Exhibit 10.01
Medical Capital Management Corporation
Master Service Agreement
This Master Service Agreement, including the Exhibits and Appendices attached
hereto ("Agreement"), is entered into among: Medical Capital Management, Inc.
("Company"), Medical Tracking Services, Inc. ("Servicer"), and Zions First
National Bank ("Trustee") effective _____________.
STATEMENT OF PURPOSE
The Company desires to engage Servicer to provide certain services related to
the processing and servicing Healthcare and other types of Business Accounts
Receivable, pursuant to the First Amended Note Issuance and Security Agreement
between Company and Trustee.
1. AGREEMENT
In consideration of the mutual covenants set forth below and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
2. SCOPE
2.1 MASTER SERVICE AGREEMENT - This Agreement outlines the overall
responsibilities and relationships between the Company and the Servicer
as regards the acquisition by Company of Accounts Receivables and the
provision of specific functions and services by Servicer as outlined in
detail under one of the following Component Agreements, as may be
entered into from time to time.
2.1.2 ADMINISTRATIVE SERVICES AGREEMENT - Agreement covering determination of
the Expected Net Receivable, reporting of anticipated reimbursement and
issuance of checks on new work referred to Servicer by Company.
3. DEFINITIONS
3.1 GENERAL: Except as otherwise specified or as the context may otherwise
require, the following terms have the respective meanings set forth
below for all purposes of this Agreement, and the definitions of such
terms are equally applicable to all genders of such terms.
3.2 AFFILIATE OF ANY SPECIFIED PERSON means any person directly or
indirectly controlling or controlled by or under direct or indirect
common control with such specified person. Control means the power to
direct the management and policies of such person.
3.3 BATCH means a group of Healthcare and other types of Business Accounts
Receivable purchased by the Company from a single Health Care Client or
Business on a particular date.
3.4 BUSINESS DAY means each Monday, Tuesday, Wednesday, Thursday and Friday
which is a day (i) on which banking institutions in the city of Reno,
Nevada, where the corporate trust office or the corporation trust
operations office for the Trustee are located and are authorized or
obligated by law or executive order to close.
3.5 CASH PERCENTAGE, ALSO CALLED ADVANCE RATE, shall be equal to a
designated percentage established for a client of Company in the
Purchase Agreement or other Agreement by and between the Company and its
Client(s) which percentage shall be identified by the Company to
Servicer for such Client(s).
3.6 CASH PORTION OR CASH ADVANCE with respect to a Healthcare and other
types of Business Accounts Receivable shall mean the Cash Percentage
times the Expected Net Receivable.
3.7 COMPENSABLE RECEIVABLES means all Healthcare and other types of Business
Accounts Receivable purchased by the Company and submitted by the
Company to the Servicer for servicing. However, with respect to a
skilled nursing facility or a nursing home, room and board charges for
each patient during any calendar month shall be deemed to be a single
Compensable Receivable notwithstanding purchases by the Company of such
Healthcare Receivables on a weekly basis during a calendar month.
3.8 DEFAULT means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
3.9 EFFECTIVE DATE means the date of execution and delivery of this
Agreement.
3.10 EVENT OF DEFAULT by Servicer has the meaning specified in Paragraph 7.1.
3.11 EVENT OF DEFAULT by the Company has the meaning specified in Paragraph
7.2.
3.12 EXPECTED NET RECEIVABLE (ENR) with respect to a Healthcare and other
types of Business Accounts Receivable, shall mean an amount for such
Receivable which shall be calculated by Servicer by: multiplying the
Expected Net Receivable percentage determined by the Company; or its
Administrator or authorized agent(s), times gross amount of the
Healthcare and other types of Business Accounts Receivable.
3.13 GOVERNMENT ENTITY means the United States of America, any state, and any
agency or instrumentality of the United States of America or any state
which is obligated to make any payment with respect to Medicare,
CHAMPUS, Medicaid, Various State Health Title Programs and any other
type of Receivable representing amounts owing under any program
established by federal or state law. Including CHAMPUS as set forth in
Title 10, U.S.C. Section 1071 et. seq., and the program set forth in
Title 3, I.S.C Section 1713.
3.14 HEALTHCARE RECEIVABLES means, with respect to each Client, the patient
accounts existing or hereafter created on the records of such Client,
any and all rights to receive payments due on such accounts from any
Third Party Obligor under or in respect of such account and all proceeds
in any way derived, whether directly or indirectly, from any of the
foregoing.
3.15 HEALTHCARE INSURER OR OBLIGOR means any Payor which in the ordinary
course of its business or activities agrees to pay for healthcare goods
and services received by individuals, including a commercial insurance
company, a nonprofit insurance company (such as Blue Cross/Blue Shield
entity), an employer or union which self-insures for employee or member
health insurance and a health maintenance organization approved by the
Company other than a Governmental Entity which is responsible for
payment of all or any portion or a Healthcare Receivable. An Insurer
includes any insurance companies issuing health, personal injury,
workmen's compensation or other types of insurance, but does not include
any individual guarantors.
3.16 LOCKBOX ACCOUNT means a Lockbox account established by the Company or
the Trustee, or the Servicer on behalf of the Company, for the
collection of Healthcare and other types of Business Accounts Receivable
purchased by the Company.
3.17 MEDICARE AND MEDICAID RECEIVABLES means a Healthcare Receivable
representing a claim against a Governmental Entity pursuant to the
Medicare program (as set forth in Title 42 U.S.C. Section 1395 et. seq.)
or the Medicaid Program (as set forth in Title 42 U.S.C. Section 1396
et. seq.).
3.18 NOTE ISSUANCE AND SECURITY AGREEMENT - the Note agreement, by and
between the Company and its Trustee, as amended from time to time, which
provides the terms and conditions of securitization for the promissory
notes, and by which the Trustee administers the payments to the secured
promissory note holders.
3.19 OFFICER means, with respect to any corporation, the Chairman of the
Board, President, or a Vice President, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the applicable
corporation.
3.20 OFFICER'S CERTIFICATE means a certificate that has been signed on behalf
of the Servicer by an individual who is identified in that certificate
as an Officer of the Servicer.
3.21 PARTICIPATION INTEREST with respect to a Healthcare and other types of
Business Accounts Receivable, means a percentage which will be
identified by the Company to Servicer with respect to each Receivable
purchased by the Company or its designee such percentage will be used
pursuant to The Purchase Agreement to determine the amount collected
with respect to such Receivables in excess of the Sharing Breakpoint to
be paid to the Client.
3.22 PERSON means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
3.23 PURCHASE AGREEMENT means the agreement between the Company and a Health
Care Client or other type of Business pursuant to which the Client or
Business agrees to sell the Company its Receivables substantially in the
form set forth on Exhibit C hereto.
3.24 HEALTH CARE CLIENT, OR CLIENT means a hospital, medical practitioner,
nursing home, professional service corporation, clinic, medical group or
any other Client of healthcare goods or services, each of which is
acceptable to Servicer as identified by a Federal and or State Client
Identification Number, or a separate geographic location and which has
entered into a Purchase Agreement.
3.25 PURCHASED ACCOUNT FILE means, with respect to each Healthcare and other
types of Business Accounts Receivable purchased by the Company, the
related billing and invoicing forms, patient consent to payment and all
other medical documents and authorizations necessary to obtain payment
from any Payor or Obligor.
3.26 REPURCHASE PRICE with respect to an Unacceptable Account, means an
amount equal to (i) the Sharing Breakpoint for such Unacceptable Account
plus (ii) interest equal to 18% per annum or such lesser rate identified
to Servicer by the Company on such difference from and including the
date that payment of the Repurchase Price is demanded to the date the
Repurchase Price is paid.
3.27 SHARING BREAKPOINT with respect to a Receivable, means an amount equal
to the Expected Net Receivable for such, multiplied by a fraction (the
numerator of which is the Cash Percentage and the denominator of which
is the Participation Interest). Provided, however, that after a client
has ceased selling Receivables to the Company or the Company has ceased
purchasing Receivables from a Client, the Company shall combine all
Receivables for which there has been no final settlement, and treat such
Receivables as a single Receivable, at which time the Sharing Breakpoint
will become the total Expected Net Receivable, of all previously unpaid
Receivables of such Client, multiplied by a fraction (the numerator of
which is the Cash Percentage and the denominator of which is the
weighted average of the Participation Interest for all of such combined
Receivables of such Client). The Company shall give Servicer written
notice indicating when the above provision is to be used in the
preparation of reports by Servicer.
3.28 THIRD PARTY HEALTHCARE PAYOR means a commercial Insurer, a private
insurer, a company that is self-insured, or a federal or state
governmental agency that is responsible for payment of all or any
portion of a Healthcare Receivable.
3.29 TRUSTEE - the term Trustee shall refer to the designated entity acting
as Indentured Trustee under the Note Issuance and Security Agreement
pursuant to which the Company is purchasing Healthcare and other types
of Business Accounts Receivable.
3.30 UNACCEPTABLE ACCOUNT - means a Receivable purchased by the Company for
which there has been an uncured breach of a representation or warranty
by the client pursuant to the terms of the Purchase Agreement and a
Receivable which is not included in any of the collateral coverage
ratios set forth in the Note Issuance and Security Agreement.
4. SERVICES PROVIDED BY SERVICER RELATED TO: PURCHASE OF HEALTHCARE AND
OTHER TYPES OF BUSINESS ACCOUNTS RECEIVABLE AND SERVICING, TRACKING AND
REPORTING ON OTHER FORMS OF COLLATERAL
4.1 OBTAINING HEALTHCARE AND OTHER TYPES OF BUSINESS ACCOUNTS RECEIVABLE
DATA RECORDS. The Company or its designee will instruct each Client to
furnish Servicer with all information and data relating to each
Compensable Receivable which is necessary for the Servicer to perform
its duties as described in the relevant Exhibits attached to this
Agreement for each Component Agreement. In the event the information or
data provided by the Client to Servicer requires clarification, Servicer
will communicate directly with the Client to obtain such clarification.
4.2 REPORTING ON RECEIVABLES. In addition to the information set forth and
described in the relevant Exhibit for each Component Agreement to the
extent required (i) for the preparation of the required reports (to the
extent that such information is different from prior information
submitted to Servicer); (ii) for Servicer to identify the Client and its
receivables and to set it up on its systems and (iii) for Servicer to
identify the parameters that the Company utilizes for entering into
transactions with such Client. Company will assure the required
information is timely supplied to Servicer by Company or Client.
4.3 POSSESSION OF RECEIVABLE DOCUMENTS. Unless otherwise specified herein
for two (2) years from the resolution of the claim represented by the
respective Compensable Receivable for which Servicer has provided
servicing or billing services. Servicer shall maintain, for the benefit
of the Company and the Trustee, physical possession of good and legible
copies (which copies may consist of or electronic media) of the
Purchased Account File with respect to each Compensable Receivable
purchased by the Company, together with such other instruments or
documents that modify or supplement the Purchased Account File and all
other instruments and documents generated by or coming into the
possession of Servicer that are required to document or service such
Receivable; including but not limited to, insurance claim files, ledger
showing payment records, the premium receipts, correspondence and
current and historical computerized data files, whether developed or
originated by Servicer or others who have delivered such items to
Servicer. No earlier than the end of twenty four (24) months from the
date on which the respective Compensable Receivable was purchased by the
Company, Servicer will notify the Company of the proposed destruction of
the foregoing documents and electronic media and, if requested by the
Company within ten (10) days of the Company's receipt of such
notification, transfer physical possession of the foregoing documents
and electronic media to the Company of the applicable Client. Any such
transfer shall be at the Company's cost. If the Company does not request
such transfer within such ten (10) day periods, Servicer may destroy
such documents and electronic media. Prior to destruction, each
Purchased Account File shall remain the property of the Company
regardless of whether Servicer or the Company has physical possession.
4.4 DATA PROCESSING OF INFORMATION SUPPLIED PURSUANT TO PARAGRAPH 4.1 AND
PARAGRAPH 4.2. Servicer shall enter into the applicable tracking system,
either by electronic data interchange or manually the accounts
receivable data necessary to adequately and properly service, monitor
and report on the receivables delivered to Servicer pursuant to
Paragraph 4.1 above. Servicer will make every effort to maintain data in
a manner that complies with all federal and state requirements regarding
maintaining the confidentiality of the contents of the receivables
files.
4.5 OBTAINING DATA AND RECORDS ON OTHER ASSETS SECURED BY COMPANY. The
Company, or its designee will instruct each Client to furnish Servicer
with all information and data relating to each Asset that is Secured for
lending, investment, or ownership purposes by Company. The information
to be provided to the Servicer by the Client of the Company will be in
sufficient detail to allow the Servicer to maintain appropriate and
adequate data to monitor, track and report on in sufficient detail.
Servicer shall maintain fixed asset ledgers and loan amortization
schedules on collateral such as equipment and buildings that are
secured. The Servicer will be responsible for obtaining initial
appraisals of equipment and buildings. These appraisals will also be
done on an annual basis and when it is apparent that the market value of
the asset has changed. If notes are purchased from companies related by
ownership, or control to Company, the Servicer will maintain records of
note amortization and note payments. In the event the information or
data provided by the Client to Servicer requires clarification, Servicer
will communicate directly with the Client to obtain such clarification.
4.6 REPORTING ON OTHER COLLATERAL. In addition to the information set forth
and described in the relevant Exhibits to this Agreement, Servicer will
report fully and promptly, on a periodic basis, regarding the nature,
value, transactions and other relevant information regarding the secured
collateral. Reporting will be done by the Servicer to the Trustee and
the Company. Periodic reports will be sent to each Client listing the
balances and transactions in their respective accounts.
4.7 POSSESSION OF RECEIVABLE DOCUMENTS. Unless otherwise specified herein,
for two (2) years from the resolution of the claim represented by the
respective Compensable Receivable for which Servicer has provided
servicing or billing services, Servicer shall maintain, for the benefit
of the Company and the Trustee, physical possession of good and legible
copies (which copies may consist of or electronic media) of the
Purchased Account Files with respect to each Compensable Receivable
purchased by the Company, together with such other instruments or
documents that modify or supplement the Purchased Account File and all
other instruments and documents generated by or coming into the
possession of Servicer that are required to document or service such
Receivable; including but not limited to, insurance claim files, ledger
showing payment records, the premium receipts, correspondence and
current and historical computerized data files, whether developed or
originated by Servicer or others who have delivered such items to
Servicer . No earlier than the end of twenty four (24) months from the
date on which the respective Compensable Receivable was purchased by the
Company, Servicer will notify the Company of the proposed destruction of
the foregoing documents and electronic media and, if requested by the
Company within ten (10) days of the Company's receipt of such
notification, transfer physical possession of the foregoing documents
and electronic media to the Company of the applicable Client. Any such
transfer shall be at the Company's cost. If the Company does not request
such transfer within such ten (10) day periods, Servicer may destroy
such documents and electronic media. Prior to destruction, each
Purchased Account File shall remain the property of the Company
regardless of whether Servicer or the Company has physical possession.
4.8 IMPLEMENTATION OF PROCEDURES AT CLIENT'S LOCATION. Company, or its
assigns, assisted by Servicer, shall use reasonable efforts and
resources to cause Clients to implement appropriate procedures and
processes in their offices for the purpose of maintaining adequate
records of the collateral secured by the Company. The Company will also
make reasonable demands to cause the Clients to exercise due care and
custodianship of the collateral so as to ensure it is adequately insured
and that adequate safekeeping measures are taken to preserve its value.
4.9 SERVICER'S FEES. Servicer shall be compensated for providing a variety
of services in the method outlined below:
(i) Servicer is to be paid a fee of $1,500 (one thousand five hundred)
per new client for establishing a new claims management account in its
claims management computer system;
(ii) Servicer is to be paid a fee of $1,500 (one thousand five hundred)
per new client for establishing a new electronic data interface between
the new client's billing system and the tracking system of Servicer;
(iii) Servicer is to be paid a fee of $2.00 (two dollars) per claim
posted on its tracking system. This posting process includes the
entering on the tracking system of the billing charges and also entering
on the tracking system the payments received from the various payors.
This charge is the same if the entries are facilitated manually, or by
electronic data interface posting. This charge also applies if the
client provides the Servicer with billing claims that duplicate the
claims that have been previously provided to the Servicer;
(iv) Servicer is to be paid $.15 (fifteen cents) per page copied of
various documents, reports or information;
(v) Servicer is to be paid a fee of a minimum charge of $200 (two
hundred) per month for tracking and reporting on each individual client.
This minimum fee is to cover the Servicer's Administrative, equipment
and other overhead costs.
5. COVENANTS
5.1 CORPORATE EXISTENCE: SERVICER. Servicer shall keep in full force and
effect its existence and good standing as a corporation under the laws
of the State of Nevada and will obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to enable Servicer to perform its
duties under this Agreement.
5.2 SERVICER'S AGREEMENT NOT TO TERMINATE.
5.2.1 Except as provided in Paragraph 5.2.2, in event of Company default and
failure to cure that default within thirty (30) days of receipt of
written notification from Servicer, Servicer shall not resign from the
duties and obligations hereby imposed on it except upon the consent of
the Company and the Trustee.
5.2.2 Servicer shall give written notice to the Company and the Trustee within
thirty (30) days of an occurrence and continuance of an event for which
notice was given to the Company and the proper cure period expired, and
now constitutes an Event of Default. It is agreed by the parties that
the period of time for Servicer to discontinue performance of services
shall be thirty (30) days, which shall begin to run at such time as
notice is given to the Company and Trustee.
5.3 COVENANTS OF COMPANY: CORPORATE EXISTENCE. The Company shall keep in
full force and effect its existence and good standing as a corporation
under the laws of the State of Nevada and will obtain and preserve its
qualification to do business as a foreign entity in each jurisdiction in
which such qualification is or shall be necessary to enable the Company
to perform its duties under this Agreement.
5.4 NO DEFAULT CERTIFICATION. Upon request by the Company, the Servicer will
deliver to the Company an Officer's Certificate of Servicer certifying
that (i) no Default or Event of Default exists under the Servicing
Agreement, or if such a Default or Event of Default exists, the
Officer's Certificate shall identify same and specify actions being
taken to cure same and (ii) all representations and warranties made by
Servicer in paragraph 6.1 of the Servicing Agreement remain true and
correct as of the date of such Officer's Certificate or if such
representation and warranties do not remain true and correct, the
Officer's Certificate shall identify which do not remain true and
correct, and shall specify actions being taken to cure same.
6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF SERVICER.
6.1.1 Servicer hereby represents, warrants and covenants to the Company and
the Trustee that, as of the date hereof:
(i) Servicer is a corporation duly organized, and validly existing and
in good standing under the laws of the State of Nevada with corporate
power and authority to conduct its business as currently conducted and
as contemplated by this Agreement;
(ii) All necessary corporate action has been taken by Company to
authorize and empower Servicer and its officers or representatives,
acting on Servicer's behalf. To ensure Servicer has full power and
authority to execute, deliver and perform this Agreement;
(iii) The execution and delivery of this Agreement by Servicer and its
performance and compliance with the terms of this Agreement will not
violate Servicer's organization and regulatory documents or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
contract, indenture, loan, credit agreement or any other agreement or
instrument to which Servicer is a Party or which may be applicable to
Servicer or any of its assets;
(iv) Servicer is not in violation of, and the execution and delivery of
this Agreement by Servicer and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to,
any order or decree of any court or any order, regulation or demand of
any federal, state, municipal or governmental agency, which violation
might have consequences that would materially and adversely affect the
condition (financial or other) or options of Servicer or its properties
or might have consequences that would affect the perfom1ance or its
properties or might have consequences that would affect the perfom1ance
of its duties hereunder; provided, however, that Servicer is not
representing or warranting whether its performance and compliance with
the terms of this Agreement will constitute a violation under the
Medicare or Medicaid laws or other federal or state laws referenced in
Paragraph 6.2.7 below;
(v) To the knowledge of Servicer, no proceeding of any kind, including,
but not limited to, litigation, arbitration or administrative, is
pending or threatened against or contemplated by Servicer which would
have any material adverse effect on the execution, delivery, performance
or enforceability of this Agreement;
(vi) No information, certificate of an officer, statement furnished in
writing or report delivered to the Company or the Trustee by Servicer
regarding this Agreement or the duties or obligations contemplated by
the Agreement has, to the knowledge of Servicer, contained any untrue
statement of a material fact or omitted a material fact necessary to
make the information, certificate, statement or report not misleading;
and
6.1.2 It is understood and agreed that the representations and warranties set
forth in this Paragraph 6.1 shall inure to the benefit of the Company
and the Trustee.
6.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
6.2.1 The Company hereby represents, warrants and covenants to Servicer that,
as of the date hereof and as of the date of each delivery of a Purchased
Account File for a Healthcare and other types of Business Accounts
Receivable to Servicer:
(i) The Company is a corporation duly organized, and validly existing
and in good standing under the laws of the State of Delaware with power
and authority to conduct its business as currently conducted and is
contemplated by this Agreement;
(ii) All necessary partnership, regulatory or other similar action has
been taken to authorize and empower the Company and the officer or
representatives acting on the Company's behalf, and the Company has full
power and authority to execute, deliver and perform this Agreement;
(iii) The execution and delivery of this Agreement by the Company and
its performance and compliance with the terms of this Agreement will not
violate the Company's organization and regulatory documents or
constitute a default (or an event which, with notice of lapse of time,
or both, would constitute a default) under, or result in the breach of,
any material contract, indenture, loan credit agreement or any other
agreement or instrument to which the Company is a Party or which may be
applicable to the Company or any of its assets;
(iv) This Agreement constitutes a valid, legal and binding obligation of
the Company, enforceable against it in accordance with the terms
thereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditor's rights
generally and to general principles or equity, regardless of whether
such enforcement is considered in a proceeding in equity or at law;
(v) The Company is not in violation of and the execution and delivery of
this Agreement by the Company and its performance and compliance with
the terms of this Agreement will not constitute a violation with respect
to, any law, order or decree of any court or any order, regulation or
demand of any federal, state, municipal or governmental agency, which
violation might have consequences that would materially and adversely
affect the condition (financial or other) or operations of the Company
or its properties or might have consequences that would affect the
performance of its duties hereunder;
(vi) To the knowledge of the Company, no proceeding of any kind,
including, but not limited to, litigation, arbitration, judicial or
administrative, is pending or threatened against or contemplated by the
Company which would under any circumstance have any material adverse
effect on the execution, delivery, performance or enforceability of this
Agreement;
(vii) The Company's purchase of Healthcare Receivables representing
claims under the Medicare and Medicaid programs and any other programs
established by Governmental Entities, as contemplated by the respective
Purchase Agreements, will not violate any provisions of the Medicare Act
(42 U.S.C. Sections 1395-1396) or the Medicaid Program of the Social
Security Act (42 U.S.C. Sections 1396-1396p) or any other provisions of
federal or state law which provide for payment for healthcare services
to be made to the Clients of such services; and
(viii) No information, certificate of an officer, statement furnished in
writing or report delivered to Servicer by the Company, to the knowledge
of the Company, contains any untrue statement of a material fact or
omits a material fact necessary to make the information, certificate,
statement or report not misleading.
It is understood and agreed that the representations and warranties set
forth in this Paragraph 6.2 shall inure to the benefit of the Servicer
and the Trustee.
7. DEFAULT
7.1 EVENTS OF DEFAULT - SERVICER. Any act or occurrence described in
Paragraph 7.1 shall constitute an Event of Default by Servicer under
this Agreement.
7.1.1 Any failure to deposit in the Lockbox Account any payment required to be
so deposited by Servicer under the terms of this Agreement other than a
failure that does not continue for more than two (2) Business Days after
the earlier of (i) discovery of such failure by an Officer or Servicer
or (ii) delivery of written notice of such failure to Servicer by or on
behalf of the Company of the Trustee;
7.1.2 Any failure on the part of Servicer duly to observe or perform in any
material respect any of the other covenants or agreements on the part of
Servicer to be performed under this Agreement, which failure continues
unremedied for a period of (i) five (5) Business Days with respect to
the delivery of reports required by a Component Agreement and (ii) with
respect to all other covenants or agreements, thirty (30) calendar days
after the date on which written notice of such failure; requiring the
same to be remedied, shall have been given by Servicer by or on behalf
of the Company or the Trustee;
7.1.3 The entry of a decree or order for relief by any court or agency or
supervisory authority having jurisdiction in respect of Servicer in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, conservator or other similar
official in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, ordering the winding up or
liquidation of the affairs of Servicer shall have been entered against
Servicer and the continuance of any such decree or order unstayed and in
effect for a period of sixty (60) consecutive days;
7.1.4 Servicer shall consent to the appointment of a conservator or receiver
or liquidator in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to Servicer or relating to all or substantially all of its
property.
7.1.5 Servicer shall (i) admit in writing its inability to pay its debts
generally as they become due, (ii) commence a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any present
or future federal or state bankruptcy, insolvency or similar law, (ii)
consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of Servicer or of a substantial part of its property, (iii)
make an assignment for the benefit of its creditors, (iv) fail generally
to pay its debts as such debts become due, or (v) take corporate action
in furtherance of any of the foregoing.
7.1.6 Any material representation, warranty or statement of Servicer made
herein or in any certificate, report of other writing delivered pursuant
hereto shall prove to be incorrect in any material respect as of the
time when the same shall have been made and, within thirty (30) calendar
days after written notice thereof shall have been given to Servicer by
or on behalf of the Company or the Trustee, the circumstance or
condition in respect of which such representation, warranty or statement
was incorrect shall not have been eliminated or otherwise cured and the
adverse effects thereof shall not have been cured.
7.2 EVENTS OF DEFAULT - COMPANY. Any act or occurrence described in
Paragraph 7.2 shall constitute an Event of Default by Company under this
Agreement.
7.2.1 Any failure by the Company to timely make any payment to Servicer
required to be made by the Company pursuant to this Agreement other than
a failure that does not continue for more than two (2) Business Days
after the earlier of (i) discovery of such failure by an Officer of the
Company or (ii) delivery of written notice of such failure to the
Company by or on behalf of the Servicer shall constitute an Event of
Default by the Company under this Agreement. If any fees or expenses are
not paid when due, Client agrees to pay a late charge on the past due
amount equal to the lower of one and one-half percent (1-1/2%) of such
amount per month, or the maximum rate allowed by law;
7.2.2 Failure of the Company to provide information or to use their influence
and authority to cause information required for Servicer's processing to
be furnished by the Company or Client within the time frame stipulated
in the Component Agreement;
7.2.3 The entry of a decree or order for relief by any court or agency or
supervisory authority having jurisdiction in respect of the Company in
an involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, conservator or other similar
official in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, ordering the winding up or
liquidation of the affairs of Servicer shall have been entered against
the Company and the continuance of any such decree or order unstayed and
in effect for a period of sixty (60) consecutive days;
7.2.4 The Company shall consent to the appointment of a conservator, receiver
or liquidator in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Company or relating to all or substantially all of its
property.
7.2.5 The Company shall (i) admit in writing its inability to pay its debts
generally as they become due, (ii) commence a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any present
or future federal or state bankruptcy, insolvency or similar law, (iii)
consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Company or of a substantial part of its property, (iv)
make an assignment for the benefit of its creditors, (v) fail generally
to pay its debts as such debts become due or (vi) take corporate action
in furtherance of any of the foregoing.
7.3 If an Event of Default by the Company shall have occurred and be
continuing under this Agreement for a period of thirty (30) days from
the time of notice in writing, Servicer shall be entitled to terminate
this Agreement pursuant to notifications outlined in Paragraph 5.2, and
cease all Servicing with respect to Purchased Accounts in its
possession, in which event it shall return the Purchased Accounts to the
Company and shall be entitled to retain all fees previously paid by the
Company to Servicer as per Paragraph 5.2.2.
8. INDEMNITY AND EXCULPATION
8.1 INDEMNIFICATION OF COMPANY AND SERVICER.
8.1.1 INDEMNIFICATION BY SERVICER. Servicer shall indemnify, defend and hold
harmless the Company from and against any and all losses, costs,
expenses, damages and liabilities, including, without limitation,
reasonable attorney's fees and court costs, directly attributable to any
claim by any third Party that Servicer committed any act involving
negligence, willful misconduct, or breach of this Agreement provided
that as to third Party claims a court of competent jurisdiction has
determined that Servicer's actions involved negligence, willful
misconduct or breach of this Agreement (a "Servicer Adjudication"), and,
provided, further, that Servicer is given prompt written notice of such
third Party claim after the Company or the Trustee becomes aware of the
same, reasonable assistance from the Company and sole authority to
defend or settle such claim subject to Paragraph 8.2. Servicer shall
have no obligation under this Paragraph if such claim arises from
Servicer's or a subcontractor's compliance with or reliance upon the
Company's, Trustee's or the Lockbox Account bank's data specification or
instructions, policies or procedures or if such third Party claim is the
direct result of the negligence of Trustee.
8.1.2 INDEMNIFICATION BY COMPANY. Company shall indemnify, defend and hold
harmless the Servicer from and against any and all losses, costs,
expenses, damages and liabilities including, without limitation,
reasonable attorney's fees and court costs, directly attributable to any
claim by any third Party that Company committed any act involving
negligence, willful misconduct, or breach of this Agreement provided
that a court of competent jurisdiction has determined that the Company's
actions involved negligence, willful misconduct or breach of this
Agreement (a "Company Adjudication") and, provided further, that Company
is given prompt written notice of such third Party claim after the
Servicer or the Trustee becomes aware of the same, reasonable assistance
from the Servicer and sole authority to defend or settle such claim
subject to Paragraph 8.3. Company shall have no obligation under this
Paragraph if such claim arises from Company's or a subcontractor's
compliance with or reliance upon the Servicer's or the Lockbox Account
bank's data, specification or instructions, policies or procedures
8.2 PROCEDURE FOR THIRD PARTY CLAIM INDEMNIFICATION. In the event any third
Party asserts any claim: (i) against the Company with respect to any
matter to which the indemnification of Paragraph 8.1.1 may eventually be
applicable; or (ii) against Servicer with respect to any matters as to
which the indemnification of Paragraph 8.1.2 may eventually be
applicable, then the Party seeking indemnification (the "Indemnified
Party") shall give notice to the other Party (the "Indemnifying Party")
of such claim and the Indemnifying Party shall have the right at its
election to take over the defense or settlement of such claim at its own
expense by giving notice of such election in writing to the Indemnified
Party. If the Indemnifying Party does not give notice and does not
proceed to diligently defend such third Party claim within thirty (30)
days after notice from the Indemnified Party, the Indemnifying Party
shall have no further right to defend such third Party claim or
participate in the negotiation of any settlement but shall reimburse the
Indemnified Party for all losses, costs, expenses, damages and
liabilities, including without limitation, reasonable attorney's fees
and court costs related to the defense or settlement of such third Party
claim. The Indemnifying Party shall be entitled to participate in and,
upon notice to the Indemnified Party, assist in the defense of any such
action or claim in reasonable cooperation with, and with the reasonable
cooperation of, the Indemnified Party .The Indemnified Party will have
the right to employ its own counsel in any such action in addition to
the counsel to the Indemnifying Party, but the fees and expenses of such
counsel will be at the expense of such Indemnified Party, unless (a) the
employment of counsel by the Indemnified Party at its expense has been
authorized in writing by the Indemnifying Party, (b) the Indemnifying
Party has not in fact employed counsel to assume the defense of such
action within a reasonable time after receiving notice of the
commencement of the action, or (c) the named parties to any such action
or proceeding (including any impleaded parties) include both the
Indemnifying Party and one or more Indemnified Parties, and the
Indemnified Parties shall have been advised by counsel that there may be
one or more legal defenses available to them which are different from or
in addition to those available to the Indemnifying Party (it being
understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the Indemnified
Party). The fees and expenses of counsel, except for the Indemnified
Party's separate counsel retained under circumstances that are not set
forth in (a), (b) and (c) above, will be at the expense of the
Indemnifying Party, and all such fees and expenses will be reimbursed
promptly as they are incurred. No settlement of any such claim or
action, including an admission of liability or the imposition of duties
of performance or payment of fines or other monetary amounts upon the
Indemnified Party or the Indemnifying Party shall be entered into
without the prior written consent of the Indemnified Party or, if the
Indemnifying Party is not controlling the proceedings, the Indemnifying
Party. Any failure by an Indemnified Party to comply with the provisions
of this Paragraph shall relieve the Indemnifying Party of liability only
if such failure is prejudicial to the position of the Indemnifying Party
and then only to the extent of such prejudice.
8.3 OTHER PROVISIONS LIMITING LIABILITY. In no event shall Servicer or
Company be liable to each other or to any third Party for any lost
profits, lost business opportunities or any other consequential or
incidental damages arising out of or related to this Agreement or the
Processing Services. This limitation of liability shall apply even if
Servicer or Company has been advised of the possibility of such damages.
Servicer shall not be liable for any action taken or omitted by the
Company or the Trustee. Servicer may rely in good faith and shall be
protected in acting upon (i) any document or information of any kind
respecting any matter arising hereunder believed by Servicer to be
genuine and correct and to have been signed or sent by the proper person
and (ii) any instructions, consents, notices, or waivers given by the
Company or the Trustee. Notwithstanding Paragraph 8.1.1 or 8.1.2, the
indemnity obligation owed to an Indemnified Party shall be reduced to
the extent of an Indemnified Party's comparative negligence as
determined by a Servicer Adjudication or Company Adjudication as the
case may be.
9. TERM AND TERMINATION OF AGREEMENT
9.1 TERM AND TERMINATION OF AGREEMENT.
9.1.1 The initial term of this Agreement shall commence upon the Effective
Date and expire at midnight on the anniversary date thereof, unless
terminated pursuant to the terms hereof. Assuming the parties elect not
to terminate the agreement by giving written notice thereof at least
ninety (90) days in advance of the initial anniversary date, then the
agreement shall automatically renew for an additional five (5) year
period from the initial anniversary date. Thereafter, the five (5) year
term shall renew automatically, and perpetually, in successive five (5)
year terms unless prior written notice is given to the non-terminating
Party at least ninety (90) days prior to the applicable expiration date.
9.1.2 Absent an Event of Default of this Agreement, this Agreement shall not
be terminated solely as a result or an Event of Default under the
Indenture (unless such action or omission is also an Event of Default
under the terms of this Agreement) or any action taken by the Trustee
thereafter with respect thereto, and any liquidation or preservation of
the Estate by the Trustee thereafter shall be subject to the rights of
Servicer to service the Healthcare Receivables and to collect servicing
compensation as provided hereunder.
9.1.3 All rights accrued and obligations incurred by any Party prior to
termination of this Agreement shall continue to exist notwithstanding
such termination.
9.2 TRANSFER OF SERVICING. In the event servicing performed hereunder is
terminated by Company. Servicer shall (i) pay over to the Trustee or any
other Person entitled thereto all other moneys with respect to the
Healthcare Receivables held by Servicer less any amounts then due to
Servicer under this Agreement, (ii) subject to Paragraph 7.2, release
the servicing and deliver all the Purchased Account Files then in the
possession of Servicer to the Trustee or any other person or entity as
designated by the Trustee or the Company and (iii) perform all steps
required of a Servicer of accounts receivable to transfer such servicing
under applicable law, provided that all costs and expenses of such
transfer shall be paid by the Company or from funds held by the Trustee
pursuant to the Indenture.
9.3 Without limitation to the foregoing, and to facilitate the transfer or
servicing to the Trustee or successor Servicer. Servicer shall, at the
Company's sole expense (except as provided in the provisions above),
promptly deliver to the Company, from time to time, upon request of the
Company and provided that at the time of such request all amounts owing
Servicer pursuant to this Agreement have been paid, a computer-generated
magnetic test tape (the "Tape") in a form acceptable to the Company and
with programming adjustments containing any information regarding the
Receivables which the Company reasonably requests in good faith. Upon
transfer of servicing, a final updated computer-generated tape, in form
and substance and with programming adjustments satisfactory to the
Company and the Trustee, shall be delivered to the Trustee or its
designee at the Company's sole expense. Servicer and the Company shall
cooperate with one another to facilitate an orderly transfer of
servicing.
9.4 Following the transfer of servicing by Servicer, all amounts relating to
the Receivables collected by Servicer shall be received in trust for the
benefit of the Company and the Trustee and immediately forwarded to the
Trustee within two (2) Business Days after the date of receipt of such
amounts.
10. MISCELLANEOUS PROVISIONS
10.1 AMENDMENT. Except as provided herein under Paragraph 10.7, this
Agreement may only be amended by the written agreement of the parties
hereto, provided that the Trustee shall have given its prior written
consent to such amendment. Servicer may amend the terms and conditions
of Component Agreements if necessary to conform to the requirements of
applicable law or the policies or requirements of payors by giving
Company prior written notice thereof.
10.2 WAIVERS. The failure of either Party at any time to require performance
by the other of any provision of this Agreement shall in no way affect
that Party's right to enforce such provision, nor shall the waiver by
either Party of any breach of any provision of this Agreement be taken
or held to be a waiver of any further breach of the same provision or
any other provision.
10.3 NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be sufficiently given and shall
be deemed given when delivered personally or mailed by first-class mail,
postage prepaid, or sent by telegram, telex or telecopy, or other
similar facsimile communication, or when given by telephone, confirmed
in writing, sent by any of the above methods on the same day, addressed
as follows or to any other address designated in writing by the
applicable Party:
Servicer: Medical Tracking Services, Inc.
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Company: Medical Capital Management, Inc.
0000 Xxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Trustee: Zions First National Bank
Attention:
Telephone:
Facsimile:
10.4 SEVERABILITY OF PROVISION. If one or more of provisions of this
Agreement shall be for any reason whatever held invalid, such provisions
shall be deemed severable from the remaining covenants, agreements and
provisions of this Agreement and shall in no way affect the validity or
enforceability of such remaining provisions or the rights of any parties
hereto. To the extent permitted by law, the parties hereto waive any
provision of law, which renders any provision of this Agreement
prohibited or unenforceable in any respect.
10.5 RIGHTS CUMULATIVE. Except as specifically set forth herein, all rights
and remedies from time to time conferred upon or reserved to the
Company, the Trustee, or Servicer or to any or all of the foregoing are
cumulative, and none is intended to be exclusive of another. No delay or
omission in insisting upon the strict observance of performance of any
provision of this Agreement, or in exercising any right or remedy shall
be construed as a waiver or relinquishment of such provision, nor shall
it impair such right or remedy. Except as specifically set forth herein,
every right and remedy may be exercised from time to time as often as
deemed expedient.
10.6 INSPECTION AND AUDIT RIGHTS.
10.6.1 Servicer agrees that, upon prior written notice and to the extent
permitted under laws relating to the privacy rights of patients, will
permit the Company or independent certified public accountants selected
by the Company, during Servicer's normal business hours, to examine the
Purchased Account Files, all the books of account, records, reports and
other papers in the possession of Servicer relating to the Receivables
purchased by the Company and to make copies and extracts therefrom such
as to cause such books to be audited for the purpose of (i) confirming
that nothing has come to their attention that causes them to believe
that the servicing has not been conducted in substantial compliance with
the terms and conditions set forth in Exhibit B, and (ii) reconciling on
a test basis the information contained in the weekly reports delivered
by the Servicer with information contained in the accounts, records and
computer systems of Servicer .
10.6.2 Servicer shall, upon the prior written request of the Trustee, permit
the Trustee or its designated representatives to inspect the books and
records of Servicer as they may relate to the Receivables (other than
the books and records relating to the profits or losses of Servicer) to
the extent permitted under laws relating to the private rights of
patients.
10.7 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF, THE OBLIGATION OF
SERVICER. Nothing in this Agreement shall prevent (i) any consolidation
or merger of Servicer with or into any other corporation, or any
consolidation or merger of any other corporation with or into Servicer,
or (ii) any assignment by Servicer of its rights and obligations
hereunder to any Affiliate or to any corporation which is the surviving
corporation of any such consolidation or merger or which acquires all or
substantially all of its assets. Servicer covenants and agrees that the
consolidation, merger or assignment shall be upon the conditions that
the due and timely performance and observance of all the terms,
covenants and conditions of this Agreement to be kept or performed by
Servicer shall, by an agreement supplemental hereto, executed and
delivered to the Trustee, be assumed by the Affiliate which is the
assignee hereunder or by the successor corporation (if other than
Servicer) formed by or resulting from any such consolidation or merger,
or which shall have received the transfer of all or substantially all of
the property and assets of Servicer and to which the assignee hereunder
or successor corporation shall succeed to such rights and obligations,
just as fully and effectually as if such successor corporation had been
the original Servicer. Upon the effectiveness of such consolidation
merger or assignment, the assigning Servicer shall cease to be obligated
hereunder.
10.8 MUTUAL COVENANTS NOT TO COMPETE. Company is not in the business of
computerized servicing, tracking, billing, invoicing, or collecting
medical receivables for third parties, nor does Company have any
intention of doing so. Rather, Company is in the business of financing
the acquisition or factoring of Healthcare and other types of Business
Accounts Receivable receivables. Also, Servicer is not in the business
of acquiring or factoring receivables, and has no intention of doing so.
Rather, Servicer is in the business of utilizing computer technology to
service, track, xxxx, invoice, and collect receivables. The intention of
this Agreement is to create a strategic alliance of the parties for the
benefit of both parties, without fear or threat of competition from each
other's business activities. To the extent permitted by applicable law,
the parties agree not to compete with each other during the terms, or
extended terms, of this Agreement, as applied to the United States of
America. In the event this Agreement is terminated, this covenant not to
compete shall continue in full force and effect for a period of eighteen
(18) months after the date of termination.
10.9 BINDING EFFECT. All provisions of this Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
parties hereto.
10.10 CAPTIONS. The article, paragraph and other headings contained in this
Agreement are for reference purposes only and shall not limit or
otherwise affect the meaning hereof.
10.11 LEGAL HOLIDAYS. In the case where the date on which any action required
to be taken, documents required to be delivered or payment required to
be made is not a Business Day, such action, delivery or payment need not
be made on such date, but may be made on the next succeeding Business
Day.
10.12 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.
10.13 GOVERNING LAW. This Agreement shall be deemed entered into with and
shall be governed by and interpreted in accordance with the laws of the
State of Nevada. The rights and liabilities of the parties hereto shall
be determined in accordance with the laws of the State of Nevada except
to the extent that it is mandatory that the laws of some other
jurisdiction apply.
10.14 ASSIGNMENT AND DELEGATION OF DUTIES. It is understood and agreed that
the Company's rights under this Agreement will be assigned by the
Company to the Trustee as security for the Notes; and such assignment is
hereby consented to by Servicer, and the Trustee may exercise all of the
Company's rights and accept all of the Company's benefits hereunder.
Notice by the Trustee to Servicer that an Event of Default has occurred
under the Note Issuance and Security Agreement shall be sufficient
evidence thereof for Servicer to rely upon directions of the Trustee to
the exclusion of the Company. Prior to such an Event of Default,
Servicer shall follow directions given by the Company, unless otherwise
directed in writing by the Trustee, except as provided in Paragraph
10.7. Servicer may not delegate any of its duties or obligations under
this Agreement to another entity.
10.15 TRUSTEE A THIRD PARTY BENEFICIARY. The parties agree that the trustee is
intended to be a third Party beneficiary of the representations,
warranties, covenants and agreements set forth in this servicing
Agreement.
10.16 MUTUAL COVENANTS REGARDING MARKETING EFFORTS. The parties covenant that
upon entering into this Agreement each will use its best efforts to
establish and in1plement a joint marketing effort whereby Servicer and
Company will each facilitate access to officers and other management and
decision making personnel of the other's clientele in order that each
may make known its respective servicing and financing capabilities.
IN WITNESS WHEREOF, Servicer and the Company have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
MEDICAL CAPITAL MANAGEMENT, INC.
By
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MEDICAL TRACKING SERVICES, INC.
By
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Title
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Zions First National Bank, as Trustee, hereby acknowledges that the Company has
assigned its rights under this Agreement to the Trustee and accepts such right
(but none of the obligations or liabilities of the Company hereunder), subject
to all provisions.
TRUSTEE
By
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