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Exhibit 10.3
RECEIVABLES PURCHASE AGREEMENT
between
NATIONAL MEDICAL CARE, INC.
as Seller
and
NMC FUNDING CORPORATION
as Purchaser
Dated as of August 28, 1997
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TABLE OF CONTENTS
PRELIMINARY STATEMENTS -1-
ARTICLE I DEFINITIONS -1-
SECTION 1.1. Certain Defined Terms -1-
SECTION 1.2. Other Terms -13-
SECTION 1.3. Computation of Time Periods -13-
ARTICLE II PURCHASE AND SETTLEMENTS -13-
2.1. Purchases of Receivables; Agreement to Purchase -13-
2.2. Payment for the Purchases -15-
2.3. Purchase Price Credit Adjustments -16-
2.4. Payments and Computations, Etc. -17-
2.5. Transfer of Records to Purchaser -17-
SECTION 2.6. Protection of Ownership Interest of the
Purchaser -18-
ARTICLE III REPRESENTATIONS AND WARRANTIES -20-
SECTION 3.1. Representations and Warranties of the Seller -20-
SECTION 3.2. Reaffirmation of Representations and
Warranties by the Seller -24-
ARTICLE IV CONDITIONS PRECEDENT -25-
4.1. Conditions Precedent to Closing. -25-
4.2. Conditions Precedent to Ongoing Purchases. -25-
ARTICLE V COVENANTS -26-
SECTION 5.1. Affirmative Covenants of Seller -26-
SECTION 5.2. Negative Covenants of the Seller -32-
SECTION 5.3. Financial Covenants -35-
ARTICLE VI ADMINISTRATION AND COLLECTION -35-
SECTION 6.1. Collection of Receivables -35-
SECTION 6.2. Right After Designation of New Collection Agent -35-
SECTION 6.4. Responsibilities of the Seller -36-
ARTICLE VII SELLER DEFAULTS -37-
SECTION 7.1. Seller Defaults -37-
SECTION 7.2. Remedies -39-
ARTICLE VIII INDEMNIFICATION; EXPENSES -40-
SECTION 8.1. Indemnities by the Seller -40-
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SECTION 8.2. Other Costs and Expenses -43-
ARTICLE IX MISCELLANEOUS -44-
SECTION 9.1. Term of Agreement -44-
SECTION 9.2. Waivers; Amendments -44-
SECTION 9.3. Notices -44-
SECTION 9.4. Governing Law; Submission to Jurisdiction;
Integration -45-
SECTION 9.5. Severability; Counterparts -46-
SECTION 9.6. Successors and Assigns -46-
SECTION 9.7. Waiver of Confidentiality -47-
SECTION 9.8. Confidentiality Agreement -47-
SECTION 9.9. Bankruptcy Petitions -47-
SECTION 9.10. Purchase Termination -48-
SECTION 9.11. Subordination -48-
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EXHIBITS
EXHIBIT A Forms of Contracts
EXHIBIT B Credit and Collection Policies and Practices
EXHIBIT C List of Special Account Banks and Designated
Account Agents
EXHIBIT D Form of Special Account Letter
EXHIBIT E Form of Subordinated Note
EXHIBIT F List of Actions and Suits
EXHIBIT G Location of Records
EXHIBIT H List of Seller's Subsidiaries, Divisions and
Tradenames
EXHIBIT I Form of Transferring Affiliate Letter
EXHIBIT J List of Transferring Affiliates, Chief
Executive Offices of Transferring Affiliates and
Tradenames
EXHIBIT K Form of Account Agent Agreement
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RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this "AGREEMENT") dated as of
August 28, 1997, is entered into by and between NATIONAL MEDICAL CARE, INC., a
Delaware corporation, as seller (the "SELLER"), and NMC FUNDING CORPORATION, a
Delaware corporation, as purchaser (the "PURCHASER").
PRELIMINARY STATEMENTS
WHEREAS, on the terms and conditions hereinafter set forth, the Seller
desires to sell, and the Purchaser has agreed to purchase, all of the Seller's
right, title and interest in and to the Receivables now and hereafter arising;
WHEREAS, the Seller and the Purchaser believe that it is in their
mutual interest for the Seller to sell such Receivables to the Purchaser and for
the Purchaser to purchase such Receivables;
WHEREAS, the Seller and the Purchaser intend each sale of Receivables
hereunder to be a true sale of such Receivables from the Seller to the Purchaser
providing the Purchaser with the full benefits of ownership of such Receivables,
and the Seller and the Purchaser do not intend any such transaction hereunder to
be, or for any purpose to be characterized as, a loan from the Purchaser to the
Seller; and
WHEREAS, the Purchaser has entered into the TAA, pursuant to which the
Purchaser may from time to time convey, transfer and assign undivided percentage
interests in the Receivables purchased from the Seller hereunder;
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ACCOUNT AGENT AGREEMENT" means an agreement in substantially the form
of Exhibit K hereto.
"ADVERSE CLAIM" means a lien, security interest, charge or
encumbrance, or other right or claim in, of or on any Person's assets or
properties in favor of any other Person (including any UCC financing statement
or any similar instrument filed against such Person's assets or properties).
"AFFECTED ASSETS" means, collectively, the Receivables and the Related
Security, Collections and Proceeds relating thereto.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of voting stock, by contract or otherwise.
"AGENT" means NationsBank, N.A., in its capacity as agent for the
Company and the Bank Investors under the TAA, and any successor thereto
appointed pursuant to Article IX of the TAA.
"AGGREGATE UNPAIDS" has the meaning specified in the TAA.
"AGREEMENT" has the meaning specified in the Preamble hereto.
"BANK INVESTORS" shall mean NationsBank, N.A. and each other financial
institution identified as such on the signature pages of the TAA and their
respective successors and assigns.
"BANK REVOLVER" means that certain Credit Agreement dated as of
September 27, 1996, among the Seller
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and certain subsidiaries and affiliates as borrowers, certain subsidiaries and
affiliates as guarantors, the lenders named therein, NationsBank, N.A., as
paying agent, and The Bank of Nova Scotia, The Chase Manhattan Bank, Dresdner
Bank AG, New York and Grand Cayman Branches, and NationsBank, N.A. as managing
agents.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
ss.101 et seq., as amended.
"BASE RATE" has the meaning specified in the TAA.
"BENEFIT PLAN" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which the Seller or any ERISA Affiliate of
the Seller is, or at any time during the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA.
"BMA" means Bio-Medical Applications Management Company, Inc., a
Delaware corporation, and its successors and permitted assigns.
"BMA TRANSFER AGREEMENT" means that certain Receivables Purchase
Agreement of even date herewith by and between BMA, as seller, and NMC, as
purchaser, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day on
which banks in New York, New York or Charlotte, North Carolina are authorized or
required by law to close.
"CAPITALIZED LEASE" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"CHAMPUS/VA" means, collectively, (i) the Civilian Health and Medical
Program of the Uniformed Service, a program of medical benefits covering
retirees and dependents of a member or a former member of a uniformed service,
provided, financed and supervised by the United States Department of Defense and
established by 10 USC ss.1071 ET SEQ. and (ii) the Civilian Health and Medical
Program of
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Veterans Affairs, a program of medical benefits covering dependents of veterans,
administered by the United States Veterans' Administration and Department of
Defense and established by 38 USC ss.1713 ET SEQ.
"CHAMPUS/VA REGULATIONS" means collectively, all regulations of the
Civilian Health and Medical Program of the Uniformed Services and the Civilian
Health and Medical Program of Veterans Affairs, including (a) all federal
statutes (whether set forth in 10 USC 1071, 38 USC 1713 or elsewhere) affecting
CHAMPUS/VA; and (b) all applicable provisions of all rules, regulations
(including 32 CFR 199 and 38 CFR 17.54), manuals, orders, and administrative,
reimbursement and other guidelines of all Governmental Authorities (including,
without limitation, HHS, the Department of Defense, the Veterans'
Administration, the Department of Transportation, the Assistant Secretary of
Defense (Health Affairs), and the Office of CHAMPUS, or any Person or entity
succeeding to the functions of any of the foregoing) promulgated pursuant to or
in connection with any of the foregoing (whether or not having the force of
law), in each case as may be amended, supplemented or otherwise modified from
time to time.
"CLOSING DATE" means August 28, 1997.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLECTION ACCOUNT" has the meaning specified in the TAA.
"COLLECTION AGENT" means at any time the Person then authorized
pursuant to Section 6.1 of the TAA to service, administer and collect
Receivables.
"COLLECTION DATE" means the date on which the TAA shall be terminated
in accordance with its terms and all of the Aggregate Unpaids thereunder paid in
full.
"COLLECTIONS" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable, including, without
limitation, all Finance Charges, if any, and cash proceeds of Related Security
with respect to such Receivable.
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"COMMERCIAL OBLIGOR" means any Obligor referred to in clause (C) or
(E) of the definition of "Obligor".
"COMMERCIAL PAPER" means the promissory notes issued by the Company in
the commercial paper market.
"COMPANY" means Enterprise Funding Corporation, and its successors and
assigns.
"CONCENTRATION ACCOUNT" has the meaning specified in the TAA.
"CONCENTRATION ACCOUNT AGREEMENT" has the meaning specified in the
TAA.
"CONCENTRATION ACCOUNT BANK" has the meaning specified in the TAA.
"CONCENTRATION ACCOUNT NOTICE" has the meaning specified in the TAA.
"CONFIDENTIAL INFORMATION" has the meaning specified in
Section 5.1(d).
"CONTRACT" means an agreement between an Originating Entity and an
Obligor which (i) if in writing, is in substantially the form of one of the
forms of written contract set forth in Exhibit A hereto or otherwise approved by
the Purchaser, and (ii) if an open account agreement, is evidenced by one of the
forms of invoices set forth in Exhibit A hereto or otherwise approved by the
Purchaser, in each case pursuant to or under which such Obligor shall be
obligated to pay for services or merchandise from time to time.
"CONTRACTUAL ADJUSTMENT" means, with respect to any Receivable, an
amount by which the Outstanding Balance of such Receivable is reduced as a
result of (i) Medicare or Medicaid program funding and fee requirements or (ii)
any other reasonable and customary insurance company or other charge or
reimbursement policies or procedures.
"CREDIT AND COLLECTION POLICY" shall mean the Seller's credit and
collection policy or policies and
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practices, relating to Contracts and Receivables existing on the date hereof and
referred to in Exhibit B attached hereto, as modified from time to time in
compliance with Section 5.2(c).
"CREDIT SUPPORT PROVIDER" means the Person or Persons who provides
credit support to the Company in connection with the issuance by the Company of
Commercial Paper.
"DESIGNATED ACCOUNT AGENT" means, in the case of any Originating
Entity, an Affiliate thereof that (i) is, directly or indirectly, a wholly-owned
Subsidiary of FMCH, (ii) has agreed to maintain a deposit account for the
benefit of such Originating Entity to which Obligors in respect of such
Originating Entity have been directed to remit payments on Receivables, and
(iii) shall have executed and delivered to the Purchaser an Account Agent
Agreement.
"ELIGIBLE RECEIVABLE" has the meaning set forth in the TAA, except
that, for purposes of this Agreement (a) the criteria listed in clause (ii) of
the definition of Eligible Receivable in the TAA shall not be applicable and (b)
references in clauses (iii), (iv) and (v) of such definition in the TAA to "the
time of the initial creation of an interest therein hereunder" shall instead be
deemed to mean and refer to "the time such Receivable was sold or transferred by
the Seller to the Purchaser hereunder."
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA AFFILIATE" means, with respect to any Person, (i) any
corporation which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code (as in effect from time to
time, the "Code")) as such Person; (ii) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with such Person; or (iii) a member of the same affiliated service group
(within the meaning of Section 414(n) of the Code) as such Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above.
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"EVENT OF BANKRUPTCY" means, with respect to any Person, (i) that such
Person (a) shall generally not pay its debts as such debts become due or (b)
shall admit in writing its inability to pay its debts generally or (c) shall
make a general assignment for the benefit of creditors; (ii) any proceeding
shall be instituted by or against such Person seeking to adjudicate it as
bankruptcy or insolvent, or seeking liquidation, winding up, reorganization,
arrangements, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or any substantial part of
its property or (iii) if such Person is a corporation (or other business
entity), such Person or any Subsidiary shall take any corporate (or analogous)
action to authorize any of the actions set forth in the preceding clauses (i) or
(ii).
"FINANCE CHARGES" means, with respect to a Contract, any finance,
interest, late or similar charges owing by an Obligor pursuant to such Contract.
"FMC" means Fresenius Medical Care AG, a corporation organized and
existing under the laws of the Federal Republic of Germany.
"FMCH" means Fresenius National Medical Care Holdings, Inc., a New
York corporation, and its successors and permitted assigns.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
accounting profession, which are in effect as of the date of this Agreement.
"GUARANTY" means, with respect to any Person any agreement by which
such Person assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the
obligation of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of
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any other Person or otherwise assures any other creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract and shall include, without limitation, the
contingent liability of such Person in connection with any application for a
letter of credit.
"HCFA" means the Health Care Financing Administration, an agency of
the HHS charged with administering and regulating, among other things, certain
aspects of Medicaid and Medicare.
"HHS" means the Department of Health and Human Services, an agency of
the Federal Government of the United States.
"HOSPITAL OBLIGOR" means any Obligor referred to in clause (D) of the
definition of "Obligor" contained in this Section 1.1 hereof.
"INDEBTEDNESS" means, with respect to any Person and without
duplication, such Person's (i) obligations for borrowed money, (ii) obligations
representing the deferred purchase price of property other than accounts payable
arising in the ordinary course of such Person's business on terms customary in
the trade, (iii) obligations, whether or not assumed, secured by liens or
payable out of the proceeds or production from property now or hereafter owned
or acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or other instruments, (v) Capitalized Lease obligations and (vi)
obligations for which such Person is obligated pursuant to a Guaranty.
"INDEMNIFIED AMOUNTS" has the meaning specified in Section 8.1 hereof.
"INDEMNIFIED PARTIES" has the meaning specified in Section 8.1 hereof.
"INVESTOR REPORT" has the meaning specified in the TAA.
"LAW" means any law (including common law), constitution, statute,
treaty, regulation, rule, ordinance,
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order, injunction, writ, decree or award of any Official Body.
"LIQUIDITY PROVIDER" means the Person or Persons who will provide
liquidity support to the Company in connection with the issuance by the Company
of Commercial Paper.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on any of
(i) the collectibility or enforceability of a material portion of the
Receivables or Related Security, (ii) the ability of the Seller or any other
Originating Entity to charge or collect a material portion of the Receivables or
Related Security, (iii) the ability of (A) the Seller or any other Originating
Entity to perform or observe in any material respect any provision of this
Agreement or any other Transaction Document to which it is a party or (B) of FMC
or FMCH to cause the due and punctual performance and observation by the Seller
of any such provision or, if the Seller shall fail to do so, to perform or
observe any such provision required to be performed or observed by the Seller
under this Agreement or any other Transaction Document to which the Seller is
party, in each case pursuant to the Parent Agreement, (iv) the ability of (A)
any Transferring Affiliate to perform or observe in any material respect any
provision of the Transferring Affiliate Letter or, in the case of BMA, the BMA
Transfer Agreement, or, in the case of any Designated Account Agent, the
applicable Account Agent Agreement or (B) of FMC or FMCH to cause the due and
punctual performance and observation by such Transferring Affiliate, BMA or such
Designated Account Agent of any such provision or, if such Transferring
Affiliate, BMA or such Designated Account Agent shall fail to do so, to perform
or observe any such provision, in each case, pursuant to the Parent Agreement,
(v) the financial condition, operations, businesses or properties of FMC, FMCH,
the Seller or the Transferor or (vi) the interests of the Purchaser and/or its
assignees under the Transaction Documents.
"MEDICAID" means the medical assistance program established by Title
XIX of the Social Security Act (42 USC ss.ss.1396 ET SEQ.) and any statutes
succeeding thereto.
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"MEDICAID REGULATIONS" means, collectively, (a) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting Medicaid; (b) all state statutes and plans for medical assistance
enacted in connection with such statutes and federal rules and regulations
promulgated pursuant to or in connection with such statutes; and (c) all
applicable provisions of all rules, regulations manuals, orders and
administrative, reimbursement and other guidelines of all Governmental
Authorities (including, without limitation, HHS, HCFA, the office of the
Inspector General for HHS, or any Person succeeding to the functions of any of
the foregoing) promulgated pursuant to or in connection with any of the
foregoing (whether or not having the force of law), in each case as may be
amended, supplemented or otherwise modified from time to time.
"MEDICARE" means the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act (42 USC
ss.ss.1395 et seq.) and any statutes succeeding thereto.
"MEDICARE REGULATIONS" means, collectively, (a) all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting Medicare; and (b) all applicable provisions of all rules, regulations,
manuals, orders and administrative, reimbursement and other guidelines of all
Governmental Authorities (including, without limitation, HHS, HCFA, the Office
of the Inspector General for HHS, or any Person succeeding to the functions of
any of the foregoing) promulgated pursuant to or in connection with the
foregoing (whether or not having the force of law), as each may be amended,
supplemented or otherwise modified from time to time.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is or was at any time during the current year
or the immediately preceding five years contributed to by the Seller or any
ERISA Affiliate of the Seller on behalf of its employees.
"NET INVESTMENT" has the meaning specified in the TAA.
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"OBLIGOR" of any Receivable means (i) any Person obligated to make
payments of such Receivable pursuant to a Contract and/or (ii) any Person owing
any amount in respect of such Receivable, or in respect of any Related Security
with respect to such Receivable, all such Persons referred to in any of clauses
(A), (B), (E), (F) and (G) below, and each Person referred to in any of clauses
(C) and (D) below, to be deemed for purposes of this Agreement to be one
Obligor:
(A): all Persons owing Receivables or Related Security under the
Medicare program.
(B): all Persons owing Receivables or Related Security under the
Medicaid program.
(C): each Person which is an insurance company.
(D): each Person which is a hospital or other health care
provider.
(E): all Persons, other than health care providers or Persons
referred to in clause (A), (B), (C) or (D) above or clause (F) or (G)
below, owing Receivables arising from the sale by NMC Medical
Products, Inc. of services or merchandise.
(F): all Persons owing Receivables or Related Security under the
CHAMPUS/VA Program.
(G): all Persons who receive the services or merchandise the sale
of which results in Receivables that are not insured, guaranteed or
otherwise supported in respect thereof by any of the Persons referred
to in clauses (A) through (F) above, including any Person owing any
amount in respect of Receivables by reason of insurance policy
deductibles or co-insurance agreements or arrangements.
"OFFICIAL BODY" means any government or political subdivision or any
agency, authority, bureau, central bank, commission, department or
instrumentality of any such
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government or political subdivision, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"ORIGINATING ENTITY" means any of the Seller and any Transferring
Affiliate.
"OTHER TRANSFEROR" means any Person other than the Purchaser that has
entered into a receivables purchase agreement or transfer and administration
agreement with the Company.
"OUTSTANDING BALANCE" means, with respect to any Receivable at any
time, the then outstanding principal amount thereof excluding any accrued and
outstanding Finance Charges related thereto.
"PARENT AGREEMENT" has the meaning specified in the TAA.
"PARENT GROUP" means, collectively, FMC, FMCH, the Seller, the
Originating Entities and their Subsidiaries and Affiliates (other than the
Purchaser), and "PARENT GROUP MEMBER" means any such Person individually.
"PERSON" means any corporation, limited liability company, natural
person, firm, joint venture, partnership, trust, unincorporated organization,
enterprise, government or any department or agency or any government.
"POTENTIAL SELLER DEFAULT" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Seller Default.
"PRIMARY PAYOR" means (i) each Obligor referred to in clauses (A),
(B), (E), (F) and (G) of the definition of "Obligor", (ii) collectively, all
Obligors of the type referred to in clause (C) of the definition of "Obligor"
and (iii) collectively, all Obligors of the type referred to in clause (D) of
the definition of "Obligor".
"PROCEEDS" means "proceeds" as defined in Section 9-306 (1) of the
UCC.
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"PURCHASE" means, on any Business Day, the sale, assignment,
contribution, transfer and/or other conveyance of Receivables, together with the
Related Assets with respect thereto, from the Seller to the Purchaser in
accordance with the terms of ARTICLE II hereof.
"PURCHASE PRICE" means, with respect to any Purchase on any date, the
aggregate price to be paid to the Seller in connection therewith, which shall be
an amount equal to (i) the Outstanding Balance of the Receivables that are the
subject of such Purchase, MINUS any Contractual Adjustments in respect of such
Receivables, MULTIPLIED by (ii) the Purchase Price Percentage then in effect.
"PURCHASE PRICE CREDIT" means a credit in favor of the Purchaser
against the Purchase Price otherwise due and payable by the Purchaser hereunder.
"PURCHASE PRICE PERCENTAGE" means 97%, or such other percentage as may
be agreed from time to time by the Purchaser and the Seller and which would
provide the Purchaser with a reasonable return on its Purchases hereunder after
taking into account (i) the time value of money based upon the anticipated dates
of collection of such Receivables and the cost to the Purchaser of financing its
investment in such Receivables during such period and (ii) the risk of
nonpayment by the Obligors. The Seller and the Purchaser may agree from time to
time to change the Purchase Price Percentage based on changes in the items
described in clauses (i) and (ii) above, PROVIDED that any change to the
Purchase Price Percentage shall apply only prospectively and shall not affect
the Purchase Price in respect of Purchases made prior to the date on which the
Purchaser and the Seller agree to make such change.
"PURCHASER" means NMC Funding Corporation, and its successors and
permitted assigns.
"RECEIVABLE" means the indebtedness of any Obligor owed (at the time
it arises, and before giving effect to any transfer or conveyance contemplated
in the Transferring Affiliate Letter, the BMA Transfer Agreement or hereunder)
to the Seller or any Transferring Affiliate under a Contract, whether
constituting an account, chattel paper, instrument, insurance claim, investment
property or general intangible, arising in connection with the sale or lease of
merchandise or the rendering of services by an Originating
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Entity, and includes the right to payment of any Finance Charges and other
obligations of such Obligor with respect thereto.
"RECORDS" means all Contracts and other documents, books, records and
other information (including, without limitation, computer programs, tapes,
discs, punch cards, data processing software and related property and rights)
maintained with respect to receivables and the related Obligors.
"RELATED ASSETS" has the meaning specified in Section 2.1(a) hereof.
"RELATED SECURITY" means with respect to any Receivable, all of the
Seller's rights, title and interest in, to and under:
(i) all of the Seller's or any Transferring Affiliate's interest,
if any, in the merchandise (including returned or repossessed merchandise),
if any, the sale of which gave rise to such Receivable;
(ii) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise, together with all financing statements signed by an Obligor
describing any collateral securing such Receivable;
(iii) all guarantees, indemnities, warranties, insurance (and
proceeds and premium refunds thereof) or other agreements or arrangements
of any kind from time to time supporting or securing payment of such
Receivable whether pursuant to the Contract related to such Receivable or
otherwise, including, without limitation, insurance, guaranties and other
agreements or arrangements under the Medicare program, the Medicaid
program, state renal programs, CHAMPUS/VA, private insurance policies, and
hospital and other health care programs and health care provider
arrangements;
(iv) all Records related to such Receivable;
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(v) all rights and remedies of the Seller (A) under the
Transferring Affiliate Letter, together with all financing statements filed
in connection therewith against the Transferring Affiliates and (B) under
the BMA Transfer Agreement, together with all financing statements filed in
connection therewith against BMA; and
(vi) all Proceeds of any of the foregoing.
"RESPONSIBLE OFFICER" means any of the Chief Executive Officer, the
President, the Chief Financial Officer, the Controller, the Treasurer or an
Assistant Treasurer of the Seller.
"REVOLVING LOAN" has the meaning specified in Section 2.2(c).
"SELLER" means National Medical Care, Inc., a Delaware corporation,
and its successors and permitted assigns.
"SELLER DEFAULT" has the meaning specified in Section 7.1.
"SETTLEMENT DATE" means (i) the last Business Day of each calendar
month with respect to the immediately preceding calendar month and (ii) any
additional day designated by the Purchaser.
"SOCIAL SECURITY ACT" means the Social Security Act, as amended from
time to time, and the regulations promulgated and rulings and advisory opinions
issued thereunder.
"SPECIAL ACCOUNT" means a special depositary account maintained at a
bank acceptable to the Agent for the purpose of receiving Collections, which
account is in the name of either (i) the Originating Entity in respect of the
Receivables giving rise to such Collections or (ii) a Designated Account Agent
acting on behalf of such Originating Entity.
"SPECIAL ACCOUNT BANK" means any of the banks holding one or more
Special Accounts.
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"SPECIAL ACCOUNT LETTER" means a letter, in substantially the form of
Exhibit D hereto, from an Originating Entity (or, if applicable, a Designated
Account Agent) to any Special Account Bank, executed by such Originating Entity
(or such Designated Account Agent) to such Special Account Bank.
"STANDARD & POOR'S" or "S&P" means Standard & Poor's Ratings Services,
a division of XxXxxx-Xxxx Companies, Inc.
"SUBORDINATED NOTE" has the meaning specified in SECTION 2.2(d)
hereof.
"SUBSIDIARY" of a Person means any Person more than 50% of the
outstanding voting interests of which shall at any time be owned or controlled,
directly or indirectly, by such Person or by one or more Subsidiaries of such
Person or any similar business organization which is so owned or controlled.
"TAA" means that certain Transfer and Administration Agreement of even
date herewith among the Purchaser, as "Transferor", the Seller, as the initial
"Collection Agent" thereunder, the Company, the Bank Investors and the Agent, as
the same may from time to time be amended, restated, supplemented or otherwise
modified.
"TERMINATION DATE" means the date, occurring after the "Termination
Date" under the TAA, which the parties hereto agree shall be the Termination
Date for purposes of this Agreement.
"TRANSACTION DOCUMENTS" has the meaning specified in the TAA.
"TRANSFERRING AFFILIATE" means a company specified on Exhibit J, as
such Exhibit may be amended from time to time as provided in Section 2.7;
PROVIDED, HOWEVER, that no such company shall be a Transferring Affiliate from
and after the occurrence of any Event of Bankruptcy by or with respect thereto
unless any Receivables that arose from sales by such company exist on such date,
in which case such company shall continue to be a Transferring Affiliate until
21
the respective Outstanding Balances of all such Receivables shall have been
reduced to zero; and provided further that, solely with respect to the
Receivables and Related Security transferred by it to the Seller pursuant to the
BMA Transfer Agreement, BMA shall constitute a "Transferring Affiliate"
hereunder.
"TRANSFERRING AFFILIATE LETTER" means, collectively, the respective
letters, in each case in substantially the form of Exhibit I hereto, from the
Transferring Affiliates (other than BMA) to the Agent, the Purchaser and the
Seller, as the same may be amended, restated, supplemented or otherwise modified
from time to time with the consent of the Purchaser and the Agent.
"UCC" means, with respect to any state, the Uniform Commercial Code as
from time to time in effect in such state.
"U.S." or "UNITED STATES" means the United States of America.
"US GOVERNMENT OBLIGOR" means any Obligor that is the government of
the United States, or any subdivision or agency thereof the obligations of which
are supported by the full faith and credit of the United States, and shall
include any Obligor referred to in clause (A), (B) or (F) of the definition of
"Obligor".
"VOTING STOCK" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
SECTION 1.2. OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
SECTION 1.3. COMPUTATION OF TIME PERIODS. Unless otherwise stated in
this Agreement, in the
22
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including", the words "to" and "until" each
means "to but excluding", and the word "within" means "from and excluding a
specified date and to and including a later specified date".
ARTICLE II
PURCHASE AND SETTLEMENTS
SECTION 2.1. PURCHASES OF RECEIVABLES; AGREEMENT TO PURCHASE.
(a) Subject to the terms and conditions hereinafter set forth, the Purchaser
hereby purchases from the Seller, and the Seller hereby sells, transfers,
assigns and otherwise conveys to the Purchaser, all of the Seller's right, title
and interest in and to each and every Receivable existing as of the Closing Date
as well as each and every Receivable which may arise at any time thereafter
until the Termination Date, together, in each case, with the Related Security,
Collections and Proceeds with respect thereto (such Related Security,
Collections and Proceeds, collectively, the "RELATED ASSETS"). All of the
Seller's right, title and interest in and to all Receivables and the Related
Assets with respect thereto arising on each day prior to the Termination Date
shall, without further action of any type being required on the part of the
Purchaser or the Seller (and notwithstanding any delay in making payment of the
Purchase Price therefor, or any delay in making any notation reflecting payment
of such Purchase Price), be automatically transferred on such day to the
Purchaser, whereupon the Purchaser shall have the obligation to pay the Purchase
Price in respect thereof in the manner, at the time and otherwise in accordance
with the terms specified in this Agreement. Prior to paying the Purchase Price
hereunder in respect of any Purchase, the Purchaser may request of the Seller,
and the Seller shall deliver, such approvals, opinions, information, reports or
documents as the Purchaser may reasonably request.
(b) It is the intention of the parties hereto that
each Purchase of Receivables made hereunder shall constitute a true sale of such
Receivables and the
23
Related Assets with respect thereto (including, in the case of Receivables, a
"sale of accounts," as such term is used in Article 9 of the UCC), which sales
shall, in each case, be absolute and irrevocable and provide the Purchaser with
the full benefits of ownership of such Receivables and Related Assets. Except
for the Purchase Price Credits owed pursuant to Section 2.3 hereof, each sale of
Receivables by the Seller to the Purchaser is made without recourse to the
Seller; PROVIDED, HOWEVER, that (i) the Seller shall be liable to the Purchaser
for all representations, warranties and covenants made by the Seller pursuant to
the terms of this Agreement or any other Transaction Document, and (ii) such
sale does not constitute and is not intended to result in an assumption by the
Purchaser of any obligation of the Seller, any Transferring Affiliate or any
other Person arising under or in connection with the Receivables, the Related
Assets and/or the related Contracts. In view of the intention of the parties
hereto that the Purchases of Receivables made hereunder shall constitute sales
of such Receivables rather than a loan secured by such Receivables, the Seller
agrees on or prior to the date hereof to xxxx its master data processing records
relating to the Receivables with a legend, acceptable to the Purchaser,
evidencing that the Purchaser has purchased such Receivables as provided in this
Agreement and to note in its financial statements that its Receivables have been
sold to the Purchaser.
(c) Notwithstanding any other provision of this
Agreement to the contrary, no Purchases shall be made hereunder from and after
the time of any Event of Bankruptcy with respect to the Seller or the Purchaser.
SECTION 2.2. PAYMENT FOR THE PURCHASES. (a) The Purchase Price
for the initial Purchase of Receivables hereunder shall be payable in full by
the Purchaser to the Seller, and shall be paid to the Seller in the following
manner on the date of such initial Purchase: (i) by the issuance of equity in
the manner contemplated in that certain Stockholder and Subscription Agreement
dated as of August 28, 1997 between the Seller and the Purchaser and having a
value of not less than the greater of (A) $5,000,000 or (B) three percent
(3.00%) of the Net Investment outstanding at such time under the TAA, after
giving effect to such sale under the TAA, (ii) by delivery of immediately
available funds, to the extent of funds made
24
available to the Purchaser in connection with its subsequent sale of an interest
in such Receivables to the Agent (on behalf of the Company or the Bank
Investors, as applicable) under the TAA and (iii) the balance, with the proceeds
of a Revolving Loan. The Purchase Price for each Purchase after the initial
Purchase shall be payable in full by the Purchaser to the Seller or its designee
on the date of such Purchase, EXCEPT that the Purchaser may, with respect to any
such Purchase, offset against such Purchase Price any amounts owed by the Seller
to the Purchaser hereunder and which have become due but remain unpaid.
(b) If on any date the amount of cash available to
the Purchaser to pay for the Purchases of Receivables to be made on such date is
less the Purchase Price owing therefor, the Purchaser shall, with notice to the
Seller, pay such remaining part of the Purchase Price by borrowing from the
Seller a revolving loan (each a "REVOLVING LOAN"), and the Seller, subject to
the remaining provisions of this paragraph, irrevocably agrees to advance, and
shall be deemed to have advanced, a Revolving Loan in the amount so specified by
the Purchaser; PROVIDED, HOWEVER, that no such Revolving Loan shall be made to
the Purchaser, if, after giving effect thereto, either (i) the aggregate
outstanding amount of the Revolving Loans would exceed the aggregate Outstanding
Balance of the Eligible Receivables MINUS the aggregate Net Investment
outstanding at such time under the TAA or (ii) the Purchaser's net worth would
be less than the greater of (A) $5,000,000 or (B) three percent (3.00%) of the
aggregate Net Investment outstanding at such time under the TAA. The Revolving
Loans shall be evidenced by, and shall be payable in accordance with the terms
and provisions of, a promissory note in the form of Exhibit E hereto (the
"SUBORDINATED NOTE") and shall be payable solely from funds which the Purchaser
is not required under the TAA to set aside for the benefit of, or otherwise pay
over to, the Agent, the Company and/or the Bank Investors.
(c) In the case of any Purchase subsequent to the
initial Purchase, if the Purchaser has insufficient funds to pay in full the
applicable Purchase Price therefor (after taking into account the proceeds
received from any Transfers under the TAA and the proceeds of Revolving Loans
made hereunder), then the Seller shall be deemed to have contributed to the
capital of the Purchaser Receivables
25
having a Purchase Price equal to the otherwise unpaid portion of the total
Purchase Price owed on such day.
(d) The respective Purchase Prices for the Purchases
made during any calendar month shall be settled on a monthly basis on the
Settlement Date occurring in the succeeding calendar month, such settlement to
be made based on the information contained in the Investor Report in respect of
such calendar month. With respect to any such settlement, each adjustment to the
outstanding balance of the Subordinated Note made pursuant to this Article II
and each capital contribution made by the Seller to the Purchaser pursuant to
this Article II shall be deemed to have occurred and shall be effective as of
the last Business Day of the calendar month to which such settlement relates.
Notwithstanding the foregoing, to the extent the Purchaser receives either
Collections or proceeds from any Incremental Transfers, which, in either case,
it is not required to hold in trust for, or remit to, the Agent, the Company
and/or any of the Bank Investors pursuant to the TAA, then the Purchaser shall
remit such funds to the Seller (net of any funds needed to pay existing expenses
of the Purchaser which are then accrued and unpaid) in the following order of
application: FIRST to pay the Purchase Price for any Receivables Purchased from
the Seller; and SECOND to pay amounts owed by the Purchaser to the Seller under
the Subordinated Note; PROVIDED, that if on any Settlement Date it is determined
that the aggregate amount of funds so remitted by the Purchaser to the Seller
during any calendar month exceeded the aggregate of the amounts described in
clauses FIRST and SECOND above due and payable by the Purchaser to the Seller
during such calendar month, such excess funds shall be returned forthwith by the
Seller to the Purchaser.
SECTION 2.3. PURCHASE PRICE CREDIT ADJUSTMENTS. (a) If on any
day the Outstanding Balance of a Receivable is either (x) reduced as a result of
any defective, rejected or returned merchandise or services, any discount,
credit, Contractual Adjustment, rebate, dispute, warranty claim, repossessed or
returned goods, chargeback, allowance, any billing adjustment or other
adjustment, or (y) reduced or canceled as a result of a setoff or offset in
respect of any claim by any Person (whether such claim arises out of the same or
a related transaction or an unrelated transaction), the Purchaser shall be
entitled to a Purchase Price Credit
26
in an amount equal to the full amount of such reduction or cancellation. In
addition, if on any day any representation or warranty contained in Article III
with respect to any Receivable is not true when made or deemed made, the
Purchaser shall be entitled to a Purchase Price Credit in an amount equal the
Outstanding Balance of such Receivable. If any Purchase Price Credit to which
the Purchaser is entitled pursuant to this SECTION 2.3 exceeds the Purchase
Price of the Receivables to be sold hereunder on any date, then the Seller shall
pay the remaining amount of such Purchase Price Credit to the Purchaser in cash
on the next succeeding Business Day; PROVIDED that, if the Termination Date has
not occurred, the Seller shall be allowed to deduct the remaining amount of such
Purchase Price Credit from any indebtedness owed to it under the Subordinated
Note.
(b) Any payment by an Obligor in respect of any
indebtedness owed by it to the Seller shall, except as otherwise specified by
such Obligor or otherwise required by contract or law and unless otherwise
instructed by the Purchaser, be applied as a Collection of any Receivable of
such Obligor which was included in a Purchase hereunder (starting with the
oldest such Receivable) before being applied to any other receivable or other
indebtedness of such Obligor.
SECTION 2.4. PAYMENTS AND COMPUTATIONS, ETC. All amounts to be
paid or deposited by the Seller hereunder shall be paid or deposited in
accordance with the terms hereof no later than 11:00 a.m. (New York City time)
on the day when due in immediately available funds. The Seller shall, to the
extent permitted by law, pay to the Purchaser, upon demand, interest on all
amounts not paid or deposited when due hereunder at a rate equal to 2% per annum
plus the Base Rate. All computations of interest hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
but excluding the last day) elapsed. Any computations by the Purchaser of
amounts payable by the Seller hereunder shall be binding upon the Seller absent
manifest error.
SECTION 2.5. TRANSFER OF RECORDS TO PURCHASER. (a) In
connection with the Purchases of Receivables hereunder, the Seller hereby sells,
transfers, assigns and otherwise conveys to the Purchaser all of the Seller's
right
27
and title to and interest in the Records relating to all Receivables included in
any Purchase hereunder, without the need for any further documentation in
connection with any such Purchase. In connection with such transfer, the Seller
hereby grants to each of the Purchaser and the Collection Agent (including,
without limitation, any successor Collection Agent appointed in accordance with
the TAA) an irrevocable, non-exclusive license to use, without royalty or
payment of any kind, all software now or hereafter used by the Seller to account
for the Receivables, to the extent necessary to administer the Receivables,
whether such software is owned by the Seller or is owned by others and used by
the Seller under license agreements with respect thereto (the "Software"). As of
the date hereof, with respect to all Software now existing, either (i) no
consent by any licensor of the Seller to such grant is required, (ii) if any
such consent is required, such consent has been obtained, or (iii) the data
administered and managed with the use of such Software is in a form such that
other types of software that are generally available may be used to administer
and manage such data in the same fashion as then being administered and managed
with the applicable Software. If after the date hereof the consent by any
licensor of the Seller to such grant shall be required, the Seller shall
promptly obtain such consent. The license granted hereby shall be irrevocable,
and shall not expire until the date on which this Agreement shall terminate in
accordance with its terms.
(b) The Seller shall take such action requested by
the Purchaser and/or the Agent, from time to time hereafter, that may be
reasonably necessary or appropriate to ensure that the Purchaser (and its
assignees) has (i) an enforceable ownership interest in the Records relating to
the Receivables purchased from the Seller hereunder and (ii) an enforceable
right (whether by license or sublicense or otherwise) to use all of the computer
software used to account for the Receivables and/or to recreate such Records.
SECTION 2.6. PROTECTION OF OWNERSHIP INTEREST OF THE
PURCHASER. (a) The Seller agrees that it will, and will cause each Transferring
Affiliate to, from time to time, at its expense, promptly execute and deliver
all instruments and documents and take all actions as may be
28
necessary or as the Purchaser or the Agent may reasonably request in order to
perfect or protect the ownership interest of the Purchaser in the Receivables
and Related Assets with respect thereto or to enable the Purchaser to exercise
or enforce any of its rights and remedies hereunder. Without limiting the
foregoing, the Seller will, upon the request of the Purchaser or the Agent, in
order to accurately reflect this purchase and sale transaction, execute and file
such financing or continuation statements or amendments thereto or assignments
thereof as may be requested by the Purchaser or the Agent. The Seller shall,
upon request of the Purchaser or the Agent, obtain such additional search
reports as the Purchaser or the Agent shall request. To the fullest extent
permitted by applicable law, each of the Purchaser and the Agent shall be
permitted to sign and file continuation statements and amendments thereto and
assignments thereof without the Seller's signature. Carbon, photographic or
other reproduction of this Agreement or any financing statement shall be
sufficient as a financing statement. The Seller shall not, and shall not permit
any Transferring Affiliate to, change its respective name, identity or corporate
structure (within the meaning of Section 9-402(7) of the UCC as in effect in any
applicable state) nor relocate its respective chief executive office or any
office where Records are kept unless it shall have: (i) given each of the
Purchaser and the Agent at least thirty (30) days prior notice thereof and (ii)
prepared at Seller's expense and delivered to each of the Purchaser and the
Agent all financing statements, instruments and other documents necessary to
preserve and protect the Purchaser's ownership interest in the Receivables and
the Related Assets with respect thereto or requested by the Purchaser or the
Agent in connection with such change or relocation. Any filings under the UCC or
otherwise that are occasioned by such change in name or location shall be made
at the expense of the Seller.
(b) In addition and without limiting the authority of
the Purchaser or the Agent set forth in subsection (a) above, but subject to
subsection (c) below, the Seller shall, and shall cause each Transferring
Affiliate to, instruct any or all of the Special Account Banks (which
instructions shall be maintained in full force and effect) to transfer directly
to the Concentration
29
Account all Collections from time to time on deposit in the applicable Special
Accounts on a daily basis in accordance with the terms set forth in the
applicable Special Account Letter. In the event the Seller shall at any time
determine, for any of the reasons described in subsection (c) below, that the
Seller or any Transferring Affiliate shall be unable to comply fully with the
requirements of this subsection (b), the Seller shall promptly so advise the
Purchaser and the Agent, and the Purchaser, the Agent and the Seller shall
commence discussions with a view toward implementing an alternative arrangement
therefor satisfactory to the Purchaser and the Agent.
(c) Anything to the contrary herein notwithstanding,
all Medicare or Medicaid payments which are made by an Obligor with respect to
any Receivables shall be collected from such Obligor only by (i) the applicable
Originating Entity or (ii) an agent of such Originating Entity, EXCEPT to the
extent that an Obligor may be required to submit any such payments directly to a
Person other than such Originating Entity pursuant to a court-ordered assignment
which is valid, binding and enforceable under applicable federal and state
Medicare Regulations and Medicaid Regulations; and neither this Agreement nor
any other Transaction Document shall be construed to permit any other Person, in
violation of applicable Medicare Regulations or Medicaid Regulations to collect
or receive, or to be entitled to collect or receive, any such payments prior to
such Originating Entity's or such agent's receipt thereof.
SECTION 2.7. ADDITIONAL TRANSFERRING AFFILIATES. (a) If (i)
one or more direct or indirect wholly-owned subsidiaries of the Seller (other
than the Transferring Affiliates) now owned or hereafter acquired, is primarily
engaged in the same business as is conducted on the date hereof by the Seller
and the Transferring Affiliates or (ii) the Seller reorganizes its corporate
structure such that facilities generating Receivables on the date hereof (or
acquired as contemplated by clause (i)) are owned by one or more additional
wholly-owned subsidiaries of the Seller, any or all of the wholly-owned
subsidiaries referred to in clauses (i) and (ii) may, following 30-days' prior
written notice by the Seller to the Purchaser and the Agent and with the prior
written consent of the Purchaser and the Agent
30
(which consent shall not be unreasonably withheld or delayed), become
Transferring Affiliates under this Agreement upon delivery to the Purchaser and
the Agent of (x) counterparts of the Transferring Affiliate Letter duly executed
by such subsidiary or subsidiaries and (y) the documents relating to such
subsidiary or subsidiaries of the kind delivered by or on behalf of the
Transferring Affiliates (other than BMA) pursuant to Section 4.1, together with
such other instruments, documents and agreements as either the Purchaser or the
Agent may reasonably request in connection therewith.
(b) Upon the addition of any wholly-owned subsidiary
of the Seller as a Transferring Affiliate pursuant to subsection (a) above, the
provisions of this Agreement, including Exhibit J, shall, without further act or
documentation, be deemed amended to apply to such subsidiary to the same extent
as the same apply to the Transferring Affiliates as of the date hereof and the
term "Transferring Affiliate" in this Agreement shall mean and refer to such
subsidiary as well as each then existing Transferring Affiliate.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller represents and warrants to the Purchaser that:
(a) CORPORATE EXISTENCE AND POWER. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all corporate power and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business in each jurisdiction in which its business is now
conducted. The Seller is duly qualified to do business in, and is in good
standing in, every other jurisdiction in which the nature of its business
requires it to be so qualified, except where the failure to be so qualified or
in good standing would not have a Material Adverse Effect.
31
(b) CORPORATE AND GOVERNMENTAL AUTHORIZATION;
CONTRAVENTION. The execution, delivery and performance by the Seller of this
Agreement and the other Transaction Documents to which the Seller is a party are
within the Seller's corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
Official Body or official thereof (except as contemplated by Section 2.6
hereof), and do not contravene, or constitute a default under, any provision of
applicable law, rule or regulation (including, without limitation, any
CHAMPUS/VA Regulation, any Medicaid Regulation or any Medicare Regulation) or of
the Certificate of Incorporation or By-laws of the Seller or of any agreement,
judgment, injunction, order, writ, decree or other instrument binding upon the
Seller or result in the creation or imposition of any Adverse Claim on the
assets of the Seller or any of its Subsidiaries (except as contemplated by
Section 2.6 hereof).
(c) BINDING EFFECT. Each of this Agreement and the
other Transaction Documents to which the Seller is a party constitutes the
legal, valid and binding obligation of the Seller, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally.
(d) PERFECTION. Immediately preceding each Purchase
hereunder, the Seller shall be the owner of all of the Receivables included in
such Purchase, free and clear of all Adverse Claims. On or prior to each
Purchase hereunder, all financing statements and other documents required to be
recorded or filed, or notices to Obligors required to be given, in order to
perfect and protect the ownership interest of the Purchaser against all
creditors of and purchasers from the Seller will have been duly given to such
Obligors or filed in each filing office necessary for such purpose, as
applicable, and all filing fees and taxes, if any, payable in connection with
such filings shall have been paid in full.
(e) ACCURACY OF INFORMATION. All information
heretofore furnished by the Seller (including, without limitation, each Investor
Report (to the extent such Investor Report is prepared by the Seller or any
other
32
Parent Group Member or contains any information supplied by the Seller or
any such Parent Group Member), any reports delivered pursuant to Section 6.5 and
the Seller's financial statements) to the Purchaser, the Company, any Bank
Investor, the Agent or the Administrative Agent for purposes of or in connection
with this Agreement or any other Transaction Document or any transaction
contemplated hereby or thereby is, and all such information hereafter furnished
by the Seller to the Purchaser, the Company, any Bank Investor, the Agent or the
Administrative Agent will be, true and accurate in every material respect, on
the date such information is stated or certified.
(f) TAX STATUS. The Seller has filed all tax returns
(federal, state and local) required to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental
charges.
(g) ACTION, SUITS. Except as set forth in Exhibit F
hereof, there are no actions, suits or proceedings pending, or to the knowledge
of the Seller threatened, in or before any court, arbitrator or other body,
against or affecting (i) the Seller or any of its properties or (ii) any
Affiliate of the Seller or its respective properties, which may, in the case of
proceedings against or affecting any such Affiliate, individually or in the
aggregate, have a Material Adverse Effect.
(h) USE OF PROCEEDS. No proceeds of any Purchase will
be used by the Seller to acquire any security in any transaction which is
subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) PLACE OF BUSINESS. The principal place of
business and chief executive office of the Seller are located at the address of
the Seller indicated in Section 9.3 hereof and the offices where the Seller
keeps substantially all its Records, are located at the address(es) described on
Exhibit G or such other locations notified to the Purchaser and the Agent in
accordance with Section 2.6 hereof in jurisdictions where all action required by
Section 2.6 hereof has been taken and completed. The principal place of business
and chief executive office of each Transferring Affiliate are located at the
address of such Transferring Affiliate indicated in Exhibit J hereof
33
and the offices where the each Transferring Affiliate keeps substantially all
its Records, are located at the address(es) specified on Exhibit J with respect
to such Transferring Affiliate or such other locations notified to the Purchaser
and the Agent in accordance with Section 2.6 hereof in jurisdictions where all
action required by Section 2.6 hereof has been taken and completed.
(j) GOOD TITLE. Upon each Purchase, the Purchaser
shall acquire all legal and equitable title to, and a valid and perfected first
priority ownership interest in, each Receivable that exists on the date of such
Purchase and in the Related Security, Collections and other Proceeds with
respect thereto free and clear of any Adverse Claim.
(k) TRADENAMES, ETC. As of the date hereof: (i) the
Seller's chief executive office is located at the address for notices set forth
in Section 9.3 hereof; (ii) the Seller has no subsidiaries or divisions other
than those listed on Exhibit H hereto; (iii) the Seller has, within the last
five (5) years, not operated under any tradename, and, within the last five (5)
years, has not changed its name, merged with or into or consolidated with any
other corporation or been the subject of any proceeding under Xxxxx 00, Xxxxxx
Xxxxxx Code (Bankruptcy), except, in each case, as disclosed on Exhibit H
hereto; and (iv) none of the Transferring Affiliates has, within the last five
(5) years, operated under any tradename or, within the last five (5) years,
changed its name, merged with or into or consolidated with any other Person or
been the subject of any proceeding under Xxxxx 00, Xxxxxx Xxxxxx Code
(Bankruptcy), except in each case as disclosed on Exhibit J.
(l) NATURE OF RECEIVABLES. Each Receivable purchased
by, or otherwise transferred to, the Purchaser hereunder shall be an "eligible
asset" as defined in Rule 3a-7 under the Investment Company Act, of 1940, as
amended, and, except as otherwise disclosed in writing on or prior to the date
of such purchase or transfer, shall be an Eligible Receivable as of such date.
(m) AMOUNT OF RECEIVABLES. As of July 31, 1997, the
aggregate Outstanding Balance of the Receivables in existence and the Net
Receivable Balance (as defined in the TAA) were not less than the respective
amounts certified
34
as such in (i) the Investor Report dated as of the date hereof and provided to
the Agent or (ii) the Investor Report delivered after the date hereof in
accordance with Section 4.2(a) of the TAA.
(n) CREDIT AND COLLECTION POLICY. Since July 10,
1997, there have been no material changes in the Credit and Collection Policy
other than as permitted hereunder. Since such date, no material adverse change
has occurred in the overall rate of collection of the Receivables.
(o) COLLECTIONS AND SERVICING. Since July 10, 1997,
there has been no material adverse change in the ability of the Collection Agent
(to the extent it is the Seller or any other Parent Group Member) to service and
collect the Receivables.
(p) NO SELLER DEFAULT. No event has occurred and is
continuing and no condition exists which constitutes a Seller Default or a
Potential Seller Default.
(q) NOT AN INVESTMENT COMPANY. The Seller is not, and
is not controlled by, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or is exempt from all provisions of
such Act.
(r) ERISA. Each of the Seller and its ERISA
Affiliates is in compliance in all material respects with ERISA and no lien
exists in favor of the Pension Benefit Guaranty Corporation on any of the
Receivables.
(s) SPECIAL ACCOUNT BANKS. The names and addresses of
all the Special Account Banks (and, if applicable, the Designated Account Agents
in respect thereof), together with the account numbers of the Special Accounts
at such Special Account Banks, are specified in Exhibit C hereto (or at such
other Special Account Banks, with such other Special Accounts or with such other
Designated Account Agents as have been notified to the Purchaser and the Agent
in accordance with Section 5.2(e)). Neither the Seller nor any Transferring
Affiliate has granted to any Person dominion and control over any Special
Account, or the right to take dominion and control over any Special Account at a
future time or upon the occurrence of a
35
future event and each Special Account is otherwise free and clear of any
Adverse Claim.
(t) BULK SALES. No transaction contemplated hereby
requires compliance with any bulk sales act or similar law.
(u) PREFERENCE; VOIDABILITY (THIS AGREEMENT). With
respect to each Receivable transferred to the Purchaser under this Agreement,
the Purchaser has given reasonably equivalent value to the Seller in
consideration for such transfer of such Receivable and the Related Assets with
respect thereto, no such transfer has been made for or on account of an
antecedent debt owed by the Seller to the Purchaser and no such transfer is or
may be voidable under any Section of the Bankruptcy Code.
(v) TRANSFERS BY TRANSFERRING AFFILIATES. With
respect to each Receivable, and Related Security, if any, with respect thereto,
originally owed to any Transferring Affiliate, the Seller (i) purchased such
Receivable and Related Security from such Transferring Affiliate under the
Transferring Affiliate Letter or from BMA under the BMA Transfer Agreement, such
purchase being deemed to have been made on the date such Receivable was created
(or on the Closing Date, in the case of a Receivable outstanding such date),
(ii) by the last Business Day of the month following the month in which such
purchase was so made, paid to the applicable Transferring Affiliate in cash or
by way of a credit to such Transferring Affiliate in the appropriate
intercompany account, an amount equal to the face amount of such Receivable and
(iii) settled from time to time each such credit, by way of payments in cash, or
by way of credits in amounts equal to cash expended, obligations incurred or the
value of services or property provided by or on behalf of the Seller, in each
case for the benefit of such Transferring Affiliate, to the account of such
Transferring Affiliate in accordance with the Seller's and such Transferring
Affiliate's cash management and accounting policies.
(w) PREFERENCE; VOIDABILITY (TRANSFERRING
AFFILIATES). The Seller shall have given reasonably equivalent value to each
Transferring Affiliate in consideration for the transfer to the Seller of the
36
Receivables and Related Security from such Transferring Affiliate, and each such
transfer shall not have been made for or on account of an antecedent debt owed
by such Transferring Affiliate to the Seller and no such transfer is or may be
voidable under any Section of the Bankruptcy Code.
(x) OWNERSHIP. FMC owns, directly or indirectly, all
of the issued and outstanding common stock of (and such stock comprises more
than 80% of the Voting Stock of) FMCH, free and clear of any Adverse Claim
except to the extent such stock is pledged in connection with the Bank Revolver.
All of the issued and outstanding stock of each Originating Entity is owned
directly or indirectly by FMCH, free and clear of any Adverse Claim except to
the extent such stock is pledged in connection with the Bank Revolver. All of
the issued and outstanding stock of the Purchaser is owned by the Seller, free
and clear of any Adverse Claim.
(y) REPRESENTATIONS AND WARRANTIES OF THE
TRANSFERRING AFFILIATES. Each of the representations and warranties of the
Transferring Affiliates set forth in the Transferring Affiliate Letter and each
of the representations and warranties of BMA set forth in the BMA Transfer
Agreement are true and correct in all material respects and the Seller hereby
remakes all such representations and warranties for the benefit of the
Purchaser.
Any document, instrument, certificate or notice delivered to
the Purchaser (or any of its assignees) hereunder shall be deemed a
representation and warranty by the Seller.
SECTION 3.2. REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES
BY THE SELLER. On each day that a Purchase is made hereunder, the Seller, by
accepting the proceeds of such Purchase, shall be deemed to have certified that
all representations and warranties described in Section 3.1 hereof are correct
on and as of such day as though made on and as of such day.
37
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1. CONDITIONS PRECEDENT TO CLOSING. The
effectiveness of this Agreement is subject to the conditions precedent that (i)
the Purchaser shall have received copies of each of the documents, instruments,
certificates and opinions described in Section 4.1 of the TAA and (ii) each of
the conditions precedent to the execution, delivery and effectiveness of the TAA
shall have been satisfied and/or waived in accordance with the terms thereof.
SECTION 4.2. CONDITIONS PRECEDENT TO PURCHASES. The obligation
of the Purchaser to make a Purchase on any Business Day is subject to the
conditions precedent that:
(a) the Seller shall have delivered to the Purchaser, in form
and substance satisfactory to the Purchaser, all reports required to
have been delivered by it pursuant to Section 6.5, together with such
additional information as may be reasonably requested by the Purchaser;
and
(b) the representations and warranties set forth in Article
III shall be true and correct on and as of the date of such Purchase as
though made on and as of such date, both before and after giving effect
to such Purchase and the application of the proceeds therefrom.
By accepting the proceeds of any Purchase, the Seller shall be
deemed to have represented and warranted that the foregoing conditions precedent
are satisfied.
Notwithstanding any failure or inability of the Seller to
satisfy any of the foregoing conditions precedent on any date in respect of any
Purchase, title to the Receivables and the Related Assets with respect thereto
included in such Purchase shall vest in the Purchaser without any action
required on the part of the Purchaser (but without impairment of its obligation
to pay the Purchase Price in respect thereof in accordance with the terms of
this Agreement), and the Purchaser (as owner of such Receivables) shall have a
claim against the Seller
38
arising in respect of the representations and warranties made by the Seller in
connection with such Purchase.
ARTICLE V
COVENANTS
SECTION 5.1. AFFIRMATIVE COVENANTS OF SELLER. At all times
from the date hereof to the Collection Date, unless each of the Purchaser and
the Agent shall otherwise consent in writing:
(a) FINANCIAL REPORTING. The Seller will, and will
cause each of the Transferring Affiliates to, maintain, for itself and each of
its respective Subsidiaries, a system of accounting established and administered
in accordance with GAAP, and furnish to each of the Purchaser and the Agent:
(i) ANNUAL REPORTING. As soon as available and in any
event within 105 days after the close of the fiscal year of the Seller,
a company-prepared consolidated balance sheet of the Seller and its
Subsidiaries as of the end of such fiscal year and the related
company-prepared consolidated statements of income and retained
earnings for such fiscal year.
(ii) QUARTERLY REPORTING. As soon as available and in
any event within 50 days after the end of each of the first three
fiscal quarters of the Seller, a company-prepared consolidated balance
sheet of the Seller and its Subsidiaries as of the end of such quarter
and the related company-prepared consolidated statements of income and
retained earnings for such quarterly period.
In the case of each of the financial statements
required to be delivered under clause (i) or (ii) above, such financial
statement shall set forth in comparative form the figures for the
corresponding period or periods of the preceding fiscal year or the
portion of the fiscal year ending with such period, as applicable (but
not for any period prior to the Closing
39
Date), in each case subject to normal recurring year-end audit
adjustments. Each such financial statement shall be prepared in
accordance with GAAP consistently applied.
(iii) COMPLIANCE CERTIFICATE. Together with the
financial statements required hereunder, a compliance certificate
signed by a Responsible Officer stating that (x) the attached financial
statements have been prepared in accordance with GAAP and accurately
reflect the financial condition of the applicable Person and (y) to the
best of such Person's knowledge, no Seller Default or Potential Seller
Default exists, or if any Seller Default or Potential Seller Default
exists, stating the nature and status thereof.
(iv) NOTICE OF SELLER DEFAULT OR POTENTIAL SELLER
DEFAULT. As soon as possible and in any event within two (2) days (or
the next Business Day thereafter if such day is not a Business Day)
after the occurrence of each Seller Default or each Potential Seller
Default, a statement of a Responsible Officer setting forth details of
such Seller Default or Potential Seller Default and the action which
the Seller proposes to take with respect thereto.
(v) CHANGE IN CREDIT AND COLLECTION POLICY AND DEBT
RATINGS. Within ten (10) days after the date any material change in or
amendment to any provision of the Credit and Collection Policy is made,
a copy of the Credit and Collection Policy then in effect indicating
such change or amendment.
(vi) CREDIT AND COLLECTION POLICY. Within ninety (90)
days after the close of each of the Seller's fiscal years, a complete
copy of the Credit and Collection Policy then in effect.
(vii) ERISA. Promptly after the filing or receiving
thereof, copies of all reports and notices with respect to any
Reportable Event (as defined in Article IV of ERISA) which the Seller
or any ERISA Affiliate of the Seller files under ERISA with the
Internal Revenue Service, the Pension Benefit Guaranty
40
Corporation or the U.S. Department of Labor or which the Seller or any
ERISA Affiliates of the Seller receives from the Internal Revenue
Service, the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor.
(viii) NOTICES UNDER TRANSACTION DOCUMENTS. Forthwith
upon its receipt thereof, a copy of each notice, report, financial
statement, certification, request for amendment, directive, consent,
waiver or other modification or any other writing issued under or in
connection with any other Transaction Document by any party thereto
(including, without limitation, by the Seller).
(ix) INVESTIGATIONS AND PROCEEDINGS. Unless
prohibited by either (i) the terms of the subpoena, request for
information or other document referred to below, (ii) law (including,
without limitation, rules and regulations) or (iii) restrictions
imposed by the U.S. federal or state government or any agency or
instrumentality thereof and subject to the Agent's execution of a
confidentiality agreement in form and substance satisfactory to both
the Seller and the Agent, as soon as possible and in any event (A)
within five Business Days after any Originating Entity receives any
subpoena, request for information, or any other document relating to
any possible violation by any Originating Entity of, or failure by any
Originating Entity to comply with, any rule, regulation or statute from
HHS or any other governmental agency or instrumentality, notice of such
receipt and, if requested by the Purchaser or the Agent, the
information contained in, or copies of, such subpoena, request or other
document, and (B) periodic updates and other management reports
relating to the subpoenas, requests for information and other documents
referred to in clause (A) above as may be reasonably requested by the
Purchaser or the Agent unless such updates or requests could reasonably
be deemed a contravention or waiver of any available claim of legal
privilege, or would otherwise materially impair available defenses, of
any Originating Entity.
41
(x) OTHER INFORMATION. Such other information
(including non-financial information) as the Purchaser or the Agent may
from time to time reasonably request with respect to the Seller, any
party to the Parent Agreement, any Transferring Affiliate or any
Subsidiary of any of the foregoing.
(b) CONDUCT OF BUSINESS. The Seller (i) will carry on
and conduct its business in substantially the same manner and in substantially
the same fields of enterprise as it is presently conducted and do all things
necessary to remain duly incorporated, validly existing and in good standing as
a domestic corporation in its jurisdiction of incorporation and maintain all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted and (ii) will cause each other Originating Entity to do
each of the foregoing in respect of such Originating Entity.
(c) COMPLIANCE WITH LAWS. The Seller will, and will
cause each other Originating Entity to, comply with all laws, rules and
regulations (including, without limitation, all CHAMPUS/VA Regulations, Medicaid
Regulations and Medicare Regulations), and all orders, writs, judgments,
injunctions, decrees or awards to which it or its respective properties may be
subject.
(d) FURNISHING OF INFORMATION AND INSPECTION OF
RECORDS. The Seller will, and will cause each other Originating Entity to,
furnish to each of the Purchaser and the Agent from time to time such
information with respect to the Receivables as the Purchaser or the Agent may
reasonably request, including, without limitation, listings identifying the
Obligor and the Outstanding Balance for each Receivable. The Seller will, and
will cause each other Originating Entity to, at any time and from time to time
during regular business hours permit the Purchaser, the Agent, or any of their
respective agents or representatives, (i) to examine and make copies of and take
abstracts from Records and (ii) to visit the offices and properties of the
Seller or such other Originating Entity, as applicable, for the purpose of
examining such Records, and to discuss matters relating to Receivables or the
Seller's or such other Originating Entity's performance hereunder and under the
other Transaction Documents to which such Person is a party with
42
any of the officers, directors, employees or independent public accountants of
the Seller or such other Originating Entity, as applicable, having knowledge of
such matters; PROVIDED, HOWEVER, that the Purchaser acknowledges that in
exercising the rights and privileges conferred in this Section 5.1(d) it or its
agents or representatives may, from time to time, obtain knowledge of
information, practices, books, correspondence and records ("Confidential
Information") identified to it in writing as being of a confidential nature or
in which the Seller or another Originating Entity has a proprietary interest.
The Purchaser agrees that all such Confidential Information so obtained by it is
to be regarded as confidential information and that such Confidential
Information may be subject to laws, rules and regulations regarding patient
confidentiality, and agrees that (x) it shall retain in confidence, and shall
ensure that its agents and representatives retain in confidence, and will not
disclose, any of such Confidential Information without the prior written consent
of the Seller and (y) it will not, and will ensure that its agents and
representatives will not, make any use whatsoever (other than for purposes of
this Agreement) of any of such Confidential Information without the prior
written consent of the Seller; PROVIDED, HOWEVER, that such Confidential
Information may be disclosed to the extent that such Confidential Information
(i) may be or becomes generally available to the public (other than as a breach
of this Section 5.1(d)), (ii) is required or appropriate in response to any
summons or subpoena in connection with any litigation or (iii) is required by
law to be disclosed; and PROVIDED, FURTHER, HOWEVER, that such Confidential
Information may be disclosed to (A) the Agent, the Company, any Bank Investor,
the Credit Support Provider and the Liquidity Provider, subject to the terms of
Section 5.1(d) of the TAA, (B) the Agent's or any such Person's legal counsel,
auditors and other business advisors, (C) any such Person's government
regulators and (D) the Company's rating agencies, PROVIDED that the Person
making such disclosure shall advise each recipient thereof referred to in
clauses (A), (B), (C) and (D) above that such Confidential Information is to be
regarded and maintained as confidential information and that the Agent has
agreed to keep confidential such Confidential Information as provided in clauses
(x) and (y) above.
43
(e) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. The
Seller will, and will cause each other Originating Entity to, maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing Receivables in the event
of the destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each new Receivable and
all Collections of and adjustments to each existing Receivable). The Seller
will, and will cause each other Originating Entity to, give each of the
Purchaser and the Agent notice of any material change in the administrative and
operating procedures of the Seller or such other Originating Entity, as
applicable, referred to in the previous sentence.
(f) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND
CONTRACTS. The Seller, at its expense, will, and will cause each other
Originating Entity to, timely and fully perform and comply with all material
provisions, covenant and other promises required to be observed by the Seller or
such other Originating Entity under the Contracts related to the Receivables.
(g) CREDIT AND COLLECTION POLICIES. The Seller will,
and will cause each other Originating Entity to, comply in all material respects
with the Credit and Collection Policy in regard to each Receivable and the
related Contract.
(h) SPECIAL ACCOUNTS. The Seller shall, and shall
cause each other Originating Entity to (i) establish and maintain Special
Accounts with Special Account Banks, or to engage a Designated Account Agent to
maintain a Special Account with a Special Account Bank on its behalf, (ii)
instruct all Obligors to cause all Collections to be deposited directly into a
Special Account, (iii) report on each banking day to the Concentration Account
Bank, the amount of all Collections on deposit on such banking day in the
Special Accounts at each Special Account Bank and (iv) instruct (or cause the
applicable Designated Account Agent to instruct) each Special Account Bank to
transfer to the Concentration Account prior to the close of business on such
44
banking day all Collections on deposit during such banking day in the Special
Accounts at such Special Account Bank; PROVIDED, HOWEVER, that if the
Collections on deposit in any Special Account during such banking day shall be
less than $5,000.00 (the "Minimum Amount"), the Special Account Bank shall
transfer such Collections to the Concentration Account on the next succeeding
banking day on which Collections in such Special Account first exceed the
Minimum Amount. With respect to any Special Account that is located at or
maintained by a Bank Investor, the Seller shall, by not later than the date that
occurs six months after the Closing Date, (i) close, or cause the applicable
Originating Entity to close, such Special Account and (ii) instruct, and cause
each other Originating Entity to instruct, all Obligors theretofore remitting
payments to such Special Account to remit all future payments on Receivables and
Related Security to a Special Account located at and maintained by a financial
institution that is not a Bank Investor.
(i) COLLECTIONS RECEIVED. The Seller shall, and shall
cause each other Originating Entity to, segregate and hold in trust, and
deposit, immediately, but in any event not later than the day that occurs
forty-eight (48) hours of its receipt thereof (or, if such day is not a Business
Day, the next Business Day following such receipt) to the Concentration Account
all Collections received from time to time by the Seller or such other
Originating Entity, as the case may be.
(j) SALE TREATMENT. The Seller will not, and will not
permit any Transferring Affiliate to, account for (including for accounting and
tax purposes), or otherwise treat, the transactions contemplated by this
Agreement, the Transferring Affiliate Letter or the BMA Transfer Agreement in
any manner other than as a sale of Receivables by the Seller to the Purchaser or
by the applicable Transferring Affiliate to the Seller, as applicable. In
addition, the Seller shall, and shall cause each Transferring Affiliate to,
disclose (in a footnote or otherwise) in all of its respective financial
statements (including any such financial statements consolidated with any other
Persons' financial statements) the existence and nature of the transactions
contemplated hereby, by the TAA , by the Transferring Affiliate Letter and by
the BMA Transfer
45
Agreement, and the interest of the Purchaser in the Transferred Assets.
(k) SEPARATE BUSINESS. The Seller acknowledges that
the Agent, the Company and the Bank Investors are entering into the transactions
contemplated in the TAA in reliance upon the Purchaser's identity as a separate
legal entity from the Seller. Therefore, from and after the Closing Date, the
Seller shall take all actions reasonably required to maintain the Purchaser's
status as a separate legal entity and to make it manifest to third parties that
the Purchaser is an entity with assets and liabilities distinct from those of
the Seller or any other member of the Parent Group. Without limiting the
generality of the foregoing, the Seller shall (i) not hold itself out to third
parties as liable for the debts of the Purchaser nor purport to own the
Receivables or any of the other assets acquired by the Purchaser hereunder, (ii)
shall take all other actions necessary on its part to ensure that the Purchaser
is at all times in compliance with the covenants set forth in Section 5.1(k) of
the TAA and (iii) shall cause all tax liabilities arising in connection with the
transactions contemplated herein or otherwise to be allocated between the Seller
and the Purchaser on an arm's-length basis.
(l) PAYMENT TO THE TRANSFERRING AFFILIATES. With
respect to any Receivable purchased by the Seller from any Transferring
Affiliate, the Seller shall cause such sale to be effected under, and in strict
compliance with the terms of, the Transferring Affiliate Letter and the BMA
Transfer Agreement, as applicable, including, without limitation, the terms
relating to the amount and timing of payments to be made to each Transferring
Affiliate in respect of the purchase price for such Receivable.
(m) PERFORMANCE AND ENFORCEMENT OF THE TRANSFERRING
AFFILIATE LETTER AND BMA TRANSFER AGREEMENT. The Seller shall timely perform the
obligations required to be performed by the Seller, and shall vigorously enforce
the rights and remedies accorded to the Seller, under each of the Transferring
Affiliate Letter and the BMA Transfer Agreement. The Seller shall take all
actions to perfect and enforce its rights and interests (and the rights and
interests of the Purchaser, the Agent, the Company and the
46
Bank Investors, as assignees of the Seller) under the Transferring Affiliate
Letter and\or the BMA Transfer Agreement as the Purchaser or the Agent may from
time to time reasonably request, including, without limitation, making claims to
which it may be entitled under any indemnity, reimbursement or similar provision
contained in the Transferring Affiliate Letter or the BMA Transfer Agreement.
SECTION 5.2. NEGATIVE COVENANTS OF THE SELLER. At all times
from the date hereof to the Collection Date, unless the Agent shall otherwise
consent in writing:
(a) NO SALES, LIENS, ETC. Except as otherwise
provided herein, the Seller will not, and will not permit any other Originating
Entity to, sell, assign (by operation of law or otherwise) or otherwise dispose
of, or create or suffer to exist any Adverse Claim upon (or the filing of any
financing statement) or with respect to (x) any of the Affected Assets, (y) any
inventory or goods, the sale of which may give rise to a Receivable or any
Receivable or related Contract, or (z) any Special Account or any other account
to which any Collections of any Receivable are sent, or assign any right to
receive income in respect thereof.
(b) NO EXTENSION OR AMENDMENT OF RECEIVABLES. Except
as otherwise permitted in Section 6.2 hereof, the Seller will not, and will not
permit any other Originating Entity to, extend, amend or otherwise modify the
terms of any Receivable, or amend, modify or waive any term or condition of any
Contract related thereto.
(c) NO CHANGE IN BUSINESS OR CREDIT AND COLLECTION
POLICY. The Seller will not, and will not permit any other Originating Entity
to, make any change in the character of its business or in the Credit and
Collection Policy, which change would, in either case, impair the collectibility
of any Receivable or otherwise have a Material Adverse Effect.
(d) NO MERGERS, ETC. The Seller will not, and will
not permit any other Originating Entity to, merge with or into or consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
47
transaction or in a series of transactions), all or substantially all of its
assets (whether now owned or hereafter acquired and except as contemplated in
the Transaction Documents) to any Person, except that (i) any Transferring
Affiliate may merge or consolidate with any other Transferring Affiliate if, but
only if, each of the Purchaser and the Agent shall have received at least ten
Business Days' prior written notice of such merger or consolidation and (ii) the
Seller may merge or consolidate with any other Person if, but only if, (x)
immediately after giving effect to such merger or consolidation, no Seller
Default or Potential Seller Default would exist and (y) each of the Purchaser
and the Agent shall have received a written agreement, in form and substance
satisfactory to each of the Purchaser and the Agent, executed by the corporation
resulting from such merger or consolidation, under which agreement such
corporation shall become the Seller hereunder and the Collection Agent under the
TAA, and shall assume the duties, obligations and liabilities of the Seller and
the Collection Agent under this Agreement, the TAA, the Special Account Letters
and each other Transaction Document to which the Seller is party (whether in its
individual capacity or as Collection Agent), together with the documents
relating to the Seller of the kind delivered by or on behalf of the Seller
pursuant to Section 3.1 of the TAA.
(e) CHANGE IN PAYMENT INSTRUCTIONS TO OBLIGORS,
SPECIAL ACCOUNT BANKS AND DESIGNATED ACCOUNT AGENTS. The Seller will not, and
will not permit any other Originating Entity to:
(i) add or terminate any bank as a Special Account Bank from
those listed in Exhibit C hereto, or make any change in its
instructions to Obligors regarding payments to be made to any Special
Account Bank; PROVIDED that the Seller may, and may permit any
Originating Entity to, (A) add any bank as a Special Account Bank for
purposes of this Agreement at any time following delivery to the Agent
of written notice of such addition and a Special Account Letter duly
executed by such bank, and (B) terminate any Special Account Bank at
any time following delivery to the Agent of written notice of such
termination and evidence satisfactory to the Agent that the affected
48
Obligors shall have been instructed to remit all subsequent Collections
to another Special Account; or
(ii) make any change in the instructions contained in any
Special Account Letter; or
(iii) add or terminate any Person as a Designated Account
Agent from those listed in Exhibit C hereto, or make any change in its
instructions to such Designated Account Agent regarding the handling of
the Collections in the applicable Special Account; PROVIDED that the
Seller may, and may permit any Originating Entity to, (A) add any
Person that satisfies the requirements set forth herein of a
"Designated Account Agent" as a Designated Account Agent for purposes
of this Agreement at any time following delivery to the Agent of
written notice of such addition and an Account Agent Agreement duly
executed by such Person, and (B) terminate any Designated Account Agent
at any time following delivery to the Agent of written notice of such
termination and evidence satisfactory to the Agent that either an
Originating Entity or a new Designated Account Agent shall have been
added in accordance with the terms of this Agreement to succeed such
terminated Designated Account Agent in respect of the applicable
Special Account or the affected Obligors shall have been instructed to
remit all subsequent Collections to another Special Account.
(f) DEPOSITS TO SPECIAL ACCOUNTS AND THE
CONCENTRATION ACCOUNT. The Seller will not, and will not permit any of the other
Originating Entities or Designated Account Agents to, deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any Special
Account or the Concentration Account cash or cash proceeds other than
Collections of Receivables.
(g) CHANGE OF NAME, ETC. The Seller will not, and
will not permit any other Originating Entity to, change its name, identity or
structure or the location of its chief executive office, unless at least 10 days
prior to the effective date of any such change the Seller delivers to the Agent
(i) such documents, instruments or agreements, executed by the Seller and/or the
affected Originating Entities, as are necessary to reflect such change and to
49
continue the perfection of the Purchaser's ownership interests in the Affected
Assets and (ii) new or revised Special Account Letters executed by the Special
Account Banks which reflect such change and enable the Agent to continue to
exercise its rights contained in Section 2.8 of the TAA.
(h) AMENDMENT TO TRANSFERRING AFFILIATE LETTER, ETC..
The Seller will not, and will not permit any other Originating Entity to, (i)
amend, modify, or supplement the Transferring Affiliate Letter, the BMA Transfer
Agreement or any instrument, document or agreement executed in connection
therewith (collectively the "Initial Transfer Documents"), (ii) terminate or
cancel any Initial Transfer Document, (iii) issue any consent or directive under
any Initial Transfer Document, (iv) undertake any enforcement proceeding in
respect of any of the Initial Transfer Documents, or (v) waive, extend the time
for performance or grant any indulgence in respect of any provision of any
Initial Transfer Document, in each case except with the prior written consent of
the Purchaser, the Agent and the Administrative Agent; nor shall the Seller
take, or permit any other Originating Entity to take, any other action under any
of the Initial Transfer Documents that shall have a material adverse affect on
the Purchaser, the Agent, the Company or any Bank Investor or which is
inconsistent with the terms of this Agreement.
(i) ERISA MATTERS. The Seller will not, and will not
permit any other Originating Entity to, (i) engage or permit any of its
respective ERISA Affiliates to engage in any prohibited transaction (as defined
in Section 4975 of the Code and Section 406 of ERISA) for which an exemption is
not available or has not previously been obtained from the U.S. Department of
Labor; (ii) permit to exist any accumulated funding deficiency (as defined in
Section 302(a) of ERISA and Section 412(a) of the Code) or funding deficiency
with respect to any Benefit Plan other than a Multiemployer Plan; (iii) fail to
make any payments to any Multiemployer Plan that the Seller, such Originating
Entity or any ERISA Affiliate thereof is required to make under the agreement
relating to such Multiemployer Plan or any law pertaining thereto; (iv)
terminate any Benefit Plan so as to result in any liability; or (v) permit to
exist any occurrence of any reportable event described in Title IV of
50
ERISA which represents a material risk of a liability to the Seller, such
Originating Entity or any ERISA Affiliate thereof under ERISA or the Code, if
such prohibited transactions, accumulated funding deficiencies, payments,
terminations and reportable events occurring within any fiscal year of the
Seller, in the aggregate, involve a payment of money or an incurrence of
liability by the Seller, any Originating Entity or any ERISA Affiliate thereof,
in an amount in excess of $500,000.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.1. COLLECTION OF RECEIVABLES. The servicing,
administering and collection of the Receivables shall be conducted by the
Collection Agent. For so long as the Person acting as Collection Agent is the
Seller, the Seller shall perform its duties as Collection Agent under the TAA in
accordance with the terms thereof, it being understood that it shall hold all
Receivables, Related Assets, Records and Collections which it receives from time
to time solely in its capacity as Collection Agent and shall not claim or retain
any legal or beneficial title or interest therein. If at any time the Collection
Agent is a Person other than the Seller, the Seller agrees promptly to provide
all information requested by the Collection Agent in connection with the
performance of its responsibilities under the TAA, and agrees to exert its best
efforts to assist any successor Collection Agent in assuming and performing its
duties as Collection Agent.
SECTION 6.2. RIGHTS OF PURCHASER. At any time:
(i) The Purchaser (or the Agent as assignee of
the Purchaser) may direct that payment of all amounts payable under any
Receivable be made directly to the Purchaser (or the Agent, as the case may be)
or its designee.
(ii) The Seller shall, at the Purchaser's
request (or at the request of the Agent, as assignee of the Purchaser) and at
the Seller's expense, give notice of the Purchaser's ownership of Receivables
and/or
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the Agent's interest in the Receivables to each Obligor and direct that payments
be made directly to the Purchaser (or the Agent, as the case may be) or its
designee.
(iii) The Seller shall, at the Purchaser's or the
Agent's request, (A) assemble all of the Records, and shall make the same
available to the Purchaser, the Agent or its designee at a place selected by the
Purchaser, the Agent or its designee, and (B) segregate all cash, checks and
other instruments received by it from time to time constituting Collections of
Receivables in a manner acceptable to the Purchaser and the Agent and shall,
promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Agent or its
designee.
Notwithstanding the foregoing clauses (i), (ii) and (iii), neither the Purchaser
nor any of its assigns shall at any time direct, or cause any Originating Entity
to direct, Obligors of Receivables or Related Security payable under the
Medicare or Medicaid program to make payment of amounts due or to become due to
such Originating Entity in respect of such Receivables or Related Security
directly to the Concentration Account or to the Purchaser, the Purchaser's
assigns or any of their respective designees, EXCEPT for any such payment in
respect of such Receivables or Related Security or any assignment thereof that
is established by, or made pursuant to, the order of a court of competent
jurisdiction.
SECTION 6.3. SPECIAL ACCOUNTS. The Seller hereby transfers to
the Purchaser, and shall cause each of the Transferring Affiliates to transfer
to the Purchaser, effective concurrently with the initial Purchase hereunder,
all right, title and interest of such Originating Entity in and to each Special
Account, together with each lock-box related thereto and all agreements between
such Originating Entity and the applicable Special Account Bank. The Seller
hereby authorizes the Purchaser and its assigns to take, to the extent permitted
by applicable law, any and all steps in the Seller's or any other Originating
Entity's name (which power, in the case of each Transferring Affiliate, the
Seller is authorized to grant pursuant to authority granted to the Seller under
the Transferring Affiliate Letter) and
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on behalf of the Seller and such Originating Entity necessary or desirable, in
the determination of the Purchaser or such assign, to collect all amounts due
under any and all Receivables, including, without limitation, endorsing the
Seller's or such Originating Entity's name on checks and other instruments
representing Collections and enforcing such Receivables and the related
Contracts; provided, however, that neither the Purchaser nor any of its assigns
shall have the power or authority to direct Obligors of Receivables or Related
Security payable under the CHAMPUS/VA, Medicare or Medicaid program to make
payment of amounts due or to become due to the Seller or any Transferring
Affiliate in respect of such Receivables or Related Security directly to the
Concentration Account or to the Purchaser, the Purchaser's assigns or any of
their respective designees, EXCEPT for any such payment in respect of such
Receivables or Related Security or any assignment thereof that is established
by, or made pursuant to, the order of a court of competent jurisdiction.
SECTION 6.4. RESPONSIBILITIES OF THE SELLER. Anything herein
to the contrary notwithstanding, the Seller shall, and/or shall cause each other
Originating Entity to, (i) perform all of such Person's obligations under the
Contracts related to the Receivables to the same extent as if interests in such
Receivables had not been sold hereunder and under the Transferring Affiliate
Letter and/or the BMA Transfer Agreement, and the exercise by the Purchaser of
its rights hereunder and under the Transferring Affiliate Letter and the BMA
Transfer Agreement shall not relieve the Seller from such obligations and (ii)
pay when due any taxes, including without limitation, any sales taxes payable in
connection with the Receivables and their creation and satisfaction. Neither the
Purchaser nor any of its assignees shall have any obligation or liability with
respect to any Receivable or related Contracts, nor shall it be obligated to
perform any of the obligations of the Seller thereunder.
SECTION 6.5. REPORTS. On or prior to each Settlement Date, the
Seller shall prepare and forward to the Purchaser a report setting forth the
following with respect to the immediately preceding calendar month: (i) the
aggregate Outstanding Balance of Receivables included in the Purchases occurring
during such month, (ii) the aggregate
53
Purchase Price payable to the Seller in respect of such Purchases, specifying
the Purchase Price Percentage in effect for such month and the aggregate
Purchase Price Credits deducted in calculating such aggregate Purchase Price,
(iii) the aggregate amount of funds received by the Seller during such month
which are to be applied toward the aggregate Purchase Price owing for such month
pursuant to Section 2.2(d), (iv) the increase or decrease in the amount
outstanding under the Subordinated Note as of the end of such month after giving
effect to the application of funds toward the aggregate Purchase Price, (v) the
amount of any capital contribution made by the Seller to the Purchaser as of the
end of such month and (vi) such other information concerning the Receivables as
the Purchaser may reasonably request. Promptly following any request therefor by
the Purchaser, the Seller shall prepare and provide to the Purchaser a listing
by Obligor of all Receivables together with an aging of such Receivables.
ARTICLE VII
SELLER DEFAULTS
SECTION 7.1. SELLER DEFAULTS. The occurrence of any one or
more of the following events shall constitute a Seller Default:
(a) the Seller shall fail to make any payment or
deposit to be made by it hereunder when due; or
(b) any representation, warranty, certification or
statement made or deemed made by the Seller in this Agreement, by FMC or FMCH
under the Parent Agreement, or by the Seller, FMC, FMCH or any other Parent
Group Member in any other Transaction Document to which it is a party or in any
other document certificate or other writing delivered pursuant hereto or
thereto, shall prove to have been incorrect in any material respect when made or
deemed made; or
(c) the Seller shall default in the performance of
any payment or undertaking
54
(other than those covered by clause (a) above) to be performed or observed under
(i) Section 5.1(a)(iv); PROVIDED that, in the case of
any failure to provide any such notice relating to a Potential
Seller Default that shall have ceased to exist prior to the
date such notice was required to have been given under Section
5.1(a)(iv), the failure to give such notice shall not
constitute a Seller Default unless a senior officer of the
Seller (including, the Treasurer, any Assistant Treasurer,
General Counsel or any assistant or associate general counsel
of the Seller) shall have known of the occurrence of such
Potential Seller Default during such period; or
(ii) any of Sections 5.1(a)(v), 5.1 (a)(x), 5.1
(a)(ix), 5.1(b)(i), 5.1(f), 5.1(g), 5.1(h), 5.1(i), 5.1(k),
5.2(a), 5.2(c), 5.2(d), 5.2(e), 5.2(f), 5.2(g), 5.2(h) or 6.2;
or
(iii) Section 5.1(b)(ii), and such default shall
continue for 2 Business Days; or
(iv) any other provision hereof and such default in
the case of this clause (iv) shall continue for ten (10) days;
(d) failure of the Seller, FMC, FMCH or any
Transferring Affiliate to pay when due any amounts due under any agreement to
which any such Person is a party and under which any Indebtedness greater than
$5,000,000 is governed; or the default by the Seller, FMC, FMCH or any
Transferring Affiliate in the performance of any term, provision or condition
contained in any agreement to which any such Person is a party and under which
any Indebtedness owing by the Seller, FMC, FMCH or any Transferring Affiliate
greater than $5,000,000 was created or is governed, regardless of whether such
event is an "event of default" or "default" under any such agreement; or any
Indebtedness owing by the Seller, FMC, FMCH or any Transferring Affiliate
greater than
55
$5,000,000 shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment and other than in the case of an
instrument stated to be payable on demand) prior to the date of maturity
thereof; or
(e) any Event of Bankruptcy shall occur with respect
to the Seller, any other Originating Entity, FMC or FMCH; PROVIDED that, in the
case of any Event of Bankruptcy relating to any Transferring Affiliate, such
Event of Bankruptcy shall not constitute a Seller Default hereunder if at such
time the "Percentage Factor" (as defined in the TAA) does not exceed the
"Maximum Percentage Factor" (as defined in the TAA) after reducing the "Net
Receivables Balance" (as defined in the TAA) by an amount equal to the aggregate
Outstanding Balance of all Receivables otherwise included in the calculation of
the Net Receivables Balance which either (i) have been originated by such
Transferring Affiliate or (ii) are owing from any Obligor that shall have been
directed to remit payments thereon to a Special Account that is a Special
Account to which Obligors in respect of the Transferring Affiliate that is the
subject of such Event of Bankruptcy shall have been directed to remit payments;
or
(f) after giving effect to any Purchase hereunder,
the Purchaser shall, for any reason, fail or cease to have all right, title and
interest in and to all of the Receivables which are to be included in such
Purchase, together with the Related Security and Collections with respect
thereto, free and clear of any Adverse Claim, subject only to the interests
therein of the Agent, on behalf of the Company and the Bank Investors; or
(g) the Transferring Affiliate Letter, the BMA
Transfer Agreement or any other Transaction Document shall have terminated; or
any material provision thereof shall cease for any reason to be valid and
binding on any party thereto or any party shall so state in writing; or any
party to any Transaction Document (other than the Purchaser, the Agent, the
Company or any Bank Investor) shall fail to perform any material term, provision
or condition contained in any Transaction Document on its part to be performed
or a default shall otherwise occur thereunder; or
56
(h) either FMCH or the Seller shall enter into any
transaction or merger whereby it is not the surviving entity; or
(i) there shall have occurred any material adverse
change in the operations of any of FMCH or the Seller since December 31, 1996 or
any other Material Adverse Effect shall have occurred; or
(j) a default shall occur under the Parent Agreement;
or the Parent Agreement shall for any reason terminate; or any material
provision thereof shall cease to be valid and binding on any party thereto or
any party thereto shall so state in writing; or
(k) (i) the Seller shall cease to own, free and clear
of any Adverse Claim all of the outstanding shares of capital stock of the
Transferor on a fully diluted basis; or (ii) FMCH shall cease to own, directly
or indirectly, free and clear of any Adverse Claim all of the outstanding shares
of capital stock of any of the Originating Entities on a fully diluted basis; or
(iii) FMC shall cease to own, directly or indirectly, free and clear of any
Adverse Claim other than a pledge
made pursuant to the Bank Revolver, all of the Voting Stock of FMCH other than
the preferred stock of FMCH outstanding as of the date hereof (which preferred
stock outstanding as of the date hereof shall not represent more than 20% of the
total Voting Stock of FMCH); or (iv) Fresenius AG, a corporation organized under
the laws of the Federal Republic of Germany, shall cease to own, directly or
indirectly, free and clear of any Adverse Claim at least a majority of the
Voting Stock of FMC.
SECTION 7.2. REMEDIES. (a) Upon the occurrence of any Seller
Default, the Purchaser shall have, in addition to all other rights and remedies
under this Agreement or otherwise, all other rights and remedies provided under
the UCC of the applicable jurisdiction and other applicable laws, all of which
rights shall be cumulative.
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ARTICLE VIII
INDEMNIFICATION; EXPENSES
SECTION 8.1. INDEMNITIES BY THE SELLER. Without limiting any
other rights which the Purchaser may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Purchaser and any successors and permitted
assigns (including, without limitation, the Company, the Bank Investors, the
Agent, the Administrative Agent, the Collateral Agent, the Liquidity Provider
and the Credit Support Provider) and their respective officers, directors and
employees (collectively, "INDEMNIFIED PARTIES") from and against any and all
damages, losses, claims, liabilities, costs and expenses, including, without
limitation, reasonable attorneys' fees (which such attorneys may be employees of
the Liquidity Provider, the Credit Support Provider, the Agent, the
Administrative Agent, the Collateral Agent or the Purchaser, as applicable) and
disbursements (all of the foregoing being collectively referred to as
"INDEMNIFIED AMOUNTS") awarded against or incurred by any of them in any action
or proceeding between the Seller or any Parent Group Member (including any
Parent Group Member, in its capacity as the Collection Agent) and any of the
Indemnified Parties or between any of the Indemnified Parties and any third
party or otherwise arising out of or as a result of this Agreement, the other
Transaction Documents, the ownership or maintenance, either directly or
indirectly, by the Purchaser and its assigns of Receivables and Related Assets
or any of the other transactions contemplated hereby or thereby, excluding,
however, (i) Indemnified Amounts to the extent resulting from gross negligence
or willful misconduct on the part of an Indemnified Party or (ii) recourse
(except as otherwise specifically provided in this Agreement) for uncollectible
Receivables. Without limiting the generality of the foregoing, the Seller shall
indemnify each Indemnified Party for Indemnified Amounts relating to or
resulting from:
(i) any representation or warranty made by any Parent
Group Member (including any Parent Group Member, in its capacity as the
Collection Agent) or any officers of any Parent Group Member (including
any Parent Group Member, in its capacity as the Collection Agent) under
or in connection with this Agreement, the Parent Agreement, the
Transferring Affiliate Letter,
58
the BMA Transfer Agreement, any of the other Transaction Documents, any
Investor Report or any other information or report delivered by any
Parent Group Member pursuant to or in connection with any Transaction
Document, which shall have been false or incorrect in any material
respect when made or deemed made;
(ii) the failure by any Parent Group Member
(including any Parent Group Member, in its capacity as the Collection
Agent) to comply with any applicable law, rule or regulation
(including, without limitation, any CHAMPUS/VA Regulation, any Medicaid
Regulation or any Medicare Regulation), including with respect to any
Receivable or the related Contract, or the nonconformity of any
Receivable or the related Contract with any such applicable law, rule
or regulation;
(iii) the failure to vest and maintain vested in the
Purchaser a first priority ownership interest in the Affected Assets
free and clear of any Adverse Claim;
(iv) the failure to file, or any delay in filing,
financing statements, continuation statements, or other similar
instruments or documents under the UCC of any applicable jurisdiction
or other applicable laws with respect to any of the Affected Assets;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being the legal, valid and
binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of
merchandise or services related to such Receivable or the furnishing or
failure to furnish such merchandise or services;
(vi) any failure of the Collection Agent (if a Parent
Group Member or designee thereof) to perform its duties or obligations
in accordance with the provisions of the TAA; or
59
(vii) any products liability claim or personal injury
or property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with merchandise or
services which are the subject of any Receivable;
(viii) the transfer of an ownership interest in any
Receivable other than an Eligible Receivable;
(ix) the failure by any Parent Group Member
(individually or as Collection Agent) to comply with any term,
provision or covenant contained in this Agreement or any of the other
Transaction Documents to which it is a party or to perform any of its
respective duties under the Contracts;
(x) the failure of any Originating Entity to pay when
due any taxes, including without limitation, sales, excise or personal
property taxes payable in connection with any of the Receivables; (xi)
the commingling by the Seller, any other Originating Entity or the
Collection Agent (if a Parent Group Member or designee thereof) of
Collections of Receivables at any time with other funds;
(xii) any investigation, litigation or proceeding
related to this Agreement, any of the other Transaction Documents, the
use of proceeds of Transfers by the Seller or any other Originating
Entity, the ownership of any Receivable, Related Security or Contract
or any interest therein;
(xiii) the failure of any Special Account Bank or any
Designated Account Agent to remit any amounts held by it pursuant to
the instructions set forth in the applicable Special Account Letter or
any instruction of the Collection Agent, the Seller, any Originating
Entity or the Agent (to the extent such Person is entitled to give such
instructions in accordance with the terms of the Transaction Documents)
whether by reason of the exercise of set-off rights or otherwise;
(xiv) any inability to obtain any judgment in or
utilize the court or other adjudication system of,
60
any state in which an Obligor may be located as a result of the failure
of the Seller to qualify to do business or file any notice of business
activity report or any similar report;
(xv) any failure of the Seller to give reasonably
equivalent value to any Transferring Affiliate in consideration of the
purchase by the Seller from such Transferring Affiliate of any
Receivable, or any attempt by any Person to void, rescind or set-aside
any such transfer or any transfer of any Receivable hereunder under
statutory provisions or common law or equitable action, including,
without limitation, any provision of the Bankruptcy Code;
(xvi) any action taken by the Seller, any other
Originating Entity or the Collection Agent (if a Parent Group Member or
designee thereof) in the enforcement or collection of any Receivable;
PROVIDED, HOWEVER, that if the Company enters into agreements for the
purchase of interests in receivables from one or more Other
Transferors, the Company shall allocate such Indemnified Amounts which
are in connection with the Liquidity Provider Agreement (as defined in
the TAA), the Credit Support Agreement (as defined in the TAA) or the
credit support furnished by the Credit Support Provider to the Seller
and each Other Transferor; and PROVIDED, FURTHER, that if such
Indemnified Amounts are attributable to any Parent Group Member and not
attributable to any Other Transferor, the Seller shall be solely liable
for such Indemnified Amounts or if such Indemnified Amounts are
attributable to Other Transferors and not attributable to any Parent
Group Member, such Other Transferors shall be solely liable for such
Indemnified Amounts;
(xvii) any reduction or extinguishment of, or any
failure by any Obligor to pay (in whole or in part), any Receivable or
any Related Security with respect thereto as a result of or on account
of any violation of or prohibition under any law, rule or regulation
now or hereafter in effect from time to time, including without
limitation and CHAMPUS/VA Regulation, any Medicaid Regulation or any
Medicare Regulation, or as a result of or on account of the
61
entering of any judicial or regulatory order or agreement adversely
affecting the Seller or any Parent Group Member; or
(xviii) any failure by the Seller or any Parent Group
Member to maintain all governmental and other authorization and approvals
necessary to render the services, or sell the merchandise, resulting in
Receivables.
SECTION 8.2. OTHER COSTS AND EXPENSES. (a) The Seller agrees,
upon receipt of a written invoice, to pay or cause to be paid, and to save the
Purchaser harmless against liability for the payment of, all reasonable
out-of-pocket expenses (including, without limitation, the out-of-pocket
expenses payable by the Purchaser under Section 8.4 of the TAA) or intangible,
documentary or recording taxes incurred by or on behalf of the Purchaser or any
other Indemnified Party (i) in connection with the negotiation, execution,
delivery and preparation of this Agreement, the other Transaction Documents and
any documents or instruments delivered pursuant hereto and thereto and the
transactions contemplated hereby or thereby (including, without limitation, the
perfection or protection of the Purchaser's ownership of Receivables and Related
Assets with respect thereto) and (ii) from time to time (a) relating to any
amendments, waivers or consents under this Agreement and the other Transaction
Documents, (b) arising in connection with the Purchaser's enforcement or
preservation of rights (including, without limitation, the perfection and
protection of the transfers of Receivables and Related Assets under this
Agreement), or (c) arising in connection with any audit, dispute, disagreement,
litigation or preparation for litigation involving this Agreement or any of the
other Transaction Documents.
(b) If the Seller fails to perform any of its
agreements or obligations under this Agreement, following expiration of any
applicable cure period, the Purchaser (or any assignee thereof) may (but shall
not be required to) perform, or cause performance of, such agreement or
obligation, and the reasonable expenses of the Purchaser (or any such assignee)
incurred in connection therewith shall be payable by the Seller upon the
Purchaser's (or any such assignee's) written demand therefor.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. TERM OF AGREEMENT. This Agreement shall terminate
on the date after the Collection Date on which (i) no further Purchases are to
be made hereunder, (ii) the aggregate Outstanding Balance of Receivables
conveyed to the Purchaser hereunder has been reduced to zero or written off in
accordance with the Credit and Collection Policy and (iii) the Seller has paid
the Purchaser all indemnities, adjustments and other amounts which may be owed
to the Purchaser hereunder; PROVIDED, HOWEVER, that (x) the rights and remedies
of the Purchaser with respect to any representation and warranty made or deemed
to be made by the Seller pursuant to this Agreement, (y) the indemnification and
payment provisions of Article VII, and (z) the agreements set forth in Section
9.9 hereof, shall be continuing and shall survive any termination of this
Agreement.
SECTION 9.2. WAIVERS; AMENDMENTS. No failure or delay on the
part of the Purchaser in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy. The rights and
remedies herein provided shall be cumulative and nonexclusive of any rights or
remedies provided by law. No provision of this Agreement or the Subordinated
Note may be amended, supplemented, modified or waived except in writing by the
Seller, the Purchaser, the Agent, the Company and the "Majority Investors" under
and as defined in the TAA. It is expressly understood and acknowledged that the
prior written consent of the Agent shall be required in order for the Purchaser
to grant a consent, authorization or approval requested by the Seller hereunder,
or for the Purchaser to agree to any amendment, waiver or other modification to
the terms or conditions of this Agreement.
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SECTION 9.3. NOTICES. Except as provided below, all
communications and notices provided for hereunder shall be in writing (including
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other party at its address or telecopy number set forth below or at
such other address or telecopy number as such party may hereafter specify for
the purposes of notice to such party. Each such notice or other communication
shall be effective (i) if given by telecopy when such telecopy is transmitted to
the telecopy number specified in this Section 9.3 and confirmation is received,
(ii) if given by mail 3 Business Days following such posting, postage prepaid,
U.S. certified or registered, (iii) if given by overnight courier, one (1)
Business Day after deposit thereof with a national overnight courier service, or
(iv) if given by any other means, when received at the address specified in this
Section 9.3.
If to the Purchaser:
NMC Funding Corporation
Two Ledgemont Center
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxx X. Xxxxxx
Payment Information:
Chase Manhattan Bank, N.A.
ABA 000-000-000
Account 000-0-00000
If to the Seller:
National Medical Care, Inc.
Two Ledgemont Center
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxx X. Xxxxxx
Payment Information:
Chase Manhattan Bank, N.A.
ABA 000-000-000
Account 000-0-00000
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SECTION 9.4. GOVERNING LAW; SUBMISSION TO JURISDICTION;
INTEGRATION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE SELLER HEREBY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE
CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. The Seller
hereby irrevocably waives, to the fullest extent it may effectively do so, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. Nothing in
this Section 9.4 shall affect the right of the Purchaser to bring any action or
proceeding against the Seller or any of its properties in the courts of other
jurisdictions.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH,
RELATING TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
(c) This Agreement contains the final and complete
integration of all prior expressions by the parties hereto with respect to the
subject matter hereof and shall constitute the entire Agreement among the
parties hereto with respect to the subject matter hereof superseding all prior
oral or written understandings.
(d) The Seller hereby appoints Xxxx X. Xxxxxx, Xx.,
of Arent Fox Xxxxxxx Xxxxxxx & Xxxx, located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 as the authorized agent upon whom process may be served in any action
arising out of or based upon this Agreement, the other Transaction Documents to
which such Person is a party or the transactions contemplated hereby or thereby
that may be
65
instituted in the United States District Court for the Southern District of New
York and of any New York State Court sitting in the City of New York by the
Purchaser or any of its assignees.
SECTION 9.5. SEVERABILITY; COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are 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 hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 9.6. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding on the parties hereto and their respective successors and assigns;
PROVIDED, HOWEVER, that the Seller may not assign any of its rights or delegate
any of its duties hereunder or under any of the other Transaction Documents to
which it is a party without the prior written consent of each of the Purchaser
and the Agent. The Purchaser may assign at any time any or all of its rights and
obligations hereunder and interests herein to any other Person without the
consent of the Seller. Without limiting the foregoing, the Seller acknowledges
that the Purchaser, pursuant to the TAA, shall assign to the Agent, on behalf of
the Company or the Bank Investors, as the case may be, all of its rights,
remedies, powers and privileges hereunder and that each of the Agent, the
Company and such Bank Investors may further assign such rights, remedies, powers
and privileges to the extent permitted in the TAA. The Seller agrees that the
Agent, as the assignee of the Purchaser, shall, subject to the terms of the TAA,
have the right to enforce this Agreement and to exercise directly all of the
Purchaser's rights and remedies under this Agreement (including, without
limitation, the right to give or withhold any consents or approvals of the
Purchaser to be given or withheld hereunder) and the Seller agrees to cooperate
fully with the Agent in the exercise of such rights and remedies. The Seller
further agrees to give to
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the Agent copies of all notices, reports and other documents it is required to
give to the Purchaser hereunder and to permit the Agent the rights of inspection
and audit granted to the Purchaser hereunder. In addition, the Seller agrees
that to the extent the Purchaser is herein permitted to take any action or to
provide any information or report, the Agent may similarly so direct and require
(with or without the concurrence of the Purchaser) the Seller to take such
action or to provide such information or report.
SECTION 9.7. WAIVER OF CONFIDENTIALITY. The Seller hereby
consents to the disclosure of any non-public information with respect to it
received by the Purchaser, the Company, the Agent, any Bank Investor or the
Administrative Agent to any of the Purchaser, the Company, the Agent, any
nationally recognized rating agency rating the Company's Commercial Paper, the
Administrative Agent, the Collateral Agent, any Bank Investor or potential Bank
Investor, the Liquidity Provider or the Credit Support Provider in relation to
this Agreement or the TAA.
SECTION 9.8. CONFIDENTIALITY AGREEMENT. The Seller hereby
agrees that it will not disclose, and will cause each Parent Group Member to
refrain from disclosing, the contents of this Agreement or any other proprietary
or confidential information of the Purchaser, the Company, the Agent, the
Administrative Agent, the Collateral Agent, any Liquidity Provider or any Bank
Investor to any other Person except (i) its auditors and attorneys, employees or
financial advisors (other than any commercial bank) and any nationally
recognized rating agency PROVIDED such auditors, attorneys, employees financial
advisors or rating agencies are informed of the highly confidential nature of
such information or (ii) following notice thereof to the Agent, as otherwise
required by applicable law (including the federal securities laws) or order of a
court of competent jurisdiction.
SECTION 9.9. BANKRUPTCY PETITIONS. (a) The Seller hereby
covenants and agrees that, prior to the date which is one year and one day after
the payment in full of all outstanding Commercial Paper or other indebtedness of
the Company, it will not, and the Seller will cause each Parent Group Member to
not, institute against, or join any other Person in instituting against, the
Company any
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bankruptcy, reorganization, arrangement insolvency or liquidation proceedings or
other similar proceeding under the laws of the United States or any state of the
United States.
(b) The Seller hereby covenants and agrees that, prior to the
date which is one year and one day after this Agreement shall have terminated in
accordance with its terms, it will not institute against, or join any other
Person in instituting against, the Purchaser any bankruptcy, reorganization,
arrangement insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States
SECTION 9.10. PURCHASE TERMINATION. The Seller's obligation to
sell, transfer, assigns and otherwise convey Receivables and Related Assets to
the Purchaser hereunder may be terminated at any time by the Seller by giving
written notice thereof to Purchaser and the Agent of the Seller's election to
discontinue Purchases hereunder, in which event the Purchase Termination Date
(as defined in the TAA) shall thereafter occur on the date specified therefor by
the Seller in such notice, but in any event not less than 60 days after the
Agent's receipt of such notice.
SECTION 9.11. SUBORDINATION. The Seller agrees that any
indebtedness, obligation or claim, it may from time to time hold or otherwise
have (including, without limitation any obligation or claim arising in
connection with the Revolving Loans) against the Purchaser or any assets or
properties of the Purchaser, whether arising hereunder or otherwise existing,
shall be subordinate in right of payment to the prior payment in full of any
indebtedness or obligation of the Purchaser owing to the Agent, the Company or
any Bank Investor under the TAA. The subordination provision contained herein is
for the direct benefit of, and may be enforced by, the Agent, the Company, any
Bank Investor and/or any of their respective assignees under the TAA.
SECTION 9.12. CHARACTERIZATION OF THE TRANSACTIONS
CONTEMPLATED BY THE AGREEMENT. It is the intention of the parties that each
Purchase hereunder shall constitute a sale of such Receivables, together with
the Related Assets with respect thereto, from the Seller to the
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Purchaser, conveying good title thereto free and clear of any Adverse Claims,
and that such Receivables and Related Assets not be part of the Seller's estate
in the event of an insolvency. If, notwithstanding the foregoing, the
transactions contemplated hereby should be deemed a financing, the parties
intend that the Seller shall be deemed to have granted to the Purchaser, and the
Seller hereby grants to the Purchaser, a first priority perfected and continuing
security interest in all of the Seller's right, title and interest in, to and
under the Receivables, together with the Related Assets with respect thereto,
and together with all of the Seller's rights under the Transferring Affiliate
Letter, the BMA Transfer Agreement and all other Transaction Documents with
respect to the Receivables and with respect to any obligations thereunder of any
Originating Entity with respect to the Receivables, and that this Agreement
shall constitute a security agreement under applicable law. The Seller hereby
assigns to the Purchaser all of its rights and remedies under the Transferring
Affiliate Letter and the BMA Transfer Agreement (and all instruments, documents
and agreements executed in connection therewith) with respect to the Receivables
and with respect to any obligations thereunder of any Originating Entity with
respect to the Receivables.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Receivables Purchase Agreement as of the date first written
above.
NMC FUNDING CORPORATION,
as Purchaser
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Assistant Treasurer
NATIONAL MEDICAL CARE, INC.,
as Seller
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx x. Xxxxxx
Title: President
70
Signature Page to Receivables Purchase Agreement
dated as of August 28, 1997
71
EXHIBIT A
to
RECEIVABLES PURCHASE AGREEMENT
FORMS OF CONTRACTS
72
EXHIBIT B
to
RECEIVABLES PURCHASE AGREEMENT
CREDIT AND COLLECTION POLICIES AND PRACTICES
73
EXHIBIT C
to
RECEIVABLES PURCHASE AGREEMENT
LIST OF SPECIAL ACCOUNT BANKS
AND DESIGNATED ACCOUNT AGENTS
74
EXHIBIT D
to
RECEIVABLES PURCHASE AGREEMENT
FORM OF SPECIAL ACCOUNT LETTER
75
EXHIBIT E
to
RECEIVABLES PURCHASE AGREEMENT
FORM OF SUBORDINATED NOTE
76
EXHIBIT F
to
RECEIVABLES PURCHASE AGREEMENT
LIST OF ACTIONS AND SUITS
77
EXHIBIT G
to
RECEIVABLES PURCHASE AGREEMENT
LOCATION OF RECORDS
78
EXHIBIT H
to
RECEIVABLES PURCHASE AGREEMENT
LIST OF SELLER'S SUBSIDIARIES,
DIVISIONS AND TRADENAMES
79
EXHIBIT I
to
RECEIVABLES PURCHASE AGREEMENT
FORM OF TRANSFERRING AFFILIATE LETTER
80
EXHIBIT J
to
RECEIVABLES PURCHASE AGREEMENT
LIST OF TRANSFERRING AFFILIATES, CHIEF EXECUTIVE
OFFICES OF TRANSFERRING AFFILIATES AND TRADENAMES
81
EXHIBIT K
to
RECEIVABLES PURCHASE AGREEMENT
FORM OF ACCOUNT AGENT AGREEMENT
