Exhibit 10.1
REVOLVING CREDIT AND SECURITY AGREEMENT
Section 1. Introduction
.
THIS REVOLVING CREDIT AND
SECURITY AGREEMENT (this “Agreement”) is entered
into this 26th day of September, 2007 by and between
PRESIDENTIAL HEALTHCARE CREDIT CORPORATION
(“PHCC”) and ARCADIA PRODUCTS, INC., a Delaware
corporation, ARCADIA HOME HEALTH PRODUCTS, INC., a Delaware
corporation, LOVELL MEDICAL SUPPLY, INC., a North Carolina
corporation , O2 PLUS, a California corporation, ARCADIA
HOME MIDEAST, INC., a Delaware corporation, BEACON
RESPIRATORY SERVICES OF ALABAMA, INC., a Delaware corporation,
BEACON RESPIRATORY SERVICES OF GEORGIA, INC., a Delaware
corporation, AMERICAN OXYGEN AND MEDICAL EQUIPMENT, INC., an
Illinois corporation, ARCADIA HOME OXYGEN AND MEDICAL EQUIPMENT,
INC., a Michigan corporation, and TRINITY HEALTHCARE OF
WINSTON-SALEM, INC., a Georgia corporation (collectively and
jointly and severally, the “Provider”). Subject to the
terms and conditions of this Agreement, the Provider wishes to
obtain a revolving credit loan from PHCC and PHCC wishes to make a
revolving credit loan to the Provider. Capitalized terms used
herein, unless otherwise defined, shall have the meanings set forth
in Appendix I to this Agreement. It is expressly understood
and agreed that the chairman, vice-chairman, president, any vice
president, treasurer, assistant treasurer, secretary, assistant
secretary, member or manager (or any one of them) of any one or
more of the Provider is and shall be authorized to request advances
for and on behalf of one or more of Provider and each Provider
shall be jointly and severally liable for, inter alia, (i) all
advances made to or on behalf of any one or more of the Provider
and (ii) all other advances and amounts, interest, charges and
expenses due under or in connection with this Agreement or any of
the related documents.
NOW, THEREFORE, in consideration of
the premises and in order to induce PHCC to make the Loan, PHCC and
the Provider agree as follows.
Section 2. Amount and
Payment of Loan .
(a) (i) PHCC agrees, on the
terms and subject to the conditions hereinafter set forth, to
review Advance Requests from the Provider, and to make Advances to
the Provider during the period from the date hereof to, but not
including, the earlier of (A) the date of termination in whole
of this Agreement pursuant to Section 11; and (B) the
Scheduled Maturity Date. Amounts borrowed hereunder may be repaid
and borrowed again from time to time provided that no Event of
Default shall have occurred. The principal amount of the Loan
outstanding shall not exceed the Maximum Aggregate Loan Amount at
any time.
(ii)
Any determination as to whether there is availability for Advances
shall be made by PHCC in its sole discretion and is final and
binding upon the
Provider.
Unless otherwise permitted by PHCC, each Advance shall be in an
amount of at least $10,000, or an integral multiple thereof.
Subject to the provisions of this Agreement, the Provider may
request Advances up to and including the value, in U.S. Dollars, of
the “Availability Amount” which shall equal
(A) eighty-five percent (85%) of the Net Value of Eligible
Receivables minus (B) if applicable, amounts reserved pursuant
to this Agreement. In addition, if at any time Provider is not
entitled to any advances by the terms of this Agreement, PHCC may,
in its sole discretion, make requested advances upon the payment of
an overadvance fee (an “Overadvance Fee”) in an amount
to be determined by PHCC in PHCC’s sole discretion; however,
it is expressly acknowledged and agreed that, in such event, PHCC
shall have the right, in its sole discretion, to decline to make
any requested advance and to require any payment required under the
terms of the Agreement without prior notice to Provider and the
making of any such advances shall not be construed as a waiver of
such right by PHCC.
(iii)
If at any time the outstanding balance of the Loan exceeds the
lesser of (A) the Availability Amount, or (B) the Maximum
Aggregate Loan Amount, then the Provider shall not be entitled to
any additional Advances under the Loan while such excess exists and
shall immediately remit to PHCC immediately available funds
sufficient to eliminate such excess and, if PHCC requests, deliver
to PHCC additional collateral of a value and character satisfactory
to PHCC.
(iv) In
the event that the availability of the Loan hereunder expires by
the terms of this Agreement, or by the terms of any agreement
extending the Scheduled Maturity Date of the Loan, PHCC may, in its
sole discretion, make requested Advances; however, it is expressly
acknowledged and agreed that, in such event, PHCC shall have the
right, in its sole discretion, to decline to make any requested
Advance and may require payment in full of the Loan at any time
without prior notice to Provider and the making of any such
Advances shall not be construed as a waiver of such right by
PHCC.
(v)
PHCC, in its sole credit judgment, may further adjust the
Availability Amount based upon the Provider’s actual, recent
collection history for each payor class (i.e., Medicare, Medicaid,
commercial insurance, etc.) in a manner consistent with
PHCC’s underwriting practices and procedures, including,
without limitation, PHCC’s review and analysis of, among
other things, the Provider’s historical returns, rebates,
discounts, credits and allowances. Also, PHCC shall have the right
to establish from time to time, in its sole credit judgment,
reserves against the Availability Amount, which reserves shall have
the effect of reducing the amounts otherwise eligible to be
disbursed to the Provider.
(iv)
Advances may be made by PHCC without an Advance Request as
hereinafter provided for the payment of interest due and payable on
the Loan and Fees and Reimbursable Expenses and for the payment of
fees due to the Servicer under the Servicing Agreement when such
interest and/or fees are due to the extent other moneys have not
been made available by Provider to PHCC (or, in the case of fees
due Servicer, to Servicer) for such payments and there is
sufficient Availability Amount for such Advances.
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(b) (i) Advances made by PHCC
shall be evidenced by, and repayable with interest in accordance
with, a single Revolving Variable Rate Note of the Provider payable
to the order of PHCC, dated of even date herewith, in the form of
Exhibit B hereto (the “Note”). PHCC shall record
the date and amount of each Advance made and the date and amount of
each payment of principal thereof, and any such recordation shall
constitute prima facie evidence of the accuracy of the information
so recorded. PHCC shall, on behalf of the Provider, maintain a
register (the “Register”) for the recordation of
(i) the names and addresses of PHCC and any assignees of PHCC
and (ii) the Commitment of, and the principal amount and
interest of the Loans owing to, PHCC or any assignee from time to
time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Provider, PHCC, and each
assignee of PHCC shall treat each Person whose name is recorded in
the Register as the owner of the Loans for all purposes of this
Agreement. The Note shall (A) be dated the date of issuance
thereof, or, with respect to any amendment thereof, the date of
such amendment, (B) mature on the Scheduled Maturity Date and
(C) provide for the payment of interest in accordance with
Section 2(c)(ii). The aggregate principal amount outstanding
under the Note, together with accrued but unpaid interest thereon,
Fees and Reimbursable Expenses shall be due and payable on the
Scheduled Maturity Date.
(ii)
The Provider may, in its discretion, prepay the Loan in whole or in
part at any time by paying all or any part of the outstanding
principal balance of the Note plus accrued interest and all other
Fees and Reimbursable Expenses then due (the “Prepayment
Amount”). The Provider shall prepay the Loan in full
immediately upon demand of PHCC after the occurrence of an Event of
Default by paying the Prepayment Amount.
(c) (i) Advances shall accrue
interest at the rate and in the manner set forth in the Note. The
Provider shall make payments of interest and principal as
hereinafter described (the “Loan Payments”).
(ii)
Accrued interest shall be due and payable on each Interest Payment
Date.
(iii)
Except as otherwise expressly provided by this Agreement, the
obligations of the Provider to make the Loan Payments, to make
payments of any Fees and Reimbursable Expenses, and to perform and
observe the covenants and agreements contained herein shall be
absolute and unconditional under all circumstances, without
abatement, diminution, deduction, setoff or defense for any reason.
Except as otherwise may be expressly provided by this Agreement,
the Provider shall make all such payments when due and shall not
withhold any Loan Payments or other payments due under the Provider
Agreements pending final resolution of any dispute with PHCC, nor
shall the Provider assert any right of setoff or counterclaim
against its obligation to make any such payments required under the
Provider Agreements.
(iv)
Regardless of any provision contained in any of the Loan Documents,
in no contingency or event whatsoever shall the aggregate of all
amounts that
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are contracted
for, charged or received by PHCC pursuant to the terms of this
Agreement or any of the other Loan Documents and that are deemed
interest under applicable law exceed the highest rate permissible
under applicable law. No agreements, conditions, provisions or
stipulations contained in this Agreement or any of the other Loan
Documents or the exercise by PHCC of the right to accelerate the
payment or the maturity of all or any portion of the Obligations,
or the exercise of any option whatsoever contained in any of the
Loan Documents, or the prepayment by the Provider of any of the
Obligations, or the occurrence of any contingency whatsoever, shall
entitle PHCC to charge or receive in any event, interest or any
charges, amounts, premiums or fees deemed interest by applicable
law (such interest, charges, amounts, premiums and fees referred to
herein collectively as “Interest”) in excess of the
Maximum Rate and in no event shall the Provider be obligated to pay
Interest exceeding such Maximum Rate, and all agreements,
conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel the
Provider to pay Interest exceeding the Maximum Rate shall be
without binding force or effect, at law or in equity, to the extent
only of the excess of Interest over such Maximum Rate. If any
Interest is charged or received in excess of the Maximum Rate
(“Excess”), the Provider acknowledges and stipulates
that any such charge or receipt shall be the result of an accident
and bona fide error, and such Excess, to the extent received, shall
be applied first to reduce the principal Obligations and the
balance, if any, returned to the Provider, it being the intent of
the parties hereto not to enter into a usurious or otherwise
illegal relationship. The right to accelerate the maturity of any
of the Obligations does not include the right to accelerate any
Interest that has not otherwise accrued on the date of such
acceleration, and PHCC does not intend to collect any unearned
Interest in the event of any such acceleration. Provider recognizes
that, with fluctuations in the rates of interest set forth in the
Note and the Maximum Rate, such an unintentional result could
inadvertently occur. All monies paid to PHCC hereunder or under any
of the other Loan Documents, whether at maturity or by prepayment,
shall be subject to any rebate of unearned Interest as and to the
extent required by applicable law. By the execution of this
Agreement, the Provider covenants that (i) the credit or
return of any Excess shall constitute the acceptance by the
Provider of such Excess, and (ii) the Provider shall not seek
or pursue any other remedy, legal or equitable, against PHCC, based
in whole or in part upon contracting for, charging or receiving any
Interest in excess of the Maximum Rate. For the purpose of
determining whether or not any Excess has been contracted for,
charged or received by PHCC, all Interest at any time contracted
for, charged or received from the Provider in connection with any
of the Loan Documents shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread in equal parts
throughout the full term of the Obligations. The Provider and PHCC
shall, to the maximum extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or
premium rather than as Interest and (ii) exclude voluntary
prepayments and the effects thereof. The provisions of this
Section 2(c)(iv) shall be deemed to be incorporated into every
Loan Document (whether or not any provision of this Section is
referred to therein). All such Loan Documents and communications
relating to any Interest owed by the Provider and all figures set
forth therein shall, for the sole purpose of computing the extent
of
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Obligations, be
automatically recomputed by the Provider, and by any court
considering the same, to give effect to the adjustments or credits
required by this Section 2(c)(iv).
(d) On or before the Closing Date,
the Provider shall pay to PHCC a nonrefundable commitment fee in an
amount equal to $20,000.00 (“Initial Commitment
Fee”).
(e) All payments and reimbursements
to PHCC made under any Provider Agreement shall be free and clear
of, and without deduction for, all taxes, levies, imposts,
deductions, assessments, charges or withholdings and all
liabilities with respect thereto of any nature whatsoever,
excluding taxes to the extent imposed on PHCC’s net income.
If PHCC shall be required by law to deduct any such amounts from or
in respect of any sum payable under any Provider Agreement to PHCC,
then the sum payable to PHCC shall be increased as may be necessary
so that, after making all required deductions, PHCC receives an
amount equal to the sum it would have received had no such
deductions been made. Notwithstanding any other provision of any
Provider Agreement, if at any time after the Closing Date
(i) any change in any existing law, regulation, treaty or
directive or in the interpretation or application thereof,
(ii) any new law, regulation, treaty or directive enacted or
any interpretation or application thereof, or (iii) compliance
by PHCC with any request or directive (whether or not having the
force of law) from any governmental authority: (A) subjects
PHCC to any tax, levy, impost, deduction, assessment, charge or
withholding of any kind whatsoever with respect to any Provider
Agreement, or changes the basis of taxation of payments to PHCC of
any amount payable thereunder (except for net income taxes, or
franchise taxes imposed in lieu of net income taxes, imposed
generally by federal, state or local taxing authorities with
respect to interest, Reimbursable Expenses and Fees payable
hereunder or changes in the rate of tax on the overall net income
of PHCC), or (B) imposes on PHCC any other condition or
increased cost in connection with the transactions contemplated
thereby or participations therein; and the result of any of the
foregoing is to increase the cost to PHCC of making or continuing
any Loan or Advance hereunder or to reduce any amount receivable
hereunder, then, in any such case, the Provider shall promptly pay
to PHCC any additional amounts necessary to compensate PHCC, on an
after-tax basis, for such additional cost or reduced amount as
determined by PHCC. If PHCC becomes entitled to claim any
additional amounts pursuant to this Section it shall promptly
notify the Provider of the event by reason of which PHCC has become
so entitled, and each such notice of additional amounts payable
pursuant to this Section submitted by PHCC to the Provider shall,
absent manifest error, be final, conclusive and binding for all
purposes and shall be payable on each Interest Payment Date.
(f) (i) The Provider will
prepare and deliver an Availability Certificate to PHCC by
10:00 a.m. on the Business Day prior to each Advance Day. The
Availability Certificate shall identify the aggregate Net Value of
all Eligible Receivables pledged to PHCC as Collateral hereunder,
the outstanding principal balance of the Loan, all Reimbursable
Expenses and Fees then due, the Availability Amount and such other
information regarding Eligible Receivables as is required by the
Availability Certificate.
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(ii)
Each Advance Request shall be made by the Provider prior to
12:00 p.m. (Central Standard/Daylight Time) on the Advance Day
by an Authorized Person by delivery to PHCC with a copy to the
Servicer.
(iii)
Upon receipt of the Advance Request and satisfaction of all
applicable conditions set forth in this Section 2, PHCC shall
disburse the amount of the Advance on the Advance Day by crediting
the same to the account of the Provider identified in
Exhibit C or such other account as may be designated in
writing by an Authorized Person of the Provider.
(iv) No
Advance shall cause the aggregate principal balance outstanding on
the Loan to exceed the Maximum Aggregate Loan Amount.
(g) The Provider shall use Advances
for the purpose of supporting the Provider’s business
operations and for any other general business needs.
(h) (A) As a condition precedent
to the obligation of PHCC to disburse the initial Advance under
this Agreement, the following shall have been received by PHCC and
the following actions shall have been taken to the satisfaction of
PHCC:
(i) the Provider Agreements, properly
executed on behalf of the Provider;
(ii) a certificate of an authorized
officer, manager or managing member, as the case may be, of the
Provider, certifying as to (i) the resolutions of the
Provider’s board of directors, general partner(s) or managing
member(s), as the case may be, authorizing the execution, delivery
and performance of the Provider Agreements and any related
documents and (ii) the signatures of each Authorized Person
authorized to execute and deliver the Provider Agreements and other
instruments, agreements and certificates on behalf of the Provider
and to request Advances;
(iii) if applicable, a Certificate of
Good Standing issued as to the Provider by the Secretary of the
State of the Provider’s state of organization not more than
30 days prior to the Closing Date;
(iv) payment of Reimbursable Expenses
due on the Closing Date, the Initial Commitment Fee and such other
fees, commissions and expenses required to be paid by the Provider
pursuant to the Provider Agreements as of the Closing Date;
(v) acknowledgment copies of proper
financing statements (Form UCC-1) naming the Provider as the debtor
and naming PHCC as the secured party or other similar documents or
instruments as may be necessary, or in the opinion of PHCC
desirable, under the UCC, as amended from time to time, of all
appropriate jurisdictions, or any comparable law, to perfect
PHCC’s security interest in all Collateral which may be
pledged by the Provider to PHCC hereunder;
(vi) certified copies (or copies
otherwise satisfactory to PHCC) of Requests for Information or
Copies (Form UCC-11) (or a similar search report certified by
a
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Person
acceptable to PHCC) listing all effective financing statements
(including those referred to in subsection (v) above) which
name the Provider (under its present name and any previous name) as
debtor or seller and which are filed in the jurisdictions in which
filings were made pursuant to subsection (v) above, together
with copies of such financing statements and searches of applicable
federal and state court and agency dockets and lien records showing
all judgment, tax and ERISA liens affecting the Provider or the
Collateral, none of which (except those filed pursuant to
subsection (v) above) shall cover any of the Collateral to be
pledged by the Provider to PHCC or any related Contracts unless the
documents referred to in subsection (vii) below cover such
financing statements;
(vii) releases and acknowledgment
copies of proper Termination Statements, if any, necessary to
evidence the release of all security interests, ownership and other
rights of any Person in the Collateral previously granted by the
Provider;
(viii) a copy of the Servicing
Agreement and any Addendums thereto requested by PHCC, duly
authorized, executed and delivered by the Provider and the
Servicer, together with evidence satisfactory to PHCC that the
Provider has established an account at an insured depositary
institution into which all payments with respect to the Healthcare
Receivables will be deposited;
(ix) a copy of all of the
Provider’s forms of patient consent to be signed by each
patient for which a Healthcare Receivable is or was created which
authorizes the demographic and medical information with respect to
such patient to be disclosed to, and by, the Servicer; and a copy
of the Provider’s Projected Financial Statements for the
balance of the Provider’s then current fiscal year;
(x) PHCC shall have completed
examinations, the results of which shall be satisfactory in form
and substance to PHCC, of the Collateral, the financial statements
and the books, records, business, obligations, financial condition
and operational state of the Provider, and the Provider shall have
demonstrated to PHCC’s satisfaction that (A) its operations
comply, in all respects deemed material by PHCC, in its sole
judgment, with all applicable federal, state, foreign and local
laws, statutes and regulations, (B) its operations are not the
subject of any governmental investigation, evaluation or any
remedial action which could result in any expenditure or liability
deemed material by PHCC, in its sole judgment, and (C) it has
no liability (whether contingent or otherwise) that is deemed
material by PHCC, in its sole judgment;
(xi) the various mechanisms for
creating and perfecting the security interests in the Collateral
are in effect and can be utilized with respect to the Collateral
other than Governmental Receibles;
(xii) all Collateral in which PHCC
has been granted, or may demand, a security interest are owned
outright by the Provider, are not subject to claim, assignment or
setoff, and are in the physical or constructive possession or
control of PHCC;
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(xiii) the Provider has the
unrestricted right to pledge the Collateral as contemplated
herein;
(xiv) such other documents, opinions
or certificates as PHCC may reasonably request including, but not
limited to, legal opinions regarding legal existence and
authorization from the Provider’s counsel to PHCC; and
(xv) an Availability Certificate and
Advance Request in the form of Exhibit E duly executed by an
Authorized Person.
(B) As a condition precedent to the
continuing obligation of PHCC to make each Advance, the following
conditions (in addition to those enumerated under
Section 2(h)(A) hereinabove) shall be satisfied by the
Provider:
(i) all
representations and warranties of the Provider contained herein and
in each other Provider Agreement shall be true and complete in all
material respects (determined for this purpose as if all
qualifications to such representations and warranties based on
knowledge or materiality were omitted) at all times during the term
of this Agreement;
(ii)
the Provider shall have performed and complied in all material
respects with all obligations and agreements and all covenants and
conditions contained in this Agreement and in each other Provider
Agreement to which it is a party to be performed or complied with
by it at all times (such performance or compliance to be determined
for this purpose as if all qualifications to such obligations,
agreements, covenants and conditions based on the use of diligent
efforts or best efforts were omitted) and PHCC shall have received
evidence, in form and substance reasonably satisfactory to it, of
such performance and compliance;
(iii)
all corporate actions necessary to authorize (A) the
execution, delivery and continuing performance by the Provider of
this Agreement and of each other Provider Agreement to which it is
a party and (B) the consummation of the transactions
contemplated hereby and thereby shall have been and shall continue
to be duly and validly taken by the Provider and shall be in full
force and effect. All such actions and all other actions,
proceedings, instruments and documents required to carry out the
transactions contemplated hereby or incidental hereto and all other
related legal matters shall be reasonably satisfactory to and
approved by counsel for PHCC and such counsel shall be furnished
with such certified copies of such corporate actions and
proceedings and such other instruments and documents as it shall
have reasonably requested from time to time;
(iv) no
event has occurred and is continuing, or would result from such
Advance, which constitutes an Event of Default; and
(v) the
Provider shall provide with each Advance Request an
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Availability
Certificate and Advance Request in the form of Exhibit E duly
executed by an Authorized Person.
Each Advance
Request shall constitute a representation that the above is true
and that the statements set forth in Sections 6 and 7 are
correct.
(i) PHCC’s Commitment shall
terminate on the Scheduled Maturity Date unless this Agreement is
terminated prior thereto.
Section 3. Servicing of
Healthcare Receivables . Healthcare Receivables will be
serviced by the Servicer pursuant to the terms and conditions of
the Servicing Agreement. Under the terms of the Servicing
Agreement, the Servicer shall act as the agent of the Provider,
shall service the Healthcare Receivables in accordance with the
directions of the Provider and shall, as agent of the Provider,
disburse proceeds of the Healthcare Receivables as directed by the
Provider under the Servicing Agreement.
If the Provider determines, for any
reason, to terminate or remove the Servicer, the Provider may do so
only upon not less than thirty (30) days’ prior written
notice to the Servicer, with a copy of such notice sent to PHCC,
along with (i) a certified copy of the resolution adopted by
the governing body of the Provider authorizing and directing that
the Servicer be terminated as agent under the Servicing Agreement
and (ii) a certificate signed by the Provider and the Servicer
evidencing termination of the Servicing Agreement, subject to
appointment of a successor to the Servicer as provided below
(provided, however, that the foregoing shall not impede the
Provider’s ability to change a return address or instructions
with respect to Governmental Obligors as contemplated by Section
4(b) or change an automatic transfer instruction as contemplated by
Section 4(f)). In addition, if the Servicer is in default under the
terms of the Servicing Agreement, PHCC shall have the right to
obtain the removal or termination of the Servicer for cause and the
right to have the Provider appoint a successor Servicer, subject to
the last sentence of this Section. No termination or removal of a
Servicer, whether by the Provider or at the direction of PHCC for
cause as provided herein, shall be effective unless, prior to the
date such termination or removal is to be effective, the Provider
has selected a successor Servicer acceptable to PHCC and such
successor Servicer has accepted its appointment by the Provider in
writing.
Section 4. Post Office Box
and Provider Lockbox Account For Healthcare Receivables .
(a) On or prior to the date hereof,
Provider, pursuant to the Servicing Agreement, shall have
established in its own name (1) a post office box for the
receipt of all items with respect to Healthcare Receivables (the
“Lockbox”), and (2) an account at an insured
depository institution approved by PHCC for the deposit of all
Collections and payments on the Healthcare Receivables (the
“Lockbox Account”) The Lockbox Account shall be subject
at all times to a control agreement in form satisfactory to PHCC in
PHCC’s sole discretion (the “Control Agreement”),
said control agreement to be among PHCC, Provider and the financial
institution at which the Lockbox Account is established.
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(b) The Provider hereby covenants and
agrees that, on and after the date hereof, all claims (including
CMS 1500 or related insurance billing forms) to be sent to Obligors
(and return envelopes, if provided by the Provider) shall set forth
only the address of the Lockbox as a return address for payment of
Healthcare Receivables and delivery of all EOB/ERAs and only the
Lockbox Account as the account into which wire transfers for
Collections and payments on Healthcare Receivables shall be
deposited. The Provider hereby further covenants and agrees to
instruct and notify each of the members of the Provider’s
accounting and collections staff, and of the Servicer’s
accounting and collection staff, to provide identical information
in communications with Obligors with respect to collections, wire
transfers and EOB/ERAs on Healthcare Receivables. With respect to
Non-Governmental Obligors, the Provider shall not change such
return address or the instructions in any Obligor Notice without
the express prior written consent of PHCC. With respect to
Governmental Obligors, Provider remains free to change such return
address and the instructions in any Obligor Notice; provided,
however, any such change undertaken by Provider without the express
written permission of PHCC shall constitute a breach of this
Agreement.
(c) Unless an Event of Default exists
or a court order to the contrary is received, the Provider will
retain the right to receipt of Collections and payment of the
Healthcare Receivables and all rights to demand or make claims
under the applicable Governmental program for any Governmental
Receivable to the extent provided under the Servicing Agreement.
The Provider shall remit daily to the Servicer all amounts which
the Provider receives with respect to the Healthcare Receivables
(whether received in the Lockbox, the Lockbox Account, or
otherwise, and whether accomplished through the mechanism described
in subsection (f) below or otherwise), and shall notify PHCC
and the Servicer of all such amounts, including information as to
the Healthcare Receivables to which such amounts relate and copies
of any related EOB/ERAs. Provider hereby instructs the Servicer to
pay all amounts so received on a daily basis to PHCC. PHCC will
immediately credit to interest owing hereunder and to any
outstanding line of credit balance all such amounts that were
received from account debtors which are or were at one time account
debtors on Eligible Receivables; provided, however, that in no case
shall PHCC be required to credit Provider with the amount of any
check or other instrument constituting provisional payment until
PHCC has received final payment thereof at its office in cash
accepted by PHCC. Unless an Event of Default exists, PHCC (or
Servicer on PHCC’s behalf) shall pay to Provider as necessary
any such amounts received on a day when the outstanding principal
and interest balance on Provider’s line of credit under this
Agreement is zero or less than zero.
(d) If an Obligor makes a payment on
a Healthcare Receivable other than to the Lockbox or the Lockbox
Account, with respect to wire transfers the Provider shall promptly
give written notice thereof to PHCC and the Provider shall take all
necessary steps to effect the collection of such payment from any
other Person claiming an interest therein or having possession
thereof and deliver such to the Servicer together with all
necessary endorsements. If the Provider itself shall receive any
amounts with respect to a Healthcare Receivable (other than
receipts into the Lockbox or the Lockbox Account, which receipts
are addressed elsewhere in this Agreement), the Provider shall so
notify
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PHCC and the
Servicer immediately and shall hold all checks and instruments
received in trust for PHCC and shall deliver to Servicer such
checks and other instruments duly endorsed to PHCC (or, at the
direction of PHCC, the proceeds thereof) without delay or setoff,
including information as to the Healthcare Receivable to which such
amounts relate and copies of any related EOB/ERAs. The Provider
shall cooperate with PHCC and the Servicer in the identification of
items deposited in the Lockbox or the Lockbox Account.
(e) All deliveries and notifications
referred to in this Section 4 shall be made promptly upon the
Provider’s receipt of any such amount or information and
delivery to PHCC and the Servicer thereof shall be no later than
midnight Central Time on the day of receipt by the Provider (except
with respect to delivery of tangible items, which shall be no later
than 5:00 pm CST on the business day after receipt by the
Provider).
(f) Pursuant to the Servicing
Agreement, the Provider shall instruct the financial institution
holding the Lockbox and the Lockbox Account to transfer, or cause
to be transferred, to the account described in the Servicing
Agreement, automatically, at the end of each Business Day, all
amounts on deposit in the Lockbox Account. No Person, other than
the Provider, shall have the right to change or cancel the
foregoing automatic transfer instruction; provided, however, that
the Provider shall not make such change or cancellation other than
pursuant to the Servicing Agreement and as provided in the Addendum
to the Servicing Agreement.
Section 5. Security
Interest .
(a) This Agreement is intended to
constitute a security agreement within the meaning of the UCC. As
security for the Obligations, the Provider hereby assigns, pledges
and grants to PHCC a first priority continuing security interest in
all right, title and interest of the Provider in, to and under all
of the following, whether now or hereafter owned, existing,
created, arising or acquired (collectively, the
“Collateral”):
(i) Healthcare Receivables, all
related Contracts and all Collections with regard thereto, any and
all amounts now or hereafter due to the Provider from the Lockbox,
the Lockbox Account, all funds on deposit in each of the foregoing
and all certificates and instruments, if any, from time to time
evidencing the Lockbox and the Lockbox Account and funds of the
Provider on deposit therein, all claims thereunder or in connection
therewith, all software and books and records relating to any of
the foregoing, all general intangibles, accounts, payment
intangibles, interest, dividends, moneys, instruments, securities
and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of the foregoing, and all proceeds and amounts received or
receivable under any or all of the foregoing;
(ii) Accounts;
(iii) contract rights, chattel paper,
electronic chattel paper, deposit
11
accounts,
letter of credit rights, health-care-insurance receivables, notes,
notes receivable, instruments, general intangibles related to
Eligible Receivables and payment intangibles;
(iv) licenses related to Eligible
Receivables and all further or other property that pertains,
incorporates or relates to or emanates or derives from any license
related to Eligible Receivables;
(v) lockbox account number
and deposit account number
in the Provider’s name at Bank of America, and any and all
lockboxes and related deposit accounts established from time to
time in Provider’s name at JPMorgan Chase Bank;
(vi) goods, instruments, notes, notes
receivable, documents, documents of title, warehouse receipts,
bills of lading, certificates of title, policies and certificates
of insurance, securities, investment property, chattel paper,
deposits, cash and other property which are now or may hereafter be
in the possession of PHCC, or which are otherwise assigned to PHCC,
or as to which PHCC may now or hereafter control possession by
documents of title or otherwise; and
(vii) substitutions, accessions,
additions, parts, accessories, attachments, replacements, Proceeds
and products of, for and to any and all of the foregoing,
including, without limitation, any and all insurance and tort
proceeds, and any and all such substitutions, accessions,
additions, parts, accessories, attachments, replacements, Proceeds
and products in the form of any of the property described or
referenced in (i) through (v) above.
All references
in this Agreement to the UCC shall mean the Georgia Uniform
Commercial Code (the “UCC”), as amended from time to
time. All references in this Section 5 to general intangibles,
accounts and payment intangibles shall mean those terms as defined
in the UCC.
To the fullest extent permitted by
applicable law, PHCC’s rights with respect to the Collateral
pledged hereunder include, but are not limited to, the right to:
(i) settle and/or compromise any or all of such Collateral;
(ii) do all acts necessary or advisable in furtherance of any
rights of PHCC hereunder; (iii)demand, receive and sue, in the
Provider’s name at PHCC’s option, for any moneys due or
which may become due under such Collateral, or for enforcement of
any rights afforded the Provider with respect thereto; and
(iv) sign and endorse on behalf of the Provider all checks and
instruments received in connection with Collections on the
Healthcare Receivables and the Provider hereby irrevocably appoints
PHCC the attorney-in-fact of the Provider for such purpose; and the
Provider hereby specifically authorizes, ratifies and confirms all
that PHCC shall do by virtue hereof; provided, however, that
notwithstanding anything to the contrary in this Agreement, the
Provider, and not PHCC, shall retain, unless otherwise specified in
a court order or an agreement of agency, all rights of collection
and endorsement with respect to Governmental Receivables. The
Provider specifically agrees to execute and/or
12
prepare, and
file or publish, all at the request and direction of PHCC, and at
the Provider’s expense, any and all documentation and/or
notices of PHCC’s rights herein as may be necessary or
advisable, in PHCC’s discretion, to effect the terms hereof
or protect PHCC’s interest herein described. In no event
shall PHCC be responsible, in whole or in part, for any duties,
performance or obligations of the Provider with respect to the
Collateral nor shall the Provider be relieved thereof by reason of
this Agreement.
(b) This Agreement secures the
payment and performance by the Provider of all indebtedness,
liabilities and obligations now existing or hereafter created or
arising under the Note and all renewals, extensions, restructurings
and refinancings thereof and all other amounts owing under the
Provider Agreements, including, without limitation, any additional
indebtedness which may be extended to the Provider pursuant to any
restructuring or refinancing of the Provider’s indebtedness
thereunder, and including any post-petition interest accruing
during any bankruptcy, reorganization or other similar proceeding
(collectively, the “Obligations”).
(c) It is the intent of the parties
hereto that the pledge of Collateral and any action taken with
respect thereto pursuant to this Agreement shall be in a form and
manner sufficient to create a first priority perfected security
interest therein for the benefit of PHCC. If, at any time,
PHCC’s counsel determines that the procedures necessary to
create or perfect such security interest should be modified to
enable PHCC’s counsel to deliver an opinion that PHCC’s
security interest in the Collateral is a first priority perfected
security interest, such procedures shall be modified to enable such
opinion to be delivered.
(d) The Provider hereby authorizes
PHCC to file financing statements, continuation statements, and
amendments thereto, naming the Provider as debtor and describing,
as collateral therein, all Collateral pledged by the Provider
pursuant to this Agreement, including specific lists, sublists and
types of collateral, and which contain any other information
required or permitted by the Uniform Commercial Code, as in effect
from time to time in any relevant jurisdiction.
Section 6. Representations
and Warranties of the Provider . The Provider represents and
warrants to PHCC that, as of the date hereof, and shall be deemed
to represent and warrant to PHCC as of each Advance Request, as
follows:
(a) if a corporation, limited
liability company, or partnership, the Provider has been duly
organized and is validly existing and in good standing as a
corporation, limited liability company or partnership, as the case
may be, under the laws of the jurisdiction of its organization and
is duly qualified to conduct business in each State in which it
conducts business;
(b) the Provider has full power and
authority to own or lease its properties and to conduct its
business as presently conducted and to execute, deliver and perform
the Provider Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby;
13
(c) the execution, delivery and
performance by the Provider of the Provider Agreements and all
other instruments and documents to be delivered hereunder and the
consummation of the transactions contemplated hereby are within the
Provider’s powers, have been duly and validly authorized by
all requisite action and will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien,
charge or encumbrances upon any of its property or assets pursuant
to the terms of, any indenture, mortgage, deed or trust, loan
agreement or other agreement or instrument by which it is bound or
to which any of its property or assets is subject (except the
Provider Agreements) nor will such action result in any violation
of the provisions of its organizational documents (including its
articles of incorporation and bylaws, operating agreement or
partnership agreement, as the case may be) or of any statute or any
order, rule or regulation of any court or governmental agency or
body of the United States, any state or any political subdivision
of either having jurisdiction over it or any of its properties or
assets, and no consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with
any such court or any such regulatory authority or other such
governmental agency or body is required to be obtained by or with
respect to the Provider in connection with the execution, delivery
and performance by the Provider of the Provider Agreements, all
other instruments and documents to be delivered thereunder and the
consummation of the transactions contemplated thereby, and no
transaction contemplated thereby requires compliance with any bulk
sales act or similar law;
(d) no authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the
due execution, delivery and performance by the Provider of the
Provider Agreements except for the filing of financing statements
under the UCC or the Uniform Commercial Code in effect in any
relevant jurisdiction and the giving of notices referred to in
Section 2(h)(A), all of which, at the time required in
Section 2(h)(A) shall have been duly made and shall be in full
force and effect;
(e) each of the Provider Agreements
has been duly and validly authorized, executed and delivered by the
Provider and constitutes a valid and legally binding obligation of
the Provider, enforceable against the Provider in accordance with
its terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and subject as to
enforceability to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law);
(f) there are no actions, suits,
proceedings or investigations pending or, to the knowledge of the
Provider, threatened, before any court, administrative agency,
arbitrator, governmental body or other tribunal, (i) which, if
determined adversely to the Provider, could have a material adverse
effect on the business, operations, properties, assets or financial
condition of the Provider, (ii) asserting the invalidity of
any of the Provider Agreements, (iii) questioning the
consummation by the Provider of any of the transactions
contemplated by any of the Provider Agreements or (iv) which,
if determined adversely, could materially and adversely affect the
ability of the Provider to
14
perform its
obligations under, or the validity or enforceability of any of the
Provider Agreements, Contracts or the Healthcare Receivables;
(g) the Provider has all necessary
permits, licenses, agreements, accreditation, certifications and
Governmental Consents to operate and conduct its business,
including the provision of all services reflected in and giving
rise to each Healthcare Receivable, as it is presently being
conducted, subject to minor exceptions and deficiencies which are
not material and do not affect the conduct of its business and its
ability to own, collect and grant a security interest in the
Collateral;
(h) Exhibit C lists (i) the
Provider’s exact legal name, (ii) the Provider’s
address for notices, (iii) the address of the chief executive
office of the Provider, (iv) the Provider’s State of
organization, (v) the location of the office where the
Provider keeps all of the tangible Collateral and Records related
thereto and to all of the intangible Collateral and (vi) the
location, account number and account officer responsible for the
Provider’s demand account;
(i) each Contract of the Provider is
in full force and effect and has not been amended or otherwise
modified, rescinded or revoked or assigned, the Provider is in
compliance with the requirements of the Contracts and no condition
exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension,
revocation, impairment, forfeiture or nonrenewal of any
Governmental Consent applicable to the Provider or any other health
care facility owned or operated by the Provider or such
facility’s participation in the Governmental Programs and
there is no claim that any such Contract or Governmental Consent is
not in full force and effect;
(j) there has been filed in proper
form, or a filing extension from the appropriate governmental
authority has been obtained with respect to, all federal, state,
and local income, franchise, sales, use, property, excise, payroll
and other tax returns and all other reports (whether or not
relating to taxes) required by law to be filed by or on behalf of
the Provider with any governmental authority. All taxes, fees,
assessments and charges of whatsoever nature due or payable by the
Provider on or before the date hereof pursuant to said returns or
reports or otherwise (including, without limitation, payments of
estimated taxes and deposits of taxes withheld by or on behalf of
the Provider) have been paid. There is no unpaid interest, penalty
or addition to tax due or claimed to be due from, nor any unpaid
tax deficiency determination or assessment outstanding against the
Provider, nor any basis therefore known to the Provider. No
governmental audits or investigations with respect to taxes are, to
the Provider’s knowledge, in progress with respect to the
Provider, and no governmental authority has given notice that it
will begin any such audit or investigation. All returns and reports
required to be filed, and all taxes, fees, assessments and charges
required to be paid, of whatsoever nature, have been so filed and
paid. The Provider has complied in all material respects with all
applicable laws relating to the employment of labor, including,
without limitation, ERISA and those relating to wages, hours,
collective bargaining, unemployment insurance, workers’
compensation, equal employment opportunity and the payment and
withholding of taxes, including income and social security taxes,
and has withheld (and duly segregated,
15
deposited or
paid over to the appropriate authorities) all amounts required by
law or agreement to be withheld from the wages or salaries of its
employees and is not liable for any arrears of wages or benefits or
any taxes or penalties for the Provider’s failure to comply
with any of the foregoing;
(k) the Medicare and Medicaid cost
reports of each facility and of the home office of the Provider for
all cost reporting periods ending on or before the date hereof have
been filed with the appropriate governmental entity, if due, there
are no pending or threatened Notice of Program Reimbursements
outstanding, and all prior years’ cost reports have been
examined and audited by (i) as to Medicaid, the applicable
state agency or other CMS-designated agents or agents of such state
agency charged with such responsibility or (ii) as to
Medicare, the Medicare intermediary or other CMS-designated agents
charged with such responsibility, and have been settled and there
are no offsets pending, threatened or now owed by the
Provider;
(l) the Provider has valid provider
identification numbers and licenses to generate valid Healthcare
Receivables payable by Eligible Obligors;
(m) the information furnished by or
on behalf of the Provider to PHCC and to agents and employees of
PHCC prior to the date of this Agreement and during the term of
this Agreement or in connection with any transaction contemplated
by the Provider Agreements is and will be true and correct in all
material respects and does not and will not omit to state a
material fact necessary to make the statements contained therein
not misleading;
(n) the Provider is solvent and will
not become insolvent after giving effect to the transactions
contemplated by the Provider Agreements; the Provider has not
incurred debts or liabilities beyond its ability to pay; the
Provider will, after giving effect to the transactions contemplated
by the Provider Agreements, have an adequate amount of capital to
conduct its business in the foreseeable future; and the pledge of
the Collateral hereunder is made in good faith and without intent
to hinder, delay or defraud present or future creditors of the
Provider;
(o) the Lockbox Account established
by the Provider is the only lockbox account into which the
Healthcare Receivables are or will be deposited;
(p) the exact legal name of the
Provider is as set forth in Exhibit C to this Agreement. The
Provider has not changed its name in the last six years and, during
such period, the Provider did not use, and the Provider does not
now use, any trade names, fictitious names, assumed names or
“doing business as” names;
(q) each pension plan or profit
sharing plan to which the Provider is a party has been fully funded
in accordance with the obligations of the Provider set forth in
such plan;
(r) the Healthcare Receivables have
been, and will continue to be, adjusted to reflect reimbursement
policies of the Obligors with respect thereto and the amount
16
thereof will
not exceed amounts the Provider is entitled to receive under any
capitation arrangement, fee schedule, discount formula, cost-based
reimbursement or other adjustment or limitation to the usual
charges of the Provider;
(s) the Provider is not a party to
any unresolved disputes with any Obligor on a Healthcare
Receivable, without regard to whether the dispute with an Obligor
involves a Healthcare Receivable of the Provider which is pledged
to PHCC under this Agreement, except as disclosed in writing to
PHCC;
(t) there are no pending civil or
criminal investigations involving the Provider or its officers and
directors and neither the Provider nor any of its officers or
directors has been involved in, or the subject of, any civil or
criminal investigation within the past five years;
(u) the Provider has executed and
delivered to each Obligor a notice showing the Lockbox and Lockbox
Account as the only address to which Healthcare Receivable payments
and information are to be remitted and has provided a copy of each
such notice to PHCC;
(v) other than, with respect to
Governmental Receivables, pursuant to the terms of the CMS in the
rules and regulations governing the prospective payment system for
healthcare providers or similar governmental programs or
regulations, neither the federal government nor any other Person
has asserted any claim or right to offset any liability or debt
against any Governmental Receivable. Other than, with respect to
Governmental Receivables, pursuant to the terms of the CMS in the
rules and regulations governing the prospective payment system for
healthcare providers or similar governmental programs or
regulations, the Provider has no overdue or delinquent liabilities
or debt which could give rise to a right of the federal government,
any state government or any other Person to offset such liabilities
or debt against Governmental Receivables;
(w) the Provider has heretofore
delivered to PHCC true and complete copies of the financial
statements each of which fairly presents the financial position of
the Provider as of the date thereof and the results of operations
and changes in financial condition of the Provider for the period
then ended and has been prepared in accordance with generally
accepted accounting principles consistently applied. The books of
account and records of the Provider are true and complete in all
material respects and fairly reflect all the material properties,
assets, liabilities and transactions of the Provider in accordance
with generally accepted accounting principles consistently applied.
All fees, charges, costs and expenses of any nature whatsoever
associated with the ownership, operation and management of the
business and the assets have been in all material respects fully
and properly charged and reflected in the books and records of the
Provider and in the Provider’s financial statements, and such
books and records and financial statements do not, because of the
provision of services or the bearing of costs and expenses by any
other person or for any other reason, understate in any material
respect the true costs and expenses of conducting the
Provider’s business; and
17
(x) all documents which have been or
shall be delivered to PHCC or filed with any governmental authority
by or on behalf of the Provider pursuant to this Agreement or any
other Provider Agreement or in connection with the transactions
contemplated hereby are, or when so delivered or filed shall be,
correct and complete in all material respects and, if applicable,
in full force and effect.
Section 7. Representations
and Warranties Concerning Healthcare Receivables Pledged to
PHCC . The Provider represents and warrants to PHCC, as of the
date hereof, and shall be deemed to represent and warrant to PHCC
as of each Advance Request, as follows with respect to each
Healthcare Receivable pledged to PHCC hereunder:
(a) the Net Value of such Healthcare
Receivable is payable in full by an Eligible Obligor;
(b) the Provider has submitted all
necessary documentation and supplied all necessary information for
payment of such Healthcare Receivable to the Obligor thereof
(including, but not limited to, the COMN with respect to a DME
Receivable) and has fulfilled all of its other obligations in
respect thereof, including verification of the eligibility of the
Healthcare Receivable for payment by such Obligor;
(c) the Net Value of such Healthcare
Receivable is net of contractual allowances or other
modifications;
(d) such Healthcare Receivable has
not been paid in whole or in part;
(e) neither such Healthcare
Receivable nor any related Contract has been compromised, adjusted,
extended, satisfied, subordinated, rescinded, set off or modified
by the Provider and is not subject to compromise, adjustment,
extension, satisfaction, subordination, rescission, setoff,
counterclaim, defense or modification, whether arising out of
transactions concerning the Contract or otherwise;
(f) true and correct copies of all
claims, agreements and other documents relating to the creation of
such Healthcare Receivable have been delivered to PHCC or the
Servicer;
(g) such Healthcare Receivable is
owned by the Provider free and clear of any claim of ownership of
any other Person and is not subject to any sale, lien, security
interest, financing statement or other charge or encumbrance or
other type of preferential arrangement having the effect of a lien
or security interest, in favor of any Person other than as
contemplated by this Agreement ;
(h) no action, other than the
execution and delivery of this Agreement, the filing of financing
statements in the state where the Provider is “located”
pursuant to the Uniform Commercial Code of the relevant
jurisdiction, as amended from time to time, is required to perfect
the interest of PHCC, as a secured party of and to such Healthcare
Receivable, and all such actions have been or will be accomplished
no later than the date of execution of this Agreement;
18
(i) such Healthcare Receivable
complies with all laws and regulations applicable thereto;
(j) such Healthcare Receivable is in
full force and effect and represents and constitutes a legal, valid
and binding obligation of the related Obligor enforceable against
such Obligor in accordance with its terms and constitutes an
“Account” under the Uniform Commercial Code in effect
in any jurisdiction deemed to govern the creation, perfection, and
effect of perfection or non-perfection of a security interest
therein, as amended from time to time;
(k) such Healthcare Receivable does
not constitute or has not constituted an obligation of any
subsidiary, parent or other Person which is an affiliate of the
Provider;
(l) such Healthcare Receivable
(i) is payable, in an amount equal to not less than its Net
Value, by the Eligible Obligor identified by the Provider as being
obligated to do so, and is recognized as such by the applicable
Eligible Obligor (except to the extent limited for Governmental
Receivables pursuant to the terms of the CMS in the rules and
regulations governing the prospective payment system for healthcare
providers or similar governmental programs or regulations),
(ii) is based on an actual and bona fide rendition of services
to, or the furnishing of goods or medical equipment provided to, a
patient by the Provider in the ordinary course of its business,
(iii) is denominated and payable only in lawful currency of
the United States and (iv) is an account and is not evidenced
by “negotiable documents,” “instruments” or
“tangible chattel paper” within the meaning of the
Uniform Commercial Code of any relevant jurisdiction;
(m) other than, with respect to
Governmental Receivables, pursuant to the terms of the CMS in the
rules and regulations governing the prospective payment system for
healthcare providers or similar governmental programs or
regulations, such Healthcare Receivable (i) is not subject to
any setoff, counterclaim, defense, abatement, suspension,
deferment, deductible, reduction or termination by its Obligor and
(ii) is not past, or less than 120 days prior to, the
statutory limit for collection applicable to its Obligor;
(n) the goods and services provided
and reflected in such Healthcare Receivable, or the medical
equipment provided, were medically necessary, and the patient has
received such goods, services or medical equipment;
(o) the fees charged for the services
or goods constituting the basis for such Healthcare Receivable were
the usual, customary and reasonable fees charged by other medical
service providers in the Provider’s community for the same or
similar services or goods or, if the fees for services or goods
were subject to limitations imposed by contracts for reimbursement
from the related Obligor, such fees did not exceed the limitations
so imposed, and such Healthcare Receivable for which the fees are
so restricted has been clearly identified to PHCC as being subject
to such restriction;
(p) the Provider has identified and
provided to the Servicer all Records,
19
including all
documents, contracts and other information necessary to identify
each Obligor liable on such Healthcare Receivable, whether
primarily, secondarily or otherwise, and the only Obligor(s) liable
on such Healthcare Receivable is (are) the Obligor(s)
identified in the applicable Records;
(q) other than as may be limited with
respect to Governmental Receivables pursuant to the CMS in the
rules and regulations governing the prospective payment system for
healthcare providers or similar governmental programs or
regulations, the Provider has the right to pledge such Healthcare
Receivable pursuant to this Agreement, no consent from the related
Obligor or any other Person is required to effect the pledge of
such Healthcare Receivable to PHCC and this Agreement, and such
pledge of such Healthcare Receivable will constitute a valid
security interest in such Healthcare Receivable in favor of PHCC
enforceable against the Provider and all creditors of and
purchasers from the Provider;
(r) other than, for Governmental
Receivables, pursuant to the CMS in the rules and regulations
governing the prospective payment system for healthcare providers
or similar governmental programs or regulations, the Provider has
made all payments to any Obligor necessary to prevent the Obligor
from offsetting an earlier overpayment to the Provider against any
amount the Obligor owes on such Healthcare Receivable;
(s) there are no procedures or
investigations pending or threatened before any Governmental
authority (i) asserting the invalidity of such Healthcare
Receivable or any Contract related thereto, (ii) relating to
the bankruptcy or insolvency of the related Obligor,
(iii) seeking the payment of such Healthcare Receivable or
payment and performance of such Contract or (iv) seeking any
determination or ruling that might materially and adversely affect
the validity or enforceability of such Healthcare Receivable or any
Contract related thereto;
(t) neither such Healthcare
Receivable nor Contract related thereto contravenes in any material
respect any federal, state or local laws, rules or regulations
applicable thereto (including, without limitation, the rules and
regulations of CMS and laws, rules and regulations relating to
usury, consumer protection, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy), and no party to such related
Contract is in violation of any such law, rule or regulation in any
material respect;
(u) the insurance policy or Contract
obligating an Obligor to make payment (i) does not prohibit
the transfer of the right to receive payment from the patient to
the Provider and (ii) was in full force and effect and
applicable to the patient at the time the services constituting the
basis for such Healthcare Receivable were performed; and
(v) such Healthcare Receivable
complies with such additional criteria and requirements as PHCC may
from time to time specify to Provider other than as such criteria
and requirements may be limited with respect to Governmental
Receivables pursuant to the CMS in the rules and regulations
governing the prospective payment
20
system for
healthcare providers or similar governmental programs or
regulations.
Section 8. Covenants of the
Provider . The Provider hereby agrees with and covenants to
PHCC and its successors and assigns that during the term of this
Agreement:
(a) if the Provider is a corporation,
limited liability company or partnership, the Provider shall
preserve and maintain its existence in good standing under the laws
of the state of its organization and qualify and remain qualified
in good standing as a foreign entity in each jurisdiction where the
failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would materially adversely
affect the interests of PHCC hereunder or in the Collateral, or the
ability of PHCC or the Servicer to perform its respective
obligations hereunder;
(b) the Provider shall do nothing to
impair PHCC’s right in any Collateral or impede or interfere
with the collection by PHCC or any of its agents of any Healthcare
Receivable, or compromise, adjust, extend, satisfy, subordinate,
rescind, set off or modify or otherwise permit or agree to any
deviation from the terms or conditions of any Healthcare
Receivable;
(c) the Provider shall comply, in all
material respects, with its obligations under the Contracts
relating to Healthcare Receivables, and with all laws,
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