EXHIBIT 99.2
LOAN AND SECURITY AGREEMENT BETWEEN NMHC FUNDING, LLC
AND HFG HEALTHCO-4 LLC dated January 29,2002
TABLE OF CONTENTS
Page
ARTICLE I. COMMITMENT; AMOUNTS AND TERMS OF THE REVOLVING LOAN
1.01. Revolving Advances 1
1.02. Revolving Commitment and Borrowing Limit 1
1.03. Notice of Borrowing; Borrower's Certificate. 2
1.04. Termination of the Revolving Commitment 2
1.05. Interest and Fees 2
1.06. Voluntary Reductions 3
1.07. Computation of Interest 3
1.08. Procedures for Payment 3
1.09. Indemnities 4
1.10. Telephonic Notice 5
1.11. Maximum Interest 6
ARTICLE II. COLLECTION AND DISTRIBUTION
2.01. Collections on the Receivables 6
2.02. Distributions 6
2.03. Distribution of Funds at the Maturity Date
or Upon an Event of Default 7
2.04. Distributions to the Borrower Generally 7
2.05. Avoidance of Breakage Costs 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES;
COVENANTS; EVENTS OF
3.01. Representations and Warranties; Covenants 7
3.02. Events of Default; Remedies 7
3.03. Attorney-in-Fact 8
ARTICLE IV. SECURITY
4.01. Grant of Security Interest 8
ARTICLE V. MISCELLANEOUS
5.01. Amendments, etc. 9
5.02. Notices, etc. 9
5.03. Assignability 9
5.04. Further Assurances 9
5.05. Costs and Expenses; Collection Costs 9
5.06. Confidentiality 10
5.07. Term and Termination; Early Termination Fee 11
5.08. No Liability of Lender 12
5.09. Entire Agreement; Severability 13
5.10. GOVERNING LAW 13
5.11. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE 13
5.12. Execution in Counterparts 14
5.13. No Proceedings 14
EXHIBITS
Exhibit I Definitions
Exhibit II Conditions of Revolving Advances
Exhibit III Representations and Warranties
Exhibit IV Covenants
Exhibit V Events of Default
Exhibit VI Eligibility Criteria
LOAN AND SECURITY AGREEMENT, dated as of January 29, 2002, between NMHC
Funding, LLC, a limited liability company organized under the laws of the State
of Delaware (together with its successors and assigns, the "Borrower"), and HFG
HEALTHCO-4 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 (this "Agreement").
The Borrower (i) is a limited liability company owned by the Providers,
(ii) has acquired and will acquire healthcare receivables from the Providers by
purchase or contribution to the capital of the Borrower pursuant to the RPTA, as
determined from time to time by the Borrower and the Providers, and (iii) wishes
to borrow funds from the Lender on a continuing and revolving basis secured by
all of its assets, including the healthcare receivables acquired from the
Providers.
The Lender is prepared to make a revolving loan secured by the Borrower's
assets, including such healthcare receivables on the terms and subject to the
conditions set forth herein.
Accordingly, the parties agree as follows:
ARTICLE I
COMMITMENT; AMOUNTS AND TERMS OF THE REVOLVING LOAN
1.01. Revolving Advances. (a) The Lender agrees to lend from time to time
to the Borrower, subject to and upon the terms and conditions herein set forth,
on any Funding Date, such amounts as, in accordance with the terms hereof, may
be requested by the Borrower (each such borrowing, a "Revolving Advance" and the
aggregate outstanding principal balance of all Revolving Advances from time to
time, the "Revolving Loan").
(b) Each Revolving Advance shall be made on the date specified in the
Borrower's Certificate, or telephonic notice confirmed in writing, as described
in Section 1.03 hereof.
1.02. Revolving Commitment and Borrowing Limit. (a) The Revolving Loan at
any time shall not exceed an amount equal to the lesser of (i)$40,000,000 (such
amount, or such greater or lesser amount after giving effect to any increase or
decrease pursuant to the provisions of Sections 1.02(d) and (e) hereof, the
"Revolving Commitment"), and (ii) the Borrowing Base minus Accrued Amounts as of
such time (the lesser of (i) and (ii) being the "Borrowing Limit").
(b) Subject to the limitations herein and of Exhibit II hereof, the
Borrower may borrow, repay (without premium or penalty) and reborrow under the
Revolving Commitment. The Revolving Loan shall not exceed, 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 Borrowing Limit.
(c) If at any time 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 the Lender to increase the Revolving
Commitment up to a maximum of $65,000,000 and the Lender, in its sole discretion
upon any such request, may decide to increase the Revolving Commitment. Each
such increase shall be in an amount equal to $5,000,000 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 0.75% of any
such increase to the Revolving Commitment.
(e) Upon ten days' prior Written Notice (which shall be irrevocable) to the
Lender, the Borrower may elect to decrease the Revolving Commitment; provided
that such decrease shall be in an amount equal to$5,000,000 or an integral
multiple of $1,000,000 in excess thereof. On the effective date of such
decrease, the Borrower shall pay to the Lender (i) the outstanding principal
amount of the Revolving Loan, if any, in excess of the Borrowing Limit (after
giving effect to the decrease in the Revolving Commitment), together with all
accrued interest thereon, and (ii) the Early Termination Fee.
1.03. Notice of Borrowing; Borrower's Certificate. Whenever the Borrower
desires a Revolving Advance be made, the Borrower shall give the Lender, not
later than 2:00 p.m. (New York time) one Business Day prior to the proposed
Funding Date of the Revolving Advance, written notice, or telephonic notice from
an Authorized Representative confirmed promptly by a Written Notice (which
notice, in each case, shall be irrevocable) of its desire to make a borrowing of
a Revolving Advance. Each notice of borrowing under this Section 1.03 shall (i)
be signed by the Borrower, and (ii) be substantially in the form of Exhibit
VII-B hereto (each, a "Borrower's Certificate") and specify the proposed Funding
Date (which in each instance shall be a Business Day) and the Revolving Advance
being requested. In addition, on the Business Day immediately prior to the
proposed Funding Date, not later than 2:00 p.m. (New York time), the Borrower
shall deliver to the Lender a Borrowing Base Certificate dated as of such date.
1.04. Termination of the Revolving Commitment. On the Maturity Date, the
Revolving Commitment shall be canceled automatically and the Revolving Loan
shall become due and payable in full. In addition, prior to the Maturity Date,
the Borrower may terminate the Revolving Commitment pursuant to Section 5.07(c).
Upon such cancellation, the Revolving Loan (together with all other Lender Debt)
shall become, without further action by any Person, immediately due and payable
together with all accrued interest thereon and any fees, premiums, charges or
costs provided for hereunder with respect thereto, and (y) the Early Termination
Fee.
1.05. Interest and Fees. (a) Interest. The Borrower shall pay interest on
the average daily Outstanding Balance of the Revolving Loan during the prior
Month (i) on the first Business Day of each Month, and (ii) on the Maturity Date
(whether by acceleration or otherwise), in each case, at an interest rate per
annum equal to LIBOR plus 2.40%.
(b) Default Interest. Notwithstanding anything to the contrary contained
herein, while any Event of Default is continuing, interest on the Revolving Loan
shall be payable on demand at a rate per annum equal to 2.50% in excess of the
rate then otherwise applicable to the Revolving Loan.
(c) Non-Utilization Fee. The Borrower shall pay to the Lender on the first
Business Day 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 Revolving Loan during the prior Month.
(d) Monitoring Fee. The Borrower shall pay to the Lender monthly monitoring
fee of $2,083.33 per Month, payable in arrears of on the first Business Day of
each Month with respect to the prior Month.
1.06. Voluntary Reductions. The Borrower may on any Funding Date reduce the
outstanding principal amount of the Revolving Loan; provided, however, that so
long as the then outstanding principal amount of the Revolving Loan is greater
than $10,000,000 the Borrower shall provide the Lender with at least one weeks'
prior Written Notice to the extent such reduction shall be more than 20% of the
then outstanding principal amount of the Revolving Loan.
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.
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 Entity thereof or therein, except for Excluded Taxes. If any such
taxes, duties or charges are so levied or imposed on any payment to the 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 fails 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 otherwise with
respect to, this Agreement or any other Documents and any and all recording fees
relating to any Documents securing any Lender Debt ("Other Taxes").
(c) The Borrower shall indemnify the Lender for the full amount of any
taxes, duties or charges other than Excluded Taxes (including, without
limitation, any taxes other than Excluded Taxes imposed by any jurisdiction on
amounts payable under this Section 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 due under this Section 1.08 shall
be made within 30 days from the date the Lender makes written demand therefor.
(f) 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.
1.09. Indemnities. (a) The Borrower hereby agrees to indemnify the Lender
on demand against any loss or expense which the Lender or a branch or an
Affiliate of the Lender may sustain or incur as a consequence of: (i) any
default in payment or prepayment of the principal amount of any Revolving
Advance or any portion thereof made to it or any portion thereof or interest
accrued thereon, as and when due and payable (at the due date thereof, by
irrevocable notice of payment or prepayment, or otherwise); (ii) the effect of
the occurrence of any Event of Default upon any Revolving Advance made to it or
any portion thereof; (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 a
Funding Date; or (iv) the failure by the Borrower to accept a Revolving Advance
after it has requested such borrowing; in each case including, but not limited
to, any loss or expense sustained or incurred in liquidating or employing
deposits from third parties acquired to effect or maintain such Revolving
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,
the Program Manager, the Master Servicer and their respective Affiliates,
directors, officers, agents, representatives, counsel and employees and each
other Person, if any, controlling them or any of their respective Affiliates
within the meaning of either Section 15 of the Securities Act of 1933, as
amended, or Section 20(a) of The Securities Exchange Act of 1934, as amended
(each, an "Indemnified Party"), from and against any and all losses, claims,
damages, costs, expenses (including reasonable counsel fees and disbursements)
and liabilities which are incurred by or asserted against such Indemnified Party
with respect to or arising out of the commitments hereunder to make 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 Documents), the use of proceeds of any
financial accommodations provided hereunder, any investigation, litigation or
other proceeding (brought or threatened) relating thereto, or the role of any
such Person or Persons in connection with the foregoing, whether or not they or
any other Indemnified Party is named as a party to any legal action or
proceeding ("Claims"). The Borrower will not, however, be responsible to any
Indemnified Party hereunder for any Claims to the extent that a court having
jurisdiction shall have determined by a final nonappealable judgment that any
such Claim shall have arisen out of or resulted 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, any
Provider or any of their respective designees, in each case, as determined by a
final nonappealable decision of a court of competent jurisdiction), or (b) a
successful claim by any Provider against such Indemnified Party ("Excluded
Claims"). The Indemnified Party shall give the Borrower prompt Written Notice of
any Claim setting forth a description of those elements of the Claim of which
such Indemnified Party has knowledge. The 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.
1.10. Telephonic Notice. Without in any way limiting the Borrower's
obligation to confirm in writing any telephonic notice of a borrowing, 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.
1.11. Maximum Interest. (a) No provision of this Agreement shall require
the payment to the Lender or permit the collection by the 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 the 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) payable on the first Business Day of each Month in respect of the
preceding interest computation period would exceed the amount of interest
computed in respect of such period at 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.
(c) If at any time and from time to time: (i) the amount of interest
payable to the Lender on the first Business Day of each Month shall be computed
at the Maximum Permissible Rate pursuant to the preceding subsection (b); and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to 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
2.01. Collections on the Receivables. The Lender shall be entitled with
respect to all Receivables, (i) to receive and to hold as collateral all
Receivables and all Collections on Receivables in accordance with the terms of
the Depositary Agreement, and (ii) to have and to exercise any and all rights to
collect, record, track and, during the continuance of an Event of Default, take
all actions to obtain Collections with respect to all Receivables.
2.02. Distributions. On each Business Day, and provided, that no Event of
Default is continuing, the Lender shall distribute any and all cash Collections
in the Collection Account prior to 12:00 p.m. (New York City time) on the
immediately prior Business Day as follows: FIRST, to the Lender, an amount in
cash equal to fees and interest that are due and payable as of such Business Day
and have not otherwise been paid in full by the Borrower, if any, until such
amounts have been paid in full; SECOND, to the Lender, an amount in cash equal
to the Borrowing Base Deficiency, if any, until such amount is paid in full;
THIRD, to the Lender, an amount in cash equal to the reduction of the principal
amount of the Revolving Loan directed by the Borrower to be repaid on such
Business Day pursuant to Section 1.02(b), if any, until such amount has been
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 Business Day, if any, until such
amount has been paid in full; and FIFTH, to the Borrower, all remaining amounts
of Collections, as requested.
2.3. 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 as follows: FIRST, to the Lender, an amount in cash equal to any and
all accrued fees and collection costs as set forth in Sections 1.05 and 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 Loan (at the
rates established under Section 1.05) until such amount has been paid 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 date, until such amount has been paid in full; and FIFTH, to the Borrower,
all remaining amounts of Collections.
2.04. Distributions to the Borrower Generally. Distributions to the
Borrower on each Business Day shall be deposited in the Borrower Account.
2.05. Avoidance of Breakage Costs. So long as no Default or Event of
Default is continuing or the Borrower has provided at least one weeks' prior
Written Notice thereof, the Lender shall not apply out of the Collections any
payment of principal to any portion of the Revolving Loan in excess of 20% of
the Revolving Loan outstanding at such time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF DEFAULT
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.
3.02. Events of Default; Remedies. (a) If any Event of Default shall occur
and be continuing, the Lender may, by Written Notice to the Borrower, take
either or both of the following actions: (x) declare the Maturity Date to have
occurred, and (y) without limiting any rights hereunder and subject to
applicable law, replace the Borrower or any of the Borrower's agents, as the
case may be, in its performance of any or all of the "Primary Servicer
Responsibilities" under the RPTA (which replacement may be effectuated through
the outplacement to a qualified and experienced third-party of all back office
duties, including billing, collection and processing responsibilities, and
access to all personnel, hardware and software utilized in connection with such
responsibilities); provided, that with respect to the Event of Default in clause
(i) of Exhibit V, the Maturity Date shall be deemed to have occurred
automatically and without notice. Upon any such declaration or designation, the
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 any Lender Debt due and
payable against (i) any Collections, or (ii) the principal amount of any
Revolving Advance requested on or after such due date. No further notification,
act or consent of any nature whatsoever is required prior to the right of the
Lender to exercise such right of set-off; provided, however, a member of the
Lender Group shall notify the Borrower: (1) a set-off pursuant to this Section
3.02 occurred, (2) the amount of such set-off and (3) a description of the
Lender Debt that was due and payable.
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, absent a court order, payments from
Governmental Entities), drafts, or other instruments or documents in respect of
the Receivables, (ii) notify Obligors 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
5.01. Grant of Security Interest. (a) As collateral security for the
Borrower's obligations to pay the Lender Debt when due and payable and its
indemnification obligations hereunder, the Borrower hereby grants to the 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 Provider
Documents, (ii) the Lockboxes and the Lockbox Accounts, (iii) all of the
Borrower's Receivables whether now owned or hereafter acquired, (iv) any and all
amounts held in any accounts maintained at JPMorgan Chase Bank or any other bank
in respect of any of the foregoing or in compliance with any terms of this
Agreement (excluding the Excluded Assets), (v) all of the Additional Collateral,
and (vi) all proceeds of the foregoing (all of the foregoing, the "Collateral").
This Agreement shall be deemed to be a security agreement as understood under
the UCC.
(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
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 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 Fitch, Inc. or any other rating agency
then rating the receivables financing program of the Lender, so long as any such
change, modification or amendment does not materially adversely affect the
parties hereto or the obligations of the Borrower evidenced hereby.
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
the Lender 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 the Lender), 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 and as such schedule may be amended from time to time by the
Lender. Notices and communications by facsimile shall be effective when sent
(and shall be immediately followed by hard copy sent by regular mail), and
notices and communications sent by other means shall be effective when received.
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) The Borrower may not assign its rights or obligations hereunder or any
interest herein without the prior written consent of the Lender.
(c) The Lender may assign any of its rights or obligations under the Loan
Documents to any Affiliate of the Lender or to any financial institutions
without the Borrower's prior written consent; provided, that following the
occurrence of an Event of Default (unless waived in writing by the Lender), the
Lender may assign its rights and obligations hereunder to any Person. The Lender
and the Borrower agree to execute such documents (including without limitation
amendments to this Agreement and the other Documents) as shall be necessary to
effect the foregoing.
5.04. Further Assurances. 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.
5.05. Costs and Expenses; Collection Costs. The Borrower agrees to pay on
demand (i) all reasonable non-legal costs and expenses in connection with the
preparation, execution and delivery of this Agreement; (ii) the reasonable fees
and out-of-pocket expenses of counsels for the Lender and its Affiliates in
connection with this transaction; and (iii) within seven days of receiving
Written Notice thereof, 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 to pay on the Initial
Funding Date (and with respect to costs and expenses incurred following the
Initial Funding Date, within seven days of demand therefor) (a) all reasonable
costs and expenses incurred by the Lender or its agent in connection with
periodic audits of the Receivables (the Lender estimates that the cost of each
such periodic audit as of the date hereof would be approximately $10,000), (b)
all reasonable costs and expenses incurred by the Master Servicer or the Program
Manager to accommodate any significant coding or data system changes made by the
Borrower that would affect the transmission or interpretation of data received
through the interface, and (c) all reasonable costs and expenses incurred by the
Lender for additional time and material expenses of the Master Servicer
resulting from a lack of either cooperation or responsiveness of the Borrower to
agreed-upon protocol and schedules with the Master Servicer; provided, that the
Borrower has been informed of the alleged lack of cooperation or responsiveness
and has been provided the opportunity to correct such problems.
(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 reasonable expenses, costs, charges and other
fees incurred by such counsel in any way or with respect to or arising out of or
in connection with or relating to any of the events or actions described in this
Section 5.05 shall be payable by the Borrower to the Lender on demand (with
interest accruing from the earlier of two Business Days following (i) the date
of such demand and (ii) the date the Borrower became aware of the incurrence of
such cost), and shall be additional obligations under this Agreement. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: recording costs, appraisal costs, paralegal fees, costs and
expenses; accountants' fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express 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.
5.06. Confidentiality. (a) The Borrower and the Lender hereby acknowledge
that this Agreement, the RPTA and documents delivered hereunder or under the
RPTA (including, without limitation, any information relating to the Borrower,
any member of the Lender Group or any Provider) contain confidential and
proprietary information. Unless otherwise required by applicable law, the
Borrower and the Lender each hereby agrees to maintain the confidentiality of
this Agreement (and all drafts, memos and other documents delivered in
connection therewith including, without limitation, any information relating to
the Borrower, any member of the Lender Group or any Provider delivered hereunder
or under the RPTA) in communications with third parties and otherwise and to
take all reasonable actions 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, accountants and auditors, the Providers under the RPTA, and the
Provider's investors, creditors, legal counsel, accountants and auditors, (ii)
the Program Manager, the Person then fulfilling the "Primary Servicer
Responsibilities" under the RPTA, each member of the Lender Group, investors in
and creditors of the Lender, appropriate rating agencies with respect to the
Lender, and each of their respective legal counsel and auditors; provided that
such persons agree to maintain the same standard of confidentiality as the
Lender and the Borrower, (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; provided that such
persons agree to maintain the same standard of confidentiality as the Lender and
the Borrower, and provided further that the Borrower shall not disclose such
confidential information to any financial adviser, except with the consent of
Lender. Notwithstanding the foregoing, the parties hereto agree that NMHC, as a
public company, may make such disclosure as is required by state and federal
law, including, but not limited to, such filings as are required by the
Securities and Exchange Commission.
(d) The Borrower understands and agrees that the Lender or the Lender Group
may suffer irreparable harm if the Borrower breaches its obligations under
Section 5.06(a) 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 (or the applicable member
of the Lender Group, as the case may be), 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.
(e) The Lender hereby agrees to, and shall take reasonable steps to cause
each member of the Lender Group to, comply with all state and Federal laws and
regulations, existing from time to time, relating to medical record
confidentiality.
5.07. Term and Termination; Early Termination Fee. (a) This Agreement shall
have an initial term commencing on the Initial Funding Date and expiring on
January 28, 2005 (the "Initial Term").
(b) 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.
(c) The Borrower may terminate this Agreement at any time prior to the
Maturity Date upon payment in full of all Lender Debt, including all applicable
fees, charges, premiums and costs, all as provided hereunder, and the
termination of the Revolving Commitment hereunder.
(d) If the Revolving Commitment is reduced or terminated or the Revolving
Loan becomes due and payable prior to the scheduled end of the Initial Term
(including by reason of an Event of Default), the Borrower shall pay to the
Lender the Early Termination Fee.
(e) 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 has
been paid and performed in full.
(f) Upon an Event of Default under this Agreement, all Lender Debt shall be
due and payable on the date of the Event of Default. 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.
(g) 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.
(h) All indemnities contained herein shall survive termination hereof
unless otherwise provided.
(i) 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 in accordance with its terms, 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.
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 any Obligor, or any plan participant of the Obligor, or any
obligation of the Borrower or any Provider.
(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 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.
5.09. Entire Agreement; Severability. (a) This Agreement, including all
exhibits and schedules hereto and the documents referred to herein, embody the
entire agreement and understanding of the parties concerning the subject matter
contained herein. This Agreement supersedes any and all prior agreements and
understandings between the parties, whether written or oral.
(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.
5.10. GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE WITH SECTION
5-1401 OF THE GENERAL OBLIGATION LAW OF THE STATE OF NEW YORK, BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAWS
PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTERESTS GRANTED HEREUNDER, OR REMEDIES RELATED THERETO, IN RESPECT OF
ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW YORK.
5.11. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE. EACH OF THE PARTIES
HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY
LITIGATION WITH RESPECT TO ANY MATTER RELATED TO THIS AGREEMENT, AND HEREBY
IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED
IN NEW YORK COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION WITH ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN ANY SUCH LITIGATION,
EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL DIRECTED TO THE PARTIES HERETO AT THEIR ADDRESSES SET FORTH ON
THE SIGNATURE PAGE HEREOF.
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.
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 (h) of
Exhibit V so long as any senior indebtedness issued by the Lender shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such senior indebtedness shall have been outstanding.
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: NMHC FUNDING, LLC,
By: National Medical Health Card
Systems, Inc., a New York
Corporation
By:_____________________________
Name:
Title:
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx,
Chief Financial Officer
Facsimile Number: 000 000-0000
LENDER: HFG HEALTHCO-4 LLC
By: HFG Healthco-4, Inc.
By:
Name:
Title:
c/o Lord Securities Corporation
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxx
Facsimile Number:(000)000-0000
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):
"Accrued Amounts" means, as at any date, the aggregate amount of accrued
but unpaid (whether or not due and payable) (a) interest, (b) Non-Utilization
Fees, and (c) the monthly monitoring fees.
"Additional Collateral" means (other than Excluded Assets) all (i)(a)
present and future securities, security entitlements and securities accounts
(collectively, "Investment Property"); (b) all deposit accounts and all other
goods and personal property (including, without limitation, patents, patent
applications, trade names and trademarks and Federal, state and local tax refund
claims of all kinds), whether tangible or intangible, or whether now owned or
hereafter acquired and wherever located; and (c) all proceeds of every kind and
nature, including proceeds of proceeds, of any and all of the foregoing, and
(ii) money and cash; and all books, records and other property relating to or
referring to any of the foregoing including all books, records, ledger cards,
data processing records, computer software and other property and general
intangibles at any time used or useful in connection with, evidencing,
embodying, referring to, or relating to, any of the foregoing.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person. For the purposes of this
definition, "control", when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" has the meaning set forth in the preamble hereto.
"Assignment of Contracts" means that certain Assignment of Contracts as
Collateral Security, dated the date hereof, between the Borrower and the Lender,
in substantially the form attached hereto as Exhibit X, as such agreement may be
amended, modified or supplemented from time to time in accordance with its
terms.
"Authorized Representative" means 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.
"Automated Clearing House Origination Service Agreements" means (i) the
Automated Clearing House Origination Service Agreement, dated as of November,
2001 between NMHC and Bank of Oklahoma, National Association, and (ii) any other
Automated Clearing House Origination Service Agreements entered into with any
other entity by NMHC. "Automated Clearing House Origination Service Agreement
Assignment" means a document in form and substance satisfactory to Healthco-4
assigning all rights of NMHC under any Automated Clearing House Origination
Service Agreement to the Purchaser, naming Healthco-4 as assignee thereunder.
"Blocked Account Agreement" means that certain Blocked Account Agreement,
dated the date hereof, among the Provider, 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.
"Borrower" has the meaning set forth in the preamble hereto.
"Borrower Account" means initially account #777-741989 of the Borrower at
JPMorgan Chase Bank, ABA # 000-000-000, or, thereafter, 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.
"Borrower's Certificate" has the meaning set forth in Section 1.03.
"Borrowing Base" means, as of any time, an amount equal to (x) (i) for the
period beginning the date hereof until April 15, 2002, 88% of the Expected Net
Value of Eligible Receivables, (ii) for the period beginning on April 16, 2002
until July 15, 2002, 86.5% of the Expected Net Value of Eligible Receivables,
and (iii) for the period beginning July 16, 2002 and any period thereafter, 85%
of the Expected Net Value of Eligible Receivables plus (y) 100% of the Cash
Collateral as of such time, in each case and at all times as determined by
reference to and as set forth in the most recent Semi-Monthly Report delivered
to the Lender by the Borrower as of such time pursuant to Exhibit IV, clause
(j)(i).
"Borrowing Base Certificate" means a certificate (which may be sent by
Transmission) signed by the Borrower and the Primary Servicer, substantially in
the form set forth in Exhibit VII-A hereto, which shall provide the most
recently available information (including updated information) with respect to
the Eligible Receivables of the Borrower (segregated by the classes (if any) set
forth on Schedule V hereto) that is set forth in the aged accounts receivable
trial balance and books and records of the Providers, in form and substance
satisfactory to the Lender and the Master Servicer.
"Borrowing Base Deficiency" means, as of any date, the positive difference,
if any, between (i) (x) the Revolving Loan, plus (y) Accrued Amounts minus (ii)
the Borrowing Base indicated on the most recent Borrowing Base Certificate.
"Borrowing Limit" has the meaning set forth in Section 1.02(a).
"Business Day" means any day on which banks are not authorized or required
to close in New York City, New York.
"Cash Collateral" means all cash and securities held in the Cash Collateral
Account.
"Cash Collateral Account" means the Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated account nos. 334-1308 and 550-07930 or any other cash collateral
account to be established pursuant to a Cash Collateral Account Agreement.
"Cash Collateral Account Agreement" means any cash collateral account
agreement, including, but not limited to, the Xxxxxxx Xxxxx Pledged Collateral
Account Control Agreement between the Borrower, the Lender and Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, that establishes a first priority security
interest in favor of the Lender in the Cash Collateral and Cash Collateral
Account in form and substance satisfactory to the Borrower and the Lender, as
such agreement may be amended, modified or supplemented from time to time in
accordance with its terms.
"Centrus" means Centrus and Centrus Pharmacy Benefits Management.
"Centrus Acquisition" means the acquisition of the Centrus assets from
Health Solutions, Ltd. by HSL Acquisition Corp., a Delaware corporation,
together with its corporate successors and assigns pursuant to the Asset
Purchase Agreement, dated as of the date hereof, among the Primary Servicer, HSL
Acquisition Corp., Health Solutions, Ltd. and the other persons named therein,
and the other acquisition documents attached hereto as Exhibit XVI.
"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
Entities (including, without limitation, the Department of Health and Human
Services, the Department of Defense, the Department of Transportation, the
Assistant Secretary of Defense (Health Affairs), and the Office of CHAMPUS, or
any Person or entity succeeding to the functions of any of the foregoing)
promulgated pursuant to or in connection with any of the foregoing (whether or
not having the force of law) in each case as may be amended, supplemented or
otherwise modified from time to time.
"Claims" has the meaning set forth in Section 1.09(b).
"CMS" means the Centers for Medicare and Medicaid Services of the United
States Department of Health and Human Services.
"Collateral" has the meaning set forth in Section 4.01(a).
"Collection Account" means the Lender's account maintained at The Bank of
New York, ABA # 000000000, GLA 111565, For Further Credit to Account #205779,
Ref: HEALTHCO-4/LCHI, Attn: Xxxxx Xxxxxx, or such other bank account designated
by the Lender from time to time.
"Collections" means all cash collections, wire transfers, electronic funds
transfers and other cash proceeds of Receivables deposited in or transferred to
the Collection Account, including, without limitation, all cash proceeds
thereof.
"Credit and Collection Policy" means those receivables credit and
collection policies and practices of the Borrower in effect on the date of the
Agreement and set forth in Schedule II hereto, as modified from time to time in
accordance with the provisions of the Agreement.
"Debt" of any Person means (without duplication): (i) all obligations of
such party for borrowed money, (ii) all obligations of such party evidenced by
bonds, notes, debentures, or other similar instruments, (iii) all obligations of
such party to pay the deferred purchase price of property or services (other
than trade payables in the ordinary course of business), (iv) all "capital
leases" (as defined by GAAP) of such party, (v) all Debt of others directly or
indirectly guaranteed (which term shall not include endorsements in the ordinary
course of business) by such party, (vi) all obligations secured by a Lien
existing on property owned by such party, whether or not the obligations secured
thereby have been assumed by such party or are non-recourse to the credit of
such party (but only to the extent of the value of such property), and (vii) all
reimbursement obligations of such party (whether contingent or otherwise) in
respect of letters of credit, bankers' acceptances and similar instruments.
"Default" means an event, act or condition which with the giving of notice
or the lapse of time, or both, would constitute an Event of Default.
"Defaulted Receivable" means a Receivable (i) as to which the Obligor
thereof or any other Person obligated thereon has taken any action, or suffered
any event to occur, of the type described in paragraph (h) of Exhibit V, or (ii)
which, consistent with the Credit and Collection Policy, would be written off
the applicable Provider's books as uncollectible.
"Delinquency Ratio" has the meaning set forth in the RPTA.
"Delinquent Receivable" means a Receivable (a) that has not been paid in
full on or following the 180th day following the date of original invoicing
thereof, or (b) that is a Denied Receivable.
"Denied Receivable" means any Receivable as to which any related
representations or warranties have been discovered at any time to have been
breached.
"Distribution" means any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any capital
interest in the Borrower, or return any capital to its members as such, or
purchase, retire, defease, redeem or otherwise acquire for value or make any
payment in respect of any shares of any class of capital interests in the
Borrower or any warrants, rights or options to acquire any such interests, now
or hereafter outstanding. "Documents" means this Agreement, the Blocked Account
Agreement, the Assignment of Contracts, each Provider Document, each Borrower's
Certificate, each Borrowing Base Certificate, and each other document or
instrument now or hereafter executed and delivered to the Lender by or on behalf
of the Borrower pursuant to or in connection herewith or therewith (including,
without limitation, each other agreement now existing or hereafter created
providing collateral security for the payment or performance of any Lender
Debt).
"Early Termination Fee" means an amount equal to 2.00% of the Revolving
Commitment (or portion of Revolving Commitment being terminated).
"Eligibility Criteria" means the criteria and basis for determining whether
a Receivable shall be deemed by the 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 Borrower, based on historical actual final
collections received on the Receivables within the 180 days of the Invoice Date
of such Receivables.
"Eligible Receivables" means Receivables that satisfy the Eligibility
Criteria, as determined by the Lender Group.
"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 Affiliates, or with respect to which any of them have any
liability.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any entity which is under common control with the
Borrower within the meaning of ERISA or which is treated as a single employer
with the Borrower under the Internal Revenue Code of 1986, as amended.
"Event of Default" means any of the events specified in Exhibit V hereto.
"Event of Termination" has the meaning set forth in the RPTA.
"Excluded Assets" means (a) the Excluded Receivables; and (b) (i) account #
15004196713505, established at M&T Bank Corporation, 000 Xxxx Xxxxxx,0xx Xxxxx,
Xxx Xxxx, XX 00000 to provide a cash reserve with respect to all set-off rights
with respect to Receivables created in Ohio, under Ohio law 3901-1-51 Regulation
of Third Party Administrators, (ii) an account established at Citibank, N.A to
provide a cash reserve with respect to all set-off rights with respect to
Receivables created in Ohio, under Ohio law 3901-1-51 Regulation of Third Party
Administrators, (iii) account # 777-243202, established at JPMorgan Chase Bank
to provide a cash reserve with respect to all set-off rights with respect to
Receivables created in Ohio, under Ohio law 3901-1-51 Regulation of Third Party
Administrators and (iv) any other accounts established to provide a cash reserve
with respect to all set-off rights with respect to Receivables created in Ohio,
under Ohio law 3901-1-51 Regulation of Third Party Administrators; provided that
the accounts listed in clauses (i), (ii), (iii) and (iv) above shall at no time
in the aggregate exceed the amount required pursuant to Ohio law 3901-1-51
Regulation of Third Party Administrators.
"Excluded Receivables" means indebtedness and all proceeds thereof of
Obligors that make payments to a Provider and such payments are subject to Ohio
law 3901-1-51 Regulation of Third Party Administrators.
"Excluded Claims" has the meaning set forth in Section 1.09(b).
"Excluded Taxes" means taxes upon or determined by reference to the
Lender's net income imposed by the jurisdiction in which such Lender is
organized or has its principal or registered office.
"Expected Net Value" means, with respect to any Eligible Receivable, the
gross unpaid amount of such Receivable on date of creation thereof, times the
applicable Net Value Factor.
"Funding Date" means the Initial Funding Date and any Business Day on which
a Revolving Advance is made at the Borrower's request in accordance with
provisions of the Agreement.
"GAAP" means generally accepted accounting principles in the United States
of America, applied on a consistent basis as set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board
and/or the rules and regulations of the Securities and Exchange Commission
and/or their respective successors and which are applicable in the circumstances
as of the date in question.
"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. xx.xx. 1395 et seq.), including payments under Medicare, Medicaid and
CHAMPUS, and payments administered or regulated by CMS.
"Governmental Entity Payments" means any payments from Governmental
Entities governed under the Social Security Act (42 U.S.C. xx.xx. 1395 et seq.),
including payments under Medicare, Medicaid, and CHAMPUS/Champva, and payments
administered or regulated by CMS.
"Group-Wide Event of Termination" has the meaning set forth in the RPTA.
"Indemnified Party" has the meaning set forth in Section 1.09(b).
"Initial Funding Date" means the date of the first borrowing under the
Agreement.
"Initial Term" has the meaning set forth in Section 5.07(a).
"Interest Period" means each one Month period (or shorter period ending on
the Maturity Date); provided, that the initial Interest Period shall commence on
the Initial Funding Date and shall end on February 1, 2002.
"Invoice Date" means, with respect to any Receivable, the date set forth on
the related invoice or statement.
"Last Service Date" means, with respect to any Receivable that is not an
Open Rebate Receivable or Managed Rebate Receivable, the earlier of (i) the date
on which the applicable Provider has received the data required to xxxx such
Receivable and (ii) the last day for submission of the related claim under any
related contracts.
"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 Borrower, any Provider, or any Affiliate of the Borrower
or any Provider, arising under or in connection with this Agreement or any other
Document, in each instance, whether absolute or contingent, direct or indirect,
secured or unsecured, due or not, arising by operation of law or otherwise, and
all interest and other charges thereon, including, without limitation,
post-petition interest whether or not such interest is an allowable claim in a
bankruptcy.
"Lender Group" means (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.
"LIBOR" means the rate established by the Program Manager two Business Days
prior to the first day of each Interest Period based on an annualized 30-day
interest rate (calculated on the basis of actual days elapsed over a 360-day
year) equal to (a) the offered rate that appears on page 3750 of the Telerate
Service for U.S. dollar deposits of amounts and in funds comparable to the
principal amount of the Revolving Loan, or (b) at any time the offered rate is
not available on page 3750 of the Telerate Service, the offered rate that
appears in the Wall Street Journal for U.S. dollar deposits of amounts and in
funds comparable to the principal amount of the Revolving Loan.
"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.
"Lockboxes" means the lockboxes located at the addresses set forth on
Schedule IV to receive checks with respect to Receivables.
"Lockbox Accounts" means the accounts at the Lockbox Bank as set forth on
Schedule IV as associated with the Lockboxes and established by the Borrower to
deposit all Collections, including Collections received in the Lockboxes and
Collections received by wire transfer directly from Obligors, all as more fully
set forth in the Blocked Account Agreement.
"Lockboxes Bank" means JPMorgan Chase Bank, as lockbox bank under the
Blocked Account Agreement.
"Loss-to-Liquidation Ratio" means, as of the last Business Day of each
Month, a percentage equal to:
DFR
C
where:
DFR = The Expected Net Value of all Receivables
which became Defaulted Receivables in the
Month immediately prior to the date of
calculation.
C = Collections on such Receivables in the Month immediately
prior to the date of calculation.
"Managed Rebate Receivable" means the rebate earned by a Provider on paid
prescriptions processed by such Provider on behalf of an Obligor that actively
manages its formularies, subject to the terms and payment schedules pursuant to
a contract entered into by such Provider with an Obligor that is (a) a rebate
aggregator or (b) a manufacturer or distributor of pharmaceutical products.
"Master Servicer" means the Program Manager and any other Person then
identified by the Lender to the Borrower as being authorized to administer and
service Receivables.
"Material Adverse Effect" means any event, condition, change or effect that
(a) has a materially adverse effect on the business, Properties, capitalization,
liabilities, operations, prospects or financial condition of (i) the Providers
on a consolidated basis, (ii) the Borrower, or (iii) the Primary Servicer, (b)
materially impairs the ability of the Borrower to perform its obligations under
this Agreement or any of the other Documents, (c) materially impairs the ability
of the Primary Servicer, any Provider or the Borrower to perform their
respective obligations under the RPTA or any of the other Provider Documents, or
(d) materially impairs the validity or enforceability of, or materially impairs
the rights, remedies or benefits available to the Lender under this Agreement or
(as assignee of the Borrower) under the RPTA or any of the other Provider
Documents.
"Maturity Date" means the earlier of (a) the date on which this Agreement
terminates in accordance with the provisions of Section 5.07(a), and (b) the
occurrence of an Event of Default unless such event is waived by the Lender in
writing.
"Maximum Permissible Rate" has the meaning set forth in Section 1.11(a).
"Medicaid" means the medical assistance program established by Title XIX of
the Social Security Act (42 U.S.C. Secs. 1396 et seq.) and any statutes
succeeding thereto.
"Medicare" means the health insurance program for the aged and disabled
established by Title VXII of the Social Security Act (42 U.S.C. Secs. 3395 et
seq.) and any statutes succeeding thereto.
"Month" means a calendar month.
"Multiemployer Plan" means a plan, within the meaning of ss. 3(37) of
ERISA, as to which the Borrower or any ERISA Affiliate contributed or was
required to contribute within the preceding five years.
"Net Value Factor" means, initially, the percentages set forth on Schedule
V attached hereto, as such percentages may be adjusted, upwards or downwards on
a prospective basis with Written Notice to the Borrower, in the good faith
discretion of the Lender in consultation with the Borrower and the Primary
Servicer, based on historical actual final collections received on the
Receivables within the 180 days of the Invoice Date of such Receivables (without
regard to the factors set forth in the definition of "Defaulted Receivable").
"Non-Utilization Fee" has the meaning set forth in Section 1.05(c).
"Obligor" means any Person which in the ordinary course of its business or
activities agrees to pay for pharmacy benefit or pharmaceutical contract related
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,
Governmental Entities (other than with respect to Governmental Entity Payments),
health maintenance organizations, third party administrators, rebate aggregators
and pharmaceutical companies. "Obligor" includes insurance companies issuing
health, personal injury, workers' compensation or other types of insurance but
does not include any individual guarantors.
"Open Rebate Receivable" means the rebate earned by a Provider on paid
prescriptions processed by such Provider on behalf of an Obligor that does not
actively manage its formularies, subject to the terms and payment schedules
pursuant to a contract entered into by such Provider with an Obligor that is (a)
a rebate aggregator or (b) a manufacturer or distributor of pharmaceutical
products.
"Other Entities" means any Provider and each of its direct and indirect
parents or subsidiaries (in whatever business form such Person exists) other
than the Borrower.
"Other Taxes" has the meaning set forth in Section 1.08(b).
"Outstanding Balance" means, with respect to the Revolving Loan, as of any
date of determination, the aggregate outstanding principal balance of the
Revolving Loan (plus interest that is due and payable on the Revolving Loan that
remains unpaid beyond the first Business Day of such Month); provided that any
Collections utilized to reduce the principal amount of the Revolving Loan shall
reduce the "Outstanding Balance" hereunder only following a one Business Day
clearance period applied thereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Permitted Investment" means, at any time:
(a) any evidence of indebtedness issued or guaranteed by the
United States government or any agency thereof;
(b) commercial paper, in each case issued by a corporation (other
than the Borrower or any Affiliate of the Borrower) organized under
the laws of any state of the United States or of the District of
Columbia and rated at least A-1 by Standard & Poor's or P-1 by Xxxxx'x
Investors Service, Inc.;
(c) any certificate of deposit (or time deposits represented by
such certificates of deposit) or bankers acceptance or overnight
federal funds transactions that are issued or sold by a commercial
banking institution that is a member of the Federal Reserve System and
has a combined capital and surplus and undivided profits of not less
than $500,000,000;
(d) money market mutual funds registered under the Investment
Company Act of 1940, as amended, having a rating, at the time of such
investment, from each of Standard & Poor's and Xxxxx'x Investors
Service, Inc. in the highest investment category granted thereby;
and/or
(e) investments in a Xxxxxxx Xxxxx xxxxx term municipal bond fund
having a rating, at the time of such investment, from Xxxxx'x
Investors Service, Inc. in the highest investment category granted
thereby held in the Xxxxxxx Xxxxx, Piece, Xxxxxx & Xxxxx Incorporated
account nos. 334-1308 and 550-07930.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Primary Servicer" has the meaning set forth in the RPTA.
"Program Manager" means (i) Healthcare Finance Group, 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, movable, immovable, corporeal,
incorporeal, real, personal or mixed, tangible or intangible (including, without
limitation, all rights relating thereto), whether owned or acquired on or after
the date of this Agreement.
"Provider" has the meaning set forth in the RPTA.
"Provider Documents" has the meaning set forth in the RPTA.
"Rebate Receivable" means a Managed Rebate Receivable or an Open Rebate
Receivable.
"Receivable Information" has the meaning set forth in the RPTA.
"Receivables" means all health-care-insurance receivables, accounts,
chattel paper, instruments, general intangibles and goodwill, and all other
obligations for the payment of money, in each case, owing (or in the case of
Unbilled Receivables, to be owing) to any Provider, including those arising out
of the rendition of pharmacy benefit and formulary management or rebate
administration services or pharmacy benefit consulting services provided to any
Person (including the provision of market information) or the sale of medical or
pharmaceutical products by a Provider and any medical services rendered in
connection therewith, including, without limitation, all amounts due from
manufacturers or distributors of pharmaceutical products based on contractual
payments and all rights to reimbursement under any agreements with and payments
from Obligors, customers, residents other Persons, together with, to the maximum
extent permitted by law, all accounts and general intangibles related thereto,
all rights, remedies, guaranties, security interests and Liens in respect of the
foregoing, all books, records and other Property evidencing or related to the
foregoing, and all proceeds of any of the foregoing, excluding Excluded
Receivables.
"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 members or its stockholders.
"Revolving Advance" has the meaning set forth in Section 1.01(a).
"Revolving Commitment" has the meaning set forth in Section 1.02(a).
"Revolving Loan" has the meaning set forth in Section 1.01(a).
"RPTA" means that certain Healthcare Receivables Purchase and Transfer
Agreement, dated as of the date of this Agreement, among the Primary Servicer,
the Providers and the Borrower, as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms hereof and thereof.
"Semi-Monthly Report" has the meaning set forth in the RPTA
"Tangible Net Worth" with respect to the Borrower, means, at any time, the
excess of (i) the Expected Net Value of all Receivables owned by the Borrower,
plus cash, plus investments, plus amounts which are owing from the Lender to the
Borrower minus (ii) the sum of all accrued unpaid monetary obligations and
accrued unpaid fees and expenses payable hereunder or otherwise owed by the
Borrower.
"Transmission" means, upon establishment of computer interface between the
Borrower and the Master Servicer in accordance with the specifications
established by the Master Servicer, the transmission of Receivable Information
through computer interface to the Master Servicer in a manner satisfactory to
the Master Servicer.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the specified jurisdiction.
"Unbilled Receivable" means a Receivable in respect of which the goods have
been shipped, or the services rendered, or rebate earned and rights to payment
therefor have accrued under the relevant contractual provisions, but the invoice
has not been rendered to the applicable Obligor.
"Written Notice" and "in writing" means any form of written communication
or a communication by means of telex, telecopier device, telegraph or cable.
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.
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).
(b) Certified copies of the organizational documents and all amendments
thereto, certified copies of resolutions of the managers of the Borrower
approving this Agreement, certified copies of all documents filed to register
any and all assumed/trade names of the Borrower, and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement.
(c) A certificate of the Secretary or Assistant Secretary of the Borrower
certifying the names and true signatures of the officers of the Borrower
authorized to sign this Agreement and the other documents to be delivered by it
hereunder.
(d) A copy of the opening balance sheet of the Borrower as at the Initial
Funding Date, certified by the chief financial officer of the Borrower.
(e) Acknowledgment or time-stamped receipt copies of proper financing
statements (showing the Borrower as debtor and the 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 security interests contemplated by the Agreement.
(f) Completed requests for information (UCC search results) and a schedule
thereof listing all effective financing statements filed in the applicable
jurisdictions that name the Borrower as debtor, together with copies of such
financing statements.
(g) Releases of, and acknowledgment copies of proper termination statements
(Form UCC-3), if any, necessary to evidence the release of all security
interests, ownership and other rights of any Person previously granted by
Borrower in the Collateral.
(h) A favorable opinion of Certilman Balin Xxxxx & Xxxxx, LLP, counsel to
the Borrower, substantially in the form attached hereto as Exhibit IX-A, and as
to such other matters as the Lender Group requests.
(i) A favorable opinion of Certilman Balin Xxxxx & Xxxxx, LLP, counsel for
the Borrower, substantially in the form attached hereto as Exhibit IX-B, and as
to such other matters as the Lender Group requests.
(j) The Assignment of Contracts with respect to the RPTA and the other
Provider Documents and assignments of all other documents, the Lockboxes and
Lockbox Accounts with respect to the RPTA and the other Provider Documents, duly
executed by the Borrower and acknowledged by the other Persons party to such
Provider Documents.
(k) Originally executed copies of the RPTA and the other Provider
Documents, all other documentation required to be delivered with respect to this
Agreement, the RPTA and the other Documents, all in form and substance
satisfactory to the 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 the
initial purchase under the RPTA have been satisfied or waived.
(m) A duly executed Blocked Account Agreement, together with evidence
satisfactory to the Lender that the Lockboxes and the Lockbox Accounts have been
established.
(n) A duly executed Cash Collateral Account Agreement
(o) A duly executed Pledge Agreement and Irrevocable Proxy
(p) Payment of a facility fee of $200,000 to Healthcare Finance Group, Inc.
(q) Payment of all reasonable attorneys' fees incurred by the Lender Group
plus reasonable disbursements.
(r) Evidence that the capitalization of the Borrower is satisfactory to the
Lender.
(s) Completion of a due diligence review by the Lender (or its agent) of
the Providers, the results of which are 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 one Business
Day prior to such Funding Date, in form and substance satisfactory to the Lender
a completed Borrower's Certificate, together with such additional information as
may reasonably be requested by the Lender or the Master Servicer;
(b) the Borrower shall have delivered to the Lender, on the Business Day
immediately prior to such Funding Date, in form and substance satisfactory to
the Lender a completed Borrowing Base Certificate, together with such additional
information as may reasonably be requested by the Lender or the Master Servicer;
(c) on such Funding Date the following statements shall be true and correct
(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
and correct):
(i) the representations and warranties contained in Exhibits III
and VII are true and correct on and as of the date of such Revolving
Advance as though made on and as of such date (except any
representations or warranty that expressly indicates that it is being
made as of a specific date, in which case such representation or
warranty shall be true and correct as of such date), and
(ii) no event has occurred and is continuing, or would result
from such Revolving Advance or any actions connected therewith, that
constitutes a Default or an Event of Default; and
(d) the Lender shall have received such other approvals, opinions or
documents as it may reasonably request.
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 except in any
jurisdiction where the failure to so qualify would not have a Material Adverse
Effect.
(b) The execution, delivery and performance by the Borrower of the
Agreement and the other documents to be delivered by it thereunder, (i) are
within the Borrower's powers, (ii) have been duly authorized by all necessary
limited liability company action, (iii) do not contravene (1) the Borrower's
operating agreement or certificate of formation, (2) any material law, rule or
regulation applicable to the Borrower, (3) any material contractual restriction
binding on or affecting the Borrower or its Property, or (4) any order, writ,
judgment, award, injunction or decree binding on or affecting the Borrower or
its Property, and (iv) do not result in or require the creation of any Lien upon
or with respect to any of its Properties, other than the security interest
created by the Agreement. The Agreement has been duly executed and delivered by
the Borrower. The Borrower has previously furnished to the Lender a correct and
complete copy of the Borrower's certificate of formation and operating agreement
including all amendments thereto.
(c) No authorization or approval or other action by, and no notice to or
filing with, any Governmental Entity is required for the due execution, delivery
and performance by the Borrower of the Agreement or any other document to be
delivered thereunder.
(d) The Agreement constitutes the legal, valid and binding obligation of
the Borrower, enforceable against the Borrower in accordance with its terms,
except as limited by bankruptcy, insolvency, moratorium, fraudulent conveyance
or other laws relating to the enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforcement is sought at
equity or law).
(e) Except as disclosed on Schedule III hereto, the Borrower has all power
and authority, and has, if any, all permits, licenses, accreditations,
certifications, authorizations, approvals, consents and agreements of all
Obligors, 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, the RPTA and the other
Documents to which it is a party, and (iv) to receive payments from the Obligors
in the manner contemplated in the Agreement and the RPTA.
(f) Except as disclosed on Schedule III hereto, no Provider has been
notified by any Obligor, Governmental Entity or instrumentality, accreditation
agency or any other person, during the immediately preceding 24 Month period,
that such party has rescinded or not renewed, or is reasonably likely to rescind
or not renew, any such permit, license, accreditation, certification,
authorization, approval, consent or agreement granted 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 of the date thereof all in accordance with GAAP.
(i) The RPTA is in full force and effect and no Event of Termination or
Group-Wide Event of Termination (without regard to waivers granted or sought) is
continuing thereunder.
(j) Except as disclosed on Schedule III, there is no pending or, to the
Borrower's knowledge, any threatened action or proceeding or injunction, writ or
restraining order affecting the Borrower or any Provider before any court,
Governmental Entity or arbitrator which 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 RPTA or any other Document, and neither
the Borrower nor any Provider is currently the subject of, or has any present
intention of commencing, an insolvency proceeding or petition in bankruptcy.
(k) The Borrower is the legal and beneficial owner of the Collateral free
and clear of any Lien. No effective financing statement or other instrument
similar in effect covering any item of Collateral is on file in any recording
office, except those being terminated on or before the Initial Funding Date and
those filed in favor of the Borrower relating to the purchase of the Receivables
under the RPTA and those in favor of the 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
Collateral 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.
(n) The provisions of the Agreement create legal and valid Liens in all of
the Collateral 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 Collateral, having priority over all
other Liens on such Collateral, enforceable against the Borrower and all third
parties.
(o) The Borrower has not changed its principal place of business or chief
executive office in the last five years.
(p) The exact name of the Borrower is as set forth on the signature page of
the Agreement, and except as notified in writing to the 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, any Providers or the Primary Servicer,
since the Funding Date prior to the making of this representation, there has
occurred no event which has or is reasonably likely to 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 such
Provider which has or is reasonably likely to have a Material Adverse Effect.
(s) The Borrower has filed on a timely basis (which basis shall include all
lawful extensions) all tax returns (federal, state and local) required to be
filed and has paid, or made adequate provision for payment of, all taxes,
assessments and other governmental charges due from the Borrower. No tax Lien
has been filed and is now effective against the Borrower or any of its
Properties except any Lien in respect of taxes and other charges not yet due or
contested in good faith by appropriate proceedings. To the Borrower's knowledge,
there is no pending investigations of the Borrower by any taxing authority nor
any pending but unassessed tax liability of the Borrower. The Borrower does not
have any obligation under any tax sharing agreement.
(t) The Borrower is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement; the Borrower has not
incurred debts or liabilities beyond its ability to pay nor does it intend to
incur such debts or liabilities; the Borrower will, after giving effect to the
transaction contemplated by this Agreement, have an adequate amount of capital
to conduct its business in the foreseeable future; the transactions contemplated
under the Documents are made in good faith and without intent to hinder, delay
or defraud present or future creditors.
(u) The Lockboxes are the only post office boxes and the Lockbox Accounts
are the only lockbox accounts maintained by the Providers and the Borrower for
Receivables and no direction of any Provider is in effect directing Obligors to
remit payments on Receivables other than to the Lockboxes or the Lockbox
Accounts.
(v) The Borrower has no pension plans or profit sharing plans.
(w) Except as disclosed on Schedule III hereto, to the knowledge of the
Borrower there are no pending civil or criminal investigations by any
Governmental Entity involving the Borrower, any Provider or any of their
respective officers or directors and none of the Borrower, any Provider or any
of their respective officers or directors has been involved in, or the subject
of, any civil or criminal investigation by any Governmental Entity.
(x) The sole business of the Borrower is as provided in its organizational
documents.
(y) The assets of the Borrower are free and clear of any Liens in favor of
the Internal Revenue Service, any Employee Benefit Plan, any Multiemployer Plan
or the PBGC other than inchoate tax Liens resulting from an assessment of a
Provider or the Borrower.
(z) None of the Eligible Receivables constitutes or has constituted an
obligation of any Person which is an Affiliate of the Borrower.
(aa) The Obligor of each Eligible Receivable has not been the Obligor of
any Defaulted Receivables in the past 12 Months (other than, for the purpose of
this clause, as a result of good faith disputes).
(bb) No transaction contemplated under this Agreement requires compliance
with any bulk sales act or similar law.
(cc) The Borrower has no Debt except hereunder and under the RPTA.
(dd) Each Receivable that is an Unbilled Receivable (including, without
limitation, each Managed Rebate Receivable) will be, or has been, billed to the
Obligor of such Receivable within 30 days of the Last Service Date, or in the
case of an Open Rebate Receivable, will be, or has been, billed to the Obligor
within 30 days after the end of the fiscal quarter in which such Open Rebate
Receivable became due and payable, or in the case of a Managed Rebate
Receivable, will be, or has been, billed to the Obligor within 45 days after the
end of the fiscal quarter in which such Managed Rebate Receivable became due and
payable.
EXHIBIT IV
COVENANTS
Until the payment in full of all Lender Debt and the termination of the
Revolving Commitment hereunder:
(a) Compliance with Laws, etc. The Borrower will comply in all material
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its limited liability company existence, rights, franchises,
qualifications, and privileges.
(b) Offices, Records and Books of Account. The Borrower will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Collateral at the address of the Borrower set
forth under its name on the signature page to the Agreement or, upon 30 days'
prior Written Notice to the 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 Collateral have been taken and
completed. The Borrower shall keep its books and accounts in accordance with
GAAP and shall make a notation on its books and records, including any computer
files, to indicate that the Receivables have been assigned as security to the
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 Primary Servicer, the Providers or their designees to fully
perform and comply) with all material provisions, covenants and other promises
required to be observed by it under the contracts related to the Receivables,
and timely and fully comply in all material respects with the Credit and
Collection Policy in regard to each Receivable and the related contract, and the
Borrower shall maintain, at its expense, in full operation each of the bank
accounts and lockboxes required to be maintained under the Agreement. The
Borrower shall do nothing, nor suffer or permit any other Person, to impede or
interfere with the collection by the 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 the Lender and the Master Servicer of any breach of
covenants or representations and warranties hereunder and under the RPTA,
including, without limitation, upon discovery of a breach of the Eligibility
Criteria set forth in Exhibit VI hereof and thereof.
(e) Debt, Sales, Liens, etc. The Borrower will not incur or assume any Debt
or issue any securities except under or as expressly contemplated by the
Documents. The Borrower will not sell, assign (by operation of law or otherwise)
or otherwise dispose of, or create or suffer to exist any Liens upon or with
respect to, the Borrower's Properties, or upon or with respect to any account to
which any Collections are sent, or assign any right to receive income in respect
thereof except (i) those Liens in favor of the Lender or any assignee of the
Lender relating to the Agreement, and (ii) those assignments of Denied
Receivables upon receipt by the Borrower of the respective Repurchase Prices (as
defined in the RPTA).
(f) Extension or Amendment of Receivables. The Borrower shall not amend,
waive or agree, or otherwise suffer or permit any Provider to amend, waive or
agree, to any deviation from the terms or conditions of any Receivable owned by
the Borrower in a manner inconsistent with the Credit and Collection Policy.
(g) Change in Credit and Collection Policy; Change in Business. The
Borrower will not make any material change in the Credit and Collection Policy
without the prior written consent of the Lender; provided, however, that during
the continuance of an Event of Default, it will not make any change in the
Credit and Collection Policy. The Borrower will not make any change in the
character of its business that is reasonably likely to result in a Material
Adverse Effect.
(h) Audits and Visits. The Borrower will, from time to time during regular
business hours as requested by the Lender, permit the Lender upon reasonable
notice, without interfering with the Borrower's or the Providers' businesses or
operations and subject to compliance with applicable law in the case of review
of plan participant/patient/customer information, or its agents or
representatives (including the Master Servicer), (i) to examine and make copies
of and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the control of
the Borrower relating to Receivables including, without limitation, the related
contracts, and (ii) to visit the offices and properties of the Borrower for the
purpose of examining and auditing such materials described in clause (i) above,
and to discuss matters relating to Receivables or the Borrower's performance
hereunder or under the contracts with any of the officers or employees of the
Borrower having knowledge of such matters. The Borrower shall 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
Lockboxes or the Lockbox Accounts, or make any change or replacement in the
instructions contained in any invoice, notice to an Obligor or otherwise, or
regarding payments with respect to the Receivables 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.
(j) Reporting Requirements. The Borrower will provide to the Lender (in
multiple copies, if requested by the Lender) the following:
(i) on the fifth Business Day following the fifteenth and last
day of each Month, a copy of the "Semi-Monthly Report";
(ii) on or prior to the fifth Business Day following the
fifteenth and last day of each Month, a copy of the "Semi-Monthly
Report" delivered by the Primary Servicer to the Purchaser pursuant to
Section 1.03 of the RPTA, together with a revised Borrowing Base
Certificate based on reconciliations and adjustments reflected in such
Semi-Monthly Report certified by the chief financial officer of the
Borrower and the Primary Servicer;
(iii) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, balance sheets of the Borrower as of the end of such quarter
and statements of income, cash flows and retained earnings of the
Borrower for the period commencing at the beginning of the current
fiscal year and ending with the end of such quarter, certified by the
chief financial officer of the Borrower, and accompanied by a
certificate of an authorized officer of the Borrower stating that, as
of such date, (i) no Event of Default exists and is continuing, (ii)
all representations and warranties are true and correct in all
material respects (except any representation or warranty that
expressly indicates that it is being made as of a specific date, in
which case such representation or warranty shall be true and correct
on and as of such date) and (iii) the conditions precedent set forth
in paragraph 2 of Exhibit II have been fulfilled or waived in writing
by the Lender, and detailing its compliance for such fiscal period
with the financial covenants contained in this Agreement;
(iv) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, balance sheets as of, and
statements of income for, such fiscal year, and accompanied by a
certificate of an authorized officer of the Borrower stating that, as
of such date, (i) no Event of Default exists and is continuing, (ii)
all representations and warranties are true and correct in all
material respects (except any representation or warranty that
expressly indicates that it is being made as of a specific date, in
which case such representation or warranty shall be true and correct
on and as of such date) and (iii) the conditions precedent set forth
in paragraph 2 of Exhibit II have been fulfilled or waived in writing
by the Lender, and detailing its compliance for such fiscal period
with the financial covenants contained in this Agreement;
(v) promptly and in any event within five Business Days after the
occurrence of each Default or Event of Default, a statement of the
chief financial officer of the Borrower setting forth details of such
Default or Event of Default, and the action that the Borrower has
taken and proposes to take with respect thereto;
(vi) 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;
(vii) promptly (and in no event later than five Business Days
following actual knowledge or receipt thereof), Written Notice in
reasonable detail, of (w) any Lien asserted or claim made against a
Receivable, (x) the occurrence of an Event of Default, (y) any notice
of any investigations or similar audits of any Provider being
conducted by any federal, state or county Governmental Entity or its
agents or designees or (z) the results of any cost report filed and
reviewed by any Governmental Entity or its fiscal intermediary or
settled, and investigations or similar audits of any Provider being
conducted by any federal, state or county Governmental Entity or its
agents or designees;
(viii) no later than five Business Days after the commencement
thereof, Written Notice of all actions, suits, and proceedings before
any Governmental Entity or arbitrator affecting the Borrower which, if
determined adversely to the Borrower, could have a Material Adverse
Effect;
(ix) as soon as possible and in any event within five Business
Days after becoming aware of the occurrence thereof, Written Notice of
any matter that could have a Material Adverse Effect;
(x) within 90 days after the end of each fiscal year of the
Borrower, a certificate of independent certified public accountants
stating that to their knowledge no Group-Wide Event of Termination has
occurred and exists as of the end of such fiscal year, or if in their
opinion such a Group-Wide Event of Termination has occurred and is
continuing, a statement as to the nature thereof; and
(xi) 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 in a face amount in excess of $100,000.
The Borrower shall make, or cause to be made, all payments to the Obligors
necessary to prevent the Obligors from offsetting any earlier overpayment to the
Borrower or any Provider against any amounts the Obligors owe on any
Receivables.
(l) Officer's Certificate. On the dates the financial statements referred
to in clause (j) above are to be delivered after the Initial Funding Date, the
chief financial officer of the Borrower shall deliver a certificate to the
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 Lender's security interest in the Collateral, or to enable
the Lender or the Program Manager to exercise or enforce the rights of the
Lender hereunder or in the Collateral. Without limiting the generality of the
foregoing, the Borrower will upon the request of the Program Manager execute and
file such UCC financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices, as may be, in the
opinion of the Program Manager, necessary or appropriate. The Borrower hereby
authorizes the Program Manager to file one or more financing or continuation
statements and amendments thereto and assignments thereof, relative to all or
any of the Collateral now existing or hereafter arising without the signature of
the Borrower where permitted by law. If the Borrower fails to perform any of its
agreements or obligations under the Agreement, the Program Manager may (but
shall not be required to) itself perform, or cause performance of, such
agreement or obligation, and the expenses of the Program Manager incurred in
connection therewith shall be payable by the Borrower.
(n) Merger, Consolidation. The Borrower shall not merge with or into,
consolidate with or into, or enter into any agreement to merge or consolidate
with or into, another Person, or convey, transfer, lease or otherwise dispose of
all or substantially all of its assets (whether now owned or hereafter
acquired).
(o) No "Instruments". The Borrower shall not take any action which would
allow, result in or cause any Eligible Receivable to be evidenced by an
"instrument" within the meaning of the UCC of the applicable jurisdiction.
(p) Preservation of Company Existence. The Borrower shall preserve and
maintain its existence, rights, franchises and privileges in the jurisdiction of
its organization, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would have a
Material Adverse Effect.
(q) Provider Documents. The Borrower will, at its sole expense, timely and
fully perform and comply with all provisions, covenants and other promises
required to be observed by it under the such Provider Documents, maintain such
Provider Documents in full force and effect, enforce each Provider Document in
accordance with its terms, take all such action to such end as may be from time
to time reasonably requested by the Lender, and make to any party to the
Provider Documents such demands and requests for information and reports or for
action as the Borrower is entitled to make thereunder and as may be from time to
time reasonably requested by the Lender. The Borrower shall not permit any
waiver, modification or amendment of any Provider Document.
(r) New Providers. The Borrower shall not cause or suffer or permit any
other Person to become a "Provider" under the RPTA without the prior written
consent of the Lender.
(s) Master Servicer Certificate. On or before the 30th calendar day after
the Initial Funding Date, the Lender shall receive a certificate from the Master
Servicer stating that all computer linkups and interfaces necessary or
desirable, in the judgment of the Master Servicer, to effectuate the
transactions and information transfers contemplated hereunder, are fully
operational to the reasonable satisfaction of the Master Servicer.
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, manager or
employee of an Affiliate of the Borrower or any Other Entity and who is not a
current or former officer or employee of the Borrower and (y) not a stockholder
or the holder of any other equity interests of any Other Entity or any of their
respective Affiliates.
(ii) The Borrower will not direct or participate in the management of any
of the Other Entities' operations.
(iii) The Borrower will at all times be adequately capitalized in light of
its contemplated business.
(iv) The Borrower will at all times provide for its own operating expenses
and liabilities from its own funds.
(v) Subject to consolidation with the Providers for accounting and tax
purposes, the Borrower will maintain its assets and transactions separately from
those of the Other Entities and reflect such assets and transactions in
financial statements separate and distinct from those of the Other Entities and
evidence such assets and transactions by appropriate entries in books and
records separate and distinct from those of the Other Entities. The Borrower
will not hold itself out as being liable, primarily or secondarily, for any
obligations of the Other Entities.
(vi) The Borrower will not maintain any joint account with any Provider or
any Other Entity, or be a party, whether as a co-obligor or otherwise, to any
agreement to which any Other Entity is a party (other than any Provider
Document) or become liable as a guarantor or otherwise with respect to any
indebtedness or contractual obligation of any Other Entity.
(vii) Other than as contemplated under this Agreement or under any other
Document and the payment of dividends or distributions to its members, the
Borrower will not make any payment or distribution of assets with respect to any
obligation of any Other Entity or xxxxx x Xxxx on any of its assets to secure
any obligation of any Other Entity.
(viii) The Borrower will not make any loans, advances or otherwise extend
credit to any of the Other Entities; provided, that the Borrower may issue
dividends or distributions to each of its members to the extent otherwise
permitted under this Agreement and under applicable law.
(ix) The Borrower will hold regular duly noticed meetings of its members
and make and retain minutes of such meetings.
(x) The Borrower will comply in full with the procedures set forth in the
Documents with respect to the assignment of all assets from any of the Other
Entities.
(xi) The Borrower will not engage in any transaction with any of the Other
Entities or any of their respective subsidiaries, except as permitted or
contemplated by the Agreement and as contemplated by the Documents.
(xii) The Borrower will not enter into any transaction with any Affiliate
or third party except (a)(x) as permitted or contemplated by this Agreement or
the Documents, or (y) investments of cash and cash equivalents with third
parties and (b) on terms and conditions which reasonably approximate an arm's
length transaction between unaffiliated parties.
(xiii) The Borrower will not amend, modify or supplement its organizational
documents.
(xiv) The Borrower will not have any subsidiaries nor ownership interest in
any other entities.
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 to five Business Days to cure
such a default with respect to a Borrowing Base Deficiency) whether pursuant to
Article II of this Agreement, at maturity, by acceleration or otherwise.
(b) The Borrower shall default in the due and punctual payment of any
installment of interest on the Revolving Loan or any other Lender Debt,
including, without limitation, 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 Business Days.
(c) Any material provision of any Document is no longer in full force and
effect or there shall be continuing a default in the performance or observance
of any covenant, agreement or provision (other than as described in clause (a)
or (b) above) contained in this Agreement or any other Document or in any
instrument or document evidencing or creating any obligation, guaranty or Lien
directly or indirectly in favor of the 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 30 days (or, in the
case where agreements and covenants contained in any Document provide for a
grace period that is less than 30 days, continuance of a default for such
shorter period) after the earlier of (i) there has been given Written Notice of
such default to either of the Borrower or the Primary Servicer on behalf of any
Provider by the 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 Lender.
(d) A Group-Wide Event of Termination shall have occurred under the RPTA
(without regard to waivers granted or sought).
(e) Any representation or warranty made or deemed made by the Borrower
(other than with respect to the eligibility of Receivables as Eligible
Receivables hereunder) under or in connection with the Agreement or any other
Document or any information or report delivered by the Borrower (other than with
respect to the Providers) pursuant to the Agreement or any other Document shall
prove to have been incorrect or untrue in any material respect when made or
deemed made or delivered.
(f) The Borrower shall incur any Debt other than under the Agreement or the
RPTA.
(g) This Agreement shall for any reason (other than pursuant to the terms
hereof) fail or cease to create, or the security interest created by this
Agreement fails or ceases to be, a valid and perfected first priority security
interest in the Collateral free and clear of all Liens (other than Liens
referred to in clauses (i) and (ii) of paragraph (e) of Exhibit IV).
(h) 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 45 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).
(i) There shall have occurred any Material Adverse Effect since September
30, 2001.
(j) The Borrower (x) shall have entered into any transaction or agreement
and not provided prompt Written Notice thereof to the Lender, or (y) shall have
consummated, any transaction or agreement intended to result in (i) the merger
or consolidation of the Borrower, (ii) the acquisition of all or a substantial
portion of the assets of any Person, (iii) the transfer, sale, assignment, lease
or other disposition of all or a substantial portion of the Borrower's assets or
Properties, (iv) a change in the general nature of the Borrower's business, or
(v) the sale of a controlling interest, directly or indirectly, in the Borrower.
(k) The Loss-to-Liquidation Ratio at end of any Month exceeds 5%.
(l) The arithmetic average of the Loss-to-Liquidation Ratios for any three
Months exceeds 3%.
(m) The Delinquency Ratio at the end of any Month exceeds 5%.
(n) The arithmetic average of the Delinquency Ratios for any three
consecutive Months exceeds 3%.
(o) 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 $250,000 in the aggregate against the Borrower remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period
of 30 days or more.
(p) 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 $250,000 which remains unpaid or discharged for a period of
30 days or more.
(q) The Borrower shall fail to discharge within a period of 30 days after
the commencement thereof any attachment, sequestration, forfeiture, or similar
proceeding or proceedings involving an aggregate amount in excess of $250,000
against any of its Properties.
(r) 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.
(s) The Borrower sells, leases, assigns, transfers, or otherwise disposes
of any of its Receivables, except as permitted or contemplated under the
Agreement.
(t) The Borrower declares or makes any Distribution, unless both prior and
subsequent to the effectiveness of such proposed Distribution, (i) no Event of
Default is continuing, (ii) such Distribution is in full compliance with
applicable law, including the law of the State of Delaware as in effect at such
time, and (iii) the Borrower and the recipient of such Distribution have taken
all necessary and appropriate action to effectuate such Distribution.
(u) The Borrower engages in any business other than solely the business of
directly or indirectly purchasing Receivables from the Providers and in
financing such Receivables with the Lender hereunder and the other transactions
permitted or contemplated hereby.
(v) The Borrower shall at any time fail to maintain a Tangible Net Worth of
at least 3% of the higher of (i) the Borrowing Limit and (ii) the then
outstanding amount of the Revolving Loan.
(w) If, at any date, the aggregate Expected Net Value of all Delinquent
Receivables that became Delinquent Receivables during the prior 3 Months is in
excess of 3% of the aggregate Expected Net Value of all Receivables pledged 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
RPTA).
(x) As of any date after the Initial Funding Date, more than 4% of all
outstanding Eligible Receivables are (i) with respect to Eligible Receivables
that are not Rebate Receivables, aged more than 120 days but less than 180 days
from the respective Last Service Dates of such Eligible Receivables and (ii)
with respect to Eligible Receivables that are Rebate Receivables, aged more than
150 days but less than 180 days from the respective billing date of such Rebate
Receivable, which billing date shall be no later than the last day of the fiscal
quarter in which such Rebate Receivable was earned.
(y) 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 80% of the aggregate gross value (billed amount) of such Eligible
Receivables.
(z) The Borrower shall fail to perform or observe any other term, covenant
or agreement contained in the Assignment of Contracts, the Cash Collateral
Account Agreement or any Provider Document on its part to be performed or
observed.
(aa) Automated Clearing House Origination Service Agreement Assignment.
NMHC shall fail to deliver within 30 days of the date hereof an executed
Automated Clearing House Origination Service Agreement Assignment with (i) Bank
of Oklahoma, National Association, and (ii) any other entity that has entered
into an Automated Clearing House Origination Service Agreement with NMHC.
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. Except with respect to Unbilled Receivables, the related Provider has
billed the applicable Obligor and has delivered or is in the process of
delivering to such Obligor all requested supporting claim documents with respect
to such Receivable and no amounts with respect to such Receivable have been paid
as of the date and time of the inclusion of such Receivable in the Borrowing
Base. 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 related Provider)
has or will promptly provide the same, and if any error has been made with
respect to such information, the Borrower (or the related Provider) will
promptly correct the same and, if necessary, rebill such Receivable.
(b) Each such Receivable (i) is payable, in an amount not less than its
Expected Net Value, by the Obligor identified by the related Provider as being
obligated to do so, (ii) is based on an actual and bona fide rendition of
services to the Obligor or sale of goods to an Obligor or plan participant of
such Obligor or payment due under contract from an Obligor in the ordinary
course of business, (iii) is denominated and payable only in U.S. dollars in the
United States, and (iv) is an account or general intangible within the meaning
of the UCC of the state in which the related Provider is incorporated, or is a
right to payment under a policy of insurance or proceeds thereof, and is not
evidenced by any instrument or chattel paper. There is no payor other than the
Obligor identified by the Borrower as the payor primarily liable on such
Receivable.
(c) Each such Receivable (i) is not the subject of any action, suit,
proceeding or dispute (pending or threatened), setoff, counterclaim, defense,
abatement, suspension, deferment, deductible, reduction or termination by the
Obligor thereof (except for statutory rights of Governmental Entities that are
not pending or threatened), (ii) is not subject of any setoff or collection
claim of any nature (including any contractual claim of agency by a Provider on
its behalf) by any pharmacy or other Person, (ii) is not past, or within 60 days
of, the statutory limit for collection applicable to the Obligor thereof or is
not aged more than 180 days from its Invoice Date, (iii) in the case of a
Receivable that is not an Open Rebate Receivable, was not billed to the Obligor
thereof on a date more than 30 days after the Last Service Date, and (iv) in the
case of an Open Rebate Receivable, was not billed to the Obligor on a date more
than 30 days after the end of the fiscal quarter in which such Open Rebate
Receivable became due and payable.
(d) Each such Receivable is not due from any Governmental Entity.
(e) Neither the Borrower nor the related Provider has any guaranty of,
letter of credit providing credit support for, or collateral security for, such
Receivable, other than any such guaranty, letter of credit or collateral
security as has been assigned to the Lender, and any such guaranty, letter of
credit or collateral security is not subject to any Lien in favor of any other
Person.
(f) The Obligor with respect to each such Receivable is (i) not currently
the subject of any bankruptcy, insolvency or receivership proceeding, nor is it
unable to make payments on its obligations when due, (ii) located in the United
States of America, (iii) 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, third party administrators, rebate aggregators,
manufacturers or distributors of pharmaceutical products or any other similar
person or (y) an individual, (iv) not a subsidiary, parent or other Person that
is an Affiliate of any Provider, and (v) not the Obligor of any Receivables that
was a Defaulted Receivable in the past 12 Months.
(g) The financing of such Receivable hereunder is made in good faith and
without actual intent to hinder, delay or defraud present or future creditors of
the Borrower.
(h) The contract or other instrument obligating an Obligor to make payment
with respect to such Receivable (i) does not contain any provision prohibiting
the grant of a security interest in or the assignment of such payment obligation
to the related 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 the Obligor
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 plan participant at
the time the goods or services constituting the basis for such Receivable were
sold or performed.
(i) 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.
(j) 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/Amount
------- -----------------
any single AAA rated Obligor 15%
any single AA rated Obligor 10%
any single A rated Obligor 8%
any single BBB rated Obligor 5%
any single unrated Obligor $750,000
(k) Unless specifically verified and accepted by the Master Servicer or
Program Manager, no single Eligible Receivable that is not an Open Rebate
Receivable has an Expected Net Value greater than $2,000,000; provided that upon
consummation of the Centrus Acquisition, no single Eligible Receivable under the
Centrus contracts as of the date of the consummation of the Centrus Acquisition
that is not an Open Rebate Receivable shall have an Expected Net Value greater
than $5,000,000.
(l) 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.
