EXHIBIT 10.1
DEBTOR-IN-POSSESSION MASTER PURCHASE AND SALE AGREEMENT
MASTER PURCHASE AND SALE AGREEMENT dated as of the __24_day of
December, 2002 between Sun Capital Healthcare, Inc., located at 000 Xxxxx Xxxxx
Xxxx, Xxxx Xxxxx, Xxxxxxx 00000 (the "PURCHASER") and Med Diversified, Inc.,
located at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX., Chartwell Diversified
Services, Inc., located at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX.,
Resource Pharmacy, Inc., located at 5 Cactus Garden Drive, Henderson, NV.,
Chartwell Community Services, Inc., located at 00000 Xxxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, TX., and Chartwell Caregivers, Inc., located at 00000 Xxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx, TX., debtors and debtors in possession (each, a "DEBTOR" and
"PROVIDER;" collectively, the "DEBTORS" and "PROVIDERS") relating to the sale,
from time to time, of certain third-party payable accounts receivable of each
Provider.
1. ACCOUNTS TO BE OFFERED. On the terms and subject to the
conditions set forth in this Agreement, during a period of one (1) year subject
to the provisions of Section 11 hereof (the "OFFER PERIOD") from the date hereof
each Provider may offer, on a weekly basis, to sell to Purchaser), free and
clear of all liens, claims, encumbrances and rights of any other person or
entity, all of the third party payable accounts receivable (the "ACCOUNTS"),
owing to the Provider arising out of the delivery of medical, surgical,
diagnostic or other healthcare related goods or services, of which a portion of
(or all of) such Accounts are payable by commercial insurance companies,
not-for-profit insurance companies (such as Blue Cross and Blue Shield entities)
issuing health, personal injury, workers' compensation or other types of
insurance, employers or unions which self-insure for employee or member health
insurance, prepaid healthcare organizations, preferred provider organizations,
health maintenance organizations or other similar entities, Medicare, Medicaid,
governmental bodies or other similar entities, or any third-party intermediary
with respect to any of the foregoing (each, a "THIRD PARTY OBLIGOR"), together
with all accounts, chattel paper, and general intangibles related thereto, all
rights, remedies, guarantees, security interests and liens in respect of any of
the foregoing, all records (other than patient medical records to the extent
protected from disclosure by law) and other information necessary or relevant to
the collection of the Accounts and all proceeds of any of the foregoing.
Accounts for which the Third Party Obligor is the United States of America or
any state or any agency or instrumentality thereof or any state which is
obligated to make any payments with respect to Medicare or Medicaid Accounts or
representing amounts owing under any other program established by a federal or
state law which provides for payments for healthcare goods or services to be
made to the Provider are hereinafter referred to as "GOVERNMENTAL ACCOUNTS"; all
other Accounts are sometimes hereinafter referred to as "NON-GOVERNMENTAL
ACCOUNTS". The Purchaser shall have the right, in its sole discretion for any or
for no reason, to purchase, or not purchase, any of the Accounts as are
acceptable to it in its sole discretion, but, on account of all obligations of
each and all of the Providers under this Agreement, the Purchaser shall in any
event have a lien and security interest, upon (i) all accounts owned by and
payable to each and all of the Providers by any Third Party Obligor and
(ii) all accounts owned by and payable to each and all of the Provider by any
patients directly (each a "PATIENT OBLIGOR").
2. INITIAL DOWN PAYMENT AND PURCHASE PRICE.
(a) Upon Purchaser's receipt and acceptance of each Purchase
Schedule (annexed hereto as Exhibit A), or any portion thereof, Purchaser may
advance to the Provider up to 80 percent of the aggregate expected Net
Collectible Amount (as hereinafter defined) of the Accounts described in each
Purchase Schedule (the "INITIAL DOWN PAYMENT") subject to Purchaser's right to
maintain a Reserve Account. The Reserve Account shall be an account maintained
on Purchaser's books, and Purchaser shall not be obligated to: (i) maintain cash
or other funds in such account; or (ii) segregate funds or other amounts held in
or credited to the Reserve Account from other funds held by Purchaser. The
Provider shall not be entitled to any interest or income on amounts credited to
the Reserve Account. All checks received shall be deemed credited to the Reserve
Account not less than 5 days after receipt. The Reserve Account shall mean an
amount sufficient to cover, among other things, returns, allowances, deductions,
reductions in the unpaid balance of an Account, and disputes and/or charge backs
including any charge back Purchaser anticipates might arise in the future, as
security for the payment of each Provider's and all of the Providers'
obligations hereunder to Purchaser. Purchaser may, in its sole and exclusive
discretion, increase or decrease the amount of the Reserve Account as Purchaser
may deem necessary to protect Purchaser's interests. Subject to Purchaser's
right to withhold funds with respect to the Reserve Account, on each Friday (or
if such Friday is a bank holiday in the State of Florida, on the next business
day which is not such a bank holiday) of the week in which all Purchased
Accounts (as hereinafter defined) set forth on the applicable Purchase Schedule
have been collected in good funds (other than as to any Purchased Account not
collected as a result of a discharge in bankruptcy or insolvency of the
applicable Third Party Obligor), Purchaser will pay to the Provider the amount
of the Purchase Price minus (i) the Initial Down Payment, (ii) the Purchaser's
discount fees, (iii) all returns, allowances, deductions, reductions and
discounts calculated upon shortest or longest selling terms, at Purchaser's
option, on any alternative terms of sale offered by the Provider to Third Party
Obligor, and (iv) all other unpaid sums charged or chargeable to the Provider
which shall include, but not be limited to, all costs and expenses (including
attorney's fees), of any kind and nature, which Purchaser may incur including
notice, audit, lien and title examinations, and including protecting and
preserving its interests under or in connection with this Agreement.
(b) Purchaser's discount fee as to each Purchased Account shall be a
percentage of the Net Collectible Amount (as hereinafter defined) of each
Purchased Account based on the number of days elapsed between the Weekly Closing
Date (as defined below) relating to such Purchased Account and the date on which
Purchaser shall have received collections in an amount equal to the Initial Down
Payment for such Purchased Account.
2
PERCENTAGE OF
DAYS ELAPSED NET COLLECTIBLE AMOUNT
0 - 150 .075% per day
Over 150 18.00% per annum
(c) The purchase price for each Account (the "PURCHASE PRICE") shall
be an amount equal to the result of (i) the Initial Down Payment plus (ii) the
Deferred Purchase Price (as defined in Section 4), if any, with respect to such
Account. However, as contemplated by this Agreement, the Purchaser's discount
fees will be netted from the payment of Purchase Prices and other amounts
payable under this Agreement.
(d) As used herein the term "NET COLLECTIBLE AMOUNT" with respect to
an Account means the gross amount billed to the applicable Third Party Obligor,
less those anticipated contractual allowances, all discounts taken, available or
extended by the Third Party Obligor, whether taken or not, and credits or
deductions of any kind allowed or granted to or taken by the Third Party Obligor
all of which shall be determined in the Purchaser's discretion. The Net
Collectible Amount of a Purchased Account is the amount reasonably expected by
the Purchaser, in consultation with the Provider, to be collected on such
Purchased Account from Third Party Obligors (excluding any amount to be
collected from Patient Obligors) and is based on actual collection experience
and other relevant factors. For purposes of determining the Net Collectible
Amount with respect to each batch of Accounts to be purchased pursuant to this
Agreement, the gross amounts billed to the applicable Third Party Obligors will
be adjusted based on a percentage of 80%, provided, however, that the Purchaser
shall have the right at any time and from time to time to reasonably make such
adjustments on a prospective basis based on any change in the expected Net
Collectible Amount evaluation criteria. Provider shall promptly provide
Purchaser with supporting documentation as to Provider's calculation of the Net
Collectible Amount of any Account upon Purchaser's request.
(e) As referenced in paragraph 2(a) above, any Initial Down Payment
is in Purchaser's sole discretion, in accordance with the terms of this
Agreement and all Initial Down Payments are subject to: (1) Accounts that are in
dispute; (2) Accounts that are not payable by a Third Party Obligor; (3)
rejected Accounts; and (4) any fees, actual or estimated, that are chargeable to
the Reserve Account.
3. PROCEDURES FOR OFFERS, PURCHASES AND PAYMENTS. On Monday of
every week during the Offer Period (or, if any Monday shall be a bank holiday in
the State of
Florida, on next succeeding business day which is not such a bank
holiday), the Provider shall offer all of its Accounts to the Purchaser at the
Purchase Price by sending Purchaser (a) a Purchase Schedule (in the form of
Exhibit A hereto) signed by the Provider (an "OFFER NOTICE") with respect to
each Account then being offered and (b) any other information or documentation,
including all required Uniform Commercial Code (the "UCC") releases or financing
statements which the Purchaser may need in order to identify the Accounts
purchased from the Provider and obtain payment from the respective Third Party
Obligors thereon and by simultaneously therewith sending to the servicer,
currently Sun Capital Healthcare, Inc. including its successors and
3
assigns and any substitute servicers appointed by Purchaser (the "SERVICER") of
Accounts purchased by the Purchaser a complete set of claim documentation, all
in the form submitted to the Third Party Obligor, for each Account offered for
sale to the Purchaser together with copies of invoices which may include, but
are not limited to, Form UB-82/92, HCFA 1500, transmission reports, electronic
media such as on-line access or such other forms approved by Purchaser and/or
any Third Party Obligor, all shipping or delivery receipts, eligibility cards,
insurance verification forms, nurses' notes, treatment authorization requests
and such other proof of sale and delivery or performance as Purchaser may, at
any time or from time to time, require. Within forty-eight (48) hours following
its receipt of an Offer Notice (or, if the day on which the forty-eighth (48th)
hour occurs is a Saturday, Sunday or a bank holiday in the State of
Florida,
upon the next succeeding business day which is not such a bank holiday), the
Purchaser will advise the Provider which if any of such Accounts it will
purchase, by delivering to the Provider a list of the Accounts which it desires
to purchase (the "PURCHASED ACCOUNTS"). All such Purchased Accounts shall be
sold to the Purchaser, and title to such Purchased Accounts shall pass to
Purchaser, on the day on which the Purchaser sends such list to the Provider
(each such date of title transfer being hereinafter referred to as the "WEEKLY
CLOSING DATE"). Notwithstanding the foregoing, any Offer Notice received by the
Purchaser after 5:00 p.m. Eastern Standard Time on any day (and any Offer Notice
received by the Purchaser on a day which is a Saturday, Sunday or a day which is
a bank holiday in the State of
Florida), will be deemed to have been received by
the Purchaser on the next day which is not a Saturday, Sunday or bank holiday in
the State of
Florida.
Purchaser shall pay to the Provider the Initial Down Payment for the
applicable Purchased Accounts on the Weekly Closing Date, less the Purchaser's
minimum discount fee. At Purchaser's option, Purchaser may pay some or all of
such payment for a Purchased Account (or some or all of any other amounts
payable by Purchaser to the Provider) by netting against amounts otherwise
payable to Purchaser by the Provider. Except with respect to Purchased Accounts
which are Governmental Accounts, all invoices or other statements to Third Party
Obligors concerning Purchased Accounts shall clearly state, in language
satisfactory to Purchaser, that each such Account has been sold and assigned to
Purchaser and is payable to Purchaser and to Purchaser only. Copies of such
invoices and statements shall also bear such language.
3.1 EFFECT OF PURCHASE. Upon each Weekly Closing Date, all of the
Provider's right, title and interest in and to all Accounts listed in the
applicable list of Purchased Accounts and in any proceeds of such Accounts shall
automatically vest in the Purchaser, which shall thereby be and become the sole
and absolute owner of all such Purchased Accounts and all of the Provider's
rights and remedies with regard to such Purchased Accounts (including, without
limitation, rights to payment from the respective Third Party Obligors on such
Accounts) and all of the Provider's rights under all guarantees, assignments and
securities, if any, with respect to each such Purchased Account. Subject to the
terms of this Agreement, Provider will retain (i) the right to receipt of
payment on Purchased Accounts which are Governmental Accounts and (ii) all
rights to demand or otherwise make any claim upon applicable Governmental Third
Party Obligors. Notwithstanding the foregoing, to the extent not prohibited by
applicable law, Purchaser shall be entitled from time to time to obtain and
enforce orders and injunctions from one or more courts directing one or more
Third Party Payors (including without
4
limitation Medicare and Medicaid programs) to make payments on Purchased
Accounts directly to Purchaser and its designee.
3.2 LIABILITIES NOT ASSUMED BY THE PURCHASER. Each Provider hereby
represents, warrants, covenants and agrees that the Purchaser shall not be
deemed by anything contained in this Agreement to have assumed any liabilities
whatsoever relating to, or arising out of, any Account, including, without
limitation, the following:
(a) any liability of the Provider to any person or entity, the
existence of which constitutes a breach of any representation, warranty,
covenant or agreement of the Provider contained in this Agreement;
(b) any liability of the Provider for any federal, state, municipal,
local or foreign taxes, assessments, additions to tax, interest, penalties,
deficiencies, duties, fees and/or any other governmental charges or
impositions of each and every kind or description, whether measured by
properties, assets, wages, payroll, purchases, value added, payments,
sales, use, business, capital stock, surplus or income with respect to
ownership of any of the Purchased Accounts or with respect to the sale of
any Purchased Accounts;
(c) any liability or obligation (contingent or otherwise) of the
Provider to any person or entity arising out of any litigation, claim,
arbitration or other proceeding;
(d) any liability or obligation of any kind whatsoever relating to
any action or inaction by any person or entity, including, without
limitation, any of the Provider's officers, directors, shareholders,
employees, agents, representatives or independent contractors relating in
any way to the services rendered by any, of them, including without
limitation by similarity or otherwise, any liability or obligation for
claims of medical or other malpractice in connection with any of the
Purchased Accounts or the servicing of any of the Purchased Accounts in the
case of such servicing;
(e) any liability or obligation (contingent or otherwise) of the
Provider arising out of defects in or mislabeling of, or damages to persons
or entities or property arising out of defects or mislabeling of, products
(including, without limitation, prescription medications) manufactured,
sold, or prescribed by the Provider in connection with any of the Accounts;
(f) any liability or obligation of the Provider to compensate any
person or entity, including, without limitation, any agent, licenser,
supplier, distributor or customer of the Provider, in respect of any
services rendered or products manufactured, sold or prescribed in
connection with the Accounts;
(g) any recapture, set-off, recoupment, or other claim made by any
Third Party Obligor against any of the Accounts;
5
(h) any liability of the Provider for any overpayments including
(without limitation) any penalties imposed or sought to be imposed by any
Third Party Obligor including, but not limited to, the Medicare or Medicaid
programs; and
(i) any liability of the Provider arising out of any activities
which are prohibited under federal Medicare and Medicaid statutes, federal
CHAMPUS statutes, or the regulations promulgated pursuant to such statutes
or any other federal or state or local statutes or regulations or which are
prohibited by rules of professional conduct, including but not limited to:
(i) knowingly and willfully making or causing to be made a false statement
or representation of a material fact in any application for any benefit or
payment; (ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment; (iii) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued
right to any benefit or payment; (iv) knowingly and willfully soliciting or
receiving any remuneration (including without limitation any kickback,
bribe or rebate), directly or indirectly, overtly or covertly, in cash or
in kind or offering to pay such remuneration: (A) in return for referring
an individual to a person or entity for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or
in part by Medicare, Medicaid or any federal healthcare program or other
governmental healthcare program, or (B) in return for purchasing, leasing
or ordering or arranging for or recommending the purchasing, leasing or
ordering of any good, facility, service or item for which payment may be
made in whole or in part by Medicare, Medicaid or any federal healthcare
program or other governmental healthcare program; or (v) making prohibited
referrals. For purposes hereof, a "federal healthcare program" shall mean
any plan or program that provides health benefits, whether directly,
through insurance, or otherwise, which is funded, in whole or in part by
the United States Government.
3.3 FURTHER INFORMATION. From time to time on and after any Weekly
Closing Date, each Provider shall immediately provide the Purchaser or the
Servicer, as the case may be, with any and all additional information which the
Purchaser or the Servicer may request in order to assure that the Purchaser can
exercise any and all rights of the Provider to collect, record, track and take
all actions to obtain collections with respect to each Purchased Account.
3.4 FURTHER ASSURANCES. From time to time on and after each Weekly
Closing Date, each Provider (a) shall immediately execute and deliver to the
Purchaser or, if requested, the Servicer, such instruments of sale, transfer,
conveyance, assignment and delivery, consents, assurances, powers of attorney
and other instruments as may be requested by the Purchaser or the Servicer in
order to evidence the fact that the Purchaser has purchased all right, title and
interest of the Provider in and to the Purchased Accounts, and (b) shall take
such other actions as the Purchaser or the Servicer may request in order to
carry out the purpose and intent of this Agreement.
3.5 APPLICABILITY OF REPRESENTATIONS AND WARRANTIES. Every
representation, warranty, covenant and agreement of each Provider in this
Agreement shall also
6
apply to every Purchased Account irrespective of when purchased, and shall
survive the closing of the purchase and sale of each Purchased Account.
4. LOCKBOX AGREEMENT; COLLECTION OF PURCHASED ACCOUNTS.
4.1 LOCKBOX AGREEMENT. Simultaneously herewith, the Purchaser, each
Provider and Sun Trust Bank (the "LOCKBOX BANK") shall enter into a Wholesale
Lockbox Deposit and Blocked Account Service Agreement (the "LOCKBOX AGREEMENT"),
substantially in the form and to the effect of Exhibit B hereto. Pursuant to the
terms and conditions of the Lockbox Agreement, the Lockbox Bank, as agent for
the Purchaser and the Providers, collectively, shall rent two separate post
office boxes to receive checks, drafts, money orders or any other negotiable
instrument or order for the payment of money (and the proceeds thereof) payable
to the Provider or the Purchaser as the case may be (collectively "ITEMS") from
(i) Non-Governmental Third Party Obligors (the "PURCHASER LOCKBOX") and (ii)
Governmental Third Party Obligors (the "PROVIDER LOCKBOX"; the Purchaser Lockbox
and the Provider Lockbox being referred to collectively as "LOCKBOXES"). The
Lockbox Bank shall deposit all Items received (i) in the case of the Purchaser
Lockbox to a dedicated bank account for all Non-Governmental Accounts (the
"PURCHASER LOCKBOX BANK ACCOUNT"), and (ii) in the case of the Provider Lockbox
to a dedicated bank account for all Governmental Accounts (the "PROVIDER LOCKBOX
BANK ACCOUNT"; the Purchaser Lockbox Bank Account and the Provider Lockbox Bank
Account being referred to collectively as the "LOCKBOX BANK ACCOUNTS").
4.2 PAYMENT MECHANICS OF NON-GOVERNMENTAL ACCOUNTS.
(a) Each Provider shall take all necessary and appropriate steps,
including the sending of a notice to Third Party Obligors of
Non-Governmental Accounts ("NON-GOVERNMENTAL THIRD PARTY OBLIGORS"), in the
form of Exhibit C hereto or in such other form as Purchaser may at any time
or from time to time provide for such purpose, to assure that all proceeds
paid with respect to all Non-Governmental Accounts, together with all
related Explanations of Benefits ("EOBS"), be sent exclusively to the
Purchaser Lockbox and that all wire transfers or other electronic payments
of proceeds with respect to Non-Governmental Accounts be made directly into
the Purchaser Lockbox Bank Account. The Lockbox Agreement provides that the
Lockbox Bank shall transfer automatically on each business day all amounts
then on deposit in the Purchaser Lockbox Bank Account to a separate
collection account at the Lockbox Bank in the name of Purchaser (the
"PURCHASER COLLECTION ACCOUNT").
(b) Each Provider hereby covenants and agrees that, on and after the
date hereof all invoices to be sent to Non-Governmental Third Party
Obligors (and return envelopes which shall, in each instance, be furnished
by the Provider) shall set forth only the address of the Purchaser Lockbox
as a return address for payment of Non-Governmental Accounts and delivery
of related EOBs and only the Purchaser Lockbox Bank Account as a receiving
account with respect to wire transfers and other electronic transfers for
payment of Non-Governmental Accounts. Each Provider hereby further
covenants and agrees to instruct and notify each of the members of the
Provider's accounting and collections staff to provide identical
information in communications with
7
all Non-Governmental Third Party Obligors with respect to Non-Governmental
Accounts and related collections, wire transfers and EOBs.
4.3 PAYMENT MECHANICS OF GOVERNMENTAL ACCOUNTS.
(a) Each Provider shall instruct the Lockbox Bank to: (i) transfer
and deposit automatically on the close of business on each business day all
checks and other Items received in the Provider Lockbox into the Provider
Lockbox Bank Account; and (ii) transfer automatically on each business day
all amounts then on deposit in the Provider Lockbox Bank Account to the
Purchaser Collection Account. The Provider shall have no right, title or
interest in any Purchaser Collection Account. Provider agrees to provide
Purchaser with at least twenty-one days prior written notice of any change
of automatic transfer instructions set forth in this Section 4.3(a).
Provider shall not change or cancel such automatic transfer orders at any
time, or, without the prior written consent of the Purchaser, change the
identity of the Provider Lockbox Account or the Provider Lockbox Bank
Account or the instructions, if any, to any Third Party Obligor of a
Purchased Account to make its payments to such Provider Lockbox or Provider
Lockbox Bank Account.
(b) Each Provider shall take all necessary and appropriate steps,
including without limitation the sending of a notice to all Third Party
Obligors of Governmental Accounts ("GOVERNMENTAL THIRD PARTY OBLIGORS"), in
the form of Exhibit D hereto or in such other form as Purchaser may at any
time or from time to time provide for such purpose, to assure that all
proceeds paid with respect to all Governmental Accounts, together with all
related EOBs, be sent exclusively to the Provider Lockbox and that all wire
transfers or other electronic transfers of proceeds with respect to
Governmental Accounts be made directly into the Provider Lockbox Bank
Account. All wire transfers will be credited on the date received in the
Purchaser Collection Account and all checks, drafts, money orders or any
other negotiable instruments shall be credited five business days after
received into the Purchaser Collection Account.
(c) Each Provider hereby covenants and agrees that, on and after the
date hereof, all invoices to be sent to Governmental Third Party Obligors
or their respective fiscal intermediaries (and return envelopes which
shall, in each instance, be furnished by the Provider) shall set forth only
the address of the Provider Lockbox as a return address for payment of
Governmental Accounts and delivery of related EOBs and only the Provider
Lockbox Bank Account as a receiving account with respect to wire transfers
and other electronic transfers for payment of Governmental Accounts. Each
Provider hereby further covenants and agrees to instruct and notify each of
the members of the Provider's accounting and collections staff to provide
identical information in communications with all Governmental Third Party
Obligors and their respective fiscal intermediaries with respect to
Governmental Accounts and related collections, wire transfers and other
electronic transfers and EOBs.
(d) Each Provider shall maintain the Provider Lockbox Bank Account
solely and exclusively for the receipt of payments from Governmental Third
Party Obligors.
8
Each Provider shall take all actions necessary to ensure that no payments
from any Non-Governmental Third Party Obligor or any other entity or person
shall be deposited into, and that no withdrawals, other than in accordance
with the Lockbox Agreement, shall be made from, the Provider Lockbox or the
Provider Lockbox Bank Account. The Provider shall not have any other
account (other than the Provider Lockbox Bank Account) or post office box
(other than the Provider Lockbox) into which proceeds from any Account
payable by a Governmental Third Party Obligor purchased by Purchaser shall
be deposited.
4.4 INFORMATION RELATING TO COLLECTIONS ON ACCOUNTS; PAYMENT OF
DEFERRED PURCHASE PRICE AND NON-PURCHASED ACCOUNT AMOUNT.
(a) each Provider shall furnish to Purchaser: (i) reports relating
to the creation of accounts as may reasonably be required by Purchaser;
(ii) quarterly financial statements within 45 days of the end of each
fiscal quarter of each of the Providers; (iii) annual financial statements
within 90 days of the end of each fiscal year of each Provider; and (iv)
any other financial or accounting reports or statements as Purchaser may
reasonably request from time to time.
(b) On or about each Wednesday and Friday, Purchaser and each
Provider shall cause the Lockbox Bank to deliver, by Federal Express or
other recognized overnight courier, to each of the Providers, the Purchaser
and the Servicer, with respect to the period since the close of business on
the most recent day covered by a previous delivery: (i) copies of (A) each
Item, EOB and other documents or other communication received in the
Purchaser Lockbox and (B) advices of each wire transfer or other electronic
transfer received in the Purchaser Lockbox Bank Account; and (ii) copies of
(A) each Item, EOB and other document or other communication received in
the Provider Lockbox, and (B) advices of each wire transfer or other
electronic transfer received in the Provider Lockbox Bank Account. Each
Provider shall cause the Lockbox Bank to include any corrections or
adjustments in respect of any such delivery promptly after discovery of the
need therefor.
(c) Not more frequently than once a week, the Providers shall send
by facsimile transmission to the Servicer and the Purchaser a report in
form and substance satisfactory to the Purchaser, signed by an authorized
representative of each Provider (an "ACTIVITY PAYMENT REPORT"), which shall
set forth for all Items received in the Lockbox Bank Accounts during the
period covered by such report.
(d) Unless a Provider is in default under the terms of this
Agreement, promptly, but not later than the fifth business day after the
Purchaser shall have received notice of Servicer's approval of any Activity
Payment Report (or amended Activity Payment Report), and on the eighth
business day after the Purchaser shall have received an Activity Payment
Report (or amended Activity Payment Report) for which the Servicer shall
not have delivered notice of its approval (or valid reasons for its
non-approval), the Purchaser shall transfer the Deferred Purchase Price
(less any amounts owed to Purchaser by a Provider), and the Non-Purchased
Account Amount (less any
9
amounts owed to Purchaser by a Provider), as each is reflected on such
Activity Payment Report or amended Activity Payment Report, to a business
checking account established by the Providers with _________ and specified
in writing by Providers to Purchaser at least ten days prior to any such
transfer (the "PROVIDER OPERATING ACCOUNT"). The Purchaser shall use its
reasonable efforts to transfer such Deferred Purchase Price and
Non-Purchased Account Amount, if any, to the Provider Account prior to the
Weekly Closing Date following the date which is three business days after
receipt by the Servicer of any Activity Payment Report.
"DEFERRED PURCHASE PRICE", with respect to a Purchased Account, means
the excess, if any, of (i) the aggregate amount of collections on such Purchased
Account received by Purchaser over (ii) the sum of (x) the Target Amount of such
Purchased Account plus (y) the amount of such collections applied by Purchaser
to pay amounts owed by a Provider to Purchaser pursuant to this Agreement, to
pay amounts owed by Purchaser or a Provider to the Lockbox Bank pursuant to the
Lockbox Agreement, or to reimburse Purchaser for amounts paid by Purchaser
(directly or indirectly, including without limitation by a debit to a bank
account) to the Lockbox Bank pursuant to the Lockbox Agreement.
"NON-PURCHASED ACCOUNT AMOUNT", with respect to any Account other than
a Purchased Account, means the excess, if any, of (i) the aggregate amount of
collections on such account received by the Purchaser over (ii) the amount of
such collections applied by Purchaser to pay amounts owed by a Provider to
Purchaser pursuant to this Agreement, to pay amounts owed by Purchaser or a
Provider to the Lockbox Bank pursuant to the Lockbox Agreement, or to reimburse
Purchaser for amounts paid by Purchaser (directly or indirectly, including
without limitation by a debit to a bank account) to the Lockbox Bank pursuant to
the Lockbox Agreement.
"TARGET AMOUNT" means, with respect to a Purchased Account, the sum of
(a) the Initial Down Payment for such Purchased Account plus (b) the amount of
Purchaser's discount fees accrued with respect to such Purchased Account through
the date on which Purchaser has received collections on such Purchased Account
in an amount at least equal to the Initial Down Payment for such Purchased
Account.
(e) The amounts of all Deferred Purchase Prices and Non-Purchase
Account Amounts transferred to the Provider Operating Account as described
above are subject to collection.
5. MISDIRECTED PAYMENTS; EOBS. Any payment with respect to an
Account, whether in the form of check or other instrument, cash or wire
transfer, received by the Providers which, pursuant to Section 4 hereof, should
have been sent to either the Purchaser Lockbox or the Purchaser Lockbox Bank
Account or the Provider Lockbox or the Provider Lockbox Bank Account shall be
deemed a "MISDIRECTED PAYMENT." In the case of any Misdirected Payment, the
Provider, at its sole cost and expense, shall promptly take all necessary steps
described in paragraphs (a) through (d) of this Section 5 and, pending the
delivery of any such payments as so provided, shall: (i) hold all such payments
in trust for the Purchaser and (ii) segregate all such payments and not deposit
the same in the account of any other person or entity other than as
10
provided below nor commingle the same with the funds of the Provider or the
funds of any other person or entity.
(a) In the event that a Provider receives a Misdirected Payment from
a Third Party Obligor in the form of a check or other instrument, the
Provider shall, as applicable, either: (i) in the case of Non-Governmental
Accounts, immediately deposit in the Purchaser Lockbox such check or other
instrument, duly endorsed over to the Purchaser, together with the related
EOB and the envelope in which such payment was received; or (ii) in the
case of Governmental Accounts, immediately deposit in the Provider Lockbox
such check or other instrument, together with the related EOB and the
envelope in which such payment was received. In the event that a Provider
receives a Misdirected Payment in the form of cash or wire transfer or
other electronic transfer, the Provider shall immediately wire transfer the
full amount of the Misdirected Payment directly into the Purchaser Lockbox
Bank Account and shall simultaneously therewith send all related EOBs to
the Purchaser Lockbox. All Misdirected Payments and EOBs shall be so
deposited or wire transferred not later than the Provider's close of
business on the fifth business day following its receipt of such
Misdirected Payment or EOB.
(b) If a Provider does not deposit or wire transfer a Misdirected
Payment into the applicable Lockbox or the applicable Lockbox Bank Account,
as applicable, in accordance with paragraph (a) above, by the close of
business on the fifth business day following its receipt of a Misdirected
Payment, then the Provider shall pay interest on such Misdirected Payment
to the Purchaser, from such date until and including the date such
Misdirected Payment is received in such Lockbox or Lockbox Bank Account, as
the case may be, at a rate equal to eighteen percent (18%) per annum or the
maximum rate legally permitted if less than such rate (the "ADDITIONAL
CHARGE"). Such interest shall be payable on demand or, at the option of the
Purchaser, in accordance with paragraph (c) below. For purposes of the
foregoing, if a Misdirected Payment is in the form of a check or other
instrument, the Provider shall be deemed to have received such Misdirected
Payment on the date that is five (5) days after the postmark date on the
envelope from the Third Party Obligor enclosing such check or instrument
(or, if no such envelope is deposited in the applicable Lockbox, on the
date that is five (5) days after the date of such check or other
instrument).
(c) The Purchaser shall have the right, without notice, to set-off
or recoup the full amount of all Misdirected Payments (plus interest
thereon at the Additional accrued or accruing in accordance with paragraph
(b) above) against any amounts payable from time to time to a Provider
pursuant to this Agreement.
(d) Each Provider hereby agrees and consents that the Purchaser or
Servicer, as the case may be, shall have the right to take such actions as
are deemed by either of them to be necessary or appropriate to ensure that
future payments from the Third Party Obligor of a Misdirected Payment shall
be made in accordance with the notice previously delivered to such Third
Party Obligor pursuant to paragraph 4.2 or 4.3 of this Agreement,
including, without limitation by similarity or otherwise: (i) the Purchaser
or Servicer executing on the Provider's behalf and delivering to such Third
Party Obligor a new
11
notice and (ii) the Purchaser or the Servicer contacting such Third Party
Obligor by telephone to confirm the instructions previously set forth in
the notice to such Third Party Obligor. Upon request, each Provider shall
promptly (and, in any event, within one (1) business day from such request)
take such actions as the Purchaser or Servicer may request.
6. INELIGIBLE ACCOUNTS. A Purchased Account shall be an "INELIGIBLE
ACCOUNT" if one of the following has occurred: (i) there has been a breach of
any representation or warranty contained herein relating to such Purchased
Account; (ii) Purchaser has not received collections with respect to such
Purchased Account in an amount at least equal to the Target Amount for such
Purchased Account within 120 days from the date of service relating to such
Purchased Account (other than as a result of the bankruptcy or insolvency or
receivership of the applicable Third Party Obligor), or (iii) Purchaser
reasonably has determined prior to the end of such 120 day period (other than a
result of the bankruptcy or insolvency or receivership, or anticipated
bankruptcy or insolvency or receivership, of the applicable Third Party Obligor)
that such Third Party Obligor will not pay, by the end of such 120 day period,
an amount on such Purchased Account equal to not less than the Target Amount for
such Purchased Account. Each Provider shall cure such breach or repurchase each
such Ineligible Account from the Purchaser at a price equal to the Repurchase
Price within five (5) business days of the earlier of notification to, or
discovery by, the Provider or Purchaser of the breach or failure of Purchaser to
receive payment of the Target Amount as described above. The "REPURCHASE PRICE"
for an Ineligible Account (a "REPURCHASED ACCOUNT") shall be equal to (i) the
sum of the Initial Down Payment for such Account plus the amount of Purchaser's
discount fees for such Account accrued through the date of Provider's repurchase
of such Account, less (ii) any amount collected by the Purchaser with respect to
such Ineligible Account. The Repurchase Price shall be payable by check or wire
transfer, at the option of the Purchaser. Upon receipt by the Purchaser of the
Repurchase Price, the Provider shall be deemed to have repurchased, and the
Purchaser shall be deemed to have resold to the Provider, the Ineligible Account
without any representation, warranty or recourse whatsoever and, thereupon, the
Purchaser shall have no obligation whatsoever to the Provider with respect to
such Repurchased Account and such Account shall cease to be a Purchased Account.
Notwithstanding any other provision of this Agreement to the contrary, and in
addition to all other rights and remedies available to Purchaser under this
Agreement or at law or in equity, the Purchaser may offset against or recoup
from any amounts it may owe to the Provider any and all amounts due to the
Purchaser with respect to Repurchased Accounts. If, after receipt of any payment
of all or any part of the Repurchase Price for any Repurchased Account, the
Purchaser is required to surrender such payment to any person or entity because
such payment is determined to be void or voidable as a preference, impermissible
set-off, diversion of trust funds, or for any other reason, this Agreement shall
continue in full force (except, at the Purchaser's option, with respect to any
obligation it may be deemed to have to purchase any additional Accounts from the
Provider) and the Provider shall be liable to the Purchaser for, and shall
indemnify and hold the Purchaser harmless against, the aggregate amounts of all
such surrendered payments, any damages to the Purchaser resulting therefrom and
any legal fees and other costs or expenses incurred by or on behalf of the
Purchaser in enforcing its rights hereunder or with respect thereto.
12
7. REPRESENTATIONS AND WARRANTIES OF EACH PROVIDER. Each Provider
represents and warrants to the Purchaser, each of which representation and
warranty shall be deemed material and relied upon by the Purchaser, as follows:
(a) With respect to the Provider, as of the date hereof and as of
the date of each purchase of Accounts:
(i) If a corporation or a partnership or a limited liability
company, the Provider is duly organized, validly existing and in good
standing as such under the laws of the jurisdiction of its
organization; is qualified to do business and is in good standing
under the laws of each state where the failure to so qualify would
have a material adverse effect on the business and operations of the
Provider; and has all the power and authority necessary to: (A)
operate its business as it is now being conducted, including the sale
of Accounts, (B) execute, deliver and perform this Agreement,
including all obligations contemplated hereby, (C) execute and deliver
and perform its obligations under all other documents now or hereafter
executed in connection herewith (all such documents to be included
within the definition of Agreement), and (D) convey good and
marketable title and ownership of the Purchased Accounts to the
Purchaser. The execution, delivery and performance by the Provider of
this Agreement have been duly authorized by all appropriate action on
behalf of the Provider. If a sole proprietorship, the Provider has the
necessary power and capacity under applicable law to operate its
business as it is now being conducted and to execute, deliver and
perform all its obligations as provided for in this Agreement.
(ii) This Agreement is the legal, valid and binding
obligation of the Provider, enforceable against the Provider in
accordance with its terms. Upon the filing of financing statements
setting forth the collateral described on Exhibit E hereto in all
appropriate jurisdictions, any security interest in favor of the
Purchaser granted pursuant to this Agreement will be a fully
enforceable first priority security interest validly perfected whether
or not the Third Party Obligors have been notified of the sale of
Accounts to the Purchaser.
(iii) The execution, delivery and performance of this
Agreement does not and will not violate any provision of law,
regulation or any order or decree of any court or governmental agency,
or violate any provision of the Provider's organizational documents
(if a corporation or partnership or limited liability company) or any
agreement to which the Provider is a party or by which it or any of
its assets are bound, and does not and will not, with the giving of
notice, the passage of time or otherwise, conflict with, result in a
breach of, or constitute a default under, any such agreement or result
in the creation of any lien or security interest upon any of the
Provider's assets, except in favor of the Purchaser.
(iv) The Provider has all permits, licenses, provider
numbers, accreditations, certifications, authorizations, approvals,
consents and agreements of all Third Party Obligors, governmental
agencies and instrumentalities,
13
accreditation agencies and any other person or entity necessary or
required for the Provider to own the assets that it now owns, to carry
on its business as now conducted, to execute, deliver and perform this
Agreement, including any other documents contemplated hereby, and to
receive payments from the Third Party Obligors; and the Provider has
not been notified by any such Third Party Obligor, governmental agency
or instrumentality, accreditation agency or any other person or entity
that any such Third Party Obligor, agency, instrumentality or other
person or entity has rescinded or not renewed, or intends to rescind
or not renew, any such permit, license, provider number,
accreditation, certification, authorization, approval, consent or
agreement granted by it to the Provider or to which it and the
Provider are parties.
(v) There are no actions, suits, proceedings or
investigations pending or threatened against the Provider before any
court, governmental agency or other tribunal, other than suits filed
prior to commencement of the Bankruptcy Case (as defined below), which
could materially and adversely affect its ability to perform under
this Agreement. The Provider does not have any intent to hinder,
delay, or defraud any of its creditors in connection with the
transactions contemplated by this Agreement.
(vi) Neither the Provider nor any persons who provide
professional services under agreements with the Provider have engaged
in any activities which are prohibited under federal Medicare and
Medicaid statutes, federal CHAMPUS statutes or regulations promulgated
pursuant to such statutes or any other federal or state or local
statutes or regulations or which are prohibited by rules of
professional conduct, including but not limited to: (A) knowingly and
willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit
or payment; (B) knowingly and willfully making or causing to be made
any false statement or representation of a material fact for use in
determining rights to any benefit or payment; (C) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the
initial or continued right to any benefit or payment on its own behalf
or on behalf of another; (D) knowingly and willfully soliciting or
receiving any remuneration (including any kickback, bribe or rebate),
directly or indirectly, overtly or covertly, in cash or in kind or
offering to pay such remuneration: (xx) in return for referring an
individual to a person or entity for the furnishing or arranging for
the furnishing of any item or service for which payment may be made in
whole or in part by Medicare, Medicaid or any federal healthcare
program or other governmental healthcare program or (yy) in return for
purchasing, leasing or ordering or arranging for or recommending the
purchasing, leasing or ordering of any good, facility, service or item
for which payment may be made in whole or in part by Medicare,
Medicaid or any federal healthcare program or other governmental
healthcare program, or (zz) in connection with making prohibited
referrals.
14
(vii) The Provider has valid business reasons for selling the
Purchased Accounts rather than obtaining a loan with the Accounts as
collateral.
(b) With respect to each Account, as of the date such Account is
purchased and continuing thereafter so long as the Provider shall have any
obligations remaining hereunder:
(i) All documents and agreements relating to each Purchased
Account that are necessary to collect such Purchased Account have been
delivered to the Purchaser and all such documents and agreements are
true, correct and complete; the Provider has billed the applicable
Third Party Obligor and the Provider has delivered or caused to be
delivered to such Third Party Obligor all requested supporting claim
documents with respect to such Purchased Account; all information set
forth in the xxxx and supporting claim documents is true, correct and
complete, and, if any error has been made, the Provider will promptly
correct the same and, if necessary, rebill or, if requested by the
Purchaser or Servicer, cooperate to rebill such Purchased Account.
(ii) Each Account is exclusively owned by the Provider
(immediately prior to the sale of such Account to Purchaser pursuant
to this Agreement) and there is no security interest or lien in favor
of any third party, and no recording or filing against the Provider,
as debtor, covering or purporting to cover, any interest of any kind
in any Account, except (x) as has been released by each party holding
such interest or lien in the Account and (y) in favor of Purchaser.
Upon the Weekly Closing Date with respect to a Purchased Account all
right, title and interest of the Provider with respect thereto
automatically shall be vested in the Purchaser, free and clear of any
lien, security interest, claim or encumbrance of any kind, and the
Provider agrees, at its sole cost and expense, to defend the same
against the claims of all persons and entities.
(iii) Each Purchased Account: (A) is payable, in an amount not
less than and in a manner consistent with the assumptions underlying
the determination of its expected Net Collectible Amount, by the Third
Party Obligor identified by the Provider as being obligated to do so;
(B) is based on an actual and bona fide rendition of services or sale
of goods to the patient by the Provider in the ordinary course of its
business; (C) is denominated and payable only in lawful currency of
the United States; (D) is an account or general intangible within the
meaning of the UCC of the state in which the Provider has its
principal place of business or is a right to payment under a policy of
insurance or the proceeds thereof, and is not evidenced by any
instrument; and (E) to the best of Provider's knowledge and belief
will be paid by the Third Party Obligor in an amount equal to the Net
Collectible Amount within one hundred twenty (120) days after the
related goods are provided or services are rendered by the Provider
unless such Obligor, at such 120th day, is the subject of bankruptcy,
insolvency, or receivership proceedings. There is no payor other than
the Third Party Obligor identified by the Provider as the payor
primarily liable on any Purchased Account.
15
(iv) Each Purchased Account is not subject to any action,
suit, proceeding or dispute (pending or threatened), set-off,
recoupment, counterclaim, defense, abatement, suspension, deferment,
deductible, reduction or termination or the like by any Third Party
Obligor. The Weekly Closing Date relating to a Purchased Account is
not later than 60 days after the date of service giving rise to such
Account.
(v) The Provider does not have any guaranty of, letter of
credit providing credit support for, or collateral security for, any
Purchased Account, other than any such guaranty, letter of credit or
collateral security which has been assigned and delivered to the
Purchaser, and any such guaranty, letter of credit or collateral
security is not subject to any lien in favor of any other person or
entity.
(vi) The goods provided or services rendered giving rise to
each Purchased Account were furnished by Provider in the ordinary
course of its business and to the best of Provider's knowledge and
belief were medically necessary for the patient; the fees charged for
such goods or services were the usual, customary and reasonable fees
charged by other providers in the Provider's community and the
community in which such patient resides for the same or similar goods
and services; the fees for goods and services relating to the
Purchased Accounts which are subject to limitations imposed by
workers' compensation regulations or by contracts for reimbursement
from Third Party Obligors do not exceed the limitations so imposed and
each Purchased Account relating to goods and services the fees for
which are so restricted has been clearly identified by the Provider to
Purchaser as being subject to such restriction; the patient received
such goods or services and the medical insurance coverage or other
coverage by the responsible Third Party Obligor with respect thereto
was effective at the time of treatment. Each patient signed a patient
consent form in connection with all Purchased Accounts and such
consent form is sufficient to allow the Provider to deliver to the
Purchaser and Servicer with respect to each such Purchased Account,
and for the Provider, the Purchaser, and the Servicer to deliver to
the Third Party Obligor with respect to each such Purchased Account,
information or documents necessary for the performance of servicing
obligations with respect to such Purchased Accounts without violating
any patients' privacy rights.
(vii) The expected payment by the applicable Third Party
Obligor for the goods or services constituting the basis for each
Purchased Account is consistent with the usual, customary and
reasonable fees charged by other similar medical service providers in
the Provider's community for the same or similar services.
(viii) To the best of Provider's knowledge and belief, the
Third Party Obligor with respect to each Purchased Account is: (A)
not, as of the date such Account is purchased, the subject of any
bankruptcy, insolvency or receivership proceeding, nor, as of the date
such Account is purchased, is it generally unable to
16
make payments on its obligations when due; (B) located in the United
States; and (C) one of the following: (i) an entity which in the
ordinary course of its business or activities agrees to pay for
healthcare services received by individuals, including, without
limitation, commercial insurance companies and not-for-profit
insurance companies (such as Blue Cross and Blue Shield entities)
issuing health, personal injury, workers' compensation or other types
of insurance, employers or unions which self-insure for employee or
member health insurance, prepaid healthcare organizations, preferred
provider organizations, health maintenance organizations or any other
similar entity; or (ii) Medicare, Medicaid, governmental bodies or
another Third Party Obligor of the type described in the definition of
Governmental Accounts.
(ix) The proceeds of the sale of the Purchased Accounts will
be used for the business and commercial purposes of the Provider. The
sale of the Purchased Accounts pursuant to this Agreement is made in
good faith and without actual intent to hinder, delay or defraud
present or future creditors of the Provider. The Purchase Price for
the Purchased Accounts is reasonably equivalent to the value of such
Purchased Accounts.
(x) To the best of Provider's knowledge and belief, the
insurance policy, contract or other instrument obligating a Third
Party Obligor to make payment with respect to any Purchased Account:
(A) does not contain any provision prohibiting the transfer of the
right to receive such payment from the patient to the Provider, or
from the Provider to the Purchaser; (B) has been duly authorized and,
together with the Purchased Account, constitutes the legal, valid and
binding obligation of the Third Party Obligor enforceable against such
Third Party Obligor in accordance with its terms; (C) together with
the Purchased Account, does not contravene in any material respect any
requirement of law applicable thereto; and (D) was in full force and
effect and applicable to the patient at the time the goods or services
constituting the basis for the Purchased Account were furnished.
(xi) The representations, warranties and statements made by
the Provider in this Agreement and any other documents delivered
pursuant hereto, any financial information with respect to the
Provider delivered to the Purchaser and any other related documents,
including, without limitation, any description of any Purchased
Account, are and to the best of Provider's knowledge and belief shall
remain true, correct and complete and do not and will not contain any
untrue statement of material fact or omit to state a material fact
necessary to make the statements made therein not misleading.
Promptly, upon discovering that any such representations, warranties
and/or statements made by the Provider have become untrue, incorrect
or incomplete or contain an untrue statement of fact, Provider shall
immediately notify Purchaser of such change. Immediately upon
discovering that any such representations, warranties and/or
statements made by the Provider have become untrue, incorrect or
incomplete, Provider shall have an obligation to immediately notify
the Purchaser of such change.
17
(xii) The Provider has complied with all of its covenants and
agreements in this Agreement with respect to each Account.
(xiii) As an additional condition to Purchaser's obligations
under this Agreement and the Factoring Order, each of the Provider's
Chief Executive Officer, Chief Financial Officer, and Chief Accounting
Officer (collectively, the "SENIOR OFFICERS") shall execute and
deliver to Purchaser an acknowledgement of validity of receivables, in
the form and substance reasonably satisfactory to Purchaser, Provider
and each of the Senior Officers, that includes an acknowledgement
that, to the best of his or her knowledge (but without any obligation
on the part of the Senior Officers to make investigation, other than
such investigation, if any, customary in the industry and consistent
with the ordinary course of business between and among the Provider
and the obligor of each Purchaser Account), each Purchased Account is
valid, enforceable and collectible in accordance with its terms.
8. COVENANTS OF EACH PROVIDER. Each Provider covenants and agrees
with the Purchaser as follows:
(a) The Provider shall execute such financing statements under the
UCC (naming the Purchaser as Purchaser and/or secured party) as the
Purchaser may reasonably request with respect to all Accounts whether or
not purchased pursuant to this Agreement. From time to time, upon request
of the Servicer or Provider, the Provider shall provide the Purchaser with
any additional information, shall execute and deliver to the Purchaser any
additional agreements, instruments, notices to Third Party Obligors,
documents or financing statements and shall take all actions deemed by the
Purchaser as necessary or desirable to effectuate the provisions of this
Agreement and any documents delivered pursuant hereto, to evidence, protect
and perfect the assignment of the title to the Purchased Accounts and the
grant of a security interest in and lien on the Accounts and to facilitate
the collection of the Purchased Accounts. Notwithstanding the foregoing,
Purchaser shall have the right to file financing statements without the
Provider's signature thereon, such right being hereby authorized. Unless
otherwise requested by the Purchaser, the Uniform Commercial Code ("UCC")
financing statement property description in the UCC financing statement
filed by the Purchaser against the Provider shall be in the form of Exhibit
E. At the option of the Purchaser, at any time and from time to time, the
Provider shall furnish to the Purchaser claim documents relating to
Accounts which are not Purchased Accounts.
(b) The Purchaser and its agents and representatives are hereby
irrevocably constituted and designated as the Provider's attorneys-in-fact,
which irrevocable power of attorney is coupled with an interest: (i) to
endorse or sign the Provider's name to remittances, invoices, assignments,
checks (other than in payment of Governmental Accounts, unless the
Purchaser has obtained an appropriate court order or decree), drafts or
other instruments or documents in respect of the Purchased Accounts; (ii)
to notify Third Party Obligors (other than Governmental Third Party
Obligors, unless the Purchaser has obtained an appropriate court order or
decree) to make payments on the
18
Purchased Accounts directly to the Purchaser; and (iii) to bring suit in
the Provider's name and to settle or compromise such Purchased Accounts as
the Provider or the Servicer may, in its discretion, deem appropriate
(other than with respect to Governmental Third Party Obligors, unless
Purchaser has obtained an appropriate court order or decree); and (iv) to
sign and file financing statements on the Provider's behalf.
Notwithstanding the foregoing, upon request of Purchaser from time to time,
Provider shall cooperate with Purchaser in order to allow Purchaser to
obtain a court order or decree directing Governmental Third Party Obligors
to make payments on Governmental Accounts directly to the Purchaser Lockbox
or the Purchaser Lockbox Bank Account.
(c) The Provider shall pay to the Purchaser (or any assignee or
participant) the out of pocket costs, fees and expenses (including
reasonable attorney's fees and auditing fees) incurred by the Purchaser (or
any assignee or participant) incident to the exercise of the rights of the
Purchaser and the enforcement of the Provider's obligations hereunder,
including those involving any bankruptcy or insolvency proceedings of the
Provider, and the Purchaser's costs, fees and expenses in monitoring and
participating in any such proceedings, within fifteen (15) days of the
receipt of notice thereof. Upon request, Provider will reimburse Purchaser
(or any assignee or participant) certain routine expenses, including credit
research, filing searches, filing fees, wire transfer costs, overnight mail
and travel expenses.
(d) The Provider shall: (i) treat transfers to the Purchaser of
Purchased Accounts hereunder as a sale for all purposes, including tax and
accounting (and shall accurately reflect all such sales in its financial
statements; the financial statements of the Provider shall disclose the
effects of the sale and purchase of the Purchased Accounts in accordance
with generally accepted accounting principles, including treating the sale
of the Purchased Accounts as a sale rather than as a financing transaction;
and the financial statements of the Provider shall clearly indicate that
the Purchased Accounts have been purchased by the Purchaser and that the
Purchased Accounts are not available to satisfy the obligations of the
Provider or its affiliates) , and shall promptly advise all persons and
entities who inquire about the ownership of any Purchased Accounts that the
Purchased Accounts have been sold to the Purchaser; (ii) not treat any
Purchased Accounts as an asset on the Provider's books and records; (iii)
record in the Provider's books, records and computer files pertaining
thereto that the Purchased Accounts have been sold to the Purchaser and
that the Purchaser has exclusive ownership of the Purchased Accounts; (iv)
pay all taxes, if any, relating to the transfer of the Purchased Accounts
after the same have been purchased by the Purchaser; (v) not assign or
grant any security interest in any Accounts from and after the date hereof
to any person or entity other than the Purchaser; (vi) not impede or
interfere with the Purchaser's collection of any Purchased Accounts; (vii)
not amend, waive or otherwise permit or agree to any deviation from the
terms or conditions of Purchased Accounts; (viii) obtain all consents from
patients which are required by law in order for the Purchaser or the
Servicer to obtain information needed to obtain payment from the respective
Third Party Obligors; (ix) xxxx Accounts on the same bases and using the
same policies and practices that it has used in the past unless the
Purchaser has been advised of and consented in writing to a change prior to
its purchase of such Accounts; and (x) not claim any ownership interest in
any Purchased Account.
19
The Purchaser or its designated representatives from time to time may audit
or otherwise verify any Accounts, inspect, check, and take copies of or
extracts from the Provider's books, records and files and interview
employees and former employees of the Provider and, in each instance, the
Provider shall make the same available to the Purchaser or such
representatives at any reasonable time for such purposes.
(e) The Provider agrees that the Purchaser or the Servicer shall
have the right but not the obligation to have at least one of its agents or
representatives physically present in the Provider's administrative offices
during normal business hours to assist the Provider in performing its
obligations under this Agreement.
(f) Until such time as the Provider has satisfied all obligations
owed Purchaser under this Agreement, the Provider shall deliver to the
Purchaser: (i) within 45 days after the end of each fiscal quarter, the
Provider's financial statements for such period and for that portion of its
fiscal year through the end of such period; (ii) within 150 days after the
end of the Provider's fiscal year, the Provider's audited, annual financial
statements for such year (or if such statements are not audited, annual
financial statements certified by the Provider's chief financial officer);
and (iii) promptly upon request, such other information concerning the
Provider as the Purchaser or the Servicer may from time to time request,
including without limitation Medicare cost reports and audits. All
financial statements delivered to the Purchaser shall be prepared on a
basis consistent with those previously submitted to the Purchaser. The
Provider shall not change its accounting coding system for its Accounts
without prior written notification to the Purchaser of such change.
(g) The Provider shall promptly notify the Purchaser and the
Servicer in the event of any action, suit, proceeding, dispute, offset,
deduction, defense or counterclaim that is or may be asserted by a Third
Party Obligor with respect to any Account. The Provider shall make all
payments to the Third Party Obligors necessary to prevent the Third Party
Obligors from offsetting any earlier overpayment to the Provider against
any amounts the Third Party Obligors owe on any Purchased Accounts.
(h) Subject to the disclosure requirements applicable in Chapter 11
Bankruptcy Cases, the Provider shall not at any time, during or after the
Offer Period, disclose to any third party the terms of this Agreement
(including without limitation the exhibits hereto) or any information or
materials communicated to the Provider by the Purchaser or obtained by the
Provider from the Purchaser (the "CONFIDENTIAL MATERIALS") unless
specifically authorized in writing by the Purchaser to do so; provided,
however, that the Provider may disclose certain Confidential Materials, on
a need-to-know basis, to its officers, directors, shareholders and
employees as is reasonably necessary for compliance with the terms of this
Agreement, provided, further, however, that the Provider shall comply with
its obligations under this Agreement to inform third parties that the
Purchaser owns the Purchased Accounts. In the event that at any time or
from time to time the Purchaser shall give the Provider written
authorization to make any disclosures of Confidential Materials, the
Provider shall do so only within the limits and to the extent of such
authorization. In addition, the Provider shall take all actions
20
necessary to prevent disclosure of any Confidential Materials to any third
party. In the event that the Provider is requested or directed to supply
any information contained in any such Confidential Materials pursuant to
the terms of a subpoena, order, civil investigation demand or similar
process issued by a court of competent jurisdiction or by a governmental
body, the Provider shall: (a) immediately notify the Purchaser of the
service of such process and of all other terms and circumstances
surrounding such request or direction; (b) consult with the Purchaser on
the advisability of taking legally available steps to resist or limit such
request or direction; and (c) if disclosure of such information is
required, furnish only that portion of the Confidential Materials which, in
the opinion of the disclosing party's counsel, is legally required to be so
disclosed and advise the Purchaser as far in advance of such disclosure as
is possible in order that the Purchaser may have an opportunity to seek an
appropriate protective order or other reliable assurance that confidential
treatment will be accorded such Confidential Materials. Without limiting
the generality of the foregoing, the Provider shall not oppose any actions
by the Purchaser or any of its agents or representatives to obtain
appropriate protective orders or other reliable assurances that
confidential treatment shall be accorded to such Confidential Materials.
Notwithstanding the foregoing, no act of disclosure by the Debtors during
their Bankruptcy Case (as defined below) that is reasonably necessary or
appropriate to the Chapter 11 process or under applicable non-bankruptcy
law shall be deemed a violation of this Subsection (h).
(i) The Provider shall not: (i) enter into any agreement to
subordinate its rights with respect to any Accounts to any other person or
entity without the prior written consent of the Purchaser, or (ii) amend
any such agreement as to which Purchaser's consent has been given, without,
in each such instance, the prior written consent of Purchaser to such
amendment.
(j) The Provider shall immediately notify the Purchaser of any
default in any indebtedness of the Provider. The Provider agrees that,
subject to the penultimate sentence of this paragraph, the Purchaser shall
have the right, in its sole discretion, to pay any person or entity as to
whom such default exists out of amounts otherwise payable to the Provider
pursuant to this Agreement, and the Provider hereby authorizes the making
of any such payment directly to such aggrieved person or entity and any
such payment by the Purchaser to such person or entity shall be deemed to
constitute a payment to the Provider of the corresponding amount payable by
Purchaser to the Provider. In the event of a good faith dispute as to the
existence of any such default, the Provider agrees that, subject to the
penultimate sentence of this paragraph, the Purchaser shall have the right,
in its sole discretion, to make any such payment into an escrow account
pending determination thereof. It is understood and agreed that this
provision is for the benefit of the Purchaser and that the third party
person or entity shall not be entitled to enforce any rights hereunder. It
is further understood that prior to the Purchaser making any payments
pursuant to this paragraph (whether directly to another person or entity or
to an escrow account), the Purchaser shall give the Provider prior written
notice of the Purchaser's intent to make such payment and the Purchaser
shall give the Provider 20 days to cure such default. If such default is
not cured within such 20 day period the Purchaser shall be entitled to make
the payments described in this paragraph.
21
(k) The Provider shall immediately notify the Purchaser if any
representation or warranty made by the Provider pursuant to this Agreement
shall cease to be true, correct and complete in all respects.
(l) The Provider shall immediately notify the Purchaser in writing
(i) if it has any intention of commencing any bankruptcy or insolvency
proceeding or (ii) upon the commencement of any bankruptcy or insolvency
proceeding by or against the Provider. This Sub-section (l) shall not be
enforceable during the pendency of the Debtors' jointly administered
Chapter 11 Bankruptcy Case filed on November 27, 2002, with the United
States Bankruptcy Court for the Eastern District of New York, Case Nos.
0-00-00000 (the "BANKRUPTCY CASE").
(m) Provider acknowledges that there is no, and it will not seek or
attempt to establish any, fiduciary relationship between Purchaser and
Provider and Provider waives any right to assert, now or in the future, the
existence or creation of any fiduciary relationship between Purchaser and
Provider in any action or proceeding (whether by way of claim,
counterclaim, crossclaim or otherwise) for damages or other relief.
(n) Provider acknowledges that this Agreement is one of financial
accommodation and not assumable by any debtor, trustee, or
debtor-in-possession in any bankruptcy proceeding without Purchaser's
express written consent. Notwithstanding the foregoing, this Subsection (n)
shall be deemed inapplicable during the pendency of the Bankruptcy Case.
(o) Purchaser's books and records shall be admissible in evidence
without objection as prima facie evidence of the status of the accounts
between Purchaser and Provider. Each statement, report or accounting
rendered or issued by Purchaser to Provider shall be deemed conclusively
accurate and binding on Provider unless within fifteen (15) days after the
date of issuance Provider notifies Purchaser to the contrary by registered
or certified mail, setting forth with specificity the reasons why Provider
believes such statement, report or accounting is inaccurate, as well as
what Provider believes to be correct amount(s) therefor. Provider's failure
to receive any such statement shall not relieve it of the responsibility to
request such statement and Provider's failure to do so shall nonetheless
bind Provider to whatever Purchaser's records would have reported.
(p) In the event Provider's principals, officers or directors form a
new entity, which shall engage in the same business as Provider, whether
corporate, partnership, limited liability company or otherwise during the
term of this Agreement or while Provider remains liable to Purchaser for
any obligations under this Agreement, such entity shall be deemed to have
expressly guaranteed the obligations due Purchaser by Provider under this
Agreement. Upon the formation of any such entity, Purchaser shall be deemed
to have been granted an irrevocable power of attorney with authority to
execute, on behalf of the newly formed entity, a new UCC-1 financing
statement and to have it filed with any and all appropriate secretaries of
state or other UCC filing offices. Purchaser shall be held harmless by
Provider and be relieved of any liability as a result of
22
Purchaser's execution and recording of any such financing statement or the
resulting perfection of a lien in any of the new entity's assets. In
addition, Purchaser shall have the right to notify the new entity's Third
Party Obligors of Purchaser's rights, including without limitation,
Purchaser's right to collect all Accounts, and to notify creditor of the
new entity that the Purchaser has rights in such new entity's assets.
9. SECURITY INTEREST.
(a) "SUBJECT PROPERTY" (sometimes referred to herein as
"COLLATERAL") means all of the Providers' right, title and interest in, to
and under any and all of the following: all Accounts and Purchased Accounts
arising on or after October 18, 2002, and all Accounts and Purchased
Accounts representing any and all of Providers' rights to payment, whenever
arising, together with all accounts, chattel paper, documents, instruments,
letter of credit rights, supporting obligations, deposit accounts, and
general intangibles arising from or related thereto, all rights, remedies,
guarantees, security interests and liens in respect of any of the
foregoing, all records (other than patient medical records to the extent
protected from disclosure by law) and other information necessary or
relevant to the collection of such Accounts and Purchased Accounts, whether
now owned or existing or hereafter created, acquired or arising and
wherever located and all of the proceeds, products, and offspring of the
foregoing (all of such terms, as applicable, are presently or hereafter
defined in the Uniform Commercial Code), including but not limited to (i)
all rights to payment arising on or after October 18, 2002 under any
agreements with all Third Party Obligors, (ii) all cash deposited with
Purchaser or that Purchaser is entitled to retain or otherwise possess as
collateral pursuant to the provisions of this Factoring Agreement, and
(iii) any and all cash and non-cash proceeds of the foregoing (including,
but not limited to, any claims to any items referred to in this definition
and any claims against third parties for loss of, damage to, or destruction
of any or all of the Subject Property or for proceeds payable under or
unearned premiums with respect to policies of insurance) in whatever form.
(b) In the event that, contrary to the mutual intent of the Provider
and the Purchaser, any purchase of any Purchased Accounts is not
characterized as a sale, each Provider shall, effective as of the date
hereof, be deemed to have granted (and the Provider does hereby grant) to
the Purchaser a first priority security interest in and to all of the
Subject Property to secure the repayment of all amounts advanced to or for
the benefit of each Provider and all of the Providers hereunder and all
other amounts due or owing to the Purchaser by any and all of the
Providers, and this Agreement shall be deemed to be a security agreement
for such purposes. In such event, it is agreed that this Agreement is
intended to comply in all respects with all provisions of law and not to
violate, in any way, any legal limitations on interest charges.
Accordingly, if, for any reason, the Providers are required to pay, or have
paid, interest or fees at a rate in excess of the highest rate of interest
which may be charged by the Purchaser or which the Providers may legally
contract to pay under applicable law (the "MAXIMUM RATE"), then the
interest rate shall be deemed to be reduced, automatically and immediately,
to the Maximum Rate, and interest or fees payable hereunder shall be
computed and paid at the Maximum Rate and the portion of all prior payments
of interest or fees in excess of the
23
Maximum Rate shall be deemed to have been prepayments of the amounts
advanced to the Providers hereunder.
(c) With respect to the grant of a security interest as set forth
above, the Purchaser may, at its option, exercise from time to time any and
all rights and remedies available to it under the UCC or otherwise. Each
Provider agrees that five (5) days shall be reasonable prior notice of the
date of any public or private sale or other disposition of all or part of
the Subject Property.
(d) Each Provider represents and warrants that: (i) the location of
the Provider's principal place of business, chief executive office and all
locations in which the Provider maintains records with respect to the
Accounts are set forth in the introductory paragraph of this Agreement, and
that the Provider has not changed any such location in the last five (5)
years; and (ii) the exact name of the Provider is as set forth in the
introductory paragraph of this Agreement and, except as set forth therein,
the Provider has not changed its name in the last five (5) years and during
such period the Provider did not use, nor does the Provider now use, any
fictitious, doing business as or trade name or any other name. Each
Provider shall notify the Purchaser in writing thirty (30) days prior to
any change in any location referred to in clause (i) and/or any change in
any name referred to in clause (ii).
10. REMEDIES. Each of the Purchaser's rights and remedies under this
Agreement are cumulative, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies which the Purchaser may
have under applicable law. The Purchaser shall have the right, in its sole
discretion, to determine which rights and remedies, and in which order any of
the same, are to be exercised. No act, failure or delay by the Purchaser shall
constitute a waiver of any of the rights and remedies to which it would
otherwise be entitled. In the event Purchaser deems it necessary to seek
equitable relief, including, but not limited to, injunctive or receivership
remedies, as a result of any Provider's default, each Provider waives any
requirement that Purchaser post or otherwise obtain or procure any bond.
Alternatively, in the event Purchaser, in its sole and exclusive discretion,
desires to procure and post a bond, Purchaser may procure and file with the
court a bond in an amount up to and not greater than $10,000.00 notwithstanding
any common or statutory law requirement to the contrary. Upon Purchaser's
posting of such bond it shall be entitled to all benefits as if such bond was
posted in compliance with applicable law. Each Provider also waives any right it
may be entitled to, including an award of attorney's fees or costs, in the event
any equitable relief sought by and awarded to Purchaser is thereafter, for
whatever reason(s), vacated, dissolved or reversed. Notwithstanding the
existence of any law, statute or rule, in any jurisdiction which may provide a
Provider with a right to attorney's fees or costs, each Provider hereby waives
any and all rights to hereafter seek attorney's fees or costs thereunder and
each Provider agrees that Purchaser exclusively shall be entitled to
indemnification and recovery of any and all attorney's fees or costs in respect
to any litigation based hereon, arising out of, or related hereto, whether
under, or in connection with, this and/or any agreement executed in conjunction
herewith, or any course of conduct, course of dealing, statements (whether
verbal or written) or actions of either party.
24
11. TERM; TERMINATION.
(a) The Offer Period shall be automatically extended from year to
year on the terms and conditions set forth in this Agreement unless (i)
Purchaser shall, not less than thirty (30) days prior to the expiration of
the initial one year Offer Period or any subsequent one year Offer Period,
give to the Providers notice of Purchaser's intention not to so extend or
(ii) the Providers shall, in accordance with paragraph (b), give to
Purchaser notice of the Providers' intention to terminate this Agreement.
This Agreement shall be binding upon the parties hereto upon its execution
and shall continue until the later of (i) the collection of all Accounts
sold hereunder or (ii) the payment of any Repurchase Prices and all other
amounts due hereunder.
(b) The Providers may terminate their obligation to offer to sell
Accounts to the Purchaser pursuant to this Agreement upon no less than
sixty (60) days prior written notice to the Purchaser.
(c) In addition to any other rights and remedies provided for
herein, the Purchaser may, upon the occurrence of any of the following
Termination Events, by way of example, but not by way of limitation,
enforce all of their rights (so long as Purchaser provides Debtors, the
United States Trustee, and counsel for the Unsecured Creditors' Committee,
if any, with not less than ten (10) calendar days written notice to cure).
Notwithstanding the foregoing, upon a Default, Purchaser shall be entitled
to a hearing on an expedited basis after three (3) business days' notice to
Debtors and counsel for Debtors, subject to the Court's calendar and
availability, regarding immediate relief from the automatic stay of
Bankruptcy Code Section 362 (a), which shall entitle the Purchaser to seek,
inter alia and without limitation, the following relief:
(i) immediate payment of all money due under the Factoring
Agreement;
(ii) immediate set-off against any and all Collateral for all
amounts owed;
(iii) immediate notification to all non-government account
debtors, whether or not of purchased accounts, that payment shall be
made exclusively to Purchaser;
(iv) immediate authority for Purchaser to proceed in any
non-bankruptcy court to enforce their rights.
(d) Notwithstanding anything contained herein to the contrary, the
Purchaser may terminate this Agreement immediately and without notice upon
the occurrence of any of the following events (each a "TERMINATION EVENT"):
(i) any of the Providers fail to make any payment required
under this Agreement;
25
(ii) there is an occurrence of a Bankruptcy Event (as defined
below) with respect to any Provider provided, however, that this
Subsection (d)(ii) shall be deemed inapplicable during such time that
the Bankruptcy Case is open and until such time that a plan of
reorganization is confirmed;
(iii) any Provider fails to honor any obligation set forth in
this Agreement. For purposes of this Agreement, "BANKRUPTCY EVENT"
shall mean the Provider generally not paying its debts as such debts
become due, or admitting in writing its inability to pay its debts
generally, or making a general assignment for the benefit of
creditors; or any proceeding being instituted by or against any
Provider seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, dissolution, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property or assets
and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for
relief against, or the appointment of a receiver, trustee, custodian
or other similar official for, it or for any substantial part of its
property or assets) shall occur; or the Provider taking any action to
authorize or acquiesce in any of the actions set forth above in this
paragraph;
(iv) any lien or encumbrance is granted, is discovered, or
attaches to any of the Collateral, except the liens and security
interests in favor of Purchaser, and Permitted Liens (as set forth on
the attachment hereto entitled "PERMITTED LIENS"), without the express
written consent of Purchaser;
(v) any administrative expense claim is allowed and is
senior to or pari passu with the Purchaser's claims or if any lien
shall be granted in the Bankruptcy Case with respect to any of the
Collateral (other than those granted with the written consent of
Purchaser or as authorized by this agreement); however, Debtors are
not prohibited from paying ordinary and routine operating expenses,
U.S. Trustee fees and professional fees and costs on terms and
conditions established and approved by the Bankruptcy Court;
(vi) the Debtors make any disposition of Collateral outside
the ordinary course of Debtors' businesses without the express written
consent of Purchaser;
(vii) the Debtors fail to pay timely any statutory fees
payable to the United States Trustee pursuant to 28 U.S.C. Section
1930(a)(6);
(viii) any representation, warranty, or certification made by
the Debtors or any of the Senior Officers, is or becomes incorrect in
any material respect;
26
(ix) the Bankruptcy Case is dismissed or converted to a
Chapter 7 Bankruptcy Case, or a Chapter 11 trustee or an examiner is
appointed in the Bankruptcy Case;
(x) the Factoring Order approving the Factoring Agreement is
stayed, amended, modified, reversed, or vacated;
(xi) a plan of reorganization is confirmed that fails to
provide for termination of the Factoring Agreement and payment in
full, in cash, of Debtors' obligations under the Factoring Agreement
on the effective date of the plan unless the plan adopts the exact
terms of the Factoring Agreement, as approved by the Bankruptcy Court,
or Purchaser agrees, in writing, to a modification or different
treatment and affirmatively votes in favor of the plan;
(xii) the Bankruptcy Court enters an order granting relief
from the automatic stay to any creditor with respect to any claim in
an amount equal to or exceeding $75,000.00 in the aggregate; provided,
however, that it shall not be an Event of Default if the automatic
stay is lifted solely for the purpose of allowing a creditor to
liquidate its claim against a Debtor or seek payment from an insurance
policy, or the Debtors file a document with the Bankruptcy Court
acknowledging that such property is not necessary to an effective
reorganization;
(xiii) Debtors' current principals cease to actively manage and
be involved in the operations of the Debtors and replacements
reasonably acceptable to the Purchaser shall not be retained or the
principal(s) of the Debtors become deceased or incompetent,
notwithstanding Bankruptcy Rule 1016;
(xiv) an order is entered in the Bankruptcy Case authorizing
the sale or other disposition of all, or substantially all, of the
assets of any or all of the Debtors, unless such order provides for
payment in full, in cash, of Debtors' obligations under the Factoring
Agreement upon consummation of the sale; or
(xv) the Debtors take any action inconsistent with the
foregoing or fail to timely contest any prohibited conduct or relief
requested."
(e) If a Termination Event shall occur and be continuing, the
Purchaser may, without limiting any right of the Purchaser hereunder, take
complete authority and control of all administration and servicing of the
Accounts, at the Providers' sole cost and expense. Upon any such action,
the Purchaser shall have, in addition to the rights and remedies which it
may have under this Agreement, all other rights and remedies provided after
default under the UCC and under other applicable law, which rights and
remedies shall be cumulative. A Termination Event shall not affect any
security interest granted pursuant to this Agreement, including but not
limited to security interests in property not yet owned by a Provider or
not created as of the Termination Event.
(f) Unless Purchaser agrees in writing, at its sole discretion, to
extend the term of the Factoring Agreement, or until a Termination Event,
the obligations due the
27
Purchaser under the Factoring Agreement are to be paid in full within 15
days after the date of the entry of an order confirming a plan of
reorganization unless the Debtors assume the terms of the Factoring
Agreement in their entirety without modifications; or, the Debtors and
Purchaser agree to other treatment under the plan. Moreover, no
confirmation order for a plan of reorganization shall provide for a
discharge or otherwise affect in any way any of the obligations of the
Debtors or any Guarantors as those obligations are detailed in the
agreements approved by the Bankruptcy Court), including without limitation,
the Debtors' agreements with Purchaser.
Termination of the Factoring Agreement shall not terminate,
extinguish, or remove any liens or security interests granted to Purchaser until
Debtors have fully paid and discharged all of their obligations to Purchaser.
12. INDEMNIFICATION. This Agreement shall not constitute an
assumption by the Purchaser of any obligation to any Third Party Obligor or
patient. Each Provider shall indemnify and hold harmless the Purchaser, and its
officers, directors, shareholders, employees, representatives, agents and
assigns (each an "INDEMNIFIED PARTY"), from and against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, settlement costs and any attorneys and accountants fees and expenses
relating to or in connection with the enforcement of the Purchaser's rights and
remedies hereunder, or for investigating, prosecuting or defending any actions
or threatened actions) which may be imposed on, incurred by or asserted against,
any Indemnified Party in any way relating to or arising out of any breach by any
Provider of any representation, warranty, covenant or agreement contained in
this Agreement, including without limitation any document furnished pursuant
hereto, together with interest on cash disbursements in connection therewith at
the Additional Charge from the date cash disbursements were made or incurred by
any Indemnified Party until paid in full by the Providers. Any amount payable by
the Providers to the Purchaser under any provision of this Agreement shall be
paid without any deduction or set-off by the Providers of any kind.
13. CONTROLLING LAW. This Agreement, each of the other documents
delivered and to be delivered pursuant hereto and all of the rights and
obligations of the parties hereunder and thereunder shall be governed by and
interpreted in accordance with the laws of the State of
Florida, without regard
to the conflict of law provisions of the State of
Florida, provided, however,
that during the Bankruptcy Case, federal bankruptcy law shall be controlling to
the extent it may be inconsistent with
Florida law.
14. WAIVER OF JURY TRIAL, JURISDICTION AND VENUE. EACH PROVIDER
HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION WITH
RESPECT TO ANY MATTER RELATING TO THIS AGREEMENT AND/OR ANY OF THE DOCUMENTS
DELIVERED AND TO BE DELIVERED HEREUNDER AND EACH PROVIDER HEREBY IRREVOCABLY
CONSENTS TO THE SOLE AND EXCLUSIVE JURISDICTION OF, AT THE OPTION OF THE
PURCHASER, THE STATE OR FEDERAL COURTS IN THE STATE OF
FLORIDA, PALM BEACH
COUNTY, IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND/OR ANY SUCH DOCUMENTS. EACH
28
PROVIDER ALSO WAIVES ANY RIGHT TO OBJECT TO VENUE OR SEEK TO CHANGE VENUE BASED
ON INCONVENIENCE OR OTHERWISE. EACH PROVIDER WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE
BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE PROVIDER AT THE PROVIDER'S
ADDRESS FIRST ABOVE SET FORTH IN THIS AGREEMENT. THE PROVIDER SHALL APPEAR IN
ANSWER TO SUCH SUMMONS, COMPLAINT OR OTHER PROCESS WITHIN THE TIME PRESCRIBED BY
LAW, FAILING WHICH THE PROVIDER SHALL BE DEEMED IN DEFAULT AND JUDGMENT MAY BE
ENTERED BY THE PURCHASER AGAINST THE PROVIDER FOR THE AMOUNT OF THE CLAIM AND
ANY OTHER RELIEF REQUESTED THEREIN. NOTWITHSTANDING THE FOREGOING DURING THE
PENDENCY OF THE BANKRUPTCY CASE, THE BANKRUPTCY COURT SHALL HAVE SOLE AND
EXCLUSIVE JURISDICTION TO DETERMINE ANY AND ALL DISPUTES ARISING UNDER OR
RELATING TO THE FACTORING AGREEMENT OR ANY OF THE OTHER DOCUMENTS DELIVERED AND
TO BE DELIVERED PURSUANT THERETO.
15. MISCELLANEOUS.
(a) This Agreement sets forth the entire agreement and understanding
of the parties hereto concerning the subject matter provided for herein.
This Agreement supersedes any and all prior agreements and understandings
between the parties with respect to such subject matter, whether oral or
written.
(b) This Agreement may only be amended by a writing signed by both
of the parties hereto. No waiver shall be effective unless it is in writing
and is signed by the waiving party. Any waiver shall be effective only in
the specific instance and for the specific purpose for which it is given.
(c) This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
Notwithstanding the foregoing, the Providers may not, directly or
indirectly, voluntarily or by operation of law, assign this Agreement or
any of its rights or obligations hereunder without first obtaining the
prior written consent of the Purchaser. Each Provider acknowledges that the
Purchaser may pledge, assign or transfer any or all of its rights and
obligations hereunder and its interest in the Purchased Accounts and the
other Subject Property to another entity, including as collateral security
for any indebtedness of the Purchaser.
(d) The invalidity or unenforceability of any provision of this
Agreement shall not impair the validity or enforceability of any other
provisions of this Agreement.
(e) Unless otherwise expressly provided in this Agreement, all
notices and other communications provided for herein shall be in writing
and shall be deemed to have been given when delivered by facsimile
transmission or overnight delivery service or two (2) days after mailed by
first class registered or certified mail, postage prepaid, to the addresses
first above set forth, or to such other address as may be furnished from
time to time by notice similarly served to the other party at the address
first above set forth.
29
(f) The representations, warranties and covenants of each Provider
contained herein shall be cumulative and shall survive the purchase of the
Purchased Accounts and shall remain in full force and effect
notwithstanding any investigation made by or on behalf of the Purchaser and
notwithstanding any knowledge (actual or imputed) that the Purchaser may
have which is inconsistent therewith.
(g) Each Provider agrees that the Servicer shall not be liable in
any respect to the Provider for the structuring of this Agreement, the flow
of funds received from the servicing of Purchased Accounts or any of the
Purchaser's obligations to the Provider. Any provision in this Agreement
which refers to the Servicer shall also apply to any sub-servicer which may
at any time or from time to time be appointed by the Purchaser or the
Servicer.
(h) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which shall
constitute one and the same instrument.
(i) Nothing set forth herein or otherwise shall render Purchaser, on
the one hand, and the Providers, on the other hand, partners of one
another, or constitute any of the Provider as an agent of Purchaser.
(j) The Providers' sole remedy for any breach committed by Purchaser
of any obligation owed under this Agreement or any other agreement between
the Providers and Purchaser shall be limited to the balance of the Reserve
Account. Under no circumstances shall Purchaser be liable for any
incidental, special or consequential damages, including, but not limited
to, loss of goodwill, loss of profit, or any other costs associated
therewith, whether Purchaser did or did not have any reason to know of a
loss that may result from any general or particular requirement of the
Providers.
(k) Each Provider agrees to execute any and all forms (including
without limitation, Forms 8821 and/or 2848) that Purchaser may require in
order to enable Purchaser to obtain and receive tax information with
respect to the Provider from the Department of the Treasury, Internal
Revenue Service or other taxing authority, or receive refund checks.
(l) Each Provider agrees that it shall not institute against, or
solicit or encourage any person or entity to institute against, or join any
person or entity in instituting against, the Purchaser or any of its
property any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or any other similar proceeding under any federal,
state or other law.
(m) Each of the parties hereto, by its signature below, acknowledges
that all of the terms, conditions, covenants and agreements set forth above
are acceptable to it and that it shall comply with all of the terms and
conditions set forth in this Agreement. The date of this Agreement is the
date set forth on the first page of this Agreement.
30
16. REIMBURSABLE EXPENSES. Purchaser shall be entitled to use its
own internal auditors when possible; otherwise it shall be entitled to engage an
outside auditor or professional to perform audit or investigative services of
the Debtors' financial condition or with respect to the Collateral. Purchaser
shall be entitled to be reimbursed all of their post-petition, pre-plan
confirmation reasonable attorneys' fees and costs in accordance with the
following procedure: Purchaser, or its professionals each month, shall transmit
a copy of its monthly statements for fees and costs to the United States
Trustee, counsel for any official unsecured creditors' committee and Debtors'
counsel. Unless a written objection (specifying the line item of the xxxx
objected to, the reason for the objection and a proposed resolution of the
objection) is received by Purchaser's counsel within 10 days of submission of
the monthly statement to the above stated parties, Purchaser shall automatically
be entitled to charge Debtors' account or demand payment. All obligations (as
referenced in this section) of the Debtors to the Purchaser shall likewise be
secured by a senior, first priority lien pursuant to Bankruptcy Code Section
364(d)(1), and payable forthwith. Any disputes with, respect thereto shall be
subject to the jurisdiction of the Bankruptcy Court.
17. BANKRUPTCY PROVISIONS.
(a) Debtors shall at all times fully comply with all substantive and
procedural requirements of the Bankruptcy Court, the Bankruptcy Code, the
Bankruptcy Rules, the Local Bankruptcy Rules, and all other applicable
local rules of court, including any administrative orders.
(b) Debtors shall permit the Purchaser or a professional retained by
the Purchaser, at the Debtors' expense, to (i) inspect the Debtors' books
and records, (ii) to discuss the Debtors' affairs, finances and accounts
with their professionals, officers, and employees, (iii) to obtain from the
Debtors copies of the Debtors' records, and (iv) furnish all information
reasonably requested by the Purchaser.
(c) Debtors shall keep financial statements in accordance with the
standard known as Generally Accepted Accounting Principles or GAAP, as GAAP
is applicable to similar entities operating under Chapter 11.
(d) Debtors shall cause to be promptly delivered to Purchaser's
counsel all pleadings, motions, applications, financial information, DIP
reports and other documents filed by or against Debtors in the Bankruptcy
Court or that may be distributed to any official committee appointed in the
Bankruptcy Case. Purchaser shall file a Request For Special Notice with the
Bankruptcy Court regarding the address or addresses for delivery of such
documents.
(e) Debtors shall timely pay all post-petition taxes and other
obligations including those required under 28 U.S.C. Section 1930(a)(6).
(f) Debtors shall notify the Purchaser immediately of any
Termination Event as defined in section 11 of this
Master Purchase and Sale
Agreement or under any other related agreements.
31
(g) Debtors acknowledge that under Bankruptcy Code Section 506(a),
the value of Purchaser's claims against Debtors are fully secured.
(h) Except as expressly provided herein, Debtors hereby waive any
and all of their rights to: (a) recover from Purchaser or from the
Collateral costs and expenses of preserving or disposing of the Collateral
or any other costs, expenses, or claims, whether such rights would arise
under Bankruptcy Code Section 506(c) or otherwise; and (b) subordinate any
or all of Purchaser's claims, liens or security interests to any other
claims, liens or security interests under Bankruptcy Code Section 510(c) or
otherwise.
(i) Debtors agree that, in consideration of Purchaser's entering
into the Factoring Agreement, Purchaser shall be excused from compliance
with any requirement that Purchaser take any additional actions or file,
record or serve any additional instruments, documents or notices to perfect
or enforce their liens on or security interest in any Collateral, including
the Cash Collateral and the Lockbox Bank Accounts, including the filing of
a notice pursuant to Bankruptcy Code Section 546(b) or the filing of a
motion for sequestration or any other motion, and that Purchaser's liens on
and security interests in the Collateral, including the Cash Collateral and
the Lockbox Bank Accounts, shall be deemed automatically perfected as of
the Petition Date without any further notice or action or order of the
Bankruptcy Court.
(j) Debtors hereby acknowledge that Purchaser has perfected, first
priority, enforceable, unavoidable liens on and security interests in the
Collateral, including the Cash Collateral and the Lockbox Bank Accounts
(with priority over all other liens), and agrees that Debtors, as
debtors-in-possession, shall not be permitted to assert against Purchaser
any of the avoiding powers under the Bankruptcy Code, including such powers
arising under Bankruptcy Code Sections 544, 545, 547, 548, 549 or 553.
(k) The terms and conditions of the Factoring Agreement (and any
extensions or renewals thereof) shall: (a) control in any plan of
reorganization and may not be modified through any plan of reorganization
without Purchaser's prior written consent obtained after the Bankruptcy
Court the Factoring Agreement; (b) be binding upon any trustee appointed in
the this Chapter 11 Bankruptcy Case or any Chapter 7 case to which this
Chapter 11 Bankruptcy Case may be converted.
(l) The parties to the Factoring Agreement have been represented and
advised by counsel with respect to the Factoring Agreement, and have
entered into it freely and voluntarily. The Factoring Agreement is intended
to be enforceable according to their written terms, is an integrated
agreement, and there are no promises, oral agreements, or expectations of
the parties to the contrary. The Bankruptcy Court may enter an order
enforcing any of the terms and conditions of the Factoring Agreement after
notice and opportunity for a hearing to Debtors, Purchaser, the United
States Trustee, and any other party in interest.
(m) In the event that the Factoring Agreement is not approved by the
Bankruptcy Court for any reason, then the Master Agreement shall be null
and void and
32
of no further force and effect, and no action or procedure taken, and no
statement made in connection with the negotiation, preparation,
formulation, or seeking approval thereof, shall be referred to by any
entity in connection with any proceeding or action.
(n) Whenever the Factoring Agreement requires Debtors or Purchaser
to deliver a writing to, or serve a writing upon the other, such writing
shall be delivered or served upon each of the following:
In the case of Purchaser:
Xxxxxx Xxxxxx, President
SUN CAPITAL HEALTHCARE, INC.
000 Xxxxx Xxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
PROSKAUER ROSE LLP
Xxxxxxx X. Xxxxxxx, Esq.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
and
XXXXXX XXXXXX & XXXXXXX, P.A.
Xxxxxxx X. Xxxxxxx, Esq.
000 Xxxx Xxxxxxxx Xxxx Xxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
In case of Debtors:
Xxxxx X. Xxxxxxxxxxxx, Xx., Chief
Executive Officer
MED DIVERSIFIED, INC., et al.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx [insert zip code]
XXXXX XXXXXX LLP
Xxxx Xxxxx XxXxxxxxxx (TM-8340)
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Phone: (000) 000-0000
33
Fax: (000) 000-0000
and
Xxxx X. Xxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
(o) The Factoring Agreement shall be binding on and insure to the
benefit of the parties' respective successors and assigns, including any
trustee appointed under the Bankruptcy Code.
(p) The terms and conditions set forth in the Factoring Agreement
and the Factoring Order approving same shall not affect in any way the
obligations of any person or entity that guaranteed or is otherwise liable
in any way on Debtors' obligations to Purchaser.
(q) The Factoring Agreement is the product of negotiation among the
parties hereto and represents the jointly conceived, bargained-for and
agreed upon language mutually determined by the parties to express their
intention in entering into the Factoring Agreement. Any ambiguity or
uncertainty in the Factoring Agreement shall be deemed to be caused by, or
attributable to, all parties hereto collectively. In any action or
proceeding to enforce or interpret the Factoring Agreement, the Factoring
Agreement shall be construed in a neutral manner, and no term or condition
of the Factoring Agreement, or the Factoring Agreement as a whole, shall be
construed more or less favorably to any one party, or group of parties, to
the Factoring Agreement.
(r) Debtors shall cause each of the following documents to be
promptly delivered to counsel for Purchaser within one business day after
filing with the Bankruptcy Court or if such document is filed by a party
other than Debtors' counsel then within one business day after receipt of
such document by Debtors' counsel:
(i) The Petition.
(ii) The Schedules of Assets and Liabilities required by
Bankruptcy Rule 1007(b) and official form number 6.
(iii) The Statement of Executory Contracts required by
Bankruptcy Rule 1007 (b) and official form number 6, schedule G.
(iv) The Statement of Financial Affairs required by
Bankruptcy Rule 1007 (a) and official form number 7.
(v) The List of Equity Security Holders required by
Bankruptcy Rule 1007(a)(3).
34
(vi) All applications and orders to employ attorneys,
accountants or any other professional on behalf of the Debtors.
(vii) Any order entered by the Bankruptcy Court appointing an
unsecured creditors' committee and any orders authorizing the
committee to employ attorneys, accountants or other professionals.
(viii) Any motions filed by secured creditors seeking stay
relief or sequestration of cash collateral or agreements that have
been approved by the Bankruptcy Court with respect to same.
(ix) All real property leases upon which the Debtors operate
and any agreements with landlords and motions with respect to real
property leases that have been filled.
(x) Any plan of reorganization that has been prepared and/or
filed.
(xi) All debtor-in-possession reports (i.e., reports that are
routinely required to be filed by the Bankruptcy Court or the U.S.
Trustee periodically, usually every month, addressing all financial
activity within that time period) as well as the materials required to
be provided to the U.S. Trustee during the Bankruptcy Case, including
but not limited to the "7-Day Package" and the materials required to
be filed within 15 days of filing the Petition (as such period may be
extended).
(s) Debtors shall be responsible to have a Motion for Order (i)
authorizing Debtors to enter into a Post-Petition Factoring Agreement, (ii)
granting Security Interest and Superpriority Administrative Expense
Treatment and (iii) approving Sun Capital Healthcare, Inc.'s Fees and Costs
(the "Motion"), duly served, filed and noticed for hearing with the
Bankruptcy Court, which Motion and the proposed Factoring Order shall be in
form and substance satisfactory to Purchaser.
(t) Debtors shall cause each of the following documents to be
delivered to Purchaser's counsel prior to the filing of the Motion:
(i) The Motion and the proposed Factoring Order, in
substantially final form, it being understood that in no event shall
the proposed Factoring Order be submitted for approval and entry by
the Bankruptcy Court unless it is in a form acceptable to Purchaser in
its sole and absolute discretion.
(ii) Any other documents Purchaser may reasonably require in
connection with the Motion and the proposed Factoring Order, including
all post-petition budgets of the Debtors and analyses and reports
requested by Purchaser with respect to the Collateral.
PURCHASER:
35
SUN CAPITAL HEALTHCARE, INC.
a
Florida corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and C.O.O.
PROVIDERS:
MED DIVERSIFIED, INC., debtor and
debtor in possession
By: /s/ Xxxxx X. Xxxxxxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President of Finance
CHARTWELL DIVERSIFIED SERVICES,
INC., debtor and debtor in possession
By: /s/ Xxx Xxxxx
-------------------------------
Name: Xxx Xxxxx
Title: President
By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
Title: VP of Finance
RESOURCE PHARMACY, INC., debtor
and debtor in possession
By: /s/ Xxxxx X. Xxxxxxxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title: Chief Executive Officer
36
CHARTWELL COMMUNITY SERVICES,
INC., debtor and debtor in possession
By: /s/ Xxx Xxxxx
-------------------------------
Name: Xxx Xxxxx
Title: President of CDSI
By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
Title: VP of Finance
CHARTWELL CARE GIVERS, INC.,
debtor and debtor in possession
By: /s/ Xxx Xxxxx
-------------------------------
Name: Xxx Xxxxx
Title: President of CDSI
By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
Title: VP of Finance
37
EXHIBIT A
SUN CAPITAL HEALTHCARE, INC.
PURCHASE SCHEDULE
[Account information shall be specified in each Purchase Schedule in
form and substance satisfactory to Purchaser.]
EXHIBIT B
LOCKBOX AGREEMENT
[attached]
EXHIBIT C
FORM OF PROVIDER NOTICE OF
SALE TO NON-GOVERNMENTAL THIRD PARTY OBLIGORS
(PURSUANT TO SECTION 4. 2(a))
[Letterhead of the Provider]
[Date]
Ladies and Gentlemen:
Please be advised that we have assigned our receivables to SUN CAPITAL
HEALTHCARE, INC. Consequently, we hereby request that you send all payments due
from you to us that are made by wire transfer or by other electronic transfer
directly into SUN CAPITAL HEALTHCARE, INC.'S account at:
Sun Trust Bank
Account No.: 0494002031913
Please send all explanations of benefits, remittance advices and other
forms of payment, including checks, with respect to such receivables to SUN
CAPITAL HEALTHCARE, INC.'S post office box located at:
X/X Xxx Xxxxx Xxxx
X.X Xxx 00-0000
Xxxxxxx, Xx. 32891-7416
All such payments shall be made payable to SUN CAPITAL HEALTHCARE,
INC. This direction may not be revoked or changed without the prior written
consent of SUN CAPITAL HEALTHCARE, INC. Any questions concerning this notice
shall be directed to SUN CAPITAL HEALTHCARE, INC. at 000 Xxxxx Xxxxx Xxxx, Xxxx
Xxxxx, Xxxxxxx 00000.
This letter supersedes any notices or directions that we have
previously given to you. Thank you for your cooperation in this matter.
Very truly yours,
Print Name:
Title:
EXHIBIT D
FORM OF PROVIDER NOTICE OF PAYMENT DIRECTION TO
GOVERNMENTAL THIRD PARTY OBLIGORS
(PURSUANT TO SECTION 4.3(b))
[Letterhead of the Provider]
[Date]
Ladies and Gentlemen:
Please be advised that we have opened a new bank account at Sun Trust
Bank and a post-office box with respect to such bank account. Accordingly, we
hereby request that:
(1) all wire transfers or other electronic transfers be made
directly into our account at
Sun Trust Bank
Account No.: 0494002031847
Routing No.: 000000000
(2) all explanations of benefits, remittance advices and other forms
of payment, including checks, be sent to our post office box located at:
x/x Xxx Xxxxx Xxxx
X.X. Xxx 00-0000
Xxxxxxx, Xx. 32891-7408
This letter supersedes any notices or directions that we have
previously given to you. Thank you for your cooperation in this matter.
Very truly yours,
Print Name:
Title:
EXHIBIT E
FORM OF UCC LANGUAGE
(UNTIL OTHERWISE SPECIFIED BY THE PURCHASER)
(PURSUANT TO SECTIONS 8(a) AND 9(a))
All now owned or existing or hereafter acquired, arising or created
accounts, chattel paper, documents, instruments and general intangibles, and all
proceeds and products and offspring of the foregoing (as all of such terms are
presently or hereafter defined in the Uniform Commercial Code), as well as all
Accounts and Purchased Accounts as defined in the
Master Purchase and Sale
Agreement between Debtor and the Secured Party (as amended, amended and
restated, or otherwise modified from time to time), including but not limited to
all rights to payment under any agreements with all Third Party Obligors as
defined therein.
