LOAN AND SECURITY AGREEMENT
Dated as of December 23, 1996
Between
CCA FUNDING LLC
as Borrower
and
DAIWA HEALTHCO-2 LLC
as Lender
TABLE OF CONTENTS
Page
ARTICLE I.
COMMITMENT; AMOUNTS AND TERMS OF THE REVOLVING ADVANCES
ss. 1.01. Revolving Advances.......................................................................1
ss. 1.02. Revolving Commitment and Borrowing Limit.................................................1
ss. 1.03. Notice of Borrowing; Borrower's Certificate..............................................2
ss. 1.04. Termination of Revolving Commitment......................................................2
ss. 1.05. Interest and Non-Utilization Fee.........................................................2
ss. 1.06. Renewals.................................................................................3
ss. 1.07. Computation of Interest..................................................................4
ss. 1.08. Procedures for Payment...................................................................4
ss. 1.09. Indemnities..............................................................................5
ss. 1.10. Telephonic Notice........................................................................6
ss. 1.11. Maximum Interest.........................................................................6
ARTICLE II.
COLLECTION AND DISTRIBUTION
ss. 2.01. Collections on the Receivables...........................................................7
ss. 2.02. Distribution of Funds....................................................................7
ss. 2.03. Distribution of Funds at the Maturity Date or Upon an Event of Default
..........................................................................................................7
ss. 2.04. Distributions to the Borrower Generally..................................................8
ss. 2.05. Avoidance of Breakage Costs..............................................................8
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF DEFAULT
ss. 3.01. Representations and Warranties; Covenants................................................8
ss. 3.02. Events of Default; Remedies..............................................................8
ss. 3.03. Attorney-in-Fact.........................................................................9
ARTICLE IV.
SECURITY
ss. 4.01. Grant of Security Interest...............................................................9
ARTICLE V.
MISCELLANEOUS
ss. 5.01. Amendments, etc..........................................................................9
ss. 5.02. Notices, etc............................................................................10
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ss. 5.03. Assignability...........................................................................10
ss. 5.04. Further Assurance.......................................................................10
ss. 5.05. Costs and Expenses; Collection Costs....................................................11
ss. 5.06. Confidentiality.........................................................................11
ss. 5.07. Term and Termination; Early Termination Fee.............................................12
ss. 5.08. No Liability of Lender..................................................................13
ss. 5.09. Entire Agreement; Severability..........................................................14
ss. 5.10. GOVERNING LAW...........................................................................14
ss. 5.11. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE............................................14
ss. 5.12. Execution in Counterparts...............................................................14
ss. 5.13. No Proceedings..........................................................................14
EXHIBITS
Exhibit I Definitions
Exhibit II Conditions of Purchases
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
SCHEDULES
Schedule I Addresses for Notices
Schedule II Credit and Collection Policy
Schedule III License Revocations
Schedule IV Lockbox Information
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LOAN AND SECURITY AGREEMENT, dated as of December __, 1996,
between CCA FUNDING LLC, a Delaware limited liability company (together with its
successors and assigns, the "Borrower") and DAIWA HEALTHCO-2 LLC, a Delaware
limited liability company (together with its successors and assigns, the
"Lender"), agree as follows:
Certain terms that are capitalized and used throughout this
Agreement are defined in Exhibit I to this Agreement. References herein and in
the Exhibits and Schedules hereto to the "Agreement" refer to this Agreement, as
amended, restated, modified or supplemented from time to time in accordance with
its terms.
The Borrower (i) is a Delaware limited liability company owned
by CCA and the Providers, (ii) has acquired heathcare receivables from the
Providers pursuant to the RPA or by contribution to the capital of the Borrower,
as determined from time to time by the Borrower and the Providers, and (iii)
wishes to borrow funds from the Lender on a continuing and revolving basis
secured by healthcare receivables acquired from the Providers.
The Lender is prepared to make revolving loans secured by such
healthcare receivables on the terms and subject to the conditions set forth
herein.
Accordingly, the parties agree as follows:
ARTICLE I.
COMMITMENT; AMOUNTS AND TERMS OF THE REVOLVING ADVANCES
ss. 1.01. Revolving Advances. (a) The Lender agrees to lend to the
Borrower, subject to and upon the terms and conditions herein set forth, on any
Funding Date, such amounts as may be requested by the Borrower (each such
borrowing, a "Revolving Advance" and the outstanding principal balance of all
Revolving Advances from time to time, the "Revolving Loan").
(b) Each Revolving Advance shall be in a minimum amount of
$100,000 or an integral multiple thereof and shall be made on the date specified
in the Written Notice or telephonic notice confirmed in writing as described in
Section 1.03 hereof.
ss. 1.02. Revolving Commitment and Borrowing Limit. (a) The aggregate
unpaid principal amount of the Revolving Advances outstanding at any time shall
not exceed an amount equal to the lesser of (i) $15,000,000 (such amount, or
such greater amount after giving effect to an increase pursuant to the
provisions of Section 1.02(d) hereof, the "Revolving Commitment"), and (ii) the
Borrowing Base as of such time (the lesser of (i) and (ii) being the "Borrowing
Limit").
(b) Subject to the limitations of Article II hereof, the
Borrower may borrow, repay (without premium or penalty) and reborrow the
Revolving Loan. The Revolving Loan shall not exceed in aggregate principal
amount at any one time outstanding, and the Lender shall not have any obligation
to make any Revolving Advance which shall result in the Revolving Loan being in
excess of, the Revolving Commitment.
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(c) If at any time the outstanding principal amount of the
Revolving Loan 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.
(d) The Borrower may request that the Lender increase the
Revolving Commitment, and the Lender, in its sole discretion upon such request,
may decide to increase the Revolving Commitment, provided that the Revolving
Commitment, as so increased, shall in no event exceed $20,000,000. Each such
increase shall be in an amount equal to $1,000,000 or an integral multiple of
$1,000,000 in excess thereof and the Borrower shall, upon the effective date of
such increase, pay to the Lender a fee in an amount equal to 1.00% of any such
increase.
(e) The Borrower may elect to decrease the Revolving
Commitment; provided, that (i) such decrease shall be in an amount equal to
$1,000,000 or an integral multiple of $1,000,000 in excess thereof and the
Borrower shall, upon the effective date of such decrease, pay to the Lender an
amount equal to 1.25% of any such decrease, and (ii) following the delivery of
such decrease request, the Borrower shall not request any increase pursuant to
Section 1.02(d).
ss. 1.03. Notice of Borrowing; Borrower's Certificate. Whenever the
Borrower desires to make a borrowing of a Revolving Advance, the Borrower shall
give the Lender not later than 11:00 a.m. (New York time), on the day of a
proposed Revolving Advance prior Written Notice or telephonic notice from an
Authorized Representative confirmed promptly in writing (which notice shall be
irrevocable) of its desire to make a borrowing of a Revolving Advance on a
Funding Date. Each notice of borrowing under this Section 1.03 shall be
substantially in the form of Exhibit VII-B hereto (each a "Borrower's
Certificate") and specify the date on which the Borrower desires to make a
borrowing of a Revolving Advance (which in each instance shall be a Funding
Date), the amount of such borrowing, and shall attach the most recent Borrowing
Base Certificate to the Borrower's Certificate to be delivered by the Borrower
to the Lender and set forth the Borrowing Base provided therein.
ss. 1.04. Termination of Revolving Commitment. On the Maturity Date, the
Revolving Commitment shall be cancelled automatically. In addition, prior to the
Maturity Date, the Borrower may terminate the Revolving Commitment pursuant to
Section 5.07(b). Upon such cancellation, the Revolving Advances (together with
all other Lender Debt) shall become, without further action by any Person,
immediately due and payable together with all accrued interest thereon to such
date plus any fees, premiums, charges or costs provided for hereunder.
ss. 1.05. Interest and Non-Utilization Fee. (a) During the Special Period
or at any time the Revolving Loan is greater than the Basic Borrowing Amount,
the Borrower shall pay interest on the unpaid principal amount of each Revolving
Advance made to it outstanding from time to time on each Interest Payment Date
(i) on the Basic Borrowing Amount (or any lesser principal amount outstanding
from time to time), at an interest rate per annum equal to the LIBO Rate for the
Interest Period in effect for such Revolving Advance plus 2.00%, and (ii) on any
principal amount outstanding in excess of the Basic Borrowing Amount, at an
interest rate per annum equal to the
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LIBO Rate for the Interest Period in effect for such Revolving Advance plus (x)
3.50% plus, during the Special Period, (y) (1) 0.50% multiplied by (2) the
number of monthly anniversaries to have occurred since the Initial Funding Date.
(b) Interest Following the Expiration of the Special Period.
Following the expiration or termination of the Special Period and provided that
the Revolving Loan is equal to or less than the Basic Borrowing Amount, the
Borrower shall pay interest on the unpaid principal amount of each Revolving
Advance made to it outstanding from time to time (i) on each Interest Payment
Date, and (ii) on the Maturity Date (whether by acceleration or otherwise) upon
demand, in each case at an interest rate per annum equal to the LIBO Rate for
the Interest Period in effect for such Revolving Advance plus 2.00%.
(c) Default Interest. Notwithstanding anything to the contrary
contained herein, while any Event of Default is continuing, interest on the
Revolving Advances shall be payable on demand at a rate per annum equal to two
percentage points (2.00%) in excess of the rate then otherwise applicable to any
Revolving Advance.
(d) LIBO Rate Determination. The Lender, upon determining the
LIBO Rate shall promptly notify by telephone (confirmed promptly in writing) or
in writing the Borrower of such rates. Such determination shall, in the absence
of manifest error, be conclusive and binding upon the Borrower.
(e) Non-Utilization Fee. The Borrower shall pay to the Lender
on the first Funding Date of each month a fee (the "Non-Utilization Fee") equal
to 0.375% per annum on the average amount, calculated on a daily basis, by which
the Revolving Commitment exceeded the outstanding amount of the Revolving Loan
during the prior Month.
ss. 1.06. Renewals. (a) The Borrower may, from time to time following the
Initial Funding Date and prior to the Maturity Date, renew all or a portion of
its outstanding Revolving Advances so long as the aggregate principal balance of
the portion of the Revolving Advance made to the Borrower being renewed, if any,
is $100,000 or an integral multiple of $100,000 in excess of $100,000; provided,
however, that the Borrower shall not be entitled to renew any Revolving Advance,
or portion thereof unless all accrued interest on the Revolving Advance renewed
through the date of such renewal shall have been paid in full.
(b) Each renewal by the Borrower of an outstanding Revolving
Advance or portion thereof shall be made on notice to the Lender given not later
than 11:00 a.m. (New York time) on the date at least two Business Days' prior to
the last day of the Interest Period just ending for such Revolving Advance. Each
notice (which notice shall be irrevocable) by the Borrower of the renewal of a
Revolving Advance or portion thereof, shall be in writing or by telephone from
an Authorized Representative of the Borrower confirmed promptly in writing and
shall specify the amount of such renewal of the Revolving Advance or portion
thereof. Notwithstanding the above, the Borrower shall not be entitled to renew
a Revolving Advance or a portion thereof, if at the time of the selection of
such renewal there shall exist a Default or an Event of Default.
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(c) Any Revolving Advance or portion thereof as to which the
Lender shall not have received a proper notice of renewal as provided in Section
1.06(b) hereof or notice of payment or prepayment by 3:00 p.m. (New York time)
at least three Business Days prior to the last day of the Interest Period just
ending for such Revolving Advance shall (whether or not any Default or Event of
Default has occurred) shall either be paid in full or if not paid in full, at
the Lender's sole and absolute discretion, may be converted, in whole or in
part, to a new Revolving Advance on the last day of the Interest Period.
ss. 1.07. Computation of Interest. (a) Interest on the Revolving
Loan and fees and other amounts calculated by the Lender on the basis of a rate
per annum shall be computed on the basis of actual days elapsed over a
360-day year.
(b) 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; provided, however, that if such extension would cause a payment of
a Revolving Advance to be made, or the last day of such Interest Period for a
Revolving Advance to occur, in the next following Month, such payment shall be
made and the last day of such Interest Period shall occur on the next preceding
Business Day.
ss. 1.08. Procedures for Payment. (a) Each payment hereunder 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 and 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 Body thereof or therein, except for Excluded Taxes. If any such
taxes, duties or charges are so levied or 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 the 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 1.08, 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 Lender 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 fail to remit to the
Lender the required information evidencing payment of any such taxes, duties or
charges so withheld or deducted, the Borrower shall indemnify the Lender for any
incremental taxes, duties, charges, interest or penalties that may become
payable by the Lender as a result of any such failure.
(b) 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
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otherwise with respect to, this Agreement or other Documents and any and all
recording fees relating to any Documents securing any Lender Debt ("Other
Taxes").
(c) The Borrower shall indemnify the Lender for the full
amount of any taxes, duties or charges other than Excluded Taxes and Other Taxes
(including, without limitation, any taxes other than Excluded Taxes and Other
Taxes imposed by any jurisdiction on amounts payable under this Section 1.08)
duly paid or payable by the Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto.
Indemnification payments shall be made within 30 days from the date the Lender
makes written demand therefor.
(d) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 1.08 shall survive the payment in full of principal
and interest hereunder and under the Notes indefinitely.
ss. 1.09. Indemnities. (a) The Borrower hereby agrees to indemnify the
Lender on demand against any loss or expense which the Lender or its branch or
Affiliate may sustain or incur as a consequence of: (i) any default in payment
or prepayment of the principal amount of any Revolving Advance 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
Advance made to it; (iii) the payment or prepayment of the principal amount of
any Revolving Advance made to it or any portion thereof, on any day other than
the last day of an Interest Period or the payment of any interest on any
Revolving Advance made to it, or portion thereof, on a day other than an
Interest Payment Date for such Revolving Advance; or (iv) the failure by the
Borrower to accept or make a borrowing of a Revolving Advance or a renewal of a
Revolving Advance after it has requested such borrowing, conversion or renewal;
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 Advance or any portion thereof. The Lender
shall provide to the Borrower a 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.
(b) The Borrower hereby agrees to indemnify and hold harmless
the Lender and its Affiliates, directors, officers, agents, representatives,
counsel and employees and each other Person, if any, controlling them or any of
its Affiliates within the meaning of either Section 15 of the Securities Act of
1933, as amended, or Section 20(a) of the Exchange Act (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 the Revolving Advances, 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 exercise by the Lender of rights and remedies or any power of attorney with
respect thereto, and any action or inaction of the Lender under and in
accordance with any Security Document), 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
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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 solely 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, CCA, 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 CCA
or any Provider against such Indemnified Party ("Excluded Claims"). Further,
should any employee of the Lender, in connection with such employee's employment
by the Lender, be involved in any legal action or proceeding in connection with
the transactions contemplated hereby (other than relating to an Excluded Claim),
the Borrower hereby agrees to pay to the Lender such per diem compensation as
the Lender shall request for each employee for each day or portion thereof that
such employee is involved in preparation and testimony pertaining to any such
legal action or proceeding. 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 Lender, 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.
ss. 1.10. Telephonic Notice. Without in any way limiting the Borrower's
obligation to confirm in writing any telephonic notice of a borrowing,
conversion or renewal, the Lender may act without liability upon the basis of
telephonic notice believed by the Lender in good faith to be from an Authorized
Representative of the Borrower prior to receipt of written confirmation.
ss. 1.11. Maximum Interest. (a) No provision of this Agreement or any Note
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 any Lender (such
maximum rate being the Lender's "Maximum Permissible Rate").
(b) If the amount of interest computed without giving effect
to this Section 1.11 and payable on any interest payment date in respect of the
preceding interest computation period would exceed the amount of interest
computed in respect of such period at the Maximum Permissible Rate, the amount
of interest payable to the Lender on such date in respect of such period shall
be computed at the Maximum Permissible Rate.
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(c) If at any time and from time to time: (i) the amount of
interest payable to any Lender on any interest payment date 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 the Lender would be less than the amount of interest
payable to the Lender computed at the Maximum Permissible Rate, then the amount
of interest payable to the 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 the Lender shall equal the total amount
of interest which would have been payable to the Lender if the total amount of
interest had been computed without giving effect to the preceding subsection
(b).
ARTICLE II.
COLLECTION AND DISTRIBUTION
ss. 2.01. Collections on the Receivables. The Lender shall be entitled with
respect to all Accounts, (i) to receive and to hold as collateral all Accounts
and all Collections on Accounts 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 Accounts 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
take all actions to obtain Collections with respect to all Accounts payable by
Governmental Entities.
ss. 2.02. Distribution of Funds. On each Funding Date, and provided, that
(i) no Event of Default is continuing, and (ii) the Borrower shall have
successfully sent by Transmission to the Master Servicer all information
required with respect to the Receivables for the period since the immediately
prior Funding Date, the Lender shall distribute any and all Collections received
since the immediately prior Funding Date, together with interest thereon (at the
Overnight Rate established from time to time) from the date of receipt until the
Funding Date so distributed as follows: FIRST, to the Lender, an amount in cash
equal to the Fee and Interest Shortfall, if any, until such amount has been paid
in full; SECOND, to the Lender, an amount in cash equal to the payment, if any,
of principal on the Revolving Loan due and payable on such Funding Date, until
such amount has been paid in full; THIRD, to the Lender, an amount in cash equal
to the payment of any other Lender Debt due and payable on such Funding Date, if
any, until such amount has been paid in full; and FOURTH, to the Borrower, all
remaining amounts of Collections, together with interest thereon (at the
Overnight Rate established from time to time) from the date of receipt until the
Funding Date so distributed.
ss. 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 Lender shall distribute any and all
Collections to the Lender as follows: FIRST, to the Lender, an amount in cash
equal to any and all accrued fees and collection costs as set forth in Section
5.05, until such amount has been paid in full; SECOND, to the Lender, an amount
in cash equal to all accrued and unpaid interest on the Revolving Loans (at the
rate established under Section 1.05(b)) until such amount has
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been funded in full; THIRD, to the Lender, an amount in cash equal to the
principal amount of the Revolving Loan, until such amount is paid in full;
FOURTH, to the Lender, an amount in cash equal to the payment of any other
Lender Debt due and payable on such Funding Date, until such amount has been
paid in full; and FIFTH, to the Borrower, all remaining amounts of Collections.
ss. 2.04. Distributions to the Borrower Generally. Distributions to the
Borrower on each Funding Date shall be deposited in an account designated by the
Borrower in writing to the Program Manager from time to time.
ss. 2.05. Avoidance of Breakage Costs. So long as no Default or Event of
Default is continuing, the Lender shall not apply out of the Collections, unless
requested in writing by the Borrower, any payment of principal to any portion of
a Revolving Loan until the last day of the respective Interest Period thereof or
the earlier maturity of such portion of such Revolving Loan by acceleration or
otherwise.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF DEFAULT
ss. 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.
ss. 3.02. Events of Default; Remedies. (a) If any Event of Default shall
occur and be continuing, the Lender may, by 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, replace the Borrower to
in its performance of any or all of the "Primary Servicer Responsibilities"
under the RPA (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 (g) of Exhibit V, the Maturity Date shall be deemed to have occurred
automatically and without notice. Upon any such declaration or designation, the
Lender shall have, in addition to the rights and remedies which it may have
under this Agreement, all other rights and remedies provided after default under
the UCC and under other applicable law, which rights and remedies shall be
cumulative.
(b) Right of Set-Off. The Borrower hereby irrevocably
authorizes and instructs the Lender to set-off the full amount of the any Lender
Debt due and payable against (i) any Collections, or (ii) the principal amount
of any Revolving Advance to be financed on or after such date. No further
notification, act or consent of any nature whatsoever is required prior to the
right of the Lender to exercise such right of set-off; provided, however, a
member of the Lender Group
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shall notify the Borrower that a set-off pursuant to this Section 3.02 occurred,
the amount of such set-off and a description of the Lender Debt that was due and
payable.
ss. 3.03. Attorney-in-Fact. The Borrower hereby irrevocably designates and
appoints the Lender, 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 payments from Governmental Entities),
drafts or other instruments or documents in respect of the Receivables and the
Receivables, (ii) notify Insurers to make payments on the Receivables directly
to the Lender, and (iii) bring suit in the Borrower's name and settle or
compromise such Receivables as the Lender or the Master Servicer may, in its
discretion, deem appropriate.
ARTICLE IV.
SECURITY
ss. 4.01. Grant of Security Interest. (a) As collateral security for the
Borrower's obligations to pay the Lender Debt when due and payable hereunder,
the Borrower hereby grants to the Lender 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 RPA, (ii) to the maximum extent permitted by
law, the Provider Lockboxes and the Provider Lockbox Accounts, (iii) all of the
Borrower's Accounts whether now owned or hereafter acquired, (iv) any and all
amounts held in any accounts maintained at KeyBank in respect of any of the
foregoing or in compliance with any terms of this Agreement, (v) any and all
amounts held in any accounts maintained at First Union National Bank of Florida
in respect of any of the foregoing or in compliance with any terms of this
Agreement, and (vi) all proceeds of the foregoing. This Agreement shall be
deemed to be a security agreement as understood under the UCC.
(b) The Borrower agrees to execute, and hereby authorizes the
Lender 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 Lender, be desirable, and to do so without the signature of the
Borrower where permitted by law.
ARTICLE V.
MISCELLANEOUS
ss. 5.01. Amendments, etc. (a) No amendment or waiver of any provision of
this Agreement or consent to any departure therefrom by a party hereto shall be
effective unless in a writing signed by the Lender and the Borrower and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
the Lender or the Borrower to exercise, and no delay in exercising, any right
hereunder
9
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
(b) The parties hereto agree to make any change, modification
or amendment to this Agreement as may be requested by Duff & Xxxxxx Credit
Rating Co. or any other rating agency then rating the healthcare financing
program of the Lender, so long as any such change, modification or amendment
does not materially adversely affect the parties hereto.
ss. 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 (and DH-2 hereby agrees that notices to or for its benefit may be
delivered to the Program Manager and such delivery to the Program Manager shall
be deemed received by DH-2), 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 Program
Manager and the Master Servicer at the addresses set forth on Schedule I
attached hereto. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by regular mail), and notices and
communications sent by other means shall be effective when received.
ss. 5.03. Assignability. (a) This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective permitted successors
and assigns.
(b) Without the prior consent of CCA (acting on behalf of the
Providers) and the Borrower (which consent shall not be unreasonably withheld),
the Lender may not assign this Agreement and the Lender's rights, title and
interest and obligations contained herein (including its security interest in
the Receivables) (collectively, "Lender Position"); provided, that (i) the
Lender may assign the Lender Position to another limited purpose
bankruptcy-remote entity sponsored and managed by the Program Manager which does
not result in any increased costs or liabilities to the Borrower or diminution
of the Borrower's rights hereunder and which agrees in writing in a manner
reasonably acceptable to the Borrower to be bound by and perform all of the
Lender's obligations hereunder, and (ii) the Borrower hereby acknowledges that
the Lender is granting Daiwa Finance Corporation a security interest in the
Lender's Position, including without limitation, this Agreement.
(c) The Borrower may not assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Lender.
ss. 5.04. Further Assurance. The Borrower shall, at its cost and expense,
upon the request of the Lender, duly execute and deliver, or cause to be duly
executed and delivered, to the Lender 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 Lender to carry out more effectively the provisions and purposes
of this Agreement.
10
ss. 5.05. Costs and Expenses; Collection Costs. (a) 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 Lender and its Affiliates in
connection with this transaction; and (iii) all reasonable costs and expenses,
if any (including reasonable counsel fees and expenses), of the Lender and its
Affiliates in connection with any waiver, modification, supplement or amendment
hereto, or the enforcement of this Agreement. The Borrower further agrees 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 Lender or its agent in
connection with periodic audits of the Receivables which audits, other than
after an Event of Default, shall occur no more frequently than annually, (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 (calculated at a rate of $100 per hour) and material
expenses of the Master Servicer resulting from a lack of cooperation or
responsiveness of the Borrrower 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.
(b) In the event that the Lender shall retain an attorney or
attorneys to collect, enforce, protect, maintain, preserve or foreclose its
interests with respect to this Agreement, any other Documents, 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 Lender may take judgment
for all such amounts. The attorney's fees arising from such services, including
those of any appellate proceedings, and all 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 Lender on demand (with
interest accruing from the earlier of two Business Days following (i) the date
of such demand, and (ii) the date that 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 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.
ss. 5.06. onfidentiality. (a) The Borrower and the Lender hereby
acknowledge that this Agreement and documents delivered hereunder or under the
RPA including, without limitation, any information relating to the Borrower, the
Lender or the Providers contain confidential and proprietary information. Unless
otherwise required by applicable law, the Borrower and the Lender
11
each hereby agrees to maintain the confidentiality of this Agreement (and all
drafts and other documents delivered in connection therewith including, without
limitation, any information relating to the Borrower, the Lender or the
Providers delivered hereunder or under the RPA) in communications with third
parties and otherwise and to take all reasonable action to prevent the
unauthorized use or disclosure of and to protect the confidentiality of such
confidential information; provided, that, such confidential information may be
disclosed to (i) the Borrower's legal counsel and auditors and to the Provider
under the RPA and their investors and creditors, and their respective legal
counsel and auditors, (ii) the Program Manager, the Person then fulfilling the
"Primary Servicer Responsibilities" under the RPA, each member of the Lender
Group, investors in and creditors of DH-2, appropriate rating agencies with
respect to DH-2, and each of their respective legal counsel and auditors, (iii)
any Person, if such information otherwise becomes available to such Person or
publicly available through no fault of any party governed by this Section 5.06,
(iv) any Governmental Entity requesting such information and (v) any other
Person with the written consent of the other party, which consent shall not be
unreasonably withheld, and provided further that the Borrower and the Providers
shall not disclose such confidential information to any financial adviser not a
party to this Agreement, except with the consent of Lender, which will not be
unreasonably withheld.
(b) The Borrower understands and agrees that the Lender may
suffer irreparable harm if the Borrower breaches its obligations under Section
5.06(a) herein and that monetary damages shall be inadequate to compensate the
Lender for such breach. Accordingly, the Borrower agrees that, in the event of a
breach by the Borrower of Section 5.06(a), the Lender, in addition and not in
limitation of its rights and remedies under law, shall be entitled to a
temporary restraining order, preliminary injunction and permanent injunction to
prevent or restrain any such breach.
(c) Lender 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 it receives in connection with the
transactions described in this Agreement.
ss. 5.07. Term and Termination; Early Termination Fee. (a) The obligations
of the Lender under this Agreement shall continue in full force and effect from
the date hereof until the Maturity Date. Upon the payment in full of all Lender
Debt, the Lender 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 effect such termination.
(b) The Borrower may terminate this Agreement at any time
prior to the Maturity Date upon (i) lapse of not less than ten days' prior
Written Notice (which shall be irrevocable) to the Lender of default of the
commitment by the Lender pursuant to Article I hereof to make Revolving Advances
and (ii) payment in full of all Lender Debt, including all applicable fees,
charges, premiums and costs, all as provided hereunder, and in such occurrence
of clauses (i) and (ii) the commitment hereunder shall be deemed to be
terminated.
12
(c) Upon the termination of this Agreement (for any reason
other than the default hereof by the Lender) prior to the Scheduled Maturity
Date, the Borrower shall pay to the Lender an early termination fee amount equal
to 1.25% of the Revolving Commitment then in effect.
(d) The termination of this Agreement shall not affect any
rights of the 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 have been paid and performed in full.
(e) Upon the giving of notice of a Default or an Event of
Default of this Agreement, all Lender Debt shall be due and payable on the date
of Default or the Event of Default specified in such notice. Upon the (i) the
termination of all commitments and obligations of the Lender, and (ii) the
indefeasible payment in full of all Lender Debt, the Lender shall, at the
Borrower's request and sole cost and expense, execute and deliver to the
Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
(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.
(g) All indemnities representations, warranties, covenants,
waivers and agreements contained herein shall survive termination hereof unless
otherwise provided.
(h) Notwithstanding the foregoing, if after receipt of any
payment of all or any part of the Lender Debt, the 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 Commitment of the Lender shall have
been terminated), and the Borrower shall be liable to, and shall indemnify and
hold the Lender harmless for the amount of such payment surrendered until the
Lender 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 the Lender in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to the
Lender's rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
ss. 5.08. No Liability of Lender. (a) Neither this Agreement nor any
document executed in connection herewith shall constitute an assumption by the
Lender of any obligation to an Obligor or a patient of the Borrower.
(b) Notwithstanding any other provision herein, no recourse
under any obligation, covenant, agreement or instrument of the Lender contained
herein or with respect hereto shall be had against any Related Person 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 the Lender herein and with respect hereto
are solely its corporate
13
obligations; provided, however, nothing herein above shall operate as a release
of any liability which may arise as a result of such Related Person's gross
negligence or willful misconduct. The provisions of this Section 5.08 shall
survive the termination of this Agreement.
ss. 5.09. Entire Agreement; Severability. (a) This Agreement embodies the
entire agreement and understanding of the parties concerning the subject matter
contained herein. This Agreement supersedes any and all prior agreements and
understandings between the parties, whether written or oral.
(b) If any provision of this Agreement shall be declared
invalid or unenforceable, the parties hereto agree that the remaining provisions
of this Agreement shall continue in full force and effect.
ss. 5.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF).
ss. 5.11. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE. THE PARTIES HERETO
HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION WITH
RESPECT TO ANY MATTER RELATED TO THIS AGREEMENT, AND HEREBY IRREVOCABLY CONSENT
TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK COUNTY,
NEW YORK CITY, NEW YORK IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT. IN ANY SUCH LITIGATION, THE PARTIES HERETO
WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREE 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 PARTY
PROSECUTING THE CLAIM FOR THE AMOUNT OF THE CLAIM AND OTHER RELIEF REQUESTED
THEREIN.
ss. 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.
ss. 5.13. No Proceedings. The Borrower hereby agrees that it will not
institute against the Lender any proceeding of the type referred to in clause
(g) of Exhibit V so long as any senior indebtedness issued by the Lender shall
be outstanding or there shall not have elapsed one
14
year plus one day since the last day on which any such senior indebtedness shall
have been outstanding.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
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: CCA FUNDING LLC
By:
Name:
Title: Manager
Address: 0000 X. Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xx. Xxxxx X. Xxxxx
Facsimile Number: (000) 000-0000
LENDER: DAIWA HEALTHCO-2 LLC
By:
Name:
Title:
c/o Lord Securities Corporation
Xxx Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile Number: (000) 000-0000
16
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 any and all accounts (including, without limitation, all
Receivables), general intangibles and other obligations owing or to be owing to
the Borrower for the payment of money arising out of any sale of medical
products or rendition of medical, surgical, diagnostic or other professional
medical services in the ordinary course of business by any Provider (including,
without limitation, under any tradenames of such Provider), whether now existing
or hereafter arising, including all rights to reimbursement under any agreements
with and payments from Obligors, patients, residents or other Persons and all
proceeds of any of the foregoing.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person. For the purposes of this
definition, "control", when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" has the meaning set forth in the preamble hereto.
"A/R Fee" means the account receivable tracking fee, due on the first
Business Day of each Month, in an amount equal to:
AORA x TD / 360 x ARP
where:
AORA = The average outstanding amount of the Revolving Loan
for the prior Month, calculated as the arithmetic
average of all daily balances
TD = The actual amount of days in such prior Month
ARP = The applicable A/R Fee Percentage, determined by
reference to the AORA for the prior Month, as follows:
I-1
AORA for A/R Fee
the Prior Month Percentage
--------------- ----------
less than or equal to $3,000,000 0.60% greater than $3,000,000 but less than or
equal to $5,000,000 0.55% greater than $5,000,000 but less than or equal to
$7,000,000 0.50% greater than $7,000,000 but less than or equal to $10,000,000
0.45% greater than $10,000,000 but less than or equal to $15,000,000 0.40%
greater than $15,000,000 but less than or equal to $20,000,000 0.35% greater
than $20,000,000 0.30%;
provided that if this Agreement shall be terminated on a day other than the
first Business Day of a Month, such A/R Fee for such period from the last day of
the prior Month to the date of termination shall be calculated as above by
substituting such final period for the term "Month" hereinabove.
"Authorized Representative" shall mean each Person designated from time to
time, as appropriate, in a Written Notice by the Borrower to the Lender for the
purposes of giving notices of borrowing, conversion or renewal of Revolving
Advances, which designation shall continue in force and effect until terminated
in a Written Notice to the Lender.
"Basic Borrowing Amount" shall mean an amount equal to eighty-five percent
(85%) of the Expected Net Value of Eligible Receivables as of such time.
"Borrower" has the meaning set forth in the preamble hereto.
"Borrower's Certificate" has the meaning set forth in Section 1.03.
"Borrower Account" means account #2090001617808 of the Borrower at First
Union National Bank of Florida, ABA #063 0000 21, 000 Xxxxx Xxxxxxx Xxxx,
Xxxxxx, XX 00000, or such other bank account designated by the Borrower by
Written Notice to the Master Servicer, the Lender and the Program Manager from
time to time.
"Borrowing Base" shall mean, (a) during the Special Period, the greater of
(i) the Basic Borrowing Amount or (ii) an amount equal to the lesser of (x)
$14,500,000 and (y) ninety-four percent (94%) of the Expected Net Value of all
Accounts (including receivables of private payors) owned by the Borrower which
meet the criteria set forth in clauses (a) through (d), (f) through (m), and (p)
of the Eligibility Criteria hereunder, and solely for the purposes of this
clause (ii)(y), "Obligor" shall include private payors; and, (b) at any time
following the expiration of the Special Period, an amount equal to the Basic
Borrowing Amount; in each case and at all times as determined by reference to
and as set forth in the most recent Borrowing Base Certificate delivered to the
Lender by the Borrower as of such time pursuant to Exhibit IV, Clause (j)(i).
I-2
"Borrowing Base Certificate" shall mean a certificate (which may be sent by
Transmission), 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 set forth in the definition of "Net Value Factor")
that is set forth in the general trial balance of each of the Providers, in form
and substance satisfactory to the Lender and the Master Servicer.
"Borrowing Base Deficiency" shall mean, as of any date, the positive
difference, if any, between (x) the outstanding principal amount of the
Revolving Loan, minus (y) the Borrowing Base indicated on the most recent
Borrowing Base Certificate.
"Borrowing Limit" has the meaning set forth in Section 1.02.
"Business Day" means any day on which banks are not authorized or required
to close in New York City, New York or Naples, Florida.
"CCA" means Community Care of America, Inc., together with its corporate
successors and permitted assigns.
"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 xx.xx. 1071-1106, and all
regulations promulgated thereunder including without limitation (a) all federal
statutes (whether set forth in 10 USC xx.xx. 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
Authorities (including, without limitation, the Department of Health and Human
Services, the Department of Defense, the Department of Transportation, the
Assistant Secretary of Defense (Health Affairs), and the Office of CHAMPUS, or
any Person or entity succeeding to the functions of any of the foregoing)
promulgated pursuant to or in connection with any of the foregoing (whether or
not having the force of law) in each case as may be amended, supplemented or
otherwise modified from time to time.
"Claims" has the meaning set forth in Section 1.09.
"Collections" means all cash collections, wire transfers, electronic funds
transfers and other cash proceeds of Accounts deposited in or transferred to the
Lender Lockbox Account, including, without limitation, all cash proceeds
thereof.
"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 described in Schedule II hereto, as modified from time to time
with the consent of the Lender.
I-3
"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" shall mean 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" shall mean a Receivable (i) as to which the Obligor
thereof or any other Person obligated thereon has taken any action, or suffered
any event to occur, of the type described in paragraph (i) of Exhibit V, or (ii)
which, consistent with the Credit and Collection Policy, would be written off
the appropriate Provider's books as uncollectible.
"Delinquency Ratio" has the meaning set forth in the RPA.
"Delinquent Receivable" shall mean a Receivable (a) that has not been paid
in full on or following the 180th day following the Last Service Date thereof,
or (b) that is a Denied Receivable.
"Denied Receivable" shall mean any Receivable to which any related
representations or warranties have been discovered at any time to have been
breached.
"Depositary Agreement" means that certain Depositary Account Agreement,
dated the date hereof, among the Providers, CCA, the Borrower, the Lender, 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" shall mean 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" shall mean this Agreement, the RPA, the Depositary Agreement,
each Borrower's Certificate, each Borrowing Base Certificate and each other
document or instrument now
I-4
or hereafter executed and delivered to the Lender by or on behalf of the
Borrower pursuant to or in connection herewith or therewith.
"Eligible Receivables" means Receivables that satisfy the Eligibility
Criteria, as determined by the Lender Group.
"Eligibility Criteria" means the criteria and basis for determining whether
a Receivable shall be deemed by the Lender Group 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 Lender in its good faith discretion
upon Written Notice to the Provider.
"Employee Benefit Plan" means any employee benefit plan within the meaning
of ss. 3(3) of ERISA maintained by any Provider, the Borrower, any of their
respective ERISA Affiliate, or with respect to which any of them have any
liability.
"EOB" means the explanation of benefit from an Obligor that identifies the
services rendered on account of the Receivable specified therein.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity which is under common control with 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" shall have the meaning set forth in the RPA.
"Excluded Claims" has the meaning set forth in Section 1.09(b)
"Excluded Taxes" shall mean taxes upon or determined by reference to the
Lender's net income imposed by the jurisdiction that any 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
Net Value Factor.
"Fee and Interest Shortfall" as of any Funding Date, shall mean the amount,
if any, of A/R Fee or interest that is due and payable and has not otherwise
been paid in full by the Borrower.
"Funding Date" means Tuesday of each week after the Initial Funding Date,
or if such day is not a Business Day, the next succeeding Business Day.
I-5
"GAAP" means generally accepted accounting principles in the United States
of America, applied on a consistent basis as set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board
and/or the rules and regulations of the Securities and Exchange Commission
and/or their respective successors and which are applicable in the circumstances
as of the date in question.
"Governmental Entity" means the United States of America, any state, any
political subdivision of a state and any agency or instrumentality of the United
States of America or any state or political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. Payments from Governmental Entities
shall be deemed to include payments governed under the Social Security Act (42
U.S.C. 1395, et seq.), including payments under Medicare, Medicaid and CHAMPUS,
and payments administered or regulated by HCFA.
"HCFA" means the Health Care Financing Administration of the United States
Department of Health and Human Services.
"Indemnified Party" has the meaning set forth in Section 1.09.
"Initial Funding Date" means the date of the initial Revolving Advance in
respect of Receivables hereunder.
"Insurer" means any Person which in the ordinary course of its business or
activities agrees to pay for healthcare goods and services received by
individuals, including commercial insurance companies, nonprofit insurance
companies (such as Blue Cross, Blue Shield entities), employers or unions which
self-insure for employee or member health insurance, prepaid health care
organizations, preferred provider organizations and health maintenance
organizations. "Insurer" includes insurance companies issuing health, personal
injury, workers' compensation or other types of insurance but does not include
any individual guarantors.
"Interest Payment Date" shall mean the last day of the Interest Period for
the applicable Revolving Advance.
"Interest Period" shall mean the period commencing on, as the case may be,
the borrowing or conversion date with respect to such Revolving Advance and
ending one month thereafter; provided, however, that no Interest Period may be
selected that expires later than the Maturity Date; and provided, further, that
any Interest Period that begins on the last Business Day of a Month (or on a day
for which there is no numerically corresponding day in the Month at the end of
such Interest Period) shall, subject to the foregoing proviso, end on the last
Business Day of a Month.
I-6
"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 a Provider to the related
patient.
"Lender" has the meaning set forth in the preamble hereto.
"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 the Lender, the Program Manager or the
Master Servicer by the Provider, any Affiliate of the Provider or any "Lender"
under the RPA, arising under or in connection with this Agreement, the RPA or
the Depositary Agreement, 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 (i) the Lender, the Program Manager and the Master
Servicer, and (ii) the Lender's agents and delegates identified from time to
time to effectuate this Agreement.
"Lender Lockbox" means the lockbox located at the address set forth on
Schedule IV to receive checks and EOB's with respect to Receivables payable by
Insurers.
"Lender Lockbox Account" means the account at the Lockbox Bank as set forth
on Schedule IV as associated with the Lender Lockbox and established by the
Borrower to deposit Collections, including Collections received in the Lender
Lockbox and Collections received by wire transfer directly from Insurers, all as
more fully set forth in the Depositary Agreement.
"Lender Position" has the meaning set forth in Section 5.03.
"LIBO Rate" means an annualized 30-day interest rate (calculated on the
basis of actual days elapsed over a 360-day year) equal to the offered rate that
appears on page 3751 of the Telerate Service for the Bank of Tokyo for U.S.
dollar deposits of amounts and in funds comparable to the principal amount of
such Revolving Advance requested by the Borrower for which the LIBO Rate is
being determined with maturities comparable to the 30-day period for which such
LIBO Rate will apply as of approximately 10:00 a.m. (New York time) two Business
Days prior to the commencement of such Funding Date.
"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.
"Lockbox Bank" means KeyBank, as lockbox bank under the Depositary
Agreement.
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"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 four week period
immediately prior to the date of
calculation.
C = Collections on such Eligible Receivables
in the four week period immediately prior to
the date of calculation.
"Master Servicer" means RJE Data Processing, Inc., and any other Person
then identified by the Lender to the Borrower as being authorized to administer
and service Receivables.
"Maturity Date" means the earlier of (a) the Scheduled Maturity Date, and
(b) the occurrence of an Event of Default unless such event is waived by the
Lender in writing.
"Material Adverse Effect" means any event, condition, change or effect that
(a) has a materially adverse effect on the business, operations or financial
condition of (i) CCA on a consolidated basis, (ii) the Borrower, or (iii) any
Provider, (b) materially impairs the ability of the Borrower to perform its
obligations under this Agreement, (c) materially impairs the ability of CCA, a
Provider or the Borrower to perform their respective obligations under the RPA,
or (d) materially impairs the validity or enforceability of, or materially
impairs the rights, remedies or benefits available to the Lender under this
Agreement or (as assignee from the Lender) under the RPA.
"Maximum Permissible Rate" has the meaning set forth inSection 1.11(a).
"Month" means a calendar month.
"Multiemployer Plan" means a plan, within the meaning of ss. 3(37) of
ERISA, as to which the Borrower or any ERISA Affiliate contributed or was
required to contribute within the preceding five (5) years.
"Net Value Factor" means, initially, as follows:
Obligor Net Value Factor
Private 98%
Medicare 99%
Medicaid 99%
Medicare Part B 99%
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Insurance 98%
VA and Other 98%
as such percentage may be adjusted, upwards or downwards with Written Notice to
the Borrower, in the good faith discretion of the Lender but in consultation
with the Borrower and CCA, based on historical actual final collections received
on the Receivables within the past 180 days.
"Non-Utilization Fee" has the meaning set forth in Section 1.05(d).
"Obligor" means the Insurer or Governmental Entity, as applicable, who is
responsible for the payment of all or any portion of a Receivable.
"Other Corporations" means each Provider and each of its direct and
indirect parents or subsidiaries other than the Borrower.
"Other Taxes" has the meaning set forth in Section 1.08.
"Overnight Rate" means the interest rate for overnight funds as set by the
Lockbox Bank from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Program Manager" means (i) Daiwa Securities America Inc. or (ii) any other
Person then identified by the Lender to the Borrower as being authorized to
provide administrative services with respect to the Lender and the Lender's
finance, funding and collection of healthcare receivables.
"Property" means property of all kinds, real, personal or mixed, tangible
or intangible (including, without limitation, all rights relating thereto),
whether owned or acquired on or after the date of this Agreement.
"Provider" means each party listed as a Provider under the RPA, together
with its corporate successors and permitted assigns.
"Provider Ancillary Lockbox" means the lockbox set forth on Schedule IV
hereto to receive checks and EOB's with respect to Receivables payable by
private payors.
"Provider Ancillary Lockbox Account" means the account set forth on
Schedule IV hereto in the name of the Providers and associated with the Provider
Ancillary Lockbox established
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and controlled by the Providers to deposit Collections, including Collections
received in the Provider Ancillary Lockbox and Collections received by wire
transfer, all as more fully set forth in the Depositary Agreement.
"Provider Government Lockbox" means the lockbox set forth on Schedule IV
hereto to receive checks and EOB's with respect to Receivables payable by
Governmental Entities.
"Provider Government Lockbox Account" means the account set forth on
Schedule IV hereto in the name of the Providers and associated with the Provider
Government Lockbox established and controlled by the Providers to deposit
Collections, including Collections received in the Provider Government Lockbox
and Collections received by wire transfer directly from Governmental Entities,
all as more fully set forth in the Depositary Agreement.
"Provider Lockboxes" means, collectively, the Provider Ancillary Lockbox
and the Provider Government Lockbox, or, as the context requires, either such
lockbox.
"Provider Lockbox Account" means, collectively, the Provider Ancillary
Lockbox Account and the Provider Government Lockbox Account, or, as the context
requires, either such lockbox account.
"Receivable Information" has the meaning set forth in the RPA.
"Receivables" means the third-party reimbursable or the third-party
directly payable portion of healthcare accounts receivable, owing (or in the
case of Unbilled Receivables, to be owing) to the Borrower, arising out of the
rendition of medical, surgical, diagnostic or other professional medical
services or the sale of medical products by the Provider, including all rights
to reimbursement under any agreements with and payments from Obligors, together
with, to the maximum extent permitted by law, all accounts and general
intangibles related thereto, all rights, remedies, guaranties, security
interests and Liens in respect of the foregoing, all books, records and other
Property evidencing or related to the foregoing and all proceeds of any of the
foregoing.
"Related Person" means any incorporator, stockholder, Affiliate (other than
the Program Manager), agent, attorney, officer, director, member, manager,
employee or partner of the Lender or its stockholders.
"RPA" means that certain Receivables Purchase and Transfer Agreement, dated
as of the date of this Agreement, among CCA, the Providers named therein, and
the Borrower, as such agreement may be amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof.
"Revolving Advance" has the meaning set forth in Section 1.01.
"Revolving Commitment" has the meaning set forth in Section 1.02.
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"Revolving Loan" has the meaning set forth in Section 1.01.
"Scheduled Maturity Date" means the date 36 months after the Initial
Funding Date.
"Servicer Termination Event" shall have the meaning set forth in the RPA.
"Special Period" shall mean the period commencing on the Initial Funding
Date and ending on the earliest to occur of (i) the three month anniversary of
the Initial Funding Date, and (ii) the occurrence of any Event of Default,
unless such event is waived by the Lender in writing.
"Tangible Net Worth" with respect to the Borrower, means, at any time, the
excess of (i) the Expected Net Value of all Receivables owned and not financed
by the Lender, plus cash, plus investments, plus amounts which are owing from
the Lender minus (ii) the sum of all accrued unpaid monetary obligations and
accrued unpaid fees and expenses payable hereunder or otherwise.
"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, and prior to such time (not
to exceed 60 days from the Initial Funding Date), by facsimile or overnight
courier, all 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 customer or patient, rights to
payment thereon have accrued, but the invoice has not been rendered to the
applicable Obligor.
"Written Notice" and "in writing" shall mean any form of written
communication or a communication by means of telex, telecopier device, telegraph
or cable.
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.
I-11
EXHIBIT II.
CONDITIONS OF REVOLVING ADVANCES
1. Conditions Precedent on Initial Funding Date. The making of
the Revolving Advance on the Initial Funding Date is subject to the conditions
precedent that the Lender shall have received on or before the Initial Funding
Date the following, each (unless otherwise indicated) dated such date, in form
and substance satisfactory to the Lender:
(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) or an opinion of counsel for the Borrower to
that effect.
(b) Certified copies of the Articles of Organization and
Operating Agreement of the Borrower, certified copies of resolutions of the
Managers of the Borrower approving this Agreement 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 Lender as secured
party) duly filed on or before the Initial Funding Date under the UCC of all
jurisdictions that the Lender may deem necessary or reasonably desirable in
order to perfect the ownership interests contemplated by the Agreement.
(f) 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 its Receivables.
(g) A copy of all of the Providers' existing forms of patient
consents which were signed by each patient for which the currently existing
Receivables were created, as well as a copy of each new patient consent form to
be signed by each patient for which a Receivable will be created after the
Initial Funding Date, which consents authorize certain demographic and medical
information with respect to such patient to be disclosed by each Provider to its
servicing agents and by such servicing agents to any third party obligors
thereon, certified by a Secretary or Assistant Secretary of the Borrower as
being true, complete and correct.
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(h) A favorable opinion of Blass & Xxxxxx, substantially
in the form attached hereto as Exhibit IX-A.
(i) A favorable opinion of Blass & Xxxxxx, counsel for the
Borrower, CCA and the Providers, substantially in the form attached hereto as
Exhibit IX-B.
(j) The Assignment of Contract with respect to the RPA and
assignments of all other documents, lockboxes and lockbox accounts with respect
to the RPA, duly executed by the Borrower and acknowledged by CCA and the
Providers.
(k) Originally executed copies of the RPA, all other
documentation required to be delivered with respect to this Agreement and the
RPA, all in form and substance satisfactory to the Lender, which agreements
shall be in full force and effect and enforceable in accordance with their
respective terms.
(l) Evidence that all of the conditions precedent with respect
to each Provider to the initial purchase from such Provider under the RPA have
been satisfied or waived.
(m) A duly executed Depositary Agreement, together with
evidence satisfactory to the Lender that the Provider Lockboxes and the Provider
Lockbox Accounts have been established.
(n) Payment of a facility fee of $150,000 to Daiwa
Securities America Inc.
(o) Payment of all reasonable attorneys' fees incurred by
the Lender Group plus reasonable disbursements.
(p) Affirmation by Duff & Xxxxxx Credit Rating Co. or an
equivalent rating agency acceptable to the Lender of the transactions
contemplated hereunder with a minimum rating of AA/BBB-.
(q) Evidence that the capitalization of the Borrower is
satisfactory to the Lender.
2. Conditions Precedent on All Funding Dates. Each Revolving
Advance on a Funding Date (including the Initial Funding Date) shall be subject
to the further conditions precedent that the Borrower and the Lender shall have
agreed upon the terms of such Revolving Advance and also that:
(a) the Borrower shall have delivered to the Lender, at least
two Business Days prior to such Funding Date, in form and substance satisfactory
to the Lender a completed Borrower's Certificate and a Borrowing Base
Certificate, together with such additional information as may reasonably be
requested by the Lender or the Master Servicer;
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(b) on such Funding Date the following statements shall be
true (and acceptance of the proceeds of such Revolving Advance shall be deemed a
representation and warranty by the Borrower that such statements are then true):
(i) the representations and warranties contained
in Exhibits III and VII are correct on and as of the date of such Revolving
Advance as though made on and as of such date, and
(ii) no event has occurred and is continuing, or
would result from such Revolving Advance or any actions connected
therewith, that constitutes a Default or an Event of Default;
(c) the Lender 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
organizational action, (iii) do not contravene (1) the Borrower's Articles of
Organization or Operating Agreement, (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
Articles of Organization 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 (iv) to receive payments from the Obligors in the manner contemplated in
this Agreement.
(f) Except as disclosed in Schedule III, the Providers have
not been notified by any Insurer, Governmental Entity or instrumentality,
accreditation agency or any other person, during the immediately preceding 12
month period, that such party has rescinded or not renewed, or is reasonably
likely to rescind or not renew, any such permit, license, accreditation,
certification,
III-1
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 Lender,
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 Lender, fairly present the financial condition of the
Borrower as at such date all in accordance with GAAP.
(i) The RPA is in full force and effect and no Event of
Termination or Servicer Termination Event (without regard to waivers granted or
sought) is continuing thereunder.
(j) There is no pending or, to the Borrower's knowledge,
threatened action or proceeding or injunction, writ or restraining order
affecting the Borrower or any Provider before any court, Governmental Entity or
arbitrator which could reasonably be expected to result in a Material Adverse
Effect, or which purports to affect the legality, validity or enforceability of
the Agreement, the RPA or any other document executed in connection herewith or
therewith, 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
Receivables free and clear of any Lien; the Lender shall acquire a valid
security interest in the Receivables and in the Collections with respect thereto
subject to no third-party claims of interest thereon. No effective financing
statement or other instrument similar in effect covering any Receivables or the
Collections with respect thereto 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 RPA
and those in favor of the Lender 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 Receivables are located at the address referred to on the signature page of
the Agreement and there have been no other such locations for the four
immediately prior months.
III-2
(n) The provisions of the Agreement create, on the Initial
Funding Date, legal and valid Liens in all of the Borrower's Receivables in the
Lender's favor and when all proper filings and other actions necessary to
perfect such Liens have been completed, will constitute a perfected and
continuing Lien on all of the Borrower's Receivables, having priority over all
other Liens on such Receivables of the Borrower, 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
Lender, the Borrower has not changed its name in the last 12 months, and, except
as notified in writing to the Lender, the Borrower did not use, nor does the
Borrower now use, any fictitious or trade name.
(q) With respect to the Borrower or the Provider, since the
Funding Date prior to the making of this representation, there has occurred no
event which has or is reasonably likely to have 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 any Provider which has or is reasonably likely to have a Material Adverse
Effect.
(s) The Borrower has filed on a timely basis all tax returns
(federal, state and local) required to be filed and has paid, or made adequate
provision for payment of, all taxes, assessments and other governmental charges
due from 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 or any pending but unassessed tax liability of the
Borrower.
(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; 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 sales of Receivables hereunder are made in good faith
and without intent to hinder, delay or defraud present or future creditors of
the Borrower.
(u) Each Provider maintains only the one Provider Government
Lockbox and only the one Provider Government Lockbox Account, each as described
on Schedule IV to this Agreement, for Receivables of which the Obligor is a
Governmental Entity (except those lockboxes and lockbox accounts terminated or
being terminated prior to or on the Initial Funding Date); and no direction is
in effect directing Obligors to remit payments on Receivables other than to the
III-3
applicable Lender Lockbox, Lender Lockbox Account, Provider Lockbox, or Provider
Lockbox Account, each as described on Schedule IV.
(v) The Borrower has no pension plans or profit sharing
plans.
(w) 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 neither 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.
(x) The sole business of the Borrower is as provided in
its Operating Agreement.
(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 any Provider, CCA 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 Proposed 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 RPA.
(dd) Each Receivable that is an Unbilled Receivable will be,
or has been, billed to the Obligor of such Receivable within 45 days of the Last
Service Date.
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 corporate existence, rights, franchises,
qualifications, and privileges except to the extent that the failure so to
comply with such laws, rules and regulations or the failure so to preserve and
maintain such existence, rights, franchises, qualifications, and privileges
would not result in Material Adverse Effect.
(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 Receivables 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 Lender, at any other locations in
jurisdictions where all actions reasonably requested by the Lender or otherwise
necessary to protect and perfect the Lender's interest in the Receivables have
been taken and completed. The Borrower shall keep its books and accounts in
accordance with generally accepted accounting principles and shall make a
notation on its books and records, including any computer files, to indicate
which Receivables have been assigned as security to the Lender and the security
interest of the Lender in the Borrower's Accounts not assigned to the Lender.
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 applicable Provider or its designee 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 Lender or the Master Servicer, on behalf of
the Lender, 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
IV-1
the Lender and the Master Servicer of any breach of covenants or representations
and warranties hereunder and under the RPA, including, without limitation, upon
discovery of a breach of the criteria set forth in Exhibit VI hereof and
thereof.
(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 Accounts, 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) the Borrower may xxxxx x Xxxx on Accounts that is expressly
subordinated in writing to the Lien created hereunder in a manner acceptable to
the Lender, in its sole discretion, and (ii) those Liens in favor of the Lender
or any assignee of the Lender relating to the Agreement.
(f) Extension or Amendment of Receivables. The Borrower shall
not amend, waive or otherwise suffer or permit a Provider to, 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 Business or Credit and Collection Policy. The
Borrower will not make any change in the Credit and Collection Policy or make
any change in the character of its business that, in either event, is reasonably
likely to result in a Material Adverse Effect. The Borrower will not make any
other material changes in the Credit and Collection Policy without the prior
written consent of the Lender.
(h) Audits and Visits. The Borrower will, from time to time
during regular business hours as requested by the Lender, permit the Lender upon
reasonable notice, without interfering with the Borrower's or a Provider's
business or operations and subject to compliance with applicable law in the case
of review of patient 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
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 permit the Master Servicer to have at least one of
its agents or representatives physically present in the Borrower's
administrative office during normal business hours to assist the Borrower in the
collection of Receivables.
(i) Change in Payment Instructions. The Borrower will not
terminate the Provider Lockboxes, the Provider Lockbox Accounts, the Lender
Lockbox, or the Lender Lockbox Account, or make any change or replacement in the
instructions contained in any Notice or otherwise, or regarding payments to be
made to the Borrower, the Lender or the Master Servicer, except upon the prior
and express direction of the Program Manager or the Lender.
IV-2
(j) Reporting Requirements. The Borrower will provide to
the Lender (in multiple copies, if requested by the Lender) the following:
(i) on Monday of each week (or, if such day is
not a Business Day, the immediately following Business Day), a Borrowing Base
Certificate;
(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 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 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 Event of Default or event which, with
the giving of notice or lapse of time, or both, would constitute an
Event of Default, a statement of the chief financial officer of the
Borrower setting forth details of such Event of Default or event, 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;
(vi) promptly (and in no event later than five
Business Days following actual knowledge or receipt thereof), Written
Notice in reasonable detail, of (x) any Lien asserted or claim made
against a Receivable, (y) the occurrence of a Event of Default,
including the occurrence of any other event which could have a Material
Adverse Effect, or (z) the results of any cost report or similar audits
of a Provider being conducted by any federal, state or county
Governmental Entity or its agents or designees;
(vii) no later than five (5) Business Days after the
commencement thereof, Written Notice of all actions, suits, and
proceedings before any Governmental Authority or arbitrator affecting
the Borrower which, if determined adversely to the Borrower, could have
a Material Adverse Effect;
IV-3
(viii) as soon as possible and in any event within
five (5) Business Days after becoming aware of the occurrence thereof,
Written Notice of any matter that could have 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 Servicer Termination
Event has occurred and exists as of the end of such fiscal year, or if
in their opinion such a Servicer Termination Event 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 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 all payments to the Obligors necessary to prevent the Obligors from
offsetting any earlier overpayment to the Borrower against any amounts the
Obligors owe on any Receivables.
(l) Officer's Certificate. On the date the financial
statements referred to in clause (ii) above are to be delivered each fiscal year
after the Initial Funding Date, the chief financial officer of the Borrower
shall deliver a certificate to the Lender, 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 Lender, and (iii) no Event of Default exists and is
continuing.
(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 Lender
may reasonably request, from time to time, in order to perfect, protect or more
fully evidence the assignment as security of the Receivables, or to enable the
Lender or the Program Manager to exercise or enforce the rights of the Lender
hereunder or under the Receivables. 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, upon two Business Days' notice, to file one or
more financing or continuation statements and amendments thereto and assignments
thereof, relative to all or any of the Receivables 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.
IV-4
(n) Merger, Consolidation. The Borrower shall not merge with
or into or consolidate with or into, another Person, or convey, transfer, lease
or otherwise dispose of all or substantially all of its assets (whether now
owned or hereafter acquired).
(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 Corporate Existence. The Borrower shall
preserve and maintain its corporate 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 materially adversely affect the interests of the Lender or
the Program Manager or their ability of to perform their respective obligations
hereunder or under the RPA.
(q) RPA. The Borrower will, at its sole expense, timely and
fully perform and comply with all provisions, covenants and other promises
required to be observed to be observed by it under the RPA, maintain the RPA in
full force and effect, enforce the RPA in accordance with its terms, take all
such action to such end as may be from time to time reasonably requested by the
Lender, and make to any party to the RPA 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 Lender.
The Borrower shall not permit any waiver, modification or amendment of the RPA.
The Borrower shall not permit any other Person to become a "Provider" under the
RPA or permit the removal of any "Provider" thereunder pursuant to Section 5.19
of the RPA without the written consent of the Lender (which consent, unless an
Event of Default is continuing hereunder, shall be governed by the conditions
set forth in Section 5.19 of the RPA).
(r) Master Servicer Certificate. On or before the thirtieth
calendar day after the Initial Funding Date, the Purchaser shall receive a
certificate from the Master Servicer stating that all computer linkups and
interfaces necessary or desirable, in the judgment of the Master Servicer, to
effectuate the transactions and information transfers contemplated hereunder,
are fully operational to the satisfaction of the Master Servicer.
IV-5
SPECIAL COVENANTS
ENTITY SEPARATENESS
Until the payment in full of all Lender Debt and the termination
of the 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 or employee of an Affiliate of the Borrower or any Other
Corporation and who is not a current or former officer or employee of
the Borrower and (y) not a stockholder of any Other Corporation or any
of their respective Affiliates.
(ii) The Borrower will not direct or participate in the
management of any of the Other Corporations' 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 CCA for accounting and tax
purposes, the Borrower will maintain its assets and transactions
separately from those of the Other Corporations and reflect such
assets and transactions in financial statements separate and distinct
from those of the Other Corporations and evidence such assets and
transactions by appropriate entries in books and records separate and
distinct from those of the Other Corporations. The Borrower will not
hold itself out as being liable, primarily or secondarily, for any
obligations of the Other Corporations.
(vi) The Borrower will not maintain any joint account with any
Provider or any Other Corporation, or be a party, whether as a
co-obligor or otherwise, to any agreement to which any Other
Corporation is a party (other than the RPA) or become liable as a
guarantor or otherwise with respect to any indebtedness or contractual
obligation of any Other Corporation.
(vii) Other than as contemplated under this Agreement or under
the RPA 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 Corporation or xxxxx x Xxxx on
any of its assets to secure any obligation of any Other Corporation.
(viii) The Borrower will not make loans, Revolving Advances or
otherwise extend credit to any of the Other Corporations, 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-6
(x) The Borrower will comply in full with the procedures set
forth in the RPA with respect to the assignment of all assets from any of the
Other Corporations.
(xi) The Borrower will not engage in any transaction with any
of the Other Corporations or any of their respective subsidiaries, except as
permitted or contemplated by the Agreement and as contemplated by the RPA.
(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 RPA, 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
Articles of Organization or Operating Agreement.
(xiv) The Borrower will not have any Subsidiaries.
IV-7
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 the Revolving Loan, when and as the same shall become due
and payable (except that the Borrower shall have up 15 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 of the Revolving Loans or any other Lender
Debt or of any fee or expense owing to the 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 (3) Business
Days.
(c) The Borrower shall 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 in favor of the Lender 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 thirty days (or, in the case where
agreements and covenants contained in any Document provide for a grace period
that is less than thirty days, continuance of a default for such shorter period)
after the earlier of (i) there has been given Written Notice of such default to
any of CCA, the Borrower or the Providers by the Lender 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
Agent.
(d) An Event of Termination shall have occurred under the RPA
(without regard to waivers granted or sought).
(e) The Borrower shall send a Revocation Order (as defined in
the Depositary Agreement) or make any change or replacement 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
information or report delivered by the Borrower (other than with respect to a
Provider) pursuant to the Agreement shall prove to have been incorrect or untrue
in any material respect when made or deemed made or delivered.
V-1
(g) The Borrower shall fail to pay any principal of or premium
or interest on any of its Debt when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to repay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof.
(h) This Agreement shall for any reason (other than pursuant
to the terms hereof) fail or cease to create or fail or cease to be a valid and
perfected security interest in the Receivables and the Collections with respect
thereto free and clear of all Liens (other than Liens referred to in clauses (i)
and (ii) of paragraph (e) of Exhibit IV).
(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, a Provider is found to
have been overpaid by Governmental Entities by 8% or more during any period
covered by an audit conducted by the HCFA and such overpayment is not repaid
within 30 days of the earlier of receipt of a notice by, or the knowledge of,
such Provider of a notice of such overpayment.
(k) There shall have occurred any change in the financial
condition or operations of the Borrower since September 30, 1996 that has
resulted in a Material Adverse Effect.
(l) The Borrower (x) shall have entered into any transaction
and not provided prompt Written Notice thereof to the Lender, or (y) shall have
consummated, any transaction which shall result in the consummation of (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,
V-2
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, or (v) the sale of a controlling interest, directly or
indirectly, in the Borrower.
(m) The Loss-to-Liquidation Ratio in any four week period exceeds 5%.
(n) The arithmetic average of the Loss-to-Liquidation Ratios in any three
consecutive four week periods exceeds 3%.
(o) The Delinquency Ratio in any four week period exceeds 10%.
(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 $500,000 in the aggregate against the Borrower remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period
of 90 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 $500,000 which remains unpaid or discharged for a period of
60 days or more.
(r) The Borrower shall fail to discharge within a period of thirty (30)
days after the commencement thereof any attachment, sequestration, forfeiture,
or similar proceeding or proceedings involving an aggregate amount in excess of
$500,000 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 this
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, including an Event of Default under clause (w) of this
Exhibit V hereof, (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 corporate action to effectuate such Distribution.
(v) The Borrower engages in any business other than solely the businesses
of directly or indirectly purchasing Receivables from the Provider and financing
in such Receivables to the Lender hereunder and the other transactions permitted
or contemplated hereby.
V-3
(w) The Borrower shall at any time fail to maintain a Tangible
Net Worth of at least 3.0% of the higher of (i) the Revolving Advance Limit, and
(ii) the then outstanding amount of the Revolving Loan.
(x) Any representation or warranty made or deemed made by the
Provider under or in connection with the RPA or any information or report
delivered by the Provider pursuant to the RPA shall prove to have been incorrect
or untrue in any material respect when made or deemed made or delivered and such
misstatement causes a Event of Default under the RPA.
(y) The Borrower shall fail to perform or observe any other
term, covenant or agreement contained in the Collateral Account Agreement on its
part to be performed or observed.
(z) If, at any date, the aggregate Expected Net Value of all
Delinquent Receivables that became Delinquent during the prior 3 months is in
excess of 20% of the aggregate Expected Net Value of all Receivables sold by the
Borrower to the Lender during the prior 3 months (regardless of whether the
Denied Receivables are reassigned by the Borrower pursuant to Article IV of the
Agreement).
(aa) As of any date after the Initial Funding Date, (i) the
dollar-weighted average days outstanding with respect to all outstanding
Eligible Receivables on such date and on the same day of each of the two
preceding Months (or if there is no corresponding day in any such preceding
month, the last day of such month) is greater than 65 days, or (ii) the average
over the preceding 90- day period of the dollar-weighted average days
outstanding with respect to all outstanding Eligible Receivables on each day
during such period is greater than 60 days.
(bb) As of any date after the Initial Funding Date, more than
25% 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.
(cc) As of any date, Collections on all Eligible Receivables
that have been liquidated or written off during the then most recent 13 week
period, are less than 50% of the aggregate gross value (billed amount) of such
Eligible Receivables.
V-4
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 Lender are true and
correct. Other than in respect of Unbilled Receivables, the applicable 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 sale of such Receivable to the Lender. Each such Provider has, or has the
right to use, valid provider identification numbers and licenses to generate
valid Receivables. All information set forth in the xxxx 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
applicable Provider) has or will promptly provide the same, and if any error has
been made with respect to such information, the Borrower will promptly correct
the same and, if necessary, rebill such Receivable.
(b) Each Provider's Medicare and Medicaid cost reports 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 HCFA- designated agents or
agents of such state agency, charged with such responsibility or (ii), as to
Medicare, the Medicare intermediary or other HCFA-designated agents charged with
such responsibility; and there is no basis for any Governmental Entity to assert
an offset against each 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 applicable
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 applicable Provider
in the ordinary course of business, (iii) is denominated and payable only in
U.S. dollars in the United States, (iv) is (or, in the case of Unbilled
Receivables, will be upon billing) an account receivable or general intangible
within the meaning of the UCC of the state in which the applicable Provider has
its principal place of business, or is a right to payment under a policy of
insurance or proceeds thereof, and is not evidenced by any instrument or chattel
paper, and (v) shall be subject to a patient consent form approved by the Lender
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;
provided, however, notwithstanding the foregoing, Receivables billed or to be
billed to Medicaid or Medicare for services or goods which were initially the
obligation of the patient or customer on a "Medicaid/Medicare pending" basis are
eligible to be Eligible Receivables hereunder.
VI-1
(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 (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 or is not aged more than 180 days
from its Last Service Date, and (iii) was not billed to the Obligor 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 any 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 Lender, 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 or services provided and reflected by such Receivable were
medically necessary for the patient, and the patient has received such goods or
services.
(h) The fees charged for the goods or services constituting the basis for
such Receivable are consistent with the usual, customary and reasonable fees
charged by other similar medical goods or service providers for the same or
similar goods or services in the applicable 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, and (iii) one of the following: (x) a Person which in the
ordinary course of its business or activities agrees to pay for healthcare
services received by individuals, including, without limitation, commercial
insurance companies and non-profit insurance companies (such as Blue Cross and
Blue Shield) issuing health, personal injury, worker's compensation or other
types of insurance, employers or unions which self-insure for employee or member
health insurance, prepaid healthcare organizations, preferred provider
organizations, health maintenance organizations, commercial hospitals,
physician's groups or any other similar person and which has a debt rating
equivalent to "A" or higher, (y) a state, an agency or instrumentality of a
state or a political subdivision of a state, or (z) the United States of America
or an agency or instrumentality of the United States of America.
(j) The financing of such Receivables 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 an
Insurer to make payment with respect to such Receivable (i) does not contain any
provision prohibiting the grant of a security interest in such payment
obligation from the patient to the applicable Provider, from such Provider to
the Borrower, or from the Borrower to the Lender, (ii) has been duly authorized
and, together with such Receivable, constitutes the legal, valid and binding
obligation of
VI-2
the Insurer in accordance with its terms, (iii) together with such Receivable,
does not contravene in any material respect any requirement of law applicable
thereto, and (iv) was in full force and effect and applicable to the patient at
the time the goods or services constituting the basis for such Receivable were
sold or performed.
(l) 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 patient at
the time the goods or services constituting the basis for such Receivable were
sold or performed.
(m) 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 Lender.
(n) 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 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 85%
Blue Cross/Blue Shield 25%
All Commercial Insurance Obligors, HMOs and PPOs 75%
CHAMPUS/Champva 20%
any single AAA rated (non-governmental) Obligor 10%
any single AA rated (non-governmental) Obligor 10%
any single A rated (non-governmental) Obligor 5%
any single BBB rated (non-governmental) Obligor 2%
any single unrated (non-governmental) Obligor 1%
(o) Unless specifically verified and accepted by the Master
Servicer or Program Manager, no single Eligible Receivable has an Expected Net
Value greater than $25,000 for inpatient services or $5,000 for outpatient
services.
VI-3
(p) 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.
VI-4
EXHIBIT VII-A
FORM OF BORROWING BASE CERTIFICATE
[FOR USE DURING THE SPECIAL PERIOD]
DAIWA HEALTHCO-2 LLC
Borrowing Base Report
Report Submission Date:_____________
Schedule #:______________
As of Date:______________
A. Eligible B. A/R's less
Receivables than 180 days
----------- -------------
VII. Beginning A/R Balance (from Previous Report)
VIII. Additions:
8.01. New xxxxxxxx
8.02. Late Charges/Adjustments
Total Additions
IX. Deductions:
9.01. Collections
9.02. Contractual/Discounts
9.03. Transfers Bad Debt
9.04. Other Discounts/Adjustments
Total Deductions
X. Accounts Receivable Balance
XI. Less: Ineligible Collateral
XII. Total Eligible Collateral (Gross)
XIII. Estimated Net Value %
XIV. Total Eligible Collateral (Net)
XV. Less: Unposted Cash
VII-1
XVI. Adjusted Net Eligible Collateral
XVII. Advance Rate Percentage 85% 94%
XVIII. Maximum Loan Availability on Collateral
XIX. Maximum Loan Availability per Agreement $15,000,000 $14,500,000
----------- -----------
XX. TOTAL LOAN AVAILABILITY (LESSOR OF 12 OR 13)
XXI. Outstanding Loan Balance Prior Report
XXII. Less Collections (Net Cash)
XXIII. Plus Draws Since Prior Report
XXIV. Interest Due/Fees
XXV. Additional Advance Requested
XXVI. LOAN BALANCE THIS REPORT
XXVII. NET AVAILABILITY (14. minus 20.)
The undersigned represents and warrants that the foregoing information is true,
complete and correct and that the collateral reflected herein with the
conditions, terms, warrantees, representations and covenants set forth in the
Loan and Security Agreement between the undersigned and Daiwa Healthco-2 LCC and
any supplements and amendments, if any, thereto (the "Agreement"). The
undersigned promises to pay to Daiwa Healthco-2 LCC the new loan balances
reflected above, plus interest, as set forth in the Agreement.
CCA FUNDING LLC
By:_____________________________ Date:____________
Name:
Title:
VII-2
[FOR USE AFTER THE SPECIAL PERIOD]
DAIWA HEALTHCO-2 LLC
Borrowing Base Report
Report Submission Date:_____________
Schedule #:______________
As of Date:______________
XXVIII. Beginning A/R Balance (from Previous Report)
XXIX. Additions:
29.01. New xxxxxxxx
29.02. Late Charges/Adjustments
Total Additions
XXX. Deductions:
30.01. Collections
30.02. Contractual/Discounts
30.03. Transfers Bad Debt
30.04. Other Discounts/Adjustments
Total Deductions
XXXI. Accounts Receivable Balance
XXXII. Less: Ineligible Collateral
XXXIII. Total Eligible Collateral (Gross)
XXXIV. Estimated Net Value %
XXXV. Total Eligible Collateral (Net)
XXXVI. Less: Unposted Cash
XXXVII. Adjusted Net Eligible Collateral
XXXVIII. Advance Rate Percentage 85%
XXXIX. Maximum Loan Availability on Collateral
VII-1
XL. Maximum Loan Availability per Agreement
XLI. TOTAL LOAN AVAILABILITY (LESSOR OF 12 OR 13)
XLII. Outstanding Loan Balance Prior Report
XLIII. Less Collections (Net Cash)
XLIV. Plus Draws Since Prior Report
XLV. Interest Due/Fees
XLVI. Additional Advance Requested
XLVII. LOAN BALANCE THIS REPORT
XLVIII. NET AVAILABILITY (14. minus 20.)
The undersigned represents and warrants that the foregoing information is true,
complete and correct and that the collateral reflected herein with the
conditions, terms, warrantees, representations and covenants set forth in the
Loan and Security Agreement between the undersigned and Daiwa Healthco-2 LCC and
any supplements and amendments, if any, thereto (the "Agreement"). The
undersigned promises to pay to Daiwa Healthco-2 LCC the new loan balances
reflected above, plus interest, as set forth in the Agreement.
CCA FUNDING LLC
By:_____________________________ Date:____________
Name:
Title:
VII-2
EXHIBIT VII-B
FORM OF BORROWER'S CERTIFICATE
Daiwa Healthco-2 LLC
Xxx Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The undersigned refers to the Loan and Security Agreement,
dated as of December __, 1996 (as the same may be amended, supplemented,
restated, or modified from time to time, the "Loan Agreement") between CCA
Funding LLC (the "Borrower") and Daiwa Healthco-2 LLC (the "Lender").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Loan Agreement.
In accordance with Section 1.03 of the Loan Agreement and in
fulfillment of the condition precedent set forth in Section 2(a) of Exhibit II
thereto, the Borrower hereby gives you irrevocable notice that the undersigned
requests a Revolving Advance under the Loan Agreement, and in connection
therewith sets forth below the information relating to such Advance as required
by Section 1.03 of the Loan Agreement:
Proposed Revolving Advance:
(i) The Funding Date of such Revolving Advance is requested
to be _______ __, 199_;
(ii) The amount of the Revolving Advance is requested to be
$_______________; and
(iii)Attached is the Borrowing Base Certificate delivered to
you on the immediately prior Monday.
The Borrower hereby certifies that the following statements
are true and correct on the date hereof, and will be true and correct on the
date of the proposed Revolving Advance:
(A) the representations and warranties contained in
Exhibits III and IV of the Loan Agreement are and will be true
and correct, both before and after giving effect to the
Revolving Advance requested herein and to the application of
the proceeds thereof, as though made on and as of such date
(it being understood and agreed that
VII-3
any representation or warranty which by its terms is made on a
specified date shall be required to be true and correct only
as of such specified date); and
(B) no event has occurred and is continuing, or would
result from the Revolving Advance requested herein or from the
application of the proceeds thereof that constitutes or an
Event of Default; and
(C) the aggregate outstanding principal amount of the
Revolving Advances after giving effect to the Revolving
Advance requested herein is not in excess of the lesser of the
Revolving Commitment and the Borrowing Limit.
Very truly yours,
CCA FUNDING LLC
By:__________________________
Name:
Title:
VII-4
EXHIBIT VIII
FORM OF DEPOSITARY AGREEMENT
[TO BE ATTACHED]
VIII-1
EXHIBIT IX-A
FORM OF OPINION OF COUNSEL
IX-1
EXHIBIT IX-B
FORM OF OPINION OF COUNSEL
IX-2
SCHEDULE I
ADDRESSES FOR NOTICE
If to the Program Manager:
Daiwa Securities America Inc.
Financial Square
00 Xxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Chief Financial Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Master Servicer:
RJE Data Processing, Inc.
0000 Xxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
IX-3
SCHEDULE II
CREDIT AND COLLECTION POLICY
[TO BE ATTACHED]
IX-4
SCHEDULE III
LICENSE REVOCATIONS
The following facilities have been decertified from the Medicaid and Medicare
Programs during the past 24 months:
(1) Community Care of America at Toledo (Toledo, Iowa)
Community Care of America voluntarily decertified this
facility from both the Medicare and Iowa state Medicaid
programs on March 8, 1996. The company has been recertified to
participate in both programs effective September 20, 1996 and
November 20, 1996 respectively.
(2) Community Care of America at Council Bluffs North (Council
Bluffs, Iowa) This facility was decertified from both the
Medicare and Iowa state Medicaid programs on April 17, 1996.
The company has been recertified to participate in both
programs effective July 1, 1996.
IX-5
SCHEDULE IV
LOCKBOX INFORMATION
Provider Ancillary Lockbox:
CCA - Self-pay
Xxxx Xxxxxx Xxx 000000
Xxxxxxxxxx, Xxxx 00000-0000
Provider Ancillary Lockbox Account:
CCA - Self-pay
Account #00109-98906
KeyBank
000 Xxxxxx Xxxxxx, xxxxxxx xxxxx
Xxxxxxxxx, Xxxx 00000-0000
ABA #041 001 039
Provider Government Lockbox:
CCA - Governmental
Xxxx Xxxxxx Xxx 000000
Xxxxxxxxxx, Xxxx 00000-0000
Provider Government Lockbox Account:
CCA - Governmental
Account #00109-98891
KeyBank
000 Xxxxxx Xxxxxx, xxxxxxx xxxxx
Xxxxxxxxx, Xxxx 00000-0000
ABA #041 001 039
Lender Lockbox:
Xxxx Xxxxxx Xxx 000000
Xxxxxxxxxx, Xxxx 00000-0000
Lender Lockbox Account:
Account # 50020-61106
KeyBank
000 Xxxxxx Xxxxxx, xxxxxxx xxxxx
Xxxxxxxxx, Xxxx 00000-0000
ABA #041 001 039
IX-6
