Exhibit 4.01
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SECOND AMENDED AND RESTATED
NOTE ISSUANCE AND SECURITY AGREEMENT
by and between
MEDICAL CAPITAL MANAGEMENT, INC.
and
ZIONS FIRST NATIONAL BANK,
as Trustee
Dated as of April 10, 2002
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Reconciliation and tie between Trust Indenture Act of 1939 and Second
Amended and Restated Note Issuance and Security Agreement dated as of April 10,
2002.
TRUST INDENTURE ACT SECTION NOTE AGREEMENT SECTION
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Section 310(a)(1) 5.02
Section 310(a)(2) 5.02
Section 310 (b) 5.02;5.03
Section 311 5.04
Section 312(a) 2.01(C)
Section 312(b) 5.05
Section 312(c) 5.05
Section 313(a) 5.06
Section 313(b) 5.06
Section 313(c) 10.03(B)
Section 313(d) 5.06
Section 314(a) 5.07;10.03(B)
Section 314(a)(4) 5.08
Section 314(c)(1) 10.04
Section 314(c)(2) 10.04
Section 314(d) 10.07
Section 314(e) 10.05
Section 315(a) 5.09(A)
Section 315(b) 7.05
Section 315(c) 5.09(A)
Section 315(d) 10.07
Section 315(e) 10.07
Section 316(a) 10.07
Section 316(b) 6.02;10(I)
Section 3.17(a)(1) 7.03(B)
Section 317(a)(2) 7.04
Section 317(b) 10.07
Section 318(a) 10.07
Section 318(c) 10.07
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NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Amended and Restated Note Issuance and Security Agreement.
Attention should also be directed to Section 318(c) of the Trust Indenture Act
of 1939, which provides that the provisions of Sections 310 to and including 317
of the Trust Indenture Act of 1939 are a part of and govern every qualified
indenture, whether or not physically contained therein.
(This Table of Contents is for convenience of reference only and is not
intended to define, limit or describe the purpose or intent of any provisions of
this Amended and Restated Note Agreement.)
ARTICLE I
Definitions....................................................................1
ARTICLE II
NOTES
Section 2.01. The Notes.......................................................8
Section 2.02. Registration, Transfer and Exchange of Notes...................12
Section 2.03. Registration, Transfer and Exchange of Beneficial
Interests in Notes............................................12
Section 2.04. Persons Deemed Owners..........................................14
Section 2.05. Redemption.....................................................14
Section 2.06. Book-Entry Notes...............................................16
Section 2.07. Notices to Clearing Agency.....................................17
Section 2.08. Definitive Notes...............................................17
ARTICLE III
SECURITY
Section 3.01. Grant of Security..............................................18
Section 3.02. Pledge to Secure Obligations...................................20
Section 3.03. Collateral Transfers and Other Liens...........................20
Section 3.04. Sale of Collateral.............................................20
Section 3.05. Responsibilities of Debtor.....................................21
Section 3.06. Continuing Security Interest...................................23
Section 3.07. Further Assurances.............................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties.................................24
Section 4.02. Replacement of Defective Collateral............................24
ARTICLE V
TRUSTEE; COMMUNICATIONS AND REPORTS; ACCOUNTS
Section 5.01. Certain Duties of Trustee......................................26
Section 5.02. Corporate Trustee Required; Eligibility; Conflicting
Interests.....................................................26
Section 5.03. Replacement of Trustee.........................................27
Section 5.04. Preferential Collection of Claims Against Debtor...............28
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Section 5.05. Communication by Noteholders with Other Noteholders............28
Section 5.06. Reports by Trustee to Noteholders..............................28
Section 5.07. Reports by Debtor..............................................28
Section 5.08. Statement as to Compliance.....................................29
Section 5.09. Performance by the Trustee.....................................29
Section 5.10. Indemnity and Expenses.........................................30
Section 5.11. Accounts; Payments on Notes....................................31
ARTICLE VI
SENIOR DEBT
Section 6.01. Senior Indebtedness............................................36
Section 6.02. Noteholders' Rights Not Impaired...............................36
Section 6.03. Acceptance by Noteholders......................................36
ARTICLE VII
DEFAULT
Section 7.01. Events of Default..............................................37
Section 7.02. Noteholder's Direction Upon Default............................38
Section 7.03. Remedies.......................................................39
Section 7.04. Trustee May File Proofs of Claim...............................41
Section 7.05. Notice of Defaults.............................................41
Section 7.06. Trustee May Enforce Claims Without Possession Of Notes.........42
Section 7.07. Limitation On Suits............................................42
ARTICLE VIII
TERMINATION OF nOTE AGREEMENT
Section 8.01. Deposit of Payment.............................................43
Section 8.02. Application of Funds...........................................43
Section 8.03. Reinstatement..................................................43
Section 8.04. Unclaimed Funds................................................44
ARTICLE IX
AMENDMENTS AND SUPPLEMENTAL NOTE AGREEMENTS
Section 9.01. General........................................................44
Section 9.02. Amendment Without Consent of Noteholders.......................44
Section 9.03. Amendment With Consent of Noteholders..........................45
Section 9.04. Senior Indebtedness............................................46
Section 9.05. Notice to Noteholders..........................................46
Section 9.06. Compliance With TIA............................................46
Section 9.07. Rights of Noteholders Not Impaired.............................46
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ARTICLE X
MISCELLANEOUS
Section 10.01. Governing Law..................................................46
Section 10.02. Waiver.........................................................46
Section 10.03. Notices........................................................47
Section 10.04. Certificate and Opinion as to Conditions Precedent.............48
Section 10.05. Statements Required in Certificate or Opinion..................48
Section 10.06. Severability...................................................48
Section 10.07. TIA............................................................48
Section 10.08. Nonliability of Directors; No General Obligation...............49
Section 10.09. Scope Of Debtor's Liability....................................49
Section 10.10. Assignment.....................................................49
Section 10.11. When the Debtor May Merge or Transfer Assets...................49
Section 10.12. Section References.............................................50
Exhibit A-1 Form of Eligible Receivable Acquisition Certificate
Exhibit A-2 Form of Non-Receivable Asset Acquisition Certificate
Exhibit A-3 Form of Collateral Replacement Certificate
Exhibit B Form of Sale of Collateral and Release of Lien Certificate
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SECOND AMENDED AND RESTATED
NOTE ISSUANCE AND SECURITY AGREEMENT
This SECOND AMENDED AND RESTATED NOTE ISSUANCE AND SECURITY AGREEMENT,
dated as of the 10th day of April, 2002 (the "Note Agreement"), is made by and
between MEDICAL CAPITAL MANAGEMENT, INC., a Delaware corporation (hereinafter
referred to as the "Debtor") and ZIONS FIRST NATIONAL BANK (the "Trustee"), a
national banking association duly organized, existing and authorized to accept
and execute trusts of the character herein set out under and by virtue of the
laws of the United States, with its principal office located in Salt Lake City,
Utah, as trustee for the benefit of the Noteholders, and amends and restates the
Amended and Restated Note Issuance and Security Agreement (the "Restated Note
Agreement") between the Debtor and the Trustee dated as of February 15, 2001.
WITNESSETH:
WHEREAS, the parties hereto desire to amend and restate the Restated Note
Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and for good and
valuable consideration, the adequacy and sufficiency of which is hereby
acknowledged, each party agrees, for the benefit of the other and for the equal
and ratable benefit of the Noteholders, to amend and restate the Restated Note
Agreement in its entirety to read as follows:
ARTICLE I
DEFINITIONS
When used herein, the following terms shall have the meanings set forth
below:
"ACCOUNTS" means the Concentration Account and the Note Payment Account.
"ADMINISTRATION AGREEMENT" means the Administrative Services Agreement
entered into as of August 4, 2000 between the Administrator and the Debtor
concerning the administrative services to be performed by the Administrator with
regard to the Receivables, as supplemented and amended.
"ADMINISTRATOR" means Medical Capital Corporation, Inc., a Nevada
Corporation, or any other successor selected by the Debtor and identified in
writing to the Trustee.
"AGGREGATE NOTE BALANCE" means, as of any date of determination, the total
unpaid principal and accrued and unpaid interest evidenced by all of the
Outstanding Notes.
"A.M. BEST" shall mean A.M. Best Company an insurance industry rating
company existing under the laws of the State of New Jersey.
"APPLICABLE NOTES" means (a) the Notes (Series I) in the case of an Event
of Default and (b) the Notes of each other series, in the case of an Event of
Default with respect to such series as provided in any supplemental note
agreement relating to the Notes of such series; but in no event shall the term
"Applicable Notes" include Notes of more than one series unless there is an
Event of Default with respect to such series.
"APPROVED PAYOR" means (a) any private medical insurance company which at
the time of purchase of any Receivable payable by such private medical insurance
company, the private medical insurance company has been assigned a long-term
debt rating, or a rated claims paying ability of "AA" or better by S&P, "AA3" or
better by Moody's, "A" or better by A.M. Best or Fitch, or the Administrator in
its determination, otherwise believes is financially suitable; (b) any Federal
or State government sponsored health care program; (c) large self insured
corporations (as determined by the Administrator in its discretion); and (d)
health maintenance organizations, in each case as identified in a certificate
signed by the Administrator and delivered to the Trustee.
"ASSETS" shall have the meaning set forth in Section 3.01 (b).
"BATCH" means a group of Receivables that were acquired on the same date
from a single Health Care Provider.
"BENEFICIAL OWNER" means, with respect to a Book-Entry Note, the Person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an Indirect Participant,
in accordance with the rules of such Clearing Agency).
"BOOK-ENTRY NOTES" means Notes in which beneficial interests are owned and
transferred through book entries made by a Clearing Agency as provided in
Section 2.06 hereof or through the facilities of the Trustee as provided in
Sections 2.02 and 2.03 hereof.
"BROKER/DEALER" means First Montauk Securities Corp., First Securities USA,
Inc., Hanmi Securities, Inc. and such other Persons as may be designated in
writing by the Debtor to the Trustee from time to time, provided that the number
of Broker/Dealers the Trustee shall be required to register as Noteholders under
this Note Agreement shall not exceed three at any one time.
"BUSINESS DAY" means each day of the year on which federally-chartered
banking institutions are not required or authorized to close in New York, New
York, and in the city in which the principal office of the Trustee is located.
"CLEARING AGENCY" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act and serving as clearing agency for
Book-Entry Notes. The Clearing Agency shall initially be The Depository Trust
Company and its successors, unless the Debtor shall designate an alternative
Clearing Agency by notice given to the Trustee.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with such Clearing
Agency.
"COLLATERAL" shall have the meaning set forth in Section 3.01(c).
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"CONCENTRATION ACCOUNT" means the account established and maintained
pursuant to Section 5.11(a) , including any subaccounts created by the Trustee
therein pursuant to this Note Agreement.
"CORPORATE TRUST OFFICE" means the Denver, Colorado office of the corporate
trust department of the Trustee, or such other office as may be set forth from
time to time in Section 10.03.
"DATE OF ISSUE" means, with respect to a Note, the date the Broker/Dealer
or other brokerage firm for which the Broker/Dealer acts as agent receives the
proceeds from the initial sale of all of the beneficial interests in the Note,
or, if later exchanged pursuant to Section 2.01(f), the date the Note or portion
thereof is exchanged, or, with respect to Book-Entry Notes registered in the
name of a Clearing Agency, the first day of the month in which the Note is
issued.
"DEBTOR" means Medical Capital Management, Inc., a Delaware corporation, or
its successors in interest.
"DEFINITIVE NOTES" means Notes in definitive, fully registered form as
provided in Section 2.08.
"XXXX & BRADSTREET" means a credit reporting agency associated with
"Moody's" existing under the laws of the State of New Jersey.
"ELIGIBLE ACCOUNT" means a trust account established with (a) a trust
company or depositary institution subject to regulations on fiduciary funds on
deposit substantially similar to 12 CFR Section 9.10 (b), or (b) a trust company
or depository institution the long-term unsecured debt obligations of which are
rated at least "A" by S&P and "A-1" by Moody's (unless rated by only one of S&P
and Moody's in which case such rating shall suffice).
"ELIGIBLE RECEIVABLE" means, as of the date that it is pledged to the
Trustee pursuant to this Note Agreement, any Receivable that:
(a) an Approved Payor is directly obligated to pay the Receivable,
which obligation is valid, binding, and enforceable against the Approved
Payor in accordance with its terms except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws (whether statutory, regulatory or decisional) now or hereafter
in effect relating to creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought, whether a proceeding
at law or in equity;
(b) is not subject to any dispute, offset, counterclaim or defense;
(c) is denominated and payable in U.S. dollars in the United States
and that is acquired by the Debtor pursuant to a Purchase Document;
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(d) constitutes an "account" as defined in the Uniform Commercial Code
as in effect in the jurisdiction in which the Debtor is required to perfect
a security interest therein;
(e) with regard to which each of the representations and warranties
set forth in Article IV is true and correct;
(f) the Approved Payor of which (other than a Receivable payable by
Medicare or Medicaid) has received written notice of the sale of the
Receivable to Debtor;
(g) with regard to which (i) the claim for payment has been submitted
to the Approved Payor not more than one hundred eighty (180) days prior to
the purchase thereof by the Debtor (if the Receivable is part of the first
Batch purchased from a Health Care Provider);
(h) will be subject to a first priority perfected lien held by the
Trustee pursuant to this Note Agreement upon its purchase with funds from
the Concentration Account and the filing of any applicable financing
statement pursuant to the UCC;
(i) the claim for payment has been acknowledged by the Approved Payor;
and the Approved Payor has received written notice that payments with
respect thereto are to be sent solely to a Lock Box Account; and
(j) is set forth in a certificate delivered to the Trustee by the
Debtor in the form attached as Exhibit A-1 hereto.
"EVENT OF DEFAULT" (a) with respect to the Notes (Series I), shall have the
meaning set forth in Section 7.01 (a) through (j) and (b) with respect to each
other series of Notes shall have the meaning set forth in the supplemental note
agreement creating such series.
"FITCH" shall mean Fitch, Inc., a corporation organized and existing under
the laws of the State of Delaware, its successors.
"HEALTH CARE PROVIDER" means any provider of medical, hospital or dental
services, or durable medical equipment, and whose financial condition meets the
criteria set forth by the Debtor. The criteria set by the Debtor shall be based
on ratings of the provider published by Xxxx & Bradstreet and other rating
agencies, as well as the underwriting criteria for such providers established by
the Debtor from time to time.
"INDIRECT PARTICIPANT" shall mean Persons such as securities brokers and
dealers, banks and trust companies that clear or maintain a custodial
relationship with a participant of DTC, either directly or indirectly.
"INTEREST PAYMENT DATE" means, with respect to an outstanding Note, the
tenth day of each calendar month commencing with the tenth day of the month
following the month in which the Date of Issue occurs and continuing on each
succeeding tenth day of each month until the Note has been repaid in full, or if
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the tenth day of a month is not a Business Day, then the next following Business
Day.
"LOCK BOX ACCOUNT" means an account established by the Debtor, or the
Servicer on behalf of the Debtor, with a bank chartered by the United States or
any state therein for the purpose of collecting the proceeds of Receivables for
the benefit of the Trustee as set forth in the applicable Purchase Agreement and
as to which a copy of the written executed agreement pursuant to which the
account has been established has been provided to the Trustee.
"MATURITY DATE" with respect to a Note of any class shall have the meaning
set forth in Section 2.01(f).
"MOODY'S" means Xxxxx'x Investors Services, Inc., and its successors.
"NET COLLECTIBLE AMOUNT" means, with respect to a Receivable, the net
amount that is expected to be collected on a medical claim by the related Health
Care Provider from a third party payor, which shall be calculated by Servicer
based on the claim information gathered from the such Health Care Provider in
accordance with the applicable Purchase Documents and the Servicer's customary
methods.
"NOTE" is any one of the different classes or series of promissory notes
issued by the Debtor in book entry form without coupons pursuant to the terms of
this Note Agreement.
"NOTE PAYMENT ACCOUNT" shall mean the account established and maintained
pursuant to Section 5.11(c), including any subaccounts created by the Trustee
therein pursuant to this Note Agreement.
"NOTE (SERIES I)" is any one of the different classes of promissory notes
issued by the Debtor pursuant to Section 2.01(d).
"NOTE AGREEMENT" means this Second Amended and Restated Note Issuance and
Security Agreement dated as of April 10, 2002, between the Trustee and Debtor,
as amended, supplemented or otherwise modified from time to time.
"NOTE REGISTER" has the meaning set forth in Section 2.02(a).
"NOTEHOLDER" means the Person in whose name a Note is registered on the
Note Register.
"OBLIGATIONS" has the meaning set forth in Section 3.02.
"OUTSTANDING" shall mean, on the date of determination (i) with respect to
a Note, a Note which has been issued pursuant to this Note Agreement which on
such date remains unpaid as to principal or interest, unless provision has been
made for such payment pursuant to Section 2.05, excluding Notes which have been
replaced pursuant to this Note Agreement and (ii) with respect to any other
Obligation, the unpaid amount of the Obligation.
"PERMITTED INVESTMENTS" means any of the following:
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(a) direct obligations of the United States of America;
(b) obligations, the payment of the principal of and interest on
which, in the opinion of the Attorney General of the United States, is
unconditionally guaranteed by the United States;
(c) interest-bearing time or demand deposits, certificates of deposit
or other similar banking arrangements, investment agreements, repurchase
agreements, or guaranteed investment contracts, with a maturity of twelve
(12) months or less with any bank, trust company, national banking
association or other depository institution, including those of the Trustee
(and, with respect to, investment agreements or guaranteed investment
contracts, any corporation), provided that, at the time of deposit or
purchase such depository institution has commercial paper which is rated
"A-1" by S&P, "P-1" by Moody's or "F-1" by Fitch;
(d) interest-bearing time or demand deposits, certificates of deposit
or other similar banking arrangements, investment agreements, repurchase
agreements, or guaranteed investment contracts, with a maturity of twenty
four (24) months or less, but more than twelve (12) months, with any bank,
trust company, national banking association or other depository
institution, including those of the Trustee and any of its affiliates (and,
with respect to , investment agreements or guaranteed investment contracts,
any corporation), provided that, at the time of deposit or purchase such
depository institution has senior debt rated "A" or higher by S&P, "P-1" or
higher by Moody's or "A" or higher by Fitch, and, if commercial paper is
outstanding, commercial paper which is rated "A-1" by S&P, "P-1" by Moody's
or "F-1" by Fitch;
(e) interest-bearing time or demand deposits, certificates of deposit
or other similar banking arrangements, investment agreements, repurchase
agreements, or guaranteed investment contracts, with a maturity of more
than twenty four (24) months with any bank, trust company, national banking
association or other depository institution, including those of the Trustee
and any of its affiliates (and, with respect to , investment agreements or
guaranteed investment contracts, any corporation), provided that, at the
time of deposit or purchase such depository institution has senior debt
rated "AA" or higher by S&P, "Aa2" or higher by Moody's or "AA" or higher
by Fitch and, if commercial paper is outstanding, commercial paper which is
rated "A-1" by S&P, "Aa2" by Moody's or "F-1" by Fitch;
(f) commercial paper, including that of the Trustee and any of its
affiliates, which is rated no less than "A-1" by S&P, "P-1" by Moody's or
"F-1" by Fitch, and which matures not more than two hundred seventy (270)
days after the date of purchase;
(g) bonds, debentures, notes or other evidences of indebtedness issued
or guaranteed by any of the following agencies: Federal Farm Credit Banks,
Federal Home Loan Mortgage Corporation; Governmental National Mortgage
Association; Export-Import Bank of the United States; Federal National
Mortgage Association; Student Loan Marketing Association; Farmers Home
Administration; Federal Home Loan Banks; or any agency or instrumentality
of the United States of America which shall be established for the purposes
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of acquiring the obligations of any of the foregoing or otherwise providing
financing therefor;
(h) a money market mutual fund investing solely in the above listed
assets; or
(i) the AIM Short-Term Investments Trust Treasury Portfolio (Private
Class) Money Market Fund, which is rated "AAA" by S&P, Moody's and Fitch
and invests in U.S. Treasury bills, notes and direct obligations of the
U.S. Treasury and in repurchase agreements fully collateralized by such
obligations.
"PERSON" or "PERSONS" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PURCHASE AGREEMENT" means each fully executed agreement between a Health
Care Provider and the Debtor or the Administrator in effect as of the date of
determination pursuant to which Receivables are acquired from such Health Care
Provider.
"PURCHASE DOCUMENTS" means with respect to each Health Care Provider, (a)
with regard to the initial purchase of Receivables from such Health Care
Provider, the Purchase Agreement executed by the Debtor (or the Administrator)
and such Health Care Provider, including Exhibit A thereto listing the
Receivables to be purchased, along with copies of all security documentation
executed in connection therewith, including all: UCC Financing Statements,
personal guarantees, bills of sale and powers of attorney and (b) with regard to
each subsequent purchase of Receivables from such Health Care Provider, a
supplement to the Purchase Agreement listing the additional Receivables to be
purchased from such Health Care Provider, along with all additional security
documentation executed in connection therewith, including any amendments to
previously delivered security documentation.
"RECEIVABLE" means any right to payment or reimbursement from an Approved
Payor or Health Care Provider, whether constituting an account, chattel paper,
instrument or a general intangible, arising from or in connection with the
provision of medical, hospital, or dental services by a Health Care Provider or
durable medical equipment to a Health Care Provider that was (a) acquired or
funded by the Debtor from amounts on deposit in the Concentration Account or
otherwise accounted for in the Concentration Account or otherwise constituting a
part of the Collateral or (b) substituted or exchanged for Receivables pursuant
to Article IV, but does not include Receivables released from the lien of this
Note Agreement.
"RECORD DATE" means, with respect to a Note, the close of business on the
last day of the month immediately preceding the month in which a payment of
interest or principal, or both, is due and payable on a Note.
"REDEMPTION PRICE" means the unpaid principal balance, plus all accrued and
unpaid interest thereon to (but excluding) the date set for redemption, of an
Outstanding Note (or part thereof) selected for redemption, all as pursuant to
Section 2.05. If a Note is issued with original issue discount, the amount
payable upon full or partial redemption will be the applicable portion of the
amortized face amount on the redemption date. The amortized face amount of such
an original issue discount Note will be equal to the issue price plus that
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portion of the difference between the issue price and the original principal
amount of the Note that would have accrued at the yield to the maturity of the
Note, prorated to (but excluding) the redemption date. The amortized face amount
of an original issue discount Note will never be greater than its original
principal amount.
"REVENUE" or "REVENUES" means all recoveries of principal, dividends,
interest, payments, proceeds, charges and other income or amounts received by
the Trustee or the Debtor from or on account of any of the Collateral (excluding
amounts described in Sections 5.11(a)(ii)(B)).
"S&P" means Standard & Poor's Ratings Group, a Division of The XxXxxx-Xxxx
Companies, Inc., and its successors.
"SENIOR INDEBTEDNESS" has the meaning set forth in Article VI.
"SERVICER" means Medical Tracking Services, Inc. a Nevada Corporation,
whose rights and obligations are more fully set forth in the Servicing
Agreement.
"SERVICING AGREEMENT" means the Master Servicing Agreement dated as of
August 4, 2000 by and between the Debtor and the Servicer, and acknowledged by
the Trustee, as the same may be amended, supplemented or otherwise modified from
time to time.
"TIA" means the Trust Indenture Act of 1939, as amended, as in effect on
the date of this Note Agreement.
"TRANSACTION DOCUMENTS" means the Notes, this Note Agreement, the Servicing
Agreement, the agreements pursuant to which the Lock Box accounts have been
established and are administered, the Purchase Documents and any other documents
executed in connection therewith.
"TRUSTEE" means Zions First National Bank, a national banking association,
or its successors in interest.
"UCC" means, with respect to each separate item of Collateral, the Uniform
Commercial Code of the State the law of which governs the creation and
perfection of the Trustee's security interest in the item of Collateral or the
Debtor's security interest in the item of Collateral, as the case may be.
ARTICLE II
NOTES
SECTION 2.01. THE NOTES.
(a) ISSUABLE IN SERIES; GENERAL TITLE. The Notes may be issued in
series as from time to time shall be authorized by the Debtor. With respect
to the Notes of any particular series, the Debtor may incorporate in or add
to the general title of such Notes any words, letters or figures designed
to distinguish that series. Each series shall be designated sequentially
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with Roman numerals beginning with Series I and each class shall contain a
sequential alphabetic designation beginning with Class A.
(b) TERMS OF PARTICULAR SERIES. The Notes of each series (other than
the Notes (Series I) as to which specific provision is made in Section
2.01(d) and (e)) shall be payable at such place or places, shall mature on
such date or dates, shall bear interest at such rate or rates payable in
such installments and on such dates and at such place or places and to
Noteholders registered as such, and may be redeemable at such price or
prices and upon such terms, all as shall be provided for in the
supplemental note agreement creating that series. The Debtor may at the
time of the creation of any series of Notes or at any time thereafter make,
and the Notes of such series may contain, provision for:
(i) the redemption of all, or of all or any part, of the Notes of
such series prior to maturity;
(ii) a sinking, amortizations improvement or other analogous
fund;
(iii) limiting the aggregate principal amount of the Notes of
such series;
(iv) the exchange or conversion of the Notes of that series, at
the option of the Noteholders thereof, for or into new Notes of a
different series and/or shares of stock of the Debtor and/or other
securities;
(v) exchanging Notes of that series, at the option of the
Noteholders thereof, for other Notes of the same series of the same
aggregate principal amount of a different authorized kind and/or
authorized denomination or denominations; and/or
(vi) extension of the maturity date for the Notes at the option
of the Noteholder.
(c) FORM AND DENOMINATIONS. The form of the Notes of each series
(except the Notes (Series I)) may be established by the supplemental note
agreement creating such series. The Notes (Series I) shall be issued only
as Book-Entry Notes unless otherwise agreed by the Debtor and the Trustee
pursuant to a supplemental Note Agreement. The Notes of each series shall
be distinguished from the Notes of other series in such manner as may be
prescribed in the supplemental note agreement creating such series. The
Notes of each series shall be issued in such denominations as shall be
provided in the supplemental note agreement creating such series or as the
Debtor may determine, except that the Notes (Series I) shall be issued in
the denominations provided for in Section 2.01(d) below.
(d) NOTES (SERIES I). There shall be an initial series of Notes
entitled Secured Notes (Series I). The Notes (Series I) shall be issued as
various classes of Notes substantially in the forms set forth in Exhibit A
hereto. The Notes (Series I) shall be issued in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof. Each Note
(Series I) shall be payable and have such other terms and provisions as
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provided in Exhibit A and in this Note Agreement. The Notes (Series I)
issued with a Clearing Agency as the Noteholder shall be issued with a
Maturity Date as follows:
CLASS MATURITY DATE
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Class A The 10th day of the month occurring 12 months from the month
in which the Class A Note is issued;
Class B The 10th day of the month occurring 24 months from the month
in which the Class B Note is issued;
Class C The 10th day of the month occurring 36 months from the month
in which the Class C Note is issued; and
Class D The 10th day of the month occurring 48 months from the month
in which the Class D Note is issued.
The Notes (Series I) issued without a Clearing Agency as the Noteholder
shall be issued with a Maturity Date as follows:
MATURITY DATE FROM
CLASS DATE OF ISSUANCE
----- ----------------
Class A One year
Class B Two years
Class C Three years
Class D Four years
(e) GENERAL TERMS. Notes will bear different Maturity Dates based on
the Date of Issue and its class or series designation, but in no event may
a Note have a term of less than one (1) year. Interest rates may vary as
among the series and classes of Notes, as determined by the Debtor in its
sole discretion. Notes in the same class of a series may be issued with
different fixed rates of interest as determined by the Debtor in its sole
discretion. Following execution and delivery of this Note Agreement, the
Trustee shall register the name and address of the Noteholder, and the
terms of the related Note, in the Note Register only after the Trustee has
been notified in writing by the Debtor that the Debtor has received and
forwarded to the Trustee the Note issuance proceeds equal to the aggregate
issue price of the Note plus, in the case of Notes registered in the name
of a Clearing Agency, accrued interest on such Note from the first day of
the month in which the Note is issued to but not including the date in the
month on which the Note is issued. The Notes bear interest at their
respective stated fixed rates of interest per annum. The interest on a Note
will begin to accrue on its Date of Issue; provided, that Notes registered
in the name of a Clearing Agency will begin to accrue interest from the
first day of the month in which the Note is issued. The interest accrued on
a Note in a calendar month will be paid on the next following Interest
Payment Date in accordance with Section 5.11(f) prior to the maturity date
of the Note to the Noteholders as of each related Record Date. Interest on
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each Note will be calculated on the basis of a three hundred sixty (360)
day year consisting of twelve (12) - thirty (30) day months. If, in
accordance with this Note Agreement, the Trustee holds in the Note Payment
Account on a date set for redemption or the stated maturity of one or more
Notes, money or securities, if permitted hereunder, sufficient to pay in
full the Notes to be redeemed on that date, then on and after that date
such Notes shall cease to be outstanding and interest, if any, on such
Notes shall cease to accrue; provided, if such Notes are to be redeemed,
notice of such redemption has been duly given pursuant to this Note
Agreement or provision therefor satisfactory to the Trustee has been made.
(f) PAYMENTS AT MATURITY. Principal on a Note is due and payable in
full on its original stated maturity date (the "Maturity Date") unless,
between the tenth Business Day and fifth Business day prior to the Maturity
Date of the Note, the Debtor has given written direction to the Trustee to
exchange the Note, and the Trustee has received written notification from
the Debtor that the Noteholder intends to exchange all or a portion of the
Note for a new Note having, in the case of Notes issued on or prior to
February 14, 2002, terms and conditions identical to the Note exchanged
and, in the case of Notes issued after February 14, 2002 with a Clearing
Agency as the Noteholder, having terms and conditions identical to the Note
exchanged except for the interest rate on the Notes and a Maturity Date
determined as set forth in Section 2.01(d). If, between the tenth Business
Day and the fifth Business Day prior to the Maturity Date of a Note, the
Trustee has received the notification and written direction referred to in
the preceding sentence, or receives notification and written direction that
only a portion of the principal amount of the Note will be exchanged, the
Trustee shall exchange the Noteholder's Note (or portion thereof set forth
in the notice and written direction) for a new Note having, in the case of
Notes issued on or prior to February 14, 2002, terms and conditions
identical to the Note exchanged and, in the case of Notes issued after
February 14, 2002 with a Clearing Agency as the Noteholder, having terms
and conditions identical to the Note exchanged except with respect to
changes necessary to reflect any payment of a portion of principal on the
Maturity Date, any change in the interest rate for Notes and having a
Maturity Date determined as set forth in Section 2.01(d) without further
action on the part of the Noteholder; provided, however, that Notes shall
only be exchanged pursuant to this sub-section (f) if the Debtor furnishes
a then current prospectus containing audited financial statements as
required by the rules and regulations of the U.S. Securities and Exchange
Commission, as then in effect, and a state blue sky qualification, or valid
exemption therefrom, is in effect with respect to the state in which the
applicable Beneficial Owner(s) of the Note resides, and the Debtor
furnishes a certificate to the Trustee to the forgoing effect or represents
the same in the notice referred to above. If such current prospectus is not
available or such blue sky qualification or exemption is not effective on
the Maturity Date, the maturing Note shall be paid on the Maturity Date.
Any notice received by the Trustee modifying a previous notice received by
the Trustee with respect to a Note under this Section 2.01(f) shall
supersede and restate the previous notice in its entirety and shall be
controlling if received by the Trustee within the time period specified in
this Section 2.01(f). If a Noteholder wishes to renew a maturing Note as
provided above, written notice from the Noteholder or the Beneficial Owner
of the Note must be given to the Debtor at least 90 calendar days but no
more than 120 calendar days prior to the Maturity Date. If the Debtor
determines, at its option, not to renew such Note then the Debtor shall
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give written notice to such effect to such requesting Noteholder or
Beneficial Owner not less than 20 days nor more than 60 days before the
Maturity Date in accordance with Section 2.05.
(g) DEPOSIT OF NOTE PROCEEDS. With respect to the gross proceeds from
initial sale of beneficial interests in a Note, the Debtor agrees to cause
each Broker/Dealer or other brokerage firm for which the Broker/Dealer acts
as agent selling for such beneficial interest to forward to the Debtor the
gross proceeds promptly upon receipt by the Broker/Dealer or other
brokerage firm. The Debtor shall remit the gross proceeds from the initial
sale of each such beneficial interest by wire transfer to the Trustee for
deposit into the Concentration Account not later than the Business Day
following the date such proceeds are received by the Debtor and constitute
cleared funds in the Debtor's accounts. In connection with the wire
transfer to the Trustee, the Debtor shall provide to the Trustee a written
statement setting forth with respect to each class of Note for which gross
proceeds are being wired to the Trustee: (i) the name of the Person that
will be the Noteholder and their Clearing Agency Participant number, if
applicable, and (ii) the class, principal balance, interest rate, Date of
Issue, Maturity Date, and amount of gross proceeds received by class by the
Debtor with respect to the Note. Upon receipt of such gross proceeds, the
Trustee shall deposit such proceeds into the Concentration Account.
SECTION 2.02. REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.
(a) The Trustee shall cause to be kept at its Corporate Trust Office a
Note Register (the "Note Register") in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the
recordation of Notes and of transfers, pledges and exchanges of Notes as
herein provided. Each Note shall be held, transferred, and exchanged
either, at the option of the Debtor with notice to the Trustee, through the
book-entry facilities of the Trustee in accordance with its customary
procedures or in accordance with the procedures specified in Section 2.06;
provided, that if no election is made, each Note shall be transferred
through the provisions of Section 2.06.
(b) At the option of the Noteholders, Notes may be transferred to
another Broker/Dealer or Clearing Agency Participant or exchanged for other
Notes in the same series and of the same class in authorized denominations
evidencing the same aggregate principal amount, interest rate and maturity
(subject to Section 2.01(f)) in accordance with the customary procedures of
the Trustee or the Clearing Agency with respect to the transfer or exchange
of book-entry obligations. All Notes canceled by the Trustee in connection
with a transfer or exchange of Notes shall not be entitled to payment of
principal and shall have no further legal rights or effect.
SECTION 2.03. REGISTRATION, TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS
IN NOTES.
(a) By its acceptance of Notes whether upon original issue or upon
transfer or assignment thereof, except in the case of Notes registered in
the name of a Clearing Agency as provided in Section 2.06, each
Broker/Dealer accepts and agrees to be bound by the following provisions.
Except as provided below and except in the case of the Notes registered in
the name of a Clearing Agency as provided in Section 2.06, the Notes issued
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to a Broker/Dealer shall at all times remain registered in the name of that
Broker/Dealer or its nominee and at all times:
(i) registration of the Notes may not be transferred by the
Trustee except to another Broker/Dealer;
(ii) the Broker/Dealer and any brokerage firm for which the
Broker/Dealer acts as agent with respect to the Notes shall maintain
book-entry records with respect to the holders of beneficial interests
in such Notes and with respect to ownership and transfers of such
interests;
(iii) ownership and transfers of registration and exchanges of
the Notes on the books of the Broker/Dealer shall be governed by
applicable rules and procedures established by the Broker/Dealer;
(iv) the Broker/Dealer may collect its usual and customary fees,
charges and expenses with respect to the registration of ownership,
transfer, and exchange of interests in the Notes;
(v) the Trustee shall deal with the Broker/Dealer as a
representative of the holders of beneficial interests in its Notes for
purposes of exercising the rights of Noteholders under this Note
Agreement, and requests or directions from, or votes of, the
Noteholder with respect to any matter shall not be deemed inconsistent
if made with respect to (or in separate proportions corresponding to)
different holders of beneficial interests in the Notes.
(vi) the Trustee may rely and shall be fully protected in relying
upon information requested by the Trustee and furnished by the
Broker/Dealer, with respect to its holders of beneficial interests in
a Note and furnished by a brokerage firm for which it acts as agent
with respect to the Note with respect to Persons shown on the books of
such brokerage firms as holders of beneficial interests in the Note.
(b) All transfers by a Broker/Dealer of beneficial interests in a Note
shall be made in accordance with the procedures established by the
Broker/Dealer or other brokerage firm representing the holders of
beneficial interests in the Note, as applicable. Each Broker/Dealer shall
only transfer beneficial interests in a Note of the holders thereof that it
represents or of brokerage firms for which it acts as agent with respect
the Notes in accordance with the Broker/Dealer's customary procedures.
(c) The Trustee shall not have any duty to monitor, maintain records
concerning (or determine compliance with any of the restrictions on
transfer applicable to) holders of beneficial interests in a Note. The
Trustee shall not have any liability for the accuracy of the records of the
Broker/Dealers or the brokerage firms for which they act as agents, or any
actions or omissions of such the Broker/Dealers or the brokerage firms.
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SECTION 2.04. PERSONS DEEMED OWNERS. Prior to notice to the Trustee for
registration of the transfer of a Note, the Trustee and any agent of the Trustee
may treat the Person in whose name any Note is registered in the Note Register
as the owner of such Note for the purpose of receiving payments and for all
other purposes whatsoever, and none of the Trustee, nor any agent of the
Trustee, shall be affected by notice to the contrary. Brokerage firms for which
a Noteholder acts as agent and holders of beneficial interests in a Note
represented by the Noteholder or the brokerage firm shall have no rights under
this Note Agreement with respect to such Notes. The rights of Beneficial Owners
of a Note shall be limited to those established by law and agreements between
such Beneficial Owners and the Broker/Dealers, Clearing Agencies or Clearing
Agency Participants, as the case may be, that are the Noteholders of record with
respect to such Beneficial Owners' Notes.
SECTION 2.05. REDEMPTION.
(a) The Debtor, at its option, at any time may redeem one or more of
the Outstanding Notes in whole or in part. If the Debtor elects to redeem
all or part of any Note, it shall notify the Trustee in writing of the
redemption date and the principal amount of Notes to be redeemed. The
Debtor shall give the notice to the Trustee provided for in this Section
2.05 in the case of any redemption of the Notes, at least 25 days but not
more than 65 days before the redemption date unless a shorter notice shall
be satisfactory to the Trustee.
(b) If less than all the Notes are to be redeemed, (i) the Debtor
shall designate in writing to the Trustee the Notes or portions thereof to
be redeemed or (ii) if the Debtor does not so designate or such method is
prohibited by the rules of any securities exchange or quotation system on
which the Notes are then listed or quoted, the Trustee shall select the
Notes to be redeemed pro rata or by lot among classes of Notes and by lot
within each class. The Debtor or the Trustee shall make the selection at
least 20 days, but not more than 60 days, before the redemption date from
Outstanding Notes not previously called for redemption. The Debtor or the
Trustee may select for redemption Notes or portions of the principal amount
of Notes that have denominations of $5,000 or larger but only in integral
multiples of $1,000 of initial principal amounts. If the Trustee designates
Notes or portions thereof for redemption, the Trustee shall notify the
Debtor promptly of the Notes or portions thereof to be redeemed.
(c) At least 20 days but not more than 60 days before a redemption
date, the Trustee shall mail a notice of redemption by first-class mail,
postage prepaid, to each Noteholder of Notes (or portion thereof) to be
redeemed. The notice shall identify the Notes to be redeemed and shall
state:
(i) the redemption date;
(ii) the Redemption Price;
(iii) the name and address of the Trustee as paying agent;
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(iv) if fewer than all the Outstanding Notes are to be redeemed,
the certificate number and principal amounts of the particular Notes
to be redeemed; and
(v) that interest, if any, on Notes (or portions thereof) called
for redemption will cease to accrue on and after the redemption date.
(d) The notice, if mailed in the manner herein provided, shall be
conclusively presumed to have been duly given, whether or not the
Noteholder receives such notice. In any case, failure to give such notice
by mail or any defect in the notice to the Noteholder of any Note
designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Note. At the
Debtor's request, the Trustee shall give the notice of redemption in the
Debtor's name. All redemption notices shall be at the Debtor's expense.
(e) Once notice of redemption is given pursuant to this Section 2.05,
the Notes or portion of the Notes called for redemption become due and
payable on the redemption date and at the Redemption Price. Upon the
redemption date, such Notes shall be paid at the Redemption Price stated in
the notice.
(f) Prior to 11:00 a.m., Mountain Time, on one Business Day prior to
the redemption date, the Debtor shall deposit with the Trustee into the
Note Payment Account immediately available funds sufficient to pay the
Redemption Price of all Notes or portion of the Notes to be redeemed on
that date other than Notes or portions of Notes called for redemption which
prior thereto have been delivered by the Debtor to the Trustee for
cancellation, and on or after the redemption date (unless the Debtor shall
default in the payment of the Notes at the Redemption Price), interest, if
any, on the Notes or portion of Notes called for redemption shall cease to
accrue and, except as provided in Section 8.02 below, to be entitled to any
benefit or security under this Note Agreement, and the Noteholders thereof
shall have no right in respect of such Notes (or portion thereof) except
the right to receive the Redemption Price thereof. The Trustee shall as
promptly as practicable return to the Debtor from amounts on deposit in the
Note Payment Account all funds so deposited by the Debtor that are not
required to be paid to Noteholders as the Redemption Price.
(g) Upon partial redemption of a Note, the Trustee shall make the
appropriate entries on the Note Register to evidence such partial
redemption and a new authorized denomination equal in principal amount to
the unredeemed portion of the Note.
(h) Pursuant to this Note Agreement, any amounts held under this Note
Agreement which are available to redeem Notes may instead be used by the
Trustee at the direction of the Debtor to purchase Outstanding Notes at the
same times and subject to the same conditions (except as to price) as apply
to the redemption of Notes. Any Notes purchased shall be retired by the
Trustee and shall no longer be deemed Outstanding hereunder.
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SECTION 2.06. Book-Entry Notes.
Unless otherwise provided in Sections 2.02 and 2.03 and in any related
supplement with respect to a series of Notes, upon original issuance, each
series of Notes shall be issued in the form of typewritten Notes representing
the Book-Entry Notes to be delivered to the depository (or to be held on behalf
of the Clearing Agency by the Trustee) specified in such supplement (which shall
be the Clearing Agency), by or on behalf of such series.
Unless otherwise provided in the related supplement, the Notes of each
series initially shall be registered in the Note Register in the name of the
nominee of the Clearing Agency for such Book-Entry Notes and shall be delivered
to the Trustee or, pursuant to such Clearing Agency's instructions, held by the
Trustee's agent as custodian for the Clearing Agency.
Unless and until Definitive Notes are issued under the limited
circumstances described in Section 2.08, no Beneficial Owner shall be entitled
to receive a Definitive Note representing such Beneficial Owner's interest in
such Note. Unless and until Definitive Notes have been issued to the Beneficial
Owners pursuant to Section 2.08:
(a) the provisions of this Section 2.06 shall be in full force and
effect with respect to each such series;
(b) the Trustee shall be entitled to deal with the Clearing Agency and
the Clearing Agency Participants for all purposes of this Note Agreement
and any related supplement (including the payment of principal of and
interest on the Notes of each such series) as the authorized
representatives of the Beneficial Owners;
(c) to the extent that the provisions of this Section 2.06 conflict
with any other provisions of this Note Agreement, the provisions of this
Section 2.06 shall control with respect to each such series;
(d) the rights of Beneficial Owners of each such series shall be
exercised only through the Clearing Agency and the applicable Clearing
Agency Participants and shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the depository agreement
applicable to a series, unless and until Definitive Notes of such series
are issued pursuant to Section 2.08, the initial Clearing Agency shall make
book-entry transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the Notes to such
Clearing Agency Participants; and
(e) whenever this Note Agreement requires or permits actions to be
taken based upon instructions or directions of the Noteholders evidencing a
specified percentage of the Outstanding Notes, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has received
instructions to such effect from the Beneficial Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Trustee.
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SECTION 2.07. Notices to Clearing Agency.
Unless and until Definitive Notes shall have been issued to Beneficial
Owners pursuant to Section 2.08, whenever a notice or other communication to the
Noteholders is required under this Note Agreement, the Trustee shall give such
notice or communication to the Clearing Agency, as applicable, for distribution
to Beneficial Owners and shall have no obligation to distribute such notice or
other communication directly to the Beneficial Owners.
SECTION 2.08. Definitive Notes.
(a) If:
(i) (A) the Debtor advises the Trustee in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities as Clearing Agency with respect to the Book-Entry
Notes of a given series and (B) the Debtor is unable to locate and
reach an agreement on satisfactory terms with a qualified successor;
(ii) the Debtor, at its option, advises the Trustee in writing
that it elects to terminate the book-entry system through the Clearing
Agency with respect to such series; or
(iii) after the occurrence of an Event of Default, Beneficial
Owners aggregating a majority of the Outstanding Notes of such series
advise the Trustee and the applicable Clearing Agency through the
applicable Clearing Agency Participants in writing that the
continuation of a book-entry system is no longer in the best interests
of the Beneficial Owners of such series,
then, unless the Debtor and, with respect to clause (iii) above only, the
affected Beneficial Owners elect to utilize the book-entry facilities of the
Trustee as provided in Section 2.02 and 2.03 hereof, the Trustee shall notify
all Beneficial Owners of such series of the occurrence of such event and of the
availability of Definitive Notes to Beneficial Owners of such series requesting
the same. Upon surrender to the Trustee of the Notes of such series accompanied
by registration instructions from the applicable Clearing Agency, the Debtor
shall execute, and the Trustee shall authenticate and deliver, Definitive Notes
of such series and shall recognize the registered holders of such Definitive
Notes as Noteholders under this Note Agreement. Neither the Debtor nor the
Trustee shall be liable for any delay in delivery of such instructions, and the
Debtor and the Trustee may conclusively rely on, and shall be protected in
relying on, such instructions.
(b) Upon the issuance of Definitive Notes of any series as provided in
Section 2.08(a), all references herein to obligations imposed upon or to be
performed by the applicable Clearing Agency shall be deemed to be imposed
upon and performed by the Trustee to the extent applicable with respect to
such Definitive Notes, and the Trustee shall recognize the registered
holders of the Definitive Notes of such series as Noteholders of such
series hereunder. Definitive Notes will be transferable and exchangeable at
the offices of the Trustee.
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ARTICLE III
SECURITY
SECTION 3.01. GRANT OF SECURITY.
(a) The Debtor, to secure the obligations described in Section 3.02
below, hereby does grant, convey, pledge, transfer, assign and deliver to
the Trustee for the equal and proportionate benefit and security of all
present and future registered Noteholders a first and prior security
interest in, all of the Debtor's right, title and interest in and to the
following, whether now or hereafter existing and/or arising or acquired:
(i) All Receivables, whether eligible or ineligible, that are
identified on a certificate in the form of Exhibit A-1 hereto
delivered to the Trustee and Servicer in connection with (A) the
disbursement of funds from the Concentration Account by the Trustee at
the direction of Debtor to purchase the Receivables identified on such
certificate or (B) the replacement of Receivables that are not
Eligible Receivables pursuant to Section 4.02;
(ii) All collections in respect of such Receivables and all funds
as may be held by the Trustee or Servicer from time to time in the
Accounts together with all certificates and instruments, if any, from
time to time evidencing such Accounts, and funds on deposit and all
investments made with such funds, all claims thereunder or in
connection therewith, and interest, dividends, moneys, instruments,
securities and other property from time to time received, receivable
or otherwise distributed in respect of any or all of the foregoing;
(iii) All moneys, cash, credits, contract rights, and other
obligations of any kind now or hereafter existing and/or arising out
of or in connection with the Receivables and all rights now or
hereafter existing in and to all agreements and contracts securing or
otherwise relating to any such Receivables;
(iv) The rights of the Debtor (but not its obligations) in, to
and under the Purchase Documents including, without limitation, the
rights of the Debtor (A) to enforce the Purchase Documents and the
agreements pursuant to which the Lock Box Accounts are established and
maintained against the respective Health Care Providers and the
obligations thereunder and (B) to cause the Health Care Providers to
repurchase Receivables purchased under the respective Purchase
Document as to which there has occurred a breach of representation,
warranty or covenant in accordance with the provisions of the Purchase
Documents;
(v) All of the Debtor's rights, (but not its obligations) in, to
and under the Servicing Agreement, including any rights (if any) of
Debtor in and to Servicer's software programs and billing systems, if
any;
(vi) The Accounts;
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(vii) All products and proceeds of any and all of the foregoing
and, to the extent not otherwise included, all payments under
insurance (whether or not the Debtor is the loss payee thereof), or
any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing; and
(viii) Subject to Section 3.01(b) below, any and all other
property, rights and interests of every kind or description that from
time to time hereafter is granted, conveyed, pledged, transferred,
assigned or delivered to the Trustee as additional security hereunder.
(b) The Debtor, to secure the obligations described in Section 3.02
below, hereby does grant, convey, pledge, transfer, assign and deliver to
the Trustee for the equal and proportionate benefit and security of all
present and future registered Noteholders a first and prior or junior
security interest in, all of the Debtor's right, title and interest in and
to the following, whether now or hereafter existing and/or arising or
acquired:
(i) All of the stock and other tangible and intangible assets,
moneys, rights, and properties related to the healthcare industry
(including, without limitation, HMO's, PPO's, and third party
administrators) that may be purchased by the Debtor from time to time
from funds disbursed from the Concentration Account, which shall be
identified on a certificate in the form of Exhibit A-2 hereto
(including the type of Asset being purchased pursuant to this Section
3.01(b)) provided to the Trustee by the Debtor (the "Assets"), which
certificate shall certify the value of each of the Assets set forth on
the certificate and the basis for the valuation thereof and the
priority of the lien granted hereunder to the Trustee;
(ii) All collections and distributions in respect of the Assets
and all funds as may be held or controlled by the Trustee or Servicer
from time to time in the Concentration Account from collections and
distributions in respect of the Assets, together with all certificates
and instruments, if any, from time to time evidencing such collections
and distributions, and such collections and distributions on deposit
and all investments made with such collections and distributions, all
claims in connection therewith, and interest, dividends, moneys,
instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of any or all of the
foregoing;
(iii) All moneys, cash, credits, contract rights, and other
obligations of any kind now or hereafter existing and/or arising out
of or in connection with the Assets and all rights now or hereafter
existing in and to all agreements and contracts securing or otherwise
relating to any such Assets; and
(iv) All products and proceeds of any and all of the assets,
moneys, rights, and properties described in Section 3.01(b)(i) above
and, to the extent not otherwise included, all payments under
insurance (whether or not the Debtor is the loss payee thereof), or
19
any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing.
(c) All of the moneys, rights, and properties described in Sections
3.01(a) and 3.01(b) are referred to as the "Collateral" unless released
from the lien of this Note Agreement pursuant to the terms hereof.
SECTION 3.02. PLEDGE TO SECURE OBLIGATIONS.
This Note Agreement secures the Notes and enforcement of the payment of the
Notes in accordance with their terms, and all other sums payable hereunder or on
the Notes (whether now or hereafter existing, whether for principal, interest,
fees, expenses or otherwise, whether matured or unmatured, absolute or
contingent), and for the performance of and compliance with the obligations,
covenants, and conditions of this Note Agreement, as if all the Notes at any
time Outstanding had been executed and delivered simultaneously with the
execution and delivery of this Note Agreement (collectively, the "Obligations");
provided however, that pursuant to the terms of a supplemental note agreement
under which a series of Notes is issued, the Assets and Receivables acquired
from the proceeds of such series of Notes and the related Collateral can be
pledged to secure only that series of Notes and the other related Obligations
and not any other series of Notes or its related Obligations, in which case
Collateral pledged to secure other series of Notes and their related Obligations
shall not secure the series of Notes issued pursuant to such supplemental note
agreement or other related Obligations.
SECTION 3.03. COLLATERAL TRANSFERS AND OTHER LIENS.
Subject to Section 3.04 below, the Debtor shall not:
(a) Assign (by operation of law or otherwise) or otherwise dispose of
any of the Collateral or any interest therein; or
(b) Create or suffer to exist any lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral to
secure debt of any person or entity, except (i) for the security interest
created by this Note Agreement and (ii) with respect to Collateral other
than the Receivables, any security interest set forth on the schedule
describing the other Collateral provided pursuant to Section 3.01(b) to the
Trustee upon disbursement of funds from the Concentration Account in
connection with the acquisition of the other Collateral.
SECTION 3.04. SALE OF COLLATERAL.
(a) Collateral may be sold, transferred or otherwise disposed of by
the Debtor free from the lien of this Note Agreement and any applicable
supplemental note agreement at any time, provided that the Trustee has
received from the Debtor a written statement of the gross proceeds to be
derived from the sale and the Person to which the Collateral is to be sold
or transferred and certifying to the Trustee substantially in the form of
Exhibit B:
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(i) the disposition price is equal to or in excess of the amount
disbursed from the Concentration Account to acquire the Collateral
(less any principal amounts received by the Trustee with respect to
such Collateral); or
(ii) the disposition price is lower than the amount disbursed
from the Concentration Account to acquire the Collateral (less any
principal amounts received by the Trustee with respect to such
Collateral), and (A) the Revenues expected to be received from the
remaining Collateral (after giving effect to such disposition) would
be at least equal to the Revenues required to timely pay the principal
and interest on the Outstanding Notes, or (B) the Debtor shall remain
able to pay debt service on the Notes and make payment on any other
Obligations on a timely basis (after giving effect to such sale,
transfer or other disposition) whereas it would not have been able to
do so on a timely basis if it had not sold, transferred or disposed of
the Collateral at such discounted amount, or (C) the sum of the
amounts on deposit in the Accounts (less moneys in any Account which
the Debtor, Servicer, or Administrator is then entitled to receive but
which has not yet been removed from the Account) plus the Net
Collectible Amount of the Receivables and the fair market value of
other Collateral will be at least equal to one hundred percent (100%)
of the aggregate principal amount of the then Outstanding Obligations
plus accrued interest after giving effect to such sale, transfer or
other disposition.
(b) The Trustee, following receipt of the foregoing and such other
certificates as may be required by this Note Agreement or any applicable
supplemental note agreement, shall release such Collateral from the lien of
this Note Agreement upon the receipt of the gross proceeds set forth on a
certification substantially in the form of Exhibit B and deliver all
documents evidencing the Debtor's ownership of the collateral as directed
in writing by the Debtor at the expense of the Debtor.
(c) Gross proceeds to be received upon any disposition of Collateral
may consist of cash, Permitted Investments, and/or Eligible Receivables.
The Trustee shall deposit all of such gross proceeds into the Concentration
Account.
SECTION 3.05. RESPONSIBILITIES OF DEBTOR.
(a) If any other Collateral (or the Debtor's ownership interest
therein) shall be evidenced by a promissory note, other instrument or
chattel paper, the Debtor shall promptly deliver possession thereof to the
Trustee duly endorsed and accompanied by the duly executed instruments of
transfer or assignment. The Debtor shall promptly deliver possession to the
Trustee of such other original documents relating to the Collateral,
possession of which are necessary to perfect the security interest of the
Trustee in the Collateral under this Note Agreement.
(b) With respect to the acquisition of Assets, as a condition
precedent to the disbursement of funds pursuant to Section 5.11(a)(ii)(E),
the Debtor shall deliver at Debtor's expense an opinion of counsel
reasonably acceptable to the Trustee to the effect that immediately
following the acquisition of the Assets, the Trustee will have a perfected
21
security interest therein, which security interest is subject to the
provisions of this Note Agreement.
(c) The Debtor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Collateral at the Debtor's notice address set forth in Section 10.03 or,
upon thirty (30) days prior written notice to the Trustee, at such other
locations specified in a written notice to the Trustee. The Debtor will
hold and preserve its records concerning such Collateral, and will permit
representatives of the Trustee and the Noteholders upon reasonable prior
notice during normal business hours to inspect and make abstracts from such
records relating to the Collateral as well as any contract, other
agreements, documents, instruments or chattel paper that relate to the
Collateral.
(d) The Debtor agrees to take or cause to be taken such actions and
execute such documents (including, without limitation, the delivery of such
legal opinions as may reasonably be requested by the Trustee in form and
substance reasonably acceptable to the Trustee and the filing in the
applicable public recording office of all necessary UCC-1 financing
statements or chattel mortgage agreements, which may be made through
blanket filings covering Collateral and after-acquired Collateral pledged
to the Trustee under this Note Agreement) naming the Debtor as debtor and
the Trustee as secured party and any amendments to UCC-1 financing
statements as are necessary to perfect and protect the Trustee's interests
in the Collateral on behalf of the Noteholders and the proceeds thereof and
all other items described in Section 3.01. The Trustee shall be responsible
at the Debtor's expense to file all required continuation statements for
the UCC-1 financing statements then on file against the Debtor with respect
to the Collateral.
(e) With respect to Receivables pledged to the Trustee from time to
time, the Debtor shall be responsible at the Debtor's expense to file all
required continuation statements for the UCC-1 financing statements then on
file listing Medical Capital Management, Inc. as the creditor and the
Health Care Provider or other seller of the Receivable to Medical Capital
Management, Inc. as the debtor.
(f) The Debtor authorizes the filing by the Trustee of any and all
UCC-1 financing statements with respect to the Collateral or amendments,
continuation statements, or termination statements for any related UCC-1
financing statement as may be necessary to perfect the security interest of
the Trustee in the Collateral under the applicable UCC. In the event that
the Debtor fails to file UCC-1 financing statements or continuation
statements as required pursuant to Sections 3.05(d) or (e), the Trustee
shall file such statements pursuant to Section 3.05(d) (and may file such
statements pursuant to Section 3.05(e)) promptly after actual knowledge of
such failure is obtained by any officer within the Corporate Trust
Department of the Trustee.
(g) The Debtor will provide to the Trustee a schedule in an electronic
form readable by the Trustee listing all of the (i) Collateral then pledged
to the Trustee and each of the related UCC-1 financing statements showing
the Trustee as secured party, the location where each was filed, filing
number assigned by the applicable public recording agency, date of filing,
and the Debtor's name appearing as debtor thereon and (ii) the UCC-1
22
financing statement filed with respect to each of the Receivables then
pledged to the Trustee showing the Debtor as secured party, the location
where it was filed, filing number assigned by the applicable public
recording agency, date of filing, and the debtor's name appearing thereon.
The schedule shall be provided to the Trustee within 15 days after the end
of each calendar quarter. The Trustee shall hold such schedule in its files
and shall have no obligation to review, examine, inspect, or otherwise
determine the accuracy of the information set forth therein.
SECTION 3.06. CONTINUING SECURITY INTEREST.
This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until payment in full
of all Notes, (b) be binding upon the Debtor, its successors and assigns, and
(c) inure to the benefit of the Trustee, the Noteholders, and any participant
and their respective successors, transferees, and assigns.
SECTION 3.07. FURTHER ASSURANCES.
(a) The Debtor agrees from time to time, at Debtor's expense, to
promptly execute and deliver all further instruments and documents
(including, without limitation, legal opinions in form and substance
reasonably acceptable to the Trustee), and take all further action, that
may be necessary or desirable, or that the Trustee may reasonably request,
in order to perfect and protect any security interest granted or purported
to be granted hereby or to enable the Trustee to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Debtor shall
from time to time at Trustee's request provide promptly to it a current,
accurate and complete list of all Health Care Providers (and their
respective addresses) from whom Debtor has acquired any Receivables.
Insofar as any property and/or documents which may be Collateral hereunder,
the Debtor will sign and deliver to the Trustee on demand such forms of
financing statements as may be required by the Trustee, will pay any
related filing fees, and will file, or cause to be filed, such financing
statements in the applicable jurisdictions. The Trustee's rights as
specified herein or therein shall be in furtherance of and/or in addition
to, but not in limitation of, the Trustee's rights under any applicable
law.
(b) The Debtor hereby authorizes the Trustee in connection with the
lapse or imminent lapse of any previously filed financing statement to file
one or more financing or continuation statements, and amendments thereto
relative to all or part of the then Collateral (including, without
limitation, the financing or continuation statements referred to in Section
3.05(e)) without the signature of the Debtor where permitted by law. The
Debtor agrees to reimburse the Trustee for the expense of any such filings,
including its legal fees and expenses incurred in connection herewith.
(c) The Debtor will furnish to the Trustee and the Noteholders, from
time to time, statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
the Trustee or the Noteholders may reasonably request, all in reasonable
detail.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES. The Debtor represents and
warrants as follows:
(a) The Debtor owns the Collateral free and clear of any lien,
security interest, charge or encumbrance, except (i) for the security
interest created by this Note Agreement and any financing statement filed
in favor of the Trustee in connection herewith and (ii) with respect to
Collateral other than Receivables, any security interest set forth on the
schedule describing such other Collateral provided pursuant to Section
3.01(b) to the Trustee upon disbursement of funds from the Concentration
Account in connection with the acquisition of such other Collateral. No
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording
office, except (i) such as may have been filed in favor of the Trustee
relating to this Note Agreement and (ii) with respect to Assets, such as
may have been filed in connection with any security interest set forth on
the schedule describing such other Collateral provided pursuant to Section
3.01(b) to the Trustee upon disbursement of funds from the Concentration
Account in connection with the acquisition of such other Collateral.
(b) This Note Agreement creates a valid security interest in favor of
the Trustee in the Collateral, securing the payment of the Obligations, and
all filings have been made that are necessary in any jurisdiction to
perfect in favor of the Trustee for the benefit of the Noteholders (i) a
first priority security interest in the Receivables and (ii) with respect
to other Collateral a first or junior priority security interest as set
forth on the schedule describing the other Collateral provided pursuant to
Section 3.01(b) to the Trustee upon disbursement of funds from the
Concentration Account in connection with the acquisition of the other
Collateral.
(c) Except as contemplated by this Note Agreement, no authorization,
approval or other actions by, and no notice to or filing with, any
governmental authority or regulatory body is required by either (i) for the
grant by the Debtor of the security interest granted hereunder or for the
execution, delivery or performance of this Note Agreement by the Debtor or
(ii) for the perfection of or the exercise by the Trustee of its rights and
remedies hereunder.
(d) All of the Receivables are "accounts" with the meaning of Article
9 of the Uniform Commercial Code.
SECTION 4.02. REPLACEMENT OF DEFECTIVE COLLATERAL.
(a) Upon discovery by the Debtor, or upon actual knowledge of the
Trustee, of a breach of any of the such representations and warranties in
Section 4.01 which materially and adversely affects the value of the
Collateral or the interest of the Noteholders, or which materially and
adversely affects the interests of the Noteholders in the related item of
24
Collateral as determined by the Administrator in the reasonable exercise of
its discretion, the party discovering such breach shall give prompt written
notice to the other. The Debtor shall within ninety (90) days of the
earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, promptly cure such breach in all material
respects or (i) if the defective item of Collateral is a Receivable,
replace the defective item of Collateral with Eligible Receivables as to
which the Debtor is entitled to receive in the aggregate at least as much
from the related Approved Payor as under the defective Receivable or (ii)
if the defective item of Collateral is not a Receivable, replace it with
Collateral of substantially equivalent fair market value as determined by
the Administrator, or (iii) prepay principal on Outstanding Notes pursuant
to Section 2.05 in an amount at least equal to the funds disbursed from the
Concentration Account to purchase the defective item of Collateral.
(b) It is understood and agreed that the obligations of the Debtor set
forth in this Section 4.02 to cure or substitute a defective item of
Collateral or prepay Notes constitute the sole remedies of the Trustee and
the Noteholders hereunder respecting a breach of the representations and
warranties contained in Section 4.01. Any cause of action against the
Debtor relating to or arising out of a material defect in a document
relating to Collateral or arising out of a breach of any representations
and warranties made in Section 4.01 shall accrue as to any item of
Collateral upon (i) discovery of such defect or breach by any party and
notice thereof to the Debtor, (ii) failure by the Debtor to cure such
defect or breach or replace such defective collateral or prepay Notes as
provided in this Section 4.02, and (iii) demand upon the Debtor by the
Trustee or a majority of the Noteholders of the aggregate principal amount
of then Outstanding Notes to take the actions described in Section
4.02(b)(ii).
(c) Neither the Debtor nor the Trustee shall have any duty to conduct
any affirmative investigation as to the occurrence of any condition
requiring the prepayment of Notes or replacement of any defective item of
Collateral pursuant to this Section or the eligibility of any item of
Collateral for purposes of this Note Agreement.
(d) In connection with a prepayment of Notes or replacement of a
defective item of Collateral pursuant to this Section 4.02, the Debtor
shall amend and deliver to the Trustee the applicable schedule of
Collateral provided to the Trustee and an executed Certificate of
Replacement Collateral substantially in the form of Exhibit A-3 hereto to
reflect (i) the removal of the applicable item of defective Collateral from
the terms of this Note Agreement and (ii) if applicable, the replacement of
the defective item of Collateral. Upon the Debtor's compliance with the
terms of this Section 4.02, the Trustee shall cause the lien of this Note
Agreement and any applicable supplemental note agreement to be released
with respect to the item of defective collateral and promptly return to the
Debtor all documents evidencing the item of defective Collateral.
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ARTICLE V
TRUSTEE; COMMUNICATIONS AND REPORTS; ACCOUNTS
SECTION 5.01. CERTAIN DUTIES OF TRUSTEE. In addition to the other duties
set forth in this Note Agreement, the Trustee as trustee for the Noteholders
shall:
(a) NOTES. Record the transfer or exchange of Notes as provided in
Article II hereof;
(b) RELEASE. The Trustee shall upon written request from the Debtor in
the form of Exhibit B hereto and subject to the provisions of this Note
Agreement, take all actions reasonably necessary to effect the release of
any Collateral from the lien of this Note Agreement or any supplemental
note agreement to the extent the terms hereof permit the sale, disposition
or transfer of such Collateral.
(c) POWER OF ATTORNEY. The Debtor hereby irrevocably appoints, and
hereby does appoint, the Trustee both as trustee for the Noteholders and as
the Debtor's Attorney-in-Fact with full authority in the place and stead of
the Debtor and in the name of Debtor, the Trustee or otherwise, from time
to time in the Trustee's discretion, effective upon the occurrence of an
Event of Default, to take any action and to execute any instrument which
the Trustee may deem necessary or advisable to enforce, collect and dispose
of the Collateral and to enforce the Transaction Documents, including the
authority to:
(i) ask, demand, collect, xxx for, recover, compound, receive and
give acquaintance and receipts for money due and to become due under
or in respect to any of the Collateral;
(ii) receive, endorse, collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above or
otherwise;
(iii) file any claims or take any action or institute any
proceedings which the Trustee may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the right
to the Trustee for the benefit of the Noteholders with respect to any
of the Collateral; and
(iv) notify the Servicer, any Health Care Provider and any
Approved Payor of Debtor's collateral assignment and/or grant of a
security interest in the Receivables to the Trustee for the benefit of
the Noteholders and cause such Persons to remit payments directly to
the Trustee and its designee.
The Debtor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 5.01(c) is irrevocable and coupled with an
interest.
SECTION 5.02. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; CONFLICTING
INTERESTS. There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA Section 310(a) and shall have a combined
capital and surplus of at least $50,000,000. If such corporation publishes
26
reports of condition at least annually, pursuant to law or the requirements of
federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section 5.02, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 5.02, it shall correct such ineligibility or resign
immediately in the manner and with the effect hereinafter specified in Section
5.03. Neither the Debtor nor any Person directly or indirectly controlling or
controlled by, or under common control with, the Debtor shall serve as Trustee.
SECTION 5.03. REPLACEMENT OF TRUSTEE.
(a) The Trustee may resign by so notifying the Debtor; provided,
however, no such resignation shall be effective until a qualified successor
Trustee has accepted its appointment pursuant to this Section 5.03. The
Noteholders of a majority in aggregate Outstanding principal amount of the
Notes may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Debtor shall remove the Trustee if:
(i) the Trustee fails to comply with, or ceases to be eligible
under, Section 5.02 hereof;
(ii) the Trustee is adjudged bankrupt or insolvent;
(iii) a receiver or public officer takes charge or control of the
Trustee or its property or affairs; or
(iv) the Trustee otherwise in the Debtor's reasonable judgment
becomes incapable of acting.
(b) If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Debtor shall promptly appoint, by
resolution of its Board of Directors, a successor Trustee. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Debtor and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on the request of
the Debtor or the successor Trustee, such retiring Trustee shall, upon
payment of its charges (including all unpaid amounts due and owing),
execute and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Debtor shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor
Trustee all such rights, powers and trusts. No successor Trustee shall
accept its appointment unless at the time of such acceptance such successor
Trustee shall be eligible under this Note Agreement.
27
(c) If no successor Trustee has been appointed by the date specified
or within a period of ninety (90) days from the receipt of the notice by
the Debtor, whichever period is the longer, (i) the Trustee may appoint a
temporary successor Trustee having the qualifications provided in Section
5.02 hereof or (ii) the retiring Trustee, the Debtor or the Noteholders of
a majority in aggregate Outstanding principal amount of the Notes may
request a court of competent jurisdiction to appoint a Trustee having the
qualifications provided in Section 5.02 hereof. In the event a temporary
successor Trustee is appointed pursuant to (i) above, the Board may remove
such temporary successor Trustee and appoint a successor thereto.
SECTION 5.04. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEBTOR. The Trustee
shall comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b). A Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated therein. The Trustee
hereunder, or any successor Trustee, in its individual or other capacity, may
become the owner or pledgee of Notes and may otherwise deal with the Debtor,
with the same rights it would have if it were not the Trustee. The Trustee may
act as depository for, and permit any of its officers or directors to act as a
member of, or act in any other capacity in respect to, any committee formed to
protect the rights of the Noteholders or to effect or aid in any reorganization
growing out of the enforcement of the Notes or of this Note Agreement, whether
or not any such committee shall represent the Noteholders of more than sixty
percent (60%) of the collective aggregate principal amount of the Outstanding
Notes.
SECTION 5.05. COMMUNICATION BY NOTEHOLDERS WITH OTHER NOTEHOLDERS.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Note Agreement or the Notes.
The Debtor, the Trustee, and anyone else shall have the protection of TIA
Section 312(c).
SECTION 5.06. REPORTS BY TRUSTEE TO NOTEHOLDERS. Within thirty (30) days
after each twelve (12) month interval beginning with the date of this Note
Agreement, the Trustee shall mail to each Noteholder a brief report that
complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b). A copy of each report at the
time of its mailing to Noteholders shall be filed with the SEC and each
securities exchange on which the Notes are listed. The Debtor agrees to promptly
notify the Trustee whenever the Notes become listed on any securities exchange
and of any delisting thereof.
SECTION 5.07. REPORTS BY DEBTOR. The Debtor will:
(a) file with the Trustee, within fifteen (15) days after the Debtor
is required to file the same with the Securities and Exchange Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Securities Exchange Commission may from time to time by rules and
regulations prescribe) which the Debtor may be required to file with the
Securities and Exchange Commission pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934, as amended (the "Securities
Exchange Act");
(b) file with the Trustee and the Securities and Exchange Commission,
in accordance with rules and regulations prescribed from time to time by
the Securities Exchange Commission, such additional information, documents
28
and reports with respect to compliance by the Debtor with the conditions
and covenants of this Note Agreement as may be required from time to time
by such rules and regulations; and
(c) transmit by mail to the Noteholders, within thirty (30) days after
the filing thereof with the Trustee, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information,
documents and reports required to be filed by the Debtor pursuant to
clauses (a) and (b) of this Section 5.07 as may be required by rules and
regulations prescribed from time to time by the Securities and Exchange
Commission.
SECTION 5.08. STATEMENT AS TO COMPLIANCE. The Debtor will deliver to the
Trustee, within one hundred twenty (120) days after the end of each fiscal year,
a written certificate, signed in the name of the Debtor by its Chairman of the
Board, a Vice Chairman, its President or a Vice President and one other such
officer of the Debtor, and delivered to the Trustee in which one of the two
officers signing such certificate is either the principal executive officer,
principal financial officer or principal accounting officer of the Debtor,
stating whether or not to the knowledge of the signers thereof the Debtor is in
compliance with all conditions and covenants under this Note Agreement,
including, without limitation, whether all additional information, documents and
reports required to be filed pursuant to Section 5.07 have been filed as
required by Section 5.07, (all without regard to any period of grace or
requirement of notice provided hereunder) and, in the event of any
noncompliance, specifying such noncompliance and the nature and status thereof
of which the signers may have knowledge.
SECTION 5.09. PERFORMANCE BY THE TRUSTEE.
(a) The Trustee hereby accepts the trusts imposed upon it by this Note
Agreement, and agrees to perform said trusts, but only upon and subject to
the following terms and conditions.
(i) Except during the continuance of an Event of Default of which
an officer in the Corporate Trust Department of Trustee has actual
knowledge, the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Note Agreement and the
Transaction Documents to which it is a party, and no implied covenants
or obligations shall be read into this Note Agreement against the
Trustee. The Trustee shall not be obligated to perform any of the
obligations or duties of the Debtor thereunder or to take any action
to collect or enforce any Receivable, Asset, Transaction Document or
other claim for payment assigned hereunder, except as the Trustee may
elect to undertake on behalf of the Noteholders upon full and adequate
indemnification acceptable to the Trustee for any and all costs and
liabilities that may result from such collection or enforcement.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Note Agreement; but in the case of any such certificates or
29
opinions which by any provisions hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform as to form
with the requirements of this Note Agreement and whether or not they
contain the statements required under this Note Agreement.
(iii) In case an Event of Default has occurred and is continuing,
the Trustee, in exercising the rights and powers vested in it by this
Note Agreement, shall use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) If the Debtor fails to perform any agreement contained herein, the
Trustee may itself perform, or cause performance of, such agreement, and
the expenses of the Trustee incurred in connection therewith shall be
payable by the Debtor under Section 5.10.
(c) The Trustee shall pay the interest on the Notes(s) when due and
payable and in accordance with Section 2.01(f) the principal on the Notes
when they mature from the cash available in the Note Payment Account. The
Trustee has no duty or obligation to pay the Notes from its own funds,
assets or corporate capital or to make inquiry regarding, or investigate
the use of, amounts disbursed from the Note Payment Account pursuant to
Section 5.11(c)(iv).
(d) Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, if it is
reasonably determined by the Trustee that it may incur costs, damages or
liability for which it has no adequate source of payment or indemnity, the
Trustee shall have no duty as to the Notes or any Collateral or as to the
taking of any necessary steps to preserve or exercise rights against any
Persons or any other right pertaining to any Collateral.
SECTION 5.10. INDEMNITY AND EXPENSES.
(a) The Debtor agrees to indemnify each of the Trustee and the
Noteholders from and against any and all claims, losses and liabilities
growing out of or resulting from this Note Agreement or any other security
held by the Trustee with respect to the Notes, except claims, losses or
liabilities resulting from such indemnified party's negligence or willful
misconduct.
(b) The Debtor will pay upon demand to the Trustee the amount of any
and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the
Trustee may incur, acting in good faith, in connection with (i) the
custody, collection from, or other realization upon, any of the Collateral
upon the occurrence of an Event of Default, (ii) the exercise of or
enforcement of any of the rights of the Trustee hereunder, or (iii) the
failure by the Debtor to perform or observe any of the material provisions
hereof.
30
(c) The Debtor's payment obligations pursuant to this Section 5.10
shall survive the discharge of this Note Agreement. When the Trustee incurs
expenses after the occurrence of an Event of Default specified in Section
7.01(g) or (h), the expenses are intended to constitute expenses of
administration under Xxxxx 00, Xxxxxx Xxxxxx Code, or any similar Federal
or state law for the relief of debtors.
SECTION 5.11. ACCOUNTS; PAYMENTS ON NOTES. The Trustee as trustee for the
Noteholders shall establish, maintain and administer each of the Accounts as
follows:
(a) CONCENTRATION ACCOUNT.
(i) DEPOSITS: The Trustee shall deposit into the Concentration
Account:
(A) Pursuant to Section 2.01(g), the proceeds from the
issuance of Notes;
(B) The gross proceeds received pursuant to Section 3.04;
(C) All amounts wired to the Trustee pursuant to Section
5.11(b), amounts remitted by the Debtor pursuant to Section
5.11(d), all proceeds derived from the Collateral and all other
amounts to be deposited therein upon receipt of a direction in
writing from the Debtor;
(ii) WITHDRAWALS. To the extent funds are available in the
Concentration Account, the Trustee shall withdraw from the
Concentration Account and pay, remit, or transfer as and when
instructed by the Debtor in writing (except as to amounts under
clauses (A) and (C) below) or otherwise as directed by an order of a
court of competent jurisdiction the following amounts in the following
order of priority (any funds not so transferred or paid are to remain
in the Concentration Account until subsequently applied pursuant to
this Section 5.11(a)(ii)):
(A) To pay to the Trustee, the amount of its fee due and
payable for performing services under this Note Agreement and any
supplemental note agreements and expenses incurred in connection
therewith relating to the Notes (Series I);
(B) Any amounts specifically identified by the Debtor or the
Servicer in writing (I) deposited in the Concentration Account by
the Debtor, or transferred to the Trustee from a Lock Box
Account, in error, (II) deposited in the Concentration Account
with respect to property that does not constitute Collateral,
Permitted Investments, proceeds from the issuance of the Notes or
proceeds thereof, or (III) deposited in the Concentration Account
with respect to Assets that are pledged to secure Senior
Indebtedness to the extent that such monies are required by the
terms of the Senior Indebtedness to be held in a separate trust;
31
(C) To transfer to the Note Payment Account, the amounts
specified in Section 5.11(c)(i);
(D) Following each deposit pursuant to Section 5.11(a)(i)(A)
or each exchange of a Note pursuant to Section 2.01(f), to pay,
as directed by the Debtor in writing, to the applicable
Broker/Dealer or other selling agent any related sales expenses
and commissions or to the Debtor to reimburse the Debtor for its
payment of such sales expenses and commissions;
(E) As directed in writing by the Debtor from time to time,
amounts for the purchase of Eligible Receivables, Assets, or
both, provided that the Trustee has received a duly authorized
and executed certification substantially in the form of Exhibits
A-1 or A-2, as applicable, to this Note Agreement;
(F) As certified in writing by the Debtor to the Trustee
from time to time, the fee then payable to Administrator for
services performed under the Administration Agreement and the fee
payable to the Servicer for services performed under the
Servicing Agreement;
(G) To pay to the Debtor, the amount of the reserve account
balance of a Health Care Provider that the Debtor certifies to
the Trustee in writing that the Debtor is required to return
pursuant to the related Purchase Documents;
(H) To pay amounts to the Debtor pursuant to Section
5.11(h);
(I) Invest the remaining amounts promptly in Permitted
Investments as provided in Section 5.11(e); and
(J) Withdraw and pay to the Debtor all of the remaining
amounts upon termination of this Note Agreement.
(b) FUNDS FROM LOCK BOX ACCOUNTS. The Debtor shall cause each
custodian or trustee of a Lock Box Account to sweep the funds in each Lock
Box Account and wire such funds to the Trustee on each Business Day on
which such custodian or trustee and the Trustee is open for business.
(c) NOTE PAYMENT ACCOUNT. The Trustee shall:
(i) No later than three Business Days prior to an Interest
Payment Date or Maturity Date, the Trustee shall calculate all amounts
then due in accordance with Section 5.11(d)(ii) and withdraw from the
Concentration Account such amounts that, when added to the amounts
then on deposit in the Note Payment Account, are sufficient to pay
principal and interest pursuant to Section 5.11(c)(iv) on the next
following Interest Payment Date or Maturity Date, as applicable, and
deposit all such amounts withdrawn pursuant to this clause (i)
immediately into the Note Payment Account, provided, however, that the
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Trustee may, but is not obligated to, make calculations of accrued
interest due on the next following Interest Payment Date and withdraw
related amounts from the Concentration Account and deposit them into
the Note Payment Account more frequently during the calendar month
preceding the Interest Payment Date (except that no portion of a
principal payment on a Maturity Date may be withdrawn pursuant to this
clause (i) before three Business Days in advance of the Maturity
Date);
(ii) Deposit amounts received pursuant to Section 5.11(d)(ii);
(iii) Deposit amounts received pursuant to Section 2.05(f);
(iv) From amounts then on deposit in the Note Payment Account,
withdraw amounts first to pay to the Noteholders of Outstanding Notes
on each Interest Payment Date the interest then due and payable on the
Notes and second, subject to Section 2.01(f), to pay to the
Noteholders of Outstanding Notes on their Maturity Date or other date
set for redemption of Outstanding Notes all principal then due and
payable pursuant to the terms of such Notes, this Note Agreement, and
any applicable supplemental note agreement;
(v) Invest the remaining in the Note Payment Account promptly in
Permitted Investments as provided in Section 5.11(e); and
(vi) Withdraw and pay to the Debtor all remaining amounts upon
termination of this Note Agreement.
(d) DEBTOR TO REMIT FUNDS; SCHEDULE OF PAYMENTS.
(i) All Revenues received by the Debtor, if any, in respect of
the Collateral shall be immediately remitted to the Trustee for
deposit into the Concentration Account, which Revenues shall at all
times be segregated from other funds of the Debtor.
(ii) At the written request of the Trustee, interest and
principal that is due and payable on any Note shall be deposited by
the Debtor into the Note Payment Account to the extent the Trustee
determines (after taking into consideration the withdrawals, if any,
to be made pursuant to Section 5.11(c)(i) and the deposits, if any,
made pursuant to Section 5.11(c)(iii)) that amounts on deposit in the
Note Payment Account on the date the payment of interest or principal,
or both, is due and payable will not be sufficient to make such
payment in full. Such deposit into the Note Payment Account shall be
made by the Debtor no later than one Business Day prior to the date
such payment is due and payable. The Trustee shall provide written
notice to the Debtor no later than three (3) Business Days prior to
the date that the payment of interest or principal, or both, is due
and payable stating the amount then on deposit in the Note Payment
Account and the amount of any such insufficiency. In the absence of
any manifest error in such statement or objection by the Debtor no
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later than one Business Day prior to the due date of such payment, the
Trustee's calculations shall be deemed final and conclusive.
(e) INVESTMENT OF FUNDS HELD BY TRUSTEE.
(i) The Trustee shall invest money held for the credit of any
Account or subaccount held by the Trustee hereunder as directed in
writing (or oral direction confirmed in writing) by the Debtor, to the
fullest extent practicable and reasonable, in Permitted Investments.
Such direction by the Debtor shall not conflict with the obligation of
the Trustee to make timely payments pursuant to Section 5.11(c)(iv).
In the absence of any such direction and to the extent practicable,
the Trustee shall invest amounts held hereunder in those Permitted
Investments described in clause (i) of the definition of the Permitted
Investments. All income and earning on such investments shall be held
in the Account to which the Permitted Investment is related and
withdrawn pursuant to the applicable provisions of Section 5.11. The
Trustee and the Debtor hereby agree that unless an Event of Default
shall have occurred hereunder, the Debtor shall be entitled to, and
shall, provide written direction or oral direction confirmed in
writing to the Trustee with respect to any discretionary acts required
or permitted of the Trustee under any Permitted Investment and the
Trustee shall not take such discretionary acts without such written
direction.
(ii) The Permitted Investments held by the Trustee shall be
deemed at all times to be part of the related Account or subaccounts
or combination thereof, and the Trustee shall inform the Debtor of the
details of all such investments. Upon direction in writing from the
Debtor, the Trustee shall use reasonable efforts to sell at the best
price obtainable, or present for redemption, any Permitted Investment
whenever it shall be necessary to provide money to meet any payment
from the applicable Account. The Trustee shall advise the Debtor in
writing, on or before the tenth (10th) day of each calendar month (or
(A) if such day is not a Business Day, on the next following Business
Day or (B) such later date as reasonably consented to by the Debtor)
of all investments held for the credit of each Account in its custody
under the provisions of this Note Agreement as of the end of the
preceding month and the market value thereof in accordance with the
Trustee's customary bank statements.
(iii) Money in any Account may be pooled for the purpose of
making investments. Notwithstanding the foregoing, the Trustee shall
not be responsible or liable for any losses on investments made by it
hereunder or for keeping all Accounts held by it fully invested at all
times, its only responsibility being to comply with the investment
instructions of the Debtor.
(f) PAYMENT OF INTEREST AND PRINCIPAL. Pursuant to Section
5.11(c)(iv), the Trustee shall pay interest and principal due on the Notes
from the funds on deposit in the Note Payment Account. Such payments shall
be made on the date due to the registered Noteholder on the applicable
Record Date. Each payment of interest and principal on any Note shall be
paid in immediately available funds to each Noteholder's address located
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inside the United States as provided to the Trustee in writing. Each
registered Noteholder shall be responsible for the proper calculation and
payment of principal and interest to the holders of beneficial interests in
the related Note and the Trustee shall have no responsibility therefor.
(g) PAYMENTS TO BENEFICIAL OWNERS. Each payment with respect to a Note
shall be paid to the Noteholder. Each Noteholder shall be responsible for
remitting payments made by the Trustee with respect to the Note to the
holders of beneficial interests in the Note that it represents or to each
brokerage firm for which it acts as agent with respect to the Note in
accordance with its normal procedures. Each such brokerage firm or Clearing
Agency shall be responsible for disbursing funds to the holders of
beneficial interests in the Note that it represents in accordance with its
normal procedures. None of the Trustee, the Debtor, the Administrator or
the Servicer shall have any responsibility therefor except as otherwise
provided by this Note Agreement.
(h) EXCESS FUNDS. As directed in writing by the Debtor, the Trustee
shall distribute a portion of the monies on deposit in the Concentration
Account to the Debtor free of the lien of this Note Agreement, provided
that no distribution under this paragraph shall be made to the Debtor
unless the Debtor certifies to the Trustee before the distribution that
immediately after taking into account any such distribution, the sum of (i)
the amounts on deposit in the Concentration Account (less moneys in the
Concentration Account which the Debtor, Servicer, or Administrator is then
entitled to receive but which have not yet been removed from the
Concentration Account) and (ii) the then Net Collectible Amount of the
Receivables and the fair market value of other Collateral is will be,
immediately after such transfer, at least equal to one hundred percent
(100%) of the aggregate principal amount of the then Outstanding
Obligations plus accrued interest. For purposes of this Section 5.11(h),
the fair market value of the Collateral other than the Receivables shall be
certified in writing to the Trustee by the Debtor and determined in a
manner reasonably acceptable to the Trustee at the expense of the Debtor.
(i) RIGHTS TO PAYMENTS. The rights of the Noteholders to receive
payments in respect of their Notes, and all rights and interests of the
Noteholders in and to such payments, shall be as set forth in this Note
Agreement. Neither the Noteholders of any class of Notes nor any party
hereto shall in any way be responsible or liable to the Noteholders of any
other class of Notes in respect of amounts properly previously distributed
on the Notes.
(j) Any amounts which the Debtor requests the Trustee to wire pursuant
to this Note Agreement shall be wired by the Trustee as directed by the
Debtor on the day the executed certification or other request in form and
substance as required by this Note Agreement is received by the Trustee if
such certification or request is received before 11:00 a.m. Mountain Time,
and if not so received, on the next following Business Day.
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ARTICLE VI
SENIOR DEBT
SECTION 6.01. SENIOR INDEBTEDNESS.
(a) Nothing in this Note Agreement shall restrict the right of the
Debtor to issue Senior Indebtedness or any other indebtedness on terms
deemed acceptable by the Debtor in its sole discretion, provided that (i)
the terms of this Note Agreement and any supplemental note agreement may
only be amended or modified pursuant to Article IX and (ii) the priority of
the lien held by the Trustee in any monies or property to be pledged to
secure the Senior Indebtedness shall not be modified, changed or
subordinated except pursuant to Section 9.03.
(b) "Senior Indebtedness" is indebtedness of the Debtor in which the
instrument creating or evidencing the indebtedness or the assumption or
guarantee thereof expressly provides that such indebtedness shall be senior
in right of payment to the Notes or indebtedness which is senior by law in
right of payment to the Notes, including, without limitation, all
deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to, the foregoing. The term "Senior
Indebtedness" shall not include (i) indebtedness evidenced by the Notes,
(ii) indebtedness of the Debtor to any subsidiary parent or affiliate of
the Debtor, a majority of the voting stock of which is owned, directly or
indirectly, by the same Persons, (iii) accounts payable or other
indebtedness to trade creditors created or assumed by the Debtor in the
ordinary course of business unless required by law to be senior in right of
payment to the Notes, and (iv) any particular indebtedness in which the
instrument creating or evidencing the same or the assumption or guarantee
thereof expressly provides that such indebtedness shall not be senior in
right of payment to, or is pari passu with, or is subordinated or junior
to, the Notes.
SECTION 6.02. NOTEHOLDERS' RIGHTS NOT IMPAIRED. Subject to the right of any
Senior Indebtedness to be repaid from the income, assets, and properties of the
Debtor to the extent not pledged to the Trustee hereunder, nothing contained in
this Article VI or elsewhere in this Note Agreement or in the Notes is intended
to or shall impair, as between the Debtor, its creditors and the Noteholders,
the obligation of the Debtor to pay to the Noteholders the amounts due to them
hereunder as and when the same shall become due and payable in accordance with
the terms of this Note Agreement, nor shall anything herein prevent the Trustee
or the Noteholder of any Note from exercising all remedies otherwise permitted
by applicable law upon default under this Note Agreement, subject to the rights,
if any, under this Article VI of the holders of Senior Indebtedness.
SECTION 6.03. ACCEPTANCE BY NOTEHOLDERS. Each Noteholder by such
Noteholder's acceptance of Notes acknowledges and agrees that the foregoing
provisions are, and are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness, whether such Senior Indebtedness was
created, assumed or acquired before or after the issuance of the Notes, to
acquire and continue to hold, or to continue to hold, such Senior Indebtedness
and such holder of Senior Indebtedness shall be deemed conclusively to have
relied on such provisions in acquiring and continuing to hold, or in continuing
36
to hold, such Senior Indebtedness, and no amendment or modification of the
provisions contained herein shall diminish the rights of such holder or holders
unless such holder or holders shall have agreed in writing thereto. Each Person
holding any Note whether upon original issue or upon transfer or assignment
thereof, accepts and agrees to be bound by such provisions of this Article VI.
ARTICLE VII
DEFAULT
SECTION 7.01. EVENTS OF DEFAULT. With respect to the Notes (Series I) and
except as provided in Section 6.01, each of the following events and occurrences
shall constitute an "Event of Default" under this Note Agreement:
(a) Debtor shall default in the payment or prepayment when due of any
principal or interest on any Note (Series I), or Debtor shall fail to make
any payment or deposit when required hereunder with respect to the Notes
(Series I), and such default or failure shall continue unremedied for
fifteen (15) days;
(b) Subject to Section 4.02, any representation or warranty made by
Debtor in any Transaction Document securing the Notes (Series I) shall have
been incorrect in any material respect when made or confirmed, or any
certificate or determination of Debtor furnished hereunder or in connection
with the Notes (Series I) was false or misleading as of the date made in
any material respect, and which within 30 days of notice by the Trustee
fails to cure such inaccuracy;
(c) Debtor materially breaches any other covenant or provision of this
Note Agreement with respect to the Notes (Series I) and such breach
continues unremedied for a period of 30 days after receipt of notice from a
Noteholder or the Trustee;
(d) Debtor materially breaches any of the terms, conditions or its
obligations in the Servicing Agreement or the Administration Agreement with
respect to the Notes (Series I) and such breach continues unremedied for a
period of thirty (30) days after notice from the Servicer or the
Administrator, as applicable;
(e) Any judgment against the Debtor or any attachment, levy or
execution against any material portion of its respective properties for
which an amount in excess of twenty five percent (25%) of the Debtor's
total assets shall remain unpaid, or shall not be discharged of record, or
bonded, for a period of ninety (90) days or more after its entry, issue or
levy, as the case may be;
(f) The Debtor shall be unable, or generally fail to pay, or admit in
writing its inability or unwillingness to pay its debts as they mature or
become due;
(g) The Debtor shall make any assignment for the benefit of creditors,
or a trustee, receiver or liquidator shall be appointed for the Debtor or
for any of their property, or the commencement of any case or proceedings
by the Debtor under any bankruptcy, reorganization, arrangement of debt,
insolvency, readjustment of debt, receivership, liquidation or dissolution
37
law or statute or the commencement of any such case or proceedings without
the consent of the Debtor and such proceeding shall continue undischarged
for a period of ninety (90) days;
(h) Debtor ceases to do business for any reason whatsoever or
institutes any proceeding for its dissolution or termination;
(i) A moratorium shall be agreed to or declared in respect of any
indebtedness of Debtor, or any governmental authority or agency shall have
seized, compulsorily purchased or appropriated all or a substantial part of
the assets of Debtor; or
(j) It becomes unlawful for Debtor to perform any material obligation
hereunder or under other documents executed in connection herewith.
SECTION 7.02. NOTEHOLDER'S DIRECTION UPON DEFAULT. If an Event of Default
shall occur and be continuing, (a) the Trustee may, in its sole discretion and
(b) subject to Section 7.02(c), the Trustee shall upon written request of
Noteholders of Outstanding Applicable Notes evidencing more than fifty percent
(50%) of the principal due on the Outstanding Applicable Notes, by notice to
Debtor declare all Applicable Notes together with accrued interest and any other
sum payable hereunder, to be immediately due and payable (and the same shall
thereupon become due and payable without presentment, demand, protest or notice
of any kind, other than are hereby expressly required by this Section 7.02, all
of which are hereby expressly waived by Debtor). Upon such acceleration, in
addition to the other remedies set forth in Section 7.03:
(a) The Trustee may liquidate all funds in the Accounts related to the
Applicable Notes (and all related funds that may thereafter be deposited in
such Accounts) and the Permitted Investments related to the Applicable
Notes. Upon such liquidation, the proceeds realized from any such
liquidation shall be applied by the Trustee on the next Interest Payment
Date on which the Applicable Notes are Outstanding in the following order
of priority:
(i) First, to the payment of all of Trustee's fees, costs and
expenses incurred by it or incurred by acting on behalf of the
Noteholders of the Applicable Notes in enforcing Its rights and
remedies hereunder (including, without limitation, its attorneys' fees
and expenses);
(ii) Second, to the payment of Senior Indebtedness to the extent
that such proceeds are required by an order of a court of competent
jurisdiction court to be used to pay the Senior Indebtedness;
(iii) Third, to the payment of any unpaid fee that is payable to
(A) the bank acting as the custodian for the Lock Box Account with
respect to the Applicable Notes and (B) the Servicer and Administrator
for services performed under the Servicing Agreement and the
Administration Agreement with respect to the Collateral for the
Applicable Notes following its pledge to the Trustee hereunder;
38
(iv) Fourth, to the payment of all of the costs and expenses of
the Noteholders of the Applicable Notes incurred in enforcing their
rights and remedies hereunder (including, without limitation, their
attorneys' fees and expenses) or under the other related Transaction
Documents;
(v) Fifth, to the payment to the Noteholders of the Applicable
Notes, pro rata, the amount then owing or unpaid under the Note for
interest and then principal; and
(vi) Sixth, to the extent available, to the payment to Debtor,
its successors or assigns, or to whomever may be lawfully entitled to
receive same any remaining proceeds of such liquidation.
(b) The Trustee shall apply all payments received thereafter with
respect to the Receivables or other Collateral securing the Applicable
Notes in the order of priority set forth in Paragraph 7.02(a) above.
(c) Upon providing to the Trustee adequate indemnity for costs,
expenses and liability, the Trustee shall take any and all actions
permitted by law to realize upon their security interest in the Collateral
securing the Applicable Notes and otherwise exercise remedies and undertake
all actions as may be desirable or necessary to recover all amounts due and
owing Noteholders of the Applicable Notes;
(d) The Trustee may, and upon the written instruction of Noteholders
of Outstanding Applicable Notes evidencing more than fifty percent (50%) of
the principal due on the Outstanding Applicable Notes shall, exercise all
of the Debtor's rights, but not its obligations, under the terms of the
Servicing Agreement, the Purchase Agreement and the other Transaction
Documents with respect to the Applicable Notes; and
(e) The Trustee may, and upon the written instruction of Noteholders
of Outstanding Applicable Notes evidencing more than fifty percent (50%) of
the principal due on the Outstanding Applicable Notes shall, waive the
Event of Default, except failure to pay principal and interest when due,
provided that no waiver of any Event of Default shall constitute a waiver
of any other or any succeeding Event of Default or of the continuance of
the Event of Default so waived except in accordance with the terms of the
waiver.
SECTION 7.03. REMEDIES.
(a) Pursuant to the Debtor's collateral assignment of all of its
interest in the Collateral to the Trustee, and pursuant to the Servicing
Agreement, Debtor agrees that the Trustee may, upon occurrence of an Event
of Default, collect, at the Debtor's expense, all amounts due or to become
due under the Collateral securing the Applicable Notes. In connection with
such collections, the Debtor agrees that the Trustee may take or direct
such action as the Trustee may deem necessary or advisable to enforce
collection or liquidation of such Collateral.
39
(b) If an Event of Default occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against
the Debtor for the whole amount owing with respect to the Applicable Notes
and the amounts provided for in Section 5.10.
(c) Upon the occurrence of any Event of Default, Trustee may, and
shall upon the direction of the Noteholders as provided in Section 7.02
above, exercise any of the rights provided for in this Note Agreement
(including Section 7.02) or other Transaction Document with respect to the
Applicable Notes, or at law or equity, including, without limitation, all
the rights and remedies of a secured party under the UCC. The Trustee shall
be obligated to act only upon receipt of full and adequate indemnification
from Noteholders of the Applicable Notes for any and all costs and
liabilities that may result from exercise of such remedies prior to
undertaking any thereof.
(d) At any time after a declaration of acceleration has been made
pursuant to Section 7.02 and before a judgment or decree for payment of the
money due has been obtained by the Trustee as provided herein, the
Noteholders of Outstanding Applicable Notes evidencing more than fifty
percent (50%) of the principal due on the Outstanding Applicable Notes, by
written notice to the Debtor and the Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Debtor has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue installments of interest on such Applicable
Notes,
(B) the principal of and premium, if any, on such Applicable
Notes which have become due otherwise than by such declaration of
acceleration and interest thereon at the respective rates borne
by such Applicable Notes,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the respective
rates borne by such Applicable Notes, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, in each case, with
respect to such Applicable Notes; and
(ii) all Events of Default, other than the nonpayment of the
principal of such Applicable Notes which have become due solely by
such acceleration, have been cured or waived as provided in this Note
Agreement.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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SECTION 7.04. TRUSTEE MAY FILE PROOFS OF CLAIM.
(a) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Debtor or any
other obligor upon the Notes or the property of the Debtor or of such other
obligor or their creditors, the Trustee (irrespective of whether the
principal of the Notes of any class or series shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Debtor for the
payment of overdue principal, premium, if any, or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise:
(i) to file and prove a claim for the whole amount, or such
lesser amount as may be provided for in the Applicable Notes, of
principal and interest, if any, owing and unpaid in respect of the
Applicable Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel)
and of the Noteholders allowed in such judicial proceeding; and
(ii) to collect and receive any money or other property payable
or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator (or
other similar official) in any such judicial proceeding is hereby
authorized by each Noteholder to make such payments to the Trustee,
and if the Trustee shall consent to the making of such payments
directly to the Noteholder, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances
of the Trustee and any predecessor Trustee, their agents and counsel,
and any other amounts due the Trustee or any predecessor Trustee.
(b) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Noteholder
any plan of reorganization, arrangement, adjustment or composition
affecting the Applicable Notes or the rights of any Noteholder thereof, or
to authorize the Trustee to vote in respect of the claim of any Noteholder
of an Applicable Note in any such proceeding.
(c) In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture
to which the Trustee shall be a party), the Trustee shall be held to
represent all the Noteholders of the Applicable Notes, and it shall not be
necessary to make any Noteholder of the Applicable Notes parties to any
such proceedings.
SECTION 7.05. NOTICE OF DEFAULTS. Within ninety (90) days after the
occurrence of any default hereunder with respect to the Applicable Notes, the
Trustee shall transmit in the manner and to the extent provided in Section
313(c) of the TIA notice of such default hereunder known to the Trustee, unless
such default shall have been cured or waived. Such default shall be treated as
known to the Trustee only when actual knowledge of such default is obtained by
any officer within the Corporate Trust Department of the Trustee, including,
41
without limitation, any Vice President, Assistant Vice President, Secretary,
Assistant Secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer of the Trustee to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. Except in the case of a default in the
payment of the principal of or interest with respect to any Applicable Note, or
in the payment of any sinking fund installment with respect to the Notes, the
Trustee shall be protected in withholding such notice if and so long as an
authorized officer of the Trustee in good faith determines that the withholding
of such notice is in the interest of the Noteholders. The second sentence of
this Section 7.05 shall be in lieu of the proviso to Section 315(b) of the TIA,
and such provision is hereby expressly excluded from this Note Agreement, as
permitted by the TIA. For the purpose of this Section 7.05, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default with respect to the Applicable Notes. The Trustee shall not
give notice of a default in the payment of the principal of or interest with
respect to any Applicable Note until at least sixty (60) days have passed since
its occurrence.
SECTION 7.06. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All
rights of action and claims under this Note Agreement or the Applicable Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Applicable Notes or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Noteholders in respect of which such judgment has been
recovered.
SECTION 7.07. LIMITATION ON SUITS.
(a) No Holder of any Applicable Note shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Note Agreement,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(i) such Noteholder has previously given written notice to the
Trustee of a continuing Event of Default with respect to Applicable
Notes of the same series;
(ii) the Noteholders of Outstanding Applicable Notes evidencing
not less than twenty five percent (25%) of the principal due on the
Outstanding Applicable Notes shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
42
(iv) the Trustee for sixty (60) days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Noteholders of
Outstanding Applicable Notes evidencing more than fifty percent (50%)
of the principal due on the Outstanding Applicable Notes;
(b) One or more Noteholders shall not have any right in any manner
whatever by virtue of, or by availing of, any provision of this Note
Agreement to affect, disturb or prejudice the rights of any other
Noteholders, or to obtain or to seek to obtain priority or preference over
any other Noteholders or to enforce any right under this Note Agreement,
except in the manner herein provided and for the equal and ratable benefit
of all the Noteholders.
ARTICLE VIII
TERMINATION OF NOTE AGREEMENT
SECTION 8.01. DEPOSIT OF PAYMENT. When the Debtor has delivered to the
Trustee a statement that it does not intend to authorize any further series or
classes of Notes under this Note Agreement and all Outstanding Notes have become
due and payable and the Debtor deposits with the Trustee funds, as permitted by
the terms of this Note Agreement including all supplemental note agreements,
sufficient to pay at their stated maturity the principal and accrued and unpaid
interest of all Outstanding Notes, and the Debtor deposits with the Trustee or
pays, or adequate provision has been made for, all other sums payable under this
Note Agreement and all supplemental note agreements, then this Note Agreement
and all supplemental note agreements and the trusts created thereby shall,
subject to Section 5.10 above, cease to be of force and further effect and shall
terminate. The Trustee shall join in the execution of a document prepared by the
Debtor and reasonably acceptable to the Trustee acknowledging satisfaction and
discharge of this Note Agreement and all supplemental note agreements on request
of the Debtor.
SECTION 8.02. APPLICATION OF FUNDS. The Trustee shall hold in trust for the
benefit of the Noteholders all amounts deposited pursuant to Section 8.01 (and
all investments of such amounts). The Trustee shall apply such deposited amounts
first in accordance with Section 5.11(a) and then 5.11(c) this Note Agreement.
SECTION 8.03. REINSTATEMENT. If the Trustee is unable to apply any amounts
deposited in accordance with Section 8.01 by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Debtor's obligations under this Note
Agreement shall be revived and reinstated as though no deposit had occurred
pursuant to this Article VIII, until such time as the Trustee is permitted to
apply all such amounts in accordance with Section 8.02; provided, however, that
if the Debtor makes any payment of principal of or interest on any Note
following the reinstatement of its obligations, the Debtor shall be subrogated
to the rights of the Noteholders to receive such payment from the amounts held
by the Trustee after payment in full to the Noteholders.
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SECTION 8.04. UNCLAIMED FUNDS. The Trustee shall return to the Debtor any
money held by it for the payment of any amount with respect to the Notes that
remains unclaimed one year subsequent to the due date of such payment provided,
the Trustee before being required to make any such return, shall mail to each
such Noteholder notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than thirty (30) days from the date
of mailing, any unclaimed money then remaining will be returned to the Debtor.
After return to the Debtor, Noteholders entitled to the money must look to the
Debtor for payment as general creditors unless an applicable abandoned property
law designates another Person.
ARTICLE IX
AMENDMENTS AND SUPPLEMENTAL NOTE AGREEMENTS
SECTION 9.01. GENERAL. Subject to Sections 9.02 and 9.03 below, this Note
Agreement may be amended only by an instrument in writing signed by the Trustee
and the Debtor which may waive any provision of this Note Agreement. Upon the
execution of any amendment or supplemental note agreement under this Article IX,
this Note Agreement shall be modified in accordance therewith, and such
amendment or supplemental note agreement shall form a part of this Note
Agreement for all purposes; and every Note theretofore or thereafter issued
hereunder shall be bound thereby.
SECTION 9.02. AMENDMENT WITHOUT CONSENT OF NOTEHOLDERS. The Debtor and the
Trustee may, without the consent of or notice to any of the Noteholders, enter
into or amend any note agreement(s) supplemental to this Note Agreement for any
one or more of the following purposes:
(a) to cure any ambiguity or formal defect or omission in this Note
Agreement;
(b) to grant to or confer upon the Trustee for the benefit of the
Noteholders any additional benefits, rights, remedies, powers or
authorities that may lawfully be granted to or conferred upon the
Noteholders or the Trustee;
(c) to subject to this Note Agreement additional revenues, properties
or collateral;
(d) modify, amend or supplement this Note Agreement in such manner as
to permit the qualification of this Note Agreement or any supplemental note
agreement under the TIA or any similar federal statute hereafter in effect
or to permit the qualification of the Notes for sale under the securities
laws of the United States of America or of any of the states of the United
States of America, and, if they so determine, to add to this Note Agreement
or any indenture supplemental hereto such other terms, conditions and
provisions as may be permitted by the TIA or similar federal statute;
(e) to evidence the appointment of a separate or co-Trustee or a
co-registrar or transfer agent or the succession of a new Trustee
hereunder;
44
(f) to provide for the issuance or redemption of Notes pursuant to
this Note Agreement, including the creation of appropriate Accounts and
subaccounts with respect to such Notes;
(g) to amend this Note Agreement to allow for any Notes to be
supported by a letter of credit or insurance policy or a liquidity
agreement;
(h) to make any other change which, in the judgment of the Trustee, is
not to the material prejudice of the Noteholders;
(i) to provide for the assumption of the Debtor's obligations to the
Noteholders of the Notes in case of a merger or consolidation or sale of
all or substantially all of the Debtor's assets;
(j) to provide for the creation, terms and provisions of any series of
Notes (other than Notes (Series I)) as provided in Article III ;
provided, however, that nothing in this Article IX shall permit, or be
construed as permitting, any modification of the trusts, powers, rights,
duties, remedies, immunities and privileges of the Trustee without the
prior written approval of the Trustee, which approval shall be evidenced by
execution of a supplemental note agreement.
SECTION 9.03. AMENDMENT WITH CONSENT OF NOTEHOLDERS. Exclusive of
amendments and supplemental note agreements covered by Section 9.02 and subject
to the terms and provisions contained in this Section 9.03, the Noteholders of
Outstanding Notes evidencing more than fifty percent (50%) of the principal due
on the Outstanding Notes shall have the right, from time to time, to consent to
and approve the execution by the Debtor and the Trustee of such other Note
Agreement supplemental hereto as shall be deemed necessary and desirable by the
Trustee for the purpose of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in this
Note Agreement or in any supplemental note agreement; provided, however, if such
modified, altered, amended, added or rescinded provision applies only to a
particular series of Notes, or the rights of the Noteholders of only a
particular series would be modified, the consent of the Noteholders of
Outstanding Notes evidencing more than fifty percent (50%) of the principal due
on the Outstanding Notes of only such series shall be required, and, provided
further, that nothing in this Article IX shall permit, or be construed as
permitting:
(a) without the consent of all Noteholders affected thereby,
(i) an extension of the maturity date of the principal of or a
change in the interest rate on any Note other than in accordance with
the terms of this Note Agreement;
(ii) a reduction in the principal amount due on any Note or
alteration of the manner or rate of accrual of interest thereon;
(iii) a privilege or priority of any Note over any other Note;
45
(iv) a reduction in the aggregate principal amount of the Notes
required for consent to a supplemental note agreement or modification,
alteration, amendment, addition to or rescission of this Note
Agreement; or
(v) the creation of any lien on the Collateral securing the Notes
except as otherwise provided herein; or
(vi) any modification of the trusts, powers, rights, obligations,
duties, remedies, immunities and privileges of the Trustee without the
prior written approval of the Trustee.
It shall not be necessary for the consent of the Noteholders under this Article
IX to approve the particular form of any proposed amendment or supplemental note
agreement, but it shall be sufficient if such consent approves the substance
thereof.
SECTION 9.04. SENIOR INDEBTEDNESS. An amendment or supplemental note
agreement under this Article IX may not make any change that adversely affects
the rights under Article VI of any holder of Senior Indebtedness then
outstanding unless the requisite holders of such Senior Indebtedness consent to
such change pursuant to the terms of such Senior Indebtedness, as evidenced in
writing and delivered to the Trustee.
SECTION 9.05. NOTICE TO NOTEHOLDERS. After an amendment or supplemental
note agreement under this Article IX becomes effective, the Trustee shall mail
to each Noteholder a notice briefly describing the amendment or supplemental
note agreement.
SECTION 9.06. COMPLIANCE WITH TIA. Every supplemental note agreement
executed pursuant to this Article IX shall comply with the TIA as then in
effect, if then required to so comply.
SECTION 9.07. RIGHTS OF NOTEHOLDERS NOT IMPAIRED. Notwithstanding any other
provision of this Note Agreement, but subject to Article VI, Section 7.02(e),
and Section 10.02 , the right of any Noteholder to receive payment of the
principal amount, Redemption Price or interest, if any, in respect of the Notes
held by such Noteholder, on or after the respective due dates expressed in the
Notes or any date of redemption, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected adversely without the consent of each such Noteholder.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal law of the State of Colorado without
regard to applicable conflicts of law principles.
SECTION 10.02. WAIVER. The Debtor hereby waives notice of acceptance of
this Note Agreement and also presentment, demand, protest and notice of dishonor
of any and all of its Obligations herein or in the Notes, or other Transaction
Documents, and promptness in commencing suit against any party hereto or liable
46
thereon, and in giving any notice to or of making any claim or demand hereunder
upon the Debtor. No failure on the part of Trustee to exercise, and no delay in
exercising, any right hereunder or with respect to the obligations shall operate
as a waiver thereof; nor shall any single or partial exercise of any rights
hereunder or with respect to the Obligations preclude any other right. No waiver
of any Event of Default shall constitute a waiver of any other or any succeeding
Event of Default or of the continuance of the Event of Default so waived except
in accordance with the terms of the waiver. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law or equity.
SECTION 10.03. NOTICES.
(a) Any notice hereunder shall be in writing and shall be personally
delivered or transmitted by facsimile, postage prepaid registered mail,
return receipt requested, or overnight delivery service addressed to the
party receiving such notice at the following address:
If to Debtor:
Medical Capital Management, Inc.
0000 Xxxxx Xxxxx Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Telephone: 0-000-000-0000
Facsimile: 0-000-000-0000
If to Trustee:
Zions First National Bank
000 00xx Xxxxxx,
Xxxxx 000
Xxxxxx, XX 00000
Attention: Corporate Trust Administration
Telephone: 000-000-0000
Facsimile: 000-000-0000
All notices and other communications shall be deemed to have been duly
given on the date of delivery if delivered personally, the date five (5)
days after if transmitted by mail, in the case of a telecopy, telex,
telegram, or cable, at the time sent, provided that any notice to be given
to the Noteholder or the Trustee shall be effective only when received. Any
party may change its address for proposes hereof by written notice to the
other.
(b) The Debtor or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders.
Except as otherwise provided, if a notice or communication is mailed in the
manner provided above, it is duly given, whether or not received by the
47
addressee. If the Debtor mails a notice or communication to the
Noteholders, it shall mail a copy to the Trustee.
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any
request or application by the Debtor to the Trustee to take any action under
this Note Agreement, the Debtor shall furnish to the Trustee:
(a) a written certificate signed in the name of the Debtor by its
Chairman of the Board, a Vice Chairman, its President or a Vice President,
and delivered to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Note Agreement
relating to the proposed action have been complied with; and
(b) an opinion of counsel reasonably acceptable to the Trustee stating
that, in the opinion of such counsel, all such conditions precedent have
been complied with;
provided that in the case of any such request or application as to which the
furnishing of such documents is specifically required by any provision of this
Note Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
officers' certificate or opinion of counsel with respect to compliance with a
covenant or condition provided for in this Note Agreement shall include:
(a) a statement that each individual making such officers' certificate
or opinion of counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
officers' certificate or opinion of counsel are based;
(c) a statement that, in the opinion of each such individual, he or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement that, in the opinion of such individual, such covenant
or condition has been complied with.
SECTION 10.06. SEVERABILITY. Any provision of this Note Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Note Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 10.07. TIA. This Note Agreement is hereby made subject to, and
shall be governed by, the provisions of the TIA required to be part of and to
govern indentures qualified under the TIA. If any provision in this Note
Agreement or any supplemental note agreement limits, qualifies or conflicts with
48
another provision in this Note Agreement or any supplemental note agreement
which is required to be included in an indenture qualified under the TIA, such
required provision shall control.
SECTION 10.08. NONLIABILITY OF DIRECTORS; NO GENERAL OBLIGATION. It is
hereby expressly made a condition of this Note Agreement that any agreements,
covenants, or representations herein contained or contained in the Notes or
supplemental note agreements do not and shall never constitute or give rise to a
personal or pecuniary liability or charge against the incorporators, officers,
employees, agents, or directors of the Debtor. Nothing contained in this
Section, however, shall relieve the Debtor from the observance and performance
of the several covenants and agreements on its part herein contained.
SECTION 10.09. SCOPE OF DEBTOR'S LIABILITY. Anything herein to the contrary
notwithstanding:
(a) The Debtor shall remain liable under the Notes, Servicing
Agreement and the other Transaction Documents and all other agreements
included in the Collateral to the extent set forth therein to perform all
of its duties and obligations thereunder to the same extent as if this Note
Agreement has not been executed; and
(b) The exercise by the Trustee of any of the rights hereunder shall
not release the Debtor from any of its duties or obligations under the
Note, the Receivables, the Assets, other Transaction Documents and all
other agreements included in the Collateral.
SECTION 10.10. ASSIGNMENT. Except as set forth in Section 5.03, the Trustee
may assign or transfer this Note Agreement or transfer therewith the whole or
any part of the security hereunder only with the prior written consent of the
Noteholders holding Notes evidencing more than 50% of the principal due on the
Notes. The Debtor shall not be entitled to transfer its rights and obligations
hereunder without the prior written consent of the Trustee and the Noteholder
holding Notes evidencing more than 50% of the principal due on the Notes.
SECTION 10.11. WHEN THE DEBTOR MAY MERGE OR TRANSFER ASSETS.
(a) The Debtor shall not consolidate with or merge with or into any
other Person (other than in a merger or consolidation in which the Debtor
is the surviving Person), unless:
(i) the Person (if other than the Debtor) formed by such
consolidation or into which the Debtor is merged or the Person which
acquires by conveyance, transfer or lease the properties and assets of
the Debtor substantially as an entirety shall be a corporation,
limited liability company, partnership or trust organized and validly
existing under the laws of the United States or any State thereof or
the District of Columbia, and shall expressly assume by a supplemental
note agreement, executed and delivered to the Trustee in form
reasonably satisfactory to the Trustee, the due and punctual payment
of the Obligations and Redemption Price, if any, on the Notes,
according to their tenor, and the due and punctual performance of all
of the covenants and obligations of the Debtor under the Notes and
this Note Agreement, and shall have provided for conversion rights in
accordance with this Note Agreement; and
49
(ii) immediately after giving effect to such transaction, no
Event of Default or any event, condition or occurrence that after
notice or lapse of time or both, would constitute an Event of Default
shall have occurred and be continuing
(b) The successor Person formed by such consolidation or into which
the Debtor is merged shall succeed to, and be substituted for, and may
exercise every right and power of, the Debtor under this Note Agreement
with the same effect as if such successor had been named as the Debtor
herein; and thereafter, except in the case of a lease, the Debtor shall be
discharged from all obligations and covenants under this Note Agreement and
the Notes.
SECTION 10.12. SECTION REFERENCES. All references to Articles, Sections,
Subsections, or Clauses in this note Agreement are a reference to an Article,
Section, Subsection or Clause of this Note Agreement unless otherwise stated.
50
IN WITNESS WHEREOF, the parties hereto have caused this Second Amended and
Restated Note Agreement to be duly executed by their authorized representatives
as of the date first written above.
DEBTOR: MEDICAL CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
Title: Chief Operating Officer
TRUSTEE: ZIONS FIRST NATIONAL BANK, as Trustee
By: /s/ Xxxxxxxxx Xxx Xxxxxxxx
-------------------------------------
Name: Xxxxxxxxx Xxx Xxxxxxxx
Title: Assistant Vice President
51
EXHIBIT A-1
RECEIVABLE ACQUISITION CERTIFICATE
This Receivable Acquisition Certificate is submitted pursuant to the
provisions of Section 5.11(a)(ii)(E) of the Second Amended and Restated Note
Issuance and Security Agreement, dated as of April 10, 2002, (the "Agreement"),
between Medical Capital Management, Inc., a Delaware corporation (the "Debtor")
and Zions First National Bank, as Trustee (the "Trustee"). All capitalized terms
used in this Certificate and not otherwise defined herein shall have the same
meanings given to such terms in the Agreement. In your capacity as Trustee, you
are hereby authorized and requested to disburse to the Debtor the sum of
$____________ for the acquisition of Eligible Receivables. With respect to the
Eligible Receivables so to be acquired, the Debtor hereby certifies as follows:
1. The receivables to be acquired are Eligible Receivables, and the wiring
instructions and related information are specified in Schedule A attached hereto
(the "Acquired Eligible Receivables") and the information therein is true and
correct.
2. If applicable, the requirements of Section 3.04 of the Agreement will be
met upon the acquisition of the Acquired Eligible Receivables.
3. Each Acquired Eligible Receivable is an Eligible Receivable authorized
so to be acquired by the Agreement.
4. You have been previously, or are herewith, provided with the following
items:
(a) a copy of the Purchase Documents between the Debtor and the seller
of the Acquired Eligible Receivables (the "Seller") with respect to the
Acquired Eligible Receivables (original copy maintained on file with the
Debtor on behalf of the Trustee); and
(b) instruments duly assigning the Acquired Eligible Receivables to
the Trustee pursuant to the Note Agreement.
5. The Debtor is not, on the date hereof, in default under the Agreement or
in the performance of any of its covenants and agreements made in the Purchase
Documents relating to the Acquired Eligible Receivables, and, to the best
knowledge of the Debtor, the Seller is not in default in the performance of any
of its covenants and agreements made in the Purchase Documents applicable to the
Acquired Eligible Receivables, and the Agreement and the covenants and
agreements made in the Purchase Documents are enforceable in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
effect affecting the enforcement of creditors' rights general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
6. All of the conditions specified in the Purchase Agreement applicable to
the Acquired Eligible Receivables and the Agreement for the acquisition of the
Acquired Eligible Receivables and the disbursement hereby authorized and
requested have been satisfied.
7. If an Eligible Receivable currently pledged to the Trustee is being sold
in exchange for an Acquired Eligible Receivable, the final expected maturity
date of such Acquired Eligible Receivable shall be substantially similar to that
of the Eligible Receivable being sold and such sale and exchange will not
adversely affect the ability of the Trustee to make timely principal and
interest payments under the Agreement on the Notes.
8. The proposed use of moneys in the Concentration Account as directed by
the Debtor to acquire the Acquired Eligible Receivables is in compliance with
the provisions of the Agreement.
9. The Administrator has conducted such UCC searches as it has deemed
prudent with respect to such Acquired Eligible Receivables, and such searches
indicate that such Acquired Eligible Receivables are free and clear of all liens
and security interests. The Debtor or the Administrator on your behalf is
retaining such UCC searches.
10. The Debtor will use the funds disbursed pursuant to this Certificate
solely in connection with the acquisition and pledge of the Acquired Eligible
Receivables pursuant to the Agreement.
The undersigned is authorized to sign and deliver this Certificate on
behalf of the Debtor.
WITNESS my hand this _____ day of ___________.
MEDICAL CAPITAL MANAGEMENT, INC.
By _____________________________________
Name ___________________________________
Title __________________________________
A-1-2
SCHEDULE A TO EXHIBIT A-1
ACQUIRED ELIGIBLE RECEIVABLES
LIST OF ACQUIRED ELIGIBLE RECEIVABLES
[INSERT INFORMATION]
WIRING INSTRUCTIONS
We hereby authorize and request you to wire funds per the following instructions
to Medical Capital management, Inc. for the purpose of acquiring the Acquired
Eligible Receivables:
Face Amount Adjusted Value Advance Amount to be
of Receivables of Receivables Amount Wired at Closing
-------------- -------------- ------ ----------------
$ $ $ $
Wire Instructions:
Account #
ABA#
Withhold anticipated shortfall $__________
EXHIBIT A-2
NON-RECEIVABLE ASSET ACQUISITION CERTIFICATE
This Non-Receivable Asset Acquisition Certificate is submitted pursuant to
the provisions of Section 5.11(a)(ii)(E) of the Second Amended and Restated Note
Issuance and Security Agreement, dated as of April 10, 2002, (the "Agreement"),
between Medical Capital Management, Inc., a Delaware corporation (the "Debtor")
and Zions First National Bank, as Trustee (the "Trustee"). All capitalized terms
used in this Certificate and not otherwise defined herein shall have the same
meanings given to such terms in the Agreement. In your capacity as Trustee, you
are hereby authorized and requested to disburse to the Debtor the sum of
$____________ for the acquisition of Assets. With respect to the Assets so to be
acquired, the Debtor hereby certifies as follows:
1. The Assets to be acquired are eligible as Collateral, and the wiring
instructions and related information are specified in Schedule A attached hereto
(the "Acquired Assets") and the information therein is true and correct.
2. Each Acquired Asset is an Asset authorized so to be acquired by the
Agreement.
3. You have been previously, or are herewith, provided with the following
items:
(a) a copy of the agreement between the Debtor and the seller of the
Acquired Assets pursuant to which the Acquired Assets are being purchased;
(b) instruments duly assigning the Acquired Assets to the Trustee
pursuant to the Agreement;
(c) an opinion from counsel reasonably acceptable to the Trustee to
the effect that the Trustee will have a perfected security interest in the
Acquired Assets upon their acquisition by the Debtor;
(d) copies of all applicable Bills of Sale or Assignments relating to
the Acquired Assets; and
(e) to the extent the Acquired Assets are stock in a corporation, the
applicable stock certificates endorsed in blank and accompanying stock
powers.
4. The Debtor is not, on the date hereof, in default under the Agreement or
in the performance of any of its covenants and agreements made in the purchase
agreement relating to the Acquired Assets, and, to the best knowledge of the
Debtor, the seller of the Acquired Assets is not in default in the performance
of any of its covenants and agreements made in the purchase agreement applicable
to the Acquired Assets, and the Agreement and the covenants and agreements made
in the purchase agreement are enforceable in accordance with their terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter effect
affecting the enforcement of creditors' rights general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
5. All of the conditions specified in the purchase agreement applicable to
the Acquired Assets and the disbursement hereby authorized and requested have
been satisfied.
6. The proposed use of moneys in the Concentration Account as directed by
the Debtor to acquire the Acquired Assets is in compliance with the provisions
of the Agreement.
7. The Debtor has conducted such UCC searches [and searches of records of
other applicable governmental authorities covering ownership or lien matters] as
it has deemed prudent with respect to such Acquired Assets, and such searches
indicate that such Acquired Assets are free and clear of all liens and security
interests, except those listed on Schedule A hereto. The Debtor on your behalf
is retaining such UCC and other searches.
8. The Debtor will use the funds disbursed pursuant to this Certificate
solely in connection with the acquisition and pledge of the Acquired Assets
pursuant to the Agreement.
The undersigned is authorized to sign and deliver this Certificate on
behalf of the Debtor.
WITNESS my hand this _____ day of ___________.
MEDICAL CAPITAL MANAGEMENT, INC.
By _____________________________________
Name ___________________________________
Title __________________________________
A-2-2
SCHEDULE A TO EXHIBIT A-2
ACQUIRED ASSETS
TRUSTEE LIEN
LIST VALUE BASIS FOR VALUATION PRIORITY/OTHER LIENS
---- ----- ------------------- --------------------
[INSERT INFORMATION]
WIRING INSTRUCTIONS
We hereby authorize and request you to wire funds per the following instructions
to Medical Capital management, Inc. for the purpose of acquiring the Acquired
Assets:
Amount to be
Gross Purchase Price Fees and Expenses Wired at Closing
-------------------- ----------------- ----------------
$ $ $
Wire Instructions:
Account #
ABA
EXHIBIT A-3
COLLATERAL REPLACEMENT CERTIFICATE
This Collateral Replacement Certificate is submitted pursuant to the
provisions of Section 4.02 of the Second Amended and Restated Note Issuance and
Security Agreement, dated as of April 10, 2002, (the "Agreement"), between
Medical Capital Management, Inc., a Delaware corporation (the "Debtor") and
Zions First National Bank, as Trustee (the "Trustee"). All capitalized terms
used in this Certificate and not otherwise defined herein shall have the same
meanings given to such terms in the Agreement. With respect to the replacement
Collateral, the Debtor hereby certifies as follows:
1. The replacement Collateral constitutes [Eligible Receivables or assets
eligible as Collateral], and information specified in Schedule A attached hereto
(the "Replacement Collateral") and the information therein is true and correct.
2. If applicable, the requirements of Section 3.04 of the Agreement will be
met upon the acquisition of the Replacement Collateral.
3. Each item of Replacement Collateral is an Eligible Receivable or Asset
authorized so to be acquired by the Agreement.
4. You have been previously, or are herewith, provided with the following
items:
(a) a copy of the [Purchase Documents] [or other document pursuant to
which the Replacement Collateral is acquired by the Debtor] between the
Debtor and the seller of the Replacement Collateral (the "Seller") with
respect to the Replacement Collateral (original copy maintained on file
with the Debtor on behalf of the Trustee);
(b) instruments duly assigning the Replacement Collateral to the
Trustee pursuant to the Note Agreement; and
(c) [if the Replacement Collateral is not a Receivable] an opinion
from counsel in form and substance reasonably acceptable to the Trustee to
the effect that that the Trustee will have a perfected security interest in
the Replacement Collateral upon their acquisition by the Debtor.
5. The Debtor is not, on the date hereof, in default under the Agreement or
in the performance of any of its covenants and agreements made in the [Purchase
Documents] [or other document pursuant to which the Replacement Collateral is
acquired by the Debtor] relating to the Replacement Collateral, and, to the best
knowledge of the Debtor, the Seller is not in default in the performance of any
of its covenants and agreements made in the [Purchase Documents] [or other
document pursuant to which the Replacement Collateral is acquired by the Debtor]
applicable to the Replacement Collateral, and the Agreement and the covenants
and agreements made in the [Purchase Documents] [or other document pursuant to
which the Replacement Collateral is acquired by the Debtor] are enforceable in
accordance with their terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter effect affecting the enforcement of creditors' rights
general and except as such enforceability may be limited by general principles
of equity (whether considered in a proceeding at law or in equity).
6. All of the conditions specified in the [Purchase Documents] [or other
document pursuant to which the Replacement Collateral is acquired by the Debtor]
applicable to the Replacement Collateral and the Agreement for the acquisition
of the Replacement Collateral requested have been satisfied.
7. If an Eligible Receivable currently pledged to the Trustee is being sold
in exchange for Replacement Collateral constituting an Eligible Receivable, the
final expected maturity date of such Replacement Collateral shall be
substantially similar to that of the Eligible Receivable being sold and such
sale and exchange will not adversely affect the ability of the Trustee to make
timely principal and interest payments under the Agreement on the Notes.
[IF REPLACEMENT COLLATERAL IS RECEIVABLES, ADD THE FOLLOWING:] 8. The
Administrator has conducted such UCC searches as it has deemed prudent with
respect to such Replacement Collateral, and such searches indicate that such
Replacement Collateral is free and clear of all liens and security interests.
The Debtor or the Administrator on your behalf is retaining such UCC searches.
[IF REPLACEMENT COLLATERAL IS NOT RECEIVABLES, ADD THE FOLLOWING:] 8. The
Debtor has conducted such UCC searches [and searches of records of other
applicable governmental authorities covering ownership or lien matters] as it
has deemed prudent with respect to such Replacement Collateral, and such
searches indicate that such Replacement Collateral are free and clear of all
liens and security interests, except those listed on Schedule A hereto. The
Debtor on your behalf is retaining such UCC and other searches.
The undersigned is authorized to sign and deliver this Certificate on
behalf of the Debtor.
WITNESS my hand this _____ day of ___________.
MEDICAL CAPITAL MANAGEMENT, INC.
By _____________________________________
Name ___________________________________
Title __________________________________
A-3-2
SCHEDULE A TO EXHIBIT A-3
ACQUIRED ELIGIBLE RECEIVABLES
LIST OF REPLACEMENT COLLATERAL
[INSERT INFORMATION]
EXHIBIT B
SALE OF COLLATERAL AND RELEASE OF LIEN CERTIFICATE
This Sale of Collateral and Release of Lien Certificate is submitted pursuant to
the provisions of Section 3.04 of the Second Amended and Restated Note Issuance
and Security Agreement, dated as of April 10, 2002 (the "Agreement"), between
Medical Capital Management, Inc., a Delaware corporation (the "Debtor") and
Zions First National Bank, as Trustee (the "Trustee"). All capitalized terms
used in this Certificate and not otherwise defined herein shall have the same
meanings given to such terms in the Agreement.
Pursuant to Section 3.04, the Debtor intends to sell the Collateral set forth on
the attached Schedule I (the "Sale Collateral") to [NAME] (the "Purchaser"). In
your capacity as Trustee, you are hereby authorized and directed to take all
actions reasonably requested by the Debtor to release the lien to which the Sale
Collateral is subject under the Agreement and to transfer the Sale Collateral to
the Purchaser. The gross proceeds from the sale will be $________, consisting of
________. The gross proceeds from the sale shall be deposited directly with the
Trustee and the Trustee shall deposit such proceeds into the Concentration
Account. With respect to the sale of the Sale Collateral, the Debtor hereby
certifies to the Trustee as follows [INCLUDE ONE OF THE FOLLOWING]:
[the disposition price is equal to or in excess of the amount disbursed from the
Concentration Account to acquire the Sale Collateral (less any principal amounts
received by the Trustee with respect to such Sale Collateral).]; or
[the disposition price is lower than the amount disbursed from the Concentration
Account to acquire the Sale Collateral (less any principal amounts received by
the Trustee with respect to such Sale Collateral), and (A) the Revenues expected
to be received from the remaining Collateral (after giving effect to such
disposition) would be at least equal to the Revenues required to timely pay the
principal and interest on the Outstanding Notes, or (B) the Debtor shall remain
able to pay debt service on the Notes and make payment on any other Obligations
on a timely basis (after giving effect to such sale, transfer or other
disposition) whereas it would not have been able to do so on a timely basis if
it had not sold, transferred or disposed of the Sale Collateral at such
discounted amount, or (C) the sum of the amounts on deposit in the Accounts
(less moneys in any Account which the Debtor, Servicer, or Administrator is then
entitled to receive but which has not yet been removed from the Account) plus
Net Collectible Amount of the Receivables and the fair market value of other
Collateral will be at least equal to one hundred percent (100%) of the aggregate
principal amount of the then Outstanding Obligations plus accrued interest after
giving effect to such sale, transfer or other disposition of the Sale
Collateral.]
The undersigned is authorized to sign and deliver this Certificate on
behalf of the Debtor.
WITNESS my hand this _____ day of ___________.
MEDICAL CAPITAL MANAGEMENT, INC.
By _____________________________________
Name ___________________________________
Title __________________________________
B-2
