all actions to obtain Collections with respect to
all Receivables payable by Governmental Entities.
Section 2.02. Distributions. On each Business Day, and provided, that
no Event of Default is continuing, the Program Manager shall distribute any and
all cash Collections in the Collection Account prior to 12:00 p.m. (New York
City time) on such Business Day and any other payments received hereunder as
follows: FIRST, to the Lenders and the Master Servicer, on a pro rata basis, an
amount in cash equal to fees and interest that are due and payable as of such
Business Day and have not otherwise been paid in full by the Borrower, if any,
until such amounts have been paid in full; SECOND, to the Lenders, on a pro rata
basis, an amount in cash equal to the Borrowing Base Deficiency, if any, until
such amount is paid in full; THIRD, to the Lenders, on a pro rata basis, an
amount in cash equal to the reduction of the principal amount of the Revolving
Loan, if any, directed by the Borrower in writing to be repaid on such Business
Day pursuant to Section 1.07(a) until such amount has been paid in full; FOURTH,
to the Lenders, on a pro rata basis, an amount in cash equal to the payment of
any other Lender Debt due and payable on such Business Day, if any, until such
amount has been paid in full; and FIFTH, to the Borrower, all remaining amounts
of Collections.
Section 2.03. Distribution of Funds at the Maturity Date or Upon an
Event of Default. At the Maturity Date or upon the occurrence and during the
continuance of an Event of Default, subject to the rights and remedies of the
Lender pursuant to Section 3.02 hereof, the Program Manager shall distribute any
and all Collections and other payments received hereunder as follows:
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FIRST, to the Lenders, the Master Servicer and the Program Manager, on a pro
rata basis, an amount in cash equal to any and all accrued fees and collection
costs as set forth in Sections 1.06 and 5.05, until such amount has been paid in
full; SECOND, to the Lenders, on a pro rata basis, an amount in cash equal to
all accrued and unpaid interest on the Revolving Loans (at the rates established
under Section 1.05) until such amount has been paid in full; THIRD, to the
Lenders, on a pro rata basis, an amount in cash equal to the principal amount of
the Revolving Loans, until such amount is paid in full; FOURTH, to the Lenders,
on a pro rata basis, an amount in cash equal to the payment of any other Lender
Debt due and payable on such date, until such amount has been paid in full; and
FIFTH, to the Borrower, all remaining amounts of Collections.
Section 2.04. Distributions to the Borrower Generally. Distributions to
the Borrower on each Business Day shall be deposited in the Borrower Account.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF DEFAULT
Section 3.01. Representations and Warranties; Covenants. The Borrower
makes on the Initial Funding Date and on each subsequent Funding Date, the
representations and warranties set forth in Exhibit III hereto, and hereby
agrees to perform and observe the covenants set forth in Exhibit IV hereto.
Section 3.02. Events of Default; Remedies. If any Event of Default
shall occur and be continuing, the Program Manager may, and at the request of
the Required Lenders shall, by Written Notice to the Borrower, take either or
both of the following actions: (x) declare the Maturity Date to have occurred,
and (y) without limiting any rights hereunder and subject to applicable law,
replace the Borrower or any of the Borrower's agents, as the case may be, in its
performance of any or all of the "Primary Servicer Responsibilities" under the
RPTA (which replacement may be effectuated through the outplacement to a
qualified and experienced third-party of all back office duties, including
billing, collection and processing responsibilities, and access to all
personnel, hardware and software utilized in connection with such
responsibilities); provided, that with respect to the Event of Default in clause
(i) of Exhibit V, the Maturity Date shall be deemed to have occurred
automatically and without notice. Upon any such declaration or designation, the
Program Manager and the Collateral Agent shall have, in addition to the rights
and remedies which they may have under this Agreement, all other rights and
remedies provided after default under the UCC and under other applicable law,
which rights and remedies shall be cumulative.
(a) Right of Set-Off. The Borrower hereby irrevocably authorizes and
instructs the Program Manager to set-off the full amount of any Lender Debt due
and payable against (i) any Collections, or (ii) the principal amount of any
Revolving Loans requested on or after such due date. No further notification,
act or consent of any nature whatsoever is required prior to the right of the
Program Manager to exercise such right of set-off; provided, however, the
Program Manager shall notify the Borrower: (1) a set-off pursuant to this
Section 3.02 occurred, (2) the amount of such set- off and (3) a description of
the Lender Debt that was due and payable.
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(b) The remedies described in (a) and (b) above will be available to
the Program Manager, on behalf of the Lenders, only until all Lender Debt is
paid in full, after which the Program Manager, on behalf of the Lenders, shall
relinquish any and all of the Primary Servicer Responsibilities to the Borrower
and the Borrower's agents.
Section 3.03. Attorney-in-Fact. The Borrower hereby irrevocably
designates and appoints the Program Manager, the Collateral Agent, the Master
Servicer and each other Person in the Lender Group, to the extent permitted by
applicable law and regulation, as the Borrower's attorneys-in-fact, which
irrevocable power of attorney is coupled with an interest, with authority, upon
the continuance of an Event of Default (and to the extent not prohibited under
applicable law and regulations) to (i) endorse or sign the Borrower's name to
financing statements, remittances, invoices, assignments, checks (other than,
absent a court order, payments from Governmental Entities), drafts, or other
instruments or documents in respect of the Receivables, (ii) notify
non-Governmental Entities to make payments on the Receivables directly to the
Program Manager, and (iii) bring suit in the Borrower's name and settle or
compromise such Receivables as the Program Manager or the Master Servicer may,
in its discretion, deem appropriate.
ARTICLE IV.
SECURITY
Section 4.01. Grant of Security Interest. As collateral security for
the Borrower's obligations to pay the Lender Debt when due and payable and its
indemnification obligations hereunder, the Borrower hereby grants to the
Collateral Agent, for the benefit of the Lenders, a first priority Lien on and
security interest in and right of set-off against all of the rights, title and
interest of the Borrower in and to (i) the Provider Documents, (ii) to the
maximum extent permitted by law, the Provider Account and the Government
Lockboxes, (iii) all of the Borrower's Accounts whether now owned or hereafter
acquired, (iv) any and all amounts held in any accounts maintained at Citizens
Bank of Massachusetts, Bank One, N.A. (formerly American National Bank), or any
other bank in respect of any of the foregoing or in compliance with any terms of
this Agreement, (v) all of the Additional Collateral, and (vi) all proceeds of
the foregoing (all of the foregoing, the "Collateral"). This Agreement shall be
deemed to be a security agreement as understood under the UCC.
(a) The Borrower hereby authorizes the Collateral Agent to file, one or
more financing statements or continuation statements or amendments thereto or
assignments thereof in respect of the Lien created pursuant to this Section 4.01
which may at any time be required or, in the opinion of the Collateral Agent or
the Program Manager, be desirable, and to do so without the signature of the
Borrower where permitted by law.
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ARTICLE V.
MISCELLANEOUS
Section 5.01. Amendments, Waivers. No amendment or waiver of any
provision of this Agreement or consent to any departure therefrom by a party
hereto shall be effective unless in a writing signed by the Borrower and the
Required Lenders or the Borrower and the Program Manager with the consent of the
Required Lenders; provided that no such agreement shall (i) increase the
Revolving Commitment of any Lender without the written consent of such Lender,
(ii) reduce the principal amount of any Revolving Loan or reduce the rate of
interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender directly affected thereby, (iii) postpone the Maturity
Date, (iv) change Section 2.02 or 2.03, (v) increase any percentage contained in
the definition of Borrowing Base, release all or a material portion of the
Collateral or make overadvances other than Permitted Overadvances without the
written consent of each Lender, (vi) release any Guarantee (other than in
accordance with its terms) without the consent of each Lender, (vii) increase
the Total Revolving Commitment pursuant to Section 1.01(c), or (viii) change any
of the provisions of this Section or the definition of "Required Lenders" or any
other provisions hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or make any determination or
grant any consent hereunder, without the written consent of each Lender;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Program Manager, the Collateral Agent or the
Syndication Agent hereunder without the prior written consent of the Program
Manager, the Collateral Agent or the Syndication Agent, as the case may be.
(a) No failure on the part of the Program Manager, the Collateral Agent
or any Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. No waiver of any provision in this Agreement or consent to
any departure by the Borrower therefrom shall in any event be effective unless
the same shall be permitted by paragraph (a) or (b) of this Section, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 5.02. Notices, etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which may
include facsimile communication) and shall be faxed or delivered, (i) to each
party hereto at its address set forth under its name on the signature pages
hereof or at such other address as shall be designated by such party in a
Written Notice to the other parties hereto, and (ii) to the Master Servicer at
the address set forth on Schedule I attached hereto and as such schedule may be
amended from time to time. Notices and communications by facsimile shall be
effective when sent (and shall be immediately followed by hard copy sent by
regular mail), and notices and communications sent by other means shall be
effective when received.
Section 5.03. Assignability; Participations. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
permitted successors and assigns, except that (i) the Borrower may not assign or
otherwise transfer any of its rights or obligations hereunder or any interest
herein without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void) and (ii) no
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Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section. Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, their respective Affiliates and the
respective directors, officers, employees, agents and advisors of the parties
and their Affiliates) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(a) Subject to the conditions set forth in paragraph (c) of this
Section, any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Revolving Commitment and the Revolving Loans at the time owing to it) with the
prior written consent (such consent not to be unreasonably withheld) of the
Program Manager, provided that no consent of the Program Manager shall be
required for an assignment to an assignee that is a Lender immediately prior to
giving effect to such assignment or to any Affiliate or branch of any Lender, or
to any trust or special purpose funding vehicle, whether or not the Lender
maintains any interest in such trust or special purpose funding vehicle. The
Program Manager shall notify the Borrower of any such assignment; provided,
however, that failure to so notify shall not effect the validity of such
assignment.
(b) Assignments shall be subject to the following additional
conditions:
(i) the assignee is a competent Person with the financial
ability to perform as a Lender under this Agreement;
(ii) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Revolving Commitment or Revolving Loans, the amount of the
Revolving Commitment or Revolving Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Program Manager) shall not be
less than $1,000,000 of such Lender's Revolving Commitment unless the Program
Manager otherwise consents; and
(iii) the parties to each assignment shall execute and deliver
to the Program Manager an Assignment and Assumption, together with a processing
and recordation fee of $3,500; provided that such fee shall not apply to an
assignment by a Lender to an Affiliate of such Lender or to an assignment by an
Initial Lender, an Affiliate of an Initial Lender or an Affiliate of the Program
Manager.
(c) Subject to acceptance by the Program Manager pursuant to paragraph
(e) of this Section, from and after the effective date specified in each
Assignment and Assumption the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the
14
benefits of Sections 1.09, 1.10 and 5.05). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 5.03 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (f) of this Section.
(d) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee and the processing and
recordation fee referred to in paragraph (c)(ii) and any written consent to such
assignment required by paragraph (b) of this Section, the Program Manager shall
accept such Assignment and Assumption.
(e) Any Lender may, without the consent of the Borrower or the Program
Manager, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
this Agreement (including all of a portion of its Revolving Commitment and the
Revolving Loans owing to it); provided that (A) such Lender's obligations under
this Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Program Manager, the Collateral Agent, the Master
Servicer, the Syndication Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 5.01(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees, to the
fullest extent permitted under applicable law, that each Participant shall be
entitled to the benefits of Section 1.09 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. A Participant shall not be entitled to receive any greater payment
under Section 1.09 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower's prior
written consent.
(f) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.
Section 5.04. Further Assurances. The Borrower shall, at its cost and
expense, upon the request of the Program Manager or the Collateral Agent, duly
execute and deliver, or cause to be duly executed and delivered, to such Person
such further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of the Program Manager or the
Collateral Agent to carry out more effectively the provisions and purposes of
this Agreement.
15
Section 5.05. Costs and Expenses; Collection Costs. The Borrower agrees
to pay on demand (i) all reasonable non-legal costs and expenses in connection
with the preparation, execution and delivery of this Agreement; (ii) the
reasonable fees and out-of-pocket expenses of counsels for the Program Manager,
the Collateral Agent, the Syndication Agent, the Lead Arranger, the Initial
Lenders and their respective Affiliates in connection with this transaction
(including the allocated fees and expenses of internal counsel); and (iii) all
reasonable costs and expenses, if any (including reasonable counsel fees and
expenses (including the allocated fees and expenses of internal counsel)), of
the Program Manager, the Collateral Agent, the Syndication Agent, the Lead
Arranger, the Initial Lenders and their respective Affiliates in connection with
any waiver, modification, supplement or amendment hereto, or the enforcement of
this Agreement. The Borrower further agrees to pay on the Initial Funding Date
(and with respect to costs and expenses incurred following the Initial Funding
Date, within seven days of demand therefor) (a) all reasonable costs and
expenses incurred by the Program Manager or its agent in connection with up to
four periodic audits of the Receivables during any calendar year; provided,
however, that during the continuance of an Event of Default, the Borrower shall
pay all reasonable costs and expenses incurred by the Program Manager or its
agent in connection with all audits of the Receivables, (b) all reasonable costs
and expenses incurred by the Master Servicer or the Program Manager to
accommodate any significant coding or data system changes made by the Borrower
that would affect the transmission or interpretation of data received through
the interface, and (c) all reasonable costs and expenses incurred by the Lender
for additional time and material expenses of the Master Servicer resulting from
a lack of either cooperation or responsiveness of the Borrower to agreed-upon
protocol and schedules with the Master Servicer; provided, that the Borrower has
been informed of the alleged lack of cooperation or responsiveness and has been
provided the opportunity to correct such problems.
(a) In the event that the Program Manager or Collateral Agent shall
retain an attorney or attorneys to collect, enforce, protect, maintain, preserve
or foreclose its interests, for the benefit of the Lenders, with respect to this
Agreement, any other Document, any Lender Debt, any Receivable or the Lien on
any Collateral or any other security for the Lender Debt or under any instrument
or document delivered pursuant to this Agreement, or in connection with any
Lender Debt, the Borrower shall pay all of the reasonable costs and expenses of
such collection, enforcement, protection, maintenance, preservation or
foreclosure, including reasonable attorneys' fees, which amounts shall be part
of the Lender Debt, and the Program Manager and/or Collateral Agent may take
judgment for all such amounts. The attorney's fees arising from such services,
including those of any appellate proceedings, and all reasonable expenses,
costs, charges and other fees incurred by such counsel in any way or with
respect to or arising out of or in connection with or relating to any of the
events or actions described in this Section 5.05 shall be payable by the
Borrower to the Program Manager or Collateral Agent, as the case may be, on
demand (with interest accruing from the earlier of two Business Days following
(i) the date of such demand and (ii) the date the Borrower became aware of the
incurrence of such cost), and shall be additional obligations under this
Agreement. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: recording costs, appraisal costs, paralegal
fees, costs and expenses; accountants' fees, costs and expenses; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express
16
charges; telegram charges; telecopier charges; secretarial overtime charges; and
expenses for travel, lodging and food paid or incurred in connection with the
performance of such legal services.
Section 5.06. Confidentiality. The Program Manager hereby agrees to,
and shall take reasonable steps to cause each member of the Lender Group to,
comply with all applicable laws regarding confidential patient information, if
any, it receives in connection with the transactions described in this
Agreement.
Section 5.07. Term and Termination; Early Termination Fee. This
Agreement shall commence on the Initial Funding Date and expire on October 24,
2005.
(a) The obligations of the Lenders under this Agreement shall continue
in full force and effect from the date hereof until the Maturity Date.
(b) The Borrower may terminate this Agreement at any time prior to the
Maturity Date upon payment in full of all Lender Debt, including all accrued
interest, applicable fees, charges, premiums and costs with respect thereto, all
as provided hereunder, and the termination of the Revolving Commitment
hereunder.
(c) If the Revolving Commitment is reduced or terminated or the
Revolving Loan becomes due and payable prior to October 24, 2003 (including by
reason of an Event of Default), the Borrower shall pay to the Program Manager,
for the account of the Lenders, the Early Termination Fee.
(d) The termination of this Agreement shall not affect any rights of
the Program Manager, the Collateral Agent or any Lender or any obligations of
the Borrower arising on or prior to the effective date of such termination, and
the provisions hereof shall continue to be fully operative until all Lender Debt
incurred on or prior to such termination has been paid and performed in full.
(e) Upon the giving of notice of a Default or an Event of Default under
this Agreement, all Lender Debt shall be due and payable on the date of Default
or the Event of Default specified in such notice.
(f) The Liens and rights granted to the Lender hereunder shall continue
in full force and effect, notwithstanding the termination of this Agreement,
until all of the Lender Debt has been indefeasibly paid in full in cash. Upon
the (i) the termination of all commitments and obligations of the Lenders, and
(ii) the indefeasible payment in full of all Lender Debt, the Collateral Agent
and the Program Manager shall take all actions and deliver all assignments,
certificates, releases, notices and other documents, at the Borrower's expense,
as the Borrower may reasonably request to evidence such termination.
(g) All indemnities, representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof unless
otherwise provided.
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(h) Notwithstanding the foregoing, if after receipt of any payment of
all or any part of the Lender Debt, any Lender is for any reason compelled to
surrender such payment to any Person or entity because such payment is
determined to be void or voidable as a preference, an impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force (except that the Revolving Commitments of the Lenders shall have
been terminated), and the Borrower shall be liable to, and shall indemnify and
hold each such Lender harmless for the amount of such payment surrendered until
such Lender or Lenders shall have been finally and irrevocably paid in full. The
provisions of the foregoing sentence shall be and remain effective
notwithstanding any contrary action which may have been taken by any Lender in
reliance upon such payment, and any such contrary action so taken shall be
without prejudice to any Lender's rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable.
Section 5.08. No Liability; No Fiduciary Duty. Neither this Agreement
nor any document executed in connection herewith shall constitute an assumption
by any Agent or any Lender of any obligation to any Obligor, or any patient or
customer of the Borrower or any Provider.
(a) Notwithstanding any other provision herein, no recourse under any
obligation, covenant, agreement or instrument of an Agent or a Lender contained
herein or with respect hereto shall be had against any Related Party whether
arising by breach of contract, or otherwise at law or in equity (including any
claim in tort), whether express or implied, it being understood that the
agreements and other obligations of each Agent and each Lender herein and with
respect hereto are solely its corporate obligations; provided, however, nothing
herein above shall operate as a release of any liability which may arise as a
result of such Related Party's gross negligence or willful misconduct. The
provisions of this Section 5.08 shall survive the termination of this Agreement.
(b) The Borrower hereby acknowledges that (i) none of the Agents or the
Lenders has any fiduciary relationship with or fiduciary duty to the Borrower
arising out of or in connection with this Agreement or any of the other
Documents, and the relationship between the Lenders and the Borrower in
connection herewith is solely that of debtor and creditor; and (ii) no joint
venture is created hereby or by any other Documents or otherwise exists by
virtue of the transactions contemplated hereby between the Borrower and any of
the Agents or the Lenders.
(c) The Borrower hereby acknowledges that it has been advised by
counsel in the negotiation, execution and delivery of this Agreement and the
other Documents.
Section 5.09. Entire Agreement; Severability. This Agreement, including
all exhibits and schedules hereto and the documents referred to herein, embody
the entire agreement and understanding of the parties concerning the subject
matter contained herein. This Agreement supersedes any and all prior agreements
and understandings between the parties, whether written or oral.
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(a) If any provision of this Agreement shall be declared invalid or
unenforceable, the parties hereto agree that the remaining provisions of this
Agreement shall continue in full force and effect.
Section 5.10. GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE WITH
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS
OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF
ANY OTHER JURISDICTION EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTERESTS GRANTED HEREUNDER, OR REMEDIES RELATED THERETO, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
Section 5.11. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE. EACH OF THE
PARTIES HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY
LITIGATION WITH RESPECT TO ANY MATTER RELATED TO THIS AGREEMENT, AND HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED
IN NEW YORK COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION WITH ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN ANY SUCH LITIGATION,
EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL DIRECTED TO THE PARTIES HERETO AT THEIR ADDRESSES SET FORTH ON
THE SIGNATURE PAGE HEREOF. THE PARTIES HERETO SHALL APPEAR IN ANSWER TO SUCH
SUMMONS, COMPLAINT OR OTHER PROCESS WITHIN THE TIME PRESCRIBED BY LAW, FAILING
WHICH THE PARTY FAILING TO SO APPEAR SHALL BE DEEMED IN DEFAULT AND JUDGMENT MAY
BE ENTERED BY THE OTHER PARTY FOR THE AMOUNT OF THE CLAIM AND OTHER RELIEF
REQUESTED THEREIN.
Section 5.12. Execution in Counterparts. This Agreement may be executed
in counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
Section 5.13. No Proceedings. The Borrower hereby agrees that it will
not institute against any Lender any proceeding of the type referred to in
clause (i) of Exhibit V so long as any senior indebtedness issued by such Lender
shall be outstanding or there shall not have elapsed one year plus one day since
the last day on which any such senior indebtedness shall have been outstanding.
19
ARTICLE VI.
AGENTS
Each of the Lenders hereby irrevocably appoints the Program Manager as
its agent, the Collateral Agent as its collateral agent and Dresdner Kleinwort
▇▇▇▇▇▇▇▇▇▇▇ LLC as the Syndication Agent and authorizes each Agent to take such
actions on its behalf and to exercise such powers as are delegated to such Agent
by the terms hereof and the other Documents, together with such actions and
powers as are reasonably incidental thereto.
Each Person serving as an Agent hereunder and under the other Documents
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not an Agent and each such
Person and their respective Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Borrower or any Subsidiary
or other Affiliate thereof as if it were not an Agent hereunder.
No Agent shall have any duties or obligations except those expressly
set forth herein or in the other Financing Documents. Without limiting the
generality of the foregoing, (a) no Agent shall be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) no Agent shall have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or thereby that such Agent is required to exercise
in writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
5.01), and (c) except as expressly set forth herein, no Agent shall have any
duty to disclose, and shall not be liable for any failure to disclose, any
information relating to the Borrower, the Primary Servicer or any of the
Providers that is communicated to or obtained by such Person serving as an Agent
or any of its Affiliates in any capacity. No Agent shall be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 5.01) or in the absence
of its own gross negligence or wilful misconduct. No Agent shall be deemed to
have knowledge of any Default unless and until written notice thereof is given
to such Agent by the Borrower or a Lender, and no Agent shall be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents
of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Exhibit II or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to such Agent.
Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts
20
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
Each Agent may perform any and all of its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by such
Agent. Each Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of such Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as such Agent.
With respect to the release of Collateral, the Lenders hereby
irrevocably authorize the Program Manager, at its option and in its discretion,
to direct the Collateral Agent to release any Lien granted to or held by the
Collateral Agent upon any property covered by this Agreement or the other
Documents (i) upon termination or expiration of the Revolving Commitments, the
payment and satisfaction of all Lender Debt; or (ii) constituting property being
sold or disposed of in compliance with the provisions of the Documents (and the
Program Manager may rely in good faith conclusively on any certificate stating
that the property is being sold or disposed of in compliance with the provisions
of the Documents, without further inquiry); provided, however, that (x) the
Program Manager shall not be required to cause the Collateral Agent to execute
any release on terms which, in the Program Manager's opinion, would expose the
Program Manager or the Collateral Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty, and (y) such release shall not in any manner discharge, affect or
impair any Liens upon all interests retained, all of which shall continue to
constitute part of the property covered by the Documents.
With respect to perfecting security interests in Collateral which, in
accordance with Article 9 of the Uniform Commercial Code or any comparable
provision of any Lien perfection statute in any applicable jurisdiction, can be
perfected only by possession, each Lender hereby appoints each other Lender its
agent for the purpose of perfecting such interest. Should any Lender (other than
the Collateral Agent) obtain possession of any such Collateral, such Lender
shall notify the Program Manager, and, promptly upon the Program Manager's
request, shall deliver such Collateral to the Collateral Agent or in accordance
with the Program Manager's instructions. Each Lender agrees that it will not
have any right individually to enforce or seek to enforce this Agreement or any
other Document or to realize upon any Collateral for the Lender Debt, it being
understood and agreed that such rights and remedies may be exercised only by or
with the approval of the Program Manager.
In the event that a petition seeking relief under Title 11 of the
United States Code or any other Federal, state or foreign bankruptcy,
insolvency, liquidation or similar law is filed by or against the Borrower, the
Primary Servicer, any Provider or any other Person obligated under any Document,
the Program Manager is authorized, to the fullest extent permitted by applicable
law, to file a proof of claim on behalf of itself and the Lenders in such
proceeding for the total amount of obligations owed by such Person. With respect
to any such proof of claim which the Program Manager may file, each Lender
acknowledges that without reliance on such proof of claim, such
21
Lender shall make its own evaluation as to whether an individual proof of claim
must be filed in respect of such obligations owed to such Lender and, if so,
take the steps necessary to prepare and timely file such individual claim.
Subject to the appointment and acceptance of a successor Agent as
provided in this paragraph, any Agent (including the Program Manager and the
Collateral Agent) may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right,
to appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent. Upon the acceptance of its
appointment as an Agent hereunder by a successor, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After an Agent's resignation hereunder,
the provisions of this Article and Sections 1.10 and 5.05 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as such Agent.
Each Lender acknowledges that it has, independently and without
reliance upon any Agent or any Related Party thereof or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon any Agent or
any Related Party thereof or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Revolving Loans, and
expressly consents to and waives any claim based upon such conflict of interest.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
22
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.
BORROWER: FSQC FUNDING CO., LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Chief Financial Officer, Treasurer
and Assistant Secretary
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
LENDERS: DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ I. M. ▇▇▇▇▇▇▇
Name:
Title:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇/1774
Revolving Commitment: $1,250,000
HFG HEALTHCO-4 LLC
By: HFG Healthco-4, Inc., a member
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
c/o Lord Securities Corporation
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Revolving Commitment: $11,250,000
PROGRAM MANAGER: DRESDNER KLEINWORT ▇▇▇▇▇▇▇▇▇▇▇ LLC
By: /s/ I. M. ▇▇▇▇▇▇▇
Name:
Title:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇/1774
HEALTHCARE FINANCE GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Operating Officer
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
LEAD ARRANGER AND
SYNDICATION AGENT: DRESDNER KLEINWORT ▇▇▇▇▇▇▇▇▇▇▇ LLC
By: /s/ I. M. ▇▇▇▇▇▇▇
Name:
Title:
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇/1774
COLLATERAL AGENT: HFG HEALTHCO-4 LLC
By: HFG Healthco-4, Inc., a member
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
c/o Lord Securities Corporation
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits and Schedules), the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accounts" means all health-care-insurance receivables, accounts,
chattel paper, instruments, general intangibles and goodwill, whether now
existing or hereafter arising, including, all Receivables and all payments due
from any Governmental Entity based on a cost report settlement or expected
settlement, and all proceeds of any of the foregoing.
"Accrued Amounts" means, as at any date, the aggregate amount of
accrued but unpaid (whether or not due and payable) (a) interest, (b)
Non-Utilization Fees, and (c) Collateral Tracking Fees.
"Additional Collateral" means all of the Borrower's (i)(a) present and
future securities, security entitlements and securities accounts (collectively,
"Investment Property"); (b) all deposit accounts and all other goods and
personal property (including, without limitation, patents, patent applications,
trade names and trademarks and Federal, state and local tax refund claims of all
kinds), whether tangible or intangible, or whether now owned or hereafter
acquired and wherever located; and (c) all proceeds of every kind and nature,
including proceeds of proceeds, of any and all of the foregoing, and (ii) money
and cash; and all books, records and other property relating to or referring to
any of the foregoing including all books, records, ledger cards, data processing
records, computer software and other property and general intangibles at any
time used or useful in connection with, evidencing, embodying, referring to, or
relating to, any of the foregoing.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person. For the purposes of this
definition, "control", when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means each of the Program Manager, the Collateral Agent and the
Syndication Agent.
"Agreement" has the meaning set forth in the preamble hereto.
"Assignment of Contracts" means that certain Assignment of Contracts as
Collateral Security, dated the date hereof, between the Borrower and the
Collateral Agent, in substantially the form attached hereto as Exhibit X, as
such agreement may be amended, modified or supplemented from time to time in
accordance with its terms.
I-1
"Authorized Representative" means each Person designated from time to
time, as appropriate, in a Written Notice by the Borrower to the Program Manager
for the purposes of giving notices of borrowing, conversion or renewal of
Revolving Loans, which designation shall continue in force and effect until
terminated in a Written Notice to the Program Manager.
"Borrower" has the meaning set forth in the preamble hereto.
"Borrower Account" means initially account # 1135638907 of the Borrower
at Citizens Bank of Massachusetts, ABA #▇▇▇▇▇▇▇▇▇, or, thereafter, such other
bank account designated by the Borrower by Written Notice to the Master Servicer
and the Program Manager from time to time.
"Borrower Lockbox Account(s)" means, collectively, the Primary Borrower
Account and the Local Borrower Accounts set forth on Schedule IV hereto
established by the Borrower to deposit all cash collections, wire transfers,
electronic funds transfers and other cash proceeds of Receivables from
non-Governmental Entities, including collections received in the form of a check
and collections received by wire transfer directly from non-Governmental
Entities.
"Borrower's Certificate" has the meaning set forth in Section 1.03.
"Borrowing Base" means, as of any time, an amount equal to 75% of the
Expected Net Value of Eligible Receivables the Obligors of which are
Governmental Entities; provided, however, that no more than 6% of all Eligible
Receivables included in the Borrowing Base at any time shall be aged more than
120 days from its Last Date of Service. All items in the prior sentence,
including the proviso, shall at all times be determined by reference to and as
set forth in the most recent Borrowing Base Certificate required to be delivered
to the Program Manager by the Borrower as of such time pursuant to Exhibit IV,
clause (j)(i).
"Borrowing Base Certificate" means a certificate (which may be sent by
Transmission) signed by the Borrower and the Primary Servicer, substantially in
the form set forth in Exhibit VII-A hereto, which shall provide the most
recently available information (including updated information) with respect to
the Eligible Receivables of the Borrower (segregated by the classes (if any) set
forth on Schedule V hereto) that is set forth in the aged accounts receivable
trial balance and books and records of the Providers, in form and substance
satisfactory to the Lender and the Master Servicer.
"Borrowing Base Deficiency" means, as of any date, the positive
difference, if any, between (i) (x) the aggregate outstanding principal amount
of all Revolving Loans, plus (y) Accrued Amounts minus (ii) the Borrowing Base
indicated on the most recent Borrowing Base Certificate.
"Borrowing Limit" has the meaning set forth in Section 1.01(a).
"Business Day" means any day on which banks are not authorized or
required to close in New York City, New York.
I-2
"CHAMPUS" means the Civilian Health and Medical Program of the
Uniformed Service, a program of medical benefits covering former and active
members of the uniformed services and certain of their dependents, financed and
administered by the United States Departments of Defense, Health and Human
Services and Transportation and established pursuant to 10 USC Sectionss.
1071-1106, and all regulations promulgated thereunder including without
limitation (a) all federal statutes (whether set forth in 10 USC Sectionss.
1071-1106 or elsewhere) affecting CHAMPUS; and (b) all rules, regulations
(including 32 CFR 199), manuals, orders and administrative, reimbursement and
other guidelines of all Governmental Entities (including, without limitation,
the Department of Health and Human Services, the Department of Defense, the
Department of Transportation, the Assistant Secretary of Defense (Health
Affairs), and the Office of CHAMPUS, or any Person or entity succeeding to the
functions of any of the foregoing) promulgated pursuant to or in connection with
any of the foregoing (whether or not having the force of law) in each case as
may be amended, supplemented or otherwise modified from time to time.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement or (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Entity after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 1.11(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Entity made or
issued after the date of this Agreement.
"Claims" has the meaning set forth in Section 1.10(b).
"CMS" means the Centers for Medicare and Medicaid Services of the
United States Department of Health and Human Services.
"Collateral" has the meaning set forth in Section 4.01(a).
"Collateral Agent" means HFG Healthco-4 LLC as collateral agent for the
Lenders, and its successors and assigns in such capacity.
"Collateral Tracking Fee" has the meaning set forth in Section 1.06(b).
"Collection Account" means the Program Manager's account maintained at
The Bank of New York, ABA # ▇▇▇▇▇▇▇▇▇, GLA 111565, For Further Credit to Account
#205779, Ref: HEALTHCO-4/FSQC, Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, or such other bank account
designated by the Program Manager from time to time.
"Collections" means all cash collections, wire transfers, electronic
funds transfers and other cash proceeds of Receivables deposited in or
transferred to the Collection Account, including, without limitation, all cash
proceeds thereof.
"Control Agreement" means each Control Agreement, dated as of the date
hereof, among the Primary Servicer, the Provider named therein, the Borrower,
the Program Manager, the Collateral Agent and the bank named therein, in
substantially the form attached hereto as Exhibit XI,
I-3
as such agreement may be amended, modified or supplemented from time to time in
accordance with its terms.
"Credit and Collection Policy" means those receivables credit and
collection policies and practices of the Borrower in effect on the date of the
Agreement and set forth in Schedule II hereto, as modified from time to time in
accordance with the provisions of the Agreement.
"Debt" of any Person means (without duplication): (i) all obligations
of such party for borrowed money, (ii) all obligations of such party evidenced
by bonds, notes, debentures, or other similar instruments, (iii) all obligations
of such party to pay the deferred purchase price of property or services (other
than trade payables in the ordinary course of business), (iv) all "capital
leases" (as defined by GAAP) of such party, (v) all Debt of others directly or
indirectly guaranteed (which term shall not include endorsements in the ordinary
course of business) by such party, (vi) all obligations secured by a Lien
existing on property owned by such party, whether or not the obligations secured
thereby have been assumed by such party or are non-recourse to the credit of
such party (but only to the extent of the value of such property), and (vii) all
reimbursement obligations of such party (whether contingent or otherwise) in
respect of letters of credit, bankers' acceptances and similar instruments.
"Default" means an event, act or condition which with the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Defaulted Receivable" means a Receivable (i) as to which the Obligor
therefor or any other Person obligated thereon has taken any action, or suffered
any event to occur, of the type described in paragraph (i) of Exhibit V, or (ii)
which, consistent with the Credit and Collection Policy, would be written off
the applicable Provider's books as uncollectible; provided, however, that a
Receivable as to which the Obligor therefor has suffered a temporary
governmental shutdown or delay shall not be a "Defaulted Receivable".
"Delinquency Ratio" means, as of the last Business Day of each Month, a
percentage equal to:
DLR
---
ENV
where:
DLR = The Expected Net Value of all Receivables which
were transferred to the Borrower and which became
Delinquent Receivables in the Month immediately prior
to the date of calculation.
ENV = The Expected Net Value of Eligible Receivables
which were transferred to the Borrower in the Month
that is six Months immediately prior to the date of
calculation.
I-4
"Delinquent Receivable" means a Receivable (a) that has not been paid
in full on or following the 180th day following the date of original invoicing
thereof, or (b) that is a Denied Receivable.
"Denied Receivable" means any Receivable as to which any related
representations or warranties have been discovered at any time to have been
breached.
"Depositary Agreement" means that certain Depositary Agreement, dated
as of the date hereof, among the Primary Servicer, the Providers, the Borrower,
the Program Manager, the Collateral Agent, and the Lockbox Bank, in
substantially the form attached hereto as Exhibit VIII, as such agreement may be
amended, modified or supplemented from time to time in accordance with its
terms.
"Distribution" means any dividend payment or other distribution of
assets, properties, cash, rights, obligations or securities on account of any
capital interest in the Borrower, or return any capital to its members as such,
or purchase, retire, defease, redeem or otherwise acquire for value or make any
payment in respect of any shares of any class of capital interests in the
Borrower or any warrants, rights or options to acquire any such interests, now
or hereafter outstanding.
"Documents" means this Agreement, the Depositary Agreement, the
Government Depositary Agreement, the Control Agreements, the Assignment of
Contracts, the RPTA, each other Provider Document, each Borrower's Certificate,
each Borrowing Base Certificate, and each other document or instrument now or
hereafter executed and delivered to the Lender by or on behalf of the Borrower
pursuant to or in connection herewith or therewith (including, without
limitation, each other agreement now existing or hereafter created providing
collateral security for the payment or performance of any Lender Debt).
"Early Termination Fee" means an amount equal to .50% of the Revolving
Commitment (or portion of Revolving Commitment being terminated).
"Eligibility Criteria" means the criteria and basis for determining
whether a Receivable shall be deemed by the Program Manager to qualify as an
Eligible Receivable, all as set forth in Exhibit VI hereto, as such Eligibility
Criteria may be modified from time to time by the Program Manager in its good
faith discretion and based on historical performance and other Obligor-related
factually-based credit criteria upon Written Notice to the Borrower.
"Eligible Receivables" means Receivables that satisfy the Eligibility
Criteria, as determined by the Program Manager.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained by any Provider, the Borrower, any
of their respective ERISA Affiliates, or with respect to which any of them have
any liability.
"EOB" means the explanation of benefit from an Obligor that identifies
the services rendered on account of the Receivable specified therein.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity which is under common control with
the Borrower within the meaning of ERISA or which is treated as a single
employer with the Borrower under the Internal Revenue Code of 1986, as amended.
"Event of Default" means any of the events specified in Exhibit V
hereto.
"Event of Termination" has the meaning set forth in the RPTA.
"Excluded Claims" has the meaning set forth in Section 1.10(b).
"Excluded Taxes" means taxes upon or determined by reference to a
Lender's net income imposed by the jurisdiction in which such Lender is
organized or has its principal or registered office.
"Expected Net Value" means, with respect to any Eligible Receivable,
the gross unpaid amount of such Receivable on date of creation thereof, times
the applicable Net Value Factor.
"Five Star" means Five Star Quality Care, Inc., a corporation organized
under the laws of the State of Maryland, together with its successors and
assigns.
"Funding Date" means the Initial Funding Date and any Business Day on
which a Revolving Loan is made at the Borrower's request in accordance with
provisions of the Agreement.
"GAAP" means generally accepted accounting principles in the United
States of America, applied on a consistent basis as set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board
and/or the rules and regulations of the Securities and Exchange Commission
and/or their respective successors and which are applicable in the circumstances
as of the date in question.
"Government Depositary Agreement" means each Depositary Agreement,
dated as of the date hereof, among the Primary Servicer, the Provider named
therein, the Borrower, the Program Manager, the Collateral Agent and the bank
named therein, in substantially the form attached hereto as Exhibit XI, as such
agreement may be amended, modified or supplemented from time to time in
accordance with its terms.
"Government Lockbox(es)" means each of the lockboxes identified on
Schedule IV hereto as a Government Lockbox, established to receive checks and
EOB's with respect to Receivables payable by Governmental Entities to the
Providers listed on Schedule VI hereto.
"Government Lockbox Account(s)" means each of the accounts identified
on Schedule IV hereto as a Government Lockbox Account in the name of a Provider
listed on Schedule VI hereto and associated with the Government Lockbox
established and controlled by such
I-6
Provider to deposit all cash collections, wire transfers, electronic funds
transfers and other cash proceeds of Receivables from the applicable
Governmental Entity listed on Schedule VI, including collections received in the
associated Government Lockbox and collections received by wire transfer directly
from applicable the Governmental Entity, all as more fully set forth in the
Government Depositary Agreement.
"Governmental Entity" means the United States of America, any state,
any political subdivision of a state and any agency or instrumentality of the
United States of America or any state or political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. Payments from Governmental Entities
shall be deemed to include payments governed under the Social Security Act (42
U.S.C. Section 1395 et seq.), including payments under Medicare, Medicaid and
CHAMPUS, and payments administered or regulated by CMS.
"Group-Wide Event of Termination" has the meaning set forth in the
RPTA.
"Indemnified Party" has the meaning set forth in Section 1.10(b).
"Initial Funding Date" means the date of the first borrowing under the
Agreement.
"Initial Lenders" means, collectively, Dresdner Bank AG, New York and
Grand Cayman Branches and HFG Healthco-4 LLC.
"Insurer" means any Person (other than a Governmental Entity) which in
the ordinary course of its business or activities agrees to pay for healthcare
goods and services received by individuals, including commercial insurance
companies, nonprofit insurance companies (such as Blue Cross, Blue Shield
entities), employers or unions which self-insure for employee or member health
insurance, prepaid health care organizations, preferred provider organizations,
health maintenance organizations, commercial hospitals, physician's groups or
any other similar person. "Insurer" includes insurance companies issuing health,
personal injury, workers' compensation or other types of insurance but does not
include any individual guarantors.
"Interest Period" means (a) with respect to any LIBOR Loan, the period
commencing on the date of such LIBOR Loan and ending on the numerically
corresponding day in the Month that is one Month thereafter, (b) with respect to
any Market Rate Loan, the period commencing on the date of such Market Rate Loan
and ending on any day that is less than one Month thereafter, and (c) with
respect to any Prime Rate Loan, the period commencing on the date of such Prime
Rate Loan and ending on either (x) the numerically corresponding day in the
Month that is one Month thereafter or (y) any day prior to such date; provided,
that (i) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day and
(ii) in the case of a LIBOR Loan or a Prime Rate Loan with an Interest Period
pursuant to clause (c)(x), an Interest Period that commences on a day for which
there is no numerically corresponding day in the last calendar month of such
Interest Period shall end on the last Business Day of the last calendar month of
such Interest Period. For purposes hereof, the date of a Revolving Loan
initially
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shall be the date on which such Revolving Loan is made and thereafter shall be
the effective date of the most recent continuation of such Revolving Loan.
"Last Service Date" means, with respect to any Eligible Receivable, the
date set forth on the related invoice or statement as the most recent date on
which services or merchandise were provided by the related Provider to the
related patient or customer.
"Lender Debt" means and includes any and all amounts due, whether now
existing or hereafter arising, under the Agreement, including, without
limitation, any and all principal, interest, penalties, fees, charges, premiums,
indemnities and costs owed or owing to any Lender, the Program Manager or the
Master Servicer by the Borrower, any Provider, or any Affiliate of the Borrower
or any Provider, arising under or in connection with this Agreement or any other
Document, in each instance, whether absolute or contingent, direct or indirect,
secured or unsecured, due or not, arising by operation of law or otherwise, and
all interest and other charges thereon, including, without limitation,
post-petition interest whether or not such interest is an allowable claim in a
bankruptcy.
"Lender Group" means each Lender, the Program Manager, the Master
Servicer, the Collateral Agent and their respective agents, delegates, designees
and assigns identified from time to time.
"Lenders" means the Persons listed on Schedule 1.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption.
"LIBOR" means, with respect to any Revolving Loan for any Interest
Period, (i)(a) the rate appearing on Page 3750 of the Dow ▇▇▇▇▇ Market (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Program
Manager from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period, or (b) if the rate set forth in clause (a) is not
available at such time for any reason, then the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of Dresdner Bank AG in immediately available funds
in the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period or (c) if the
rate set forth in clause (a) is not available and Dresdner Bank AG is not
quoting lending rates, then the rate per annum applicable to the most recent
Interest Period for which one of the prior provisions applied divided by (ii) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental special or other reserves required by applicable law) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency funding
or liabilities as defined in Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or
I-8
a portion thereof establishing reserve requirements (or an successor category of
liabilities under Regulation D).
"LIBOR Loan" means a loan bearing interest based on LIBOR.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
hypothecation, assignment, preference, priority, other charge or encumbrance, or
any other type of preferential arrangement of any kind or nature whatsoever by
or with any Person (including, without limitation, any conditional sale or title
retention agreement), whether arising by contract, operation of law, or
otherwise.
"Local Borrower Account(s)" means each of the accounts identified on
Schedule IV hereto as a Local Borrower Account established by the Borrower to
deposit all cash collections, wire transfers, electronic funds transfers and
other cash proceeds of Receivables from non-Governmental Entities, including
collections received in the form of a check and collections received by wire
transfer directly from non-Governmental Entities.
"Lockbox Bank" means Citizens Bank of Massachusetts, as lockbox bank
under the Depositary Agreement.
"Loss-to-Liquidation Ratio" means, as of the last Business Day of each
Month, a percentage equal to:
DR
--
C
where:
DR = The Expected Net Value of all Eligible Receivables
which became Defaulted Receivables in the Month
immediately prior to the date of calculation.
C = Collections on such Eligible Receivables in the
Month immediately prior to the date of calculation.
"Market Rate" means a rate of interest per annum determined by the
Program Manager.
"Market Rate Loan" means a loan bearing interest based on the Market
Rate.
"Master Servicer" means Healthcare Finance Group, Inc. and any other
Person then identified by the Program Manager to the Borrower as being
authorized to administer and service Receivables.
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"Material Adverse Effect" means any event, condition, change or effect
that (a) has a materially adverse effect on the business, Properties,
capitalization, liabilities, operations, prospects or financial condition of (i)
the Providers, taken as a whole, (ii) the Borrower, or (iii) Five Star, (b)
materially impairs the ability of the Borrower to perform its obligations under
this Agreement or any of the other Documents, (c) materially impairs the ability
of the Primary Servicer, any Provider or the Borrower to perform their
respective obligations under the RPTA or any of the other Provider Documents, or
(d) materially impairs the validity or enforceability of, or materially impairs
the rights, remedies or benefits available to the Collateral Agent for the
benefit of the Lenders, under this Agreement or (as assignee of the Borrower)
under the RPTA or any of the other Provider Documents.
"Maturity Date" means the earlier of (a) the date on which this
Agreement terminates in accordance with the provisions of Section 5.07(a), and
(b) the occurrence of an Event of Default unless such event is waived by the
Required Lenders in writing.
"Maximum Permissible Rate" has the meaning set forth in Section
1.14(a).
"Medicaid" means the medical assistance program established by Title
XIX of the Social Security Act (42 U.S.C. Secs. 1396 et seq.) and any statutes
succeeding thereto.
"Medicare" means the health insurance program for the aged and disabled
established by Title VXII of the Social Security Act (42 U.S.C. Secs. 3395 et
seq.) and any statutes succeeding thereto.
"Month" means a calendar month.
"Multiemployer Plan" means a plan, within the meaning of Section 3(37)
of ERISA, as to which the Borrower or any ERISA Affiliate contributed or was
required to contribute within the preceding five years.
"Net Value Factor" means, initially, the percentages set forth on
Schedule V attached hereto, as such percentages may be adjusted, upwards or
downwards with notice (which may be telephonic) to the Borrower, in the good
faith discretion of the Program Manager, based on historical actual final
collections received on the Receivables within the 180 days of the Last Service
Date of such Receivables (without regard to the factors set forth in the
definition of "Defaulted Receivable").
"Non-Utilization Fee" has the meaning set forth in Section 1.06(a).
"Notice" has the meaning set forth in the RPTA.
"Obligor" means each Person who is responsible for the payment of all
or any portion of a Receivable.
"Other Entities" means any Provider and each of its direct and indirect
parents or subsidiaries (in whatever business form such Person exists) other
than the Borrower.
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"Other Taxes" has the meaning set forth in Section 1.09(b).
"Outstanding Balance" means, as of any date of determination, the
aggregate outstanding principal balance of all Revolving Loans (plus interest
that is due and payable thereon that remains unpaid beyond the first Business
Day of such Month); provided that, for purposes of interest calculation only,
any Collections utilized to reduce the outstanding principal amount of the
Revolving Loans shall reduce the "Outstanding Balance" hereunder only following
a one Business Day clearance period applied thereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Permitted Overadvances" means involuntary overadvances that may result
from time to time due to the fact that any borrowing formulas set forth in the
Documents were unintentionally exceeded (whether at the time of any Revolving
Loan or otherwise) for any reason (other than the Program Manager's gross
negligence or willful misconduct), including Receivables believed to be eligible
in fact being or becoming ineligible. To the extent any Permitted Overadvances
are made, each Lender shall bear its pro rata (based on its Revolving
Commitment) share thereof.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, an Insurer or a
Governmental Entity.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by JPMorgan Chase Bank at its principal office in New York
City as its prime rate in effect at such time.
"Prime Rate Loan" means a loan bearing interest based on the Prime
Rate.
"Primary Borrower Account" means the account identified on Schedule IV
hereto as the Primary Borrower Account, established by the Borrower to deposit
all cash collections, wire transfers, electronic funds transfers and other cash
proceeds of Receivables from non-Governmental Entities, including collections
received in the Local Borrower Accounts and collections received by wire
transfer directly from non-Governmental Entities, all as more fully set forth in
the Depositary Agreement.
"Primary Provider Account" means the account set forth on Schedule IV
hereto in the name of the Providers established and controlled by the Providers
to deposit all cash collections, wire transfers, electronic funds transfers and
other cash proceeds of Receivables from Governmental Entities, collections
received in the Government Lockbox Accounts and collections received by wire
transfer directly from Governmental Entities, all as more fully set forth in the
Depositary Agreement and the Government Depositary Agreement.
"Primary Servicer" has the meaning set forth in the RPTA.
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"Program Manager" means (i) collectively, Dresdner Kleinwort
▇▇▇▇▇▇▇▇▇▇▇ LLC and Healthcare Finance Group, Inc., in their capacity as program
manager hereunder and any successors or assigns in such capacity or (ii) any
other Person identified by the then Program Manager in writing to the Borrower
as being authorized to provide administrative services with respect to the
Borrower and the funding and collection of healthcare receivables by and on
behalf of the Lenders.
"Property" means property of all kinds, movable, immovable, corporeal,
incorporeal, real, personal or mixed, tangible or intangible (including, without
limitation, all rights relating thereto), whether owned or acquired on or after
the date of this Agreement.
"Provider" has the meaning set forth in the RPTA
"Provider Account(s)" means, collectively, the Primary Provider Account
and the Government Lockbox Accounts set forth on Schedule IV hereto in the name
of the Providers and associated, in the case of the Government Lockbox Accounts,
with the Government Lockboxes established and controlled by the Providers to
deposit all cash collections, wire transfers, electronic funds transfers and
other cash proceeds of Receivables from Governmental Entities, including
collections received in the Government Lockboxes and collections received by
wire transfer directly from Governmental Entities, all as more fully set forth
in the Depositary Agreement and the Government Depositary Agreements.
"Provider Documents" has the meaning set forth in the RPTA.
"Receivable Information" has the meaning set forth in the RPTA.
"Receivables" means all third-party reimbursable portions or
third-party directly payable portions of health-care-insurance receivables, all
accounts and general intangibles, and all other obligations for the payment of
money, in each case, owing (or in the case of Unbilled Receivables, to be owing)
by an Obligor and arising out of the rendition of medical, surgical, diagnostic
or other professional medical services or the sale of medical products by a
Provider in the ordinary course of its business, including all rights to
reimbursement under any agreements with and payments from Obligors, customers,
residents, patients or other Persons, together with, to the maximum extent
permitted by law, all accounts and general intangibles related thereto, all
rights, remedies, guaranties, security interests and Liens in respect of the
foregoing, all books, records and other Property evidencing or related to the
foregoing, and all proceeds of any of the foregoing.
"Related Party" means, with respect to any specified Person, such
Person's Affiliates, incorporators, members and stockholders and the respective
agents, attorneys, advisors, officers, directors, members, managers, employees
or partners of such Person and such Person's Affiliates, incorporators, members
and stockholders.
"Required Lenders" means, at any time, Lenders holding Revolving
Commitments representing at least 66 2/3% of the Total Revolving Commitment or,
if the Revolving Commitments
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shall have been terminated, having at least 66 2/3% of all outstanding Revolving
Loans; provided, that if at any time there are only two Lenders, Required
Lenders shall mean both such Lenders.
"Revolving Commitment"means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans hereunder in an aggregate
amount at any time outstanding not in excess of the amount set forth under the
name of such Lender on the signature pages hereof, or, if applicable, the amount
set forth in the Assignment and Assumption pursuant to which such Lender became
a Lender hereunder, as such commitment may be reduced or increased from time to
time pursuant to the term of this Agreement.
"Revolving Loan" means a Revolving Loan made pursuant to Section 1.03.
"RPTA" means that certain Receivables Purchase and Transfer Agreement,
dated as of the date of this Agreement, among the Primary Servicer, the
Providers and the Borrower, as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
"Syndication Agent" means Dresdner Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ LLC, in its
capacity as syndication agent hereunder.
"Tangible Net Worth" with respect to the Borrower, means, at any time,
the excess of (i) the Expected Net Value of all Receivables owned by the
Borrower and not financed by the Lender, plus cash, plus investments, plus
amounts which are owing from the Lenders to the Borrower minus (ii) the sum of
all accrued unpaid monetary obligations and accrued unpaid fees and expenses
payable hereunder or otherwise owed by the Borrower.
"Total Revolving Commitment" means the sum of the Lenders' Revolving
Commitments, as the same may be reduced or increased from time to time pursuant
to this Agreement.
"Transmission" means, upon establishment of computer interface between
the Borrower and the Master Servicer in accordance with the specifications
established by the Master Servicer, the transmission of Receivable Information
through computer interface to the Master Servicer in a manner satisfactory to
the Master Servicer.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
"Unbilled Receivable" means a Receivable in respect of which the goods
have been shipped, or the services rendered, to the relevant customer or
patient, and rights to payment therefor have accrued, but the invoice has not
been rendered to the applicable Obligor.
"Written Notice" and "in writing" means any form of written
communication or a communication by means of telex, telecopier device, telegraph
or cable.
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Other Terms. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.
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EXHIBIT II
CONDITIONS OF REVOLVING LOANS
1. Conditions Precedent on Initial Funding Date. The making of the
Revolving Loan on the Initial Funding Date is subject to the conditions
precedent that the Program Manager shall have received on or before the Initial
Funding Date the following, each (unless otherwise indicated) dated such date,
in form and substance reasonably satisfactory to the Program Manager:
(a) A certificate issued by the Secretary of State of the State of
Delaware, dated as of a recent date, as to the legal existence and good standing
of the Borrower (which certificate may be dated not more than 20 days prior to
the Initial Funding Date).
(b) Certified copies of the organizational documents and all amendments
thereto, certified copies of resolutions of the managers of the Borrower
approving this Agreement, certified copies of all documents filed to register
any and all assumed/trade names of the Borrower, and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement.
(c) A certificate of the Secretary or Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the other documents to be
delivered by it hereunder.
(d) A copy of the opening balance sheet of the Borrower as at the
Initial Funding Date, certified by the chief financial officer of the Borrower.
(e) Acknowledgment or time-stamped receipt copies of proper financing
statements (showing the Borrower as debtor and the Collateral Agent as secured
party) duly filed on or before the Initial Funding Date under the UCC of all
jurisdictions that the Collateral Agent may deem necessary or reasonably
desirable in order to perfect the security interests contemplated by the
Agreement.
(f) Completed requests for information (UCC search results) and a
schedule thereof listing all effective financing statements filed in the
applicable jurisdictions that name the Borrower as debtor, together with copies
of such financing statements.
(g) Releases of, and acknowledgment copies of proper termination
statements (Form UCC-3), if any, necessary to evidence the release of all
security interests, ownership and other rights of any Person previously granted
by Borrower in the Collateral.
(h) With respect to each Provider, a copy of each of such Provider's
existing forms of patient consents, as well as a copy of each new patient
consent form to be signed by each patient for which a Receivable will be created
after the Initial Funding Date, which consent forms authorize certain
demographic and medical information with respect to such patient to be disclosed
by such Provider to its servicing agents and by such servicing agents to any
third party obligors
II-1
thereon, certified by a Secretary or Assistant Secretary of such Provider as
being true, complete and correct.
(i) A favorable opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel
to the Borrower, substantially in the form attached hereto as Exhibit IX-A, and
as to such other matters as the Lender Group requests.
(j) A favorable opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel
for the Borrower, substantially in the form attached hereto as Exhibit IX-B, and
as to such other matters as the Lender Group requests.
(k) The Assignment of Contracts with respect to the RPTA and the other
Provider Documents and assignments of all other documents, lockboxes and lockbox
accounts with respect to the RPTA and the other Provider Documents, duly
executed by the Borrower and acknowledged by the other Persons party to such
Provider Documents.
(l) Originally executed copies of the RPTA and the other Provider
Documents, all other documentation required to be delivered with respect to this
Agreement, the RPTA and the other Documents, all in form and substance
satisfactory to the Program Manager, which agreements shall be in full force and
effect and enforceable in accordance with their respective terms.
(m) Evidence that all of the conditions precedent with respect to the
initial purchase under the RPTA have been satisfied or waived.
(n) A duly executed Depositary Agreement, together with evidence
satisfactory to the Program Manager that the Primary Borrower Account and the
Primary Provider Account and the Government Lockboxes and the Government Lockbox
Accounts have been established.
(o) Duly executed Government Depositary Agreements, together with
evidence satisfactory to the Program Manager that the Government Lockboxes and
the Government Lockbox Accounts have been established.
(p) Duly executed Control Agreements, together with evidence
satisfactory to the Program Manager that the Local Borrower Accounts have been
established.
(q) Payment of all fees and other amounts due and payable, on or prior
to the Initial Funding Date under this Agreement, the RPTA or otherwise,
including the reimbursement or payment of all out-of-pocket expenses required to
be reimbursed or paid and all reasonable attorneys' fees and disbursements
incurred by the Lender Group.
(r) Evidence that the capitalization of the Borrower is satisfactory to
the Program Manager.
(s) Completion of a due diligence review by the Program Manager (or its
agent) of the Providers, the results of which are satisfactory to the Program
Manager.
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2. Conditions Precedent on All Funding Dates. Each Revolving Loan on a
Funding Date (including the Initial Funding Date) shall be subject to the
further conditions precedent that the Borrower and the Program Manager shall
have agreed upon the terms of such Revolving Loan and also that:
(a) the Borrower shall have delivered to the Program Manager, at least
two Business Days prior to such Funding Date, in form and substance satisfactory
to the Program Manager a completed Borrower's Certificate, together with a
completed Borrowing Base Certificate and such additional information as may
reasonably be requested by the Program Manager or the Master Servicer;
(b) on such Funding Date the following statements shall be true and
correct (and acceptance of the proceeds of such Revolving Loan shall be deemed a
representation and warranty by the Borrower that such statements are then true
and correct):
(i) the representations and warranties contained in
Exhibits III and VII are true and correct in all material respects on
and as of the date of such Revolving Loan as though made on and as of
such date (except any representations or warranty that expressly
indicates that it is being made as of a specific date, in which case
such representation or warranty shall be true and correct as of such
date), and
(ii) no event has occurred and is continuing, or
would result from such Revolving Loan or any actions connected
therewith, that constitutes a Default or an Event of Default; and
(c) the Program Manager shall have received such other approvals,
opinions or documents as it may reasonably request.
II-3
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
(a) The Borrower is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly qualified to do business, and is in good standing, in every jurisdiction
where the nature of its business requires it to be so qualified.
(b) The execution, delivery and performance by the Borrower of the
Agreement and the other documents to be delivered by it thereunder, (i) are
within the Borrower's powers, (ii) have been duly authorized by all necessary
limited liability company action, (iii) do not contravene (1) the Borrower's
operating agreement or certificate of formation, (2) any law, rule or regulation
applicable to the Borrower, (3) any contractual restriction binding on or
affecting the Borrower or its Property, or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Borrower or its Property, and
(iv) do not result in or require the creation of any Lien upon or with respect
to any of its Properties, other than the security interest created by the
Agreement. The Agreement has been duly executed and delivered by the Borrower.
The Borrower has previously furnished to the Lender a correct and complete copy
of the Borrower's certificate of formation and operating agreement including all
amendments thereto.
(c) No authorization or approval or other action by, and no notice to
or filing with, any Governmental Entity is required for the due execution,
delivery and performance by the Borrower of the Agreement or any other document
to be delivered thereunder.
(d) The Agreement constitutes the legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its terms,
except as limited by bankruptcy, insolvency, moratorium, fraudulent conveyance
or other laws relating to the enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is sought at
equity or law).
(e) The Borrower has all power and authority, and has all permits,
licenses, accreditations, certifications, authorizations, approvals, consents
and agreements of all Insurers, Governmental Entities, accreditation agencies
and any other Person necessary or required for the Borrower (i) to own the
assets (including Receivables) that it now owns, (ii) to carry on its business
as now conducted, (iii) to execute, deliver and perform the Agreement and the
other Documents to which it is a party, and (iv) to receive payments from the
Obligors in the manner contemplated in the Agreement and the RPTA, except, in
each case, where the failure to do so would not reasonably be expected to result
in a Material Adverse Effect.
(f) Except as disclosed on Schedule III, no Provider has been notified
by any Insurer, Governmental Entity or instrumentality, accreditation agency or
any other person, during the immediately preceding 24 Month period, that such
party has rescinded or not renewed, or is
III-1
reasonably likely to rescind or not renew, any such permit, license,
accreditation, certification, authorization, approval, consent or agreement
granted by it to such Provider or to which it and such Provider are parties.
(g) As of the Initial Funding Date, all conditions precedent set forth
in Exhibit II have been fulfilled or waived in writing by the Program Manager,
and as of each Funding Date, the conditions precedent set forth in paragraph 2
of such Exhibit II shall have been fulfilled or waived in writing by the Lender.
(h) The opening balance sheet of the Borrower, copies of which have
been furnished to the Program Manager, fairly present the financial condition of
the Borrower as of the date thereof all in accordance with GAAP.
(i) The RPTA is in full force and effect and no Event of Termination or
Group-Wide Event of Termination (without regard to waivers granted or sought) is
continuing thereunder.
(j) There is no pending or, to the Borrower's knowledge, any threatened
action or proceeding or injunction, writ or restraining order affecting the
Borrower or any Provider before any court, Governmental Entity or arbitrator
which would reasonably be expected to result in a Material Adverse Effect, or
which purports to affect the legality, validity or enforceability of the
Agreement, the RPTA or any other Document, and neither the Borrower nor any
Provider is currently the subject of, or has any present intention of
commencing, an insolvency proceeding or petition in bankruptcy.
(k) The Borrower is the legal and beneficial owner of the Collateral
free and clear of any Lien. No effective financing statement or other instrument
similar in effect covering any item of Collateral is on file in any recording
office, except those being terminated on or before the Initial Funding Date and
those filed in favor of the Borrower relating to the purchase of the Receivables
under the RPTA and those in favor of the Collateral Agent relating to the
Agreement, and no competing notice or notice inconsistent with the transactions
contemplated in the Agreement has been sent to any Obligor.
(l) All Receivable Information, information provided in the application
for the program effectuated by the Agreement, and each other Document, report
and Transmission provided by the Borrower to the Lender Group is or shall be
accurate in all material respects as of its date and as of the date so
furnished, and no such document contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
(m) The principal place of business and chief executive office of the
Borrower and the office where the Borrower keeps its records concerning the
Collateral are located at the address referred to on the signature page of the
Agreement or in a Written Notice pursuant to clause (b) of Exhibit IV and there
have been no other such locations for the four immediately prior Months.
III-2
(n) The provisions of the Agreement create legal and valid Liens in all
of the Collateral in favor of the Collateral Agent, for the benefit of the
Lenders, and when all proper filings and other actions necessary to perfect such
Liens have been completed, will constitute a perfected and continuing Lien on
all of the Collateral, having priority over all other Liens on such Collateral,
enforceable against the Borrower and all third parties.
(o) The Borrower has not changed its principal place of business or
chief executive office in the last five years.
(p) The exact name of the Borrower is as set forth on the signature
page of the Agreement, and except as notified in writing to the Program Manager,
the Borrower has not changed its name in the last 12 Months, and, except as
notified in writing to the Program Manager, the Borrower did not use, nor does
the Borrower now use, any fictitious or trade name.
(q) With respect to the Borrower, any Providers or the Primary
Servicer, since the Funding Date prior to the making of this representation,
there has occurred no event which has or is reasonably likely to result in a
Material Adverse Effect.
(r) Neither the Borrower nor any Provider is in violation under any
applicable statute, rule, order, decree or regulation of any court, arbitrator
or governmental body or agency having jurisdiction over the Borrower or such
Provider which has or is reasonably likely to result in a Material Adverse
Effect.
(s) The Borrower has filed on a timely basis, including applicable
extensions, all tax returns (federal, state and local) required to be filed and
has paid, or made adequate provision for payment of, all taxes, assessments and
other governmental charges due from the Borrower. No tax Lien has been filed and
is now effective against the Borrower or any of its Properties except any Lien
in respect of taxes and other charges not yet due or contested in good faith by
appropriate proceedings. To the Borrower's knowledge, there is no pending
investigations of the Borrower by any taxing authority nor any pending but
unassessed tax liability of the Borrower. The Borrower does not have any
obligation under any tax sharing agreement.
(t) The Borrower is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement; the Borrower has not
incurred debts or liabilities beyond its ability to pay nor does it intend to
incur such debts or liabilities; the Borrower will, after giving effect to the
transaction contemplated by this Agreement, have an adequate amount of capital
to conduct its business in the foreseeable future; the transactions contemplated
under the Documents are made in good faith and without intent to hinder, delay
or defraud present or future creditors.
(u) The Providers maintain only the Government Lockboxes, the
Government Accounts and the Provider Accounts as described on Schedule IV to the
Agreement, for Receivables the Obligor of which is a Governmental Entity (except
those lockboxes and lockbox accounts terminated or being terminated prior to or
on the Initial Funding Date); the Providers do not maintain any lockboxes and
the Local Borrower Accounts are the only lockbox accounts maintained for
Receivables, the Obligors of which are non-Governmental Entities; and no
direction is in effect
III-3
directing Obligors to remit payments on Receivables other than to the applicable
Provider, Borrower Lockbox Account, Government Lockbox or Provider Account, each
as described on Schedule IV.
(v) The Borrower has no pension plans or profit sharing plans.
(w) Except as disclosed on Schedule III hereto, there are no pending
civil or criminal investigations by any Governmental Entity involving the
Borrower, any Provider or any of their respective officers or directors and none
of the Borrower, any Provider or any of their respective officers or directors
has been involved in, or the subject of, any civil or criminal investigation by
any Governmental Entity that would reasonably be expected to result in a
Material Adverse Effect.
(x) The sole business of the Borrower is as provided in its
organizational documents.
(y) The assets of the Borrower are free and clear of any Liens in favor
of the Internal Revenue Service, any Employee Benefit Plan, any Multiemployer
Plan or the PBGC other than inchoate tax Liens resulting from an assessment of a
Provider or the Borrower.
(z) None of the Eligible Receivables constitutes or has constituted an
obligation of any Person which is an Affiliate of the Borrower.
(aa) The Obligor of each Eligible Receivable has not been the Obligor
of any Defaulted Receivables in the past 12 Months (other than, for the purpose
of this clause, as a result of good faith disputes).
(bb) No transaction contemplated under this Agreement requires
compliance with any bulk sales act or similar law.
(cc) The Borrower has no Debt except hereunder and under the RPTA.
III-4
EXHIBIT IV
COVENANTS
Until the payment in full of all Lender Debt and the termination of the
Revolving Commitment hereunder:
(a) Compliance with Laws, etc. The Borrower will comply in all material
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its limited liability company existence, rights, franchises,
qualifications, and privileges.
(b) Offices, Records and Books of Account. The Borrower will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Collateral at the address of the Borrower set
forth under its name on the signature page to the Agreement or, upon 30 days'
prior Written Notice to the Program Manager, at any other locations in
jurisdictions where all actions reasonably requested by the Lender or otherwise
necessary to protect and perfect the Collateral Agent's interest in the
Collateral have been taken and completed. The Borrower shall keep its books and
accounts in accordance with GAAP and shall make a notation on its books and
records, including any computer files, to indicate that the Receivables have
been assigned as security to the Collateral Agent, for the benefit of the
Lenders. The Borrower shall maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Receivables and related contracts in the event of the destruction of
the originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for collecting all
Receivables (including, without limitation, records adequate to permit the daily
identification of each Receivable and all Collections of and adjustments to each
existing Receivable) and for providing the Receivable Information.
(c) Performance and Compliance with Contracts and Credit and Collection
Policy. The Borrower will, at its expense, timely and fully perform and comply
(and will cause the Primary Servicer, the Providers or their designees to fully
perform and comply) with all material provisions, covenants and other promises
required to be observed by it under the contracts related to the Receivables,
and timely and fully comply in all material respects with the Credit and
Collection Policy in regard to each Receivable and the related contract, and the
Borrower shall maintain, at its expense, in full operation each of the bank
accounts and lockboxes required to be maintained under the Agreement. The
Borrower shall do nothing, nor suffer or permit any other Person, to impede or
interfere with the collection by the Program Manager or the Master Servicer on
behalf of the Lenders, of the Receivables.
(d) Notice of Breach of Representations and Warranties. The Borrower
shall promptly (and in no event later than five Business Days following actual
knowledge thereof) inform the Program Manager and the Master Servicer of any
breach of covenants or representations and warranties hereunder and under the
RPTA, including, without limitation, upon discovery of a breach of the
Eligibility Criteria set forth in Exhibit VI hereof and thereof.
IV-1
(e) Debt, Sales, Liens, etc. The Borrower will not incur or assume any
Debt or issue any securities except under or as contemplated by this Agreement.
The Borrower will not sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Liens upon or with
respect to, the Borrower's Properties, or upon or with respect to any account to
which any Collections are sent, or assign any right to receive income in respect
thereof except (i) those Liens in favor of Collateral Agent, for the benefit of
the Lenders or any assignee of any Lender relating to the Agreement, and (ii)
those assignments of Denied Receivables upon receipt by the Borrower of the
respective Repurchase Prices (as defined in the RPTA).
(f) Extension or Amendment of Receivables. The Borrower shall not
amend, waive or agree, or otherwise suffer or permit any Provider to amend,
waive or agree, to any deviation from the terms or conditions of any Receivable
owned by the Borrower in a manner inconsistent with the Credit and Collection
Policy.
(g) Change in Credit and Collection Policy; Change in Business. The
Borrower will not make any material change in the Credit and Collection Policy
without the prior written consent of the Program Manager; provided, however,
that during the continuance of an Event of Default, it will not make any change
in the Credit and Collection Policy. The Borrower will not make any change in
the character of its business that is reasonably likely to result in a Material
Adverse Effect.
(h) Audits and Visits. The Borrower will, from time to time during
regular business hours as requested by the Program Manager, permit the Lender
upon reasonable notice, without interfering with the Borrower's or the
Providers' businesses or operations and subject to compliance with applicable
law in the case of review of patient/customer information, or its agents or
representatives (including the Master Servicer), (i) to examine and make copies
of and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the control of
the Borrower relating to Receivables including, without limitation, the related
contracts, and (ii) to visit the offices and properties of the Borrower for the
purpose of examining and auditing such materials described in clause (i) above,
and to discuss matters relating to Receivables or the Borrower's performance
hereunder or under the contracts with any of the officers or employees of the
Borrower having knowledge of such matters. The Borrower shall, at any time and
from time to time during regular business hours as requested by the Master
Servicer, permit the Master Servicer to have at least one of its agents or
representatives physically present in the Borrower's administrative office, upon
reasonable notice, to assist the Borrower in the collection of Receivables;
provided, however, that no notice shall be required upon the occurrence and
during the continuance of an Event of Default.
(i) Change in Payment Instructions. The Borrower will not terminate the
Primary Provider Account, the Borrower Lockbox Account, any Government Lockbox
Account or any Government Lockbox or make any change or replacement in the
instructions contained in any invoice, Notice or otherwise, or regarding
payments with respect to the Receivables to be made to the Borrower, the Lenders
or the Master Servicer, except upon the prior and express direction of the
Program Manager.
IV-2
(j) Reporting Requirements. The Borrower will provide to the Program
Manager (in multiple copies, if requested by the Program Manager) the following:
(i) on or prior to the 15th of each Month, a copy of
the "Monthly Report" delivered by the Primary Servicer to the Borrower
pursuant to Section 1.03 of the RPTA, together with a Borrowing Base
Certificate, which shall be a revised Borrowing Base Certificate based
on reconciliations and adjustments reflected in such Monthly Report if
a Borrowing Base Certificate was delivered with respect to a Funding
Date occurring after delivery of the prior "Monthly Report", in each
case, certified by the chief financial officer of the Borrower and the
Primary Servicer;
(ii) as soon as available and in any event within 45
days after the end of each of the first three quarters of each fiscal
year of the Borrower, balance sheets of the Borrower as of the end of
such quarter and statements of income, cash flows and retained earnings
of the Borrower for the period commencing at the beginning of the
current fiscal year and ending with the end of such quarter, certified
by the chief financial officer of the Borrower, and accompanied by a
certificate of an authorized officer of the Borrower stating that, as
of such date, (i) no Event of Default exists and is continuing, (ii)
all representations and warranties are true and correct in all material
respects (except any representation or warranty that expressly
indicates that it is being made as of a specific date, in which case
such representation or warranty shall be true and correct on and as of
such date) and (iii) the conditions precedent set forth in paragraph 2
of Exhibit II have been fulfilled or waived in writing by the Program
Manager, and detailing its compliance for such fiscal period with the
financial covenants contained in this Agreement;
(iii) as soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, balance sheets
as of, and statements of income for, such fiscal year, and accompanied
by a certificate of an authorized officer of the Borrower stating that,
as of such date, (i) no Event of Default exists and is continuing, (ii)
all representations and warranties are true and correct in all material
respects (except any representation or warranty that expressly
indicates that it is being made as of a specific date, in which case
such representation or warranty shall be true and correct on and as of
such date) and (iii) the conditions precedent set forth in paragraph 2
of Exhibit II have been fulfilled or waived in writing by the Program
Manager, and detailing its compliance for such fiscal period with the
financial covenants contained in this Agreement;
(iv) promptly and in any event within five Business
Days after the occurrence of each Default or Event of Default, a
statement of the chief financial officer of the Borrower setting forth
details of such Default or Event of Default, and the action that the
Borrower has taken and proposes to take with respect thereto;
(v) at least ten Business Days prior to any change in
the Borrower's name, a notice setting forth the new name and the
proposed effective date thereof;
IV-3
(vi) promptly (and in no event later than five
Business Days following actual knowledge or receipt thereof), Written
Notice in reasonable detail, of (w) any Lien asserted or claim made
against a Receivable, (x) the occurrence of an Event of Default,
including the occurrence of any other event which could have a material
adverse effect on the value of a Receivable, (y) any notice of any
investigations or similar audits of any Provider being conducted by any
federal, state or county Governmental Entity or its agents or designees
or (z) the results of any cost report filed and reviewed by any
Governmental Entity or its fiscal intermediary or settled, and
investigations or similar audits of any Provider being conducted by any
federal, state or county Governmental Entity or its agents or
designees;
(vii) no later than five Business Days after the
commencement thereof, Written Notice of all actions, suits, and
proceedings before any Governmental Entity or arbitrator affecting the
Borrower which, if determined adversely to the Borrower, could result
in a Material Adverse Effect;
(viii) as soon as possible and in any event within
five Business Days after becoming aware of the occurrence thereof,
Written Notice of any matter that would reasonably be expected to
result in a Material Adverse Effect;
(ix) within 90 days after the end of each fiscal year
of the Borrower, a certificate of independent certified public
accountants stating that to their knowledge no Group-Wide Event of
Termination has occurred and exists as of the end of such fiscal year,
or if in their opinion such a Group-Wide Event of Termination has
occurred and is continuing, a statement as to the nature thereof; and
(x) such other information respecting the Receivables
or the condition or operations, financial or otherwise, of the Borrower
as the Program Manager or any Lender may from time to time reasonably
request.
(k) Notice of Proceedings; Overpayments. The Borrower shall promptly
notify the Master Servicer (and modify the next Borrowing Base Certificate to be
delivered hereunder) in the event of any action, suit, proceeding, dispute,
set-off, deduction, defense or counterclaim that is or may be asserted by an
Obligor with respect to any Receivable. The Borrower shall make, or cause to be
made, all payments to the Obligors necessary to prevent the Obligors from
offsetting any earlier overpayment to the Borrower or any Provider against any
amounts the Obligors owe on any Receivables.
(l) Officer's Certificate. On the dates the financial statements
referred to in clause (j) above are to be delivered after the Initial Funding
Date, the chief financial officer of the Borrower shall deliver a certificate to
the Program Manager, stating that, as of such date, (i) all representations and
warranties are true and correct, (ii) the conditions precedent set forth in
paragraph 2 of Exhibit II have been fulfilled or waived in writing by the
Program Manager, and (iii) no Event of Default exists and is continuing.
IV-4
(m) Further Instruments, Continuation Statements. The Borrower shall,
at its expense, promptly execute and deliver all further instruments and
documents, and take all further action that the Program Manager or the
Collateral Agent may reasonably request, from time to time, in order to perfect,
protect or more fully evidence the Collateral Agent's security interest in the
Collateral, or to enable the Collateral Agent or the Program Manager to exercise
or enforce the rights of the Collateral Agent, for the benefit of the Lender,
hereunder or in the Collateral. Without limiting the generality of the
foregoing, the Borrower will upon the request of the Program Manager execute and
file such UCC financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be, in the
opinion of the Program Manager, necessary or appropriate. The Borrower hereby
authorizes the Program Manager to file one or more financing or continuation
statements and amendments thereto and assignments thereof, relative to all or
any of the Collateral now existing or hereafter arising without the signature of
the Borrower where permitted by law. If the Borrower fails to perform any of its
agreements or obligations under the Agreement, the Program Manager may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Program Manager incurred in
connection therewith shall be payable by the Borrower.
(n) Merger, Consolidation. The Borrower shall not merge with or into,
consolidate with or into, or enter into any agreement to merge or consolidate
with or into, another Person, or convey, transfer, lease or otherwise dispose of
all or substantially all of its assets (whether now owned or hereafter
acquired).
(o) No "Instruments". The Borrower shall not take any action which
would allow, result in or cause any Eligible Receivable to be evidenced by an
"instrument" within the meaning of the UCC of the applicable jurisdiction.
(p) Preservation of Company Existence. The Borrower shall preserve and
maintain its existence, rights, franchises and privileges in the jurisdiction of
its organization, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would result in a
Material Adverse Effect.
(q) Provider Documents. The Borrower will, at its sole expense, timely
and fully perform and comply with all provisions, covenants and other promises
required to be observed by it under the Provider Documents, maintain the
Provider Documents in full force and effect, enforce each Provider Document in
accordance with its terms, take all such action to such end as may be from time
to time reasonably requested by the Program Manager, and make to any party to
the Provider Documents such demands and requests for information and reports or
for action as the Borrower is entitled to make thereunder and as may be from
time to time reasonably requested by the Program Manager. The Borrower shall not
permit any waiver, modification or amendment of any Provider Document.
(r) New Providers. The Borrower shall not cause or suffer or permit any
other Person to become a "Provider" under the RPTA without the prior written
consent of the Program Manager.
IV-5
(s) Master Servicer Certificate. On or before the 30th calendar day
after the Initial Funding Date, the Program Manager shall receive a certificate
from the Master Servicer stating that all computer linkups and interfaces
necessary or desirable, in the judgment of the Master Servicer, to effectuate
the transactions and information transfers contemplated hereunder, are fully
operational to the reasonable satisfaction of the Master Servicer.
IV-6
SPECIAL COVENANTS
ENTITY SEPARATENESS
Until the payment in full of all Lender Debt and the termination of the
Total Revolving Commitment hereunder:
(i) The Borrower will at all times maintain at least one
independent manager who is (x) not a current or former officer, director,
manager or employee of an Affiliate of the Borrower or any Other Entity and who
is not a current or former officer or employee of the Borrower and (y) not a
stockholder or the holder of any other equity interests of any Other Entity or
any of their respective Affiliates.
(ii) The Borrower will not direct or participate in the
management of any of the Other Entities' operations.
(iii) The Borrower will at all times be adequately capitalized
in light of its contemplated business.
(iv) The Borrower will at all times provide for its own
operating expenses and liabilities from its own funds.
(v) Subject to consolidation with the Providers for accounting
and tax purposes, the Borrower will maintain its assets and transactions
separately from those of the Other Entities and reflect such assets and
transactions in financial statements separate and distinct from those of the
Other Entities and evidence such assets and transactions by appropriate entries
in books and records separate and distinct from those of the Other Entities. The
Borrower will not hold itself out as being liable, primarily or secondarily, for
any obligations of the Other Entities.
(vi) The Borrower will not maintain any joint account with any
Provider or any Other Entity, or be a party, whether as a co-obligor or
otherwise, to any agreement to which any Other Entity is a party (other than any
Provider Document) or become liable as a guarantor or otherwise with respect to
any indebtedness or contractual obligation of any Other Entity.
(vii) Other than as contemplated under this Agreement or under
any other Document and the payment of dividends or distributions to its members,
the Borrower will not make any payment or distribution of assets with respect to
any obligation of any Other Entity or ▇▇▇▇▇ ▇ ▇▇▇▇ on any of its assets to
secure any obligation of any Other Entity.
(viii) The Borrower will not make any loans, advances or
otherwise extend credit to any of the Other Entities; provided, that the
Borrower may issue dividends or distributions to each of its members to the
extent otherwise permitted under this Agreement and under applicable law.
(ix) The Borrower will hold regular duly noticed meetings of
its members and make and retain minutes of such meetings.
IV-7
(x) The Borrower will comply in full with the procedures set
forth in the Documents with respect to the assignment of all assets from any of
the Other Entities.
(xi) The Borrower will not engage in any transaction with any
of the Other Entities or any of their respective subsidiaries, except as
permitted or contemplated by the Agreement and as contemplated by the Documents.
(xii) The Borrower will not enter into any transaction with
any Affiliate or third party except (a)(x) as permitted or contemplated by this
Agreement or the Documents, or (y) investments of cash and cash equivalents with
third parties and (b) on terms and conditions which reasonably approximate an
arm's length transaction between unaffiliated parties.
(xiii) The Borrower will not amend, modify or supplement its
organizational documents.
(xiv) The Borrower will not have any subsidiaries nor
ownership interest in any other entities.
IV-8
EXHIBIT V
EVENTS OF DEFAULT
Each of the following shall be an "Event of Default":
(a) The Borrower shall default in the due and punctual payment of the
principal of any Revolving Loan when and as the same shall become due and
payable (except that the Borrower shall have up five Business Days to cure such
a default with respect to a Borrowing Base Deficiency) whether pursuant to
Article II of this Agreement, at maturity, by acceleration or otherwise.
(b) The Borrower shall default in the due and punctual payment of any
installment of interest on any Revolving Loan or any other Lender Debt,
including, without limitation, any fee or expense owing to the Program Manager
or any Lender pursuant to any of the Documents, when and as such amount of
interest, fee or expense shall become due and payable and such default shall
continue unremedied for three Business Days.
(c) Any material provision of any Document is no longer in full force
and effect or there shall be continuing a default in the performance or
observance of any covenant, agreement or provision (other than as described in
clause (a) or (b) above) contained in this Agreement or any other Document or in
any instrument or document evidencing or creating any obligation, guaranty or
Lien directly or indirectly in favor of the Collateral Agent, for the benefit of
the Lenders, in connection with or pursuant to this Agreement or any Lender
Debt, and, except in the case of the agreements and covenants contained in any
Document as to each of which no notice or grace period shall apply, such default
continues for a period of 30 days (or, in the case where agreements and
covenants contained in any Document provide for a grace period that is less than
30 days, continuance of a default for such shorter period) after the earlier of
(i) there has been given Written Notice of such default to either of the
Borrower or the Primary Servicer on behalf of any Provider by the Program
Manager or (ii) discovery thereof by the Borrower; or if this Agreement or any
other Document or any such other instrument or document shall terminate, be
terminated or become void or unenforceable for any reason whatsoever without the
written consent of the Program Manager.
(d) A Group-Wide Event of Termination shall have occurred under the
RPTA (without regard to waivers granted or sought).
(e) A Revocation Order (as defined in the Depositary Agreement) shall
have been sent or any change or replacement shall have been made in the Standing
Revocable Instruction (as defined in the Depositary Agreement).
(f) Any representation or warranty made or deemed made by the Borrower
(other than with respect to the eligibility of Receivables as Eligible
Receivables hereunder) under or in connection with the Agreement or any other
Document or any information or report delivered by the Borrower (other than with
respect to the Providers) pursuant to the Agreement or any other
V-1
Document shall prove to have been incorrect or untrue in any material respect
when made or deemed made or delivered.
(g) The Borrower shall incur any Debt other than under this Agreement
or the RPTA.
(h) This Agreement shall for any reason (other than pursuant to the
terms hereof) fail or cease to create, or the security interest created by this
Agreement fails or ceases to be, a valid and perfected first priority security
interest in the Collateral free and clear of all Liens (other than Liens
referred to in clauses (i) and (ii) of paragraph (e) of Exhibit IV).
(i) The Borrower or any Provider shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower or any Provider
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its Property and, in the case of
any such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 30 days, or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
Property) shall occur; or the Borrower or any Provider shall take any action to
authorize any of the actions set forth above in this paragraph (i).
(j) As of any date of determination, any Provider is found to have been
overpaid by Governmental Entities by an amount equal to 10% of the Expected Net
Value of all Eligible Receivables or more during any period covered by an audit
conducted by CMS or any state authority and such overpayment is not repaid
within 30 days of the earlier of receipt of a notice by, or the knowledge of,
such Provider of a notice of such overpayment or reserved for in a manner
reasonably acceptable to the Program Manager.
(k) There shall have occurred any Material Adverse Effect since
December 31, 2001.
(l) The Borrower (x) shall have entered into any transaction or
agreement and not provided prompt Written Notice thereof to the Program Manager,
or (y) shall have consummated, any transaction or agreement intended to result
in (i) the merger or consolidation of the Borrower, (ii) the acquisition of all
or a substantial portion of the assets of any Person, (iii) the transfer, sale,
assignment, lease or other disposition of all or a substantial portion of the
Borrower's assets or Properties, (iv) a change in the general nature of the
Borrower's business, (v) the sale of a controlling interest, directly or
indirectly, in the Borrower, or (vi) a Change of Control with respect to Five
Star.
(m) The Loss-to-Liquidation Ratio at end of any Month exceeds 5%.
V-2
(n) The Delinquency Ratio at the end of any Month exceeds 7%.
(o) The arithmetic average of the Delinquency Ratios for any three
consecutive Months exceeds 4.5%.
(p) Judgments or orders for payment of money (other than 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 Borrower remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period
of 30 days or more.
(q) Any governmental authority (including, without limitation, the
Internal Revenue Service or the PBGC) files a notice of a Lien against (i) any
of the Receivables or (ii) assets other than the Receivables involving an
aggregate amount in excess of $100,000 which remains unpaid or discharged for a
period of 30 days or more.
(r) The Borrower shall fail to discharge within a period of 30 days
after the commencement thereof any attachment, sequestration, forfeiture, or
similar proceeding or proceedings involving an aggregate amount in excess of
$100,000 against any of its Properties.
(s) The Borrower does not pay or discharge at or before maturity or
before becoming delinquent all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any of its Property, except
any taxes, levies, assessments or charges contested in good faith by appropriate
proceedings.
(t) The Borrower sells, leases, assigns, transfers, or otherwise
disposes of any of its Receivables, except as permitted or contemplated under
the Agreement.
(u) The Borrower declares or makes any Distribution, unless both prior
and subsequent to the effectiveness of such proposed Distribution, (i) no Event
of Default is continuing, (ii) such Distribution is in full compliance with
applicable law, including the law of the State of Delaware as in effect at such
time, and (iii) the Borrower and the recipient of such Distribution have taken
all necessary and appropriate action to effectuate such Distribution.
(v) The Borrower engages in any business other than solely the business
of directly or indirectly purchasing Receivables from the Providers and in
financing such Receivables with the Lenders hereunder and the other transactions
permitted or contemplated hereby.
(w) The Borrower shall at any time fail to maintain a Tangible Net
Worth of at least 120% of the Borrowing Limit.
(x) As of any date after the Initial Funding Date, more than 8% of all
outstanding Eligible Receivables are aged more than 120 days but less than 180
days from the respective Last Service Dates of such Eligible Receivables.
V-3
EXHIBIT VI
ELIGIBILITY CRITERIA
The following shall constitute the eligibility criteria for acceptance
of Receivables for financing and inclusion in the Borrowing Base under the
Agreement (the "Eligibility Criteria"):
(a) The information provided by the Borrower with respect to each such
Receivable is complete and correct and all documents, attestations and
agreements relating thereto that have been delivered to the Program Manager are
true and correct in all material respects. Except with respect to Unbilled
Receivables, the related Provider has billed the applicable Obligor and has
delivered to such Obligor all requested supporting claim documents with respect
to such Receivable and no amounts with respect to such Receivable have been paid
as of the date and time of the inclusion of such Receivable in the Borrowing
Base. Each Provider has, or has the right to use, valid provider identification
numbers and licenses to generate valid Receivables. Except with respect to
Unbilled Receivables, all information set forth in the ▇▇▇▇ and supporting claim
documents with respect to such Receivable is true, complete and correct; if
additional information is requested by the Obligor, the Borrower (or the related
Provider) has or will promptly provide the same, and if any error has been made
with respect to such information, the Borrower (or the related Provider) will
promptly correct the same and, if necessary, rebill such Receivable.
(b) The related Provider's Medicare and Medicaid cost reports, if any,
with respect to such Receivable for all cost reporting periods ending on or
before the date of the last audited cost report have been examined and audited
by (i), as to Medicaid, the applicable state agency or other CMS-designated
agents or agents of such state agency, charged with such responsibility or (ii),
as to Medicare, the Medicare intermediary or other CMS-designated agents charged
with such responsibility; and there is no basis for any Governmental Entity to
assert an offset against such Provider.
(c) Each such Receivable (i) is payable, in an amount not less than its
Expected Net Value, by the Obligor identified by the related Provider as being
obligated to do so, (ii) is based on an actual and bona fide rendition of
services or sale of goods to the patient by the related Provider in the ordinary
course of business, (iii) is denominated and payable only in U.S. dollars in the
United States, (iv) is an account or general intangible within the meaning of
the UCC of the state in which the related Provider is incorporated, or is a
right to payment under a policy of insurance or proceeds thereof, and is not
evidenced by any instrument or chattel paper, and (v) shall be subject to a
patient consent form as described in Exhibit II, Section 1(h) approved by the
Program Manager and executed by the applicable patient. There is no payor other
than the Obligor identified by the Borrower as the payor primarily liable on
such Receivable.
(d) Each such Receivable (i) is not the subject of any action, suit,
proceeding or dispute (pending or threatened), setoff, counterclaim, defense,
abatement, suspension, deferment, deductible, reduction or termination by the
Obligor thereof (except for statutory rights of Governmental Entities that are
not pending or threatened), (ii) is not past, or within 60 days of, the
statutory limit for collection applicable to the Obligor thereof or is not aged
more than 180 days from
VI-1
its Last Service Date, and (iii) except with respect to Unbilled Receivables,
was not billed to the Obligor thereof on a date more than 45 days after the Last
Service Date.
(e) Each such Receivable is not due from any Governmental Entity based
on any cost report settlement or expected settlement.
(f) Neither the Borrower nor the related Provider has any guaranty of,
letter of credit providing credit support for, or collateral security for, such
Receivable, other than any such guaranty, letter of credit or collateral
security as has been assigned to the Collateral Agent, for the benefit of the
Lenders, and any such guaranty, letter of credit or collateral security is not
subject to any Lien in favor of any other Person.
(g) The goods and services provided and reflected by such Receivable
were medically necessary for the customer or patient, and the customer or
patient has received such goods and services.
(h) The fees charged for the goods and services constituting the basis
for such Receivable are consistent with the usual, customary and reasonable fees
charged by other similar medical providers for the same or similar goods in the
related Provider's community and in the community in which the patient resides.
(i) The Obligor with respect to each such Receivable is (i) not
currently the subject of any bankruptcy, insolvency or receivership proceeding,
nor is it unable to make payments on its obligations when due, (ii) located in
the United States of America, (iii) not a subsidiary, parent or other Person
that is an Affiliate of any Provider, (iv) not the Obligor of any Receivables
that was a Defaulted Receivable in the past 12 Months and (v) a Governmental
Entity.
(j) The financing of such Receivable hereunder is made in good faith
and without actual intent to hinder, delay or defraud present or future
creditors of the Borrower.
(k) The insurance policy, contract or other instrument obligating a
Governmental Entity to make payment with respect to such Receivable (i) has been
duly authorized and, together with the applicable Receivable, constitutes the
legal, valid and binding obligation of the Governmental Entity in accordance
with its terms, (ii) together with the applicable Receivable, does not
contravene in any material respect any requirement of law applicable thereto,
and (iii) was in full force and effect and applicable to the customer or patient
at the time the goods or services constituting the basis for such Receivable
were sold or performed.
(l) No consents by any third party to the sale of such Receivable are
required other than consents previously obtained in writing by the Borrower, a
copy of each such consent having been provided to the Program Manager.
(m) The inclusion of such Receivable in the Borrowing Base would not
increase the fraction expressed as a percentage where (i) the numerator is the
sum of the then outstanding principal amount of Eligible Receivables for any
obligor (or group of obligors) listed below included
VI-2
in the Borrowing Base, and (ii) the denominator is the Borrowing Base for all
Eligible Receivables, above the corresponding maximum percentage listed below:
Maximum
Obligor Percentage
------- ----------
Medicare 50%
Medicaid from any single state 30%
(n) Unless specifically verified and accepted by the Master Servicer or
Program Manager, no single Eligible Receivable has an Expected Net Value greater
than $15,000.
(o) No prior sale or assignment of security interest which is still in
effect on the applicable Funding Date has been made with respect to or granted
in any such Receivable.
(p) Such Receivable does not constitute or relate to a worker's
compensation or personal injury claim.
(q) An Event of Termination shall not have occurred and be continuing
with respect to the related Provider.
VI-3
SCHEDULE I
ADDRESSES FOR NOTICE
If to the Master Servicer:
Healthcare Finance Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Chief Credit Officer
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
OMITTED EXHIBITS AND SCHEDULES
The following Exhibits and Schedules to the Loan and Security Agreement have
been omitted:
Exhibit Number Exhibit Title
-------------- -------------
VII-A Form of Borrowing Base Certificate
VII-B Form of Borrower's Certificate
VIII Form of Depository Agreement
IX-A Form of Opinion of Counsel with Respect to
Certain Corporate and UCC Matters
IX-B Form of Opinion of Counsel with Respect to
"True Sale" and Substantive Consolidation
X Form of Assignment of Contracts
XI Form of Governmental Depositary Agreement
Schedule Number Schedule Title
--------------- --------------
Schedule II Credit and Collection Policy
Schedule III Disclosures
Schedule IV Lockbox Information
Schedule V Net Value Factors
The Registrant agrees to furnish supplementally a copy of the foregoing omitted
exhibits and schedules to the Securities and Exchange Commission upon request.